The Definitive Source For News On Jews

If you thought Wall Street’s debt crisis was traumatic, wait till you the see the consequences of Washington’s debt crisis!

Never before in history has a world power like the U.S. been so utterly buried in debt! And never before has that debt been financed so massively by foreign investors!

Nineteenth century Mexico, Spain, and Argentina accumulated so much debt, they were forced to default.

In the 20th century, a similar fate befell Germany (1932) … China (1939) … Turkey (1978) … Mexico again in 1982 … Brazil and the Philippines (1983) … South Africa in 1985 … plus Russia and Pakistan in 1998.

Argentina kicked off the 21st century with a default in 2001. And barring a euro zone rescue, Greece, Spain, and Portugal are prime candidates for debt defaults this year.

But in NONE of these examples did we — or do we — see the debt crisis striking a dominant world power! In ALL cases, the debts represent little more than a small fraction of the total debts outstanding worldwide.

Not so in our case today!

In the entire world, the United States government and its agencies have, by far, the largest pile-up of interest-bearing debts ($15.6 trillion), the largest accumulation of unsecured obligations (over $60 trillion), the largest yearly deficit ($1.6 trillion), and the greatest indebtedness to the rest of the world ($4.8 trillion).

In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. But unlike Washington’s debts, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

Don’t kid yourself …The Great Recession is still in full force …

Now is the time to prepare your portfolio!

If you want Weiss Capital Management’s independent view on the economy and markets so you’re ready for the next move — be sure to watch this important investment briefing:

Washington’s debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances. Because no one can answer this simple question being asked by former GAO chief David Walker:

Who will bail out America?

Not you, not me, and not 300 million Americans! Not China, not Japan, nor all the powers on Earth put together! They’re simply not big enough. They don’t have the money.

Yet, despite the utter gravity of our plight,
nothing is being done to change our course.

In recent weeks, Congress could not even agree to study the issue. They could not vote on a deficit commission.

The president has just appointed a separate commission. But even after moons of deliberation, it will have no authority to bring its recommendations to a vote in Congress — let alone get them passed.

The president says that the effort must be bipartisan, that all options must be on the table, and that no cows can be sacred.

And indeed, this song sounds good. But it’s more out of synch with political reality than rap rock at the Bolshoi Ballet:

Democrats vow never to cut to Social Security or Medicare …

Republicans vow never to accept tax hikes, and all the while …

Economists swear that only a full-court, frontal attack on the deficit has any chance of making a dent.

My family and I — plus many others more illustrious than us — have been warning about this danger since 1960.

That was the year my father, J. Irving Weiss, founded our Sound Dollar Committee, organized a nationwide grassroots movement, and helped prompt 11 million telegrams, phone calls, and letters of protest to Capitol Hill.

That was the effort which persuaded Congress to vote for a balanced budget and helped give President Eisenhower a victory the likes of which has never been seen again.

In subsequent years, Dad and I nagged, cajoled, and testified before Congress so often I lost count.

I think we gathered more evidence and made more phone calls than a telethon phone bank.

But our warnings have typically been given little more than the time of day.

And always — ALWAYS — the so-called “solution” has been the same: more borrowing from Peter to pay Paul, more can-kicking down the road, more smoke and mirrors, more lies.

The Consequences of This
Complacency Are Catastrophe

To whit …

Consequence #1. Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

Already, despite the weakest post-recession recovery in memory, bond prices are plunging and their rates are surging.

Just a few weeks ago, the yield on 30-year Treasury bonds busted through a declining trend that had not been penetrated in more than 20 years.

And just last week, it came within a hair of its highest level in over two years.

With just one more, ever-so-slight nudge to the upside, all heck could break loose in the Treasury-bond market. You could see a surge in long-term interest rates that will make your hair curl.

If the U.S. economy could boast a booming housing market or low unemployment, this would not be such a shock.

Or if consumer price inflation were surging, it would also not be so unusual.

What’s so damning about this action in the bond market right now is the fact that it’s coming at the worst possible time.

That’s why Washington and Wall Street fear it so much. That’s why they’re so anxious NOT to tell you about it.

Consequence #2. All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof.

Reason: When Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

Consequence #3. Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates.

If you want to take out a 30-year fixed mortgage (now close to 5 percent) on a median-priced home ($178,300), and you can afford a 10 percent down payment …

Just a 1 percent rise in rates will drive your monthly payment from $861 to $962 …

A 2 percent increase will drive it to $1,068 …

And the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford.
Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives, the impact of surging interest rates will be even more traumatic.

Consequence #4. The fledgling recovery in housing and auto sales — the pride and joy of Washington’s bailout brigades — will be toast.

Consequence #5. Institutions and individual investors holding piles of lower yielding long-term bonds will get killed. That includes:

U.S. households stuck with $801 billion in Treasuries, $979.5 billion in municipal bonds, plus a whopping $2.4 trillion in corporate bonds.

Banks and credit unions holding $199 billion in Treasuries, $228 billion in munis, $1.066 trillion in corporate bonds and, worst of all, $1.408 trillion in government agency (and GSE) bonds.

Insurance companies buried in Treasuries ($196 billion), munis ($444 billion), agency bonds ($469 billion) and a TON of corporate bonds — $2.180 trillion.

Private pension funds, state and local governments, and even their employees’ retirement funds — all loaded with similarly vulnerable bonds.
Not all of these holdings are of the long-term variety. But most are.

Investors and institutions who own them on behalf of millions of retirees will suffer shocking declines in the market value of their portfolios.

They could suffer a chain reaction of defaults, gutting their income stream.

And worst of all, they now have some reason to fear the de facto default of the biggest debtor of all — the government of the United States of America.

I doubt very much we will see THAT happen. But two events are very possible, even likely:

America will lose its triple-A rating. And if the Wall Street rating agencies don’t have the moral fiber to announce downgrades, the marketplace will do it for them.

Our leaders will face an Armageddon unlike any since the Civil War: Either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America.
They will no doubt seek every other alternative and try every other trick. But alas, no printing press can run faster than our foreign creditors can sell their U.S. bonds. No one will bail out America.

Ultimately, there is NO choice.

We must bite the bullet. We must make the sacrifices. Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences:

#6. Declining home values.

#7. Falling stocks.

#8. The end of the recovery!

And many, many more.

My recommendation: Hold on tight. Don’t veer from your safety-first approach.

Good luck and God bless!

A Run on the Dollar Starts Soon
By Porter Stansberry
Saturday, November 28, 2009

It’s one of those numbers that’s so unbelievable you have to actually think about it for a while…

Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that’s not counting any additional deficit spending, which is estimated to be around $1.5 trillion.

Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That’s an amount equal to nearly 30% of our entire GDP. And we’re the world’s biggest economy. Where will the money come from?

How did we end up with so much short-term debt? Like most entities that have far too much debt – whether subprime borrowers, GM, Fannie, or GE – the U.S. Treasury has tried to minimize its interest burden by borrowing for short durations and then "rolling over" the loans when they come due. As they say on Wall Street, "a rolling debt collects no moss."

What they mean is, as long as you can extend the debt, you have no problem. Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask themselves: What are the chances I will ever actually be repaid? And that’s when the trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. Bankruptcy is next.

When governments go bankrupt, it’s called a "default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists – Alan Greenspan and Pablo Guidotti – published the secret formula in a 1999 academic paper. The formula is called the Greenspan-Guidotti rule.

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world’s largest money-management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."

The principle behind the rule is simple. If you can’t pay off all of your foreign debts in the next 12 months, you’re a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It’s a guaranteed default.

The U.S. holds gold, oil, and foreign currency in reserve. It has 8,133.5 metric tonnes of gold (it is the world’s largest holder). At current dollar values, it’s worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that’s roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether… that’s around $500 billion of reserves. Our short-term foreign debts are far bigger.

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 months. So looking only at short-term debt, we know the Treasury will have to finance at least $2 trillion worth of maturing debt in the next 12 months. That might not cause a crisis if we were still funding our national debt internally. But since 1985, we’ve been a net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe foreign creditors at least $880 billion in the next 12 months – an amount far larger than our reserves.

Keep in mind, this only covers our existing debts. The Office of Management and Budget is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding requirements on the order of $3.5 trillion over the next 12 months.

So… where will the money come from? Total domestic savings in the U.S. are only around $600 billion annually. Even if we all put every penny of our savings into U.S. Treasury debt, we’re still going to come up nearly $3 trillion short. That’s an annual funding requirement equal to roughly 40% of GDP.

Where is the money going to come from? From our foreign creditors? Not according to Greenspan-Guidotti. And not according to the Indian or Russian central banks, which have stopped buying Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 metric tonnes this month. Sources in Russia say the central bank there will double its gold reserves.

So where will the money come from? The printing press. The Federal Reserve has already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or later, our creditors will face a stark choice: Hold our bonds and continue to see the value diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet.

One thing they’re not going to do is buy more of our debt. Which central banks will abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central banks that own the least amount of gold. None owns even 1% of its total reserves in gold.

Don’t Fool Yourself: America Is "Now a Communist Nation"
The Federal Reserve Is Openly Telling You to Buy Gold and Silver

All of this is going to lead to a severe devaluation of the U.S. dollar… Which I expect to happen within 18 months. I examined these issues in much greater detail in the most recent issue of my newsletter, Porter Stansberry’s Investment Advisory, which was published last week. Coincidentally, America’s paper of record – the New York Times – repeated our warnings (nearly word for word) last weekend. Word is getting out.

If you haven’t taken steps to protect yourself from the coming devaluation – like owning gold and silver bullion, foreign real estate, and farmland – make sure you do it soon. The dollar rout is coming.

Good investing,

Porter Stansberry

US Secretary of Education Arne Duncan expresses concern as budget deficits expose American teachers and educators to risk of imminent layoff.

"I am very, very concerned about layoffs going into the next school year starting in September. Good superintendents are going to start sending out pink slips in March and April, as they start to plan for their budgets," said Duncan, referring to the slips of paper included in some paychecks to notify a person of being fired.

The layoffs will come as plummeting tax revenues force states and cities to cut costs, including education funds, in a bid to keep their budgets balanced.

This could spell more than simply bad news for Americans who are already angry with the government over the rate of unemployment, despite a 0.3 percent drop from last year’s 10.0 percent.

Duncan further referred to the economic stimulus package pushed by the Obama administration and approved by the Congress, saying the plan saved at least 320,000 education jobs last year.

The plan created a stabilization fund of $48 billion that provided cash directly to states, mostly for schools; but those funds will likely run out before the end of the year.

This is while Obama warned last week of possible job cuts in state governments when the stimulus ends.

In January, there were 8.03 million workers in local government education, down from 8.09 million the previous year and 8.05 million in January 2008, according to the Bureau of Labor Statistics.

The Economic Elite Have Engineered an Extraordinary Coup, Threatening the Very Existence of the Middle Class
The economic elite have robbed us all. The amount of suffering in the United States of America is literally a crime against humanity.
February 15, 2010

The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight." — Michael Lind, To Have and to Have Not

We all have very strong differences of opinion on many issues. However, like our founding fathers before us, we must put aside our differences and unite to fight a common enemy.

It has now become evident to a critical mass that the Republican and Democratic parties, along with all three branches of our government, have been bought off by a well-organized Economic Elite who are tactically destroying our way of life. The harsh truth is that 99 percent of the U.S. population no longer has political representation. The U.S. economy, government and tax system is now blatantly rigged against us.

Current statistical societal indicators clearly demonstrate that a strategic attack has been launched and an analysis of current governmental policies prove that conditions for 99 percent of Americans will continue to deteriorate. The Economic Elite have engineered a financial coup and have brought war to our doorstep…and make no mistake, they have launched a war to eliminate the U.S. middle class.

The Economic Elite Have Engineered an Extraordinary Coup, Threatening the Very Existence of the Middle Class | Economy | AlterNet

The Richest 1% Have Captured America’s Wealth — What’s It Going to Take to Get It Back?

The U.S. already had the highest inequality of wealth in the industrialized world prior to the financial crisis — and it’s gotten even worse.

This is Part II of David DeGraw’s report, "The Economic Elite vs. People of the USA

The war against working people should be understood to be a real war…. Specifically in the U.S., which happens to have a highly class-conscious business class…. And they have long seen themselves as fighting a bitter class war, except they don’t want anybody else to know about it." — Noam Chomsky

As a record amount of U.S. citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEOs are receiving record-breaking bonuses. How could this be happening, how did we get to this point?

The Economic Elite have escalated their attack on U.S. workers over the past few years; however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970 – 2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.

As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.

Paul Buchheit, from DePaul University, revealed, "From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%." Robert Freeman added, "Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%."(How many of this 1% were Jewish war profiteer’s?)

Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the US population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all time record.

As mentioned before, just look at the first full year of the crisis when workers lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans increased by $30 billion, bringing their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the US population. Just to make this point clear, 400 people have more wealth than 155 million people combined.

Meanwhile, 2009 was a record-breaking year for Wall Street bonuses, as firms issued $150 billion to their executives. 100% of these bonuses are a direct result of our tax dollars, so if we used this money to create jobs, instead of giving them to a handful of top executives, we could have paid an annual salary of $30,000 to 5 million people.

So while US workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite.

If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000?

So it should come as no surprise to see that we now have the highest inequality of wealth in the industrialized world and the highest inequality of wealth in our nation’s history. The backbone of America, a hard working middle class that has made our country a world leader, has been devastated.

The US federal deficit has hit a record $430.69 billion in the first quarter of the fiscal year 2010 despite hopes of a recovery from the latest financial crisis.

In a Wednesday statement by the Treasury Department, this year’s total quarterly budget deficit was shown to have surpassed that of last year’s, during the same period, by 8.8 percent.

Critics say that one of the major contributors to the burgeoning US deficit, projected to hit 1.6 trillion dollars in 2010, is President Barack Obama’s economic stimulus package meant to inject hundreds of billions of dollars to jolt the clogged financial market.

The Treasury Department says China and Japan have decreased their holdings in the treasury fund.

Beijing reduced its holdings by $34.2 billion to $755 billion entitling it to the second-largest foreign holder of US Treasuries behind Japan.

The big drop in China’s holdings in December is the largest monthly drop since the year 2000, it said.

Japan also reduced its holdings to $768.8 billion by trimming $11.5 billion of it in December, but it still remains the largest holder of US Treasury securities.

"Foreign holdings of US Treasury securities fell by 53 billion dollars in December, surpassing the previous record drop of 44.5 billion dollars in April 2009," the report said.

The US budget deficit is projected to hit a record high of $1.56 trillion in 2010, surpassing last year’s record $1.4 trillion deficit.

Critics say the gigantic gap will not be sustainable and will eventually damage the economy.

They also warned that the decline in holdings of Treasury securities may force the US government to make higher interest payments in the future.

The billboard will stay up for at least six months at a cost of $1000 per month.

Monday, February 15th 2010

An unnamed company in Wisconsin has rented a billboard calling for President Obama’s impeachment — which is in no way meant to suggest that Obama has committed an impeachable offense, according to a representative for the group.

The billboard along Highway 41 in Oshkosh reads, "Impeach Obama." The tagline says: "America’s small businesses are failing; help us spread the message."

An attorney for the company, Tom Wroblewski, told The Associated Press the sentiment is that Washington politics are bad for small businesses.

The sign went up Thursday, according to WLUK-TV.

It will remain up for at least six months, at a cost of $1,000 per month.

Wroblewski says despite the billboard’s language, he’s not suggesting Obama committed an offense worthy of impeachment.

Worried about the global economic crisis? It’s all in your head, says a leading financial expert.

And that’s the problem, according to Jeff Gates, author of the highly-regarded Democracy at Risk: Rescuing Main Street from Wall Street, a sequel to The Ownership Solution: Toward a Shared Capitalism for the 21st Century. The latter book was described by one reviewer as “the best book on economics for a generation,”1 and praised by Ralph Nader as “a Capitalist Manifesto, a blueprint for spreading the benefits of capitalism more equitably.”

Gates, a former counsel to the U.S. Senate Committee on Finance (1980-87), identifies the source of the current economic crisis as a “shared mindset” into which we have been induced to put our faith, to the grave detriment of the majority but to the immense benefit of a very few.

While the events of September 2008 on Wall Street may have come as a shock to many – not least those who suddenly found themselves out of work or on the streets – they were “perfectly predictable” to a close-knit group of “financial sophisticates,” Jeff Gates maintains.

But is there any evidence that this was a deliberate fraud?

“Systems analysts offer an acronym (“POSIWID”) to identify systemic flaws: the purpose of a system is what it does,” Gates says.

“In financial systems, results are downstream of the ‘Chicago model’ – a shared mindset from which today’s results flow. Over the past half-century, this market-fundamentalist perspective evolved into the ‘Washington’ consensus to emerge as the guiding principle of the World Trade Organization (WTO) now taking this model to global scale.”

What exactly does he mean by the “Chicago model”?

“At the core of this worldview lies a premise whose purpose is easily stated: ‘maximize financial returns and – trust us – all else will be fine.’ Faith in that perspective ensured today’s results,” Gates explains.

“As this ‘Chicago’ frame of mind gained the force of law through the ‘law and economics’ movement, the result became a globalized operating system best described as ‘money-on-autopilot.’ There lies the blame for this collapse – in that narrow ‘consensus’ perspective.”

The “law and economics” movement referred to by Gates also traces its origins to the University of Chicago. As key opponents of financial regulation, this movement was heavily funded by the same Olin Foundation that also supported neoconservatism through its funding of neocon think tanks such as the American Enterprise Institute.

This “Chicago” state of mind, Gates argues, had far-reaching consequences that could have been easily foreseen by its advocates.

“The results of this purpose-driven ‘operating system’ were guaranteed to concentrate wealth and income and thereby undermine both democracies and markets. By equating personal freedom with financial freedom, we were induced to freely embrace the very forces that now jeopardize freedom,” Gates says.

“Nowhere in this operating system is there any provision for the values essential to the long-term health of communities: fiscal foresight, civil cohesion and environmental sustainability. Money is the only value granted a voice.”

Jeff Gates’ latest book, Guilt By Association: How Deception and Self-Deceit Took America to War, traces the corruption that plagues American politics to a network who “share an ideological bias sympathetic to Israel.” It should be read by concerned citizens everywhere, but especially in the United States, where the “Chicago” mindset has been most deeply embedded in its economic and foreign policy-making.

Endorsed by former U.S. Ambassador Edward Peck and Illinois Congressman Paul Findley (1961–1983),2 Guilt By Association identifies those who have promoted aggressive economic and foreign policies that have been “ruinous” not only to America’s reputation but also to “moderate and secular Jews.” The latter, Gates points out, are often unfairly portrayed as “guilty by association” with the behaviour of these “elites and extremists.”

Who are these “elites and extremists,” and how do they make America appear “guilty by association”?

“When waging unconventional warfare, Defense Secretary Robert Gates points to the perilous role of ‘the people in between.’ Thus, for instance, while pro-Israelis induced the U.S. to wage war in Iraq with false and flawed intelligence, ‘the people in between’ created, promoted and reported intelligence ‘fixed’ around that pre-determined goal,” Gates explains.

“In the financial domain, ‘the people in between’ are securities bundlers, rating agencies and, most fundamentally, those who induce “the mark” (the public) to put their faith in the financial premise that enables this ongoing fraud.

“All flows downstream from a ‘consensus’ perspective – regardless whether the deception is a shared belief in Iraqi weapons of mass destruction or a consensus faith in the infallibility of unfettered financial markets. The modus operandi is identical – the displacement of facts with beliefs.”

Perhaps not coincidentally, the intellectual roots of neoconservatism can also be traced to Chicago, where University of Chicago Professor Albert Wohlstetter’s cadre of students included Richard Perle ~jewified~ and Paul Wolfowitz. ~jewified~ Wohlstetter himself had been a protégé of another University of Chicago Professor, Leo Strauss. Considered to be the “intellectual godfather” of the neocons, Strauss significantly advocated a “philosophy of deception.”3

Through their failure to identify the source of the problem, government responses to the ongoing economic crisis will only make matters worse, maintains Gates.

“Lawmakers seek to solve a systemic problem well downstream of its source. By piling on more interest-bearing debt without addressing the underlying problem, they are unleashing long-term financial forces destined to make a bad situation worse – at a staggering cost,” he says.

“We can anticipate stagnation and inflation while ‘the people in between’ continue to amass more assets (at distressed prices) and collect more interest on more taxpayer-secured debt. The pace is poised to quicken in this policy-enabled redistribution of wealth – from the bottom to the top.”

Dissident Voice : The Source of the Economic Crisis: A Chicago State of Mind

Jeff Gates speaks to Hesham Tillawi. Guilt By Association

WATCH

The value of a pension pot at maturity has dropped by 60 per cent since 2000, Moneyfacts, the financial information group, has warned, hampering the ability of pensioners to live comfortably on their pension income alone.

An individual who paid £100 per month into a balanced managed fund for the preceding 20 years would have built up a pension pot of £40,749 if he or she retired now, compared with £103,914 if he or she had retired 10 years ago, according to the research.

Moneyfacts blamed the sharp fall in the value of pension savings on economic volatility, from the dot-com crash at the start of the decade to the credit crunch, and the longest recession in generations. [Blame it on Jewish ~jewified~ Bankers]

Richard Eagling, editor of Investment Life & Pensions Moneyfacts, said: "It is hardly surprising that pension funds have performed so poorly. However, unless individuals increase their contributions and take greater interest in the returns generated, the next decade could prove just as disappointing."

The situation facing pension savers would have been worse had it not been for the recent stock market revival, which saw the average pension fund grow by 22.35 per cent in 2009, the highest annual return since 1999.

A fall in the value of pension savings is not the only hurdle facing individuals nearing retirement, Moneyfacts warns.

The majority of pensioners opt to use their pension pot to buy an annuity, which will provide a regular pay out for the rest of their life. A £10,000 pension pot would have bought you an annuity paying £866 a year in 2000, compared to £624 now – a 28 per cent drop.

When Moneyfacts combined the fall in annuity rates with the drop in the value of pension savings, the research showed that annual retirement income has fallen 72 per cent in the last ten years to £2,542, compared to £8,998 in 2000.

The figures are based on a man contributing £100 gross earnings each month into a balanced managed fund over a 20 year period and retiring at the age of 65 with a standard level no-guarantee annuity.

Moneyfacts said that an individual retiring today would have to save £355 gross a month to match the income of an individual who contributed £100 a month a decade ago.

Mr Eagling added: "Although these figures do little to inspire confidence, they at least serve as a powerful reminder of the investment risks inherent in saving via a defined contribution pension. It is clear from such alarming statistics that if the pensioners of tomorrow are to enjoy the same level of retirement as their predecessors, much has to change and quickly."

11 Feb 2010

US stocks have fallen further on Bernanke’s ~jewified~ exit plan.

US stocks slumped Tuesday night as the market reacted to comments from Federal Reserve chief Ben Bernanke ~jewified~ on an exit strategy from a massive monetary stimulus.

The Dow Jones Industrial Average ended 20.26 points (0.2 per cent) lower to 10,038.38, as the NASDAQ slid 3 points (0.14 per cent) to 2147.87.

Investors were unsettled by comments released by Bernanke ~jewified~ that evoked mixed reactions about when the Fed may exit from a massive monetary stimulus.

Bernanke ~jewified~ has hinted at higher interest rates as the US central bank ends its stimulus effort.

”We have been working to ensure that we have the tools to reverse, at the appropriate time, the currently very high degree of monetary stimulus. We have full confidence that, when the time comes, we will be ready to do so," Bernanke ~jewified~ had said Wednesday.

US stocks were also affected by concerns about the debt crisis in Greece.

The 2010 Food Crisis Means Financial Armageddon

Over the last two years, the world has faced a series of unprecedented financial crises: the collapse of the housing market, the freezing of the credit markets, the failure of Wall Street brokerage firms (Bear Stearns/Lehman Brothers), the failure of Freddie Mac and Fannie Mae, the failure of AIG, Iceland’s economic collapse, the bankruptcy of the major auto manufacturers (General Motors, Ford, and Chrysler), etc… In the face of all these challenges, the demise of the dollar, derivative markets, and the modern international system of credit has been repeatedly forecasted and feared. However, all these doomsday scenarios have so far been proved false, and, despite tremendous chaos and losses, the global financial system has held together.

The 2010 Food Crisis is different. It is THE CRISIS. The one that makes all doomsday scenarios come true. The government bailouts and central bank interventions, which have held the financial world together during the last two years, will be powerless to prevent the 2010 Food Crisis from bringing the global financial system to its knees.

Financial crisis will kick into high gear

So far the crisis has been driven by the slow and steady increase in defaults on mortgages and other loans. This is about to change. What will drive the financial crisis in 2010 will be panic about food supplies and the dollar’s plunging value. Things will start moving fast.

Dynamics Behind 2010 Food Crisis

Early in 2009, the supply and demand in agricultural markets went badly out of balance. The world experienced a catastrophic fall in food production as a result of the financial crisis (low commodity prices and lack of credit) and adverse weather on a global scale. Meanwhile, China and other Asian exporters, in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style overconsumption, prodded on by a flood of cheap credit and easy loans from the government.

Normally food prices should have already shot higher months ago, leading to lower food consumption and bringing the global food supply/demand situation back into balance. This never happened because the United States Department of Agriculture (USDA), instead of adjusting production estimates down to reflect decreased production, adjusted estimates upwards to match increasing demand from china. In this way, the USDA has brought supply and demand back into balance (on paper) and temporarily delayed a rise in food prices by ensuring a catastrophe in 2010.

While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN HONG KONG)

He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN KOREA).

After cooking his breakfast in his new electric skillet (MADE IN INDIA) he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today.

After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA) he got in his car (MADE IN GERMANY) filled it with GAS (from Saudi Arabia) and continued his search for a good paying AMERICAN JOB.

At the end of yet another discouraging and fruitless day checking his Computer (made in MALAYSIA), John decided to relax for a while.

He put on his sandals (MADE IN BRAZIL), poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN INDONESIA), and then wondered why he can’t find a good paying job in AMERICA…

Obama delivers remarks at the Democratic National Committee winter meeting on February 6, 2010 in Washington, DC, Getty Images.

US President Barack Obama’s approval rating has dropped to the lowest level since his inauguration for the way he has steered the country’s trouble-ridden economy through the financial crisis.

Only 36 percent of the Americans approve of the commander-in-chief’s economic management and 32 percent approve of his efforts to contain the runaway federal red-ink budget, a Gallup Poll said on Monday reporting on the results of a study conducted by the opinion survey group.

As the country is struggling to harness a 9.7 unemployment rate, the poll showed that about 68 percent of the US citizens were uneasy with the way Obama had chosen to create jobs.

The survey was conducted among 1,025 adults from February 1 to 3.

Obama has earmarked a whopping $3.8-trillion budget for the next fiscal year. The military gets an unprecedented share of the sum — $708-billion — amid the ongoing criticism of the country’s overseas military interventions.

The proposal puts the US budget deficit for this year at a record $1.6 trillion.

February 06, 2010

THE world’s top central bankers ~jewified~ began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets.

Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank ~jewified~ landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports.

Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies.

Speculation that the chairman of the US Federal Reserve, ~jewified~ Dr Ben Bernanke, would make an appearance could not be confirmed last night.

The event will be dominated by Asian delegations and is expected to include governors of the Peoples Bank of China, the Bank of Japan and the Reserve Bank of India. (Hmmmmmm)

The arrival of the high-powered gathering coincided with a fresh meltdown on world sharemarkets, sparked by renewed concerns about global growth and sovereign debt.

Fears countries including Greece, Portugal, Spain and Dubai could default on debt repayments combined with disappointing US jobs data to spook investors.

Australia’s ASX 200 slumped 2.4 per cent, to a its lowest close since November 5, echoing a sharp fall on Wall Street.

Asian share markets were also pummelled, with Japan’s Nikkei 225 down almost 3 per cent and Hong Kong’s Hang Seng slumping 3.3 per cent.

The damage was also being felt by European markets last night with London’s FTSE 100 down sagging 1 per cent in early trade.

Sovereign debt fears rippled through to the Australian dollar which was hammered to a four-month low of US86.43 and was trading at US86.77 cents last night.

"This does feel like ’08 and ’07 all over again whereby we had these sort of little fires pop up and they are supposedly contained but in reality they are not quite contained,” said H3 Global Advisors chief executive Andrew Kaleel.

"Dubai should have been an isolated incident and now we are seeing issues with Greece, Portugal and Spain.”

It wasn’t all bad news with the RBA yesterday upping its Australian growth forecasts and flagging more interest rate rises this year.

The central bank estimates the economy grew 2 per cent in 2009, and will expand by 3.25 per cent in 2010, and by 3.5 per cent in 2011.

The outlook for global growth is likely to be a key theme of the high level central bank talks. ~jewified~

The gathering also comes at an important time for the BIS as it initiates an overhaul of the global banking system which will include new capital rules applying to banks and more stringent standards regulating executive pay. ~jewified~

A key part of the two-day talkfest will be a special meeting of Asian central bankers chaired by the governor of the Central Bank of Malaysia, Dr Zeti Akhtar Aziz.

Influential BIS general manager Jaime Caruana is also expected to take a prominent role in the talks.

Federal Treasurer Wayne Swan will address the central bank officials at a dinner on Monday night.

The middle and working-classes have been hammered by the Great Recession and no industry has taken it more on the chin than construction. Nationally, unemployment fell to 9.7% in January, but in construction it jumped to 24.7% from 18.7% in October. In many regions, union officials report 30% of their members are unemployed or "riding the bench." "In the previous 14 years, I had not been out of work for more than one week," says Pat O’Connor, 57, a Connecticut carpenter. With no work since July, O’Connor says, "It is a bad dream turning into a nightmare. Is construction dead? It’s just horrible right now. No one expected this. It’s a depression." He has a mortgage and is worried he will fall behind and lose his condo. "When I go to bed, I keep the TV on just so I have the noise. If it gets silent, I get a panic attack."

Commercial construction workers are in a bind. Before, if work dried up in Boston or Seattle, carpenters, electricians and plumbers would pack up and go to Las Vegas or Texas or Alaska. "Now there is no work anywhere," says Mark Erlich, whose New England Regional Council of Carpenters represents 22,000 union members in six states. "The largest problem is the continued lack of financing," says Jerry Rhoades, executive secretary treasurer of the Florida Carpenters Regional Council. "In the summer of 2009, there were 800 jobs on the books to build across the state. We do commercial, high-rise residential and power plants. The permits were ready, but the financing dried up. I am in my 60s and I’ve never experienced a downturn like this. Three years ago, three contractors would bid on a project. Now 90 contractors bid on a project. That is how desperate people are." (See why teens are suffering in the current employment market.)

In the Southwest, the construction site is what the factory floor is to the MidWest — the place where blue-collar men and women earn their keep. A tour of downtown Los Angeles and the industrial warehouse area to the south finds busy jobs sites few and far between. In Vernon, Oltmans Construction Co., ranked as one of the nation’s elite "Top 400 Contractors" by Engineering News Record, is completing a gleaming white 60,000 square foot warehouse and office space for CR Lawrence whose business is construction, industrial, architectural and automotive supplies. Ed Sorbel, superintendent for Carpenter’s Local 630, says at the project’s peak more than 70 men worked at the site. But the outlook is grim for commercial construction firms such as Oltmans and its union work force. Asked if business is picking up, Oltmans Project Manager James Wu, 37, says, "I have not seen it. It’s not looking good ahead." (See TIME’s cover story on unemployment in the Great Recession.)

General Foreman Javier Gonzalez, 50, wearing a red bandana and an orange Oltmans T-shirt, says, "I was only out of work for two months in ’09." Other carpenters were not so lucky. Gonzalez says his laid-off colleagues are paying their bills in a variety of ways. "One guy is doing tattoos. Some guys are bartending. And there is a group who work for realtors cleaning out foreclosed homes. They empty everything that is left in the house, resell what that can salvage and do minor repairs. It’s sad. There is no work right now. Here we are in February and we’ve only picked up one job this year. In four weeks when this job is done, I’ll be out on my ass."

Local 630, based in Long Beach, has 400 carpenters in the field with Oltmans when business is strong, says Sorbel, the union’s top man on the Vernon project. "We are trying to keep our core guys, 125 to 150 men, busy. But there is no work out there." Miles Davy, a burly asphalt subcontractor, says there have been massive layoffs across all sectors of the construction trades. "I’ve had to let go men I have known for years. Grown men crying in my office. It’s the saddest thing I’ve ever done." (See pictures of the recession of 1959.)

In downtown Los Angeles, just east of Little Tokyo, one of the only active construction sites is a 53-unit apartment building at Alameda and 4th Street. Valentin Marquez, 41, father of four, does foundation and concrete work. Before this job he says he was out of work for a year. He is now struggling to keep his house. "The company I worked for for 18 years went bankrupt," he says. His colleague, Alonzo Chavez, 34, worked for the same contractor and then took a job in a burrito factory at minimum wage. Both non-union men, hands gray with concrete dust, know this job will only last another two months. "This year looks rough," says Marquez as he sits in the cab of his blue GMC pickup truck.

In the Northwest, the contraction in commercial construction came late, says Eric Franklin, spokesperson for the Pacific Northwest Regional Council of Carpenters. "We’re at the bottom now." Across a membership of 26,000 in 42 locals in five states unemployment ranges from 21% to 35%. One bright spot: a few big public projects on the horizon, including a floating bridge that will connect Seattle to its suburbs. "It’s a mess," says Erlich in New England. "The private sector is dead. We’re at the point where we are considering investing money from our pension fund in construction projects. We either need another stimulus focused on job creation or the banks must be directed to lend."

North America’s largest building-trades union, the United Brotherhood of Carpenters is a half-million members strong. For tens of thousands of its members, and the millions of Americans who depend on the construction business to make a living, it is a winter of anxiety and discontent. Tim Ahern of Carpenters Local 210 in Fairfield, Connecticut sums up the plight of the construction trades across the nation. "I only worked 20 hours the whole year in 2009."

See the top 10 news stories of 2009.

See the photos of the year.

Bank of America charged with fraud over Merrill purchase

Latest: BoA bosses charged with fraud

The office of the New York attorney general, Andrew Cuomo, has charged Bank of America, its former chief executive Kenneth Lewis and ex-chief financial officer Joe Price with fraud for allegedly misleading shareholders over its acquisition of Merrill Lynch. Invoking a powerful state law used to combat securities fraud, Cuomo yesterday filed a lawsuit accusing Bank of America, Lewis and Price of intentionally failing to disclose huge losses at Merrill before a shareholder vote on the merger. Cuomo alleged that later the defendants misled federal government in claiming a "surprise" increase in Merrill’s losses would allow BoA to back out of the merger if it did not get massive taxpayer help. BoA ultimately received $20bn (£12.7bn) of federal bailout money from the Troubled Asset Relief Program, which it has since repaid.

Bank of America charged with fraud over Merrill purchase | Business | guardian.co.uk

White House economic advisor Christina Romer

The White House on Friday characterized the new jobless report as an "encouraging" sign as it introduces a 0.3 percent decline in the nation’s unemployed rate.

"While unemployment remains a severe problem, today’s employment report contains encouraging signs of gradual labor market healing," said White House economic advisor Christina Romer, AFP reported.

However, Romer said that the "the unemployment rate remains unacceptably high," and noted that the actual number of unemployed Americans rose slightly. -yaya-

"Even as today’s numbers contain signs of the beginning of recovery, they are also a reminder of how far we still have to go to return the economy to robust health and full employment," she said in a statement.

The unemployment rate is expected to remain high this year despite President Barack Obama‘s focus on reviving the job market. This has raised concerns that the economy could enter a period of extremely slow growth or even fall into another downturn that economic pundits call a double-dip recession.

This research is another example of why the housing problems in the U.S. are so intractable. Building permits rose 11% in December, but housing starts were down. RealtyTrac recently forecast that about 3 million homes will go into foreclosure this year, up slightly from the 2009 numbers. A large number of interest-rate only mortgages will reset higher in the next two years, raising monthly payments on those loans.

Despite low mortgage rates, which have in some cases fallen below 5%, and tax credits for some home buyers, people are reluctant to purchase new houses. Some fear that they could become unemployed like 10% of the full-time work force. Others are concerned that home prices will continue to fall and that even a home bought in 2010 could have an underwater mortgage of its own in 2011.

The likelihood that homeowners will reach a point of despair also increases as more homes drop below the value of the mortgages that their owners carry. That in turn makes it more likely that people will hand their keys over to the bank. And troubled banks, particularly regional and community banks, are often not in good enough financial shape to handle mass mortgage defaults, which then puts pressure on the FDIC’s resources.

The federal government is left with few options. Even if it saw fit to put $745 billion into programs that would reduce mortgages on homes with underwater loans, the cost is too high with the federal budget deficit for this fiscal year projected to be nearly $1.6 trillion.

Without a solution, and there are almost certainly no solutions forthcoming, home values will continue to drop this year and probably into next.

The global bank HSBC may be running offshore accounts for central banks. According to a U.S. Senate investigation, an HSBC subsidiary in London called HSBC Equator Bank had a sister bank in the Bahamas.
According to an internal e-mail, the bank told HSBC USA it had been providing offshore accounts to central banks for 20 years, because the banks wanted to avoid “Mareva” injunctions, legally enforceable orders to freeze funds.

This was revealed by a report to be released Thursday by the Senate Subcommittee on Investigations. A subcommittee staff member who worked on the investigation said, “You have a central bank saying to their banker, I don’t want to have to comply with a legally enforceable order so put me offshore. So they did.”

HSBC declined to confirm or deny the charge. HSBC told IPS, “HSBC takes compliance matters very seriously. HSBC’s record demonstrates a commitment to vigorous enforcement and continuous enhancement of anti-money laundering policies and practices.” It would not comment further.

The committee’s 350-page report of an investigation that lasted two years focuses on how U.S. banks, lawyers, real estate and escrow agents hide the origins of funds belonging to foreign government officials and other “politically exposed persons” (PEPS) who might be moving illicit cash.