Saturday, April 16, 2011

Get Ready for Federal Budget Gridlock

Greg Hunter
USA Watchdog

This week, President Obama gave a speech outlining his plan for long term deficit reduction. He invited the Republican leadership for what many thought would be some sort of bi-partisan federal budget 2011 solution. In reality, it was kind of a St. Valentine’s Day massacre because right off the bat, Mr. Obama pulled out the Presidential tommy-gun and started shooting. He said, “This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending. It’s about the kind of future we want. It’s about the kind of country we believe in.”

Surprise, surprise. The kind of country President Obama “believes in” is a lot different than the Republicans. The President said the Republican plan “ends Medicare as we know it.” Sounds to me the President will play the class warfare card during the 2012 election season because he went on to say, “The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?” (Click here to read the entire text of the President’s deficit speech.) I can see why the President is playing to lower income people. Recently, a poll revealed a majority of the poorest Americans no longer support Obama. reports, “President Barack Obama’s approval among the poorest Americans dropped to an all-time low of 48 percent last week, according to the Gallup poll, leaving the president with less-than-majority approval among all income brackets reported in Gallup’s presidential approval surveys.” (Click here to read the complete story.)

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Visible's Primer on Basic Economics and Prosperity.

Dog Poet Transmitting.......

‘May your noses always be cold and wet’.

There’s something that goes through my mind a lot and I don’t think I have to be Maynard Keynes, John Stuart Mill or Milton Freidman to understand it. Certain things have happened in the United States that caused serious problems for the general population and for most of the countries they interacted with and it was all about Wall Street being able to run roughshod over all legal and moral strictures, with the assistance of the veiled operations of the bloodsucking Federal Reserve. You look at the names of the players from both of these Crime Syndicates and you’re almost surprised when you find a gentile name. If this is not true, I want the dissenter to give me a list that proves otherwise. We’re talking only top tier here and only the US, though the same is true no doubt, in The Crown Colonies.

I don’t like having to point the finger at the same suited hoodlums all the time but... since they are behind most of the troubles in the world, where else should I point? This is less about these predatory pirates than it is about how the system works and what happens when the system is compromised. The Petri Dish is a kind of wide net, Profiles in Evil so this is a good place for this because it’s all pretty horrifically evil. The same way that so many things are made out of petroleum and rely on it from manufacture to transport, in the same way, the manipulation of money and equity touches every life except the lives of those perverting the system. It touches them too but in a profit making way.

Years ago I looked at the situation in the Middle East. This is probably before I ever got in front of a computer and I saw what Israel was doing to the Palestinians; killing them, stealing their land and ritually torturing them whenever the libido demanded it. I used to say to people that the solution was simple and I would get endless arguments about how complex it was. I said it wasn’t complex. All that was required was for Israel to give the Palestinians their land and create a border. Then I would get loads of brainwashed, “What ifs”, to which I would reply, “I don’t do hypothetical”. Hypothetical is the last refuge of the uninformed.

It’s the same thing with economies. A successful economy is a simple thing and I dare anyone to prove otherwise. You know what makes it complex? Lawyers working for people who want to steal more than what is fair permits. Whenever lawyers are included, it nearly always involves someone looking to steal or defraud someone else, unless someone is reacting to it happening to them with lawyers. I know there are patent attorneys and estate attorneys and various attorneys who work along the line of hammering out contracts but all of that is based on protecting the client from theft and related matters. Theft is vin ordinaire of this kind of system when it decays and even well before that.

There is one key reality that guarantees a successful economy and that is a prosperous middle class; including good social services, a nation wide safety net, it works marvels and I’ve seen it at work in Europe. I’ve seen it really working. Here I am referring to retirement, medical and related common concerns. It’s much less expensive to make sure that the poor have somewhere to live and food to eat than it is to make it a police matter, and a corporate handout to the private prison industry, by denying them (as they do in the US) and it militates toward quality of life for all.

The thing is, once the rich and rapacious have stolen everything they can get their hands on, with the assistance of their busy lawyers, they look to change the laws, so that they can steal what everyone else has as well. They lobby to get oversight and protective laws removed and then, who’s to stop them?

Just like in The Great Depression, which was orchestrated by the same people who are doing the same thing now, the present depression was also orchestrated so that people’s homes and property could be stolen. The manufacturing base went offshore so that the cost of raw materials and unions could be eliminated or radically reduced. These middle class, blue collar workers were redundant, considering the profit margin for the predatory rich, once they could head off to Sweat Shop Heaven and Hide and Seek Tax Haven Heaven. Then it became too much of an expense for them even to pay their taxes so the middle class had to do that too. There’s not that much of a middle class in the US any more and therefore it is doomed. It is only a matter of time. The predatory rich don’t care. They’re planning to strip the carcass and move to Brazil.

Young, dumb and full of cum soldiers swear dubious oaths to something that doesn’t exist and go off to die in wars for profit. Hypocritical politicians salute the flag and then sell the country out from under the inhabitants. When you consider how feckless and stupid the inhabitants are, it’s almost like they deserve it. They don’t seem to care what the rich get to eat as long as they get their seat at the table in the common man’s tent. What they don’t tumble to is that the rich are eating them; they might as well butcher and barbeque them. How much difference would there be?

The single most treasonous and unpatriotic act any person or organization can engage in is to make war on the middle class. That IS the country. You know a country is in its death throes, when this is permitted through the agency of those elected and appointed to protect them. This is a capital crime. Let’s put it in perspective. Let’s see it as it is. It’s not just funny math and creative book-keeping, its murder and treason. These are the very scum who parade around on the holidays and mouth sanctimonious platitudes about patriotism and sacrifice. Animal Farm was on the money in more ways than one; certainly a ‘character driven plot', if I’ve ever seen one.

These are not just criminals; these bankers and brokers, politicians and judiciary whores, CEO’s, lawyers and lobbyists are guilty of treason. They have collectively destroyed the country and sold it into slavery as a hedge against rebellion. Millions of people lived and worked and died for two centuries for nothing. The people who do talk about these things are ignored or slandered. The people who spin the lies that support the policies of treason are respected pundits, laden with gravitas and… lathered with lard. What a load of shit. What a cheap song and dance of another word for something truly ugly.

The Middle Class IS the country. Everything is supposed to be geared toward making prosperity for them a given, dependent on personal industry and an intelligent understanding of savings and investment. You’ll hear the vampire clowns say, “Well that’s what we do”! Sure buddy. Morality is the province of the middle class. A nation’s awareness of what that actually is should be based on the tastes and preferences of the middle class.

I’m not trying to imply that the middle class is some enlightened force of wisdom and good. What I know is that when they are generally pleased, most everyone else is too, except the predatory rich. As for the morality clause, they’re the ones who make the most importance out of it. The poor are confused about what that means and are forced to cut corners concerning it and the predatory rich don’t possess any, so give what applies where it resides. I’m mentioning this because laws come out of this and the laws should serve the interest of the middle class first. I recognize that this is not the way for me to go about getting the drugs that I prefer, over the unpleasant crap the pharmaceutical companies make, made legal and acceptable. But as far as I’m concerned, the middle class shouldn’t take drugs anyway. They’re not bright enough to appreciate them. They’re the kind of people who smoke pot and think getting the munchies is what it’s all about. They might as well just drink themselves to death.

I’m not a fan of the middle class because their bourgeois and pedestrian tastes are not my cup of tea but I recognize their importance to society; you don’t have one without them and I recognize the truth of reincarnation and understand that eventually you evolve out of the middle class but hopefully not into the company of the predatory rich.

The predatory rich, the banks and the politicians, along with a collective of bought and sold judges and media mouthpieces killed your country. They raped and killed it and the country watched it on TV. They buggered their children and ruined their future and they still think the enemy lives in a cave in the Hindu Kush.

End Transmission.......

How Goldman Sachs Created 'Shitty' CDOs, Sold Them To AIG, Forced AIG Into Bankruptcy, Got A $20 Billion

And Paulson was CEO at the time and knew all about it. More truth about lack of Fed transparency. This is not entirely new if you've been following the work we've published from Janet Tavakoli, who is quoted extensively in the article below. Still, it underscores some of the more arcane points and delves into new territory with discussion of CDO substitutions. Easy to follow summary piece from Bloomberg's Richard Teitelbaum.

Here's what you need to take from this: Goldman put together crappy CDO's, bought Credit Default Swap protection (insurance) from AIG, pushed AIG into bankruptcy by making claims on the insurance, and then got paid -- not by AIG -- but by the TAXPAYER.

Oh, and the guy who tried to cover all this up? Barack Obama picked him to be your Treasury Secretary. Is this a great country, or what?


(Reprinted with persmission from Bloomberg)

By Richard Teitelbaum

(Bloomberg) -- When a congressional panel convened a hearing on the government rescue of American International Group Inc. in January, the public scolding of Treasury Secretary Timothy F. Geithner got the most attention.

Lawmakers said the former head of the New York Federal Reserve Bank had presided over a backdoor bailout of Wall Street firms and a coverup. Geithner countered that he had acted properly to avert the collapse of the financial system.

A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.

These were the deals that pushed the insurer to the brink of insolvency -- and were eventually paid in full at taxpayer expense.

  • The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year, even when AIG wanted it released.

That lack of disclosure shows how the government has obstructed a proper accounting of what went wrong in the financial crisis, author and former investment banker William Cohan says. “This secrecy is one more example of how the whole bailout has been done in such a slithering manner,” says Cohan, who wrote “House of Cards” (Doubleday, 2009), about the unraveling of Bear Stearns Cos. “There’s been no accountability.”

CDOs Identified

The document Issa made public cuts to the heart of the controversy over the September 2008 AIG rescue by identifying specific securities, known as collateralized-debt obligations, that had been insured with the company. The banks holding the credit-default swaps, a type of derivative, collected collateral as the insurer was downgraded and the CDOs tumbled in value.

The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place.

The banks should have to explain how they managed to buy protection from AIG primarily on securities that fell so sharply in value, says Daniel Calacci, a former swaps trader and marketer who’s now a structured-finance consultant in Warren, New Jersey. In some cases, banks also owned mortgage lenders, and they should be challenged to explain whether they gained any insider knowledge about the quality of the loans bundled into the CDOs, he says.

‘Too Uncanny’

“It’s almost too uncanny,” Calacci says. “If these banks had insight into the underlying loans because they had relationships with banks, originators or servicers, that’s at the least unethical.”

The identification of securities in the document, known as Schedule A, and data compiled by Bloomberg show that Goldman Sachs underwrote $17.2 billion of the $62.1 billion in CDOs that AIG insured -- more than any other investment bank. Merrill Lynch & Co., now part of Bank of America Corp., created $13.2 billion of the CDOs, and Deutsche Bank AG underwrote $9.5 billion.

These tallies suggest a possible reason why the New York Fed kept so much under wraps, Professor James Cox of Duke University School of Law says: “They may have been trying to shield Goldman -- for Goldman’s sake or out of macro concerns that another investment bank would be at risk.”

Poor Performers

Goldman Sachs spokesman Michael DuVally declined to comment.

Schedule A also makes possible a more complete examination of why AIG collapsed. Joseph Cassano, the former president of the AIG Financial Products unit that sold the swaps, said on a December 2007 conference call that his firm pulled back from selling swaps on U.S. subprime residential CDOs in late 2005. The list shows that the $21.2 billion in CDOs minted after 2005, mostly based on prime and commercial mortgages, performed as badly as or worse than the earlier subprime vintages.

A lawyer for Cassano declined to comment.

As details of the coverup emerge, so does anger at the perceived conflicts. Philip Angelides, chairman of the Financial Crisis Inquiry Commission, at a hearing held by his panel on Jan. 13, questioned how banks could underwrite poisonous securities and then bet against them. “It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars,” he said.

‘Part of the Coverup’

Janet Tavakoli, founder of Tavakoli Structured Finance Inc., a Chicago-based consulting firm, says the New York Fed’s secrecy has helped hide who’s responsible for the worst of the disaster. “The suppression of the details in the list of counterparties was part of the coverup,” she says.

E-mails between Fed and AIG officials that Issa released in January show that the efforts to keep Schedule A under wraps came from the New York Fed. Revelation of the messages contributed to the heated atmosphere at the House hearing.

“What date did you know there was a coverup?” Republican Congressman Brian Bilbray of California demanded of Geithner. Lawmakers used the word coverup more than a dozen times as they peppered Geithner with questions.

Geithner said that he wasn’t involved in matters of disclosure and that his former colleagues did the best they could. In a Jan. 19 statement, the New York Fed said, “AIG at all times remained responsible for complying with its disclosure requirements under the securities laws.”

The government has committed more than $182 billion to AIG and owns almost 80 percent of the company.

Document Withheld

In late November 2008, the insurer was planning to include Schedule A in a regulatory filing -- until a lawyer for the Fed said it wasn’t necessary, according to the e-mails. The document was an attachment to the agreement between AIG and Maiden Lane III, the fund that the Fed established in November 2008 to hold the CDOs after the swap contracts were settled.

AIG paid its counter­parties -- the banks -- the full value of the contracts, after accounting for any collateral that had been posted, and took the devalued CDOs in exchange. As requested by the New York Fed, AIG kept the bank names out of the Dec. 24 filing and edited out a sentence that said they got full payment.

The New York Fed’s January 2010 statement said the sentence was deleted because AIG technically paid slightly less than 100 cents on the dollar.

Paid in Full

Before the New York Fed ordered AIG to pay the banks in full, the company was trying to negotiate to pay off the credit- default swaps at a discount or “haircut.”

By March 2009, responding to a request from Christopher Dodd, chairman of the Senate Committee on Banking, Housing and Urban Affairs, AIG released the names of the counterparty banks. In a filing later that month, AIG included Schedule A, showing bank names while withholding all identification of the underlying CDOs and the amounts of collateral each bank had collected. The document had more than 800 redactions.

In May 2009, AIG again filed Schedule A, this time with about 400 redactions. It revealed that Paris-based Societe Generale got the biggest payout from AIG, or $16.5 billion, followed by Goldman Sachs, which got $14 billion, and then Deutsche Bank and Merrill Lynch. It still kept secret the CDOs’ identification and information that would show performance.

‘Right to Know’

“This is something that belongs in the public domain because it was done with public money,” Issa says. “The public has the right to know what was done with their money and who benefited from it.” Now, thanks to Issa, the list is out, and specific information about AIG’s unraveling can be learned from it.

At the Jan. 27 hearing, the New York Fed was still arguing that the contents of Schedule A shouldn’t be fully disclosed. Thomas Baxter, the New York Fed’s general counsel, testified that divulging the names of the CDOs could erode their value: “We will be hurt because traders in the market will know what we’re holding.”

Tavakoli calls that wrong. With many CDOs, providing more information to the market will give the manager a greater chance of fetching a realistic price, she says.

Jack Gutt, a spokesman for the New York Fed, declined to comment, as did AIG’s Mark Herr.

Bad to Worse

Tavakoli also says that the poor performance of the underlying securities (which are actually specific slices or tranches of CDOs) shows they were toxic in the first place and were probably replenished with bundles of mortgages that were particularly troubled. Managers who oversee CDOs after they are created have discretion in choosing the mortgage bonds used to replenish them.

“The original CDO deals were bad enough,” Tavakoli says. “For some that allow reinvesting or substitution, any reasonable professional would ask why these assets were being traded into the portfolio. The Schedule A shows that we should be investigating these deals.”

Among the CDOs on Schedule A with notional values of more than $1 billion, the worst performer was a tranche identified as Davis Square Funding Ltd.’s DVSQ 2006-6A CP. It was held by Societe Generale, underwritten by Goldman Sachs and managed by TCW Group Inc., a Los Angeles-based unit of SocGen, according to Bloomberg data. It lost 77.7 percent of its value -- though it isn’t in default and continues to pay.

SocGen spokesman James Galvin and TCW spokeswoman Erin Freeman declined to comment.

Documentation Needed

Ed Grebeck, CEO of Tempus Advisors, a global debt market strategy firm in Stamford, Connecticut, agrees that more digging is necessary. “You need all the documentation and more than that, all the e-mails,” he says. “That would allow us to understand what went wrong and how to fix it going forward.”

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, who delivered a report on the AIG bailout in November, says he’s not finished. He has begun a probe of why his office wasn’t provided all of the 250,000 pages of documents, including e-mails and phone logs, that Issa’s committee received from the New York Fed.

Schedule A provides some answers -- and raises questions that need to be tackled to avoid the next expensive bailout.

To contact the reporter on this story: Richard Teitelbaum in New York at

ATTENTION CONGRESS: CLOSE THE LOOPHOLE: Hedge Fund Manager John Paulson Earned $5 Billion In 2010, Paid Only 15% Tax


Last year was very lucrative for some of the biggest and best-performing hedge funds’ chiefs. Wealth was so concentrated that a mere 25 people pocketed a total of $22.07 billion, according to this year’s annual ranking by AR Magazine, which tracks the hedge fund industry. At $50,000 a year, it would take the salaries of 441,400 Americans to match that sum.

Making matters worse, hedge fund managers benefit from preferential tax treatment that middle-income Americans don’t. Due to what’s known as the carried-interest loophole, the income that hedge fund managers receive if their funds make money is treated as capital gains — rather than ordinary income — and gets taxed at the capital gains rate of 15 percent. Even though the pay is performance-based compensation (just like any other performance-based bonus made by any other worker), hedge fund managers receive a tax break on that income.

This results in hedge fund managers paying less in taxes on this income than middle-class workers, who are subject to a 25 percent top marginal tax rate.



New York Times

How Large Will The U.S. National Debt Be In 2015? - Try $1.2 Million Per Taxpayer

We deal with these numbers and issues daily, and still we were smacked in the face by this reality. Click the link below and when it loads, click a 2nd time to expand the infographic to full size.

Presenting The 2015 U.S. National Debt

Offshore Banking and Tax Havens Have Become Heart of Global Economy

As millions of Americans prepare to file their income taxes ahead of Monday’s deadline, we look at how corporations and the wealthy use offshore banks and tax havens to avoid paying taxes and other governmental regulations. "Tax havens have grown so fast in the era of globalization, since the 1970s, that they are now right at the heart of the global economy and are absolutely huge," says our guest, British journalist Nicholas Shaxson. "There are anywhere between $10 and $20 trillion sitting offshore at the moment. Half of world trade is processed in one way or another through tax havens." Shaxson is the author of the new book, Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens. [includes rush transcript]

The Birthplace of the Internet

This is 3420 Boelter Hall in UCLA. Looks cool and decidedly 1970s, right? Long manes, gnarly mustaches and vintage technology cabinets. What were they doing in there? Turns out, this is where the Internet was born.

Whoa, what? Yeah! The first Internet message was sent from a node of the ARPA network (a computer network commissioned by the U.S. Department of Defense) in UCLA to Stanford on October 29, 1969. That ARPA network became what we now know as the Internet making that message the first use of the Internet. And that message was sent inside 3420 Boelter.

But it was long forgotten! Not until Brad Fidler, a history doctoral candidate, researched and investigated pictures did he realize that the "birthplace of the Internet" was a boring 'ol undergraduate classroom. Not anymore though! 3420 Boelter is being restored back to its 1969 roots to become Kleinrock Internet Heritage Site and Archive, a historical site. [3420 Boelter Hall via BoingBoing]


Robert Bobb plans to use new powers to modify union contracts

Robert Bobb: "I fully intend to use the authority that was granted" to emergency financial managers in a new state law.
Robert Bobb: "I fully intend to use the authority that was granted" to emergency financial managers in a new state law. / KIMBERLY P. MITCHELL/DFP

Robert Bobb, the emergency financial manager for Detroit Public Schools, put teachers on notice Thursday that he plans to use his expanded powers under a new state law to modify their contracts.

"I fully intend to use the authority that was granted," Bobb said, referring to a new law that gives emergency managers the authority to modify -- or terminate -- collective bargaining agreements. It was the first time Bobb had publicly indicated he intends to use the expanded authority.

His statement came as the district announced Thursday it is sending layoff notices to all 5,466 members of the Detroit Federation of Teachers and non-renewal notices to 248 administrators. DPS has issued massive layoff notices before, but not to every teacher.

The layoff notices are required under the contract within 60 days of the end of the school year. In recent years, the district has issued large numbers of layoff notices this time of year as it prepares to respond to shrinking enrollment.

The district said it plans to issue notices to its other bargaining units by April 30.

The layoff notices and Bobb's comments drew a sharp response from the DFT.

"If he tries to modify the contract and back-door us on the issue of seniority, we are aptly prepared," said DFT President Keith Johnson, who also will receive a layoff notice. "We have already prepared our legal counter."

During the last contract negotiation in 2009, Bobb wanted the union to give up the seniority process so that administrators could hire or fire teachers regardless of experience. The union balked, but agreed to $90 million in concessions, including teachers deferring $10,000 in pay for two years. That money goes into an account, allowing the district to use it to pay bills, but employees are supposed to get it back when they exit the district.

Carla Henry, a high school special education teacher, said Thursday that teachers already gave up so much in the 2009 contract and she's angry that Bobb is now coming back and saying there will be more changes. She was among those who voted no to that contract.

"I personally feel this was a garbage contract," Henry said. "We were bamboozled. Now, the proof is in the pudding."

Henry said she is disheartened because she believes teachers are under attack across the country.

"We're just being walked all over, when we are the ones who help educate everyone else to get to the positions they're in, including the emergency financial manager. It took a teacher to educate him," she said.

District officials said in their news release Thursday that the layoff and non-renewal notices are a "fiscally responsible" step to trim the workforce to match the district's declining enrollment.

What's unclear is just how many teachers will lose their jobs.

Last April, the district sent layoff notices to 2,000 teachers based on seniority. But by August, most of those notices had been rescinded.

The release also said that "the timeliness of the process allows for ample preparation so that the district can assess staffing needs to create a smooth transition for the start of the school year and ensure all teachers and staff will be in place on the first day so that teaching and learning can begin immediately for students."

Japan's nuclear crisis continues to hit economy

TOKYO — Japan's nuclear crisis sent corporate confidence plunging to a record low in April and the International Monetary Fund (IMF) warned the risk to the world's third largest economy is firmly on the downside, with no end in sight to its nuclear disaster.

Engineers at Japan's crippled nuclear plant, who are struggling to regain control of reactors, are now concerned that some spent fuel rods may have been damaged by the March 11 earthquake and tsunami and could be emitting high levels of radiation.

A Reuters poll released on Thursday found business confidence, which had been recovering, fell back into negative territory for the first time this year, with the gloom spreading through both the manufacturing and service sectors.

The Reuters Tankan survey of 400 large firms found power shortages caused by the crippled Fukushima Daiichi nuclear plant had hit nearly 60 percent of local companies, disrupting production and supply chains.

The disruption to Japan's supply chains has had a global impact, with Sony Corp suspending production and the world's largest automaker Toyota Motor Corp idling plants both locally and in the United States.

The IMF has warned that unless Japan can end its nuclear crisis soon and restore power and production to normal in two to three months, its economy is set for further decline.

"There's very high uncertainty on Japan's outlook," Naoyuki Shinohara, deputy managing director of the International Monetary Fund, told Reuters in an interview on Wednesday.

"If power shortages are prolonged or if the situation at the nuclear plant deteriorates, the outlook will change...the risk is firmly to the downside," he said.

The IMF cut Japan's economic growth forecast to 1.4 percent this year from 1.6 percent, projected three months ago, and the Bank of Japan is expected to cut its January growth forecast of 1.6 percent when it issues its twice-yearly outlook on April 28.

The Japanese government has already cut its outlook for the economy, in deflation for almost 15 years.

Japan is struggling to cope with its worst crisis since World War Two, after the earthquake and 15-meter tsunami hit on March 11, leaving 28,000 people dead or missing, its northeast coast a splintered wreck and a nuclear plant with six reactors damaged.

The total cost of the triple disaster has been estimated at $300 billion, making it the world's most costly natural disaster.

The Nikkei business newspaper reported on Thursday that Japan and the United States were considering establishing a "reconstruction fund" with corporate investment from both nations. The Nikkei said an agreement on the fund was expected when U.S. Secretary of State Hilary Clinton visits Japan on April 17.

Damaged nuclear fuel rods

Japan's nuclear crisis has been rated on par with the world's worst nuclear crisis at Chernobyl in 1986, although the total amount of radiation released is only a fraction of that when the nuclear plant in Ukraine exploded.

Japan has expanded the 20 km (12 miles) evacuation zone around the plant because of high accumulated radiation. No radiation-linked deaths have been reported and only 21 plant workers have been affected by minor radiation sickness.

A series of strong aftershocks this week has rattled eastern Japan, slowing the recovery effort at the Fukushima Daiichi plant due to temporary evacuations of workers and power outages.

Japan's Nuclear and Industrial Safety Agency (NISA) has asked the plant operator to assess the quake resistance of the damaged reactor buildings, and to look into how they could be reinforced against aftershocks.

With the plant's internal cooling system damaged, engineers are struggling to cool overheated fuel rods, both inside reactors and in storage pools on reactor roofs, and are pumping water onto the rods.

Some spent fuel rods stored at a pool at Daiichi's No.4 reactor may be damaged and could be emitting high levels of radiation, said the Tokyo Electric Power Co (TEPCO) .

However, TEPCO said the majority of the roughly 1,300 spent fuel rods at the No.4 reactor are presumed to be undamaged.

NISA said radiation above the spent fuel rod pool at No. 4 reactor was measured at 84 millisieverts per hour on Tuesday, compared with a normal level of 0.1 microsieverts.

But TEPCO was unsure whether the higher radiation was from the pool containing the used fuel rods or from a leak in the actual reactor. Further water sampling of the pool will determine whether the rods are damaged and emitting the radiation.

Spent fuel rods take several years to cool down and need to be kept submerged in water. TEPCO is planning to move the spent fuel rods from the damaged reactors although they are yet to work out the details.

The strategy of hosing reactors to keep the rods cool has left some 60,000 tonnes of radioactive water on site, hindering access to the reactors and forcing workers to pump contaminated water into the sea due to a lack of storage.

The pumping of radioactive water stopped on Monday but has heightened tensions with neighbors China and South Korea.

Japan's nuclear safety agency said the latest tests showed radiation nearly doubled last week, to 23 times above legal limits, in the sea off Minamisoma city near the plant.

TEPCO's beleaguered president, Masataka Shimizu, said on Wednesday that TEPCO was still formulating a blueprint on how to end the nuclear crisis, almost five weeks since it started, but that the situation at the Daiichi plant had stabilized.

He also said TEPCO was working on a compensation plan.

The Yomiuri newspaper reported on Wednesday that the government may cap TEPCO's liability to as little as $24 billion for damages. Bank of America-Merrill Lynch has estimated compensation claims of more than $130 billion. — Reuters

Peter Schiff: Obama's Spending Cuts Won't Work

Taxman -- George Harrison and Eric Clapton (live)

Republicans will make US a 'Third World' country: Obama

© AFP/Getty Images Scott Olson

CHICAGO (AFP) - US President Barack Obama accused his Republican foes of wanting to turn the United States into a "Third World" country Thursday as he rallied support for his reelection campaign.

The attack came a day after Obama savaged Republican budget plans and unveiled his $4 trillion deficit reduction drive that aims to raise taxes on the wealthiest Americans in order to preserve key social services.

The debate over fiscal policy will prove critical to the 2012 campaign, and Obama sought to frame it as a "stark choice" between investing in the future or watching the country fall apart.

"Under their vision, we can't invest in roads and bridges and broadband and high-speed rail," Obama told a select group of the Democratic faithful at the second of three fundraising events in his hometown of Chicago.

"I mean, we would be a nation of potholes, and our airports would be worse than places that we thought -- that we used to call the Third World, but who are now investing in infrastructure."

Republican plans to shrink the reach of government is "not a vision that's impelled by the numbers" but a "choice" to give a trillion dollars in tax breaks to the rich rather than ask those who have been "blessed" to "give a little more," he said.

Obama said his vision was one of an ambitious, compassionate and caring America "where we're living within our means but we're still investing in our future."

"If we apply some practical common sense to this, we can solve our fiscal challenges and still have the America that we believe in," Obama told supporters at Chicago's N9NE restaurant.

"That's what this budget debate is going to be about. And that's what the 2012 campaign is going to be about."

The events in Chicago were Obama's first fundraisers since he officially launched his bid for a second term on April 4 and were expected to raise about two million dollars (1.4 million euros).

Analysts predict Obama -- who raised a record $750 million ahead of the 2008 election -- will build a billion-dollar war chest this time around.

But money won't be enough to win, senior advisor and 2008 campaign manager David Plouffe told a crowd of 2,300 supporters gathered in a ballroom at Navy Pier ahead of Obama's speech.

"If only the people who normally vote in presidential elections vote in this election it will be too close," Plouffe said as he urged supporters to get more people involved in the campaign.

"You've got to get these people to get involved and to vote so we can make sure that we succeed in this election."

Obama established his 2012 campaign headquarters in Chicago, the first time a presidential reelection campaign was not based in Washington.

He said the campaign wanted to be "rooted in your hopes and rooted in your dreams" instead of influenced by Washington pundits and powerbrokers.

Obama reminded the cheering crowd of the sense of hope and possibility they felt when they celebrated his election as the first African-American US president in Chicago's Grant Park.

"And yet, even as we celebrated -- you remember what I said back then? I said our work wasn't ending, our work was just beginning," Obama said.

"We've still got business to do. We are not finished.

"We've got to reclaim the American dream for all Americans. That's the change we still believe in," the US leader added.

"We took office in the middle of the worst recession in our lifetimes," Obama reminded supporters. The recession, he said, was "so bad that many families are still grappling with the aftershocks, even though the economy is growing again."

Barring a dramatic turn, no major adversary from within his party is likely to challenge Obama, who turns 50 in August.

As for who might run against him from the Republican Party's ranks, uncertainty reigns.

Former Minnesota governor Tim Pawlenty and former Massachusetts governor Mitt Romney have taken the first official steps toward candidacy, while conservative former House speaker Newt Gingrich and even real estate mogul Donald Trump have hinted at mounting bids for the Republican nomination.

In less than a month, the 64-year-old Trump has jumped from 10 to 19 percent support among Republican voters, tying with former Arkansas governor Mike Huckabee, according to a CNN poll released this week.

Republican officials worry that the crowded field of possible White House hopefuls could end up helping Obama, who could be vulnerable as the US economy limps out of its worst downturn since the Great Depression of the 1930s.

© AFP -- Published at Activist Post with license

True News: The Insanity of 'Budget Cutting' -

Goldman Sachs Credit-Default Swaps Jump as Levin Claims Bank Duped Clients

The cost to protect debt issued by Goldman Sachs Group Inc. (GS) jumped to a one-month high after the chairman of the Senate panel that investigated the financial crisis said the bank misled clients and Congress about investments in securities tied to mortgages.

Credit-default swaps on the New York-based company climbed 5.6 basis points to 116.9 basis points at 8:50 a.m. in New York, according to data provider CMA. That’s the highest level since 118.1 basis points on March 17.

Senator Carl Levin said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought collateralized debt obligations without knowing the firm was betting they would fall in value.

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The Goldman Sachs Hearings: 7 Cantankerous Hours Securitized Into A 5 Minute Super Clip (Comedy)

Investing Strategies During Chaos

“Often we will divert from sound investment strategies, based more on a longterm approach, and we start knee-jerk reacting to sound-bytes that we hear, either to jump into something or to avoid something completely,” said investment analyst, Mark Robinson.

Robinson said there are questions all potential investors need to consider.

“What am I attempting to accomplish? How much time do I have? How much risk? Do I have any tactical or theme-based convictions? And, after we’ve arrived at all the, what stuff do I wanna by?”

Certified Financial Planner Caterina deFalco said it’s important to get rid of your debt before investing.

“Pay off your debt, first; establish an emergency fund, second. Then you can start your investment strategy. Definitely having money set aside in a savings account, in my opinion, is priority to beginning your investment strategy,”

Obamanomics: Waging War on American Workers

Since taking office, Obama shamelessly betrayed his constituents by:

-- ignoring popular needs during America's greatest economic crisis since the Great Depression;

-- giving Wall Street crooks trillions of taxpayer dollars;

-- spending another $1.5 trillion annually on militarism, imperial wars, and related policies at a time America has no enemies;

-- waging war on organized labor and public education, as well as civil and human rights; and

-- claiming "tough choices" demand class warfare through neoliberal austerity for working Americans, mainly middle and lower income ones least able to afford it.

On April 13, he announced his latest plan through $4 trillion in largely social spending budget cuts over the next 12 years. More on them below.

The same day, New York Times writers Mark Landler and Michael Shear headlined, "Obama's Debt Plan Sets Stage for Long Battle Over Spending," saying:

Obama's Wednesday George Washington University speech "propos(ed) a mix of long-term spending cuts, tax increases, and changes to social welfare programs," omitting that they harm working Americans most.

A Times editorial headlined, "President Obama, Reinvigorated," saying:

"The man America elected president has re-emerged." His budget speech "was a reasonable basis for a conversation and is far better than its most prominent competitors. That is because it is grounded in themes of generosity and responsibility....(I)t was a relief to see Mr. Obama standing up for the values that got him to the table."

These aren't surprising comments from a broadsheet long associated with wealth and power interests, now pretending hammering working Americans is fair and just.

A supportive Washington Post editorial headlined, "President Obama's deficit plan: Benefits and drawbacks," saying:

Obama "made an important and welcome contribution to the debate over deficit reduction Wednesday...(S)orely needed presidential engagement on the nation's fiscal crisis has arrived at last."

A Wall Street Journal editorial, however, called Obama "The Presidential Divider," saying:

His speech was "toxic," "dishonest," (and) even worse (for) deficits and debt" by not matching Rep. Ryan's (R. WI) slash and burn plan even more draconian that his own - "in the midst of a fiscal crisis" both parties refuse to address responsibly, nor do major media reports, op-eds, and editorials explain it.

In fact, Obama largely embraces plans proposed by Republicans and his own deficit cutting commission, offering a different mix for the same purpose - protecting America's super-rich while hammering working Americans through "shared sacrifice."

In other words, middle and low income households "sacrifice" to let wealthy ones "share," his agenda since day one in office.

For example, his proposed tax increase plan is a sham, knowing Republicans won't agree. Moreover, since taking office, he broke every major campaign pledge, and twice, since December alone, capitulated to Republicans on taxes and spending:

-- last December, with Democrats controlling both Houses, by extending Bush's tax cuts to the rich after promising to end them; and

-- in April, agreeing to $38 billion in largely vital social services cuts after promising to preserve them, rationalized by arguing for "a willingness to give on both sides."

Representing wealth and power, his promises are empty. His April 8 budget deal includes significant social spending cuts including:

-- $3.5 billion from Children's Health Insurance Program (CHIP) funding;

-- $2.2 billion from nonprofit health insurance cooperatives;

-- $600 million from community healthcare centers;

-- $1 billion from HIV/AIDS, tuberculosis, and other disease prevention programs;

-- $1.6 billion from EPA's clean/safe drinking water and other projects;

-- $950 million from community development grants;

-- $504 million from nutrition aid for poor Women, Infants, and Children (WIC);

-- $500 million from education programs;

-- $390 million from home heating subsidies to the poor, as well as $2.5 billion for the Low Income Energy Assistance Program (LIHEAP) announced in February;

-- $350 million from labor programs, including grants for community service jobs for seniors;

-- other social service cuts;

-- $786 million from FEMA first-responder funding;

-- $407 million from energy efficiency and renewable energy programs;

-- $260 million from National Institutes of Health (NIH) medical research;

-- $127 million from the National Park Service; and

-- billions less for public infrastructure and transportation spending, while increasing war appropriations by multiples more, including for conquering and controlling Libya.

Moreover, Obama agreed to more draconian FY 2012 cuts and corporate tax breaks as part of a deal to raise the debt ceiling before its limit is reached in mid-May. Appearing on NBC's Meet the Press April 10, senior White House advisor David Plouffe said he'd consider new austerity measures to raise the debt ceiling and reduce the deficit - an oxymoronic compromise, especially with unlimited defense spending and generous corporate handouts instead of major reductions.

Obama Proposes Draconian Cuts on Working Americans

According to White, Obama's plan over 12 years includes:

-- $4 trillion overall;

-- $770 billion from education, environmental, transportation, and other infrastructure cuts, as well as lower wages and benefits for federal workers when they need more, not less;

-- $480 billion from Medicare and Medicaid, besides another $1 trillion from Obamacare;

-- $360 billion from mandated domestic programs, including food stamps, home heating assistance, income for the poor and disabled, federal pension insurance, and farm subsidies;

-- $400 billion from military-related spending from unneeded weapons, as well as healthcare and other benefits for active service members and veterans - not priority items the Pentagon and war profiteers want to protect generous annual defense spending increases and supplemental add-ons, plus black-hole black budgets for intelligence and other nefarious purposes.

Like all his demagoguery, Obama hypocrically stressed we're broke and have to make shared sacrifices, suppressing how he's served wealth and power interests at the expense of working Americans during the greatest economic crisis since the Great Depression.

The times demand stimulus, job creation, help for the working poor and unemployed, and much more, including:

-- programs to prevent banks from foreclosing on homeowners they defrauded;

-- slashing defense spending;

-- ending imperial wars and occupations;

-- using the funds for vital domestic programs;

-- breaking up the too-big-to-fail banks; prosecuting their officials guilty of grand theft;

-- reinvigorating public education;

-- strengthening Social Security, Medicare and Medicaid, as well as assuring universal healthcare;

-- guaranteeing every qualified student affordable higher education;

-- supporting organized labor;

-- instituting tough regulations to end monopoly and oligopoly power, punish corporate theft, curb speculation, end subsidies, and assure they all pay their fair share in taxes;

-- replacing today's dysfunctional tax system with a progressive one, making the rich share the burden they now avoid;

-- making social justice issue one at a time none exists, Democrats as mean-spirited as Republicans; and

-- instituting real government of, by and for the people, what's never existed and doesn't now under corrupted duopoly governance, ignoring people needs to serve Wall Street, war profiteers, and other corporate favorites.

The alternative assures greater militarism, social inequality and decay, growing poverty, eroding freedoms, police state harshness, and overall conditions too dire to imagine because public apathy let elected officials do nothing to change things.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen [at] Also visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

BRICS Rails at Financial Status Quo

President Dmitry Medvedev and other BRICS leaders called for sweeping reforms of international financial mechanisms, hinted at displacing the U.S. dollar as the world's major trade currency and condemned the NATO bombing of Libya at a summit of leading emerging economies in China on Thursday, but there were few actions to match the words.

Speaking at the summit of Brazil, Russia, India, China and South Africa in Sanya, China, Medvedev said he and his Chinese counterpart Hu Jintao had "agreed to intensify work on the eastern and western gas supply routes before the end of the year" during a bilateral meeting earlier in the day.

"We are talking about this year, I mean the basic conditions for approval. Naturally, the deliveries will begin later," he told reporters, adding that, although each side would push its own business interests in price negotiations, positions had generally moved closer.

China is a growing foreign policy priority for Russia. It is the world's biggest energy consumer and became Russia's main trading partner last year.

Medvedev promised during a visit to Beijing in September to supply China with all the gas it needs for economic development.

In 2009, China extended a $25 billion preferential-rate loan to Rosneft and Transneft in exchange for a 20-year oil supply contract.

Medvedev will go on an extended visit to China, following the BRICS meeting, with an appearance at China's Boao Forum and a visit to Hong Kong on Saturday.

Although the BRICS forum had criticized the world's reliance on the U.S. dollar, Medvedev played down speculation that the five countries might adopt the Chinese yuan as a trade currency.

"Of course, the Chinese economy is huge, and in this sense the role of the yuan is growing, but we haven't made any special decisions regarding the yuan, nor are they being discussed," he told reporters.
Earlier Thursday, the five countries signed a memorandum on cooperation among their national financial development institutions that paves the way for the countries to grant one another loans in their national currencies.

Vladimir Dmitriyev, head of Vneshekonombank, told Interfax that the document marked "the first practical step toward using national currencies in economic cooperation between these countries."
China Development Bank was the first institution to take advantage of the new measures, saying it was ready to extend 10 billion yuan in loans to Brazil, Russia, India and South Africa.

The loans are expected to focus on large oil and natural gas projects. China Development Bank chief Chen Yuan cited deepening cooperation with Brazil's Petro Bas when asked for specifics, Reuters reported.

No specific deals relating to Russian companies have emerged so far.

Medvedev also held bilateral meetings with Hu, Brazilian President Dilma Rousseff, Indian Prime Minister Manmohan Singh and South African President Jacob Zuma during the meeting.

Thursday's was the first summit since South Africa joined the club of emerging economies, prompting Medvedev to make a flat joke.

"I don't know who came up with the BRIC abbreviation … but we've come up with a different acronym, and it has already become quite popular."

"After the accession of South Africa, the Russian abbreviation BRYuKI emerged," Medvedev told reporters in Sanya, China. Bryuki means "pants" in Russian.

It may have been a weak joke, but he was right to say the group has changed.

BRIC — Brazil, Russia, India and China — was born as an acronym thought up by Goldman Sachs economist Jim O'Neill as shorthand for the world's leading emerging markets.

But it has become a club for countries — including now South Africa — with a common interest in turning their growing economic strength into political clout on the world stage.

All five are currently members of the UN Security Council.

In this spirit, the five issued a joint statement calling for an overhaul of the international financial system and reform of the International Monetary Fund, criticizing dependence on traditional reserve currencies like the U.S. dollar and condemning NATO-led air strikes against Libya.

"This is not a format where countries decide things; it is much more about showing the emergence of new structures as opposed to old organizations," said Fyodor Lukyanov, editor-in-chief of Russia in Global Affairs.

Nonetheless, there are differences in the group.

In the March 17 Security Council vote authorizing military action in Libya, Brazil, Russia, India and China abstained. South Africa voted in favor, along with other African Union countries.

Banks Face $3.6 Trillion 'Wall' of Debt: IMF

The world's banks face a $3.6 trillion "wall of maturing debt" in the next two years

and must compete with debt-laden governments to secure financing, the IMF warned on Wednesday.

Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

The debt rollover requirements are most acute for Irish and German banks, with as much as half of their outstanding debt coming due over the next two years, the fund said.

"These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources," the IMF said.

Overall, the IMF said global financial stability has improved over the past six months.

The most pressing challenges in the coming months will be funding of banks and sovereigns, particularly in vulnerable euro area countries, it said.

The IMF and European Union bailed out Greece and Ireland, and are in talks with Portugal on a lending program as sovereign borrowing costs surge.

Many investors have questioned whether Spain can avoid a similar fate, but the IMF said Spanish authorities were taking the right steps to address the country's debt problems.

"The actions that have been taken in Spain recently have managed to decouple, in the views of markets, the fortunes of Spain relative to those of Portugal" and Ireland, said Jose Vinals, director of the IMF's Monetary and Capital Markets Department.

European banks hold large amounts of euro zone sovereign debt, making them vulnerable to losses if countries are forced to restructure.

Vinals said lending programs in Greece and Ireland were built on the assumption there would be no such restructuring, and the programs needed time to work.

Still, worries about bad debt exposure have heightened investor concerns about bank balance sheets, making it even more important for firms to shore up their capital.

US banks built up capital buffers in 2009, when regulators completed a set of stress tests that revealed some large holes.

But European banks still need to raise a "significant amount of capital" to regain access to funding markets, the fund said.

"It is ... imperative that weak banks raise capital to avoid a pernicious cycle of deleveraging, weak credit growth, and falling asset prices," it warned.

Living Dangerously

The European Central Bank's upcoming stress tests provide a "golden opportunity" to improve bank balance sheet transparency and reduce market uncertainty about the quality of assets on banks' books, the IMF said.

European banks won't be able to obtain all the necessary capital from markets, and public money may have to fill some of the gaps, it added.

Banks could also cut dividends and retain a larger portion of earnings.

"Overall, a comprehensive set of policies -- including capital-raising, restructuring and where necessary resolution of weak banks, and increased transparency about banking risks -- is needed to solve banking system vulnerabilities," it said.

"Without these reforms, downside risks will re-emerge." The IMF said banks' exposure to troubled sovereign debt is "uncertain," which adds to the funding strains.

It said government debt was generally high and on a worrying upward path in many advanced economies.

It repeated its warning that the United States and Japan faced particularly dangerous debt dynamics.
Advanced economies were "living dangerously" with high debt burdens, and faced the difficult task of trying to pare deficits without choking off the economic recovery.

The fund said government interest bills would likely rise, although the burden should generally remain manageable provided countries proceed with deficit reduction plans.

For 2011, Japan and the United States face the largest public debt rollovers of any advanced economy at 56 percent and 29 percent of gross domestic product, respectively.

"While the United States and Japan continue to benefit from low current (borrowing) rates, both are very sensitive to a potential rise in funding costs," it said.