Sunday, January 23, 2011

“That Guy”

A couple weeks ago, Treasury Secretary Timothy Geithner sent a letter to Senator Harry Reid urging Congress to take swift action to raise the national debt ceiling. The letter is several paragraphs long, and is publicly available on the Treasury website. One of the most noteworthy parts of Geithner’s letter is his list of “specific consequences” that would occur if the United States were to refrain from raising the debt ceiling:

  • The Treasury would be forced to default on legal obligations of the United States, causing catastrophic damage to the economy, potentially much more harmful than the effects of the financial crisis of 2008 and 2009.
  • A default would impose a substantial tax on all Americans. Because Treasuries represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale.
  • Default would have prolonged and far-reaching negative consequences on the safe-haven status of Treasuries and the dollar’s dominant role in the international financial system, causing further increases in interest rates and reducing the willingness of investors here and around the world to invest in the United States.
  • Payments on a broad range of benefits and other U.S. obligations would be discontinued, limited, or adversely affected, including:
    • U.S. military salaries and retirement benefits;
    • Social Security and Medicare benefits;
    • veterans’ benefits;
    • federal civil service salaries and retirement benefits;
    • individual and corporate tax refunds;
    • unemployment benefits to states;
    • defense vendor payments;
    • interest and principal payments on Treasury bonds and other securities;
    • student loan payments;
    • Medicaid payments to states; and
    • payments necessary to keep government facilities open.

This list is noticeably similar to the kind of letter that many people have received from debt collectors in reference to overdue obligations—the “pay us or else” notice. Sadly, it is likely that Geithner is correct in his assessment of these consequences. Failure to raise the debt ceiling promptly will almost certainly have far-reaching negative results.

However, Geithner’s letter fails to address the most important aspect of raising the debt ceiling. His perspective is perhaps skewed by his closeness to the slash-and-burn school of economics represented by the Federal Reserve and the big investment banks of Wall Street.

Apparently, long-term fiscal planning has become a lost art in the federal government, but the Treasury Secretary’s responsibility doesn’t end with making sure the ship doesn’t sink on his watch. Geithner has laid out the short-term consequences of failure to raise the debt ceiling fairly well, but the long-term consequences of continuing to raise the debt ceiling are also worthy of discussion.

Nearly everyone knows “that guy,” the one who lives far beyond his means and appears to have no sense of his financial future. He’s the friend or relative with so much debt that, on any given day, he can’t accurately account for it all. If there is a payment plan available for something he wants, he will buy it, even if he cannot afford it in the long run. He pays his household bills with a credit card and considers himself to be on solid financial ground if he can make his minimum payments on time, even if it means taking out payday loans to do it. A budget is a foreign concept to him.

We all know the situation “that guy” is getting himself into. Outside of the extremely unlikely event that he simultaneously wins the lottery and learns to balance his finances, his life will become a perpetual game of cat-and-mouse with debt collectors and repo men. He will sigh dejectedly every time his phone rings, knowing that most of the time it is another account representative calling to dun him for a past-due bill.

In the end, he will lose all of those nice things he bought and still owe significant sums of money for them. He’ll probably have to file for bankruptcy, and he’ll be lucky if he can sign up for phone plan or get a checking account for a decade afterward.

Unfortunately, the United States Congress is “that guy.” In the short term, cutting off access to further debt would be devastating. The entire national budget is conceived on the presumption that there will always be more credit available, and that everything is fine as long as we can make our minimum payments. But in the long run, continuing this foolish policy is not a viable option.

Eventually, the ability to borrow more and more money won’t make a difference. The interest will pile up higher and higher as the debt-bandages grow into larger obligations themselves. The government will have to cut services we’ve paid for and tax us all into poverty in order to keep propping up the system, as yet another short-term measure to keep the budget afloat. When that fails—and it will, without a question—inability to disburse extended unemployment benefits and student loans will be the least of our worries.

There’s one thing that very few people seem to understand about debt, and the national debt in particular. Lenders don’t just give out money on blind faith. There is always some security feature, some form of collateral that backs up the borrower’s promise to pay. In the case of the national debt, that collateral is the country itself—its natural resources, its land, the productivity of its people, and whatever else the lender might demand in repayment.

If the federal government continues on its current path, showering borrowed money on every perceived problem instead of seeking real solutions, the irresponsible politicians will be selling out all of us. Our once-great country will need to refinance its debt, the national equivalent of filing for bankruptcy, and we will be left at their mercy. The international banks will dictate our policies (not as they do now through lobbying, but as official mandates) and turn the United States into another of its vassals, like they have done to so many other debtor nations in the past decades. It will be devastating in ways that Geithner’s list of consequences does not come close to describing.

It is true that we must raise the debt ceiling now. By not doing so, we would effectively be forfeiting our economy. But, if opening the door to additional debt is to have any meaningful purpose, this willingness to permanently operate deeper and deeper in the red must end immediately. We need real leaders who will set us on a sustainable path for the future, not a series of schemes that will only see us through to the next election cycle.

Astronomical Debt!

Not-So-Fun Facts: If the national debt of the United States were to be printed in $100 notes and put into a single stack, that stack would be over 9,500 miles tall. From sea level, more than 99% of the stack would protrude out of Earth’s atmosphere and into space. If the debt were printed in $1 notes instead of $100 notes, it would be nearly enough to create 4 full stacks from Earth to the moon. If the debt were minted in pennies, it would be enough to create 14 stacks from Earth to the sun, with a leftover 15th stack approximately 46,000,000 miles tall.

Quantitative Easing Is Causing Food Prices to Skyrocket

As I've previously noted, interest rates have risen both times after the Fed implemented quantitative easing.

Graham Summers points out that food prices have also skyrocketed both times:

In case you’ve missed it, food riots are spreading throughout the developing world Already Tunisia, Algeria, Oman, and even Laos are experiencing riots and protests due to soaring food prices.

As Abdolreza Abbassian, chief economist at the UN’s Food and Agriculture Organization (FAO), put it, “We are entering a danger territory.”

Indeed, these situations left people literally starving… AND dead from the riots.

And why is this happening?

A perfect storm of increased demand, bad harvests from key exporters (Argentina, Russia, Australia and Canada, but most of all, the Fed’s money pumping. If you don’t believe me, have a look at the below chart:

[Summers shows the share price of Elements Rogers International Commodity Agriculture ETN as a proxy for food prices generally.]

As you can see, it wasn’t until the Fed announced its QE lite program that agricultural commodities exploded above long-term resistance. And in case there was any doubt, QE 2 sent them absolutely stratospheric.

This isn't really unexpected.

Last November, David Einhorn warned:

It is quite likely that QE2 will slow the economy by raising food and energy prices [because it is easier to generate these price increases]. [These price hikes] would act as a tax on consumers and businesses.

Also in November, Karl Denninger wrote:

We have a Federal Reserve that, in the last two years, has printed and debased the currency of this nation by more than 100%, taking their balance sheet from $800 billion to more than $2 trillion. They now threaten, today, to do even more of that. This has resulted in insane price ramps in soft commodities ....

("soft commodities" means food crops).

As the Wall Street Journal, Tyler Durden, the Economic Policy Journal and others note, inflation in food prices isn't limited to developing nations, but is coming to the U.S.

A Path Is Sought for States to Escape Their Debt Burdens

Policymakers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.

Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.

But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

“All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration.

For now, the fear of destabilizing the municipal bond market with the words “state bankruptcy” has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month.

House Republicans, and Senators from both parties, have taken an interest in the issue, with nudging from bankruptcy lawyers and a former House speaker, Newt Gingrich, who could be a Republican presidential candidate. It would be difficult to get a bill through Congress, not only because of the constitutional questions and the complexities of bankruptcy law, but also because of fears that even talk of such a law could make the states’ problems worse.

Lawmakers might decide to stop short of a full-blown bankruptcy proposal and establish instead some sort of oversight panel for distressed states, akin to the Municipal Assistance Corporation, which helped New York City during its fiscal crisis of 1975.

Still, discussions about something as far-reaching as bankruptcy could give governors and others more leverage in bargaining with unionized public workers.

“They are readying a massive assault on us,” said Charles M. Loveless, legislative director of the American Federation of State, County and Municipal Employees. “We’re taking this very seriously.”

Mr. Loveless said he was meeting with potential allies on Capitol Hill, making the point that certain states might indeed have financial problems, but public employees and their benefits were not the cause. The Center on Budget and Policy Priorities released a report on Thursday warning against a tendency to confuse the states’ immediate budget gaps with their long-term structural deficits.

“States have adequate tools and means to meet their obligations,” the report stated.

No state is known to want to declare bankruptcy, and some question the wisdom of offering them the ability to do so now, given the jitters in the normally staid municipal bond market.

Slightly more than $25 billion has flowed out of mutual funds that invest in muni bonds in the last two months, according to the Investment Company Institute. Many analysts say they consider a bond default by any state extremely unlikely, but they also say that when politicians take an interest in the bond market, surprises are apt to follow.

Mr. Maco said the mere introduction of a state bankruptcy bill could lead to “some kind of market penalty,” even if it never passed. That “penalty” might be higher borrowing costs for a state and downward pressure on the value of its bonds. Individual bondholders would not realize any losses unless they sold.

But institutional investors in municipal bonds, like insurance companies, are required to keep certain levels of capital. And they might retreat from additional investments. A deeply troubled state could eventually be priced out of the capital markets.

“The precipitating event at G.M. was they were out of cash and had no ability to raise the capital they needed,” said Harry J. Wilson, the lone Republican on President Obama’s special auto task force, which led G.M. and Chrysler through an unusual restructuring in bankruptcy, financed by the federal government.

Mr. Wilson, who ran an unsuccessful campaign for New York State comptroller last year, has said he believes that New York and some other states need some type of a financial restructuring.

He noted that G.M. was salvaged only through an administration-led effort that Congress initially resisted, with legislators voting against financial assistance to G.M. in late 2008.

“Now Congress is much more conservative,” he said. “A state shows up and wants cash, Congress says no, and it will probably be at the last minute and it’s a real problem. That’s what I’m concerned about.”

Discussion of a new bankruptcy option for the states appears to have taken off in November, after Mr. Gingrich gave a speech about the country’s big challenges, including government debt and an uncompetitive labor market.

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Japan rocket ferrying supplies to space station

TOKYO – A Japanese rocket carrying supplies for the International Space Station successfully lifted off from a remote island Saturday on a mission designed to help fill a hole left by the retirement of NASA's space shuttle program.

The unmanned rocket — Japan's second flight to the space station — was ferrying nearly 6 tons of food, water, clothing and experimental equipment to the astronauts in orbit aboard the international project involving 15 nations. The rocket also was carrying cargo for NASA.

After docking with the space station, dropping off its cargo and being loaded up with waste material, the rocket's transfer vehicle, named "Kounotori2," will be detached and burn itself up upon re-entering Earth's atmosphere. Kounotori means white stork in Japanese.

Applause broke out at the control center on Tanegashima Island as officials announced that the launch phase was a success. Tracking was switched to a center in Guam as the vehicle moved rapidly away from Japan.

Kounotori2 is expected to reach the space station on Jan. 27.

JAXA, Japan's space agency, hopes the project will help it build expertise for similar low-cost ferrying missions and push forward manned flights of Japan's own.

Cargo missions for the International Space Station have become more important now that the United States has scaled back its ability to launch supplies. Since 2009, the station has been manned by six astronauts, but keeping them fed and supplied has become a bigger challenge because of the retirement of the U.S. space shuttles.

NASA is linking up with commercial companies to launch future cargo expeditions.

JAXA officials say they are studying the possibility of reconfiguring the Kounotori vehicle — which is about the size of a large passenger bus — for manned flight.

Japan's space program has yet to attempt manned flight. Japan has a module attached to International Space Station that can be used by astronauts, but has relied on the United States to get them there. A Russian Soyuz is to take the next Japanese astronaut to the space station in May.

Japan sent cargo on its first unmanned carrier to the international station in 2009.

Money, more than technology, is generally seen as Japan's biggest hurdle.

JAXA's budget for last year was 180 billion yen ($2 billion), about one-fourteenth of what the U.S. spends on space exploration and less than half of what the EU spends, according to Japanese government estimates.

Even so, Japan boasts a reliable booster rocket in the domestically produced H-II series — the rocket used Saturday — and has been one of the leaders in launching satellites.

Still, its program in recent years has been marred by setbacks.

Last month, a Japanese probe to Venus failed to reach orbit. Officials said they have not completely given up hope and are trying to reprogram the probe to try again in another five — or if that fails six — years.

Japanese scientists had been hopeful of success with the Venus probe after the country brought a probe back from a trip to an asteroid.

Japan has never succeeded in an interplanetary mission. It launched a mission to Mars in 1998 that was plagued by technical glitches and finally abandoned in 2003. Russia, the United States and the Europeans have successfully explored other planets.

Japan has also been overshadowed in recent years by China, which sent its first astronaut into space in 2003 and carried out its first spacewalk in 2008.

How Excess Spending, Taxation, and Controls are Destroying the USA Economy

David Redick
Activist Post

Politicians, ‘Progressive’ activists, NeoCon Imperialists, and bankers worldwide love to spend money and love the unending supply of it from; 1. taxing 'other people,' and 2. fiat paper money (‘face value’ decreed by government) from the central banks that create and control it. With this supply, the politicians never run out of money for their vote-for-me pork; Progressive activists get it for their welfare and subsidy projects; Imperialists for their wars and 'foreign aid' bribery; and bankers get cash and credit for the reserves they need to continue lending and for creating bizarre investment schemes. All four view the government and its central bank (ours is the Federal Reserve System, or ‘Fed’) as the unlimited source of funding to finance their projects, and bail them out if they get into trouble.

Of course, most of these handouts come with strings attached, so the federal government gains creeping power over state and personal matters. The controls that should be removed are those that limit choices by consumers, or do favors for political friends. The normal laws are still there for prevention of fraud, and disclosure of things that could cause harm, or pose a threat to users. Further, this loose, cheap money creates the moral hazard of false confidence that causes businessmen, politicians, and bankers to engage in expensive and risky deals (new factories, wars for oil and bases, welfare, derivatives, no-doc home mortgages, etc.) that they would otherwise avoid, or could not finance. More and bigger wars, spending, and business cycles (bubbles) are the result.

Big spending got a boost in 1913 when the Fed was created (fake money funded two World Wars, VietNam, Medicare, etc.), and another major jump occurred when Nixon cut the dollar’s last ties to gold in 1971; we were running out and we had no limits on the amount of fake money we could create. Being the world’s reserve currency allowed us to do this, since our dollar -- even those newly created -- were treated as 'good as gold.' Due to this added increase in excess spending and borrowing since 1971, the US has declined from the world’s biggest lender to the biggest borrower, and our growing national debt of $14 trillion is now about equal to our Gross National Product, which all economists agree is dangerous. Our problems are very similar to those that caused the recent crashes in Greece and Ireland, and which have Spain, Portugal and England on the brink. How did we get into this mess? Why do people seek more government when history is so full of economic and human loss due to central control of the economy?

The Start of Our Decline
The USA started a trend toward more government in 1933 when FDR announced the New Deal. The Great Depression was caused by excess ‘stimulus’ money created by the Fed in the 1920s that led to mal-investments and bubbles that burst in 1929 (they always do). In a similar manner, today’s TARP and Quantitative Easing schemes are flooding our economy with money, with little benefit and much harm.

FDR tried to end the depression with government spending by his New Deal. This postured the government for the first time in US history in a paternalistic (nanny) way as funder and manager of the economy, and much of our personal lives. This Paternalism violates the Constitution, which mainly empowers the government to protect our rights, and is the opposite of the personal responsibility and initiative that built our country, thus marking the beginning of our decline.

The New Deal funded the ‘Progressive-Liberal-Socialistic’ (pick a term; they all seek free benefits from big government) projects that continue in various forms today, and are the main cause of our excess, and unsustainable, spending and borrowing at both the State and Federal level. I include in this group the former Liberals who became ‘neo-conservatives’ to push their imperial agenda (they and Pres. Obama ended the Liberal anti-war movement) with the false Conservatives such as Presidents R. Nixon and G. W. Bush. This imperial thinking has led to our chosen role as the World’s Policeman (or bully?) since 1945, and the huge costs of our ‘defense’ equipment, military people, contractors, and bases (about 1,000 in 130 countries), which exceeds the total spending of all other nations combined!

This can be called Empire-USA, and must end. The nations we ‘protect’ with our SOFAs (Status of Forces Agreements), save billions of dollars of ‘defense’ expense by trading some control of their skies, land and economy for our presence. Maybe we should declare the USA as a neutral country like Sweden or Switzerland? As a ‘neutral’ we would only need homeland defense (low cost, similar to Sweden and Switzerland), and would have additional reasons to eliminate the Patriot Act, FISA, TSA, MCA, etc., when the blowback from our overseas invasions, killings, tortures, and meddling ends.

As opposed to false conservatives such as Nixon and both Bushes, a true Conservative or Libertarian is for low spending and taxes, sound money, adherence to the Constitution (limited government), social freedom, and a non-interventionist foreign policy. Thus, under true Conservative-Libertarian leadership: a) our Federal spending would be reduced by more than half, and b) The unlimited supply of fake money would end by abolishing the Fed. Money would be limited in quantity, and made of, or backed-by, precious metal (silver and/or gold), the unit of account (price of things) would be by weight of the metal -- grams, not dollars, dimes, etc. -- with private mints and no central bank or legal-tender laws.

Of course most economists are now in the Liberal (more-government; Keynesian style) camp, especially the grant-seeking academics. As a result of this Progressive dominance during most of the years since 1933, our nation, the US Dollar, and many states are now facing economic collapse.

History is full of the failure of nations and empires. Most fail due to excess government control, high costs, and corruption, plus a decline of personal responsibility in the people due to the moral hazards of laziness and excess consumption caused by subsidized or free goods and services. The USA is on the brink.

Success Stories for Limited Government
Conversely, in the last fifty years we have seen the recovery of countries that suffered economic failure (low Liberty, GDP, and standard of living) due to excess government control, when they introduced some free-market capitalism as a means to end their decline. Examples are:

1. USSR: In 1985 General Secretary Mikhail Gorbachev introduced Glasnost (openness of government activity) and Peristroika (restructuring, privatization) at the same time. It didn’t work because: a) the Russian people had lost their desire and skills to take initiative, and b) the corrupt Apparatchiks (former Communists bureaucrats) and Oligarchs (business magnates) grabbed ownership of the industries that were divested, often at fraudulently low prices. The USSR is gone, and surviving Russia still has serious problems with corruption and low productivity, but at least its homeland still exists and is trying to reform.

2. Vietnam: Since we stopped bombing and murdering them in 1975, Vietnam has made a shift from a highly-centralized planned economy to a socialist-oriented market economy which uses limited central control, and much free-enterprise by the people. It is working well, but Liberty remains low.

3. Most of the former Soviet-controlled countries in eastern Europe (Eastern Bloc) have reduced central planning, and increased free-enterprise in various amounts, and the results are good to the extent government control has been reduced. Poland and the Czech Republic have done best because of their leaders and a spirit of initiative in the people. Even Cuba has tried some free-enterprise in a desperate move to avoid collapse.

4. India is a good example of choosing to reform due to the failure of central planning, and prohibition of foreign investment. Following the socialist inspired economy after its 1947 independence from Britain, in 1990 India allowed international competition and foreign investment. Results have been excellent, but a high percent of the population are still poor. Economists predict that by 2020, India will be among the leading economies of the world.

5. China: We have seen the People’s Republic of China rise as an economic success after they allowed free-enterprise to create new products, services, and exports. Since the revolution in 1949, the political campaigns led by Mao Zedong, such as the Great Leap Forward and the Cultural Revolution, are blamed for 40 to 70 millions of deaths, causing severe famine and damage to the culture, society and economy of China. After Mao's death in 1976, his main leftist supporters, led by the Gang of Four, were ousted in a coup, and reformists led by Deng Xiaoping took power in 1978, and started economic reforms based on more free-enterprise, but with considerable central government ownership and control. Civil liberties have remained low, but ‘Free Trade Zones’ have grown to larger areas. The economic reforms occurred in two stages. The first stage, staring in 1978, involved the decollectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start-up businesses. However, most industry remained state-owned, inefficient and acted as a drag on economic growth. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China's GDP by 2005, a figure larger in comparison to many Western nations. From 1978 to 2010, unprecedented growth occurred, with the economy increasing by 9.5% a year, and China's economy became the second largest after the United States, and also the world's largest holder of US debt at about $900 billion (or over $1 trillion when Hong Kong's holdings are included). The conservative Hu-Wen Administration more heavily regulated and controlled the economy after 2005, reversing some reformist gains. For 2010, China was ranked 140th among 179th countries in Heritage Foundation’s Index of Economic Freedom World Rankings, which is an improvement from the preceding year.

Again, why do some Americans seek more government when history is so full of economic and human loss due to central control of the economy? They will cite the success of some of the above hybrid socialist-oriented market economies (but not all attempts are a big success, depending on leaders and rules, but free markets always bring some improvement), as to why they want it for the USA, but that would include giving-up most of our Liberty, and the present hybrid system is failing all around us! I say these people want more government because: a) they are delusional ‘do-gooders’ who are ignorant of, or ignore, the past (or think 'we’ll do it right this time'), and are determined to impose their views of ‘common good’ and ‘shared responsibility’ on others by force of law. They all focus on the good parts, and ignore the bad side-effects. (I suggest private charity), b) they see a benefit in it for themselves (free health care, tuition, tenure, etc.), and/or c) they seek the prestige, power, security, and wealth that comes with being in charge of government programs (even when they know there is much harm being done; employees of the Fed are classic). Shame on all three types!

The problems with the Progressive system are: 1. It is immoral due to using ‘tyranny of the majority’ gang-theft to impose a higher tax rate on certain groups (‘the rich’, inheritors, property owners, corporations, etc.), and they want more even though the top 20% of earners already pay about 80% of our tax revenue. They justify these tax attacks by claiming ‘the rich’ are lucky, more fortunate, etc., while ignoring the fact that most high net-worth people earned their wealth by work, risk, investment, and brains; 2. It damages personal responsibility, social values, and private charity while creating a fragile entitlement-based dependency for both people and business (nurturing ties with friends and family means less when you perceive 'the government' as your best friend); and 3. It creates an unfriendly national and state regime of taxes and fees that scare away successful people and firms, and thus causes a net loss in tax revenues. Individuals and firms are moving to other countries. WI, IL, CA and other high-tax-and-spend states are losing people and businesses to low-tax-and-spend states like TX and FL. Texas gained four new Congressional seats in the last census!

The economic and social problems we face today are clear notice that the day of reckoning has arrived. Taxes, regulations, spending, paternalism, and our empire of bases and meddling worldwide must be reduced, or our economy and social order will collapse, as it has for all previous empires (UK, Spain, USSR, France, etc.) that failed to heed the warnings!


Ellen Strickland, 80, says she was fired from Home Depot because of her age

Ellen Strickland, 80, was fired after 19-year career at Home Depot for crediting her bank card while making store purchases.
Farriella for News
Ellen Strickland, 80, was fired after 19-year career at Home Depot for crediting her bank card while making store purchases.

An 80-year-old Home Depot checkout lady known as "Mom" to co-workers says she was canned over a 6-cent screw.

But Ellen Strickland says her September firing had more to do with her age than the screw.

She's suing the home-improvement giant for age discrimination in Queens Supreme Court.

Strickland says she was called into her boss' office and told that her habit of ringing up 6-cent screws to get cash back on her debit card and avoid ATM fees was a no-no.

Strickland, who worked as a bookkeeping supervisor for 15 years before she moved to the register, agreed to stop. By then she had done it four times.

"I used to handle millions of dollars for this company and for 24 cents I'm told I'm going to have to leave?" Strickland said. "There was not a penny missing."

A spokeswoman for the South Ozone Park Home Depot could not be reached for comment.

Strickland says the move stunned her since she had recently been honored at an employee luncheon for registering above-average grades for "cashier friendliness" and a stellar "wait to checkout" time.

Her lawyer, Esther Goldbas, says Strickland was fired despite "a flawless record."

Strickland "performed an action that was common practice among store employees....Plaintiff was the only employee terminated for this action, while younger employees were not," the lawsuit claims.

The firing forced Strickland to leave a place that became a second home after the death of her husband five years ago.

"I enjoyed getting out and seeing the kids," Strickland says. "I was enjoying getting up and going to work every day."

Over 19 years she attended weddings, baby showers and other major events in the lives of co-workers who called her Mom. On days off, they would travel to Atlantic City together.

She says she proved a quick study when Home Depot moved her to the cash register in 2008. She didn't mind standing for eight-hour shifts and rarely took breaks except for lunch. "I couldn't be bothered," she said. "I went ahead and worked....I could outwork most of the younger kids."

For now, she's filling the time by swimming at a recreation center near her Jamaica, Queens, home.

"I'm not one of these 80-year-old people who are just going to sit at home," she said.

Fed Buys $20 Billion More This Week: That's $320 Billion In Treasury Debt Monetization Since August - And Counting


NEW YORK (MarketWatch) -- The Federal Reserve Bank of New York bought $8.36 billion in Treasury debt on Friday, adding to the $312 billion the central bank has bought already since August. The buybacks are part of the Fed's second round of quantitative easing, and include purchases made under a previous program to reinvest cash from its maturing mortgage-related holdings back into Treasurys. Dealers offered to sell the Fed $18.959 billion in debt maturing from 2018 through 2020. After the announcement, the broader bond recovered its small gains from earlier.



NEW YORK (MarketWatch) -- The Federal Reserve Bank of New York bought $2.2 billion in inflation-linked Treasury debt on Thursday, adding to the $309 billion the central bank has bought already since August. The buybacks are part of the Fed's second round of quantitative easing, and include purchases made under a previous program to reinvest cash from its maturing mortgage-related holdings back into Treasurys. Dealers offered to sell the Fed $8.169 billion in debt maturing from 2028 to 2040.



NEW YORK (MarketWatch) — Treasurys edged between minor gains and losses after the Federal Reserve Bank of New York bought $7.7 billion in debt on Wednesday.

The operation was the latest of the Fed’s second round of quantitative easing to support lending and spending.


Further reading...


DEADBEAT MILLIONAIRES: Biggest Defaulters On Mortgages Are The Rich

Editor's Note: We are reposting this NYT story from this Summer for those who missed it the first time around...


In certain cases, walking away and sending jingle mail to your bank is the smartest and most rational option facing mortgage holders in a dead market. Banks themselves do not hesitate to walk away from billion-dollar CRE projects, so why should you be expected to behave any differently.

Don't fall for the guilt trip. Do what is right for you and your situation. Now onto the story from this morning's NYT.


LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”


SNL Classic: The Real Ronald Reagan: "The red countries are where we sell arms; .....

Video: Reagan behind the scenes on Iran Contra -- Saturday Night Live

Starring the late Phil Hartman.

  • "The red countries are where we sell arms. The green countries are where we launder our money."



Check out this one...

Editor's Note - Fans of women's swimming (and high heel shoes) might want to make sure to see pic #4...


Start the Slideshow...Takes 2 Minutes

You will see several examples of ACTUAL fraudulent documents that were submitted by large, well known banks in court proceedings.

We're talking over the top, ridiculous fraud here - Fake people, fake signers, fake documents, false notaries, and EVEN fake banks...


Spoiler ALERT -- Do not miss #7:


And more photos...

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


And finally these...


Song: Green Energy Blues

Original Song - Wind Power Blues...

Don't infer from this clip that we're lovers of carbon pollution; there are no easy energy solutions (outside of cold fusion -;), and wind farms are not without their problems, as demonstrated cogently in the above clip.

Mostly, it's just an original song for a Friday night...


This is an absolute must see...


Further reading (includes excellent Al Gore cartoons)...

FDIC closes United Western

Federal regulators closed United Western Bank on Friday evening, ending the $2 billion thrift's long struggle to raise capital and survive.

First-Citizens Bank & Trust Co. of Raleigh, N.C., will assume United Western's deposits, valued at $1.65 billion last September, the Federal Deposit Insurance Corp. said in a statement.

United Western's eight branches will reopen Monday as branches of First-Citizens Bank & Trust.

The FDIC urged customers to keep using ATM or debit cards and to write checks as they normally would over the weekend. All outstanding checks will be processed.

Those with questions were directed to call 1-800-405-8028 begin_of_the_skype_highlighting 1-800-405-8028 end_of_the_skype_highlighting or visit /failed/unitedwestern.html.

"This is a prime example of a seasoned and time-tested resolution system at work," said Don Childears, president of the Colorado Bankers Association.

Childears said customers shouldn't experience any noticeable changes, and the state will gain a new bank eager to compete.

United Western is the state's largest bank failure since the collapse on April 10, 2009, of New Frontier Bank, a $1 billion bank in Greeley. The FDIC couldn't find a bank to take over New Frontier.

United Western, formerly known as Matrix Bancorp, shifted from a wholesale mortgage bank to a more diversified commercial lender in 2006.

But it continued to hold a large concentration in mortgage-backed securities, which dropped sharply in value during the credit crisis. Those losses were compounded when commercial borrowers began defaulting.

The FDIC on Friday also took over Bank of Asheville, based in Asheville, N.C., with $195.1 million in assets, and CommunitySouth Bank and Trust, based in Easley, S.C., with $440.6 million in assets.

Read more: FDIC closes United Western - The Denver Post
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EwalletXpress Regretfully Apologize to US Gamblers

The Magic 8 Ball should have told US players what was in the cards for EwalletXpress and their casino accounts in a matter of minutes back in November with the tell tale signs making an appearance once again at a frequently used payment processor, EwalletXpress. When players across the US tried to access their EwalletXpress accounts on that cold winter day and found that there was “no access” available and just a little note explaining that upgrades were taking place and accounts would be available soon. Hopes of a easy solution were prayed for across the US but when players started noticing one by one that banking options were suspiciously absent from their accounts, no deposit methods available a bit of déjà vu started taking over.

Still players held out hope, because EwalletXpress were sticking with their “technical” issues as the reason for the unavailability to players, but why just US players? Clients of EwalletXpress started realizing after days and days of no change in their accounts that the days of EwalletXpress were coming to an end because the “big bad wolf” huffed and puffed and confiscated their money! That’s right, the Federal Government once again seized a payment processor and yes Virginia, kept all the players money! When will the madness end?

EwalletXpress, finally has made a statement to their customers admitting the seizure and confiscation of players funds and have explained in their own words that their hands are tied and are not able to address the issues until given permission by the Feds because they are negotiating with them and confidentiality was necessary. A Statement from EwalletXpress had this to say, “At this point we must regretfully inform you that our funds and accounts were seized by the US government as part of a confidential investigation. We have contacted the US investigating agencies and are currently negotiating with them at present. We apologize for any inconvenience this may have caused any players and due to the sensitivity of the situation, we were not able to notify our players at an earlier time and we sincerely regret this and apologize. We are grateful for your years of patronage to our company over the years and are trying our best to resolve this matter quickly.”

No one can answer if players will ever get their funds returned to them even though gambling online is NOT illegal in the US. Only the banking and financial businesses are performing illegal activities when they process players winnings, not the players at all, so why they should have to forfeit their money still needs addressing by the federal government . However, if past experience shows us anything, don’t hold your breath for any funds being returned, just look under the federal governments Christmas trees this next Christmas and say “Your Welcome”.

Santa Barbara seeks to turn the tables on the homeless

Officials hope to realign sidewalk benches so that pedestrians can avoid encounters with the homeless. Some say the money would be better spent on aiding the needy.


Pedestrians pass homeless people in downtown Santa Barbara. Officials want to turn the benches so they face one another, making it difficult for the homeless to interact with passersby. (Brian van der Brug / Los Angeles Times / January 17, 2011)

Cities have tried many ways to move panhandlers and vagrants out of prime shopping districts, but Santa Barbara believes it has a new angle — 90 degrees.

Using $50,000 in redevelopment funds, the city is planning to turn 14 benches perpendicular to the State Street storefronts they now face. The idea is to make it more difficult for beggars to establish contact with passersby, officials said.

"They'll be sitting with their backs to half the people coming and going on the sidewalk," said Marck Aguilar, a supervisor for the city's redevelopment agency. "They'll have half the potential contacts with the public. It might not be financially beneficial for them."

To discourage prolonged stays, Aguilar said, workers will also remove the backs from several benches on a two-block stretch of the city's most vibrant commercial thoroughfare. If the pilot program succeeds, it may be extended the length of the street, where crowds of students and well-heeled tourists from around the world amble into upscale stores and restaurants.

The idea, which originated with the Santa Barbara Downtown Organization, a business group, has again focused attention on Santa Barbara's efforts to deal with its sizable homeless population.

"This is the kind of step that people who want to do something about the problem have been forced to in desperation," said City Council member Dale Francisco, a conservative voice in a largely liberal town. "For a long time, political actors have been against doing anything to reduce the number of homeless people on the street."

But Ken Williams, a county social worker and impassioned advocate for the homeless, called the idea "rearranging deck chairs on the Titanic."

"You can flush them off of State Street and they'll go to the east side or the beaches," he said. "It doesn't do any good."

Four of Santa Barbara's homeless people have died since Jan. 1, and 32 died last year. The bench project's $50,000 would be better used to provide services, Williams said: "We're talking benches versus homeless deaths?" That's nuts!"

Benches have been an issue elsewhere. Some cities install armrests in the middle of benches to keep people from lying down. In La Jolla two years ago, one community activist tried recruiting residents to sit three-hour shifts to keep homeless people off public benches.

In Santa Barbara, workers are to start relocating the loveseat-sized, Mission-style wooden benches in May, unbolting them from concrete pads beneath the red brick sidewalks. Some will face each other, forming a kind of conversation pit — and further limiting their view of the passing parade. Redoing the concrete and brickwork accounts for much of the $50,000 tab, officials said.

On a recent afternoon, benches on the two target blocks were occupied by high school water polo players in town for a tournament, a woman changing a baby's diaper and a woman eating an ice cream cone. A trio of scruffy young people on neighboring benches were making 'Got Change?' signs and 60-year-old Paul Johnson, who said he spends most of his days on a bench near a closed Borders bookstore, was changing his socks, revealing bloody scrapes on his feet.

"That's just stupid," he said of the bench plan. "It won't do a thing and it's another slap in the face of homeless people."

Johnson sat beside a rolling rack loaded with his coats, neatly folded sweatshirts, a bookshelf filled mostly with religious works and some homemade signs with mystical aphorisms such as "God Is Love — but Love Is not God."

He said he prides himself on not asking for money directly, but a nearby business owner who asked not to be identified because of the issue's "sensitivity" said panhandling is only part of the problem.

"It's just like they've made the street their living room," she said. "They just sit there — all day, every day. One of them even has a portable TV. It's totally inappropriate."

Dave Lombardi, a Santa Barbara Downtown Organization board member, said people camping on benches create a negative impression that upsets visitors and residents alike.

"We shouldn't have to be accosted or afraid when we go downtown," he said, adding that, with a variety of programs to aid the homeless, Santa Barbara is "a very compassionate town."

From where Johnson sits, that's not always the case.

"This town is a contrast between the super-rich and the desperately poor," he said, surveying the crowd strolling on State Street.


VOTERS are today being urged to lobby their MPs to back a bid to give the people of Britain a say on whether they want to stay in Europe.

Parliament is expected to vote next week on a senior Conservative backbencher’s proposal to require the holding of a binding referendum on Britain’s EU membership.

Peter Bone believes MPs on all sides are sympathetic to the idea and would be encouraged by an avalanche of support from their constituents.

He said: “This is the first time we have had a serious attempt to put on the statute book the right of people to have an ­‘in-out’ referendum.”

UK NEWS: MPs under pressure to back vote on EU


Huge majority oppose England forest sell-off, poll finds

YouGov poll finds 84% of British public agree that woods and forests should be kept in public ownership for future generations

The pine forest at Bedgebury is owned by the Forestry Commission
Trees in Bedgebury Pinetum, close to the Kent/East Sussex border, owned by the Forestry Commission. Photograph: David Levene for the Guardian

The vast majority of the public oppose the government's plan to sell off all or part of the publicly owned forests and woodland in England.

A YouGov poll found that 84% of people agreed the woods and forests should be kept in public ownership for future generations, while only 2% disagreed.

The plan has already prompted a mass demonstration in the ancient Forest of Dean, and an online petition organised by the campaign group 38 Degrees has attracted more than 164,000 names so far.

"Most British people want our woodlands protected for future generations and for wildlife. Yet right now the government is pushing through plans to privatise them," said David Babbs, executive director of 38 Degrees, whose members paid for the poll. "The government consultation looks like it will ask the wrong question. They are asking us how the forests should be privatised. But most of us don't want our forests privatised at all."

Caroline Spelman, the secretary of state for the environment, food and rural affairs, will be given the powers to sell land currently run by the Forestry Commission under the Public Bodies bill. In November, her minister, Jim Paice, told a House of Lords select committee: "We wish to proceed with very substantial disposal of public forest estate, which could go to the extent of all of it."

Responding to the poll, a Defra spokesman said: "The interest this [issue] has generated clearly shows that the public care about the country's forests. We do too and that is why protection will be in place. We urge anyone with an interest in this issue to wait for the consultation to be published and see our plans in full and not base views on speculation about privatisation."

Opponents of the sale of public forests and woods argue that public access has not been preserved following earlier small sales by the Forestry Commission, such as at Pennygrove Wood in east Sussex where "private property" signs were erected, and that wildlife would not be protected. Others argue that privatisation of English woodland could cost the government millions of pounds in lost tax revenues and cancel out most of the money raised from its sale, as private owners enjoy exemption from capital gains tax, income tax and inheritance tax.

Mary Creagh, Labour's shadow minister for environment, said: "The Tory-led government plan to sell off England's forests is an act of environmental vandalism. The public bodies bill, if it is passed, will be a loggers' charter. Private companies will cherry-pick sites for commercial development, and voluntary groups will be left to look after ancient woodlands without a budget. The true value of England's forests will never be reflected in the price the Tory-led government gets from selling them."

Union representatives are also concerned about the loss of 850 jobs in England and the research on climate change and tree diseases carried out by the Forestry Commission. Lorraine Adams, a Forestry Commission scientist and branch president for the union Prospect, said only public ownership would preserve the added value – beyond timber – of forests as havens for wildlife and recreation. She said current rules only preserved access on foot, not for bicycles, horses, cars or visitors with disabilities.

The YouGov poll surveyed 2,253 adults between 13-17 January 2011 and is representative of all UK adults. A second question asked: "To what extent do you support or oppose the government's plans to sell publicly owned woodlands and forests in England?" Three-quarters of respondents opposed the sale, while 6% supported it. The Forestry Commission owns 199,000 ha of woodland in England.

Jim Rogers: Not Just China, Everyone Worry About US Dolla

Click this link .....

Accounting Tweak Could Save Fed From Losses

Dees Illustration

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.

But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted.

"Could the Fed go broke? The answer to this question was 'Yes,' but is now 'No,'" said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."

Viktor Bout: Lord of War blame game

Oklahoma First Grader Suspended For ‘Offensive’ Hand Gesture

An Oklahoma boy got in trouble during an assembly at Parkview Elementary when he made a simple hand gesture. No, not that one. The first grader just made the childhood symbol for a gun, pretending he was shooting. This is something we, at least guys, have always done. My kids make the gesture hundreds of times a day — like a nervous tick.

The boy was placed on in-school suspension and threatened with more severe punishment should he repeat the gesture.

Things have changed since I was kid. Schools are trying so hard control every aspect of our childrens’ lives. No longer is youthful exuberance an valid excuse for behavior. Kids today are expected to fall in line or they will receive stern punishment. The general message is to submit to authority.

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Schmidt steps down, Google evil no more?

Are We Headed for a Soviet-Style Collapse? - Dmitry Orlov

'America will collapse'