Monday, February 18, 2013

Bangladesh’s PM hints at backing ban of Islamic party


Mourners gather and carry the casket bearing Ahmed Rajib Haider, 26, in Dhaka on Feb. 16, 2013. Image via AFP.
 
Bangladeshi Prime Minister Sheikh Hasina indicated Saturday she would back a ban on the country’s largest Islamic party, as tens of thousands of people joined the funeral of an anti-Islamist blogger.
Hasina said after a meeting with the mourning relatives of Ahmed Rajib Haider that the Jamaat-e-Islami party, whose members are suspected in the blogger’s murder, had “no right to be in politics in free Bangladesh”.
Demonstrations championed by the country’s online activists have seen thousands take to the streets for the last two weeks demanding the execution of leaders of the Jamaat-e-Islami party who are on trial for war crimes.


Rival protests by Islamists demanding a halt to the trials of Jamaat leaders including its chief and deputy chief over their role in the 1971 independence war have turned violent across the country, leaving 13 people dead.
Late on Friday Haider, an organiser of the anti-Islamist protests, was hacked to death with a machete near his Dhaka home.
Police have yet to comment on a possible motive, but his brother said Haider was targeted by Jamaat’s student wing for his online activities. Fellow blogger Shakil Ahmed said a pro-Jamaat website had last week named Haider as a target.
Hasina visited Haider’s home on Saturday and hinted in comments to reporters that she would back a ban for Jamaat.
“Anyone can assume who were behind this,” she said, alluding to Jamaat.
“Many claim they are a democratic political party, a democratic force. Now it is proved that they believe in terrorism not democracy, she said.
“We will do to them what is necessary. They have absolutely no right to be in politics in free Bangladesh.”
Thousands of people including war veterans joined the funeral late Saturday at Dhaka’s Shahbag intersection, where protests have been staged against Islamist groups since February 5.
Local police chief Sirajul Islam told AFP at least 50,000 people attended the funeral.
“We touched his coffin and vowed that we won’t leave the protests until the government finds his killers, and bans Jamaat and its student wing Islami Chhatra Shibir,” said blogger and protester Mahbubur Rahman.
Clashes between police and Islamists have intensified since last week after a senior Jamaat leader was sentenced to life imprisonment for mass murder.
Jamaat and the main opposition Bangladesh Nationalist Party have said the trials are based on bogus charges and are part of a wider political vendetta.
The government rejects the accusations and says the trials are needed to heal wounds of the nine-month war in which it says three million people were killed, many by pro-Pakistani militia whose members allegedly included Jamaat officials.
The killing on Friday was the second attack in Dhaka against a blogger critical of Islamist groups in less than a month, after the stabbing of a self-styled online “militant atheist” by three unidentified men.
[Image via Agence France-Presse]

America’s atomic arsenal is stuck in the Cold War era

These days superpower nuclear-weapons controversies hardly elicit the excitement that once inspired such bumper-sticker slogans as, “you can’t hug children with nuclear arms.” The “no nukes!” movement has gone the way of the Cold War and MTV playing music videos, right?
In the 21st century, the 2002 Treaty of Moscow and 2010’s New START (Strategic Arms Reduction Treaty) were supposed set the clock on bilateral warhead reduction, and there are no plans for the production of more nuclear weapons. Pretty cut and dried, one would think. But like everything radiating out of Washington, the atomic drawdown is not what it seems.
Despite a deficit reduction plan to cut $1.2 trillion in federal spending over 10 years and ongoing negotiations by the so-called supercommittee to identify cuts of $1.5 trillion more, members of Congress are pushing an expanded plutonium storage and production assistance facility at Los Alamos National Laboratory in New Mexico. Critics say the facility is unnecessary, poorly designed, and dangerous—there are fault lines throughout the Los Alamos property—and its cost has ballooned from $375 million in 2001 to an estimated $5.5 billion today.
It hasn’t been built yet—in fact, the designs aren’t even finished after 10 years. But the Chemistry and Metallurgy Research Replacement Nuclear Facility (CMRR-NF) has been soaking up taxpayer money all the same as the scope of the project has metastasized.
“The country doesn’t have money to pour into an unnecessary, giant boondoggle that has grown beyond all original expectations,” charges Greg Mello, executive director of the Los Alamos Study Group, probably the toughest grassroots opposition the CMRR-NF project faces right now. “When the cost of a facility increases by more than a factor of ten, even as the fundamental purposes are evaporating, it’s important to stop, to pause and to question whether this is the right thing to do.”
There is no doubt that the budget-cutting imperative is clashing with the old way of doing business on Capitol Hill, as pet projects and earmarks come under more scrutiny than ever. Bureaucratic institutions used to getting their way by easing expensive, potentially controversial programs under the radar are finding themselves squarely in critics’ sights.
That includes CMRR-NF, which has never been the subject of a public congressional hearing or passionate floor speech—much less a heated debate on cable TV or talk radio—but has been controversial nonetheless.
“I think the key is, it appears to be a huge waste of money and particularly in our current fiscal situation there is no need to hurry this thing at all,” says Peter Stockton, senior investigator for the Project on Government Oversight, which is currently working on its own CMRR-NF report.
•    •    •
The mission of National Nuclear Security Administration (NNSA), which is a semi-autonomous agency of the U.S. Department of Energy, is to “improve national security through the military application of nuclear energy.” It oversees Los Alamos and is in charge of the CMRR project.
Initially, the NNSA was merely focused on renovating the parts of Los Alamos’s old Chemistry and Metallurgy Research (CMR) building that were outmoded and deteriorating by the late 1990s. Tests had found faults running under the property that could cause dangerous earthquakes.
After President George W. Bush was elected, plans to improve and upgrade salvageable portions of the nearly 60-year-old CMR were scrapped, and NNSA set about designing a “simple” replacement facility with two buildings about a mile away. One, the Radiological Laboratory Utility Office Building, is not controversial and almost complete. The other—the NF in CMRR-NF—is a new nuclear facility that would support Los Alamos’s nuclear-weapons mission, including plutonium storage, and assist in the production of plutonium-based “pits,” the fissile cores of nuclear weapons. This currently takes place at the existing TA-55/PF-4 nuclear facility next to the proposed site.
The nuclear facility, according to its critics, has become a monster. Aside from the runaway cost estimates, according to Mello the envisioned facility would give TA-55/PF-4 the capacity to double the number of pits Los Alamos produces each year and could store up to six metric tons of plutonium, “enough to rebuild the entire U.S. strategic arsenal.” This when there are thousands of pits already in storage and a treaty with the Russians sharply limits the nuclear arsenal.
Even if the increase in pit production were necessary—and as Mello and others point out, with much of the information classified or otherwise unavailable to the public, it is hard to know—the existing lab could be upgraded to carry out Los Alamos’s publicly stated mission to refurbish the current stockpile. NNSA, critics complain, has so far refused to seriously consider any alternative.
“We think there are simpler, cheaper, faster alternatives to accomplishing their stated mission, though their stated missions are aggrandized to begin with,” says Los Alamos Study Group President Peter Neils, who was on Capitol Hill in late October to get the word out about CMRR-NF. He blames the out-of-control designs and spiraling cost on a mix of Cold War ideology, over-reliance on contractors, and the self-sustaining mentality of all bureaucracies.
Simply put, says Mello, “the warhead establishment and the Cold War hawks cannot let go of designing and building new kinds of warheads, to create what they call ‘end-to-end’ work for the weapons complex.”
•    •    •
As of June, the Federation of American Scientists reports, the U.S. had 1,950 operational strategic nuclear warheads, plus approximately 200 deployed on behalf of allied countries—Belgium, Turkey, Netherlands, Italy and Germany—and 2,850 in reserve. In addition, some 3,500 retired warheads are awaiting dismantlement. This all jibes with numbers issued by the State Department in 2010. START demands that the U.S. bring those deployed numbers down closer to 1,550 by 2018.
At its peak in 1967 during the Cold War, the nuclear stockpile was at 31,225 warheads. America had 22,217 when the Berlin Wall fell in 1989. If the Cold War were still on, say critics, we might need additional capacity to build pits. But as it is there are thousands of usable pits already in reserve, and the scientific consensus says the plutonium parts of the pits have a lifespan of at least 100 years. The U.S. arsenal is well stocked in this regard.
The new CMRR-NF would help Los Alamos’s TA-55/PF4 site boost production to a conservative estimate of 125 pits a year on a double shift, according to observers. 
This is as outrageous as it is unnecessary, claims Frank von Hippel, a professor and principal investigator at Princeton University’s Program on Science and Global Security, in an affidavit for the Los Alamos Study Group, which is trying to force NNSA’s hand in court.
“There is no anticipated need to produce new pits for U.S. nuclear weapons for several decades,” he writes. The oldest pit produced in the U.S. is 32 years old, he added, noting the current TA-55/PF-4’s production rate of 10 pits per year would be adequate for any replacements necessary during the modernization and maintenance that is already going on under the auspices of NNSA.
Critics say the entire landscape of nuclear-weapons production has changed since CMRR-NF was conceived—all in the direction of reducing the nuclear stockpile—yet every adjustment in the facility’s blueprints has resulted in more capacity to store plutonium and build additional pits.
Most notably, the Reliable Replacement Warhead, a new family of warheads conceived in 2004 and used as a chief justification for modernizing Los Alamos’s nuclear-weapons complex, was defunded by Congress and cancelled by the Obama Administration in 2009.
CMRR-NF “is being built to increase capacity for pit production, even though pit production is not what we need,” the Project on Government Oversight’s Stockton charges. NNSA did not respond to several phone calls for comment on these and other charges lobbed by the opposition.
A three-page “Questions and Answers Regarding the CMRR Project” issued by NNSA before the Reliable Replacement Warhead was canceled maintains that the “primary mission of CMRR will be to support the current nuclear weapons stockpile through surveillance and life-extension programs necessary for the nuclear weapons complex” and “the size of CMRR remains the same.” It blames the soaring expense on poor initial estimates, cost increases in “the construction industry worldwide,” and requirements relating to the seismic risks, nuclear quality assurance, and security. The words “fissile core” or “pit” are never mentioned.
NNSA also contends it has put alternatives up for public comment, most recently when it amended the plans under its Final Supplemental Environmental Impact Statement, which the agency says has incorporated “updated seismic safety design information.” (The Los Alamos Study Group disagrees and has filed a second lawsuit against NNSA, contending that it’s relying on outdated feasibility and impact studies, among other charges.)
Critics say that if the new facility’s mission is merely to help maintain the stockpile, the job could be handled at an improved and upgraded TF-22/P4 facility or elsewhere at a fraction of the cost. As for size, Mello says NNSA can longer say the facility is “the same”—the square footage might be, but the installation’s scope has certainly grown since 2001.
•    •    •
CMRR-NF is not without detractors on Capitol Hill. Over the years, its budget and plans have been questioned for all of the reasons already cited and more. Indeed, today’s fiscal environment has bolstered the criticism, with results that can be seen in competing House and Senate appropriations bills. (Some $450 million has been appropriated to CMRR since 2002.)
Calling it a “cost reduction strategy,” the House in July cut $100 million from NNSA’s $300 million request for CMRR-NF as part of the overall $30.6 billion Fiscal Year 2012 Water and Energy Appropriations package. “The [House and Water and Energy Subcommittee] fully supports the Administration’s plans to modernize the infrastructure, but intends to closely review the funding request for new investment to ensure those plans adhere to good project management practices,” the final bill reads.
By trimming the agency’s request by a third, the House is refusing to provide “the additional funding to support early construction” and would not do so until NNSA resolves “major seismic issues with design” and tames CMRR’s cost.
The Senate subcommittee, too, has expressed concerns. Pointing to the growing expense, its FY 2012 appropriations bill demands NNSA submit a contingency plan that would identify the cost and consequences of delaying the implementation of CMRR, as well as a planned Uranium Processing Facility at Oak Ridge, Tennessee—another project that has gone from an estimated $1.5 billion to upwards of $6.5 billion in the last five years. The committee also proposes to cut $60 million from the NNSA’s $300 million request for CMRR, but allows for preliminary “site preparation”—in other words, construction may begin on a project whose designs are not yet finished.
Mello and Neils have tried to convince lawmakers to put a permanent stop to CMRR-NF. It’s a difficult task, they say. Many legislators are hearing about the issue for the first time and might not be willing to plough through intimidating scientific and technical jargon to get at why this project is bad news.
And CMRR-NF already has momentum. Mike Lofgren, who spent 28 years on Capitol Hill as an aide on defense issues for the House and Senate Budget Committees, says this is bureaucracy in action, and anything relating to weapons systems is going to be expensive.
“It doesn’t surprise me that after a requirement has gone away, or the need has been severely curtailed, they would just continue on with this thing,” Lofgren tells TAC. “These projects get front-loaded by optimistic projections of their cost and overstatements of, ‘hey, we really need this thing,’ so you front-load them and politically engineer them by getting the local congressmen all hyped up by saying it’s going to create new jobs.”
When lawmakers start asking whether a particular project is really worth it, the response, Lofgren says, is always, “it’s too early to tell or too late to stop” and the effort will go on until the money is gone, mission accomplished or not. One need look no further than the $65 billion fleet of F-22 Raptors, which was grounded from May to August because of operational problems and has never seen a day of combat.
It’s hard to get a firm handle on how CMRR-NF has come to be apparently unstoppable because no wants to talk—neither the detractors on the Energy and Water Development Subcommittees, nor the project’s proponents, who have long been led by figures like Sen. John Kyl (R-Ariz.). In fact, reports at the time of Senate negotiations over New START indicate that as Republican Senate whip, Kyl was successful in obtaining additional funds for CMRR-NF in exchange for Senate GOP support for Obama’s treaty with the Russians. Kyl’s office did not return calls for comment.
A spokeswoman for Sen. Jeff Bingaman (D-NM), known as a longtime supporter of the CMRR project, responded with a statement from the senator that hardly sounded like a ringing endorsement.
“The CMRR is an important project for [Los Alamos National Laboratory] and for New Mexico, but it is also important to be sure environmental and cost issues are fully addressed,” Bingaman said. “My top concern as the project has been developed continues to be safety and security of the proposed facility.”
Contractors, post-Cold War ideologues, and bureaucracy may keep the CMRR-NF project going, but those interests appear to be clashing directly with the forces of fiscal restraint and new environmental concerns. After the earthquake-spawned Fukushima nuclear power plant disaster in Japan last spring, fears over seismic hazards at Los Alamos have only grown.
Meanwhile, the Los Alamos Study Group insists its goal is not to stop the U.S. nuclear program, but to make it safer, more efficient and less expensive.
The nuclear-weapons establishment “could do their job more efficiently and more cheaply if they didn’t infuse their work with so much ideology and were just more practical and straightforward,” says Mello. And CMRR-NF is not the only program that might demand additional scrutiny. According to the New York Times, the facility is just one of a host of modernization projects that could cost taxpayers over $600 billion in the next decade.

Xi warns CPC of Soviet-style collapse if faced with dissent

Beijing: China's new Communist Party leader Xi Jinping has warned cadres of a Soviet-style collapse if the party is confronted with ideological dissent, military disloyalty and corruption, the deadly mix that led to the dramatic disintegration of once mighty Soviet Union.

China must heed the still "deeply profound" lessons of the former Soviet Union, where political rot, ideological heresy and military disloyalty brought down the governing party, Xi, 59, reportedly told party leaders during his tour of Guangdong province in December last year soon after his election as the General Secretary of the ruling party a month before.

"Why did the Soviet Union disintegrate? Why did the Soviet Communist Party collapse? An important reason was that their ideals and convictions wavered," the New York Times, which has obtained the summary of his comments, quoted Xi as saying.

Official media, which covered his visit to China's richest province, did not publicise his remarks. 


"Finally, all it took was one quiet word from (the last Soviet leader) Mikhail Gorbachev to declare the dissolution of the Soviet Communist Party, and a great party was gone," he said about the dramatic collapse of the Soviet Communist Party in 1991.

"In the end, nobody was a real man, nobody came out to resist," Xi said, referring to the collapse of the mighty Soviet Union after the 74-year-long rule by the Soviet Communist Party.

About Chinese Communist Party whose iron-fisted rule of the country entering 64th year, he said, "We're a major power, and we absolutely cannot allow any subversive errors when it comes to the fundamental issues."

In some ways, Xi's warnings were not new as the lessons of the Soviet collapse are part of the curriculum of schools run by the CPC to enlighten its cadre about hidden dangers and threats to the party's rule.

"The Soviet Communist Party collapsed in 1991 after 74 years in power. It is a wake-up call for the CPC and a very good lesson to be learnt," Zhou Jintang, the vice president of the China Executive Leadership Academy at Jiangxi province, told visiting Foreign Journalists few months ago.

The Academy, one of six established by the CPC, trains around 5,000 middle rung party leaders and officials from the military, government business every year in various aspects of ideological education.

Ever since he took over as Party leader, Xi, currently the Vice President, has been warning the party about rot setting in its ranks reminding them about "cyclical fall of rulers" throughout Chinese history.

In one of his meetings with the non-Communist parties, Xi also narrated an ancient Chinese saying which stated "things must have gone rotten before insects can grow" while asking his party-men to stay clean and self-disciplined.

Vowing to carry forward reforms, he has also been cautioning about any ideological confusion in the CPC in the backdrop of disgraced Party leader, Bo Xilai, who, before his fall last year, tried to resurrect old Maoist hardline ideology playing up on the growing rich-poor divide.

Since his election, Xi has also been insisting that the country's 2.3-million-strong PLA, the world's largest Army, should remain under the leadership of the party and cannot have an independent command structure.

After taking over as party chief, Xi also took over as the Chairman of the Military Commission, which controlled the armed forces.

He is due to take over as President after the retirement of Hu Jintao, making him the most powerful leader of the party in recent years.

Hu had to wait for two years to become head of the Military Commission after his election as party chief ten years ago.

In one of his addresses to the military last month, Xi called for absolute loyalty to the CPC.

PTI 

China's Gold demand to outstrip supply by 2015 by 550 metric tons



China has a ferocious appetite for Gold now.  In 2012, Hong Kong shipped 94% more gold to the mainland than they did in 2011.

They are buying all the gold they can get and China's gold councils have projected by 2015, China's demand will outstrip their supply by 550 metric tons.   

There are approximately 2471 tons of gold mined annually around the world.  China mines approximately 403 tons of that.  That means within 2 years time China will be buying almost half the gold mined.

It is estimated they bought 832 tons of gold in 2012.  Here is an article from China on that subject alone.


China's gold consumption amounted to 832.18 tonnes in 2012, an increase of 9.35 percent from a year earlier, data from China Gold Association showed Saturday.
Consumption of gold jewelry rose 10.09 percent year on year to 502.75 tonnes, while those of gold bars and gold coins gained 12.22 percent and 21.63 percent, respectively, to 239.98 tonnes and 25.3 tonnes.
But consumption for industrial and other uses saw a drop last year, the association said.Demand for gold has grown steadily over the years as more Chinese see it as a hedge to diversify investment risks and battle against inflation.  China is currently the world's second-largest gold consumer after India.
China produced 403.05 tonnes of gold in 2012, making it the world's largest producer for the sixth straight year, according to previous data from the association.


Portions from article about demand:  (sorry for some reason the below will not format correctly, it splits the words when published)


The country's demand for the precious metal is expected to outstrip supply by at least 550 metric tons by 2015, statistics released by several gold councils showed.

China has been the world's biggest producer of gold for six years since 2007, with an annul output of 403 tons in 2012, a year-on-year growth of 11.7 percent.
A quarter-to-quarter comparison shows China's demand for gold investment saw a 24 percent increase in the fourth quarter of 2012, said Marcus Grubb, the council's managing director for investment.
To meet demands for physical gold, Hong Kong shipped 114 tons of gold to the mainland in December, a record high for monthly exports. Hong Kong's net gold flow to the mainland jumped 47 percent in 2012, totaling of 557 tons.
Data from the Hong Kong Census and Statistics Department show Hong Kong's total gold shipments to the mainland in 2012 jumped 94 percent from 2011 to more than 832 tons, while imports were six times higher at 275 tons.


You really have to wonder with China's purchases of gold and the demand so high, how is it that gold keeps getting hit and the price falls drastically as it did this last Friday.

I spoke to David Morgan from Silver-Investor.com  on Friday when Gold and Silver were getting smashed about what is going on.  He said that he believes they are in such a bad position of shorts that they had to smash it to get people to give up their long positions and to sell their gold and silver.  We spoke about the psychology of it and getting into people's mind in giving up their gold and silver.  Last year I interviewed David about that subject and the psychology of smashing metals.

I have no doubt that China loves the manipulation of Gold by the Western bankers so they can purchase at lower prices.  It is said they participate in the manipulation, which would make sense, so they can keep purchasing all they can get their hands on.

The question is.... are we now getting to the point that full demand has outstripped the physical and they are playing the paper to get people to give up their physical?  Is there such a shortage with countries now wanting to repatriate their gold, they are desperately smashing it for the last few times until it breaks away?

In regards to silver, there was an article two days ago on Silver Doctor  about a German car manufacturer hoarding silver due to the shortages of it and the need for them to have it in manufacturing their vehicles.

Portion:

New signs of an extremely tight wholesale physical silver market have now emerged, as a first-hand account has revealed that one of the largest and most famous German automakers is hoarding massive amounts of physical silver inside one of the most secure vaults in Zurich, Switzerland.
Everyone needs to ask themselves.... "Am I going to take advantage of these prices right now or am I going to give up on metals?"

I really hope that everyone makes the right decision and understands what is happening with the prices are all based on paper trades and not real physical gold and silver.

With the demand coming out of China for physical gold, (which does not include India's or Russia's appetites for Gold right now) prices will have to break out in a violent fashion one day (in the near future?).  At some point the truth will have to be revealed.

Think about how in less than 2 years (by 2015) the demand in China is going to outstrip supply.  This does not include any other country's demand or countries demanding their gold back.

Osborne and Obama have got it wrong

The passing down of inherited capital is one of the most important and fruitful features of modern capitalism

The wrong point: Barack Obama delivered a State of the Union address which made scarcely any mention of the national deficit and what measures might be required to reduce it
The wrong point: Barack Obama delivered a State of the Union address which made scarcely any mention of the national deficit and what measures might be required to reduce it Photo: AP
 
 
 
Is there anybody in charge on either side of the Atlantic who has the remotest understanding of what is happening with the economy? Or even a glimmering of what would be required to bring about its recovery?
If there is, then it is the best kept secret in public life. Judging by the pronouncements and policy decisions of a Left-of-centre administration in Washington and a Right-of-centre government here, this total absence of comprehension seems to be common to those of all political persuasions in positions of power: it is the universal blind spot of the governing class. The ability to perceive reality is apparently confined to those who are either in official opposition (in the US), or belong to dissident factions within the party which holds office (in Britain). For those of us who believed that the Anglosphere was the last redoubt of economic literacy – struggling to speak sense in a world drowning in European gibberish – this has been a trying week.
Barack Obama delivered a State of the Union address which made scarcely any mention of the national deficit and what measures might be required to reduce it – which is to say, the need to cut government expenditure. Instead, he announced even larger and more ambitious federal spending programmes. He made it absolutely clear that the mission of his presidency was to redistribute wealth rather than to address the urgent question of why America is failing to create more of it. (His only nod in the direction of the need to stimulate growth was to express a new-found enthusiasm for free trade with Europe which, considering his previous position on this, was a sign of desperation.)
His party’s view of the spending question is, indeed, ingeniously delusional. The Democrat leader in the House of Representatives, Nancy Pelosi, has said, “It is almost a false argument to say we have a spending problem.” (I love that “almost”.) Her party whip, Steny Hoyer, asserted that the country does not have a spending problem at all – it simply has a “paying-for problem”. (Imagine your teenage child explaining that he needs an advance on his allowance, not because he has spent too much money but because, for some peculiar reason, he just can’t pay for everything he has bought.)
In spite of being the most ostentatiously cosmopolitan and internationally confident president in a generation – in famous contrast to the parochial, down-home figure of his immediate predecessor – Mr Obama seems unaware of, or at least unwilling to acknowledge, the hard lessons of European social democracy: that if you expend all your political efforts on redistributing wealth, you inevitably end up penalising the creators of it. So, pretty soon, you run out of new wealth and you are forced to ration and recycle the shrinking pot of what is left. And the absence of wealth creation means that it is not only the sum total of capital that diminishes, but the innovativeness and optimism of the society at large. It is not just wealth that fails to grow but creativity, ambition and personal fulfilment.


In Britain, and to a lesser extent in Europe, there is some serious thought being given to escaping from this morass. It is now pretty much accepted, except by outright lunatics like Herman Van Rompuy and François Hollande, that this is the major political dilemma of our time. But for some bizarre reason, the United States is determined to relive our history of the past 40 years. Maybe the unsinkable entrepreneurial spirit of a nation of immigrants will survive even this. They say that America is an optimistic country because that’s where the optimists went. Well, good luck with that.
In the meantime, however, we have to cope with our own state of denial at home. David Cameron and George Osborne, who would insist that they do – really, truly – understand the need to reduce the deficit, cut government spending and stimulate growth, have just overseen the most spectacular extension of the universal welfare system since the Attlee government. With their new social care programme, they have effectively created a parallel national care service to run alongside the National Health Service: a guarantee that government will cover the costs of elderly nursing care for everyone, with the only limitation that those with assets of over £200,000 will have to spend £75,000 of their own money before becoming eligible. After that, everybody (even millionaires) will be entitled to free care paid for out of general taxation. Given the ageing population, which is already overtaking predictions, the cost of this is going to be stratospheric. But instead of taking this impending crisis as an opportunity to think afresh about the whole question of universal, state-subsidised provision, the Government has fallen back on the post-war model – presumably out of sheer political cowardice.
We might have taken this moment to examine alternative solutions: inviting the insurance industry to suggest products that would provide reasonably priced cover for elderly care, or co-operatives involving personal contribution-based schemes such as the trade unions used to operate. Instead we have gone for a monolithic national plan in which the less well-off will help to pay through their taxes for the care of the rich. Like the state pension system, it will be a form of Ponzi scheme, in that a current working generation will always be funding an older one instead of investing for its own future care.
Ah, but this is all right, says the Chancellor (sounding uncannily like Mr Obama), because it will be paid for by taxing the “rich”. We are going to cover the cost of this National Care Service by freezing the threshold on inheritance tax at the present level of £325,000. Let’s ignore the disastrous politics of this move – how it reverses the 2007 decision that actually brought the Tories and Mr Osborne a brief delirious spell of popularity – and just consider the economics. Depriving the “rich” (those with assets worth roughly the price of an upmarket suburban semi) of the right to pass on the full value of their assets is presumably seen as damaging no one except their own over-privileged children. I return to my original question: does anybody around here have a grasp of economic reality?
The passing down of small parcels of inherited capital is one of the most important and fruitful features of modern capitalism. If every generation has to start from scratch in building capital, the possibility of investment diminishes drastically. People who inherit their parents’ homes or savings don’t stash the money under the mattress. They spend it, or they invest it – very often in their own businesses, which then expand. And those little parcels of wealth that aren’t sucked into the government’s deadening grasp go back into the economy to help fuel growth. Does Mr Osborne – or Mr Obama – really not understand that?

$1,728,477,000,000: Fed’s Holdings of U.S. Debt Hit Another Record

(CNSNews.com) - The Federal Reserve's holdings of U.S. government debt climbed to yet another record this week, hitting $1,728,477,000,000.00 by the close of business Wednesday, Feb. 13, according to data released late Thursday by the Fed.
That was an increase of $10,734,000,000.00 from the close of business on the previous Wednesday.
As of Wednesday, the total debt of the federal government was $16,524,304,599,079.04. That included $11,668,602,027,147.93 in debt held by the public and $4,855,702,571,931.11 in intragovernmental debt, which is money the Treasury has taken out of government trust funds—such as the Social Security Trust Fund—and spent on other government programs.
Since Jan. 2 of this year, the Federal Reserve has increased its holdings of U.S. government debt by $62,359,000,000.00 At the same time, the Treasury has increased the overall debt held by the public by $87,084,476,752.86. Thus, the Federal Reserve has bought up the equivalent of 71.6 percent of the publicly held debt that has been issued by the Treasury so far this calendar year, and 14.8 percent of all of the U.S. government's publicly held debt that is now extant.
On Jan. 30, the Fed said it intended to buy $45 billion in federal government debt per month with the aim of helping to insure economic growth at what it called a “moderate pace” as well as an unemployment rate that would “gradually decline.”
In the fourth quarter of 2012, the U.S. economy did not grow, according to the Bureau of Economic Analsysis. On the contrary real GDP declined by 0.1 percent. In January, according to the Bureau of Labor Statistics, unemployment did not decline. In fact, it ticked up from 7.8 percent in December to 7.9 percent in January.
“The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate,” the Federal Open Market Committee said in a press release.


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Sunday, February 17, 2013

G20 leaders agree to avoid 'Currency Wars'

Participants of G20 states finance ministers and central bank governors meeting pose for family picture in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
Participants of G20 states finance ministers and central bank governors meeting pose for family picture in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
While the ‘Currency War’ debate headlined the agenda at the G20 Summit, financial leaders in Moscow failed to reach a debt agreement, but managed to outline plans to crack down on corporate tax loopholes.
Currency manipulations, dubbed as ‘currency wars’ dominated conversation at the G20 conference. Though Friday’s program was set to target austerity and economic stabilization strategies, it derailed with ‘overblown’ talks of currency manipulation.
"We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes,” announced top finance officials after late night discussions.
“Currencies should not be a tool for competitive devaluation," stressed British chancellor George Osborne.
The Japanese Yen and Chinese Yuan have recently come under fire for intentionally reducing value in order to gain a market advantage. The Yen has dropped over 7 percent under Abe Shinzo’s aggressive monetary and fiscal policies to battle deflation, Bloomberg reports.   
In a joint statement, leaders reinforced their opposition to such tactics, and echoed the G7 – which includes Japan – statement issued earlier this week declaring their commitment to "market-determined exchange rates".
European countries and the US worry that devaluations of currencies like the yen will make their exports less competitive and impede economic recovery at home.
US Federal Reserve Chairman Ben Bernanke attends a meeting of G20 states finance ministers and central bank governors′ deputies in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
US Federal Reserve Chairman Ben Bernanke attends a meeting of G20 states finance ministers and central bank governors' deputies in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
On the other hand, the projected goal of striking an agreement on budget deficit levels was left up in the air. The Toronto 2010 G20 summit resolved to cut annual budget deficits in half by 2013 and this pact expires in September.
Russia's Finance Minister Anton Siluanov is confident the G20 will have reached an agreement by that time, while forum host Vladimir Putin expressed hopes Moscow can serve as a model for other debt-stricken nations.
Russia has one of the world's lowest state debt levels… and the country's lowest inflation rate for the past 15-20 years. We hope we'll continue this strategy this year and in the medium term. We'll abide by a very weighted and responsible conservative approach to state finances," Putin said.
The debt-deficit limit was set up after Greece, Portugal, Ireland, Spain, and Cyprus required Eurozone assistance dealing with their overblown budget deficits. All the five countries (and Italy could very well be on the heel of this trend) tapped into the Eurozone’s monetary rescue fund.
G20 states finance ministers and central bank governors′ deputies attend their meeting in Moscow, on February 16, 2013  (AFP Photo / Yuri Kadobnov)
G20 states finance ministers and central bank governors' deputies attend their meeting in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)

Eliminating tax havens and loopholes   

Meanwhile, British, French, and German finance ministers led the crusade against tax-avoidance at the forum.
The cash-strapped European heavyweights have joined forces to ensure big business pays their fair share in taxes. As the recession drags on, Finance Ministers have ramped up efforts to abolish tax havens such as Bahamas, Cyprus, Monaco, Bermuda, British Virgin Islands, and the Cayman Islands. 
The campaign is being backed by the Organisation for Cooperation and Economic Development (OECD) which is working together with European governments to crack down on companies that exploit tax structures for profit.
International Monetary Fund (IMF) Managing Director Christine Lagarde (C) attends a meeting of G20 states finance ministers and central bank governors′ deputies in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
International Monetary Fund (IMF) Managing Director Christine Lagarde (C) attends a meeting of G20 states finance ministers and central bank governors' deputies in Moscow, on February 16, 2013 (AFP Photo / Yuri Kadobnov)
"We want businesses to pay the taxes that we set in our countries. And that cannot be achieved by one country alone,” George Osborne, UK finance minister, said pointing out that companies that transfer profits internationally to avoid higher taxes will be more heavily scrutinized.  
Amazon, Google, Starbucks, Google raked in billions of profits, but have paid miniscule amounts in taxes. In Britain last year, Starbucks paid just $13.8 million in corporate taxes.  
“We are determined to develop measures to address base erosion and profit shifting, take the necessary collective action and look forward to the comprehensive action plan the OECD will present to us in July,” the summit communiqué reported.  
Russia is the 2013 G20 chair, and the Leader’s Summit will be held in St. Petersburg on September 5-6, 2013. The G20 is a forum of the world’s largest economies that was established after the 2008 economic crisis. Russia’s agenda for the summit is international financial reform, world trade, investment, energy, and job creation.