Tuesday, January 22, 2013

The Trans-Pacific Slam Job

Scott Tips, JD, Green Med Info
Waking Times
Do you remember when the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA) were proposed and passed? (Well, CAFTA didn’t really pass, except through legislative trickery.) Promises were made about the abundant benefits that would fall into the laps of its signatories, but especially into the lap of the United States. None of those promises were ever kept, except to the large corporations in partnership with their government concubines.
And “Free Trade” as a name in those agreements’ titles? That was a misnomer if there ever was one. Those incredibly lengthy documents were all about “Managed Trade” and not the free market. If they had truly been about free trade, then it would have taken one-page, maybe two (for the signatures) to set forth the parties’ agreement: “All tariffs and trade barriers between and among the signatory parties are hereby eliminated.” So, the Agreements are nothing but a costly joke and a way to usher into our lives a soul-numbing harmonization that already is reducing our freedoms into dim memories and pat slogans of patriotism.
Now arrives yet another insult to our freedoms – the Trans-Pacific Partnership, which some are already describing as “NAFTA on steroids.” The TPP, as it is called, is a very-secretive, multi-national trade agreement currently being negotiated among eleven different Pacific-Rim countries and pushed by both Republicans and Democrats. In its fourteenth round of negotiations – which just finished in Leesburg, Virginia, as you read these words – the parties hope to make wide-ranging changes to all parties’ laws, rules, and regulations. (See http://www.ustr.gov/tpp)
Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, the United States, and recent newcomers Mexico and Canada (since June 2012) are the negotiating partners. China is a noticeable absence, but the office of the United States Trade Representative has announced that it hopes that 40% of the World’s population will eventually be covered by this Agreement. In the same way that the European Union sprang from the loins of the European Economic Community (another free-trade partnership), I see the TPP as the real debut of the global World Government for which some have been so fervently working.

Secrecy Par Excellence

The TPP is so secretive that even Senator Ron Wyden, chairman of the Senate committee charged with jurisdiction over “trade” agreements like the TPP, has been blocked from reviewing the United States’ own negotiating proposals. Yet, 600 corporate representatives – excuse me, lobbyists – have full access to TPP documents and a special role in negotiations for the United States, let alone all of those other lobbyists acting with the other participating countries.
When you consider that even the World Trade Organization allows its own negotiating texts to be issued to the public, this secrecy is rather strange. Stranger still is that the parties to the TPP have agreed that they will not make public any of their negotiating texts until four years after the deal has been concluded or abandoned!
Couple this secrecy with the feeble coverage by the mainstream press and you have the typical recipe for disastrous surprises for the citizens of these eleven countries as their own laws and customs are overturned.

Here’s the Rub

So what will this “trade” agreement do? Well, since it is so secret, we don’t really know the full extent of what good or harm it will do. But, some parts of the texts have leaked out and they are not pretty.
There are 26 chapters to the Agreement; but, unsurprisingly, only two of them deal with trade matters. The rest – the 24 other chapters – are a wish-list of the Elite. So, calling this Agreement a “trade agreement” is like calling an automobile a radio. As Lori Wallach wrote in her article, “NAFTA on Steroids,” “Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny.”
From what we do know, the TPP threatens to extend restrictive intellectual property laws into its partner countries and rewrite international rules for their enforcement. Leaked drafts of the Agreement reveal the negotiators’ plans to limit freedom of speech, right to privacy and due process, as well as cripple individuals’ abilities to innovate. This includes making copyright infringement a criminal offense! (See the February 2011 draft Chapter on Intellectual-Property Rights at http://keionline.org/sites/default/files/tpp-10feb2011-us-text-ipr-chapter.pdf)

And according to Médecins Sans Frontières (Doctors Without Borders), “the U.S. is asking countries to create new, enhanced and longer patent and data monopoly protections for multinational pharmaceutical companies so they can keep competitors out of the market and charge higher prices for longer.” Again, texts are not fully available, so we cannot confirm all of these statements.
Yet, it is clear that in another chapter of the agreement, an expansion of NAFTA’s nasty corporate tribunals is planned. These tribunals have been used under NAFTA to adjudicate “trade” disputes and strike down public-interest legislation. TPP would create a three-person tribunal of attorneys to adjudicate legal disputes concerning governmental laws, rules, and regulations that do not comply with the terms of the TPP. And in an amazing conflict of interest, these very same attorney-judges would be permitted to switch sides in other cases and represent the plaintiff corporations!
It is guaranteed that in this Agreement there are other outrageous intrusions upon our substantive and procedural freedoms, ready to be sprung at the appropriate time. Fortunately, although the United States and other countries are in a strong push to complete this Agreement, it has not yet been finalized. This is mainly because of Australia’s objections to TPP’s faux-court system and New Zealand’s complaints about the overriding of its own drug-pricing policies.

What Can Be Done

If we wait until after the Agreement is signed, then the likelihood of any of us being able to change the Agreement will be next to nothing. And if the passage of NAFTA and CAFTA is any indicator of the future, then we can surely expect more lies, threats, and outright chicanery when the TPP comes up for a vote. Still, spreading the word about the Trans-Pacific Partnership is imperative, as is contacting your Federal legislators to demand accountability. The more light that is shined on the TPP and the more of a stink that is made about it, the better the chances that it will be exposed as the fraud it is and defeated.
Some clever people have even offered a reward for the full negotiating text of the TPP. (See http://salsa.democracyinaction.org/o/1439/content_item/freetpp) That is a good start, which I fully support. We need all of the action that we can muster on this assault, because this time they are going for the golden ring – the golden ring that is intended for our noses and with which they expect to lead us around. We cannot allow that to ever happen.

NY town defends Remington factory amid new gun ban

Chron – by MICHAEL HILL, Associated Press
ILION, N.Y. (AP) — The big brick Remington gun factory pieces together military-style rifles in a state that has just banned their sale after a string of mass shootings led to a national outcry over civilian ownership of them.
Residents of Ilion see the issue far differently: The gun factory is a major local employer and a source of pride for almost two centuries.

As Mayor John Stephens put it, “Remington is Ilion. Ilion is Remington.”
Little wonder that residents in this blue-collar stretch of the Mohawk Valley are defending Remington after state lawmakers banned the sale of semi-automatic rifles like the Bushmaster weapon made there. The move came after the weapon was linked to gunmen in the deadly Connecticut school shooting and in the Christmas Eve slayings of two firefighters in western New York.
Remington employee Tom Bradle said don’t blame the guns in mass shootings, blame the shooters.
“It’s the person that pulls the trigger. I don’t care what kind of gun it is,” Bradle said as he walked back to the factory from lunch break on a chilly, gray day recently.
Chad Delmedico, who works on Remington’s Model 700 bolt-action rifle, said it more simply: “We have a bum rap.”
Remington has been intertwined with Ilion since shortly after Eliphalet Remington crafted a flintlock rifle on his father’s forge in 1816. Even the elementary school shares the company’s name. Company officials did not respond to calls seeking comment, but locals say the factory employs about 1,200 people and produces Bushmaster, Marlin and H&R products.
Parts of the Remington Arms Co. factory, with its imposing four-story front of brick and old-style, multi-paned windows, date back to the days when upstate New York was a manufacturing powerhouse. But factory jobs have become rarer in the string of modest towns along the Mohawk River, and Ilion, with about 8,000 residents, depends heavily on Remington.
Stephens, the mayor, was disgusted by the news last month of 20 first-graders and six adults killed by a gunman at Sandy Hook Elementary School in Newtown, Conn. But he is critical of the New York state law approved last week banning certain semi-automatic rifles and large-capacity magazines and calling for background checks on ammunition purchases, among other measures. He dismisses the idea that there’s an emotional link between Newtown and Ilion.
“Are people disappointed and distraught?” Stephens asked. “Do they feel bad and are they sad? Absolutely! Absolutely! I would never wish that on anyone, never. But as far as an emotional attachment between us and them, I don’t see it.”
Stephens voiced a sentiment heard frequently in this largely conservative area: New York’s law and the sweeping gun regulation package proposed recently by President Barack Obama are wrongheaded.
The New York law, starting when Gov. Andrew Cuomo signed it Jan. 15, defined as illegal assault weapons semi-automatic rifles that accept detachable magazines and have one additional military-style feature such as a pistol grip, flash suppressor or bayonet mount. The old law required two such features.
At the State Bowling Center next to the Remington factory, Rod Brown said the weapon that the Newtown gunman used could easily have been a Smith & Wesson or a Browning instead of a Bushmaster model.
Kelley Holmes-Morton in her salon, Heads-R-Turning, said she is a National Rifle Association member who believes gun makers are not to blame. And Betty Watkins said as she pumped gas that the Second Amendment, about people’s right to bear arms, is being “pushed around and misused.”
Robbi Breit at the Sellers Avenue consignment shop seemed more conflicted than others in Ilion but still feels that closing Remington won’t end gun violence.
“I cried my heart out” after Sandy Hook, she said. “I’m torn between both sides. But you can get another job. You can’t get another kid.”
Bushmaster is owned by Freedom Group Inc., the largest firearms maker in the U.S., which has its headquarters on Remington Drive outside the neighboring small towns of Madison and Mayodan, N.C.
No guns or ammunition are manufactured there. Most people around know the 43,000-square-foot building near the high school and the Walmart as the home of Remington Arms, which moved to the site in the mid-1990s, and not the weapons conglomerate Freedom Group has become, said Mayodan Town Manager Michael Brandt.
“They’re not big contributors to the community like a typical large company would be in an area,” Brandt said. “This is where they’re located, but we don’t really see much of them.”
Word that Freedom Group is for sale and changes are looming has generated little local concern in an area where surviving textile producers and a Miller-Coors brewery are bigger employers, said Sharon Chirichella, who runs a temporary staffing agency and is an officer with the local chamber of commerce.
That contrasts with Ilion, where the concern among people is the future of Remington. The company had said last March it could leave New York if the state went ahead with a move to add unique identifying information on spent bullet casings. That proposal is off the table, but people in town wonder where things stand in the wake of the new state law, which does not affect Remington’s ability to manufacture military-style weapons.
“If I’m an executive at Remington, what’s my attitude going to be toward the state that bans one of the premier products that I produce?” local Assemblyman Marc Butler asked.
Obama’s gun control proposal added more uncertainty. Jamie Rudwall, who has worked at the plant since 1995 and is president of the United Mine Workers of America Local 717, said he expected the gun business to increase in the short term amid new regulatory proposals, but he worries about jobs in Ilion long term.
“We’ve been here almost 200 years,” he said. “I hope to be here another 200.”

James Turk: "Germany's Gold Is Being Held Hostage By The Fed"

Smoke and mirrors.  The Fed doesn't have the gold.
Highlight from James Turk's interview Saturday with King World News.
“It’s quite clear that the German gold is being held hostage.  They are not getting what they want.  They are getting what the Federal Reserve is telling them they can have.  The fact that they are doing it over 7 years rather than 7 weeks, is just an indication that gold probably isn’t in the Federal Reserve, and the Federal Reserve doesn’t want to have to go out and buy it overnight to fulfill the German demand.  They are trying to stretch it out as long as possible in order to keep gold prices controlled.”
“I mean you can do 5 tons at a time on an airplane shipment. A few hundred shipments and you can have that (1,536 tons of) gold back (in Germany) in a matter of weeks. The only possible conclusion you can make is the gold isn’t there.
You can do what France did back in the 1960s....
“You send over a couple of ships and bring the gold back to your country that way.
When Charles de Gaulle asked for his gold out of the Federal Reserve back in 1962, it didn’t take 7 years. He got it right away. But back then the gold was in the Federal Reserve because it wasn’t going out in the leasing and lending program that governments have been using in recent years in order to keep the gold price suppressed.
It will be interesting to see whether this leads to other central banks also asking for their physical gold.  And more importantly, since there are so many paper (claims on gold) in the various gold ETFs around the world, it will be interesting to see whether the institutional investors are starting to recognize what the central banks are doing, and take some of that GLD and all of the other ETF paper and start saying, ‘Look, I don’t want shares, I actually want ounces.  Deliver me the physical metal.’
Continue reading...
More Detail
German Gold Storage In The Year 2020
The German central bank is planning a “phased relocation” of 300 tonnes (metric tons) of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The reserves should end up looking like this:
  • Frankfurt (31%, currently) 50% by Dec. 31, 2020
  • New York (45%, currently) 37% by Dec. 31, 2020
  • London 13% no change
  • Paris (11%, currently) 0% by Dec. 31, 2020
Funny stuff:
This just in from the Onion...Geithner is pissed.

GOLDMAN BONUS WATCH: Blankfein Gets $13.4 Million


Lloyd celebrates.
Gary Cohn and outgoing CFO David Viniar both snagged more than $12 million in bonus.
Jan. 18 (Bloomberg) -- Goldman Sachs granted CEO Lloyd Blankfein a $13.4 million stock bonus for 2012, up 90 percent from last year, as the bank’s shares were up 40% in 2012.

Photos by William Banzai7...

The Swiss turn on the super-rich

(Reuters) - In February 2008, Thomas Minder, a Swiss businessman whose family-owned company is best known for its old-fashioned herbal toothpaste, attacked his banker, UBS Chairman Marcel Ospel, as if he were a form of stubborn plaque. At a shareholders' meeting in Basel, he stormed the podium as Ospel addressed the crowd. Ospel's bodyguards grappled with Minder and wrestled him away before he could land his symbolic blow — he was trying to hand the embattled head of Switzerland's largest bank a bound copy of Swiss company law, which codifies corporate temperance.
"Gentlemen, you are responsible for the biggest write-downs in Swiss corporate history," Minder had railed just a few minutes before, referring to UBS's loss of $50 billion during the subprime meltdown that prompted it to seek a government bailout. "Put an end to the Americanization of UBS corporate philosophy!"
The bodyguards marched Minder out of the hall amid a chorus of boos and jeers. Two months later, Ospel was gone, taking the fall for UBS's recklessness, but Minder's campaign against big bonuses had only just begun; shortly after Ospel was ousted, Minder filed the 100,000 signatures needed to launch a referendum to impose some of the tightest controls on executive compensation in the world.
Of the top 100 Swiss companies, 49 give shareholders a consulting vote on the pay of executives. A few other countries, including the United States and Germany, have introduced advisory "say on pay" votes in response to the anger over inequality and corporate excess that drove the Occupy Wall Street movement. Britain is also planning to implement rules in late 2013 that will give shareholders a binding vote on pay and "exit payments" at least every three years. Minder's initiative goes further, forcing all listed companies to have binding votes on compensation for company managers and directors, and ban golden handshakes and parachutes. It would also ban bonus payments to managers if their companies are taken over, and impose severe penalties — including possible jail sentences and fines — for breaches of these new rules.
Despite strong opposition from the business elite, Minder's initiative is given a good chance of passing when it goes to a vote on March 2. Even if his referendum fails, the country will automatically adopt a counterproposal put forward by parliament that would compel companies to hold votes on executive pay, although the results would not be binding.
This is a stunning turn of events for the land of secret bank accounts and carefully calibrated neutrality. Even though most Swiss enjoy a very high standard of living, Minder's campaign has struck a chord in a proudly egalitarian country increasingly unhappy with a growing class of super-rich unafraid to flaunt their wealth. Combine that with an undercurrent of xenophobia — many of the top-paid executives in Switzerland are foreigners — and you have a volatile mix. In another sign of discontent, parts of the country are also considering scrapping the tax breaks that have lured wealthy foreigners such as Formula One driver Michael Schumacher, pop stars Phil Collins and Tina Turner, and Switzerland's richest man, Ingvar Kamprad, the Swedish founder of Ikea. "There is severe inequality that one really senses, even if there is no abject poverty in Switzerland," says economist Hans Kissling, former head of the Zurich statistics office, who has written a book warning that the growing influence of the super-rich carries the risk of turning Switzerland into a feudal state by undermining a tradition of direct democracy that dates back to the Middle Ages.
Statistics say the Swiss are the richest people in the world, with net financial assets of nearly $148,000 per capita. That is a third more than the average for the next two wealthiest nations—Japan and the United States. And when it comes to distribution of income, Switzerland is one of the most equal societies.
But the ownership of that wealth, including stocks or physical assets such as land and housing, is much more unequally shared in the nation, as is the trend elsewhere. The top 1 percent in Switzerland control more than a third of the nation's wealth, which is slightly larger than the share owned by the richest 1 percent in the United States. Switzerland also has the highest density of millionaires in the West, with 9.5 percent of all households having $1 million or more, and the greatest number of ultra-rich families — 366 households worth more than $100 million. Ten percent of all the world's billionaires live there.
This astounding concentration of wealth riles the Swiss, although their economy has held up relatively well through the financial crisis. For all its prosperity and success in international banking, Switzerland is a country still firmly rooted in its farming past, a nation with no history of monarchy or even aristocracy. "Even though Swiss people earn good money and have an average high salary, we also have a strong traditional feeling about what is good corporate governance," Minder says as he sucks one of his company's herbal throat lozenges. "You can have your second home, you can drive your Ferrari, you can eat your beef every day, but Swiss people are middle class, with no extreme highs or lows."
Minder is the epitome of the Swiss entrepreneurs whose small businesses are the backbone of the country's economy. They chide big banks and other homegrown multinationals — like Roche, Novartis, Nestle and ABB — for adopting an American-style get-rich-quick corporate culture. That, in their view, contrasts with a Swiss business ethos that favors sustainability and long-term relationships, one that has helped build a reputation for high-quality products like watches and other precision instruments. Minder took over the family business, Trybol, from his father in 1999; his grandfather bought the company in 1913. Founded by a dentist in 1900 in the northern town of Schaffhausen, Trybol produced one of the first toothpastes in Switzerland and is also known for its herbal mouthwash and natural cosmetics.
Minder blames bankers like Ospel, a Swiss national who spent several years in investment banking in London and New York, for infecting Swiss business with a high-pay culture. "He was working for Merrill Lynch in New York — Wall Street — and there is where the music was playing. (Big bonuses) came over, and now (they're) not only in the financial industry: (They're) also in productive industry, pharma, Nestle and others. There's a lot of bullshit coming from America. There's no sustainable feeling of how managers lead a company. It shouldn't be for the money, it shouldn't be personal gain — it should be for the customer."
In 2001, just two years after Minder took over at Trybol, it was threatened with ruin when Swissair reneged on a $530,000 contract. In a blow to national pride, the debt-ridden airline had to ground its fleet for two days in October 2001. That same year, Swissair paid Mario Corti $13.4 million, even though he had failed to keep the company aloft. "It was nearly the grounding of Switzerland, not only of Swissair," says Minder, who saved his company by begging the new head of the airline, which was taken over by Lufthansa, to honor the contract. But his rage over Conti still burns. "That guy is now in America. He has not given back any money. He was working for one year. I would say it is even criminal."
Minder spent several years venting his outrage to newspapers before deciding to go to war. He spent two years raising funds to force a referendum on executive compensation and another two years gathering signatures. It took him another five years to actually put the issue to the people as the Swiss Parliament wrangled over alternative proposals and tried to get Minder — elected to parliament as an independent in 2011 — to drop his initiative.
The influential business federation Economiesuisse, which represents 100,000 companies, says Minder's proposals could undermine Switzerland's position as the world's most competitive economy, a title awarded to it this year for the fourth year running by the World Economic Forum because of its low taxes, stable politics and business-friendly laws. Swiss companies accounted for five of the top 10 best-paid chairmen in Europe in 2011, but only the heads of Novartis and Roche made it into the continent's top 10 for chief executives.
While Minder expects Economiesuisse to spend up to $16 million to defeat his referendum, a poll conducted in May showed that 77 percent of Swiss voters back his proposals. Even the Swiss monthly business magazine Bilanz has criticized high pay for CEOs and chairmen. "Too powerful, too expensive," it scolded in a recent cover story, noting that the board presidents of Novartis and Roche earn more than 10 times the compensation of their counterparts at British pharma companies.
Few top executives have dared speak out on this land-mine issue. Nestle Chairman Peter Brabeck, an Austrian who has accumulated a fortune of up to $215 million, is one of the few. "If the Minder initiative were to be adopted, Switzerland would unnecessarily give up one of the world's best company laws," he wrote in an opinion piece in the Neue Zürcher Zeitung daily. "No well-advised company would chose to set up headquarters in a country where an infringement of corporate government rules can lead to imprisonment."
Many believe support for Minder's initiative is driven by a national allergy to high achievers. The Swiss seem to feel the need to cut their stars down to size, such as former Swiss central bank chief Philipp Hildebrand, who was long vilified as too proud even before a currency-trading scandal forced him to resign in January 2011. One exception to that aversion is tennis player Roger Federer, who has managed to stay popular, in part by retaining a down-to-earth image despite his wealth and success with a racket.
Experts attribute the Swiss aversion to star culture to a long history of consensus building between the German-speaking majority and French- and Italian-speaking minorities, and between Protestants and Catholics. Apart from folk hero William Tell, Swiss history is thin on great figures, perhaps because, having stayed out of the continent's major wars, the country has not needed strong leaders. "Switzerland has no kings, no emperors, no preeminent president, no one person upon whom everything is focused," says Karin Frick, an economist at the Gottlieb Duttweiler Institute, an independent research body. "Egalitarian thinking and behavior is in the DNA of Switzerland, which means that people who are richer or more successful than others tend not to show it. The name of the game is understatement."
Communicaid, a London-based business consultancy specializing in cross-cultural awareness, cautions executives visiting Switzerland that its business leaders tend to be modest about their role and discreet in their exercise of authority. "People expect others to be on an equal level, and from someone in leadership or senior management they expect a certain amount of modesty and frugality in the way they approach money or material goods," says Cora Malinak, an intercultural specialist from Communicaid.
In his campaign, Minder, the vice president of his local soccer club and a keen birdwatcher and Alpine sports enthusiast, has repeatedly jabbed at the growing number of foreign CEOs, tapping into simmering resentment of outsiders in this tight-knit nation of just eight 8 million. The highest-paid chief executives in Switzerland in 2011 were all foreigners: Americans Joe Jiminez and Joe Hogan at Novartis and ABB, Roche's Severin Schwan from Austria, and Nestle's Paul Bulcke from Belgium. Minder regularly pillories Credit Suisse's American CEO, Brady Dougan, who has drawn fire for the $75 million stock windfall he received in 2009. "The moment you have the guys like Brady Dougan and all the foreigners, if it's not working, they're on the next plane back to New York," Minder says. "Swiss guys in my position, usually they're accepted in the village. They don't only have their work, but they have something besides their work — they cannot manage a company the same way as Brady Dougan." (The ill will is compounded by the fact that Dougan still can't speak German, even after five years leading Switzerland's second-biggest bank.)
Regardless of which reform plan the Swiss adopt, David Roth, the leader of the youth wing of the Social Democrats, says it won't do much to address Switzerland's deep inequality of wealth. Roth, 27, who organized the "Occupy Davos" camp of igloos in Davos in 2011, is pushing for a much more radical reform: Limit the annual compensation of top executives to just 12 times that of their lowest-paid worker. Both World Economic Forum founder Klaus Schwab and French President Francois Hollande have called for top pay to be capped at 20 times that of the lowest pay-tier. "If the shareholders vote on executive pay, it is still the rich voting about the rich," Roth says. "This whole cartel needs to be broken." His initiative is likely to be put to a vote in late 2013.
A separate campaign to end special tax deals for wealthy foreigners who live but don't work in Switzerland has also been driven by the growing wealth divide and taps into Swiss hostility to immigrants. The annual list of Switzerland's wealthiest 300 people published by Bilanz names 131 foreigners, with Ikea founder Kamprad in first place, at $38 billion.
Special tax deals for foreigners were first introduced in 1862 by the canton of Vaud along Lake Geneva (where Kamprad lives) in a bid to boost the tourist industry in poor rural regions by encouraging wealthy pensioners to move there. The deals were later adopted nationwide in rules dubbed Lex Chaplin after Charlie Chaplin moved to Switzerland in 1953, having fled the United States as a suspected Communist during the McCarthy witch hunt.
The number of super-wealthy foreigners lured to Switzerland has doubled in the last decade, to more than 5,000. Their taxes are based on the rental value of their property rather than their income or wealth, on the condition that they do not work in the country. The influx is blamed for pushing up housing prices, particularly in desirable areas around Lake Zurich and Geneva as well as the more glitzy Alpine resorts. Many of the tax exiles come from neighboring France, and more French could be scuttling across the border soon due to a 75 percent super-tax on income above 1 million euros ($1.29 million) proposed by Socialist President Hollande. Bernard Arnault, France's richest man, was pilloried last year for his decision to seek Belgian nationality.
The cantons of Zurich, Basel, Schaffhausen and Appenzell Ausserrhoden have already scrapped their special deals for foreign tax exiles, but others have upheld the current system, albeit raising the taxes levied on foreigners. Roth's Social Democrats are campaigning to force a national referendum on this issue too. "The system has an extremely damaging impact on the housing market, on Switzerland's image, and international tax justice," he says.
The Swiss government, which saw revenues of $716 million in 2010 from the special taxes on foreigners, is seeking to head off the Social Democrat campaign by increasing those taxes by about 40 percent. Economiesuisse is campaigning to uphold the current system.
Both Minder and Roth fear their campaigns could be scuppered. "It is going to be a battle of money," says Minder. "It's the classic battle between the small guy and the huge Economiesuisse establishment."
He's right to be worried. Zurich economist Kissling says money has increasingly determined the outcome of Swiss referenda, especially since billionaire industrialist Christoph Blocher started funding campaigns by the right-wing Swiss People's Party. He argues that the only way to tackle wealth inequality is to increase the inheritance tax, another issue the Social Democrats want to put to a vote, although that would likely face even more entrenched opposition. Swiss inheritance tax varies from canton to canton but is generally low — another draw for foreigners.
The 1 percent may be outraged by these assaults on their wallets, but they are already adjusting. Back at that UBS shareholder meeting from which Minder got the bum's rush, another chiding stockholder offered Ospel a string of sausages. "In the future you will have to live a little more modestly," he told the UBS chairman. Forewarned of the stunt, Ospel whipped out a tube of mustard, as though he were ready to tuck into them right then. But he got the message. Later that year, Ospel and other ex-board members agreed to return $35 million in bonuses and other payments from the bank. Credit Suisse has not paid top executives any cash awards for the last four years, in favor of stock-based schemes linked to the bank's share price. Dougan's pay was cut in half in 2011 as the bank's stock tumbled, although he still took home $6.2 million.
Ethos, an influential group of shareholders that makes recommendations to Swiss pension funds, says managers' total pay at financial firms dropped 23 percent in 2011, although remuneration in other sectors rose 5 percent.
UBS drew howls of outrage again last year over the $4 million signing-on fee for new chairman Axel Weber, prompting more than a third of its shareholders to reject the bank's pay plans. Weber, who is German, refuses to comment publically on the debate around the Minder proposals. That might be caution, or it might be a smart tactical decision. "It is a matter for the Swiss people," he told the SonntagsZeitung newspaper. "At the moment, we generally see that the more bankers publically wish for something, the less likely it is to be fulfilled politically."
(Editing by Jonathan Oatis and Prudence Crowther)

The Nature of Central Banking: The Secret of Ben Bernanke by Hans Hermann Hoppe

The Nature of Central Banking: The Secret of Ben Bernanke by Hans Hermann Hoppe

China Poised To Play Debt Card – For U.S. Land

Could real estate on American soil owned by China be set up as “development zones” in which the communist nation could establish Chinese-owned businesses and bring in its citizens to the U.S. to work?
That’s part of an evolving proposal Beijing has been developing quietly since 2009 to convert more than $1 trillion of U.S debt it owns into equity.
Under the plan, China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss.

Yu Qiao, a professor of economics in the School of Public Policy and Management at Tsighua University in Beijing, proposed in 2009 a plan for the U.S. government to guarantee foreign investments in the United States.
WND has reliable information that the Bank of China, China’s central bank, has continued to advance the plan to convert China’s holdings of U.S. debt into equity owned by China in the U.S.
The Obama administration, under the plan, would grant a financial guarantee as an inducement for China to convert U.S. debt into Chinese direct equity investment. China would take ownership of successful U.S. corporations, potentially profitable infrastructure projects and high-value U.S. real estate.
The plan would be designed to induce China to resume lending to the U.S. on a nearly zero-interest basis.
However, converting Chinese debt to equity investments in the United States could easily add another $1 trillion to outstanding Obama administration guarantees issued in the current economic crisis.
As of November 2012, China owned $1.17 trillion in U.S. Treasury securities, according to U.S. Department of Treasury and Federal Reserve Board calculations published Jan. 16.
Concerned about the unrestrained growth in U.S. debt under the Obama administration, China has reduced by 97 percent its holdings in short-term U.S. Treasury bills. China’s holding of $573.7 billion in August 2008, prior to the massive bank bailouts and stimulus programs triggered by the collapse in the U.S. mortgage market, dwindled to $5.96 billion by March 2011.
Treasury bills are short-term debt that matures in one year or less, sold to finance U.S. debt. Holdings of Treasury bills are included in the $1.17 trillion of total Treasury securities owned by China as of November 2012.
In addition to a national debt in excess of $16 trillion, the U.S. government in 2010 faced over $70 trillion in unfunded obligations, including Social Security and Medicare benefits scheduled to be paid retiring baby boomer retirees in the coming decades, with unfunded obligations showing no sign of being reduced with Congress at a deadlock over reducing federal government spending.
Yu Qiao observed that if the U.S. dollar collapsed under the weight of proposed Obama administration trillion-dollar budget deficits into the foreseeable future, holders of U.S. debt would face substantial losses that the Financial Times estimated “would devastate Asians’ hard-earned wealth and terminate economic globalization.”
“The basic idea is to turn Asian savings, China’s in particular, into real business interests rather than let them be used to support U.S. over-consumption,” Yu Qiao wrote, reflecting themes commonly suggested by Chinese government officials. “While fixed-income securities are vulnerable to any fall in the value of the dollar, equity claims on sound corporations and infrastructure projects are at less risk from a currency default,” he continued.
The problem is that, in a struggling U.S. economy, China does not want to trade its investment in U.S. Treasury debt securities, with their inherent risk of dollar devaluation, for equally risky investments in U.S. corporations and infrastructure projects.
“But Asians do not want to bear the risk of this investment because of market turbulence and a lack of knowledge of cultural, legal and regulatory issues in U.S. businesses,” he stressed. “However if a guarantee scheme were created, Asian savers could be willing to invest directly in capital-hungry U.S. industries.”
Yu Qiao’s plan included four components:
  1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
  2. China would pool a portion of its holdings of Treasury bonds under the CFR umbrella to convert sovereign debt into equity. Any CFR funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
  3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
  4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.
“The CRF would lessen Asians’ concern about implicit default of sovereign debts caused by a collapsing dollar,” Yu Qiao concluded. “It would cost little and help the U.S. by channeling funds to business investment.”
Read more at http://www.wnd.com/2013/01/china-poised-to-play-debt-card-for-u-s-land/#tYCJ6rlh9hdIkHYw.99

Bill O'Reilly: The U.S. Dollar will Collapse

Bill O'Reilly: The U.S. Dollar will Collapse

Bill O'Reilly struck a rather apocalyptic tone in his Talking Points Memo tonight, warning viewers of the danger facing the economy and the country if it continues down the same path already half-forged by President Obama. O'Reilly predicted that no matter how many people try to sound the alarm about where the nation is headed, most people are just too content with their lives to listen or care. O'Reilly opened with a very simple question: are the people to blame for the current state of the government? He cited nations of citizens falling in lockstep behind men like Adolf Hitler and Fidel Castro. O'Reilly clarified that the United States is not approaching a totalitarian state, but dealing with a "very serious economic situation."
O'Reilly cited a report from the Government Accountability Office concluding that "absent policy changes----the federal government continues to face an unsustainable fiscal path." He said if there is not a serious attempt to curb spending or entitlements, "the U.S. dollar will collapse," which, as O'Reilly delicately phrased it, will lead to people's savings and investments "blow up before our eyes."
O'Reilly doubted that anyone in the liberal media would want to talk about the GAO report, because Obama does not want to cut spending or reform entitlements, and so the doting media will ignore the damaging report. O'Reilly compared it to people standing on a beach and refusing to leave after they've been warned of an impending tidal wave.
Of course, it is a government of the people, and O'Reilly argued that people not caring enough about the government are allowing the government to get out of control. O'Reilly ended by saying he is simply trying to tell the truth, but not enough people care to listen.

Pay-day timebomb: One million Wonga loans not repaid on time as lender calls in debt collectors

Almost one million loans made by Wonga have not been repaid on time because customers were unable to meet their repayments.
A spokesman for the payday loan firm said it was considering trying partly to recoup its losses by selling bad debts to third parties.
The revelation came during a grilling of the company in front of the Public Accounts Committee on the effectiveness of consumer credit regulation.
Wonga advert
Anger: MPs are concerned about the spiralling number of people who are unable to to repay their loans plus the interest at much-criticised rates of about 4,200 per cent
MPs said the debt sell-off raised concerns about the spiralling number of people who could not afford to repay the money they had borrowed plus the interest at much-criticised rates of about 4,200 per cent.
They also said they were worried about how debtors would be treated when the problem was put into the hands of third-party debt- collection agencies.
The most recently available information suggests that Wonga wrote off £77 million as bad debt in 2011, MPs said. They estimated that was the equivalent to about 300,000 loans in one year.

The average amount borrowed by customers of Wonga – Britain’s biggest payday loan provider – is £257.
‘Bluntly, given the size of or our balance sheet, we have to look at alternatives [when customers fail to pay],’ Henry Raine, Wonga director of legal affairs, told MPs.
Representatives from short-term lenders Provident Financial and Fair Finance also appeared before the committee.
Margaret Hodge MP said she was concerned about the access that companies like Wonga had to bank account details and was also worried about fraud.
She pointed out that many people had been taking out payday loans after fraudulently giving details of the bank accounts of third parties who then find themselves making the loan repayments.
Raine admitted that the online industry had a ‘significant problem’ with fraud and identity theft.
The company has told a panel of MPs that an average 15 per cent of its loans are not paid back on time and it has to date made six million loans.
Wonga was founded by South African Errol Damelin and his business partner Jonty Hurwitz. The most recently announced figures showed that the company’s profits had tripled to £46 million in 2011.
The payday loans industry has grown massively since the recession began as consumers have found it increasingly difficult to borrow from mainstream lenders.
Campaigners have raised alarms over the number of people taking out payday loans, particularly over Christmas to deal with festive bills.
Financial Mail has complained to the Office of Fair Trading about the behaviour of more than 80 payday loan firms. Several others have been reported to the Advertising Standards Authority for possible breaches of regulations.
Citizens Advice said the number of people contacting them with problems relating to payday loans doubled last year. It has launched a national survey to measure the problem and to test the strength of the payday lenders’ self-regulating ‘good practice’ charter.

Abe's adviser blasts China in barbed Hong Kong speech

Abe aide's address read out at HK forum accuses Beijing of using force in islands row

Japan's top foreign policy adviser, in an inflammatory speech delivered at a regional forum in Hong Kong yesterday, accused China of asserting a territorial claim by force and breaching the international order.
Yachi Shotaro's speech, read on his behalf by a former Japanese official, at the third Sino-US Colloquium, was immediately rebuffed by Chinese participants.
Retired People's Liberation Army major general Pan Zhenqiang, now a government adviser, described Yachi's statement as "very rude and arrogant", and warned Tokyo to treat China as an enemy at its peril.
The fiery exchanges came as Chinese Foreign Ministry spokesman Qin Gang yesterday expressed "strong discontent" about comments by US Secretary of State Hillary Rodham Clinton over the Diaoyu Islands. Clinton said earlier that the United States acknowledged Japan's control of waters near the disputed island although it did not have a stance over who had ultimate sovereignty.
This is the first time that Japan has sent delegates to the annual forum, organised by the China Energy Fund Committee in Hong Kong. Among its speakers were two former US four-star generals, one PLA general and two former Japanese commanders, as well as top thinkers and government advisers from the three countries.
All attention was on the speech by Yachi, widely believed to be the architect of Prime Minister Shinzo Abe's foreign policy and who was recently appointed a special foreign adviser. Yachi did not attend the talk in person but wrote the speech read by Takujiro Hamada, a former deputy foreign minister of Japan.
Yachi warned China to be careful of its behaviour or risk being isolated by its neighbours. He said Chinese leaders "made absolutely no claim" over the Diaoyu Islands after the second world war or in 1997, when the countries normalised their ties.
"You are now asserting the claim by force," said Yachi, referring to Beijing's dispatching of surveillance planes and ships to waters near the Diaoyus, which Japan calls the Senkakus.
"One must say that the act alone is breaching the rule of international order," he said. "I should like to ask you: is this a China you want to show to the world? Is this a China that your children will be proud of?
"My message to the Chinese is that now it is time for you to be content about who you are and what you have accomplished. Now it is time for you to be a good neighbour of Japan, a good neighbour to the Philippines and a good neighbour to Vietnam.
"Use of force and intimidation will buy you no goodwill from your neighbour or that of the international community. You will be a superpower - much feared but not much liked."
He called for the US to strengthen ties with Japan and said Tokyo was ready to "activate the dormant right of collective defence" - which could be interpreted as a step for Japan to rearm.
General Pan rebuffed Yachi's remarks. "I feel shocked and a bit sad about his historic view and his value system," he told the forum. "Mr Yachi's comments are so rude and arrogant. It is confusing [on who is in] the right and the wrong. [He] is saying that China can only be a responsible member if it totally complies to Japan's demands, otherwise China is irresponsible.
"When Japan invaded China [in the 1930s and 40s], this was the kind of attitude they showed to Chinese people: you can only enjoy peace and prosperity if you listen to our command. Do they still want to send that message to [the] Chinese today?"
Pan called Japan Asia's revisionist power, as Abe's government was trying to change the international order established after the second world war, which imposed a peaceful constitution on Japan and banned it from full-fledged militarisation.
"I just want to remind Japanese friends: is it in Japan's interest to treat China as an enemy? Is this the way for Japan to win respect by insisting on such strange historic view?" Pan said.

JPMorgan Embraces Offshore Yuan as Trading Doubles

Standard Chartered Plc estimates offshore trading of yuan has doubled to at least $6 billion a day, giving investors more confidence to invest in the currency using options, forwards and Dim Sum bonds.
Average daily transactions in Hong Kong surged from $3 billion in the past year, said Charles Feng, Standard Chartered’s regional head for fixed-income trading in the city. Trading in offshore options in the currency swelled to between $300 million and $500 million per day, according to J.P. Morgan Private Bank, which is buying the contracts for its clients. HSBC Holdings Plc says combined yuan deposits and certificates of deposits in the city will rise 43 percent this year to 1 trillion yuan ($161 billion).
Dim Sum bonds have been rallying for a record six consecutive weeks as the central bank announced plans to accelerate the opening up of capital markets to foreigners and allow cross-border yuan loans. The average yield on the securities fell five basis points last week to 3.5 percent, the lowest since October 2011, a Deutsche Bank AG index showed. That compares with an average 2.62 percent for global corporate debt, according to Bank of America Merrill Lynch data.
“Offshore yuan liquidity is unambiguously improving,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong. “In particular, there is more official sector activity in the first days of the year. This flow is very promising for central banks to get more involved.”

Offshore Premium

The yuan in Hong Kong climbed 0.5 percent this month and touched 6.1735 per dollar on Jan. 11, the highest since trading started in 2010, Bloomberg data show. The offshore rate was 6.1908 as of 11:24 a.m. local time today, a 0.45 percent premium to the spot rate of 6.2187 in Shanghai. Twelve-month non- deliverable forwards gained 0.8 percent in Hong Kong this month.
One-year implied volatility on the offshore yuan, a measure of expected moves in exchange rates used to price options, was 2.4 percent today, down from 4.4 percent a year ago, data compiled by Bloomberg showed. Comparable gauges are 10 percent for the Brazilian real, Russian ruble and India’s rupee.

‘Burgeoning’ Market

The yield on Chinese government Dim Sum bonds due June 2022 was 3.06 percent today, compared with 1.84 percent for 10-year U.S. Treasuries, Bloomberg data show.
“We have been utilizing high carry and low volatility for our clients in the offshore renminbi via its burgeoning options market,” said Erik Wytenus, Hong Kong-based head of foreign exchange and commodities at J.P. Morgan Private Bank in Asia. “This allows for a beneficially asymmetric risk profile for these strategic positions.”
Hong Kong’s Dim Sum bond market is increasingly offering attractive yields as long as buyers are selective, said Adam K. Tejpaul, managing director for the investment business of JPMorgan Chase & Co.’s private bank unit in Asia. The yield on Caterpillar Inc.’s Dim Sum bonds due 2014 was 2.53 percent at the end of last week, compared with 0.58 percent on its similar- maturity dollar debt. The machinery maker is rated A at Standard & Poor’s.
China backed Hong Kong’s status as the major offshore yuan hub in its latest five-year economic plan and is seeking to curb reliance on the use of dollars in international trade and investment. The city “will consolidate and expand the offshore yuan business,” in particular cross-border trade settlement and sales of yuan-denominated securities, Leung Chun-ying, Hong Kong Chief Executive said in a Jan. 16 policy address.

Loan Experiment

Central bank governor Zhou Xiaochuan said on Dec. 31 the country will “deepen” financial reform in 2013. The government may soon announce details for a cross-border yuan loan program in Qianhai, a trial zone near Hong Kong, China Securities Journal reported Jan. 9, citing Wang Jinxia, a spokesperson for the Qianhai management bureau. Hang Seng Bank Ltd., a Hong Kong- based subsidiary of HSBC, will arrange the first yuan loan to Qianhai Co., the lender said Dec. 31.
“The Qianhai trial will accelerate the recycling of the yuan and boost the currency’s liquidity,” said Ken Hu, a Hong Kong-based fund manager at BOCHK Asset Management Ltd, who runs the best-performing Dim Sum bond fund that returned 29 percent in 2012.

Japan Warns It May Fire On Chinese Aircraft Over Disputed Islands; China Retorts: "There Will Be No Second Shot"

A week ago we reported that following what China said was a response to counter "Japanese military aircraft disrupting the routine patrols of Chinese administrative aircraft" over the East China Sea, the world's most populous country (and one which has the largest, 2.25 million strong, standing army) scrambled several jets and put its military on high alert. Now, it is the turn of Japan, and its brand new militant and nationalistic government, to "retaliate" and escalate tensions by one more notch, in the process crashing any hope that Chinese imports of Japanese goods may resume, and obviating the ongoing temporary plunge in the yen (which while doing nothing to boost exports to this 20% trading partner, has made imports so expensive, inflation in the past two months has already soared well above the 2% target for various key goods as previously reported).
Moments ago, Japan says it may fire warning shots and take other measures to keep foreign aircraft from violating its airspace in the latest verbal blast between Tokyo and Beijing that raises concerns that a dispute over hotly contested islands could spin out of control.
AP reports:
Japanese officials made the comments after Chinese fighters tailed its warplanes near the islands recently. The incident is believed to be the first scrambling of Chinese fighters since the tensions began to rise last spring.
According to Chinese media, a pair of J-10 fighters was scrambled after Japanese F-15s began tailing a Chinese surveillance plane near the disputed islands in the East China Sea. China has complained the surveillance flight did not violate Japanese airspace and the F-15s were harassing it.
It was the first time the Chinese media has reported fighters being mobilized to respond to Japanese air force activity in the area and comes amid what Japan says is a rapid intensification of Chinese air force activity around the islands, where Japanese and Chinese coast guard ships have squared off for months.
Though there have been no outright clashes, the increased sea and air operations have fueled worries that the situation could spin out of control.
"Every country has procedures for how to deal with a violation of its territory that continues after multiple cautionary measures," Japanese Defense Minister Itsunori Onodera said on Jan. 16 when asked if tracer shots would be fired against intruding aircraft that refuse to change course. "We have response measures ready that are consistent with global standards."
Onodera said the use of warning shots has long been provided for under Japan's defense policies and is widely accepted under international rules of engagement. Japan's air force has not actually resorted to them since 1987--against a Soviet aircraft--and none were fired last week.
But Chinese and Japanese media have suggested Tokyo is publicly floating the possibility to test China's reaction.
Perhaps it may surprise Japan, but "China's reaction" will hardly be one of a dog retreating with its tail between its legs. In fact, it will likely be quite the opposite.
And the fact that the US has once again stepped in, and is once again on the side of the party that started this whole escalation fiasco (that would be Japan for those who have forgotten), will not help:
The escalation of tensions has worried the United States, with Secretary of State Hillary Rodham Clinton saying on Jan. 18 that while the U.S. doesn't take a position on who has sovereignty over the islands, it opposes "any unilateral actions that would seek to undermine Japanese administration."
That brought a sharp retort from the Chinese Foreign Ministry on Jan. 20. The comments "ignore the facts" that the islands are China's inherent territory, spokesman Qin Gang said in a statement that urged the U.S. to adopt "a responsible attitude."
In Beijing last week, a Foreign Ministry spokesman said China is on "high alert" and suggested Japan is escalating the tensions over the islands, called the Diaoyu in China and the Senkaku in Japan. Taiwan also claims the small isles, which are uninhabited but may be surrounded by valuable underwater natural resources.
"Chinese planes and ships are exercising normal jurisdiction in the waters and airspace surrounding the Diaoyu Islands," spokesman Hong Lei said. "We are opposed to the operations of Japan's planes and ships, which violate our rights around Diaoyu. We are on high alert against this escalation."
As is often the case, Chinese media quoted military academics with a much more fiery response.
"Japan's desire to fire tracer warning shots as a way of frightening the Chinese is nothing but a joke that shows the stupidity, cruelty and failure to understand their own limitations," Maj. Gen. Peng Guangqian of the Chinese Academy of Military Sciences was quoted as saying by the China News Service and other state media.
"Firing tracer bullets is a type of provocation; it's firing the first shot," he said. "Were Japan to dare to fire tracers, which is to say fire the first shot, then China wouldn't stint on responding and not allow them to fire the second shot."
Sounds like a catalyst to double down and buy every ES contract in sight: just think of the GDP boost and appropriate fiscal multiplier once Japan is levelled.

Japan should let elderly ‘hurry up and die’: finance minister Taro Aso

Japanese finance minister Taro Aso speaks at a press conference in Tokyo on Janaury 15, 2013 (AFP_File, Yoshikazu Tsuno)
Japan’s finance minister Taro Aso said Monday the elderly should be allowed to “hurry up and die” instead of costing the government money for end-of-life medical care.
Aso, who also doubles as deputy prime minister, reportedly said during a meeting of the National Council on Social Security Reforms: “Heaven forbid if you are forced to live on when you want to die. You cannot sleep well when you think it’s all paid by the government.
“This won’t be solved unless you let them hurry up and die,” he said.
“I don’t need that kind of care. I will die quickly,” he said adding he had left written instructions that his life is not artificially prolonged.
During the meeting, he reportedly referred to “tube people” when talking of patients who cannot feed themselves.
The 72-year-old Aso, a former prime minister, has been in his current job less than a month, but has a long history of planting his foot firmly in his mouth.
In 2001 he triggered a furore by saying a successful country was one where “rich Jews” wanted to live.
After Monday’s mis-step, he tried to backtrack, insisting he had only been talking about his personal wishes when he said the elderly should shuffle off quickly.
“I said what I personally believe, not what the end-of-life medical care system should be,” he told reporters.

“It is important that you can spend the final days of your life peacefully.”
Aso was born into a blue-blooded industrialist family but his often crude verbal slip-ups stand in marked contrast to his heritage.
He is the grandson of Shigeru Yoshida, one of Japan’s most influential prime ministers who helped rebuild the country from the ashes of World War II, and he is married to the daughter of another former premier.
Ageing is a sensitive issue in Japan, one of the world’s oldest countries, with almost a quarter of its 128 million people over 60. That figure is expected to rise to 40 percent within the next half-century.
At the same time a shrinking number of workers is placing further strain on an already groaning social security system, with not enough money going into the pot to support those who depend on it.

Ron Paul 1/21/13: Fiat Currency is NOT Wealth!

Ron Paul 1/21/13: Fiat Currency is NOT Wealth!

Krugman, Japan and the definition of insanity

The belief in Keynesian stimulus spending is the perfect example of Albert Einstein's definition of insanity


Recently the beleaguered government of Japan announced they would be embarking on a programme of fiscal stimulus totalling the equivalent of £72 billion. It is hoped this new programme of government spending will raise economic growth by 2 percent and create 600,000 jobs.
Unsurprisingly the world’s favourite Keynesian, Paul Krugman, welcomed this move by the Japanese government and showered praise on the Prime Minister of Japan: 
"In short, Mr. Abe has thumbed his nose at orthodoxy, with excellent results."
In Krugman's eyes Japan is abandoning the 'failed orthodoxy' of austerity and is turning to policies that will promote jobs and growth. He has also been supportive of moves to pressure the bank of Japan to seek higher inflation to help Japanese exporters.
The problem is we have been here before. In the 2009 the New York Times reported that "during nearly two decades Japan accumulated the largest public debt in the developed world totalling 180% of its $5.5 trillion economy while failing to generate a convincing recovery".
Between 1992 and 1995 Japan introduced six stimulus programs totalling 65.5 trillion yen. Before the decade was out another four stimulus packages were introduced. By the end of the 90s ten stimulus packages, totalling over 100 trillion yen, had been thrown at the Japanese economy with little to show for it in terms of economic growth.
The belief in Keynesian stimulus spending is the perfect example of Albert Einstein's definition of insanity - doing the same thing over and over again, expecting different results.
It is interesting to observe Krugman's attitude towards the effectiveness of stimulus spending in Japan when in 1999 he wrote:
anyone who believes that temporary fiscal stimulus will produce sustained recovery is implicitly endorsing a rather fancy economic model, the sort of model that finance ministries would under normal circumstances regard as implausible and disreputable…
…What continues to amaze me is this: Japan's current strategy of massive, unsustainable deficit spending in the hopes that this will somehow generate a self-sustained recovery is currently regarded as the orthodox, sensible thing to do – even though it can be justified only by exotic stories about multiple equilibria, the sort of thing you would imagine only a professor could believe
Krugman appears to justify government spending regardless of any other factors including vast government debt, deficits, and previous failures. He seemingly rejects any notion that cuts in government spending can ever lead to a positive outcome, explaining away every example to the contrary including Canada 1994–1998, Denmark 1982–86, Finland 1992–2000, Ireland 1987–89, and Sweden, 1992–2000.
He has moved to such an extreme position, denying almost any evidence that large amounts of government debt could be a problem. A paper written by Carmen Reinhart and Kenneth Rogoff titled 'Growth in a time of debt' shows that once a nation's debt-to-GDP ratio reaches 90 percent median growth, rates fall by 1 percent; Krugman also rejects this.
As his arch nemesis Robert Murphy points out: "Krugman and his allies have been backed into a corner, having to explain away (at least) nine historical episodes that contradict their theories."
The fundamental flaw in the Keynesian analysis is that if you ask the wrong questions you will get the wrong answer. As the economist Benjamin Powell points out, neither the Keynesian nor Monetarist explanations provide a compelling account of why the Japanese economy has stagnated since the early 1990s.
In marked contrast the Austrian perspective provides a compelling account of the crisis. The origin of the crisis was the unsustainable boom during the 1980s in large part due to the expansionary policy of the bank of Japan. Consistent with Monetarist theory the recession came due to the contraction of monetary expansion. But Austrians see this as a necessary process to rebalance the economy.
During the artificial boom in Japan and the subsequent government interventions that were meant to deal with the inevitable bust, the structure of production has been further distorted. As with most government interventions in the economy Japan's numerous spending packages have been based around political decision making processes favouring certain groups and preventing the restructuring the economy needs to grow and satisfy consumer preferences.
Krugman's stance should not surprise anyone. Debates around government spending have moved far beyond the realm of whether the economics is right and wrong. The point is an ideological one; it is no surprise that Krugman's column is called 'conscience of a liberal' rather than something like 'notes of an economist'.
For those who wish to expose the factual failure of the arguments advanced by Krugman and his allies this must be coupled with a message countering the moralistic arguments that a nation’s compassion is measured by how much its government spends or an individual’s morality is measured by how much tax they pay.
When governments preside over a stagnating economy or an inflationary crisis it is the poorest and most vulnerable who are hit are hardest. The Keynesian fantasy leads to nothing more than economy based on cronyism and a society based on envy.
Guy Bentley is a Libertarian blogger and a former editorial assistant at the Commentator
Read more on: Japanese stimulus spending, Japanese economy, Guy Bentley, Paul Krugman, Japan and QE, quantitative easing in Japan, Japan, Keynesian climate, and keynesianism

Inauguration: Barack Obama is sworn in for second term

President Barack Obama recites his oath of office at his inauguration ceremony
Barack Obama has taken the oath of office in Washington DC to inaugurate his second term as US president, before hundreds of thousands of spectators.
Mr Obama, 51, who is the 44th president of the US, was sworn in by Chief Justice John Roberts.
Monday's inaugural festivities in the US capital include black-tie balls, a parade and musical performances.
In his inaugural address, the Democratic president is now laying out his vision for the next four years.
He was formally sworn in at a small White House ceremony on Sunday - the US Constitution dictates presidential terms begin on 20 January.
In the famous Blue Room with his wife and daughters, the 44th president rested his hand on a Bible that was used for many years by Michelle Obama's family, as Justice Roberts administered the oath of office.

Inauguration Day schedule

1155: Obama publicly sworn in as president by Chief Justice John Roberts
1200: Obama delivers inaugural address
1239: Obama signs nomination papers for his Cabinet
1300: Inaugural lunch in Statuary Hall at the US Capitol
1436: Inaugural parade on Pennsylvania Avenue, ending at White House
All time EST, five hours behind GMT
According to the words prescribed by the US Constitution, Mr Obama swore he would "faithfully execute the office of president of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States".
He repeated those words at Monday's public inauguration, placing his left hand on Bibles owned by legendary American civil rights leader Martin Luther King Jr and President Abraham Lincoln.
Former Presidents Bill Clinton and Jimmy Carter, along with dozens of senators, congressional leaders and other dignitaries have attended the event at the US Capitol.
In his inaugural address, Mr Obama is not expected to preview his policy agenda on Monday. He will address that in next month's State of the Union speech, asking bitterly divided lawmakers to come together and reduce gun violence, overhaul the immigration system and reduce the yawning federal budget deficit.
Speaking at a reception for supporters late on Sunday, Mr Obama suggested he would dwell on the "common good" and the "goodness, the resilience, neighbourliness, the patriotism" of Americans.
"What we are celebrating is not the election or the swearing-in of the president," Mr Obama said. "What we are doing is celebrating each other and celebrating this incredible nation that we call home."
By Monday afternoon, Mr Obama will have taken the oath four times - as many as President Franklin D Roosevelt.
Four years ago, Mr Obama repeated the oath privately to make sure all constitutional obligations were met after Justice Roberts tripped over the words in the public ceremony.
Mr Obama took his official oath on Sunday in the White House's Blue Room
Following Monday's ceremony, Mr Obama will have the traditional lunch with US lawmakers in the capitol building's Statuary Hall.
Later, the president is expected to walk at least part of the parade route down Pennsylvania Avenue toward the White House.
Vice-President Joe Biden, who was also sworn in on Sunday - by Supreme Court Justice Sonia Sotomayor - repeated his oath publicly as well.
In the evening, the Obamas will don formal evening attire for several lavish inaugural balls in Washington.
The zone surrounding the National Mall in the US capital is in virtual lockdown, with movement of people and vehicles tightly restricted.
White tents, trailers and generators are set up along the parade route, while nearby buildings have been adorned with red, white and blue bunting.
Officials estimate about 700,000 people were to attend the inauguration, down significantly from 2009, when about 1.8 million people witnessed Mr Obama be sworn in as America's first black president.
About 260,000 people attended George W Bush's second inauguration ceremony in 2005, with an additional 150,000 lining the parade route, officials said.
"We wanted to see history, I think, and also for the children to witness that anything is possible through hard work," David Richardson of Atlanta, in the crowd with his two young children, told the Associated Press.

Goldman bankers get rich betting on food prices as millions starve

Bank criticised for making £250m after destructive spikes in global food market


Goldman Sachs made more than a quarter of a billion pounds last year by speculating on food staples, reigniting the controversy over banks profiting from the global food crisis.
Less than a week after the Bank of England Governor, Sir Mervyn King, slapped Goldman Sachs on the wrist for attempting to save its UK employees millions of pounds in tax by delaying bonus payments, the investment bank faces fresh accusations that it is contributing to rising food prices.
Goldman made about $400m (£251m) in 2012 from investing its clients' money in a range of "soft commodities", from wheat and maize to coffee and sugar, according to an analysis for The Independent by the World Development Movement (WDM).
This contributed to the 68 per cent jump in profits for 2012 Goldman announced last week, allowing it to push up the average pay and bonus package of its bankers to £250,000.
The extent of Goldman's food speculation can be revealed after the UN warned that the world could face a major hunger crisis in 2013, after failed harvests in the US and Ukraine. Food prices surged last summer, with cereal prices hitting a record high in September.
Christine Haigh of the WDM said: "While nearly a billion people go hungry, Goldman Sachs bankers are feeding their own bonuses by betting on the price of food. Financial speculation is fuelling food price spikes and Goldman Sachs is the No 1 culprit."
Goldman makes its "food speculation" revenues by setting up and managing commodity funds that invest money from pension funds, insurance companies and wealthy individuals in return for fees and commissions. The firm invented these kinds of funds and continues to dominate the market, together with Barclays and Morgan Stanley. Swiss trading giant Glencore hit the headlines in August when its head of agriculture proclaimed that the US drought will be "good for Glencore".
Goldman has always shrouded the breakdown of its profits in secrecy, but a WDM commodities derivatives expert has calculated the revenues it believes the bank makes from food speculation through an analysis of its recent results and market information.
The bank declined to comment on WDM's estimate or the impact of speculation on food prices. But Goldman Sachs is known to be advising clients that corn is one of its top trading tips for 2013, after the worst drought in US history whittled stockpiles down to their lowest level since 1974.
Although global food prices averaged seven per cent below 2011's record, prices in 2012 were 16 per cent higher than in 2010 and 2.3 times as expensive as a decade earlier, even after adjusting for inflation, according to the United Nations.
British consumers have not been spared the impact of rising food costs – prices have, on average, risen by nearly 40 per cent in the past seven years.
Rob Nash, Oxfam's private sector adviser, said: "Oxfam is very concerned about food speculation, especially in the light of increasingly extreme weather conditions which can reduce supply suddenly and severely deplete stocks. The last thing we need is for that volatility to be exacerbated by speculation and exploited for short-term profit."
Banks and hedge funds typically argue that speculation makes little or no difference to food prices and point out that no definitive link has been proved. But there is a growing consensus that the influx of cash into food has increased demand so much that it has inevitably pushed up the prices.
Since deregulation allowed the creation of the commodity funds that allowed many speculators to invest in agriculture for the first time, institutions such as Goldman have channelled more than $200bn of cash into the area. This investment has coincided with a significant and sustained rise in global food prices.

Repatriation Avalanche Gaining Momentum: Azerbaijan to Withdraw All Gold From JP Morgan Vaults

The State Oil Fund of Azerbaijan has withdrawn the first ton of its physical gold from JP Morgan vaults, and placed it in their own Central Bank vaults in Baku.
The Fund has announced it will withdraw all of its physical gold assets from JP Morgan warehouses in London.

The game of musical chairs known as bullion banking allocated (rehypothecated) gold storage appears to be rapidly coming to an end.

As  abc.az reports, the first ton of physical gold has already been transferred out of JP Morgan vaults via Brinks:
Baku, Fineko/abc.az. The State Oil Fund of Azerbaijan (SOFAZ) has placed today the first ton of physical gold in the safety vaults of the Central Bank in Baku, purchased at the London Stock Exchange of Precious Metals (LBMA) within the SOFAZ investment policy.
According to the Fund, today British company Brink’s Global Services delivered from London to Baku and placed 1 ton (32,150 ounces) of gold owned by SOFAZ in the CBA vaults.
The Oil Fund has been acquiring physical gold since February 2012 in batches of 10,000 ounces a week. By early 2013 SOFAZ brought its gold assets up to 14,934 kg (480,146 ounces).
Initially London-based warehousing units of JP Morgan were selected for storage, but now all the gold will be gradually transferred to storage in Azerbaijan. Prior to the completion of construction of a new residence of SOFAZ this gold will be stored in the CBA vaults, and then will be transferred to the Fund’s own store in its residence at Heydar Aliyev Avenue in Baku.
SOFAZ investment policy allows it to keep in gold up to 5% of assets.
The size of the gold withdrawal from the cartel bullion banking system is not the important thing in Azerbaijan’s announcement- rather the increasing liklihood that our bankster friends will soon be facing repatriation requests from every last rehypothecated gold bar owner.
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