Monday, January 31, 2011

Mayor Warns of Mass Teacher Layoffs

New York City could lose $1 billion in education aid from the state, forcing the nation's largest school system to cut more than 21,000 teachers, Mayor Michael Bloomberg said Friday.

As Gov. Andrew Cuomo prepares to unveil his first budget proposal since taking office on New Year's Day, Mr. Bloomberg and his new schools chancellor, Cathie Black, are bracing for what could be devastating cuts to city schools.

On his weekly radio show Friday, Mr. Bloomberg stressed that he has yet to receive word of a definitive budget proposal from the governor. "Scuttlebutt is that the education budget will be cut statewide, and New York City's share of that would be a billion-dollar cut," he said.

If the governor proposes a $1 billion cut and the Legislature approves it, the mayor estimated the city would be forced to cut 15,000 teachers, most of which would be accomplished through layoffs. That's on top of plans, outlined by the mayor in November, to cut 6,166 teachers in the fiscal year beginning July 1.

In total, the administration is facing the specter of losing 21,000 teachers in the coming months, most through layoffs. An aide to the mayor warned that these numbers would probably change as negotiations with lawmakers over the state and city budgets begin in earnest in the coming weeks.

The city's Department of Education currently employs roughly 75,000 teachers.

Josh Vlasto, a spokesman for Mr. Cuomo, said it's "premature to speculate about the budget" that the governor will release Tuesday. He declined to comment further.

A seniority rule in state law requires that the teachers hired most recently be the first to face layoffs. As a result, city officials estimate that every teacher hired during the past five years would be let go if the state moves forward with a $1 billion cut in aid to city schools.

Mr. Bloomberg said this tenure rule means the city will "have to part company with some of the best teachers." And because new teachers are typically employed in communities that are struggling the most, these layoffs would "disproportionately hurt the schools with more minorities," he said.

The mayor and his new chancellor have launched an intense lobbying campaign to persuade the state to change the law regarding last in, first out.

On Friday, Ms. Black said she would "fight tooth and nail to keep the best teachers in the classrooms. It cannot be about whether a teacher has been in the system for two years or 22 years."

If the seniority law remains in place, parts of the South Bronx could lose 27% of their teachers due to the prevalence of rookie teachers in the area, she said. Other more affluent neighborhoods would lose half that.

"The budget situation is very dire, and any major cutbacks are going to translate into real job losses," said Ms. Black, adding that she and the mayor will fight as hard as they can to avert as many teacher layoffs as possible.

But Michael Mulgrew, president of the United Federation of Teachers, criticized the mayor and Ms. Black for focusing attention on the seniority issue.

"It seems the mayor and chancellor know a lot about how they want to fight for how to do layoffs—and not fight for the children of New York City to not do layoffs," Mr. Mulgrew said.

"No matter what happens, if we do layoffs, kids are going to get hurt," said Mr. Mulgrew, who argued that the state should maintain a tax on people earning more than $200,000 that is set to expire at year-end.

Mr. Mulgrew said the seniority laws are in place to guard against layoff decisions based on age, race, gender or cronyism. "Perhaps the mayor likes cronyism," he said, a pointed reference to his controversial selection of Ms. Black, a former media executive with no prior experience in education.

City Council Member Robert Jackson, chairman of the council's Education Committee, described the possibility of reducing the number of teachers by 21,000 as "absolutely insane, crazy." These types of cuts would be "devastating" and "just outrageous," he said.

"The governor has to look at whether or not the whole system is going to collapse," said Mr. Jackson, pledging to fight to restore the budget cuts. "Class size will be up to 35, 40 kids in a class, if you have to cut 21,000 teaching positions. I can't imagine it, quite frankly."

On Friday, the mayor said he's sympathetic to the governor, who is scrambling to combat a deficit of roughly $10 billion.

"Andrew Cuomo was brought in to balance the budget. He didn't create the situation. But he's got to deal with it," he said. "And it's Medicaid and education—two things everybody says don't cut. But those are the things where all the money is."

"But it's going to hurt," Mr. Bloomberg added. "Unless we can find something else, it's going to cost us an awful lot of jobs."

Mr. Bloomberg is scheduled to present his preliminary budget for the upcoming fiscal year by mid-February. The mayor is looking to fill a gap of $2.4 billion. But as his budget director, Mark Page, testified last month, that gap could swell to $4.4 billion depending on how much aid Albany cuts to the city.

Video of fighter jets & choppers over Cairo as military tries to take co...

Anti-government protests continue in Egypt

Egypt - Mohamed ElBaradei calls for 'new Egypt' Jan 30. 2011

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Habitiat For Humanity Now Forclosing on Homes

This economic times does not discriminate against no one. I watched on the news periodically about the smiles of people having there homes built by Habitat for Humanity with low interest loans to people who can afford homes. Now people who occupy these homes. Some are starting to default on their no interest mortgages even with this non profit organization.
In Florida. One of the states hit by this economic downturn the hardest is now starting foreclosing proceedings against homeowners who are clients of Habitat for Humanity. It is hard to squeeze blood out of a stone. Most of the clients for this non profit organization are already low income. These are the people hurt the most by economic deepression due to inflation and the rise in cost for basic needs. I do not know what to say about this non profit organization filing foreclosure suits against people. It can go both ways.
I think we need a moratorium on all foreclosures with banks till this economic downturn is reversed.I can understand if Habitat is foreclosing on people who will not work with the organization to restructure payments to satisfy both parties. I can understand under those circumstance going forward with foreclosing to repossess the home if the client will not work out a solution. On the other hand I hate when people kick a person who is down on their luck . I hope that is not the case of Habitat.
When we see Habitat for Humanity start to foreclose on clients because they can not even afford a no interest house payment.This says the Wall Street money addicts and the Central Bankers policies have hurt the poorest among us by inflation and no jobs. As the Oligarchs have their cigars and brandy toasting to a multi billion dollar bonuses off the backs of the poor. This is a grave injustice that must be corrected that is long overdue. This why we need to get rid of the Federal Reserve Bank.When there is no honest money anymore because the issuance of currency is out of the peoples hands and put in the care of private central bankers. That is when people get hurt and suffer to enrich the very few at the expense of many.

The Federal Reserve as an Instrument of War

ABSTRACT: While much has been written about how the Federal Reserve benefits certain private parties and how it generates money out of thin air, this paper delves deeper into the operation of the Federal Reserve as an instrument of war, and its historical role as a primary enabler of armed international conflict. A comparison is done with an analogous monetary institution, the Bank of Canada, to show that the Federal Reserve is being operated differently, with war being its chief historical focus.

The above image is licensed under a Creative Commons License. Feel free to use it. You can get a high quality image for printing here.

This paper resulted from attempts to derive the logic of mechanisms that govern money supply, with focus on the United States. I will also assess whether or not instruments of money supply have stayed true to the logic behind their existence. And if not, I will try to derive the rationale behind their present operation.

An Introduction to Juris Naturalis, an organic view of economics

My perspective may be categorised as that of the Austrian School of Economics, Objectivist and Libertarian. But I would like to emphasize the role of Richard Maybury’s naturalist philosophical viewpoints in shaping my perspective. Maybury attempts to derive human laws from Judeo-Christian moral beliefs. While this is a broad subject, Maybury has distilled the essence of these moral beliefs into two laws[1] that are very relevant to inter-human relations:
1. Do all you have agreed to do.
2. Do not encroach on other persons or their property.
Maybury regards these laws with the same certainty as scientific principles, a concept he refers to as juris naturalis. Maybury demonstrates that adherence to or deviation from these laws results in predictable economic outcomes.[2]
These laws are more relevant to understanding money supply than economics, mainly on the basis of what came first. Maybury demonstrates that these laws were taken for granted by the founding fathers of America, when they were drafting laws that lead to the creation of the largest “free market.” On the other hand, modern day economics is a relatively new discipline that attempts to identify patterns using a rigid but limited framework. To quote Alfred Marshall in The Principles of Economics:
The forces to be dealt with are…so numerous, that it is best to take a few at a time…Thus we begin by isolating the primary relations of supply and demand.[3]

Why Establishment Economics Fails

When Alfred Marshall published his conclusions in 1890, supply and demand diagrams appeared only in a footnote,[4] despite his being an outstanding mathematician. Modern day economics has taken this approach to the extreme, and instead of factoring in complexity, it is geared towards providing predictable outcomes on the basis of a narrow set of variables. These predictions in turn, are elevated to an exact science in understanding economic activity. Since economics has been reduced to a largely technical subject, many economists unknowingly use their tools to validate ideas that have been set by larger interests. For example, a major employer of economists in the United States today is the Federal Reserve. Nearly 74 per cent of articles on monetary policy published by American economists in American journals appear in journals of the Federal Reserve or are authored/co-authored by their staff economists.[5] They are keen in establishing their viewpoints in the area of money supply specifically,[6] portraying the Federal Reserve System as a “social welfare optimizer.”[7]
Understanding money supply from the perspective of juris naturalis may appear too simplistic, considering the complicated jargon economists currently use. But the interpretation remains as powerful and pristine as a natural law. Money is solely meant to be a medium of exchange, as bartering needs and goods is complicated. Although people have tried using various objects as units of money, only units of gold and silver have proven to be effective.

Why Politicians will always hate Gold

The problem with using units of gold and silver arose when people started violating the two laws. For example, counterfeiters introduced coins minted from other metals and polished with gold or silver. But such crimes were still not potent enough to damage the overall money supply. The money supply was damaged when institutions and/or organizations entrusted with minting the coins violated the two laws. For example, when Roman politicians discovered that raising taxes to finance their wars resulted in public discontent, they resorted to counterfeiting. Any silver coin that made its way back into the Roman Treasury had its edges shaved off, and these shavings were used to mint new coins,[8] which the Roman government would use at its own discretion. When people noticed this, they started reeding the edges of the coins. A coin missing the reeding could thus be differentiated as “clipped.”[9] Undeterred, Roman politicians resorted to debasing the currency, increasing the proportion of copper in the coins. In 54 A.D. a denarius was 94 per cent silver. Almost 200 years later, the silver content had been reduced to 1 per cent.[10] The quantity of denarii increased, but their value plummeted, resulting in inflation. We thus see inflation as a natural by-product of violating the two laws. On the other hand, modern day economists see inflation as inherent but manageable, such that it can be tamed into delaying its cataclysmic effects.

Nevertheless, politicians were still tempted to break the two laws and the invention of the printing press gave them the opportunity to issue legal tenders or fiat money. The use of legal tenders has been traced Kublai Khan,[11] a tyrant who ruled Central Asia in 1270 A.D. Kublai Khan wanted money to finance his wars but did not want to create unrest by raising taxes. So he invented paper money. If he needed to pay in gold, he would simply write the amount in gold on paper and sign his name on it. Anyone who refused to accept the money was punished. When George Washington wanted to finance his war, he introduced the Continental dollar as legal tender. This currency was destroyed by inflation, and to avoid the deleterious effects of such forms of money in the future, a statement was added to the American constitution when America became independent. To quote Article One, Section Ten of the U.S. Constitution,
No State shall enter into any Treaty, Alliance or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payments of Debts; Pass any Bill of Attainder, ex posto facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.[12]
But even such measures did not stop further use of legal tenders. During the American Civil War, politicians on both sides broke the two laws once again by issuing legal tenders to finance their war machines. Both these forms of money, the Confederate Dollar and the Greenback Dollar were destroyed by inflation.[13]

Banks were supposed to be Warehouses of Gold, not Houses of Cards

Going by Maybury’s narrative, people invented money warehouses, which became banks. A person could deposit his gold or silver coins in a bank for safekeeping. He would then be issued an IOU by the bank for the amount of gold or silver coins. He could redeem the IOU for gold or silver coins from the bank whenever he wanted. And thus, the IOUs became banknotes. The most popular banknotes in circulation were aptly called silver certificates. Unlike today’s Federal Reserve notes, they had no legal tender statement. The statement on them read as:
This certifies that there is on Deposit in the Treasury of the United States of America One Dollar in Silver Payable to the Bearer on Demand.[14]

World Wars, Depression and the Crash of 1929

Most people used dollars without ever converting them to gold or silver. But even guaranteed convertibility did not stop politicians from trying to violate the two laws once again. This time, they had an instrument known as the Federal Reserve at their disposal, which I will discuss later. They needed to print more dollars in order to finance American intervention in World War I. To quote Maybury, these newly created dollars caused the “Roaring Twenties” to roar and caused stock prices to skyrocket when people invested these new dollars into the stock market.[15] The inflation that followed set the stage for the Great Depression, which was heralded by the stock market crash of 1929. In this scenario, it was only guaranteed convertibility that prevented politicians from further devaluing the dollar. Depositors started switching their dollar assets to gold, and politicians were forced to reduce the printing of dollars.
This did not fare well with politicians, who wanted to further increase the supply of dollars to finance American intervention in World War II. President Franklin Roosevelt had Congress recall all gold certificates, and the printing of silver certificates was increased to substitute. America was quietly and unofficially put on a silver standard. Silver is not as expensive as gold, giving politicians more leeway to inflate its value.

Bretton Woods and the New World Order

At the end of the war, The Powers That Be across the globe realized how guaranteed convertibility could jeopardize financing of future wars, and decided to further distance themselves from guaranteed convertibility through the Bretton-Woods agreement of 1944. Under this system, signatory countries fixed their exchange rates relative to the American dollar. And America promised to fix the price of gold at $35 per ounce.[16] Instead of maintaining proportional gold reserves, a fractional gold standard was introduced, that allowed politicians to increase money supply under the assumption that most of the money created would never be exchanged for gold.
Rather than being an impartial economic recovery plan, the Bretton-Woods agreement was designed to weaken the currencies of non-American signatories by making them dependent on the American dollar instead of their local gold reserves. Every upturn or downturn faced by the American economy would be mirrored in the economies of these countries. For example, when America went off the gold standard, all the signatory countries, including Canada, went off the gold standard as well.

The Bretton-Woods agreement was also designed to finance a bipolar postwar world, using inflated American dollars. This New World Order was only meant to be dominated by America and the Soviet Union, as the Powers That Be had envisioned in the Yalta conference of 1945. Other potential emerging powers were to be offered huge inducements in exchange for aligning their currency with the American dollar and opening their markets to American economic intervention. In other words, their leaderships were being bribed into putting aside their nations’ pretensions of being independent world powers as they once were. Billions of inflated American dollars were channelled to these countries in the guise of aid for postwar recovery (Marshall plan). Despite the fact that Japan had made a huge initial recovery without such aid, while Turkey, a major recipient of such aid, went from being a respected sovereign power to a corrupt proxy state of NATO. In 1970, nationalist French President Charles De Gaulle decided to trade dollars received through such channels for gold. Realising that this could become a trend that would jeopardise this New World Order, President Nixon made the America dollar inconvertible to gold directly (except on the open market). The American dollar had finally transitioned into a fiat currency.

Why the Federal Reserve System is Unsustainable by Design

At this point, it is moot to ask whether or not the decisions being made by politicians were in accordance with Maybury’s two laws. The United States had moved beyond its humble isolationist origins towards interventionism. And its common law underpinnings were being overhauled to accommodate the demands of this New World Order. Supply of the new American dollar was governed by private banks through a complex mechanism known as the Federal Reserve. The practice of usury, or interest is taken for granted in the Federal Reserve, though Christianity staunchly prohibited it until the reformation. Judaic scripture still prohibits usury. Ironically, many Jewish people have risen to prominence in interest based banking.
A complete understanding of the Federal Reserve System is beyond the scope of this paper. To quote Maybury,
However, modern politicians don’t just run the printing presses. They use a more complex system. They use the banks and Federal Reserve. You don’t need to know how it works, all you need to know is that it does the same thing. It increases the amount of money, and that makes the money worth less. Prices rise.[17]
Maybury is implying that the United States has resorted to practicing the boom-bust cycle of increased money supply, followed by runaway inflation and eventual devaluation of the currency, as characterized in banana republics. But it is being done in a more controlled manner. We too could leave our understanding of the Federal Reserve System at that, but there are two reasons why a more thorough understanding of it is pertinent.
Firstly, the removal of the American dollar from the gold standard and the ascendancy of the Federal Reserve System may be related to the plateauing of the American standard of living (measured as a function of GDP), which had been constantly soaring upwards till the seventies (See Figure I).
Figure I: Richard J. Maybury, Whatever Happened to Justice (Placerville: Bluestocking Press, 1993), 221. Copyright © Bluestocking Press, All Rights Reserved. Reproduced for strictly academic/educational use under the Fair Dealing provision of the Copyright Act of Canada.

Secondly, the American government’s debt soared after 1971. It had taken politicians 194 years to have the American government accumulate its first trillion of debt.[18] After 1971, the American government started accumulating many more trillion in debt, in time spans even as small as two years (See Figure II)! To quote Maybury,
During the 1980s, the federal government’s uncontrolled tax-and-spend policy became an uncontrolled tax-and-borrow-and-spend policy. [....] To pay for its runaway spending, the federal government is now borrowing money at the rate of $1.4 million every two minutes.[19]
Today, the American government borrows at a rate of $4.14 billion per day.[20] It is clear that such practices were never meant to be sustainable. This is confirmed by the fact that the Federal Reserve has discontinued publishing the M3 monetary aggregate,[21] which gives the total amount of American dollars in circulation. Looming economic disaster could thus be kept hidden for a long time. And The Powers That Be are using the debt to pursue military objectives that have little relevance to the American population. Worse, the future devaluation of the American dollar will also hurt the prospects of all other currencies still pegged to it through the Bretton-Woods agreement, including the Canadian dollar.

Figure II: Ed Hall, “US National Debt Clock FAQ,” 4 June 2010

The Secret History of the Federal Reserve

The Federal Reserve System originally came into being through the Federal Reserve Act of 1913. But it was only after the abolition of the gold standard in 1971 that the American Dollar became subservient to the Federal Reserve. As one may easily notice, the date of its inception coincides with the beginning of America’s boom-bust cycles. The Federal Reserve System was the agency used by the Powers That Be to first inflate American Dollars, even when they had their gold backing, creating the fractional gold standard. The Federal Reserve Act is documented to have originated in a 1910 secret meeting among top American politicians and financiers at Jekyll island. To quote Forbes magazine founder Bertie Charles Forbes,
Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundred of miles South, embarking in a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret episode in the history of American finance. [22]

Is the sinking of the Titanic related to the creation of the Federal Reserve?
Among the private bankers who attended, those aligned to the German Rothschild banking family figure prominently. In fact, Rothschild frontman J.P. Morgan is said to have arranged the trip.[23] And once the Federal Reserve Act was enacted, banks aligned to both the Rothschild and Rockefeller families became the most prominent member banks in the Federal Reserve System, on account of their large sizes. If the conspiracy theorists are to be believed, the sinking of the Titanic in 1912 is related to the creation of the Federal Reserve. According to Bill Hughes,[24] some of the older wealthy families of America wanted a bigger share in the Federal Reserve, and threatened to oppose the creation of the Federal Reserve until their wish was granted. So J.P. Morgan had his White Star Lines build the Titanic. All these competing families were invited for the maiden voyage. But J.P. Morgan cancelled his booking at the last minute.[25]

The Federal Reserve: Private, Semi-private, Quasi-private or what?

Figure III: Note the word “incorporated”
The Federal Reserve System can be considered a quasi-private arrangement. The Federal Reserve Board consists of public officials. Private banks that opt for membership in the Federal Reserve System grant the Federal Reserve Board limited supervisory powers in exchange for some benefits not available to other banks. These benefits may be considered trivial when we take into account that Member banks become Federal Reserve Banks, and can act as monetary representatives of the United States government. They have a say in the issuing of banknotes and in the measures to control money supply. The quasi-private nature of the Federal Reserve System can be best illustrated by the logo of the Federal Reserve Bank of New York (See Figure III). The logo bears the word “incorporated” which is designated for private entities. While the word “Federal” gives the connotation of government authority.
Most American banks are not members of the Federal Reserve System but the banks that are members constitute the largest banks in America, with more assets than non-member banks. The gold standard restrained the Federal Reserve System from increasing the money supply whimsically. But with the abolition of the gold standard in 1971, the American dollar became completely subservient to the Federal Reserve System.
It is clear that some of the giant banks have considerable say in the determination of American money supply, and all related policy, such as the determination of interest rates. In fact, the Federal Reserve System owes its creation to certain specific New York banks. To quote,
The influence of the New York bankers appears again and again. Earlier they had opposed a central bank in Philadelphia, while later on they had opposed one because they had in effect been able provide the central bank functions they felt beneficial to them. Did the Federal Reserve System give the New York bankers what they had wanted in light of the weaknesses revealed by 1907? New York City bankers were able to maintain a strong influence in the call loan market and hence in the stock market, and with a central bank the call loan market was now relieved of its previous, tenuous role as a source of emergency liquidity. The bankers also got lower reserve requirements and, perhaps most important, they no longer held the responsibility for controlling panics. The role of New York City banks was now to aid the commercial development of the country, that is, to serve as the source of financing business, and the reserve banks were to serve as the provider of emergency liquidity.[26]

Figure IV: Promotional gear sold on Congressman Ron Paul’s website, promoting his Audit the Fed campaign.
The Federal Reserve System functions in a relative absence of transparency. For example, the Federal Open Market Committee, consisting of seven members of the Federal Reserve Board and five representatives of Federal Reserve banks meet several times a year to determine United States monetary policy. These meetings are not open to public. The Federal Reserve System’s quasi-private status allows it be insulated from Freedom of Information requests. It was only in 2009 that Congressman Ron Paul proposed a thorough audit of the Federal Reserve System. To quote Ron Paul’s speech to Congress when introducing his bill (H. R. 1207) to audit the Federal Reserve System,

Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. [....] The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? [...] If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.[27]
Despite the bill acquiring a cult following among many Americans, many politicians came forward to hijack the bill, proposing modified versions instead, which allowed the Federal Reserve System to maintain its veil of secrecy. As of this date, the bill faces an uncertain future.

How the Federal Reserve “Pretends” to Work

The basic explanation on how the Federal Reserve System allows its member banks to profiteer runs like this. Suppose the government desperately needs $1 billion. In the absence of the Federal Reserve System, it would raise taxes, or use up accumulated taxes. But with the Federal Reserve System, it asks the member banks for a loan. The member banks grant the loan, and the Federal Reserve prints the $1 billion and issues it to the government at interest. How the banks “grant” the loan is hazy. They certainly do not transfer cash from their own private holdings to the Federal Reserve. To add another layer of abstraction, these processes are “computerized.” To pay back the loan plus interest to the banks, the government taxes the American people (income taxes constituted 43% of Federal receipts in 2009). It is important to note that when the government pays back the loan plus interest to the banks, the banks receive actual cash transfers from the government. If the loan is too big to pay (as is always the case), the government merely pays the interest on it (which accounted to 5% of Federal expenditure in 2009), and the banks become holders of American debt. Holding American debt has asset value, as it guarantees a steady trickle of interest by none other than the United States government. And therefore, it can be inferred that the banks in question are not that keen about repayment of the principle.
The government could accomplish the same results by having the Treasury print the money whenever needed, resulting in similar levels of inflation. But by inviting the banks to the table, the Powers That Be have managed to divert Federal expenditure towards paying “interest” for the banks’ “loans.” And in this process, these private banks have become the holders of American debt. More than half of American debt is held by foreign interests. When we try to understand how the banks “grant” the loan to the government in the first place, we are reminded of Class Action Suit filed by John Dempsey against major Canadian financial institutions at the Supreme Court of British Columbia on 15th April 2005. The lawsuit was dismissed as frivolous. But Dempsey’s objections to how banks “granted” loans to the Bank of Canada are still pertinent. To quote,
42. At all material times, these defendant banks and all of them have no legal standing to lend any money to borrowers, because:
1) these banks and credit unions did not have the money to lend, and therefore they did not have any capacity to enter into a binding contract;

2) the defendants did not have any cash reserve, they are not legally permitted to lend their depositor’s or member’s money without expressed written authorization from the depositors, and:
3) the defendants have no tangible assets of their own to lend and all their “assets” are “paper assets” which are mainly in the form of “receivables” created by them out of “thin air,” derived out of loans whereas the monies loaned out were also created out of thin air.
43. Other than bookkeeping and computer entries, no money or substance of any value was loaned by the defendants to the Plaintiff. In all of the loan transactions entered into between the Plaintiff and the Defendants, the financial institutions did not bring any equity to any of the transaction.[28]

A Comparison with the Canadian “Federal Reserve”

A system identical to the Federal Reserve System was created in Canada in 1935 with the establishment of a central bank known as the Bank of Canada. As in the case of the Federal Reserve System, which came into being to finance American intervention in World War I, the Bank of Canada was created as an instrument financing large-scale Canadian involvement in World War II, and later, the Korean war, by inflating Canadian dollars (See Figure V).
Figure V
When Canada became a signatory to the Bretton Woods agreement, the Canadian dollar was pegged to the American dollar. And when the American dollar was taken off the gold standard, the Canadian dollar still continued to be pegged to the value of the American dollar. The supply of Canadian dollars is governed by the main clients of the Bank of Canada, such as Royal bank, the Bank of Montreal, CIBC and the government of Canada.[29] But unlike the United States, these entities have not facilitated the creation of a gargantuan Federal debt, as in the case of the United States. They have even managed to shrink the Canadian Federal debt, creating a surplus instead of the expected deficit!

If we are to assume that systems such as the Federal Reserve and the Bank of Canada are created to assist private member banks in profiteering, how is it that both these almost analogous systems have produced completely different results in two neighbouring countries? To arrive at an understanding, we must assume that the Powers That Be created these systems for larger objectives than immediate monetary profit.

Beyond Profit: How the Federal Reserve is being used to facilitate Global Conflict

The Federal Reserve has helped underwrite continued American military expenditures, even after the World Wars. As of 2009, “Defence” accounts for 23% of all American Federal spending. And therefore, the gargantuan size of the American Federal debt is related to the continuation of American military interventions abroad. In contrast, Canada only piled up a huge Federal debt only when the Powers That Be decided to use its resources in World War II.

Figure VI: Advertisement of Ford trucks in Nazi Germany
If we assume that such systems are primarily instruments of war, can we also infer that the World Wars could have been prevented in their absence. Most of us naively assume that the Federal Reserve only underwrote the American war effort. This is not the case. In World War II, the Lend-Lease program was used to ship supplies worth $759 billion in 2008[30] to other countries involved in the war. Some of these countries, such as Soviet Union and China, cannot be considered belligerents. Even more bewildering is the fact that the inflated dollars churned out by the Federal Reserve managed to find their way into Nazi Germany, through American private “investments.” Once we discard the myth that Germany recovered after World War I like a punching doll, it appears that the rearmament of Germany was largely the effort of American “investors” investing the new American dollars produced by the Federal Reserve. One such interesting case is that of the German chemical conglomerate, I.G. Farben, which was central to the rearmament of Germany. It had on its board of directors Paul Warburg, who also sat on the board of the Federal Reserve Bank of New York.[31] Warburg is considered to be the mastermind behind the creation of the Federal Reserve System. Other board members of I.G. Farben also sat on the boards of Ford Motor Company and the Rockefeller owned Standard Oil. Suspiciously, the main I.G. Farben complex in Germany managed to avoid Allied bombing during the war.
War is a profitable enterprise. But the destruction of economies also hampers profits for banks and major commercial entities. An investigation into the motives of The Powers That Be with respect to the World Wars is beyond the scope of this paper. And this aspect cannot be fairly understood while fixating on monetary profit. But if we give credence to fringe historians, we can arrive at some basic conclusions. It could be that monopoly capitalists in the United States, such as J. P. Morgan (who is believed to represent the moustachioed Mr. Monopoly in the Monopoly board game) realised the limitations they faced in the Western world. And so, they decided to expand outside the Western world, creating societies free of the limitations they faced in the

The moustachioed Mr. Monopoly in the popular Monopoly board game may have been a fairly realistic depiction of J.P. Morgan
West. In both the World Wars, only the Soviet Union made notable territorial acquisitions. While offering a panacea to capitalism, the Soviet system created an unprecedented concentration of power, creating a form of monopoly state capitalism, which was highly favoured by The Powers That Be. The Soviet Union may have thus been a modern day colony of “capitalists” based in places like New York and Calgary. There is suggestive evidence pointing towards the same. Notable capitalists took trips to the Soviet Union as if it were a country club. Since the Soviet Union did not allow private investment, these visitors may have had a direct stake in the Soviet Empire. While the United States spared no effort in creating a military industrial complex to counter the Soviet Union, actual operations against the Soviet Union were half-hearted. For example, the Vietnam War forced many Vietnamese people to ally with the Soviets. There is the case of Australian journalist Roland Perry, who wrote a book[32] suggesting that the late Victor Rothschild (the head of the British arm of the Rothschild banking dynasty) might have been the “fifth man” in the infamous Cambridge Soviet spy ring. In 1983, Congressman Lawrence Patton Macdonald took a flight to South Korea to warn South Koreans that American policy towards that nation was designed to placate the Soviets. The plane literally disappeared, very likely diverted to the Soviet Union. Then there is the case of General Zia of Pakistan, who had supervised the “jihad” against the Soviets in Afghanistan. General Zia was killed in a suspicious plane crash. Despite the death of an American diplomat who was also on board the plane, the FBI showed little interest in investigating the case.
The Powers That Be have repeatedly hinted that the American nation is more of a means to an end (manifest destiny?), and that the sustainability of the American economy and the middle class is not their priority. If the American dollar is not meant to be sustainable by design, what form of money is then sustainable? A growing number of Americans are stockpiling gold (as they are stockpiling bullets). Gold still retains its instinctive appeal. According to Carlton Brown, a commodities trader on Wall Street, when 9-11 happened, all traders on the floor instinctively became fixated on the price of gold.[33] As for the gold that was used to leverage the dollar prior to 1971, even Congressman Ron Paul has no idea of what became of it.[34]

[1] Richard J. Maybury, Whatever Happened to Justice (Placerville: Bluestocking Press, 1993), 36.

[2] Maybury, Justice 67.
[3] Michael Parkin and Robin Bade, Microeconomics: Canada in the Global Environment 5th ed. (Toronto: Pearson Education Canada Inc., 2003), 148.

[4] Parkin & Bade, 148.
[5] Lawrence H. White, “The Federal Reserve System’s Influence on Research in Monetary Economics,” Econ Journal Watch 2.2 (2005): 325. 3 June 2010
[6] White, 339.

[7] White, 327.
[8] Richard J. Maybury, Whatever Happened Penny Candy (Placerville: Bluestocking Press, 1993), 21.
[9] Maybury, Penny Candy 22.

[10] Maybury, Penny Candy 22.
[11] Maybury, Penny Candy 31.
[12] Maybury, Penny Candy 32.

[13] Maybury, Penny Candy 33.
[14] Maybury, Penny Candy 30.
[15] Maybury, Penny Candy 56.

[16] Wikipedia contributors. “Gold standard.” Wikipedia, The Free Encyclopedia Wikipedia, The Free Encyclopedia, 20 May. 2010. Web. 27 May. 2010.
[17] Maybury, Penny Candy 36.
[18] Maybury, Penny Candy 67.

[19] Maybury, Penny Candy 67.
[20] Ed Hall, “US National Debt Clock,” 4 June 2010
[21] Federal Reserve Statistical Release, “Discontinuance of M3,” 10 November 2005 rev. 9 March 2006 Board of Governors of the Federal Reserve System 3 June 2010 <>

[22] Cushing T. Daniel, Real Money Versus False Money – Bank Credits (Amsterdam: Fredonia Books, 2004), 169-170.
[23] Robert West, Banking Reform and the Federal Reserve, 1863-1923 (Ithaca: Cornell University Press, 1977), 71.
[24] Bill Hughes, The Secret Terrorists (Eustis: Truth Triumphant Ministeries, 2002)

[25] Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Grove Press, 2001), 146.
[26] Jon R. Moen & Ellis W. Tallman, “New York and the politics of central banks, 1781 to the Federal Reserve Act,” Working Paper 2006-23, Federal Reserve Bank of Atlanta 3 June 2010

[27] Ron Paul, “Audit the Federal Reserve,” 26 February 2009 3 June 2010
[28]Dempsey et all v Envision Credit Union et all, 2005 BCSC S91786, 6-7.
[29] Parkin & Bade, 267.

[30] Wikipedia contributors. “Lend-Lease.” Wikipedia, The Free Encyclopedia Wikipedia, The Free Encyclopedia, 5 Jun. 2010. Web. 5 Jun. 2010.
[31] Antony C. Sutton, Wall Street and the Rise of Hitler (Sudbury: Bloomfield Books, 1976), 35.
[32] Roland Perry, The Fifth Man (London: Pan Books, 1994).

[33] The Corporation, writ Mark Achbar, Harold Crooks, Joel Bakan, dir Jennifer Abbot, Mark Achbar, Zeitgeist Films, 5 April 2005.
[34] America: Freedom to Fascism, dir Aaron Russo, Cinema Libre, 12 December 2006.

Jordanians rally against corruption and poverty

Reuters/Raw Story

AMMAN (Reuters) - Jordanian activists rallied outside government offices Saturday as they tried to step up their campaign to force Prime Minister Samir Rifai to step down.

Inspired by unrest in Tunisia and elsewhere in the region, about 200 Jordanians gathered outside the prime minister's office shouting "Our government is a bunch of thieves" and holding banners reading "No to poverty or hunger."

"We've come from distant, rural areas to Amman to ask Rifai to leave," said Mohammed Sunaid, a prominent labor activist.

"We call for the overthrow of this government that has destroyed the poor. This government should be for all Jordanians not just the rich."

Jordan is struggling with its worst economic downturn in decades. The government has announced measures to cut prices of essentials, create jobs and raise salaries of civil servants.

Protesters say the moves do not go far enough and have staged rallies calling for the reversal of free-market reforms which many blame for a widening gap between rich and poor.

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Loan modifications burn many homeowners

MINNEAPOLIS — Many people who sought help under a federal program created to keep them from losing their homes are instead saddled with huge, unexpected bills.

Thousands now face a stark choice: Go deeper into debt, or foreclosure.

Lenders routinely approved short-term “trial” loan modifications that reduced payments for desperate borrowers under the umbrella of the Obama administration’s Home Affordable Modification Program. But lenders continued to count the mortgages as delinquent or in default.

Now instead of granting permanent modifications, lenders often are reinstating the original loan terms and demanding big back payments.

Through November nationwide, lenders canceled 729,109 trial modifications. Carl Christensen, a Minneapolis real estate attorney, said he is getting 15 telephone calls a week from shocked borrowers.

“The banks put out their hand and say, ‘We’re going to help you,’ and then stab people right in the back,” Christensen said.

Shocking demand

Patti, 51, and Scott Weddle, 57, of Harris, Minn., were ecstatic when JPMorgan Chase offered in November 2009 to cut their monthly mortgage payments by about 20 percent under a trial modification. Patti was out of work with a neck and back injury, and the Weddles were having difficulty making ends meet.

Nearly a year later, the Weddles were told their application for a permanent modification was denied and they would have to pay $24,228 to bring their mortgage current and avoid foreclosure.

The Weddles insist the demand came as a shock, because they had made all their payments on time under the trial modification. “We did everything that was asked of us, and it only pushed us deeper in the hole,” Patti Weddle said.

JPMorgan Chase and other lenders argue that the risks are clearly disclosed to borrowers when they sign up for temporary loan modifications. Even so, many homeowners are caught by surprise.

A growing number of critics contend the loan modification program, known within the industry as HAMP, may be doing more harm than good. Many homeowners are draining their savings and incurring new loans to make the temporary payments only to end up in foreclosure anyway when they can’t afford the large, lump-sum payments demanded at the end of the process.

The trial modifications also can ruin borrowers’ credit. The reason: Many lenders classify modified mortgages as technically in default, even if borrowers make all their reduced payments on time under the trial plans. Each month these borrowers make reduced payments, they are reported as delinquent to credit bureaus.

Sad stories

“We’re seeing a lot of really sad stories of families who thought they were getting help only to discover they’re $20,000 or $30,000 behind and about to lose their house,” said Thomas Bloomquist, housing supervisor for LSS Financial Counseling Services in Duluth, Minn.

It would seem to be in a mortgage company’s interest to modify a mortgage, because lenders often recover only a small fraction of a loan after a foreclosure. But only 12 percent of all delinquent mortgage borrowers are receiving permanent relief under HAMP. Last month, a congressional panel predicted it would prevent just 700,000 to 800,000 foreclosures — far fewer than the Obama administration’s original goal of 3 million to 4 million.

Some lending experts argue that the root of the problem lies in the complicated way in which mortgages are bought and sold. Most end up with institutions or investment trusts that hire servicers to collect monthly payments. Servicers, unlike lenders, don’t generally lose money on a foreclosure. In fact, servicers actually can collect more in fees on a foreclosure than from modifying a mortgage, according to a 2009 study by the National Consumer Law Center.

To correct this distortion, the U.S. Treasury offered incentive payments of $1,000 to servicers for each permanent loan modification, plus success payments of $1,000 for each year a borrower stays current. Critics argue that the payments are too small to offset the costs of modifying a mortgage and the substantial profits servicers earn from foreclosure-related fees.

Awaiting papers

When the Weddles got turned down for permanent relief under HAMP, they decided to stop making their monthly payments. They expect to receive foreclosure papers any day, and most of their belongings are packed. “If we had $24,000 lying around, then we wouldn’t have sought help to begin with,” Patti Weddle said.

A spokesman for JPMorgan Chase said the risks were disclosed to the Weddles. Under the trial modification signed by the couple, JPMorgan reserved the right to terminate the plan at any point and begin foreclosure. The bank also reserved the right to determine the final amounts of unpaid interest and any other delinquent amounts.

“We work with customers to try to keep them in the home whenever possible,” said Thomas Kelly, a bank spokesman. “And the HAMP documents clearly explain the steps along the way.”

Wish they'd known

Many borrowers say they never would have signed up for HAMP had they known the risks.

Lynda Devine, 49, of Faribault, Minn., said she had not even heard of HAMP until she called her mortgage servicer, Aurora Loan Services of Colorado, about a routine matter. While on hold, she found herself listening to a recorded message that said she might qualify for HAMP. She checked it out and learned it was a program sponsored by the Obama administration. “It all seemed very legit,” she said.

Aurora agreed to cut her monthly payment to $1,400 from $2,000 under a trial modification. But Devine, a children’s mental health social worker and waitress, soon found herself mired in a bureaucratic nightmare. As she sought permanent relief, Aurora kept asking for the same documents — including bank and tax statements. Devine estimates she has faxed documents to Aurora more than 60 times.

Nonetheless, she received notice in July that she was in default. Soon after, she got a letter from Aurora’s law firm saying she would have to come up with $13,496 or face foreclosure. Devine couldn’t stomach the idea of losing her 1920s-era farmhouse and her 35 acres, where she keeps three beloved horses.

Aurora did not return repeated calls seeking comment.

Devine borrowed against her truck and horse trailer to pay the $13,496, but she’s considering suing Aurora to get the money back. “The only reason I paid that money is because they threatened to take this place,” she said. “If you ask me, that’s theft.”

World urges Egypt to stop fury; India still numbs

Cairo, Jan 30: Egypt observed one of its worst riots as more than hundred people died and the country watched a huge loss over the nation wide violence from last six days. US president Barack Obama personally called Egypt's president Hosni Mubarak to take necessary steps. Now, France, Germany, Britain follow Obama's path.

During a joint statement issued Saturday, Jan 29, French President Nicolas Sarkozy, German Chancellor Angela Merkel and British Prime Minister David Cameron urged the Egyptians to drop violence.

The world leaders express their "concern" regarding the fury that spreaded over the nation. They also hoped that Mubarak will be able to control the situation and also urged the protesters to safeguard their rights in a peaceful way.

However, India once again failed to take an initiative to express concern over a crisis in international level as no statement has been given yet by the government.

Obama, in his conversation with Mubarak, stated, "he (Mubarak) has a responsibility to give meaning to those words, to take concrete steps and actions that deliver on that promise. Violence will not address the grievances of the Egyptian people. Suppressing ideas never succeeds in making them go away."

But Nobel peace prize owner and one of the main Opposition leader in Egypt, Mohamed Mustafa Elbaradei criticised US's stand on the whole issue as Elbaradei stated, "but at the last minute he (Obama) came out with an empty statement which was a huge disappointment to the Egyptian people."

Elbaradei also stated, "I will continue to participate in whatever it takes to make sure that the Mubarak regime should leave."

However, 82-year-old Mubarak on Jan 29 showed first signs of handing over power as he appointed for the first time his intelligence chief, Omar Suleiman as Vice-President after 30 years of autocratic rule.

Mubarak's decision at this time raised the question - Isn't it too little, too late?

Egypt Army Storms Government Building & Arrest Minister Of Interior

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Rallies Held Across The U.S. To Show Solidarity With Egypt

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Cairo citizen guards protect homes

GENIUS VIDEO: Bank Bailouts Explained - The Screwing Of The American People - Make This Go Viral

Yes, these clips look stupid, but this one is not. Dr. Pitchfork thinks it's the best one yet. Same guy who did QE2 for dummies...

Paulson, Geithner, AIG, Goldman, Bernanke and more.

On the Goldman Sachs:

  • "Because when you already own the U.S. government, you don't need to buy any more banks."
  • "What about the president Obama and the change? Did the president Obama bring the change to the Timothy Jeethner?"


News Bulletin - 0435GMT update

Video of Egypt's bloody clashes as protesters defy curfew in Cairo

Egyptian Museum Looted: Egypt Looters Rip Heads Off 2 Mummies At Famed Cairo Museum

Egyptian Museum

CAIRO — Would-be looters broke into Cairo's famed Egyptian Museum, ripping the heads off two mummies and damaging about 10 small artifacts before being caught and detained by army soldiers, Egypt's antiquities chief said Saturday.

Zahi Hawass said the vandals did not manage to steal any of the museum's antiquities, and that the prized collection was now safe and under military guard.

With mass anti-government protests still roiling the country and unleashing chaos on the streets, fears that looters could target other ancient treasures at sites across the country prompted the military to dispatch armored personnel carriers and troops to the Pyramids of Giza, the temple city of Luxor and other key archaeological monuments.

Hawass said now that the Egyptian Museum's collection is secure from thieves, the greatest threat to the collection inside is posed by the torched ruling party headquarters building next door.

"What scares me is that if this building is destroyed, it will fall over the museum," Hawass said as he watched fire trucks spray water on the still smoldering NDP headquarters.

The museum, which is home to the gold mask of King Tutankhamun that draws millions of tourists a year, also houses thousands of artifacts spanning the full sweep of Egypt's rich pharaonic history.

"It is the great repository of Egyptian art. It is the treasure chest, the finest sculptures and treasures from literally 4,000 years of history," said Thomas Campbell, the director of New York's Metropolitan Museum of Art by telephone. "If it is damaged through looting or fire, it would be a loss to all humankind."

The museum is located near some of the most intense of the mass anti-government protests sweeping the capital, and Egyptian army commandoes secured the building and its grounds early Saturday morning.

Before the army arrived, young Egyptians – some armed with truncheons grabbed off the police – created a human chain at the museum's front gate to prevent looters from making off with any of its priceless artifacts.

"They managed to stop them," Hawass said. He added that the would-be looters only vandalized two mummies, ripping their heads off. They also cleared out the museum gift shop.

The prized King Tutankhamun exhibit had not been damaged and was safe, he said.

An Associated Press Television News crew that was allowed into the museum saw two vandalized mummies and at least 10 small artifacts that had been taken out of their glass cases and damaged.

Fears of looters have prompted authorities elsewhere to take precautions to secure antiquities at other sites.

The military closed the pyramids on the outskirts of Cairo to tourists, and armored personnel carriers could be seen outside the famed archaeological site.

Archaeologist Kent Weeks, who is in the southern temple town of Luxor, said that rumors that attacks were planned against monuments prompted authorities to erect barriers and guard Karnak Temple while tanks were positioned around Luxor's museum.

Sharon Herbert, director of the Kelsey Museum at the University of Michigan, which is home to a collection of Egyptian artifacts, said any looting or damage at Egypt's museums would be a tragedy.

"Anything can happen when crowds get out of control," Herbert said. "You're hard put to put any monetary price on these things. They're priceless. They're parts of the whole world heritage that can't be replaced."


Associated Press writer Chris Hawley in New York contributed to this report.

Protests in Egypt Spread to New York

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NEW YORK -- The protests that have engulfed much of Egypt arrived in New York today when more than 2,000 people gathered near the United Nations building to support those demonstrating on the streets of Cairo to bring down President Hosni Mubarak.

"Its time for him to go," said Hoda Elmasry, 24, a student at Columbia University, whose parents came to the United States in the 1980s to escape what she described as "corruption and lack of opportunities" in Egypt.

Protesters also called for the U.S. to stop backing Mubarak, who has been in power for 30 years.

Placards reading "Free Egypt Now" and "Obama Democracy = Democracy, Don't Play Favorites," spelled out the mood and message. "I would like to see Obama support democracy rather than stability," added Elmasry.

"We are here so that the American government feels our pressure," said Ali Mansour, a 34-year-old doctor from New Jersey.
Spencer Platt, Getty Images
People protest against the regime of Egyptian President Hosni Mubarak outside of the United Nations on Saturday in New York City.

Mansour, who came with his young children to the protest, urged Obama to cut off financial aid to Egypt and impose an economic blockade if the will of the people is ignored.

One protester held up a poster saying "Mubarak, let me e-mail my mommy," in reference to the cell phone and Internet blackout in the country. While the Internet is still down, people in the U.S. were able to speak with their family members today on cell phones and landlines.

Many told stories about their relatives, saying that "thugs," some affiliated with the government, were coming into several areas to terrorize and loot.

"My sister said that there are three military tanks in their locality to provide security," said Mansour.

Protesters said the revolution in Tunisia has ignited the spark that would spread across the Middle East and bring down other regimes in Saudi Arabia, Jordan and Yemen.

Varied reactions have come from countries in the Middle East.

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  • Egypt's Uprising Unites Society in Rage
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  • Looters Rip Heads Off 2 Mummies at Egyptian Museum
King Abdullah bin Abdulaziz al-Saud of Saudi Arabia phoned Mubarak today and said, "The Government of Saudi Arabia and people condemns strongly this and stands with all its potentials by the Government and brotherly people of Egypt."

On the other hand, Iranian Foreign Ministry spokesman Ramin ...

Hundreds rally in Seattle in support of Egyptians

SEATTLE - A crowd of about 300 gathered at Seattle's West Lake plaza Saturday afternoon in a show of solidarity with Egyptian protesters.

Anti-government protesters in Egypt are demanding economic and political change. Tens of thousands of people filling the streets of Cairo and other cities are calling for President Hosni Mubarak to resign after nearly 30 years in power.

In Seattle, tears filled Usama Baioumy 's eyes when the crowd sang his homeland's anthem. Egypt is in his heart, and in his children's blood.

"I talked to my kids yesterday... this is the way you can stand up for the right thing, whatever it is... This is our jihad: to stand against a tyrant," said Baioumy.

Now, concerns over the violence Egypt is also keeping this Snohomish family up at night. Baioumy says they've hardly slept in three days. He talked to his mother in Cairo on Saturday morning.

"She was crying, she was crying, she was scared. My sister was scared. They were hearing a gun shoot around them," said Baioumy.

The rally in downtown Seattle provided on outlet for hundreds like the Baioumy family. It gave them a place to stand with those who share the same concern over the violence, and share the same demands for change.

Rally co-organizer Alaa Badr listed those demands in a speech - " ...legitimate democracy, free speech, true opposition, accurate representation... the right to a fair trial."

After the speech, Mohamed Souaiaia grabbed a bullhorn and beamed with pride. The protests sweeping parts of the Arab world began in his native Tunisia weeks ago. Souaiaia calls it a revolution of dignity, that's now violated and exported for the whole world to see.

"I feel it's just scary to see people getting hit by bullets, tear gas. I saw a picture of a people standing by a truck with those water hoses," said 10-year-old Nour Ayad.

But those images also spark a feeling of pride in the boy's heart, pride in his heritage, and hope for his Egypt's future.

Valerie Plame Confronted Over New 9/11 Investigation - "Government Could...

Today Show January 1994...What is the Internet?!