Friday, February 28, 2014

YouTube ordered to take down anti-Muslim film

SAN FRANCISCO (AP) — A U.S. appeals court ordered YouTube on Wednesday to take down an anti-Muslim film that sparked violent riots in parts of the Middle East and death threats to the actors.
The decision by a divided three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco reinstated a lawsuit filed against YouTube by an actress who appeared briefly in the 2012 video that led to rioting and deaths because of its negative portrayal of the Prophet Muhammad.
YouTube resisted calls by President Barack Obama and other world leaders to take down the video, arguing that to do so amounted to unwarranted government censorship and would violate the Google-owned company's free speech protections. Besides, the company argued that the filmmakers and not the actors of "Innocence of Muslims" owned the copyright and only they could remove it from YouTube.
And typically, that's the case with the vast majority of clips posted on YouTube — and Hollywood in general — that don't violate decency laws and policies. But the 9th Circuit said Wednesday that this case was far from typical and that the actress, Cindy Lee Garcia, retained a copyright claim that YouTube must respect. That's because she believed she was acting in a different production than the one that ultimately appeared online.
"Had Ms. Garcia known the true nature of the propaganda film the producers were planning, she would never had agreed to appear in the movie," said Cris Armenta, Garcia's attorney.
Google argues that the actress had no claim to the film because filmmaker Mark Basseley Youssef wrote the dialogue, managed the entire production and dubbed over Garcia's dialogue during postproduction editing.
Writing for the court, Chief Judge Alex Kozinski said the ruling was not a blanket order giving copyright protection to every actor, but that in this case, Garcia's performance was worthy of copyright protection.
"We need not and do not decide whether every actor has a copyright in his performance within a movie," the judge wrote. "It suffices for now to hold that, while the matter is fairly debatable, Garcia is likely to prevail."
Judge N. Randy Smith dissented, arguing that Garcia's five-second appearance gave her no ownership claims.
"Her brief appearance in the film, even if a valuable contribution to the film, does not make her an author," Smith wrote. "Indeed, it is difficult to understand how she can be considered an 'inventive or master mind' of her performance under these facts."
Youssef, the filmmaker, was sentenced to 21 months in prison for check fraud in 2010 and barred from accessing the Internet without court approval. He was returned to prison in 2012 for violating terms of his probation and was released on probation in September 2013.
Garcia was paid $500 to appear for five seconds in a film she was told was called "Desert Warrior" that she thought had nothing to do with religion or radical Islam. When the clip was released, her lines were dubbed to have her character asking Muhammad if he was a child molester.
"This is a troubling case," Kozinski wrote. "Garcia was duped into providing an artistic performance that was used in a way she never could have foreseen. Her unwitting and unwilling inclusion in Innocence of Muslims led to serious threats against her life. It's disappointing, though perhaps not surprising, that Garcia needed to sue in order to protect herself and her rights."
For Google, the ruling represents a nettlesome issue if allowed to stand. The company fears that bit players and extras appearing in popular clips will now be emboldened to send takedown notices to YouTube unless settlements can be reached with the filmmakers.
Google Inc., which has removed the clip, said it will appeal the decision to a special 11-judge panel of the appeals court. The next move after that would be to ask the U.S. Supreme Court to review the case.
"We strongly disagree with this ruling and will fight it," said Google spokeswoman Abbi Tatton.

'World must recognise M'sia belongs to Malays'

Islamic NGO Ikatan Muslimin Malaysia (Isma) today demanded global recognition that Malaysia is the land of the Malays, claiming that scientific study had proven that the Malay civilisation was older than Angkor Wat or Borobudur.
"Like how the world recognises that China is for Chinese, India is for Indians, England for the English, Ireland is for the Irish, and Germany is for Germans, surely Malays have their own land," Isma's vice-president II Abdul Rahman Dali said in a statement today.
Quoting a scientific research, Isma said that the Malay genes was proven to exist before the that of the Chinese.
"This region, which centres at the land of the Malays, is called the Cradle of Human Civilization, which gave birth to other ethnicities. So it is valid that this land belongs to the Malays originally," he said.
He also claimed a recent research showed that the Kedah Tua Malay civilisation in Lembah Bujang dates back to the 2nd century BC, thus confirming that the civilisation was older than archaeological and historical sites such as Angkor Wat in Cambodia and Borobudur in Indonesia.
"As such, we want the Chinese, Indians or anyone not to question the Malay position anymore. We also want the whole world to recognise Malaysia, which is known as Malaya, as the heritage and right of the Malays," Abdul Rahman said.
Isma's statement today comes following months of increasing demands by several Islamic and Malay rights NGOs, including Isma and Perkasa, to strengthen Malay supremacy in the country.
The calls grew louder ever since a kangkung-themed flash mob, organised by PKR's Machang Bubok assemblyperson Lee Khai Loon, which angered such NGOs who claimed the act of stuffing the leafy vegetable into an effigy of Prime Minister Najib Abdul Razak was an affront to Malays and the rulers.
Racial and religious tension in the country have escalated of late, partially due to the Court of Appeal ruling in October last year that Catholic weekly The Herald is not allowed to use the word 'Allah' to address God in its Malay texts.
The Christian community in Malaysia, especialy those in Sabah and Sarawak, have used the term in Malay copies of the Bible for years, however, various other quarters have claimed that 'Allah' is exclusive to Muslims.

Tips to help you buy your dream car

Buying the right car is never easy, especially when you've decided to go down the pre-owned route. But here are some tips that might make life easier for you.
Buying a new car is always a more pleasant ordeal than buying a used one. The salesman is very friendly, answers all the questions you have for him and even get’s you your choice of coffee or tea. Within 15 minutes, you already know what you like and dislike about a certain car. If you do choose to buy the car, other than the regular financial documents submission and loan approval, there is nothing to worry about. All you have to do is wait for the call to come in saying when you can pick up the car.
When going down the pre-owned path, things aren’t as rosy. At every used car lot is a dodgy looking salesman who come hook or crook, wants to unload whichever car he can on some poor sucker who doesn’t know any better. As such many get burned when opting for a used car as they finally drive home a lemon- a car they had not interest in buying but were talked into getting anyway.
That’s a real shame as there are some really good runners out there that can not only offer bucket loads of driving enjoyment but will also be as reliable as a Toyota Corolla. To find such a car, here are tips you must follow:
Tip #1: Identify your budget
Find out how much you have to spend on a car then set aside RM7,500 for repairs for the next six months. You probably won’t need it if you’ve bought a good car but it helps to be prepared.
Tip #2: Know what you want to use the vehicle for
List down what you will be using the vehicle for. There is no point in buying a super cheap pick-up truck when all you are going to be doing are urban cruises. If it’s seating capacity you are after, then opt for an MPV. If all you need is a reliable and fuel-efficient car, get a compact hatchback.

Tip #3: Look through car classified ads and make a shortlist

Browsing the car classifieds section in Motor Trader magazine and it's online site will give you a rough idea as what is and isn’t in your budget. Make a shortlist of what you can afford.
Tip #4: Do your homework
After you’ve settled on a car. Do your research and find out as much as you can about it.
- How much does servicing it cost
- Are spare parts readily available
- Is the car prone to particular mechanical issues
- What do current owners have to say about it
Sometimes after completing your research, the car you’ve chosen doesn't turn out to be the dream car you that it would.

Tip #5: Visit the dealers’ lots
Look at as many examples of the car that you want. Scrutinize everything from the condition of the upholstery to the sound of the engine when idle. Ask as many questions as possible. Take a test drive if permitted. If you aren't happy with the condition of it, walk away. Never settle for anything less than your expectations.

Tip #6: If a deal seems too good to be true, walk away

Often, dealers will a few lemons that they can’t shift. It’s because they are accident vehicles or are naturally problematic. As such, to sell you the car, they will keep that information from you but tell you that your getting a darn good deal!
Then they will tell you that they are clearing the stock and that is why its going for such a price! This is total BS. So don’t believe it.
Tip #7: Seek the advice of counsel
It will be very helpful if you have a trusted mechanic on hand. If you don’t have one, you need to make friends with one soon as he will probably be the go-to-guy should something eventually need mending. Take him with you when inspecting a car. He will probably be able to spot potential issues that don’t seem obvious to the average Joe.
Tip #8: Haggle like there’s no tomorrow
Most dealers hike the prices of their cars, so take your best haggling skills with you and low-ball them if possible.

Tip #9: Make sure all the paperwork is in order

Once you’ve settled on a car, make sure the paperwork is all in order before signing on the dotted line.
That's all you need to remember. If you follow these rules and remain weary of used car dealers' tricks, you should be able to drive home your dream car.
Finding a reputable car mechanic can be tough but Carama’s online site has a whole list of certified mechanics you can trust. If you are interested, visit their site.
More from Motor Trader on Yahoo! Autos can be found here.

Are Proton vehicles better than they used to be?

Proton's recent quality control standards have been better than what they used to be but are the cars better than they were a decade ago?
Has Proton changed its ways? In the late 1990s and early 2000s, Proton vehicles were famous for dodgy build quality. Electrical systems that worked only when they felt like it, mechanicals that would wear out quickly and trim panels that fell apart within months of use.
I should know as I honed my driving skills in one – a Proton Wira SE. Within months of buying the car, the rear wiper stopped working, reverse sensors went on leave indefinitely and trim panels in the cabin lost the will to stick together.
The car’s only saving grace was the Mitsubishi sourced mechanicals. It ran pretty well regardless of how much it was abused and the performance of the engine was pretty decent albeit that could have been due to the raspy exhaust note, which amplified the driving enjoyment.
This brings me to my question, has Proton learned from its past and put steps in place to rectify QC issues? Has it realised that the Malaysian people and not its UK customers are its most loyal followers and the reason for its financial health growth?
In the mid 2000s Proton seemed poised to be a worthy Asian competitor with the introduction of the Waja, Gen2, Savvy, Saga BLM, Satria Neo and Persona vehicles. The automaker no longer relied on Mitsubishi to deliver the goods. For the first time in decades, Proton was standing on its own two feet. There were problems along the way as their cars were still plagued by build quality issues (uncooperative power windows) but as a whole, progress was being made.
Then came the Inspira, a mere rebadged Mitsubishi. It felt like déjà vu, just like it did in the 1990s, rebadging the Lancer of that era and calling it the Wira, Proton was back to its old ways. The company did try to justify its actions by stating volume of vehicles in that segment couldn’t justify plans of building a car from scratch. Unfortunately, most Malaysians saw it as Proton wanting easy money.
Then came the Preve and the Suprima S. On paper both cars were a monumental step forward from what Proton were used to offering. Impressive interiors, loads of equipment and a turbocharged engine that had the oomph most Protons lacked with the exception of the Perdana V6. But in reality, the cars have fallen short of expectations. Early adopters have found the CFE engine’s performance, overtime, less than stellar. It isn’t uncommon to see black smoke spewing out of the exhaust tip, a clear indication of the turbo consuming oil.
The Koreans were smart, in order to appeal the global market, they worked tirelessly to offer the best designs, pack each model with as much technology as possible and then find a way to sell their products at cut throat prices. By doing this they managed to undercut the competition while offering more features. Despite the Japanese’s best efforts, their cars have gained significant popularity.
Despite DRB-HICOM’s financial help, Proton will not be able to replicate the Korean success but it can take certain cues from them. Keep customers happy by offering the best product possible. That’s all that is needed. No Malaysian expects a Proton to compete with the Japanese and Germans on a level playing field, but it can do so. Just cut out the lacklustre manufacturing practices and entertaining incompetent vendors. A car built with reliability in mind is what is needed these days. It doesn’t matter if there is no reverse camera, as long as the car starts, goes and stops without issues for several years, it’s a good car!
Quality has improved since the early years but sadly not as much as we would have wanted. With DRB-HICOM’s financial backing Proton can be a worthy global competitor, but the question is do they want to be one?

Who Really Gets The Biggest Welfare Handout?

Abby Martin remarks on a recent report by which exposes the absurd amount of taxpayer money used to provide some of the wealthiest companies in the US with corporate welfare.

Another Recession Looms? Personal Income Faces First Year-over-Year Drop Since Recession Ended, The Deflationary Pressures Are Continuing In Many Areas

Personal income faces first year-over-year drop since recession ended: As incomes collapse, spending via consumer credit begins to increase
There is little doubt that our economy runs on access to debt.  Not a tiny bit of debt.  But Himalayan mountains of debt.  The banking crisis was pitched to the public as one of liquidity but in reality, it was one of solvency.  The difference?  One is a temporary inability to repay debts while the other is a complete mathematical inabilityto support current debts based on income.  The Fed has done everything to increase access to debt to member banks to re-inflate their balance sheets.  Those that think inflation is non-existent need only look at housing values, college tuition, and healthcare costs and see how realistic that is based on their income growth.  This leads us to our current article in terms of personal income.  The latest reading shows that personal income had its first year-over-year drop since the recession ended.  This further underscores the massive disconnect between the stock market and regular American households.  A large part of boosting corporate profits involved slashing wages, benefits, and households making due with less.  This has increased the wealth and income inequality in our nation as the stock market reaches a new apex.  What is troubling is that now that banks are flooded with easy access to credit, they are starting to lend to cash strapped households in a fashion similar to our last credit bubble.
Personal incomes fall
I’m not sure if people are aware of how rare it is for personal income to fall on a year-over-year basis in a fiat system where inflation is championed. 
Inflation when it goes hand in hand with income growth is rarely felt by the public at large.  However, as we have discussed with the shrinking middle class, inflation with no subsequent wage growth translates to a declining standard of living.
Going back to data form the 1950s personal income never declined on a year-over-year timeframe.  That is until the Great Recession.  So this recent reading showing personal income declining year-over-year is notable:
personal income
Consumer Confidence Drops Most In 4 Months
This Will Stun The World & Bring Chaos To Global Markets
Greyerz:  “Eric, the deflationary pressures are continuing in many areas.  As an example, the eurozone consumer confidence had the biggest drop in 18 months.  And in Germany, the latest figures are showing wage deflation of 0.6%.  We also saw the same deflation in France of 0.6%….
Gov Report: Up To ONE MILLION Jobs Will Be Lost Due to Minimum Wage Hike
A few weeks ago the Congressional Budget Office, which is responsible for the accounting and reporting associated with federal legislation and regulations, estimated that the Affordable Care Act would raise national budget deficits by $1 trillion and lead to the destruction of some 2.5 million jobs.
But the new health insurance mandates and the pressure they will put on America’s businesses aren’t the only challenges facing an already dwindling labor force.
Earlier this month President Obama raised the minimum wage for federal workersthrough an Executive Orders that will take effect on January 1, 2015. He promised to push through a similar mandate for the private sector. However, just because minimum wage workers in America will see a roughly $3 increase in their hourly pay doesn’t necessarily mean that they’ll be better off than today.
According to the CBO, the wage hike is going to do exactly the opposite of its intended purpose. Not only can we expect businesses to almost immediately raise prices on the goods and services they offer in order to offset the wage hikes, but it will end up costing the American economy even more jobs in the long run.
Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects. As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of 1.0 million workers.Congressional Budget Office: The Effect of a Minimum Wage Increase (PDF)
Global Economy Collapses Despite 4th “Warmest” January On Record
G-10 macro data is collapsing
The Shanghai Index, Copper and Freeport McMoran look to be forming Descending triangle patterns. If you are unfamiliar with this pattern please read about them here  Bottom line to this pattern, a break of support suggests a decline, the size of the triangle!
The key to this patterns is the support line, which must hold, or sellers will step in. Commodities and the largest country in the world don’t have much to brag about over the past few years, other than poor performance and relative weakness! If support breaks, the new thing they could get to brag about ….”we sent a signal ahead of time that the macro picture was about to slow down.”
Support at this time is STILL IN PLACE…. support has NOT broken. I am attempting to make you aware of this pattern should it come true, so you could be thinking about portfolio construction ahead of time.

Where Did the Bitcoins Go? The Mt. Gox Shutdown, Explained

hacker can tinker with the code that makes a Bitcoin transaction happen, so that it looks like it didn’t go through. The person who was supposed to receive a payment then asks again and, in Mt. Gox’s case, is paid again automatically. Mt. Gox has acknowledged this was happening. It seems that someone has been slowly bleeding it for months, leaving it without the funds to pay out legitimate withdrawals. But with the company being pretty tight-lipped about it for now, that’s only the best theory.
Was this a shot from the blue?
Not quite. Mt. Gox has been having problems for months, and people have been complaining about not being able to get their money out of the system since late last year. The company halted withdrawals altogether in early February. So while the number of lost Bitcoins is striking, many people have seen the failure of Mt. Gox as imminent for a while.
Who is affected?
Many people who had Bitcoins were relying on Mt. Gox to hold them, and the chances they will get them back at this point don’t seem very good. Other Bitcoin companies may also be affected. BTC.SX, which allows users to trade derivatives based on the Bitcoin market, said Tuesday it couldn’t take new orders because of Mt. Gox’s problems, although it also said that users’ balances were secure and it would continue to honor withdrawals.
Where did the lost Bitcoins go?
In theory, Mt. Gox could begin to track their path by identifying the fraudulent transactions and searching for the wallets the coins ended up in. But no one is putting much faith in the accounting expertise over there at the moment. In any case, many of the tainted coins have likely moved beyond their initial destinations. If there really has been a slow leak from Mt. Gox for a long time, then the coins could have spread to the ends of the earth by now. One thing is certain: They are probably all over the place, just based on the sheer number of coins alleged to have been stolen. They’d amount to about 6 percent of the Bitcoins in existence.
Is this a security problem with Bitcoin itself?
When Mt. Gox described the issue as a bug in the Bitcoin protocol, people didn’t appreciate it. The technical issue at the root of Mt. Gox’s problem didn’t just crop up recently; it seems that Mt. Gox was left vulnerable because it didn’t protect itself against the issue.
What’s next?
For Mt. Gox, probably not much. For the rest of the Bitcoin world, probably greater scrutiny from regulators, who will want to be confident that this doesn’t happen again. And for those who lost their Bitcoin, likely a fair dose of cynicism.

Mt. Gox bitcoin customers could be out of luck, experts warn

(Reuters) - What can you do if you deposited bitcoins at Mt. Gox, which shuttered on Tuesday with little explanation? Probably not much.
Customers of the bitcoin exchange may have little chance of recovering their funds if they prove to be missing, legal and regulatory experts said.
Clients could file lawsuits, claiming negligence or breach of contract, but the virtual currency is subject to very little regulatory oversight and no government guarantees.
Japan-based Mt. Gox went dark on Tuesday, weeks after a spate of cyber attacks, leaving customers unable to access their accounts and underscoring the risks associated with bitcoins.
Bitcoins, which exist in electronic form, depend on a network of computers to solve complex mathematical problems in order to verify and record every transaction. Investors deposit their bitcoins in digital "wallets" at various exchanges; Mt. Gox had been the largest as recently as February 7, when it and other exchanges were forced to halt withdrawals following several cyber attacks.
Unlike bank accounts in the United States, bitcoin deposits have no government-backed insurance. Instead, customers would have the same avenues of legal redress as anyone who entrusted property to an institution that failed to keep it protected, such as negligence, breach of contract or even fraud, said James Grimmelmann, a professor at the University of Maryland who focuses on Internet law.
"To me, the first really important conceptual hurdle to get over is that these things really are property," he said. "When you take money from the public and store it somewhere you claim is secure, you put property law in play."
If Mt. Gox has no assets, however, individual claims would fail to recover any funds, said Daniel Friedberg, a lawyer with Riddell Williams in Seattle who specializes in financial regulatory matters.
"The practical reality is, even if you do get a judgment against Mt. Gox, do they have the ability to pay?" Friedberg said.
A document circulating online that purports to be a crisis plan for Mt. Gox indicated that the exchange had $174 million in liabilities against $32.75 million in assets, though its veracity could not be confirmed.
The Tokyo-based Mt. Gox could also file for bankruptcy in Japan, leaving it up to a court to distribute any remaining assets to its creditors.
Several regulatory and legal experts said they expected the Mt. Gox shutdown could spur regulators to take more immediate steps to protect future customers.
Jeffrey Matsuura, a lawyer at Alliance Law Group in Virginia who specializes in online commerce issues, said he wouldn't be surprised if state or federal consumer protection agencies eventually take some kind of action regarding Mt. Gox and other exchanges.
But Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, said people who deposited bitcoins with Mt. Gox knew that the exchange had experienced problems in recent months.
"At this point, bitcoin is speculative," he said. "People are going in with eyes wide open."
Thus far, the only U.S. regulatory agency with specific oversight of Mt. Gox is the U.S. Treasury Department's anti-money laundering unit, the Financial Crimes Enforcement Network, or FinCEN, after the exchange agreed to register as a money services business last summer.
New York State's top banking regulator is exploring licensing requirements for bitcoin exchanges, while the Commodity Futures Trading Commission has considered whether to set rules for the virtual currency. And federal prosecutors in New York have issued subpoenas to Mt. Gox and other exchanges seeking information on how they had handled recent cyber attacks, a source told Reuters.
"Bitcoin in many ways is terra incognita for the regulatory system," said Joseph Grundfest, a law professor at Stanford University and a former SEC commissioner.
But, he added, that would not stop federal prosecutors in Manhattan from investigating criminal activity involving bitcoins if any of the transactions had a connection to New York.
"The lack of clarity about formal regulatory status provides no safe harbor for liability for criminal fraud," he said.
(Reporting by Joseph Ax and Karen Freifeld; Additional reporting by Emily Flitter; Editing by Ken Wills)

Wage Crisis – America’s New Underclass

Fed to Cut Off Europe to Support U.S. Borrowing

Janet Yellen, newly confirmed Federal Reserve (Fed), announced on February 19th that America’s central bank is moving to cut off the massive financial lifeline that has been subsidizing the European banking system since the beginning of the global financial crisis in March of 2008.  By delaying foreign bank compliance with the stringent capital and borrowing requirements of section 165 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) imposed on American banks, the Fed was engaging in the moral hazard of allowing Europe to borrow at virtually zero interest from the Fed to fund their bloated social welfare states.  Chair Yellen’s actions mean the Fed is cutting off Europe and providing greater support for U.S. borrowing.      
People around the world often complain about the “exorbitant privilege” America enjoys by sponsoring the U.S. dollar as the world’s reserve currency.  Of the $1.25 trillion of dollars in circulation, about $700 billion is held outside the United States.  Foreign holdings of the dollar essentially act as a perpetual interest-free loan to the U.S. government and force foreign businesses to lose money exchanging their foreign currency into dollars.  The privilege also reduces the interest costs the American government pays on the $5.8 trillion of U.S. Treasury debt held by foreigners by one half percent.  This privilege adds more than $120 billion to U.S. consumption each year.  
But with the privilege of sponsoring the dollar as the world’s reserve currency, America also bears “extraordinary risk” in times of financial crisis, because the Fed is morally expected to provide liquidity at virtually zero interest rates to foreign banks as the lender-of-last-resort.  According to Fed data, at the peak of the financial meltdown on Oct. 29, 2008 almost half of the $111 billion in central bank emergency “discount window” loans went to the U.S. subsidiaries of French/Belgium based Dexia Bank and German based Depfa Bank.  Although the parent banks of both of these institutions were grossly insolvent, money borrowed from America’s Fed was quickly wired offshore to prevent imminent bankruptcy filings of the institutions’ European parent banks.
The 2008-2009 financial meltdown was caused by what economists refer to as “moral hazard,” a situation where one party takes undue risks if they know the potential costs of the risk will be borne by others.  U.S. and European banks knew the moral hazard of using risky valuation models to profit from mortgage securitization was inappropriate, but they expected the America’s Fed would bail them out of potential losses. 
But during Fed Chairman Alan Greenspan's 1987-2006 tenure, whenever a crisis arose and stocks fell by more than 20%, the Fed lowered the Fed Funds Rate to add liquidity to avert further deterioration.  Greenspan’s Fed bailed-out banks during the 1987 stock market crash, savings and loan crisis, Gulf War, Mexican debt crisis, Asian debt crisis, collapse of Long Term Capital Management, Dot-Com Bubble, and 9/11 terrorist attacks. 
In March of 2008, recently appointed Fed Chair Ben Bernanke bailed out thousands of hedge funds with $30 billion in cash subsidies to bail out of Bear Stearns.  Hedge funds knew Bear Stearns was outrageously leveraged by 35 times equity, but deposited their money in the firm’s Prime Broker accounts as unsecured creditors, because Bearn Stearns allowed hedge funds to also engage extremely leverage investments. 
The moral hazard of the Fed bailing out Bear Stearns actually encouraged speculators to take much more risk based on the confidence the Fed would bail them out of any future problem.  Increased speculative investing drove up inflation and interest rates in the summer of 2008.  When the Fed refused in September to bail out Lehmann Brothers, securities markets crashed and a worldwide financial panic erupted.  The Fed was then forced to organize and lead the largest financial bail-out in history.
From November 2008 through January 2014 the Fed flooded the world with liquidity by engaging in three rounds of “quantitative easing” to buy $2.8 trillion in bank debt, mortgage-backed securities, and Treasury notes.  During the same period, the European Central Bank and the Bank of England also engaged in another $1.4 trillion of quantitative easing. 
Almost none of this liquidity was loaned to U.S. operating businesses, as private non-residential investment in America fell by 80% as a percentage of the total GDP of the U.S. between 2007 and 2009.  Although capital spending has somewhat recovered, American business investment is still at its lowest level as a share of GDP since 1947. 
Most of the Fed’s cash appears to have gone to European Union (EU) banks to cover loan losses and buy sovereign debt of EU countries.  Bank balance sheets in the EU are still leveraged at 25 to 35 times equity.  Despite the GDP of the EU nations since 2008 falling by .4%; their debt outstanding rose by 34%, from $10.3 trillion to $14.5 trillion.
Congress and financial regulators sought to avoid future moral hazard by passing Dodd-Frank’s Section 165 “Stress Testing” requirements in 2012 to impose strict leverage limits on U.S. financial institutions with “consolidated assets of more than $10 billion.”  Large banks, brokers and insurance companies were forced to raise $450 billion in capital and their leverage was cut from 18 times to less than 9 times, a 50% reduction. 
Just 16 day after her confirmation, Chairman Yellen seems determined to root out the expectation that the U.S. Federal Reserve will continue the moral hazard of allowing excess risk taking in the expectation the Fed will provide bail-outs as the sponsor of the dollar.  President Teddy Roosevelt said: “Speak softly and carry a big stick; you will go far.”  New Federal Reserve Chairman Janet Yellen on February 18th picked up her big stick and softly announced the Fed is about to cut off its massive cash lifeline keeping Europe afloat and will now concentrate on support the credit needs of Americans. 
The author welcomes feedback and can be contacted at
Chriss Street is teaching microeconomic at University of California, Irvine

First-time jobless claims climb by 14,000

WASHINGTON, Feb. 27 (UPI) -- First-time unemployment benefits claims rose by 14,000 to 348,000 in the week that ended Saturday, the U.S. Bureau of Labor Statistics said.
First-time claims rose from a revised figure of 334,000 for the previous week, the department said Thursday.
The four-week rolling average of first-time jobless claims was unchanged at 338,250.
The largest increases in initial claims for the week ending February 15 were in California with a gain of 5,832, Michigan, up by 2,129, and Oregon with 1,574 additional claims.
The largest decreases were in Georgia with a drop of 7,759, Pennsylvania, down by 3,677, and Wisconsin with 3,227 fewer claims.
© 2014 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.

Rome days away from bankruptcy

Eternal city warns it will go bust for the first time since it was destroyed by Nero

Ignazio Marino, Rome mayor, said city services like public transport would come to a halt and that he would not be a
Ignazio Marino, Rome mayor, said city services like public transport would come to a halt and that he would not be a "Nero"  Photo: GETTY IMAGES
Matteo Renzi, the Italian prime minister, came under pressure on Thursday as the city of Rome was on the brink of bankruptcy after parliament threw out a bill that would have injected fresh funding.
Ignazio Marino, Rome mayor, said city services like public transport would come to a halt and that he would not be a "Nero" - the Roman emperor who, legend has it, strummed his lyre as the city burnt to the ground.
Marino said that Renzi, a centre-left leader and former mayor of Florence who was only confirmed by parliament this week, had promised to adopt urgent measures to help the Italian capital at a cabinet meeting on Friday.
The newly-elected mayor faces a budget deficit of 816 million euros ($1.1 billion) and the city could be placed under administration if he does not manage to close the gap with measures such as cutting public services.
"Rome has wasted money for decades. I don't want to spend another euro that is not budgeted," Marino said, following criticism from the Northern League opposition party which helped shoot down the bill for Rome in parliament.
The draft law would have included funding for Rome from the central government budget as a compensation for the extra costs it faces because of its role as the capital including tourism traffic and national demonstrations.
Other cash-strapped cities complained it was unfair.
But Marino warned there could be dire consequences.
"We're not going to block the city but the city will come to a standstill. It will block itself if I do not have the tools for making budget decisions and right now I cannot allocate any money," he told the SkyTG24 news channel.
Marino said that buses may have to stop running as soon as Sunday because he only had 10 percent of the money required to pay for fuel in March.
He added: "With the money that we have in the budget right now, I can do repairs on each road in Rome every 52 years. That's not really maintenance."

RBS has lost all the £46bn pumped in by the taxpayer

Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago when the lender came close to collapse.

The bank has confirmed its total losses since its bailout have now drawn level with the £46bn pumped into it in 2008 in return for an 81pc stake.
RBS made a loss last year of £8.2bn, its sixth consecutive annual loss, taking its cumulative losses to £46bn.
The scale of the losses means that all the capital provided by the taxpayer has now been used up dealing with the toxic legacy assets on the bank's balance sheet.

Losses at the bank came after it took a £3.8bn bill for customer mis-selling compensation and a £4.8bn impairment charge against the continued run down of its bad loans.

Excluding these costs, RBS reported an operating loss for the year of £2.5bn, with profits from its retail and commercial business falling 4pc year-on-year to £4.1bn, while its markets division reported a 58pc fall compared to 2012 making a profit of £638m.

Despite, the loss RBS said it had put aside £576m to pay staff bonuses for 2013.
Ross McEwan, chief executive of RBS, will use the results to set out his plans to turnaround the lender that has yet to report a profit six years on from its state-funded £46bn bailout in 2008.
Mr McEwan said his priority would be restoring trust in the bank, which is 81pc owned by the taxpayer, after a series of scandals.
"We want to be number one for customer service, trust and advocacy, in every one of our chosen business areas by 2020," wrote Mr McEwan in a message to investors.
RBS operating structure will also be simplified and the business's current seven divisions collapsed into three to reduce complexity and costs.
"Our three customer businesses will cover Personal & Business Banking, Commercial & Private Banking, and Corporate & Institutional Banking. Across the businesses we will have one management team, working to one joined-up plan," he wrote.
RBS will embark on a new cost-cutting plan, and Mr McEwan said he would reduce the bank's running costs by £5bn by 2017 in an effort to reduce the business's cost to income ratio to about 50pc.
Mr McEwan has also set out how he will address RBS's relatively weak capital base. At the end of last year the bank's core Tier 1 ratio had fallen to 8.6pc, more than two percentage points lower than some of its peers.
Mr McEwan said he would be targeting a 12pc ratio by 2016 and that the rundown of the bank's bad assets and the flotation of the US Citizens business would be the main boosters of core capital.
Citizens will be floated on the US market later this year and the RBS confirmed it had selected advisers for the multi-billion listing.
RBS shares fell 4.5pc as the stock market opened in London on Thursday.
RBS-NatWest to axe 'teaser rates' including 0pc credit cards

The Evolving Global Economic Crisis

Much like a perfect storm at sea is the consequence of three converging bad weather fronts, three significant global economic trends have begun to intensify and converge in recent months: (1) a slowing of the China economy and a parallel growing financial instability in its shadow banking system; (2) a collapse in emerging markets currencies (India, Brazil, Turkey, South Africa, Indonesia, etc.) and their economic slowdown; (3) a continued drift toward deflation in the Eurozone economies, led by growing problems in Italy and economic stagnation now spreading to France, the Eurozone’s second largest economy. The problems in these three critical areas of the global economy, moreover, have begun to feed off of each other.
Despite tens of trillions of dollars injected into the global economy since 2008 by central banks in the US, UK, Europe, and, most recently Japan, real job creating investment is slowing everywhere globally. The massive liquidity (money) injections by central banks have either flowed into global financial markets speculation (stocks, bonds, derivatives, futures, options, foreign exchange, funds and financial instruments of various kinds), hoarded as cash on bank and non-bank corporate balance sheets, hidden away in dozens of offshore tax shelters from Cayman islands to the Seychelles, or invested in emerging markets like China, India, Brazil, Indonesia, Turkey, and elsewhere.
The primary beneficiaries of these central bank money creation policies have been global very high net worth investors, their financial institutions, and global corporations in general. According to a study in 2013 by Capgemini, a global business consultancy, Very High Net Worth Investors increased their investable wealth by $4 trillion in 2012 alone, with projected further asset growth of $4 trillion a year in the coming decade. The primary financial institutions which invest on their behalf, what are called ‘shadow banks’ (i.e. hedge funds, private equity firms, asset management companies, and dozens of other globally unregulated financial institutions) more than doubled their total assets from 2008 to 2013, and now hold more than $71 trillion in investible assets globally.
This massive accrual of wealth by global finance capitalists and their institutions occurred in speculating and investing in offshore financial and emerging market opportunities—made possible in the final analysis by the trillions of dollars, pounds, Euros, and Yen provided at little or no cost by central banks’ policies since 2008. That is, until 2014.
That massive tens of trillions of dollars, diverted from the US, Europe and Japan to the so-called ‘Emerging Markets’ and China is now beginning to flow back from the emerging markets to the ‘west’.
Consequently in turn, the locus of the global crisis that first erupted in 2008 in the U.S., then shifted to Europe between 2010-early 2013, is now shifting again, a third time. Financial and economic instability is now emerging and deepening in offshore markets and economies—and growing increasingly likely in China as well.
(The following analysis of China today is an excerpt from the author’s forthcoming article “The Emerging Global Economic Perfect Storm”, that will appear in the March print issue of ‘Z’ Magazine, where the Eurozone and Emerging Markets’ economies are assessed as well. For the complete article, see Z Magazine or the author’s website,
China’s Growing Financial and Economic Instability
Prior to the 2008 global financial crisis and recession, China’s economy was growing at an annual rate of 14 percent. Today that rate is 7.5 percent, with the strong possibility of a still much slower rate of growth in 2014.
China initially slowed economically in 2008 but quickly recovered and grew more rapidly by 2009—unlike the U.S. and Europe. A massive fiscal stimulus of about 15 percent of its GDP, or 3 times the size of the comparable U.S. stimulus of 2009, was responsible for China’s quick recovery. That fiscal stimulus focused on government-direct investment in infrastructure, unlike the U.S. 2009 stimulus that largely focused on subsidies to states and tax cuts for business and investors. In 2007-08 China also had no shadow banking problem to speak of. So the expansionary monetary policies it introduced, along with its stimulus, further aided its rapid recovery by 2010. Since 2012, however, China has been encountering a growing problem with global shadow banks that have been destabilizing its housing and local government debt markets. At the same time, beginning in 2012, the China non-financial economy, including its manufacturing and export sectors, has been showing distinct signs of slowing as well.
On the financial side, total debt (government and private) in China has risen from 130 percent of GDP in 2008 to 230 percent of GDP, with shadow banks share rising from 25 percent in 2008 to 90 percent of the totals by 2013. So shadow banks share of total debt has almost quadrupled and represents nearly all the debt as share of GDP increase since 2008. Shadow banks have thus been the driving force behind China’s growing local debt problem and emerging financial fragility.
Much of that debt increase has been directed into a local housing bubble and an accompanying local government debt bubble, as local governments have pushed housing, new enterprise lending, and local infrastructure projects to the limit. Local government debt was estimated in 2011 by China central government at $1.7 trillion. It has grown in just 2 years to more than $5 trillion by some estimates. Much of that debt is also short term. It is thus highly unstable, subject to unpredictable defaults, and could spread and destabilize a broader segment of the financial system in China—much like subprime mortgages did in the U.S. before.
A run-up in private sector debt is now approaching critical proportions in China. A major global instability event could easily erupt there, in the event of a default of a bank or a financial product. In some ways, China’s situation today increasingly appears like the U.S. housing and U.S. state and local government debt markets circa 2006. China may, in other words, be approaching its own Lehman Moment. That, in fact, almost occurred a few months ago with financial trusts in China. Fearing a potential default by the China Credit Trust, and its spread, investors were bailed out at the last moment by China central government. According to the Wall St. Journal, the event “exposes the weakness of the shadow banking system that has sprung up since 2009.
Growing financial instability in China in its local markets is thus a major potential problem for China, and for the global economy as well, as both China and the world economy begin to slow in 2014.
Early in 2013, China policymakers recognized the growing problem of shadow banks and bubbles in its local housing and investment markets. Speculators had driven housing prices up by more than 20 percent in its major cities by 2013, from a more or less stable 3-5 percent annual housing market inflation rate in 2010. China leaders therefore attempted to rein in the shadow banks in May-June 2013 by reducing credit throughout the economy. But that provoked a serious slowdown of the rest of the economy in the spring of 2013. Politicians then returned on the money spigot quickly again by summer 2013 and added another mini-fiscal stimulus package to boost the faltering economy. That stimulus targeted government spending on transport infrastructure, on reducing costs of exports for businesses, and reducing taxes for smaller businesses. The economy recovered in the second half of 2013.
By early 2014, the housing bubble has again appeared to gather steam, while the real economy shows signs once again of slowing as well. In early 2014 it appears once again that China policymakers intend to go after its shadow bank-housing bubble this spring 2014. That will most likely mean another policy-initiated slowing of the China economy, as occurred in the spring of 2013 a year earlier. But that’s not all. Overlaid on the financial instability, and the economic slowdown that confronting that instability will provoke, are a number of other factors contributing to still further slowing of the China economy in 2014.
Apart from the economy’s recent fiscal stimulus and its overheated housing markets, China’s other major source of economic growth is its manufacturing sector, and manufacturing exports in particular. And that, too, is slowing. The reasons for the slowing in manufacturing and exports lie in both internal developments within the Chinese economy as well as problems growing in the Euro and Emerging market economies.
China is experiencing rising wages and a worsening exchange rate for its currency, the Yuan. Both are raising its manufacturing costs of production and in turn making its exports less competitive. Rising costs of production are even leading to an exodus of global multinational corporations from China, headed for even cheaper cost economies like Vietnam, Thailand, and elsewhere.
The majority of China’s exports go to Europe and to emerging markets, not just to the U.S. And as emerging market economies slow, their demand for China manufactured goods and exports declines. Conversely, as China itself slows economically, it reduces its imports of commodities, semi-finished goods, and raw materials from the emerging market world (as well as from key markets like Australia and Korea).
Similar trade-related effects exist between China and the Eurozone. China in fact is Germany’s largest source for its exports, larger even than German exports to the rest of Europe. So if China slows, it will require fewer exports from Europe, which will slow the already stagnant Eurozone economies even further. Similarly, as Europe stagnates, it means less demand for China goods—and thus a further slowing of China’s manufacturing. In other words, China’s internal slowdown will exacerbate stagnation and deflation in Europe, as well as contribute to an even faster economic slowing now underway in the emerging market world.
Slowing will result as well from government policies designed to structurally shift the economy to a more consumption driven focus. That shift to consumption will begin in earnest following the Community Party’s March 2014 meeting. But consumption in China represents only 35% percent of the economy (unlike 70 percent in the U.S.), while China government investment is well over 40 percent of GDP. And it is not likely that consumption can grow faster enough to offset the reduction in investment, at least not initially.
So a long list of imminent major developments and trends in China point to a slowing of growth in that key global economy of almost $10 trillion a year. What happens in China, the second largest economy in the world, has and will continue to have a major negative impact on an already slowing Emerging Markets and a chronically stagnant Eurozone.
How the U.S. economy responds to the emerging global perfect storm will prove interesting, to say the least. But with evidence of US slowing in housing, manufacturing, job creation, auto and other retail sales, and with real family median income in decline and the real likelihood of further spikes in food and gasoline prices in the months immediately ahead, the ‘perfect storm’ emerging offshore do not portend well for the still fragile US economy now in its fifth year of below average, ‘stop-go’ economic recovery.
Jack Rasmus is the author of the book, ‘Obama’s Economy: Recovery for the Few’, Pluto press, 2012 and ‘Epic Recession: Prelude to Global Depression’, Pluto, 2010. He is the host of the weekly radio show, ‘Alternative Visions’, on the Progressive Radio Network. His website is, his blog,, and twitter handle, @drjackrasmus.

Number of people seeking help for payday loan problems doubles and average debts exceed monthly pay of borrowers

The number of people seeking help with payday loan problems from Stepchange almost doubled in the last year, the debt charity has revealed.
The benefits of the UK's recovering economy are not filtering down to those with squeezed budgets as 66,557 people sought help with their payday loan debts from Stepchange in 2013 - an 82 per cent rise on the 36,413 who did the same in 2012.
The average client held three different payday loans and owed £1,647 in total, suggesting they are letting their debts mount up by 'rolling over' their loans to the next month.
Trouble: The number of people needing help with payday loan debts almost doubled in 2013.
Trouble: The number of people needing help with payday loan debts almost doubled in 2013.

Mike O'Conner, chief executive of Stepchange, said: 'The widespread harm and misery caused by payday loans continue unabated.
'The industry has failed to address the problems causing untold misery and damage to financially vulnerable consumers across the UK.'

While some of the rise in calls could be attributed to people becoming more aware of debt charities like StepChange or Citizens Advice, the sheer size of the rise suggests the proliferation of fast and astronomically expensive short-term loans has not been checked.
This could potentially change once the Financial Conduct Authority brings in the cap on interest and charges announced by Chancellor George Osborne in November, as well as imposing new rules on affordability checks carried out by payday lenders.

StepChange says the importance of affordability cannot be understated, given that the average income of clients seeking help is £1,381-a-month, less than the amount they owe in payday loans, suggesting that some people are being allowed to borrow without the appropriate checks.
With interest rates running into the many thousands of per cent, the amount a person owes can multiply quickly, particularly if the loans are allowed to roll over. One StepChange client saw his £200 loan rise to £1,851 in the space of just three months.
And those taking out payday loans have other debts to contend with too - with 62 per cent having overdraft debts, 60 per cent credit cards, 45 per cent personal loans and 39 per cent catalogue debts to pay off.
In total last year, the charity handled clients with 202,233 payday loan debts totalling £110million, up from £60million in 2012.
Mr O'Connor said: 'We hope the FCA's proposals will address some of the areas of consumer detriment, but on issues such as affordability checking, rollover and repeat borrowing, there is an urgent need for even more radical reform.'


Central Banks Spend No Time Thinking About Gold: Pierre Lassonde — Gold Stock Analyst’s Investor Day

Kitco News speaks with famed entrepreneur and leader in the mining industry Pierre Lassonde, who was the keynote speaker at GSA Investor Day. Lassonde shares his comments on gold prices, central banks, and the current landscape of the mining industry. Tune in now to hear more from the Franco-Nevada Chairman.

Part I: Saudi Arabia Acting Like an Anchor Weight Around the Petrodollar…

I’ve gotta tell you, it must take a tremendous amount of effort to stay woefully ignorant in today’s world. My guess is it takes more work to stay THAT ignorant than it does to learn something daily about your surroundings… I can’t believe I am STILL getting emails about the DHS Agent Who Reveals U.S. to Collapse Within 6 Weeks. People still calling me names, asking if my “Tin Foil Hat” is too tight… REALLY? You have GOT to be kidding me.
What are they putting in Cool Aid these days?
Part of me just thinks I should laugh and feel sorry for you… but in all honesty, YOU are the reason I work so hard on this site. TO OPEN YOUR EYES. If you’re going to insist on name calling, and not debating the facts, you are unbelievably easy to block on all my sites… I just pray you don’t reproduce.
The gene pool is clearly suffering enough. 
So, in the coming weeks, I am going to try to put more of the FINANCIAL STORIES OUT, and not just the FEMA Camp ones… and if you can follow what ultimately becomes a bit high level on the economics… you’re going to wish you hadn’t. It’s probably going to rob you of a lot of sleep…
Just THINKING about it has already taken the lives of an estimated 20+ bankers so far… but that will be a few lessons down the road… You’ve heard about all the European bankers jumping to their deaths etc.? One guy “committed suicide” by shooting himself in the head with a nail gun 8 times. Uh, yeah. Ok. Over 20 dead… but since its in Europe, no one here is paying attention. Even if it was happening here, I’m not sure many agencies here in the States have the journalistic integrity to write about actual news. NEWSFLASH: It’s not isolated to Europe. 
The American Empire, or the American Century, or the PetroCentury, whatever you want to call it, it is coming to an end… AND FAST! American’s really should begin getting used to the fact would’s major powers are going to be countries like China, Russia, Iran, India, etc. and in MUCH sooner time than you think… Before you know it, the U.S. will be the world’s sweat shop making Nike Sneakers and killing each other for food. This is not a theory I have. This is a DONE DEAL. 
I’ll talk more about the Petrodollar, or the U.S. Dollar being the World Reserve Currency, and what that means both to US and the REST OF THE WORLD in the next few days or so. I am SHOCKED people don’t understand or appreciate the significance of that one simple fact and what it means. That is one of the biggest ingredients in the glue that holds everything together. Again, much more to come on that later. For now, I want this article to highlight the people and places around the globe who are no longer using or trading in the World Reserve Currency. Let’s keep it there for now. MORE TO COME SOON!

The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it.  This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014.  Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does.  In February, China imported 1.39 million barrels of oil per day from Saudi Arabia.  That was 39 percent higher than last February.  So why is this important?  Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars.  This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy.  But if China becomes Saudi Arabia’s most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars?  And if the petrodollar system collapses, what is that going to mean for the U.S. economy?
Those are very important questions, and they will be addressed later on in this article.  First of all, let’s take a closer look at the agreement reached between Saudi Arabia and China recently.
The following is how the deal was described in a recent China Daily article….
In what Riyadh calls “the largest expansion by any oil company in the world”, Sinopec’s deal on Saturday with Saudi oil giant Aramco will allow a major oil refinery to become operational in the Red Sea port of Yanbu by 2014.
The $8.5 billion joint venture, which covers an area of about 5.2 million square meters, is already under construction. It will process 400,000 barrels of heavy crude oil per day. Aramco will hold a 62.5 percent stake in the plant while Sinopec will own the remaining 37.5 percent.
At a time when the U.S. is actually losing refining capacity, this is a stunning development.
Yet the U.S. press has been largely silent about this.
Very curious.
But China is not just doing deals with Saudi Arabia.  China has also been striking deals with several other important oil producing nations.  The following comes from a recent article by Gregg Laskoski….
China’s investment in oil infrastructure and refining capacity is unparalleled. And more importantly, it executes a consistent strategy of developing world-class refining facilities in partnership with OPEC suppliers. Such relationships mean economic leverage that could soon subordinate U.S. relations with the same countries.
Egypt is building its largest refinery ever with investment from China.
Shortly after the partnership with Egypt was announced, China signed a $23 billion agreement with Nigeria to construct three gasoline refineries and a fuel complex in Nigeria.
Essentially, China is running circles around the United States when it comes to locking up strategic oil supplies worldwide.
And all of these developments could have tremendous implications for the future of the petrodollar system.
If you are not familiar with the petrodollar system, it really is not that complicated.  Basically, almost all of the oil in the world is traded in U.S. dollars.  The origin of the petrodollar system was detailed in a recent article by Jerry Robinson….
In 1973, a deal was struck between Saudi Arabia and the United States in which every barrel of oil purchased from the Saudis would be denominated in U.S. dollars. Under this new arrangement, any country that sought to purchase oil from Saudi Arabia would be required to first exchange their own national currency for U.S. dollars. In exchange for Saudi Arabia’s willingness to denominate their oil sales exclusively in U.S. dollars, the United States offered weapons and protection of their oil fields from neighboring nations, including Israel.
By 1975, all of the OPEC nations had agreed to price their own oil supplies exclusively in U.S. dollars in exchange for weapons and military protection.
This petrodollar system, or more simply known as an “oil for dollars” system, created an immediate artificial demand for U.S. dollars around the globe. And of course, as global oil demand increased, so did the demand for U.S. dollars.
Once you understand the petrodollar system, it becomes much easier to understand why our politicians treat Saudi leaders with kid gloves.  The U.S. government does not want to see anything happen that would jeopardize the status quo.
A recent article by Marin Katusa described some more of the benefits that the petrodollar system has had for the U.S. economy….
The “petrodollar” system was a brilliant political and economic move. It forced the world’s oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world’s oil for free, since oil’s value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.
The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.
So what happens if the petrodollar system collapses?
Well, for one thing the value of the U.S. dollar would plummet big time.
U.S. consumers would suddenly find that all of those “cheap imported goods” would rise in price dramatically as would the price of gasoline.
If you think the price of gas is high now, you just wait until the petrodollar system collapses.
In addition, there would be much less of a demand for U.S. government debt since countries would not have so many excess U.S. dollars lying around.
So needless to say, the U.S. government really needs the petrodollar system to continue.
But in the end, it is Saudi Arabia that is holding the cards.
If Saudi Arabia chooses to sell oil in a currency other than the U.S. dollar, most of the rest of the oil producing countries in the Middle East would surely do the same rather quickly.
And we have already seen countries in other parts of the world start to move away from using the U.S. dollar in global trade.
For example, Russia and China have agreed to now use their own national currencies when trading with each other rather than the U.S. dollar.
That got virtually no attention in the U.S. media, but it really was a big deal when it was announced.
A recent article by Graham Summers summarized some of the other moves away from the U.S. dollar in international trade that we have seen recently….
Indeed, officials from China, India, Brazil, Russia, and South Africa (the latest addition to the BRIC acronym, now to be called BRICS) recently met in southern China to discuss expanding the use of their own currencies in foreign trade (yet another move away from the US Dollar).
To recap:
  • China and Russia have removed the US Dollar from their trade
  • China is rushing its trade agreement with Brazil
  • China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)
  • Saudi Arabia is moving to formalize trade with China and Russia
  • Singapore is moving to trade yuan
The trend here is obvious. The US Dollar’s reign as the world’s reserve currency is ending. The process will take time to unfold. But the Dollar will be finished as reserve currency within the next five years.
Yes, the days of the U.S. dollar being the primary reserve currency of the world are definitely numbered.
It will not happen overnight, but as the U.S. economy continues to get weaker it is inevitable that the rest of the world will continue to question why the U.S. dollar should automatically have such a dominant position in international trade.
Over the next few years, keep a close eye on Saudi Arabia.
When Saudi Arabia announces a move away from the petrodollar system, that will be a major trigger event for the global financial system and it will be a really, really bad sign for the U.S. economy.
The level of prosperity that we are enjoying today would not be possible without the petrodollar system.  Once the petrodollar system collapses, a lot of our underlying economic vulnerabilities will be exposed and it will not be pretty.
Tough times are on the horizon.  It is imperative that we all get informed and that we all get prepared.

Obamacare – Medicare Actuary Predicts Higher Premiums For 65% Of Small Companies – Americas Newsroom

Doug Casey On The Chinese 21st Century And The Us Following Roman Empire Decline

Our lead story: Erin looks at a landmark deal between Comcast and Netflix this past weekend that gives Netflix direct access to Comcast’s broadband network. This agreement removes Internet middlemen like Cogent Communications and Level 3, which Netflix previously used to send its content to broadband providers. Now Netflix has cut out these middle players so that it has a direct pipeline to Comcast. So instead of public pipes for the Internet at large, Netflix got its own pipe, and set a terrible precedent.Doug Casey calls in from Punta del Este, Uruguay to give us his assessment of China and why he thinks that 21st Century is a Chinese century. In this segment, he explains why he thinks central banks will lead to greater higher inflation and economic volatility in the near future; extols gold and explains why you should buy it; and warns why economic nationalism by governments could threaten economies throughout the world. After the break, Casey talks about water scarcity, the rising price of oil extraction, and how financialization and militarization hurt the US economy.In today’s Big Deal, Erin welcomes Ed Harrison back to talk about Abenomics and what it is trying to do to overcome Japan’s economic problems. Harrison expects Abenomics to eventually fail since wages remain stagnant despite the recent inflation numbers. He also explains why he thinks that the United States could become the next Japan.
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Half of General Dynamics Lynn Haven Work Force Looking For Jobs, Again.

LYNN HAVEN, Fla. General Dynamics has sent letters to 730 of its employees at the ObamaCare call facility that they are being laid off. That's about half of the workforce at the facility in the old SalleMae facility at the Lynn Haven Industrial park.
U.S. Rep. Steve Southerland, II of Panama City says the loss of 730 Bay County jobs is a stark reminder of America’s transformation into a part-time, short-term society.
The Congressman told NewsChannel 7, " I am saddened that these hardworking men and women are paying the price for the Obama administration’s unyielding pursuit of a job-crushing, Washington-first agenda that has made private sector job growth more difficult by the day. With nearly 80% of new jobs representing part-time opportunities, we must do better to restore the certainty that these 730 Northwest Floridians deserved from the start.”

Nancy Pelosi: "Nothing Left To Cut" - Gov't Made $100B+ In Improper Payment In '12 - Wasting Away

Best Buy cutting 2,000 managers

Best Buy cutting 2,000 managers

Best Buy has a major cost-cutting operation in the works, and the code word is “pink slip.”
The nation’s biggest electronics chain — which saw sales fall 2.6 percent during the Christmas selling season because of a price war with Amazon — has begun laying off thousands of midlevel managers nationwide as it girds for even more competition, The Post has learned.
After slashing hundreds of jobs at Best Buy’s Minneapolis HQ last year and closing unprofitable stores, CEO Hubert Joly is now swinging the ax across the retailer’s 1,056 US big-box stores and regional offices, according to insiders briefed on the plans.
No store closings are planned in this latest round of cuts, and the exact number of pink slips hasn’t yet been confirmed. But one insider said layoffs could affect upward of 2,000 managers and supervisors.
“This is ripping off the Band-Aid,” one Minneapolis source told The Post, noting that Joly is making the layoffs in a hurry to avoid uncertainty and prolonged pain.
Indeed, about 500 field managers were notified of the cuts last week, while store-level management is expected to get the news by next week, said one source.
A spokesman for Best Buy, which is slated to report results Thursday, declined to comment.
Joly, a former restaurant-and-hotel exec who took the reins in August 2012, is resorting to the ax after recent rounds of cutbacks on contracts with outside vendors and worker benefits.
Last week, in an internal memo to employees reviewed by The Post, Joly signaled “field leadership changes” designed to reduce head count in a “thoughtful, purposeful way.”
Most of the affected workers are from the middle management ranks, many of them commanding salaries that soar into the six-figure range as they supervised product categories at more than a dozen stores each.
The idea, Joly told employees in last week’s memo, is to give the manager of each store location the “full ability to run their (respective) stores.”
On the flip side, however, remaining managers in the field will be spread increasingly thin, in some cases forced to supervise two to three times as many locations, insiders said.
The bloodbath at regional offices is intended to minimize the carnage inside stores, as Joly looks to trim costs without compromising Best Buy’s customer service, according to sources.
As such, the firings aren’t expected to affect employees that directly assist shoppers. Still, it’s likely that some will see their hours cut, one source said.
The prospect of fresh firings rose for Best Buy employees last month after the company reported squeezed holiday margins, worsened by deep discounting and dwindling demand for cellphones.
The Jan. 16 announcement sent the retailer’s stock tumbling 35 percent. Two weeks later, Best Buy disclosed it is laying off 950 workers in Canada, or 6 percent of the workforce there.
Best Buy shares rose 2 percent on Wednesday to $25.82, plus another 1.4 percent after hours.
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