Thursday, February 17, 2011

A Tipping Point Is Nearing

AFP image
Jeff T. Allen
American Thinker

We are facing a tipping point. There will soon be a crisis affecting US citizens beyond any experienced since the Great Depression. And it may happen within the year. This past week three awful developments put a dagger into the hope for a growth-led recovery, which held promise of possibly averting a debt and currency implosion crushing the American economy.

The first was a little-noticed, but tragic, series of events in the newly elected House of Representatives. The speaker, Mr. Boehner, had given the task of fashioning the majority's spending cut agenda to Representative Paul Ryan (R-Wisconsin), a rising conservative star representing the vocal wing of fiscal conservatives in the House. Promising to cut $100 billion of government spending, Mr. Boehner spoke before the elections of the urgency to produce immediately when Republicans took control.

Out of a $3.8 trillion government spending agenda, the wonkish Mr. Ryan, considered by many to be the best hope for fiscal conservatives, revealed proposed cuts of a whopping $74 billion. After some tense meetings, (referred to as a "revolt" by some media) newly elected conservative congressmen convinced the leadership to commit to unspecified cuts of an additional $26 billion. The actual "cuts" from any such legislation will, of course, be less once the appropriate political log rolling and deal-making are done- let's call it $50 billion (while the deficit grows by $26 billion during the week it takes to discuss it). So go the hopes for serious spending restraint from our newly elected wave of rabid, anti-big government Republicans. They may deliver cuts 1.3% of total spending that is itself approximately 90% greater than collected taxes. Let's mark this spending reduction effort as an epic fail, at a time when epic success is almost required for survival.

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US home building stagnant

© AFP/Getty Images/Kevork Djansezian

WASHINGTON (AFP) - Construction of new homes in the United States grew by nearly 15 percent last month, but remained near levels seen since the sub-prime mortgage meltdown, official data showed Wednesday.

At an annual rate of 596,000 starts, building in January was 2.6 percent below the levels seen in the same month last year, according to Commerce Department figures.

It was a "quite disappointing report, despite the increase in the overall housing starts figure," said Inna Mufteeva, an economist with Natixis, who described sentiment in the sector as "anemic."

Adding to the bleak outlook, building permits were 10.4 percent below the levels seen in December and 10.7 percent below last January.

But experts predicted those low rates of permitting and building would pick up as the recovery progresses.

"(The market) should eventually be supported by the extremely low inventories of new homes and decent homes sales expected on the housing market," said Mufteeva.

© AFP -- Published at Activist Post with license

Cut Benefits to Bankers, Not Public Services (One Good Cut)

Madoff To NY Newspaper: Banks 'Complicit' In Fraud

Bernard Madoff Says He Gave Documents To Help Get Money Back

Disgraced Wall Street financier Bernard Madoff said in an interview published online Tuesday that banks and hedge funds were "complicit" in his scheme to fleece victims out of billions of dollars. Madoff did not name any institutions in his series of interviews with The New York Times but said banks and hedge funds "were complicit in one form or another." He said they failed to scrutinize the discrepancies between his regulatory filings and other information. "They had to know," he said in his first interviews for publication since his 2008 arrest. "But the attitude was sort of, 'If you're doing something wrong, we don't want to know.'" Madoff spoke to the newspaper via e-mail and during a private two-hour interview at Butner Federal Correctional Complex in Butner, N.C., where he's serving a 150-year sentence. The reporter who conducted the interviews, Diana B. Henriques, is writing a book about the Madoff scandal. Madoff, who's 72, touched on subjects including the effect of his crimes on his family, his son Mark Madoff's suicide on Dec. 11 and the effort to recover money for his victims. A court-appointed trustee seeking to recover money on behalf of Madoff's victims filed a lawsuit this month against his primary banker, JPMorgan Chase, alleging the bank had suspected something wrong in his operation for years. The bank has denied any wrongdoing. Madoff also said he had given the legal team of trustee Irving Picard "information I knew would be instrumental in recovering assets from those people complicit in the mess I put myself into." Picard said Wednesday through a spokeswoman that he will have no comment on the Times story. The Times said also that Picard declined to comment for its story. About $10 billion has been recovered through asset sales and settlements. Madoff also spoke to the Times about another defendant of a civil lawsuit brought by Picard's team: the Wilpon family, owner of the New York Mets. He said Fred Wilpon and his brother-in-law Saul Katz "knew nothing." While the Wilpons claim they were victims who lost money in the Madoff swindle, Picard says they withdrew more than they put in and should have heeded warnings that Madoff's claimed profits were too good to be true. Madoff, touching on the subject of his devastated family, said that he was unhappy with the media coverage of his son's death, calling it "disgraceful." Mark Madoff, 46, hanged himself with a dog leash in his Manhattan apartment on the second anniversary of his father's arrest. He left behind a wife and four children, ages 2 to 18. At the time of his suicide, federal investigators had been trying to determine if he, his brother and an uncle participated in or knew about the fraud. The relatives, who held management positions at the family investment firm, denied any wrongdoing. Bernard Madoff also maintained in the interviews that his family didn't know about his vast Ponzi scheme.

Madoff: Banks Knew I Was a Crook (NYT Interview)

Source - New York Times

BUTNER, N.C. — Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.

In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.

But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved in the fraud.

Mr. Madoff, who is serving a 150-year sentence, seemed frail and a bit agitated compared with the stoic calm he maintained before his incarceration in 2009, perhaps burdened by sadness over the suicide of his son Mark in December. In many ways, however, he is unchanged. He spoke with great intensity and fluency about his dealings with various banks and hedge funds. In asserting the complicity of others, Mr. Madoff in the interview pointed to the “willful blindness” of many banks and hedge funds who dealt with his investment advisory business and their failure to examine discrepancies between his regulatory filings and other information available to them.

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.

Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.

“I’m reading more now about how suspicious they were than I ever realized at the time,” he said with a faint smile.

He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.

Continue reading...


JP Morgan Faces More Risks On Madoff Trustee Allegations

Wall Street Journal – February 3, 011

By David Benoit (of Dow Jones Newswire)

Janet Tavakoli, the president of Tavakoli Structured Finance and a financial fraud expert, said her initial read showed Picard appeared to raise troublesome issues for J.P. Morgan.

The suit alleges J.P. Morgan was “basically creating products to leverage off of this relationship with Madoff,” Tavakoli said. “Instead then of asking questions, terminating the relationship or talking with the [Securities and Exchange Commission], they decide to create products based on something that they have a series of red flags on.”


JT Note: JPMorgan allegedly was Madoff’s primary banker for more than twenty years. It might be argued that given JPMorgan’s position of leadership in the business and failure to disclose red flags that it alone knew, the bank lent sponsorship and credibility to Madoff allowing him to enjoy a “halo effect.”

JPMorgan had a responsibility to hold itself to a high standard of ethical conduct, due diligence, and disclosure with respect to Madoff’s fund. Yet, allegedly JPMorgan failed to take appropriate action such as investigating suspicious money transfers, investigation of concerns about structured products expressed by its employees, investigations allegations that the fund was a Ponzi scheme, and terminating its business relationship with Madoff when Madoff declined to allow JPMorgan to perform due diligence on him.

Janet Tavakoli


Tavakoli Structured Finance, Inc.

Sculpture - Madoff and the Bull Market

Sculpture - Madoff and the Bull Market

UK Baby boomers 'must pay for their own elderly care'

The post-war baby boom generation “has done pretty well for itself” and should be prepared to use its property wealth to pay for care in old age, a government adviser has said.

Tim Ross

Lord Warner, who is drafting plans to reform the elderly care system, said it would be unfair to expect the working population to foot the bill for looking after their parents’ ageing generation.

He warned that the “squeezed” middle-classes face potentially the greatest burden, amid concerns that it is already too late to help ease the “catastrophic” costs likely to hit the recently retired.

The former health minister called on insurance firms to develop “creative” new products to allow pensioners to protect themselves against being forced to sell their homes to pay for care and support.

But he warned that the independent commission drawing up reforms for the Coalition would have to consider how to exploit the “big chunk of potential” funding currently locked up in housing.

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"I've got an 8 pound Bass hanging on the wall that, if he could talk, would tell you what happens when you swallow anything that is presented without checking it out really well first, and this story smells like he would after about three days in the sun !"

I was talking to a friend of mine as I scanned the international news websites starting with Matt Drudge, when the headline blared out the news . As soon as I saw it, I immediately said, I bet it's Lara Logan !.. No I didn't have special powers, or inside info, but I do have a good memory.
I remembered the 'scuttlebutt' during the Iraq war and Afghanistan recounting her interesting habit of attempting to break the monotony over there by 'boinking' several soldiers and other contract employees sometimes in the back of pickup trucks and hummers. This practice was widely known by those who could get her anything she was in need of. (transportation to the front, permission to travel to certain destinations, information she could use, etc.) That's why I said I bet its Lara Logan. It just didn't smell right. (No pun intended) but back to the story.

So let's start out with the term most journalist and editors use until the facts are proven. The Term is 'allegedly' .
Were there any witnesses to this alleged 'sexual' assualt ? (as opposed to a crowd of people hollering at her, or smacking or pushing her around and in the process touching her in her 'no no places' as we tell our kids) You know witnesses are people willing to come forward and say 'Yep, I saw it, that's what happened all right'

The second red flag was the use of terms like 'she was surrounded by dangerous elements' and 'It was a crowd of 200 whipped up into a frenzy !' nothing suspicious here right ??!!

'She was rescued by a group of women and about 20 soldiers' .. so I assume one of them (at least) must have seen this alleged 'sexual' assault right? Did they attempt to take her to any hospital or anywhere else for medical treatment ? Did the soldiers attempt to round up those responsible ? Did in fact, anybody see this alleged sexual assault which presumably took place in a crowd of thousands of witnesses ? C'mon folks .. anybody ?

Another red flag (for me) was .. 'she was covering the 'jubilation in the square' and I thought to myself, is this what people in Egypt do when they are celebrating their new found freedom? Is this what I would do if I were an Egyptian and I had just heard that this tough fought battle against Mubarak was won ? At a time when I'd be standing there with my heart bursting with pride and my mouth filled with joyous chants, do I say .. 'Hey I'm so proud to re-write Egyptian history after years of oppression, let's go grab that american reporter and beat her up and have our way with her guys. I mean who will see it, who will notice? ... I think not.

Look folks we'd already seen Anderson Cooper being chased all over Cairo, and 'roughed up' (he must have come from a different neighborhood then were I grew up !) and sweet little Katie Couric run screaming to the airport after being 'crowded' so reporters being chased and screamed at, at this point, was getting to be a normal bill of fare on the TV news. Typical page 6 stuff.

Then along comes Lara, a little bigger, a little different, a little better story Lara. A reporter with a reputation for doing whatever it takes to get 'face time' on TV Lara.
I suspect that she knew that getting roughed up would have hardly elicited a yawn at that point, so she decided to 'pump it up' or 'sex it up' as the Brits would say, just a little. Let's make it more interesting. We'll add a little sex to the story (You know how those Americans love that stuff !)

Did they throw her down on the ground and gang rape her, or did some Egyptian in his excitement plant a wet one on her face without asking her permission first ? (the nerve !) I mean we know 'Those Mooslims' are known for sexually assaulting women in crowded squares in front of thousands of witnesses right ? Please !!

I've got an 8 pound Bass hanging on the wall that, if he could talk, would tell you what happens when you swallow anything that is presented without checking it out really well first, and this story smells like he would after about three days in the sun !

So, if "There will be 'no further comment from CBS News' and correspondent 'Logan and her family respectfully request privacy at this time" ... I guess we'll just have to take her word for it right ? (Not !!)
Sorry Lara, if its all true, you have my sympathies, but until I hear it from witnesses all I can say is ..
Lara your reputation precedes you !

But true or false .. Let's examine how this story will play .. What's the subliminal message here ?.. What will the drones walk away with after reading it .. 'Those Egyptians have brought shame down on themselves and Egypt !' .. 'How brave our journalists are for facing these beatings and assaults in an effort to defend the 4th Estate !' ... Now who would want to put that kind of a message out ! Surely not the big MSM's like Fox, CNN, ABC, or CBS !

Now I'm aware that some REAL journalists were arrested and beaten etc, but as far as I can keep count, most of the 'talking heads' from the MSM that were there trying to use the occasion as a backdrop for there stories, ended up suffering mostly from shoulder sprains as a result of excessive 'patting themselves on the back' for being sooo brave !

Honestly, I'm beginning to think that CBS has come to stand for 'Complete Bull Shi # ..'
Yahoo's Story here ... Scroll down to the comments section at the bottom of the page .. Interestingly it says "There are no comments yet" and underneath that ..
"Comments have been closed for this article" well, I guess that's one way of stifling the input ! I wonder why?

The Fed's Policy of Creating Inflation: A Massive Wealth Transfer

"If once [the people] become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions." Thomas Jefferson (1743-1826), 3rd US President

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson (1743-1826), 3rd US President

[Corruption in high places would follow as] “all wealth is aggregated in a few hands and the Republic is destroyed.” Abraham Lincoln (1809-1865), American 16th US President (1861-65)

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." Frederic Bastiat (1801-1850), French economist

“Inflation made here in the United States is very, very low.” Ben Bernanke, Fed Chairman, Thursday, February 10, 2011

Let us begin with some macroeconomic indicators of reference.

In October 2010, the world value of total production (all Gross Domestic Products or GDPs) was estimated to be $61.96 trillion U.S. dollars at current nominal prices. The U.S.GDP was estimated at $16.11 trillion or 26 % of world GDP. [ ]

The two largest financial markets in terms of trading values are the global foreign exchange market (all currency markets) that has an average daily turnover in global foreign exchange transactions of about $4 trillion per day, and the privately-traded and mostly unregulated world derivatives market (all the derivatives markets) whose total world outstanding contracts has been estimated by the Bank for International Settlements in Switzerland to have a notional or face value of about $791 trillion in 2010.[ ][ ]

In terms of real wealth, however, the two most important financial markets are the world bond market [ ] and the world stock market. [ ] In 2009, for example, the global bond market had an outstanding value of $US 91 trillion, with the U.S. bond market, at a value of $US 35.5 trillion, being the largest domestic bond market. –In mid-2010, the global equity market capitalization on regulated exchanges was estimated at $US 54.9 trillion, with the U.S. stock market having a value of some $US 19.8 trillion.

With such a large amount of financial assets, it is understandable that shifts in prices and interest rates have important effects on each market. If long-term interest rates go up, the nominal value of bonds goes down, and conversely, when interest rates decline, bond prices go up. As for stocks, many factors, such as company earnings, future profit prospects and inflation expectations, as well as political and taxation considerations, can influence their value. However, in general, they tend to fare better when short-term interest rates are low rather than high.

Sometimes, these two important financial markets move up together, especially in an environment of general disinflation, when interest rates tend to decline. They also tend to decline in tandem when real interest rates
[ ] are on the rise, both bond prices and stock prices are then falling.

Sometimes, however, they can move in different directions, especially in the early phase of an inflationary period, such unexpected inflation being good for the stock market but bad for the bond market. Since last fall, this has been case, with the bond market falling and the stock market rising. The question is how long this decoupling can last.

And how does the Fed's monetary policy fit into such an environment of oncoming inflation, and what should the Fed do?

Last November 3rd, the day after the 2010 mid-term elections, the Bernanke Fed announced that it will be embarking on a second round of quantitative easing (QE2), [ ] a fancy word for printing new money in exchange for government bonds—in other words, monetizing the public debt. It seems that Chairman Bernanke and the Fed board felt that months of lending to the large American banks trillions of dollars at close to zero interest rate, while paying them 0.25 percent to keep their excess reserves on its books, was not enough. They announced that the Fed would buy $600 billion-worth of additional Treasury bonds until June 2011, while reinvesting some $300 billion of principal payments from its portfolio holdings of mortgage-backed securities.

In doing so, the Fed professed to follow two somewhat interrelated objectives; 1- to lower long-term real interest rates in order to stimulate economic activity and create employment; and 2- to simultaneously raise inflation expectations in order to avoid the effect of deflation on the U.S. debt-leveraged economy. It should be remembered that from 1913 to 1977, the Fed had only one objective to pursue, i.e. price stability. Currently, however, the Fed has officially a double mandate. As a matter of fact, since 1977, the amended Federal Reserve Act of 1913 [ ] stipulates that the U.S. central bank should set its monetary policy in order to promote employment while maintaining price stability. It says that the Fed should promote “maximum employment, stable prices, and moderate long-term interest rates.”

Of course, a central bank in a fiat currency system can always create inflation through monetary policy and its printing press, but, in a market economy, it has little direct influence on job creation and on long-term interest rates. Employment depends on investments, innovation and market opportunities at home and abroad, while long-term interest rates depend on the amount of savings available, on investment demand and on long-term inflation expectations, all factors that are more or less out of the reach of a central bank. It is easy to delude oneself into thinking otherwise, but that's the reality.

What the Fed can do with certainty, however, is to create inflation by expanding the monetary base [ ] and the money supply; it can also reign in inflation by draining liquidity from the system. If it goes overboard one way or the other, it can also create asset price bubbles [ ] by maintaining its managed short-run interest rates too low for too long, or it can create a credit crunch [ ] by putting the brakes too hard on credit creation, usually in a haste to correct its previous mistake.

These short-term gyrations in monetary policy are very destabilizing to the real economy, sometimes creating a temporary boom; sometimes precipitating an economic downturn. They are also accompanied by massive shifts of wealth between creditors and debtors.

In the first instance, when the Fed (or any central bank for that matter) creates too much money by buying financial assets and writing checks on itself, inflation and inflation expectations ensue. This pushes short-term interest rates down and long-term interest rates up (a steepening of the yield curve) [ ] and the price of long bonds goes down, with the effect of imposing an inflation tax [ ] on all the holders of fiat dollars. This inflation tax results in a transfer of wealth between unsuspecting dollar holders and bond holders who see the real value of their holdings go down, while net debtors and stock owners see their real debt load being reduced by inflation and the value of most shares in the stock market going up.

In the second instance, the reverse can happen if the economy is starved of liquidity: the yield curve inverts with short-run interest rates moving way up as compared to long-term interest rates. A stock market crash and an economic recession generally follow.

—That's pretty much what the Fed has been doing over its nearly 100 years of existence, keeping short-run interest rates too low for too long, creating unsustainable asset bubbles, and then applying the monetary brakes to kill inflation expectations that it has created on its own. Sometimes, the Fed has maintained price stability and the value of the U.S. dollar; but at other times, it has willingly acted to destroy the purchasing power of the dollar by printing too much of it.

As a general principle, if inflation expectations increase faster than nominal long-term interest rates, real interest rates, i.e. the real cost of capital for investors and home buyers, would decline and this would, hopefully, stimulate economic activity and employment.

Unfortunately for the Fed, its Nov. 3rd announcement translated into an important loss of confidence in its ability to design and pursue an appropriate monetary policy and was immediately decried by other central banks and by America's biggest creditor, China, as a blatant attempt to generate and export inflation. Bond prices began immediately to fall and bond yields to rise. It seems that bondholders began selling longer-term Treasuries at a faster rate than the Fed could buy them.

Chairman Ben Bernanke and his board seem to have forgotten that the United States is now a debtor nation, [ ] not a creditor nation. A creditor nation could get away with an outspoken policy of creating inflation—but not a debtor nation. In 2010 alone, the U.S. registered another half a trillion-dollar trade deficit with the rest of the world. This has to be financed, and it is done with foreign borrowings. To a large extent, foreign creditors now decide the final outcome of American monetary policy.

The 10-year Treasury yield, [ ] which hit a low at 2.40 percent in October 2010, was at 2.63 percent the day before the Fed's announcement on November 2, 2010. As it turned out, it closed at 3.64 on Friday February 11, after hitting a high of 3.75 percent on February 8. The same is true of the 30-year Treasury yield that hit a high of 4.76 percent on February 8, thus approaching the dangerous threshold of 4.90 percent. The latter stood at 3.93 percent on Nov. 2, 2010.

Obviously, the Fed's ultra loose monetary policy has backfired. Its intended policy of printing money in excess of what the economy demands has resulted in raising real long-term interest rates, not lowering them. Indeed, with long-term nominal rates on the rise while inflation will take many months to surface, the immediate effect of the Fed's November announcement was to raise real long-term Treasury rates, not to lower them. Mortgage rates are also on the rise, threatening to postpone the long anticipated recovery in the housing market.

—It is certainly possible that we are entering a period when the already observed rise in real interest rates can derail the stock market rally that has been in force since early March 2009. Later on, however, a slowdown in the economy coupled with fiscal compressions can be expected to push long-term rates down again. Such a roller-coaster path for interest rates is not very helpful.

The current Fed board seems to believe that the Fed is more than a central bank, that it is a sort of a government unto itself that can both control monetary conditions and solve the structural problems in the real economy at the same time, irrespective of what the rest of the world thinks. This would seem to be most unrealistic. Perhaps a dose of humility would be salutary at this time, before irreparable damage is done.

Rodrigue Tremblay [ ] is professor emeritus of economics at the University of Montreal and can be reached at He is the author of the book "The Code for Global Ethics" at:

The book “The Code for Global Ethics, Ten Humanist Principles”, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, has just been released by Prometheus Books.

Please visit the book site at:

Rodrigue Tremblay is a frequent contributor to Global Research.

Dim view of housing market weighs on economy

WASHINGTON (AP) -- Optimism is in short supply among U.S. homebuilders, a sign that the depressed housing market will slow the economy's gains this year.

The outlook by builders hasn't improved since the fall, when new-home sales were in the midst of their bleakest year in a half-century.

Less home building means fewer jobs for the economy. Construction work now accounts for about 5 percent of the nation's private employment. But nearly 2 million of the roughly 14 million unemployed Americans previously worked in construction.

Analysts say the economy needs to accelerate job creation before the housing industry can fully recover. Without more jobs and higher wages, home sales will stagnate.

"We probably won't see a strong recovery in construction jobs anytime soon," said Sal Guatieri, senior economist BMO Capital Markets. "Not a lot of people are showing up to builders' lots, not even to kick the tires. We just have to wait it out."

The National Association of Home Builders' index of builder sentiment for February was unchanged for the fourth straight month, at 16, the association said Tuesday. Any reading below 50 indicates negative sentiment. The index hasn't topped 50 since April 2006.

On Wednesday, the Commerce Department will report on home construction for January. The consensus view of economists is that builders broke ground on a seasonally adjusted annual rate of 535,000 homes last month. That's barely half the pace that economist view as healthy.

Homebuilders are struggling to compete with waves of foreclosures that are forcing prices down. Banks foreclosed on more than 1 million homes last year, and this year's figure is expected to be higher. Last year was also the worst in more than a decade for sales of previously occupied homes.

High unemployment, tight lending standards and uncertainty about prices have kept many would-be buyers away. Mortgage rates had been at their lowest levels in decades but have begun to climb. The average rate for a 30-year fixed mortgage just topped 5 percent for the first time since April.

Outside of housing, most signs point to a strengthening economy. The unemployment rate, now at 9 percent, fell over the past two months at the fastest pace in 50 years. Layoffs have sunk to their lowest levels since 1993. Economic growth is rising. And people are spending at the highest levels since 2006, when the housing market went bust.

Further declines in home prices could make people feel less secure with their finances, slowing spending and broader growth.

New-home sales represent only a small fraction of overall sales. But they drive job growth in construction. Each new home built generates, on average, the equivalent of three jobs for a year and about $90,000 in taxes, according to the homebuilders' group.

More jobs would spur demand for new homes. Increased sales would help clear some of the excess supply. Prices would stabilize, consumer confidence would rise and prices would gradually increase.

But with prices falling in most U.S. cities, new homes are less likely to be built.

"It's very hard to make a living when homes are being sold at fire-sale prices," said Patrick Newport, an economist with IHS Global Insight. "The economy's got traction, so the housing market should improve. But the numbers right now across the board are at rock-bottom levels."

Chris Schoonmaker, vice president for sales at S&A Homes in Pennsylvania and West Virginia, said he has seen a spike in the number of people looking to buy custom-built homes in Pittsburgh and State College, Pa. But he doesn't expect to hire until the housing industry achieves a full-blown recovery.

"Our goal this year is to hire back in a few spots, but we'll be very conservative with that," he said.

Analysts say the housing market should show some signs of revival this year. But it will likely be uneven. The latest regional data showed builders are becoming more optimistic in the Northeast and South but less hopeful in the Midwest and West.

"There are signs that we're starting to claw back from the bottom," said Carl J. Riccadonna, a senior U.S. economist with Global Markets Research. "As long as it's flat-lining during the winter, it's the spring that will tell the tale." Spring is the peak time for home-buying.

The latest builder sentiment report reflects a survey of 424 residential developers. They are more optimistic about single-family sales now and over the next six months than they were in January, even though foot traffic by prospective buyers remains fairly flat.

The world's biggest home-improvement retailer, Home Depot Inc., said Tuesday it plans to hire more than 60,000 seasonal workers to help with the busy spring season. But those hires, which are similar in number to the company's staffing levels last year, are tied to a seasonal promotion focused on flowers, vegetables and lawn care products.

Jill Didonna, division president for GL Homes, a Florida builder, said she is "cautiously optimistic" that buyers will be found for two master-planned communities set to open soon in Del Ray Beach and Naples. But that doesn't mean she's going to hire anytime soon.

"We don't see us expanding, but we don't see us contracting," she said. "We haven't reduced staff since 2006."

Herron reported from New York.

Obama allocates $44 billion for Homeland Security to purchase hundreds more health-destroying naked body scanners

(NaturalNews) The Obama administration recently announced its $3.73 trillion dollar budget plan for the 2012 fiscal year beginning on October 1. The new budget includes a more than $44 billion allocation for the U.S. Department of Homeland Security (DHS) to purchase 275 more naked body scanners to be installed at U.S. airports, despite continued outcry from health experts and the public about the machines' safety hazards, threats to personal privacy, and complete ineffectiveness.

Up three percent from last year's budget, the DHS allocation is just the start of the Obama administration's efforts to have 1,275 naked body scanners installed in airports by the end of 2012. The plan disregards the numerous testimonies from security experts who have dubbed the machines "useless," and say they fail to detect explosive materials any better than conventional scanners.

"I don't know why everybody is running to buy these expensive and useless machines," said Rafi Sela, former chief of security at the Israel Airport Authority and expert in airport security. "I can overcome the body scanners with enough explosives to bring down a Boeing 747. That's why we haven't put them in our airport."

The machines are also a huge health threat, as they bombard travelers with low intensity radiation in a way that spreads it across the skin of the entire body. This full-body radioactive blast has not been fully investigated and nobody knows for sure what the long-term consequences of exposure will be.

"It concerns me a great deal," said University of California - San Francisco (UCSF) professor Robert Stroud in an interview with CBS 5 San Francisco, concerning the machines. "We simply don't know enough about low intensity radiation. Skin is where a lot of this particular radiation probably will be the most damaging."

Other Obama administration budgetary changes in the DHS category include a $10 million cut for border security in southwest states like Arizona and California.

Dylan Ratigan: Mortgage & Banking Fraud - Where Are The Handcuffs! (VIDEO)

Great discussion. Ratigan, well, he's on fire.

Video - Ratigan with Nevada attorney General - Feb. 4, 2011


Dylan takes up the issue of mortgage fraud, predatory lending and liars loans. We know there were crimes committed. In many cases, we know who the criminals are. But the "regulators and the Dept. of Justice have done NOTHING."

Angelo Mozilo, for example, just settled with the California AG for $6.5M, admitting no wrong doing, and Mozilo will not pay a dime out of his own pocket.

Yesterday, thousands called their state AG's as part of a national day of action to demand that AG's do something about rampant fraud in the mortgage system, including fraud involved with the Obama administration's HAMP program. (Some critics contend that HAMP was a failure, by design, meant only to prop up real estate prices and provide another subsidy to the banks.)

Dylan cuts to the core issue of the fraud: the securitization of mortgages, known to be fraudulent, which were then sold on to pension funds and retail investors. This practice was highlighted in the FCIC report. Why has nothing been done, when everyone, including (usually the last to know) congressional commissions like the FCIC, knows about it?

Dylan asks the Nevada AG, who was a guest on the show, whether this practice occurred in her state and what she can do about it. She says that she is limited in what she can do, in terms of jurisdiction (fair enough), but then she spits out a barrage of verbiage (5:14 - 6:30) about "process" and "looking at every aspect" of the problem, and... Something tells me she doesn't plan to do much of anything about the big players in the mortgage securitization scandal. Otherwise, she simply would have said she would find out and go after anyone involved, but she spent 1 minute and 15 seconds basically making excuses for why she hadn't done so already. Credit Dylan, though, for asking the right questions.