Zimbabwe's currency crashes, prices rocket.

By Nelson Banya

HARARE, June 5 (Reuters) - Zimbabwe's currency plunged to a new record low on Thursday, trading at an average 1 billion to the U.S. dollar on a recently introduced interbank market and triggering massive price increases.

Traders were quoting the Zimbabwean dollar at between 995 million and 1.45 billion against the greenback in Thursday morning trade, up from an average 700 million at the beginning of the week. The currency has depreciated by about 84 percent since the central bank effectively floated it in early May after years of an official peg.

Analysts said the rapid weakening of the currency was being driven by inflation expectations as well as huge demand for hard currencies.

"The exchange rate is being driven by massive demand for forex, as well as the desire to hedge against inflation," said Mudzingwa Nhiwatiwa, a research analyst at ZABG banking group.

"It shows our forex generating capacity is perilously low. Until we restore production and exports, the Zimbabwean dollar will continue to depreciate sharply."

Zimbabwe's production capacity, largely based on agriculture, has declined sharply mainly due to upheavals on commercial farms following President Robert Mugabe's drive to seize land from whites to resettle landless blacks.

Prices of basic goods, most of which are now imported, have gone up sharply since the disputed March 29 election in which Mugabe's ZANU-PF lost its parliamentary majority for the first time in 28 years.

Opposition leader Morgan Tsvangirai also beat Mugabe in the presidential election, but not by enough votes to avoid a run-off ballot, set for June 27.

PRICES SOAR

Nhiwatiwa said the freeing up of the exchange rate system in the absence of improved production and amid uncertainty over the unresolved election stalemate, had seen prices rising sharply.

For instance, a loaf of bread, which cost about Z$15 million before the polls, now costs about Z$600 million.

A two-litre bottle of cooking oil costs about Z$5 billion, almost equal to an average low-income worker's monthly wage, piling the misery on a country also grappling with food, fuel, water and electricity shortages, 80 percent unemployment and hyperinflation.

Official figures put Zimbabwe's annual inflation -- the highest in the world -- at 165,000 percent in February, but analysts say the figure vaulted as high as 1.8 million percent by May.

Prices on Zimbabwe's stock market, for long a refuge for investors in the inflation-ravaged country, have rocketed since the beginning of the year.

The benchmark Zimbabwe Stock Exchange (ZSE) industrial index leapt to a new high above 900 billion points on Wednesday, from just over 1.2 billion points at the start of the year.

Critics blame Mugabe's policy for the economic crisis, but he denies the charge, and says the economy has been undermined by Western governments plotting to oust him as punishment for his land reforms.

10 USA airports install body scanners, Devices can peer under passengers' clothes

The Transportation Security Administration (TSA) recently started using body scans on randomly chosen passengers in Los Angeles, Baltimore, Denver, Albuquerque and at New York's Kennedy airport.

Airports in Dallas, Detroit, Las Vegas and Miami will be added this month. Reagan National Airport in Washington starts using a body scanner today. A total of 38 machines will be in use within weeks.

Monkeys control a robot arm with their thoughts...

Monkeys control a robot arm with thoughts

Two monkeys with tiny sensors in their brains have learned to control a mechanical arm with just their thoughts, using it to reach for and grab food and even to adjust for the size and stickiness of morsels when necessary, scientists reported on Wednesday.

The report, released online by the journal Nature, is the most striking demonstration to date of brain-machine interface technology. Scientists expect that technology will eventually allow people with spinal cord injuries and other paralyzing conditions to gain more control over their lives.

The findings suggest that brain-controlled prosthetics, while not practical, are at least technically within reach.

In previous studies, researchers showed that humans who had been paralyzed for years could learn to control a cursor on a computer screen with their brain waves and that nonhuman primates could use their thoughts to move a mechanical arm, a robotic hand, a robot on a treadmill or a small vehicle.

The new experiment goes a step further. In it, the monkeys' brains seem to have adopted the mechanical appendage as their own, refining its movement as it interacted with real objects in real time. The monkeys had their own arms gently restrained while they learned to use the added one.

Experts not involved with the study said the findings were likely to accelerate interest in human testing, especially given the need to treat head and spinal injuries in veterans returning from Iraq and Afghanistan.

"This study really pulls together all the pieces from earlier work and provides a clear demonstration of what's possible," said Dr. William Heetderks , director of the extramural science program at the National Institute of Biomedical Imaging and Bioengineering.

Dr. John Donoghue, director of the Institute of Brain Science at Brown University, said the new report was "important because it's the most comprehensive study showing how an animal interacts with complex objects, using only brain activity."

The researchers, from the University of Pittsburgh and Carnegie Mellon University, used monkeys partly because of their anatomical similarities to humans and partly because they are quick learners.

In the experiment, two macaques first used a joystick to gain a feel for the arm, which had shoulder joints, an elbow and a grasping claw with two mechanical fingers.

Then, just beneath the monkeys' skulls, the scientists implanted a grid about the size of a large freckle. It sat on the motor cortex, over a patch of cells known to signal arm and hand movements. The grid held 100 tiny electrodes, each connecting to a single neuron, its wires running out of the brain and to a computer.

The computer was programmed to analyze the collective firing of these 100 motor neurons, translate that sum into an electronic command and send it instantaneously to the arm, which was mounted flush with the left shoulder.

The scientists used the computer to help the monkeys move the arm at first, essentially teaching them with biofeedback.

After several days, the monkeys needed no help. They sat stationary in a chair, repeatedly manipulating the arm with their brain to reach out and grab grapes, marshmallows and other nuggets dangled in front of them. The snacks reached the mouths about two-thirds of the time — an impressive rate, compared with earlier work.

The monkeys learned to hold the grip open on approaching the food, close it just enough to hold the food and gradually loosen the grip when feeding.

On several occasions, a monkey kept its claw open on the way back, with the food stuck to one finger. At other times, a monkey moved the arm to lick the fingers clean or to push a bit of food into its mouth while ignoring a newly presented morsel.

The animals were apparently freelancing, discovering new uses for the arm, showing "displays of embodiment that would never be seen in a virtual environment," the researchers wrote.

"In the real world, things don't work as expected," said the senior author of the paper, Dr. Andrew Schwartz, a professor of neurobiology at the University of Pittsburgh. "The marshmallow sticks to your hand or the food slips, and you can't program a computer to anticipate all of that.

"But the monkeys' brains adjusted. They were licking the marshmallow off the prosthetic gripper, pushing food into their mouth, as if it were their own hand."

The co-authors were Meel Velliste, Sagi Perel, M. Chance Spalding and Andrew Whitford.

Scientists have to clear several hurdles before this technology becomes practical, experts said. Implantable electrode grids do not generally last more than a period of months, for reasons that remain unclear.

Experts not involved with the study said the findings were likely to accelerate interest in human testing, especially given the need to treat head and spinal injuries in veterans returning from Iraq and Afghanistan.

"This study really pulls together all the pieces from earlier work and provides a clear demonstration of what's possible," said Dr. William Heetderks , director of the extramural science program at the National Institute of Biomedical Imaging and Bioengineering.

Dr. John Donoghue, director of the Institute of Brain Science at Brown University, said the new report was "important because it's the most comprehensive study showing how an animal interacts with complex objects, using only brain activity."

The researchers, from the University of Pittsburgh and Carnegie Mellon University, used monkeys partly because of their anatomical similarities to humans and partly because they are quick learners.

In the experiment, two macaques first used a joystick to gain a feel for the arm, which had shoulder joints, an elbow and a grasping claw with two mechanical fingers.

Then, just beneath the monkeys' skulls, the scientists implanted a grid about the size of a large freckle. It sat on the motor cortex, over a patch of cells known to signal arm and hand movements. The grid held 100 tiny electrodes, each connecting to a single neuron, its wires running out of the brain and to a computer.

The computer was programmed to analyze the collective firing of these 100 motor neurons, translate that sum into an electronic command and send it instantaneously to the arm, which was mounted flush with the left shoulder.

The scientists used the computer to help the monkeys move the arm at first, essentially teaching them with biofeedback.

After several days, the monkeys needed no help. They sat stationary in a chair, repeatedly manipulating the arm with their brain to reach out and grab grapes, marshmallows and other nuggets dangled in front of them. The snacks reached the mouths about two-thirds of the time — an impressive rate, compared with earlier work.

The monkeys learned to hold the grip open on approaching the food, close it just enough to hold the food and gradually loosen the grip when feeding.

On several occasions, a monkey kept its claw open on the way back, with the food stuck to one finger. At other times, a monkey moved the arm to lick the fingers clean or to push a bit of food into its mouth while ignoring a newly presented morsel.

The animals were apparently freelancing, discovering new uses for the arm, showing "displays of embodiment that would never be seen in a virtual environment," the researchers wrote.

"In the real world, things don't work as expected," said the senior author of the paper, Dr. Andrew Schwartz, a professor of neurobiology at the University of Pittsburgh. "The marshmallow sticks to your hand or the food slips, and you can't program a computer to anticipate all of that.

"But the monkeys' brains adjusted. They were licking the marshmallow off the prosthetic gripper, pushing food into their mouth, as if it were their own hand."

The co-authors were Meel Velliste, Sagi Perel, M. Chance Spalding and Andrew Whitford.

Scientists have to clear several hurdles before this technology becomes practical, experts said. Implantable electrode grids do not generally last more than a period of months, for reasons that remain unclear.

Nepal's lawmakers abolish the country's monarchy.

Nepal's lawmakers have abolished the monarchy and declared the country a republic, ending 239 years of royal rule in the Himalayan nation.

Nepal's lawmakers abolish the country's monarchy.

Nepal's lawmakers have abolished the monarchy and declared the country a republic, ending 239 years of royal rule in the Himalayan nation.

UnaSur, the South America Union, Is Born Today in Brazil

Leaders of South America are scheduled to meet this Friday, May 23, in Brazil for a summit. During the encounter the visiting heads of government and host Brazilian President Luiz Inácio Lula da Silva will be signing the legal framework of the charter for the Union of South American Nations, UnaSur.

Originally identified as the South American Community of Nations, it was first conceived in 2005 in Cuzco, Peru, during a regional leaders' summit.

UnaSur is made up of Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay and Bolivia.

The leaders of all member countries have confirmed their assistance to Brasília with the exception of Uruguay and Peru that will be represented by the vice president and the Foreign Affairs minister, respectively.

The blueprint of the charter was worked out earlier in the month in a technical meeting in Venezuela. However once signed "since it is a treaty," according to Brazilian diplomatic sources, the charter must be considered and approved by the different legislative branches.

A "transition period" until the full legitimate formality has been achieved will also be discussed, "although it's not central to Friday's agenda," added Brazilian diplomatic sources.

Another issue on the table is the Brazilian initiative for the creation of a South American Defense Council, with the purpose of coordinating defense policies in the region and work towards a common understanding on the matter.

Brazilian Defense minister Nelson Jobim last month visited most countries in the region to discuss the proposal with local officials from the Executive branch and legislative Defense committees.

"It's more ambitious than a military alliance, it's a forum to discuss and agree on common defense policies," said Jobim. The proposal was well received in most countries but Uruguay asked for more time to consider the concept.

UnaSur was scheduled to meet in January in Colombia but was delayed for March and then indefinitively because of the conflict between Colombia and Ecuador triggered when the incursion of Colombian forces in Ecuadorian border territory to eliminate a guerrilla camp.

Commodities Prices: Speculation Exposed

"The most exciting thing that happened Tuesday was the testimony of Michael Masters to the Senate Committee on Homeland Security (who have sweeping powers) as he spilled the beans and gave the Senate a very detailed inside view of exactly how speculators are the primary cause of high commodity prices.

Don't look for any commentary on this in the WSJ or most media outlets, you would think this entire investigation isn't going on as you watch CNBC wearing their Oil $130 party hats this evening!

What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant.

With very bold categories in his presentation like "Index Speculator Demand is Driving Prices Higher" Masters lays out a simple and compelling case that illustrates how over $250Bn of speculative money has poured into the commodities markets since 2003, driving the average cost of commodities indexed up 183% WITHOUT ANY SIGNIFICANT INCREASE IN ACTUAL DEMAND.


It's not just oil, there is a chart on page 4 of his presentation that shows how on Jan 1st 2003 sugar futures stockpiled totaled 2.3Bn pounds. On March 12th of this year, speculators had stockpiled 48Bn pounds of sugar. Soybean oil went from 163M pounds to 4.5Bn pounds, corn from 242M bushels to 2.4Bn bushels, coffee from 195M pounds to 2.4Bn pounds. wheat from 166M bushels to 1.1Bn bushels. Even cattle and hogs have had 10-fold increases in speculation. This is your "demand," 10 month supplies of commodities removed from the markets over 5 years and held by speculators who point to the "demand" as evidence of a tight supply - A TOTAL CROCK!

Speculators "consumed" as much additional oil as China in the past 5 years (848M barrels) while gasoline stockpiles have risen from 1.1Bn gallons to 3.5Bn gallons and natural gas stored by speculators has gone up from 331M BTUs to an insane 2.3 Billion BTUs. Aluminum - 10x, Nickel - 5x, Zinc - 10x, Copper - 7x, Gold - 10x, Silver - 15x — Madness!

In fact, Index Speculators have now stockpiled, via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own stockpile as the United States has added to the Strategic Petroleum Reserve over the last five years.

Demand for futures contracts can only come from two sources: Physical Commodity Consumers and Speculators. Speculators include the Traditional Speculators who have always existed in the market, as well as Index speculators. Five years ago, Index Speculators were a tiny fraction of the commodities futures markets. Today, in many commodities futures markets, they are the single largest force. The huge growth in their demand has gone virtually undetected by classically-trained economists who almost never analyze demand in futures markets.


I urge you to set aside the time to read this full report, it is an excellent presentation of pretty much everything I've been "ranting" about for 2 years put together by a guy who trades commodities for a living and is, as I am, totally fed up with the destruction of our economy and the suffering that is being caused by this rampant commodity speculation. In order for Goldman Sacks to make $1Bn, every driver on Earth needs to pay another $1 per gallon for gas this year - is that an efficient market? If all 2Bn of us just send GS a check for .50, THAT would be efficient. Unfortunately, as we discussed last week, Goldman's partners in crime who got together and formed the ICE back in 2003 (when all this started) also want their Billions - no matter what it costs you.

One particularly troubling aspect of Index Speculator demand is that it actually increases the more prices increase. This explains the accelerating rate at which commodity futures prices (and actual commodity prices) are increasing. Rising prices attract more Index Speculators, whose tendency is to increase their allocation as prices rise. So their profit-motivated demand for futures is the inverse of what you would expect from price-sensitive consumer behavior.

When Congress passed the Commodity Exchange Act in 1936, they did so with the understanding that speculators should not be allowed to dominate the commodities futures markets. Unfortunately, the CFTC has taken deliberate steps to allow certain speculators virtually unlimited access to the commodities futures markets.

Masters closes with the key issue, that:

The CFTC has granted Wall Street banks an exemption from speculative position limits when these banks hedge over-the-counter swaps transactions. This has effectively opened a loophole for unlimited speculation. When Index Speculators enter into commodity index swaps, which 85-90% of them do, they face no speculative position limits.

The really shocking thing about the Swaps Loophole is that Speculators of all stripes can use it to access the futures markets. So if a hedge fund wants a $500 million position in Wheat, which is way beyond position limits, they can enter into swap with aWall Street bank and then the bank buys $500 million worth of Wheat futures. In the CFTC's classification scheme all Speculators accessing the futures markets through the Swaps Loophole are categorized as "Commercial" rather than "Non-Commercial." The result is a gross distortion in data that effectively hides the full impact of Index Speculation.

Additionally, the CFTC has recently proposed that Index Speculators be exempt from all position limits, thereby throwing the door open for unlimited Index Speculator "investment." The CFTC has even gone so far as to issue press releases on their website touting studies they commissioned showing that commodities futures make good additions to Institutional Investors' portfolios.

This is how the current administration, through the "Enron Loophole" and other directives to the CTFC, has perverted an organization that is supposed to be CONTROLLING speculation and turned them into more than an enabler, but an actual cheerleader for the commodity markets. You would think this would be news but the same people who are sucking over $2Tn a year out of our pockets (over and above what we paid for the same commodities 5 years ago) are also the people who control the mainstream media and the very government that is listening to this testimony.

In order to put a stop to this YOU have to act. YOU have to get mad, YOU have to tell people what is happening because no one else is doing it are they? Feel free to copy this, Email it, print flyers - whatever - this is something that needs to be talked about and what better time than the day oil hits $130 a barrel while you drive less than you did last year, when it was $51.03 in January!"

US Tax assessors boggled by housing price buble collapse.

By D.L. BENNETT
The Atlanta Journal-Constitution
Published on: 05/12/08

For less than the price of a decent used car, you can buy a home in Atlanta today.

Actually, real estate agents list a dozen choices for $10,000 or less.Recent headlines:

Step up in price to $20,000 and your choices expand 10 fold.

The prices seem absurd but they are part of a real estate market suffering with rampant foreclosures, mortgage fraud, abandoned investor properties, a collapsing mortgage industry and other ills. The market is unlike anything seen in metro Atlanta in years and it has local tax assessors and appraisers as confused as anyone.

What is the value of a lot if no one can get a loan to buy it? How should you value a home that sits on the market for a year with no offers? When a neighborhood has several foreclosures, short sales and abandoned properties, do they set the market?

The training and rules for mass appraisal say taxable values should be set at fair market value or at the price for a sale between a "willing buyer and willing seller." Distressed sales, foreclosures and short sales are not supposed to count toward setting taxable values.

Therein lies the problem for tax assessors.

As Fulton's chief appraiser, Burt Manning finds it hard to believe any parcel in Fulton is worth less than $10,000.

Still, real estate listings prove they are.

"We are trying to understand all these things," said Manning. "What's the right answer? We don't know. It's tough. I've got entire neighborhoods where all I've got is distressed sales. I don't have any good sales."

In fact, seven of Atlanta's least-expensive homes are listed on average for $8,800 but taxed at an average value of nearly $93,000.

The cheapest, at 336 Adelle Street in the Lakewood area, comes in at $5,900. Tax records list its value at $101,700.

The problems are pronounced in areas like West End, Lakewood and Vine City.

Wayne Flanagan, a RE/MAX agent who sells bank-owned properties, said in zip codes like 30310 and 30315 values have taken a nosedive faster than public officials can account for.

"There are some price ranges like $20,000-$80,000 where 90 percent of the properties on the market are foreclosures," Flanagan said. "You've got one bank competing against another. It's a spiraling situation, downward."

The agent said when tax values and true values are way apart, it can keep properties from selling and further depress values. Flanagan said he'd had a $95,000 deal on a duplex fall through recently because it was being taxed at $300,000. The buyer didn't want to be saddled with taxes at that level.

"They (government officials) are going to have to take a look at this," Flanagan said. "We are experiencing some of the same problems as Detroit, taxes are so high they drive down value."

Fulton noted the downturn in its 2008 values by marking down about 86,000 properties a total of nearly $364 million. Manning said in a typical year, Fulton tallies about 27,000 sales assessors consider as valid to set tax values. This year he counted only 20,000 due to the increase in distressed sales.

"I am less uncomfortable with values than I've been in a long time," Manning said. "These are unusual times."

Still, the issues aren't confined to Atlanta and Fulton.

Record foreclosure numbers across the region have appraisers in Cobb, Gwinnett, DeKalb and other counties wrestling with similar concerns. They also struggle with where to set the values for homes that don't sell or lots that normally are easy to value but now are tumbling because lenders won't give builders money to build new homes.

Thomas Stump, interim chief appraiser in DeKalb, said the number of "good sales" dropped from 12,400 last year to 8,500 this year. The lower number makes it even harder for the assessors to come up with values, he said.

"We have people in our office who want to sell but can't find a buyer," Stump said. "Still, there are buyers out there. It may take much longer. I don't think you can say a property has no value because it won't sell."

DeKalb reduced the values on about 4,500 parcels in 2008 and expects to drop many more in 2009 if the market slump continues.

"It's just a very strange market," he said. "It's very difficult to determine values."

Calvin Wimberly, a real estate agent who primarily sells bank-owned properties and has two listings under $10,000, said home prices in some areas have tumbled 200 or 300 percent in the past year. He said many suffered from mortgage fraud that artificially inflated values.

Wimberly said he'd recently sold a home in West End that tells the tale of what's happened in some neighborhoods. The home sold in March 2004 for $305,000 and then in August 2004 for $700,000. It tumbled to $122,900 in a sale last year. It sold recently for $51,000.

Those are the kind of numbers that have public officials scratching their heads.

"I had the toughest time trying to convince the bank the price was correct," Wimberly said. "They thought I was out of my mind."

After the boomers, meet the children dubbed 'baby losers'.

After the boomers, meet the children dubbed 'baby losers'

Across Spain, France and Italy, young middle-class professionals with good degrees and diplomas are facing a lifetime on low salaries with unrewarding jobs, forever poorer than their parents. Investigation by Graham Keeley in Barcelona, Jason Burke in Paris and Tom Kington in Rome
Graham Keeley
Article history
The Observer, Sunday May 11 2008 Article history

The kids learning to swim at the pool near Via Casilina, in a working-class suburb of Rome, could not ask for better qualified instructors. One is a literature graduate with a masters in communications from Brussels, while another, Antonio di Martino, is an aerospace engineer.

Di Martino, 30, still has to finish his degree, but with a one-year-old baby and another child on the way, and afternoons and evenings working at the pool to bring in €1,100 (£870) a month, something had to give.

'Some of the pressure to graduate also slipped away when I saw one friend get his degree and then only earn €500 a month at an Italian space firm and another get €800 a month at the European Space Agency,' said Di Martino, bouncing his son on his knee as his partner, Mattia, rushes out the door to her teaching job, which pays €1,200 a month. 'My parents bought me my flat, making me one of the lucky ones since prices are crazy and I would never get a mortgage,' he said. 'I spent two years of savings on doing up the bathroom and now I worry about my son. One problem, one unforeseen expense and things get serious.'

He said price checking in supermarkets was the norm - 'something my mother never did'. And the family thinks hard before travelling. 'With petrol and tolls, even a trip to my parents in southern Italy now costs €100.'

Di Martino is part of a new phenomenon sweeping Europe. As he spoke, Africa Garcia Arias, 32, was nearing the end of a 45-hour week in a busy Madrid hospital. Six months pregnant, Arias will scale back her working week in the coming month. But, though she is exhausted, this is hardly much relief. Her salary of €1,600 will drop to €1,000 a month.

On Friday night, Lorenzo, 35, was on a train heading to work a nightshift for a major American sales website's Berlin branch. He trained as a historian and a photographer. 'The pay is just about OK - €2,700 a month for a 40-hour week - but it is hardly the job I dreamed of doing,' he said.

And in Paris, Nathalie, 24, was sitting in a friend's tiny rented flat in the rundown 20th arrondissement, the poorest district of the city, having finished another month of unpaid 'work experience' for a major publishing company. Tomorrow she will be at the second home of her parents in Brittany to sit in the sun in the garden, read and swim. 'I look at how they live, and how they lived when they were my age or a few years older, and I realise that I will never have any of that,' she said. 'I am not sure whether to be angry, sad or simply resigned.'

With inflation soaring, property prices sky high, wages relatively static, labour markets gridlocked and sluggish or slowing economies, Nathalie, Lorenzo, Arias and Di Martino are among tens of millions of Europeans raised to expect that their degrees and diplomas will assure them a relatively high quality of life who are now realising that the world has changed. The disappointment is a shock with big political, social, cultural, even demographic consequences.

'I am angry. I know a lot of people who are in the same situation and our qualifications are not being rewarded,' said Arias. For Nathalie, the weekend in her parents' seaside home will leave 'a bitter taste in my mouth'.

Freelance architect Emilio Tinoco Vertiz, 32, earns just €1,000 a month. 'Who needs architects when no one wants to build houses?' he said. In Spain people such as Emilio are known from their pay as the 'mileuristas' (thousand euro-ers). In France they are the 'babylosers' - a term coined by sociologist Louis Chauvel to contrast them with 'babyboomers'. According to Chauvel, 41, a sociologist at the National Foundation for Political Science, for the first time in recent history a generation of French citizens aged between 20 and 40 can expect a lower standard of living than the one before. 'Mileuristas or babylosers: it's the same story,' he said. 'They have an average of three years more education than their parents, a worse job and a lower standard of living.'

In 1973, only 6 per cent of recent university leavers in France were unemployed; now the rate is 25 to 30 per cent; salaries have stagnated for 20 years while property prices have doubled or trebled, though the overall proportion of French people living in poverty has not changed. Whereas in the 1960s the poor were mainly the old, now they are the young; in 1970, salaries for 50-year-olds were only 15 per cent higher than those for workers of 30; the gap now is 40 per cent.

'Some talk of a war between the generations, but that's a little simplistic. It is more that the system means that the haves are keeping what they have and no one is helping the have-nots,' said Chauvel. 'The big determinant in France now of success is not your educational level but the wealth of your parents, if they can support you during your twenties as you fight your way into a closed employment market.'

French economists speak of 'insiders and outsiders'. The insiders are those who already have a job and are well-defended by the battery of French laws protecting the workforce and the unions. The outsiders are those without work which, naturally, include newcomers on the job market. Chauvel says the problem is particularly bad in Latin countries where parents are expected to support their children much longer.

In Spain, even during the boom years when growth outstripped the rest of the European Union, the 'mileuristas' found themselves unable to afford their own homes. But now with the Spanish economy crashing, prospects are grim. In the first three months of 2008, Spanish unemployment hit 9.6 per cent, the highest for three years and second only to Slovakia in the 27-nation EU.

Once one of Europe's success stories, Spain's Socialist government has been forced to cut its 2008 growth estimate to 2.3 per cent from 3.1 per cent. Josep Comajuncosa, a macro-economics specialist at the Esade business school in Barcelona, said the downturn may help the 'mileuristas' buy homes but it will not solve their basic problem. 'What is needed is a model of growth based on greater productivity and new industries primarily service-based such as IT, financial services and new technology which can raise salaries,' he said.

In an effort to save Spain from the worst effects of the downturn, the government has announced an ambitious public works programme, including a massive social housing plan that could help many to finally buy property. Such policies are likely to become common.

In Germany, according to a report published by consultancy McKinsey, those earning between 70 and 150 per cent of the average income - the standard definition of the middle class - will make up less than half the population by 2020, against 54 per cent today.

Only eight years ago, 62 per cent of Germans were in the middle-class bracket, according to a second study. Key markers of middle-class status - such as overseas holidays - are disappearing or becoming blurred. 'I haven't been away for two years,' said Aurel Thurn, 38, who works for an art gallery in Berlin and has top-level qualifications, 10 years' experience and speaks four languages fluently. 'I have enough money for my rent, my telephone and food. But that's it.'

Many feel that Germany's middle class has not benefited from the nation's recent economic recovery. The result has been political pressure, with trade union activism and a wave of industrial action aimed at securing higher wages and enhanced benefits as well as lower taxes for average earners and higher taxes on the rich. Germany's political parties have reacted by boosting public spending and are considering wide tax cuts.

'There is a political swing towards what were once considered the ideas of the political left such as minimum wages, benefits and so on,' said Holgar Schaefer, labour economist at the Cologne Institute of Economics. 'It is a tendency that is only likely to become more obvious in coming years.'

The same thing is happening elsewhere. In France, there has been a mass mobilisation of teachers and pupils against plans to slash staffing levels. 'It is completely unprecedented,' said author and journalist Ariane Chemin.

'There is a potentially explosive combination of political disillusion with a fascination for politics. Young people are both deeply cynical and deeply politicised. They are at the school gates calling teachers who work "scabs". We haven't seen anything like it for years.'

But it may be that, instead of the demise of the European class, we are merely witnessing its evolution. Daniel Gros, of the Centre for European Policy Studies in Brussels, said the middle classes across Europe were 'splintering'. 'The homogeneous middle class that you once had based on industry and a protected government sector is disappearing,' he said.

The political and social consequences are already visible. The success of Nicolas Sarkozy is one, according to Gros. 'The old massive blocs of Gaullist right and Socialist left based on clear understandings of what it is to be working class and socialist have broken down,' he said. 'Sarkozy's appeal cut across those classic divisions.'

Analysts also point out that the 'hardship' of the middle classes is relative - according to the European Commission, there are an estimated 16 million people in the EU at risk of poverty. 'The decline in standards of living for young middle class people is pretty moderate when compared with the very dramatic situation of their counterparts in totally marginalised communities such as the poor French suburbs,' said Professor Ian Begg of the London School of Economics.

'And it is an extremely varied picture. New service sector jobs can be low grade and badly paid - such as night shifts for an IT company - or very lucrative. Collectively, Europe is richer than it has ever been. Average income has been going up pretty well without a blip since 1945 and whatever the disparities some of that has filtered down to pretty much everybody.'

Begg pointed out that, with economic and social changes, a certain amount of 'blurring' was inevitable. 'There is a trend towards a certain classlessness and some win and some lose. Jobs that were previously passports to stable middle-class incomes and wealth no longer are. And those who lose out most tend to shout loudest.'

Iran dumps U.S. dollar for oil trades

TEHRAN, Iran (AP) -- Iran, OPEC's second-largest producer, has stopped conducting oil transactions in U.S. dollars, a top Oil Ministry official said Wednesday, in a concerted attempt to reduce reliance on Washington at a time of tension over Tehran's nuclear program and suspected involvement in Iraq.

Mahmoud Ahmadinejad, Iran's President, has called the dollar a 'worthless piece of paper.'

Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency.

Oil is priced in dollars on the world market, and the currency's depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

"The dollar has totally been removed from Iran's oil transactions," Oil Ministry official Hojjatollah Ghanimifard told state-run television Wednesday. "We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies."

Iranian President Mahmoud Ahmadinejad called the depreciating dollar a "worthless piece of paper" at a rare summit last year in Saudi Arabia attended by state leaders from OPEC countries.

Bank of England bail-outs to be kept secret so British taxpayers will never know where their money went

Bank bail-outs to be kept secret
Dan Atkinson, Simon Watkins, Mail on Sunday
27 April 2008, 8:59am

The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.

Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.

Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.

Any Bank of England employee leaking the names of institutions involved will face court action for breach of contract.

Even a figure for the overall amount advanced will not be published until October. Meanwhile the Bank is expected to issue at least £50bn of Treasury bills to banks in exchange for their mortgages - entirely in secret.

This hypersensitive official stance is thought to be a response to the events of last year when a huge stigma was attached to any lender suspected of going to the Bank for cash help.

The scheme is intended to steady the markets, but it is feared that reports of banks making widespread use of the facility could trigger further instability.

Barclays and HBoS have both confirmed they will use the Bank of England scheme. 'We welcome the Bank facility and we will participate in it,' confirmed Andy Hornby, chief executive of HBoS.

Other banks declined to comment, but it is expected that this week all of the leading banks, with the exception of Lloyds TSB, will tender some of their mortgages to the Bank of England.

HBoS confirmed last week it had packaged up £9bn of mortgages ready either for securitisation - in effect, selling them on in the wholesale financial markets - or to be offered to the Bank in return for Treasury bills.

The scheme, drawn up by King and approved by Chancellor Alistair Darling, aims to improve banks' liquidity by temporarily swapping bundles of mortgages and credit card debt for Treasury bills, which are short-dated Government debt that matures within nine months.

The scheme will run for three years so these bills will be replaced by new ones when required.

Under the plan, bills will be exchanged only for securities rated triple-A - the highest possible grade of security - by at least two of the three big ratings agencies, Fitch, Moody's and Standard & Poor's.

It would not normally be considered acceptable for big companies to arrange billions of pounds of financial support without telling their shareholders.

But one source close to major institutional investors said: 'I can see why there may be a case for secrecy.

'It may be the lesser of two evils.'

The £50bn or more of Treasury bills involved will dwarf the £17.6bn currently in issue, but the authorities are adamant this will not destabilise the Government debt market.

Worst USA Cities For Homeowner Debt

Raised in boom times, many Gen-X and Yers see their dreams go bust

Raised in boom times, many Gen-X and Yers see their dreams go bust
Few can remember a time when jobs weren't plentiful and life wasn't one big shopping trip. Now they are out of work and drowning in debt.
By Daniel Costello, Los Angeles Times Staff Writer
April 27, 2008
Jason Liebrecht used to write about his motorcycle adventures on his blog. But since early this month, the 36-year-old San Diego computer software engineer's daily musings have been about a less thrilling new experience: unemployment.

"Do I find a job, or do I head to Central and South America on the motorcycle?" he wrote on Day 4. By Day 7, he had become more realistic: "So far in the last week I've made $1,245 off of EBay sales. Mostly stuff I wasn't using, or don't need much. Nice way to clean the house up!"

After selling some stock and applying for unemployment, Liebrecht figures he can pay his $2,300-a-month mortgage and other bills for just two months. When his company health insurance runs out in a few weeks, he'll go uncovered because he can't afford the premiums.

"You have to just hope you land on your feet," Liebrecht said in an interview.

People everywhere are coping with rising credit card balances, falling home values and layoffs. But such worries are particularly jarring for a younger slice of the workforce that has known little but long-term financial prosperity and optimism.

After all, a large share of today's 20- and 30-somethings -- a nearly 80-million strong cohort -- were in college or high school (and some in grade school) the last time the country experienced a severe financial jolt. Some can barely remember the mild recession of 2001, which was followed by an extraordinary boom that coincided with their entry into the workforce.

Raised amid a long stretch of financial bounty and weaned on video games, cellphones, iPods and weekends at the mall, many Generation X and Y members have barely seen a time when they couldn't spend freely on the latest styles and gadgets.

In these tighter times, they're watching their spending and they're borrowing money from family members for the first time. To economize, some are moving in with friends and -- the horror -- even Mom and Dad.

And after years of being able to boast about promotions and climbing income, a growing number find themselves having to admit that they are out of a job. In the last year, the unemployment rate for 25- to 34-year-olds rose from 4.3% to 5.4% -- nearly twice the increase for age groups above them.

"This generation as a whole has not experienced any substantial kind of financial difficulty," said Leslie Winefield, director of the Portland, Maine-based Institute for Financial Literacy. "It could be a defining moment for them."

Jean Twenge, a San Diego State psychology professor and author of "Generation Me: Why Today's Young Americans Are More Confident, Assertive, Entitled -- and More Miserable Than Ever Before," said many are so far in debt that even a minor recession could be extremely challenging.

"Now they have to deal with losing their jobs, keeping their house and $4 gas," Twenge said.

Paradoxically, she said research shows that younger people have grown up in a time of great wealth but have more anxiety about their economic future than past generations.

"They seem to be looking into the future and understanding they may not have it as easy as their parents," she said.

Years of low unemployment may have masked the precarious finances of many young workers.

A study released last year by the Brookings Institution and the Pew Charitable Trust found that the median income of men in their 30s fell 12% from 1974 to 2004 when adjusted for inflation.



Charged up

Credit card debt for the average 25- to 34-year-old rose 52%, from $2,873 to $4,357, between 1989 and 2004, when adjusted for inflation, according to the research institute. The age group also experienced the largest increase in those making late payments during that period, up from 3% of all cardholders to 12%.

Nearly a quarter of all bankruptcies in 2006 were filed by people ages 25 to 34, up 40% in the last decade. But the age group makes up only 14% of the adult population.

The state of the economy has passed the Iraq war as the top concern for voters between ages 18 and 29, according to a poll this month by CBS News and MTV, raising the possibility that economic anxiety among younger workers could weigh heavily on the upcoming presidential election.

Kelly McAuliffe of Los Angeles can't believe how quickly she has gone from rushing to back-to-back business meetings to passing her days watching the Game Show Network and reruns of "Law & Order."

Since getting laid off from an online advertising company in February, the 34-year-old former sales director has stopped meeting friends for drinks and has pared her grocery list (less Whole Foods, more sales at Ralphs). She's scaling back her cellphone calls and where she drives because of rising gas prices.

To get by, she recently did the unthinkable: She borrowed money from her mother.

"It's hard to say it, but it's demeaning," said McAuliffe, who has had a handful of job interviews in the last month. "You work so long to make your parents proud, and this is the last thing you expect to be doing at my age."



Ray of hope

Few experts predict that younger workers face a dire long-term financial future, and not everyone is suffering. Some say younger workers may weather the uncertainty of economic downturns well because they're accustomed to changing jobs frequently.

The housing crisis might even open up opportunities.

"The bright spot is that younger people who didn't buy a house in the last few years and who have some cash can get into the housing and stock markets" for the first time in years, said Boston University economist Laurence Kotlikoff.

Although there are few reliable statistics on how many among younger home buyers are dealing with foreclosure, some economists believe they are bearing the brunt of the housing downturn. The explosion of sub-prime loans coincided with many first-time buyers with poorer credit histories entering the market.

Edward Wolff, an economist at New York University who studies generational wealth differences, worries that many younger people could accumulate even more debt in this downturn on top of outsize college loans, credit card balances and mortgage payments.

"It's not a doomsday scenario," Wolff said. But younger people "are stretched thin and don't have as much to fall back on."



Time running out

Dulce Maya is worried that she won't be able to squeeze by much longer. The 27-year-old restaurant manager bought a three-bedroom, two-bath house in Fontana for $350,000 two years ago with a $5,000 down payment and an adjustable-rate mortgage.

This year, her $2,300 monthly payment will probably rise to $3,300 and her work hours were recently cut because business is slow. Maya has asked her bank to lower her payments so she can keep her house, which is now valued at $200,000, and expects to hear back in the next few weeks. If it doesn't agree, she says, she may have no choice but to hand the bank the keys.

"I don't know what happens next," Maya said. "I may try and rent an apartment for around what I'm paying, but rents are going up too."

Rice Shortage Prompts Costco Calif. Rice Rationing

Costco is now posting signs limiting how much rice you can buy based on your previous purchases.

Wal-Mart Rations Rice, Warns of "Supply and Demand" Concerns -

Wal-Mart, the world’s largest retailer, said on Wednesday that it would ration the amount of rice each customer can purchase at its Sam's Club stores because of recent “supply and demand trends.”

“We are limiting the sale of Jasmine, Basmati and Long Grain White Rices to four bags per member visit,” the company said in a statement. “This is effective immediately in all of our U.S. clubs, where quantity restrictions are allowed by law.”

SEC rejects Congress' request, SEC refuses to allow Bear Stearns Investigation

SEC Rebuffs Lawmakers Over Bear
By Michael Siconolfi
Word Count: 361 | Companies Featured in This Article: Bear Stearns, J.P. Morgan Chase

Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities.

The Securities and Exchange Commission cited confidentiality in its decision involving the late-stage probe of the Wall Street firm.

At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. The firm ...

Forget About $5 Gas, What Happens At $10 Bread? Could Food Riots Come To America?

Forget About $5 Gas, What Happens At $10 Bread? Could Food Riots Come To America?

What's wrong with this picture: Go to Google News and do a quick search for the term food riots. You get (as of now) about 4,755 results. The stories that appear, while some concern dire predictions about near future events, a majority of the stories are talking about situations developing right now.

A side effect of the steadily increasing price of oil has led to the desire for readily available biofuel, i.e. growing your own fuel (a-la Brazil). This turns over land previously used to grow good old food to land used to grow food to be turned into fuel. What is debatable is exactly how much growing capacity the world has to meet demand of food or fuel. The inequalities in the world being as they are, there were starving people before this latest crisis began, but now their numbers being increased - driven by a sharp increase in the price of basic foods. Debatable is whether the price increase is real (in which case we are screwed), just another speculator-driven bubble (which may explain oil), or a symptom of the U.S. Dollar's death dive (which probably explains oil). What is not debatable is the effect that these increases are having on society in some third world nations, a crisis that is only threatening to spread. Some recent examples of trouble:

Hati saw riots during the latter half of March and early April:
Quote from: http://www.jamaica-gleaner.com/gleaner/20080413/focus/focus1.html
Since the start of April, Haiti has been experiencing protests over rising food prices. However, these protests became violent this past week. The protests have been triggered by rising food prices, both as a result of international factors such as oil price and grain price increases and the impact of bad weather on agriculture, creating shortages in production and consequently, an increase in agricultural and food prices.

The price of rice in Haiti has doubled from US$35 to US$70 for a 120-pound pack. Gasolene has risen three times in the last two months. Countries as diverse as Haiti, Cuba and Jamaica import most of their food. Food prices have risen around the world on average by 40 per cent since mid-2007 and the price of staples has risen by 80 per cent since 2005.

Rioting has also struck in Indonesia:
Quote from: http://www.theglobeandmail.com/servlet/story/LAC.20080412.FOODSIDE12/TPStory/TPInternational/Asia/
In Indonesia, the prices of some essentials have surged more than 50 per cent since January. Prices for tofu, soybeans and gasoline are now beyond the reach of the poorest families, rattling a government wary of social unrest. It responded by slashing import tariffs and subsidizing food in local markets, but that's not enough to ease the sting for many families in the developing world who must spend 50 to 60 per cent of their income on food, reports the United Nations Food and Agriculture Organization.

Rioting has led to general strikes which have led to more violence in Egypt:
Quote from: http://www.iht.com/articles/ap/2008/04/08/africa/ME-GEN-Egypt-Protest-Death.php
Ahmed Ali Hammad, 15, died from gun shot wounds Tuesday morning in the Mahalla hospital, said a security official on condition of anonymity because he was not authorized to speak to the press.

The gritty industrial city has been the scene of two days of violent clashes between police and residents angered over rising food prices. On Sunday, security prevented workers from going on strike.

In Ivory Coast, a three-day spike in food led to rioting in the capital:
Quote from: http://allafrica.com/stories/200803311850.html
At least a dozen protestors were wounded during several hours of clashes with police on 31 March as they demanded government action to curb food prices.

...

"A kilo of beef has increased from 700 CFA (US$1.68) to 900 CFA (US$2.16) in just three days," one of the protestors, Amйlie Koffi, told IRIN. "One litre of oil has increased from 600 CFA (US$1.44) to 850 CFA (US$2.04) in the same time."

"We only eat once during the day now," said another protestor, Alimata Camara. "If food prices increase more, what will we give our children to eat and how will they go to school?"

Cameroon...
Quote from: http://www.iht.com/articles/2008/02/27/africa/27cameroon.php
In the commercial capital of Douala, a police helicopter dropped tear gas on hundreds of protesters who marched to demand bigger cuts in fuel and food prices. As the marchers scattered in panic on Wouri Bridge, some fell into the river.

Witnesses saw police arrest dozens of protesters, taking them away in trucks. Some were beaten with rifle butts, the witnesses said. Anti-government protests were also reported in Bamenda in the northwest.

Cameroon is the world's fourth largest cocoa producer; no details were immediately available on disruption to shipments.

Other third world countries are relatively stable for the moment, but the pinch is getting worse. This from Venezuela:
Quote from: http://www.miamiherald.com/top_stories/story/494440.html
Jenny Dнaz pays a mark up for scarce eggs, sugar and cooking oil because she sometimes has to buy them from the back of a truck. Dayra Barreto gave up eating pricey asparagus, palm hearts, mushrooms and artichoke hearts. And Andrea Gonzбlez substitutes baloney for ham.

This snapshot of shoppers at a middle class grocery store in Caracas illustrates how rising food prices are hurting not just the poor in Latin America and the Caribbean, a region where some people spend more than half their income on food.

The Philippines...
Quote from: http://www.iht.com/articles/ap/2008/04/14/asia/AS-GEN-Philippines-Rice.php
Philippine officials dismissed fears of possible rioting over rising food prices and tight rice supplies, saying Monday that the unrest that toppled Haiti's government could not happen here.

Defense Secretary Gilberto Teodoro said the security situation in the country was stable and that skyrocketing rice prices were a global concern.

"I don't see any food riots in the Philippines," Teodoro said. "I think what this will do, on the contrary, is to give us more incentives and impetus to work together to solve the problem rather than fractionalizing the country."

Riots in Haiti at the weekend toppled its government after a wave of deadly looting because of rising food prices. Angry protests also erupted in Egypt over the cost of food.

The list goes on and on.

For anyone who has taken a trip to the grocery store recently, it's also obvious that the spike in food prices is not limited to the third world, and is having some very serious and real impacts in the West - thankfully limited to curtailed spending and an economic slowdown thusfar.

I have hit on the fact of rapidly rising prices before, but I'll highlight a couple more important facts to this discussion.

Quote
* Canola: up 133% in 2 years
* Cocoa: up 206% in 7 years
* Coffee: up 170% in 6 years
* Corn: up 150% in 2 years
* Oats: up 160% in 3.5 years
* Rice: up 239% in 6 years
* Soybeans: up 134% in 1.5 years
* Wheat: up 200% in 2 years

Here in America and the West, we can "take" those increases, at least for the moment. The belts are getting tighter and our lavish way of living is getting just a bit harder, but we can still "take" it. We can cut back on driving or that new computer or a video game or that satellite tv package, but we can still "take" the increases. (Take is in quotes because that is of course not 100% true and there are hungry people in this country, I'm just using it as a broad brush - when you compare the Haitian government collapsing because of food riots to the current situation in America, the Americans can at least be said that they are getting by.)

When you start out making a dollar or two per day and the cost of a bag of rice rises to three dollars, you suddenly have a serious problem. People go from poor to poorer, from poorer to impoverished, impoverished to starving, and soon - starving to dead.

Unfortunately for governments the world over, the average person isn't going to sit around and starve. Enough of their daily livelihood taken away and they are likely to protest, to riot, to demand change, to ask the questions and demand answers for why that loaf of bread was within their financial reach last Christmas but now would make an excellent Christmas gift. When governments can not provide the proper answers, they get toppled. At the moment the toppling movement appears to be of the peaceful kind - the desire to sweep out one party's rule or regime in favor of a supposedly better one. Despite the dreams revolutionaries may have, unless their trusted leaders have the gift of time machines and a means to transport a lot of food through them, they will not be able to end this crisis on their own, and may soon find their selves toppled as well.

A fed up public may turn its back on the elected system, seeking not change by the ballot box but the more quick, decisive, and satisfying-to-a-few-sick-people methods of revolt, guns, and civil war. How many months or years of hungry bellies and starving children would it take before a nation of people take up arms against their government?

Think of the average stability of an African nation. Now apply that sort of trouble to southeast Asian nations, Pacific Rim countries, middle eastern countries, and of course the big 800lb gorillas in the room - nuclear armed India and Pakistan. How far of a stretch is it really to go from a food riot in India to a toppled government to a new regime blaming it on the Pakistanis?

While the rest of the world stands on that precipice, the West sits back and watches. With military too strong to allow a successful armed rebellion, their governments can rest assured that despite what may be going on, they will presumably be able to stand and make it though this.

"Make it through" to what, exactly? Where is the light at the end of this tunnel? These countries have people too, and more people are going more hungry in these countries, leading to more anger against the government.

As far as America is concerned, right now the system is holding. Considering all the land that this nation has to grow things, I personally find it hard to believe our food prices are spiking as they are, but we'll leave that to conspiracy theories and traders looking to make a killing in the futures markets.

The signs of trouble are there, however. The number of people below the poverty line in America is growing. 28 million Americans - more than 10% of the available workforce - are now on food stamps, and their numbers are increasing as well. Food stamps being quoted in dollars and not in meals, the spike in prices means stamps aren't going as far as they used to go, either.

It is now becoming apparent that the idea to use biofuels like Brazil has is turning out to be a major mistake for countries like the United States. It turns out that more than driving, Americans also need food.

The penultimate question in all of this, still, is how do we get out of this mess? Rising fuel costs, land gradually becoming less usable because of global warming, converting food growing lands over to fuel growing lands, factory farms squeezing out the little guy which prevents supermarkets from being undercut by local growers who could do a better job at less transportation costs (which would use less fuel), growing populations, growing disparity between the top and the bottom of the economic ladder, the list goes on.

The 1990's were the decade of everything being great, relatively. This decade has been the decade of waking up to reality. The next decade will be a decade of decision. Whether the 2020's are marked by renewed prosperity or a world embroiled in worldwide resource wars and economic depression, well there's only a few more election cycles to put people into positions of power to figure out how that's all going to turn out.

Forget about five dollar gasoline, we should start asking ourselves if we are going to see ten dollar bread in our near future.

Making Government Immune From Law

NewsMax
By Paul Craig Roberts
January 14, 1999


If President Bill Clinton were being tried by the U.S. 10th Circuit Court of Appeals, he would be home free.


In a horrendous ruling devastating for justice, fair play and the rule of law, the 10th Circuit has ruled (9-to-3) that the laws of the United States do not apply to officers and agents of the government unless Congress specifically designates that the law applies to the government.


"Statutes of general purport do not apply to the United States unless Congress makes the application clear and indisputable," says the court, citing a 1873 case that "it is a familiar principle that the King is not bound by any act of Parliament unless he be named therein by special and particular words."


At dispute in the case, Singleton v. U.S., is the federal statute that specifies punishment for "whoever" promises anything of value to a witness in exchange for testimony for or against another person. Under the normal reading of the statute, prosecutors who promise defendants reduced sentences in exchange for testimony against others are violating the prohibition.


According to the majority opinion, federal prosecutors are not bound by the law against bribing witnesses, because they serve as alter ego for the government and "the word 'whoever' connotes a being," whereas "the U.S. is an inanimate entity, not a being. The word 'whatever' is used commonly to refer to an inanimate object. Therefore, construing 'whoever' to include the government is semantically anomalous."


In other words, "whoever" doesn't mean "whoever" if the "whoever" is an officer of the government. This Clintonesque word-play is necessary because, as the court acknowledges, "no practice is more ingrained in our criminal justice system" than convicting people with purchased testimony. Faced with an emptying of the prisons, the court ruled that the U.S. government is not a government accountable to law, but a "sovereign" above the law.


Prosecutors have found that it is far easier to purchase with leniency the testimony of accomplices against their confederates than to build a case against the confederates. When this practice began it was aimed at known criminals against whom evidence was lacking. But once the practice began, it has taken on a life of its own.


Today many innocents are ensnared by untrue accusations from criminal defendants seeking reduced charges by producing more fodder for prosecutors. Less and less does the criminal justice system work by police investigating a known crime and building a case. All too often, the first knowledge of the "crime" occurs when a defendant seeking reduced charges accuses others. In these cases, the accusation is the sole "evidence" of the crime, and prosecutors, who serve career instead of justice, are increasingly destroying innocents with purchased testimony.


A recent example is Khem Batra of Burke, Va. Mr. Batra, married with two children, came to the U.S. in 1974 from New Delhi, India. He has been a U.S. citizen since 1981 and was successfully operating his own travel agency. His troubles began when the husband of one of his employees approached him for loans to enable him to purchase distressed properties at auction. Soon Mr. Batra found himself in partnership, pooling money to bid on properties.


Unbeknownst to Mr. Batra, his sometime partner was illegally obtaining multiple mortgages on the same property. When the partner was apprehended, instead of being indicted, he was wired and promised leniency in exchange for implicating others. The partner managed to implicate some mortgage companies in technical infractions and apparently made an unsuccessful attempt to implicate the Burke and Herbert Bank in Alexandria, Va.


Mr. Batra was never implicated in the illegal financing schemes, but his partner, desperate to earn his leniency, testified that his money-pooling partnership with Mr. Batra was a conspiracy to under-bid the properties. On the basis of his partner's plea-bargained testimony, Mr. Batra was convicted in federal court of one count of violating the Sherman Anti-trust Act.


It is a definite sign of prosecutorial abuse when the Sherman Anti-trust Act, designed to bust up large monopolies, is applied to a small-time local partnership speculating in distressed properties sold at auctions where Mr. Batra and his partner comprised one of many bidders.


Such a dubious interpretation of the anti-trust statute shows an extraordinary determination to convict. But justice is forfeited when, in addition, the conviction is obtained solely through the purchased testimony of a defendant who committed a real crime and is seeking to reduce his charges.


Until the Glorious Revolution when Parliament established the supremacy of law over the sovereign, kings dealt with enemies by bribing or compelling witnesses to testify against them. Once law and not the king's government was supreme, Matthew Hale established the maxim that testimony purchased with reward has no standing in court.


It is an abomination that the 10th Circuit has enabled unscrupulous prosecutors to resurrect the ancient practice of convicting defendants with paid testimony.


COPYRIGHT 1999 PAUL CRAIG ROBERTS DISTRIBUTED BY CREATORS SYNDICATE, INC.

IRS Flunks Audit

Widespread Problems at Tax-Collecting Agency


ABC News
ABCNEWS Correspondent Jackie Judd
March 1, 1999


W A S H I N G T O N, March 1 - Just as millions of Americans struggle to meet the strict reporting standards set by the Internal Revenue Service, the tax-collecting agency itself has failed a federal audit.


The General Accounting Office today slammed the IRS for poor bookkeeping, paying out fraudulent refunds and leaving holes in computer security that may let outsiders ``access, alter or abuse'' taxpayer information.


Most significantly, the amount of money the IRS has failed to collect has reached a whopping $222 billion dollars - the same amount of money we spend every year on Medicare.


Most of it will never be collected, because it is owed by either bankrupt companies, failed savings and loans, individuals who are missing, or dead - or just plain deadbeats.


Congressman Blasts IRS


The litany of IRS failures was aired at a hearing today on Capitol Hill, drawing sharp criticism from lawmakers.


"I think the stockholders, the taxpayers, have every reason to demand a dramatic and immediate change and that includes debt collection," said Rep. Steve Horn, R-Calif., chairman of the government management subcommittee.


Debt collection was not the only problem found by the GAO. The IRS essentially failed the same sort of audit it forces upon taxpayers.


"Think of this as not balancing your monthly checkbook to the monthly bank statement," said GAO auditor Gregory Kutz, "and at the same time having a record-keeping system that was prone to error."


Shoddy Filing System


In some cases, the GAO said, the IRS had no record- keeping system at all. The IRS could not provide a list of what it owed outside vendors - such as utility companies that supply power to field offices.


Also, the IRS lost track of its own property. While some items may have been lost to theft, others simply could not be accounted for.


"We noted a missing Chevy Blazer, laptop computer and $300,000 printer," Kutz told lawmakers. "At one IRS field office, 19 of 130 computer assets over $50,000 each could not be located."


The IRS blamed antiquated computer systems for many of the snafus and asked for the same thing that many anxious taxpayers want: more time to fix the problem.

U.S. States Suffer as They Become Biggest Corporate Taxers in the World

March 18, 2008
New Study: U.S. States Suffer as They Become Biggest Corporate Taxers in the World

Combined with federal tax, corporate income tax in most states is world's highest

WASHINGTON, Mar 18, 2008 - A new study from the Tax Foundation, a nonpartisan tax research group in Washington, shows that most American states tax job providers at a higher rate than any other country in the developed world.

"This is startling news for America's businesses and workers," said Tax Foundation president Scott Hodge, the study's author. "Tax competition for jobs and investment is fierce, and the U.S. continues to fall further and further behind. Our states should be the world's leaders in many things, but high taxation should not be one of them. The high federal corporate tax rate is literally crushing states' competitive abilities. That means fewer jobs for American workers."

Counting the federal rate alone, the U.S. has the world's highest corporate tax rate, but including average sub-national rates (federal plus state in the U.S.), Japan edges out the U.S. for the highest-tax location (see table).

This new study breaks the tax down state-by-state, adding each state's corporate tax rate to the federal corporate tax rate. The results show that 24 states impose, when combined with the federal rate, a higher business tax rate than in any other nation. In fact:
24 states have a combined corporate tax rate higher than top-ranked Japan.
32 states have a combined corporate tax rate higher than third-ranked Germany.
46 states have a combined corporate tax rate higher than fourth-ranked Canada.
All 50 states have a combined corporate tax rate higher than fifth-ranked France.

"If federal lawmakers are serious about making the U.S. corporate tax system more competitive globally, they will have to partner with state officials to lower the nation's overall corporate tax burden," Hodge added. "Likewise, state officials should have a vested interest in cutting the federal corporate tax rate because there is only so much they can do to improve their own competitiveness. After all, even corporations in the three states that do not impose a major state-level corporate tax—Nevada, South Dakota, and Wyoming—still shoulder a higher corporate tax rate than France, and 25 other major countries, because of the 35 percent federal corporate rate."

The table below lists each state's combined corporate tax rate, and then compares them (bolded) with the rates of our major trading partners and competitors.
OECD Overall Rank
Country/State
Federal Rate Adjusted
Top State Corporate Tax Rate
Combined Federal and State Rate (Adjusted) (a)

....
Iceland
18
0
18

30
Ireland
12.5
0
12.5
.....
*Michigan, Texas and Washington have gross receipts taxes rather than traditional corporate income taxes. For comparison purposes, we converted the gross receipts taxes into an effective CIT rate. See footnote 2 for methodology.

(a) Combined rate adjusted for federal deduction of state taxes paid


Source: OECD, http://www.oecd.org/dataoecd/26/56/33717459.xls

For details: http://www.taxfoundation.org/publications/show/22917.html

The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.

Judge admits mistake in kicking whites out of court

Judge admits mistake in kicking whites out of court
Story Highlights
Judge Marvin Arrington regrets decision to remove white lawyers from court
Arrington says he wanted to talk to black defendants, urging them to get lives together
Arrington plans to open court to everyone Thursday, deliver same speech

(CNN) -- An Atlanta, Georgia, judge who ordered white lawyers out of his courtroom so he could lecture African-American defendants called that decision a "mistake" Tuesday night.

"In retrospect, it was a mistake," Judge Marvin Arrington told CNN. "Because my sheriff said to me, 'Judge, that message should be given to everybody' -- 'Don't violate the law, make something out of yourself, go to school, find a role model, somebody that will help you advance your life.'"

Arrington, who is African-American, is a judge in Fulton County, Georgia, which includes the city of Atlanta.

He said he got fed up seeing a parade of young black defendants shuffle into his courtroom and decided to address them one day last week -- out of the earshot of white lawyers.

"I came out and saw the defendants, and it was about 99.9 percent Afro-Americans," Arrington told CNN affiliate WSB-TV of Atlanta, "and at some point in time, I excused some lawyers -- most of them white -- and said to the young people in here, 'What in the world are you doing with your lives?'"

The judge thought his message would make a greater impact if he delivered it to a black-only audience, he said. Watch judge talk about decision to lecture black defendants »

"I didn't want them to think I was talking down to them; trying to embarrass them or insult them; be derogatory toward them, and I was just saying, 'Please get yourself together,'" Arrington said.

In his Tuesday night appearance on CNN, Arrington told Anderson Cooper that that seeing the same faces walk in and out of his courtroom year after year takes its toll.

"I ask them all the the time, 'What progress are we making with you?' And sometime they cannot answer," he said.

He said he would open his court doors to everyone on Thursday and "I am going to give the same identical speech: 'You've got to do better.'"

How Goldman Sachs Secretly Destroyed Bear Stearns

News that Wall Street powerhouse Goldman Sachs (GS) is taking the rest of Wall Street to the cleaners is nothing new, but now comes word that Goldman played a direct role in the destruction of competitor Bear Stearns (BSC). According to Fortune's Roddy Boyd, several days before the collapse, Goldman decided to stop backing up Bear Stearns derivatives deals--and it announced this decision to hedge-fund clients in an email that was then forwarded around an increasingly panicked Wall Street:
[On the morning of Tuesday, March 11], Goldman Sachs's credit derivatives group sent its hedge fund clients an e-mail announcing another blow. In previous weeks, banks such as Goldman had done a brisk business (for a handsome fee, of course) agreeing to stand in for institutions nervous, say, that Bear wouldn't be able to cough up its obligations on an interest rate swap. But on March 11, Goldman told clients it would no longer step in for them on Bear derivatives deals. (A Goldman spokesman asserts that the e-mail was not a categorical refusal.)

"I was astounded when I got the [Goldman] e-mail," says Kyle Bass of Hayman Capital. He had a colleague call Goldman to see if it was a mistake. "It wasn't," says Bass, who is a former Bear salesman. "Goldman told Wall Street that they were done with Bear, that there was [effectively] too much risk. That was the end for them"...

When word of the Goldman e-mail leaked out, the floodgates opened. Hedge funds and other clients, eventually running into the hundreds, began yanking their funds.

The next afternoon, Bear CEO Alan Schwartz announced on CNBC that everything was hunky-dory (which it wasn't). And two days later, Bear Stearns effectively went bankrupt.

Should Goldman be blamed for this? Absolutely not. Bear Stearns was under-capitalized, over-leveraged, and stuffed to the gills with crappy debt. Once again, Goldman seems to have outsmarted the rest of Wall Street, spotting a problem before everyone else did. But because "runs on the bank" are often started when smart players cut and run, Goldman's decision appears to have at least contributed to the stampede.

Goldman Sachs: Giving new meaning to "crushing the competition."

California freefall: Home prices down 26% in February

California freefall: Home prices down 26% in February

Signs of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.

--Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week, the California Association of Realtors reports. Further, the CAR says the Fed's interest rate-cutting campaign "will have little near-term direct effect on the housing market."

--In the San Fernando Valley, losing a home to foreclosure is now almost as common for families as buying a home. The L.A. Daily News: "During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in Valley communities from Glendale to Calabasas, according to the San Fernando Valley Economic Research Center at California State University, Northridge."

"It's bad. It's really bad," market analyst Nima Nattagh told the Daily News.

The California Association of Realtors reports median prices fell 27.2% from year-ago levels in the hard-hit Inland Empire east of Los Angeles, 30.9% in Sacramento, and 39.1% in Santa Barbara County.

On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% in median prices reported this week by the National Association of Realtors. On an absolute basis, the California meltdown is even more severe: Nationally, prices fell over the past year at a rate of $338 per week; in California, prices fell at a rate of $2,788 per week.

According to the CAR, "The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007." The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.

"The Federal Reserve Bank’s recent action to reduce the federal funds rate will have little near-term direct effect on the housing market," said CAR Vice President and Chief Economist Leslie Appleton-Young. "However, Fed rate cuts should result in more favorable real estate finance rates as we move through the year."


Median home sales prices sometimes exaggerate swings in market activity. A year ago, median home sales prices in California continued to show price gains, even though the market downturn had begun. At the time, the collapse of sub-prime lending had the effect of freezing the lower end of the market. With fewer sales of less expensive homes, the market was dominated by sales at higher price points, and median sales prices showed gains.

The opposite appears to be happening now, as lower-priced foreclosed homes come onto the market, increasing sales at lower price points, while the market for more expensive homes has slowed dramatically.

Survival skills.

investor-related condominium sales in Canada

“The real estate company estimates that 50% of all sales activity in downtown Vancouver can be linked to investors while the figure for downtown Toronto attributable to new sales is approximately 60% to 85%.”

French-to-English and back legal lexicon

A Bankrupt Superpower

Published: March 19, 2008 Author: Paul Craig Roberts

In his famous book, The Collapse of British Power (1972), Correlli Barnett reports that in the opening days of World War II Great Britain only had enough gold and foreign exchange to finance war expenditures for a few months. The British turned to the Americans to finance their ability to wage war. Barnett writes that this dependency signaled the end of British power.

From their inception, America's 21st century wars against Afghanistan and Iraq have been red ink wars financed by foreigners, principally the Chinese and Japanese, who purchase the US Treasury bonds that the US government issues to finance its red ink budgets.

The Bush administration forecasts a $410 billion federal budget deficit for this year, an indication that, as the US saving rate is approximately zero, the US is not only dependent on foreigners to finance its wars but also dependent on foreigners to finance part of the US government's domestic expenditures. Foreign borrowing is paying US government salaries--perhaps that of the President himself--or funding the expenditures of the various cabinet departments. Financially, the US is not an independent country.

The Bush administration's $410 billion deficit forecast is based on the unrealistic assumption of 2.7% GDP growth in 2008, whereas in actual fact the US economy has fallen into a recession that could be severe. There will be no 2.7% growth, and the actual deficit will be substantially larger than $410 billion.

Just as the government's budget is in disarray, so is the US dollar which continues to decline in value in relation to other currencies. The dollar is under pressure not only from budget deficits, but also from very large trade deficits and from inflation expectations resulting from the Federal Reserve's effort to stabilize the very troubled financial system with large injections of liquidity.

A troubled currency and financial system and large budget and trade deficits do not present an attractive face to creditors. Yet Washington in its hubris seems to believe that the US can forever rely on the Chinese, Japanese and Saudis to finance America's life beyond its means. Imagine the shock when the day arrives that a US Treasury auction of new debt instruments is not fully subscribed.

The US has squandered $500 billion dollars on a war that serves no American purpose. Moreover, the $500 billion is only the out-of-pocket costs. It does not include the replacement cost of the destroyed equipment, the future costs of care for veterans, the cost of the interests on the loans that have financed the war, or the lost US GDP from diverting scarce resources to war. Experts who are not part of the government's spin machine estimate the cost of the Iraq war to be as much as $3 trillion.

The Republican candidate for President said he would be content to continue the war for 100 years. With what resources? When America's creditors consider our behavior they see total fiscal irresponsibility. They see a deluded country that acts as if it is a privilege for foreigners to lend to it, and a deluded country that believes that foreigners will continue to accumulate US debt until the end of time.

The fact of the matter is that the US is bankrupt. David M. Walker, Comptroller General of the US and head of the Government Accountability Office, in his December 17, 2007, report to the US Congress on the financial statements of the US government noted that "the federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of September 30, 2007." In everyday language, the US government cannot pass an audit. AD

Moreover, the GAO report pointed out that the accrued liabilities of the federal government "totaled approximately $53 trillion as of September 30, 2007." No funds have been set aside against this mind boggling liability.

Just so the reader understands, $53 trillion is $53,000 billion.

Frustrated by speaking to deaf ears, Walker recently resigned as head of the Government Accountability Office.

As of March 17, 2008, one Swiss franc is worth more than $1 dollar. In 1970, the exchange rate was 4.2 Swiss francs to the dollar. In 1970, $1 purchased 360 Japanese yen. Today $1 dollar purchases less than 100 yen.

If you were a creditor, would you want to hold debt in a currency that has such a poor record against the currency of a small island country that was nuked and defeated in WW II, or against a small landlocked European country that clings to its independence and is not a member of the EU?

Would you want to hold the debt of a country whose imports exceed its industrial production? According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007 imports were 14 percent of US GDP and US manufacturing comprised 12% of US GDP. A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.

The dollar has even collapsed in value against the euro, the currency of a make-believe country that does not exist: the European Union. France, Germany, Italy, England and the other members of the EU still exist as sovereign nations. England even retains its own currency. Yet the euro hits new highs daily against the dollar.

Noam Chomsky recently wrote that America thinks that it owns the world. That is definitely the view of the neoconized Bush administration. But the fact of the matter is that the US owes the world. The US "superpower" cannot even finance its own domestic operations, much less its gratuitous wars except via the kindness of foreigners to lend it money that cannot be repaid.

The US will never repay the loans. The American economy has been devastated by offshoring, by foreign competition, and by the importation of foreigners on work visas, while it holds to a free trade ideology that benefits corporate fat cats and shareholders at the expense of American labor. The dollar is failing in its role as reserve currency and will soon be abandoned.

When the dollar ceases to be the reserve currency, the US will no longer be able to pay its bills by borrowing more from foreigners.

I sometimes wonder if the bankrupt "superpower" will be able to scrape together the resources to bring home the troops stationed in its hundreds of bases overseas, or whether they will just be abandoned.

Traders at top investment bank 'covered up losses to protect their bonuses in £1.4 bn scam'

Traders at top investment bank 'covered up losses to protect their bonuses in £1.4 bn scam'
By SAM FLEMING - Last updated at 00:24am on 21st March 2008


Canary Warf based Credit Suisse discovered a £1.4 billion scam by traders trying to protect their bonuses
A top investment bank said yesterday that some of its traders had tried to protect their massive bonuses with a £1.4billion scam.


Credit Suisse was forced to admit it will pay the price for the traders' ruthless scheming by sinking into the red.


All the traders involved - some of them based in London - have been fired or suspended.


Shares in the bank, which is based in Zurich, tumbled 7.5 per cent yesterday.


Credit Suisse admitted it had discovered intentional "pricing errors" by a small number of traders involved in complex investments linked to the mortgage market.


The latest revelations sent more shockwaves around stock markets still reeling from the collapse of Wall Street banking giant Bear Stearns over the weekend.


In London the FTSE 100 Index fell 50.4 points to 5495.2 as investors digested the latest round of grim news. The seemingly relentless series of financial scandals are badly damaging the reputation of the banking sector.


Worryingly, many banks appear to have only a slender grasp of the activities of their trading floors, sparking fears that there are more financial timebombs waiting to go off.


The news is also a fresh blow to the reputation Switzerland's conservative and secretive banking sector, which has long been seen as one of the safest places for the wealthy to stash their money.


Credit Suisse said yesterday it will slash £1.4billion from the valuation of its assets following its investigation.

It has refused to name the individuals responsible. But the team involved was reportedly led until recently by Kareem Serageldin, a managing director who left the bank last month.


Brady Dougan, chief executive of Credit Suisse, said the bank was taking a number of steps to bring its traders under control.


And he insisted the firm's finances were robust.


Mr Dougan said: "This incident is unacceptable and it does not represent the high standard of Credit Suisse.


"Our overall control framework remains sound. We are taking strong action to move forward.


"Credit Suisse continues to be well positioned through the challenging and volatile markets that have existed since the middle of 2007."


But in a further sign of the crisis afflicting the industry, it emerged that Citigroup is planning a new round of job cuts.


Around 2,000 investment banking and trading positions will be slashed at the world's largest financial firm, most of them in New York and London.


This comes on top of 4,200 job cuts announced in January.

US economist calls financial crisis worst since 1930s

19 Mar, 2008, 1659 hrs IST, IANS

WELLINGTON: The current financial crisis is the worst the world has seen since the Great Depression of the 1930s and the US Federal Reserve move to cut interest rates will not make much difference, the Nobel Prize winning economist Joseph Stiglitz said on Wednesday.

"It will have some impact - it will do a little bit to stem the blood - but it's not addressing the fundamental problems underlying the collapse of the financial sector," Joseph said.

Stiglitz, who won the Nobel Prize in economics in 2001, is a former chief of the World Bank and chaired former US president Bill Clinton's council of economic advisers. He is in New Zealand on a lecture tour.

He said the Federal Reserve's move to cut its funds rate by three-quarters of a percentage point was "just trying to ease the economy down rather than try to address the underlying problems."

Stiglitz said the main problem was the fact that an estimated 2 million Americans were going to lose their homes because they could not repay mortgages which exceed the value of their property as house prices fell dramatically.

"As people walk away from their mortgages there will be more and more defaults - that undermines the whole financial system," he said.

Stiglitz said the Bush administration was bailing out banks, but accused it of refusing to do anything to help poor people stay in their homes which would stabilise the housing market.

"It's very easy to do something about it," he said, suggesting the administration could give assistance to write down mortgages to about 90 per cent of the value of a house which would enable people to stay in their properties.

However, the Bush administration has unveiled plans designed to help homeowners in danger of losing their homes by allowing holders of sub-prime mortgages to borrowers with poor credit to more easily apply for refinancing. The government will also send out tax rebate cheques in May.

Stiglitz said it was ironic that former Federal Reserve head Alan Greenspan had said it was the world's worst economic problem in the last 50 years, adding, "He is the source of much of the problem."

He said mismanagement by the Federal Reserve over the last seven years was one of the major factors underlying the current problem.

"They had the regulatory authority to prevent some of these bad practices that we are now paying for and he chose not to do it."

Stiglitz said the reason related in part to the war in Iraq and the very negative effect on the economy.

"They didn't want Americans to know exactly how bad the war was for the economy so they flooded it with liquidity, they looked the other way with regulations and they deliberately, I think, postponed the problem into the future and now we're paying the price."

Investment Houses Borrow Billions From Fed's Emergency Lending Program

Investment Firms Tap Fed for Billions
Thursday March 20, 5:03 pm ET
By Jeannine Aversa, AP Economics Writer

Investment Houses Borrow Billions From Fed's Emergency Lending Program

WASHINGTON (AP) -- Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday.

The lending is part of a major effort by the Fed to help a financial system in danger of freezing.

Those large firms averaged $13.4 billion in daily borrowing over the past week from the new lending facility. The report does not identify the borrowers.

The Fed, in a bold move Sunday, agreed for the first time to let big investment houses get emergency loans directly from the central bank. This mechanism, similar to one available for commercial banks for years, got under way Monday and will continue for at least six months. It was the broadest use of the Fed's lending authority since the 1930s.

Goldman Sachs, Lehman Brothers and Morgan Stanley said Wednesday they had begun to test the new lending mechanism.

On Wednesday alone, lending reached $28.8 billion, according to the Fed report.

The Fed created a way for financially strapped investment firms to have regular access to a source of short-term cash. This lending facility is seen as similar to the Fed's "discount window" for banks. Commercial banks and investment companies pay 2.5 percent in interest for overnight loans from the Fed.

Investment houses can put up a range of collateral, including investment-grade mortgage backed securities.

The Fed, in another rare move last Friday, agreed to let JP Morgan Chase secure emergency financing from the central bank to rescue the venerable Wall Street firm Bear Stearns from collapse. Two days later, the Fed back a deal for JP Morgan to take over Bear Stearns.

Thursday's report offered insight on how much credit was extended to Bear Stearns via JP Morgan through the transaction the Fed approved last Friday. Average daily borrowing came to $5.5 billion for the week ending Wednesday.

Separately, the Fed said it will make $75 billion of Treasury securities available to big investment firms next week. Investment houses can bid on a slice of the securities at a Fed auction next Thursday; a second is set for April 3.

The Fed will allow investment firms to borrow up to $200 billion in safe Treasury securities by using some of their more risky investments as collateral.

By allowing this, the Fed is hoping to take pressure off financial companies and make them more inclined to lend to people and businesses.

The housing collapse and credit crunch have led to record-high home foreclosures and forced financial companies to rack up multibillion losses in complex mortgage investments that turned sour.

In the past day and weeks, the Fed has taken extraordinary moves aimed at making sure that problems in credit and financial markets do not sink the economy.

Lord Rothschild Backs John McCain.

From Elmer Lane
3-17-8
Under the headline "Lord Rothschild Backs John McCain"

The Washington Post(March 15, 2008) informs us that "Sen. John McCain plans at least one campaign event on his week-long congressional trip to Europe and the Middle East: a March 20 fundraiser in London. An invitation sent out by the campaign says the luncheon will be held at Spencer House, St. James's Place, 'by kind permission of Lord Rothschild OM GBE and the Hon Nathaniel Rothschild.' Tickets to the invitation-only event cost $1,000 to $2,300. Attire is listed as "lounge suits.
How innocent is that?
"The time to buy is when blood is running in the streets." This remark was made by an earlier Nathan Rothschild, the one who reduced the Bank of Englands gold reserves by 100,000 pounds by cahsing hundreds of small notes, almost sinking that institution because the bank would not cash his one of his larger notes. You will note that as blood has been running in Wall Street Goldman Sachs has been investing billions in its hedge funds, paying off %16 percent in just one month, "contrarian-like-a-fox" profitably buying up selected assets as share prices tumble. But the Rothschilds are also playing this game with their hedge funds. Are they placing bets which McCain will turn into sure things? Consider what is behind that question:


"Nathaniel Philip Rothschild (b. 1971), British investor, co-chairman of Atticus Capital. More than 200 years after Mayer Amschel Rothschild founded the family dynasty that offered discreet counsel and investment wisdom to kings, queens, emperors and industrial titans, his 35-year-old direct descendant, Nathaniel, has emerged as a kingmaker in his own right and an investor who some say may become the richest Rothschild of them all. In five short years, the man in line to be the fifth Baron Rothschild became close to becoming a billionaire through a web of private equity investments in Ukraine, Eastern Europe and most significant, his partnership stake in Atticus Capital, the fast-growing $14 billion hedge fund. Rothschild began his career in 1994 at Lazard Brothers Asset Management in London, before joining Gleacher Partners, the New York-based mergers and acquisitions (M&A) advisory firm founded by Eric Gleacher, former head of M&A at Morgan Stanley and Lehman Brothers. Rothschild is partner and co-chairman of Atticus Capital LLC, an international investment management firm established in 1995, that has offices in New York and London. Mr. Rothschild is also a director of RIT Capital Partners plc, and a director of The Rothschild Foundation. Rothschild is a member of the Belfer Center's International Council at Harvard's John F. Kennedy School of Government and the International Advisory Council of the Brookings Institution. He is also a member of the International Advisory Board of the Barrick Gold Corporation. Mr. Rothschild was nominated as a "Young Global Leader" by the World Economic Forum in 2005. Among the top money makers of the world almost all of the money coming from earnings of his investment in Atticus Capital hedge fund. He is partner and co-chairman of Atticus. In addition to his responsibilities at Atticus, Rothschild is director of RIT Capital Partners, his father's publicly traded U.K. investment trust. He is also director of JNR Ltd. -- the initials stand for Jacob and Nathaniel Rothschild -- a merchant banking boutique that specializes in emerging markets. Like his forebears, Nathaniel Rothschild prefers that his influence remain unseen. Mr. Rothschild is a principal adviser to Oleg Deripaska, one of the richest oligarchs in Russia and the owner of the aluminum giant Rusal, which recently merged with two other companies to create the world's largest aluminum company. Mr. Rothschild received no public credit despite having played a crucial role in getting the deal done.


"Lord Jacob Rothschild, OM GBE was born Nathaniel Charles Jacob Rothschild, the fourth Baron Rothschild. The 78 year old merchant banker is President of the Institute for Jewish Policy Research, an organization dedicated to cooperation in research, analysis and policy planning on issues affecting Jewish life worldwide. He is head of the English branch of the Rothschild family and chairman of RIT Capital Partners plc. Lord Rothschild is a member of the board of trustees of the Open Russia Foundation and serves as chairman of Yad Hanadiv, the Rothschild foundation which built and handed over to the State of Israel the buildings for both the Knesset and the Supreme Court. He is also Chairman of Rothschild Investment Trust (now RIT Capital Partners plc), an investment trust listed on the London Stock Exchange. He is a shareholder in Rothschild Continuation Holdings, the Swiss-based holding company for the Rothschild interests which has positions in many of the family businesses, including the bank N M Rothschild & Sons. From his headquarters in St James's Place in London, Jacob Rothschild has cultivated an influential set of clients, business associates and friends who have extended his interests far beyond the normal scope of a banker. He maintains strong personal and business links with Henry Kissinger. His country estate has been a regular venue for visiting heads of state including Bill Clinton. He hosted the European Economic Round Table conference in 2002, attended by such figures as James Wolfensohn, former president of the World Bank, Nicky Oppenheimer, Warren Buffett and Arnold Schwarzenegger.

"Forbes magazine poses lower ranking billionaires like Bill Gates and Warren Buffett as the richest men in the World. Retired management consultant Gaylon Ross Sr, author of Who's Who of the Global Elite, has been tipped from a private source that the combined wealth of the Rockefeller family in 1998 was approx (US) $11 trillion and the Rothschilds (U.S.) $100 trillion. A recent article in the London Financial Times indicates why it is impossible to gain an accurate estimate of the wealth of the trillionaire bankers. Discussing the sale of Evelyn Rothschild's stake in Rothschild Continuation Holdings, it states: ...[this] requires agreement on the valuation of privately held assets whose value has never been tested in a public market. Most of these assets are held in a complex network of tax-efficient structures around the World. The power of the Rothschild family was evidenced on 24 Sept 2002 when a helicopter touched down on the lawn of Waddedson Manor, their ancestral home in Buckinghamshire, England. Out of the helicopter strode Warren Buffet, - touted as the second richest man in the World but really a lower ranking player- and Arnold Schwarzenegger (the gropinator), at that time a candidate for the Governorship of California. Also in attendance at this two day meeting of the World's most powerful businessmen and financiers hosted by Jacob Rothschild were James Wolfensohn, president of the World Bank and Nicky Oppenheimer, chairman of De Beers. Arnold went on to secure the governorship of one of the biggest economies on the planet a year later. That he was initiated into the ruling class in the Rothschilds' English country manor suggests that the centre of gravity of the three hundred trillion dollar cartel is in the U.K. and Europe not the U.S. "

"United Kingdom banker N M Rothschild & Sons Ltd. is one of the last remaining of the great family-controlled banking dynasties established in the 19th century. Dwarfed by its larger, public rivals, Rothschild nonetheless remains a mythical name in the banking world. N M Rothschild provides banking and treasury financing services, treasury metals, and resource banking, including a central position in the world bullion markets, investment banking services (together with its joint-venture partnership with ABN AMRO), and risk management services. Since the 1990s, N M Rothschild has been taking steps to consolidate the operations of the various and far-flung Rothschild financial operations, most of which operate as subsidiaries under the Rothschild family-controlled Rothschild Continuation Holdings AG, established in Switzerland in the early part of the 20th century to protect the family's ownership of its banking empire. N M Rothschild has also been working in close cooperation with the--independent--Paris branch of Rothschild banking interests, Rothschild & Cie, led by David de Rothschild, who also functions as deputy chairman of N M Rothschild and is the heir-apparent to chairman and long-time leader Evelyn de Rothschild.

"N M Rothschild found plenty of work in the great wave of British privatization that swept the country during the late 1980s. The company was involved in a number of the country's most ambitious privatization programs, including the £5.6 billion privatization of British Gas in 1986, the exit of the British government from British Petroleum in 1987, and the privatization of the United Kingdom's water and sewage industry in 1989. At the same time, N M Rothschild, while remaining true to its family-owned and independent status, nonetheless made moves to establish itself as a globally operating entity capable of competing with the financial industry's heavyweights. As such N M Rothschild bolstered its international presence, consolidating its United States operations under the single Rothschild Inc. entity, based in New York, in 1981 and establishing separate Canadian operations with its Rothschild Canada Inc. subsidiary. The firm also opened offices in Germany and Italy at the end of the decade. During the 1990s, N M Rothschild began making stronger moves to draw together the various elements of the Rothschilds' empire. One of the last of these was the highly successful Paris-based banking arm, Rothschild & Cie., which retained its independent status. This business, led by David de Rothschild, had been created in the mid-1980s as France's banking industry shrugged off the ill-fated nationalization of the country's commercial banking system under the Socialist government in the early 1980s. The former Banque de Rothschild had been nationalized in 1982. Two years later, Baron Guy de Rothschild and son David took the compensation they had received--about 80 million--and started a new investment banking firm, Paris-Orleans Finance. It was not until 1986, however, that the French Rothschilds were granted a new banking license and the right to restore the family's name to their bank, as the French banking industry once again became privatized.
David de Rothschild quickly took the lead in rebuilding Rothschild & Cie, transforming it into a new French financial powerhouse and one of the driving forces behind many of the country's largest business deals through the next decade. When Evelyn de Rothschild began to look toward consolidating the family's banking interests, he tapped David de Rothschild to become N M Rothschild's deputy chairman in 1992, establishing his younger cousin as his heir apparent. That position was reinforced in 1996, when N M Rothschild engaged in a restructuring of its global operations, reorganizing its businesses around five main product lines: resource banking and treasury operations; investment banking; asset management; development capital; and private banking and trust management services. At the same time the Rothschild operations set up a group investment banking committee charged with coordinating the global financial business of the Rothschild empire. David de Rothschild was named as head of the new committee. Also in that year, N M Rothschild established a joint venture with Dutch bank ABN AMRO to compete for contracts in the world's equity markets. By 1999, that venture--ABN AMRO Rothschild--was completing deals worth more than $125 billion per year.



In the late 1990s, N M Rothschild client-intensive approach paid off as the group became an important player in the booming European market for mergers and acquisitions.


The firm took part in such important deals as the launch of EADS, the European aerospace group created from the merger of France's Aerospatiale, Spain's CASA, and Germany's DASA. N M Rothschild was also an advisor on the massive restructuring of Deutsche Telekom, valued at more than $15 billion; the firm also backed England's National Grid Group in its $8.9 billion takeover of Niagara Mohawk Holdings in the United States, while playing a supporting role in the takeover of Mannesmann by Vodaphone, worth more than $200 billion.

"As the company celebrated more than 200 years of operations at the heart of the world's financial markets, N M Rothschild continued to explore new frontiers. In 1999 the company announced its plans to extend the ABN AMRO Rothschild joint venture to cover the lucrative market for initial public offerings in the United States.

"N M Rothschild found plenty of work in the great wave of British privatization that swept the country during the late 1980s. The company was involved in a number of the country's most ambitious privatization programs, including the £5.6 billion privatization of British Gas in 1986, the exit of the British government from British Petroleum in 1987, and the privatization of the United Kingdom's water and sewage industry in 1989. At the same time, N M Rothschild, while remaining true to its family-owned and independent status, nonetheless made moves to establish itself as a globally operating entity capable of competing with the financial industry's heavyweights. As such N M Rothschild bolstered its international presence, consolidating its United States operations under the single Rothschild Inc. entity, based in New York, in 1981 and establishing separate Canadian operations with its Rothschild Canada Inc. subsidiary. The firm also opened offices in Germany and Italy at the end of the decade.

"During the 1990s, N M Rothschild began making stronger moves to draw together the various elements of the Rothschilds' empire. One of the last of these was the highly successful Paris-based banking arm, Rothschild & Cie., which retained its independent status. This business, led by David de Rothschild, had been created in the mid-1980s as France's banking industry shrugged off the ill-fated nationalization of the country's commercial banking system under the Socialist government in the early 1980s. The former Banque de Rothschild had been nationalized in 1982. Two years later, Baron Guy de Rothschild and son David took the compensation they had received--about 80 million--and started a new investment banking firm, Paris-Orleans Finance. It was not until 1986, however, that the French Rothschilds were granted a new banking license and the right to restore the family's name to their bank, as the French banking industry once again became privatized.

"David de Rothschild quickly took the lead in rebuilding Rothschild & Cie, transforming it into a new French financial powerhouse and one of the driving forces behind many of the country's largest business deals through the next decade. When Evelyn de Rothschild began to look toward consolidating the family's banking interests, he tapped David de Rothschild to become N M Rothschild's deputy chairman in 1992, establishing his younger cousin as his heir apparent. That position was reinforced in 1996, when N M Rothschild engaged in a restructuring of its global operations, reorganizing its businesses around five main product lines: resource banking and treasury operations; investment banking; asset management; development capital; and private banking and trust management services. At the same time the Rothschild operations set up a group investment banking committee charged with coordinating the global financial business of the Rothschild empire. David de Rothschild was named as head of the new committee. Also in that year, N M Rothschild established a joint venture with Dutch bank ABN AMRO to compete for contracts in the world's equity markets. By 1999, that venture--ABN AMRO Rothschild--was completing deals worth more than $125 billion per year. In the late 1990s, N M Rothschild client-intensive approach paid off as the group became an important player in the booming European market for mergers and acquisitions. The firm took part in such important deals as the launch of EADS, the European aerospace group created from the merger of France's Aerospatiale, Spain's CASA, and Germany's DASA. N M Rothschild was also an advisor on the massive restructuring of Deutsche Telekom, valued at more than $15 billion; the firm also backed England's National Grid Group in its $8.9 billion takeover of Niagara Mohawk Holdings in the United States, while playing a supporting role in the takeover of Mannesmann by Vodaphone, worth more than $200 billion. As the company celebrated more than 200 years of operations at the heart of the world's financial markets, N M Rothschild continued to explore new frontiers. In 1999 the company announced its plans to extend the ABN AMRO Rothschild joint venture to cover the lucrative market for initial public offerings in the United States.