It's the Economy, Stupid: Sid Harth
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2010-02-02 14:02:18 UTC
It's the economy, stupid

"It's the economy, stupid" was a phrase in American politics widely
used during Bill Clinton's successful 1992 presidential campaign
against George H. W. Bush. For a time, Bush was considered unbeatable
because of foreign policy developments such as the end of the Cold War
and the Persian Gulf War. The phrase, coined by Clinton campaign
strategist James Carville, refers to the notion that Clinton was a
better choice because Bush had not adequately addressed the economy,
which had recently undergone a recession.

In order to keep the campaign on message, Carville hung a sign in Bill
Clinton's Little Rock campaign headquarters that said:

Change vs. more of the same
The economy, stupid
Don't forget health care.[1]

Although the sign was intended for an internal audience of campaign
workers, the phrase became something of a slogan for the Clinton
election campaign. Clinton's campaign used the recession to
successfully unseat George H.W. Bush. In March 1991, days after the
ground invasion of Iraq, 90% of polled Americans approved of President
Bush's job performance.[2] Later the next year, Americans' opinions
had turned sharply; 64% of polled Americans disapproved of Bush's job
performance in August 1992.[2]

The phrase is repeated often in American political culture, usually
starting with the word "it's" and with commentators sometimes using a
different word in place of "economy." Examples include "It's the
deficit, stupid!"[3]
"It's the corporation, stupid!"[4]
"It's the math, stupid!"[5]
and "It's the voters, stupid!".[6]
In British political satire The Thick Of It, It's the Everything,
Stupid was the name of a book written by one of the characters.[7]

See also

List of political catch phrases
The War Room
It's About The Money, Stupid


Wikiquote has a collection of quotations related to: James Carville

^ Alleyne, Richard. Gordon Brown: It's the economy, stupid! The Daily
Telegraph. 2008-05-23

^ a b Agiesta, Jennifer. Approval Highs and Lows. The Washington Post.

^ Plumer, Bradford. It's the Deficit, Stupid!. Mother Jones.

^ Ivins, Molly. It's the Corporation, Stupid. AlterNet. 2006-02-23.

^ Falvey, Christopher J. It's the Math, Stupid. The VN/VO.

^ It's the Voters, Stupid Time Magazine 2008-01-21

^ The Thick Of It Cast of Characters: Ben Swain BBC.

Retrieved from "http://en.wikipedia.org/wiki/It


James Carville

Born Chester James Carville, Jr.

October 25, 1944 (1944-10-25) (age 65)

Fort Benning, Georgia

Residence New Orleans, Louisiana

Nationality American

Education Louisiana State University (A.B., J.D.)

Occupation Political consultant,

Political science lecturer, Tulane University

Spouse(s) Mary Matalin (m. 1993–present) «start: (1993)»"Marriage:
Mary Matalin to James Carville"

Location: (linkback:http://en.wikipedia.org/wiki/James_Carville)


Official site

James Carville (born October 25, 1944) is an American political
consultant, commentator, actor, attorney, media personality, and
prominent liberal pundit. Carville gained national attention for his
work as the lead strategist of the successful presidential campaign of
then-Arkansas governor Bill Clinton. Carville was a co-host of CNN's
Crossfire until its final broadcast in June 2005. Since its
cancellation, he has appeared on CNN's news program, The Situation
Room. As of 2009, he hosts a weekly program on XM Radio titled 60/20
Sports with Luke Russert, son of the late Tim Russert who hosted NBC's
Meet The Press. He is married to Republican political consultant Mary
Matalin. In 2009, he began teaching political science at Tulane

Early life and education

Carville, the oldest of eight children, was born Chester James
Carville, Jr.[2]

at Fort Benning, Georgia, the son of Lucille (née Norman), a former
school teacher who sold World Book Encyclopedias door-to-door, and
Chester James Carville, a postmaster as well as owner of a general

He has Irish and Cajun ancestry. James Carville was raised in
Carville, Louisiana,[5] and attended Ascension Catholic High School in
Donaldsonville, Louisiana.[4]

He graduated from Louisiana State University with undergraduate and
law degrees. He served for two years in the United States Marine

Early career

Before entering politics, Carville worked as a litigator at a Baton
Rouge law firm from 1973–1979, spent two years serving in the United
States Marines, and worked as a high school teacher.

Prior to the Clinton campaign, Carville and consulting partner Paul
Begala gained other well-known political victories, including the
gubernatorial victories of Robert Casey of Pennsylvania in 1986, and
Zell Miller of Georgia in 1990. But it was in 1991 when Carville and
Begala rose to national attention, leading appointed incumbent Senator
Harris Wofford of Pennsylvania back from a 40-point poll deficit over
White House hand-picked candidate Dick Thornburgh. Also noteworthy is
that Wofford's campaign was where the "it's the economy, stupid"
strategy used by Bill Clinton in 1992 was first implemented.

Bill Clinton's 1992 Presidential campaign

In 1992, Carville helped lead Bill Clinton to a win against George H.
W. Bush in the Presidential election. In 1993, Carville was honored as
Campaign Manager of the Year by the American Association of Political
Consultants. His role on the Clinton campaign was documented in the
feature-length Academy Award-nominated film, The War Room. One of the
formulations he used in that campaign has entered the language,
derived from a list he posted in the war room to help focus himself
and his staff, with these three points:

Change vs. more of the same.
The economy, stupid.
Don't forget health care.

Political/Media work

After 1992 Carville stopped working on domestic campaigns, stating
that he would bring unneeded publicity, but he has worked on a number
of foreign campaigns, including those of Prime Minister Tony Blair of
the United Kingdom, Ehud Barak of Israel's Labor Party, and the
Liberal Party of Canada. In 2002, Carville worked as a Greenberg
Carville Shrum (GCS) strategist to help American-educated Bolivian
Gonzalo Sánchez de Lozada win the presidency in Bolivia which was
portrayed in a documentary Our Brand Is Crisis.

Carville at an All the King's Men press conference in 2006

In 2004, he was brought in for last-minute consulting on Senator John
Kerry's Presidential campaign, but he did not play a major role.

In 2005, Carville taught a semester of the course "Topics in American
Politics" at Northern Virginia Community College. Among the guests he
had come speak to the class were Al Hunt, Mark Halperin, Senator
George Allen, George Stephanopoulos, Karl Strubel, Stan Greenberg,
Tony Blankley, representatives from the Motion Picture Association of
America, James Fallows.

In 2006, Carville switched gears from politics to sports and became a
host on a sports show called 60/20 Sports on XM Satellite Radio with
Luke Russert, son of the late NBC journalist Tim Russert. The show is
an in-depth look at the culture of sports based on the ages of the two
hosts (60 and 20). After the Democrats' victory in the 2006 midterm
election, Carville criticized Howard Dean as Democratic National
Committee Chair, calling for his ouster, as he believed Dean had not
spent enough money. In late November 2006, Carville proposed a truce
of sorts.[6]

Carville is the executive producer of the 2006 film All the King's
Men, starring Sean Penn and Anthony Hopkins, which is loosely based on
the life of Louisiana Governor Huey Long.

Carville had believed that Al Gore, whom he helped put in the White
House as vice president in 1992, would run for president in 2008.[7]

This prediction did not come true.

Carville has moved to New Orleans, and will teach at Tulane University
as professor of practice starting spring semester of 2009.

On March 4, 2009, Politico reported that Carville, Paul Begala, and
Rahm Emanuel were the architects of the Democratic Party's strategy to
cast conservative talk radio host Rush Limbaugh as the face of the
Republican Party.[8]

Carville was particularly critical of Limbaugh for saying he wanted
Barack Obama to "fail." It was later reported that Carville had voiced
the opinion, during the presidency of George W. Bush, that, "I don’t
care if people like him or not, just so they don’t vote for him and
his party. That is all I care about. I hope he doesn’t succeed, but I
am a partisan Democrat. But the average person wants him to succeed.
It is his country, his life or their lives. So he has that going for

Carville made the remarks on September 11, 2001, shortly before the
terrorist attacks on the United States. Upon hearing news of the
attacks, Carville asked reporters to "disregard" his prior comments.

Afghan presidential candidate Ashraf Ghani hired Carville as a
campaign advisor in July 2009. Carville said that the 2009 Afghan
presidential election is "probably the most important election held in
the world in a long time," and he called his new job "probably the
most interesting project I have ever worked in my life."[11]

Carville, whose work for Ghani is pro bono, when asked about
similarities between politics in Afghanistan and politics in
Louisiana, responded:

Yeah, I felt a little bit at home, to be honest with you.[12]

Hillary Clinton's 2008 Presidential campaign

Main article: Hillary Clinton presidential campaign, 2008

As an advisor to Hillary Rodham Clinton's 2008 presidential campaign,
Carville told The New York Times on March 22, 2008, that New Mexico
Governor Bill Richardson, who had just endorsed Senator Barack Obama
for the Democratic nomination, was comparable to Judas Iscariot. It
was "an act of betrayal," said Carville. "Mr. Richardson’s endorsement
came right around the anniversary of the day when Judas sold out for
30 pieces of silver, so I think the timing is appropriate, if ironic,”
Mr. Carville said, referring to Holy Week. Governor Richardson had
served in President Bill Clinton's administration as both United
States Ambassador to the United Nations and Secretary of Energy, and
Carville believed that Richardson owed an endorsement to Senator
Clinton in exchange for being offered those posts by her husband.
Carville also claimed that Richardson assured many in the Clinton
campaign that he would at least remain neutral and abstain from taking

Richardson refuted Carville's account, arguing that he had not made
any promises to remain neutral. Richardson claims that his decision to
endorse Obama was "clinched" by his speech on race relations following
the swirl of controversy surrounding Obama's former pastor Jeremiah

Carville went on to note,"I doubt if Governor Richardson and I will be
terribly close in the future," Carville said,[15]

but "I've had my say...I got one in the wheelhouse and I tagged it."

Even as Clinton's campaign began to lose steam, Carville remained both
loyal and positive in his public positions, rarely veering off message
and stoutly defending the candidate. But on May 13, 2008, a few hours
before the primary in West Virginia, Carville remarked to an audience
at Furman University in South Carolina, "I'm for Senator Clinton, but
I think the great likelihood is that Obama will be the nominee."[16]

The moment marked a shift from his previous and often determinedly
optimistic comments about the state of Hillary's campaign.

After Barack Obama's clear lead for victory in the Democratic
presidential campaign on June 3, James Carville said he was ready to
open up his wallet to help Obama build a political war chest to take
on John McCain in November.[17]

Career as author

Carville is also a best-selling author. With his wife, Republican Mary
Matalin, and writer Peter Knobler, Carville co-wrote All's Fair: Love,
War and Running for President, published in 1995. He later wrote:
We're Right, They're Wrong: A Handbook for Spirited Progressives,
published in 1996; ...And The Horse He Rode In On: The People vs.
Kenneth Starr, published in 1998; With Paul Begala he co-wrote
Stickin. Suck Up, Buck Up... and Come Back When You Foul Up, in 2001,
which detailed strategies for fighting and winning in business,
politics, and life. In 2004, Carville released a political banter book
entitled Had Enough?, as well as a children's picture book, Lu and the
Swamp Ghost, with co-author Patricia McKissack and illustrator David
Catrow. In January 2006, he released another book co-written with
Begala, Take It Back: Our Party, Our Country, Our Future.

Carville's most recent book is entitled 40 More Years: How the
Democrats Will Rule the Next Generation.

In 1996, Carville was inducted into the Louisiana Political Museum and
Hall of Fame in Winnfield, along with former Louisiana State Treasurer
Mary Evelyn Parker and the late segregationist leader Leander Perez.

Personal life

Carville is married to Republican political pundit Mary Matalin, who
had worked for President George H. W. Bush on his 1992 reelection
campaign. Carville and Matalin were married in New Orleans in October
1993. They have two daughters: Matalin Mary "Matty" Carville and
Emerson Normand "Emma" Carville. Carville publicly acknowledged that
he has adult attention-deficit disorder.[18]

In 2008, Carville and Matalin relocated their family from Virginia to
New Orleans.[19]

He is currently on the faculty of the department of political science
at Tulane University.

Film and television appearances

Lists of miscellaneous information should be avoided. Please relocate
any relevant information into appropriate sections or articles.
(September 2008)

Carville and Keith Ellison in 2007Carville takes a lead role in The
War Room, a documentary about Bill Clinton's 1992 presidential
campaign, together with George Stephanopoulos.

He appeared in the 1996 film The People vs. Larry Flynt as attorney
Simon Leis.

He appeared in three episodes of the sitcom Mad About You playing
himself, as head of a political consulting firm that hires Jamie
Buchman, played by Helen Hunt.

In the film Old School, Carville makes a cameo appearing as himself,
brought in as a ringer at a college-level debate society meeting and
introduced as the "ragin' cajun". Will Ferrell then inexplicably gives
a complex answer regarding US biotechnology policy.

When it comes to Carville's rebuttal, he only says, "...We...
(stumbles) have no response. That was perfect..."

In the film Wedding Crashers, Carville makes a cameo appearance
alongside Senator John McCain of Arizona.

He appeared as himself in Rachel Boynton's Our Brand Is Crisis, a
documentary that goes behind-the-scenes to show the manipulation and
orchestration that is involved in big-time political campaigning. The
movie follows members of the consulting firm of Greenberg Carville
Shrum to Bolivia, where they have been hired to help controversial
candidate Gonzalo Sanchez de Lozada reclaim the presidency.

Carville appears as the Governor of Missouri, Thomas Crittenden, in
the 2007 movie The Assassination of Jesse James by the Coward Robert

He was in a Coca-Cola ad during Super Bowl XLII in 2008, with former
Republican Senator Bill Frist.

He appeared as himself in NBC's comedy 30 Rock, season 2 episode 8,
where he advises Jack Donaghy (a Republican supporter) on his
relationship with a Democratic Congresswoman, and advises numerous
characters on how to deal with their problems "Cajun style". ("Tryin'
to steal candy from a vending machine? Here, let me show you how it's
done...Cajun style.")

Appeared in cartoon form in Season 2, Episode 10 of the Family Guy
"Running mates". Carville was introduced as the ragin' cajun and was
trying to save Peter Griffin's career as school president. Peter
cringed in terror every time he saw Carville's face.

Starred in Steven Soderbergh's HBO series K Street along with his

Starred in a 1998 Alka-Seltzer commercial with his wife Mary Matalin


This biographical section needs additional citations for
verification. Please help by adding reliable sources. Contentious
material about living persons that is unsourced or poorly sourced must
be removed immediately, especially if potentially libelous or harmful.
(July 2009)

Wikiquote has a collection of quotations related to: James Carville

On the odds of John McCain beating Obama: "John King said that it
would be the biggest comeback of the century. It actually would be the
biggest comeback since Lazarus"[20]

"But one of Clinton's problems was, the interest groups don't care
about the working poor. The Republicans don't care about the working
poor — they don't know any. The Op-Ed writers don't care about the
working poor. The editorial writers don't care about the working poor.
The talking heads don't care about the working poor."

"Drag $100 bills through trailer parks, there's no telling what you'll
find." regarding Paula Jones[21]

Further reading

Clinton, Bill (2004). My Life. Vintage. ISBN 1-4000-3003-X.

See also

United States Marine Corps portal
K Street (TV series)
Ray Nagin


^ Hobgood, Kathryn (2008-11-18). "Political Pundit Joins Faculty". New
Orleans, LA: Tulane University. http://tulane.edu/news/newwave/111808_carville.cfm.
Retrieved 2009-01-29.

^ James Carville Deposition section 3

^ The Columnists. Salon.

^ a b Carville, James; Mary Matalin; Federal News Service (transcript)

27). "CEA Washington Forum" (.doc). Washington, D.C.: Consumer
Electronics Association.

Retrieved 2008-04-01.

^ Anchors & Reporters. CNN.

^ Hotline On Call: Carville's Truce? The Hotline. National Journal
Group. 2006-11-30.

^ James Carville: Al Gore Will Run in 2008. NewsMax.com. 2007-02-27.

^ Martin, Jonathan (March 4, 2009). "Rush Job: Inside Dems' Limbaugh
Plan". Politico.

http://www.politico.com/news/stories/0309/19596.html. Retrieved

^ Sargent, Greg (March 12, 2009). "Revealed: What James Carville
Really Said On 9/11 About Wanting Bush To Fail". WhoRunsGov.com.

Retrieved 2009-03-12.

^ Sammon, Bill (March 11, 2009). "Flashback: Carville Wanted Bush to

FoxNews.com. http://www.foxnews.com/politics/2009/03/11/carville-wanted-bush-fail/.
Retrieved 2009-03-12.

^ "U.S. strategist helps rival of Afghan president". Associated Press.

http://www.kansascity.com/659/story/1312800.html. Retrieved
2009-07-14. Cf. "Carville to Advise Karzai Challenger in Afghan
Election Contest". Bloomberg. 2009-07-06.
Retrieved 2009-07-14.

^ Bruce Eggler & Michelle Krupa, "Carville finds familiar politics in
Afghanistan" (section titled "Going native") in Times-Picayune, 2009
August 1, Saint Tammany Edition, p. B3.

^ Adam Nagourney and Jeff Zeleny, "First a Tense Talk With Clinton,
Then Richardson Backs Obama", The New York Times, March 22, 2008.

^ CNN Political Ticker: All politics, all the time Blog Archive -
Richardson: Obama’s speech was decisive « - Blogs from CNN.com

^ Sinderbrand, Rebecca (2008-03-25). "Carville: Controversial Judas
comment 'had the desired effect'". CNN Political Ticker

Retrieved 2008-04-01.

^ CNN Political Ticker: All politics, all the time Blog Archive -
Carville: Obama likely to win nomination « - Blogs from CNN.com

^ http://www.nndb.com/org/684/000167183/

^ Thakkar, Vatsal, Medscape Psychiatry & Mental Health, "Depression
and ADHD: What You Need to Know", http://www.medscape.com/viewarticle/549018,
retrieved 2009-04-17

^ Argetsinger, Amy; Roxanne Roberts (2008-03-27). "His Family Is
Following the Ragin' Cajun Home". The Reliable Source (The Washington
Post): pp. C03.

Retrieved 2008-04-01.

^ http://transcripts.cnn.com/TRANSCRIPTS/0811/03/lkl.01.html

^ Adam Cohen (1997-01-20). ""Will she have her day in court?"". Time
(magazine) (New York). http://www.time.com/time/magazine/article/0,9171,985789,00.html.
Retrieved 2008-01-21.

External links

Wikimedia Commons has media related to: James Carville

The Office of James Carville

CNN Biography

James Carville at the Internet Movie Database


...and I am Sid Harth

...and I am Sid Harth
2010-02-02 14:08:12 UTC
A Citizen's Guide to the US Economy for the 2008 Election

You don't need to be an economist to understand this Guide, but it
will provide you with an intelligent roadmap to understanding the US
economy so you can make more informed, intelligent choices about our
future in the new global economy.

Students and teachers with a .edu

email get $5 OFF every paperback copy.

Feb 02, 2010

It's the Economy (stupid) Introduction

"A most timely book and one that every American concerned for his
country should read and think about. Patric Hale may be a voice crying
in the wilderness but those who fail to heed it will pay a terrible
Hugh Menzies

Former Assoc. Editor, Fortune
Former Int'l Bus. Editor, BusinessWeek

In 2008, the American people will be barraged with claims and counter-
claims during our quadrennial presidential elections. In the process
there will be the usual myriad of issues facing Americans presented by
the candidates, from which the common citizen will have to determine
our next leader. The most important ones that always face Americans,
however, are those of war-and-peace and "pocketbook" issues. But of
these two, everyone knows that the economy is the most important daily
issue that faces us all. Despite this nothing exists in America that
gives the people a guide to the US economy so they can better
understand these issues in a more intelligent, informed way. This is
the fundamental reason why I've written this Guide.

This Guide is not meant to be polemic in terms of the data. As Joe
Friday from Dragnet used to say: "Just the Facts, Ma'am." That's what
this Guide is meant to provide - just the facts. "Ah, facts," you say,
(I hear the skeptics amongst you), "but one man's fact is another
man's opinion!" There's also the other saying: "There are lies, damn
lies, and statistics!" Both are witty, of course, but mostly untrue. I
say mostly because the world is never stagnant enough to fully achieve
perfection in the accumulation of statistical information; invariably
the world has moved on and the statistical snapshot becomes history.
Nonetheless, there is a body of statistical information that policy-
makers in Washington, and indeed those around the world, accept as
benchmarks to help them truly understand the economy in as unbiased a
way as possible. These are the sources that are used in this Guide.
Most of them are readily available as public information on the
internet. Unfortunately, if you really want to know the information it
will literally take you months to find it, and more to put it together
in a useful form. That's also why I've written the Guide - to save you
the time and trouble to put it in a useful format that helps make you
a better informed citizen.

Facts and figures by themselves, however, don't provide enough
perspective on the US economy. The American Heritage dictionary
defines "perspective" as "the relationship of aspects of a subject to
each other and to a whole". That's what this Guide will also provide
the reader. The first perspective required is for every reader to
remember that the United States is only one of almost 200 countries in
the world, and although it is the largest economy it must be seen in
perspective to the global economy to properly understand its role.
Indeed, issues like our deficits - either short-term or long-term -
only truly matter in a global economy relative to America's global
competitors and to its own GDP (see Chapter 9). The second perspective
of importance is that of time; so I've provided historic data where
appropriate to explain the development of the US economy over time.

Why is perspective important, especially in an election year? A friend
of mine, for example, once made the pronouncement that "under Bush we
have the largest deficit in our history". This is true in absolute
terms; but compared to what? Deficits are not absolutes; they are
actually relative terms, particularly to our competitors because it
affects our global competitiveness, and relative to our own GDP and to
our past. So part of the guiding light in understanding the US economy
and some of the polemic subjects that always arise in an election is
to always keep the question "compared to what?" in mind. This Guide
provides this perspective, too.

The USA in the New Global Economy

Click to enlarge

Click to enlarge
"A universally helpful and insightful book. I particularly liked the
straightforward charts and summary points. It should be a reference
manual for everyone interested in the US economy."
David Gamble
Former Chief Executive
British Airways Pension
Investment Management Ltd
(excerpt from the book...)

It seems almost trite to say we live in a global economy in ways we
never have before. But this is, nonetheless, a fact. While there has
always been a global economy, with trade being carried out around the
globe, nonetheless, the level of trade and the interconnectivity
through the internet, global telecommunications, and relatively
inexpensive air transportation has increased the importance of the
global economy, especially to America. Unfortunately, it does not
always seem that America's policy-makers understand this point as will
be clarified in this book.

As we all know, the US economy became the world's biggest as a result
of WWII, since all its major competitors--France, UK, Germany, Italy,
Soviet Union, and Japan--had their economies seriously disrupted if
not destroyed. As Stalin imposed the Cold War on the world, and Mao
took China out of the community of nations, the world economy was
divided into: Capitalist states (free markets), communist states
(command economies), and the rest of the world, which were referred to
as "under-developed nations" or "less-developed nations" or
"developing nations". (There were numerous economists who quite
rightly drew up ways of dividing the rest of the world into these
categories). But nonetheless, the total sum contribution to the global
economy of these countries was very little. There was the "First
World" - i.e., the capitalist countries (also known as "the free
world"); then the "Second World" - i.e. the communist countries; and
then the "Third World" - meaning everyone else.

Consequently, it is vitally important moving forward that Americans
understand its relative position in the new global economy and the
implications. On page 14 is a list of the top 20 economies in the
world ranked by GDP (see Summary Point #1 for definition). As you can
see, according to the World Bank, the top 20 economies are responsible
for over 80% of the economic activity of the world. Consequently, as
the top 20 goes, so goes the rest of the global economy. You will see
that the USA remains the #1 single country economy in the world with
roughly 25% of the global economy. However, as you'll see in the chart
on the bottom, the European Union has surpassed the USA, although
those countries that accept the euro is still smaller than the USA.

The distinction is important since currencies are determinants of
trade in the global economy. Consequently, unlike in the past up to
2002, the US dollar--and thus the US economy--now has competition of
equal standing in the new global economy. The US cannot claim
leadership in this regard as it has since WWII; it has to earn its

What does this mean, and why is it important? In the past, to be
blunt, the USA determined terms of trade in the "global" (albeit
"restricted") First World because no other economy could provide the
liquidity in the form of the US dollar needed for the global economy
to grow. This is now no longer the case. Now for America to remain
leader in the global economy--despite the size of its economy- it has
to compete in the global economy in ways it never has had to before.

US Trade in the Global Economy

Click to enlarge

Click to enlarge
"I am a retired professor of economics, having taught for 40 years at
New York University, San Francisco State University, and the
University of California. During my tenure, I worked for three
publishing companies as a consulting editor on new book proposals.
"It's the Economy! (Stupid)" is one of the best manuscripts that I
have ever read covering the golden keys to our economic future and a
"must read" for our politicians, university faculty, and money vendors
on Wall Street."
Prof. Stanford L. Johnson, PhD
Emeritus, San Francisco State Univ.
(excerpt from the book...)

The one thing that truly distinguishes the new global economy is
trade. Since the fall of the Wall in 1989, global trade has defined
economic growth. There is simply no way to compete economically
without competing on trade. Trade means competing and in ways that the
USA has never understood before. As much as some people seem to argue
against "globalization" the fact is we have no choice as Americans.
Either we understand this fundamental truth, pull up our straps, and
get out into the global market and sell more American products or our
national economic security will be even more imperiled than it already
is. It simply does no good to bemoan some of the displacement effects
of globalization; these effects are with us and the only way to
counter them is to compete even harder in the new global economy.

In the early 80s, as some may recall, America was awash with fear-
mongering about the "Japanese Challenge". Back then the prospect of
Japan surpassing the USA actually unified Americans--especially
American business--and we rose to the challenge and turned it back
decidedly. Now, however, there doesn't seem to be any sense of urgency
either by the federal government--Congress and the Administration--or
American businesses to rise to this new global challenge and compete
aggressively. This is surprising considering the verve with which
capitalist America supposedly embraces competition. Yet the facts
don't lie as you will see from the charts in this chapter.

America's trade deficit from 1976 up to 1999 remained under 3% of GDP.
Since US economic growth--including productivity gains--outstripped
this deficit, it was viewed with benign neglect and generally drew a
big yawn from policy-makers. But something happened in 1999: Our trade
deficit went from 1.8% the previous year to 2.8%, and it hasn't
stopped growing since. By 2006, our trade deficit had grown to over 6%
of GDP, surpassing American economic development. Simply put, this
means 6% of America's economy is walking out the backdoor each year
and no one is paying any attention! Can you imagine the response if an
employee were stealing 6% of a store's stock out the back door? Yet
that's what's happening to the US economy with our trade deficit but
our government is doing nothing about it!

Why Our Trade Deficit is Our Own Fault

In 1962, the Kennedy administration was convinced that movie-stars and
millionaires were living outside of the U.S. to avoid taxation.
Despite this having never been proved either then or since, it hasn't
stopped the US government from instituting a myriad of legislation to
effectively punish any private citizen from leaving America's shores
to pursue any opportunity abroad, especially increasing US exports.
This includes instituting a taxation regime based on nationality
instead of territoriality--the only industrial country in the world to
do so. What this means is all Americans--not just millionaires--are
required to file a tax return on his/her worldwide income no matter
where they live, and pay US tax liability on any income not taxed
according to the rules of the IRS. The government is "kind" enough to
grant a tax credit for any income tax a US citizen pays to the local
government, but requires the overseas American to make up any
difference between comparable local taxes and any hypothetical US tax
liability. In practice this means that if an overseas American lives
in a country with little or no income tax comparable to US taxes, he/
she is required to pay taxes to the US government on their income as
if he/she never left America. But, of course, not all countries in the
world use income taxes similar to America to fund themselves. As far
as the US government is concerned this is just too bad for the
individual and he/she faces an increased tax liability to the IRS. Of
course, the Federal government never understands that overseas
Americans do not receive any of the benefits that the US government
provides citizens and other residents in the USA, but they are
nonetheless required to act fiscally as if they never left. The
concept and practice is simply absurd--moreso now when we need more
and more Americans going overseas to increase our exports!

The USA in the New Global Economy

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"Patric Hale has done a wonderful job researching and presenting the
key issues facing the United States in the 21st century. His new book
is exciting to read and should be in the library of every concerned
citizen and corporate manager. This book is a general guide and
reference that can be used and accessed for many years to come."
Robert Johnson
Director (Ret.)
(excerpt from the book...)

Since 87.8% of the US GDP is a result of private industries (see chart
below and on the following page), it is important to understand which
industries and companies produce this 87.4% of our current $13 trillion
+ GDP. First, however, take a look at the chart at the left. In a
nutshell, here is the Summary Point:

The USA economy is 70% consumption, 17% investments, 19% government,
and it loses 6% of its consumption through our trade deficit.

While the concentration of economic power represented by just the top
500 companies in America can be seen as "threatening" (concentrated
economic power--like political power--always has a latent threat),
they nonetheless also represent the success of America's free
enterprise system which shouldn't be overlooked. Despite the seemingly
monolithic nature of America's largest companies, nothing could be
farther from the truth. The US economy--as has been stated so often--
is one of the most dynamic in the world. In theoretic terms, at the
heart of what's known as "capitalism" is a term called "creative
destruction". Essentially this means that as long as the capitalist
system is based on intense competition, the newer, better, cheaper,
more-in-demand solutions will inevitably defeat the older ways of
doing things. Here's one of the best ways to illustrate this in
laymen's terms: There is more computing power in today's cell-phone
than was on board the Apollo spacecraft that landed on the Moon in

But perhaps in economic terms the page at the left and the two that
follow best illustrate this point. The Fortune 500 list was
inaugurated in 1957. Last year they celebrated their 50th anniversary
by printing the original list and the current list. On these pages
you'll find the top 100 companies from both lists. See how many
companies that were on the original list in 1957 are still on the list
in 2007. Surprisingly, only 22 companies from 1957 are still on the
Fortune 500 list in 2007; of these, only 20 are amongst the top 100.
That means that 80 of the top 100 companies in America weren't around
50 years ago--including the #1 company, Wal-Mart!

The USA in the New Global Economy

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"Patric Hale has done a wonderful job researching and presenting the
key issues facing the United States in the 21st century. His new book
is exciting to read and should be in the library of every concerned
citizen and corporate manager. This book is a general guide and
reference that can be used and accessed for many years to come."
Robert Johnson
Director (Ret.)
(excerpt from the book...)

The financial markets--and especially the banking industry--of any
economy, and especially the USA, hold a privileged position. And for
good reason. In this chapter you will learn why this must be so and
how these markets work. This will be accompanied with a statistical
analysis of the various parts to provide a factual basis for
understanding this point.

"Money makes the world go around" as the song from the show Cabaret
states so eloquently, and it is certainly true. Another word for money
in economic terms is "liquidity". Liquidity is to the body of an
economy what blood is to your own body. Maintaining your body's blood
pressure and preventing any blockages is as vital to your personal
health as ensuring the circulation of money/liquidity is to our
economy. The reason why I use the term "liquidity" instead of simply
money is that "money" denotes a "thing", in this case the currency we
hold that hopefully retains its value and is used as a means for
exchange. "Liquidity", however, denotes the "dynamic process" whereby
money flows throughout the entire body of the economy. To continue the
blood analogy, while the blood itself is what maintains healthy cells
in the body, it is meaningless without the constant flow to-and-from
the heart to constantly replenish the cells. This is why maintaining a
well-regulated blood pressure is so important to maintaining a healthy
body, in the same way as the importance of liquidity is to the
economy. Hence the process is vitally more important than the thing
itself, though the two are invariably connected.

This is a "dynamic process" because the US economy is constantly
changing--expanding and contracting--and therefore the need for
liquidity management for the economy is like maintaining blood
pressure to your own body.

The Federal Reserve system is virtually the heart of the economy in
almost the same way as the heart is to the body. That's why our
current crisis in the financial markets is so critical: It is similar
to a heart attack and the Fed is trying to prevent the economy from
going into cardiac arrest or developing a stroke. This is just as
important to the economy as if you were going through something with
your own heart.

In this chapter you'll learn how liquidity/money is added to the
economy, how it is distributed, how it is managed, how it is lent out,
how it is invested, how the pension fund and money managers affect the
investments, as well as putting our stock markets into perspective,
both relative to our own economy and to other stock markets around the
world. This is an essential part of understanding the role of money/
liquidity in our society that affects all of us. Clearly, the
objective here is not to cover all of the bases in depth, but to
provide you with a basic but understandable panorama of the US
financial markets.

Income in America and the IRS

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"I am a retired professor of economics, having taught for 40 years at
New York University, San Francisco State University, and the
University of California. During my tenure, I worked for three
publishing companies as a consulting editor on new book proposals.
"It's the Economy! (Stupid)" is one of the best manuscripts that I
have ever read covering the golden keys to our economic future and a
"must read" for our politicians, university faculty, and money vendors
on Wall Street."
Prof. Stanford L. Johnson, PhD
Emeritus, San Francisco State Univ.
(excerpt from the book...)

Show Me the Money! - The IRS Data

Before going into an analysis of the Federal Government's role in the
economy and an explanation of the Federal budget, it's important to
remember that the source of the US government's revenue--as with most
governments--comes from its power to impose taxation on the people and
then enforce the collection of it.

Of course, each country in the world has developed various forms of
direct and indirect taxation. In the USA most of the revenue generated
to fund the Federal Government comes from five major sources:
Corporate income tax, individual income tax, employment taxes, estate
and gift taxes, and excise taxes. On the facing page you'll see how
these five categories break out from 2002-2006. As you can see the
Federal Government took in a total of $2.5 trillion in taxes in 2006.
Since the GDP of America in 2006 was $13.2 trillion, tax receipts
equaled 18.9% of GDP--let's say 19% to make it easy. In other words,
for each $1 trillion of GDP growth, the government receives $190
billion in new tax receipts.

But how much the government receives, especially from individuals,
isn't nearly as interesting as who pays it, particularly since there
are common assumptions in public opinion and the presidential campaign
about this issue. On the next three pages you will see who paid the
$935 billion in individual income taxes based on the IRS income bands.
(The IRS provides all of these income bands and more information on
their website as a matter of public record; www.irs.gov).

There were about 90 million returns filed in 2006 (no break-out is
provided as to how many were single and how many joint), which showed
total taxable income of roughly $5 trillion. Of this taxable income,
$935 billion, or 18.7%, was paid in taxes. As we all know, the tax
burden is not the same for all. But who paid the taxes might surprise

This chapter also includes a brief but interesting history of taxation
in America under different administration and compare and contrasts
them to the function of the US economy.

The Federal Government & the Economy

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"Patric Hale has done a wonderful job researching and presenting the
key issues facing the United States in the 21st century. His new book
is exciting to read and should be in the library of every concerned
citizen and corporate manager. This book is a general guide and
reference that can be used and accessed for many years to come."
Robert Johnson
Director (Ret.)
(excerpt from the book...)

The Federal government comprises 7.1% of the GDP of the USA (see table
on next page), a budget of almost $3 trillion, and it employs 4.2
million people in all its branches. It is the largest organization in
the United States, and indeed the entire world. The responsibility of
the President of the United States is not only to identify problems in
America and abroad that affect our lives and security, and then
proffer possible solutions to Congress, but he or she must also be the
CEO and COO of this large organization with all of the management
requirements this implies. It is, therefore, not for the faint of
heart and requires considerable analytical, organizational,
managerial, and budgetary skill. While much of this is always
delegated, as Harry Truman so eloquently pointed out with the sign on
his desk in the Oval Office - "the buck stops here" with the

This chapter will look at how the government relates to and affects
the US economy as a whole. In the next chapter we will examine the
budget itself and how it is constituted. The information in these two
chapters - like most of the information in this book - comes from the
Bureau of Economic Advisors. These are the numbers that the President
and his cabinet use to help them manage the government and the
economy. Thus, if you ever want to become President, pay attention to
these numbers and understand the implication of what it means to
manage the US government. When you do this, you will understand why
the US public has felt more comfortable in the last 100 years with
electing men (to date) who have served either as governor of one of
our states or as Vice President before occupying the Oval Office. In
fact, only one sitting Senator has been elected President during this
time--President Kennedy. While all presidents must have an
understanding of the problems that face us, and be able to communicate
effectively about the policies he/she chooses to deal with them, he/
she also must be acutely adept at managing the business of the Federal
government, too. This presidential role is as critical as the others
in assuring the country's interests are well looked after.

On the facing page you will see the percentage shares of the major
components of the US economy broken out into categories since 1930 to
get an overview of their relationships to the economy as a whole. On
the next two pages you will find a further break-out of these
categories into smaller parts for those who want more detail.

As you can easily see, the share of government at all levels at its
height in the 70s comprised only 22.5% of the GDP of the country -
that's the most it has been except during WWII itself which was an
extraordinary period as we all know. Consumption makes up about 70%,
investment about 16% and there was little or no trade deficit until
1990. Beginning in 1990, however, and accelerating after 1999, as the
negative sign implies, the trade deficit has been depleting the US
economy ever since. Indeed, the percentage of the GDP dedicated to
both imports and exports has risen markedly since 1970, again
underscoring the growing dependence of our country on the new global
economy in ways it hasn't been in the past. Imports, for instance,
jumped by over 55% during the 90s, from 10.9% in 1990 to 16.9% in
2006. Exports grew, however, from 9.5% to only 11.1%.

What's perhaps most interesting looking at the chart on the facing
page is how fairly consistent the economy has performed over time. The
only major anomaly since 1930, besides trade, has been the shift from
the production of non-durable goods (from 37% in 1930 to 20% today) to
services (from 32% in 1930 to 42% today).

The Federal Budget Explained

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"Having worked in the financial world for over 30 years and witnessed
first hand the lack of education relative to global economies, this is
the first book that finally allows non-professors a birds-eye view on
world economics in plain English!"
Jeff Marshall - President & CEO,
Green Earth Technologies, Inc.
(excerpt from the book...)

As stated in the previous chapter, the US Federal Government is the
largest business in the world with a budget of almost $3 trillion and
employs 4.2 million people. By itself, it is as large as the entire
economy of China--the third largest in the world. By contrast, the
largest private company in the world by market capitalization is
ExxonMobil at a mere $410 billion, or roughly 14% the size of the
Federal Government. For US citizens the Federal government's size
seems overwhelming and unwieldy. The budget itself seems beyond
comprehension--to citizens and some of our leaders alike.

On the facing page you will see the development of the Federal
Government by the numbers since 1901. The numbers quickly become
staggering almost beyond comprehension. But "beyond comprehension" is
simply unacceptable both for us who pay all that money, and especially
for the media and members of the government who must try to explain it
to us. So this chapter will focus on trying to bring some clarity to
the Federal Budget, showing where the money goes, and putting all of
this in context.

Let's begin with the $3 trillion itself. Some politicians on both
sides rail against this figure as being either too big or too small
depending on what one wants the Federal Government to actually do for
its citizens. Again, the question is: "Compared to what?" On the next
page you will see the same chart as that on the left but broken out as
a percentage of GDP since 1930. The numeric size of our government by
the numbers is actually meaningless--as our economy grows, and
inflation affects all things economic, so will our government grow as
well. Consequently, the only way to keep these big numbers in context
is understanding them as a percentage of GDP over time. Only then can
we track whether the situation is getting better or worse compared to
the past.

On the chart on the next page it is the "outlays" column that matters
most because this is the amount of money the government actually
spends that determines its size, not how much it actually receives.
Naturally most citizens would prefer that it be the other way around,
but that's another issue. Over time, as you can see, with the
exception of WWI and WWII, Federal Government outlays have generally
been between 18-23%, or an average of about 20%. Considering the size
of the US economy, an average of 20% is hardly unreasonable for its
government. And despite our understandable anathema for deficits--for
good reason--even that has been hardly out of whack over the years
(see Chapter 9). Nonetheless, it seems incongruous that our leaders
can't seem to balance the books each year as the difference between
receipts and outlays is statistically so small. But let's move on....

The best way to approach the budget of the Federal Government is to
view it just as if it were any other business: That is, it has
receipts and different subsidiaries that have demands on those
receipts; then a bottom line after the receipts are distributed. On
the next three pages you will see the Federal Budget described
department-by-department, and the major sub-expenditures. On the left
you will see a top-line summary of all of these.

The States and Their Economies

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"Having worked in the financial world for over 30 years and witnessed
first hand the lack of education relative to global economies, this is
the first book that finally allows non-professors a birds-eye view on
world economics in plain English!"
Jeff Marshall - President & CEO,
Green Earth Technologies, Inc.
(excerpt from the book...)

The US economy is more than the private sector and the Federal
government, of course. Most Americans regard the Federal government as
the ultimate political power in the land, but we all really live in
the 50 states or the District of Columbia (except the 4 million living
overseas). Consequently, our perspective in our day-to-day lives for
the most part is local and state, not federal and international. But
since we all live in one state as our principle residence, chances are
we don't know too much about the rest of the other states with respect
to their economies, how large they are, and how they compare to each
other. You might know something about what's happening in a
neighboring state if you live in places like New England, but chances
are if you live in Texas, California, or Alaska you have no clue as to
what's happening in other parts of the same state let alone
neighboring states. Similarly, those on the coasts of America probably
have little in common with or knowledge of those who populate the big
middle of America. If you live on the coast, for example, how amazed
are you whenever you meet someone from the Great Plains who has never
seen the ocean before; or the last time a coastal dweller has seen
corn-fields going on and on for miles?

In 1981, a book called "The Nine Nations of North America," written by
Joel Garreau, divided North America into nine separate regions, (or
"nations" as he called them), based upon socio-economic commonalities
(see map on next page). Garreau identified different parts of North
America in terms readily identifiable for most: Hence the Great Plains
is referred to as the "Breadbasket Nation"; the South as "Dixie";
southern Texas, New Mexico, and Arizona are merged with Mexico to form
"Mexamerica", etc. While doing this goes decidedly against most
Americans' political sensitivities, from a socio-economic perspective
of how Americans work and are integrated with their neighbors it is
too close to being correct to ignore. Naturally when North America is
put into this perspective, issues on trade under NAFTA, for instance,
become more readily understandable to almost everyone.

We are defined as a nation because of our common history and the
political development that stemmed from that history. But as far as
our daily lives are concerned, they are ruled by the invisible--and
more and more by the very visible--hand of economics. Americans living
in the Great Plains, for instance, have more in common with Canadians
north of the border than they do with Californians or those who live
on the East coast since their lives and livelihood are commonly
connected more to corn, wheat, and soy prices than stock markets or
commuting problems.

So it's appropriate in this chapter to make you all aware of your
fellow Americans in the other states and how you compare to each other
from an economic perspective. The tables on page 140 and on the facing
page rank the states based first on GSP (Gross State Product - the
state equivalent to GDP for countries) and then per capita income--the
same criteria as we began the book when putting the USA in perspective
with the rest of the world. As you can readily see, although Thomas
Jefferson in the Declaration of Independence may have stated that "all
men are created equal", we know, however, that's not how we are likely
to live out our economic lives. Indeed, as the table on the facing
page shows, the per capita of people living within the 50 states
varies greatly from a low of $24,062 in Mississippi to a high of
$59,228 in Delaware--a variance of over 145%!

On Deficit & the Economy

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"Patric Hale has done a wonderful job researching and presenting the
key issues facing the United States in the 21st century. His new book
is exciting to read and should be in the library of every concerned
citizen and corporate manager. This book is a general guide and
reference that can be used and accessed for many years to come."
Robert Johnson
Director (Ret.)
(excerpt from the book...)

Much is made of government deficits and perhaps it is important to
remind politicians on a regular basis about deficit spending since it
is, after all, our money that they are spending. But in macro-
economics there are deficits, and then there are deficits. And all
deficits are not the same or have the same effect on the economic
health of the nation. Nor are deficits static and unrelated to events.
Nor are they unrelated to our competitors in the new global economy.
For example, you'll hear in 2008, how "Bush has increased the deficit
to $8 trillion! Oh my god!" This actually is true. But, so what? That
is: "Compared to what", and "how bad is it?" You are probably thinking
I'm crazy, but bear with me because this is very important to
understand about our economy, and especially relative to the new
global economy.

First, let's identify the "deficits" that are common to normal
political discourse: These are the short-term current budget deficit
and the long-term government deficit (also know as "the national debt"
in popular parlance). The first concerns the difference between how
much the government takes in and how much it spends on a yearly basis.
This deficit then accumulates over time and becomes the long-term
government (national) debt. These two are the deficits used most often
in the political football game that's played during election years.
But there are actually two other deficits that aren't talked about
which in many ways are far more important to the issue of American's
global competitiveness: These are our trade deficit and our
international investment deficit (see Chapter 2).

While all deficits effectively mean "we owe someone", unfortunately,
as mentioned in Chapter 2, these latter deficits don't seem to get the
attention from anyone in America that they should, neither from the
administration, nor Congress, nor the American people. Yet these
deficits are what should concern us most in the new global economy!
This notwithstanding, since so many Americans focus on and discuss the
politics of the long-term national debt and budget deficit, these will
be the focus of this chapter to bring more clarity to them for all.

Let's begin by dealing with deficits in the abstract. To do this, try
to think beyond our own nation-state's borders and imagine the entire
world in its galactic state as an on-going globe that spins around on
its axis, and its axis spins around the sun, and the universe spins
around in space. In other words, the global economy never stops.
Therefore, to view deficits just within the confines of our own
country at any one given time is to ignore that our economy is
intricately linked to the global economy, and at any given time, our
economy has always been relative to the rest of the world.
Consequently, all things economic should truly be considered based on
this new paradigm because the USA is not alone in the world, and its
deficits are intricately connected to our relative competitive
position in the new global economy.


So when discussing America's budget "crisis", one needs to ask first:
"Is there a crisis?" And then ask: "Compared to what?"
Only by answering these questions can we have a better perspective on
the subject. The first thing against which to measure our budget is
our own economy. Why? Because the first perspective on deficits is on
the totality of our relative economic progress spinning through the
universe and not just on a fixed point. In 2007, the size of the US
economy was roughly $13.8 trillion. Our long-term debt was $8.8
trillion. This works out to our long-term debt being approximately 64%
of our current GDP. This, in isolation, seems like a colossal disaster
in the making. But is it? For instance, is the current long term debt
the worst in our history?

On Energy Independence

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Click to enlarge
"Having worked in the financial world for over 30 years and witnessed
first hand the lack of education relative to global economies, this is
the first book that finally allows non-professors a birds-eye view on
world economics in plain English!"
Jeff Marshall - President & CEO,
Green Earth Technologies, Inc.
(excerpt from the book...)


Industrial countries run on energy - no energy, no industrial society,
it really is that simple. Consequently, one of the primary
responsibilities for national policy-makers must be an accurate
appraisal of long-term energy management. This requires, first,
identifying energy dependency through consumption and production
patterns; and, second, developing a long-term policy to secure our
future energy resources. Understanding how these two responsibilities
play out by the numbers for the USA is the first step in being clear
about the issue of "energy independence" - a term that many political
candidates are talking boldly about this election year. However it is
clear they aren't fully aware of what this means, and therefore are
misleading the public!

This Chapter will provide you with the numbers about our energy uses -
past and present - and then those for the future as determined by the
Department of Energy (DoE). Then we'll look at what has to happen to
achieve energy independence and the implications for our country. It
is understood that we are all in favor of energy independence for lots
of good reasons. Consequently as a country we should all seriously
understand these numbers if we want to move in that direction. To do
so requires an evaluation of how our country consumes energy. And it
means an appreciation of "time" in how long it takes to accomplish
changes in our pattern of energy consumption. Unfortunately, Americans
are not the most patient people in the world when it comes to
"change". So let's first evaluate what our energy consumption is,
particularly historically and then in relation to the rest of the

Although this chapter is entitled "energy independence" much of it
will be devoted to the issue of "oil independence" for one important
reason: Although energy encompasses many forms--oil, coal, natural
gas, hydro, nuclear, and renewable sources--only oil poses a serious
threat to our national economic security, as we all now know from our
forays into the Middle East and the price of gasoline now at over
$4.00/gallon. And for the most part, all Americans would be more than
happy to figure out a way where we are no longer dependent on oil
imports from the Middle East (or other unstable regimes for that
matter) for our energy needs. But wishing it so doesn't make it

The Department of Energy publishes an International Energy Outlook
(IEO) each year as well as a US Annual Energy Outlook (AEO), both of
which are available on their website, www.doe.gov, and OPEC maintains
an excellent website as well to provide information about global
energy and oil patterns www.opec.org. OPEC is focused entirely on oil
and natural gas, while the other DOE reports focus on all energy
sources at a comparable focus. The DOE uses a standard for energy
measurement called the "British thermal unit" (Btu) since Btus measure
energy output from any energy source. Gross energy consumption and
production is measured in "quadrillion British thermal units," or Btu
quads, for short. In this way we can equate energy produced and/or
consumed whether from coal, nuclear, oil, or any source. This is
useful in the overall analysis of our energy production and
consumption patterns, especially compared to other countries, but of
course different energy sources are used for different purposes; for
example, we're not shoveling coal into our cars to make them go, are

On page 172 is a quick historic view of global energy consumption by
energy source since 1635. In a snapshot you can see that it is only
150 years that we've lived in a truly multi-energy source world. "King
Coal" lasted less than 100 years before oil supplanted it as the
dominant energy source. There is a corresponding statistic to this
snapshot that should be kept in mind here: In 1800, the world
population was only 978 million. By 1900, it had increased 69% to 1.65
billion. In the last century, however, the world population has
exploded from 1.65 billion to over 6 billion--an increase of 363% -
the greatest increase of population in recorded history! While energy
sources are certainly not the cause for this increase in population -
declines in infant mortality, fewer global wars, and medical
improvements, esp. disease control, are the major reasons -
nonetheless, the end result of this population explosion has led to an
equal explosion in energy demand that quite literally the world had
never seen before. To bring this down to a personal level, many of you
reading this probably had a grandparent born around 1900 who witnessed
most of this transformation personally, so it isn't so far removed
from our own lives.

On Health Care in America

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"A universally helpful and insightful book. I particularly liked the
straightforward charts and summary points. It should be a reference
manual for everyone interested in the US economy."
David Gamble
Former Chief Executive
British Airways Pension
Investment Management Ltd
(excerpt from the book...)


The sickest thing in America these days is its health care "system".
This isn't just my opinion but everyone's opinion. The price for
health insurance doesn't seem to ever decline, let alone increase at
anything as low as the rate of inflation. We, the people who pay
health insurance - either as individuals or corporately - are told
it's because costs keep increasing. It's a vicious circle that seems
to have stymied even the most sensible and experienced minds. I, for
one, am literally sick and tired of being ripped off in this colossal
bunko game. So, in this chapter will be a number of possible
solutions, all of which are improvements on the current situation.

Permit me give you some of my personal background: I grew up in
Connecticut but lived in Europe for 27 years (France, Germany, and the
UK) before returning to the USA 10 years ago. Shortly after arriving
back in America I was ripped off by the first insurance company when
my wife had to have an emergency operation for which they refused to
pay, so it ended up costing us $14,000 for just one overnight stay in
the hospital. At least that was the hospital's first bill.... When I
explained my circumstances of not being insured and "could we do
something?" I was told that if I paid cash it would "only" cost
$9,000! Incidentally, in this process the original bill just for ONE
HOUR of the anesthetist was $1,200! I'm sure he was very good, but for
ONE HOUR's work?! In the end, when I told them I had no insurance,
they, too, settled the bill for only $400! It was, in my opinion,
still an obscene amount of money for one hour's work, but at least
infinitely more reasonable than $1,200! Why the lowered cost? Because
no insurance company was involved! So if the hospital considers they
were actually saving 28% if insurance companies were not involved,
that should tell us all something about this so-called "system" that
supposedly "insures" us, but doesn't "assure" anyone about our health

Since then I've been insured by only one company. After the first year
my insurance rate increased 25%. The second year it increased 24%,
simply because I turned 50 - the worst birthday present you can
imagine, especially since I was still in the peak of health. The third
year it increased another 20%. I actually called and asked what I
thought was a sensible question: "Considering the inflation rate is
less than 2%, on what basis can you justify such an increase?" The
answer made my blood boil: "Well, we've separated Fairfield and New
Haven counties [Connecticut] from the rest of the state since the
costs are higher there, so we've had to increase your rates
accordingly." "But that negates the very principle of insurance which
is to spread the risk as widely as possible to lower the cost for
everyone," was my--I thought--intelligent retort. "Nothing we can do
about it, we're sorry." I wrote to the governor complaining that in
such a small state like Connecticut such a thing shouldn't be allowed.
I received a very polite, professional response from the state
insurance department explaining that it was fully within the legal
rights of the insurance company to do so. That brings us up to today
when I've just received my renewal contract which came with another
increase of 10%! Oh yes...wouldn't you know, each year as prices went
up, benefits have gone down and the only way I could keep costs as low
as I did was to agree to a $1,500 annual deductible! In the interim,
because I've had some health problems, I've been told that even if I
could find a cheaper insurance, chances are I wouldn't be accepted. So
now I seem to be caught in a trap and I can't get out.

Now I am not a socialist of any kind, let me make that clear! Since
part of my university studies took place in Berlin during the height
of the Cold War (including living virtually next to the infamous
Wall), I absolutely abhor anything having to do with centrally planned
anything. Nonetheless, I do believe the purpose of politics is to
provide a better government for a better society. And in that
definition, I expect government to intervene to resolve problems that
are critical to a better society where the "market" has fallen down or
fallen apart. And that's what I believe is the case concerning health
care in America and why a drastic and dramatic rethink about improving
it is imperative.

It's clear that the health care industry is simply out of control.
Health care workers blame trial lawyers for malpractice suits. And
malpractice suits are blamed by health insurers for increasing
premiums. And increasing premiums are blamed on health care workers
for increasing costs. In the end, it seems a vicious circle where
those inside the circle all benefit at the expense of the rest of us
who live outside of the circle. America is the land of innovation in
business, to say nothing of being the richest country on earth. There
simply must be better ways to organize providing health care and peace-
of-mind to the American people. A few suggestions follow an analysis
of this issue.

The Hale 200 Index of Global Economic Entities

Click to enlarge
"Having worked in the financial world for over 30 years and witnessed
first hand the lack of education relative to global economies, this is
the first book that finally allows non-professors a birds-eye view on
world economics in plain English!"
Jeff Marshall - President & CEO,
Green Earth Technologies, Inc.
(excerpt from the book...)

Throughout this book I've referred to the "new global economy", and in
the first chapter I described what I meant by this term. But
describing something is never as effective as presenting a visual
presentation of what I mean. For that, an expansion on the definition
of the "new global economy" is necessary. Heretofore, global economic
competition was waged mostly by private companies based in a sovereign
state--sometimes with the aid of that sovereign state--against other
companies from different sovereign states. In this process the
"sovereignty of the state" ruled; that is, the economic pursuits of
the private companies accrued to the general benefit of the state in
which that company was domiciled. Below is the political definition of

"Sovereignty is the claim to be the ultimate political authority,
subject to no higher power as regards the making and enforcing of
political decisions. In the international system, sovereignty is the
claim by the state to full self-government, and the mutual recognition
of claims to sovereignty is the basis of international society."
While no doubt our leaders and those of other countries still view
this definition as valid, nonetheless the development of the new
global economy is breaking up this definition significantly. Not only
has the establishment of the European Union superseded this definition
in many ways, but the development of the private sector has literally
outgrown the geographical and political confines of the nation-state
to where the on-going power and "sovereignty" of that state is being
challenged by these new global economic forces.
Consequently, the private sector is rapidly dissolving any economic
notions of sovereignty that still remain the world. While the USA, as
the largest economy in the world, has been more immune than most in
the past, this is no longer true. Indeed, one of the major points of
this book is to awaken America's national leaders and decision-makers
to the realities of the new global economy and how the implications
affect the national economic security of the nation. While it is
understandable that most of us still view issues of sovereignty in
terms of the geographical delineations of the nation-state, this
remains true only in political terms. In economic terms a nation-state
is just another "economic entity" in the new global economy and it is
on a par as an economic entity with other entities in the private
sector that co-occupy this new global economy.

On pages 222 and 226-229 is what I immodestly call the "Hale 200 Index
of Global Economic Entities". This is a co-mingled ranking of the top
countries ranked by GDP, the top 50 financial institutions ranked by
assets, the 50 largest global money managers ranked by assets under
management (that is, funds held in trust by the managers to maximize
the returns), and the top 50 companies in the world ranked by market
value. The result is a ranking of the Top 200 Global Economic Entities
in the world.

Index of Tables

Global GDP - Top 20 Countries 14
Major Economic Countries & Groups 14
Global Population - Top 25 Countries 16
Comparative G-7 Data 20-22
US Gross Domestic Product in Detail 24
Macro-economic Overview of the USA 26
US International Transactions 28
US Trade in Goods 31
GDP & US Trade Balance, 1976-2004 33
Top 30 US Suppliers (Imports) Manufactured Products 34
How Much Red Ink is Too Much? 36
What's Wrong with This Chart? 36
International Investment Position of the United States at Year-end 41
US Net International Investment Position at Year-end, graph 42
US Gross Domestic Produce, Expanded Detail 44
US Economy Sectors 45
US Economy by % GDP of Major Industry Sector 46-47
Percentage Shares of Gross Domestic Produce 1930-2006 48
Gross Domestic Product, Expanded Detail 50-52
Forbes Global 2000-Top 40 Companies by Market Value 54
Forbes Global 2000-Top 40 Companies by Sales 55
Forbes Global 2000-Top 40 Companies by Profits 56
Forbes Global 2000-Top 40 Companies by Assets 57
Composition of Fortune 100: 1957-2007 58, 60, 61
The Federal Reserve System 62
The Fed Rate and US GDP - Regulating the Heartbeat od the US Economy,
1954-2006 64
FDIC-Insured Financial Institutions 66
FDIC-Insured Financial Institutions by Asset Size: 2006 68
Insured US Chartered Commercial BanksRanked by Consolidated Assets 70
Equities, Corporate Bonds, and Treasury Securities Holdings by Type of
Investor 72, 74
Watching the Rich Getting Richer 76
Rest of World Investing in America, % of Total Holdings 77
Largest Stock Exchanges 78
Global Stock Exchanges Ranked by Market Cap 80
P&I/Watson Wyatt Top 40 Global Money Managers 82
P&I/Watson Wyatt Top 40 US Money Managers 84
P&I/Watson Wyatt Top 40 Global Pension Funds 86
P&I/Watson Wyatt Top 40 US Pension Funds 88
Worldwide Total Net Assets of Mutual Funds 90
Stock Market/Dow Jones Index Performance 1900-Oct 2007 92
Internal Revenue Gross Collections by Type of Tax, 2002-2006 94
Who Pays Individual Income Taxes? - 2006 95
Internal Revenue Gross Collections, by Type of Tax 96
Internal Revenue Receipts & Refunds, by Type of Tax 98
Selected Income & Tax Items and Accumulated Size of AGI - 1 Size of
Adjusted Gross Income 100
Selected Income & Tax Items and Accumulated Size of AGI - 2
Accumulated from Smallest Size of Adj. Gross Income 101
Selected Income & Tax Items and Accumulated Size of AGI - 3
Accumulated from largest Size of Adj. Gross Income 102
USA Government Receipts, Outlays, and Surpluses or Deficits as % of
GDP: 1930-2013 108
US GDP Growth 1930 - 2007 116
Percentage Shares of GDP 1930- 2006 118
Government Current Receipts & Expenditures 1930.-1980 120
Government Current Receipts & Expenditures 1990 - 2006 121
Federal Receipts, Outlays, Surpluses or Deficits 1901-2011 124
Federal Receipts, Outlays, Surpluses or Deficits as % of GDP: 1930 -
2011 126
Federal Budget Top Line Amounts 127
Federal Budget - Outlays by Function and Sub-function 128-130
FY 208 Appropriations Earmarks Summary 131
Top Suppliers to US Government: 2000-2007 135-138
Real GSP by State, 2003-2006 140
Per Capita Real GSP by State, 2003-2006 142
The Nine Nations of North America, illustration 143
State & Local Revenues 2004 144-145
State & Local Governments-Summary of Finances: 1990-2004 146-147
US States Compared to Countries by GSP/GDP - 2006 148
Personal Income Summary: Metropolitan Statistical Areas 150
G-7 Comparable Government Balances 1980-2008 152
USA Government Receipts, Outlays, and Surpluses or Deficits as % of
GDP: 1930-2013 158
Government Deficits/Surpluses 1997-2007 168
Global Energy Consumption by Source, 1635-2000 172
US Energy Consumption History & Outlook 1949-2030 172
Oil Production/Consumption Industrial Countries 174
World Oil Reserves by Country 176
US Energy Production by Major Source, 1950-2006 180
US Oil Imports by Country of Origin 2002-2007 182
US Energy Overview and Consumption per Person 1950-2006 184
US Energy Use per dollar of GDP 184
US Petroleum Consumption by Sector, 1950-2006 186
US Transportation Energy Consumption 186
US Petroleum Consumption by Major Product 186
US Motor Vehicle Indicators, Fuel Consumption, Mileage 188
US Motor Vehicle Fuel Rates, Motor Vehicles in USA 190
US Energy Imports and Exports, 1950-2006 193
World Total Energy Consumption by Region and Fuel 195-196
Health Expenditures as a % of GDP, OECD Countries, 2005 201
Health Expenditures per Capita, Public & Private Expenditure, OECD
Countries, 2005 203
The Hale 200 Index of Global Economic Entities 222, 226-230
The Hale Super 25 Index of Global Economic Entities 231

While there is narrative in each section, I have endeavored to keep
this to a minimum. It is my belief that all Citizens can look at the
statistics, if properly presented (which I hope I've accomplished
here) and truly understand our economy in perspective. Economics and
statistics are dreary sciences for most citizens, and I, too, was
personally disinterested in these subjects. But the problem with this
disinterest is that it overlooks an undeniable fact: Economics rule!
Or as a business professor once said: "If you don't know your numbers,
you don't know what you're talking about!" Another professor once
said: "If something is knowable--know it!"

In the past several years I've found, sadly, that, along with most of
us, few journalists or politicians actually take the time to dig for
the numbers before making all too often wild claims in the press. And
we, the citizens of the United States, normally take their information
on face value because we don't have the time either to dig for the
numbers, thus accepting these bold statements as fact instead of
opinion (and all too often badly formed opinion). Before the internet,
there was good reason for this: There was little opportunity for the
private citizen to seek out the numbers by him/herself without
essentially taking a sabbatical from everyday work to camp out in
Washington DC, and New York, and go from office to office to find out
the information for ourselves. And, of course, few amongst us could
afford to do so or truly would want to. Thankfully, the internet is a
liberating medium because all of this information is now there to be
found in the comfort of our own home - but it still requires digging!
I've found it shameful, however, that many of the most reputable news
organizations don't seem to do more than a modicum of research via the
web to find out the veracity of economic claims, particularly when the
internet is so accessible and easy to use for this purpose. So I've
taken the months to dig, and worked diligently to put this information
in a useful, easily understandable form to help our fourth estate,
too, because an informed press also leads to an informed citizenry,
and thus strengthens our democracy.

The Guide will be unwelcomed particularly by polemicists who seem to
be out there in abundant numbers spouting off figures that are either
not true, or without a proper perspective that would explain the
economy better. But this Guide is truly for them, too. Despite all the
numbers and statistics in the Guide, these still only frame our
political economic debateas a society moving forward. Past performance
is never a predictive guarantee for the future - but it can certainly
help us better understand the parameters of the debate. Santayana's
admonition about those who fail to learn from the mistakes of the past
are condemned to repeat them should continue to guide us moving
forward as a nation in the new global economy.

An advanced word of caution. Although I have endeavored diligently to
present just the facts in their non-polemic form, inevitably these
color my narration, and I, too, have my own opinions which I
occasionally interject based on these facts. This I consider an
author's prerogative and even responsibility since interpreting the
information herein is as important as actually presenting the data and
facts. The reader is, of course, free--and welcome--to ignore my
opinions and form his/her own views. I hope, nonetheless, the data and
facts will be the formative basis for these views. At the end of the
day, the numbers are the numbers--at least you have them here.

Finally, this website has a blog section where you can see updates and
discussions on these issues, so feel free to join in. I also intend to
update this book on a regular basis and would welcome your input,
comments, and suggestions. Please contact me at:

Patric Hale
Capital Markets LLC
PO Box 347
Cos Cob, CT 06807-0347


Some people have a problem "relating" to charts and graphs, and
"statistic-rich zones". There are many in this book as you will see.
Don't let all of the numbers force you to overlook the information in
these charts--I've taken the effort to color code the charts to make
it easier for you to read, too. If you take as much time reading them
as you would a normal page of text you will begin to understand them
with increasing ease. And when you take the time to patiently
understand these charts it will permit you to make your own analysis
without listening to anything I have to say.


..and I am Sid Harth
2010-02-02 14:10:46 UTC
It's the Incompetence, Stupid!
June 4, 2002
By Caroline Spector

Back in the halcyon days of the early 1990s – before our Lives Were
Changed Forever – a brash young Democrat went up against a sitting
president who had recently won a “war” in the Middle East. Though
flush with his victory and riding high poll numbers – the president
had mismanaged things so badly at home that the young contender had a
foothold to climb into the most powerful office in the land.

During Bill Clinton’s campaign against Poppy Bush, there was one thing
that his campaign managers kept hammering away on: The moribund US
economy. The “It’s the Economy, stupid” slogan was born and written in
large letters in the campaign war room.

It’s time for a new slogan.

Personally, I think “It’s the Stupidity, stupid” has a nice
alliterative ring to it, but since that might sound like too much of
an ad hominem attack on the person currently occupying the White
House, perhaps we should go with “It’s the Incompetence, stupid.”

After all, even the spokespeople for this administration keep telling
us, there isn’t anything they can do.

Which, you have to admit, is a pretty amazing statement coming from
the group who promoted themselves as “the adults,” as in, “The adults
are back in charge.” This really begs the question, “In charge of

As more and more revelations regarding information about the events
leading up to September 11 in the possession of the various
intelligence agencies and top administration officials comes to light,
the Bush regime has trotted out a wide variety of excuses and
“explanations” for why all these hints were missed, and as each one of
the excuses were shown to be nonsensical, they’ve fallen back on the,
“I dunno, boss” sword.

In short, “We screwed up, but anyone else would have done the same.”

Except that is utter nonsense.

In fact, numerous terrorist attacks were planned during the Clinton
administration, especially plans for attacks during the 2000
millennium celebrations. These were all stopped.

Though there were terrorist attacks on American property around the
world during the Clinton administration, and even a bombing of the WTC
in 1993, on the whole, the losses on American soil were relatively
minor. The losses at the American embassies in Africa in 1998 were
another story. Of course, when Bill Clinton tried to go after
terrorists at that time, he was accused of using this as a distraction
from the Paula Jones matter and got no support from Congressional

Now the Bush administration would have you believe that there are
looming terrorist attacks about which they can do nothing.

This is an astounding statement.

This group of “adults” are saying they are too incompetent to do
anything about terrorist violence to our people on our own soil.

Color me amazed.

And in their latest act of stunning incompetence, the Bush
administration has finally admitted that, yes, indeed, there is global
warming. But hey, they can’t do a thing about it, so we must “adapt.”

How pray tell do they suggest we do such a thing. Drink more ice tea?
Turn up our air conditioners?

Is there anything resembling leadership from this cabal? Do they
acknowledge that gutting emission standards by classifying SUVs as
trucks for the first ten years of their manufacture has wreaked havoc
on the ozone layer? Do they suggest that maybe crappy fuel standards
have added to the carbon dioxide levels?

Do they suggest that they should lead a national charge to change from
our fossil fuel dependency to more clean and renewable sources? Do
they encourage Americans to tackle this new threat to life on the
planet by having a vision of the future that is more ecologically
friendly? Do they challenge corporations to help in this effort?


They can’t do a thing.

Part of the mantra for George Bush’s campaign was that though the
candidate himself was woefully inadequate in matters such as foreign
affairs, economics, and, well, much of anything, his “managerial”
style was to delegate and therefore he would be bringing aboard the
very best minds to do the heavy lifting for him. (Apparently, these
were mostly to be relics from Poppy’s regime, The Gang That Couldn’t
Iran/Contra Straight with a few fundamentalist Christians thrown in
for good measure.)

And yet, these supposedly grown-up and bright appointees managed to
miss the terrorist ball completely.

Actually, what's at play here is really pretty simple. As most of us
who’ve held jobs in the real world know, any workplace reflects the
values and attitudes of its boss.

In other words, the fish rots from the head down.

The incompetence of this administration should be the mantra of every
committed Democrat. The Bush administrations repeated claims that they
can’t do anything about terrorism, that they can’t do anything about
global warming reveals a mindset of incompetence. If you believe
there’s nothing you can do, you usually prove yourself right.

The incompetence this sort of rhetorical garbage reveals must be
pounded home as often as possible. We don’t pay taxes to be told that
there’s nothing the administration can do. We don’t give the lives of
our men and women so that the Bush administration can be derelict in
its duty to the citizens of this country, security being but one its
obligations. We should expect leadership.

And we sure as hell need to point out that though they may claim the
adults are in charge, the leader of this pact is an overgrown teenager
who acts as if he’s been given and exceptionally annoying chore to

And the result has been nothing but incompetence.

Caroline Spector is a writer living in Austin, TX (where you can't
swing a dead cat without hitting far too many other writers). She is a
yellow-dog Democrat, thank you very much.


It's the economy, stupid DNC

Following a tour of Montana's lovingly restored capitol, we settled
down into the Old Supreme Court Chambers. In the midst of all this
history: wireless networking!

This is pretty rough, as I'm trying to type and listen all at the same
time...and we have to go, so I'll post my notes and try to clean them
up later.

Panel 1: Rebuilding the West's Economy in George Bush's America
Speakers: Bill Lombardi: Former Montana Dem. Party Economic
Development Advisor

Rebuilding the West's Economy in George Bush's America.

Evan Barrett--Montana Chief Development Officer
Bill Lombardi--Former Montana Democratic Party Development Advisor

Bill Lombardi:

Have to plan economics on local, regional, state, federal bases. Need
a game plan because it's a top issue. Work with state legislators and
candidates. Dems learned that you have to have a positive plan that
you can sell to the voters.

Looked at polling: economy right track/wrong track.

Affordable, reliable energy
Access to land to hunt fish camp
Jobs with good pay
Strengthening families

Went round state and asked chambers of commerce, labor leaders, local
business, economists.

West is one of fastest growing areas of the country.
People are moving here. Health services, small businesses,

Declining: mining, transportation.

Symbols: how do you change the symbols? Independence/freedom: cowboys,
farmers, railroad workers--myth of the west even though only a
fraction of economy. Simple, common messages. Plain-spoken so people
can understand in their hearts and guts.

Montana Dems for jobs and business plan. Boiled it down. Trained all
candidates in the message. Based on what was heard in the field. Added
to it. Made sure everyone was on the same page. Formed basis for
legislative agenda.


This is NOT George Bush's america. West is most dynamic economic area
in the country. "Third coast" up the Rocky Mountains.

Montana is growing less fast. When the economy isn't working, the Dems
have an opportunity if they address jobs. Parts of Montana are growing
really, really fast, but in rural areas are suffering--much economic
dislocation. Challenge the Democratic Party needs to look at.

Dems had abdicated rural areas. "You cannot turn over regions of your
state any more than you can turn over part of the country if you want
to be successful." It's the rural areas that have the most economic
dislocation--if Dems aren't there, they get the social "ills" message
and vote against their own economic interests. Must compete for those
votes--and the best way to compete is on jobs. Should not let the
republicans have that message: got painted into environment vs jobs.

We're for clean environment: for fishing, hunting, and camping. Do not
accept jobs vs. environment. You can have mining, agriculture, energy--
we need to have that--but we need to do it right. Dems need to be
about responsible economic growth.

Key component of growth: education. Don't want to get victimized as
tax and spend. "smart use of money." Articulate it. What doesn't work:
Republican: "I'll do anything for jobs." Dem: "Jobs require education
so we have to put more money into education to train people for the
jobs of the 21st century"

Real stuff, and then there's the rhetoric. Be smart. Let's define us,
not let the Reeps define us. The dominant thinking in west is
populist. In populist thinking, a job is a basic thing needed. Can't
be ashamed of it. Find allies, peel them away from interest groups
that don't really serve them.

Jobs were blue collar jobs in west. West is where people go to find
challenge and opportunity--entrepreneurial thinkers. Need to allow new
economy to grow while continuing to develop the traditional economy.
We are first and foremost about making sure you have a job that
enables you and your family to live.

We have to make growth everywhere: not just the easy high-tech stuff.
Do resource industries. Make it OK to be a Dem in Glendive. It's not
about what church they go to, but what plant they work at.

Where economic development happens:

Competitive advantage: cheaper shipping
Comparative: quality of life

Energy policy: producing domestic energy the right way, not just
bulldozing anwar. Comparative advantage.

Tech, manufacturing, services.

do not give up the right to talk about development and job growth to
the republicans

Q: Jeff Smith re populism

Populism was a negative movement: against big business, trusts, etc.
We need to be against something.
What direction does the blame arrow go? Does it go up (big business)
or down (welfare queens) battling for minds of people who want to be
against things.

13-14 drafts of economic document draft. Very time-consuming, but
worthwhile. All legislators, Sen. Baucus, Gov. 6 months to pull it
together and another month to edit, then field-tested, then refined.

Political message: Frank Mankowitz "you can always tell what a
politician means if you look for the active part of the sentence,
which often comes after the "but." It doesn't matter what you're for--
just think about where the emphasis is. Do qualifiers first, then
hammer at the end.

Jenny Greenleaf | June 3, 2005 |


...and I am Sid Harth
2010-02-02 15:01:29 UTC
ALL of the Despicable Democrats;
Barney Frank, Nancy Pelosi, Barbara Boxer,
Dianne Feinstein, Sheila Jackson Lee, and Harry Reed,
Have BLOCKED Congressional Investigations into
ACORN's Crimes, Illegal Activities and CORRUPTION.

Obama has FAILED to Request an Investigation
into the Crimes, Illegal Activities and CORRUPTION.

Could it be that All of these Despicable Democrats are not only
CORRUPT, but also on the Payroll of ACORN?

Could it be that ALL of the Despicable Democrats;
Barney Frank, Nancy Pelosi, Barbara Boxer,
Dianne Feinstein, Sheila Jackson Lee,
and Harry Reed are ALL CORRUPT????

ALL of the Despicable Democrats;

Barack Hussein Obama, Barney Frank, Nancy Pelosi,
Barbara Boxer, Dianne Feinstein, Sheila Jackson Lee,
and Harry Reed are Guilty of

High Crimes and Misdemeanors


Obstruction of Justice





Obama is a Miserable Failure

Hey, 3 Stooges....
Respect the Will of the People!


The 3 Stooges:
Commie, Crazy and Looney (a/k/a "Blinkie")




Impeach Nancy Pelosi


"Blinkie" has got to go, NOW!


Nancy Pelosi - You are a LIAR.

Nancy Pelosi - You are a HYPOCRITE.



Nancy Pelosi - You are a very BITTER person, with
a personal agenda, and driven by your Partisan Politics,
and a SELFISH agenda. You no longer capable of
doing the People's business.





Be sure to turn off the Lights when you LEAVE (or get IMPEACHED!) so
you can reduce your Greenhouse Gas Emissions!

If the "truth commission" is going to move forward, we want Nancy
Pelosi on the witness stand first. We want to know what she knew
about being briefed on our CIA's interrogation methods and when she
knew it. When Nancy Pelosi is found to be lying - as everyone knows
she is - we want her indicted for perjury, impeached and removed from
our office.


Barack Hussein Obama:

You are a Liar.
You are a Loser.
You are a Moron.
You are a COMPLETE Failure.
You and your radical, extremist, Un-American Liberal agenda brings
Shame and Disgrace to the Office of President and the American


This is not Russia:
"Czars" like Van Jones are UNCONSTITUTIONAL!

John Kerry - one miserable, despicable human being.
You are a despicable democrat.

Barbara Boxer - Shame on you "mam" - you are not worthy of the title.
You are a "despicable democrat."

Barack: keep the terrorists in GITMO.

GITMO isn't broken, and your logic on this is illogical.

If you want to break something that is working just fine,
and are hell-bent on closing GITMO, send the terrorists
to a prison back in Iraq or Afghanistan.


Rise Above Politics!

Thank you!
President Bush
Vice President Cheney
for your outstanding job, hard work, and success
in protecting our country,
from September 12, 2001 to January 20, 2009

Sick of Barack Obama, his OVER-EXPOSURE,
his RADICAL, Socialist Agenda and Policies???

Everyday, we are BOMBARDED by the "drive-by" liberal
(and completely dishonest) press about what Obama did and
what Obama said. It's simply a case of way too much
Obama and what we call; "Obamaitis!"


for more information on Obamaitis.

The good news is you don't have to see your government (socialist)
doctor just yet, but you DO have to go vote next time, and vote for
FREEDOM and CONSERVATIVES who are opposed to Obama and his destructive
policies and socialist agenda.

Say NO To Socialism

Nancy Pelosi

Barack Hussein Obama:

Your "Change" is NOT: the "Change We Can Believe In"

Keep YOUR Change

Protect Our Country and Protect Our Borders and REMOVE ILLEGAL ALIENS

Obama: Rosa Brooks appointment is evidence of your poor judgment. Fire

Barack Obama, Hugo Chavez & Fidel Castro
Advocates of Socialism and
Banana Republic Politics





IMPEACH Despicable Democrats
like Obama, Pelosi and Reid!

Sarah Palin, Newt Gingrich,
Rick Santorum, J.C. Watts, or Ron Paul

Unborn Babies are People Too!
Defend and Protect Innocent Life!
Abortion Stops A Beating Heart!
Life Begins At Conception!

Return to the Constitution!

Time for a "National Sales Tax"
The "Fair Tax" Works, FAIRLY, for All!


Brilliance, Brains and Beauty
& a role model for all "real women"!

Governor Sarah Palin


Smart, Articulate, Competent, Proven,
Tenacious, AND a Proven Conservative!

Sarah Palin for President 2012

J.C. Watts, Rick Santorum, or Ron Paul
for Vice President 2012

Sarah Palin is the
"Change We Can Believe In"






We The People Have Had Enough!

We The People Are Mad As Hell!

Enforce Immigration Laws!

"A nation without borders is NOT a nation!"
President Ronald Reagan

Protect Our Borders!

Corrupt to the Core

Question: What is the definition
of a "Despicable Democrat"?

Answer: Barack Hussein Obama, Nancy Pelosi, Diane einstein, Harry
Reid, Joe Biden, and any democrat that places their party and their
political agenda over our country's best interests.

Say NO To Obama and
Say No to Socialism

Vote for REAL
"Change We Can Believe In"
in 2012


Joe Biden - you are a pathological LIAR - I would rather follow
President George W. Bush anyday.
Hey Joe, turn around, take a look and see.....
Nobody is following you!

Joe Biden is a CLOWN,
and a "Jimmy Carter" wannabe!

Abolish The Federal Reserve

We Support Congressman Ron Paul's Bill, H.R. 1207
that will Make a GREAT Start to Abolishing the Fed,
by Auditing the Fed, under his Bill, H.R. 1207!

Let's Elect an Honest, Decent, American For President
Someone that Places America First, and will Support and Defend our
Constitution, our Borders, and will Insure that American Jobs - go to

Support and Defend the Constitution

We Can Believe In


Email: ***@ChangeWeCanBelieveIn.com

Change We Can Believe In

Obama, Pelosi & Reid


Are Obama, Reid and Pelosi,
Guilty of High Crimes and Misdemeanors
Against our country and our Constitution?

And now, a Message From Jimmy Carter,
The First Clown to Ever be Elected President:

"Thanks Barack!"

Denzel Washington, Hollywood Box-office Star, also a Real American and
True Patriot!

Remember this next time you walk up to the ticket window of your local
movie theater with $10 in your hand.

The Liberal Left-wing media missed this one, but our brave soldiers

They would like you to send the following to everybody you know, about
what an outstanding American and Patriot that Denzel Washington truly

Denzel Washington with Soldiers at the
Brooks Army Medical Center in San Antonio, Texas

Did you hear that Denzel Washington and his family visited the troops
at Brook Army Medical Center, in San Antonio, Texas (BAMC) the
other day?

Brook Army Medical Center is where soldiers who have been evacuated
from Germany come to be hospitalized in the United States, especially
burn victims. There are some buildings there called Fisher Houses.

The Fisher House is a Hotel where soldiers' families can stay, for
little or no charge, while their soldier is staying in the Hospital.
BAMC has quite a few of these houses on base, but as you can imagine,
they are almost filled most of the time.

While Denzel Washington was visiting BAMC, they gave him a tour of
one of the Fisher Houses. He asked how much one of them would cost to
build. He took his checkbook out and wrote a check for the full
amount right there on the spot. The soldiers overseas were amazed to
hear this story and want to get the word out to the American public,
because it warmed their hearts to hear it.

Why can't the "Hollywood Fluffs" like Brad Pitt, Angelina Jolie,
Madonna and Tom Cruise Self-centered and Ego-maniacs follow Denzel
Washington's Patriotic Lead?

The "Hollywood Fluffs" with their ridiculous antics make front page
headlines while real patriots like Denzel Washington, don't even make
the news (except the local newspaper in San Antonio).

A true American and friend to all in uniform!

Thank you Denzel Washington!

The following adapted from a popular, and wide-spread email

As the U.S. government has determined that it is against the law for
the words 'under God' to be on our money, then, so be it.

And, in its' infinite and all-knowing wisdom, the U.S. government has
decided that our Lord's '10 Commandments' are not to be used in or on
a government facility of installation, then, so be it.

We say, 'so be it,' as we would all like to be a law abiding American
citizens, right?

We say, 'so be it,' because we would like to think that smarter people
- our "elected" representatives and senators, who are in positions to
make "wise" decisions for those they represent, right?

We would like to think that these people have our country's best
interests at heart, right?


We believe, that our elected officials have THEIR "special interests"
at heart, and that's what drives their decisions and and every single
vote that they cast - their special interests come first, and really,
America and its citizens, do not matter at all in their decision-

We think, that they think, our elected officials (including judges and
federal judges) that they are unaccountable to those they have a
sacred trust to represent.

We think, that they think, they are "above the laws" they enact - that
the laws they create, are for the "regular" citizens, and the

We think, that they think, they are above God's laws, and that some of
these elected officials, Nancy Pelosi, Harry Reid, Barack Obama,
Barbara Boxer, Diane Feinstein, and Barney Frank, believe that the
government is (or should be) "God."

We know, that they have forgotten that America is a CHRISTIAN, nation,
founded by Christians, who were forced to flee their native England,
to escape the tyranny and oppression of their government, to come to
America and form a more perfect government, of the people, by the
people and for the people, and to be a Christian nation with liberty,
freedom and justice for all.

Question: Is the American government of today - that is led by these
"wise" elected representatives, turning our government back into a
"monarchy" of tyrants and oppressors of the 1700's of England???????

Have they forgotten why there was a revolution and why there was a
Boston Tea Party?

We believe the answer is readily apparent.

We are - after all, a nation of laws, are we not?

And, since we are a nation of laws, and "the law is the law," after
all, and as our government and judges have decided or ruled that we
can no longer pray to God (the Creator of Heaven and Earth - not the
god the government) in "OUR" public schools, or public functions,

And, as we can no longer "Trust in God"

And, as we cannot post "His" Commandments in Government buildings, we
don't believe the Government and its employees should participate in
those days that honor Him, those days and holidays like; Easter,
Thanksgiving and Christmas, or participate in any of the celebrations
which honor the God that our government has eliminated.


We would like our mail delivered on the following days:

* Christmas Day (and the day before or after which is now a
day off )
* Good Friday
* Easter Sunday
* Thanksgiving Day (and the day before or after which is now
a day off)

After all, our all-knowing and wise leaders and judges have declared
these days that honor our Lord and Savior, as "just another day."

We would also like "OUR" government, as well as the U.S. Supreme Court
to be in session on these "regular days:"

* Christmas Day (and the day before or after which is now a
day off )
* Good Friday
* Easter Sunday
* Thanksgiving Day (and the day before or after which is now
day off)

After all, our leaders and judges have declared that these days are
"just another day."

We would also expect that all state governments, elected officials,
and employees, to ALL be working on these "regular" dates.

And, for the elected and wise leaders in the U.S. Senate and the House
of Representatives, you will no longer have to worry about wrapping
up the "people's business" early, so you can fly off in your private
jets (paid for or owned by "special interests"),

or you nancy pelosi,

taking OUR Boeing 757 across the country, so you can get home in time
to celebrate the birth of Jesus, our Lord and Savior, and the
'Christmas Break,' after all, this is just another day.

We also don't understand how the Catholic Church has not ex-
communicated you - Nancy Pelosi - for your radical and ultra-liberal
views on supporting and advocating the death of innocent babies, as
the Catholic Church has done to the "commoners" for supporting the
slaughter of the innocents.

We believe that our taxpayer dollars would be better spent, and this
could also help save the taxpayers dollars, for you to follow the laws
you created, and judges have ruled, that these dates are, in fact,
"just regular days."

We believe that if all of our government offices and employees that
are on the "public dole" would actually "work" (no pun intended) on
these "regular days" (Christmas, Good Friday & Easter and the other
days surrounding these "regular days," now taken for as holidays),
then we - the regular citizens, and taxpayers, would save on overtime
pay, and actually get more "work" (again, no pun intended) from our
government, that provides us with all of their wonderful government
services it provides its "regular" citizens. Since, after all, these
are "regular" days, just like any other day of the week - and for a
government that is trying to be 'politically correct,' is this not the
PC thing to do? Should our government not lead by example?!?

In fact.... we believe that our government SHOULD work (again, no pun
intended!) on Sundays that were originally set-aside for worshipping
"the" one true God. Again, our government says that it should be just
another day.

If this idea gets to enough people, maybe our elected officials,
judges, and bureaucrats will stop giving in to the 'minority opinions'
like the ultra-radical, the A.C.L.U. - the American Civil Liberties
Union - and their anti-God and atheist views - and for our government
to represent the 'MAJORITY' of ALL of the American people.

We pray, dear Lord, please forgive our country's leaders and those
judges, for not remembering you, and the special days that were set-
aside to honor you. Please restore our country to be the Christian
nation we once were. And to be a country that President Abraham
Lincoln said, "that this nation, under God, shall have a new birth of
freedom -- and that government of the people, by the people, for the
people, shall not perish from the earth." Please provide us and our
leaders with your wisdom and guidance, and remind our elected
officials that we are a Christian nation, founded on the Bible. We
pray for those elected officials that you have placed in to office,
that they will be reminded of what Jesus said in Matthew 22:36-40 (New
International Version);

36 "Teacher, which is the greatest commandment in the Law?"

37 Jesus replied: " 'Love the Lord your God with all your heart and
with all your soul and with all your mind.'

38 This is the first and greatest commandment.

39 And the second is like it: 'Love your neighbor as yourself.'

40 All the Law and the Prophets hang on these two commandments."

and we are also pray that we as a nation, 'seek ye first the kingdom
of God, and his righteousness; and all these things shall be added
unto you.'"


Coming Soon: The United States of Meximerica

After hearing illegal aliens (mexicans) want to sing OUR National
Anthem in Spanish - that was about all I could stand. Enough is

Nowhere did they sing our National Anthem in Italian, Polish, Irish
(Celtic), German or any other language because of LEGAL immigrants who
obeyed the laws of our land, and immigrated to our country LEGALLY.
Our National Anthem was written by Francis Scott Key and should be
sung word for word the way it was written, and in OUR language.

We are proud of our country and it being a melting pot of many
cultures and languages - all of who came here LEGALLY and learned OUR

We are NOT sorry if this offends anyone because this is OUR COUNTRY.

We can't even afford to educate OUR children so that they can compete
with children from Asia and Europe, and we have to pay to educate

We are NOT opposed to immigration -- just come here like every other
citizen that has come here from other countries. Get a sponsor; get a
home or apartment - with YOUR money; have a job; pay your taxes, live
by OUR laws and rules AND LEARN OUR LANGUAGE as every other immigrant
has in the past. And, GOD BLESS AMERICA!

PART OF THE PROBLEM IS YOU if you don't want to forward information
for fear of offending ILLEGAL aliens.

BTW: Calling an ILLEGAL alien an "undocumented worker" is like
calling a drug dealer an 'unlicensed pharmacist' !!!

The U.S. Postal Service was established in 1775. You have had 234
years to get it right; it is Broke.

Social Security was established in 1935. You have had 74 years to get
it right; it is Broke.

Fannie Mae was established in 1938. You have had 71 years to get it
right; it is Broke.

The "War on Poverty" started in 1964 - you have had 45 years to get
it right; $1 trillion of our money is confiscated each year and
transferred to "The Poor";
it hasn't worked, they are still poor. 45 years and counting...

Medicare and Medicaid were established in 1965. You have had 44 years
to get it right; they are Broke.

Freddie Mac was established in 1970. You have had 39 years to get it
right; it is Broke.

Trillions of dollars were spent in the massive political payoffs
called TARP, the "Stimulus", the Omnibus Appropriations Act of
2009... none show signs of working, although ACORN appears to have
found a new Involuntary Contributor: . . . the American Taxpayer.

And finally, to set a new record:

"Cash for Clunkers" was established in 2009 and went broke in 2009!
It took good dependable cars (that were the best some people could
afford) and replaced them with high-priced and less-affordable cars,
mostly Japanese. A good percentage of the profits went out of the
country. And the American Taxpayers pay the bill for Congress'
generosity in burning three $billion more of our dollars on failed
experiments. Additionally, the car buyers are now finding out that
this $4,500 Gift from the American Taxpayers might be taxed as REGULAR
INCOME... (gee, who would have thought that?)

So with a perfect 100% failure rate and a record that proves that
"services" you shove down our throats are failing faster and faster,
you want Americans to believe you can be trusted with a Government-
run Health Care System?

Putting our Very Lives at Risk?

20% of our Entire Economy?

With all due respect,


Hey Barack,
It's the Economy, Stupid!

As it Appears you FAILED your History classes.... Here's a History
Lesson for you to help you Get it Right:

Capitalism: Good
Socialism: Bad

What Does STUPID Look Like?

The Barack Obama Plan
for "Helping" our Economy

Barack Obama: Just Plane STUPID?!?

Why can you have the people's Air Force One fly down the Hudson River
in New York City, scaring the hell out of hundreds of thousands of
people thinking another 911 was underway - for a photo op, and WASTE
thousands of gallons of jet fuel, PLUS all those dangerous carbon
dioxide emissions that Air Force One generates, and yet you forbid a
private company, from flying their privately owned business jet, that
uses far less jet fuel, and far fewer carbon dioxide emissions, that
they use as it saves time and money for them?!?

Are you just a hypocrite -
or a "carbon criminal" or both?

Barack Hussein Obama:

Barack Obama: HOW DARE YOU SAY

Barack Hussein Obama - you need a history lesson in the founding on
this Christian nation because you are WRONG again, the U.S.A. is a

Barack Obama said in Turkey : "We do not consider ourselves a
Christian nation or a Jewish nation or a Muslim nation. We consider
ourselves a nation of citizens who are bound by ideals and a set of

Do you know the Preamble
for your state?

Alabama 1901, Preamble
We the people of the State of Alabama , invoking the favor and
guidance of Almighty God, do ordain and establish the following

Alaska 1956, Preamble We, the people of Alaska , grateful to God and
to those who founded our nation and pioneered this great land.

Arizona 1911, Preamble We, the people of the State of Arizona ,
grateful to Almighty God for our liberties, do ordain this

Arkansas 1874, Preamble We, the people of the State of Arkansas ,
grateful to Almighty God for the privilege of choosing our own form of

California 1879, Preamble We, the People of the State of California ,
grateful to Almighty God for our freedom...

Colorado 1876, Preamble We, the people of Colorado , with profound
reverence for the Supreme Ruler of Universe...

Connecticut 1818, Preamble. The People of Connecticut, acknowledging
with gratitude the good Providence of God in permitting them to

Delaware 1897, Preamble Through Divine Goodness all men have, by
nature, the rights of worshipping and serving their Creator according
to the dictates of their consciences...

Florida 1885, Preamble We, the people of the State of Florida ,
grateful to Almighty God for our constitutional liberty, establish
this Constitution...

Georgia 1777, Preamble We, the people of Georgia , relying upon
protection and guidance of Almighty God, do ordain and establish this

Hawaii 1959, Preamble We , the people of Hawaii , Grateful for Divine
Guidance ... Establish this Constitution.

Idaho 1889, Preamble We, the people of the State of Idaho , grateful
to Almighty God for our freedom, to secure its blessings.

Illinois 1870, Preamble We, the people of the State of Illinois,
grateful to Almighty God for the civil , political and religious
liberty which He hath so long permitted us to enjoy and looking to Him
for a blessing on our endeavors.

Indiana 1851, Preamble We, the People of the State of Indiana ,
grateful to Almighty God for the free exercise of the right to choose
our form of government.

Iowa 1857, Preamble We, the People of the St ate of Iowa , grateful to
the Supreme Being for the blessings hitherto enjoyed, and feeling our
dependence on Him for a continuation of these blessings, establish
this Constitution.

Kansas 1859, Preamble We, the people of Kansas , grateful to Almighty
God for our civil and religious privileges establish this

Kentucky 1891, Preamble.. We, the people of the Commonwealth are
grateful to Almighty God for the civil, political and religious

Louisiana 1921, Preamble We, the people of the State of Louisiana ,
grateful to Almighty God for the civil, political and religious
liberties we enjoy.

Maine 1820, Preamble We the People of Maine acknowledging with
grateful hearts the goodness of the Sovereign Ruler of the Universe in
affording us an opportunity .. And imploring His aid and direction.

Maryland 1776, Preamble We, the people of the state of Maryland ,
grateful to Almighty God for our civil and religious liberty...

Massachusetts 1780, Preamble We...the people of Massachusetts,
acknowledging with grateful hearts, the goodness of the Great
Legislator of the Universe In the course of His Providence, an
opportunity and devoutly imploring His direction

Michigan 1908, Preamble. We, the people of the State of Michigan ,
grateful to Almighty God for the blessings of freedom, establish this

Minnesota, 1857, Preamble We, the people of the State of Minnesota,
grateful to God for our civil and religious liberty, and desiring to
perpetuate its blessings:

Mississippi 1890, Preamble We, the people of Mississippi in convention
assembled, grateful to Almighty God, and invoking His blessing on our

Missouri 1845, Preamble We, the people of Missouri , with profound
reverence for the Supreme Ruler of the Universe, and grateful for His
goodness . Establish this Constitution...

Montana 1889, Preamble. We, the people of Montana , grateful to
Almighty God for the blessings of liberty establish this
Constitution ..

Nebraska 1875, Preamble We, the people, grateful to Almighty God for
our freedom . Establish this Constitution.

Nevada 1864, Preamble We the people of the State of Nevada , grateful
to Almighty God for our freedom, establish this Constitution...

New Hampshire 1792, Part I. Art. I. Sec. V Every individual has a
natural and unalienable right to worship God according to the dictates
of his own conscience.

New Jersey 1844, Preamble We, the people of the State of New Jersey,
grateful to Almighty God for civil and religious liberty which He hath
so long permitted us to enjoy, and looking to Him for a blessing on
our endeavors.

New Mexico 1911, Preamble We, the People of New Mexico, grateful to
Almighty God for the blessings of liberty..

New York 1846, Preamble We, the people of the State of New York ,
grateful to Almighty God for our freedom, in order to secure its

North Carolina 1868, Preamble We the people of the State of North
Carolina, grateful to Almighty God, the Sovereign Ruler of Nations,
for our civil, political, and religious liberties, and acknowledging
our dependence upon Him for the continuance of those...

North Dakota 1889, Preamble We , the people of North Dakota , grateful
to Almighty God for the blessings of civil and religious liberty, do

Ohio 1852, Preamble We the people of the state of Ohio , grateful to
Almighty God for our freedom, to secure its blessings and to promote
our common.

Oklahoma 1907, Preamble Invoking the guidance of Almighty God, in
order to secure and perpetuate the blessings of liberty, establish

Oregon 1857, Bill of Rights, Article I Section 2. All men shall be
secure in the Natural right, to worship Almighty God according to the
dictates of their consciences

Pennsylvania 1776, Preamble We, the people of Pennsylvania, grateful
to Almighty God for the blessings of civil and religious liberty, and
humbly invoking His guidance....

Rhode Island 1842, Preamble. We the People of the State of Rhode
Island grateful to Almighty God for the civil and religious liberty
which He hath so long permitted us to enjoy, and looking to Him for a

South Carolina , 1778, Preamble We, the people of he State of South
Carolina grateful to God for our liberties, do ordain and establish
this Constitution.

South Dakota 1889, Preamble We, the people of South Dakota , grateful
to Almighty God for our civil and religious liberties ...

Tennessee 1796, Art. XI..III. That all men have a natural and
indefeasible right to worship Almighty God according to the dictates
of their conscience...

Texas 1845, Preamble We the People of the Republic of Texas ,
acknowledging, with gratitude, the grace and beneficence of God.

Utah 1896, Preamble Grateful to Almighty God for life and liberty, we
establish this Constitution.

Vermont 1777, Preamble Whereas all government ought to enable the
individuals who compose it to enjoy their natural rights, and other
blessings which the Author of Existence has bestowed on man ..

Virginia 1776, Bill of Rights, XVI Religion, or the Duty which we owe
our Creator can be directed only by Reason and that it is the mutual
duty of all to practice Christian Forbearance, Love and Charity
towards each other

Washington 1889, Preamble We the People of the State of Washington,
grateful to the Supreme Ruler of the Universe for our liberties, do
ordain this Constitution

West Virginia 1872, Preamble Since through Divine Providence we enjoy
the blessings of civil, political and religious liberty, we, the
people of West Virginia reaffirm our faith in and constant reliance
upon God ...

Wisconsin 1848, Preamble We, the people of Wisconsin, grateful to
Almighty God for our freedom, domestic tranquility...

Wyoming 1890, Preamble We, the people of the State of Wyoming ,
grateful to God for our civil, political, and religious liberties,
establish this Constitution...

After reviewing acknowledgments of God from all 50 state
constitutions, one is faced with the prospect that maybe, the ACLU and
the out-of-control federal courts are wrong! If you found this to be
'Food for thought' send to as many as you think will be enlightened as
I hope you were.

(Please note that at no time is anyone told that they MUST worship


We Oppose Obama's Selection of
Harold Koh
to our U.S. State Department

We oppose Rosa Brooks selection
to serve in our Pentagon.

Let's replace the dishonest, immoral, indecent, pathological liars and
idiotic imbeciles and Socialists now in the White House and Congress
with decent, honest, freedom-loving American's like:
Sarah Palin
Newt Gingrich
Rick Santorum
J.C. Watts
Ron Paul

The Following Op-Ed Posted on Thu, Apr. 9, 2009
The Elephant in the Room: Obama vs. United States

The president is contemptuous of American values. And one key nominee
prefers the judgment of other countries and global elites.
By Rick Santorum
Watching President Obama apologize last week for America's arrogance -
before a French audience that owes its freedom to the sacrifices of
Americans - helped convince me that he has a deep-seated antipathy
toward American values and traditions. His nomination of former Yale
Law School Dean Harold Koh to be the State Department's top lawyer
constitutes further evidence of his disdain for American values.

This seemingly obscure position in Foggy Bottom's bureaucratic maze is
one of the most important in any administration, shaping foreign
policy in the courts and playing a critical role in international
negotiations and treaties.

Let's set aside Koh's disputed comments about the possible application
of Sharia law in American jurisprudence. The pick is alarming for more
fundamental reasons having to do with national sovereignty and
constitutional self-governance.

What is indisputable is that Koh calls himself a "transnationalist."
He believes U.S. courts "must look beyond national interest to the
mutual interests of all nations in a smoothly functioning
international legal regime. ..." He thinks the courts have "a central
role to play in domesticating international law into U.S. law" and
should "use their interpretive powers to promote the development of a
global legal system."

Koh's "transnationalism" stands in contrast to good, old-fashioned
notions of national sovereignty, in which our Constitution is the
highest law of the land. In the traditional view, controversial
matters, whatever they may be, are subject to democratic debate here.
They should be resolved by the American people and their
representatives, not "internationalized." What Holland or Belgium or
Kenya or any other nation or coalition of nations thinks has no
bearing on our exercise of executive, legislative, or judicial power.

Koh disagrees. He would decide such matters based on the views of
other countries or transnational organizations - or, rather, those
entities' elites.

Unsurprisingly, Koh is a strong supporter of the International
Criminal Court, which could subject U.S. soldiers and officials to
foreign criminal trials for their actions while fighting for our
security. He has recommended that American lawyers work to "undermine"
official American opposition to the court.

If only Koh's transnationalism ended there. Our Eighth Amendment's
prohibition on cruel and unusual punishment? Koh believes it should be
reinterpreted in light of foreign and international law to pay "decent
respect to the opinions of humankind."

Old fogies like me believe we ought to pay more attention to the
opinions of the Founders who wrote the Constitution and the people who
have lived under it. If Americans want to end the death penalty, they
can do so through their elected state representatives.

If foreign opinions trump those of Pennsylvanians on capital
punishment, why not on other issues? Why not, indeed: Koh thinks
"international comity" trumps American sovereignty. He believes that,
since certain nations recognize a right to same-sex marriage, our
courts should, too. He wrote that "the principles of human dignity and
autonomy that are the essence of the modern right-protecting democracy
demand that civil marriage be available to all couples and that the
equality of all citizens triumph over historical attitudes."

What's beneath this legal jargon? Simply this: Even if marriage in
Pennsylvania has always been understood as involving one man and one
woman - even if Pennsylvanians, through referendum or constitutional
amendment, decide it should remain so - none of that should count.
What should count are the views of courts in other nations or
international bodies.

"I'd rather have [Supreme Court Justice Harry] Blackmun, who used the
wrong reasoning in Roe to get the right results," Koh wrote of the
landmark abortion case, "and let other people figure out the right

Stunning and revealing: Koh tells us it doesn't matter if the right to
abortion can be found in the Constitution. In fact, he concedes that
Blackmun's reasoning was wrong. But it is up to others to get it
right. How? By finding out what the United Nations, European Union, or
particular European nations think.

Koh tops the list of Obama's potential Supreme Court nominees. Is this
what Sen. John Kerry meant when he once suggested that American policy
must pass a "global test"? Or what Barack Obama meant when he said
last week that we have failed to "appreciate Europe's leading role in
the world"? Or when he spoke of "change we can believe in"? And just
who are "we"?

“This op-ed originally appeared in The Philadelphia Inquirer" and has
been re-printed with the permission of Senator Santorum with our

Congressman Ron Paul Introduces Bill to Audit the Fed

By admin • February 28, 2009

February 26, 2009

Madame Speaker,

I rise to introduce the Federal Reserve Transparency Act. Throughout
its nearly 100-year history, the Federal Reserve has presided over the
near-complete destruction of the United States dollar. Since 1913 the
dollar has lost over 95% of its purchasing power, aided and abetted by
the Federal Reserve’s loose monetary policy. How long will we as a
Congress stand idly by while hard-working Americans see their savings
eaten away by inflation? Only big-spending politicians and politically
favored bankers benefit from inflation.

Serious discussion of proposals to oversee the Federal Reserve is long
overdue. I have been a longtime proponent of more effective oversight
and auditing of the Fed, but I was far from the first Congressman to
advocate these types of proposals. Esteemed former members of the
Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales
were outspoken critics of the Fed and its lack of transparency.

Since its inception, the Federal Reserve has always operated in the
shadows, without sufficient scrutiny or oversight of its operations.
While the conventional excuse is that this is intended to reduce the
Fed’s susceptibility to political pressures, the reality is that the
Fed acts as a foil for the government. Whenever you question the Fed
about the strength of the dollar, they will refer you to the Treasury,
and vice versa. The Federal Reserve has, on the one hand, many of the
privileges of government agencies, while retaining benefits of private
organizations, such as being insulated from Freedom of Information Act

The Federal Reserve can enter into agreements with foreign central
banks and foreign governments, and the GAO is prohibited from auditing
or even seeing these agreements. Why should a government-established
agency, whose police force has federal law enforcement powers, and
whose notes have legal tender status in this country, be allowed to
enter into agreements with foreign powers and foreign banking
institutions with no oversight? Particularly when hundreds of billions
of dollars of currency swaps have been announced and implemented, the
Fed’s negotiations with the European Central Bank, the Bank of
International Settlements, and other institutions should face
increased scrutiny, most especially because of their significant
effect on foreign policy. If the State Department were able to do
this, it would be characterized as a rogue agency and brought to heel,
and if a private individual did this he might face prosecution under
the Logan Act, yet the Fed avoids both fates.

More importantly, the Fed’s funding facilities and its agreements with
the Treasury should be reviewed. The Treasury’s supplementary
financing accounts that fund Fed facilities allow the Treasury to
funnel money to Wall Street without GAO or Congressional oversight.
Additional funding facilities, such as the Primary Dealer Credit
Facility and the Term Securities Lending Facility, allow the Fed to
keep financial asset prices artificially inflated and subsidize poorly
performing financial firms.

The Federal Reserve Transparency Act would eliminate restrictions on
GAO audits of the Federal Reserve and open Fed operations to enhanced
scrutiny. We hear officials constantly lauding the benefits of
transparency and especially bemoaning the opacity of the Fed, its
monetary policy, and its funding facilities. By opening all Fed
operations to a GAO audit and calling for such an audit to be
completed by the end of 2010, the Federal Reserve Transparency Act
would achieve much-needed transparency of the Federal Reserve. I urge
my colleagues to support this bill.

111th Congress - 1st Session

H.R. 1207


To amend title 31, United States Code, to reform the manner in which
the Board of Governors of the Federal Reserve System is audited by the
Comptroller General of the United States and the manner in which such
audits are reported, and for other purposes.

1. Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

This Act may be cited as the “Federal Reserve Transparency Act of


(a) IN GENERAL. - Subsection (b) of section 714 of title 31, United
States Code, is amended by striking all after “shall audit an agency”
and inserting a period.

(b) AUDIT. - Section 714 of title 31, United States Code, is amended
by adding at the end the following new subsection:


“(1) IN GENERAL. - The audit of the Board of Governors of the Federal
Reserve System and the Federal reserve banks under subsection (b)
shall be completed before the end of 2010.

“(2) REPORT -

“(A) REQUIRED. - A report on the audit referred to in paragraph (1)
shall be submitted by the Comptroller General to the Congress before
the end of the 90-day period beginning on the date on which such audit
is completed and made available to the Speaker of the House, the
majority and minority leaders of the House of Representatives, the
majority and minority leaders of the Senate, the Chairman and Ranking
Member of the committee and each sub-committee of jurisdiction in the
House of Representatives and the Senate, and any other Member of
Congress who requests it.

“(B) CONTENTS. - The report under subparagraph (A) shall include a
detailed description of the findings and conclusion of the Comptroller
General with respect to the audit that is the subject of the report,
together with such recommendations for legislative or administrative
action as the Comptroller General may determine to be appropriate.”.


Rep. Ronald Paul [R-TX]


We Support the Impeachment of
Barack Hussein Obama
and His Removal from the Office of the President
for his Multiple Failures, including:

Obama's failure to protect and defend our country,

Obama's failure to protect and defend American jobs,

Obama's SLASHING of our defense budget,

Obama's failure to keep the full tax deduction for churches and other

Obama's failure to deport illegal aliens, including his aunt, who has
been told TWICE to leave our country,

Obama's failure to uphold America's Christian principals and beliefs
on which our great country was founded,

Obama's failures to control spending, and out of control government

Obama's failures to reduce taxes for 95% of all Americans,

Obama's failures to allow failed companies, to fail, or file for

Obama's failures to protect innocent, unborn Americans,

Obama's radical socialist agenda,

Obama's failures to protect innocent, unborn Americans,

Obama's pro-islam and anti-Christian beliefs,

Obama's closing down of GITMO - the prison where we are detaining
terrorists, and considering moving these terrorists to U.S.

Obama's bowing down to a muslim, and NOT to the Queen of England?

Obama has done more in 30 days to damage our county, our economy and
our nation's defense than all presidents for the past 100 years -

Obama has got to be a complete IMBECILE, and TRAITOR, for announcing
Al Qaeda - our enemy - what our timetable is for withdrawing our
troops from Iraq!

Obama - guilty of gross negligence, incompetence and dereliction of

Obama's appointment of the Ultra-Liberal and Left-wing NUT-JOB Rosa
Brooks to OUR Pentagon, is COMPLETELY UNACCEPTABLE. Her selection and
appointment is yet another indicator of Obama's many FAILURES to
appoint American's who will PROTECT AND DEFEND OUR COUNTRY.


Barack Hussein Obama - an ignorant imbecile and a real danger to the
peace, safety, and welfare of the U.S.A., our Constitution and freedom-
loving people everywhere.

Hey Obama, hear our voices LOUD AND CLEAR:








Barack Hussein Obama - goes from: Despicable Democrat to DESPICABLE
FAILURE in record time.... only 60 days in office and already, Obama


Barack Hussein Obama is NOT MY PRESIDENT



According to Joe Biden -
Who we all know NOW, is a pathological "LIAR"
Barack Hussein Obama is
"NOT Ready To Be President."

This time, Joe Biden was telling the truth about Obama: Barack Hussein
has now PROVEN, just like Joe Biden stated,
he is NOT ready to be President


Hey Joe Biden - you're a LIAR....
I would rather follow an honorable, decent and honest President like
George W. Bush
ANYDAY - over you and Obama

Obama & Biden:

The Facts of Life in California
This is only one State out of 50, if the following doesn't open your
eyes nothing will!

The following facts are from the L. A. Times:

1. 40% of all workers in L. A. County ( L. A. County has 10.2 million
people)are working for cash and not paying taxes. This is because they
are predominantly illegal immigrants working without a green card.

2. 95% of warrants for murder in Los Angeles are for illegal aliens.

3. 75% of people on the most wanted list in Los Angeles are illegal

4. Over 2/3 of all births in Los Angeles County are to illegal alien
Mexicans on Medi-Cal, whose births were paid for by AMERICAN

5. Nearly 35% of all inmates in California detention centers are
Mexican nationals here illegally

6. Over 300,000 illegal aliens in Los Angeles County are living in

7. The FBI reports half of all gang members in Los Angeles are most
likely illegal aliens from south of the border.

8. Nearly 60% of all occupants of HUD properties are illegal.

9. 21 radio stations in L. A. are Spanish speaking.

10. In L. A. County 5.1 million people speak English, 3.9 million
speak Spanish.
(There are 10.2 million people in L. A. County.)

The above facts are from the Los Angeles Times

Less than 2% of illegal aliens are picking our crops, but 29% are on
welfare. Over 70% of the United States ' annual population growth (and
over 90% of California , Florida , and New York ) results from
immigration. 29% of inmates in federal prisons are illegal aliens.

We are a bunch of fools for letting this continue.
And you wonder why Nancy Pelosi wants them to become voters!

Time for the National Sales Tax!


9 Principles We Believe In
(from www.GlennBeck.com)
America Is Good. (Correction, America is GREAT, and the best hope for
man wanting to be free!)

I believe in God and He is the Center of my Life. (and, in Jesus
Christ, God's only begotten Son)

God “The propitious smiles of Heaven can never be expected on a
nation that disregards the external rules of order and right which
Heaven itself has ordained.” from George Washington’s first Inaugural

I must always try to be a more honest person than I was yesterday.

Honesty “I hope that I shall always possess firmness and virtue
enough to maintain what I consider to be the most enviable of all
titles, the character of an honest man.” George Washington

The family is sacred. My spouse and I are the ultimate authority, not
the government.

Marriage/Family “It is in the love of one’s family only that
heartfelt happiness is know. By a law of our nature, we cannot be
happy without the endearing connections of a family.” Thomas

If you break the law you pay the penalty. Justice is blind and no one
is above it.

Justice “I deem one of the essential principles of our government…
equal and exact justice to all men of whatever state or persuasion,
religious or political.” Thomas Jefferson

I have a right to life, liberty and pursuit of happiness, but there
is no guarantee of equal results.

Life, Liberty, & The Pursuit of Happiness “Everyone has a natural
right to choose that vocation in life which he thinks most likely to
give him comfortable subsistence.” Thomas Jefferson

I work hard for what I have and I will share it with who I want to.
Government cannot force me to be charitable.

Charity “It is not everyone who asketh that deserveth charity; all
however, are worth of the inquiry or the deserving may suffer.” George

It is not un-American for me to disagree with authority or to share
my personal opinion.

On your right to disagree “In a free and republican government, you
cannot restrain the voice of the multitude; every man will speak as he
thinks, or more properly without thinking.” George Washington

The government works for me. I do not answer to them, they answer to

Who works for whom? “I consider the people who constitute a society
or a nation as the source of all authority in that nation.” Thomas

12 Values We believe In
(from: www.GlennBeck.com)








Hard Work


Personal Responsibility


The Following is a True Story About Ted Turner and Jane Fonda!

The radio station America FM was doing one of its 'Is Anyone
Listening?' bits this morning.

The first question was, 'Ever have a celebrity come up with the 'Do
you know who I am routine?'

A woman called in and said that a few years a go, while visiting her
cattle rancher uncle in Billings, Montana, she went to dinner there at
a restaurant that does not take reservations. The wait that night was
about 45 minutes and there were many ranchers and their wives waiting
to eat there.

Ted Turner and his ex-wife Jane Fonda came in to the restaurant and
wanted a table. The hostess informed them that they'd have to wait 45

Jane Fonda asked the hostess, 'Do you know who I am?'

The hostess answered, 'Yes, but you'll have to wait 45 minutes.'

Then Jane asked the waitress if the manager was in.

When the manager came out, he asked, 'May I help you?'

'Do you know who we are?' both Ted and Jane asked.

'Yes' replied the manager, who then said, 'these folks have been
waiting, and I can't put you ahead of them.

'Then Ted asked the manager to speak with the restaurant's owner.

The owner came out, and Jane again asked, 'Do you know who I am?'

The owner answered, 'Yes, I do.' The owner then said to Ted and Jane
'Do you know who I am? I am the owner of this restaurant and I am a
Vietnam Veteran. Not only will you not get a table ahead of my friends
and neighbors who have been waiting here, but you also will not be
eating in my restaurant tonight or any other night. Good bye.'

To all who read this - it is a true story and the name of the steak
house is: Sir Scott's Oasis Steakhouse. They are located at 204 W.
Main in Manhattan, Montana 59741 Their phone number is: (406)
284-6929 (but they don't accept reservations!)

If you ever get there, give the owner a special thank you for his
service to our country, enjoy a great steak dinner and tip the

Keep passing this on. We should never forget our country's number one
national traitor and her socialist ex-husband!


"The powers not delegated to the United States by the Constitution,
nor prohibited by it to the States, are reserved to the States
respectively, or to the people."

Questions never asked or answered about the Federal Reserve System:

1. Who owns the member banks of the Fed/Reserve? Who owns the shares
of stock of the Federal Reserve?

2. Since "our" money is not backed by anything of intrinsic value,
what purpose does the gold reserve in Ft. Knox serve?

3. It is said that the Federal Reserve is a “quasi” governmental
institution. Which part is governmental?

4. If the Chairman of the Federal Reserve decides to raise or lower
interest rates, can anyone say no to him?

5. Foreign holders of dollars can exchange them for gold. Why can’t
U.S. citizens do the same?

6. What causes inflation?

7. The President appoints the Chairman of the Fed/Res but who picks
the nominee?

8. Why must "our" money be processed through the Federal Reserve?

9. Who sets the amount of money a bank must hold in surplus assets?

10. Since the Federal Reserve is a private corporation, where is the
Federal Reserve incorporated?

Oct 9, 2008

President Bush FINALLY vindicated on WMD in Iraq...A national defense
analyst says President Bush should be commended for keeping quiet
about a discovery that could have blown his critics out of the water.

Retired Major General Jerry Curry is a decorated combat veteran who
served as an Army aviator, paratrooper, and Ranger during a military
career that began during the Korean conflict. He recently wrote about
a very under reported story by the Associated Press.

According to the report, a large stockpile of concentrated natural
Uranium, known as "yellowcake," reached a Canadian port to complete a
top secret U.S. Operation that included a two-week airlift from
Baghdad, and a ship voyage crossing two oceans. The Uranium material
had been housed at a former Iraqi nuclear complex 12 miles from

Curry says the president kept mum about the discovery in order to keep
terrorists in the dark. "He made a very brave stand, a resolute
stand..., in which he decided that he wasn't going to blab everything
to the press, "Curry commends."...And in the meantime while he kept it
quiet, he was buying time from the terrorists to get all that stuff
out of the country. So that's what was done -- he just very quietly
kept his mouth shut."

"The press beat him to death for the last several years," he
continues," and now it turns out that, yes, there were weapons of mass
destruction...." Curry also maintains that Saddam Hussein had an
active nuclear program and the material could have been made into a
nuclear weapon.

President Bush's actions took courage, he notes, and all Americans
should be thankful to have such a brave president who puts the welfare
of the American people above personal considerations.

On July 5, 2008, the Associated Press (AP) released a story titled:
Secret U.S. mission hauls uranium from Iraq. The opening paragraph is
as follows:

The last major remnant of Saddam Hussein's nuclear program (a huge
stockpile of concentrated natural uranium) reached a Canadian port
Saturday to complete a secret U.S. operation that included a two-week
airlift from Baghdad and a ship voyage crossing two oceans.

See anything wrong with this picture?

We have been hearing from the far left for more than five years how
President Bush lied. Somehow, that slogan loses its credibility now
that 550 metric tons of Saddam's yellowcake, used for nuclear weapon
enrichment, has been discovered and shipped to Canada for its new use
as nuclear energy.

It appears that American troops found the 550 metric tons of uranium
in 2003 after invading Iraq. They had to sit on this information and
the uranium itself for fear of terrorists attempting to steal it. It
was guarded and kept safe by our military in a 23,000-acre site with
large sand beams surrounding the site.

This is vindication for the Bush administration, having been attacked
mercilessly by the liberal media and the far-left pundits on the blogo-
sphere. Now that it is proven that President Bush did not lie about
Saddam's nuclear ambitions, one would think that the mainstream media
would report the true story. Once the AP released the story, the
mainstream media should have picked it up and broadcast it worldwide.

That never happened, due in large part, I believe, to the fact that
the mainstream media would have to admit they were wrong about Bush's
war motives all along. Thankfully, the AP got it right when it said,
"The removal of 550 metric tons of yellowcake, the seed material for
higher-grade nuclear enrichment, was a significant step toward closing
the books on Saddam's nuclear legacy."

Closing the book on Saddam's nuclear legacy? Did Saddam have a nuclear
legacy after all? I thought Bush lied? As it turns out, the people who
lied were Joe Wilson and his wife.

Valerie Plame engaged in a clear case of nepotism and convinced the
CIA to send her husband on a fact finding mission in February 2002,
seeking to determine if Saddam Hussein attempted to buy yellowcake
from Niger. The CIA and British intelligence believed Saddam contacted
Niger for that purpose but needed proof.

During his trip to Niger, Wilson actually interviewed the former prime
minister of Niger , Ibrahim Assane Mayaki. Mayaki told Wilson that in
June of 1999, an Iraqi delegation expressed interest in "expanding
commercial relations" for the purposes of purchasing yellowcake.

Wilson chose to overlook Mahaki's remarks and reported to the CIA that
there was no evidence of Hussein wanting to purchase yellow cake from

However, with British intelligence insisting the claim was true,
President Bush used that same claim in his State of the Union address
in January of 2003. Outraged by Bush's insistence that the claim was
true, Wilson wrote an op-ed in the New York Times in the summer of
2003 slamming Bush.

Wilson did this in spite of the fact that Mayaki said Saddam did try
to buy the yellowcake from Niger. The Senate Select Committee on
Intelligence disagreed with Wilson and supported Mayaki's claim. This
meant nothing to Wilson who was opposed to the Iraq war and thus had
ulterior motives in covering up the prime minister's statements.

It was a simple tactic, really. If the far-left and their friends in
the media could prove Bush lied about Hussein wanting to purchase
yellowcake from Niger, it would undermine President Bush's credibility
and give them more cause for asking what other lies he may have told.

Yet the real lie came from Wilson, who interpreted his own meaning
from the prime minister's statements and concluded all by himself that
the claim of Saddam attempting to purchase yellowcake was
"unequivocally wrong." Curiously the CIA sat on this information and
did not inform the CIA Director, who sided with Bush on the yellowcake
claim. This was made Public in a bipartisan Senate Intelligence
Committee report in July 2004.

Valerie Plame also engaged in her own lie campaign by spreading the
notion that the Bush Administration outed her as a CIA agent. Never
mind that it was Richard Armitage - no friend of the Bush
administration – who leaked Plame's identity to the press. Never mind
that Plame had not been in the field as a CIA agent in some six years.

The truth is, due to their opposition to the war, Joe Wilson, Valerie
Plame, the mainstream media, and their left-wing friends on the blogo-
sphere engaged in a propaganda campaign to undermine the Bush

Now that Saddam's uranium has been made public and is no longer a
threat to the world, do you think these aforementioned parties will
apologize and admit they were wrong?

Don't count on it.

The rest of the American people should hear the truth about Saddam's
uranium. It is up t you and me to inform them.

As far as the anti-war crowd is concerned, the next time they say that
Bush lied, we should tell them to "have the yellowcake and eat it

What is sad is this is being claimed as 'False' because,and I quote
the NY Times; This is not the same yellow cake that bush claimed in
his 2003 state of the union speech."

So, since this isn't the "same" uranium therefore we should ignore the

For verification of the above, see: http://www.msnbc.msn.com/id/25546334/


Nancy Pelosi:



Like Speaker Hastert before you!


Who does "Blinky" Pelosi think she is?

Remember the big media flap about Sarah Palin's clothing expenses?

Americans! Where are you? Are you awake?

Newt Gingrich, a Republican, served in the House as a member from
Georgia beginning in 1978. He became House Minority Whip in 1989. He
was Speaker of the House from 1995 to 1999.

During all of that time he never made use of US military aircraft.

Today Nancy Pelosi, a Democrat from California, is Speaker of the
House. The Pentagon provides the House speaker with an Air Force plane
large enough to accommodate her staff, family, supporters, and members
of the California delegation when she travels around the country.
But, Pelosi wants routine access to a larger plane that includes 42
business class seats, a fully-enclosed state room, an entertainment
center, a private bed, state-of-the-art communications system, and
requires a crew of 16 to fly. Pelosi wanted "carte blanche for an
aircraft any time," including weekend trips home to San Francisco.
Pretty nice but a very expensive perk!

The Air Force C-32 now flies around in costs approximately $15,000 an
hour or approximately $300,000 per trip home. And she has the
unmitigated gaul to confront the Big Three CEOs
for flying their corporate jets to Washington?!?!?

What an OUTRAGEOUS and "lavish" luxury that Pelosi is NOT deserving
of.... Send Pelosi a letter demanding that she turn in this
OUTRAGEOUS and expensive luxury and start taking the small jet that
was good enough for the previous Speaker.

We haven't heard any comments from media on "Queen" Pelosi's snit
about having to ride home in the small private, economy jet that comes
with the Speaker's job.

Remember how Pelosi was so aggravated that this little jet had to
refuel while transporting her to California every week?

Remember that she insisted on a luxurious 200 seat jet to fly her to
California nonstop, instead?




Washington legislators who observed the Pelosi's Big Fat jet grinned
with glee as Joe The Plumber informed all of us that Nancy 's luxury
Jet will require hard working American taxpayers, to buy thousands of
gallons of expensive jet fuel every week.

Pelosi only works 3 days a week but her gas guzzler luxury jet flights
home, to California, costs to taxpayers $60,000 one way! As Joe noted,
'Unfortunately we have to pay to bring her back on Monday night,' so
there goes another $60,000. (and everyone thought CEO pampering was

Folks, that is $480,000 per month or an annual cost to taxpayers of

And Pelosi complains about the cost of the war?!?

Pelosi should try "leading" by example! Pelosi should take the
smaller jet (C-20) which she says would cramp her style -- but since
her flying in style takes precedence over war costs -- what do you

Military families in this country do without while this woman, who
heads up the most do-nothing Congress in the history of our country,
spends lavishly to fly herself and associates to and from California
every week. Does that burn you, too?

Pelosi - you are not only a HYPOCRITE, you are a "Carbon Criminal!"
Pelosi, if you care so much for the environment, why don't you take
the smaller jet?!? Pelosi, if you are so concerned about the economy,
and the budget deficit, TAKE THE SMALLER JET!

Pelosi expects you and I to conserve our carbon footprint by driving
smaller cars and buying a bicycle pump to over-inflate our tires for
better economy while she and her hypocrite cohorts waste tax payer

Ticks you off, too, right?

Please keep this circulating and let's join Joe bringing their "pork
barrel" spending to American's attention to make a difference in how
Congress spends our hard earned money through their "personal waste"
and "ear marks."

Here is more information on what the Former Speaker was "authorized"
to fly in - the C-20


The C-20 is a twin-engine, turbofan aircraft acquired to fill the
airlift mission for high-ranking government and Department of Defense
officials. The 89th Airlift Wing, Andrews Air Force Base, Md.,
operates five C-20B's for worldwide special air missions. The 86th
Airlift Wing, Ramstein Air Base, Germany, operates two C-20H's for
operational support airlift missions.


Two Rolls Royce Spey Mark 511-8 engines power the C-20B models. The
primary difference between the C-20B and H model is the electrical
system, engines, and the avionics package. Two Rolls Royce Tay Mark
611-8 engines power the C-20H. The Tay Mark 611-8 engines provide
greater performance, greater range and are reduced noise signature
than the B model. The C-20H is also slightly longer than the B model,
and has an upgraded avionics package and interior. Worldwide secure
and non-secure passenger communication capability exists on both


The C-20A/B, military versions of the Gulfstream III, was chosen in
June 1983 as the replacement aircraft for the C-140B Jetstar. Three A
models were delivered to the 89th Airlift Wing under a cost-saving
accelerated purchase plan. Upon delivery of the C-20B's, Andrews
transferred the three C-20A's to Ramstein Air Base and all C-140B's at
both locations were phased out of the U.S. Air Force inventory. In
1992, Gulfstream delivered their latest model, the C-20H (Gulfstream
IV) to Andrews AFB. In 2002, the C-20A was selected for
decommissioning and two C-20Hs at Andrews were transferred to


In 1929, the Soviet Union established gun control. From 1929 to 1953,
about 20 million dissidents, unable to defend themselves, were rounded
up and exterminated.

In 1911, Turkey established gun control. From 1915 to 1917, 1.5
million Armenians, unable to defend themselves, were rounded up and

Germany established gun control in 1938 and from 1939 to 1945, a total
of 13 million Jews and others who were unable to defend themselves
were rounded up and exterminated.

China established gun control in 1935. From 1948 to 1952, 20 million
political dissidents, unable to defend themselves, were rounded up and

Guatemala established gun control in 1964. From 1964 to 1981, 100,000
Mayan Indians, unable to defend themselves, were rounded up and

Uganda established gun control in 1970.. From 1971 to 1979, 300,000
Christians, unable to defend themselves, were rounded up and

Cambodia established gun control in 1956. From 1975 to 1977, one
million educated people, unable to defend themselves, were rounded up
and exterminated.

Defenseless people rounded up and exterminated in the 20th Century
because of gun control: 56 million.

It has now been 12 months since gun owners in Australia were forced
by new law to surrender 640,381 personal firearms to be destroyed by
their own Government, a program costing Australia taxpayers more than
$500 million dollars. The first year results are now in after banning
guns in Australia:

Australia-wide, homicides are up 3.2 percent.

Australia-wide, assaults are up 8.6 percent.

Australia-wide, armed robberies are up 44 percent (yes, 44 percent)!

In the state of Victoria alone, homicides with firearms are now up
300 percent. Note that while the law-abiding citizens turned them in,
the criminals did not, and criminals still possess their guns!

While figures over the previous 25 years showed a steady decrease in
armed robbery with firearms, this has changed drastically upward in
the past 12 months, since criminals now are guaranteed that their prey
is unarmed.

There has also been a dramatic increase in break-ins and assaults of
the ELDERLY. Australian politicians are at a loss to explain how
public safety has decreased, after such monumental effort, and expense
was expended in successfully ridding Australian society of guns. The
Australian experience and the other historical facts above prove it.

You won't see this data on the US evening news, or hear politicians
disseminating this information.

Guns in the hands of honest citizens save lives and property and, yes,
gun-control laws adversely affect only the law-abiding citizens.

The next time someone talks in favor of gun control, please remind
them of this history lesson.

With guns, we are 'citizens'. Without them, we are 'subjects'.

During WWII the Japanese decided not to invade America because they
knew most Americans were ARMED!

If you value your freedom, please spread this anti-gun control message
to all of your friends.

The purpose of fighting is to win. There is no possible victory in
defense. The sword is more important than the shield, and skill is
more important than either. The final weapon is the brain. All else is



Bumper Stickers for Conservatives

Background: William Ayers was a member of the Weather Underground, a
radical leftist group that from 1969 to the mid-'70s conducted several
bombings of government institutions. Ayers served on the group's
Central Committee. The Weather Underground bombed the U.S. Capitol,
the Pentagon, military installations, and police stations. In all,
seven people were killed. In 1981, two police officers and one
security guard were killed by members of the Weather Underground in
the robbery of a Brinks truck in New York state. After Ayers married
Bernardine Dohrn, also a member of the Weather Underground (who was
described by FBI Director J. Edgar Hoover as "the most dangerous woman
in America"), they settled in Chicago.

Fact: Bernardine Dohrn had this to say in response to the Charles
Manson murders, which she romanticized as a revolutionary coup at a
Flint, Mich., Weatherman War Council in December 1969: "Dig it! First
they killed those pigs, then they ate dinner in the same room with
them. They even shoved a fork into the victim's stomach! Wild!" Dohrn
later stated this was meant as a "joke."

Fact: In 1969, Bernardine Dohrn and other members of the Weather
Underground traveled to Cuba and met with representatives of the North
Vietnam and Cuban governments.

Fact: In 1970, Ayers explained what the Weather Underground was all
about: "Kill all the rich people. Break up their cars and apartments.
Bring the revolution home; kill your parents; that's where it's really

Fact: Both Ayers and Dohrn lived on the run from authorities from
approximately 1970 to 1980. The case against Ayers and Dohrn was
dropped due to illegal wiretaps and prosecutor misconduct. The FBI was
conducting "black bag jobs," or illegal break-ins, in their pursuit of
the Weather Underground. Some of these black bag jobs were authorized
by Mark Felt, later to be known as "Deep Throat" of Watergate fame.

Fact: Shortly after turning themselves in, Dohrn and Ayers became
legal guardians of the son of former members of the Weather
Underground, Kathy Boudin and David Gilbert, after they were convicted
of murder for their roles in a 1981 armored car robbery. Two police
officers and one Brinks guard were killed in the robbery.

Fact: Starting in the mid-'90s, Ayers and Obama served on the board of
the Chicago Annenberg Challenge Project. They served together on the
board for approximately seven years. Ayers and Obama were tasked with
the oversight of a $100 million budget. The board, under Obama's
chairmanship the Annenberg project gave hundreds of thousands of
dollars to Bill Ayers' projects promoting alternative schools.

["Anderson Cooper 360," CNN, Oct. 6, 2008]

Fact: From 1984 to 1988, Bernardine Dohrn was employed by the
prestigious Chicago law firm Sidley Austin. She was hired by Howard
Trienens, the head of the firm at that time and someone who knew
Thomas G. Ayers, Bill's father. However, Dohrn's criminal record has
prevented her from being admitted to either the New York or Illinois
bar. "Dohrn didn't get a [law] license because she's stubborn . . .
She wouldn't say she's sorry."

[Chicago Tribune, May 18, 2008]

Fact: In 1991, Dohrn was hired by Northwestern University School of
Law in Chicago, as an adjunct professor of law, with the title
"clinical associate professor of law." Thomas Ayers was a long-time
member of the Northwestern Board of Trustees, and was named life
trustee in 1987.

[Source: Feb. 7, 2008 speech to the Conservative Political Action
Conference, CPAC]

Fact: In 1994, Dohrn was quoted on her political beliefs: "I still see
myself as a radical."

[Chepesiuk, Ron, "Sixties Radicals, Then and Now: Candid Conversations
With Those Who Shaped the Era," McFarland & Company, Inc]

Fact: In 1995, Obama's first autobiography is released. In it he
writes of his years in college, associating with radicals. "To avoid
being mistaken for a sellout, I chose my friends carefully. The more
politically active black students. The foreign students. The Chicanos.
The Marxist professors and structural feminists and punk rock
performance poets . . . When we ground out our cigarettes in the
hallway carpet or set our stereos so loud that the walls began to
shake, we were resisting bourgeois society's stifling constraints. We
weren't indifferent or careless or insecure. We were alienated."

[Obama, Barack, "Dreams from My Father: A Story of Race and
Random House, Pages 100-101]

Fact: In 1995, Ayers and Dorn opened their Chicago Hyde Park home to
host a political coming-out party for Barack Obama, when he ran for
the state Senate. Someone who was at this party for Obama wrote that
Ayers and Dohrn were launching him, "introducing him to the Hyde Park
community as the best thing since sliced bread."

[Politico.com, Feb. 22, 2008]

Fact: From 1999-2002, Ayers and Obama served together on a second
charitable foundation, The Woods Fund. While at the Woods Fund, they
gave money to the Rev. Jeremiah Wright's church, which Obama attended,
and a children and family center, where Dohrn worked.

["Anderson Cooper 360," CNN, Oct. 6, 2008]

Fact: In a 1996 interview, one year after hosting Barack Obama's
coming-out party in their home, Ayers and Dohrn were profiled by "The
NewsHour" on PBS. Ayers was asked, "Looking back, would you do it
differently now?" He stated, "I doubt it . . . probably not."

Fact: Question to Obama in 2000, during his run for the U.S. Congress:
"What is your argument, based on the one term that you served in the
[Illinois] Senate so far, that makes you prepared for the Congress?"

Answer: "I would argue . . . my experience previous to elected office
equips me for the job . . . I've chaired major philanthropic efforts
in the city, like the Chicago Annenberg Challenge that gave $50
million to prompt school reform efforts throughout the city."

Fact: In 2001, Ayers made a $200 campaign contribution to Illinois
state Sen. Barack Obama.

Fact: In promoting his book "Fugitive Days" Ayers told The New York
Times on Sept. 11, 2001, "I don't regret setting bombs. I feel we
didn't do enough." When asked if he would "do it all again," he said,
"I don't want to discount the possibility."

Fact: Just days after 9/11, Ayers was quoted in The New York Times
Magazine: "This society is not a just and decent place . . . We're
living in a country where the election was stolen, and we didn't have
a mass uprising. It's incredible. We're all asleep. The pundits all
pat themselves on the back: 'God, what a great country'. . . It makes
me want to puke."




Fact: In 2001, Ayers posed for a photograph in Chicago magazine,
accompanying a profile of his book, which shows him stepping on an
American flag.


Fact: In a 2001 profile, a writer quotes Ayers as saying, "I think
there will be another mass political movement, because I believe that
the kind of injustice that is built into our world will not go quietly
into the night."

[Chicago magazine, August 2001 online edition]

Fact: In his 2001 memoir, "Fugitive Days," Ayers writes of the time he
took part in bombing the Pentagon. "Everything was absolutely ideal on
the day I bombed the Pentagon. The sky was blue; the birds were
singing. And the bastards were finally going to get what was coming to

Fact: In 2008, Ayers again denies he was ever a terrorist, writing on
his blog: "The September 11 attacks were acts of terrorism, and the
U.S. bombings in Viet Nam for a decade were acts of terrorism.
Terrorism is never justifiable, even in a just cause . . . I've never
advocated terrorism, never participated in it, never defended it. The
U.S. government, by contrast, does it routinely and defends the use of
it in its own cause consistently."


Fact: In the 2008 presidential race, Obama downplays his association
with Ayers, saying that he is just a "guy who lives in my

[The Washington Post, Oct. 7, 2008]

Fact: David Axelrod, Obama's chief strategist, attempted to downplay
the Obama/Ayers relationship: "Bill Ayers lives in his neighborhood.
Their kids attend the same school . . . They're certainly friendly;
they know each other, as anyone whose kids go to school together."

[Politico.com, Ben Smith, Feb. 26, 2008]

Fact: Obama's children never attended school with the Ayers children.
Obama's children are ages 9 and 6. Ayers and Dohrn have two adult
children, and they adopted a son from their fellow Weather Underground
terrorist Kathy Boudin. That son was born in 1981.

Fact: Chicago's Hyde Park residents speak of Obama and Ayers'
relationship. "Neighbors said it's only natural that Obama would know
Ayers and Dohrn, who often open their homes for gatherings filled with
lively discussions about politics, arts, and social issues. Obama and
his wife 'are part of our neighborhood and part of our social circle,'
said Elizabeth Chandler, a neighbor of Ayers'."

[ChicagoTribune.com, April 17, 2008]

Background: The driver's license issue emerged in September 2007, when
then-Gov. Eliot Spitzer ordered New York officials to grant driver's
licenses to illegals. During the Oct. 30, 2007, Democratic primary
debate at Drexel University, Sen. Hillary Clinton fumbled a question
from the late Tim Russert over whether she supported Spitzer's plan.
As for Obama, he has supported driver's licenses for illegals since
his days in the Illinois Senate, and continues to maintain that
training illegals to drive, and insuring them, enhances public

Fact: Homeland Security chief Michael Chertoff called then-Gov. Elliot
Spitzer in October 2007, warning his plan to grant driver's licenses
to illegals would undermine federal plans to enhance security. Spitzer
withdrew the plan two weeks later.

[Source: The New York Times, Oct. 31, 2007]

Fact: During the Democratic presidential debate held in Las Vegas in
November 2007, moderator Wolf Blitzer asked Obama if he supported
driver's licenses for illegal immigrants. Obama answered: "Yes."

[Source: Debate transcript, Nov. 15, 2007, Las Vegas]

Fact: Obama also addressed the licensing of illegals during the
October 2007 debate. Asked if he favored Spitzer's plan, Obama
replied: "I think that it is the right idea. And I disagree with
[Sen.] Chris [Dodd], because there is a public safety concern. We can
make sure that drivers who are illegal come out of the shadows, that
they can be tracked, that they are properly trained, and that will
make our roads safer. That doesn't negate the need for us to reform
illegal immigration."

[Source: Debate transcript, Drexel University, Philadelphia, Pa., Oct.
30, 2007]

Fact: The 19 terrorists involved in 9/11 obtained 13 driver's
licenses, as well as 21 federal or state-issued ID cards. Eight of the
9/11 terrorists were registered to vote.

[Source: Wall Street Journal column by John Fund, Nov. 2, 2007]

Fact: The day Gov. Spitzer withdrew his driver's license plan, Clinton
released this statement: "I support Governor Spitzer's decision today
to withdraw his proposal. His difficult job is made that much harder
by the failure of the Congress and the White House to pass
comprehensive immigration reform.

"As president, I will not support driver's licenses for undocumented
people, and will press for comprehensive immigration reform that deals
with all of the issues around illegal immigration including border
security and fixing our broken system."

[Source: Hillary Clinton statement dated Nov. 14, 2007]

Fact: A full 77 percent of American adults oppose granting driver's
licenses to people who are in the United States illegally.

[Source: Rasmussen Reports, national telephone survey, November 2007]

Fact: There are 203 million licensed drivers in America, according to
the Federal Highway Administration. Approximately 1 in 5 fatal car
accidents involves a driver who, for whatever reason, does not have a
valid driver's license.

[Source: "Outrageous! Cracking Down on Illegal Drivers"
by Michael Crowley, Readers Digest, September 2008]

Fact: Sen. John McCain's online policy statements do not specifically
address driver's licenses for illegals. McCain is on record, however,
opposing any benefits for those who "have come here illegally and
broke our laws."

In one speech he pledged, "It would be among my highest priorities to
secure our borders first, and only after we achieved widespread
consensus that our borders are secure, would we address other aspects
of the problem in a way that defends the rule of law and does not
encourage another wave of illegal immigration."

[Source: Feb. 7, 2008 speech to the Conservative Political Action
Conference, CPAC]

Fact: In February, Obama told ABC's David Muir, "If [McCain] wants to
try to parse out this one issue of driver's licenses, an issue of
public safety, my response is that we have to solve the overall
problem and this driver's license issue is a distraction."

[Source: "Obama Defends Illegals' Driver's Licenses," ABC.com]

Fact: When he served as a member of the Illinois state Senate, Obama
voted to train, insure, and license illegals to operate motor vehicles
in order to "protect public safety."

[Source: Debate transcript, Nov. 15, 2007, Las Vegas]

Fact: Obama has promised amnesty for all 12 million illegal aliens in
the U.S.
Granting amnesty absolves illegal aliens of violating federal law by
entering the U.S. illegally. Once granted, the aliens are eligible for
citizenship and the full benefits of citizenship.


Fact: When asked about the fact that illegal immigrants don't speak
English, Obama said the solution was for American kids to learn
Spanish. "Instead of worrying about whether immigrants can learn
English, they will learn English. You need to make sure your child can
speak Spanish." (Obama himself cannot speak Spanish.)

Fact: Obama voted "No" on making English the official language of the
United States government. A full 91 percent of the people in America
want English as an official language, and 76 percent of Hispanics
believe English should be the official language.


Fact: Obama voted "Yes" on allowing illegal immigrants to participate
in Social Security. Obama voted to kill an amendment that would
"reduce document fraud, prevent identity theft, and preserve the
integrity of the Social Security system, by ensuring that persons who
receive an adjustment of status under this bill are not able to
receive Social Security benefits as a result of unlawful activity."


Fact: Obama wants healthcare for illegal immigrants. When Obama was
asked, "Does your healthcare plan cover the estimated 12 million
illegal immigrants?" He answered that his health plan will cover all
of America's 47 million uninsured, but that figure includes
approximately 12 million illegal aliens. Obama said, "When we've got
millions of citizens that aren't yet covered, it's important for us to
make sure that they are provided coverage."

[Democratic Presidential Debate sponsored by CNN and
the Congressional Black Caucus Institute on Jan. 21, 2008]

Fact: Obama supports giving illegal immigrants a driver's license.
Obama was asked, "In the absence of comprehensive immigration reform,
do you support driver's licenses for illegal immigrants?" To which he
responded, "Yes. I am going to be fighting for comprehensive
immigration reform, and we shouldn't pose the question that, somehow,
we can't achieve that. The American people desperately want it; that's
what I'm going to be fighting for as president."

[Democratic Primary Debate in Las Vegas, Nev., Nov.15, 2007]

Fact: Obama wants all states to give illegals in-state tuition at
state and community colleges.


Fact: Obama opposed punishing "sanctuary" cities that violate federal
law by harboring illegals. He voted "Yes" to kill an amendment that
ensured that federal assistance does not go to sanctuary cities that
ignore the immigration laws of the United States and create safe
havens for illegal aliens and potential terrorists. Those who voted
"No" stated, "Are we going to give folks in sanctuary cities amnesty
for defying federal law and refusing to cooperate with federal
immigration officials?"


Fact: Obama supported The Dream Act for children of illegal
immigrants. The Dream Act is a piece of proposed federal legislation
in the United States that would provide achieving illegal immigrant
high school students the opportunity to obtain permanent residency.

[Democratic Debate Jan. 31, 2008]

Fact: Obama co-sponsored a bill to provide funding for social services
for illegal aliens.


Fact: Obama receives an 8 percent rating from USBC (The U.S. Border
Control). The USBC was founded in 1988, and is a non-profit, tax-
exempt, citizen's lobby to protect the border and deter illegal


Fact: Barack Obama blames a rise in hate crimes against Hispanics on
Lou Dobbs and Rush Limbaugh. He stated at a Palm Beach fundraiser, "A
certain segment has basically been feeding a kind of xenophobia.

"There's a reason why hate crimes against Hispanic people doubled last
year. If you have people like Lou Dobbs and Rush Limbaugh ginning
things up, it's not surprising that would happen." (According to The
Washington Post fact checker, Obama's "hate crimes statistics are
wildly inaccurate — and a subsequent modified claim provided by his
campaign was also off the mark.")

Fact: Obama is against raids on illegal immigration. Obama's plan?
"Improve Our Immigration System: We must fix the dysfunctional
immigration bureaucracy and increase the number of legal immigrants to
keep families together and meet the demand for jobs that employers
cannot fill."

["The Blueprint for Change: Barack Obama's Plan for America," Pages

Why Does Barack Hussein Obama's Aunt Receive Special Treatment?

Barack Hussein Obama's Aunt Receiving Special Treatment
An Illegal Alien, She Was Ordered to IMMEDIATELY Leave the U.S. by an
Immigration Judge 4 Years Ago Yet, She Is STILL in the U.S.

And, as an Illegal Alien, she has been Receiving Public Assistance,
and Making Illegal Campaign Contributions to Barack Hussein Obama's
Campaign. Both of These Are Criminal Offenses.

Why is She Not Prosecuted and Deported?

Why is the US Immigration and Customs Enforcement Agency NOT Doing

Why Does This Illegal Alien Receive Special Consideration?

Why is Sandra B. Henriquez Still The Head of the Boston Housing
Authority for Protecting Barack Hussein Obama's Aunt?

Why Are "Heads NOT Rolling" at the Boston Housing Authority and US
Immigration and Customs Enforcement Over This?

Why is the Federal Election Commission NOT Investigating the Millions
of Dollars Flowing into Barack Hussein Obama's Campaign?

Barack Hussein Obama's aunt, Zeituni Onyango, a woman who, for the
past 4 years, has been living, illegally in the U.S. and in PUBLIC
HOUSING, in Boston, Massachusetts, after an immigration judge rejected
her request for asylum four years ago.

Zeituni Onyango, 56, was ordered to leave the United States by a U.S.
immigration judge who denied her asylum request.

In addition to living in the U.S. illegally, and defying an
immigration judge's order to leave the U.S. over 4 years ago, Zeituni
Onyango has also been receiving welfare and public assistance, which
illegal aliens are prohibited from receiving.

And, according to the Federal Election Commission documents filed by
the Barack Hussein Obama's campaign, Onyango has contributed $260 to
Obama. Under federal election law, only U.S. citizens or those
legally permitted to be here in the U.S., and have a "green-card," are
legally permitted to give money to campaigns.

Zeituni Onyango is employed by the Boston Housing Authority - and we
have to ask why an illegal alien is being employed by a public agency,
and why her citizenship was not verified by the Boston Housing
Authority.... and why she is permitted to receive public assistance if
she is employed, illegally, by the Boston Housing Authority.
According to Barack Hussein Obama's campaign, Zeituni Onyango's latest
contribution was for $5 on Sept. 19.

We believe the Federal Election Commission needs to immediately
investigate Barack Hussein Obama and learn more about how many
millions of dollars his campaign is receiving from illegal sources,
and why there are no indictments or prosecutions for these clearly
illegal campaign contributions.

We also call on the Attorney General for the State of Massachusetts to
investigate Zeituni Onyango's illegal and criminal acts, and why she
has not been deported - and why an illegal alien is permitted to take
a job away from a U.S. citizen. And, how is it that an illegal alien
is permitted to live in public housing and receive public
assistance.... and why "heads are not rolling" at the Boston Housing
Authority for their ineptness and incompetence.

Why is the US Immigration and Customs Enforcement Agency NOT Doing

Finally, we call for an investigation into Sandra B. Henriquez, the
head of the Boston Housing Authority, to learn she does not verify the
citizenship of their employees, and why illegal aliens are permitted
to receive public assistance. Who else, other than Sandra B.
Henriquez needs to be fired for NOT doing their jobs, and protecting
Barack Hussein Obama's aunt?

"Heads need to be rolling, and rolling now!"

Hillary's Secrets Can Defeat Obama
Dear Fellow American:

Never before in the history of our nation have we faced such a grave
crisis: one of the most radical political figures ever to be nominated
by a major party is just minutes away from becoming President of the
United States.

That man is Barack Obama.

He promises to change America forever. If elected, he will do just
that — but in ways you make not like.

Remember Obama is the most liberal member of the United States Senate.

He received a 100 percent Liberal Rating from the National Journal,
making him the most left-wing Senator in Washington — more liberal
than even Democratic senators like Ted Kennedy.

If you look at Obama's record, you will understand just how dangerous
this man is.

He even has terrorist friends he won't denounce. One such man is
William Ayers, a leader in the radical terrorist group the Weatherman
Underground. The group bombed several government buildings, including
the Pentagon, killing civilians and police officers.

In 2001, Ayers said he had no regrets for his actions and wished he
could have done more.

The ties between Obama and Ayers are tight. Both served on two non
profit boards and they worked closely together. Ayers even hosted a
political event at his home for Obama.

Obama has acknowledged he is a friend of Ayers and defends his
association by saying he, Obama, was only 8 years old at the time of
the Pentagon bombing.

However, Obama has no explanation as to why he is still a friend of

Obama has even been endorsed by radicals such as Nation of Islam
Leader Louis Farrakhan.

No one can deny hearing about Obama's relationship with the America-
hating Rev. Jeremiah Wright.

There should be little doubt that William Ayers and Louis Farrakhan
and the Rev. Jeremiah Wright are rooting for Obama — because he is one
of them.

In keeping with such friends, Obama has promised to meet with radical
leaders like Iranian President Mahmoud Ahmadinejad without
"preconditions" even though Ahmadinejad has promised to "wipe Israel
off the map" and "destroy" America.

Even radical Hamas terrorists have praised him.

"We like Mr. Obama and we hope he will win the election," Ahmed
Yousef, senior Hamas leader was quoted by ABC radio as saying.

Help the National Republican Trust PAC tell the truth about Obama — Go
Here Now

Dangerous Economic Plan
And then there are Obama's dangerous economic plans for America.

He wants to almost double the capital gains tax. He wants to strip the
FICA tax cap off every worker making more than $97,500. He wants to
increase the dividend tax. He wants to let the Bush tax cuts expire —
giving almost every American family an automatic tax increase.

He has called for more than $800 billion in new spending programs.

He is so radical he even backed driver's licenses for illegal aliens —
even though such a move would help future terrorists move freely in
the United States.

He is the most pro-abortion candidate in the history of the country.
In 2001, as a state legislator in Illinois, he opposed a bill to
protect live born children — children actually born alive! He was the
only Illinois senator to speak out against the bill.

He opposes gun rights. He has long history of trying to deny ordinary
citizens access to guns.

He originally backed Washington D.C.'s total ban on private handguns —
a ban that was overturned. The NRA rated him an "F" on gun positions
and says he is one of the most dangerous anti-gun politicians in the

Never forget that Obama is a Harvard educated elitist. To him we
Americans are simply "bitter" and he has mocked us saying "[they]
cling to their guns and their religion."

Support the National Republican Trust PAC's Campaign to Expose Obama —
Go Here Now

Exposing the Truth
Hillary Clinton was late in recognizing the threat Obama posed to her
campaign, but once she did, her strategy worked.

When Hillary exposed Obama publicly, her campaign saw a major

Hillary won every major state primary in the nation with the sole
exception of Obama's home state of Illinois.

And even though Obama was "anointed" by the media and Democratic
elites, Hillary went on to win eight of the last 10 Democratic

How did Obama beat Hillary for the nomination?

Well, using a loophole in Democratic rules, he was able to rack up
large majorities in caucus states where he outspent and out organized

But in large, contested states she won almost every time. Why? Because
when Democrats heard what Obama really stood for, they turned on him.

Make no mistake about it: If we let Americans know the truth about
Obama, John McCain can win this election!

But we must employ Hillary Clinton's strategy.

We must expose Obama for the dangerous radical he is.

Send a donation today to help our cause — Go Here Now

Barack Hussein Obama:



Barack Hussein Obama:

You are VERY confused on the very basics of theology and what the
Bible says about life, and when life begins

The Bible is VERY clear on this issue:



Barack Hussein Obama:

If you are so concerned about theology and what the Bible says about
Abortion, you would stand up for the most innocent of all human life,
and vote to:



Barack Hussein Obama's
Support of Abortion
includes the following statements and votes he made for supporting the
death of innocent, unborn babies:

Just like a "flip-flopper," and actually, "much worse than a flip-
flopper," Barack Hussein Obama seems to think he can have it both ways
as he stated, "We can find common ground between pro-choice and pro-
life." (Apr 2008) FACT: There is NO common ground on this issue, you
are either PRO-LIFE or PRO-DEATH.

Despite proclaiming to be a "Christian" and that he reads the Bible,
he is still undecided on whether
"Life Begins At Conception." (Apr 2008)

Rated 100% by NARAL on pro-choice votes in 2005, 2006 & 2007. (Jan

Voted against banning partial birth abortion. (Oct 2007)

Supports the death penalty for unborn babies via his support of
partial-birth abortion. (Apr 2007)

Extend presumption of good faith to abortion protesters. (Oct 2006)

Passed the Stem Cell Research Bill. (Jun 2004)

Protect a woman's right to kill her unborn baby through abortion. (May

As a PRO-DEATH supporter, he fully supports the death penalty for
unborn babies and
Roe versus Wade. (Jul 1998)

Voted NO on defining unborn child as eligible for SCHIP. (Mar 2008)

Voted NO on prohibiting minors crossing state lines for abortion. (Mar

Voted NO on notifying parents of minors who get out-of-state
abortions. (Jul 2006)

Voted YES on $100M to reduce teen pregnancy by education &
contraceptives. (Mar 2005)

Rated 0% by the NRLC, indicating his radical, and ultra extremist pro-
death stance. (Dec 2006)

The following by President Abraham Lincoln
still timely, and still 100% correct!

You cannot help the poor by destroying the rich.

You cannot strengthen the weak by weakening the strong.

You cannot bring about prosperity by discouraging thrift.

You cannot lift up the wage earner by pulling down the wage payer.

You cannot further the brotherhood of man by inciting class hatred.

You cannot build character and courage by taking away man’s initiative
and independence.

You cannot help men permanently by doing for them what they could and
should do for themselves.

Spoken in 1862 by the great emancipator: President Abraham Lincoln

The Real Difference Between

John McCain
Barack Hussein Obama:

John McCain puts
"Country Over Party"

Barack Hussein Obama puts
"Party Over Country."














Stop Tax-Payer Funding of this Partisan, Racist, Anti-Republican, Pro-
Democratic, Tax-Exempt/Non-Profit and Socialist Organization that
Supports Voter Fraud, Illegal Voting and other Criminal Activities!




Could it be that a Democratic Congress investigating
"one of its' own" would be like Richard Nixon calling
for investigations into Watergate?

We know that Barack Hussein Obama is an extremist, left-wind radical
liberal, with the most outrageous and extremist voting record in
support of the socialist agenda.

Barack Hussein Obama - the very best friend to:
Domestic Terrorists like William Ayers,
who proudly admits to bombing our own Pentagon

Barack Hussein Obama, the very best friend to terrorists who attack a
woman's womb to murder innocent babies.

Barack Hussein Obama: enemy to the U.S. Constitution, and
every person's right to "Life, Liberty and the Pursuit of Happiness."

Barack Hussein Obama has the most extreme, pro-death voting record of
any Senator.

Barack Hussein Obama, the very best friend to radical racists and
people that preach hate and racism, such as Jeremiah Wright, Barack
Hussein Obama's preacher and friend for over 20 years:

Sen. Barack Hussein Obama, with Jeremiah Wright, his preacher and good
friend for over 20 years, a radical racist that preaches hate and

Democratic Vice President Nominee and Multi-Millionaire
Joe "Cheapskate" Biden:
supposedly, a good, sympathetic Democrat who is concerned about
others, and also being a "good" Catholic, yet only gives $369/year to
charity, each year, on average over the past 10 years.

A real compassionate Democrat, and Catholic multi-millionaire, Joe
Biden gives a MEASLY $369/year each year to charity?!?

Joe, don't you read your Bible, it states that the first 10% of your
income belongs to the Lord. And you didn't even give 1%?!?

More information about this cheapskate multi-millionaire follows:

Delaware Senator Joe Biden, the Democratic nominee for vice president
and his wife reported giving a very small fraction of 1 percent of
their income to charity during the past decade. This amount of
"charitable" giving is far below the national average according to
most experts.

Biden and his wife, Jill, earned $319,853 in adjusted gross income and
paid $72,787 in federal taxes last year, including $2,721 in
alternative minimum taxes.

Over the past 10 years, the Biden's gave an average of $369/year to

Their deductions for charitable giving amount to about two-tenths of 1
percent of their income -- and this amount is far lower than the
national average of about 3.1 percent - this, according to
JustGive.org, a nonprofit organization that connects donors with

What is the definition of a
"Despicable Democrat?"

A "Despicable Democrat" is a Democrat that places the
Democratic Party's agenda over our country's best interests.



Favors new drilling offshore US

Will appoint judges who interpret the law not make it

Served in the US Armed Forces

Amount of time served in the US Senate
173 DAYS

Will institute a socialized national health care plan

Supports abortion throughout the pregnancy

Would pull troops out of Iraq immediately

Supports gun ownership rights

Supports homosexual marriage

Proposed programs will mean a huge tax increase

Voted against making English the official language

Voted to give Social Security benefits to illegals


0% on home sales up to $500,000 per home (couples). McCain does not
propose any change in existing home sales income tax.

28% on profit from ALL home sales. (How does this affect you? If you
sell your home and make a profit, you will pay 28% of your gain on
taxes. If you are heading toward retirement and would like to down-
size your home or move into a retirement community, 28% of the money
you make from your home will go to taxes. This proposal will adversely
affect the elderly who are counting on the income from their homes as
part of their retirement income.)


15% (no change)

39.6% - (How will this affect you? If you have any money invested in
stock market, IRA, mutual funds, college funds, life insurance,
retirement accounts, or anything that pays or reinvests dividends, you
will now be paying nearly 40% of the money earned on taxes if Obama
becomes president. The experts predict that 'Higher tax rates on
dividends and capital gains would crash the stock market, yet do
absolutely nothing to cut the deficit.')



(no changes)
Single making 30K - tax $4,500
Single making 50K - tax $12,500
Single making 75K - tax $18,750
Married making 60K- tax $9,000
Married making 75K - tax $18,750
Married making 125K - tax $31,250

OBAMA (reversion to pre-Bush tax cuts)
Single making 30K - tax $8,400
Single making 50K - tax $14,000
Single making 75K - tax $23,250
Married making 60K - tax $16,800
Married making 75K - tax $21,000
Married making 125K - tax $38,750
Under Obama, your taxes could almost double!


- 0% (No change, Bush repealed this tax)

Restore the inheritance tax

Many families have lost businesses, farms, ranches, and homes that
have been in their families for generations because they could not
afford the inheritance tax. Those willing their assets to loved ones
will only lose them to these taxes.


New government taxes proposed on homes that are more than 2400 square
feet. New gasoline taxes (as if gas weren't high enough already) New
taxes on natural resources consumption (heating gas, water,
electricity) New taxes on retirement accounts, and last but not
least....New taxes to pay for socialized medicine so we can receive
the same level of medical care as other third-world countries!!!

Let's Make Barack Hussein Obama a 1-Term President and Consider
Electing a Real American, Like Governor Sarah Palin!

See How Governor Palin Compares with Obama
on the Following Issues

Governor Sarah Palin

Barack Hussein Obama

Office being sought
Vice President of the United States
President of the United States and Leader of the Free World

Full name
Sarah Louise Heath Palin
Barack Hussein Obama II

Sarah Barracuda
Barry Obama; "The One"

Public opinion
Smoking hot in a "naughty librarian" sort of way
May be The Messiah


5: two sons, three daughters
2: two daughters

Religion/Church attendance
Evangelical Christian;

attends Juneau Christian Center when in Juneau and grew up attending
Wasilla Assembly of God
Attended Trinity United Church of Christ for 20 years, a "black
liberation theology" church formerly led by Rev. Jeremiah Wright and
governed according to the Black Value System

Current Job
Governor of Alaska
Junior Senator from Illinois

Previous Public Jobs
Mayor of Wasilla , AK (1996-2002); President of Alaska Conference of

City Council member (1992-1996)
State Senator (1997-2004);

Community Organizer

Executive Experience
Governor for 2 years;

Mayor for 10 years

Foreign Relations experience
Governor of state that borders two foreign countries ( Canada and
Russia )
Chaired Senate subcommittee on Europe but never called it into

once gave a speech to 200,000 screaming Germans

Military Affairs experience
Commander in Chief of Alaska National Guard;

Son is enlisted Infantryman in U.S. Army

Private Sector Experience
Sports reporter;

Salmon fisherman
Associate at civil rights law firm

Speaking ability
Beautifully executed initial stump speech in Dayton , OH hockey arena
without a teleprompter
An enter...wait--did you say without a teleprompter??

Spouse's name
Todd Mitchell Palin
Michelle LaVaughn Robinson Obama

Spouse's occupation
Salmon fisherman;

Former North Slope production supervisor for BP Oil
Vice President for Community and External Affairs at University of
Chicago Hospitals;

former Associate Dean of Student Services at the University of
Chicago ;

former Executive Director for the Chicago office of Public Allies;

former Assistant to the Mayor of Chicago;

former associate at Sidley Austin law firm

Reaction to spouse's political success
Quit 17-year BP oil job when BP became involved in natural gas
pipeline negotiations with wife's administration
Promoted and given 160% pay raise by UofC hospitals within months of
husband's election to U.S. Senate;

Employer received $1,000,000.00 federal earmark, requested by husband,
after her promotion

Coolest thing about Spouse
Tesoro Iron Dog Snowmobile race champion (longest snowmobile race in
the world);

In 2008, while defending his championship, was injured when he was
thrown 70 feet from his machine. He was sent to the hospital but still
finished in fourth place
Sister of Oregon State University head basketball coach Craig

Most Courageous Moment in Public Service
Resigned in protest from position of Ethics Commissioner of Alaska
Oil and Gas Conservation Commission in order to expose legal
violations and conflicts of interest of Alaska Republican leaders,
including the former state Attorney General and the State GOP Chairman
(who was also an Oil & Gas Commissioner), who was doing work for the
party on public time and supplying a lobbyist with a sensitive e-mail.
Gave an anti-Iraq war speech to a crowd of anti-Iraq war
demonstrators in Hyde Park in 2002

In Current Office Because...
Upset sitting Governor in GOP primary due to public support for her
efforts to clean up corrupt government establishment
Republican opponent, who was leading in the polls, was forced to
leave race after unsealing of divorce records exposed a sex scandal

Change and Clean Government
Hope and Change;

"Bringing Change from Outside Washington "

What they've done to live that theme:
Replaced entire Board of Agriculture and Conservation because of
conflict of interest;

Resigned from position of Ethics Commissioner of the Alaska Oil and
Gas Conservation Commission in order to expose corruption among
members of own party
Selected 36-year incumbent Senator as running mate

Family Affairs
May have removed State Public Safety Commissioner as part of effort
to protect sister in messy divorce and child custody battle
Often says, "I am my brother's keeper";

Brother lives in a hut in Nairobi on $12 per year

Union affiliation
Union member, married to Union member
Endorsed by a union

Iraq and Troop Support
Formerly (pre-surge) critical of apparent lack of long-term strategy
for Iraq ;

Visited wounded U.S. soldiers in Germany ;

visited AK National Guard soldiers deployed to Kuwait ;

Son deploying to Iraq on 9/11/08 as Army infantryman
Gave an anti-Iraq war speech to a crowd of anti-Iraq war

almost visited wounded troops in Germany , but decided to go shopping
in Berlin instead

Bipartisan/"maverick" credentials
Married to a non-Republican;

Exposed corruption within own party;

Campaigned for Lt. Gov. Sean Parnell against corrupt GOP congressman
Don Young;

Called out Sen Ted Stevens (R-AK) to "come clean" about financial
dealings that are under fed investigation
Talks about bipartisanship

Legislative Record
Passed a landmark ethics reform bill;

Used veto to cut budgetary spending;

Prevented "bridge to nowhere" that would have cost taxpayers $400
million dollars.
Voted "present" over 100 times as IL state senator

How they dealt with corrupt individuals in home city/state
Exposed legal violations and conflicts of interest of Alaska
Republican leaders;

Campaigned against corrupt GOP Representative;

Ran against and defeated corrupt incumbent governor in GOP primary
Launched political career in home of unrepentant domestic terrorist
Bill Ayers (and still refers to him as a part of "mainstream
Democratic Chicago";

Purchased home with help of convicted felon Tony Rezko

Lifetime member of NRA and avid hunter;

video can be found on YouTube of Palin firing an M4 at a military
firing range
Worked to pass legislation in Illinois that would prevent all law-
abiding citizens from owning firearms

Opposed "Bridge to Nowhere" project;

Said Alaska should avoid relying on federal money for projects;

Campaigned against porker Don Young (R-AK) in 2008 primary
Secured federal earmarks for wife's employer and for campaign

Pro life;

gave birth to 5th child knowing that he would have Down's syndrome
Pro-death - favors the murder of unborn babies and is the most
liberal of all liberals on abortion.;

only IL state sen. to speak against the Born Alive Infant's Protection
Act, which required medical care to be given to live infants who
survived abortions

Believes energy independence is a matter of national security;

For drilling in ANWR, which is in her state
Says Americans should "get tune-ups" and "check tire pressure";

Says "we can't expect the world to be okay with" our use of heating
and air conditioning

Chair of Alaska Conservation Commission (2003-4);

Announced plans to create sub-cabinet group of advisors to address
climate change and reduce greenhouse gas emissions in AK
Talks about the environment a lot

Athletic prowess
Runs marathons
Has reporters tailing him to the gym

Barack Hussein Obama's
38 Lies, Half-Truths, and "Not-Exactly's"

1.) Selma Got Me Born - NOT EXACTLY, your parents felt safe enough to
have you in 1961 - Selma had no effect on your birth, as Selma was in
1965. (Google' Obama Selma ' for his full March 4, 2007 speech and
articles about its various untruths.)

2.) Father Was A Goat Herder - NOT EXACTLY, he was a privileged, well
educated youth, who went on to work with the Kenyan Government.

3.) Father Was A Proud Freedom Fighter - NOT EXACTLY, he was part of
one of the most corrupt and violent governments Kenya has ever had.

4.) My Family Has Strong Ties To African Freedom - NOT EXACTLY, your
cousin Raila Odinga has created mass violence in attempting to
overturn a legitimate election in 2007, in Kenya . It is the first
widespread violence in decades. The current government is pro-American
but Odinga wants to overthrow it and establish Muslim Sharia law. Your
half-brother, Abongo Obama, is Odinga's follower. You interrupted your
New Hampshire campaigning to speak to Odinga on the phone.

Obama's cousin Odinga in Kenya ran for president and tried to get
Sharia muslim law in place there. When Odinga lost the elections, his
followers have burned Christians' homes and then burned men, women and
children alive in a Christian church where they took shelter.. Obama
SUPPORTED his cousin before the election process here started. Google
Obama and Odinga and see what you get. No one wants to know the truth.

5.) My Grandmother Has Always Been A Christian - NOT EXACTLY, she does
her daily Salat prayers at 5am according to her own interviews. Not to
mention, Christianity wouldn't allow her to have been one of 14 wives
to 1 man.

6.) My Name is African Swahili - NOT EXACTLY, your name is Arabic and
'Baraka' (from which Barack came) means 'blessed' in that language.
Hussein is also Arabic and so is Obama.

Barack Hussein Obama is not half black. If elected, he would be the
first Arab-American President, not the first black President. Barack
Hussein Obama is 50% Caucasian from his mother's side and 43.75%
Arabic and 6.25% African Negro from his father's side. While Barack
Hussein Obama's father was from Kenya , his father's family was mainly
Arabs.. Barack Hussein Obama's father was only 12.5% African Negro and
87.5% Arab (his father's birth certificate even states he's Arab, not
African Negro). From....and for more....go to the following website:

7.) I Never Practiced Islam - NOT EXACTLY, you practiced it daily at
school, where you were registered as a Muslim and kept that faith for
31 years, until your wife made you change, so you could run for

April 3, 2008 Article "Obama was 'quite religious in islam'"

8.) My School In Indonesia was Christian - NOT EXACTLY, you were
registered as Muslim there and got in trouble in Koranic Studies for
making faces (check your own book).

February 28, 2008. Kristoff from the New York Times a year ago: Mr.
Obama recalled the opening lines of the Arabic call to prayer,
reciting them with a first-rate accent. In a remark that seemed
delightfully uncalculated (it'll give Alabama voters heart attacks),
Mr. Obama described the call to prayer as "one of the prettiest sounds
on Earth at sunset." This is just one example of what Pamela is
talking about when she says "Obama's narrative is being altered,
enhanced and manipulated to whitewash troubling facts."

9.) I Was Fluent In Indonesian - NOT EXACTLY, not one of your former
teachers says you could speak the language.

10.) Because I Lived In Indonesia , I Have More Foreign Experience -
NOT EXACTLY, you were there from the ages of 6 to 10, and couldn't
even speak the language. What did you learn, how to study the Koran
and watch cartoons.

11.) I Am Stronger On Foreign Affairs - NOT EXACTLY, except for Africa
(surprise) and the Middle East (bigger surprise), you have never been
anywhere else on the planet and thus have NO experience with our
closest allies.

12.) I Blame My Early Drug Use On Ethnic Confusion - NOT EXACTLY, you
were quite content in high school to be Barry Obama, no mention of
Kenya and no mention of struggle to identify - your classmates said
you were just fine.

13.) An Ebony Article Moved Me To Run For Office - NOT EXACTLY, Ebony
has yet to find the article you mention in your book. It doesn't, and
never did, exist.

14.) A Life Magazine Article Changed My outlook on Life - NOT EXACTLY,
Life has yet to find the article you mention in your book. It doesn't,
and never did, exist.

15.) I Won't Run On A National Ticket In '08 - NOT EXACTLY, here you
are, despite saying, live on TV,
that you would not have enough experience by then, and you are all
about having experience first.

16.) Voting "Present" is Common In Illinois Senate - NOT EXACTLY, they
are common for YOU, but not many others have 130 NO VOTES.

17.) Oops, I Misvoted - NOT EXACTLY, only when caught by church groups
and Democrats, did you beg to change your misvote.

18.) I Was A Professor Of Law - NOT EXACTLY, you were a senior
lecturer ON LEAVE.

19.) I Was A Constitutional Lawyer - NOT EXACTLY, you were a senior
lecturer ON LEAVE.

20.) Without Me, There Would Be No Ethics Bill - NOT EXACTLY, you
didn't write it, introduce it, change it, or create it.

21.) The Ethics Bill Was Hard To Pass - NOT EXACTLY, it took just 14
days from start to finish.

22.) I Wrote A Tough Nuclear Bill - NOT EXACTLY, your bill was
rejected by your own party for its pandering and lack of all
regulation - mainly because of your Nuclear donor, Exelon, from which
David Axelrod came.

23.) I Have Released My State Records - NOT EXACTLY, as of March,
2008, state bills you sponsored or voted for have yet to be released,
exposing all the special interests pork hidden within.

24.) I Took On The Asbestos Altgeld Gardens Mess - NOT EXACTLY, you
were part of a large group of people who remedied Altgeld Gardens .
You failed to mention anyone else but yourself, in your books.

25.) My Economics Bill Will Help America - NOT EXACTLY, your 111
economic policies were just combined into a proposal which lost 99-0,
and even YOU voted against your own bill.

26.) I Have Been A Bold Leader In Illinois - NOT EXACTLY, even your
own supporters claim to have not seen BOLD action on your part.

27.) I Passed 26 Of My Own Bills In One Year - NOT EXACTLY, they were
not YOUR bills, but rather handed to you, after their creation by a
fellow Senator, to assist you in a future bid for higher office.

28.) No One on my campaign contacted Canada about NAFTA - NOT EXACTLY,
the Candian Government issued the names and a memo of the conversation
your campaign had with them.

29.) I Am Tough On Terrorism - NOT EXACTLY, you missed the Iran
Resolution vote on terrorism and your good friend Ali Abunimah
supports the destruction of Israel .

30.) I Want All Votes To Count - NOT EXACTLY, you said let the
delegates decide.

31.) I Want Americans To Decide - NOT EXACTLY, you prefer caucuses
that limit the vote, confuse the voters, force a public vote, and only
operate during small windows of time.

32.) I passed 900 Bills in the State Senate - NOT EXACTLY, you passed
26, most of which you didn't write yourself.

33.) I Believe In Fairness, Not Tactics - NOT EXACTLY, you used
tactics to eliminate Alice Palmer from running against you.

34.) I Don't Take PAC Money - NOT EXACTLY, you take loads of it.

35.) I don't Have Lobbyists - NOT EXACTLY, you have over 47 lobbyists,
and counting.

36.) My Campaign Had Nothing To Do With The 1984 Ad - NOT EXACTLY,
your own campaign worker made the ad on his Apple in one afternoon.

37.) I Have Always Been Against Iraq - NOT EXACTLY, you weren't in
office to vote against it AND you have voted to fund it every single

38.) I Have Always Supported Universal Health Care - NOT EXACTLY, your
plan leaves us all to pay for the 15,000,000 who don't have to buy it


According to Joe Biden,
Barack Hussein Obama is
"NOT Ready To Be President."

On August 19, 2007, in the Democratic Debates, Joe Biden said Barack
Hussein Obama was "not ready to lead."

About "his good friend" Senator John McCain, Senator Joe Biden said;
"I would be honored to run with or against John McCain, because I
think the country would be better off."

The exact language used by Joe Biden from the democratic debates from
August 2007 follows:

ABC’S GEORGE STEPHANOPOULOS: You were asked, “Is he ready?” You said,
“I think he can be ready but right now, I don’t believe he is. The
presidency is not something that lends itself to on-the-job training.”

JOE BIDEN: "I think that I stand by the statement."

And what about John McCain?

JOE BIDEN: "I would be honored to run with or against John McCain,
because I think the country would be better off."

Senator Joe Biden, like a typical democrat, has a problem telling the
truth and also with honesty - not to mention his little "problem" when
he was caught plagiarizing someone else's speech.

Joe Biden is obviously lying about Barack Hussein Obama's "readiness"
to serve as our country's President, as well as Joe Biden's "good
friend," John McCain.

QUESTION: When was Joe Biden lying about his "good friend" John
McCain and Barack Hussein Obama's "readiness" to serve as our
country's President?

In 1997, when he was quoted when Joe Biden was running for the
nomination of the Democratic Party for President, or now, after August
24, 2008, when he was introduced as the Democratic Party's Vice

According to Joe Biden,
Barack Hussein Obama is "NOT Ready To Lead."

Barack Hussein Obama:
an Unborn Baby's #1 Enemy?

FACT: Barack Hussein Obama is the most radical pro-death, pro-
abortion candidate to ever be nominated for president by the
democratic party

FACT: Barack Hussein Obama
has the most liberal pro-death, pro-abortion
voting record of all members of the U.S. Senate

Barack Hussein Obama:
"Leader" or Clown ?

Barack Hussein Obama's "Energy Plan."

Just what America Needs - a "Tire Gauge"
For our national "Energy Plan."

Yeah, that will make high gasoline prices drop.

We've already had one clown as President
(Jimmy Carter).

America NEEDS America's Energy!

America NEEDS America's Oil!

America doesn't need another:

Clown-in-Chief (Jimmy Carter)


Liar-in-Chief (Bill Clinton)


Adulterer-in-Chief (Bill Clinton)

Bill Clinton lost his license to practice law for lying under oath
regarding his sexual relationship with Monica Lewenski while he was
President and in the Oval Office.

Bill Clinton DISGRACED the Office of President
Just as Nancy Pelosi has disgraced the Speakers office
through her DESPERATE LIES, Hypocrisy,




Barack Hussein Obama:

Friend of Communists and Communist Sympathizers?
Friend & Associate of Convicted Felon Tony Rezko?
Friend of Terrorists and Terrorist Sympathizers?
Friend of Those Who Bombed our Pentagon?
Friend of Murderers?

Did you know that Barack Hussein Obama was a director of the Woods
Fund board from 1999 to Dec. 11, 2002 ?

This is according to the website of the Woods Fund.

Barack Hussein Obama served on the board with Ayers, who was a
Weathermen leader and has written about his involvement with the
group's bombings of the New York City Police headquarters in 1970, the
Capitol in 1971 and the Pentagon in 1972.

"I don't regret setting bombs. I feel we didn't do enough," Ayers told
the New York Times in an interview released on Sept. 11, 2001

"Everything was absolutely ideal on the day I bombed the Pentagon,"
Ayers wrote in his memoirs, titled "Fugitive Days." He continued with
a disclaimer that he didn't personally set the bombs, but his group
set the explosives and planned the attack.

A $200 campaign contribution is listed on April 2, 2001 by the
"Friends of Barack Obama" campaign fund. The two appeared speaking
together at several public events, including a 1997 University of
Chicago panel entitled, "Should a child ever be called a 'super
predator?'" and another panel for the University of Illinois in April
2002, entitled, "Intellectuals: Who Needs Them?"

The charges against Ayers were eventually dropped in 1974 because of
prosecutorial misconduct, including illegal surveillance.

Ayers is married to another notorious Weathermen terrorist, Bernadine
Dohrn, who has also served on panels with Barack Hussein Obama. Dohrn
was once on the FBI's Top 10 Most Wanted List and was described by J.
Edgar Hoover as the "most dangerous woman in America." Ayers and Dohrn
raised the son of Weathermen terrorist Kathy Boudin, who was serving a
sentence for participating in a 1981 murder and robbery that left 4
people dead.

Steve Chapman takes Barack Hussein Obama to task over his dodge about
the relationship between himself and William Ayers. Not only does
Barack Hussein Obama misrepresent the connection, Chapman writes, he
appears not to understand what it says about him and his judgment.

The Chicago Tribune columnist offers a handy analogy for those who
still don’t comprehend it:

Would Obama be friendly with someone who actually bombed abortion
clinics and defends that conduct? Not likely. But he is friendly with
William Ayers, a leader of the radical Weather Underground, which in
the 1970s carried out numerous bombings, including one inside the U.S.
Capitol. (Though the last person who should object is Hillary Clinton,
whose husband pardoned two Weather Underground members.)
Obama minimized his relationship by acknowledging only that he knows
Ayers. But they have quite a bit more of a connection than that. He’s
appeared on panels with Ayers, served on a foundation board with him
and held a 1995 campaign event at the home of Ayers and his wife,
fellow former terrorist Bernardine Dohrn. Ayers even gave money to one
of his campaigns.

It’s not as though Ayers and Dohrn have denied or repudiated their
crimes. After emerging from years in hiding, they escaped federal
prosecution because of government misconduct in gathering evidence,
but they don’t pretend they were innocent. In 2001, Ayers said, “I
don’t regret setting bombs. I feel we didn’t do enough.” …

It’s hard to imagine he would be so indulgent if we learned that John
McCain had a long association with a former Klansman who used to
terrorize African-Americans. Barack Hussein Obama’s conduct exposes a
moral blind spot about these onetime terrorists, who get a pass
because they a) fall on the left end of the spectrum and b) haven’t
planted any bombs lately.

You can tell a lot about someone from his choice of friends. What this
friendship reveals is that when it comes to practicing sound moral
hygiene, Barack Hussein Obama has work to do and no interest in doing

What would the Left say if McCain had sat on nonprofit foundation
boards with David Duke and sent money to Holocaust deniers? McCain
couldn’t have won the nomination in the first place, as such a
connection would have repulsed Republicans, and it simply is outside
the character of McCain to tolerate that. If he had, Democrats would
have a field day with it — and rightly so.

However, Barack Hussein Obama and the Left want to demand an end to
the probing of the years-long Obama-Ayers association as irrelevant.
Never mind that Ayers has openly bragged of bombing the Pentagon.
Never mind that Obama and Ayers voted to give $75,000 to Rashid
Khalidi, a Yasser Arafat protege in the PLO, during their tenure with
the Woods Foundation. The difference apparently is in the target of
one’s hatreds; as long as the hatred was directed at the American
government, the Left believes it to be irrelevant.

It’s an interesting double standard, and one that Americans might see
as very revealing in November.

Imagine a presidential candidate being associated with Bill Ayers.....
a person that joined a leftist terrorist group called Weatherman, an
offshoot of the communist-supported and socialist Students for a
Democratic Society (SDS) in 1969. The Weatherman organization engaged
in and committed violent riots, murders, bombings, various acts of
terrorism, and even officially declared war on the United States! The
group, which bombed the Pentagon, United States Capitol, also targeted
police stations and the family of a judge who presided over the trial
of the so-called "Panther 21," members of the Black Panther Party
indicted in a plot to bomb New York landmarks and department stores.

Bill Ayers has summed up the Weatherman philosophy as thus:

"Kill all the rich people. Break up their cars and apartments. Bring
the revolution home, kill your parents, that's where it's really

In addition to their communist ideology, they also believed that white
people, as a whole were racist. In the early 1970s, Bernardine Dohrn,
a leader of the Weatherman organization and also the wife of Bill
Ayers stated that:

"White youth must choose sides now. They must either fight on the side
of the oppressed, or be on the side of the oppressor."

The members of the Weatherman organization have remained proud of
their attacks on America, even to this day. Here are some of the
statements made by Bill Ayers:

On bombing the Pentagon:

"Everything was absolutely ideal on the day I bombed the Pentagon.

The sky was blue. The birds were singing. And the bastards were
finally going to get what was coming to them."

In a 2001 interview which was published on 9/11:

"I don't regret setting bombs, I feel we didn't do enough."

Bill Ayers has since been rewarded for his terrorist attacks on his
own country with a comfortable position as a tenured education
professor at the University of Illinois-Chicago. Similarly, Bernardine
Dohrn is now a Clinical Associate Professor of Law at Northwestern
University in Chicago and has previously been employed by the law firm
Sidley Austin.

In 1995, Illinois State Senator Alice Palmer introduced Barack Hussein
Obama has her chosen successor to some of the well-known leftists of
her district at the home of Bill Ayers and Bernardine Dohrn. Some of
the guests at that gathering described Obama and Ayers as "friends".

Indeed, Barack Hussein Obama and Bill Ayers' paths have crossed many
times. Both Barack Hussein Obama and Bill Ayers served on the Woods
Fund board, a Chicago-based non-profit organization that has also
donated large sums of money to Islamic groups associated with
terrorist organizations. In addition, Bill Ayers, who still serves on
the Woods Fund board, contributed $200 to Obama's senatorial campaign
fund and has served on panels with Barack Hussein Obama at numerous
public speaking engagements.

In addition to Barack Hussein Obama's connections with Bill Ayers, in
the late 1980s, Michelle Obama worked at the Chicago office of the law
firm Sidley Austin, which was the same time that Bernardine Dohrn
worked there.

Of course, these communists and communist sympathizers were a very
influential and important part of Barack Hussein Obama's constituency,
while he was running for and serving in the Illinois Senate. Yet, even
as a US Senator and now, as the Democratic Party presidential nominee,
Barack Hussein Obama has continued to represent very far left ideas,
ranking as the number one liberal in the US Senate. Above all, Obama's
ties to communists go back to the 1970s, when he was still a teenager.

In "Dreams from My Father," Barack Hussein Obama's autobiography, he
discusses the influence a mentor identified in the book only as
"Frank" had on his intellectual development. "Obama described Frank as
a drinking companion of his grandfather, who had boasted of his
association with African-American authors Richard Wright and Langston
Hughes during the time Frank was a journalist in Chicago." "Frank" has
since been identified as Frank Marshall Davis, a poet, journalist, and
member of Communist Party USA (CPUSA) - which was controlled by the
Soviet Union.

Before moving to Hawaii, Davis lived in Chicago, where he was involved
with numerous communist groups and causes. The same CPUSA and other
communist forces also supported the radical movements in the 1960s,
including the Students for a Democratic Society (SDS), of which a
faction founded the Weatherman organization.

Interestingly, after finishing college, Barack Hussein Obama followed
in the footsteps of his childhood friend and mentor Davis by moving to
Chicago and becoming involved with radical leftist individuals and
groups. Furthermore, those very same radical leftist groups helped
Obama start his political career. And, even more peculiar is the fact
that Obama went from being a barely known state senator to Democratic
Party presidential nominee in just four short years!

The Barack Hussein Obama campaign has already had its fair share of
controversies that spawned from Obama's connections with radical
leftist and anti-American figures, including Jeremiah Wright, Louis
Farrakhan, and others. In February of 2008, it was reported that a
Cuban flag featuring the image of Che Guevara was hanging in an Obama
campaign office in Texas. After being questioned about this issue, the
Obama campaign issued the following statement:

"The office featured in this video is funded by volunteers of the
Barack Hussein Obama Campaign and is not an official headquarters for
his campaign."

Finally, to no surprise, Obama has also picked up endorsements from
Cuban dictator Fidel Castro and Venezuelan dictator Hugo Chavez.

Barack Hussein Obama's Relationship with
Convicted Felon Tony Rezko

Convicted Felon Tony Rezko (left)
and Barack Hussein Obama (right)

According to the Chicago Sun Times, there are 8 things you should know
about Barack Hussein Obama and
convicted Felon Tony Rezko:

1. Tony Rezko and Barack Hussein Obama met in 1990. Obama was a
student at Harvard Law School and got an unsolicited job offer from
Rezko, then a low-income housing developer in Chicago. Obama turned it

2. Barack Hussein Obama took a job in 1993 with a small Chicago law
firm, Davis Miner Barnhill, that represents developers -- primarily
not-for-profit groups -- building low-income housing with government

3. One of Barack Hussein Obama's law firm's not-for-profit clients is
the Woodlawn Preservation and Investment Corp., co-founded by Obama's
then-boss Allison Davis -- was partners with Rezko's company in a 1995
deal to convert an abandoned nursing home at 61st and Drexel into low-
income apartments. Altogether, Obama spent 32 hours on the project,
according to the firm. Only five hours of that came after Tony Rezko
and WPIC became partners, the firm says. The rest of the future
senator's time was helping WPIC strike the deal with Rezko. Rezko's
company, Rezmar Corp., also partnered with the firm's clients in four
later deals -- none of which involved Obama, according to the firm. In
each deal, Rezmar "made the decisions for the joint venture," says
William Miceli, an attorney with the firm.

4. In 1995, Barack Hussein Obama began campaigning for a seat in the
Illinois Senate. Among his earliest supporters: Rezko. Two Rezko
companies donated a total of $2,000. Obama was elected in 1996 --
representing a district that included 11 of Rezko's 30 low-income
housing projects.

5. Tony Rezko's low-income housing empire began crumbling in 2001,
when his company stopped making mortgage payments on the old nursing
home that had been converted into apartments. The state foreclosed on
the building -- which was in Barack Hussein Obama's Illinois Senate

6. In 2003, Barack Hussein Obama announced he was running for the U.S.
Senate, and Rezko -- a member of his campaign finance committee --
held a lavish fund-raiser June 27, 2003, at his Wilmette mansion.

7. A few months after Barack Hussein Obama became a U.S. senator, he
and Tony Rezko's wife, Rita, bought adjacent pieces of property from a
doctor in Chicago's Kenwood neighborhood -- a deal that has dogged
Obama the last two years. The doctor sold the mansion to Barack
Hussein Obama for $1.65 million -- $300,000 below the asking price.
Rezko's wife paid full price -- $625,000 -- for the adjacent vacant
lot. The deals closed in June 2005. Six months later, Obama paid
Rezko's wife $104,500 for a strip of her land, so he could have a
bigger yard. At the time, it had been widely reported that Tony Rezko
was under federal investigation. Questioned later about the timing of
the Rezko deal, Obama called it "boneheaded" because people might
think the Rezkos had done him a favor.

8. Eight months later, in October 2006, Tony Rezko was indicted on
charges he solicited kickbacks from companies seeking state pension
business under his friend Gov. Blagojevich. Federal prosecutors
maintain that $10,000 from the alleged kickback scheme was donated to
Barack Hussein Obama's run for the U.S. Senate.

Barack Hussein Obama:



Barack Hussein Obama:

Too Liberal For America?


Barack Hussein Obama:

Change We Can Believe In?!?


Barack Hussein Obama:

* Unproven
* Unqualified
* Inexperienced
* Unvetted
* Over-Hyped
* Flip-Flopper
* Extremist Liberal
* Wrong on EVERY Issue
* Too Liberal For America
* Looney-leftist & Left-wing Nutjob
* More closely aligned with the Socialist Party
than the Democratic Party
* Admitted marijuana and cocaine user - others have claimed he also
was a drug dealer

Barack Hussein Obama
The Murder of Innocent Babies and
is 100% in favor of Abortion
Partial Birth Abortion
baby can experience.

Barack Hussein Obama
is the Abortion Lobby's STRONGEST
Defender and Supporter.

Barack Hussein Obama:



Barack Hussein Obama:

You are VERY confused on the very basics of theology and what the
Bible says about life, and when life begins

The Bible is VERY clear on this issue:



Barack Hussein Obama:

If you are so concerned about theology and what the Bible says about
Abortion, you would stand up for the most innocent of all human life,
and vote to:



Barack Hussein Obama's
Support of Abortion
includes the following statements and votes he made for supporting the
death of innocent, unborn babies:

Just like a "flip-flopper," and actually, "much worse than a flip-
flopper," Barack Hussein Obama seems to think he can have it both ways
as he stated, "We can find common ground between pro-choice and pro-
life." (Apr 2008) FACT: There is NO common ground on this issue, you
are either PRO-LIFE or PRO-DEATH.

Despite proclaiming to be a "Christian" and that he reads the Bible,
he is still undecided on whether
"Life Begins At Conception." (Apr 2008)

Rated 100% by NARAL on pro-choice votes in 2005, 2006 & 2007. (Jan

Voted against banning partial birth abortion. (Oct 2007)

Supports the death penalty for unborn babies via his support of
partial-birth abortion. (Apr 2007)

Extend presumption of good faith to abortion protesters. (Oct 2006)

Passed the Stem Cell Research Bill. (Jun 2004)

Protect a woman's right to kill her unborn baby through abortion. (May

As a PRO-DEATH supporter, he fully supports the death penalty for
unborn babies and
Roe versus Wade. (Jul 1998)

Voted NO on defining unborn child as eligible for SCHIP. (Mar 2008)

Voted NO on prohibiting minors crossing state lines for abortion. (Mar

Voted NO on notifying parents of minors who get out-of-state
abortions. (Jul 2006)

Voted YES on $100M to reduce teen pregnancy by education &
contraceptives. (Mar 2005)

Rated 0% by the NRLC, indicating his radical, and ultra extremist pro-
death stance. (Dec 2006)

Is Barack Hussein Obama
a Racist?

The Pastor of
Barack Hussein Obama's
church for the past 20 years is a Racist.

Is Barack Hussein Obama
a Christian?

The Pastor of Barack Hussein Obama's
church for the past 20 years preaches hate, bigotry and UN-Christian,
ANTI-Christian and
UN-American EXTREMIST Political "ideals."

How could Barack Hussein Obama be a Christian with the
teachings, preaching and political indoctrination and training this
ultra-liberal extremist and hate-monger has espoused for 20 years???

Is Barack Hussein Obama the kind of "American" we want to serve as the
President of the USA?

Is Barack Hussein Obama the kind of person that represents AMERICAN
VIEWS on religion... who believes that God has "Damned" our country?


"If it looks like a duck, quacks like a duck and
smells like a duck, it's probably a duck!"

Sen. Barack Hussein Obama,

"Change We Can Believe In"?!?!



Sen. Barack Hussein Obama,

Your: "Change We Can Believe In,"
along with

Your (Pastor's) Bigotry,

Your (Pastor's) Racist Agenda,

Your (Pastor's) Politics

and Your (Pastor's) HATE

Which you have condoned and approved of for the past 20 years through
your membership and association of this "Pastor" and your church and
does NOT belong HERE in MY country.

You can probably find support for this brand of politics, hate and
racism in the Middle East or Germany's NAZI past, where these UN-
CHRISTIAN Philosophies, Politics and Agenda might still find support
and win an election!

Sen. Barack Hussein Obama, with his preacher and good friend for 20
years, a radical racist that preaches hate and racism.

Since you are either confused,
or have forgotten....

This is NOT Syria,
This is NOT Palestine,
This is NOT Iran,

THIS is the USA!

Sen. Barack Hussein Obama,

While your wife is not "proud to be an American,"

There are still a great many
"Great American's"

that are "Proud to be an American!"

One more history lesson or you, since you obviously either failed the
class or were out smoking or dealing crack ....

Barack Hussein Obama,

WE are a CHRISTIAN nation,
founded by CHRISTIANS.

We are NOT a Muslim country, that

OUR Lord God Almighty -
the One True God,
Creator of Heaven and Earth

(NOT "allah")


(using YOUR PASTOR'S words)

And finally,
Barack Hussein Obama....

MY Bible
(and certainly NOT the koran)
states that we are to love our brothers
and sisters in Christ.

While we obviously cannot and will NOT support someone such as
yourself - we will pray for you that you find and trust Jesus, the
Christ, as your Lord and Savior, as Jesus is the Son of God and the
One you should be looking to for spiritual guidance.

A spiritual leader and "preacher" of the Bible who preaches hate,
bigotry and says that God has damned our country, is a LIAR, HYPOCRITE
and NOT a Christian.

Matthew 22 Verse 39
"The second greatest command from God (in the BIBLE) is:


1 Corinthians 13
The Excellence of Love

1 If I speak with the tongues of men and of angels, but do not have
love, I have become a noisy gong or a clanging cymbal.

2 If I have the gift of prophecy, and know all mysteries and all
knowledge; and if I have all faith, so as to remove mountains, but do
not have love, I am nothing.

3 And if I give all my possessions to feed the poor, and if I
surrender my body to be burned, but do not have love, it profits me

4 Love is patient, love is kind and is not jealous; love does not brag
and is not arrogant,

5 does not act unbecomingly; it does not seek its own, is not
provoked, does not take into account a wrong suffered,

6 does not rejoice in unrighteousness, but rejoices with the truth;

7 bears all things, believes all things, hopes all things, endures all

8 Love never fails; but if there are gifts of prophecy, they will be
done away; if there are tongues, they will cease; if there is
knowledge, it will be done away.

9 For we know in part and we prophesy in part;

10 but when the perfect comes, the partial will be done away.

11 When I was a child, I used to speak like a child, think like a
child, reason like a child; when I became a man, I did away with
childish things.

12 For now we see in a mirror dimly, but then face to face; now I know
in part, but then I will know fully just as I also have been fully

13 But now faith, hope, love, abide these three; but the greatest of
these is love.

You could have heard a pin drop!

When in England , at a fairly large conference, Colin Powell was asked
by the Archbishop of Canterbury if our plans for Iraq were just an
example of 'empire building' by President George Bush.

He answered by saying, 'Over the years, the United States has sent
many of its fine young men and women into great peril to fight for
freedom beyond our borders. The only amount of land we have ever
asked for in return is enough to bury those that did not return.'

You could have heard a pin drop!

There was a conference in France where a number of international
engineers were taking part, including French and American. During a
break, one of the French engineers came back into the room saying
'Have you heard the latest dumb stunt President Bush has done? He has
sent an aircraft carrier to Indonesia to help the tsunami victims.
What does he intended to do, bomb them?'

A Boeing engineer stood up and replied quietly: 'Our carriers have
three hospitals on board that can treat several hundred people; they
are nuclear powered and can supply emergency electrical power to shore
facilities; they have three cafeterias with the capacity to feed 3,000
people three meals a day, they can produce several thousand gallons of
fresh water from sea water each day, and they carry half a dozen
helicopters for use in transporting victims and injured to and from!
their flight

We have eleven such ships; how many does France have?'

You could have heard a pin drop!

A U.S. Navy Admiral was attending a naval conference that included
Admirals from the U.S. , English, Canadian, Australian and French
Navies. At a cocktail reception, he found himself standing with a
large group of Officers that included personnel from most of those

Everyone was chatting away in English as they sipped their drinks but
a French admiral suddenly complained that, whereas Europeans learn
many languages, Americans learn only English. He then asked, 'Why is
it that we always have to speak English in these conferences rather
than speaking

Without hesitating, the American Admiral replied 'Maybe it's because
the Brits, Canadians, Aussies and Americans arranged it so you
wouldn't have to speak German!'

You could have heard a pin drop!

Did you know.....

There were 39 combat related killings in Iraq in January. In the fair
city of Detroit there were 35 murders in the month of January?!?

That's JUST ONE AMERICAN CITY, about as deadly as the entire war-torn
country of Iraq!

When some claim that President Bush shouldn't have started this war,
tell them the following:

FDR (DEMOCRAT) led us into World War II. Germany never attacked us;
Japan did. From 1941-1945, 450,000 lives were lost at an average of
112,500 per year.

Truman (DEMOCRAT) finished that war and started one in Korea. North
Korea never attacked us. From 1950-1953, 55,000 lives were lost.... an
average of 18,334 per year.

John F. Kennedy (DEMOCRAT) started the Vietnam conflict in 1962.
Vietnam never attacked us.

Johnson (DEMOCRAT) turned Vietnam into a quagmire. From 1965-1975,
58,000 lives were lost ..... an average of 5,800 per year.

Clinton (DEMOCRAT) went to war in Bosnia without UN or French consent.
Bosnia never attacked us. He was offered Osama bin Laden's head on a
platter three times by Sudan and did nothing. Osama has attacked us on
multiple occasions. And Bill Clinton did NOTHING!

This one is a fact that makes me mad as hell..... Did you know, that
in the years since terrorists attacked us, President Bush has
liberated two countries, crushed the Taliban, crippledal-Qaida, put
nuclear inspectors in Libya, Iran, and, North Korea without firing a
shot, and captured a terrorist who slaughtered 300,000 of his own
people?!? And the Democrats are complaining about how long the war is

But Wait, There's more.

It took less time to take Iraq than it took Janet Reno (DEMOCRAT) to
take the Branch Davidian compound. That was a 51-day operation.

We've been looking for evidence for chemical weapons in Iraq for less
time than it took Hillary Clinton (DEMOCRAT) to find the Rose law firm
billing records.

It took less time for the 3rd Infantry Division and the Marines to
destroy the Medina Republican Guard than it took Ted Kennedy to call
the police after his Oldsmobile sank at Chappaquiddick.

It took less time to take Iraq than it took to count the votes in

Our Commander-In-Chief (President George W. Bush) is doing a GREAT

The Military morale WAS high when President Bush was our President!
Thank you and God bless you President Bush!!!!

Now with Obama in the people's office, morale of our military is
sinking. Especially now that Obama is SLASHING our Defense budget.

The biased media hopes we are too ignorant to realize the facts.

But Wait ....There's more!

JOHN GLENN (on the Senate floor - January 26, 2004)

Some people still don't understand why military personnel do what they
do for a living. This exchange between Senators John Glenn and Senator
Howard Metzenbaum is worth reading. Not only is it a pretty impressive
impromptu speech, but it's also a good example of one�man's
explanation of why men and women in the armed services do what they do
for a living.

This IS a typical, though sad, example of what some who have never
served think of the military.

Senator Metzenbaum (speaking to Senator Glenn):

'How can you run for Senate when you've never held a real job?'

Senator Glenn (D-Ohio): 'I served 23 years in the United States Marine
Corps. I served through two wars. I flew 149 missions. My plane was
hit by anti-aircraft fire on 12 different occasions. I was in the
space program. It wasn't my checkbook, Howard; it was my life on the
line. It was not a nine-to-five job, where I took time off to take the
daily cash receipts to the bank. I ask you to go with me, as I went
the other day... to a veteran's hospital and look those men, with
their mangled bodies ... in the eye, and tell THEM they didn't hold a

You go with me to the Space Program at NASA and go, as I have gone, to
the widows and orphans of Ed White, Gus Grissom and Roger Chaffee ...
and you look those kids in the eye and tell them that their DAD'S
didn't hold a job?!?

You go with me on Memorial Day and you stand in Arlington National
Cemetery, where I have more friends buried than I'd like to remember,
and you watch those waving flags. You stand there, and you think about
this nation, and you have the gall to tell ME that those people didn't
have a job?

What about Metzenbaum? For those who don't remember. During W.W.II,
Howard Metzenbaum was an attorney representing the Communist Party in
the USA. Now he was a Senator!

If you can read this, thank a teacher.

If you are reading this in English you need to thank EVERY Veteran!

"But in this country, it's phony to say, 'I'm for the environment but
not for limiting immigration.' It's just a fact that we can't take all
the people who want to come here. And you don't have to be a racist to
realize that." by Gaylord Nelson, Founder of Earth Day

"A nation without borders is not a nation" by Ronald Reagan, Greatest
President Ever! www.GreatestPresidentEver.com

"We need to quit subsidizing the costs for illegal immigrants'
residency in America immediately. How long will we allow them to
siphon millions upon millions from honest taxpaying Americans by
supporting their health care, welfare, education and criminal
by Newt Gingrich

"If the government can't track illegals, then let's outsource the job
to UPS or FedEx."
By Governor Mike Huckabee

"How is it that we can militarily overthrow a military government like
Iraq, yet we can't militarily keep illegalities (drugs and aliens)
from crossing our borders?"
By: Chuck Norris

"The ongoing migration of persons to the United States in violation of
our laws is a serious national problem detrimental to the interests of
the United States."
by Ronald Reagan, Greatest President Ever!

“The one absolutely certain way of bringing this nation to ruin, or
preventing all possibility of its continuing to be a nation at all,
would be to permit it to become a tangle of squabbling nationalities.”
by President Theodore Roosevelt

"Credibility in immigration policy can be summed up in one sentence:
Those who should get in, get in; those who should be kept out, are
kept out; and those who should not be here will be required to leave."
"...for the system to be credible, people actually have to be deported
at the end of the process."
by Rep. Barbara Jordan, Testimony to the House Immigration
Subcommittee, February 24, 1995

"For an American citizen to vote as a German-American, an Irish-
American, or an English-American, is to be a traitor to American
institutions; and those hyphenated Americans who terrorize American
politicians by threats of the foreign vote are engaged in treason to
the American Republic." by President Theodore Roosevelt, 1915

"Americans should be told that diseases long eradicated in this
country – tuberculosis, leprosy, polio, for example – and other
extremely contagious diseases have been linked directly to illegals.
For example, in 40 years, only 900 persons were afflicted by leprosy
in the U.S.; in the past three years, more than 7,000 cases have been
presented." by Rep. J.D. Hayworth, R-Ariz., told the Business Journal
of Phoenix

"First, our cities will not be flooded with a million immigrants
annually. Under the proposed bill, the present level of immigration
remains substantially the same.... Secondly, the ethnic mix will not
be upset…. Contrary to the charges in some quarters, [the bill] will
not inundate America with immigrants from any one country or area."
by Sen. Ted Kennedy (D-MA) assuring voters in 1965 that the passage of
the Immigration Act could not change America's ethnic balance

"...If liberals think Iraqis are genetically incapable of pulling off
even the most rudimentary form of democracy, why do they believe 50
million Mexicans will magically become good Americans, imbued in the
nation's history and culture, upon crossing the Rio Grande? Maybe we
should dunk Iraqis in the Rio and see what happens...." by Ann

"In the book of Nehemiah (Chapter 4), we learn that border security is
so important that the people of Jerusalem were told to rebuild the
wall "with a tool in one hand, and a sword in the other hand".
Christians are supposed to be charitable, but not foolish. If someone
comes to your door and asks for water, give them water -- and food,
and a coat, if they need it. But, if someone breaks into your house,
you don't adopt them!." by Tom Kovach

"There are some benefits [that illegal aliens] clearly ought not
have...[including] health benefits and welfare benefits and others
that serve as a magnet attracting people here from other countries."
by Henry Cisneros

"…Why should Pennsylvania, founded by the English, become a Colony of
Aliens, who will shortly be so numerous as to Germanize us instead of
our Anglifying them, and will never adopt our Language or Customs, any
more than they can acquire our Complexion..." by Benjamin Franklin

"A man who thinks of himself as belonging to a particular national
group in America has not yet become an American, and the man who goes
among you to trade upon your nationality is not a worthy son to live
under the Stars and Stripes." by President Woodrow Wilson

"As a nation with a long history of immigration and commitment to the
rule of law, this country must set limits on who can enter and then
credibly enforce our immigration law." by U.S. Commission on
Immigration Reform (1995)

"Illegal is anything that is against the law including drug
trafficking, smuggling, terrorism or crossing the border into a
country. Undocumented is anything that can no longer be verified
including unemployed American workers who no longer qualify for
unemployment benefits and are no longer counted in statistics. What a
sorry nation we are becoming when we allow corporate political
correctness to pervade our daily speech. Illegal means illegal."
by Peter Romanenko, Waco, Texas

"The laws should be rigidly enforced which prohibit the immigration of
a servile class to compete with American labor, with no intention of
acquiring citizenship, and bringing with them and retaining habits and
customs repugnant to our civilization." by President Grover Cleveland

"If we do not get control of our borders, by 2050 Americans of
European descent will be a minority in the nation their ancestors
created and built. No nation has ever undergone so radical a
demographic transformation and survived." by Pat Buchanan

"In the first place, we should insist that if the immigrant who comes
here in good faith becomes an American and assimilates himself to us,
he shall be treated on an exact quality with everyone else, for it is
an outrage to discriminate against any such man because of creed, or
birthplace, or origin. But this is predicated upon the person's
becoming in every facet an American, and nothing but an American...
there can be no divided allegiance here. Any man who says he is an
American, but something else also, isn't an American at all. We have
room for but one flag, the American flag... We have room for but one
language here, and that is the English language... and we have room
for but one sole loyalty and that is a loyalty to the American
people." by Theodore Roosevelt in 1907

Tiger Woods vs. Barack Hussein Obama

Bet you can't figure this one out.




More signs posted by Bill Balsamico outside his
Casa D'Ice Restaurant in Versailles, Pennsylvania:

Way to Go Bill, Keep up the Great Work,
You are a Patriot!




Reject amnesty for illegal aliens - no matter how the politicians may
disguise it.

Reject all temporary foreign-worker or guest-worker bills.

Put troops on our borders to stop the invasion of illegal aliens and
save lives, and American jobs, for America's "legal" citizens.

Cut off federal highway funds to any state that gives drivers licenses
to illegal aliens. (This is just as important and legal as past laws
that cut off funds from states that don't enforce speed-limit, seat-
belt, or alcoholic-content laws.)

Prosecute employers who import illegals and/or hire workers in the
underground economy.

Terminate the H-1B program; we have no labor shortage of engineers.

Pass strict rules to stop the rampant abuse of L-1 visas.

Forbid government agencies to outsource jobs offshore.

Forbid "totalization" of Social Security with foreign countries.

Reduce the number of legal immigrants we admit every year from 1
million to one-half million.

Eliminate fraud in legal immigration (such as fake marriages) and in
refugee admissions.

Cut off federal funds to cities that have "sanctuary" laws and refuse
to arrest illegals and turn them over to federal authorities.

Thoroughly screen immigrants for diseases in order to stop the
importation of West Nile virus, malaria, and other Third World
diseases, as well as diseases that the United States long since
eliminated in our country such as tuberculosis, polio and measles.

Napolitano is: Incompetent, Unqualified, and
Appoint a Secretary of Homeland Security
that will DO THEIR JOB!












WE OPPOSE Kathleen Sebelius,
as Secretary of Health and Human Services

Kathleen Sebelius is a pro-death liberal activist that fails to
support the most innocent of all human life, the unborn baby.
Yet she supports baby-killers like George Tiller.

Sebilius is an ultra-liberal pro-death, pro-choice extremist and
RADICAL who supports the killing of babies in the womb, including
partial birth abortion.

We agree with Senator Demint's statement in opposition to Sebelius
which states: "The overwhelming majority of Americans oppose late-
term abortions of babies that can survive on their own, but Kathleen
Sebelius clearly believes there are no limits to taking the life of
innocent unborn children. Sebelius' veto of a common sense bill to
reduce late-term abortions is an insult to Americans who respect human
dignity. This is a clear example of the her extreme pro-abortion
agenda that should disqualify her from leading our nation's health
agency. President Obama should withdraw her nomination and keep his
promise to reduce abortions, not promote politicians that seek to
reverse decades of bipartisan progress on this important issue."



Attention: Hubert T. Lacroix, President and CEO
Canadian Broadcasting Corporation

Heather Mallick


Leftist Lunatic? YES
Female, Sexist Pig? YES
Despicable, Ugly Canadian? YES
Irresponsible Journalist? YES

We are calling on the Canadian Broadcasting Corporation to IMMEDIATELY
Heather Mallick for this SEXIST, IRRESPONSIBLE JOURNALISM, Socialistic
views as well as being a LIAR for her unwarranted attack on
Governor Sarah Palin.

2008 Socialist (Democratic)Party Leaders, Extremist Liberals,
Looney-Leftists, Left Wing NutJobs
and other Despicable Democrats

Despicable Democrats

Eli Pariser:
Unamerican, Ignorant, Imbecile and a Socialist PIG
Executive Director - moveon.org

Markos Moulitas Zuniga - Pathetic Unamerican and a LOSER
who has sold out to the extremist agenda of the Socialist party

Markos Moulitas Zuniga is completely ignorant of the grave matters of
the times and too stupid to learn. . . . a complete incompetent and

Founder of the Whacked-out and ultra liberal extremist and socialist
organization: moveon.org who has been quoted as saying:

"We Own The Democratic Party"

2008 Socialist (Democratic)Party Leaders,
Looney-Leftists and Other Lesser-known
Left Wing NutJobs & Socialist Sympathizers:

Wes Boyd
Co-founder of Moveon.org

Joan Blades
Co-founder of Moveon.org

George Soros

Well-known Left Wing NutJobs
Unamerican Americans
Socialist Sympathizers:

Al Franken

The best word that describes this looney-liberal:


So far LEFT, he's "Left of Lenin."
So far left, he's left the mainstream of the democratic party and more
closely aligns with the Socialist Party.

One more word that describes Al Franken:


Barbara Streisand

A real left-wing whack job and Tight-Wad.
She's more concerned about her money and investments than her left-
wing politics or friends.

Barbra Streisand

Bruce Frederick Joseph Springsteen:

Nancy Pelosi

Harry Reid

Chevy Chase

A washed-up Hollywood has-been that used to be a very funny and gifted
comedian - but not anymore.

Chevy Chase is one of those extremists from Hollywood, that think it's
in vogue to be an "America-hater."

Chevy Chase: "I'm a complete idiot, and you're not"

Chevy Chase no longer has anything to contribute except Hollywood's
extremist, left-wing socialism and whacked-out propaganda.

John Kerry

Dennis Kucinich

Other Extremists and Racists:

Al Sharpton

the "reverend"
Jesse Jackson

Hey Jesse, you're not a reverend unless you graduated from a school of
theology or seminary... what theological school or seminary did you go
to? Oh, you didn't go to either? That makes you a LIAR and a FRAUD.

What kind of "reverend," who is supposedly married, commits adultery,
and father's children outside of marriage?

You're a fine example and role model for the black community you
supposedly care so much about.


Chris Rock

Oprah Winfrey

Please BOYCOTT anything and everything associated with Oprah Winfrey,
including her television program, her magazine, her sponsors
and advertisers, for being a racist pig.

Still, NOT well-known racist and ARAB-AMERICAN:

Barack Hussein Obama

Hey, Barack Hussein Obama....

You're No Ronald Reagan!

President Ronald Reagan
Greatest President Ever!

"I didn't leave the Democratic Party.
The party left me."
President Ronald Reagan

"We will always remember. We will always be proud. We will always be
prepared, so we may always be free."
President Ronald Reagan - Normandy, France 1984

Ronald Reagan Conservatives

"A nation without borders is NOT a nation!"
President Ronald Reagan

Corrupt to the Core

Impeach Nancy Pelosi

It's The Economy, Stupid !

Rise Above Politics!

Return To The Constitution!

Return To Our Constitution!

We Support the National Sales Tax!

Say NO To Socialism !

We Support
Enhanced Oil Recovery

Enhanced Oil Recovery:

* Recovers OVER 400 Billion barrels of AMERICA'S oil

* the "green" way to produce America's oil

* makes the U.S. energy independent

* ends the need for importing oil from the Middle East

* $60 Trillion market opportunity in the U.S.

* Removes Carbon Dioxide Emissions from the atmosphere!

Boycott ABC

Fire the Liberal David Letterman!

Drill Baby Drill !


Boycott Spain!


Don't buy any products from Spain, EVER!
Don't Travel or Vacation in Spain, EVER!

Spain: Country of cowards and traitors!
Spain: Country of Terrorists and radical muslim Sympathizers
Spain: country of muslims, socialists and anti-Christians


Susan Roesgen - CNN:

1. You are NOT the Story, and neither is CNN's
radical political agenda.
3. You are an Irresponsible Journalist.
4. You are a ROTTEN Reporter.
5. You don't have a single ounce of integrity.
6. You are a COMPLETE Disgrace and
EMBARRASSMENT to the Journalism Profession.
7. Find another line of work - as you suck at reporting.


Stop buying the products from the following companies who advertise on
CNN thereby supporting "JUNK Journalism."

Boycott the following products and companies that advertise on CNN:
List of CNN Advertisers:

1. Hyundai

2. Kentucky Fried Chicken

3. Mercedes Benz

4. Apple

5. AT&T

6. Chrysler

7. RoomsToGo

8. Alltel

9. Ford

10. Home Depot

11. Honda

12. TMobile

13. Chili’s

14. Cisco

15. Exxon-Mobile

16. Visa

17. Nissan

18. Sprint

Boycott the above companies and their products until they stop
advertising on CNN.

CNN and their ultra-liberal agenda and liberal bias to reporting needs
to understand that we will NOT tolerate their liberal and biased
"agenda" and false reporting any longer. They need to get the politics
OUT of their duty of honestly and fairly reporting the news. The only
way CNN will get the message is to BOYCOTT the products of the
companies that advertise on their network, until such time that they
can be "fair and balanced" in their journalism and news reporting.







Oprah Winfrey:
Your hypocrisy proves you are a RACIST


Corrupt to the Core
www.Impeach Dianne Feinstein.com

Our Mission

The mission of the National Chapter of "Change We Can Believe In" is
to promote and defend the great American principles of individual
liberty, constitutional government, sound money, free markets, and a
foreign policy that seeks to protect and defend our U.S. Constitution
and a strong military that defends the homeland. We believe in
"American Exceptionalism" and that our form of government and true
capitalism is the best way to protect individual liberty. We are
opposed to open borders and illegal aliens coming into our country and
taking our jobs. Without the gross corruption of big business and our
present government that does not enforce our immigration laws, and
permits big business to profit through illegal aliens and cheap labor,
wages in our country would rise significantly, and create good paying
jobs for Americans.

Our Mission will be accomplished by means of educational and political
activity, that our forefathers envisioned. While we welcome anyone
and embrace everyone who chooses to legally come into our country,
they must understand that our country is a Christian country, founded
by Christians. Christian's who go to muslim countries do not go to
their countries expecting to have them change their government, laws
or religion. Similarly, non-Christians in our country should respect
our laws, government, religion and the fact that we are a Christian

While we do not advocate any one state religion, or advocate any one
denomination, we will not tolerate our country's laws or Constitution
to be changed, challenged or influenced by non-Christians, muslims and/
or atheists.

Our Purpose

The U.S. Constitution is at the heart of what the Campaign for Liberty
stands for, since the very least we can demand of our government is
fidelity to its own governing document. Claims that our Constitution
was meant to be a “living document” that judges may interpret as they
please are corrupt in their thinking as well as fraudulent in their
analysis. Furthermore, these corrupt and liberal judges actions are
incompatible with republican government and without foundation in the
constitutional text or the thinking of those that wrote our

Three New Navy Ships


Seeing it next to the Arizona Memorial really puts its size into
perspective... ENORMOUS!

When the Bridge pipes 'Man the Rail' there is a lot of rail to man on
this aircraft carrier: shoulder to shoulder, around 4.5 acres. Her
displacement is about 100,000 tons with full complement.


Top speed exceeds 30 knots, powered by two nuclear reactors that can
operate for more than 20 years without refueling

1. Expected to operate in the fleet for about 50 years

2. Carries over 80 combat aircraft

3. Three arresting cables can stop a 28-ton aircraft going 150 miles
per hour in less than 400 feet


1. Towers 20 stories above the waterline

2. 1092 feet long; nearly as long as the Empire State Building is tall

3. Flight deck covers 4.5 acres

4. 4 bronze propellers, each 21 feet across, weighing 66,200 pounds

5. 2 rudders, each 29 by 22 feet and weighing 50 tons

6. 4 high speed aircraft elevators, each over 4,000 square feet


1. Home to about 6,000 Navy personnel

2. Carries enough food and supplies to operate for 90 days

3. 18,150 meals served daily;

4. Distillation plants provide 400,000 gallons of fresh water from
sea water daily, enough for 2,000 homes

5. Nearly 30,000 light fixtures and 1,325 miles of cable and wiring
1,400 telephones

6. 14,000 pillowcases and 28,000 sheets

7. Costs the Navy approximately $250,000 per day for pier side

8. Costs the Navy approximately $25 million per day for underway
operations (Sailor's salaries included).


The USS William Jefferson Clinton (CVS1) set sail today from its home
port of:
Vancouver, B.C., Canada

The ship is the first of its kind in the Navy and is a standing legacy
to President Bill Clinton 'for his foresight in military budget cuts'
and his conduct while holding the (formerly dignified) office of

The ship is constructed nearly entirely from recycled aluminum and is
completely solar powered with a top speed of 5 knots.

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...and I am Sid Harth
2010-02-02 15:13:54 UTC
Slogans We’ll Remember
Jan R. Van Meter
Addenda to Tippecanoe and Tyler, Too: Famous Slogans and Catchphrases
in American History

The book, ends with Ronald Reagan’s speech at the Berlin Wall in 1987
for no other reason than it had to end at some point. However, slogans
and catchphrases as an integral part of American life did not cease
then—or now. But what will survive 30 or 50 years from now, much less
nearly three centuries as have John Winthrop’s words: “We shall be as
a city upon a hill.”?

Predicting the survival of anything, much less anything as normally
ephemeral as a slogan or a catchphrase is as chancy as predicting the
survival of a clothing style or a film. The Godfather endures; Easy
Rider is now both embarrassing and forgotten. Blue jeans seem eternal;
the mini-skirt comes and goes, and the Nehru jacket and the leisure
suit don’t bear thinking about any more than Jerry Ford’s “Whip
Inflation Now (WIN).”

What seems to matter are any of a number of qualities: The importance
of the moment recalled by the phrase; the use of mnemonic devices like
meter, rhyme (why else does Tippecanoe survive?) and repetition; the
importance of the encapsulated cultural value, and the phrase’s
adaptability to other uses and times. Here are a few that might make
it in 2050.

Read My Lips; No New Taxes (1988)

George Herbert Walker Bush needed to prove he was tough, tough enough
to win the presidential election against the Democrat Michael Dukakis,
tough enough to continue the legacy of the outgoing president Ronald
Reagan, tough enough to erase his lingering reputation as an effete
aristocrat and long-time government insider.

The Bush campaign staff wanted to demonstrate his toughness, his
devotion to the Reagan ideals, and his strong conservative
convictions. And so, in his acceptance speech to the GOP Convention,
Bush stared directly into the lens of the television cameras and
grimly said:

My opponent won’t rule out raising taxes. But I will. And the Congress
will push me to raise taxes and I’ll say no. and they’ll push, and
I’ll say no, and they’ll push again, and I’ll say to them, “Read my
lips: no new taxes.”
Bush was elected, but less than two years later, with the federal
deficit reaching record levels, Bush was forced to raise some taxes as
well as cut spending. He was never forgiven by his own party’s
conservatives or by the media. Though Bush’s approval ratings with the
public improved following the first Gulf War, his slogan became a
byword for political untrustworthiness.

You’ve Got Mail (1989)

Personal computers for office and home, though common in most
businesses by the end of the 1970s, did not see any serious sales
until the 1980s. They began to take off then, but became a cultural
phenomenon in the ’90s with the advent of email late in the decade,
since email was a cheap and rapid form of communication for business
and, most important, for teenagers.

In 1989, when AOL was about to introduce its content service,
including email, with a massive and relentless marketing drive, the
CEO wanted a voice for the product to make it unique. An employee
suggested the company try her husband, an experienced broadcaster. It
did, and Elwood “El” Edwards’s “You’ve Got Mail” became ubiquitous. At
the time, just 22.8 percent of households in the U.S. had a computer—
but AOL became the market leader in a highly popular and highly
visible product.

Today, more than 75 percent of all households have a computer, and AOL
has long lost its dominant position, falling far behind the leaders.
El’s voice and words, though, live on—at least for now.

It’s the Economy, Stupid (1992)

In the latter part of the twentieh century, presidents have tended to
prefer foreign affairs to domestic ones. The approval ratings after
the start of major diplomatic or military ventures rise dramatically
and the president only has to deal with foreign leaders and villains
rather than pesky congressmen.

The problem with the preference, though, is that it ignores the fact
that voters have most often voted with their wallets and pocketbooks.

President George H.W. Bush began his reelection campaign in 1993 with
a victory in the first Iraq War and an approval rating of nearly 80%.
But he had broken his promise not to raise taxes—permanently
alienating the fiscal conservatives in the Republican Party—and failed
to appreciate the effect of a recession on both the middle and working
classes, both developments dropping his approval well below 50%. Even
worse, he faced opponents with far more charisma than he: the
Democratic candidate Bill Clinton and a wealthy and popular third
party candidate, Ross Perot.

Clinton’s chief campaign strategist James Carville had a strong
candidate in Clinton, but also one who was difficult to control in the
heat of a campaign. He posted a sign in campaign headquarters with
three commandments, one of which was “The economy, stupid.”

The race was tight, made that way by the pull of Perot among voters
unhappy with both candidates and both parties. Clinton and the
Democrats hammered on the economic issues and Carville’s slogan became
public as “It’s the economy, stupid,” and Clinton won with 43% of the
popular vote. Since then, the slogan has been altered to fit any
situation the speaker wants to make significant—a sure way for a
slogan to survive though risking death through triteness. The insult
seems to go unnoticed.

Don’t Ask, Don’t Tell (1993)

There have been gays in the military for as long as there have been
armies and navies—and gays, for that matter. Winston Churchill
famously raged at a group of British admirals, “Don’t talk to me about
naval tradition. It’s nothing but rum, sodomy and the lash.”

In the United States, pressure for civil rights for gays and lesbians
had been building since the 1970s, but the resistance in the military
remained unmoved on the grounds of morale, unit discipline, and
security. This belief persisted despite at least two internal studies
that concluded otherwise.

As one of his many campaign promises in the 1992 presidential
election, Bill Clinton vowed to end the ban on gays in the military by
executive order, just as President Truman had ended racial segregation
in the military. Predictably, there was a storm of protest from the
public, from embattled or hostile congressmen, and from the military.
Clinton’s promise threatened to derail his political agenda and the
avowed executive order turned into a compromise. Gays could serve in
the armed forces as long as they did not engage in sexual activities
or announce their sexual orientation. The military, in turn, would not
actively seek out and dismiss gays in their ranks.

The new policy quickly became known as, “Don’t ask, don’t tell.” And
so the policy remains despite ever-increasing public acceptance of
gays and lesbians. But myths die hard. The slogan will last as long as
the policy—though, since it has never been successfully used in
another context—probably no longer.

Mission Accomplished (2003)

If ever a slogan came to embody the concept of irony, the sign behind
President George W. Bush aboard the carrier USS Abraham Lincoln on May
1, 2003 did it. After some 40 days, the Iraq war—or at least the
combat part of it—was over, or, as the sign read, “Mission

The ironies were many:

The President who had spent his years during the Vietnam War in the
reserves had never seen combat, though he arrived in a flight suit as
if he had flown there himself.

The carrier was named for one of the least hubristic president in

Whatever the mission was that brought about the invasion shifted as
the prior mission failed, and kept shifting.
Vastly more casualties—civilian and military—occurred after the end of
official combat than during.

This slogan has survived as a warning to anyone who boasts and thereby
tempts fate. It is, then, one example of negative catchphrases like
Richard Nixon’s “I am not a crook,” and Bill Clinton’s “I did not have
sex with that woman,” that have characterized the darker side of
American history.

Yes We Can (2008)

It is odd that Barack Obama has been attacked for the quality of his
oratory, since he has single-handedly evoked and revived one of the
oldest traditions of American politics. With echoes of Patrick Henry,
William Jennings Bryan, and Dr. Martin Luther King, Jr., Obama’s
ability to electrify a crowd with the power of his speeches with
positive emotion is rare in modern times. Speeches have, once again,
become national events.

It was Obama’s speech in a defeat that first used the refrain “Yes We
Can” that best demonstrates his abilities. Given to his supporters on
the night of January 8, 2008, after he was narrowly defeated by
Senator Hillary Clinton in the New Hampshire primary, the speech
emphasized his momentum as a candidate. With its rhythms and
repetitions most often heard in Black churches and its subliminal
allusion to the children’s story of The Little Engine that Could, the
power of this oldest of American art forms can best be experienced as
you listen to the speech or read it aloud yourself. The phrase is used
again and again in his peroration as he builds to this conclusion:

And so tomorrow, as we take the campaign South and West; as we learn
that the struggles of the textile worker in Spartanburg are not so
different than the plight of the dishwasher in Las Vegas; that the
hopes of the little girl who goes to a crumbling school in Dillon are
the same as the dreams of the boy who learns on the streets of LA; we
will remember that there is something happening in America; that we
are not as divided as our politics suggests; that we are one people;
we are one nation; and together, we will begin the next great chapter
in the American story with three words that will ring from coast to
coast; from sea to shining sea: Yes. We. Can.

Copyright notice: ©2008 by The University of Chicago. All rights
reserved. This text may be used and shared in accordance with the fair-
use provisions of U.S. copyright law, and it may be archived and
redistributed in electronic form, provided that this entire notice,
including copyright information, is carried and provided that the
University of Chicago Press is notified and no fee is charged for
access. Archiving, redistribution, or republication of this text on
other terms, in any medium, requires the consent of the University of
Chicago Press

Jan R. Van Meter
Tippecanoe and Tyler Too: Famous Slogans and Catchphrases in American
©2008, 344 pages
Cloth $22.50 ISBN: 9780226849683

For information on purchasing the book—from bookstores or here online—
please go to the webpage for Tippecanoe and Tyler Too.


"Garve se kaho hum hindu hain"

"Mera Bharat mahan"

"India Shining"

Garibi hatao"

"Aam admi"

"Amachi Mumbai"

"Marathi manoos"

"Akhand Bharat"

"Satyameva jayate"

"Jai Hind"

"Jai Ho"

"Inqilab zindabad"

"Pakistan murdabad"





"Sanatan dharm"


"Loh purush"

...and I am Sid Harth
2010-02-02 15:15:37 UTC
It’s the Partisan Economy, Stupid
By Michael Barone
Wednesday, January 23, 2008

Filed under: Public Square, Government & Politics

Americans’ views of macroeconomic trends are increasingly a product of
their political leanings, writes MICHAEL BARONE.

“It’s the economy, stupid.” That’s the sign that James Carville
famously put up in the 1992 Bill Clinton campaign war room. As we know
now, the economy was not in such bad shape at the time: the shallow
recession of July 1990-March 1991 was already over, according to the
National Bureau of Economic Research, when Clinton announced his
candidacy in October 1991. But Clinton and the off-and-on independent
candidate Ross Perot insisted that the economy was experiencing its
worst recession since the Great Depression, and the standing of
President George H.W. Bush never recovered.

Carville’s slogan was based on the conventional wisdom about how the
economy affects American politics. That conventional wisdom is based
on the political science developed in the years after the Depression.
It was based on how voters with vivid memories of the Depression
responded to macroeconomic trends. These voters knew how a temporary
downturn in the economy could lead to a downward deflationary spiral—
and to personal economic disaster. The impact of the Depression on
Americans’ personal lives is illustrated in the fact that U.S. birth
rates declined 15 percent between 1929 and 1933, and divorce rates
dropped 25 percent. As Ben Wattenberg once put it, “If you already
were in a household, you couldn’t afford to set up a second one.”

As a result, for decades after the 1930s Americans tended to vote for
the “in” party (the party of the incumbent president) when the
macroeconomy was growing, and vote for the “out” party when the
macroeconomy was faltering or in recession. Political scientists
developed a simple rule of thumb for predicting elections: when the
economy was in good shape, the incumbent party would win.

But in recent years, this rule has proved increasingly unhelpful. One
formula predicted that Al Gore would win the 2000 election with 56
percent of the popular vote. In fact, he won 48 percent of the popular
vote, far short of the prediction.

What has changed? Two things. First, most voters today do not remember
the Great Depression. Second, voters’ assessment of the economy is
increasingly a product of their partisan leanings, rather than the
other way around.

The median-aged voter of 2008 has lived all of his or her adult life
in an economy that has had low-inflation growth about 95 percent of
the time.
The first point should be obvious. Voters from different generations,
with different experiences and different perspectives, do not
necessarily behave the same. Political scientists, to the extent that
they try to come up with universal generalizations about voting
behavior, run up against this inconvenient fact. The median-age voter
in 1960 was born around 1915 and had vivid memories of the 1930s. He
or she remembered how hard it was to get a job and begin a family in a
time of widespread unemployment. The median-age voter in 1992 was born
around 1947 and had vivid memories of the stagflation and gas lines of
the 1970s. He or she remembered how hard it was to pay rising monthly
bills with paychecks that were being eroded by bracket creep. As a
result, such voters were skeptical of high government spending and
stringent government regulation. Bill Clinton, even as he was decrying
“the economy, stupid,” kept these attitudes very much in mind.

The median-age voter in 2008 was born around 1963. This voter never
waited behind the steering wheel in gas lines and never struggled to
pay bills during the stagflation of the 1970s. This voter has lived
all of his or her adult life in an economy that has had low-inflation
growth about 95 percent of the time. For these voters, such prosperity
may largely be taken for granted. And their assessments of the economy
are likely to be very different from those of voters who had a
personal memory of the 1930s.

This leads to my second point—that Americans’ views of the economy are
increasingly a function of voting behavior or party loyalty, rather
than the other way around. The most succinct evidence of this comes
from a January 2006 report by the Pew Research Center for the People
and the Press entitled “Economy Now Seen Through Partisan Prism.” As
the Pew report notes, during the1992 campaign year and up through 1994
there was a partisan divide on the economy, with about 20 percent of
Republicans and less than 10 percent of Democrats rating it as
excellent or good. From 1995 to 1998, with a Democratic president and
a visibly aggressive Republican Congress, Democrats and Republicans
gave similar ratings to the economy. From 1998 to 2000, Democrats were
somewhat more positive about the economy than Republicans, at a time
when economic growth was vibrant and inflation low.

Then, after the election of George W. Bush, the divergence between the
two parties expanded into a chasm. It began to widen during the
recession of March-November 2001, and it widened much more as the
economy recovered and resumed low-inflation growth. By early 2006, a
time of vibrant economic growth, 56 percent of Republicans said the
economy was excellent or good, while only 28 percent of independents
and 23 percent of Democrats agreed. We have seen similar responses in
the years since, although the percentage of Republicans rating the
economy positively has dropped somewhat since the subprime mortgage
crisis and the decline in housing prices during the second half of
2007. As the Pew Research Center points out, Democrats and Republicans
of similar income levels gave sharply different ratings of the

There is a divergence here between Democrats’ and independents’
assessments of their personal economic condition, which have generally
been positive, and their assessments of the economy as a whole. It’s
hard to resist the conclusion that when Democrats—and, in 2004-2006,
independents—were responding to questions about the condition of the
economy, they were actually responding, “I am a Democrat,” or, more
emphatically, “I hate George W. Bush.”

Today, as financial markets face instability and the possibility of
recession looms, the economy is emerging as an issue in the 2008
presidential campaign. But what should be done about it? In the post-
Depression years, the alternatives were fairly clear-cut: Democrats
tended to favor increased public spending or, in the case of the
Kennedy-Johnson administration, stimulative tax cuts. Republicans
tended to favor tighter discipline on public spending and balanced
budgets, and they resisted the Kennedy-Johnson tax cuts. More
recently, since Ronald Reagan successfully pressed for tax cuts and
supported tight monetary policy in a time of slow growth and high
inflation, Republicans have tended to favor those measures. Democrats
have generally favored tax increases, as they did in 1993, or allowing
tax cuts (at least those on high earners) to expire, as they do today.
In the short term, Republicans seem to be following Democrats in
seeking tax rebates and other short-term fiscal stimulants.

But it’s not clear that either set of solutions addresses the true
policy needs of the nation—or the political needs of the presidential
candidates. At a time when the political science models of the 1950s
and the Keynesian economic models of the 1960s seem to be out of sync
with reality, new models and new policies are needed.

Michael Barone is a resident fellow at the American Enterprise

Image by Getty.


...and I am Sid Harth
2010-02-02 15:25:09 UTC
"It's the economy, stupid."

greenspun.com : LUSENET : TB2K spinoff uncensored : One

(For educational purposes only)

Bill Gave Us Peace and Prosperity

By Denis Hamill


Nine years ago, about one of four people I met in Brooklyn were either
getting laid off from a job or were already out of work.

The biggest talk on everyone's mind in the saloons, diners,
launderettes and unemployment offices of the city was work. If you
grew up and lived in the working-class neighborhoods of the outer
boroughs, you were usually defined by your work status.

Terms like "downsizing" were entering the American lexicon. Full-time
jobs were being broken into two part-time jobs so employers wouldn't
have to pay benefits. My first column for the Daily News in 1992 was
about the subject of work, and what it meant to average New Yorkers.

"How ya doin'?" was the working class refrain. "Workin' or wha'?"

After 12 years of union-busting and voodoo Reaganomics, a lot of
people were hurting. We were still reading George Bush's lips. But
only those fortunate enough to have a j-o-b were paying those new
taxes he swore we would never have to pay. The rest were signing for
unemployment checks. Unemployment reached 7.4% and inflation was at
4.2%. The Dow Jones was as low as 2,470. Everywhere I went, people
worried about work. And health insurance, rent, tuition and Christmas.
Times were terrible. Unless you were a Texas oilman, like George Bush,
life in America stunk.

That year, 1991, also was the year Bush did NOT win the Gulf War. I
never thought we should have shed a single drop of American blood for
oil, but Bush needed something to improve his approval ratings. And if
the war was going to be about oil, it was at least close to his

So Bush ordered up a live TV war.

Some 800,000 troops from 30 nations went after 545,000 entrenched
Iraqis. And after 148 Americans were killed in battle, Kuwait was
"liberated" when Iraq surrendered after 100 hours. But Bush decided
not to let Gen. Norman Schwarzkopf go into Baghdad and finish the
dirty job.

And so today, Saddam Hussein is still around, smirking, making an A-
bomb for laughs. Hoping to use it as leverage against another oilman
named George W. Bush, if we're silly enough to elect him.

That year, everybody watched the Gulf War on TV. It was all there was
to do, since so many people were out of work, sitting on sofas in
places like Bay Ridge and Ozone Park, tuned to CNN, waiting for the
mailman to deliver the unemployment check. Which was mostly worthless
in the high inflation economy.

At George Bush's side through all of this was a guy named Dick Cheney,
his ultra-conservative oilman defense secretary, who this week was
named by George W. Bush as his vice presidential running mate. Which
was really Bush's father, with his hand up the back of Junior's shirt,
saying "read my lips" all over again.

But, in 1991, after being distracted by that live reality-TV war,
rooting for the home team, waving American flags, belching jingoistic
anti-Arab slogans, and rallying around Bush for a half-hour, America
soon went back to being out-of-work. And scrounging to make ends

When the presidential election rolled around the next year, the slogan
of the Democratic Party  from sea to polluted sea  was "It's the
economy, stupid."

And a guy from Arkansas named Bill Clinton, whom most of us never
heard of, was elected. A lot of those votes came from working-class
people in places like Norwood, Red Hook and Elmhurst who were tired of
signing their names on unemployment checks and praying that their kids
wouldn't get sick at a time in their lives when they had no health

After four years of Clinton/Gore, the Dow went up to 6,500,
unemployment dropped to 5.4% and inflation fell to 3.3%. Clinton was
reelected. After eight years of Clinton/Gore, there was a very dumb
scandal that didn't make anyone I know miss a day of work.

But the Dow is now over 10,000, unemployment is 4%, and inflation is
2.5%. Crime is also down nationwide in double digits.

And most importantly, no Americans are coming home in body bags to
help boost anyone's approval ratings.

Many of the people who I met cashing unemployment checks nine years
ago in Brooklyn, are now gainfully employed, new homeowners, bragging
about their 401-K plans and playing the stock market.

Meanwhile, George W. Bush Jr. teams up with the same busted valise who
helped us NOT win the Gulf War, another anti-choice, pro-gun Texas
oilman, for a rerun of his father's vision of America. Their slogan
might be "Read Our Lips  No More Jobs."

If Al Gore really wants to win all he needs is a simple slogan:

"Are you better off than you were eight years ago?"

Because, in places like the working-class neighborhoods of the outer
boroughs, in this election, it's still the economy, stupid.

-- Cherri (***@brigadoon.com), July 31, 2000

just like the poor said when goldwater-ran..=vote for GOLDWATER-WASH
YOUR BUTT-IN COLDWATER!!!--the repubs. are the rich-landowner,s--
keeping the GOLD -controlled!!as usual-blame everything on the poor!!
oh well-the beat go"s -on.LIFE IN SATAN,S-TERRITORY!! sure glad this
is temporary!!

-- al-d. (***@zianet.com), August 01, 2000.

Never followed your political bent before. If this unfortunate drivel
actually reflects what you think is real, well, you and Hawk need to
get a room.

-- Carlos (***@cybertime.net), August 01, 2000.

How did a whining bitch like me end up with a name like Carlos? Isn't
that a man's name?

-- Carlos (***@on.the.rag), August 01, 2000.

Yes but he bombed Yugoslavia and continues the slaughter in Iraq (by
upholding sanctions)

-- richard (***@onion.com), August 01, 2000.

Carlos, the article is by an author named Denis Hamil; used to write
for the New York Daily News. Pulitzer Prize winner, if I'm not
mistaken (or is that Pete Hamil? Not sure). (Yeah, the Daily News is a
tabloid; but not as bad as the New York Post.)

Anyway, I was living in Brooklyn during those years. He's telling it
pretty much as it was; including the sentiments that were going around
at the time. Doesn't matter if you agree with the "drivel" or not; it
is what is.....history. The "middle class" was almost non- existent in
that area at that time ... you were either rich or you were poor (or
rapidly approaching poor).

Frankly, I'm much better off than I was back then. Can't say for sure
why; could just be a natural progression of events that may or may not
have happened anyway. I was unemployed at that time; I was lucky to
have found a string of temp jobs, some long-term (+/- six months). If
I hadn't found the job I left last August, I was going to move to San

Funny how things happen.

(Ever see the film, Sliding Doors? Wonderful story from two
perspectives: if she makes the train, or if she misses the train. Rent
it if you haven't seen it.)

-- Patricia (***@lasvegas.com), August 01, 2000.

He's So Fine

-- Dixie Cups (***@luv.misogynists), August 01, 2000.

Clinton only cared about his cigars. It wasn't until we finally took
over the congress that things started happening. After thirty years of
Democratic do-nothing rule, we got the economy turned around.
It wasn't until we finally took over the congress that things started happening. After thirty years of Democratic do-nothing rule, we got the economy turned around. <<
I am curious, Maria. Exactly what sort of "things" started to happen
in January, 1993 (when "we" took over the Congress) and how do you
credit them with turning around the economy?

My own belief is that the two tax hikes, first under Bush and then
under Clinton, finally got the runaway Reagan deficit back under
control, giving Greenspan and the Federal Reserve Board room to lower
interest rates, which they did. This financed the next investment
cycle in high tech. That's where most of the job growth has been
coming from in the last decade.

Inflation has been down because so much of our manufacturing has been
moved offshore, at rock-bottom wages, letting a goodly chunk of the
Fortune 500 keep profits obscenely high without raising prices here.

Very little of that was done by Congress. The tax hikes were, but they
weren't especially popular with Republicans. In fact, raising taxes
was only made possible by Ross Perot hammering away on the subject of
the national debt in 1992 and convincing the middle class that
something had to be done.

Without Perot, the Democrats would have dithered and split over
raising taxes. As it was, the Dems barely passed it and the R's get no
credit at all in that department. The repubs still want to give away
all the prospective "surplus" in tax breaks for the rich instead of
paying down the national debt. And it is still a numbskull idea in my

Even though Ross Perot is a certifiable loony, we owe him a big thanks
for making the 1992 election revolve around a real, serious, grown-up
issue, as opposed to an empty excercise in PR and posturing. With some
luck, Nader will have a similar effect this time around, using
campaign finance as his centerpiece issue the way Perot used the

If only Nader had a billion dollars to play with out of his own
Exactly what sort of "things" started to happen in January, 1993 (when "we" took over the Congress) <<
Correction: January, 1995.

-- Brian McLaughlin (***@ims.com), August 01, 2000.

Nader doesn't have a chance to do the same thing that Perot did. Not
even close. Even if he did have the money, he wouldn't get any
attention. Perot, thank him for the country's turn around? Right.
Where do you live Brian?
Yeah, after I hit the submit, I realize that there was a "we" in that
sentence. Oh well, that's what happens when I type too fast.

I remember when Clinton first got into office (maybe three or four
months), my cousin commented how things were so much better. What?
Didn't argue at the time but really what was being felt across the
country was an attitude. The economic changes were basically a result
of the previous admin's policy taking affect. Clinton wasn't in office
long enough to make any policy that could take affect that quickly
(even if he did actually put any policies to work).

Newt, remember him, he had the "contract with America". It wasn't
until Newt came around that we started seeing some true changes.
Clinton latched on to Republican ideas as if they were his own. Go-
with-the-flow Clinton didn't have a original thought except for
where's the next piece of axx. Even his "war" was because he wanted
Hillary back, not for any sense of foreign policy.

George S. (sorry can't spell it) left Clinton because of his turn coat
policies, too conservative for George's too liberal style.

Perot did nothing except split the vote. His views were nothing new
that prompted any action on the adminstration's part.
Nader doesn't have a chance to do the same thing that Perot did. Not even close. Even if he did have the money, he wouldn't get any attention. <<
By reading this I can see your opinion, but not what it is based on.
However, since Nader hasn't got Perot's billion and change, it is a
moot point, I guess.
Perot, thank him for the country's turn around? Right. <<
Close. You mistate my premise. Perot raised the issue and waved the
bloody flag over deficits when both parties wanted to duck it. He
managed on the strength of that one issue to get almost 20% of the
vote. In the next Congress, that issue was addressed effectively,
after almost 10 years of blathering and hand-wringing, but no
effective action. I do thank him for that.
Where do you live Brian? <<
Oregon. Why?
I remember when Clinton first got into office (maybe three or four months), my cousin commented how things were so much better. What? Didn't argue at the time but really what was being felt across the country was an attitude. The economic changes were basically a result of the previous admin's policy taking affect. <<
And what Bush "policy" might those be? And how did it have this
effect? Even a minimal explanation of cause and effect would be better
than bald assertion.

ALso, I was under the impression that earlier in this thread you were
crediting the Republican control of Congress for the positive news in
the economy. When Bush was in office, the Democrats controlled
Congress and (you also argued) they did nothing.

Now do you argue that they were implementing Bush's policies? I am
mildly puzzled.
Newt, remember him, he had the "contract with America". It wasn't until Newt came around that we started seeing some true changes. <<
"True", as opposed to the changes your friend noticed a few months
after Clinton took office? OK. For the sake of argument, I'll accept
that Bush's policy turned the economy around when Clinton took office,
but the only "true" changes occured after Newt "came around". I am
guessing that you mean when he became Speaker of the House instead of
Minority Leader, 1995.

Refresh my memory. Exactly what changes did Newt bring about and how
did they lead to the economic strength we see today? No need to be
elaborate. A paragraph or two outlining Newt's achievments and how
they affected inflation and the unemployment rate will be plenty.
Clinton latched on to Republican ideas as if they were his own... <<
And so on.... Is any of this important? Or can we just skip ahead?
Perot did nothing except split the vote. His views were nothing new that prompted any action on the adminstration's part. <<
Well, in 1992, Clinton promised a "middle class tax cut" in just about
every speech he made right up to November. On th other hand, Bush ran
on his record (those "policies" you now credit with turning things
around in 1993) and was soundly trounced.

While Perot's views may not have been new, they hadn't ever been put
to a vote in such a clear way. So many people jumped off the major
party's ships that you could see them bobbing like corks.

So, if Perot's substantial showing had no effect on Clinton, what
happened to that tax cut he promised? Any explanation based on
political reality will be happily accepted.

P.S. Any explanation that attempts to explain this glaring about-face
as simply "Clinton being Clinton - a perfidous bastard" will be
laughed at. Willy may be a perfidous bastard, but he doesn't lose many
points when it comes to being shrewd. He whalloped Newt right out of
town, Maria, right when the Republicans were impeaching him. That man
is no slouch at politics.

He abandoned the tax cut for a good political reason. How do you
explain it?

-- Brian McLaughlin (***@ims.com), August 01, 2000.

Brian I can see I pushed a couple of your buttons.
Nader doesn't have a chance to do the same thing that Perot did. Not even close. Even if he did have the money, he wouldn't get any attention. << By reading this I can see your opinion, but not what it is based on. However, since Nader hasn't got Perot's billion and change, it is a moot point, I guess.
Yes it's moot. But if you have some proof as to your to your stand
please add it. "With some luck, Nader will have a similar effect this
time around, using campaign finance as his centerpiece issue the way
Perot used the debt." It seems wer're talking lots of what if's and
you only have your opinion.

"You mistate my premise. " Sorry I don't. Perot didn't raise any
bloody flag. He got 20% of the vote because people didn't want the
other two. You are making more of this than need be. My opinion, Brian
just as you're entitled to yours.

I asked where you lived because I thought you lived in Canada. No
cutting meant here.

Sorry I don't have time right now to answer the rest of your rantings.
Just a real quick comment. Get a grip. Policies don't see any results
right away; it takes time. Sorry I have no proof, just observations.
It's sorta like implementing development changes; it doesn't happen
over night. If you have proof of the contradiction, please add it.
Policies don't see any results right away; it takes time. <<
Yes. You are right. Very shrewd observation, that one.

But, in my opinion, the two spheres of government policy that really
move an economy are fiscal policy and monetary policy. The Federal
Reserve Board controls monetary policy. The Congress controls fiscal
policy. George Bush didn't control either one. So he could not (in my
opinion) have instituted much of any policy that did squat to turn
around the economy in 1993.

(The Administrative branch does control foreign policy, if that is any

As for Congress under the Republicans being responsible for the
Policies don't see any results right away; it takes time. <<
So, let's just assume that in 1995 Newt put some kind of new fiscal
policy into place that benefitted the economy. You still haven't said
what this wonderful policy consisted of, but we'll pass over that
detail and assume a wonderful new policy was put in place.

So, how long did it take (in your opinion) for this "new" fiscal
policy of Newt Gringrich to show results? A year? Two years?

Let's be generous and say it took just one year. That would put the
first results of this policy into 1996. Right? Of course, this
expansion started before 1996.

So, why do you credit the expansion exclusively to the Republicans
controlling Congress? ...Aside from the fact that you think
Republicans are wonderful people who deserve credit for having
wonderful policies.

-- Brian McLaughlin (***@ims.com), August 01, 2000.

I never saw "Sliding Doors" but I did see "Run, Lola, Run". Similar
idea. It's interesting, even spooky, how our lives and world history
are hugely affected by the smallest perturbations.

-- (***@indy.net), August 01, 2000.

A Republican woman? I have seen another woman on this forum (no names)
refer to Republican women and Republican blacks as oxymorons.

-- Lars (***@indy.net), August 01, 2000.

Lars, I was wondering how long it would take you to recall that little
tidbit :-)

I said they SHOULD be oxymorons. But that's JMO.

Are you secretly a curmudgeon? Not knowing your age, I would guess yes

-- Patricia (***@lasvegas.com), August 01, 2000.

Help here Patricia,
Splain please why you would say the terms "Republican women" &
"Republican blacks", well, "SHOULD" be consider oxymoronic?

ps: Backhoe available here but doubt you'll need it.

-- Carlos (***@cybertime.net), August 01, 2000.

My memory fails. I should file old posts, cross-referenced 8 ways like
cpr does.

I can't even remember my age, but Bess Myerson thinks I am studly.

-- Lars (***@indy.net), August 02, 2000.

Carlos, it was a (pretty bad, it would seem) joke, but one that I
wholeheartedly used to believe, and still do to a certain extent. Can
you sit there and tell me with a straight face (?!) that the
Republican Party -- in the past -- has ever represented anyone outside
of White, Middle to Upper Class Men?

Didn't think so ;-)

Lars, if you saved and cross-referenced everything, you'd need a
network (I used to do that a couple of years ago as part of my job,
which is why I now cringe at the very thought.....what made it worse
was that no one ever looked at my "library" and no one ever used the
Intranet I set up to house and catalogue it...talk about *sigh*).
-- Patricia (***@lasvegas.com), August 02, 2000.

Brian, I remember now, you're the tree-hugger who believes that our
forests are depleting at astronomical rates, regardless of the fact
that we seem to be surviving now. And according to the officials, we
have too much forest, fueling our wild fires across the west.
But back to politics You seem to not want to give any credit to the
Republicans in the current economic situation. You think it lies with
the cigar smoking (er ah sucking) prez. I heard NPR (that picko
commie joking, just joking) radio station support my view of
"euphoria" when Clinton took office. They, as a matter of fact, gave
three reasons the economy was looking good; one of them attributed to
the former prez. I can't remember the numbers but they weighted each
of these reasons on the size of their effect. At no time did they say
it was because the esteemed President Clinton was doing such a
wonderful job.

Let's see when Clinton got into office: he took back the pledge on
gays (I knew that would never fly in the military); his health care
went nowhere (thank God, it would have been the downfall of our
country); and he (and the true president, his wife ) was responsible
for confiscating FBI files, travel-gate, and a slue of other fiascos.
Newt and the newly acquired Republican Congress began with balancing
the budget. Pretty good considering that the thirty-year Democratic
Congress couldn't do anything but spend. This was the beginning policy
that started to turn around our economy. As I stated above, Clinton,
as you so appropriately referred to him as the shrewd politician,
jumped on the bandwagon. He began to look like a repub. So much so,
George had enough. Poor George first he had to squash the scandals
constantly cleaning up after the little affairs. Turning red coat was
the last straw. George left him.

And Brian, I also believe that Greenspan had more to do with the
economy than prez Clinton. So your evaluation of my opinion is not
quite accurate. It would be more accurate to say that I believe that
Clinton had nothing to do with our present state. Just about anyone
but Clinton. Because you see, Clinton is a worthless piece of red neck
crap, a sociopath liar.

Clinton ran Newt out of town? Give me a break. Brian, didn't you get
the Y2K thing wrong also?
Clinton ran Newt out of town? Give me a break. <<
Oh, yes. Now I remember. After running for reelection and winning,
Newt was suddenly overcome by a desire to give up his seat and the
speakership a few weeks after the election, because he wanted to spend
more time with his family and catch up on his reading.

Of course, there was the fact that Clinton spent tens of millions of
dollars in tv ads, tying Dole to Newt in every one of them, so that he
cleverly framed the 1996 election as a referendum on how voters felt
about Newt. When Clinton won, it hurt Newt with his Republican troops
in the House, but it didn't sweep Newt away.

Seems to me that Newt and Willy went toe to toe over the budget and
"shutting the government down". Twice. Each one was on tv every night
for weeks, crooning their own version of the story. The people backed
Willy and Newt was hurt even worse with his troops, who expected
victory and got a public whupping. Twice.

So, it turned out the Democrats mimicked Clinton and ran their entire
strategy for the 1998 campaign as another referendum on Newt and the
House barely missed reverting back to the Democrats. The House
Republicans also noticed that Clinton, even in the middle of his
impeachment over the Lewinsky scandal, had approval ratings that were
triple what Newt's were and rising, the troops who survived the 1998
debacle tossed Newt overboard as more of a liability than an asset.

But that could just be me misremembering the story.

BTW, I see my tree-hugging offends you. Sorry. I will endeavor to just
pat them affectionately on the rump whenever you are around.

-- Brian McLaughlin (***@ims.com), August 02, 2000.

HAHAHA Brian, no I'm not offended by your tree hugging. Make love to
as many trees as you like; whatever floats your boat. Just a warning:
trees can give you splinters.

So we moved on from economic policies to the scandals. I'm reminded of
the interview Hillary gave on a morning talk show about how the
"enemies" are doing this to Bill. She proved that she only saw what
she wanted to see. She believed that Bill didn't have sex with that
woman, Monica. Bill does have his legacy.

Bill knows how to make friends; he does it so well. And Republicans
are not known for having this attribute. "Went to toe to toe" was a
popularity contest, nothing about issues or policies. Polls don't tell
the whole story; you should know that, Brian, from the Y2K polls. I
never pay much attention to polls or popularity contests for that
matter. I believe that it was extremely exhausting to deal with the
Clintons (the most devious couple of low lifes ever in politics and
referring back to the "forgiveness" thread, they will also find their
karma) and Newt gave up; I can't blame him for that, George S did too.
I thought that Newt would continue to speak up but alas I was wrong
about that.

-- Maria (***@ymous.com), August 02, 2000.

{Hushed silence}
Maria.... is.... wrong?

{Two years of antagonism erupt in hysterical laughterfest}

-- lisa (***@work.now), August 02, 2000.

Cherri you are in a world of your on! I do not support dem or rep
because neither care about people who have lost their jobs. People who
have been working for thirty years for on company and this company
wenth to china and they are lost. Their unimploiment runs out they
can't find jobs and they know longer count.

-- Et (***@zebra.net), August 03, 2000.

Hey Lisa, I'm ready for my kiss.

-- Maria (***@ymous.com), August 03, 2000.

This is just my observation, so I hope you're not offended when I
suggest that you're not ready for prime time in political

In almost every post you've made on this thread, your thoughts were
limited to Clinton and cigars, Clinton not having an original thought
beyond [something about axxes], Clinton just a redneck, credit ANYONE
but HIM, etc. You are apparently unaware of all the sexual scandals
that have followed Newt [and continue to follow Newt with him now
divorcing his second wife to marry the woman with whom he's NOW having
an affair.] Brian didn't mention any of Newt's scandals, yet your last
post stated:

"So we moved on from economic policies to the scandals. I'm reminded
of the interview Hillary gave on a morning talk show about how the
"enemies" are doing this to Bill. She proved that she only saw what
she wanted to see. She believed that Bill didn't have sex with that
woman, Monica. Bill does have his legacy."

You must have missed all the jokes about Bill using the Newt excuse
when he said that he didn't consider fellatio sex.

I don't think Hillary is the only one seeing only what she wants to
see. In addition, I consider bringing opinions on the unfolding of Y2k
and/or bringing environmental concerns into a political argument
reflective of YOUR inability to discuss the issue at hand, which is/
was how the economy is better 8 years later [not MONTHS later, as your
relative example described.]

-- Anita (***@hotmail.com), August 03, 2000.

Anita, please check your reading (scanning) capability. When you
state, "your thoughts were limited to Clinton and cigars", then I can
only assume you ignored most of my points. That's fine, it's your
prerogative. To answer conclusively and succinctly (obviously you
can't read too many words at once) the question as to if we're better
off than eight years ago, I'd say no. Things didn't turn around eight
years ago, when Clinton got into office. Things turned around within
the last four years, only after Republicans took over Congress.
As to Newt's affairs, your point is?

By the way who made you the discussion goddess on how to respond on
this forum? Are you now making the rules on debating on political
threads or does this apply to all threads? I'm not allowed to give my
opinion on politics and must present my discussions to your
satisfaction. How pompous of you. Do you like trees, Anita?

And Anita I hope you don't take offense but you're not ready to go
prime time on "women in the military" discussions. You never did
address my point except to direct me to endless Internet articles
forcing me to decipher your point. If you recall I just stopped
responding on that thread, simply mystified by your lack of discussion
prowess. However, I thought it best not to state my opinion.

Finally, your input is appreciated. And please don't misconstrue my
response to you. I'm not offended by your critique; just amazed by the
size of your ego.

-- Maria (***@ymous.com), August 03, 2000.

8/02/00 10:55 p.m. Shays Shocker Clinton Raped Broaddrick Twice.

By NR staff onnecticut Rep. Chris Shays said on a talk radio show
Wednesday that, based on secret evidence he reviewed during the
impeachment controversy, he believes President Clinton raped Juanita
Broaddrick, not once, but twice.

Talk-show host Tom Scott of Clear Channel Broadcasting, New Haven
(WELI 960) asked Shays about the mysterious impeachment "evidence
room," prompting the GOP moderate to say that Broaddrick "disclosed
that she had been raped, not once, but twice" to Judiciary Committee

Shays, who is often hailed by the New York Times for his independent
judgment and good sense, found the evidence compelling:

"I believed that he had done it. I believed her that she had been
raped 20 years ago. And it was vicious rapes, it was twice at the same
event." Asked point blank if the president is a rapist, Shays said, "I
would like not to say that it way. But the bottom line is that I
believe that he did rape Broaddrick."

And Shays voted against impeachment!

-- Dumb Broad (***@elected.sociopath), August 03, 2000.

Anita, please check your reading (scanning) capability. When you
state, "your thoughts were limited to Clinton and cigars", then I can
only assume you ignored most of my points. That's fine, it's your
prerogative. To answer conclusively and succinctly (obviously you
can't read too many words at once) the question as to if we're better
off than eight years ago, I'd say no. Things didn't turn around eight
years ago, when Clinton got into office. Things turned around within
the last four years, only after Republicans took over Congress.

I didn't ignore your points, but your prejudices were openly offered
regarding your hatred of Clinton, and each post reiterated this
hatred. I'm not suggesting that you shouldn't hate Clinton, but
suggesting that your hatred of the man shouldn't interfere with your
objectivity regarding what was accomplished during the Clinton
administration. Since cause and effect is difficult to pinpoint [as
we're discussing on Stephen's forum], I cannot [and have not] said
with certainly that what happened was due to Clinton or due to the
Republican Congress. As to Newt's affairs, your point is?

My point is that he was/is the KING of blow-jobs and coined the "it
isn't sex if" excuse. He was/is also the KING of extramarital affairs,
yet your posts only reference Clinton as a guilty party. My point is
that Brian didn't bring up anything about Newt in the sexual arena,
but that you made several references to those of Clinton and then went
on to suggest that the topic had changed from economics to scandal. By
the way who made you the discussion goddess on how to respond on this
forum? Are you now making the rules on debating on political threads
or does this apply to all threads? I'm not allowed to give my opinion
on politics and must present my discussions to your satisfaction. How
pompous of you. Do you like trees, Anita?

Yes...I DO like trees, although I don't consider them possible sexual
partners. And Anita I hope you don't take offense but you're not ready
to go prime time on "women in the military" discussions. You never did
address my point except to direct me to endless Internet articles
forcing me to decipher your point. If you recall I just stopped
responding on that thread, simply mystified by your lack of discussion
prowess. However, I thought it best not to state my opinion.

Again, Maria, you're looking at my offering on another topic and
suggesting that because my opinion differed from yours on that topic,
I'm proven to be wrong in every area. I certainly understand that both
you and Cherri began your careers in the military many years ago.
Neither of you have experienced combat with the current generation of
young people. Perhaps both of you have experienced discrimination due
to folks who used their own subjective experiences to say, "Women
shouldn't be allowed in the fields of men." Yesterday's woman is/was
NOT the same as today's woman. MY point was that yesterday's MAN is
NOT the same as today's man. Since I've not had experience in the
military, I linked to threads written by women recently in the
military. Finally, your input is appreciated. And please don't
misconstrue my response to you. I'm not offended by your critique;
just amazed by the size of your ego.

My lack of ego is perhaps only exceeded by my lack of emotion on many
topics that drive others to see only the side they've chosen to see. I
DO speak openly with my opinions on what I see, but I TRY to form my
side of each debate with points and links as backup.

-- Anita (***@hotmail.com), August 03, 2000.

Anita, "...because my opinion differed from yours on that topic, I'm
proven to be wrong in every area". When and where did I say this? How
did I even imply that your difference in opinion made you wrong. You
have no experience in the military so you don't know first hand
anything about. But that doesn't prove you are wrong just that you are
not willing to accept an opinion from someone who does have experience
with that topic. Again I think your ego and your willingness to "read
up" on the topic made you believe that you didn't need to "hear" the
other side of it.
You never addressed the fact that women and men in stressed situations
don't work. Yes you continued to talk about how women are as good as
men, how women have changed.

Anita wrote, "Neither of you have experienced combat with the current
generation of young people." And neither have you... So, your opinion
counts more than our opinions. What does this have to do with it? I
see the following statement clarifies that the current generation is
somehow different. Well, not really... Women haven't changed that much
in 10,000 years. We're still (for the most part) attracted to men.
10,000 years will not change the basic attraction between the sexes.

"Perhaps both of you have experienced discrimination due to folks who
used their own subjective experiences to say, "Women shouldn't be
allowed in the fields of men."" Please don't assume my experiences
included discrimination; they didn't. Quite the opposite, I was
treated exactly as any other in the military, no discrimination
whatsoever. Promotions and rankings based on accomplishments, not sex.
My opinions don't come from other people saying that "Women shouldn't
be allowed in the fields of men." Please Anita, give me more credit
than that. If you haven't concluded much from my postings, please see
that I do have a mind of my own.

Back to Clinton... Absolutely I can't hide my hatred for the man and
his wife. (I guess calling them low lifes was your clue. Glad to see
you picked up on it.) But that's my point. His administration did
nothing. His legacy is how he change the meaning of the statement
"Have a cigar".

The beginning states Clinton's responsible for peace. So that's why he
sent troops overseas? For the peace, geez and I thought it was because
he wanted to get back into Hillary's good graces. Look Anita, Of
course we can't say with certainty; it's all about opinions. And I can
see you are full of them.

-- Maria (***@ymous.com), August 03, 2000.

"Brian, I remember now, you're the tree-hugger who believes that our
forests are depleting at astronomical rates, regardless of the fact
that we seem to be surviving now. And according to the officials, we
have too much forest, fueling our wild fires across the west."
"Clinton ran Newt out of town? Give me a break. Brian, didn't you get
the Y2K thing wrong also?"

"Do you like trees, Anita?"

"And Anita I hope you don't take offense but you're not ready to go
prime time on "women in the military"

"Anita, "...because my opinion differed from yours on that topic, I'm
proven to be wrong in every area". When and where did I say this? How
did I even imply that your difference in opinion made you wrong."

Maria, I offer the above as implications that you feel that anyone
that disagrees with your opinions on ONE subject is wrong if they
disagree with you on OTHER subjects.

"The beginning states Clinton's responsible for peace. So that's why
he sent troops overseas? For the peace, geez and I thought it was
because he wanted to get back into Hillary's good graces. Look Anita,
Of course we can't say with certainty; it's all about opinions. And I
can see you are full of them. "

Did we watch our troops come home in body-bags?

Yes, indeed I have opinions. You do as well. I've never suggested that
mine were better than yours. I've simply suggested that you haven't
explored politics enough to state an unbiased opinion. [THAT's an
opinion, too.]

I'm no fan of Clinton, but your biases are hanging out like a shirt-
tail at a formal dinner.

-- Anita (***@hotmail.com), August 03, 2000.

Proven wrong in every area? My my aren't we testy. So what if I bring
up some out of topic areas! Oh I forgot I broke one of your "how to
discuss" rules. So sorry.

And you still haven't addressed "women in combat" but hey that's your
prerogative. You truly are a pompous ass. I thought it when you stated
you wouldn't vote for Bush because you could out-debate him, now I
know it. What an ego and now I see it for what it really is. Oh wait
do I need to define the word is?

-- Maria (***@ymous.com), August 03, 2000.

Oh and Anita you really need to lighten up. So serious debating, "let
me research the internet to find articles to support my view, but of
course I don't get excited as others do, I can see both sides of the

-- Maria (***@ymous.com), August 03, 2000.

I think we've both expressed our opinions enough to this audience. I
won't bother to engage you again. I found myself in a discussion not
so long ago regarding how some of us could agree on the unfolding of
Y2k yet disagree vehemently on other things in life after the CDC.
IMO, there never was a correlation between consistencies on the one
versus the other.

-- Anita (***@hotmail.com), August 03, 2000.

Anita, it might help to do some creative visualization when engaging
Maria in debate. Imagine she is your youngest aunt sitting in an
overstuffed chair, with a basket of yarn next to it, knitting away at
an afghan. From time to time she looks at you over the tops of her
eyeglasses and delivers her political or other opinions. You wait
until she finishes before you answer.
Sometimes she gets involved with the talk and drops a stitch.
Sometimes she gets involved with the afghan and drops the thread. It
all makes the same amount of difference in the end.

-- Brian McLaughlin (***@ims.com), August 03, 2000.

.....I don't mean to be overbearing or anything, but this political
discussion has got to be one of the most rooted in naivete that I have
had the pleasure of seeing!

.....The fed is responsible for the economy; not the administration,
not the congress or anyone else. The money spigots are opened and
closed at the whim of the international bankers; same with the
expansion and contraction of credit. But that's okay, you just keep
believing in fairy tales the way the polytick folks want you to, and
we'll never get this ship righted.

.....I now see why you don't discuss politics very often, Anita; (G),
but I'll leave you ladies to further this fictionalized debate, and
I'm including you, as well, Brian... (are you sure it isn't Brianna)?
The fed is responsible for the economy; not the administration, not the congress or anyone else. The money spigots are opened and closed at the whim of the international bankers... <<
Okey-dokey, Patrick. We can't all be sophisticates like you.

I can see your point. One morning an international banker just gets a
whim (your word, not mine) to close a "money spigot", and sure enough,
there she closes with a deft twist of the wrist. On. Off.

What a clean concept! What a beautiful theory!

No need for any messy reasons for anything to happen in the economy.
It's all based on a whim (your word, not mine). We are just the
playthings of the gods (read: international bankers). They kill or
spare us on a whim. I am really impressed!
But that's okay, you just keep believing in fairy tales the way the polytick folks want you to, and we'll never get this ship righted. <<
Oh, but now I want to stop believing in fairy tales! It seems so...
unbecoming, somehow. And you seem like just the person to dish out the
straight scoop. Like f'rinstance, what we have to do to get the "ship
righted". Yeah! That's a good start!

So, tell me what to do. [Whines and wriggles like an eager puppy.] I
want to know! Tell me what to do! Tell me what to do! Tell me what to
do! Tell me what to do! Tell me what to do!

I insist!

-- Brian McLaughlin (***@ims.com), August 03, 2000.

"It all makes the same amount of difference in the end."

If nothing else, I understand what you said here, and that's one of
the reasons why I reserve my emotions for real life. IMO, Maria felt
some sortof allegiance existed between us because we were both pollies
prior to Y2k's unfolding and she chose not to express herself
completely regarding my opinions on the appropriate threads at the
appropriate time. Again, IMO, it all kinda grew and festered until she
felt I'd attacked her in this thread and it all came out.

I'm pleased that you brought up visualization, however. I've found it
to be a great healer. When my son had a mole removed from his leg, I
asked the doctor if my son and I would be allowed to talk during the
"operation", or whether the only conversation would be hers. She
agreed to allow my son and I converse, and we went off to the rain
forest [both speaking aloud], with only one slight interjection by the
doctor's assistant who said, "I THINK you're talking hippopotamus
there." When the surgery was done, the surgeon gently suggested that
we return "home." Upon her return she said, "I've never encountered
such a relaxed patient. What do you call that?" I said,
"Visualization." My son then looked at his leg [which was already
bandaided] and asked, "Can I look at it?"

-- Anita (***@hotmail.com), August 03, 2000.

.....Since this is the unc forum, I trust my one-time lapse against my
language policy will be forgiven; but you could begin by taking your
mockingly condescending tone and childlike foolish antics and shove
them up your ass; that is, once you get your head out of the way.

-- Patrick (***@gradall.com), August 03, 2000.

I'm sure you feel better now that you've had your outbursts. You have
no need to worry about being a one-time or XX-time offender on this
forum. Posts are preserved here, and everyone/anyone can look at the
posts and make their own decisions on the rational of the poster.

-- Anita (***@hotmail.com), August 03, 2000.

I hate it when that happens. Patrick, please throw an 'e' at the end
of rational if you'd like my last post to make more sense.

-- Anita (***@hotmail.com), August 03, 2000.

Okay, Anita...

.....That was completely out of character for me; but folks can search
high and low, and the only cussword they'll find is that one above...
I believe...

-- Patrick (***@gradall.com), August 03, 2000.

So that's why he sent troops overseas? For the peace, geez and I
thought it was because he wanted to get back into Hillary's good

You mean there weren't those hundreds (thousands) of bodies in mass
graves over in Cosivo? Or that Clinton was responsible in some way for
the atrosities that were occuring, or that he UN was going out of
their way to help him get back in Hillary's good graces.

When people are fanatic in their belief's they tend to be blind to
anything that would show them otherwise, kinda like some people were
in Y2K.

Newt had run his campaign on "Family values". It was about the only
thing he could use against his opponent, a woman, saying she was
breaking up her family by trying to go to DC. The first thing he did
was dump his sick wife after he won the election, while she was in the
hospital suffering from cancer. Also the fact that he had been caught
getting a blow job in a car by an aid and his own daughters. If the
repub's were not aware of this fact, they soon became aware of it and
others after "someone" provided this information to over half of

He had gotten through his innappropriate campaign practices, but with
everyone screaming about Clinton and Monica, his own transgressions
were a BIG liability that could not be explained away with any
justification by his own party. Clinton didn't have to do anything to
him, he did it all to himself.

Don't assume my party beliefs because of what I post. But I believe in
intellectual honesty and will not "pretend" that what is "put on" is

Those people in Washington are supposed to represent us, they are more
concerned about getting to where they are than what we, the people

The Repub convention was so overwhelmingly phoney and manipulated that
it was an insult to the American people.

The repub's know that if they used Newt's tactics of attacking the
other party blatently and openly that the people who were discusted
over their behavior from the last two elections and of the public
airing the monica situation would be reminded and would attack them
for this behavior. They have cleverly kept the loudest critics of
Clintons behavior out of the convention

Sex in politics is not new, why does Clinton's situation with Monica
negate every other action he has performed while in the white house?
Yes, I was sick of hearing about it too, and especially mad because my
children were forced to hear about it, but place the blame for that
where it belongs, on those who manipulated the situation so that it
was aired so publicly and for so long. Why is it you had not heard of
Newt doing worse? Because it was made a political issue to have it
aired for over a year.

As for the Republican convention, don't pretend that every step has
been planned, every non white, every physically handicapped and every
female wasn't stratigly placed this past week. Bush gets off a plane
and stopps by his limo to talk animatedly to two non-whites before he
gets in the car, his 14 year old nephew's mention of "bringing respect
back to the office of the presidency" was so obviously rehearsed,
(Same exact words repeated by many others) there had to have been a
group of statements that were decided on that were to be used by
people to make sure they were heard by the largest audience possible.

The entire convention is a joke and backfired because minorities,
disabled and parents of small children are outraged over the
difference between what Bush has done in Texas and the "show" he is
putting on. It was an insult to the intellegence of everyone, and
showed he considers members of the groups he showcased as stupid
enough to fall for this farce.

It was not a republican convention, it was a well planned and
choriagraphed George W Bush show.

If you fall for everything either party had done or said hook line and
sinker, I can only feel as sorry for you as I did for those who fell
for TEOTWAWKI the same way.

Guess we just have to wait to see what goes on in the Democratic

Bringing up how Anita believes about women in combat has nothing to do
with politics, she believes with the information she has or can gain.
Not been in the military, I feel she cannot understand to the degree
that we do and accept her right to believe as she chooses and do not
consider it a fault on her part.

I choose to disagree with others without resenting them as people for

It is not up to me to tell you what to do.
you could begin by taking your mockingly condescending tone and childlike foolish antics and shove them up your ass <<
Damn, Patrick! And here I was, all ready to join the cognescenti of
international banking! My bad luck! And my ass is tingling, too. Is
this normal?

-- Brian McLaughlin (***@ims.com), August 03, 2000.

.....My guess is that you were always the class clown. How simple does
one have to be to not understand the correlation between money and
power? Hard to imagine; but if you only wish to be a cut-up, then
you'll be destined to blindly falling in line with tree-huugers, and
the politically naive to the point that all you have to offer is the
useless drivel that has so customarily appeared above your name. Do
you really consider yourself intelligent, or are you quite aware that
it's only your "front"?
How simple does one have to be to not understand the correlation between money and power? <<
But, Paaa-trick! [He whines.] I doooo understand the correlation
between money and power. Really. I do.

What I don't understand about what you came shlepping into this thread
to chastise me about, and tut-tut at Anita and Maria over (not to
mention striking a damned arrogant pose while doing so) is this:

1) How you came to lame conclusion that the Congress has no
responsibility for the economy, when they control how a budget of over
1.5 trillion dollars is spent. And they write the tax laws. And they
ratify the President's choices for all sitting members of the Federal
Reserve Board. And more.

2) How it came about that "the fed is responsible for the economy",
but at the same time "the international bankers" appear to be pulling
all the strings in your stupid little scenario? How can both be true?
And how does it happen. Name names. I dare you.

2) Why you think my name is "Brianna".

So please, explain all these to my "naive" self and all us other
"naive" participants in this thread, because so far you haven't said
one god damn thing worth blowing out my nose.

If you do make a credible accounting of your opinions and their basis,
then I promise to stop clowning around with you and come to grips with
your arguments like a thinking person. Otherwise, why the bleeping
hell should I bother?

If you don't explain yourself and just lob some more ad hominems
around and pretend you are just too cool to be bothered, then as far
as I am concerned you can just shut your cake hole, Patty, because you
are a smirking, ignorant bastard and a comb-over excuse for the
patriot you pretend to imitate.

So put up or shut up, "Patrick Henry", you poor excuse for a
decorative plant. Your choice.

[Ooops! Have I... gone too far?] [Ominous soap opera music fades out.
Roll credits.]

-- Brian McLaughlin (***@ims.com), August 04, 2000.

mutters darkly to himself... stupid tags. Oughta be a law.

-- Brian McLaughlin (***@ims.com), August 04, 2000.

"But, Paaa-trick! [He whines.] I doooo understand the correlation
between money and power. Really. I do."
.....Then what is you problem, running out of clown material?

"What I don't understand about what you came shlepping into this
thread to chastise me about, and tut-tut at Anita and Maria over (not
to mention striking a damned arrogant pose while doing so) is this:

1) How you came to lame conclusion that the Congress has no
responsibility for the economy, when they control how a budget of over
1.5 trillion dollars is spent. And they write the tax laws. And they
ratify the President's choices for all sitting members of the Federal
Reserve Board. And more."

.....Read above, Brianna; I said the fed controlled the money spigots,
which is to say the expansion and contraction of the money supply, as
well as the expansion and contraction of available credit. A child
could understand this, Brianna, why do you think you have such

"2) How it came about that "the fed is responsible for the economy",
but at the same time "the international bankers" appear to be pulling
all the strings in your stupid little scenario? How can both be true?
And how does it happen. Name names. I dare you."

.....The "fed" is privately owned by said bankers, and it matters not
one wit what a purchased and therefore compromised congressman does or
doesn't do. Stupid little scenario? You've been victim of it your
entire life, Brianna; that you aren't learned enough to know these
things is your problem, not mine, but if you choose to "shoot the
messenger" as it were, be my unlearned guest. You want names? These
are well hidden from public view, and I understand completely why you
haven't found the information; they hide these facts in books! Do some
homework for yourself; the names are hiding in plain sight...

"2) Why you think my name is "Brianna"."

.....I just can't believe that you're really a man; you certainly show
enough signs of emasculation; perhaps your glands are just producing
too much estrogen, sweetie.

"So please, explain all these to my "naive" self and all us other
"naive" participants in this thread, because so far you haven't said
one god damn thing worth blowing out my nose."

.....As if you, with your towering intellect would recognize such when
you see it; I could explain it fully, in irrefutable terms, but it
would be lost on you, Brianna... The only way you'll learn anything is
to do the legwork yourself, but I really don't expect that to
happen... you shun such exercises in favor of running around with your
puffed up rhetoric, and ridiculing demeanor, expecting that to remove
the burden of true knowledge from your obviously overly narrow
shoulders. That's fine by me, remain shrouded in ignorance; but don't
come on board spouting your hogwash expecting me to educate you. Get
off your seat and try the library, oh he-of-the-Bozo- pursuasion.

"If you do make a credible accounting of your opinions and their
basis, then I promise to stop clowning around with you and come to
grips with your arguments like a thinking person. Otherwise, why the
bleeping hell should I bother?"

.....Your first error was to assume this was mere opinion when
presented with fact; that you don't recognize one when you spot one is
predictable of someone that is "like a thinking person" as opposed to
actually being one.

"If you don't explain yourself and just lob some more ad hominems
around and pretend you are just too cool to be bothered, then as far
as I am concerned you can just shut your cake hole, Patty, because you
are a smirking, ignorant bastard and a comb-over excuse for the
patriot you pretend to imitate."

.....This one is actually kinda funny, Brianna; there were no ad homs
lobbed; I just think you learned some new words on the net, and just
can't stop using them. I don't "pretend" anything, lady, my name is my
name by birthright.

"So put up or shut up, "Patrick Henry", you poor excuse for a
decorative plant. Your choice."

.....This is beneath a response...

"[Ooops! Have I... gone too far?] [Ominous soap opera music fades out.
Roll credits.]"


-- Patrick (***@gradall.com), August 04, 2000.

-- C (***@b.c), August 04, 2000.

It is midnight. The blackbirds must be sleeping.
I could explain it fully, in irrefutable terms, but it would be lost on you, Brianna... <<
I think this pretty much sums up Patrick's contribution. I think I
first heard this dodge on the playground, and it had lost all effect
on me by the time I was in 8th grade.
The only way you'll learn anything is to do the legwork yourself <<
Ah yes. In your rather strange version of debate I am expected to
prove your assertions for you. You are too busy saving your self for
the finer things in life. If I fail to do your work for you, then I am
lazy. Geez. I read Tom Sawyer, too, Patrick. Whitewash your own
goddamn fence.
Your first error was to assume this was mere opinion when presented with fact <<
Jesus turned wine into water. Patrick turns unsupported assertions
The "fed" is privately owned by said [international] bankers <<
Far from being a "fact", this is a well-known canard, believed only by
and it matters not one wit what a purchased and therefore compromised congressman does or doesn't do. <<
And you have the damn gall to pretend you have no "opinions", but only

Patrick, your own words would have been sufficient to brand you as a
poser without my commentary. You waltzed in here and expected to be
taken for someone with important knowledge and ideas, based on waving
your hand and calling the rest of us naive. It won't wash.

Crawl back into your hole. You are the worst kind of fool - an
arrogant one.

-- Brian McLaughlin (***@ims.com), August 04, 2000.

">> The "fed" is privately owned by said [international] bankers <<
Far from being a "fact", this is a well-known canard, believed only by

.....This statement alone show how very inept you are at research; you
won't even look for the facts of the matter, you believe the fed's own
debunking "programming"... sad, really... it's no wonder this upsets
you so, Brianna, sweetie; perhaps you were too busy doing your hair to
go looking?

-- Patrick (***@gradall.com), August 04, 2000.

-- Anita (***@hotmail.com), August 04, 2000.

I am baffled as to why you refrain from citing evidence to support
your position, and how you could be shocked by the provocative effect
of telling people that they're naive and they should do their own

-- David L (***@dnet.net), August 04, 2000.

"and how you could be shocked by the provocative effect of telling
people that they're naive and they should do their own research."
.....Therein lies the problem, David; this information is readily
available to anyone that goes looking for it, (think financial forms
for the fed; think government agencies in the "white pages" and why
the fed isn't listed under US Government). Why should I do Brianna's
research? If he's too lazy to do so, let him remain ignorant...

-- Patrick (***@gradall.com), August 04, 2000.

Why should I do Brianna's research?
Because it would prove your point.

-- (***@hmm.hmm), August 04, 2000.

The number of non-mainstream (though not necessarily invalid) opinions
voiced on this forum is much too large for anyone to personally
investigate all of them. I don't think it unreasonable to want some
assurance that one won't be pursuing a wild goose.

-- David L (***@dnet.net), August 05, 2000.

Cherri wrote, "Bringing up how Anita believes about women in combat
has nothing to do with politics, she believes with the information she
has or can gain."

That's true, it has nothing to do with politics but it has to do with
her comment that I'm not ready for prime time debate. It's that people
in glass houses thing.

Cherri wrote, "Not been in the military, I feel she cannot understand
to the degree that we do and accept her right to believe as she
chooses and do not consider it a fault on her part. "

But that's the point. She thinks that she debates with clarity and
objectivity. That because I have been in the military, I can't be
objective that women belong in combat, with the statement "Perhaps
both of you have experienced discrimination due to folks who used
their own subjective experiences to say, "Women shouldn't be allowed
in the fields of men." With this statement she implies that my view
and objectivity has been clouded by my experiences. But of course,
hers are not clouded, she sees both sides of the issue.

Is that illogical or what? We all have our opinions that are shaped by
our experiences. We "debate" based on our opinions, of what we've read
and done. If someone points to an article, the next person with an
opposing view can rip into it. Does that form the basis for debate,
no. It's all about opinions. If anyone thinks they are debating on
this forum, they are welcome to their illusions.

-- Maria (***@ymous.com), August 05, 2000.

Moderation questions? read the FAQ


...and I am Sid Harth
2010-02-02 15:29:00 UTC
New Ground 46
May - June, 1996


The Counter-Offensive Gathers: It's Still the Economy, Stupid! by Bob

Downsizing: An Expensive Illusion by Albert R. Verri

Rainbow Coalition Meets in Chicago By Christine R. Riddiough, DSA
Political Director

A Future for Socialism by Gene Birmingham

5th Midwest DSA Activist Conference

Other DSA News

The Counter-Offensive Gathers
It's Still the Economy, Stupid!
by Bob Roman

After a year of damage control following the disastrous 1994
Congressional elections, a counter offensive is beginning to take
shape around economic issues of immediate concern to working people
across the nation. If Clinton is inclined to paste a smiley face on
the current situation, labor and the democratic left have not
forgotten Carville's reminder: "It's the Economy, Stupid!"

Across the country, DSA has been holding town hall meetings on
"Economic Insecurity" to packed rooms. The University of Chicago Youth
Section's first town hall meeting in February attracted an audience of
over 300. In Boston, a coalition effort led by DSA brought almost
1,000 people together.

The Progressive Caucus has decided to hold a series of monthly
hearings on Capitol Hill and in the Districts on the theme of "The
Silent Depression - The Collapse of the American Middle-Class." The
first of these hearings, was held in Washington, DC, on March 8.

Caucus chair Bernard Sanders (I-VT) said, in calling for the hearings,
"The most important economic issue facing our country is that 90% of
the American people since 1973 have seen their standard of living
stagnate or decline. The reality is that the average American, whether
white-collar manager or blue-collar factory foreman, today is working
longer hours for lower pay and in constant fear of a sudden pink slip.
Meanwhile, the richest people in America have never had it so good."

Future hearings will be held around the country and will address
issues ranging from whether we need a new national jobs policy, how to
offset the impact of corporate downsizing to the creation of jobs that
pay a living wage. Later in the years hearings will provide an
opportunity to explore untried ideas for keeping and creating more
good-paying American jobs and achieving more economic justice and
security in the context of sustainable economic development.

The AFL-CIO has adopted a strategy similar to DSA's Activist Agenda.
The campaign links its legislative, organizing, bargaining and
political efforts under the slogan "America Needs a Raise". AFL-CIO
President John Sweeney announced in February the labor federation
would hold a series of town hall meetings from March through May to
hear from workers on the impact of stagnant wages on their families.
Organized labor will also support the Jobs and Living Wage campaigns
in states and cities around the country. The AFL-CIO will hold a town
hall meeting in support of an increase in the minimum wage on
Wednesday, May 29. At press time, the venue and program were to be

The campaign begins in Chicago with a rally on April 24th in support
of the Jobs and Living Wage Ordinance and the Minimum Wage bill (HR
620). The event will take place at 5 PM in downtown Chicago in
conjunction with SEIU's national convention. At press time, the exact
venue for the rally had not been finalized, but the initial plans had
it located at the band shell in Grant Park. AFL-CIO President John
Sweeney will be a featured speaker.

The Jobs and Living Wage Ordinance will be formally introduced into
the Chicago City Council at the May meeting of the Council. The
measure, patterned after similar ordinances introduced in major cities
around the country, provides that companies contracting with or
subsidized by the city pay a living wage. The Chicago ordinance also
has provision for community based hiring halls for non-construction

The campaign for the Jobs and Living Wage Ordinance is led by Chicago
ACORN and SEIU Local 880 under the auspices of Chicago Jobs with
Justice. The campaign is very well organized and it brings together a
broad coalition of labor and community groups. Nearly every Alderman
has a group assigned to lobby in favor of the Ordinance. A video has
been produced to popularize the issue. Economic research is being done
to investigate the effect on business and the city's finances.

But opposition to the Ordinance is also organizing. The Ordinance has
been attacked by CANDO, the Chicago Association of Neighborhood
Development Organizations, on the grounds of "business climate" and
paperwork. They also do not like the hiring hall idea. Some of CANDO's
arguments could have merit. The quality of the debate is demonstrated
by the lack of any effort by CANDO to get these concerns addressed
prior to the introduction of the ordinance.

In Congress, the counter offensive is mostly centered on two "wedge"
bills, the Corporate Responsibility Act (HR2534) and the Income Equity
Act (HR 620). Neither of these bills have much chance of passing in
this Congress, but the campaign in support of them frames the issues
of economic insecurity and budget priorities in ways that are awkward
for conservatives; they bring issues of class to the forefront.

The Corporate Responsibility Act was part of the reaction to the
conservative victory in the 1994 elections. A relatively large and
complicated bill, it raised the issue of "corporate welfare" at a time
when social programs were under increasing attack. The bill closes a
number of a number of tax loopholes favored by corporations and the
wealthy. It also ends a number of Federally financed research and
development projects that are viewed as being primarily corporate

Unfortunately, this approach to the issue runs into the ambiguities of
the Federal budgeting process and the issue of industrial policy.
There is no way to distinguish between "handouts" and "investments" in
the current Federal budgeting process and there is no way to track the
performance of "investments" even if there were agreement on which is
which. Under the current Federal budgets, one person's "welfare" could
easily be another person's "investment".

The Income Equity Act is simply a bill to raise the Federal minimum
wage from $4.25 an hour to $6.50 an hour. It also has an interesting
provision which closes a tax loophole that rewards employers that pay
their most highly paid employees more than 25 times their lowest paid
employee. This bill also dates back to 1995, but it has attracted the
majority of its cosponsors in this session of Congress.

Your support for these two bills is important. Legislators need to
understand that the balance of power and wealth needs to begin tilting
toward the working people. Enclosed with this issue of New Ground is a
postcard, courtesy of Share the Wealth, to send to your Congressman.
The address is: U.S. House of Representatives, Washington, DC 20515.
Don't forget to include your name and return address. Don't delay! Do
it today! (And it only takes a 20¢ stamp!)

Chris Riddiough contributed the portion about the Progressive Caucus
to this article.

Downsizing: An Expensive Illusion
by Albert R. Verri

A generation ago, one might have heard of the word "downsizing" to
mean a slimming down of some sort. Today it is used as an euphemism
for the reduction and restructuring of workforces and such other
situations that could lessen cost to a company's operations.

Reduction of non-personnel costs is usually a regular function of
management. Extraordinary reductions of workforces, on the other hand,
have broader significance because of the social consequences they
bring in their wake.

A company decides to "downsize" in the hope that its leanness will
enable it to remain competitive and to be more profitable. The
American Management Association has reported that less than 50% of the
downsized firms had realized better profits.

In their frenzy to downsize, many firms have neglected to consider the
consequences of their actions. A host of mainstream publications, such
as the Wall Street Journal, U.S. News, Time, The New Republic and
others, have expressed some misgivings about the downsizing process as
being a form of "...anorexia - dumbsizing - neglecting future growth -
loss of employee morale - reduced productivity - making workers feel
insecure - causing disruption in workers' families...", etc.

Recently CBS-TV's 60 Minutes demonstrated how downsizing was now
affecting the higher levels of management structure with testimonials
of insecurity and bleak promises of future employment in their former
higher-paying professions. Downsizing is now affecting the ranks of
middle management, not just the entry-level jobs.

The downsized worker today has hardly the job options of a generation
ago. In 1994, for example, 45% of the 3.5 million new jobs created
were in the service sector. The proliferation of jobs in the service
industry has created a devastating "cliff effect" from a worker's
former wage to drop precipitously to low-paying service occupations.

A downsized workforce is the twin of an economic equation that we must
posit and not ignore. Our own economic history reminds us that a
healthy economy has to have a viable consuming population. Can we
forget the obvious economic deficiency of the 1930's Great Depression
that made it clear to the nation that consumer demand had to be

The departure from the laissez-faire economics of the 1920's and the
advent of the New Deal ushered in the Civilian Conservation Corps, the
Home Owners Loan Corporation to stop evictions and farm foreclosures,
guaranteed savings accounts, and mammoth programs of public works that
put millions of our "downsized" workers back on paying jobs that
resulted in increased demands for goods and services.

Should "downsizing" be the option of individual entrepreneurs along?
To paraphrase a famous quote, each company is not an island unto
itself where it can make its own decisions without regard to the
impact their actions have upon the whole of society.

Massive layoffs of workers inevitably have their effect on the level
of consumption: the part of the equation that must always balance and
synchronize with available products and services.

It was Will Rogers who said a century would have to pass before we
could determine whether the first Henry Ford had hurt or helped us.
Ford did come forth, however, with an economic principle that is still
basic to any economic system: that workers have to have the power of
consumption. Raising his workers' wages to $5 a day and then to $7 a
day during the 1920's was a phenomenal event that won no plaudits from
the business community.

Ford's dictum still prevails today as it did in the 1920's. Unless his
workers had adequate and steady wages, they could not buy the flivvers
they made and he could not have realized his own profits. Had all the
entrepreneurs followed that advice in the 1920's, perhaps, the
catastrophic depression of the 1930's might have been averted or

Unemployment and public buying power must be faced directly and
meaningfully as a question of national policy. An exaggerated "natural
rate of unemployment" departs from the reality that exists. We need to
learn from the pitfalls that occurred in the 1920's that brought us an
historic and catastrophic depression.

Creating aggregate demand to increase workers' buying power needs to
be a top priority of public policy. Ignoring this great social need
can only mean serious social consequences for our country.

Rainbow Coalition Meets in Chicago
By Christine R. Riddiough, DSA Political Director

The National Rainbow Coalition and Education Fund held its annual
meeting in Chicago at the beginning of March. The two themes of the
meeting were Target '96 and setting a new education agenda. The
convention was interesting in several respects. Perhaps most striking
was the participation on panels by key Democratic and labor leaders
who had not previously been particularly friendly to either the
Rainbow Coalition or Jesse Jackson.

Jackson, who ran for President in 1984 and 1988, has often been seen
by Democrats as too radical to include in many party activities. At
times he has been vilified as a splitter who has weakened the party
and provided fuel to the right. But it seemed clear from the presence
on Rainbow convention panels of such prominent leaders of the party as
House majority leader Dick Gephardt and Democratic National Committee
Chair Don Fowler, that Jackson is now seen as the one person who can
mobilize the African American vote; this vote is understood to be
crucial to Democratic victory in November.

Party leaders perhaps recognize that failure to mobilize these voters
(and many white women) in 1994 led to the resounding triumph of the
right in that election.

The labor breakfast drew some 600 people. It featured a keynote
address by John Sweeney, the new president of the AFL-CIO and a DSA
member. Sweeney is the first AFL-CIO leader to speak at a Rainbow
meeting and this was yet another signal of changes in direction for
the labor movement.

While the involvement of these leaders hints at the potential for
change in American politics, the meeting as a whole also hinted at
some problems. Although the labor breakfast and a sports dinner both
drew large crowds, overall attendance at the event was relatively
small - only about 300 people, most apparently from the Chicago area.
The weakness of the grass roots base of the Rainbow is an indication
of the need for stronger organizing efforts. Jackson's presence was
overwhelming; he spoke at almost every panel, as did newly elected
representative Jesse Jackson, Jr. This suggests that leadership
development is also weak.

The Rainbow Coalition continues to have enormous potential as part of
the movement to rebuild the American Left, but the challenges it faces
are also great.

A Future for Socialism
by Gene Birmingham

Harold Wells, A Future for Socialism? Political Theology and the
Triumph of Capitalism, Trinity Press International, Box 851, Valley
Forge, PA 19482, 1-800-421-8874, $19.00, paperback.

This book is for everyone interested in socialism's future, even
though addressed directly to Christians. The author has solid
credentials for his subject. He was active in the New Democratic Party
of Canada and its predecessor organization, the Cooperative
Commonwealth Federation. As a young minister in Saskatchewan he
witnessed the first "socialist" government in North America produce
universal, government sponsored medicare. He maintained a connection
with the New Democratic Party after moving to northern Ontario.

He taught Theology and Ethics and served as chaplain at the National
University of Lesotho in southern Africa, 1976 - 1981. There he
encountered a combination of Marxist and Christian thought struggling
with apartheid. He offered courses on Christian Faith and Marxism and
Liberation Theology. Wells is now Professor of Systematic Theology,
Emmanuel College, Toronto School of Theology.

Part I of the book, "What is Political Theology", is for Christians
looking for a connection between theological and socialist concepts.
One example is the similarity between the terms "kingdom of God" and
"utopia". Wells does not rule out a contribution from other religions
but emphasizes Christianity because that has provided his orientation
and has been the focus of his professional life.

Part II of the book, "The Triumph of Capitalism?", deals with the rise
and fall of Soviet communism, the problems of North American
capitalism, and the issues arising from capitalism in the Third World.
A major problem for socialists is that many transnational corporations
have more power than some governments. It will, therefore, take more
than electing new governments to make a difference. That holds
implications for socialist strategy.

In Part III, "What Is Socialism?", Wells takes the reader through a
brief, but pointed, history of socialism from the Industrial
Revolution to the present as a background for defining socialism and
looking at its various contemporary expressions. The final section,
"Concluding Theological Reflections", ties in with explicitly
Christian thought with which he began. After an attempt at definition,
Wells points to contemporary possibilities for socialism and leaves
the reader with enough hope to be optimistic in pursuing a socialist

I found helpful his distinguishing between broadly stated goals of
socialism and the need to decide on methods and strategies. Socialists
often agree on the former but disagree on the latter. His other main
point, that socialism is not one clearly defined system but a
continuum along which various kinds of socialist thought have emerged,
is also helpful.

There is no place in the world where either socialism or capitalism
exist in pure form and probably never will be. The goal for socialists
is to settle on achievable goals consistent with their ideal or
utopian visions and to find ways to bring them about in practice in a
changing world.

This book would serve well for small groups or individuals who lack
knowledge of the history of socialism and its concepts and who seek to
try to create a socialist practice in the face of contemporary
capitalist power. It offers incentive for Christians who want some
relevance between political and theological concepts. Wells
acknowledges the lack of socialist answers at present but reminds us
that the present practice of capitalism is going to lead increasingly
to calls for an alternative vision. His book provides a springboard
for that search.

5th Midwest DSA Activist Conference

A Labor Activist/Midwest Activist conference will be held in Chicago
on May 4 at Roosevelt University, 430 S. Michigan. It will follow the
annual Chicago DSA Debs - Thomas - Harrington dinner to be held Friday
evening, May 3, at the Congress Hotel at 520 S. Michigan. Tentative
agenda for the conference is:

8:30 am - Registration (Room 232)

9:00 am - Opening Plenary - Overview of Labor Today

10:30 am - Workshop Session I

DSA's Agenda: Economic Insecurity
Labor Organizing
Noon Lunch

1:30 pm - Workshop Session II

DSA's Agenda: Election's 96
Immigration, Labor & Politics
Labor & Youth, Diversity
3:00 pm - Mini-plenaries/Meetings

Labor Commission
Midwest Activists
4:30 pm - Closing Speaker/Panel

Registration for the conference is $5 to help cover costs. For more
information contact the DC DSA office at (202) 829-6167.

Other DSA News

Three out of four candidates endorsed by Chicago DSA in the March
primary election won. Only Willie Delgado lost in his effort to win
nomination for 3rd General Assembly District; he received only 43% of
the vote. Danny Davis walked away with the nomination for the 7th
Congressional District; he also had no trouble defeating two
candidates for 29th Ward Democratic Committeeman. Patricia Martin's
race for Judge of the Circuit Court (7th Subcircuit) was more of a
cliff-hanger as she won by only 3%. She will have no opposition in
November's General Election. Barack Obama won nomination to the
Illinois Senate with no opposition. He will have no opposition in
November. The 49th Ward non-binding referendum in support of the Jobs
and Living Wage Ordinance won with 3,164 votes against 576 "no" votes
and 1,140 "abstentions".

Among other election results of interest, Marc Loveless, candidate for
the Harold Washington Party nomination for Circuit Court Clerk, lost
the election to Philip Morris, which leads to some interesting
speculation. Mr. Loveless did win election as 32nd Ward HWP

Michael Chandler, Alderman of the 24th Ward, was elected in the non-
partisan Chicago City Council election last year with support from the
New Party. In March, he was elected 24th Ward Democratic Committeeman,
easily defeating Jesse Miller, Jr.

Add yourself to the Chicago DSA mailing list (snail mail and email).


...and I am Sid Harth
Sid Harth
2010-02-02 17:46:16 UTC
Can the Chinese consumer save the global economy?
posted on February 2, 2010 at 10:30 am

If, as I argued in my January 29 post
, the free-spending, never met a credit card they didn’t like U.S.
consumer of 2006 and earlier isn’t coming back within the next decade,
who will pick up the slack? Who will buy all the cars, the flat-screen
TVs, the steel, the natural gas that the global economy is geared up
to produce?

The hopeful answer, of course, is China’s growing numbers of middle
class consumers. Not only does that country’s growing wealth add
hundreds of millions of buyers to the markets for everything from
designer sunglasses to air conditioners, the Chinese government is
committed to policies that will grow domestic consumption in China.

All the world has to do is wait and the Chinese consumer will pick up
the shopping bags dropped by exhausted U.S. consumers and spend the
global economy back to prosperity.

At least that’s how the hopeful story goes.

But a new study from McKinsey & Co. makes me doubt exactly how much
global lifting China’s consumers will be able to do over the next
couple of decades.
The big obstacle is the heavy structural emphasis in the Chinese
economy on exports and government-led investment. Currently domestic
consumption makes up just 36% of GDP.

In 2007 China was, in aggregate the fifth-largest consumer market in
the world behind the United States, Japan, the United Kingdom, and
Germany. But China’s consumer spending accounts for a much lower
percentage of the economy—just 36% in 2008–than in the United States
(where consumer spending accounted for 71% of GDP in 2008) or in the
United Kingdom (where consumer consumption accounted for 67%) or Japan
(where consumer consumption accounted for 55% of GDP).

China’s consumer consumption to GDP ratio is low even for the
developing world. Brazil’s ratio came in at 65% in 2008, India’s at
57% and Thailand at 54%. As McKinsey points out China has the lowest
consumption-to-GDP Ratio of any major world economy except Saudi
Arabia where oil exports account for a huge share of the economy

And in fact China’s consumer has been losing ground since 1990 when
consumer consumption accounted for about 51% of GDP.

So what would it take to get that ratio up in China?

The study (and you can find a summary of it at
http://www.mckinseyquarterly.com/A_consumer_paradigm_for_China_2429 )
looks at three scenarios for the future trend of consumer demand in

First, there’s what McKinsey calls the base case. In this scenario,
the Beijing government doesn’t do anything to increase consumer
spending in China. Any gains in the share of the economy going into
consumer consumption come from the increasing wealth of Chinese
consumers as the economy grows. Under this scenario consumption rises
to about 39% of GDP over the next fifteen years.

Second, there’s the policy scenario. In this case the Chinese
government fully implements the changes that I have already announced
for promoting consumer consumption. Under this scenario consumption
rises to 45% of GDP. That’s a big increase but still leaves consumer
consumption with a smaller share of the economy than in South Korea
(where consumer consumption accounts for 48% of economic activity.)

Third, there’s what McKinsey calls the stretch scenario. In this case
the Chinese government implements new policies to reorder the
country’s economy. This effort could push consumption up to 50% of
GDP, still short of the consumption/GDP ratio of countries such as the
United States, the United Kingdom, and Canada (at 60% ) or France
(at 58%), but creeping toward Japan’s 55% ratio.

This third scenario would add $1.9 trillion a year in consumption to
the global economy.

China’s government seems committed to the pro-consumer changes that
make up McKinsey’s second scenario. Those changes concentrate on
repairing the social safety net in China so that Chinese families feel
more secure and don’t believe they have to put away quite so much in
savings. The average Chinese family now saves about 25% of its
discretionary income. That’s three times the savings rate for Japan, a
country of notorious savers, and 15 percentage points above the GDP-
weighted average for Asia as a whole.

The changes that have been proposed so far include health insurance
and better pensions. Lower school fees and more aid so that Chinese
families don’t have to save as much to send their children to college.
(McKinsey found in surveys that saving for the cost of a university
education was the No. 1 reason for families to save.) Implement those,
the theory goes, and Chinese families would feel able to save less.

But, according to McKinsey’s models, these plans would do very little
to increase consumption as a percentage of GDP. More financing for
education, for example, would add just 0.4 to 0.7 percentage points to
the current 36% consumption to GDP ratio. Better health care would add
just 0.4 to 0.6 percentage points.

To get to the major shift of the third scenario, the one that would
pump $1.9 trillion a year in new consumer spending into the global
economy, China’s government would have to make radical changes in the
Chinese economy.

Real wages would have to climb: currently even taking into account an
artificially undervalued currency and lower prices for many goods in
China, it takes a Chinese worker seven hours to buy the same goods and
services that a U.S. worker pays for after one hour o work.

Interest rates would have to rise from the low levels set by the
government so that Chinese savers could earn a reasonable return on
their money and could save a smaller part of their income.

The government would have to expand consumer access to credit.
Outstanding consumer credit is just 3% of GDP. In Brazil it’s 12%.

These steps McKinsey estimates could raise consumers’ share of the
economy by roughly 3 to 5 percentage points.

All this is important for investors anywhere in the world for two

First, the Chinese government’s announced plan to raise domestic
consumer spending as a percentage of GDP will make domestic (and
foreign companies with a presence in the Chinese domestic economy)
companies in fields such as life insurance, medical services, and
health care products good investments. And as the share of the
domestic economy going to consumers increases, companies selling
consumer goods—at the right price point—in the domestic economy will

Some names? Coach (COH), Luxottica (LUX), China Mobile (CHL), China
Life Insurance (LFC), Ctrip.com (CTRP), and Home Inns and Hotels
Management (HMIN). Most of these are either in one of my portfolios
such as Coach or on my new Jim’s Watch List. I’ll be adding Home Inns
and Hotels Management to my watch list with this post.

Second, I don’t expect that the Chinese government will turn the
country’s economy inside out to give domestic consumption a bigger
piece of the pie than it gets under scenario No. 2. I’m afraid that
means that China’s consumers won’t be picking up enough clout to soak
up all the excess capacity built up in the global economy. For more on
global excess capacity see my post

In that post I mentioned three themes—brands, service and distribution
networks, and technology–to use to fill a portfolio with stocks that
will profit despite this excess capacity.

Third, I think you can overweight your portfolio not to China but to
other economies in the developing world that offer a better balance of
domestic consumer spending, on the one hand, and exports and fixed
asset investment on the other than China does. I’ve got one country in
mind, Brazil.

In my next column I’m explain to you why I think Brazil is a better
long-term play—say over the 15 years of the McKinsey study—than China.

Full disclosure: I own shares of the following stocks mentioned in
this post in my personal portfolio: Coach and Ctrip.com.


tostoryteller on 2 February 2010
If you look at Scenario 2 or 3 and a net increase in consumption
growth in the world economy, how much do you subtract from global
growth if you believe US consumption will deteriorate as a % of US GDP
over the next ten years?

I believe Brazil is the trend call at the moment, but I think your
original advice to keep investments focused on companies benefiting
from internal non-export Brazilian growth is the best opportunity.

sevenacorns on 2 February 2010
I see HAO etf as similar investment vehicle for internal consumption
in China, just as BRF is for Brazil.

EdMcGon on 2 February 2010
When I look at the chart for HAO, it seems to be trapped in a trading
range of $24-28/share for the last 3 months.

Frankly, I’d sooner recommend finding some good Chinese small cap
stocks to buy. HAO is going to require some good news to get a bump
out of it’s trading range, whereas there are plenty of good Chinese
small caps to buy directly.

terryw on 2 February 2010
The consumption story in China seems to be real, they recently
surpassed the US to become the #1 automobile market, for now.


...and I am Sid Harth
Sid Harth
2010-02-02 17:54:26 UTC
FEBRUARY 2, 2010, 10:59 A.M. ET.

OECD: Inequality in China Leveling Off .

BEIJING—The increase in inequality in China has leveled off in recent
years and could be less severe than previously thought, the
Organization for Economic Cooperation and Development says, suggesting
that Beijing is starting to make progress in tackling one of its
biggest social problems.

The OECD, in its economic survey of China published Tuesday, said more
welfare spending in rural areas and increased migration to cities
helped arrest a widening of the income gap. The Paris-based
organization urged China to lower what is still a fairly high level of
inequality by further boosting social programs and eliminating
discrimination against rural residents.

The report is the OECD's second major study of China, which isn't a
member of the organization. China's economy is on pace to surpass
Japan this year as the world's second-biggest after the U.S. The OECD
urged China to take a range of measures to liberalize its economy,
such as freeing up interest rates to encourage banks to lend more to
small companies, and privatizing state-owned enterprises. It also said
that allowing the currency to appreciate would help the government
manage the economy better.

China's breakneck economic growth of the past three decades has pulled
hundreds of millions of people out of poverty. But the incomes of
people at the top have risen much faster than the rest, creating new
divisions in a once-egalitarian society. Tensions between property
developers and dispossessed farmers, and between factory bosses and
their rural work force, are often a flashpoint for social conflict.
That has pushed China's government to narrow the gap, and officials
have repeatedly said they will do more to boost incomes of the worst-

"We've already seen, in the last five years, a stabilizing of the
disparities," Richard Herd, a senior economist at the OECD, told a
press briefing in Beijing. Much of that is due to an enormous movement
of rural people off farms and into urban jobs, a change which allows
them to raise their incomes significantly. "You've had a major
adjustment in the labor market since the mid-1990s," he said.

China's income inequality as measured by the Gini index—a scale on
which zero is perfect equality and 100 is perfect inequality—was at
49.6 in 2005, already greater than the U.S., according to the Chinese
Academy of Social Sciences. But the OECD, using what it says are
better estimates of price changes and the ranks of undocumented rural
migrants in cities, puts the Gini index for 2005 at 41, and says the
measure of inequality edged down to 40.8 by 2007.

The OECD's numbers indicate that inequality remains higher in China
than in the U.S. and most other developed countries. But China's
inequality remains less severe than that of South Africa, Brazil,
Chile, Russia or Mexico. Many domestic commentators have urged China
to narrow the income gap and avoid the so-called "Latin
Americanization" of its economy, a reference to the region's chronic
wealth disparities.

Chinese officials often focus on the gap between the country and
cities. Last year, per-capita annual income in urban areas was about
$2,500, more than three times the $750 in rural areas – a ratio that
has risen over the past decade.

But that comparison doesn't take into account the growing number of
rural migrant workers in urban areas, or the fact that prices for most
things are cheaper in rural areas. After adjusting for those factors,
the OECD says, average urban incomes are actually closer to two times
rural ones, not three.

Much of the remaining gap between urban and rural incomes comes from
urban workers having more education than rural ones, Mr. Herd said. He
urged China's government, which has already cut school fees, to make
12 full years of education universally available in the countryside.
It is also important, he said, to overhaul the household registration
system, which often blocks rural migrants from receiving health care
or education in the cities where they work, and deters them from
settling there permanently.

Those initiatives will require money, which China should be able to
afford. The OECD said China's low level of government debt gives it
the ability to spend more on social programs over the long term,
particularly after spending on economic-stimulus projects is phased

Write to Andrew Batson at ***@wsj.com

Discuss: There are 4 comments

4 hours ago..Mike Zhang wrote:

.Is the OECD study robust? Inequality is the biggest domestic problem
in China, I think. The problem is not that easy to solve.

2 hours ago.Nonsubscriber .
bob king replied:
Communityclose window ..Your message has been sent.Close
window .Connect
.It sounds like you are the exact the guy to solve the problem.

33 minutes ago..Elton Ho replied:

.The basis of OECD's calculations is clear and rational. Rural
migrants send large portions of their earnings back home to take care
of families, and living standards are lower in rural areas. So these
are clear factors that should be taken into account.

Of course this does not mean there are still huge disparities to work
out. China now has the money to bring equality and prosperity to the
long suffering rural people, and should do so with haste.

Raising public education to high school level in rural areas is a
particularly good suggestions. It would be a huge help to soak up the
current huge surplus of college graduates too.

Urbanizaton and mobility will be the biggest drivers for higher
productivity and growth for China. Policies that brought inequalities
to rural people should be removed ASAP.

1 hour ago.Nonsubscriber
Feng Wen wrote:

.It takes a bit of time for Beijing to solve social problems
concerning a fifth of the human race. More work need to be done for


...and I am Sid Harth
Sid Harth
2010-02-02 18:01:02 UTC
February 2, 2010, 9:24 AM ET.

Groundhog Day 2010: Is the Economy Coming Out of Its Hole
By Phil Izzo

For the third year in a row groundhog Punxsutawney Phil saw his shadow
and headed back to his hole for six more weeks of winter. Does the
famous rodent meteorologist tell us anything about the economy?

His record as an economic forecaster isn’t much worse than some pros.
(Associated Press)

According to CNN, Phil doesn’t have the best record as a weatherman
(he’s correct just 39% of the time). During the last two years, he’s
had more success as an economic forecaster predicting turning points.

In 2008, six weeks to the day after the groundhog saw his shadow, Bear
Stearns collapsed, signaling a new phase to the credit crisis and the
first signs of the Great Panic that sent the economy into a tailspin
late that year. In 2009, Phil saw his shadow again, and who could
blame him for heading back into his hole? The stock market was still
falling, gross domestic product was tumbling and politicians were
debating stimulus plans and bank rescues.

But six weeks later, the thaw had started. The stock market hit its
low and that week began a major rally that pushed shares up nearly 19%
for the year. Soon, everyone was seeing the green shoots of spring.

So does Phil seeing his shadow mean we’ll have another turning point
for the economy six weeks from now? Probably not. As we said last
year, this is all just coincidence.

But the lesson remains the same. It’s important to remember that a lot
can change in the economy in six weeks.

There are 10 Comment(s)
comments email ***@wsj.com
9:41 am February 2, 2010
Rug wrote:
.Oh, deja vu … I thought he already said this YESTERDAY!! Hmmmmmmmmmmm
…. ;-))
9:47 am February 2, 2010
morgan wrote:
.winter……………sucks …………………………bad
9:49 am February 2, 2010
HAILEY wrote:
.I THINK THAT GROUN HOG IS CUTE!!!!!!!!!!!!!!!!!!!!!1
9:57 am February 2, 2010
Suz wrote:
.I think he’s cute, too. I still think the movie is fun to watch. If
you HATE winter, you are wasting your energy hating it. It comes every
year. If you are really that unhappy about cold, slushy weather, move
to Hawaii.
10:03 am February 2, 2010
cody harris wrote:
.ground hogs are cool but i hate the winter
10:14 am February 2, 2010
Anonymous wrote:
.Phil should just stop predicting if he’s always wrong when it comes
to spring. WASTING TIME…
10:17 am February 2, 2010
Chirs B wrote:
.Phil should just stop predicting seriously, he’s always wrong so why
bother broardcasting him. WASTE OF TIME…
10:20 am February 2, 2010
Get Real wrote:
.Once again this blog is brought down to the lowest common denominator
and the comments on here add to my belief that the average American is
stupid, lazy, spoiled and worthless (Noth that there are not great
people too). However, given the advantages we used to have over other
countries whatever happens to this country we deserve it because of
the sheer number of brain dead idiots being churned out every day.

First of all, Rupert please try to compete with Bloomberg/FT/Economist
and not Fox/CNN/MSNBC, by firing this author and whipping the
journalism into shape (ie eliminate the stupid articles). Second of
all, to the above commentors please take your stupidity to the
American Idol blog spots, Mr. Murdoch would appreciate it.
10:39 am February 2, 2010
Stupid little rat wrote:
.Let’s shoot it. He NEVER predicts spring..haha

Can’t take this cold gray hell anymore
11:47 am February 2, 2010
Jeff d wrote:
.I love ground hog day and the ground hog is so cute:)

...and I am Sid Harth
Sid Harth
2010-02-02 18:04:16 UTC
FEBRUARY 2, 2010, 11:14 A.M. ET.
UK Prime Minister Defends Slow Start; Opposition
Critical .ArticleCommentsmore in

LONDON — British Prime Minister Gordon Brown said Tuesday that it was
right for the U.K. to run a large deficit to get through the
recession, but an opposition Treasury spokesman criticized the move,
saying spending cuts should have started this year.

The U.K. Treasury expects the public sector to run a deficit of some
12.6% of gross domestic product this year, one of the highest levels
of any developed economy. The government has promised to reduce the
deficit by half over the next four years, starting in 2011, but the
opposition Conservative Party reiterated that it would start cutting
this year.

Britain will hold elections some time before June 3. Several ratings
agencies have warned the U.K. could see its AAA credit rating
downgraded if its deficit reduction plans aren't tightened.

"Every country has a higher level of debt because of the recession,"
Mr. Brown said. The policy "meant that we were able to run a flexible
enough policy—with a high deficit—to take us through the recession."

He said the government hopes that its plan to halve the deficit in
four years is clear enough, adding that he thinks investors "will be
satisfied that we are taking the actions necessary."

Mr. Brown also said he doesn't think the U.K. Treasury's growth
projections are too optimistic. The Treasury forecasts the U.K. will
grow 1.0%-1.5% in 2010 and 3.0%-3.5% in 2011.

But Conservative Party spokesman for the Treasury, George Osborne,
said that if elected, it should be judged on whether they can defend
the country's AAA credit rating. He stressed that a downgrade from any
major ratings agency would be a failure of economic policy.

In a speech in London, Mr. Osborne also confirmed that the Bank of
England would remain independent under a Conservative administration
and retain its current 2% inflation target

"I know that we are taking a political gamble to set this up as a
measure of success... but judge us by whether we can protect the U.K.
credit rating," Mr. Osborne said.

Still, the opposition spokesman declined to give details on the depth
of the Conservative Party's planned spending cuts should it win this
year's election.

Mr. Osborne also laid out several other benchmarks on which a
Conservative government should be judged, including a commitment to
raising exports as a percentage of gross domestic product.

Mr. Osborne also said that he wouldn't set a timetable for selling off
the government's stakes in banks taken during the global financial


...and I am Sid Harth
Sid Harth
2010-02-02 18:09:20 UTC
FEBRUARY 2, 2010, 7:10 A.M. ET.
UPDATE: Bank Of China Orders Property Development Loan Rate Hikes -

BEIJING (Dow Jones)--Bank of China Ltd. (3988.HK) ordered an "overall
hike" in interest rates on new loans extended to property developers
Monday, as part of efforts to curb the size of new loans and lower
potential risks in property lending, a person familiar with the
situation told Dow Jones Newswires on Tuesday.

The move appears to be in response to the China Banking Regulatory
Commission's call last week for lenders to remain vigilant to property-
market fluctuations. The regulator has pledged to step up its
supervision of property-related loans amid growing concern about the
formation of asset bubbles.

Bank of China told its credit officials at a meeting Monday that
interest rates on new loans extended to real-estate developers should
be raised from Feb. 1, and that "in principle" officials aren't
allowed to offer a rate below benchmark interest rates, according to
the person, who declined to be named.

During the meeting, management also criticized some teams for lending
too much in January, said the person, without elaborating.

An official in Bank of China's news department said he was unaware of
the move.

Analysts say the move shows lenders are making progress in curbing
loans to property companies, amid concerns over an asset bubble
forming in the fast-growing sector, but the impact on property
developers will likely be limited in the near term.

Sophie Jiang Li, a banking analyst with CCB International Investment
Ltd., said Bank of China's move signals lenders are scrutinizing their
lending practices more strictly, which will cause the growth in new
loans to stabilize in February from January.

However, she said raising loan rates won't deliver a "mortal blow" to
property developers as they have high levels of profitability and
multiple fund-raising channels other than bank lending.

State banks' average loan rates to property developers are around 15%
higher than benchmark rates, compared with the average 30% premium for
other industries, she said.

Johnson Hu, a property analyst at UOB Kay Hian, said smaller property
developers with limited liquidity and some bigger companies with
relatively higher leverage ratios would be more sensitive to such

Bank of China asked its branches to halt lending in mid-January after
an overly rapid expansion in new loans in the first half of last
month. A few other banks also slowed lending growth last month.

In a report Monday that cited unnamed sources, the Century Weekly
magazine, headed by former editors of the well-regarded Caijing
magazine, said new loans had fallen below CNY1.1 trillion as of Jan.
28 from CNY1.45 trillion as of Jan. 19 as banks slowed lending and
some bills matured.

China's regulators including the CBRC and the central bank took steps
last month to rein in the surge in loans, including hikes in banks'
reserve requirement ratio. They called for banks to achieve more
balanced lending growth throughout the year to prevent inflationary
pressures and curb asset bubbles.

Fan Gang, a key adviser to China's central bank, said Monday asset
bubbles are "the real worry" for China's economy and the government
should properly manage them, reflecting increasing official concern
about rapid real-estate price rises.

-Victoria Ruan contributed to this article, Dow Jones Newswires; 8610
8400 7799; ***@dowjones.com


...and I am Sid Harth
Sid Harth
2010-02-02 18:11:59 UTC
China Economic Indicator: Largest Oil Company To Up Output 28%
Posted: February 2, 2010 at 6:29 am

Print Email Subscribe Free Newsletter Follow us on Twitter 24/7 Wall
St Real Time 500 If there was any question about how quickly the
Chinese think their economy will grow this year, the production
targets for Cnooc, its largest off shore oil and gas exploration
company, answer them.

Cnooc plans to increase production by 28% according to Bloomberg.
“That’s a staggering production forecast after a stand-out 2009,”
David Hewitt, an energy analyst at CLSA Asia Pacific Markets said the
news service reported.

The forecast says a great deal about the likely trajectory of China’s
manufacturing and transportation industries for the balance of the
year. But, it is also a reasonable guide to oil demand, which so far
analysts have expected will be modest this year.

The predictions of $70 to $80 a barrel of crude this year are usually
based on moderate industrial growth in the developing world and tiny
improvements in the older developed nations. China’s internal growth
forecasts must be better than most experts expect.

Douglas A. McIntyre


...and I am Sid Harth
Sid Harth
2010-02-02 18:15:10 UTC
Financial Confusion Reigns On Record $1.6 Trillion Deficit Forecast
Posted: February 1, 2010 at 5:54 am

The White House is about to present its budget to Congress for the
2010 fiscal that will cause a $1.6 trillion deficit and $3.8 trillion
in spending. That would be an all-time record and $200 billion higher
than the 2009 number. The Administration’s budget would add $8.5
trillion to the federal debt through 2020 growing the debt as a
percentage of GDP to 77%, The White House forecasts that the deficit
would drop to $727 billion, or 4.2% of the gross domestic product, by

Obama’s proposal will include a freeze on spending increases in some
discretionary government programs, but the $250 billion savings that
represents over ten years will have the most minor affect on the red
The President and some members of Congress would like to put together
a bipartisan panel to analyze the nation’s finances and suggest budget
cuts, but members of the legislative branch may find the cuts
unpalatable as they seek re-election.

One of the most difficult problems is solving the budget crisis is
agreeing on what the deficits will be. The differences between the
Congressional Budget Office forecasts and those from The White House
budget authority are substantially different, which means it will be
difficult to moderate spending because there is so little agreement on
what expenses and revenue will be.

For the 2010 fiscal year, the Administration forecasts a $1.6 trillion
deficit. The CBO forecast is $1.35 trillion. The 2011 forecast from
the Administration is for a shortfall of $1.3 trillion. The CBO figure
is $980 billion. The spread between the two predictions grows even
further apart by 2020 when the difference is between a White House
estimate of a $1.6 trillion shortfall and a CBO figure of $687

These tremendous difference will cause more disputes over how the
problem should be attacked and solved. The most important assumption
is the figure for receipts to the IRS. It may be possible to manage
costs to some extent. Managing revenue is nearly impossible. It relies
on economic growth, unemployment, and tax rate. There has been a
school of thought for many years that raising tax rates slows economic
activity so the net collections by the IRS actually fall.

The other difference in projections is one of degree but not one of
severity. The costs of Social Security, Medicare, and Medicaid rise
faster than almost any other sets of costs. As the population,
especially the so call Baby Boomers, age, the needs for social
services for the old and infirmed increase at an impressive rate.

The need to bring down the deficits is clear. The size and scope of
those deficits seem nearly impossible to measure, which makes the
cutting all the more difficult.

Douglas A. McIntyre


...and I am Sid Harth
Sid Harth
2010-02-02 18:18:11 UTC
Signs Of The Apocalypse: The 182 Page CBO 2010 Deficit Analysis
Posted: January 27, 2010 at 4:52 am

A review of the Congressional Budget Office forecast of the 2010 to
2020 fiscal P&L and balance sheets for the US government leaves the
impression that the government is caught in a financial vice from
which it cannot free itself—at least not in the next ten years.

Every newspaper, newscast, and online information site gave front page
billing to the CBO report that the 2010 federal budget deficit will be
$1.35 trillion, assuming current laws and policies remain unchanged.
‘The agency worried in its report that if Congress does not cut
spending or raise revenue via taxes that the numbers could be even
worse than they were in 2009 when the deficit was $1.4 trillion. The
part of the analysis that should startle people the most is the CBO
assumption that unemployment will remain above 10% for at least the
first half of next year. This information must have caused everyone in
The White House to blanch. The Administration has pushed the idea that
its stimulus package would rescue the U.S. from severe joblessness
early this year.

The CBO was not as optimistic about the economic recovery as many
politicians and economists are. The agency expects GDP growth between
the fourth quarter of last year and the last quarter of this will only
be 2.1%.

The reasons for the deficits in 2010 and beyond are old-fashioned
ones. Outlays rise from $3.15 trillion in 2009 to $3.94 trillion in
2014. Revenue moves up much more modestly, and reaches $3.46 trillion
in 2014. And, that is if the pace of the economy goes moderately well.
The effect that accompanies this is that national debt held by the
public goes from $7.5 trillion in 2009 to $15 trillion in 2020.

The authors of the CBO report do not give any advice on how to cut the
deficits of the next decade, but they do give the reader some hints.
The report puts together two different cases for the withdrawal of
troops from Iraq and Afghanistan. The effect on the deficit in the
case of a rapid cut in troop strength is $1.8 trillion during the
2011-2020 time-frame. A freeze in discretionary spending and changes
in the tax rate are also suggested avenues to decrease the huge

The CBO report is full of analysis of the value of the dollar, trade
figures, inflation, and inventories. The reality of the choices which
face taxpayers and the federal government get easier as each year
passes in the 2010-2020 forecasts. The mandatory outlays in the budget
rise 55% over the period. Social Security costs go up by 67%, Medicare
rises by 96%, and Medicaid by 64%. The only very large outlay that
grows modestly is the Defense budget, which only rises 17%.

President Obama has suggested a freeze on the part of the budget which
is considered discretionary spending for the period from this year
until 2013. That, The White House estimates will cut the deficit by
$250 billion over the next ten years. A number of opponents of the
Administration and economists consider the proposal nothing more than
the most modest of gestures.

The hard truth about driving the deficit down is the same now as it
has been at any point in the last quarter of a century when deficits
were high. Taxes can bring in more money, but are hard to levy during
a soft economic period without throttling the recovery. Stimulus
programs may work over time, but their upfront costs are considerable
and add quickly to the government’s debt burden, perhaps so quickly
that they offer no reasonable financial return.

The reality of the probable failure of higher taxes to shrink deficits
leave only cuts in the nation’s large social safety network and its
war machine as sources of funds. No one wants to take on the project
of telling the old and those in need of help that it is not realistic
for the nation to give these services at the same level any more. Like
the people who lost their fortunes in the market crash or to swindlers
like Madoff, the country’s needy will almost certainly have to learn
to live with less.

S&P recently told the Japanese government that it would put the
nation’s sovereign debt on its negative credit watch list. Japan’s
bonds may be downgraded to “AA”. The action would not only be
humiliating to the government of the world’s second largest nation by
GDP; it would drive up the costs for Japan to borrow money to fund its
deficit. S&P reasoned that Japan’s economic growth is too slow, its
government spending is too high, and its aging population will cause
the nation to have fewer productive people who can be readily taxed.
The US might be described the same way.

The American social services that have become part of the fabric of
what the federal government provides its citizens may remain a part of
that fabric, but the services come at too high a price. The nation can
cut them judiciously now or be forced to make deeper cuts and perhaps
haphazard cuts when the question of the US government’s ability to
raise money is on the line.

Douglas A. McIntyre


...and I am Sid Harth
Sid Harth
2010-02-02 18:22:44 UTC
Congressional Budget Office 2010 Outlook… Time for the Deficit
Posted: January 26, 2010 at 10:20 am

The Congressional Budget Office has released new data for the 2010
budget, and the need for more spending freezes and spending controls
is becoming more and more evident by the day (as if you didn’t know
that). The projections are less dire than they were in August, but
the notions of finding any comfort beyond that are not present. The
CBO projects that if current laws and policies remained unchanged for
fiscal 2010, the federal budget would show a deficit of $1.35 trillion
or 9.2% of GDP. The CBO also expects an average of a little over 10%
unemployment for the first half of 2010. Here is the kicker though
that will dash any hopes for all those who have opted out of the
workforce. The CBO noted that unemployment will probably not dip
below 9% until 2012. Also noted was that under the current law the
CBO expects that individual income tax receipts are projected to surge
by 33% in 2011 and by 14% in 2012.

This deficit of $1.3 trillion for fiscal year 2010 would be slightly
smaller than the 2009 deficit but, would still be the second largest
since World War II as a share of the economy as a whole. The CBO also
said that the budget picture remains daunting beyond this year, with
deficits averaging about $600 billion annually from 2011 through 2020.

More data verbatim from the CBO summary is as follows:

Those estimates are not intended to be a prediction of actual budget
outcomes; rather, they indicate what CBO estimates would occur if
current laws and policies remained in place. Toward that end, CBO’s
projections presume no changes in current tax laws or spending
programs. Any new legislation that reduced revenues (such as indexing
the alternative minimum tax for inflation) or boosted spending (such
as providing supplemental funding for military operations in
Afghanistan) would increase projected deficits. For example, if all
tax provisions that are scheduled to expire in the coming decade were
extended and the AMT were indexed for inflation, deficits over the
2011–2020 period would be more than $7 trillion higher. (See the above
chart for details on the budgetary impact of some alternative policy
actions and see the sidebar for more information on CBO’s baseline.)

Accumulating deficits are pushing federal debt to significantly higher
levels. CBO projects that total debt will reach $8.8 trillion by the
end of 2010. At 60 percent of GDP, that would be the highest level
since 1952. Under current laws and policies, CBO’s projections show
that level climbing to 67 percent by 2020. As a result, interest
payments on the debt are poised to skyrocket; the government’s
spending on net interest will triple between 2010 and 2020, increasing
from $207 billion to $723 billion.

Economic growth will probably remain muted for the next few years. The
deep recession that began in 2007 appears to have ended in the middle
of 2009. The economy grew during the third quarter, and early signs
suggest that the labor market strengthened slightly late in 2009. CBO
expects that the economy will continue to grow, although at a slower
pace than in past recoveries. Hiring rates remain very low, and CBO
projects that the unemployment rate will average more than 10 percent
during the first half of 2010, before beginning a gradual decline.
That pattern is typical of recent recessions, where hiring continues
to fall for 6 to 12 months after the economy begins to grow.

Beyond the 10-year projection period, growth of spending for Medicare,
Medicaid, and Social Security will speed up from its already rapid
rate. To keep federal deficits and debt from reaching levels that
would substantially harm the economy, lawmakers would have to
significantly increase revenues, decrease projected spending, or enact
some combination of the two.

Doesn’t this recovery just feel stellar? The only good news here is
that this is not quite as awful as what the CBO made in projections
back in August. If you love things now, wait until you have far
higher tax outlays on top of all the continued uncertainty.



...and I am Sid Harth
Sid Harth
2010-02-02 18:27:31 UTC
Tuesday, February 2, 2010
The EU, China and Dual-Use Technology

The more I've read this report I linked to in an earlier post
concerning the PRC's licit and illicit means of information gathering,
the more I'm compelled to make a separate post of it as it really is
very interesting. The gist is that there's a tradeoff between security
concerns such as limits on the export of "dual-use" (military and
civilian) technologies and revenue generation to ensure that Europe's
innovation lead does not dwindle quickly. This situation is especially
true in the context of [no surprises here] China. Yes, it's an IPE
question with security dimensions: how can a systematic information-
gathering apparatus be put in place that monitors the export of truly
sensitive technologies abroad while not hindering exports of less-than-
sensitive ones? It's good stuff from May-Britt Stumbaum. Below is the
summary; you can download the entire report as well.

China’s rise as a high-tech military power is central to US security
concerns, while a European debate on the implications of a rising
China beyond the economic sphere is conspicuous by its absence.
Concerns about Intellectual Property Rights (IPR) have prevailed in
debates on high technology transfers to the PRC, with less attention
being paid to the ‘dual use’ nature of many of these technologies that
can be utilised in both civilian and military applications. Unlike the
United States, the European Union has no overview on the amount and
generation of sensitive technology exported to the PRC. European
policy on dual-use technologies is fragmentary at best, while
conflicting export regimes and shrinking investments in research and
education throughout the European Union are putting the EU’s
technological lead at risk. This pressure further increases the need
to find outside revenues to fund innovation and the next generation of
technology – which could come from the expanding Chinese market. Given
the central role of dual-use technologies in today’s information-based
warfare, the EU’s traditionally high level of technology exports to
China has become a sensitive topic across the Atlantic in recent
years, as was highlighted by the clash over the potential lifting of
the EU arms embargo in 2004/2005. In sum, dual-use technology
transfers touch on aspects of competitiveness and innovative capacity,
market access and security concerns.

A proactive policy needs to be based on a common understanding of
China’s potential as a military superpower and of its likely impact on
the European Union, the EU’s policies and its relationship with the
United States.
High-tech, transatlantic relations, and China on the prowl: what more
could you ask for in free reading materials?

Posted by Emmanuel at 2:51 AM


...and I am Sid Harth
Sid Harth
2010-02-02 18:42:19 UTC
U.S.-China tension was the underaddressed theme of Davos
Posted by Adam Lashinsky, Senior Editor at Large
February 2, 2010 2:34 AM

Attendees of the World Economic Forum crave validation. Validation
that they learned enough things or met enough people or conducted
enough business to justify the time and expense of spending nearly a
week in Switzerland. One form of validation, I’ve learned, is to
confidently believe one understands the mood of the conference, which
by inference is the mood of the world’s elites regarding, well, the
state of the world.

Candidates for topics of the conference that concluded Sunday in the
Swiss ski-resort town of Davos include a commitment to alternative
energy and climate-change mitigation; banker bashing and the fragile
economy; and the rise of protectionism.

In my opinion, the most important topic was one that received
relatively little direct commentary in Davos: the dramatically
heightened tension between the United States and China.

Rather than address the issue head on, most participants danced around
it. Plenty of U.S.-China side issues were prominent. As I noted
earlier, the dichotomy of 10% U.S. unemployment and 10% Chinese GDP
growth featured prominently. The important but wonky topic of the
Chinese refusal to revalue its currency received plenty of lip
service, though Chinese vice-premier Li Keqiang failed to address it
in his widely followed address to the conference. (When I asked David
D. Li, a professor of economics at Tsinghua University in Beijing, his
opinion of U.S.-China tension, he answered only about the currency
dispute, saying he thought China would in fact raise the value of the
yuan. This view is becoming less controversial in China, and it’s
telling that Li thought it was the only aspect of the relationship
worth discussing.)

Google’s confrontation with China flared up repeatedly. CEO Eric
Schmidt was hounded at every turn by Chinese and Western journalists
to address Google’s threat to abandon China over its disdain for
censorship and belief its computers in China have been hacked. On a
panel I moderated, Schmidt said Google (GOOG) wants to stay in China
but hopes to exert pressure in order to improve the lives of the
Chinese people.

The Google issue is at once significant and marginal. Yes, the
confrontation is real and serious, even if Google is confusing matters
by marrying two distinct issues: censorship, on the one hand, which
Google embarrassingly and uncomfortably has been cooperating with in
China for several years; and hacking, a crime of stealing intellectual
property that Google has all but accused the Chinese government of

Yet the Google affair may ultimately prove to be most analogous to the
assassination of Austrian Archduke Franz Ferdinand that started World
War I, even if by itself it hardly represented a call to arms. The
main issue here is bigger than a currency dispute or a corporate
spying incident. It is far more about a confident and increasingly
powerful China that increasingly intends to confront, stand up to and
otherwise challenge the U.S., which in turn appears weaker and less
confident than it has in years.

The World Economic Forum isn’t designed to address such prickly issues
head on. It is important that all nations feel comfortable in Davos
and even more important that China be encouraged to attend in ever
larger numbers. Where you stand on the issue depends on where you sit.
Ian Bremmer, who runs the U.S.-based political-risk consulting firm
Eurasia Group, says the looming conflict isn’t a cold war. “Instead,
it is economic mutually assured destruction,” he says. “China knows it
is coupled with the U.S. But it doesn’t want to be coupled.”

This coupling featured in Vice-premier Li’s comments when he vowed
that China would increase its domestic consumption. The implicit
message: China wants to be less reliant on exports, particularly to
the United States. U.S. politicians, for their part, take greater and
greater umbrage at China’s actions, from Secretary of State Hillary
Clinton’s “remarks on Internet freedom” to multiple threats of
throwing up trade barriers to America’s biggest creditor. “Both sides
will take measures that will be bad in the long term but are
politically popular in the short term,” says Bremmer, noting that the
Chinese people overwhelmingly support its attacks on the cultural
imperialism of the West, just as many U.S. voters support
protectionist measures. (U.S.-China tension features prominently in
Bremmer's upcoming book, "The End of the Free Market: Who Wins the War
Between States and Corporations?")

Each day brings an upping of the ante. The Chinese have threatened
retaliation over a recent U.S. arms sale to Taiwan, exactly the kind
of foreign policy move you’d expect from Washington when it sees its
interests threatened.

Important relationships like that of the U.S. and China run hot and
cold. It very likely will be cold again next year in Davos. I’m not
talking only about the weather.

This is the reason why we state opinions. Although I agree that China
is not going on bankrupt and in fact Google is leaving them not to
save face but with other reasons.

Reasons that perhaps won't be disclosed by google.

I for one believed that BIG G is not the type of PRO HUMAN ACTIVIST

China on the other hand is a big giant ball of cock.tail that if they
would just concentrate their manpower (physical, mental) they would
surely beyond the doubt beat the heck out of USA. Imagine, their
manpower is 1/4 even 1/5 cheaper than here in America?

More details of this Google Vs China Dispute: http://bit.ly/google-china-censorship-details

Posted By Jack Bane, USA: February 2, 2010 5:11 AM

About This Author

Adam Lashinsky

Adam Lashinsky is a San Francisco-based editor-at-large for FORTUNE,
covering Wall Street and Silicon Valley. Lashinsky joined FORTUNE in
2001, after two years as a contributing columnist. Prior to joining
FORTUNE, Lashinsky covered Silicon Valley for TheStreet.com and The
San Jose Mercury News. A Chicago native, Lashinsky holds a B.A. in
history and political science from the University of Illinois at

Email This Author


...and I am Sid Harth
Sid Harth
2010-02-02 18:45:53 UTC
FEBUARY 2, 2010, 12:22 P.M. ET.
OIL FUTURES: Crude Above $76/Bbl On US Home Sales, Economy

By Claire Rangel

NEW YORK (Dow Jones)--Crude oil futures are trading above $76 a
barrel Tuesday, after positive U.S. home sales data aided momentum to
the economic recovery.

Light, sweet crude for March delivery recently traded $1.96, or 2.6%,
higher at $76.39 a barrel on the New York Mercantile Exchange. Brent
crude on the ICE futures exchange traded $2.03, or 2.8%, higher at
$75.14 a barrel.

Existing-home sales in the U.S. unexpectedly rose in December with the
National Association of Realtors' index for pending sales of
previously owned homes increasing by 1% in December. This added to a
batch of economic indicators recently that have proved more positive
than anticipated.

"The bullish economic data of the last three trading days that began
with U.S. [gross domestic product] growth Friday, strong manufacturing
data [Monday] and [Tuesday's] home sales attracted buying interest in
industrial commodities, such as gasoline," said Andy Lebow, senior
vice-president for Energy with MF Global in New York.

The increase in manufacturing activity wasn't just limited to the
U.S., with China and Europe reporting stronger gains on Monday, too.

For some oil market participants, this rise in manufacturing portends
an eventual improvement in energy demand.

"After yesterday's manufacturing data and some positive economic data,
it is bringing the market back," said Tom Bentz, analyst and trader
with BNP Paribas in New York.

"But keep in mind that the market was oversold, and when it gets that
oversold, a rebound is inevitable and it looks for a reason to
bounce," Bentz added. Oil prices had fallen to a one-month low at the
end of last week.

Higher equity markets added to the positive economic sentiment
Tuesday, helping to lift oil prices, as investors moved out of the
dollar and into what are considered riskier assets such as stocks and

Expectations of the weather in the U.S. turning colder lent further
support to oil, Jim Ritterbusch, of trading advisory firm Ritterbusch
and Associates in Galena, Ill., said in a note.

However, Ritterbusch noted that maintaining the "optimism will require
some additional assistance from several important macro numbers
through the rest of the week."

Data on nonfarm productivity and factory orders will be released
Thursday and employment figures on Friday are shaping up to be the
most widely anticipated data set.

Despite this optimism, some analysts caution that the oil market still
faces a huge stock inventory and the economic data have yet to
translate into a real recovery in U.S. consumption. Indeed, last week
the U.S. reported a 2% decline in oil demand year-on-year for the
previous four-weeks.

In Wednesday's inventory data report from the U.S. Energy Information
Administration, analysts surveyed by Dow Jones Newswires are expecting
crude oil stocks to have risen by 400,000 barrels and gasoline by 1
million barrels. Distillate inventories are projected to have fallen
by 700,000 barrels. Refinery processing rates are seen rising 0.1
percentage point to 78.6% of total capacity.

Front-month March reformulated gasoline blendstock, or RBOB, recently
traded 6.15 cents, or 3.1%, higher at $1.9936 a gallon. March heating
oil recently traded 5.63 cents, or 2.9%, higher at $2.0112 a gallon.

-By Claire Rangel, Dow Jones Newswires; 212-416-2846;


...and I am Sid Harth
2010-02-02 22:13:39 UTC
WSJ Blogs

Economic insight and analysis from The Wall Street Journal.

February 2, 2010, 11:04 AM ET.

Volcker’s Rules
By Damian Paletta
Not so fast, bankers.

Former Federal Reserve Chairman Paul Volcker will try to dispel some
of the recent complaints made by Wall Street executives in his
testimony to the Senate Banking Committee Tuesday.

Ever since President Barack Obama proposed last month limiting the
ability of commercial banks to engage in “proprietary trading,”
bankers have complained that the definition of “proprietary trading”
is too open to interpretation and vague. Mr. Volcker doesn’t buy it.

“Every banker I speak with knows very well what ‘proprietary trading’
means and implies,” he will tell the Senate Banking Committee in the
afternoon, according to prepared remarks. (Essentially, a bank engages
in proprietary trading when it makes bets using its own capital, not a

He says “only a handful of large commercial banks — maybe four or five
in the United States and perhaps a couple of dozen world-wide — are
now engaged in this activity in volume.”

He also ticks off a list of eight different business practices besides
proprietary trading that banks use to make money, such as lending,
underwriting corporate and government securities, and managing
brokerage accounts. His point: stop your whining, bankers.

Just as interesting in the testimony is what Mr. Volcker doesn’t say.
He doesn’t delve into details of another part of the White House
proposal, which would place new constraints on the size of a bank.

All of these changes must first be approved by Congress, which is one
reason Mr. Volcker is headed to Capitol Hill.

There are 9 Comment(s)

comments email ***@wsj.com

11:56 am February 2, 2010
pete wrote:
.Memo to congress:take Volcker’s NY times Sunday’s op ed and use it as
the blueprint for reform; you can even use it as your committe notes
( that is, if you can see past the bags of money the banks’ lobbyists
are waving in front of them).:

Volcker saved us from our own excesses before(i.e., when he did what
had to be done to end inflation in the early 80’s); thanks God he’s
still around to save us again. It’s.time for the adults to take the
car keys away from the reckless teenagers who have clearly
demonstrated their irresponsibility. To paraphrase John Belushi in
“Animal House”, “we screwed up; we trusted them.”
12:40 pm February 2, 2010
Jim wrote:
.Volcker’s the MAN!!! About time someone stands up for Main Street.
12:48 pm February 2, 2010
murrko76 wrote:
.Totally agree! When you listen to CNBC and such networks you would
think the world will end because of the Volcker rule. These folks are
such cry babies that it drives me nuts. It is imperative to have
checks and balances, but these folks just want the market to correct
itself without any intervention.

I think it is clear where that led us, and it is not pretty.
2:21 pm February 2, 2010
ReturnFreeRisk wrote:
.Volcker was the only Fed chairman in history who stood up against the
market and the banks - not to mention the politicians and the bs
phillips curve proponents. The question is what do we want - long term
welfare of the country OR higher S&P 500 tomorrow?

From all indications, the majority wants the latter.
3:10 pm February 2, 2010
Gddt wrote:
.Volcker saved things once. He’s smart and honest, Bernanke is a
complete failure and I believe an eminent crook.
3:29 pm February 2, 2010
ReturnFreeRisk wrote:
.Difference between Bernanke and Volcker is -
Bernanke thinks higher S&P 500 is the solution to all problems.
Volcker believes in reform and hard work.
3:33 pm February 2, 2010
Fennec wrote:
.Volker tells bankers to quit whining. Bankers tell Volker to quit
banking. Volkswagen tells whiners to quit braking. Brokers tell
Volkers to take a break. It all comes out in the wash.
4:21 pm February 2, 2010
paul wrote:
.who would you listen to? Paul Volcker, the career civil servant who
never earned more than a junior trader at Wall street and refused to
join Wall Street after his retirement, or some wall street executives
who think making millions from us as a god given right?

The only problem is that none of the government leaders would put
forward such a plan and we need to ask the 80-year Volcker to save us
4:27 pm February 2, 2010
lynardbeezard wrote:
.Good news finally!

FEBRUARY 2, 2010, 4:29 P.M. ET.
Volcker Pushes for Limits on Banks' Trading

WASHINGTON–Large commercial banks should be restricted from engaging
in proprietary trading or private-investment activity as part of a
wider move to overhaul the regulation of the financial sector, former
Federal Reserve Chairman Paul Volcker told a panel of Senate lawmakers

Mr. Volcker was testifying before a hearing of the Senate Banking
Committee, which is considering a proposal backed by the former
central banker that received the key endorsement of President Barack
Obama last month.

View Full Image

Associated Press

Paul Volcker testifies on Capitol Hill in Washington on Tuesday.

."What we can do, what we should do, is recognize that curbing the
proprietary interests of commercial banks is in the interest of fair
and open competition as well as protecting the provision of essential
financial services," Mr. Volcker said in prepared opening remarks.

A senior Treasury official told the lawmakers that the administration
had concluded that more stringent measures are needed to rein in the
excesses at financial firms.

"We should impose mandatory limits on proprietary trading by banks and
bank holding companies, and related restrictions on owning or
sponsoring hedge funds or private equity funds," Neal Wolin, deputy
secretary at the Treasury, said in an opening statement.

The so-called Volcker Rule would prohibit large commercial banks from
owning private-equity arms or hedge funds and limit their ability to
engage in trading their own books in search of higher returns on

"These proposals were borne out of fear that a failure to act would
leave us vulnerable to another crisis, and of frustration at the
refusal of financial firms to rein in their reckless behavior," Senate
Banking Committee Chairman Christopher Dodd (D., Conn.) said Tuesday
in support of the plan.

Sen. Richard Shelby (R., Ala.), the top Republican on the banking
committee, said he is open to any proposal that would strengthen the
regulatory framework. He said he wanted to find out more of the
details of what the proposal would entail as well as whether it should
be included in the current round of regulatory overhaul or if it can
wait to be considered at a later date.

Mr. Volcker told the lawmakers that when a bank is in effect a
customer by trading its own account, it "will almost inevitably find
itself, consciously or inadvertently, acting at cross purposes to the
interests of an unrelated commercial customer of a bank."

The plan would need to be implemented as part of a wider effort to re-
regulate the industry, Mr. Volcker said, and would be best done with
international cooperation.

Mr. Volcker has been promoting the plan for several months, but until
recently it had failed to win the support of leaders in Congress or
the Obama administration. It didn't form part of the regulatory
overhaul initially put forward by Treasury Secretary Timothy Geithner,
nor was it included in sweeping legislation approved by the House of
Representatives last year.

The House did include a broad mandate for federal regulators to take
action to limit the activities of firms deemed systemically risky, but
it didn't spell out precisely what action could be taken, nor under
what circumstances.

After Mr. Dodd's plan failed to win the backing of a majority of
members of the banking panel, he was forced to return to the drawing
board and asked members of the committee to work toward reaching a
compromise agreement on a revised plan. Those negotiations continue
and it remains unclear whether Democrats and Republicans on the panel
will be able to strike a bipartisan agreement.

By deciding to back Mr. Volcker, the president chose to pursue a more

Paul Volcker

.approach to overhauling the financial industry's rulebook than Mr.
Geithner favors. It is believed that Vice President Joe Biden also
favors the tougher approach outlined by Mr. Volcker.

The Treasury secretary had advocated requiring big banks to
substantially increase their capital reserves rather than explicitly
banning some market activities by financial firms.

Mr. Volcker served as chairman of the Fed from 1979 until 1987 when he
was succeeded by Alan Greenspan.

Write to Corey Boles at ***@dowjones.com

Watch Video


Discuss: There are 33 comments

2 hours ago..Charles B. Mattingly wrote:

.I commend Mr. Volker...and President Obama for bringing his ideas
back into the discussion. Now is a time when American and the world
need a responsible, experienced and honest voice for real, workable
financial system reform. Mr. Volker provides this voice.

2 Recommendations

1 hour ago..David Pearlman replied:

.You commend Obama for bringing his ideas into the discussion? How
about the last year when, after trotting him out to appease the
economic middle, he was entirely marginalized in the Obama
administration. We are now in MUCH worse shape than when Obama took
office, and it's only because they see the ship sinking that Obama and
his team have decided to, once again, roll out Volker.

1 Recommendation

1 minute ago..AMY GRAZIOSA replied:

.Please. Drama much? My portfolio is up 30% from when O took office.

2 hours ago..Phillip Hwee wrote:

.Chairman Paul Volcker was certainly a giant when he ran the Federal
Reserve. Times have changed so much since his tenure. Undoubtedly, he
was in the right job at the right time. Today's US economy is entirely
different than the one Chairman Volcker knew intimately. As super
intelligent as he is, Mr. Volcker is not the person who President
Obama and his inept economic team should be relying upon on how to
turn around the enormously complex US economy. He's out of touch with
reality and he's looking at the world through the prisim of the
1980's. With all due respect, Mr. Volcker's advice might be
interesting but not useful. Why not call upon Professor Paul Krugman,
who like President Obama received a Nobel Prize. Professor Krugman is
in contact with the next generation of American workers in his
classrooms on a regular basis and he likely better understand the new
digital economy (than Mr. Volcker) because of his association with the
NYT. Maybe the unemployment rate is stubbornly 10 plus percent because
Mr. Obama has placed way too much reliance upon Mr. Volcker.

1 hour ago..RICHARD TERANDO replied:

.This article addresses Volker's recommendation on how to prevent "to
big to fail banks" from again bringing the economy to the point of
failure not on our current jobs crisis. Volker wants to keep these
banks from playing with my bank deposits as if they belong to the
bank. When Mark to Market gets reinstated the FDIC doesn't want to be
taking over the bank with taxpayer money because the bank lost most of
their non-depositor funds at the casino we call market investments.

1 Recommendation

1 hour ago..Charles J Jernigan replied:

.You must have lost your mind. Mr. Krugman is without a doubt the most
inept economist of our age. The work he did on trade patterns which
gained him the Nobel prize was noteworthy, however, he is an
unrepentant Keynesian. We would be much better off if we could dig up
Milton Freedman or F.A Hayke and seek their council. Failing that I
vote for Volcker who may be old but I feel certain is up to this task.
BTW no one ask Mr. Volcker to solve all of our economic problems, just
help make meaningful recommendations on restructuring the banking
industry. Paul Krugman indeed.

1 Recommendation

.The specifics of his agenda don't matter as much as fact that he
agrees in some regulations.

1 hour ago..William Ledsham wrote:

.Perhaps we would be better off with less government diktat as to who
to loan to and under what circumstances. When you remove the deck of
cards, its harder to play poker.

1 Recommendation

1 hour ago..MATTHEW WAGNER replied:

.Yeah cause that lack of regulations has really been working out for

1 Recommendation

57 minutes ago.Nonsubscriber
Abe Froman replied:


The Finance industry is one of the most regulated industries in the
country. The regulations in place have not been working out for us.

It is wiser to not speak and be considered dumb than to open ones
mouth and prove it.

2 Recommendations

30 minutes ago..Kevin McAleer replied:

.Regulations have been in place. Tell the regulators to do their job.
Take a look at Bernie Madoff.

29 minutes ago..NILE GARRITSON replied:

.To the sausage king of Chicago:

The intensity of bank regulation doesn't compare with that of drugs/
medical devices or utilities.
Does it escape you that we had an epic meltdown just a few years after
the main pillar of bank regulation was repealed? Or that the
instruments at the heart of the crisis are barely regulated at all?

26 minutes ago.Nonsubscriber

.It's not the regulations,it's the regulators themselves.If they had a
true understanding of complex banking and instruments,they would be
working for a banking firm.Remember how Madoff intimidated regulators
that were still wet behind the ears.Maybe bonuses for talented
regulators is the answer.

14 minutes ago..NILE GARRITSON replied:

.Jerry, the banks themselves hardly understood what they owned. The
Friday night before Bear was rescued they were scrambling to figure
out how much collateral they've have to post in the event they were
downgraded to junk.

8 minutes ago.Nonsubscriber
Abe Froman replied:


"The intensity of bank regulation doesn't compare with that of drugs/
medical devices or utilities." - So what's your point? I didn't say it
was the most regulated industry, just one of the most.

Second, "Does it escape you that we had an epic meltdown just a few
years after the main pillar of bank regulation was repealed?" Explain
to me how Glass-Steagall was the pillar of bank regulation. I would
love to hear your expert explanation. One catch, no Wiki.

Third, " Or that the instruments at the heart of the crisis are barely
regulated at all?" - Those "instruments", CDOs and MBSs, are in fact
securities, which are highly regulated. In regards to loan
origination, there were regulators in place that could have halted
rampant fraud and inflated appraisals. They did not do their job. Your
comments show that you do not understand the fundamental issues that
caused this down-turn.

It wasn't lack of regulation, it was lack of enforcing regulation.

Sure, the TSA makes things look safe, until you find out that the guy
next to you is trying to light his bomb-filled man-made underwear...

1 hour ago..Amelia Chen wrote:

.Why is no one concerned with the impact that Volcker's legislation
will have on the liquidity in the markets? Undermining the consumer's
ability to place trades to say, I don't know, hedge against the rise
of future commodity prices, will not only hurt the business but the
industry itself.

The entire premise of this rule is based on false assumptions and
misunderstandings of the financial inner workings of our economy.

1 hour ago..NILE GARRITSON replied:

.Was there a liquidity deficit before Glass Steagall was repealed?

1 Recommendation

29 minutes ago..Kevin McAleer replied:

.True. But was repeal of Glass Steagall the real cause of this mess.

Lehman. AIG. Bear Stearns. Fannie Mae. Freddie Mac.

Were ANY of these firms commercial banks with prop trading arms?

51 minutes ago..Charles J Jernigan replied:

.His suggestions have nothing to do with your ability to place trades.
They have to do with separating a firms own trading activity from that
of its customers and in setting up a method that shields the taxpayer
from loss by establishing a resolution trust mechanism to liquidate
failing firms. I'm for it.

1 hour ago..Albert Gelsthorpe wrote:

.Just 'cause they both use the term "bank" in their title, commercial/
lending banks and investment banks have about as much in common as
lightening and a lightening bug.

The laws of Physics haven't been repealed; the basics of human nature
havn't changed since we began walkiing upright; and risk, an income
statement and balance sheet havn't fundamentally changed since the
days of Adam Smith. Listen to Mr. Volker! His words of wisdom are

Thank about it..we don't license barrooms in churches & synagogues; we
don't license "bath houses" in nursery schools; and we expect
ourselves and our neighbors to earn a living, spend less than they
earn, and save & invest the difference.

1 Recommendation

1 hour ago..Charles B. Mattingly replied:


1 hour ago.Non
domenick negri wrote:


The economic problem is not the fault of Volcker, Bernake or Giether
so much as it is Obama's socialist agenda. Obama said that he is not
an ideologue, making a statement like that just shows how disconnected
he is from reality.

His Cap & Trade is a massive tax on the entire industrial economy.
China is sitting back and is laughing at us. They are saying bring it
on, because we will keep manufacturing cheap goods and we will not
worry about pollution. The Chinese will keep burning coal to generate
electricity whether it is dirty coal or not. All they can see is the
huge advantage they will get once Obama imposes the largest tax
increase on America.

1 hour ago..NILE GARRITSON replied:

.Right, our economy is on life support because of Obama. Everything
was cool until he took office.

I love your childish logic. Since China is going to pollute we
shouldn't stop polluting either.

.21 minutes ago.

.China doesn't engage in worker safety,rights,or a living wage,but we
seem to have no problem with that.Should we have Americans living in
houses with dirt floors and no flush toilets,in the name of Free
Market Globalism.Civil wars have started on less.

1 hour ago..Scott Keck wrote:

.If this administration wants to intensify regulation of our financial
institutions then the first place they should start is repealing the
Community Reinvestment Act. Let's face it, the more the government
gets involved, the more things get screwed up.

1 hour ago..Thomas Berhalter wrote:

.Thank you Chairman Volcker for your continuing service to our
Country. I commend you for stepping up to help protect our system and
the American Taxpayer from the costly shenanigans of a few.
it would benefit all of us to heed his concerns and support his
efforts. What comes out of all this may not be exactly what he is
putting forward but he is more right than wrong in his concerns and

1 Recommendation

1 hour ago..Jorge L. Rodriguez wrote:

.Volcker is out of step with today's world. "I'll tell you when I see
it" as a reply can only be from someone who is trying to pin blame on
proprietary trading because that's the way "he wants to see it" not
that it was the real cause for any of the systematic issues.

1 hour ago..Daniel Dimicco wrote:

.Thank you Chairman Volcker for your continuing service to our
Country. I commend you for stepping up to help protect our system and
the American Taxpayer from the costly shenanigans of a few.
it would benefit all of us to heed his concerns and support his
efforts. What comes out of all this may not be exactly what he is
putting forward but he is more right than wrong in his concerns and

1 Recommendation

38 minutes ago..Steven Weisbrod wrote:

.Volcker was a great Fed Chairman during the high inflation of the
late 70s because he abandoned interest rate targeting. As a result
policy focused on reducing base money and the fed funds rate became
highly volatile. Both the level and the volatility were necessary to
drive inflation out of the system. But he has always been a regulator.
For example, he opposed repealing interest rate ceilings on bank
deposits when he was President of the New York Fed. As far as his
present regulatory proposals go, I don't see any evidence to suggest
that they would have prevented the mortgage crisis. None of the major
investment banks -- Goldman, Morgan Stanley, Merrill, Bear, or Lehman
-- were bank holding companies. Thrifts such as Wa Mu and Countrywide
were major originators of loans securitized by subsidiaries of these
companies. Under the Volcker rule, this would go on as before.

23 minutes ago..Robert Boni wrote:

.Contrast the feeling that Volcker generates with the odors that
bernanke, summers, krugman et al exude.
He is a breath of fresh air.

19 minutes ago..Bill Buntin wrote:

.I guess I'm having trouble connecting the dots here. I thought the
big problem with banks related to their investment in securities
backed by mortgages, many of which were of the subprime variety. The
ratings agencies, relying on the protection provided by Fannie and
Freddie, gave banks the green light on these wonderful investments.
Banks participated in the process by parking money. Why the focus on
proprietary trading? It seems the problem TARP was designed to handle
could be dealt with by regulating the mortgage lending/securitization
process, including Fannie and Freddie...

27 seconds ago..James Curry replied:

.Apparently a number of investment banks were designing and selling
CDOs to customers knowing they were high risk and then placing bets
against them to the benefit of the bank. Not currently legal but
certainly a conflict of interest.

3 minutes ago..James Curry wrote:

.Regardless of who is proposing bank regulation, it is clear that US
banking must be considered a strategic industry in that it is vital to
our national interests and its failure due to inappropriate behavior
can not be tolerated. Therefore as with any strategic industry, such
as air transportation, energy or telecommunications, banking must have
stricter oversight. Just imagine what air travel would look like if we
applied current banking regulation to it. Planes would be falling out
of the sky.

This industry needs adult supervision.

1 Recommendation

2 minutes ago..Michael Moore wrote: .

.Frankly, I thought it was already the law that banks were not
permitted to finance investments in securities with government insured
deposits. Thus, what Mr. Volcker is proposing sounds more like an
effort to tighten up the current restrictions. The rule should be
simple and straightforward: no speculating in corporate securities
with government insured deposits.


WSJ Blogs

An up-to-the-minute take on deals and deal makers.

February 2, 2010, 10:02 AM ET.
Paul Volcker’s Prepared Testimony on Prop Trading Proposal
By Michael Corkery

Paul Volcker is due to testify today at 2:30 p.m. before the Senate
Banking Committee on his proposal to limit trading activities at
commercial banks. Here is his prepared statement


FEBRUARY 2, 2010

Mr. Chairman, Members of the Banking Committee:

You have an important responsibility in considering and acting upon a
range of issues relevant to needed reform of the financial system.
That system, as you well know, broke down under pressure, posing
unacceptable risks for an economy already in recession. I appreciate
the opportunity today to discuss with you one key element in the
reform effort that President Obama set out so forcibly a few days ago.

That proposal, if enacted, would restrict commercial banking
organizations from certain proprietary and more speculative
activities. In itself, that would be a significant measure to reduce
risk. However, the first point I want to emphasize is that the
proposed restrictions should be understood as a part of the broader
effort for structural reform. It is particularly designed to help deal
with the problem of “too big to fail” and the related moral hazard
that looms so large as an aftermath of the emergency rescues of
financial institutions, bank and non-bank, in the midst of crises.

I have attached to this statement a short essay of mine outlining that
larger perspective.

The basic point is that there has been, and remains, a strong public
interest in providing a “safety net” –in particular, deposit insurance
and the provision of liquidity in emergencies – for commercial banks
carrying out essential services. There is not, however, a similar
rationale for public funds - taxpayer funds - protecting and
supporting essentially proprietary and speculative activities. Hedge
funds, private equity funds, and trading activities unrelated to
customer needs and continuing banking relationships should stand on
their own, without the subsidies implied by public support for
depository institutions.

Those quintessential capital market activities have become part of the
natural realm of investment banks. A number of the most prominent of
those firms, each heavily engaged in trading and other proprietary
activity, failed or were forced into publicly-assisted mergers under
the pressure of the crisis. It also became necessary to provide public
support via the Federal Reserve, The Federal Deposit Insurance
Corporation, or the Treasury to the largest remaining American
investment banks, both of which assumed the cloak of a banking license
to facilitate the assistance. The world’s largest insurance company,
caught up in a huge portfolio of credit default swaps quite apart from
its basic business, was rescued only by the injection of many tens of
billions of dollars of public loans and equity capital. Not so
incidentally, the huge financial affiliate of one of our largest
industrial companies was also extended the privilege of a banking
license and granted large assistance contrary to long-standing public
policy against combinations of banking and commerce.

What we plainly need are authority and methods to minimize the
occurrence of those failures that threaten the basic fabric of
financial markets. The first line of defense, along the lines of
Administration proposals and the provisions in the Bill passed by the
House last year, must be authority to regulate certain characteristics
of systemically important non-bank financial institutions. The
essential need is to guard against excessive leverage and to insist
upon adequate capital and liquidity.

It is critically important that those institutions, its managers and
its creditors, do not assume a public rescue will be forthcoming in
time of pressure. To make that credible, there is a clear need for a
new “resolution authority”, an approach recommended by the
Administration last year and included in the House bill. The concept
is widely supported internationally. The idea is that, with procedural
safeguards, a designated agency be provided authority to intervene and
take control of a major financial institution on the brink of failure.
The mandate is to arrange an orderly liquidation or merger. In other
words, euthanasia not a rescue.

Apart from the very limited number of such “systemically significant”
non-bank institutions, there are literally thousands of hedge funds,
private equity funds, and other private financial institutions
actively competing in the capital markets. They are typically financed
with substantial equity provided by their partners or by other
sophisticated investors. They are, and should be, free to trade, to
innovate, to invest – and to fail. Managements, stockholders or
partners would be at risk, able to profit handsomely or to fail
entirely, as appropriate in a competitive free enterprise system.

Now, I want to deal as specifically as I can with questions that have
arisen about the President’s recent proposal.

First, surely a strong international consensus on the proposed
approach would be appropriate, particularly across those few nations
hosting large multi-national banks and active financial markets. The
needed consensus remains to be tested. However, judging from what we
know and read about the attitude of a number of responsible officials
and commentators, I believe there are substantial grounds to
anticipate success as the approach is fully understood.

Second, the functional definition of hedge funds and private equity
funds that commercial banks would be forbidden to own or sponsor is
not difficult. As with any new regulatory approach, authority provided
to the appropriate supervisory agency should be carefully specified.
It also needs to be broad enough to encompass efforts sure to come to
circumvent the intent of the law. We do not need or want a new breed
of bank-based funds that in all but name would function as hedge or
equity funds.

Similarly, every banker I speak with knows very well what “proprietary
trading” means and implies. My understanding is that only a handful of
large commercial banks – maybe four or five in the United States and
perhaps a couple of dozen worldwide – are now engaged in this activity
in volume. In the past, they have sometimes explicitly labeled a
trading affiliate or division as “proprietary”, with the connotation
that the activity is, or should be, insulated from customer

Most of those institutions and many others are engaged in meeting
customer needs to buy or sell securities: stocks or bonds,
derivatives, various commodities or other investments. Those
activities may involve taking temporary positions. In the process,
there will be temptations to speculate by aggressive, highly
remunerated traders.

Given strong legislative direction, bank supervisors should be able to
appraise the nature of those trading activities and contain excesses.
An analysis of volume relative to customer relationships and of the
relative volatility of gains and losses would go a long way toward
informing such judgments. For instance, patterns of exceptionally
large gains and losses over a period of time in the “trading book”
should raise an examiner’s eyebrows. Persisting over time, the result
should be not just raised eyebrows but substantially raised capital

Third, I want to note the strong conflicts of interest inherent in the
participation of commercial banking organizations in proprietary or
private investment activity. That is especially evident for banks
conducting substantial investment management activities, in which they
are acting explicitly or implicitly in a fiduciary capacity. When the
bank itself is a “customer”, i.e., it is trading for its own account,
it will almost inevitably find itself, consciously or inadvertently,
acting at cross purposes to the interests of an unrelated commercial
customer of a bank. “Inside” hedge funds and equity funds with outside
partners may generate generous fees for the bank without the test of
market pricing, and those same “inside” funds may be favored over
outside competition in placing funds for clients. More generally,
proprietary trading activity should not be able to profit from
knowledge of customer trades.

I am not so naive as to think that all potential conflicts can or
should be expunged from banking or other businesses. But neither am I
so naïve as to think that, even with the best efforts of boards and
management, so-called Chinese Walls can remain impermeable against the
pressures to seek maximum profit and personal remuneration.

In concluding, it may be useful to remind you of the wide range of
potentially profitable services that are within the province of
commercial banks.

• First of all, basic payments services, local, national and
worldwide, ranging from the now ubiquitous automatic teller machines
to highly sophisticated cash balance management;
• Safe and liquid depository facilities, including especially deposits
contractually payable on demand;
• Credit for individuals, governments and businesses, large and small,
including credit guarantees and originating and securitizing mortgages
or other credits under appropriate conditions;
• Analogous to commercial lending, underwriting of corporate and
government securities, with related market making;
• Brokerage accounts for individuals and businesses, including “prime
brokerage” for independent hedge and equity funds;
• Investment management and investment advisory services, including
“Funds of Funds” providing customers with access to independent hedge
or equity funds;
• Trust and estate planning and administration;
• Custody and safekeeping arrangements for securities and valuables.

Quite a list. More than enough, I submit to you, to provide the base
for strong, competitive – and profitable - commercial banking
organizations, able to stand on their own feet domestically and
internationally in fair times and foul.

What we can do, what we should do, is recognize that curbing the
proprietary interests of commercial banks is in the interest of fair
and open competition as well as protecting the provision of essential
financial services. Recurrent pressures, volatility and uncertainties
are inherent in our market-oriented, profit-seeking financial system.
By appropriately defining the business of commercial banks, and by
providing for the complementary resolution authority to deal with an
impending failure of very large capital market institutions, we can go
a long way toward promoting the combination of competition,
innovation, and underlying stability that we seek.

There are 10 Comment(s)

comments email ***@wsj.com
10:32 am February 2, 2010
Anonymous wrote:
.Why not return to Glass/Stigal?
10:39 am February 2, 2010
Let's See wrote:
.It is difficult to argue with the sound logic of Volcker’s prepared
testimony. Republicans, who think it is politically advantageous to
take the side of banksters on this issue, underestimate the anger of
struggling Americans and do so their own peril. Now is the time to
reign the avarice and arrogance of Wall Street bankers who brought our
economy to its knees. Let’s see if our elected officials, whether
Democrats or Republicans, are in the tank for the scoundrels who buy
off politicians with the crumbs of their ill-gotten gains.
11:11 am February 2, 2010
dfree wrote:
.if the investment banks don’t like, let them stop paying out all
their earnings in bonuses and instead buy back their public float and
revert to private partnerships. unlimited access to 0% financing from
the Fed and investment into risky prop desk trading is an economic
farce. all this incredible speculation began when the banks went
public and uncouple their personal risk from their business risk. stop
the music for them and let’s get back to building this country through
productive business creation.
11:31 am February 2, 2010
Craig Nisnewitz wrote:
.What Volcker says makes a lot of sense. If they want to engage in
proprietary trading than do not function as a commercial bank. The
problem is simple. If the proprietary side fails it can take down the
whole bank. We say that happen with Bear Sterns, Merrill and Lehman.
Their divisions that traded stock and invested for customers were
stable. It was their own trading that went bad and brought down the
entire entity.
11:39 am February 2, 2010
The OZ... wrote:
.I’m with… (I) eye’s-new-it on this one. At “ZERO” % Interest to the
Mega Banks they can’t lose!
The question is how in the hell can Turbo-Tax-Cheat Timmy’s desk tag
as he speaks right now say…
The HON. - Timmy Geithner
There is absolutly nothing Honorable about a crook, a thief and a
lier… ya’ think!
11:49 am February 2, 2010
JFB N>Y> wrote:
.The cities and towns did very well with taxes generated from the
boom. Freddie and Fanny opened the gate for all types of hype. The
Supreme Court decision to give corporations the same right as
individuals under the law has to be revisited. Risk without
consequence is not risk it’s shamefull corporate behavior. Most
American corporations have social conscious and know that the system
requires there acts be in fairness and with consequence.
11:56 am February 2, 2010
CLH8712 wrote:
.A very simple way to control the outright gambling by these “couple
of dozen worldwide” mega-banks is to require a cash back-up to ALL
derivative or hedge type trading of at least 50% of the value of the
underlying asset that drives that trade. So, if they want to “bet”
$100 billion that “Company XYZ” stock will rise, they can make that
deriviative trade only when they “show the money” worth $50 billion in
a cash account on deposit with the Fed or some other similar group.
Hard currency or gold, cash on the barrel — no stocks, bonds or other
“funny money.” When their own skin is at risk, they’ll stop making
these outrageous gambles.
12:02 pm February 2, 2010
Fool me once shame on me, fool me twice... off with their heads! The
OZ... wrote:
.Volker’s Rules is nothing more than a side show… called the “Gong
Show”! What is transpireing as we speak in Washington “The Turbo-Tax-
Cheat Timmy Show”… is really the one you want to watch with “EYES Wide
12:07 pm February 2, 2010
Jnewman wrote:
thousand words to say a baseball team may not pitch to itself AND be
the Umpire AND provide bats to the opposite team AND keep the Score
AND whatever … AND, as if the audience didn’t know this already !
4:03 pm February 2, 2010
crittinker wrote:
.“Let’s See” should stick with the facts behind his directionally
correct arguement and drop his bipartisan emotional response because
he is factually incorrect in labeling the republicans as the
government of “chrony capitalism”. Chrony capitalism is as dangerous
as socialism whereby both put control in the hands of a few elected
officials and their chosen few business leaders. A large majority
(approx. 70%) of wallstreet bankers are registered democrats. The CEOs
of 4 of the 5 largest bailout receivers voted for Obama. Political
patronage and chrony capitalism come at a high price..


...and I am Sid Harth
2010-02-02 22:22:52 UTC
FEBRUARY 2, 2010, 4:49 P.M. ET.

Obama Rolls Out Small Business Lending Program

WASHINGTON—President Barack Obama proposed a $30 billion small
business lending program Tuesday, the latest in a series of
administration efforts to jump-start hiring by the nation's small

The program, which Mr. Obama detailed at an appearance in Nashua,
N.H., would invest $30 billion from the government's Troubled Asset
Relief Program in community banks to encourage them to lend to small
businesses. If approved by Congress, the program would incentivize
small and midsize banks to provide loans valued at several times that

"Small businesses … have created roughly 65% of all new jobs over the
past decade and a half. And I think we should make it easier for
them," said Mr. Obama, according to prepared remarks.

Getty Images

President Barack Obama answers questions during a town hall meeting at
Nashua North High School in Nashua, N.H.

.Senior administration officials who helped draw up the proposal said
that under the program the Treasury would provides capital investments
in a swath of the nation's 8,000 banks with assets under $10 billion,
which do more than half of U.S. small-business lending.

Banks that increase lending to small businesses beyond 2009 levels
would qualify for reduced dividends owed to Treasury on the capital
investment. White House economists hope that feature will spur
interest in the program among community banks that shunned the
original TARP program because of restrictions on the capital and
worries that they would be tarred by their competitors as "troubled."

Earlier Tuesday, White House Budget Director Peter Orszag defended the
plan against a Republican lawmaker's charges that TARP is being used
as a "piggy bank."

In a testy exchange at a Senate Budget Committee hearing, Sen. Judd
Gregg (R., N.H.) said the program would violate current law by using
TARP funds for a purpose other than debt reduction.

Mr. Orszag, appearing in the first of two hearings on the White
House's $3.8 trillion fiscal 2011 budget request, said the program is
necessary because a lack of credit among small businesses is one of
the lingering problems facing financial markets and the U.S. economy.

"No, no, no, you can't make that type of statement with any
legitimacy," Mr. Gregg responded, his voice rising. "You don't appear
to understand the law."

."The law is very clear: The monies recouped from the TARP shall be
paid into the general fund of the Treasury for the reduction of the
public debt. It's not for a piggy bank," Mr. Gregg said.

Mr. Orszag said new legislation would be required to create the new
small-business plan. He said the cost of the plan would depend on the
subsidy rate of new activity and wouldn't amount to a net cost, in
terms of the deficit, of $30 billion.

Sen. Bernie Sanders (I., Vt.) jumped to Mr. Orszag's defense,
interrupting Mr. Gregg to say, "That is how laws are made. Congress
passes them."

"He's indicating he's going to go to Congress to amend the law," Ms.
Sanders said.

The program is part of a package of incentives Mr. Obama has spoken
about since his campaign, and discussed during his State of the Union
address last week. Last week, he announced a $33 billion program to
provide up to $500,000 in tax credits for businesses that add jobs or
increase wages beyond the rate of inflation this year. In the 2011
budget blueprint released Monday, the administration also proposes to
eliminate all capital gains taxes on small-business investment and
raise the limit on Small Business Administration loans from $2 million
to $5 million.

On the Road in New Hampshire
View Slideshow

Jason Reed/Reuters

President Obama presented his small-business proposal in Nashua, N.H.,
.More photos and interactive graphics

.At Tuesday's hearing, Budget Committee Chairman Kent Conrad (D.,
N.D.) praised the administration's budget for not pulling back on
stimulative spending in the near term, but said he's "very concerned"
about the nation's long-term fiscal path, which features $8.5 trillion
of deficits over the next decade.

"It has to be addressed, and I don't think the president's 10-year
outlook is the path we can take as a nation," Mr. Conrad said.

Mr. Gregg was more harsh, accusing the administration of "malfeasance"
for crafting a budget that "ends in insolvency for this nation."

Mr. Orszag sketched the administration's plans to tackle the deficit
through a fiscal commission, health-care overhaul and other steps.

"We agree the fiscal course that we are on out in 2020, 2030 and 2040
is unsustainable, and it needs to be addressed," Mr. Orszag said.

Messrs. Gregg and Conrad are advocates of a bipartisan fiscal
commission, which the Senate rejected last week. Mr. Obama will create
the panel through an executive order, but the presidentially appointed
group isn't likely to have the teeth of a statutory commission. And
it's unclear whether Republicans will take part in the panel.

Mr. Gregg suggested Congress vote again on a commission, saying both
parties should be able to cobble together enough votes for passage.
But Mr. Conrad was skeptical toward that idea. After the hearing, the
Democrat told reporters he sees no indication that lawmakers opposed
to the panel would change their mind.

—Henry J. Pulizzi contributed to this article.

Write to Elizabeth Williamson at ***@wsj.com

Discuss: There are 121 comments



...and I am Sid Harth
2010-02-03 12:55:49 UTC
Could the U.S. Economy Record Stronger GDP Growth in 2010?
Posted Jan 27th 2010 5:20PM
by Joseph Lazzaro

Can a case be made for stronger-than-expected U.S. GDP growth in 201?
Indeed it can, but you'd be decidedly in the minority camp of

It goes like this: the fiscal stimulus' second stage (about $200
billion), plus inventory replenishment by businesses, plus a sizable
increase in annual U.S. auto sales (a 2 million vehicle increase),
plus further stabilization of the housing sector, topped off by a
continued uptrend in U.S. exports.

The above could result in U.S. GDP exceeding 3.0% in 2010, up from the
current consensus range of 2.5 to 2.7%.

The wildcard in the above? The U.S. consumer: the 'frugal consumer'
era is well underway and if it continues -- with a savings rate above
4% -- it will continue to serve as a headwind for the U.S. economy.
The economy grew at a revised 2.2% rate in Q3 2009, in what many
economists believe marked the start of the economic recovery.

Investors large and small will find out if the recession officially
ended in Q4 2009 on Friday, January 29 at 8:30 a.m. EST when the U.S.
Commerce Department releases its initial estimate for Q4 2009 GDP. The
Bloomberg News consensus estimate forecasts a 4.5% GDP growth rate,
and if that's achieved, it would mark two consecutive quarters of
positive GDP growth -- historically the standard that economists use
to declare a recession over.

Financial Editor Joseph Lazzaro is writing a book on the U.S.
presidency and the U.S. economy.


Is the New York Fed a Black Ops Outfit for the Nation's Central Bank?
Posted Feb 2nd 2010 11:20AM
by Connie Madon

The current investigation of the American International Group (AIG)
bailout by Congress has brought to light the inner workings and secret
deals that were made.

Center stage in the investigation is the New York Federal Reserve.
There are 12 Federal Reserve Banks that operate under the supervision
of Federal Reserve's Board of Governors, chaired by Ben Bernanke.
Member bank presidents are appointed by the nine member board, who
themselves are appointed by other bankers.

During the AIG hearing, Representative Mary Kaptur said: "A lot of
people think that the president of the New York Fed works for the U.S.
government. But in fact you work for the private banks that elected

So what you have is a closed and secret group of bankers whose main
task it is to help other bankers when things go bad. This is exactly
what happened when AIG exploded.

AIG sold credit default swaps on toxic assets to banks including
Goldman Sachs (GS), Merrill Lynch, Societe Generale and Deutsche Bank
(DB) among others.

The New York Fed took it upon itself to buy out these swaps at 100%
face value when they knew full well that they were not worth that
much. So they took $30 billion of taxpayer money and gave it to the
banks under the guise that AIG's position was in the midst of

Now the cover up. First, there is the denial by Treasury Secretary
Paulson and Chairman Ben Bernanke. We didn't know anything about it.
That leaves Timothy Geithner, who was then head of the New York Fed
that engineered this deal. Meanwhile, can you imagine Bernanke telling
the bankers (fictitiously): Don't worry boys. Things will be fine. I'm
going to use $11.2 trillion dollars of taxpayer money to bail you guys
out. We don't have to disclose any of this to the public, so please,
keep this under wraps. It didn't matter that this $11.2 trillion could
have paid off our national debt, saved Social Security and Medicare,
provided health care for all Americans, rebuilt our infrastructure,
and provided jobs and prevented 17 million people from losing their

When things got heated, James Bergen e-mailed colleagues saying: "I
have to think this train is probably going to leave the station soon
and we need to focus efforts on explaining the story as best we can.
There are too many people involved in these deals -- too many
counterparties, too many lawyers and advisors, too many people from
AIG -- to keep a determined Congress from the information."

The New York Fed under Geithner muzzled the SEC and told them to
button up on this matter.

So there you have it. Does this sound like Watergate? Or is it
Bankgate? Here we have billions of dollars of taxpayer money funneled
to our big banks in secret deals at 100% of face value.

The question is what is Congress going to do about it?

What do you think Congress should do? Should the bankers return this
money to the Fed?


Baidu.com Could Benefit from Google's Misfortunes
Posted Feb 2nd 2010 10:00AM
by Mark Fightmaster

Yesterday was a good day for Baidu (BIDU), the Chinese Internet search
portal, after some Wall Street analysts noted that the departure of
Google (GOOG) from China could "benefit Baidu tremendously."

BIDU has traded well in the United States, hovering in the upper
reaches of the $380 region -- but GOOG's decision to operate in China
without censoring local search results after recent cyber attacks
pushed BIDU as high as $470 before the stock settled into the lower

Both Susquehanna Financial Group and Credit Suisse expressed the same
belief on Monday, with Credit Suisse estimating that -- should GOOG
pull out of China -- as much as one-third of GOOG's search advertising
in China could move to BIDU. GOOG would then see its local market
share drop to 20% from 31% by 2011. What's more, Credit Suisse
believes that BIDU's market share could stabilize this year, at up to
47%. This combination of assertions gave Credit Suisse the impetus to
upgrade BIDU to neutral from underperform.

We have looked at some of the technicals on BIDU already, but it is
very important to note that the shares enjoy support from their 10-
and 20-week moving averages. These two trendlines escorted the equity
higher throughout 2009 and are in position to continue this role in

If the shares falter, watch for this duo to step into the fray.
Furthermore, the 20-week trendline currently resides in the $405
region, making a drop below $400 unlikely. If the equity tries to fall
past $400, it won't be easy. Of course, there is always the chance
that news could push the stock considerably lower; nevertheless, BIDU
appears to be in a nice position, ready to capitalize on the
misfortunes of its major competitor.


Obama Budget, Republican Obstruction, May Lead to Gridlock in
Posted Feb 2nd 2010 4:40PM by Joseph Lazzaro

Political Science Scholar Larry Sabato co-wrote, The Party's Just
Begun, which could also prove to be an apt phrase for the political
climate in the months ahead in Washington.

That's because Congressional Republicans, emboldened by the securing
of their 41st -- and filibuster-capable -- vote in the Senate as a
result of Scott Brown's victory in the Massachusetts U.S. Senate race,
may now choose to lock horns with U.S. President Barack Obama, D-
Illinois, over his proposed $3.8 trillion fiscal 2011 budget.

And what a battle it may become: there's a 50/50 chance that the
federal government will be shut down because of a lack of a budget.
That's correct: a shutdown of non-essential services -- something the
financial markets would not look favorably on, needless to say.


The Party's Just Begun: Shaping Political Parties for America's Future
(2nd Edition) (Paperback)
~ Larry J. Sabato (Author), Bruce Larson (Author)

US economy races ahead

Financial markets reacted swiftly to the stronger-than-expected
growth, with the dollar gaining ground and bond yields rising amid
fears of rising inflation in the US economy
Comments (9)

Ashley Seager guardian.co.uk,
Friday 29 January 2010 14.06 GMT

US dollar gained ground on news that the economy had grown strongly in
Q4. Photograph: Getty/Piet Mall

The US economy grew at a faster-than-expected 5.7% annualised rate in
the fourth quarter, the strongest figure in more than six years, as
businesses reduced inventories less aggressively than before.

Growth in the October to December period was much faster than the
third quarter's 2.2% rate and was boosted by a sharp slowdown in the
pace that businesses ran down stock levels, a factor that could mask
the strength of the economic recovery from the longest and deepest
downturn since the Great Depression.

But even stripping out inventories, the economy expanded at an annual
rate of 2.2%, accelerating from the 1.5% increase in the third
quarter, reflecting relatively strong performance from other segments
of the economy.

Financial markets reacted swiftly to the surprise news, with bond
markets around the world selling off and pushing up yields as markets
feared that a roaring US economy could eventually generate inflation.

The dollar rose against most major currencies , with the pound falling
below $1.61.

Business inventories fell only $33.5bn (£20.74bn) in the fourth
quarter after dropping $139.2bn in the July-September period. The
change in inventories alone added 3.39 percentage points to GDP in the
last quarter. This was the biggest percentage contribution since the
fourth quarter of 1987, official data showed.

For the whole of 2009, the economy contracted 2.4%, the biggest
decline since 1946 but one which is half the contraction of the
British economy over the same period.

In the last three months of 2009, consumer spending increased at a 2%
annual rate, below the 2.8% in the prior quarter when consumption got
a boost from the government's "cash for clunkers" program.

Consumer spending, which normally accounts for about 70% of US
economic activity, has been held back by the worst labour market in a
quarter of a century with unemployment at 10%.

Business investment in the fourth quarter grew for the first time
since the second quarter of 2008 as the drag from the troubled
commercial real estate sector was offset by robust spending on
equipment and software.

Investment rose at a 2.9% rate after falling 5.9% over the previous
three-month period.

The growth of spending on new home construction braked sharply in the
fourth quarter to an annual rate of 5.7% from an 18.9% pace in the
third quarter. Home building has received a lift from a popular tax
credit for first-time buyers, but recent data have hinted at some
weakness starting to creep in.

Export growth outpaced imports, leaving a trade gap that contributed
half a percentage point to GDP growth in the last quarter.


Deficit politics: Chase to the cuts
Comments (41)

The Guardian,

Tuesday 2 February 2010

America cannot continue to spend as though government deficits do not
matter, Barack Obama announced yesterday as he unveiled his 2011
budget. That sort of message has now become the default position of
political leaders in many other countries too, including our own,
although the recognition has been conspicuously grudging in Gordon
Brown's case. Yet if the politics of deficits have now become
increasingly universal, the immediate implications still differ
sharply in the light of differing local circumstances.

British politicians, for instance, have few expensive shop-window
programmes whose disappearance will cause as little political blowback
as President Obama is likely to face for scrubbing Nasa's expensive
return to the moon programme this week. America is unlike Britain in
other respects too. Unemployment is higher on the other side of the
Atlantic than it is here, for instance. And the emphasis on job
creation in Mr Obama's budget is a vital reminder that there are other
ways of bringing down deficits – economic stimulus and tax rises – as
well as spending cuts.

Cuts in this country, as opposed to cuts on the moon, all come at a
political price – even the big-ticket defence cuts which many
ministers eye as an easy option but which Mr Brown is expected to try
to face down this week. The reason for this is obvious. Deficits may
matter, but spending cuts of any kind are a hard political sell in the
run-up to an election. That's why, of course, our politicians prefer
to keep it vague and to talk as much as possible about efficiency
savings that fudge the really difficult decisions about cuts, taxes
and timing.

David Cameron's decision to soften his position on early spending cuts
fits this pattern. Because the Tories have not yet set out their cuts
plans in detail, and because even their emergency budget would be
likely to make the biggest cuts in 2011-12 and beyond rather than in
2010-11, Mr Cameron's words do not rearrange many actual commitments.
Yet the words matter all the same. They are an admission that the
earlier rhetoric of immediate austerity is out of step with the
hesitant recovery and with the growing mood of public caution. Mr
Cameron may also be unnerved by recent polls showing a narrowing lead
over Labour. Either way, it is smart positioning, though the
ideologues of the right may smell a rat.

The real need as the election nears is for all the parties to get
specific about where they will spend less, where they will tax more
and where they will rely on recovery to do the job. Mr Obama has had
to get real in America. It is now time that the Tories and Labour –
and the Lib Dems too – put their cards clearly on the table over here.

Comments in chronological order (Total 41 comments)



Labour spending has 'failed' to improve child health
Wave of spending and policies 'not delivering value for money',
according to Audit Commission

Randeep Ramesh, social affairs editor
The Guardian,
Wednesday 3 February 2010

Steve Bundred, the outgoing chief executive of the Audit Commission,
said its findings were 'disappointing'. Photograph: Frank Baron

The government has failed to "significantly improve" children's health
despite spending more than £10bn and producing a policy every six
months over the last decade, according to the Audit Commission.

In a report published today, the spending watchdog found that
childhood obesity has risen from 10.1% to 13.9% between 1995 and 2008.
While infant mortality rates have declined, Britain still has the
highest number of deaths per 1,000 live births in western Europe,
higher than countries such as the Netherlands, France, the Republic of
Ireland and Spain.

The commission said it was also concerned about the persistence of
health inequalities which meant children under five living in deprived
areas had a significantly "higher risk of poor health". Children in
poorer areas are 19% more likely to have bad dental health and 9% more
likely to be born underweight.

Steve Bundred, outgoing chief executive of the commission, said the
findings were "disappointing. The policies are not delivering
commensurate improvement and value for money. Large inequalities
persist … and even before [children] are born, for many, place and
parents' income determine their quality of life and their lifespan."

The government had failed to focus on the youngest in society, the
report said. The result was that obesity, a factor in heart disease
and diabetes, cost the NHS £4.2bn a year and without action this could
double in the decades ahead. Bundred said poor diet lay at the heart
of many health inequalities. "Sugary drinks, unhealthy foods are
factors that do contribute to [health] inequalities with young
children in poorer areas," he said.

Despite 27 national policies since 1999 aimed at improving the health
of under-fives as a way to reduce the gap between rich and poor,
Bundred said much of the government's efforts ended up being
concentrated on older children.

The increasing volume of national children's policy meant there was
now "duplication and inconsistencies across government departments,
leading to confusion locally about planning and delivering health
services for the under-fives".

The report also pointed out that while councils were aware of health
issues facing young children, such as a decline in immunisation rates
for mumps, measles and rubella, there had been a 10% drop in the
number of health visitors employed in England. The commission also
found that parents from vulnerable groups were not using the
government's Sure Start children's centres, designed to serve those in
deprived areas.

This was, according to Bundred, either because they were unaware of
the service or because they "found the attitude of the staff off-
putting … too judgmental". The commission called on the government to
clearly target spending on vulnerable groups to reduce inequalities
and said there should be a single set of priorities to avoid

Many experts say that what is needed is a bigger "cultural change"
that makes children a priority in society.

In today's Society Guardian, Terence Stephenson, president of the
Royal College of Paediatrics and Child Health and Nuffield professor
of child health at University College London, says that "of 188
performance indicators available to local authorities, only six relate
to under-fives' health, and none feature in the top 20".

He added that unequal rich wealthy societies often did not produce
high levels of "child wellbeing" .

"Children in countries with more unequal wealth distribution fare
worse," he said. "Similarly, infant mortality is related to inequality
in rich countries. The UK has a worse infant mortality rate than
Greece, despite having almost double the income per person."

The government defended its record, saying that there had been
increases in breastfeeding rates and that because of a successful
immunisation programme no child died of meningitis C in 2008.

"We know there is still more to do and we're determined to keep up the
momentum. This is why we introduced the Healthy Child Programme, the
first universal, evidence-based programme to ensure that all children
get the best possible start in life," said Gillian Merron, minister
for public health.


...and I am Sid Harth
2010-02-03 13:03:47 UTC
Lisa Twaronite's This Week in Japan

Feb. 3, 2010, 12:28 a.m. EST ·

Demons out ... for now
Commentary: Japan's GDP bean counters will see improvement

By Lisa Twaronite, MarketWatch

TOKYO (MarketWatch) -- On Wednesday, children all over Japan observe a
holiday called Setsubun, which literally means "seasonal division" but
is commonly called the "Bean-Throwing Festival."

On Feb. 15, economists all over Japan will observe their own quarterly
"Bean-Counting Festival," when Japan's Cabinet Office releases its
preliminary October-December gross domestic product report at 8:50

Japanese children will toss roasted soybeans at a family member or
teacher wearing a mask of an "oni," or demon, while chanting, "Oni wa
soto! Fuku wa uchi!" or "Demons out! Good luck in!" Throwing the beans
is supposed to drive away the demon and bad luck for the coming year,
and let the good luck in. Then, as a bonus, the kids get to eat the
beans, which don't have much taste but are at least nice and crunchy.


Economists get paid for crunching their beans, but it just isn't the
same -- they aren't able to drive away the bad stuff so easily.

In fact, it's the beans they don't count that can come back to haunt
them later, when they revise the preliminary data. The July-September
quarter's data were a classic example of this.

Revised data for the third quarter of 2009 showed Japan's economy grew
just 0.3% in real terms from the previous quarter -- far less than the
on-quarter rise of 1.2% in the preliminary data. On an annualized
basis, Japan's GDP grew by a revised 1.3% in the July-September
period, down from an initial reading of 4.8%.

The dramatic downward revisions were mostly due to inclusion of the
Ministry of Finance's capital-expenditure data, which were unavailable
at the time of the initial GDP data release. The inclusive revised
figures showed a big cut in corporate capital investment, which fell
2.8% on quarter, far worse than the preliminary data's 1.6% increase.

Pick up, slow down

Most economists expect Japan's fourth-quarter GDP data to show an
improvement. But as for improvement in the current quarter already in
progress -- not so much.

A poll of economists by Japanese business daily Nikkei came up with an
average expectation of annualized GDP growth of 4.3% in real terms in
the fourth quarter of 2009. A Reuters poll found a median forecast of
4.1% expansion.

But for the quarters after that, the same polls showed economists
expect growth to slow, with the Nikkei poll showing consensus
predictions of just 1.1% growth for the January-March quarter, and
April-June growth at 0.8%, as the new Democratic Party-led government
slows its spending on public works projects approved by its

"Going forward, real GDP growth is likely to slowdown to nearly zero
in [the first half of] this year, as the effect of policy stimulus
fades out," said Junko Nishioka, chief economist at RBS Securities
Japan Ltd. in Tokyo, in a recent note to clients.

The government is due to start discussing the budget for the fiscal
year starting in April from this Friday, and the DPJ may yet get that
budget passed sometime this month. Moreover, she added, there could be
additional fiscal stimulus measures ahead of Japan's Upper House
elections in July.

But even so, she said, an economic slowdown in the first half "is
increasingly likely, given the political-vacuum period."

Local media reports Tuesday said the Cabinet Office plans to revise
its GDP-computing method this summer. Hopefully, the new steps will
help smooth out some of the gaping differences between preliminary and
revised data.

The government will adopt the new method from the July-September
period, the data for which are scheduled to be released in December
this year. It will also double the number of bean counters on its data-
compiling team to over 100.

In the meantime, as public spending wanes, Japan could use a little
bit of that good luck.

Lisa Twaronite is MarketWatch's Tokyo bureau chief.


...and I am Sid Harth
2010-02-03 13:16:59 UTC
Feb. 2, 2010, 4:12 p.m. EST · Recommend · Post:

Obama budget attacked over deficit, lending fund
Budget chief Orszag and Treasury's Geithner take proposals to Congress

By Robert Schroeder & Greg Robb, MarketWatch

WASHINGTON (MarketWatch) -- Republicans and Democrats alike picked
apart President Barack Obama's $3.8 trillion fiscal year 2011 budget
on Tuesday, as Cabinet members offered a strong defense of Obama's
plan to create jobs and pull the economy out of the Great Recession.

Treasury Secretary Timothy Geithner and White House budget director
Peter Orszag made separate appearances before two Senate committees to
sell lawmakers on Obama's budgetary priorities, at times meeting
fierce resistance from lawmakers.


Timothy Geithner, Treasury secretary. He said Tuesday: "Part of laying
a foundation for future prosperity is returning to living within our

Orszag quickly found part of Obama's jobs agenda under intense attack
from Sen. Judd Gregg, R-N.H.

Gregg slammed a proposal to use $30 billion in money repaid to the
government by Wall Street banks to set up a new lending fund for small
businesses. Obama highlighted the fund Tuesday afternoon at a town
hall meeting in Nashua, N.H. Read story about New Hampshire town

"The purpose [of the money] was to reduce the debt!" Gregg said, hotly
telling Orszag at one point: "You don't appear to understand the

Orszag replied that the proposal will require congressional approval
and that the White House will be following the law.

The budget plan released Monday forecasts a record $1.6 trillion
deficit in fiscal 2010 but then sees the red ink falling to $1.3
trillion in fiscal 2011.

But Sen. Kent Conrad, D-N.D., said the White House's budget doesn't
tackle the deficit in later years.

"I don't see the focus on bringing down that long-term debt," said
Conrad, who chairs the Senate Budget Committee.

Geithner said that the administration will seek to put in place
policies to bring the deficit down once the recovery has a "firm

"Part of laying a foundation for future prosperity is returning to
living within our means," Geithner said. He called the deficit
"alarmingly high." Read Geithner's prepared testimony.

For his part, Orszag acknowledged that the U.S. faces big deficits but
is also confronting a "jobs deficit." Unemployment is stuck at 10% and
economists expect that only modest job growth occurred in January. See
MarketWatch Economic Calendar.

Geithner's comments illustrate the tightrope that the Obama
administration is walking on fiscal policy. On the one hand, the White
House is advocating new spending to boost jobs -- but is also pledging
to be fiscally conservative in the medium term.


Peter Orszag, director of the Office of Management and Budget.

Republicans have given the budget a harsh reception, saying it spends
too much, taxes too much and borrows too much from future generations.
The transmission of the budget to Congress on Monday begins a lengthy
annual process in which the budget is scrutinized by congressional
committees and detailed spending plans are made.

The lending program and other parts of the White House's jobs plan
would need to be approved by Congress.
Robert Schroeder is a reporter for MarketWatch in Washington.

Greg Robb is a senior reporter for MarketWatch in Washington.

Obama budget attacked over deficit, lending fund
Budget chief Orszag and Treasury's Geithner take proposals to

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Feb. 2, 2010, 5:08 p.m. EST

Banks shouldn't be hedge funds, Volcker tells Senate
Federal safety net shouldn't cover speculators, Obama adviser says

WASHINGTON (MarketWatch) -- The federal safety net for commercial
banks should protect depositors, not speculators, former Federal
Reserve Chairman Paul Volcker told senators on Tuesday, urging them to
pass the so-called Volcker Rule that would ban banks from trading for
profit and that would restrict the size of the biggest banks.

Volcker, now an adviser to President Barack Obama, told the Senate
Banking Committee that the banking system must be restructured to
prevent a repeat of the bailouts of 2008.

The top Republican on the Senate Banking Committee, Sen. Richard
Shelby of Alabama, initially said he was open to any idea that would
prevent another "calamity," but, after the hearing, he said he was
inclined to vote against Volcker's idea. He chastised the
administration for "air dropping" its latest proposal months after
debate had begun on rewriting the rules of the banking system.

Sen. Chris Dodd, D-Conn., said he "strongly supports" Volcker's

Banks must not be allowed to reap the benefits of successful
speculation while handing taxpayers the costs of failure, Volcker

AM Report: Testing Volcker's Rule

The so-called "Volcker Rule," which argues for a change in proprietary
lending by banks, will be argued before the Senate this afternoon, the
News Hub reports.

Banks must not be allowed to own or operate as hedge funds. Read David
Weidner's commentary on Volcker's testimony.

Instead, commercial banks covered by the federal safety net should be
restricted to the profitable businesses of traditional banks:
operating the payment system, providing credit, helping customers
manage their money.

Volcker said only four or five U.S. commercial banks and only a couple
dozen worldwide engage in the kind of risky proprietary trading that
would be banned by the Volcker Rule.

He didn't name them, but the firms likely on the list would include
Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 15.59,
-0.01, -0.06%) , JP Morgan /quotes/comstock/13*!jpm/quotes/nls/jpm
(JPM 40.72, +0.17, +0.42%) , Citigroup /quotes/comstock/13*!c/quotes/
nls/c (C 3.39, -0.02, -0.59%) , Goldman Sachs /quotes/comstock/13*!gs/
quotes/nls/gs (GS 158.10, +1.16, +0.74%) and Morgan Stanley /quotes/
comstock/13*!ms/quotes/nls/ms (MS 28.01, -0.05, -0.18%) .

In addition to the handful of commercial banks whose risks are
taxpayer-subsidized, there are thousands of other hedge funds, private
equity firms and other institutions that do not have taxpayer
protection, yet are actively competing in capital markets, Volcker
noted. "They are, and should be, free to trade, to innovate, to invest
-- and to fail."

"What we plainly need are authority and methods to minimize the
occurrence of those failures that threaten the basic fabric of
financial markets," Volcker said. "The essential need is to guard
against excessive leverage and to insist upon adequate capital and

Commercial banks are covered by federal deposit insurance, access to
the Fed's discount window for emergency loans to survive liquidity
crises, and the knowledge that some firms are seen as simply "too big
to fail." Other types of financial institutions are not explicitly
insured by the government.

Volcker and Deputy Treasury Secretary Neal Wolin pressed the senators
to toughen their proposals for financial regulatory reform to more
closely match those already approved by the House.

"Our financial system will not be truly stable, and our recovery will
not be complete, until we establish clear new rules of the road for
the financial sector," Wolin said.

'The essential need is to guard against excessive leverage and to
insist upon adequate capital and liquidity.'

Paul Volcker

The Volcker Rule is meant "to prevent a banking firm from putting its
clients, customers and the taxpayers at risk by conducting risky
activities solely for its own enrichment," Wolin said.

The White House faces a tough political fight, because Republicans on
the Banking Committee and in the Senate are skeptical at best of the
new proposals from the White House.

In the Senate, the Republicans hold an effective veto despite being
outgunned by 59 to 41. Dodd has been meeting with Shelby in an effort
to write a bipartisan regulatory reform bill that could avoid a

Even before the administration advocated strengthening the bill by
including the Volcker Rule, a bipartisan deal was an uphill climb.
Republicans are also fighting against the creation of an independent
consumer financial protection agency to safeguard Americans against
hazardous financial products.

The heart of the financial regulatory plan is the creation of a way to
deal with large and systemically interconnected banks and financial
firms that are on the brink of failure. In 2008, those failed
companies were either bailed out, or left to die. Both approaches were

The administration's proposal would follow the model of the Federal
Deposit Insurance Corp., which takes over failing banks to protect
depositors and the payment system, without protecting management or
shareholders. "In other words, euthanasia, not rescue," Volcker said.

Wolin dismissed concerns that the Volcker Rule would hobble U.S. banks
competing globally. He noted that U.S. banks already face tougher
restrictions than their foreign competitors. Yet U.S. banks do compete
globally, and U.S. financial markets remain the biggest and most

Wolin said regulators from the Group of 20 are working on similar
proposals. Volcker said international cooperation was important, but
should not delay or stop the United States from acting.

Wolin said the proposal to limit any bank to 10% of total assets would
not require any bank to be broken up. It would prevent banks from
growing too big by merging, but would not "impede the organic growth
of financial firms."

Rex Nutting is Washington bureau chief of MarketWatch.

Banks shouldn't be hedge funds, Volcker tells Senate
Federal safety net shouldn't cover speculators, Obama adviser says

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...and I am Sid Harth
2010-02-03 13:37:19 UTC
Deflation menaces Japan's economy
Published On Fri Jan 29 2010
The Associated Press

TOKYO—Japan's economy took baby steps forward in December as
unemployment eased and factory output rose.

It could not, however, shake off a troubling combination of falling
prices and wages that only worsened during the month and threatens to
hamstring recovery.

The Japanese government released a slew of data Friday that offered
both hope and uncertainty for the world's second biggest economy.
While Japan appears unlikely to fall into recession again — as some
have feared — it faces a murky future under entrenched deflation.

"The bottom line is that a double dip is unlikely in Japan," said
Kyohei Morita, chief economist at Barclays Capital in Tokyo. "That's
mainly because corporate activity is not that weak. Exports have been
rising, which has resulted a pickup of production activity, which we
hope will translate into a pickup in capex this year."

Industrial production climbed 2.2 per cent in December from the
previous month, powered by a pickup in exports. The result just missed
Kyodo News agency's forecast for 2.3 per cent growth in its survey of

The trade ministry expects factory production to rise 1.3 per cent in
January and 0.3 per cent in February.

Earlier this week, government figures showed that robust Asian demand
in December fueled the first expansion in Japan's exports in 15

There was also a small improvement on the jobs front. The nationwide
unemployment rate fell to 5.1 per cent in December — better than 5.2
per cent in November, though still high by Japanese standards.

The average ratio of job offers to job seekers stood at 0.46, a tad
higher than 0.45 a month earlier. The figure means there were 46
offers for every 100 job seekers.

Household spending posted a solid rise in December, up 2.1 per cent
from a year earlier. The figure represents a key indicator of private
consumption, which accounts for about 60 per cent of Japan's economy.

Despite the better jobs numbers, reaction from officials and analysts
was far from jubilant.

"The rate improved slightly," Prime Minister Yukio Hatoyama told
reporters, according to Kyodo. "But it is far from giving grounds for

Goldman Sachs economist Chiwoong Lee warned that export-driven
progress may not necessarily last.

"A sustained pace of improvement in external demand is by no means
assured, and companies have become cautious in their stance," Lee said
in a note to clients. "This is not fertile ground for a strong labour
market turnaround."

Deepening deflation further complicates Japan's outlook.

Prices and wages continued to fall in December with core consumer
prices falling 1.3 per cent from a year earlier, the government said.

The key consumer price index, which excludes volatile fresh food
prices, has now fallen for 10 straight months. The reading matches
Kyodo's market forecast.

Lower prices may seem like a good thing, but deflation plagued Japan
during its "Lost Decade" in the 1990s. It can hamper economic growth
by depressing company profits, sparking wage cuts and causing
consumers to postpone purchases. It also can increase debt burdens.

Core CPI for the Tokyo area, seen as a barometer of price trends
nationwide, retreated 2 per cent in January. For the 2009 calendar
year, core CPI retreated 1.3 per cent, according to the Ministry of
Internal Affairs and Communications.

Lower prices and wary companies have led to dwindling wages. Average
monthly household income fell 4.8 per cent in December from a year
earlier, the ministry said.

Morita of Barclays Capital expects consumers to spend less in the
months ahead as wages slide and consumer incentives implemented by the
previous government run their course.

Japan's recovery should strengthen if exports remain robust and the
new government can effectively implement policy, such as cash handouts
for families with children, he said.

Hatoyama's Democratic Party of Japan swept into power last summer
promising more support for struggling workers and families. Lawmakers
this week passed a stimulus package with $80 billion yen in spending
on steps to bolster employment and help small and medium-size firms
hurt by a strong yen.


T.O. lures 10 million despite recession
Wet summer, strong loonie, new border rules only minor deterrents

Published On Wed Feb 3 2010

Despite the recession, Toronto's tourism industry held steady in 2009
compared with the year before, according to initial estimates.

The city welcomed about 10 million overnight visitors, down from about
10.6 million in 2008, Tourism Toronto said Tuesday.

"It's off a bit from the prior year, but still, it's 10 million,"
spokesman Andrew Weir said.

In 2008, overnight visitors added about $3.5 billion to the economy in
the Greater Toronto Area as they spent money on hotels, restaurants
and shopping. Another 10 million day trippers contributed an
additional $1 billion.

Through the first half of 2009, the recession took a bite out of the
travel industry as leisure and business travellers stayed home.

Then a cool, wet spring and summer season put a damper on May and
June, pulling down hotel occupancy rates by about 10 per cent from
2008 levels.

Along with the stronger Canadian dollar, new rules requiring American
visitors to present a passport at the border and travellers from
Mexico to have visas seemed to add insult to the tourism industry's

But the sector began to turn around in August, first with better
weather and then amid signs the economy was stabilizing through the

For the year, Toronto hotels' average occupancy rate was 62.3 per
cent, down from 67.6 per cent in 2008, according to Smith Travel

"We're optimistic that 2010 will be a better year, and in Toronto we
have a lot of opportunities," Weir said. "The biggest is the G20."

Toronto will host the G20 Summit in June, a gathering of finance
ministers and central-bank governors from 20 countries. The event will
bring tens of thousands of visitors to the city, along with blanket
media coverage.

Toronto has also scored three high-profile international events: the
International Indian Film Academy Awards in 2011, World Pride in 2014
and the Pan Am Games in 2015.

"We want to raise Toronto's profile, make sure people know this is one
of the top urban destinations in North America.

"These events will help cement that reputation and move Toronto up in
people's destination choices," Weir said.

Canada has recently been added to China's list of approved
destinations and the country will be an important growth market for
Toronto's tourism industry in the coming years, along with Brazil and
India, Weir said.

These countries have a burgeoning middle class with travellers who are
eager to see North America.

"They're looking for a big North American urban experience and Toronto
delivers that," Weir said. "If you like cities, Toronto should be on
your list and it should be high on your list."

Nearly two-thirds, or 65 per cent, of Toronto's 10 million overnight
visitors annually come from other parts of Canada.

About one-in-five, or 20 per cent, come from the United States,
followed by Great Britain (244,000 visitors) and Germany (77,000).


Resize:AAA.U.S. Losing Global Competitiveness with High Corporate Tax
Posted February 2nd, 2010 at 10:03am in Enterprise and Free Markets
with 0 comments Print This Post

High corporate tax rates are undermining U.S. international
competitiveness. The global economy continues to demand that companies
be flexible and swift in order to remain competitive. High tax rates
deprive companies of both the means and the incentive to take
advantage of new market opportunities or technological changes that
can improve productivity.

Most advanced countries in the world have responded to new global
economic realities by slashing corporate tax rates. The U.S. stands
almost alone in having resisted such cuts, and its corporate tax rates
are now among the highest in the world. Future U.S. prosperity depends
on the willingness of our political leaders to resist populist anti-
corporate dogma and make the necessary adjustments to keep the U.S.
economy competitive.

America’s strength and economic success are based on economic freedom,
which fosters the virtuous cycle of entrepreneurship, innovation, and
growth. Our economic freedom has sustained economic opportunity and
prosperity, as well as the creativity that leads to new products and
new jobs. Clearly, U.S. inaction in improving fiscal freedom through
more competitive tax rates undermines our economy’s innovative pulse;
America stands still while its competitors are moving forward. As the
2010 Index reveals, since July 2008, more than 30 countries have
introduced reforms in direct taxes or have implemented tax cuts as
previously planned, despite the challenging economic and political
environment caused by the global economic slowdown.

America’s inaction is particularly damaging in a time of economic
slowdown and ongoing recovery. A long-term policy plan that
strengthens economic fundamentals would calm fears among entrepreneurs
and restore confidence in the U.S. economy.


It’s Time to Turn to Innovation, Competition to Spur Economy

Posted January 27th, 2010 at 10:10am

In a recent poll by the Wall Street Journal and NBC news, a majority
of Americans expressed their frustration with the approach our
government has taken in response to the financial crisis and economic
slowdown. Just 43 percent of the respondents expressed satisfaction
with how President Obama has handled the economy, a decline of 13
percentage points from a year ago. The disapproval vividly reflects
disappointment toward economic policy decisions and management over
the past year.

As the downward-trending poll numbers suggest, a majority of our
fellow citizens are not comfortable with the “dramatic change” we have
witnessed. The quest to enlarge and mobilize government in the name of
rescuing and rebuilding our economy has created both economic
uncertainty and a considerable degree of anxiety about our economic

There has always been tension between the state and the free market.
The genius of the American economy has been its ability to balance the
two, with policies that preserve stability while promoting innovation.
However, as shown in the 2010 Index of Economic Freedom that was
released last week, the battle has tilted decidedly toward big
government. The magnitude of the recent loss of economic freedom has
been alarmingly high, with considerable negative implications for our
economic future. While many countries around the world continue on the
path of economic liberalization, the United States is, in many
respects, moving in the opposite direction, simultaneously burdening
its economy with increasing government spending, uncompetitive tax
rates, and barriers to trade and investment that stifle
entrepreneurship and dynamic growth.

By burdening our economy with even bigger government and stifling it
with less economic freedom, we are creating a dangerous economic
environment where opportunities are missed, and lingering uncertainty
undermines our economic potential.

In one of his many inspiring speeches, President Obama in fact talked
about the importance of innovation:

“[There is] an important role that we can play, laying the ground
rules to spur innovation. That’s the role of government — to provide
investment that spurs innovation and also to set up common-sense
ground rules to ensure that there’s a level playing field for all
comers who seek to contribute their innovations.”

As a matter of fact, the proven path to stimulating economic growth is
to advance economic freedom by promoting policies that generate a
virtuous cycle of innovation, vibrant economic expansion, and more
opportunities for people. Economic freedom is strongly linked to
innovation and business initiatives that cumulatively lead to greater
economic vitality for all.

As the findings of the 2010 Index demonstrate empirically, today’s
successful economies are not necessarily geographically large or
richly blessed with natural resources. Many economies have managed to
expand opportunities for their citizens by enhancing their innovation
capacities that are among the chief engines of economic prosperity.

Unfortunately, our economy’s dynamic innovative pulse is slowing in
the presence of ever more bloated government.

No doubt that the vigor of our ongoing recovery depends on private
businesses that will flourish with greater economic freedom. However,
many small and large firms are currently postponing spending decisions
and projects until they see more clearly government’s latest
intentions. Others are put off by anti-business rhetoric that
demonizes those whose profit-seeking is the very foundation of
investment and job creation.

It is time to put back our country onto the right course. In preparing
for his second State of the Union address this Wednesday, President
Obama should be reminded of how to best spur innovation, not throttle
it. The tool of choice—economic freedom—requires only an understanding
that the people, expressing their wishes freely in the market-places
of America, know better than any central planner or government
bureaucrat what they need to get moving again.


Scott Brown’s Reading List: The Index of Economic Freedom
Posted January 20th, 2010 at 4:33pm

Within a span of just a few hours this week, three seemingly unrelated
events all, by happenstance, made headlines in America: the one-year
anniversary of President Obama’s inauguration, a historically
earthshaking election in Massachusetts, and the release of The
Heritage Foundation’s Index of Economic Freedom. But perhaps there are
no coincidences in life.

What narrative arc ties these headlines together? Our Index revealed
today that the United States is no longer as economically free as it
once was (and, in fact, dropped out of the “free” category
altogether); President Obama spent his first year continuing – and
exacerbating – dangerous economic policies that predated his swearing-
in; and Scott Brown seized an unlikely victory in a true-blue state by
campaigning on fighting the President’s disastrous economic policies.
What’s more, he made it known to all that he would cast the 41st vote
to be a firewall of conservative sanity to President Obama’s liberal

Just as one wouldn’t turn up their nose at a lucky four-leaf clover,
Heritage will not let this series of coincidences pass us by. We’re
sending Mr. Brown a copy of the Index of Economic Freedom. Why not?
His campaign hit hard at Mr. Obama’s “stimulus” package, which,
according to the Index, is a policy that was a significant
contributing factor to America’s drop in economic freedom and has led
to the plunge in our investment freedom. In main street terms, the
devastating consequence is an unemployment rate of 10% that doesn’t
appear to be budging any time soon. It’s not just the layoffs, it’s
also that there’s no new investment to create employment
opportunities. In fact, of the ten categories the Index measures to
determine degree of economic freedom, the United States fell in seven.

It’s as if Mr. Brown took a page (or several pages) right out of our
Index. He relentlessly attacked our government’s interventionist
instincts—the takeover of major parts of our economy—that led to a
drop in our property rights, another reason why we are today “the land
of the mostly free.”

Let there be no doubt, our Index, which spans the June 30, 2008, to
June 30, 2009, period, makes clear that many of the policies which
have led to our “less free” status were started under President George
W. Bush. One glaring example is the Troubled Asset Relief Program,
which started under Mr. Bush. The Index makes clear, though, that Mr.
Obama has at least doubled down on all of the economically harmful
policies from the previous administration.

The Index does not cover Mr. Obama’s attempted takeover of our health
sector, which is almost one fifth of our economy. (To put it in
perspective, if it were a country it would have an economy as big as
the UK’s.) And it leaves out the attendant tax burden, deficit
spending, and miles of red tape that would come with Obamacare. And
the Index doesn’t include the job-killing cap-and-tax scheme, which
would surely cripple our economy. Of course, all of that looks less
likely right now after the fortuitous Boston Tea Party of January 19,

So we hope that Sen. Brown will enjoy our Index. Whether he knew it or
not, the message he campaigned on mirrors the ideal of economic
freedom the Index espouses. Perhaps it was a coincidence, but it’s not
one we’re willing to overlook.

The Index is published annually with The Wall Street Journal. You can
read more about it at JobsandFreedom.com or at Heritage.org/index

Follow Heritage’s Mike Gonzalez on Twitter @Gundisalvus


Morning Bell: Americans Call for Change As U.S. Becomes Less
Economically Free
Posted January 20th, 2010 at 9:36am

Scott Brown’s shocking victory in Massachusetts on Tuesday was a shot
across the bow of the liberal ruling class in Washington and declared
one clear message: Americans do not like the direction the country is
heading, and they’re not going to stand for it, even in the solidly-
blue Bay State.

The United States’ direction today is a dangerous one, even when
compared to the country’s state of affairs just one year ago, as
revealed in the 2010 Index of Economic Freedom, which we are releasing
this morning in a joint project with The Heritage Foundation and The
Wall Street Journal. The Index analyzes just how economically “free” a
country is, and this year America saw a steep and significant decline,
enough to make it drop altogether from the “free” category, the first
time this has happened in the 16 years we’ve been publishing these
indexes. The United States dropped to “mostly free.”

The drop in rankings is notable as it comes in the same week that
marks the one-year anniversary of President Barack Obama’s
inauguration. By any standard, over the last year Americans’ overall
wealth and prosperity has continued to decline. Americans, in fact,
are more likely than ever to believe that their children and
grandchildren will be worse off than the current generation. They
believe future generations will live in a less prosperous and less
economically mobile America. The traditional American faith in upward
economic mobility – widely understood to be the American Dream – seems
more elusive now than ever.

One recent poll by the Pew Research Center found that 55% of Americans
believe their children will be worse off when they grow up, while only
36% see a better future for them. Similarly, a December 2009 Gallup
study found that Americans are more pessimistic about our future now
than at any time since the late 1970s.

Sadly, this bleak view of the future is understandable – after all,
unemployment has skyrocketed and shows no signs of abating, government
spending and debt are at unprecedented levels during peacetime, and
our elected officials seem determined not only to ignore these alarm
bells but to pursue policies – expensive new entitlement programs;
debilitating new taxes on wealth creation, savings, and investments;
and new government regulations that have created a climate of such
uncertainty – that will cause entrepreneurs to stay on the sidelines
rather than take the risks that have led the United States out of
previous recessions. Studies indicate that this is indeed the case.
“The largest force driving unemployment [in the U.S.],” Heritage’s
James Sherk argues, “is the sharp drop in private-sector job creation”
rather than job losses incurred through lay-offs.

In a nutshell, there is a growing sense that, in economic terms,
America is less free and is destined to remain that way.

As the Index of Economic Freedom reveals (and as each and every
American can feel in their daily lives), the United States is now the
home of the mostly free. This development is huge – akin to learning
that the premier rating agencies have been forced to downgrade U.S.
Treasury debt to second tier status.

What exactly is the Index? It’s a comprehensive review of 179
countries around the world that considers economic freedom in ten
separate areas. Five of these measurements — freedom in business,
trade, investment, finance, and labor—measure the regulatory burdens
government places on businesses and entrepreneurs. Three — fiscal
freedom, government spending, and monetary freedom—examine the overall
size and level of intrusiveness of government and its effectiveness in
maintaining a stable economic environment. The remaining two—property
rights and freedom from corruption—look at fundamental societal
characteristics that underpin all modern prosperous economies.

Detailed analyses have found that citizens in countries with the
highest scores on the Index enjoy much higher standards of living than
their neighbors in countries that are less free. Freer countries, for
example, have levels of per capita GDP that are more than 10 times
higher than in countries that are mostly unfree or repressed. Higher
levels of economic freedom also go hand-in-hand with broader
indications of both economic and social well-being.

While some of the decline is attributable to policies enacted under
the previous Administration, this year’s findings nevertheless should
be especially relevant to the policy agendas now dominating Capitol
Hill. Specifically, the Index records a wide disparity among the 20
largest economies in the world over the past year, with half
continuing to increase economic freedom while the other half,
including the United States and the United Kingdom, embraced policies
that substantially diminished it.

In particular, countries that undertook large stimulus measures or
other government-directed attempts to spur growth failed to realize
economic growth. Not only have growth rates not increased, but the
long term impact of these measures, which includes increased deficits,
inflation, higher taxes, and protectionist measures against foreign
trade, actually diminish economic activity. In the case of a country
like the United States, which has such a large impact on the world
economy, slower growth harms not only Americans, but citizens of
almost every other country in the world, as well.

Alarmed by the findings in this year’s Index, The Heritage Foundation
has embarked on a comprehensive project to identify those policy
changes that, if enacted, would return the United States once again to
the ranks of the freest countries on Earth. We will identify the
policies in each of the ten areas of economic freedom that are most
highly associated with true economic freedom, compare those “best
practices” to the policies currently in place here, and recommend an
economic freedom agenda worthy of America.

Quick Hits:

•Read more about the 2010 Index of Economic Freedom and watch a video
by Heritage Vice President Kim R. Holmes, Ph.D. at JobsandFreedom.com.

•In the wake of Scott Brown’s victory in Massachusetts last night,
Speaker Nancy Pelosi (D-CA) said of Congressional Democrats’ efforts
at health care reform: “We will get the job done. I am confident of
that. I have always been confident of that.”

•The Yemeni air force bombed the home of a suspected al-Qaeda leader
as part of a government crackdown related to the attempted Christmas
day airplane bombing over Detroit.

•Pennsylvania welcomed 53 Haitian orphans ranging from 11 months old
to age 12 on Tuesday; the earthquake destroyed two of three buildings
in their Port-au-Prince orphanage.

•Embattled Transportation Security administration nominee Erroll
Southers withdrew his name from consideration this morning. The Obama
nominee faced “fierce opposition” “since revelations that he may have
misled Congress about an incident in the late 1980s involving a
background check of the boyfriend of his ex-wife.”


...and I am Sid Harth
2010-02-03 14:00:34 UTC
Re: The law and the current scandal surrounding Ozawa

February 02, 2010
[SSJ: 6040] Japan's Fake Reforms
From: Richard Katz
Date: 2010/01/29

Foreign Policy's online edition ran a comment by me on the DPJ's new
ten-year growth strategy under the title "Japan's Fake Reforms," (my
title had been "Can the DPJ Revive Japan's Economy"). It's at


Much of the background economic argument will be familiar to Forum
members, but here are the parts that, hopefully, add to the dialogue.
I'd be curious to hear responses to the political analysis regarding
the DPJ.

To wit: even though short-term electoral tactics lead the DPJ to avoid
real reforms, the longer term political pressure says it must either
bring about real revival or fall from power, and that there are some
really sharp younger Diet members who get this.

Here are the excerpts:

Just before the recently elected Japanese government released its new
10-year growth strategy, two top policymakers locked horns in a
sterile economic debate. Heizo Takenaka, economic advisor to former
Prime Minister Junichiro Koizumi, said the chief priority should be
business-oriented supply-side measures to generate new wealth. Naoto
Kan, the new deputy prime minister and finance minister, stressed the
need to boost demand and help consumers. Arguing that the Koizumi
cohort had failed, Kan said that companies would neither hire new
workers nor boost capacity if they couldn't sell their output.

In the end, Prime Minister Yukio Hatoyama took Kan's approach, saying,
"[The past government] was biased toward the supply side, and we
intend firmly to generate demand." His government set goals of 2
percent GDP growth per year for the next decade and the creation of
4.76 million new jobs in fields like elderly care, health, the
environment, tourism, and exports. The problem is that his "growth
strategy" includes neither growth nor strategy. It lists targets but
offers no means to achieve them.

Moreover, the goals themselves are off base. Hatoyama set a target of
2 percent per year GDP growth, starting from a 2009 baseline. But from
2007 through early-2009, the recession slashed GDP by a remarkable 9
percent. If the Japanese government based its goal from the pre-
recession GDP levels -- as it should have -- its GDP target for 2020
works out to just 1 percent growth per year, a truly dismal rate.[see
note below]. The targets on the jobs side are equally off. Over the
next decade, the country's working-age population will plunge by 7.6
million people, or 10 percent, and the number of retirees will rise by
6.5 million. How can the Hatoyama administration promise 4.8 million
additional jobs when Japan won't have the workers to fill them? No one
expects a rush of immigrants or women into the workforce to counter
this trend.

For Japan to revive, it has to move beyond Kan and Takenaka's false
supply-side, demand-side dichotomy. As famed economist Alfred Marshall
pointed out more than a century ago, scissors need two blades: supply
and demand. Japan has trouble growing because both blades are so
banged up that neither cuts very well. Plus, each blade's dullness
worsens the other.


The LDP claims as one of its alleged supply-side reforms to have aided
labor flexibility by increasing the use of part-time and temporary
workers, who now represent one-third of the labor force. In reality,
by paying these "irregular" workers meager incomes, businesses have
lowered real wages for everyone, thereby crippling consumer demand and
creating an anti-reform political backlash. Rather than addressing the
problem by providing safety nets and wage equality for "irregular"
employees, the DPJ has promised to ban their use in some sectors,
focusing on a futile effort to restore the old lifetime employment

Some in the DPJ understand that genuine flexibility, better wages, and
strong consumer demand are interdependent. But the party's political
tacticians, especially Secretary-General Ichiro Ozawa, understandably
do not want to alienate constituents in weak sectors or allies in the
unions. Therefore, the DPJ has punted on the question of the economic
fundamentals Japan needs to change.

Fortunately, there is a way out. These days, party loyalty and
traditional political machines are weaker than ever. Voters are
increasingly choosing on the basis of the economy. Hence, though it
may seem in the short-term that there is a political need to placate
assorted interest groups at the expense of economic growth, in the
long-term that is the road to electoral defeat. That's what brought
down the LDP in a landslide rejection in 2009. This new political
equation will put pressure on the DPJ to come up with some genuine

Many in the DPJ already recognize this. Several members, for instance,
have argued for allowing in cheaper food imports while giving income
support rather than production subsidies to the dwindling ranks of
aging farmers -- something that could have been political suicide in
the LDP era. And younger Diet members -- many of whom came from the
bureaucracy, business, or academia -- seem to understand that in the
long run effective politics requires effective policies.

Hopefully, the new growth strategy announcement will prove nothing
more than a disposable campaign pamphlet for this July's pivotal upper
house elections. The DPJ needs to get a single-party majority in that
chamber so it can rid itself of dependence on two small retrograde
parties and focus on hashing out the tough economic issues. The things
it had to say to win the lower house in 2009 and thinks it has to say
to win this July are very different from what it needs to do in order
to retain power. If it fails to revive Japan, it too will fall from
power. More political realignments will ensue. Japan will have no
political stability without prosperity, and no prosperity without
serious reform.

Richard Katz
The Oriental Economist Report

Note for the economically inclined

The DPJ pledges to achieve 3% nominal growth between now and 2020, of
which 1% would be inflation and 2% real growth. But look at the fine
print. The DPJ says it wants GDP to hit ¥650 trillion in 2020.
Compared to an estimated ¥473 trillion in 2009, that’s 3% nominal
growth per year—but only by starting off from the very low level
resulting from the severe recession. If we compare the ¥650 trillion
target to the pre-recession peak GDP of ¥515 trillion (nominal) in
2007, a goal of ¥650 trillion in 2020 means only 1.8% average annual
nominal growth between 2007 and 2020. This translates into less than
1% real (price-adjusted) growth. The DPJ only announced a nominal GDP
target and its inflation assumption rather than a separate real GDP


Random Shots
Wednesday, February 3, 2010 at 09:40AM

Watching, monitoring, and analysing the economy and her markets is as
much about tracking discourses (and how they change) as it is about
perusing data material on various leading and lagging indicators. And
thus, as I am still knee deep into putting the last touch on my thesis
[1] I thought that I might as well move in with some random shots at
what just might (or might not) be a subtle change of discourse in the
context of the areas of the economy I am interested in.

Rallying Risky Assets no More?

The first interesting piece that got my attention was the coverage by
FT Alphaville's Tracy Alloway of this week's musings by JPMorgan and
UBS about whether the recent dip in risky assets (and subsequent rally
of the buck) is a decisive turning point or merely a blip à la Dubai.

In terms of a change in discourse there is not much in the way of one
as e.g. JPMorgan's equity team concludes;

We advise adding to positions on weakness and would revisit this view
if jobless claims were to move back towards 500k, if Greek default
becomes a reality or if manufacturing leading indicators roll over.

Now, this appears as full out frontal bid on equities to me since if
jobless claims were to move into the 500ks it would not, I presume,
happen overnight as well as a de-facto Greek default would constitute,
an ex-post, post mortem on an equity market in shambles as it would
surely wreck havoc even in the initial stages. As for the leading
indicators they are of course, by nature leading and thus this may be
the figue leave JPMorgan can cling on to if and when they decide to
back pedal on this bullish strategy. More generally, UBS is quoted of
pointing to three sources for the recent dip in risky assets and thus
immediate source of a sudden correction. The first is the growing
worry by part of Chinese policy makers of the bubblicious state of the
economy and thus the incipient signs of monetary tightening. The
second relates to the recent barrage from Obama against the financial
sector and especially, I assume, the declared war against proprietary
trading which has been the source of fat profits for the likes of
Goldman, illuminati, Sach, Morgan Stanley and other of their ilk.
Finally, there is of course the growing unease in the market place
with the unfolding mess in the Eurozone where Greece is still taking
center stage teetering on the brink of a bailout in the form of either
and IMF led representation or an internal agreement with the EU.

While I certainly agree that those factors represent sand in the
otherwise smoothly running machine of excess liquidity driving the
rally in risky assets I tend towards a more straightforward source of
a potential correction. Consequently, and for all the stimulus and
inventory driven growth we are currently observing I think that final
demand at the end consumer as well as the willingness and capabilities
of companies to ramp up investment will disappoint thoroughly to the
downside. The need to rebuild balance sheets and deleverage across all
sectors of the real economy will trump the current positive discourse.
It is ironic in this sense that the current flurry on government
deficits (especially in the Eurozone) represents exactly the
inflection point reached by many OECD governments with respect to the
need to decisively rein deficit spending in order to put in a
reasonable effort at covering future age related liabilities (as the
principal although not only reason). In short; it is really difficult
to see from which sector in the real economy we are likely to see a
recovery to confound the current expectations in the market.

Yet, as is clear from the latest equity research from the good equity
analysts at JPMorgan and UBS the discourse is still fixed on recovery.
My bet though is that it will change at some point in 2010 in line
with the lack of response from the real economy in taking over from
stimulus driven growth, but of course; when it comes to the movements
of stocks ... I am not the right one to as. Really, I am not!

Speaking Truth on Japan

Meanwhile in Japan it was interesting to note the comments by
economist at the BOJ Kazuo Momma who managed to pinpoint with surgical
precision what exactly Japan's current woes are in terms of
macroeconomic dynamics;

(Quote Bloomberg)

Japan’s economy is far from achieving self-sustained growth as the
export-led recovery fails to spur spending at home, according to Kazuo
Momma, the Bank of Japan’s top economist. “The risk that the Japanese
economy will fall off from a cliff is small, but there is still a long
way to go,” before the expansion becomes sustainable, Momma said in
Tokyo today. “Even if the global economy continues to recover, the
spread of that to capital spending and the labor market will be

The key thing to notice above and beyond the real economic effects in
the form of entrenched deflation and low growth is the failure of the
momentum from external demand to reach the domestic economy. Perhaps
more than anything this is the defining characteristic of the Japanese
economy and, I would argue, export dependent economies in general.
Consider also that the discourse on Japan to large extent has been
solidly anchored in the expectation that the strong momentum of the
export related activities would eventually lead into a positive
feedback loop with domestic activity. This has so far closely
resembled the well known perennial wait à la Beckett and it is worth I
think to ask what exactly underlies this disconnect in the economy. In
this sense, I thought it interesting that Mr. Momma and thus the BOJ
moved in with such a decisive recognition that something seems
thoroughly broken in terms of the ability of the domestic Japanese
economy to gain traction.

Elsewhere on Japan I also took note of the veritable tableau d'horreur
in the context of the estimated fiscal outlay in the coming years.
Consequently, recent numbers from the ministry of finance suggest that
Japan will up the its bond issuance by as much as 16% moving towards
2013. Concretely, the butcher's bill is estimated to total 51.3
trillion yen in the year starting April 2011, 52.2 trillion yen in the
fiscal year of 2012 and 55.3 trillion yen in the fiscal year of 2013.
Naturally, former minister and now opposition member Yoshimasa Hayashi
was quick to slam on the critique simply noting that it was unclear
whether the new DPJ led government was worried at all about the fiscal
conditions of Japan's economy. Specifically Mr. Hayashi worries about
10 year yields which I reckon is the right time horizon for when this
could really turn out sour for Japan; (quote Bloomberg) ...

The deteriorating fiscal position has raised concern that bond
investors may start to demand higher yields for holding Japan’s debt.
The yield on the 10-year government bond rose half a basis point to
1.31 percent at 2:28 p.m. in Tokyo. It hasn’t exceeded 2 percent in
more than a decade.

Finance Minister Naoto Kan said yesterday that the government’s mid-
term fiscal strategy to be released by June will help to maintain
investors’ confidence. “We need to keep yields around the current
level by maintaining markets’ trust in our fiscal health,” he told
parliament. S&P’s downgrade of the outlook for Japan’s debt to
“negative” indicates it may cut the local-currency rating for the
first time since 2002. National Strategy Minister Yoshito Sengoku
called the warning a “wake-up call.”

Before we start comparing Japan with Greece et al though there is
little doubt that demand will be there for the securities since we can
be pretty sure that the BOJ will be provide the bid through
quantitative easing. However, in a longer term perspective and with
largest debt to GDP ratio as well as the oldest population in the
world one does not have to be a macroeconomic literate to see how this
cannot go on forever. However, as long as Japan remains a net external
lender the problem is one of accounting really and with its own
independent central bank the show can go on for quite a while.
Moreover, the likely side effect on the JPY makes it an almost
attractive route to follow by Japan in the sense that a long waited
depreciation of the JPY (if it comes) will not only strengthen the
export sector but also provide some welcome inflation to the economy.

Wither the Euro (as a "reserve" currency)?

Perhaps the most interesting headline coming in on the wires in the
beginning of the week was this Bloomberg piece running under the
header that the Euro is losing its allure as a reserve asset.

Investors are pulling cash out of Europe at a record pace as central
banks slow euro purchases, jeopardizing its status as a substitute to
the dollar as the world’s reserve currency.

Last year, policy makers loaded up on euros, while analysts at
Barclays Plc in London and Aletti Gestielle SGR SpA in Milan predicted
central bankers would make good on threats to reduce the greenback’s
dominance. Now the euro is down 8.4 percent since Nov. 25 in its
fastest slide in 10 months amid concern that cash-strapped countries
like Greece won’t pay their debts. Billionaire investor George Soros
said Jan. 28 that there’s “no attractive alternative” to the dollar.

Well well, what a difference a couple of jitters in Southern Europe
makes. Now, before we get ahead of ourselves in terms of the long term
significance of the Euro's recent slip I think this abrupt change in
discourse on the Euro is a good testament to the difficulty many have
in understanding exactly what these so-called global imbalances are.
This may sound arrogant as I imply here that I do actually understand,
but I find it extremely difficult to see how people who hitherto
believed in the Euro as a the new dominant global currency can
suddenly shift position on the back of trouble in Greece, Spain et al.
I mean, surely and if you had cared to look and listen the structural
difficulties of the Eurozone and the obvious inability of the EUR/USD
to move about in the 1.50s/1.60s and thus act as the main vessel of
rebalancing were there for anyone to see. Well not quite and while the
coup de grace from George Soros is significant in itself I think it
worthwhile to think back to the heaty days when Bernanke lowered rates
as an initial response to the subprime fallout (and the ECB
momentarily raised) and thus where the Eurozone was hailed as the new
engine of the global economy to take over from an ailing US economy.
Some of us tried to dimiss this nonsense but it appears that it takes
near default along the periphery, before it really hit the main wires.
So let me be quite clear here. The Euro is not an alternative to the
Dollar in so far as goes rebalancing of the global economy which would
entail the Eurozone being a relatively large and sustained net
external borrower. In fact, given the troubles in Spain and Greece the
real challenge is how the Eurozone can become a net surplus region and
thus reduce the borrowing of key member countries.

Bubble Trouble in China

This one is hardly news and neither has there been much of a change in
discourse as it has been some weeks now that Chinese authorities
little by little have started to voice concerns over the growing
tendencies of overheating in the Chinese economy and property sector
in particular.

China’s “real worry” is asset bubbles as capital flows into an economy
awash with money and the nation emerges from the crisis into a “boom
time,” central bank adviser Fan Gang said. Moves by the central bank
this year to curb liquidity were “timely and necessary,” Fan told a
forum in Beijing today. “Although globally we’re still talking about
the crisis, China and some developing countries now are facing another
boom time.”

Stocks fell in Asia and Europe today on speculation that Chinese
policy makers will do more to cool the world’s fastest- growing major
economy after two reports showed a sustained rebound in manufacturing
and rising prices. Excess liquidity is a “problem” as low interest
rates and slower growth in the U.S. and Europe encourage money to flow
into China, said Fan, the academic member of the monetary policy

One economist and long time China observer, Andy Xie, that I tend to
lean on is much more out spoken on the current risks in China as well
as a recent report by BNP Paribas sees decisive turning point already
in 2010 as tighter liquidity conditions begin to bite;

China’s property market “bubble” is set to burst as the government
curbs credit growth and clamps down on speculation, according to
independent economist Andy Xie As bank lending slows, “it’s very
difficult to see this demand continuing,” Xie, formerly Morgan
Stanley’s chief Asian economist, told Bloomberg Television in Hong
Kong today. Tougher property policies may lower 2010 sales volumes 10
percent, compared with an earlier forecast for growth of as much as 5
percent, BNP Paribas said in a report today.

I agree in the main. The key however is timing and just how far China
may run here. It may be longer than many imagine, but I agree with the
fundamentals of the argument. Xie apparently thinks that 2010 will see
a significant correction. I have no reason to disagree, but a bubble
in China (in general) may run a long time before she runs out of
steam. Having said this though, recent bits and pieces of information
that I have been fed from the ground in China by my "contacts"
strongly suggest that a breaking point is near. One key ingredient
here according to a property insider in China is that almost all of
the stimulus money currently being poured into the Chinese economy
(which is a lot) is going into property and needless to say, this
cannot run forever.

More generally, a full blow out of the Chinese property sector in e.g.
some of the most bubbilicious parts of the real estate sector would
constitute a severe dent in the expectations of a global recovery
driven from Asia. Perhaps this more than anything suggests why it is
important to keep a weary eye on port side property in Shanghai and
elsewhere even if you are not in the market for a condo.

A Change in Discourse?

Whether there has really been a change in discourse in some parts of
the market as per reference to the points mentioned above or whether I
am just preying on a well worn narrative to take some random shots I
will leave it for the reader to decide. In general, the ball is still
rolling on the recovery discourse but with events in the Eurozone and
a Chinese economy looking set to fall short of the promises to pull
forward the global economy things might change sooner rather than
later. To this I would add the fundamental and lingering trend of
deleveraging in all real sectors of the economy which ultimately means
that self sustained growth will disappoint thoroughly to the downside
and this I hold to be quite certain and not just a random shot.

[1] - Which I will present here in due course.

Senator Bob Corker Needs to Be Updated on His Bank Failure History
Submitted by Reggie Middleton on 02/02/2010 16:08 -0500

American International GroupBob
CorkerCitibankCitigroupCountrywideCredit CrisisFailFannie MaeFederal
Deposit Insurance CorporationFinancial Accounting Standards
BoardFreddie MacGoldman SachsHenry PaulsonHousing
MarketIllinoisLehmanLehman BrothersMerrill LynchNew York Stock
ExchangeRisk ManagementWaMuWashington MutualWells Fargo

Senator Corker challenged Mr. Volcker's stance in today's
congressional hearings on the Volker Rule by saying that no financial
holding company that had a commercial bank failed while performing
proprietary trading. It appears as if Mr. Cofker may have received his
information from the banking lobby, and did not do his own homework.

Let's reference the largest commercial bank/thrift failure of the all.
First off, a little historical reference courtesy of WSJ.com:

WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in the
History of the US!!!

In what is by far the largest bank failure in U.S. history, federal
regulators seized Washington Mutual Inc. and struck a deal to sell the
bulk of its operations to J.P. Morgan Chase & Co...

The collapse of the Seattle thrift, which was triggered by a wave of
deposit withdrawals, marks a new low point in the country's financial

The seizure was another watershed event in a frenetic period for the
U.S. banking system, and came while members of Congress wrangled over
the Bush administration's proposed $700 billion bailout package. The
tally of U.S. financial giants that have either been seized by the
government or sold themselves off to stronger firms in recent weeks
includes mortgage titans Fannie Mae and Freddie Mac, insurer American
International Group Inc., and Wall Street firms Lehman Brothers
Holdings Inc. and Merrill Lynch & Co.

The failure of WaMu eclipsed what had long been America's largest bank
bust on record, the 1984 collapse of Continental Illinois, which had
$40 billion in assets.

The seizure of Washington Mutual is likely to send tremors through the
thrift industry. Many of WaMu's smaller brethren are also struggling
with a wave of bad loans and some have already been ordered by
regulators to raise capital and stop growing. Many community and
regional financial institutions are also slashing dividends, selling
branches and reining in lending in order to preserve capital...

While WaMu has been struggling since last year, its demise occurred
with breathtaking speed.

Starting Sept. 15, the day that Lehman filed for bankruptcy
protection, WaMu's customers began heading for the exits. Over the
next 10 days, they yanked a total of $16.7 billion in deposits,
according to the Office of Thrift Supervision. That was about 9% of
the thrift's deposits as of June 30. WaMu declined to comment...

In March, with the credit crisis in full bloom, J.P. Morgan offered to
acquire WaMu but was spurned in favor of a $7 billion infusion led by
the private-equity firm TPG, considered one of the savviest buyout
firms. TPG, led by investor David Bonderman, said it will lose $1.35
billion, wiping out its investment....

"Obviously, we are dissatisfied with the loss to our partners from our
investment in Washington Mutual," said a TPG spokesman. "The
unprecedented turmoil in global financial markets and resulting macro
crisis of confidence has radically changed the dynamics for all
financial institutions, and led to widespread losses among investors
throughout the sector." TPG said its losses are about $1.35 billion,
wiping out its investment....

Regulators also hustled to shut down WaMu faster than they have with
other failing banks this year. Normally, when the FDIC and another
regulatory agency are preparing to take over a bank, the FDIC will
solicit bids for the bank on Tuesday or Wednesday and then seize it on
Friday evening, after the bank's branches have closed for the weekend.
Sometimes the FDIC will even wait another week to step in. Every bank
to fail this year has been shut down on a Friday. The FDIC steps in on
Fridays to ensure a smooth transition so that customers hardly notice
the handover.

In WaMu's case, the FDIC set a Wednesday evening deadline for
interested parties to submit their offers for various parts of WaMu.
Twenty-four hours later, they were already preparing to seize the
bank. Earlier this month, Treasury Secretary Henry Paulson made it
clear to WaMu that the company should have accepted the takeover deal
J.P. Morgan had offered earlier this year, according to a person close
to WaMu.

As pressure mounted on WaMu over the past two and a half weeks,
regulators sparred over how to handle the situation, according to
people familiar with the matter. Last week WaMu met in Washington,
D.C., with the FDIC and OTS, WaMu's chief regulator. WaMu, according
to a person familiar with the situation, asked for the meeting because
it had received conflicting information from the two agencies. The
tension between the two groups was palpable, this person said. The
FDIC, this person said, was more aggressive in describing the
information it wanted from the thrift.

Federal regulators said the exodus of deposits left WaMu "with
insufficient liquidity to meet its obligations." As a result, WaMu was
in "an unsafe and unsound condition to transact business," according
to the OTS.

The OTS closed WaMu on Thursday and appointed the FDIC as receiver.
The FDIC ran the bidding process that resulted in the decision to sell
WaMu's banking operations to J.P. Morgan....

"The housing market downturn had a significant impact on the
performance of WaMu's mortgage portfolio," said OTS director John
Reich. [which was actively traded on a proprietary basis, hence the
pertinence of the Volcker Rule]

With mortgage losses mounting and its stock price plunging, WaMu has
been scrambling over the past month to find a solution. Last week, it
put itself on the auction block. A number of banks -- including
Citigroup Inc., Wells Fargo and Banco Santander SA -- pored over
WaMu's books, but the bank didn't receive any offers. This week,
WaMu's outside bankers approached a group of private-equity funds to
gauge their interest in a deal. Those talks were viewed as a last-
ditch effort.

The article above was date SEPTEMBER 26, 2008. I warned my blog
readers about Washington Mutual in September of 2007, and was short
the stock from that point until its demise. Reference "Yeah,
Countrywide is pretty bad, but it ain’t the only one at the subprime
party… Comparing Countrywide to its Peers", Saturday, 08 September
2007 :

From my experience, there is evidence of this from Lehman Brothers,
Washington Mutual and potentially IndyMac Bank as well. I am fairly
sure that there are surprises to be had from all three of these banks
as well in the upcoming quarters, big surprises. These practices were
supported indirectly by Citibank, Lehman Brothers and Wamu through
their warehouse credit lines to subprime mortgage banks, most of which
have gone out of business or scaled down operations...

Wamu's nonperforming loans have doubled from the June 30th quarter of
‘06 to the most recent quarter, from .62% to 1.29%, but excludes
"Excludes nonaccrual loans held for sale". My best guess is that these
are the loans that have not been earmarked for the investment
portfolio, and are being held for sale, thus are not held under the
accrual accounting rules. If this is the case, these numbers were
delivered just before the massive upheaval in the markets where
investors totally shunned the MBS products. If my hunch is correct,
then "Excludes nonaccrual loans held for sale" category will be forced
into the investment portfolio, and this may look bad. The banks tried
to sell off the garbage, and Wamu wrote its fair share of it.
Reference their option arm product which was not only an annual (and
monthly) arm product, but gave the payer the option to go negative
amortization (pay a portion of the interest and allow the rest to get
tacked onto the principal)...

Even in reclaiming the property through foreclosure, Wamu will take a
BIG loss on these. Wells Fargo shows a large amount of Level 3 gains
in their latest earnings report. Level 3 gains are those market to
myth (I mean model) profits that are derived from modeling a price in
lieu of obtaining it from the market place. They may be force to keep
these on the books for a long time and/or take significant losses on
them. More on Wells Fargo later...

I think Wamu got stuck with a lot of this stuff... Unlike Countrywide,
Wamu appears to have adequate liquidity due to a larger and more
diversified thrift business, but that doesn't mean that they ain't
going to lose a lot of money on their less than prudent lending
practices. Their tangible equity to total capital is 6.07%, but
includes the footnote "Excludes unrealized net gain/loss on available-
for-sale securities and derivatives, goodwill and intangible assets
(except MSR) and the impact from the adoption and application of FASB
Statement No. 158, Employers' Accounting for Defined Benefit Pension
and Other Postretirement Plans, as of December 31, 2006. Minority
interests of $2.94 billion for June 30, 2007, $2.45 billion for March
31, 2007 and December 31, 2006 and $1.96 billion for September 30,
2006 and June 30, 2006 are included in the numerator." Now this is
scary, for these are most likely the derivatives that have no credible
bid, thus cannot be priced and/or marked to market. Exactly what is
the unrealized net gain/loss and how is it derived? We're talking 20.1
billion in subprime, and almost 30 billion in multi-family loans with
a total of 206.7 billion dollars of loans in their portfolio. Wamu
does not want high defaults or the impairment of their collateral. I
think both are a forgone conclusion due to the aggressive underwriting
to obtain these loans, specifically through the Option ARM product.
How much so is the question. The Home Loans group within Wamu has
taken consistent losses for the last 4 quarters, primarily due to
provisions for losses and non-interest expenses.

Now, on to the importance of the Volcker Rule since we have put WaMu
into historical perspective.

From Allbusiness.com

Washington Mutual Hires John Drastal as Managing Director of Trading
for WaMu Capital Corp.

Publication: Business Wire
Date: Monday, November 18 2002

Business Editors


WaMu Capital Corp., a fixed-income institutional broker-dealer and
subsidiary of Washington Mutual, Inc. (NYSE:WM), has hired John
Drastal as the managing director of trading.

Drastal will oversee all fixed income trading and risk management
within the firm, and will act as primary contact within the dealer

"John will play a key role as WaMu Capital Corp. continues to build
out its mortgage and securitization platform," said Tim Maimone,
president, WaMu Capital Corp. "Over the next year we expect to
strategically grow our sales and trading operations. We also plan to
open a New York sales office to complement our current offices in
Seattle and Los Angeles."

Drastal brings a wealth of Wall Street experience to the broker-
dealer. Prior to joining WaMu Capital Corp., Drastal spent five years
as managing director and principal for Donaldson, Lufkin and Jenrette,
where he was responsible for all aspects of the mortgage and asset-
backed security trading business, including position and risk
management, personnel, distribution, research, finance, operations and
new business development.

In his 14 years of experience in fixed-income trading and management,
Drastal has also held senior positions at Goldman Sachs and Company,
Lehman Brothers Inc. and Drexel, Burnham and Lambert. Drastal holds a
master's degree in industrial administration (MBA) from Carnegie Melon
University and earned a bachelor's degree in computer science from the
University of Delaware.

About Washington Mutual

With a history dating back to 1889, Washington Mutual is a national
financial services company that provides a diversified line of
products and services to consumers and small- to mid-sized businesses.
At September 30, 2002, Washington Mutual and its subsidiaries had
assets of $261.10 billion. Washington Mutual currently operates more
than 2,500 consumer banking, mortgage lending, commercial banking,
consumer finance and financial services offices throughout the

It is truly unfortunate that such misinformation and disinformation is
allowed to permeate through not only the media, but actual
congressional hearings. It is truly a shame. If I am not mistaken,
WaMu was the biggest bank/thrift failure, EVER! If anything, this
should provide momentum BEHIND the Volcker Rule in lieu of having
politicians trying to out-regulate an accomplished regulator on how to
regulate banks.

by Anonymous
on Tue, 02/02/2010 - 19:19

While Mr. Corker's stance came across as an advertisement for the
banks "Since you have no opposing facts, let's move forward with my
statement as fact." Yeah - Volcker is supposed to be pulling stuff out
of his ass to shoot down your endorsement of the banks that is
blatantly self interested.

Mr. Corker was referring ONLY to bank failures WRT this meltdown,
nothing prior to 2007.

I believe someone already posted how his statement was false - wrt -
Merrill Lynch going under.

by Rainman
on Tue, 02/02/2010 - 19:23

Corker needs to catch some " LIAR " lines thrown at him.

He's reading off the Bankster teleprompter. He really has no grasp of
what the hell is already processed and understood by the morts in the
world of uncorrupted reality.

by Kayman
on Tue, 02/02/2010 - 19:43

Corker needs to put a Cork in it. A lapdog of GS or delusional. Or a
lapdog of GS and delusional.

Either way this puppy is going to be put outside in the cold for a
very long time.

by boooyaaaah
on Tue, 02/02/2010 - 20:20

Corker knows who butters his bread -- not Volker

by deadhead
on Tue, 02/02/2010 - 20:23

Nicely done, Reggie. Thank you.

by Anonymous
on Tue, 02/02/2010 - 21:01

Bank lobby dressing down the best Fed chair ever via an arrogant
corrupt U.S. Senator? Shameful, pathetic, nauseating.

by Screwball
on Tue, 02/02/2010 - 21:04

It was pretty obvious who's side this clown is on. Throw his ass
out. Volcker has some quality one liners today. It was fun to watch.

Thanks Reggie.

by JR
on Tue, 02/02/2010 - 21:09

Great reporting, Reggie. "The truth has always been dangerous to the
rule of the rogue, the exploiter, the robber." --Eugene V. Debs

The Congress is out of control, worse than we’ve ever seen throughout
our history. America is at her low point. The people are finding out
what most of the world has long known. What it’s like to have a
government without representation, what it’s like to have someone ride
in and take your property and there’s nothing you can do about it.

As stock ownership (and lobbyist influence) rises in Congress, experts
warn of potential ethics concerns.

More than half of all lawmakers own stock. In the House, the number of
lawmakers trading stock jumped from 91 in 2001 to 259 today (November
23, 2009 date of article)…

"It is time for Congress to take a fresh look at the financial
conflict-of-interest rules, and how they should be enforced --
starting with a thorough overhaul of the disclosure process," said
Harvard University government professor Dennis F. Thompson, author of
"Ethics in Congress." "Stronger regulation of financial conflicts is
necessary not so much to prevent quid pro quo deals, but to check the
erosion of trust in government," he said.


by Anonymous
on Tue, 02/02/2010 - 23:09

Although yes WaMu was a commercial bank that failed, their failure had
absolutely nothing to do with WaMu capital Corp. The reason WaMu
failed, and the reason Countrywide would have failed was because of
the incredible amount of horrible loans that they made. In fact WaMu
capital Corp was closed for a year by the time the bank was ever taken
over. The fact of the matter and what the senator should have said is
that the Volker rule wouldn't have regulated pretty much all the
places that would have failed. And the ones that it did regulate , it
would have no power to stop what caused them to fail. Fannie and
Freddie were way to big and had billions in bad loans on their books,
their "failure" had nothing to do with prop trading. Lehman and Bear
were both not commercial banks. AIG is goverened by the states and
once again is not a bank.

by Reggie Middleton
on Wed, 02/03/2010 - 06:01

What he should have said and what he "did" say are two different
animals. In addition, there is a connection with prop trading by
insured entities and failure. The reason why the MBS market got so big
in the first place was the excess liquidity provided by instituions
who were federally insured. Subtract the federally insured instiutions
who had access to cheap govt. subsidized capital (ex. insured
deposits, window access, etc.) and you would have had a materially
smaller market in which to sell said MBS. If deposit holding banks
weren't allowed to engage in said trading, it would have been left up
to pure, non-insured speculators, ex. hedge funds and investment
banks, and would have made the garbage MBS distribution much more
shallow, not to mention would have reduced the market for the MBS and
would have induced more banks to keep whole loans on their books which
would have made them more responsible for prudent underwriting in the
first place.

Hence, AIG, Lehman and Bear would have had less MBS to begin with, and
potentially may not have even failed.

by Anonymous
on Tue, 02/02/2010 - 23:29

It is really shame that a Senator would have no clue as to what is
going on. And indeed it is high-time for Congress to look into the
financial conflict of interest rules and how to perfect the
unsustainable economic imperfections. Fire Congress, abolish the Fed,
redo legal tender laws, abolish fractional reserve banking/multiplier
effect, and adopt mathematical soundness in all of transactions. No
more dudes stealing from Peter to pay Paul. mms

by Anonymous
on Tue, 02/02/2010 - 23:46

ouch, i used to work for wcc

by Anonymous
on Wed, 02/03/2010 - 04:03

......That to secure these rights, Governments are instituted among
Men, deriving their just powers from the consent of the governed, —
That whenever any Form of Government becomes destructive of these
ends, it is the Right of the People to alter or to abolish it, and to
institute new Government, laying its foundation on such principles and
organizing its powers in such form, as to them shall seem most likely
to effect their Safety and Happiness.......

throw the bum out.

by Anonymous
on Wed, 02/03/2010 - 04:27

Problem is the population is too busy watching reality TV and
refinancing their houses for 5% to really care about what goes on in
congress. Give people the illusion of wealth by falsely inflating
stock markets and subsidizing loans and they don't really care about
what a smart man like Volcker has to say. The rot in our society runs


Economic Recovery: The Unresolved Mysteries
By Bill Bonner

02/02/10 Baltimore, Maryland – What a marvelous recovery! But there
are so many unresolved mysteries! GDP growth over 5%…but,
mysteriously, no jobs…and no rally in the housing market.

And now, to compound the mystery, Mr. Obama has come forward with a
$3.8 trillion budget.

The markets like it. Stocks rose 118 points on the Dow yesterday. Gold
went up $21. Investors see more hot money on its way…a Vesuvius of it…

The amount of the budget itself is staggering. That’s a lot of money.
But even more staggering is the glaring omission: the Obama
administration is planning to spend $1.6 trillion it doesn’t have. And
that’s on top of the $1.35 trillion it didn’t have, but nevertheless
spent, last year. Where is all this money coming from? Another

Let’s see…put those two deficits together and you’ve got a budget hole
as big as the Milky Way… Nearly $3 trillion, or more than 20% of GDP.

Another thing that is mysterious about this galaxy of debt is that it
comes just as the economy is supposed to be recovering. If you thought
the economy were recovering, why would you risk such a huge, record-
shattering deficit?

Nothing quite adds up. The GDP is expanding at a healthy pace –
according to the numbers handed out by the feds. But people have few
jobs and little income.

“Wage and benefit growth hits historic low,” reports The Wall Street

Employers aren’t employing. Workers aren’t working. And houses are no
longer throwing off cash. That leaves more and more people with empty

Apparently, not even the feds themselves believe the economy is really
out of the ditch. We are already rolling along on the recovery road –
supposedly. Still, the feds send out the most expensive tow truck in

And now The Financial Times draws the obvious conclusion:

“US Deflation No Longer Seen as a Risk.”

You wanna bet?

The world’s number one economy is running huge deficits. But the
world’s number two economy is running even bigger ones. Not much
bigger…but slightly bigger.

In Japan, deficits are a bit larger than tax receipts. In America,
they are a bit smaller. In both cases they are enormous…and growing.

For all its colossal deficits, Japan has not bought its way out of
depression…or out of deflation either. Au contraire, the more it
spends fighting deflation the further prices fall.

How could this be? Another mystery. How could government be so inept
as to shoot itself in the foot whenever it pulls a trigger? How could
it be so near-sighted as to aim for one thing and hit the thing it was
meant to protect? How could it be so lame-brained as to do exactly the
wrong thing at exactly the wrong time?

We can’t answer those questions…at least, not this minute.

So, let’s turn to the evidence. There it is in yesterday’s news report
from Bloomberg:

“Consumer prices in Japan in record fall.”

And there you have another mystery, don’t you? Japan inflates the
money supply with its zero rates over more than a decade…and its
Godzilla budget deficits. And what happens? Its economy sinks and its
consumer prices go down!

And so here comes the US of A following the Japanese lead…in the
sincerest form of flattery…

Will it not get the same results?

We don’t know. But we wouldn’t be surprised.

We have a lot more to say about this…

…about how the economic theories behind these moves are corrupt,
linear and superficial (if not downright stupid)…

…and about how the real driving force behind these deficits is
politics, not economics. Economists are just useful idiots. The
politicians are using them to grab more money and power for themselves
and their friends…

…but let’s go directly to the denouement of this mystery story. Here’s
what is really going on:

First, the GDP growth story is one part statistical noise, one part
counterfeit, and one part damned lie. We’re in a depression. It will
take years to resolve itself.

That’s why unemployment remains high…and why there will be no recovery
in housing prices. They may go up. They may go down. They won’t ever
get back to the bubble highs of 2006 – not in real terms. Not in our

Second, the mystery of the $1.8 trillion deficit – it too is a mixture
of mendacity, audacity, and intellectual laxity. In short, the feds
are spending so much money for one reason only: because they think
they can get away with it.

Can they?

Of course not…not really. Here’s what is going to happen…

The reality of the non-recovery is going to catch up with this market.
Stocks were down in January. Most likely, they’ll sink for the rest of
the year too.

The economy will slide as the de-leveraging process continues. It
won’t be straight down. But by fits and starts, the mistakes will be

…but that brings us back to this $3.8 trillion government budget. Its
purpose, in large part, is to prevent the corrections from occurring.
The feds will try to turn the US into Zombieland, just like the
Japanese feds did. You’ll see massive federal spending taking up some
of the slack from the private sector – but essentially wasting money
on useless projects. And you’ll see major zombie corporations – GM…AIG…
etc – propped up with taxpayer’s money.

Speaking of AIG, special agent Neil Barofsky is on the case. He’s
‘probing’ 25 cases of possible fraud involving TARP funds. The AIG
bailout is one of them. The original price tag for saving Goldman’s
speculative positions with AIG was $85 billion. The whole tab later
came to $182 billion.

The flatfoot Barofsky wants to know where the money went. To tell you
the truth, we’re curious too – although we doubt there will be any

But back on our beat…how the mysteries get resolved…

…we know why the economy is winding down…and we know why the feds are
running such huge deficits…

…but big deficits aren’t pushing up prices in Tokyo; they’re having
the opposite effect. They’re pushing them down. Does that mean US
deficits will get the same results – the economy and prices lower
instead of higher?

We don’t know…but our guess is that ‘yes’ is the right answer.

Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and
garnered camaraderie in numerous communities and industries. A man of
many talents, his entrepreneurial savvy, unique writings,
philanthropic undertakings, and preservationist activities have all
been recognized and awarded by some of America’s most respected
authorities. Along with Addison Wiggin, his friend and colleague, Bill
has written two New York Times best-selling books, Financial Reckoning
Day and Empire of Debt. Both works have been critically acclaimed
internationally. With political journalist Lila Rajiva, he wrote his
third New York Times best-selling book, Mobs, Messiahs and Markets,
which offers concrete advice on how to avoid the public spectacle of
modern finance. Since 1999, Bill has been a daily contributor and the
driving force behind The Daily Reckoning .

Special Report:The Endless PAYCHECK PORTFOLIO: In three simple steps,
unleash a steady flow of work-free income… starting with up to 75
automatic “paychecks” deposited directly into your account.

View articles by Bill Bonner
The articles and commentary featured on the Daily Reckoning are
presented by Agora Financial. Additional market commentary is
available through The 5Min Forecast .


American GDP data will hit golden price Wednesday, Feb 3 2010
Uncategorized conacc 1:01 am

London gold goes power be locked in a seesaw struggle after Asian open
quotation yesterday, obtain around 1080 dollars raise goes up after
carrying on, go up to evening new York dish period of time trades
first, in touch highest that day encountered the market is cast after
1096 dollars pressure. Spread out concussion be issued to lower levels
to go subsequently situation, be in new York end dish trade period of
time quickens be issued to lower levels, it is better to touch lowest
was obtained after 1074 dollars that day carry on buy dish, newspaper
of end of a show receives 1086.2 dollars / ounce, recover dish in drop
for the most part. Beautiful couplet store Zhou Si of be related of be
reappointed consecutively of chairman Bai Nake is obtained in senate
through, but before the blackball that he gets also exceeded any
Chairman Fed chairmans. The 4 data that publish show beautiful couplet
Chu Zhou, the United States was supplied when week M2 money on January
18 raise 7.1 billion dollar, to eighty-four thousand five hundred and
eighty-six billion dollar. Foreign Central Bank had American bond to
decrease when Zhou Chi on January 27 2.031 billion to 2.949 trillion
dollar. American senatorial Zhou Si is voting come through increasing
a government to raise debt upper limit 14.3 trillion dollar. Spokesman
of German Ministry of finance says, germany is Greek without the help
the plan that spends budgetary crisis. Zhou Si of American Department
of Commerce is announced, will be able to bear or endure in December
things order increases 0.3% , beforehand appraise is increase 2% .
Yesterday of German Ministry of finance make known his position to hit
euro to carry once more brace up dollar, look at present from global
limits, develop in economic system only economic condition of the
United States is best, euro area is perplexed by Greek problem, and
the predicament that the economic stimulation that Japan just
announced 7.2 trillion yen plans to show Japanese economy. Below this
kind of environment, beautiful couplet store begin to remove special
fluidity tool again, bring about what capital keeps to swarm into a
dollar. Present circumstance is, any United States’ favorable economy
data will bring about capital to swarm into a dollar, and because the
economy of euro area and Japan is insufficient still hopeful, the
benefit of data of obtain employment of such as United States and
building data is empty by market desalt. The American the four seasons
that will announce tonight below this kind of circumstance spends GDP
data is to give the fund that waiting for irruptive dollar undoubtedly
good accept excuse. The market anticipates American the four seasons
spends GDP data to will be in now 4.2% , show at present the market
was full of confidence to American economy, the state of mind of the
each benefit sky of the dollar of each benefit good desalt that
current market is in exaggerated dollar, the data that no matter give
heat finally,we predict below this kind of circumstance is good
anticipate at the market difference of it may not be a bad idea
anticipates it may not be a bad idea at the market, good benefit
dollar, hit the price that press gold thereby. Golden price takes
situation side, of configuration of double bottom of 1075-1085 dollar
a gleam of prop up look at present very one cannot say for sure lives,
if the near future has rebound, investor still has much sheet ought to
decisive check inventory leaving an ability is. Technical
configuration respect, line mouth is down 4 hours of Tubulin, golden
price is in in course lower part moves, at present in course
obstruction is near 1091 dollars, it is weak force structure. Macd
index twines a horizontal stroke in 0 lines lower part dish, keep a
few green post, kinetic energy of be issued to lower levels continues
abate. Overall see a technology pursue short kinetic energy of line be
issued to lower levels is progressively and abate, dropping at a
certain level it seems that the extreme of situation, the near future
may appear one rebounds situation.


Difference of data of American obtain employment rebounds considerably
at expecting golden price Wednesday, Jan 20 2010
Uncategorized conacc 11:08 pm

5 evening are Euramerican last week period of time, the raise after
international gold price ors first, at expectant United States in
difference data of blame farming obtain employment will be announced
in December hind, golden price spreads out rebound. one Asia period of
time, international gold price continues to go up, dish in with one
action breaks through early days obstruction 1140 dollars, highest and
adjacent 1160 dollars. On wire of London gold day, the price is
located in 5 days all line upper part, RSI is located in 50 upper
part, MACD crewel forms golden fork, gong Zhu expands, index is
bullish. Home market respect, shanghai gold week jumps to leave high
for nothing, but shock of the price inside day goes low. Brunt 1006
agreement clinch a deal delicate, hold the storehouse is small to
raise 2916 hands, fund is small are flowed into. United States of Zhou
Wu evening announces number of blame farming obtain employment will
reduce 85000 people in December, reduce 8000 people only under what
the market anticipates far, number of blame farming obtain employment
is small in November add 4000 people, unemployment rate will keep
balance in December at 10% . The market after data is announced is
right beautiful couplet store the anticipation of breath is added
first half of the year this year abate, dollar dish in glide
considerably, drive golden price to go tall. Meanwhile, euro area
announces unemployment rate also will continue in November small are
climbed litre, GDP of the 3rd quarter glides compared to the same
period 4.0% , market of excel of in a way anticipates, data is overall
half of stand or fall. Look nevertheless from ETF fund, although 5
prices are climbed considerably last week,rise, but ETF fund reduces a
storehouse however. Of the price rebound need merchandise on hand is
bought dish prop up, ETF decreases a storehouse to mean apt of this
kind of fund to be in exalted finish, of short line rebound the space
is unfavorable look to exorbitant. The train of thought that central
line still maintains concussion to arrange is advisable, the much
sheet of early days can continue hold, the discretion that did not
enter is chased after tall.


Economic census 2008: Reappearance of Chinese big trend is dug
Saturday, Dec 26 2009
Uncategorized conacc 2:39 pm

Last a period of time census of two years of much economy of the 2nd
whole nation, 25 days published main data. As investigation of
national power of a major national condition and peacetime great
society arouses, this census announces to change a lot of new cases
that give Chinese economy, newly, census data itself is very good to
problem of heat of a few economy solve. GDP gross increases 1.34
trillion yuan of basises the 2nd times result of countrywide economy
census, national statistic bureau according to international
convention, right count of countrywide GDP preliminary nucleus
undertook editing 2008. After editing countrywide GDP gross was thirty-
one thousand four hundred and four billion five hundred million yuan
2008, increased one thousand three hundred and thirty-seven billion
five hundred million yuan than preliminary nucleus count. Why does GDP
gross increase 1.34 trillion? Horse of director of national statistic
bureau builds an explanation to say, 2008 is census year, the 2nd
times countrywide economy general checks all the 2nd, the legal person
unit of 3 industries and individual manage door undertake ” carpet
type ” check, release than in the past so, the GDP that reachs through
groovy statistic increased. Did GDP gross increase 2008 can you affect
was GDP added 2009 fast? Economic accounting of countryman of national
statistic bureau manages director Peng Zhilong says, as a whole, after
was being moved on data 2008, right GDP gross impact is bigger 2009,
very small to speed influence. Tertiary industy is occupied than
increasing the weak point that 1.7 percent tertiary industy is
national economy progress all the time, also be statistical weak
point. The 2nd times countrywide economy general checks the data of
tertiary industy made more apparent editing. Countrywide tertiary
industy raised a cost 2008, edit by twelve thousand and forty-eight
billion seven hundred million yuan of preliminary business accounting
it is thirteen thousand one hundred and thirty-four billion yuan,
increased one thousand and eighty-five billion three hundred million
yuan; Tertiary industy holds GDP proportion by 40.1% rise for 41.8% ,
increased 1.7 percent. Edit this in 1.34 trillion yuan of addition
GDP, 80% above come from service line of business. Economic accounting
of our country countryman uses corporeal product for a long time in
the past to express a system evenly, serve trade statistic weakness.
Although after this conforms stage by stage with the business
accounting level with current international, statistic of service line
of business is strengthened ceaselessly, but because development of
line of business of service of individual privately owned is rapid,
burgeoning service line of business appears in great quantities,
groovy statistic catchs up with its grow metabolic pace hard, cause on
the low side of data of business accounting of service line of
business. Be in successive in two economy census, serve trade data
edit increasing is most outstanding. Preliminary make a thorough
investigation of energy production uses up the energy-saving demand
decreasing a platoon that highlights increasingly to answer, census of
economy of the 2nd whole nation is used up in energy production a
large number of works were done on the energy-saving index decreasing
a platoon such as gross. Xu Yifan of deputy director general of
national statistic bureau says, this census enlarged the investigation
limits that the sources of energy and water natural resources use up,
expand by dimensions above industry all the 2nd, 3 estates unit,
raised high cost can the trade is global the investigation of
equipment circumstance. Carry this general investigation, preliminary
check solid the circumstance that production of our country energy
uses up. Consume findings according to the sources of energy of census
of economy of the 2nd whole nation, gross of countrywide energy
consumption was adjusted 2008 for coal of 2.91 billion tons of
standards, more preliminary than what already announced data raises
2.12% . The energy consumption after the basis edits and GDP data,
specific power consumption of GDP of our country unit was compared
2008 on year drop 5.2% , fall a data that before comparing this,
publishs deepen 0.61 percent. (Xinhua News Agency)


Statistical bureau: The person that illicit look forward to inducts
Chinese nearly half obtain employment Tuesday, Dec 29 2009
Uncategorized conacc 12:42 am

The 2nd times result of countrywide economy census is announced GDP
growth edited 2008 the job ends the general investigation of economy
of the 2nd whole nation that is 9.6%   last a period of time more than
two years basically. Yesterday, national statistic bureau holds a
press conference, reported the main condition of countrywide economy
census and main positive result the 2nd times. Ma Jiantang of director
of national statistic bureau is entered in response “country civilian
when removing “issue, express, 2004, two census year is medium 2008,
the proportion that is not state-owned company or private enterprise
proportion rise, so census data from do not support alleged ” country
to enter on the whole civilian the existence that cancels ”
appearance. Building city: Profit of room look forward to 4 years of
census results of a real estate that adds 290.4%   to care to the
people, xu Yifan of deputy director general of national statistic
bureau is in the 2nd times on press conference of result of
countrywide economy census made detailed introduction. He points out,
2008, business profit of Chinese estate company three hundred and
eighty-six billion one hundred and thirty million, grow 290.4% than
2004, make an appointment with 3 times. In addition, arrived 2004
between 2008, the dimensions of real estate expands quickly, to 2008
end whole nation shares real estate business 214397, increased 85354
than 2004, year all grow 13.5% . Xu Yifan emphasizes technically,
“These 4 years the real estate of an our country is to last to develop
quickly, the industrialization that should say to driving a city, city
changed a respect to have main effect, the data of this respect that
the 2nd times place of countrywide economy census gains will is real
estate health will develop the fundamental data with be offerred
important continuously henceforth. “  response: Of short duration is
entered without ” country civilian retreat ” phenomenon   since last
year, a few media acclaim alleged ” country to enter civilian the
appearance that cancels ” appears, to concerning doubt, ma Jiantang
expresses on the news briefing, “The data phase of a few data that the
2nd times countrywide economy census gets and census of first time
economy is compared, go up in company unit amount at least, make clear
on the structure of company capital, 2004, year of these two census is
medium 2008, the proportion of state-owned company drops, the
proportion that is not state-owned company perhaps says the proportion
of the private enterprise rises, so census data from do not back
presence on the whole what ‘ country is entered civilian retreat ‘
phenomenon ” . Ma Jiantang still expresses, although data had not
produced heat 2009, but from 2005, 2006, 2007, annals data of 4 years
looked 2008, on the index such as proportion of a number of the
enterprise, asset, asset, capital, sales revenue, all show proportion
of civilian battalion economy is rising ceaselessly. Finally, ma
Jiantang thinks, everybody is entered to ” country civilian the
discussion that retreats ” has active sense, “On one hand vigilant the
reform that we want to push Chinese forestall trade further, vigilant
the adjustment with the state-owned strategical economy that we want
to advance China further and recombine, vigilant we should promote the
civilian battalion enterprise, reform development that is not public
company further. “  census data still shows, form from personnel of
course of study in unit of industrial legal entity on, state-owned
company and state-owned and solely invested company are occupied
9.2% , and the private enterprise is occupied 44.4% , this means the
person that illicit look forward to inducted nearly half obtain
employment. Ma Jiantang expresses, this means civilian battalion
economy to already made the main component of national economy. Data:
0.6%   rises the 2nd times after GDP edited 2008 result of countrywide
economy census shows, basis gross domestic product (GDP) business
accounting system and census result, after editing countrywide GDP
gross was thirty-one thousand four hundred and four billion five
hundred million yuan 2008, increased 0.6 percent than customary rate.
The government before this releases GDP data was 30.06 trillion yuan
2008, gross of the GDP after editing via this increased about 1.34
trillion yuan, growth is 9.6% . In addition, consume findings
according to economic census the sources of energy, gross of
countrywide energy consumption was adjusted 2008 for coal of 2.91
billion tons of standards, more preliminary than what already
announced data raises 2.12% . Be opposite according to current
practice at the same time 2005-2007 year consumptive gross data also
did the sources of energy to edit accordingly. The sources of energy
after the basis edits consumes data and GDP data, specific power
consumption of countrywide unit GDP was compared 2008 on year drop
5.2% , drop than 2005 12.45% . Concerned official thinks, 2008 of GDP
data edit to impact of GDP increase rate is not big 2009.


...and I am Sid Harth
2010-02-03 14:14:05 UTC
Japan’s Recovery Failing to Spread, BOJ’s Chief Economist Says
By Mayumi Otsuma

Feb. 1 (Bloomberg) -- Japan’s economy is far from achieving self-
sustained growth as the export-led recovery fails to spur spending at
home, according to Kazuo Momma, the Bank of Japan’s top economist.

“The risk that the Japanese economy will fall off from a cliff is
small, but there is still a long way to go,” before the expansion
becomes sustainable, Momma said in Tokyo today. “Even if the global
economy continues to recover, the spread of that to capital spending
and the labor market will be limited.”

More than $2 trillion in global stimulus spurred demand for Japanese
exports last year, helping pull the nation out of its worst postwar
recession. Momma said there’s no “magic” solution to stamp out
deflation and that overcoming price declines is the central bank’s top
priority, echoing remarks made by Governor Masaaki Shirakawa last

“Japan’s economy can probably avert a double-dip slump, but the pace
of expansion won’t gather momentum as deflation lingers,” Hiroaki
Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in
Tokyo, said before Momma’s speech.

Since lowering its benchmark interest rate to 0.1 percent in December
2008, the central bank has increased its purchases of government bonds
and made it easier for companies to obtain funds. It unveiled a 10
trillion yen ($111 billion) lending program for commercial lenders in
December, a facility Shirakawa has said the bank can expand if

Momma said capital spending won’t show signs of a clear rebound until
the year starting April 2011. Companies “remain under pressure” to
fire workers, underscoring the weakness of domestic demand, he said in
a speech at the Japan National Press Club.

Record Drop

Core consumer prices, which exclude fresh food and are the central
bank’s preferred measure of inflation, slid 1.3 percent in December.
Prices minus food and energy, which economists say reflect the trend
of prices more accurately, dropped a record 1.2 percent.

“Data underscores that deflation is entrenched in the Japanese
economy,” said Yasunari Ueno, chief market economist at Mizuho
Securities Co. in Tokyo. Ueno doesn’t expect the central bank to raise
rates until July 2011 at the earliest.

Bank of Japan board members last week affirmed their forecasts that
they expect prices will keep falling through the year ending March
2012, the third consecutive year of declines.

“As for beating deflation, there are no concrete policies with which
we can do one or two things and be able to resolve all problems at
once,” Momma said. “We would have taken those steps already if they

Momma said the global economy is recovering, though many countries
continue to struggle with high unemployment, which poses a risk to the
outlook. Such uncertainties could spur market volatility, and policy
makers need to monitor developments until the global recovery gains
stability, he said.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at

Last Updated: February 1, 2010 02:10 EST


UPDATE 1-Fed's Warsh says more regulation might hurt US economy
Tue Feb 2, 2010 5:33pm EST

WASHINGTON, Feb 2 (Reuters) - U.S. Federal Reserve Board Governor
Kevin Warsh said on Tuesday that financial reform efforts that focus
narrowly on expanding regulation could stifle the economy.

His comments, published in a Financial Times newspaper opinion piece,
come as President Barack Obama pushes for tighter rules that would
attempt to limit risky behavior by banks.

Warsh described attempts to strengthen the system as "worthwhile," but
said time would be better spent reviewing the role of government-
sponsored mortgage finance agencies Fannie Mae and Freddie Mac.

Banks, he said, should not be treated like heavily-regulated

"In a global economy, big is not bad," Warsh wrote."The U.S. economy
runs grave risks if we slouch toward a quasi-public utility model."

The Obama administration's efforts, led by senior White house adviser
Paul Volcker, would look to reinstitute the separation between the
speculative trading of investment brokers and the desposit-taking and
lending that is the bread-and-butter of commercial banks.

Volcker testified before the Senate Banking Committee on Tuesday,
arguing that while his proposal would not have prevented the collapse
of firms like Lehman Brothers and AIG, it could help avert future

"I may not live long enough to see the next crisis but my soul will
come back to haunt you," the 82-year-old Volcker quipped.

Warsh, however, spoke of a return to market discipline which he
maintained could only take place if government became, less, not more,
engaged in the banking system.

"The specter of government support threatens to confuse price signals
and create a class of institutions that operate under different rules
of the game," he said.


U.S. Economy: Q4 GDP Numbers Unearthed 3 comments
by: ETFdesk.com
January 31, 2010

Tom Schumacher's articles on Seeking Alpha

The US economy in the fourth quarter expanded at the fastest rate in
nearly six years, at 5.7% annualized. Before we jump out of our seats
with joy, it might be worthwhile to take a deeper look into these
numbers. The huge jump in real GDP was largely due to inventory
adjustments which contributed to 3.4% of GDP growth.

Keep in mind during the recession companies sold off their existing
inventories, nervous to produce new goods as the economy was falling
off a cliff. As business sold off much of their existing stocks over
the last few quarters, restocking is contributing a larger share to
GDP growth. Let's keep in mind that inventory growth is not a solid
foundation for a sustained recovery, it can't last forever. Looking at
GDP as final sales to US-based producers, the economy only grew 3.9%.
That is, before the inevitable revisions that will come.

Source: WSJ

One of our favorite analysts, Dave Rosenberg, has more to say on the
"Houdini Recovery." He brings up four good points to give a slightly
different perspective on the GDP numbers.

First, the report was dominated by a huge inventory adjustment — not
the onset of a new inventory cycle, but a transitory realignment of
stocks to sales. Excluding the inventory contribution, GDP would have
advanced at a much more tepid 2.2% QoQ annual rate, not really that
much better than the soft 1.5% reading in the third quarter. Second,
it was a tad strange to have had inventories contribute half to the
GDP tally, and at the same time see import growth cut in half last
quarter. Normally, inventory adds are at least partly fuelled by
purchases of foreign-made inputs. Not this time. Strip out inventories
and the foreign trade sector, we see that domestic demand growth in
the fourth quarter actually slowed to a paltry 1.7% annual rate from
2.3% in the third quarter. Some recovery. Based on some simulations we
ran, demand growth with all the massive doses of fiscal and monetary
stimulus should already be running in excess of a 10% annual rate. So,
the real question that nobody seems to ask is why it is that
underlying demand conditions are still so benign more than two years
after the greatest stimulus of all time. The answer is that this epic
credit collapse is a pervasive drain on spending and very likely has
another five years to play out. Third, if you believe the GDP data —
remember, there are more revisions to come — then you de facto must be
of the view that productivity growth is soaring at over a 6% annual
rate. No doubt productivity is rising — just look at the never-ending
slate of layoff announcements. But we came off a cycle with no
technological advance and no capital deepening, so it is hard to
believe that productivity at this time is growing at a pace that is
four times the historical norm. Sorry, but we're not buyers of that
view. In the fourth quarter, aggregate private hours worked contracted
at a 0.5% annual rate and what we can tell you is that such a decline
in labour input has never before, scanning over 50 years of data,
coincided with a GDP headline this good. Normally, GDP growth is 1.7%
when hours worked is this weak, and that is exactly the trend that was
depicted this week in the release of the Chicago Fed’s National
Activity Index, which was widely ignored. On the flip side, when we
have in the past seen GDP growth come in at or near a 5.7% annual
rate, what is typical is that hours worked grows at a 3.7% rate. No
matter how you slice it, the GDP number today represented not just a
rare but an unprecedented event, and as such, we are willing to treat
the report with an entire saltshaker — a few grains won’t do. Fourth,
while the Chicago PMI and the revision to the University of Michigan
consumer sentiment index also served up positive surprises, the “hard”
data in terms of housing starts, home sales and consumer spending
suggest that there is little, if any, momentum heading into early
2010. Moreover, the prospect that we see a discernible slowing in the
pace of economic activity this quarter and a relapse in the second
quarter is non trivial, in my view — by then, today's flashy headline
will be a distant memory.


The Future of the U.S. Economy: 2050
By Matthew Bandyk
Posted: February 2, 2010

Think back to 1967. The job you have today may not even have existed.
The Internet, and all the jobs that have come with it, were decades
away. The Detroit automakers were dominant. Quality of life was
different, too: The median household income was an inflation-adjusted
$40,261, compared with $50,303 in 2008. There were also a hundred
million fewer of us; 1967 was the year the U.S. population hit 200
million. We passed the 300 million mark in 2006, and by 2050, there
will very likely be more than 400 million Americans. The lifestyle of
the average American may change just as much from 2010 to 2050 as it
did from 1967 to 2006. The economy will especially undergo change.

Joel Kotkin, distinguished presidential fellow in urban futures at
Chapman University, has spent a lot of time thinking about exactly
what those changes might look like in 2050. He previously wrote a book
about the history of American cities, but in his new book, The Next
Hundred Million: America in 2050, he looks ahead to how recent
economic and demographic trends may play out over the next few
decades. Here are a few of the book's most striking predictions.

1. The death of the suburbs is highly exaggerated. In the 20th
century, the suburbs became the primary place for Americans to live.
But the recent housing market crash, high gas prices, and concerns
about environmental sustainability have caused many to wonder how long
suburbs will be able to grow. Kotkin writes that the suburbs will not
only continue to grow; they will become even more like cities. "The
suburbs of the future will in many ways be more diverse than the
cities," Kotkin told U.S. News. While the suburbs of the 1950s were
predominantly white, suburbs today have an increasing number of ethnic
minorities and recent immigrants. A major reason suburbs are changing
is that they are providing more jobs than ever. Historically, people
living in bedroom communities outside of a city have commuted downtown
to work. Suburbs are also becoming more appealing because they are
developing their own cultural amenities. "Many have rebuilt town
centers and revived Main Streets," says Kotkin.

This growth will be made possible—and desirable, Kotkin argues—because
suburbs will become what he calls "greenurbia." Kotkin predicts that
while cars will continue to be the dominant mode of transportation,
fuel-economy improvements, more energy-efficient homes, and
telecommuting will allow suburbs to coexist with a clean environment.

2. The rise of "luxury cities." Cities, however, are not on the way
out. Kotkin points to New York and San Francisco as models for some
cities in the future: expensive places that are playgrounds for
younger and often single residents. This is one trend that Kotkin
finds worrisome. "New York has got to be able to hold on to enough
middle-class people, ages 30 to 45," he says. The "luxury city" also
creates problems for residents' upward mobility. Kotkin's chief
concern is that even as more ethnic minorities join the middle class,
the ability for people in the middle class to enjoy the same lifestyle
as the upper class in their cloistered cities will be limited. "Class,
not race, is going to be the great American issue," says Kotkin.

3. Jobs get more virtual. Jobs are perhaps the biggest concern of
Americans today. Kotkin looks to new businesses that began during the
recession to point the way to the future of jobs. "There has been a
huge surge in the number of independent proprietorships," says Kotkin.
Thanks to the Internet, the average entrepreneur does not need a large
corporation in an office building to run a business and can instead
find people to help run the business online. "Some of these jobs are
going to places like China and India, but they are also going to
places like North Dakota," says Kotkin.

That's not to say that physical locations for businesses will be
unnecessary or that rural towns in the heartland can be just as
innovative as large metropolitan areas. "You'll still have centers.
Wall Street will still be a center of finance, for example. Their
market shares will reduce over time, however," says Kotkin.

4. The decline of mobility. Moving companies might not be the biggest
boom industry this century. If you don't work from an office, you
don't need to live in a particular city. Kotkin predicts that in the
next 50 years, Americans will more often choose their communities and
cities based on where they want to live, not where they want to work.
"Once they find where they want to be, they will be less likely to
move," he says. That decline in mobility would be a big change from
the trend over the past 50 years, when it became common for Americans
to move many times in their lifetime. Demographics provide another
reason moving might decline: Aging baby boomers are more likely to
stay put.

5. Less to fear from China. America is becoming a more elderly
country, but it's not alone. Demographics, Kotkin argues, will prevent
China from eclipsing the United States as an economic superpower, as
some have predicted. In the late 1980s and early 1990s, Kotkin
disagreed with people who feared that the Japanese economy was going
to outcompete America. Today, he says similar claims about the Chinese
economy are just as overblown. The United Nations has projected that
in 2050, 31 percent of China will be over age 60, compared with 25
percent in the United States. Because of its aging populace, China
will have to spend more to care for the elderly and deal with
workforce shortages. The United States will surely face those problems
with baby boomers, but Kotkin argues that America is better equipped
to handle its aging citizens than China. "We have a little more of a
head start. Our older people have quite a bit more money," he says.
China will still be a superpower, Kotkin says—but it will share that
status with the United States and India.


...and I am Sid Harth
2010-02-03 23:35:36 UTC
Japan – the indispensable power in East Asia
February 3rd, 2010

Author: Peter Van Ness, ANU

In East Asia, ‘the times they are a-changing,’ and the pundits are
full of speculation about what the new ‘architecture’ for the region
will look like. After the Democratic Party of Japan’s historic
electoral defeat of the Liberal Democratic Party in August, the
government of Prime Minister Yukio Hatoyama has the opportunity to
take the country in new directions, but it is unclear whether it will
have the vision and determination to prevail. America, the world’s
only superpower, is in serious trouble, and meanwhile China is on the
rise. The focus is on how relations between United States and China
will work out, and a discussion of new forms of multilateralism. Often
ignored in these discussions, however, is the key role of Japan. Japan
is too rich and too powerful to be left out. Whatever the future of
East Asia, Japan will have to be a founding participant. In my view,
Japan is an indispensable power in the region.

The Japanese are worried about the rise of China, but they worry even
more about how to manage their relations with their post-World War II
security guarantor, the U.S. Ever since the end of the Allied
occupation of Japan in 1952, Japan has relied on the U.S. to guarantee
its security. But now, American hegemony in East Asia has become
problematic. The disastrous policies of President George W. Bush’s
eight years in office have left the U.S. weakened militarily,
economically, and morally. Over-stretched militarily in two unwinnable
wars, staggered by a global financial crisis largely of its own
making, and humiliated in its claim to be a moral example to the world
by incontrovertible evidence of torture, America under Barack Obama
must try to find new ways to lead in what looks to be a post-hegemonic
world — while Japan watches anxiously.

Japan’s leaders worry about what those new ways might be.
Conservatives in Japan would much prefer to maintain the status quo,
but there is no longer a status quo to depend on. Hilary Clinton in
her initial trip as Secretary of State visited Japan first, but it is
clear that she and President Obama seek to build their East Asian
policy in cooperation with China. There is no way that Washington can
hope to deal effectively with the global financial crisis, climate
change, Iran, and North Korea without Beijing’s cooperation. Like all
countries in East Asia, Japan has to consider how to position itself
within this process of fundamental power transition.

Japan will have to play a major part in any new design for East Asia.
If Japan is ignored, it can readily sabotage the new arrangements. For
example, there cannot be a successful East Asian Community without
Japan’s participation. The Association of Southeast Asian Nations
(ASEAN) doesn’t want to find itself vulnerable in an ‘ASEAN +1’
arrangement just with China, but insists on an ‘ASEAN +3’ (with China,
South Korea and Japan).

Similarly, the Six-Party talks on North Korea’s nuclear programs
cannot succeed without significant financial incentives offered to
Pyongyang, for which Japan is expected to make the major contribution.
Alternatively, if the region were to turn away from cooperation toward
a confrontation between the two major powers, the U.S. and China, in
some version of a new cold war, Japan would be the mainstay of the
American strategic position in East Asia. The U.S. could not hope to
confront China successfully in the region without Japan’s full
support. Finally, if Japan’s interests are ignored, it could go
nuclear and destroy any future hope for multilateral cooperation in
the region.

Let me explain.

The Uniqueness of Japan

Pressures have been growing for years, both within and outside of the
country, for Japan to adopt the international role of a so-called
‘normal nation,’ turning its formidable economic might into political
and military influence, and even deciding to go nuclear, if necessary,
to assert its position in the global power hierarchy. But Japan is not
a normal nation. It is unique in many important ways, a fact that
provides significant opportunities to play an importantly different
kind of role in international affairs.

How is Japan unique?

Just prior to the modern period, Japan was purposefully isolated from
outside influences by its Tokugawa leaders for 250 years — a period
during which a characteristic Japanese cultural distinctiveness was

Admiral Matthew C. Perry’s ‘black ships’ broke down the Tokugawa
barriers to commerce with the West in the middle of the 19th century,
and Japan subsequently became the first non-Western country to
industrialise successfully.

Turning that industrial power into military might, Meiji Japan became
the only non-Western imperialist power in the modern period, for a
time competing successfully with Russian, British, German, and
American imperial interests in East Asia.

Defeated in World War II, Japan was the only country in history to be
attacked with nuclear weapons, in Hiroshima and Nagasaki.

The Japanese Constitution, which was adopted under the occupation by
the Allied powers, includes the unique provision in Article 9 that
states ‘the Japanese people forever renounce war as a sovereign right
of the nation and the threat or use of force as means of settling
international disputes.’

Successfully re-industrialised after World War II, Japan has served as
an economic model for other developing Asian countries, joined the
influential Group of 7 (G7) industrial countries as the only non-
Western member, and became the second largest economy in the world.

Finally, during the 65 years since 1945, Japan has lived in peace with
its neighbors, was the world’s number one bilateral foreign aid donor,
and has made major contributions to United Nations institutions and
international peace-keeping operations.

Yet successive Japanese governments have made little use of Japan’s
distinctive history to fashion the kind of unique international role
that Japan might play. Instead, in strategic deliberations like the
Six-Party talks on North Korea, Japan was often seen as simply
providing another vote for the United States – a ‘yes man’ to George
W. Bush, or a country in denial about the atrocities of its imperial
past with a prime minister insistent on insulting his Asian neighbors
by repeatedly visiting the Yasukuni Shrine or denying that so-called
‘comfort women’ were coerced into sexual slavery during the war.

However, then-Prime Minister Junichiro Koizumi was obviously a man
capable of the kind of decisive action that is needed. Sometimes
people forget that he risked not just one but two unprecedented trips
to Pyongyang to try to work out problems with Kim Jong-il. And which
other post-World War II Japanese prime minister would have dared to
attack conservatives in his own party by putting ‘assassin’ candidates
up for election against them in their own constituencies? Koizumi’s
margin of victory in the September 2005 election gave him a special
opportunity, both to overrule the Upper House should they oppose his
reform plans and to take significant initiatives in foreign policy,
but the opportunity to improve relations with Asia was largely
squandered by his insistence on visiting the Yasukuni Shrine.

When Japan attempts to gain a permanent seat on the United Nations
Security Council, some United Nations member-states must ask
themselves: how has Japan earned consideration for a permanent seat?
What is special about Japan when compared with all the other countries
that would like to achieve such an elevated strategic status? What
benefit might the rest of the world gain by supporting Japan’s hopes
for a permanent seat on the Security Council? I think that Prime
Minister Hatoyama and his colleagues in the ruling coalition should
have to answer these questions. Japan showed the way to economic
prosperity in Asia in the past. Can Japan help to lead Asia toward
greater strategic stability and security in the future?

This is an extract of a feature essay published here by Global Asia.

Peter Van Ness is a visiting fellow in the College of Asia and the
Pacific at the ANU, and coordinator of the PeaceBuilder project on
linking historical reconciliation and security cooperation in
Northeast Asia.


Daiy Market Commentary
03.02.2010 08:35 Wednesday
Fundamental Outlook at 1500 GMT (EDT + 0500)

The euro appreciated vis-à-vis the U.S. dollar today as the single
currency tested offers around the US$ 1.3965 level and was supported
around the $1.3885 level. The common currency gained some ground on
news the European Commission will support Greece’s deficit-reduction
program that will be published tomorrow. Greece’s budget deficit was
12.7% of GDP last year and is struggling to convince the markets it
can bring that down to 3% by 2012. Greek debt is now trading at a
massive 400bps premium at the ten-year level over German bunds, the
highest level since 1998. Most traders expect the European Central
Bank will keep monetary policy unchanged on Thursday. Data released
in the eurozone today saw EMU-16 producer price inflation up 0.1% m/m
and off 2.9% y/y. Also, January PMI construction improved to 48.6
from 47.1 and German December retail sales were up 0.8% m/m and off
2.5% y/y. Some dealers were spooked into selling the euro last night
after Reserve Bank of Australia surprised the markets by not raising
interest rates last night on the premise that higher-yielding
currencies like the Australian dollar could be weaker. ECB member
Weber today said fiscal consolidation is the “main challenge” in 2010
and said he expects a “slight” worsening of the German labour market
in 2010. He also said Germany will not experience a recovery before
2011 and added the economic recovery in 2010 increasingly depends on
exports. In U.S. news, traders will pay close attention to testimony
today from former Fed Chairman Volcker who will indicate hedge funds
and private equity funds should be allowed to profit and fail.
Volcker is also a proponent of limiting the size of banks so that none
are “too big to fail” and create unmanageable systemic risk. Data
released in the U.S. today saw December pending home sales print as
expected at 1.0% m/m and up 10.5% y/y. Tomorrow’s data will include
MBA mortgage applications, January Challenge job cuts, and January ISM
non-manufacturing data. The big news this week will be Friday’s
January non-farm payrolls data. Some dealers believe the U.S. jobs
report will show some improvement following a bit of an economic
bounce the economy received at the end of Q4 2009. Treasury Secretary
Geithner today reported small banks “remain under enormous pressure”
and said the proposed additional fee on banks will not impact
lending. Euro bids are cited around the US$ 1.3740 level.

¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback
tested bids around the ¥90.25 level and was capped around the ¥90.90
level. Finance minister Kan urged Bank of Japan to continue
implementing “appropriate and flexible policies” and work closely with
the government to combat deflation. BoJ Governor Shirakawa last week
reported it is a “critical challenge” to root out deflation but said
this week that a lack of final private demand is the “root cause of
deflation” and there is no “magic wand” to lift prices. Kan also said
“it is possible that the yuan will be one of the agenda items. I will
discuss it on the understanding that stable growth in China is
desirable for Japan.” Notably, bids fell short of the BoJ’s offer
today in its open market operation as part of the central bank’s
lending program announced in December. Prime Minister Hatoyama said
the budget environment in 2011 will remain “severe.” Bank of Japan
Chief Economist Momma yesterday reported “the risk that the Japanese
economy will fall off from a cliff is small, but there is still a long
way to go. Even if the global economy continues to recover, the
spread of that to capital spending and the labour market will be
limited.” Momma also indicated capital spending will not indicate
signs of a rebound until the fiscal year beginning in April 2011 and
said the labour market will also remain weak. The Nikkei 225 stock
index gained 1.63% to close at ¥10,371.09. U.S. dollar offers are
cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen
as the single currency tested bids around the ¥125.80 level and was
capped around the ¥126.80 level. The British pound moved lower vis-à-
vis the yen as sterling tested bids around the ¥143.85 level while the
Swiss franc moved lower vis-à-vis the yen and tested bids around the
¥85.45 level. In Chinese news, the U.S. dollar depreciated vis-à-vis
the Chinese yuan as the greenback closed at CNY 6.8271 in the over-the-
counter market, down from CNY 6.8275. A rumour circulated through the
market last night that China will permit the yuan to appreciate after
July. People’s Bank of China adviser Fan Gang yesterday reported
China’s “real worry” remains asset bubbles that could emerge as
China’s economy emerges from a crisis period into a “boom time.” Fan
also noted moves by PBoC to reduce liquidity last month were “timely
and necessary

The British pound moved higher vis-à-vis the U.S. dollar today as
cable tested offers around the US$ 1.5995 level and was supported
around the $1.5900 figure level. The big question facing traders is
whether Bank of England’s Monetary Policy Committee will scale back,
pause, or extend its bond purchase program when its monetary policy
announcement is made on Thursday. The opposition Tory party,
appearing poised to assume the top government slot in H1 2010, today
reported it would keep the BoE’s inflation target at 2.0% if they
assume power and control of the government. Many data were released
in the U.K. yesterday. First, January manufacturing PMI improved to
56.7 from 54.6, a fifteen-year high. Second, December mortgage
approvals decreased to 59,020. Third, net lending to individuals rose
by ₤1.2 billion in December. Fourth, Hometrack January house prices
were up +0.1%. Cable bids are cited around the US$ 1.5720 level. The
euro moved higher vis-à-vis the British pound as the single currency
tested offers around the ₤0.8760 level and was supported around the
₤0.8710 level.

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the
greenback tested bids around the CHF 1.0540 level and was capped
around the CHF 1.0605 level. There was talk in the European session
that Swiss National Bank lifted the euro/ Swiss franc cross to keep a
lid on the Swiss franc. Data released in Switzerland today saw the
SECO consumer climate indicator improve to -7 from -14. The media
this week reported Swiss National Bank is unlikely to abandon its
policy to keep a lid on the Swiss franc even though the domestic
economy continues to improve. U.S. dollar offers are cited around the
CHF 1.0760 level. The euro moved higher vis-à-vis the Swiss franc as
the single currency tested offers around the CHF 1.4740 level while
the British pound moved lower vis-à-vis the Swiss franc and tested
bids around the CHF 1.6800 figure.

DISCLAIMER: GCI’s Daily Market Commentary is provided for
informational purposes only. The information contained in these
reports is gathered from reputable news sources and is not intended to
be used as investment advice. GCI assumes no responsibility or
liability from gains or losses incurred by the information herein



Emerging markets will fuel global economic recovery, report says
Financial Post
Published: Wednesday, February 03, 2010

Warren Jestin

OTTAWA - Recovery of the world's economy will be led by emerging
nations such as China, and the Canadian government and business
leaders should take advantage of that to fully realize their growth
potential in the years to come, according to the latest Economic
Directions report released Wednesday by Scotia Economics.

"The U.S. and other developed economies should become fully airborne
in the months ahead, fuelled by unprecedented monetary and fiscal
stimulus set in motion in 2009, the revival of consumer spending and
the re-ignition of production as firms react to improving sales
prospects," Warren Jestin, chief economist at Scotiabank wrote in a

Jestin noted the report, entitled Liftoff Achieved, But The Flight
Path Will Be Turbulent, shows this year's growth in Canada and the
U.S. will do little more than backfill the hole created by the steep
decline in activity during 2008-09.

"Even this modest performance will compare favourably with trends in
Europe and Japan, where economic retrenchment has been much deeper and
the timetable for regaining lost GDP will stretch beyond 2010," he

However, China and other fast-growing emerging markets will provide a
large share of growth. China grew by nearly nine per cent in 2009 at a
time when global output shrank by over two per cent.

According to Mr. Jestin, demand from China and other emerging markets
has already helped push commodity exports to roughly half of Canada's
foreign sales. Rising incomes in these nations will underpin rapid
growth in consumer spending, providing important new opportunities for
Canadian businesses.

"Highly entrepreneurial small- and medium-sized businesses in these
rapid-growth areas will likely be a key source of Canadian job
creation over the next decade," wrote Mr. Jestin.

"For governments and many businesses, focusing scarce resources on
familiar markets and industries, while ignoring or avoiding new and
unfamiliar ones, is likely to be a losing strategy."


Mitsubishi UFJ returns to profit in April-December period as global
economy begins to recover
Associated Press
02/03/10 3:56 AM PST

TOKYO — Mitsubishi UFJ Financial Group, one of Japan's "megabanks",
returned to profit in the nine months through December amid economic
recovery in Japan and overseas.

Tokyo-based Mitsubishi UFJ reported 217 billion yen ($2.4 billion) net
profit in the April-December period, compared with a 42 billion yen
loss a year earlier.

Revenue fell to 3.77 trillion yen ($41.66 billion) from 4.35 trillion

The bank kept unchanged its projection of a 300 billion yen net profit
for the fiscal year ending March 2010. The bank posted a net loss of
256.95 billion yen in the last fiscal year.

The bank credited economic recovery in the U.S., Europe, Japan and the
rest of Asia in helping boost its income in lending and market

Cost cuts also helped improve the results in the first nine months,
Mitsubishi UFJ said.

The bank said its assets increased by 2.5 trillion yen ($27.6 billion)
to 201 trillion yen ($2.2 trillion) on equity gains, including
issuance of new shares.

Mitsubishi UFJ shares fell 0.6 percent to 475 yen ($5.2) in Tokyo.


Quote Of The Day: “We’re not finished with Toyota.”
By Bertel Schmitt on February 3, 2010

“We’re not finished with Toyota,” said Transportation Secretary Ray
LaHood in an e-mailed statement to Reuters. Bad choice of words?
Doesn’t that sound a tad vengeful? If a 900 lbs gorilla barks “I’m not
through with you” at me, then I’m very afraid. Toyota should be too.

Officially, LaHood’s comments referred to renewed efforts at the NHTSA
to recheck files from past investigations that found no problems with
Toyota’s electronic throttle control system. An Obama administration
official leaked to Reuters that safety regulators are continuing to
look at the “possibility that electromagnetic interference” might be
messing with Toyota’s throttle control systems.

“NHTSA has not seen evidence to support that” said the deep throat.

Toyota will have to testify in two hearings in Washington. Rep Bart
Stupak, chairman of the House Energy and Commerce Committee’s
investigations subcommittee, has scheduled a hearing for February 25.
The House Government and Oversight Committee will also hold a hearing
on Toyota on February 10. Reuters adds that Stupak’s “home state of
Michigan is headquarters for U.S. automakers.”

Does that smell like the beginnings of a witch hunt to anyone?

...and I am Sid Harth
2010-02-03 23:44:50 UTC
FEBRUARY 3, 2010.
Toyota's U.S. Sales Skid; Ford Gains

Recall, Sales Halt Hurt Japanese Auto Maker in January; GM Reports


DETROIT—U.S. auto sales rose in January as the economy strengthened,
but results were tempered by Toyota Motor Corp., which suffered a
sudden decline late in the month after a recall and a sales halt of
more than half its vehicles.

Toyota's monthly sales fell 16% from a year ago, dropping to less than
100,000 for the first time since 1999.

The seasonally adjusted annualized selling rate for all car makers in
January was 10.8 million cars and light trucks, marking the third
consecutive year-over-year sales increase for the beleaguered auto
industry, according to Autodata Corp. It was a substantial lift over
January 2009's rate of 9.6 million, but less than in December when
auto maker wooed customers with year-end fire sales.

Overall, car makers sold 698,378 cars and light trucks in December, up
6.3% from January 2009, Autodata said. The 2009 month had two fewer
selling days.

Improving consumer confidence, economic growth and reduced joblessness
helped bolster the market even as Toyota's troubles weighed on the

"There was more uncertainty in the marketplace by people who owned
Toyotas," said Ken Czubay, Ford's vice president of U.S. marketing. "I
don't think they made decisive moves from one dealer to another, it
was more that people said they didn't know what they wanted to do."

Toyota last week halted sales of vehicles that account for about 10%
of the U.S. retail market while it worked on a fix for sticking gas
pedals connected to unintended acceleration of some vehicles. The
company announced Monday it has found a repair that should solve the
problem and is shipping the fix to dealers this week.

Toyota's share of the U.S. market fell to 14.1%, nearly four points
lower than a year ago and the lowest since 2006, according to the

Meantime, Ford Motor Co. reported a 24.4% sales increase from a year
earlier, while General Motors Co. said sales rose 14.6%.

A month earlier, Toyota passed GM in U.S. "retail" sales for the first
time. On Tuesday, GM's chief sales analyst said the company is closing
in on Toyota as again being the world's largest auto maker.

Bob Carter, Toyota's group vice president and general manager, Toyota
was on track to increasing sales in January until the sales stoppage.
He estimated Toyota lost 20,000 sales as a result, but predicted the
collateral impact on vehicles not involved in the recall will be

"We are fortunate to have a very strong brand," he said on a
conference call with reporters.

Analysts at Ford and GM said the controversy likely led many potential
car buyers to hold off on a purchase until the issue is resolved.
Toyota owners considering a new purchase were concerned about the
trade-in value of their vehicles, they said, while potential Toyota
shoppers may have postponed their decision.

Neither GM nor Ford had data indicating whether they succeeded in
poaching customers with incentives and low-financing offers for Toyota

Industry-wide, the strong results were offset by the fact that much of
the growth came from fleet sales to rental and commercial operators,
which are generally less profitable than retail sales to individual
customers. Retail sales were down modestly across the industry.

The industry is likely to see higher fleet sales in February and
March, which will moderate later in the year. Auto makers, especially
Detroit's Big Three, have struggled to find a balance when it comes to
the fleet business.

Ford has attributed its recent sales success in part to its ability to
cut back on fleet sales but said Tuesday it is happy to have the
increased business.

Elsewhere, Honda Motor Co. sales fell 5% to 67,479, as car sales grew
2.7% but truck sales dropped 15%.

Nissan Motor Co. reported sales rose 16% to 62,572 vehicles, and the
company said it expected to see "significant market-share gains."

Chrysler Group LLC's sales fell 8% to 57,143, with similar drops for
cars and trucks.

Hyundai Motor Co. said its January sales rose 24% to 30,503 vehicles,
while Volkswagen AG's sales increased 41% to 18,019.


Global Manufacturing Continued Its Expansion In January

by Global Economy Matters (View the original article)
Posted on Feb 3, 2010

by Edward Hugh: Barcelona

The global manufacturing expansion continued to gather momentum in
January. Coming in at 56.1, up from 54.6 in December, the JPMorgan
Global Manufacturing Purchasing Managers’ Index registered its highest
reading for five and a half years. The latest improvement in overall
operating performance reflected accelerated growth of production and
new orders, while there was a slight gain in staffing levels for the
first time since March 2008.

Production increased for the eighth successive month in January, with
the rate of expansion hitting a 69-month high. The improvement in the
performance of the United States manufacturing sector was most
noticeable. The Institute for Supply Management output index rose by
6.5 points since December to reach its highest level since April 2004.

Elsewhere the position was much more uneven, with West European and
Japanese manufacturing having a much more qualified start to 2010,
with rates of expansion growth well below the global average, - and in
the case of some countries well below. Meanwhile emerging economies
like Brazil,India and Turkey continued to show a strong performance.

Asia and Emerging Markets

In Japan activity slowed, although at 52.5, the seasonally adjusted
Nomura/JMMA Purchasing Managers’ Index pointed to a moderate
improvement in operating conditions in the Japanese manufacturing
sector at the start of 2010.

Commenting on the Nomura/JMMA Japan Manufacturing PMI data, Minoru
Nogimori, Economist of Financial & Economic Research Centre at Nomura,

“The Japan Manufacturing PMI fell 1.3 points to 52.5 in January. It
remains above the key dividing line of 50.0, but has continued to
fluctuate in recent months. Although the PMI has been holding firm,
the sharp rebound phase from February through to August in 2009 has
lost steam. Furthermore, the New Export Orders Index fell rapidly, by
3.2 points to 51.5, signaling that the yen’s appreciation has
depressed exports which are the main factor behind the current
recovery in the Japanese economy. Exports are an important factor of
the future of the Where an expansion of production was signalled,
panellists generally attributed growth to higher intakes of new
orders, which increased for the seventh month running in January.
However, the latest improvement in firms’ order books was the slowest
in that sequence amid concerns over the sustainability of economic
growth. Export sales placed at manufacturers rose again in January,
extending the current period of expansion to eight months.
Nonetheless, the pace of expansion was the slowest since last June.
Anecdotal evidence suggested that increased new business from China
and other Asian countries continued to support export growth.

January data signalled that backlogs were depleted at the fastest rate
since last June, largely as a result of slower new business growth and
a robust rise in output.

Elswhere in Asia, both China and India showed strong expansions. At
57.4, up from 56.1 in the previous month, the headline HSBC China
Manufacturing PMI rose to a record high at the start of 2010,
signalling a continuing improvement in operating conditions in the
Chinese manufacturing sector. The index has now risen more than
sixteen points since posting a record low in November 2008. Export
sales also rose in January, increasing at a near-record rate. This was
in sharp contrast to the severe reductions seen at the beginning of

Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief
Economist for China at HSBC said:

“Industrial activity continues to accelerate, implying stronger GDP
growth in 1Q. But rising input and output prices also point to greater
inflationary pressure, which will likely prompt more tightening
measures in the coming months.”

The Indian manufacturing sector expanded at fastest pace for nearly
one-and-a-half years in January. Climbing to 57.6 in January, its
highest level for seventeen months, the seasonally adjusted HSBC
Markit Purchasing Managers’ Index signalled a considerable improvement
in operating conditions faced by Indian manufacturers. The headline
index has now signalled expansion of the sector since April 2009, and
at increasing rates for the past two survey periods.

Commenting on the India Manufacturing PMI survey, Robert Prior-
Wandesforde, Senior Asian Economist at HSBC said:

“Any lingering concern that India's manufacturing recovery was tailing
off should be well and truly put to rest by this strong release. A
second consecutive rise in the PMI has taken the series to a new cycle
high, consistent with on-going double digit rises in industrial
production. The most impressive part of the release was the more than
5 point jump in the new export orders index, which took it to its
highest level since October 2007 and indicated that the recovery is by
no means dependent on domestic demand alone.

“At the same time, however, price pressures are clearly intensifying.
The rate of increase in input prices was the largest since the PMI
began nearly 5 years ago, while the survey suggests that companies are
more willing to pass on these rises in the form of higher output
prices - something which the RBI is unlikely to take too kindly to.
Admittedly, the employment index only inched above 50 but it can't be
long before job hiring picks up more aggressively.”

Elsewhere among emerging economies, the Brazil performance stood out,
with the sector expanding at a considerable pace as shown by the fact
the headline seasonally adjusted Brazil Manufacturing PMI climbed to
57.8 in January, its highest level since data were first available in
February 2006.

Commenting on the Brazil Manufacturing PMI survey, Andre Loes, Chief
Economist, Brazil at HSBC said:

“The Brazilian manufacturing industry expanded at a survey record pace
in January. The Manufacturing PMI reached 57.8, up from December’s
55.8, with all five of its components supporting the strong
performance of the composite indicator.

“In our view, the particularly strong growth of output, new orders and
input stocks – all of them reached series record peaks – indicate
further vigorous expansions in manufacturing going forward. Employment
also grew faster, but as a variable that normally lags production, its
expansion fell short of the three components mentioned above. Last but
not least, charges rose, albeit modestly, for the fourth month in a

“All in, January’s Brazil Manufacturing PMI confirms the very
favorable dynamics of manufacturing activity. This highlights the
concern recently expressed by the BCB, that the quick reduction of
idle capacity could result in increased inflation pressures.”

While the South African PMI continued to show an increase in activity.
The index surged to its highest level in 21 months in January,
indicating that a recovery in manufacturing is gathering pace as
consumer spending picks up, according to Kagiso Securities who
prepared the report. The seasonally adjusted index increased to 53.6
from 52.5 in December. The PMI has now been above 50, which indicates
an expansion in factory production, for three consecutive months.

Western Europe

In Europe, solid expansions in output were recorded in Sweden, France,
Germany, the Netherlands and Austria, but these were in marked
contrast to the deeper recessions in Spain, Ireland and Greece.

The Eurozone PMI hit a two-year high, with France and Germany leading
the recovery, while Spain and Greece fell further behind. The headline
final Eurozone Manufacturing PMI – a composite index based on measures
of production, orders, employment, inventories and supplier
performance – posted 52.4 in January, its highest reading for two
years. The index value was above both its earlier flash estimate of
52.0 and the final reading of 51.6 posted in December. The level of
the PMI has risen in each month since hitting a record low last
February and has now remained above the neutral 50.0 mark for four
consecutive months.

Commenting on the PMI data, Markit Senior Economist, Rob Dobson said:

“The January final PMI readings confirm that the Eurozone
manufacturing sector has built on its positive end to last year, with
growth of output and new orders the fastest since mid-2007 and above
the earlier flash estimates. However, the recovery is becoming two-
track, with Spain and Greece in particular falling further into
recession when growth in most of the other nations, led by France and
Germany, is accelerating. Manufacturers are also continuing to focus
on reducing headcounts and lowering stocks despite gains in output.
This suggests that they retain a cautious outlook, especially while
sales are still being supported by price discounting.”

But the West European picture was characterised by two extremes. On
the one hand we have France and Sweden, were economic activity is
rebounding strongly, and on the other there is Spain and Greece, where
the contraction continues, and the outlook seems bleak.

Business conditions in the French manufacturing sector improved for a
sixth consecutive month in January. The headline Purchasing Managers’
Index posted 55.4, up from 54.7 in December. The rise in the PMI
reflected faster expansions of both output and new orders during the
latest survey period, while supplier delivery times lengthened at a
sharper rate. Manufacturing production increased for the seventh month
running in January. Furthermore, the rate of growth accelerated to the
strongest for almost nine-and-a-half years, with over one-third of
panellists reporting a rise.

Commenting on the Markit/CDAF France Manufacturing PMI final data,
Jack Kennedy, economist at Markit, said:

“The recovery in the French manufacturing sector remained intact at
the start of 2010. Output rose at the strongest rate for almost nine-
and-a-half years in January, as the rebound from the record
contraction seen in early 2009 continued. While domestic demand
remained the primary driver of growth, there was also evidence of
strengthening export sales, indicating a broad-based expansion.
However, staffing levels continued to be cut as manufacturers targeted
cost savings and productivity gains at a time when input price
inflation reached a sixteen-month high.”

In Sweden, activity simpled roared ahead, and the Silf / Swedbank
Sweden Manufacturing Purchasing Managers' Index stood at a seasonally
adjusted 61.7 in January, well above December's 58.2. The production
sub-index surged to 70.2 in January from 59.7 in the previous month.
The new orders sub-index climbed to 66.8 from 63.7, with the new
export orders sub-index gaining 4.2 points to 62.3. Despite the
improvement in new orders and production, employment levels were
slashed again. The employment sub-index stood at 49.6, up slightly
from 49.5.

In Spain January data pointed to a further deterioration of operating
conditions at Spanish manufacturing firms. Both output and new orders
fell at faster rates than in the previous month, while employment
continued to decrease sharply. Companies offered discounts to clients
in an attempt to boost sales, despite input costs rising again during
the month.

The seasonally adjusted Markit Purchasing Managers’ Index remained
well below the 50.0 no change mark, edging up slightly to 45.3 in
January, from 45.2 in December, indicating that business conditions
deteriorated for the twenty-sixth successive month. Production
contracted for the sixth month running in January, and at a steeper
rate than was registered in the previous month. The latest decline
reflected a further reduction in new business.

Commenting on the Spanish Manufacturing PMI survey data, Andrew
Harker, economist at Markit, said:

“The Spanish manufacturing sector began the new year with output, new
orders and employment all continuing to fall. The steepest decline in
input buying for seven months highlights the lack of confidence in the
sector, with firms reluctant to invest in new stock until sales have
been secured. Manufacturers were again forced to cut prices in January
as weak demand made it difficult to pass on higher raw material costs
to clients.”

Central and Eastern Europe

Turkish manufacturing sector started 2010 on positive footing as
output and new orders rose at robust rates. Increased new orders from
overseas continued to provide support to expansion of sector, and the
growth in employment was sustained. Higher input cost inflation
however droves a further rise in output prices. The headline index
posted 53.0 in January, indicating a solid improvement of business
conditions in the Turkish manufacturing sector. The rate of expansion
accelerated since December, and was the strongest in four months.

Commenting on the Turkey Manufacturing PMI survey, Dr. Murat Ulgen,
Chief Economist for Turkey at HSBC said:

“The Turkish manufacturing sector has started 2010 with a solid
expansion rate, thanks to robust increases in new orders and output.
Overall manufacturing activity has also gained traction, breaking the
five-month streak of deceleration in the pace of growth since July.
Export order growth was also strong, reflective of an improvement in
Turkey’s export markets. Manufacturers continued to slash their
finished goods inventories in order to partially fulfil rising orders,
while backlogs of work were also reduced for the third month.
Employment conditions maintained their favourable trend, improving for
the eighth consecutive month. On the other hand, the ominous outlook
on cost pressures remained intact in January, as input prices
continued to rise much faster than output prices, possibly because of
soaring raw material prices. This tells us that inflationary pressures
are in the pipeline and businesses may pass on rising costs to their
end prices when they feel more comfortable about aggregate demand

Business conditions in Russia’s manufacturing sector showed tentative
signs of recovery at the start of 2010, according to January survey
findings from VTB Capital. Output rose for the sixth straight month,
and at a faster rate as new orders increased for the first time since
last October. Employment continued to fall, but at a much slower rate
than the trend pace recorded over late-2008 and 2009. Inflationary
pressures strengthened, but remained relatively weak. The headline
seasonally adjusted Russian Manufacturing PMI posted above the no-
change mark of 50.0 for only the second time in the past eighteen
months in January, indicating an overall improvement in operating
conditions in the sector. The latest PMI reading reflected stronger
positive contributions from the output, new orders and suppliers’
delivery times indices, and less negative effects from the employment
and stocks of purchases components. That said, the latest reading of
50.8 signalled only a marginal overall improvement in conditions, and
was below the long-run trend of 52.1.

Commenting on the survey, Dmitri Fedotkin, economist at VTB Capital,

“January’s Manufacturing PMI rose to 50.8, the second reading pointing
to an expansion across the sector over the past 18 months. The
headline number was supported by new orders crossing the no-change 50
level to reach 53.0, while new export orders also rose (50.8). The
output index rose to 52.3, pointing to production rising for six
straight months and supporting the recent upturn in official
statistics. In addition, at 48.2 the employment index improved for the
fourth month running with further stabilization expected on the job
market. The input price index rose to 61.4 amid higher commodity
prices and freight charges while the output price index rose to 54.0
as companies tried to pass rising costs on to customers.”

Hungary's manufacturing purchasing manager index (PMI) jumped 4.4
percentage points to 53.5 points in January 2010, the Hungarian
Association of Logistics, Purchasing and Inventory Management (HALPIM)
reported on Monday. This marks a halt in the contraction of the
manufacturing industry that had started in September 2008. Hungary's
manufacturing PMI stood at 53.5 in Jan 10, up by 4.4 ppts from Dec 09.
This is the first time since August 2008 when the index is above 50.
(The Dec reading was revised upward to 49.1 from 48.5 originally).

HSBC survey data for the Polish manufacturing sector signalled an
overall improvement in business conditions in January, in stark
contrast to the marked contraction posted one year earlier. The
headline HSBC Poland Manufacturing PMI posted 51.0 in January, having
been unchanged at a near two-year high of 52.4 in the previous month.
Any figure greater than 50.0 represents an overall improvement in
business conditions. The PMI remained above its long-run trend of 49.5
in the latest period.

Commenting on the Poland Manufacturing PMI survey, Kubilay Ozturk,
economist at HSBC, said:

“The headline PMI remained above break-even in January, but the
momentum that prevailed in the last two months of 2009 appears to have
lost some steam, with slower expansions in output and new orders.
Domestic and external demand continued to improve over the month,
albeit at a slower pace, particularly for the former. A decline in the
employment index after a long-awaited rise in December confirms the
labour market is not out of the woods yet, while the noticeable drop
in output prices indicates a benign inflation environment ahead.
Overall, the reading is a reminder that a straight-line recovery may
not be that likely, although the Polish economy will continue to
outperform its regional peers in 2010.”

Czech manufacturing output grew at fastest rate since March 2008 and
the latest PMI data compiled by Markit for HSBC showed an overall
improvement in business conditions for the third month running in
January. Moreover, the rates of growth for both output and new orders
accelerated, and were sharper than the averages over eight-and-a-half
years of data collection for the survey. Meanwhile, manufacturers shed
jobs at a slower pace and continued to cut charges to support sales
drives. Supply delays were again registered as firms raised purchasing
volumes. The headline HSBC Czech Republic Manufacturing PMI rose to
53.1, signalling a robust overall improvement in business conditions.

Commenting on the Czech Republic Manufacturing PMI survey, Kubilay
Ozturk, economist at HSBC said:

“The headline index improved noticeably in the first month of 2010 on
the back of a remarkable increase in output and a solid rise in new
orders, underlining the uninterrupted improvement in demand. Both
external and domestic markets appear to have been on the mend in
January, suggesting a wider economic recovery is under way. The latter
was also confirmed by a leap in firms’ purchasing volumes over the
month. However, subdued increase in EMU manufacturing PMI in January
and the downside surprise in a flash estimate for German 2009 growth
suggest the impact of fiscal stimuli and car-scrappage schemes in
Western Europe may fade earlier than expected, implying recovery may
be gradual and bumpy.”


...and I am Sid Harth
2010-02-03 23:52:13 UTC
FEBRUARY 3, 2010, 2:45 P.M. ET.
UPDATE: Fed Warsh: Banking Reform Needs International Coordination
By Michael S. Derby

NEW YORK (Dow Jones)--Federal Reserve Governor Kevin Warsh said
Wednesday that reforming the financial regulatory system will require
international cooperation, if those efforts are to be successful.

"I wouldn't say there's one size that fits all" when it comes to
reforming bank oversight, Warsh said. But even so, "the need to
coordinate with our G-20 colleagues is essential," and what's been
seen so far has been good, the official said.

Warsh's comments came in response to audience questions after a speech
given before the New York Association for Business Economics.

Warsh's formal remarks centered on the matter of regulatory reform.
Congress is currently mulling proposals that could see the Fed
stripped of its bank oversight powers, a possibility that worries many
central bankers. In an opinion piece in the Financial Times published
Wednesday, Warsh argued in favor of the Fed maintaining its current
portfolio, and offered his thoughts on the best way forward for

In his prepared remarks, Warsh had warned against trying to "micro-
manage" banks. "The U.S. economy runs grave risks if we slouch toward
a quasi-public utility model." His remarks come as President Barack
Obama's administration is pushing for a $90 billion tax on big banks
to make up for taxpayer money spent on rescuing the financial sector
and tighter rules aimed at limiting risky behavior by lenders to
prevent a new financial crisis.

"In a global economy with integrated financial markets, big is not
bad," Warsh said, adding that it is better to foster competition among
banks so that smaller lenders can take market share than to "bully"
large banks.

Warsh told the audience he was heartened by the tone he has heard in
Washington over recent weeks when it comes to reform overall. He also
said that Main Street supports reform.

"If I leave places like Washington and New York and go to places in
the real part of the country where there are real businesses that are
trying to get their wits about them" and grow and hire, "they are
finding credit availability isn't what they wish it were," Warsh

"I find the message of trying to bring real competition to financial
services is incredibly well received," the official said, explaining
he hopes government also allows Wall Street the space to heal some of
its own troubles.

While he didn't address the economic outlook, Warsh spoke as financial
markets await Friday's key nonfarm payrolls for January, which
investors hope will offer clues about how solid the U.S.' move out of
recession is.

While growth has returned to the economy, it has thus far been
relatively muted and has only led to a moderation in the pace of job
losses. Policy makers and many private sector economists worry the
moderate growth expected over the course of the new year won't do much
to help lower the unemployment rate from its currently elevated

This uncertain outlook is keeping the Fed on the sidelines when it
comes to interest rates. It's seen keeping that near the current zero
percent level at least until summer, if not longer. The more immediate
question for central bankers is what they need to do with the soon-to-
end mortgage securities buying program. Some feel it should be
extended beyond March, to give the economy more room to transition to
higher growth, while other officials feel the program has done what it
can do.

While he made no direct comments on monetary policy, Warsh did flag
what he believes is the Fed's most important tool.

"The most valuable asset that the Federal Reserve had a generation or
two ago and today is our credibility," Warsh said. "We have a $2.3
trillion balance sheet and people think the source of the power comes
from the ability to grow your balance sheet, to run your printing
press," the official said. But that's wrong, because the real power is
consistent behavior and "our credibility to live up to our dual
objective, both in respect to price stability and employment," he

In other comments, Warsh said the U.S. banking system, even with its
proliferation of huge banks, compares favorably to the systems seen in
many other large nations. Warsh also said that trading conditions in
derivative securities had improved, although there was more distance
to go on that front.

-By Michael S. Derby; Dow Jones Newswires, 212-416-2214;

(Luca DiLeo in Washington contributed to this report)


Feb 03, 2010
Obama: U.S. 'can win the race' for clean energy economy
03:03 PM

President Barack Obama meets with a bipartisan group of governors in
the State Dining Room of the White House in Washington, Wednesday,
Feb. 3, 2010, to discuss energy policy. Governors pictured, from left:
Tennessee Gov. Phil Bredesen; Maine Gov. John Baldacci; Kentucky Gov.
Steve Beshear; Montana Gov. Brian Schweitzer (obscured); Wyoming Gov.
Dave Freudenthal (obscured). From right to left: Washington Gov.
Christine Gregoire; Vermont Gov. Jim Douglas; West Virginia Gov. Joe
Manchin; Alabama Gov. Bob Riley; Ohio Gov. Ted Strickland. (AP Photo/
Charles Dharapak) ORG XMIT: WHCD103
CAPTIONBy Charles Dharapak, APPresident Obama told a bi-partisan group
of governors today he is "convinced that America can win the race to
build a clean energy economy -- but we're going to have to overcome
the weight of our own politics."

"We have to focus not so much on those narrow areas where we disagree,
but on the broad areas where we agree," Obama said at a White House
meeting with 11 governors from both parties.

The president who supports legislation to cap greenhouse gas emissions
said he is also willing to explore new offshore drilling for oil and
gas, as well the possibilities of "clean coal" technology. Obama also
discussed new steps to boost production of bio-fuels.

China is making major advances on new energy sources, Obama reminded
the governors, and the United States cannot afford to finish behind
other countries "in what will be the most important economic engine in
the future."

New "clean" energy sources will help reduce global warming, Obama
said, but will also have benefits for those who do not believe in
climate change. He noted that new energy is good for "our national
security and reducing our dependence on foreign oil," amid benefits
the economy "because it will produce jobs."

"Whoever builds a clean energy economy," Obama said, "whoever is at
the forefront of that, is going to own the 21st century global

Here is a list of the governors who attended the energy meeting with

Governor Jim Douglas (R-VT), Chair, National Governors Association

Governor Joe Manchin (D-WV), Vice Chair, National Governors

Governor Steve Beshear (D-KY)

Governor Dave Freudenthal (D-WY)

Governor Brian Schweitzer (D-MT), Chair, Western Governors'
Association; Chair, NGA Natural Resources Committee

Governor John Baldacci (D-ME)

Governor Phil Bredesen (D-TN)

Governor Christine Gregoire (D-WA)

Governor Bob Riley (R-AL) Chair, Southern Governors Association

Governor Mike Rounds (R-SD)

Governor Ted Strickland (D-OH)

(Posted by David Jackson)


FEBRUARY 3, 2010, 2:32 P.M. ET.
Bernanke: We Must Protect The Fed's Independence

By Luca Di Leo

WASHINGTON (Dow Jones)--Federal Reserve Chairman Ben Bernanke
Wednesday said protecting the central bank's independence was key for
the U.S. economy, adding the Fed must become more transparent than it
already is.

At a swearing-in ceremony at the Fed marking the start of his second
four-year term, Bernanke said the central bank's independence serves
important public objectives.

"Critically, it allows the Federal Open Market Committee to make
monetary policy in the longer-term economic interests of the American
people, rather than in the service of short-term political
imperatives," the Fed chief said.

While the U.S. economy's return to growth is encouraging, Bernanke
said the country and the Fed still face "enormous" challenges.

The Fed chief faces formidable political and economic challenges in
2010, made tougher by the harsh confirmation battle in the U.S. Senate
which ended last week.

Bernanke won confirmation with a 70-30 vote, the highest level of
opposition ever from the Senate for a Fed chief, reflecting public
anger over the Wall Street bailouts during the financial crisis.

Bernanke's toughest challenge this year will be deciding when to raise
interest rates as the economic recovery takes hold. Analysts expect
the recovery will be strong enough for a rate hike around September or
October, an unpopular move right before the November mid-term

Bernanke told staff that, although the Fed is already one of the most
transparent and accountable central banks in the world, "we should be
prepared to do even more, to become even more transparent."

-By Luca Di Leo, Dow Jones Newswires; 202 862 6682;

...and I am Sid Harth
2010-02-04 00:07:23 UTC
Why an American Recovery Matters
Michael Spence

MILAN – It is hard to be optimistic about America at present. With
the help of crucial government support in the crisis, the US financial
sector (or at least parts of it) has bounced back, while America’s
real economy struggles with high unemployment, discouraged labor-force
dropouts, and damaged balance sheets.

So it is no surprise that the American public and the US Congress are
angry. The focus of that anger has been the massive and unwise
financial-sector bonuses. As a result, regulatory reforms have thus
far consisted of, first, a threat to the Federal Reserve’s autonomy,
and, second, a tax on bonuses.

The first idea is a bad one. The latter may be politically mandatory
and marginally beneficial in fiscal terms. Its effects on risk-taking
are debatable. But the much-needed structural reforms to limit
leverage and contain the risks that the financial system periodically
imposes on the real economy – and the public purse – have only
belatedly gotten off the to-do list, and the prospects of enacting
them are difficult to estimate.

In fairness, the new rule proposed by former US Federal Reserve
Chairman Paul Volcker to separate financial intermediation from
proprietary trading is not a bad idea. Combined with elevated capital
requirements for banks, it would reduce the chance of another
simultaneous failure of all credit channels. But it is not sufficient.
Hedge funds can also destabilize the system, as the collapse of Long
Term Capital Management in 1998 demonstrated. So they also need clear,
albeit different, limits on leverage.

Health-care reform has deeply divided the American public and US
politicians alike. Whatever the merits and shortcomings of various
proposals, these divisions suppressed the bipartisan aspects of the
political process and emphasized its zero-sum dimension. That, in
turn, has put in jeopardy other reforms.

One might expect that after a dangerous crisis rooted in growing
structural imbalances and an unsustainable growth pattern on the
demand side, there would be serious, ongoing debate about what is
needed to restore long-term growth and productive job creation in the
context of a rapidly evolving global economy. But there is not, which
is both puzzling and worrisome.

This is not to say that the US economy has lost its dynamism. Far from
it. But in the long term, sustaining it will require far-sighted
public policies and investments in hard and soft infrastructure to
support the private sector’s high capacity for innovation.

There are those who disagree and believe that an economy’s dynamism is
found almost entirely in the private sector, while the task of
government is mainly to stay out of the way. Still others accept that
government could in principal do something useful, but believe that it
normally does not, and that the risks outweigh the benefits.

A policy agenda in the US that is overloaded, overwhelmingly
domestically focused, and partially paralyzed will mean a lack of
attention to global issues that require cooperation and compromise,
including the international dimensions of financial reform. Absent
coordination, there is also a risk that monetary policies designed to
promote growth (or at least not impede it) will lead to a return of
financial-sector distortions and imbalances. The rebalancing and
restoration of global demand in the medium term is discussed within
the G-20, but has not really gotten underway.

From the perspectives of both policy and investment, the short and
medium term is once again risky. Many countries, including developing
ones, will adopt defensive postures, some of which, such as making
better use of the domestic market as a driver of growth, will have
broadly positive impacts, even if growth prospects are somewhat
diminished in the aggregate.

More importantly, the crisis highlighted the risks associated with
high dependence on foreign capital. That, combined with slow progress
on financial-sector reform, makes it likely that risk-aversion will
prevail, which could slow, if not reverse, financial globalization,
and probably lead to slower growth in many countries.

Restarting the Doha round of trade negotiations with a more manageable
agenda – and one focused on the poorer and more vulnerable developing
countries – would be a good way to revive progress on trade. But, in
an environment of slow growth and high unemployment, sentiment in the
advanced countries regarding efforts to liberalize trade is distinctly

The restoration of growth and balance in the US economy is crucially
important, not only for its effect on global growth, but also as a
foundation for tackling a broad array of international problems and
challenges. Right now, it looks as though creating that foundation is
on hold.

Outside the advanced countries, there is a view that the world will
return to pre-crisis conditions, with a stable US that functions as
borrower, lender, and consumer of last resort. What this perspective
ignores is that pre-crisis growth in the US and the global economy was
based in part on an unsustainable configuration.

Returning to that model is neither likely nor wise. While a relatively
high and sustainable growth pattern can be achieved, it will take
time. And it will occur (if it does) in a global economy with
fundamentally different structural and regulatory characteristics.
Waiting around for the advanced countries to right their ships so that
we can all go back to the old normal is neither good policy nor a good

What is needed is coordinated restructuring and policy setting. That
is hard to do when the US, the largest fiscally unified economy, is
focused elsewhere.

Copyright: Project Syndicate, 2010.

Michael Spence

Michael Spence is the 2001 Nobel Laureate in Economics, and Professor
Emeritus, Stanford University. He chairs the Commission on Growth and


UK economy: fiscal in-fighting
February 3, 2010 3:37pm
by Chris Giles

Britain’s two premier economic think tanks disagree on the speed and
scale of the necessary fiscal tightening. That is no surprise: the
issue is genuinely difficult.

Early this morning, the National Institute of Economic and Social
Research called for economic stability before cuts in public
borrowing. The Institute for Fiscal Studies has followed this with a
demand for faster cuts in budget deficits in the next Parliament.

There is no doubt of a difference of emphasis. Ray Barrell of NIESR

“There is no reason for tightening fiscal policy now. People are
worrying about long-term debt problems when they should be worried
about short-term output problems.”

While Robert Chote of the IFS argues:

“Whoever forms the Government after the forthcoming general election
should put in place a fiscal tightening more ambitious over the next
Parliament than that set out in the Pre-Budget Report”.

But the difference really is one of emphasis. Both organisations
insist that it would be unwise to start taking much more radical
action to reduce deficits until 2011, something it is increasingly
clear also fits Conservative plans. And both essentially see reducing
the deficit as a contingent process - you cut borrowing hard once you
are sure the private sector can cope with the pain.

That, slightly mushy position, is emerging as a consensus in Britain.
No one is willing to say yet when the axe should fall, nor how deep
the cuts should be. That is partly because we do not know, but mainly
because the choices are unpalatable and muddling through is the
British way. It is very different to the plans announced in Ireland,
Spain, Greece and the US - also countries with 10 per cent plus budget

It would be nice to think politicians would give the electorate a
clear choice come May, with specific options for cuts, such as those
outlined by the IFS today. Don’t hold your breath.

Tags: fiscal consolidation, UK economy

Your blogging team

Chris Giles has been the economics editor of the Financial Times
since 2004. Based in London, he writes about international economic
trends and the British economy. Before reporting economics for the
Financial Times, he wrote editorials for the paper, reported for the
BBC, worked as a regulator of the broadcasting industry and undertook
research for the Institute for Fiscal Studies.

Krishna Guha, US economics editor and deputy Washington bureau chief,
is the FT's chief Fed-watcher. He leads coverage of the US economy,
the IMF and the World Bank, writing on the global economy for 15
years. Educated at Cambridge and Harvard, Krishna was a Fulbright and
CV Starr scholar. He has worked as an FT economics editorial writer
and Lex columnist.

Ralph Atkins, Frankfurt bureau chief, has been writing about European
economics and politics for the Financial Times for more than 20 years
following an economics degree from Cambridge. He has been watching the
European Central Bank and eurozone economies since 2004. He has
previously worked in London, Bonn, Berlin, Jerusalem and Brussels.

Robin Harding is a Tokyo correspondent for the FT - covering the Bank
of Japan in addition to the country's technology sector - before which
he was an economics leader writer based in London. Robin studied
economics at the University of Cambridge and then did a masters degree
in economics at Hitotsubashi University in Tokyo, where he was a
Monbusho scholar. Before joining the FT, Robin worked in various
positions in asset management and banking.

Simone Baribeau is US editor of Money Supply. Before joining the FT,
she wrote for the business sections of the Washington Post, Christian
Science Monitor and TheStreet.Com, among other news outlets. She also
worked as a researcher at a DC-based economic think tank. Simone
studied economics at Cornell University and received her MA in
business journalism at NYU. See posts.

Emma Saunders is the editor of Money Supply. Before joining the FT,
Emma worked for five years in energy trading and investment banking.
She has also set up her own business, done research for the IPPR and
NGOs, and has a PPE degree from Oxford. She is currently studying for
CFA II. See posts. The FT's Money Supply blog: a guide

February 3, 2010 3:37pm in


Picking Up the Slack — Or Is It Too Late?

By Invictus - February 3rd, 2010, 11:30AM As the countdown to
Friday’s jobs number begins, it might be instructive to get yet
another perspective on the amount of slack in the labor market and its
effect on wages.

Here’s a chart built at the St. Louis Fed website that clearly drives
home the point — it perfectly captures the inverse relationship
between the Unemployment Rate and Average Hourly Earnings:

Unemployment and Average Hourly Wages: Mind the Gap

I’d postulate that only when this gap starts to close meaningfully
will we have to consider the possibility that the Fed will tighten and/
or that inflation might be somewhere out there on the horizon. Until
then, it’s very hard to envision they’ll consider moving off their

Additionally, there was much fanfare when ISM printed at an above-
consensus 58.4. And certainly it’s good to have expansion in the
manufacturing sector, to be sure. But we’re starting to get data
points (like ISM) that are really more late-cycle than they are early-
cycle. And the jobs market — admittedly a lagging indicator — is
simply taking too long to play catch up. Here’s the ISM (Index, LHS)
and Nonfarm Payrolls (YoY Pct. Change, RHS). I’ve adjusted payrolls
by three months to clearly show the correlation and account for the
lag. Is it too late to see a jobs recovery that’s going to even put a
dent in the damage that’s been done over the past 25 months? That is
the question.

ISM: How much better will it get?


Jim Hightower | Republicans Out of Touch as Middle Class Sinks
Wednesday 03 February 2010

by: Jim Hightower, t r u t h o u t | Op-Ed

American politics is a hoot! Where else can raw ignorance rise to such
high places -- and then flaunt itself shamelessly for all to see?

For example, who needs Jay Leno or Conan O'Brien for comic relief,
when we've got Andre Bauer? He's the Lieutenant governor of South
Carolina (a state, by the way, that really is a comer on the political
comedy circuit -- especially after Gov. Mark Sanford's madcap schtick
last year involving his disappearance, the Appalachian Trail and an
Argentine mistress.

But Sanford is leaving office, and Bauer, who is now a Republican
contender for governor, is the state's new star joker. He had 'em
rolling in the aisles recently when he did a wild, slapstick routine
on food stamps at a town hall meeting. Andre proclaimed that much of
his political thinking was shaped by his grandmother and that he had
learned a valuable lesson from her.

"She told me as a small child to quit feeding stray animals. You know
why?" he asked, pausing for comedic effect. "Because they breed!
You're facilitating the problem if you give an animal or a person
ample food supply. They will reproduce."

I tell you, Andre Bauer is an absolute scream!

But here's the real punch line: The need for food stamps has been
soaring as more and more Americans are falling out of the middle class
into poverty. From 2000 to 2008, 5 million more were added to the
poverty rolls, and that was before the economic collapse of the last
two years. In fact, check this out Andre, and laugh if you feel like
it: About 6 million Americans today are living entirely on food stamps
-- they've lost their jobs and have no other income. That's one out of
every 50 of us, and their numbers are growing rapidly. Now, isn't that
a hoot?
Well, one who's not laughing is Republican member of Congress John
Linder. This far-out Georgia right-winger is irked that America's food
stamp program will grow to more than $60 billion this year. "This is
craziness," Linder barked to a New York Times reporter. "We're at risk
of creating an entire class, a subset of people, just comfortable
getting by living off the government."

Comfortable? When was the last time this pampered lawmaker experienced
the "comforts" of the food stamp life? Linder himself has been "living
off the government" for 18 years, but at the high end -- drawing
$174,000 a year in pay, plus subsidized health care, a fat pension and
generous perks of office.
Hypocrisy aside, Linder is an anti-government, laissez-faire extremist
who buys into Bauer's fantasies about lazy, good-for-nothing strays
getting food stamps.

"You don't improve the economy by paying people to sit around and not
work," he grumps, adding, "You improve the economy by lowering taxes."

Really? Perhaps the gentleman from Georgia has forgotten that he and
the whole Washington insider crowd tried that scam again and again
throughout the past decade, slashing all sorts of taxes for
corporations and the wealthy. Since Linder is a multimillionaire, that
economic "plan" undoubtedly worked out splendidly for him.
For the middle class, however, the 10 years since January 2000 are
known as "the lost decade." In that period, the U.S. economy lost more
jobs than it created -- zero job growth. That's the first decade since
the end of the Depression that our country has had less than a 20
percent rise in job creation.

Also, after the 10-year frenzy of tax-cutting, middle-class families
are earning less today, in real dollars, than they did in 1999. Add in
skyrocketing health care costs and the plummeting value of people's
homes, and we get the harsh reality of mushrooming poverty.

So that "subset of people" on food stamps whom Linder so callously
denigrates are his own spawn! The food stamp program has had to grow
because the tinkle-down economy that he pushed has wrecked America's
middle class.

Does knocking poor people make these guys feel better about
themselves? How pathetic. Bauer and Linder are living proof that when
it comes to leadership, America has too many 5-watt bulbs screwed into
150-watt sockets.

Copyright 2010 Creators.com
All republished content that appears on Truthout has been obtained by
permission or license.


People tend to relate with
Wed, 02/03/2010 - 18:48 — Anonymous (not verified)
People tend to relate with people they consider being like themselves.
So Liberals looks for Liberal or whatever it is called. Conservatives
for conservatives and, so on. It looks like some people feel very
comfortable voting for jokers and idiots and ignorant. But these
idiots/ignorant are the leaders of the country. And the situation is
becoming worse. Honestly I do not see any hope for improvement.
.Just Republicans? I don't

Wed, 02/03/2010 - 18:59 — Anonymous (not verified)
Just Republicans?
I don't hear much of a message from community organizer Obama.
Neither do I see most Congressional Democrats ready to confront our
economic realities.
When they are out on the street (unfortunately probably K Street),
they can reflect on why.
.I dunno, I suspect the title

Wed, 02/03/2010 - 19:14 — Anonymous (not verified)
I dunno, I suspect the title is off a bit, Politicians, unless totally
deranged or senile, are aware of the shafted underclass. Bauer uses
them as an example. These bought and sold bums work for their
constituents. The hick from Georgia wants to make sure there's enough
dough for Lockheed Martin, can't have that if more people get on
foodstamps and cut into profits.

Wed, 02/03/2010 - 19:46 — marg (not verified)
Why am I footing their bill? They're not paying mine...
.The sad irony is that food

Wed, 02/03/2010 - 20:05 — Banquo (not verified)
The sad irony is that food stamps (like school lunch programs and most
of our foreign aid) are at heart agricultural subsidies. It's so easy
to blame the recipients and ignore the real beneficiaries.
.Why don't we eliminate

Wed, 02/03/2010 - 21:23 — radline9 (not verified)
Why don't we eliminate government subsidies and tax breaks for
corporations. After all, they are going to breed.
.Why not eliminate the FREE

Wed, 02/03/2010 - 22:43 — Anonymous (not verified)
Why not eliminate the FREE LUNCHES congress people have at the
congressional dining room???
they eat pretty darned good there on our dime. Not the stuff of us
peasants, believe me.
.Yet according to a recent

Wed, 02/03/2010 - 22:58 — Anonymous (not verified)
Yet according to a recent poll commissioned by daily Kos (or a Kos
member), a majority say they'd vote for Palin as GOP candidate and
would vote for a GOP candidate.

So what's up? Certainly I agree w/Mr. Hightower, but it seems that,
receiving food stamps or not, people are still seeing themselves as
gop. Very durable propaganda I'd say.

Or maybe it's because Obama's administration seems like bushlite in
many ways, bailing out bankers, they're still getting huge bonuses,
patriot act, still around, gitmo--still open & 50 people who have not
been convicted of anything will continue to be detained, reaffirming
Bush's DOJ stance re: gov't secrecy & ability to do warrantless search
& seizure/survelliance and so on.

Budget of aggression? Still bloated & specifically exempted from any
spending cuts.

So the differences are? A few. But there's a whole lot of angry energy
& fear that out there & neither the Obama administration nor Congress
(& definitely not an oblivious, corporate profits obsessed S.Ct
majority) seems to be able to offer it any constructive release.
Apparently because they are unable to stop themselves from kowtowing
the the corporate elite (maybe a few Congresspeople do).

the health insurance reform bill looked like farce to me. Just made
the entire uninsured population free for insurer pillaging & making
sure people will be underinsured & unable to pay for medical care
(especially preventive) because all their disposable income is going
towards paying health insurance premiums for a policy that covers
almost nothing.

."Where else can raw
Wed, 02/03/2010 - 23:06 — Anonymous (not verified)
"Where else can raw ignorance rise to such high places -- and then
flaunt itself shamelessly for all to see?"

An everyday occurence in Texas.
.Someone here had a a good

Wed, 02/03/2010 - 23:32 — Anonymous (not verified)
Someone here had a a good idea, take away Congress' health care that
we pay for and watch thing change fast. I've known people that had to
collect food stamps for a little time and I can assure you that they
weren't "comfortable."
.I've found that the most

Wed, 02/03/2010 - 23:39 — Anonymous (not verified)
I've found that the most virulent, anti-government right-wingers ALL
are getting by through generous pensions provided by their years
working on government jobs (military, police, state government, etc.)
and my most liberal, left friends are either small business owners/
entrepreneurs or work for private firms (private colleges, etc.). And
although I don't know their income levels, it would be a pretty safe
bet that my left friends pay A LOT more in federal taxes than my right
friends and relatives. Interesting, isn't it?


...and I am Sid Harth
2010-02-04 00:19:28 UTC

U.S. Economy: Services Expanded Less Than Forecast in January
February 03, 2010, 02:58 PM EST

Feb. 3 (Bloomberg) -- Service industries in the U.S. expanded less
than anticipated in January, a sign the recovery will be slow to
spread from manufacturing to the rest of the economy.

The Institute for Supply Management’s index of non- manufacturing
businesses, which make up almost 90 percent of the economy, climbed to
50.5 from 49.8 in December, figures from the Tempe, Arizona-based
group showed today. Readings above 50 signal growth. Other reports
showed firings eased last month.

Unemployment close to a 26-year high may restrain growth as Americans
limit spending on clothing, vacations and restaurant meals. Stocks
dropped on concern the recovery will lose momentum after business
investment and efforts to rebuild inventories drove the strongest pace
of expansion in six years last quarter.

“Manufacturing is getting an awful lot of help, and it looks like the
rest of the economy is getting awfully dull growth,” said Robert
Mellman, an economist at JPMorgan Chase & Co. in New York, which
correctly forecast the ISM index. Employment “will gradually get
better. Profits had another strong quarter and margins are going up.
Businesses are very, very lean and they’ll be hiring soon.”

Companies cut an estimated 22,000 jobs in January, the smallest drop
in two years, data from ADP Employer Services showed today. The report
includes only private payrolls and doesn’t take into account
government hiring.

The Standard & Poor’s 500 Index decreased 0.6 percent to 1,096.96 at
12:41 P.M. in New York. Treasury securities also dropped, sending the
yield on the benchmark 10-year note up to 3.67 percent from 3.64
percent late yesterday.

Another report showed planned firings fell 70 percent last month to
71,482 from 241,749 in January 2009, according to data collected by
the job placement firm Challenger, Gray & Christmas Inc. Announcements
increased from a two-year low of 45,094 in December, the Chicago-based
firm said today.

The report on services showed four industries, including utilities and
wholesalers, grew last month while 11 contracted. Entertainment,
mining and retail companies were among those shrinking in January.

Payroll Forecast

The economy probably created more jobs than it lost last month,
economists project a Feb. 5 report from the Labor Department will
show. Payrolls rose by 10,000 employees in January, according to the
median estimate of economists surveyed, helped by federal government
hiring of temporary workers to carry out the 2010 population count.

Retailers are among companies still cutting jobs. Atlanta- based Home
Depot Inc. last week began eliminating 1,000 positions after sales at
older stores fell 6.9 percent in the quarter ended Nov. 1.

“Household spending is expanding at a moderate rate, but remains
constrained by a weak labor market, modest income growth, lower
housing wealth and tight credit,” Federal Reserve policy makers said
after their meeting last month. The central bankers kept the benchmark
interest rate on overnight loans between banks near zero and said it
would remain “low” for an “extended period.”

The ISM services survey has lagged behind the group’s manufacturing
gauge, which rose in January to the highest level in five years as
factories ramped up production to rebuild inventories and meet
increasing global demand.

Economic Growth

The economy grew at a 5.7 percent annual pace in the fourth quarter,
the government reported last week. It was the second quarter of growth
following a year-long contraction that marked the deepest recession
since the 1930s.

Consumer spending, which accounts for 70 percent of the economy, rose
at a 2 percent pace, compared with an average 2.8 percent increase per
quarter in the six-year expansion that ended in December 2007.

United Parcel Service is among companies seeing an improvement.
Atlanta-based UPS yesterday said first-quarter profit would be
“slightly better” than a year ago, signaling that the world’s largest
package-delivery company expects a slow start to a recovery that
builds through the year.

“Economic forecasts indicate gradual improvement as 2010 unfolds,”
Kurt Kuehn, UPS’s chief financial officer, said in a statement. “The
first quarter will be the most challenging of the year for UPS, with
profitability only slightly better than last year.”

--Editors: Carlos Torres, Christopher Wellisz

To contact the reporter on this story: Bob Willis at +1-202-624-1837
or ***@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz
+1-202-624-1862 or ***@bloomberg.net


Is the U.S Economy Really Set for Recovery?
Ed Liston

Mohammed A. El-Erian, the CEO of PIMCO, the world’s biggest mutual
fund, is not very optimistic about the way the U.S economy is
recovering from the global financial crisis.

According to him, the investors have been wrong in analyzing the
orderly withdrawal of stimulus measures provided by the government, a
rebound of bank lending, and other government policies to restore
growth. Wall Street analysts expect that Standard & Poor’s 500 will
rise 10% in 2010. He says on Bloomberg that Wall Street projections
for 2010 will not prove to be right and the prices will slump. The
decline in the stock market witnessed over the last eleven months may
further decline.

The Standard & Poor’s 500 Index fell 3.7% in January, which was more
than any month since February 2009. This was in reaction to China’s
policy of setting higher reserves for lenders and Barack Obama’s
policies of reducing risk taking by banks. The MSCI Emerging Markets
Index also lost 5.7 percent last month. The employment levels also do
not seem to be improving, which is hampering the overall growth of the

El-Erian sees January’s global equity sell off as a flag that has
marked the beginning of a disappointing year for several asset
classes. The global financial crisis has increased the levels of
public debt and budget deficit of the country. The U.S government’s
budget deficit in the fiscal year ending September 30th was a record
amount of $1.42 trillion.

El-Erian however says that due to increased government regulation,
lower consumption and a smaller role for the U.S in the global
economy, the investors will get returns that trail the historical
average. He predicts that the GDP will expand 2.7 % in 2010 and 2.9%
in 2011.


market pulse
Feb. 3, 2010, 10:06 a.m. EST

U.S. Jan. ISM services index rebounds to 50.5%

By Greg Robb

WASHINGTON (MarketWatch) -- The service sectors of the U.S. economy
rebounded in January, the Institute for Supply Management reported
Wednesday. The ISM non-manufacturing index rose to 50.5% from 49.8% in
December. Despite the improvement, the increase was below
expectations. Economists were looking the index to rise to 51%. The
index had been above 50 for two months in the fall but then slipped
under the threshold in November and December. The closely-watched
employment index rose to 44.6% in January from 43.6 in December. The
employment index has been below 50 since December 2007. It hit a low
of 31.1 in November 2008.


US Job Market Improves
VOA News 03 February 2010

The battered U.S. job market got a bit better as private employers cut
just 22,000 jobs in January.

That is about one-third the number of jobs cut the prior month.

The information comes from ADP, a company that processes paychecks
across the nation.

On Friday, government experts will publish the national unemployment
rate and the net number of jobs lost or gained across the economy.

The U.S. economy lost 85,000 jobs in December, but economists
interviewed by news organizations say there could be a net gain in

They also say the jobless rate might edge up slightly to 10.1 hit

Some information for this report was provided by AFP, AP and Reuters.


...and I am Sid Harth
2010-02-04 13:43:13 UTC

Asian Stocks Decline on Australian Retail Sales, Commodities
February 04, 2010, 05:21 AM EST

By Jonathan Burgos

Feb. 4 (Bloomberg) -- Asian stocks dropped, dragging the MSCI Asia
Pacific Index lower for the first time in three days, after Australian
retail sales unexpectedly fell in December and commodity prices

CSR Ltd., Australia’s second-largest building-products maker, tumbled
6.5 percent after a court blocked the company’s plan to separate its
sugar business. Jiangxi Copper Co. Ltd., China’s biggest producer of
the metal, dropped 3.7 percent in Hong Kong after metal prices
declined. Toyota Motor Corp., the world’s biggest carmaker, slid 3.5
percent in Tokyo as the U.S. stepped up pressure on the company to fix
defects that caused the recall of almost 8 million vehicles.

The MSCI Asia Pacific Index lost 0.8 percent to 117.54 as of 7:20 p.m.
in Tokyo, snapping a two-day, 1.9 percent gain. The gauge has fallen
7.3 percent from a 17-month high on Jan. 15 on concern central banks
from China to India will tighten monetary policy to curb inflation.

“It’s not yet the time to start buying equities after the recent
declines,” said Pearlyn Wong, Singapore-based investment analyst at
Bank Julius Baer Co., which manages about $350 billion. “We’ll have to
see what happens after the Lunar New Year holiday. Economic growth may
have peaked in the fourth quarter when we’ve seen a lot of re-

Japan’s Nikkei 225 Stock Average dropped 0.5 percent. Denso Corp., a
supplier to Toyota, slumped 6.3 percent. Mitsubishi UFJ Financial
Group Inc., Japan’s largest bank by market value, dipped 2.7 percent
as bad-debt charges increased.

U.S. Service Industries

The Hang Seng Index sank 1.8 percent in Hong Kong, where Bank of
Communications Co. declined 1.7 percent after China Business News
reported the lender may sell shares. China’s Shanghai Composite Index
lost 0.3 percent.

Australia’s S&P/ASX 200 Index declined 0.6 percent as a government
report showed the country’s retail sales fell in December for the
first time in five months. A Bloomberg economist survey had projected
an increase.

Futures on the U.S. Standard & Poor’s 500 Index lost 0.7 percent. The
gauge sank 0.6 percent yesterday as a gauge of the country’s service
industries expanded less than forecast and Pfizer Inc.’s profit
trailed estimates.

“Signals remain mixed about the strength of economic recovery,” said
Tim Schroeders, who helps manage $1.1 billion at Pengana Capital Ltd.
in Melbourne. “A tug of war seems to be occurring between fundamentals
and liquidity at the moment.”

Australian Retailers

Governments around the world cut borrowing costs and boosted spending
last year to help drag the global economy out of its worst slowdown
since World War II. The MSCI Asia Pacific Index climbed 34 percent
last year on optimism growth in Asia, will outpace the rest of the
world, led by China’s expansion.

The advance beat gains of 23 percent by the Standard & Poor’s 500
Index in the U.S. and 28 percent for Europe’s Dow Jones Stoxx 600
Index. Companies in the MSCI index trade at 18.6 times estimated
earnings, compared with 14.1 times for the S&P 500 and 12.5 times for
the Stoxx 600.

David Jones Ltd., Australia’s second-biggest department store
operator, slumped 4.1 percent to A$4.73. JB Hi-Fi Ltd., the S&P/ASX
200 Index’s best-performing retail stock in 2009, sank 3.7 percent to A
$20.28. Flight Centre Ltd., the nation’s largest travel agency,
dropped 3.8 percent to A$19.04.

CSR tumbled 6.5 percent to A$1.725. UBS AG lowered the stock to
“neutral” from “buy” after the Federal Court of Australia blocked
CSR’s plan to separate its sugar business.

‘Negative Consequences’

“This decision appears to have significant negative consequences for
CSR value,” UBS AG analysts David Leitch and Satya Tammareddy wrote in
a report.

A gauge of materials producers on the MSCI Asia Pacific Index sank 1.3
percent, the biggest decline of 10 industry groups. Material producers
led the gains in the past year amid signs the global economic recovery
is accelerating. China’s gross domestic product expanded at its
fastest pace since 2007 in the fourth quarter, while U.S.
manufacturing expanded at its fastest pace since August 2004 in

Jiangxi Copper dropped 3.9 percent to HK$15.62 in Hong Kong. Aluminum
Corp. of China Ltd., the nation’s biggest producer of the metal,
declined 3.7 percent to HK$7.87. BHP Billiton Ltd., the world’s
biggest mining company, slipped 1.2 percent to A$40.99. Rio Tinto
Ltd., the world’s third-biggest mining company, dropped 2.6 percent to

Metals, Oil

Mitsubishi Corp., which gets about 47 percent of sales from
commodities, fell 2.7 percent to 2,190 yen. Inpex Corp., Japan’s
largest oil explorer, lost 1 percent to 671,000 yen.

The London Metal Exchange Index of six metals including copper and
zinc declined 2.5 percent to its lowest level since Nov. 13. Crude-oil
futures fell 0.3 percent to $76.98 a barrel in New York yesterday,
while gold retreated 0.5 percent.

In Tokyo, Toyota dropped 3.5 percent to 3,280 yen after U.S.
Transportation Secretary Ray LaHood said he planned to call Toyota
President Akio Toyoda to tell him that this vehicle recall is “serious

The stock has fallen 22 percent since announcing the recall of
vehicles with gas-pedal flaws on Jan. 21. After Japan’s stock market
closed today, Toyota forecast a return to annual profit and a 51
percent surge in North American sales this quarter even as the company
faces its worst recall crisis.

Denso, which makes automobile parts, slumped 6.3 percent to 2,532 yen.
Toyota Boshoku Corp., a parts-maker affiliated with Toyota Motor, sank
9.1 percent to 1,673 yen.

Honda, Mitsubishi UFJ

Honda Motor Co. rose 2.6 percent to 3,220 yen. Honda expects net
income of 265 billion yen ($2.9 billion) in the year ending March 31,
compared with an earlier forecast of 155 billion yen, the Tokyo-based
company said in a statement yesterday.

Mitsubishi UFJ, Japan’s largest bank by market value, slipped 2.7
percent to 462 yen as an increase in bad-debt charges at a unit in
California and a consumer-lending subsidiary at home raised concern
about earnings prospects.

“The bank’s overseas exposure and loans at its domestic consumer unit
make it vulnerable,” said Kristine Li, a Singapore-based credit
analyst at Royal Bank of Scotland Plc. “The big concern is earnings
growth is not visible.”

In Hong Kong, Bank of Communications, China’s fourth- biggest lender
by market value, dropped 1.7 percent to HK$7.90. The lender may sell
shares to the Ministry of Finance to raised funds, China Business News
reported, without citing anyone.

Dainippon Sumitomo Pharma Co. lost 5 percent to 975 yen. Citigroup
Inc. cut its rating to “sell,” citing higher-than- expected costs from
a $2.51 billion acquisition.

--With assistance from Kana Nishizawa in Tokyo. Editors: Darren Boey,
Sam Waite.

To contact the reporters for this story: Jonathan Burgos in Singapore
at +65-6212-1156 or ***@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at
+852-2977-6646 or ***@bloomberg.net.



Portugal, Spain Lead Worldwide Decline in Stocks; Dollar Gains
February 04, 2010, 08:01 AM EST

By Gavin Serkin

Feb. 4 (Bloomberg) -- Stocks and bonds fell in Spain, Portugal and
eastern Europe on concern governments will struggle to fund their
budget deficits as spending cuts in Greece trigger strikes. The dollar

Portugal’s PSI-20 Index slumped 4 percent, the most in 14 months, at
11:43 a.m. in London. Spain’s IBEX Index dropped 2.6 percent to the
lowest level since August and credit-default swaps on Hungary climbed
to a record. Futures on the Standard & Poor’s 500 Index slipped 0.7
percent. The dollar strengthened against all but one of its 16 most-
traded peers. The pound pared declines after the Bank of England
announced a pause in its asset-purchase program.

The European Union’s pledge yesterday to back Greece’s plan to cut the
region’s biggest budget deficit prompted investors to shun securities
of countries with the worst shortfalls. Spanish borrowing costs rose
at a sale of three-year notes today and Portugal scaled back an
auction of Treasury bills yesterday.

“The focus is shifting toward Spain and Portugal, where the deficit-
reduction plans have been far less ambitious than Greece,” said
Kornelius Purps, a fixed-income strategist in Munich at UniCredit
Markets & Investment Banking.

The MSCI World Index of 23 developed nations’ stocks fell 0.5 percent
as Greece’s ASE Index lost 1.9 percent on concern plans for a strike
by the country’s biggest union show Prime Minister George Papandreou
may not win enough support in parliament for spending reductions.
Piraeus Bank SA, Greece’s fourth-biggest lender, dropped 3.1 percent,
while Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank,
declined 4.4 percent. Europe’s Dow Jones Stoxx 600 Index slipped 0.9

Futures Fall

U.S. stock futures fell before a Labor Department report at 8:30 a.m.
New York time that may show initial jobless claims declined last week.
Other reports may show factory orders rose 0.5 percent in December and
worker productivity kept increasing in the fourth quarter.

The MSCI Emerging Markets Index dropped 1.2 percent, snapping a three-
day rally. Poland’s WIG 20 Index fell 1.4 percent after the European
Commission said the government’s budget gap may widen to a 15-year
high of 7.5 percent of gross domestic product in 2010, from 6.4
percent last year, without “sizeable” measures. The Budapest Stock
Exchange Index lost 1.1 percent after the opposition Fidesz party, the
favorite to win general elections in 10 weeks, said the country faces
a continuing recession and mounting debt, and has an unrealistic
budget deficit target.

Hungary Premium

The extra yield investors demand to own Hungarian sovereign and quasi-
sovereign bonds jumped the most in eight months, rising 29 basis
points to a two-month high 2.59 percentage points more than similar-
maturity U.S. Treasuries, according to JPMorgan Chase & Co.’s EMBI
Global indexes.

Portugal led declines in government bonds, with the premium investors
demand to hold the securities instead of benchmark German bunds
widening 10 basis points to 157 basis points, the biggest difference
since March. Spain sold 2.5 billion euros ($3.5 billion) of three-year
securities today to yield 2.63 percent, compared with 2.14 percent the
last time the notes were issued Dec. 3.

Credit-default swaps on Portugal’s government debt soared 15 basis
points to a record 211, according to CMA DataVision prices. Contracts
on Greece jumped 18 basis points to 415.5, Spain increased 12 basis
points to 164, Italy was up 7 at 138 and Ireland climbed 6.5 basis
points to 169.5.

Kiwi Falls

The dollar gained against high-yielding currencies, adding 1.1 percent
versus the New Zealand dollar and 0.6 percent against the South
African rand. The Dollar Index, which tracks the U.S. currency against
those of six major trading partners, climbed 0.3 percent.

The New Zealand dollar declined after a government report showed the
unemployment rate climbed to a 10-year high. The Australian dollar
dropped because retail sales unexpectedly fell in December for the
first time in five months.

Crude oil for March delivery fell 68 cents, or 0.9 percent, to $76.30
a barrel in electronic trading on the New York Mercantile Exchange
after a U.S. Energy Department report yesterday showed a bigger-than-
forecast weekly increase in crude inventories. Lead for delivery in
three months fell 0.8 percent to $2,005.75 a metric ton on the London
Metal Exchange. Gold for immediate delivery retreated 0.6 percent to
$1,103.02 an ounce.

--With assistance from Justin Carrigan, Abigail Moses, Andrew
Reierson, Stuart Wallace, Steve Voss and Andrew Rummer in London.
Editors: Paul Sillitoe, Mark Gilbert

To contact the reporters for this story: Gavin Serkin at +44
20-7673-2467 or ***@bloomberg.net

To contact the editor responsible for this story: Paul Sillitoe at +44
20-70773-3857 or ***@bloomberg.net


Market Snapshot December 16, 2009, 3:56PM EST

U.S. Stocks Erase Gain, Bond Yields Rise

Indexes retreated from earlier highs on concerns the Fed's near-zero
target for interest rates will stoke inflation Finance

By Elizabeth Stanton

Dec. 16 (Bloomberg) -- U.S. stocks erased most of their advance, the
dollar strengthened and yields on 10-year Treasury notes rose to the
highest level in four months on concern the Federal Reserve's near-
zero target for interest rates will stoke inflation.

The Standard & Poor's 500 Index added 0.2 percent to 1,109.90 at 3:54
p.m. in New York, paring a gain of as much as 0.8 percent. The dollar
rose 0.2 percent to 89.79 yen. The yield on 10-year notes touched 3.60
percent, which would be the highest closing level since August.

The Fed repeated its pledge to keep interest rates "exceptionally low"
for an "extended period," driving metal producers, energy companies
and banks to the steepest gains among 10 industries in the S&P 500.
Policy makers restated that low interest rates are contingent on "low
rates of resource utilization, subdued inflation trends, and stable
inflation expectations."

"The fear is that the Fed may wait too long before they begin raising
rates," said Joseph Veranth, chief investment officer at Dana
Investment Advisors in Brookfield, Wisconsin, which manages $2.8
billion. In the S&P 500, "when you see materials, financials and
energy leading, it means the market fears higher prices and inflation.
Market participants are going to the sectors that will perform well in
that environment."

While repeating its pledge to keep interest rates "exceptionally low"
for "an extended period," the Fed said the economy is strengthening
and that most of its special liquidity facilities will expire on Feb.
1, 2010.

"Household spending appears to be expanding at a moderate rate, though
it remains constrained by a weak labor market, modest income growth,
lower housing wealth, and tight credit," the Federal Open Market
Committee said in a statement after meeting in Washington. "Businesses
are still cutting back on fixed investment" and "remain reluctant to
add to payrolls." Deterioration in the labor market is "abating."

To contact the reporter on this story: Elizabeth Stanton in New York
at ***@bloomberg.net


Japan’s Government Bonds Fall, Pushing Yields to 3-Month High
Share Business ExchangeTwitterFacebook| Email | Print | A A A By
Yoshiaki Nohara

Feb. 4 (Bloomberg) -- Japan’s bonds fell, pushing 10-year yields to
the highest in almost three months, as signs of a recovery in the U.S.
economy damped demand for government debt.

Five-year yields climbed to the most in two months after Treasuries
slid yesterday on a private report that estimated U.S. companies cut
the fewest jobs since January 2008. Figures tomorrow will show the
biggest gain in U.S. employment in two years, according to a Bloomberg
News survey.

“People’s expectations are turning positive for the U.S. employment
data,” said Koji Ochiai, a senior market economist in Tokyo at Mizuho
Investors Securities Co., a unit of Japan’s second-largest bank.
“Japan’s bonds are under downward pressure, following the drop in

The yield on the 1.3 percent bond due December 2019 rose two basis
points to 1.375 percent as of 4:17 p.m. in Tokyo at Japan Bond Trading
Co., the nation’s largest interdealer debt broker. The price fell
0.173 yen to 99.348 yen. The yield was at the highest level since Nov.

Five-year yields gained 1.5 basis points to 0.54 percent, the highest
since Dec. 1. Ten-year bond futures for March delivery dropped 0.27 to
138.80 as of the afternoon close at the Tokyo Stock Exchange.

Japan’s yield curve steepened as the spread between 2- and 10-year
securities widened to 1.22 percentage points today, the most since May
2006, according to data compiled by Bloomberg.

A yield curve is a chart that plots the yields of bonds of the same
quality, but different maturities. It steepens when yields on shorter-
maturity notes fall, those on longer-dated bonds rise, or both happen

U.S. Jobs Data

“Investors don’t need to buy bonds in a rush before the U.S. jobs data
tomorrow,” said Takafumi Yamawaki, a senior strategist in Tokyo at BNP
Paribas Securities Japan Ltd., one of the 23 primary dealers required
to bid at the government’s debt sales. “Still, there are lingering
expectations bonds could be bought with 10-year yields approaching 1.4

The U.S. added 15,000 workers last month after losing 85,000 in
December, according to a Bloomberg News survey ahead of the Labor
Department’s report.

U.S. companies cut 22,000 jobs in January, the fewest in two years,
ADP Employer Services reported yesterday.

Ten-year Treasury yields rose six basis points to 3.71 percent
yesterday, according to BGCantor Market Data.

Nakamura Comment

Demand for Japan’s short-term notes was underpinned after Bank of
Japan board member Seiji Nakamura today reiterated that the central
bank will maintain a very accommodative monetary policy. Downward
pressure on prices won’t easily go away, Nakamura said at a business
meeting in Fukuoka, western Japan.

“As consumers expect chronic deflation, Japan’s bonds are in a
favorable environment for investors compared with foreign markets,”
Makoto Noji, a senior market analyst at Mizuho Securities Co. in
Tokyo, wrote in a research note today.

Consumer prices excluding fresh food fell 1.3 percent in December from
a year earlier, the statistics bureau reported on Jan. 29 in Tokyo.
That was a 10th-straight decline.

Deflation, a general drop in prices, enhances the value of the fixed
payments from bonds.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at

Last Updated: February 4, 2010 02:22 EST


Sony books $870mln quarterly profit
(AFP) – 6 hours ago

TOKYO, Japan — Japanese electronics and entertainment giant Sony Corp.
Thursday announced a third-quarter net profit of 870 million dollars,
a result it said "significantly exceeded expectations".

The maker of PlayStation game consoles, Bravia televisions and Cyber-
shot cameras is still emerging from the global economic slump but
narrowed its full-year loss forecast to 70 billion yen from 95 billion

"We did well across the board during the year-end shopping season,"
said Nobuyuki Oneda, Sony's chief financial officer. "It significantly
exceeded expectations."

"Cost cutting efforts bore fruits. Improvements were also seen in our
financial businesses," he told a press conference.

For the October-December quarter, Sony reported a net profit of 79.2
billion yen (870 million dollars) against a 10.4-billion-yen profit in
the same period a year earlier. In the July-September quarter, it lost
26.3 billion yen.

Sales of PlayStation 3 rose following a price cut and introduction of
successful game titles, Oneda said.

Liquid crystal display televisions in Asia -- a key product group in
an important market -- also boosted the operating profit during the
quarter although lowered prices reduced overall sales value, he said.

Sony also reported an operating profit of 146 billion yen during the
three months -- compared with an operating loss of 17.96 billion yen a
year earlier -- on revenue of 2.24 trillion yen in the three months to

Sony continued to pursue aggressive cost-cutting measures, including
shedding 20,000 jobs, Oneda said.

The company was on course to reducing cost by 330 billion yen and to
close roughly 20 percent of its factories in the year to March, he

The result came days after Sony's competitors Sharp Corp. of Japan and
Samsung Electronics of South Korea also reported they had returned to
the black in the last three months of 2009 as the global economic
crisis eased.

The robust performance in the third quarter led Sony to upgrade its
annual earnings expectations to March.

The company halved annual its operating loss estimate to 30 billion
yen, compared with an earlier loss projection of 60 billion yen.

Volatile prices of raw materials still posed risks going forward,
although Oneda remained optimistic.

"We have a sense that the economy might be bottoming out. It's
difficult to imagine things will again crumble down," Oneda said.

"We are keeping our eyes on prices of materials and memories," he

Copyright © 2010 AFP. All rights reserved.

Sony announced an October-December net profit of 870 million dollars


News and analysis

Europe On The Brink
4/02/2010 7:15:03 PM
By Greg Peel

To recap, the European Union is comprised of 27 sovereign nations in a
common trading bloc, the purpose of which is to compete as a
collective more effectively with the world's economic powerhouses of
the US, Japan and now China. It was born of the old "Common Market".

Of those 27 nations, 16 have chosen to also band together under a
common currency - the euro. Responsibility for the euro falls to the
European Central Bank, and "euro-zone" membership comes with the
requirement to satisfy various economic criteria in exchange for
central bank protection (such as lender of the last resort insurance).
One of those criteria is that members must maintain a level of public
sector deficit of no more than 3% of GDP. In order to finance
deficits, individual members issue their own soveriegn bonds. There is
no single euro-zone bond. Excessive debt issuance from one member
state incrementally impacts on each member state via the devaluation
of their common currency.

Any sovereign nation can also go cap in hand to the International
Monetary Fund for financial assistance, as that is what the IMF is
there for. But the IMF also imposes strict criteria itself when it
bails out an economy, and one of those is a forced devaluation of that
nations' currency. In the case of euro-zone members, clearly this is
not an option. Thus the ECB must respond first.
In 2009, the ECB was forced to bail out euro-zone member Ireland.
One of the euro-zone's biggest problems is economic disparity. The CIA
World Factbook (yes, the US charges the spooks with the task of
measuring everyone's economy) puts the European Union's total GDP in
2009 down as US$16.0 trillion, ahead of the US on US$14.2 trillion.
China's economy is now assumed to have exceeded that of Japan's but
for the sake of comparison, the CIA suggests Japan's GDP was US$5.0trn
in 2009 and China's US$4.7trn.

On an individual basis, in fourth place is Germany with (the numbers
are all in US$ trillions from here) 3.2 and then France with 2.6 in
fifth. Of the euro-zone members, Italy's GDP is 2.1 (7th) and Spain's
is 1.4 (9th). We then descend through the Netherlands, Belgium and
Austria before we get to Greece on 0.3 (28th), and then Finland and
Ireland before we get to Portugal on 0.2 (38th). For comparison
purposes, Austalia's GDP is 0.9 in 13th place, only 64% as big as

We would not like to think of the consequences of Australia defaulting
on its sovereign debt.

Last night the European Commision used new EU treaty powers to impose
strict measures upon the Greek government and economy. Greece has
vowed to reduce its deficit from 13% of GDP to 3% by 2012 but the EU
has given the government only one month to actually come up with a
viable plan to achieve the target and has ordered public spending to
be slashed. The new socialist government is already meeting opposition
from its trade union support base and a general strike has been
planned. The EU is under pressure from the ECB and from dominant
member Germany to bring a profligate Greece into line.

The measures are intended to prevent money flowing out of Greek
government bonds for fear that Greece may not be able to meet its
interest payment obligations. Previously the Gulf state of Dubai had
announced a freeze on interest payments, sparking fears of default,
but since the neighbouring United Arab Emirates agreed to underwrite
Dubai debt, the danger has subsided for now. The ECB cash rate is set
at 1% and the benchmark German bonds are yielding around 3%, but last
week Greek bond yields blew out to 7% as funds quickly departed.

The panic has now subsided over Greece. And nobody honestly expects
that the EU member will default. However, the austerity measures now
being imposed on Greece will not be well received by an angry

It is the nature of such default risk episodes that contagion is a
feature. When Thailand's currency began to falter in 1997 the Asian
Currency Crisis, affecting all the Asian "tiger" economies, followed.
The following year Russia defaulted, bringing down the world's biggest
hedge fund. When Iceland became the GFC's first major victim, Ireland
soon followed. No sooner had Dubai hit the headlines, Greece was not
far behind. And with the pressure now somewhat off Greece, the
attention has turned to Portugal. Last night bond traders shifted
focus to the next perceived victim and began selling out of Portuguese

There is, of course, a level of self-fulfillment about such flights of
capital. When Bear Stearns went down, Lehman Bros was not far behind.
And then the US government was forced to bail out all major US banks.

The Portuguese economy is smaller than the Greek economy, but much
larger than the Greek economy is that of Spain - the ninth biggest
economy in the world. Spain is considered to be the next domino, and
beyond Spain even the larger Italian economy is drawing attention. If
Spain were to default, the ramifications would be enormous. It would
be another Lehman Bros as far as some commentators are concerned.

Economists suggest the reason why Greece and Spain in particular are
in serious trouble is due to the lax collection of taxes. In the
property markets in particular - and Greece and Spain are both popular
rental destinations for foreigners let alone the local population -
landlords are estimated to be collecting more than half of all rents
as cash and thus avoiding tax payments. This is leaving public coffers
short by billions of euro. Clearly a serious shake-up is needed among
the so-called Club Med nations and austeritiy measures will have to be
complemented by some aggressive crack-downs.

Fortunately for Spain, it entered the GFC with a budget surplus which
provided an initial buffer against deflation. In response to criticims
from other EU members, Spain has boasted that not one Spanish bank has
needed an injection of public capital, and indeed one Spanish bank has
bought into the crumbling British banking system. (Is the UK next?).
But Spain has since suffered a huge bubble and bust in its property
market, and quickly it is becoming more Greece-like every day.

Standing on the sidelines is the huge economy of Germany, which is the
only major EU member still in surplus. As a world exporting
powerhouse, Germany has long run a fiscal surplus which has formed a
large percentage of the offsetting US deficit. Germany is the senior
member of the EU and the only member with any real capacity to come to
the aid of Club Med and, for example, bail out banks. But Germany
refuses to do so.
Which is quite understandable. Germans are renowned for being a nation of strict savers unlike their frivolous Club Med peers. Why should Germans have to stump for Mediterranean profligacy? But at the end of the day, Germany agreed to be a member of both the EU and the euro-zone and hence the survival of both may depend on German intervention.
Critics of Germany point out the underconsumption of Germans is just
as much to blame for EU disparities as is excess consumption
elsewhere. Germany is selling goods into its EU neighbours but buying
little in return. This is a microcosm of the wider world malaise,
which sees Japan, China and Germany on the one hand failing to spend
on imports to balance out the rampant spending of the US, the UK, the
rest of Europe and Australia etc on the other. The world is trapped
with the pendulum having swung too far in the one direction.
The Chinese government is currently making aggressive attempts to stimulate China's domestic economy to address the imbalance which has been exacerbated by China's currency being pegged to the US dollar. Germany's currency is also pegged to its neighbours in that they share the one single currency. For the current European economic situation to be eased, critics argue, and for the sheer survival of the euro and the EU, Germany needs to come to the party.
Otherwise what we have building is a crisis of confidence in the euro which could get out of hand. The pound would not be far behind. The irony is that once again the world is seeking sanctuary in the safety of short term US debt despite the US boasting the biggest deficit of all. The devaluation of the US dollar, as a reflection of this deficit, appeared to be underway late last year, but the trend has now reversed as the other side of the world appears in more dire straits. Nevertheless, the longer US bonds have begun to creep up again in yield as investors again begin to fear inflationary pressures.
The collapse of Lehman Bros and subsequent ramifactions showed that one investment bank had the power to bring down the world. Such a catastrophic collapse was nevertheless prevented by coordinated government intervention across the globe. But what happens when national economies start going down?
© FN Arena


...and I am Sid Harth
2010-02-04 13:47:40 UTC
Satyajit Das: The China Syndrome, parts 1,2 and 3
February 4, 2010
China Syndrome Part 1 - The Unbalanced Bicycle

by Satyajit Das

The China Syndrome

In 1971, Ralph Lapp, a nuclear physicist, used the term “China
syndrome” to describe a hypothetical nuclear reactor meltdown where
the molten core breaches containment barriers and melts through the
crust of the Earth reaching China. The economic equivalent of the
China Syndrome describes a process where China’s strong growth,
abundant savings and foreign exchange reserves assists a rapid
restoration of global growth.

The nuclear metaphor ignores the geographical fact that the opposite
side of the globe from the USA is actually the Indian Ocean and that
the entire idea is physically impossible. The economic metaphor
conveniently discards some significant doubts about the ability of
China to act as a catalyst for global recovery.

The Unbalanced Bicycle

China’s economic growth model was a contributing factor in the current
Global Financial Crisis (”GFC”).

Under Deng Xiaoping, leader of the Communist Party from 1978, China
undertook Gaige Kaifang (Reforms and Openness) - reform of domestic,
social, political and economic policy. Economic stagnation and serious
social and institutional woes that could be traced to Mao’s Cultural
Revolution forced the change.

The centrepiece was economic reforms that combined socialism with
elements of the market economy. It entailed engagement with the global
economy reversing the traditional policy of economic self-reliance and
a lack of interest in trade. As Robert Hart, 19th Century British
trade commissioner for China, wrote: “[The] Chinese have the best food
in the world, rice; the best drink, tea; and the best clothing,
cotton, silk, fur. Possessing these staples and their innumerable
native adjuncts, they do not need to buy a penny’s worth elsewhere.”

In embracing markets, Deng famously observed that: “It doesn’t matter
if a cat is black or white, so long as it catches mice.” Deng also
embraced a change in philosophy: “Poverty is not socialism. To be rich
is glorious.”

China’s economic reforms coincided with the ‘Great Moderation’ – a
period of strong growth in the global economy based on low interest
rates, low oil prices and deregulation of key industries such as
banking and telecommunciations. The boom was also based on increases
in global trade and investment driven, in part, by the fall of the
Berlin Wall, the collapse of the Soviet Union and integration of
socialist economies into the world economy.

China’s growth model, inspired by the post-War recovery of Japan, used
trade to accelerate the growth and modernisation of its economy. The
economic engine was export driven growth. Special Economic Zones
(”SEZ”), for example in Shenzen located strategically close to Hong
Kong, were established to encourage investment and industry.

The model took advantage of China’s large, cheap labour force. The
strategy benefited from rising costs in neighbouring Asian countries
such as Japan, South Korea, Taiwan, Hong Kong and Singapore. China was
able to attract significant foreign investment, technology and
management and trading skills from countries keen to outsource
manufacturing to lower cost locations to improve declining

China converted itself, at least parts of the country, into the
world’s factory of choice. It imported resources and parts that were
then assembled or processed and then shipped out again. The Great
Moderation ensured a growing market for exports.

Innate conservatism, the desire to maintain Communist Party control of
the domestic economy and avoid social disruption favoured partial
market liberalisation. China’s need to provide employment for its
underemployed population and improve its technology also favoured this
strategy. China currently needs to grow at around 7-8% pa. to absorb
workers entering the formal workforce each year.

The strategy was decidedly ‘trickle down economics’ as Deng himself
acknowledged: “Let some people get rich first.” Later, Deng would
grouse: “Young leading cadres have risen up by helicopter. They should
really rise step by step.”

As economic momentum increased, foreign businesses invested in China
to take advantage of the growth and rising living standards.
Opportunities encouraged Chinese nationals living, studying and
working overseas to return. As Deng astutely noted: “When our
thousands of Chinese students abroad return home, you will see how
China will transform itself.”

Over time, a novel liquidity system also accelerated growth to
staggering levels.

Liquidity Vortex

Export success created large foreign reserves that now total over $2
trillion. These reserves became the centre of a gigantic lending
scheme where China would finance and thereby boost global trade flows.

Dollars received from exports and foreign investment have to be
exchanged into Renminbi.

In order to maintain the competitiveness of its exporters, China
invests the foreign currency overseas to mitigate upward pressure on
the Renmimbi.

As reserves grew paralleling its growing trade surplus, China invested
heavily in dollars helping to finance America’s large trade and budget
deficits. It is estimated that China has invested around 60-70% of its
$2 trillion reserves in dollar denominated investments, primarily U.S.
Treasury bonds and other high quality securities.

Chinese funds helped keep American interest rates low encouraging
increasing levels of borrowing, especially among consumers. The
increased debt fuelled further consumption and housing and stock
market bubbles that enabled consumers to decrease savings as the
‘paper’ value of investments rose sharply. The consumption fed
increased imports from China creating further outflows of dollars via
the growing trade deficit. The overvalued dollar and an undervalued
Renminbi exacerbated excess U.S. demand for imported goods.

In effect, China was lending the funds used to purchase its goods.
China never got paid, at least until the loan to America was paid off.

The Asian crisis of 1997-98 encouraged China to build even larger
surpluses. Reserves were seen as protection against the destabilising
volatility of short-term foreign capital flows that had almost
destroyed many Asian countries during the crisis.

The substantial build-up of foreign reserves in China and the central
banks of other emerging countries was a liquidity creation scheme. The
arrangements boosted growth and prosperity in China, other emerging
markets and the developed world. Commodity exporters, such as
Australia, benefited significantly from the increased demand for
commodity and the higher prices for resources.

© 2010 Satyajit Das

Satyajit Das is a risk consultant and author of Traders, Guns & Money:
Knowns and Unknowns in the Dazzling World of Derivatives (2006, FT-
Prentice Hall).

China Syndrome Part 2 - Lock & Load

by Satyajit Das

Fall & Rise

In 2007, unsustainable levels of debt in many economies triggered a
near collapse of the global banking system that, in turn, triggered a
major slowdown in growth.

The unprecedented external demand shock, with sharp decreases in
consumption and investment from synchronous deep recessions in the
developed world, affected the Chinese economy. The sudden and
precipitous fall in exports led to a significant slow down in China’s
stellar growth rates in 2008 triggering sharp declines in stock and
property markets.

Job losses in export-intensive Guangdong province were in excess of 20
million migrant workers. Workers and students entering the workforce
were unable to find work. Fearful of social instability, the Beijing
government moved quickly to restore rapid growth.

Panicked government spending and loose monetary policies increasing
available credit is currently driving China’s recovery, contributing
around 75% of China’s growth of around 8-9% in 2009. In the June
quarter, Chinese exports (around 35-40% of the economy) decreased by
around 20% implying that the non-export part of the economy grew

In the first half of 2009, new loans totalled over $1 trillion. This
compares to total loans for the full 2008 year of around $600 billion.
Current lending is running at around three times 2008 levels and at a
staggering 25% of China’s GDP.

The availability of credit is fuelling rampant speculation in stocks,
property and commodities. Estimates suggest that around 20-30% of new
bank lending is finding it way into the stock market, driving up
values. The market for initial public offerings for new companies has
recommenced after being closed for six months.

China’s recovery, in turn, underpinned the recovery in commodity
prices and economies dependent on natural resources. In recent
parliamentary testimony, Reserve Bank of Australia Assistant Governor
Philip Lowe highlighted the extent to which Australia, a major trading
partner of China, was reliant on Chinese demand. Lowe noted that 23%
of Australia’s total exports went to China in the most recent quarter,
up from 4% 10 years ago. China now also takes 80% of Australia’s iron
ore exports and 20% of coal exports.

While a significant part of the importation of commodities is
restocking depleted inventory, abundant and low cost bank finance
combined with a deep seated fear of the long term prospects of U.S.
Treasury bonds and the dollar has encouraged speculative stockpiling
artificially boosting demand.

Lock & Load

Government spending and bank loans has resulted in sharp increases in
fixed asset investments (over 30% up on 2008). A major component is
infrastructure spending which accounts for over 70% of the Chinese
government’s stimulus package. In the first half of 2009, investment
accounted of over 80% of growth, approximately double the 43% average
contribution over the last 10 years.

Infrastructure investment is adding to production capacity in a world
with sluggish demand and major over-capacity in many industries. In
the absence of sufficient domestic demand, the production may be
directed into exports increasing the global supply glut and creating
deflationary pressures.

Progress on shifting the emphasis to domestic consumption has been
disappointing. Government incentives, in the form of rebates for
purchases of high value durables such as cars and white goods, has
increased consumption in the short run (up 15% on 2008). But, over the
last 25 years, Chinese consumption has declined from around 50% to its
current levels of 37%.

The current expansion in lending also risks creating China’s own home
grown banking crisis with a rise in non-performing bank loans. The
problems of bad debts from loose lending are not new. In the 1990s,
similar credit expansion led to an increase in bad debts. The big
state-owned Chinese banks had to be substantially recapitalised and
restructured at significant cost to the State in a series of steps
that ended as recently as 2004. Recently regulators have brought
pressure on banks to increase capital ratios to cover the rapid growth
in their loan books.

Chinese bank regulators are concerned that new lending is being used
to finance real estate and stock market speculation rather than
productive purposes. They have moved to try to reduce speculative
lending but it is likely that the central bank will resolutely
maintain its moderately loose monetary policy because of uncertainties
in the external and domestic environment.

On 24 August 2009, Chinese Premier Wen Jiabao was reported as saying:
“China will maintain its stimulative policy stance because the
economy, far from being on solid footing, is facing fresh
difficulties, … Beijing would ensure a sustainable flow of credit and
a ‘reasonably sufficient’ provision of liquidity to support growth…
‘We must clearly see that the foundations of the recovery are not
stable, not solidified and not balanced. We cannot be blindly
optimistic…Therefore, we must maintain continuity and consistency in
macro economic policies, and maintaining stable and quite fast
economic growth remains our top priority. This means we cannot afford
the slightest relaxation or wavering.’”

The centralised control structure of the Chinese economy has allowed
rapid action to be taken to avert the slowdown in growth. In July
2009, Su Ning, Vice Governor of the Chinese Central Bank People’s Bank
of China observed: “… ‘the mind and action’ of all financial
institutions should ‘be as one’ with the government’s goal, and
financial institutions should properly handle the relationship between
supporting the economy’s development and preventing financial risks.”
Even if execution is not in question, the appropriateness of the
policy measures and the sustainability of the recovery are unclear.

There are also concerns that Chinese statistics are unreliable and
frequently manipulated by officials to meet political and personal
objectives. One unexplained and nagging discrepancy is the difference
between reported growth figures and electricity consumption. It is
difficult to reconcile falls in electricity consumption with continued
robust economic growth.

Even China’s state-controlled media has become increasingly sceptical
about the accuracy of statistics. In recent polls, a high percentage
of the population doubted official data.

International commentators have become concerned about the quality of
the economic data. Commenting on the time taken by China’s National
Bureau of Statistics (”NBS”) to compile growth data, Derek Scissors,
from the Washington-based Heritage Foundation, wryly observed:
“Despite starkly limited resources and a dynamic, complex economy, the
state statistical bureau again needed only 15 days to survey the
economic progress of 1.3 billion people.”

The NBS recently launched a campaign - “Statistical Feelings: We have
walked together – Celebrating the 60th anniversary of the founding of
New China” - to increase confidence in its work. The campaign has
already produced memorable slogans and poems. “I’m proud to be a brick
in the statistical building of the republic.” “I can rearrange the
stars in the sky because I have statistics.”

The problems extend to financial information as generally accepted
accounting principles are not generally accepted in China. Writing in
the 17 August 2009 New York Times, Mark Dixon, a mergers and
acquisition advisor in China, expressed surprise that revenue and cost
gymnastics were not included as an official event at the Beijing

Bounding Mines

China’s $2 trillion foreign currency reserves, a large proportion
denominated in dollars, may have limited value. They cannot be
liquidated or mobilised without massive losses because of their sheer
size. Increasingly strident Chinese rhetoric reflects rising concern
about the security of these dollar investments as the U.S. issues
massive amounts of debt reducing the value of Treasury bonds and the

China’s Premier Wen Jiabao has expressed concern: “If anything goes
wrong in the U.S. financial sector, we are anxious about the safety
and security of Chinese capital…” In December 2008, Wang Qishan, a
Chinese vice-premier, noted: “We hope the US side will take the
necessary measures to stabilise the economy and financial markets as
well as guarantee the safety of China’s assets and investments in the

Yu Yindong, a former adviser to the Chinese central bank castigated
the U.S. over its “reckless policies”. He asked Timothy Geithner, the
U.S. Treasury Secretary to “show us some arithmetic.” At the
University of Beijing, Mr. Geithner obliged indicating that the U.S.
intended to reduce its budget deficit to 3% of GDP from its current
level of 12% eliciting sceptical laughter from students.

China’s position is similar to that of a bank or investor with poor
quality assets. China is trying to switch its reserves into real
assets – commodities or resource producers where foreign countries
will allow.

In the meantime, China continues to purchase more dollars and U.S.
Treasury bonds to preserve the value of existing holdings in a surreal
logic. On the other side, the U.S. continues to seek to preserve the
status of the dollar as the sole reserve currency in order to enable
the Treasury to finance America’s budget and trade deficit.

Every lender knows Keynes’ famous observation: “If I owe you a pound,
I have a problem; but if I owe you a million, the problem is yours.”
Almost 40 years ago, John Connally, then the U.S. Treasury Secretary,
accurately identified China’s problem: “it may be our currency, but
it’s your problem.”

The Chinese used to refer to dollars affectionately as mei jin,
literally “American gold”. Chinese investments may not be the real
thing – merely iron pyrite, fool’s gold.

China’s position is like that of an unfortunate who has stepped on a
type of anti-personnel mine, known as a ‘bounding mine’. The mine does
not explode when you step on it. Instead, it trips when you step off
it as a small charge propels the body of the mine into the air where
the explosive charge bursts and sprays fragmentation at a height of
around 3 to 4 feet (1 to 1.3 metres). China, in building and investing
its massive foreign exchange reserves in dollars and U.S. Treasury
Bonds, has stepped onto the mine and it cannot step off without
serious damage!

© 2010 Satyajit Das

Satyajit Das is a risk consultant and author of Traders, Guns & Money:
Knowns and Unknowns in the Dazzling World of Derivatives (2006, FT-
Prentice Hall).

China Syndrome Curtain Part 3 - A Future That Was?

by Satyajit Das

The Future That Was

China’s economic model is reminiscent of 17th century mercantilist
policies. Thomas Mun, a Director of the East India Company, in
England’s Treasure by Foreign Trade (1664), wrote that the purpose of
trade was to export more than you imported. At the same time, a
country should amass foreign ‘Treasure’ that would be the basis of
acquiring foreign colonies to allow control of essential natural
resources. The strategy required reducing domestic consumption and
imports and export of goods manufactured with imported foreign raw
materials. China’s strategy coincides almost entirely with Mun’s

China’s mercantilist strategies have important implications for other
developing countries. Chinese investment in and trade with Latin
America and Africa is concentrated on securing access to resources
forcing these nations to specialise in commodities. This reversion to
a 19th century trend may not be compatible with Latin American and
African long term development and stability.

The Chinese economic model may be unsustainable. It relies on global
trade and investment (much of it export related), which together
contribute a high proportion of China’s GDP. This trade entails
importing foreign components that are then reassembled and then
exported. Domestic consumption has been kept low. Treasure has been
built up in the form of domestic savings and trade surpluses.

Recently, China announced that its $2 trillion treasure would be used
to make foreign acquisitions to secure exclusive access to raw
material. The problem is that China’s treasure is already invested in
assets of dubious value and limited liquidity to finance global

Chinese Premier Wen Jiabao warned that the Chinese growth was becoming
increasingly “unstable, unbalanced, uncoordinated and ultimately
unsustainable”. That was two years ago! Currently, China may be
aggravating the problems by massive liquidity-driven stimulus to
perpetuate a failed strategy. Speaking at the meeting of the World
Economic Forum in Dalian on 10 September 2009, the Chinese Premier Wen
Jiabao repeated his message from two years ago without signalling any
change in direction: “China’s economic rebound is unstable, unbalanced
and not yet solid. We cannot and will not change the direction of our
policies when the conditions aren’t appropriate.”

There is broad agreement that a key component of the GFC was the
problem of global capital imbalances. A central feature was debt-
funded consumption by the U.S. that allowed 5% of the global
population to constitute 25% of its GDP, 15% of consumption and 48% of
global current account deficit. Japan, China, Germany and the other
savers funded the consumption.

Any lasting solution to the GFC requires this imbalance to be dealt
with. The glib solution requires the U.S. to save more and consume
less and the savers to save less and consume more. The problems in
implementing the solution are considerable. Timothy Geithner’s recent
discussion with Chinese officials, to assure his hosts of the safety
of their investments in dollars and U.S. Treasury Bonds, reveals the

On the one hand, America needs the Chinese to continue and increase
their purchase of U.S. Government debt to finance its fiscal stimulus
and bailouts. On the other hand, America needs China to cut the size
of its current account surplus, boost government spending, encourage
personal consumption and reduce savings. All this should also occur
ideally without any major decline in the value of the dollar or U.S.
Treasury bonds or the need for China to liberalise it currency and
allow internationalisation of the Renminbi.

A cursory look at the respective economies also highlights the
magnitude of the task. Consumption’s contribution to GDP in the U.S.
is 71% while in China it is 37%. Given that the GDP of China is around
$4-5 trillion versus $15 trillion for the U.S. and average income in
China is around 10-15% of U.S. earnings, the difficulty of using
Chinese consumption to drive the global economy becomes apparent.

During the last quarter of century, Chinese savings have risen and
exports have been the engine for growth. Given that a significant
portion of exports is driven ultimately by American and European
buyers, lower global growth and declining consumption creates
significant challenges for China.

Dealing with the global imbalance has not been a high priority in the
various summits global leaders have shuttled to and from.

In March 2009 in advance of schedule G-20 meeting, the Chinese central
bank proposed replacing the US dollar as the international reserve
currency with a new global system controlled by the International
Monetary Fund. In an essay posted on the Peoples’ Bank of China’s
website, Zhou Xiaochuan, the central bank’s governor, argued that
creating a reserve currency “that is disconnected from individual
nations and is able to remain stable in the long run, thus removing
the inherent deficiencies caused by using credit-based national
currencies”. Mr. Zhou wrote: “The outbreak of the [current] crisis and
its slipover to the entire world reflected the inherent
vulnerabilities and systemic risks in the existing international
monetary system.”

The US predictably dismissed the proposal. The Wall Street Journal
argued that: “For all its faults, the dollar is attractive as a
reserve currency because it is the common language of global finance
and trade. In other words, its appeal is proportionate to how many
other market players use it. For decades, the dollar has been a
convenient medium of exchange for everyone from a central bank seeking
to buy US Treasury bonds to a business exporting commodities from
Latin America to Asia.” The unstated reason was the loss of the
ability to finance itself in its own currency would significantly
disadvantage the US.

In July 2009, at the G8 Summit in the earthquake damaged town of
L’Aquila in Italy, Dai Bingguo, Chinese state councillor, was again
openly critical of the dominant role of the U.S. dollar as a global
reserve currency: “We should have a better system for reserve currency
issuance and regulation, so that we can maintain relative stability of
major reserve currencies exchange rates and promote a diversified and
rational international reserve currency system,”

Western leaders expressed concerns about even raising the issue
fearing that discussion of long-term currency issues could undermine
the nascent recovery in markets and economies. Gordon Brown, Britain’s
prime minister, spoke on behalf of the West: “We don’t want to give
the impression that big change is around the corner and the present
arrangements will be destabilised.”

In September 2009, the Americans and Europeans proposed an effort to
tackle global economic imbalances at the G20 summit in Pittsburgh.
Against a background of rising trade tensions, China’s ambassador to
the U.S. Zhou Wenzhong expressed scepticism about the proposals,
seeking focus instead on avoiding protectionism.

Still heavily reliant on exports, China was wary of a global push on
imbalances that would focus of its large trade surplus (which reached
nearly 10 per cent of GDP in 2008). Zhou pointedly blamed the crisis
on “the lack of supervision and abuse of the openness of the market,
very risky levels of leverage and too much speculation.” He proposed
improving global financial supervision, strengthen bank capital and
create global early warning systems to identify threats but resisted
action to address the imbalance.

Ironically, recent modest improvements in the global economy
potentially risked increasing the same imbalances that were one of the
factors that caused the current financial crisis. China’s and the
world’s economic future requires resolving fundamental global
imbalances that lie at the heart of the GFC.

Turning Japanese

China’s problems, to a degree, mirror earlier problems of Japan, its
neighbour and competitor for global influence.

Japan’s export driven model successfully generated strong growth of
10% average in the 1960s, 5% in the 1970s and 4% in the 1980s. This
growth was driven by a number of factors, including an artificially
low exchange Yen rate.

On 22 September 1985, Japan, the U.S., the U. K., Germany and France
signed the Plaza Accord agreeing to depreciate the dollar in relation
to the Japanese Yen and German Deutsche Mark by intervention in
currency markets. The Accord had limited success in reducing the U.S.
trade deficit or helping the American economy out of recession.

The Plaza Accord signalled Japan’s emergence as an important
participant in the international monetary system and global economy.
The effects on the Japanese economy were disastrous.

The stronger Yen triggered a recession in Japan’s export-dependent
economy. In an effort to restart the economy, Japan pursued
expansionary monetary policies that led to the Japanese asset price
bubble that collapsed in 1989. Economic growth fell sharply and Japan
entered an extended period of lower growth and recession, generally
referred to as ‘The Lost Decade’.

In the 1990s, Japan ran massive budget deficits to finance large
public works programs in a largely unsuccessful attempt to stimulate
growth to end the economy’s stagnation. Only structural reforms in the
late 1990’s and early 2000’s restored modest rates of growth. Japan’s
public debt is now approaching 200% of Japan’s GDP.

Significant shifts in economic strategy are now necessary. Chinese
President Hu Jintao recently noted: “From a long-term perspective, it
is necessary to change those models of economic growth that are not
sustainable and to address the underlying problems in member

China can try to continue its existing economic strategy, which looks
increasingly difficult. Changing its economic model is also difficult
if it means a slower rate of growth. China’s challenge will be to
learn from and avoid the problems and fate of Japan.

History and cultural issues compound China’s dilemma. The 1842 Treaty
of Nanking entered into at the end of the first Opium War awarded
Britain war reparations, eliminated the Chinese Hong monopoly, set
Chinese exports and imports at a low rate, provided British access to
several Chinese ports and transferred Hong Kong to the English. The
humiliation of the Treaty is deeply etched into China’s dealing with
the West.

China should have heeded the warning of Kang His, emperor of China, on
the British presence at Canton in 1717: “There is cause for
apprehension lest in centuries or millennia to come China may be
endangered by collision with the nations of the West.”

The trade-off between economic and political liberalisation may also
be problematic. As Fang Li, a renowned astro-physicist often called
China’s Andrei Sakharov, remarks in dissident author Ma Jian’s novel
about China “Beijing Coma”: “Without a democratic political system in
place, [China’s] economy will eventually flounder. The people’s wealth
will be eaten up by the corrupt institutions of this one party state.”

There is an apocryphal story about a visiting world leader drawing
back the current of his hotel room to be stunned by the futuristic
skyline of Shanghai’s Pudong Financial District. “How long has this
being going on?” He asked. Today, the question might be: “How long can
this go on?”

© 2010 Satyajit Das

Satyajit Das is a risk consultant and author of Traders, Guns & Money:
Knowns and Unknowns in the Dazzling World of Derivatives (2006, FT-
Prentice Hall).


...and I am Sid Harth
2010-02-04 13:50:39 UTC
Toyota May Recall New Prius After Japan Orders Probe Into Brake

By Makiko Kitamura and Tetsuya Komatsu

Feb. 4 (Bloomberg) -- Toyota Motor Corp. may recall its new Prius
hybrid model in Japan after the government ordered the company to
investigate brake-related complaints on the car.

“The possibility of a recall is not zero,” spokesman Takanori Yokoi in
Tokyo said today by phone. The company is considering measures that
may include a recall, he said.

A recall of the world’s best-selling hybrid car would bring the crisis
to Toyota’s home market and tarnish the reputation of what President
Akio Toyoda has called the company’s flagship model. The carmaker is
already reeling from recalls approaching 8 million units worldwide due
to cases of unintended acceleration.

“This could be fatal for Toyota,” said Yasuhiro Matsumoto, a Shinsei
Securities Co. analyst in Tokyo. “Toyota’s got a global problem and
it’s not a problem of local suppliers.”

Toyota is examining 77 reports in Japan and eight in North America,
Yokoi said. Driver complaints include brake failure or weaker braking
while driving on bumpy roads, according to a list posted on the Web
site of Japan’s Transport Ministry.

Toyota shares fell as much as 4.7 percent to 3,240 yen in Tokyo, to
the lowest level in almost 11 months.

U.S. Agency

The U.S. National Highway Traffic Safety Administration also has
received a number of complaints about a possible defect, the agency
said yesterday.

“There is a small computer inside the brake and Toyota is making
adjustments and improvements,” Economy Minister Masayuki Naoshima said
yesterday after meeting with Toyota Executive Vice President Shinichi
Sasaki, according to comments broadcast on NHK. “For cars currently
being built at the factory, measures have already been taken.”

Toyota was ordered by Japan’s government to investigate brake-related
problems in August, Shunsuke Miyaoka, an official in the
Transportation Ministry’s recall division, said yesterday. The public
scrutiny in Japan may undermine the company’s efforts to reassure
consumers amid a global recall on other models involving almost 8
million vehicles globally.

“Our dealers have received a lot more complaints, but we are pursuing
the root cause and we will be considering what improvement measures we
will take for our customers,” Sasaki said yesterday in remarks
broadcast on the Fuji News Network.

Toyota’s third-generation Prius, introduced last year, is made in
Japan and was the nation’s top-selling model last year. It is not
among vehicles whose sales were halted in the U.S.

Sasaki also met with Japan’s Transport Minister Seiji Maehara
yesterday, Yokoi said.

Outside Japan

Outside of Japan, the company is recalling at least 7.8 million
vehicles. The carmaker is fixing accelerator pedals on models
including the top-selling Camry and Corolla models.

That recall covers 2.57 million vehicles in the U.S. and Canada. It
also includes 1.71 million in Europe, 80,000 in China, and 180,000 in
Latin America, Africa and the Middle East, Toyota’s Sasaki told
reporters earlier this week.

Separately, Toyota is recalling 5.35 million vehicles in the U.S.,
because of floor mats that could jam pedals. Covered vehicles include
model years 2004-2009 Prius hybrid, 2007-2010 Lexus ES350, 2006-2010
Lexus IS250 and 2006-2010 Lexus IS350. Toyota has said 2.1 million
cars are covered by both safety actions.

To contact the reporter on this story: Makiko Kitamura in Tokyo at
***@bloomberg.net; Tetsuya Komatsu in Tokyo at


...and I am Sid Harth
2010-02-04 13:58:23 UTC
Vietnam Rapid Economic Recovery Attract More Japanese Firms: JETRO
Posted by VBN on Feb 4th, 2010

Vietnam’s economy on the fast recovery is attracting more Japanese
firms, according to an official from the Japan External Trade
Organization (JETRO).

Managing Director of the JETRO Office in Hanoi Yoshida Sakae said,
since mid-2009, his office has received an increasing number of
Japanese companies’ applications for consultancy for new projects in
Japanese businesses have always considered Vietnam “a firm
manufacturing base and consumption market in the long run,” he added.

The official noted that, powered by Vietnam’s economic recovery,
Japanese companies operating in the country have recovered over 80% of
their production output and many of them are recruiting more laborers.
Sakae said the implementation of the Vietnam-Japan Joint Initiative
would also help increase the number of Japanese projects in the
Southeast Asian nation.

He, however, suggested that Vietnam should continue improving the
quality of human resources and simplifying administrative reforms to
lure more foreign investors.

As of mid-December last year, Japanese companies invested in 1,160
projects worth US$17.81 billion in Vietnam, ranking the fourth among
biggest foreign investors in the country. (vietnamplus)


Addressing Barriers for FDI Attraction

Posted by VBN on Feb 4th, 2010

The United Nations said the global investment is estimated to reach US
$1.4 trillion in 2010 and US$1.8 trillion in 2011. Of the sum, 4 %
will go to developing countries and this is the opportunity for
Vietnam to attract FDI in the coming year.

The Foreign Investment Agency (FIA) under the Ministry of Planning and
Investment, said: Vietnam will remain a magnet to FDI capital in 2010.
However, to maximise the effectiveness of this investment capital
source, the country needs to overcome the weakness of infrastructure,
improve the legal framework and create favourable conditions for
registered FDI to be disbursed.

In 2010, Vietnam is expected to attract US$22-25 billion of registered
FDI capital. The disbursed capital is estimated to reach US$11
billion, up about 10 % from 2009. In fact, weak infrastructure put a
brake on FDI capital disbursement. In 2008, registered FDI was US$71.7
billion but the actual disbursement was only US$11.5 billion. In 2009,
the values were US$21.48 billion and US$10 billion in 2009,

The low %age of FDI capital disbursement distressed many foreign
investors. In 2009, the number of countries investing in Vietnam
plunged. Only four out of 89 countries and territories continued with
their new investment projects in Vietnam in 2009.

According to Mr Dang Xuan Quang, Deputy Director of Investment
Department under the Ministry of Planning and Investment, the
infrastructure systems like electricity, water, traffic, seaport and
other facilities are still very weak. Site clearance still encounters
many difficulties. Although Vietnam has joined the WTO for more than 2
years, it still lacks instructions on conditional investment sector.
According to the law, there are some 70 conditional investment areas
for which there are no instructions.

In fact, in the past time, Vietnam has adopted a number of solutions
to improve the investment environment. Most recently, in the report
submitted to the Prime Minister, the Foreign Investment Agency
proposed eight measures to attract FDI capital, focusing on law and
policy; planning; infrastructure improvement; human resources
management , investment promotion ; with an aim to draw the new wave
of investment when the climate is over.

Creating a healthy business environment and promoting social
advantages are very important for the development of the economy. In
recent years, Vietnam has successfully carried out trade and
investment promotion activities. Economic expert Le Dang Doanh said:
“In 2010, the world economy recovers, Vietnam can expect an increase
in FDI. If Vietnam wants to attract more FDI, it needs to improve the
infrastructure and the investment environment. If the infrastructure
is poor, seaports are incapable, traffic congestions are frequent and
electricity supply is instable, it will be very difficult to attract

One of the areas has not attracted much FDI capital is agriculture.
According to the statistics released by the Foreign Investment Agency,
over the past 20 years of enacting FDI attraction policies, the number
of FDI projects in agriculture, forestry and fisheries is very small.
In particular, in 2009, agriculture accounted for less than 1 % of FDI
value injected into Vietnam.

Vietnam is an agricultural country but the investment capital for this
sector is the lowest; thus failing to reflect the potential of this
sector. The main reason is, according to Dang Xuan Quang, the
Vietnamese agricultural production is still small and scattered.
Besides, unguaranteed seedling and techniques also keep foreign
investors away from the agricultural sector. According to the Foreign
Investment Agency, out of 839 FDI projects with registered capital of
US$21.48 billion in 2009, only 16 investment projects with a
registered capital of US$84.9 million were involved in agriculture,
forestry and fisheries.

Mr Do Duc Dinh, Director of Vietnam Socioeconomic Research Centre,
said: The agricultural sector of Vietnam has a lot of potential. To
attract foreign capital, Vietnam needs to have the land fund large
enough to implement key agricultural and hi-tech projects, create
favourable conditions in policy and tax for agricultural investors.


Confidence returns among investors: VAM chairman

Posted by VBN on Feb 4th, 2010

The executive chairman of Vietnam Asset Management Ltd. (VAM) said
investors’ confidence has swung back in tandem with strong hopes for
Vietnam’s higher economic growth and recovery of the global economy
this year.

John Lyn shared the point with the Daily after he made a presentation
on Vietnam’s outlook for 2010 at a business luncheon, which was
organized by the Malaysian Business Chamber (MBC) in Vietnam in HCMC
on Tuesday.

Lyn underlined the reality of more liquidity in the market despite
concern over inflation in Vietnam and elsewhere in the world. “People
are earning more money and say where they are investing right now.”

Confidence has come back after a period of time when investors had
experienced years of greed and fears with the world’s unexpected
economic growth and then downturn over the past years.

Lyn said most investors psychologically wanted to do better in making
money. “Sometimes, there’s greed that you want to double your money
quickly and at the same time there’s fear because you can lose you
your money too.

“I mean if you want higher returns, you take higher risks,” Lyn said.
He pointed out speculation on the stock and property markets as a
typical case of greed, but stressed the equity market was now okay
while the property market has recovered slightly.

In all, Lyn said the world’s improving economy backed the return of
investors’ confidence in Vietnam and there was more money put in the
market. “Confidence comes back because the whole world’s economy is

He noted companies would expand business and have more money to invest
in factories when they got more orders from the United States if this
world’s biggest economy improved.

What Lyn said was supported by the Foreign Investment Agency’s figures
that Vietnam attracted combined foreign direct investment capital of US
$318 million in the first month of 2010, a whopping increase of 71.9%

Talking about Vietnam’s prospects in 2010 and beyond, Lyn predicted a
good future for the industries linked to consumer goods, agriculture,
food and durable goods.

Shimi Sumathi Muthu Kunju, president of the Malaysian Business Chamber
(MBC) in Vietnam, said what Lyn talked about the investment
opportunities was true. She said her 18 years of living and doing
business in Vietnam showed that there was plenty of promising
industries for foreign companies to invest in.

Kunju called for investors to look for the opportunities beyond
infrastructure development, in the other areas including food
processing. “Food is so important to Vietnam and the world too… Areas
are still abundant for you to invest and produce things.”

Kunju told the Daily that she was confident in better growth of
Vietnam and had always asked Malaysian investors and others she met to
come in this market to stay long rather than wanting to make fast

“I keep telling people if you want to invest or you want to get to
know what the Vietnamese market is, come in for a long term. That’s
always my advice and I still keep saying the same,” Kunju said.

Lyn told the business luncheon that Vietnam was a true emerging
market. He depicted a general good picture of Vietnam’s economy coming
back to high growth of between 6% and 7% this year, from the 5.32%
last year, and said that most of the world’s economies in Asia and
elsewhere were improving.

“We cannot look at Vietnam in isolation. Although there’s a very
strong demand here, it is still linked internationally,” Lyn said.



Vietnam Rapid Economic Recovery Attract More Japanese Firms: JETRO
Posted by VBN on Feb 4th, 2010

Vietnam’s economy on the fast recovery is attracting more Japanese
firms, according to an official from the Japan External Trade
Organization (JETRO).

Managing Director of the JETRO Office in Hanoi Yoshida Sakae said,
since mid-2009, his office has received an increasing number of
Japanese companies’ applications for consultancy for new projects in
Japanese businesses have always considered Vietnam “a firm
manufacturing base and consumption market in the long run,” he added.

The official noted that, powered by Vietnam’s economic recovery,
Japanese companies operating in the country have recovered over 80% of
their production output and many of them are recruiting more laborers.
Sakae said the implementation of the Vietnam-Japan Joint Initiative
would also help increase the number of Japanese projects in the
Southeast Asian nation.

He, however, suggested that Vietnam should continue improving the
quality of human resources and simplifying administrative reforms to
lure more foreign investors.

As of mid-December last year, Japanese companies invested in 1,160
projects worth US$17.81 billion in Vietnam, ranking the fourth among
biggest foreign investors in the country. (vietnamplus)


...and I am Sid Harth
2010-02-04 14:08:09 UTC
Will Japan’s new economic growth strategy deliver?
February 4th, 2010

Author: Aurelia George Mulgan, ***@ADFA

On 30th December last year, the Hatoyama government launched its ‘New
Growth Strategy’ (Basic Policies). It was produced by the National
Policy Unit, or NPU (Kokka Senryaku Shitsu) as an interim strategy
with the final version to be compiled by June this year.

Prime Minister Hatoyama admitted in early December that the NPU was
‘dysfunctional’ because of a shortage of staff, but it nevertheless
produced the ‘New Growth Strategy’ in only two weeks. The NPU meeting
to decide on the strategy consisted of the prime minister, deputy
prime minister, chief cabinet secretary and all the government
ministers, as well as ‘team support’ from seven DPJ Lower House Diet
members. The former MIAC administrative vice-minister-turned deputy
chief cabinet secretary also participated.

Subtitled ‘Toward a Radiant Japan’, the 29-page document immediately
brings to mind former LDP Prime Minister Abe’s 2006 book entitled
Towards a Beautiful Country, and ex-LDP politician, Takemura
Masayoshi’s 1994 book, Japan: A Small but Shining Country.

The elevated prose does not stop at the subtitle. The strategy is
replete with the international language of strategic planning
fashionable amongst governments, which conveniently ignores the day-to-
day economic realities and hard choices that have to be made in actual
decision-making. This is despite the strategy’s espousal of the trendy
‘Plan-Do-Check-Action’ (PDCA) cycle to evaluate and verify the extent
to which its policy goals have been attained. The main function of
such strategic ‘management speak’ appears to be as political rhetoric,
not as an actual guide to action. The major growth targets the
strategy incorporates are so distant (over 10 years or by 2020) that
the DPJ will be absolved from any accountability in not achieving

The document represents a more detailed elaboration of the DPJ’s
stated policy of demand-led growth, which it pretentiously (and not
originally) describes as a ‘third way’, as opposed to the LDP’s ‘first
way’ (dependence on public works) and ‘second way’ (market
fundamentalism – a reference to Prime Minister Koizumi’s structural

The new strategy promises over ¥100 trillion in demand-led growth in
three key sectors – environment, health and tourism – and the creation
of 4.76 million extra jobs. It anticipates an increase in the average
annual economic growth rate to more than 3 per cent in nominal terms
(and more than 2 per cent in real terms) over the next 10 years until
2020. An editorial in the Nikkei, however, notes that ‘Japan’s
potential economic growth capacity has fallen to just around 0.5 per
cent a year. To make 2 per cent real economic growth a reality, more
than just the creation of new demand must be accomplished – industry
must also be transformed to spur competition and boost productivity’.
This means significant deregulation in the tourism (airlines), health
(medical care) and energy (electric power) sectors.

A major disconnect in the document lies between ends and means: the
2020 ‘goals’ and the ‘measures’ outlined to achieve them. For example,
the strategy talks about ‘Opening New Frontiers’ in ‘Asia and in
Tourism and Local Revitalisation’. The ‘Asia’ targets are:

- the creation of an APEC FTAAP (Free Trade Area of the Asia-Pacific)
- a doubling of the flow of people, goods and money
- a doubling of incomes in Asia
The principal means (i.e. measures) to achieve these goals are:

- the establishment of international safety standards together with
Asian countries
- building infrastructure in Asia in areas like rail transport, water
supply and energy
- making Haneda Airport a 24-hr international hub facility
- carrying out the strategic development of ports

It would take a giant leap of faith to believe that these proposed
measures could actually deliver on the targeted goals.

Other goals are simply unrealistic.

Increasing food self-sufficiency to 50 per cent on a calorie basis
(from the present level of 39 per cent) under the broad heading of
‘Tourism and Local Revitalisation’ is an objective that has proved
elusive for two decades despite continuing agricultural subsidies and
protection. The present target is 45 per cent by 2015.

Achieving the 50 per cent rate would need, amongst other things, a
complete reversal of several current trends: declining rice
consumption, agricultural productivity, area of cultivated land and
agricultural workforce. The 50 per cent food self-sufficiency rate
also sits uneasily alongside the APEC Free Trade goal, given the
increased levels of farm support and protection it would need for the
goal to be achieved. In practice the free trade goal is far enough off
for it not to place any immediate pressures on the Hatoyama government
for agricultural trade liberalisation.

The New Growth Strategy also smacks of LDP-style pork-barrelling,
namely the statement that ‘we will identify public infrastructure
including airports and ports that can be Japanese dynamos open to the
world and will invest intensively in them’. As economic journalist
Machida Tetsu points out, there are already 100 airports in Japan,
many of which previous LDP governments wasted money on constructing
and which are now in the red. In his view, the growth strategy is
redolent of the kind of easy pork barrel spending that will inevitably
increase taxpayer and corporate tax burdens. The strategy also refers
to ‘Revitalising forests and the forestry industry through road
network improvement, etc.’. Building forest roads was a favoured area
of public works construction under the LDP as was port development.

Machida also points out that the strategy takes no account of and has
not been coordinated with the independently produced growth strategies
being drawn up in the Ministry of Economy Trade (METI) and Industry;
Ministry of Internal Affairs and Communications (MIAC) and Ministry of
Land, Infrastructure, Transport and Tourism (MLIT). MIAC’s ‘Haraguchi
Vision’, for example, came out prior to the NPU document and is a far
superior strategy in terms of concrete implementation plans and
timetables. Machida concludes that the government’s strategy reflects
both Hatoyama’s lack of leadership and coordination ability.

To me, it brings to mind a comment made by Australia’s leader of the
opposition – Tony Abbott – about Prime Minister Rudd’s government: ‘it
over-promises and under-delivers’. The Hatoyama administration would
need to take immediate, concrete steps to implement its strategic
goals to make them credible.


4th February 20102010:

The Best of Times or the Worst?
posted in Robert Kiyosaki |

Is the recession over? Are happy days really here again? Paraphrasing
Dickens, my answer is, “For people who are prepared, 2010 will be the
best of times. For many, 2010 will be the worst of times.”

The following are a few of my predictions and reasons behind them…

Prediction #1: The real estate market will crash again.

Pictured above is a graph of mortgage resets. In simple terms, a
mortgage reset is when a mortgage comes due. In normal times,
refinancing was a simple process…but these are not normal times. Some
points of interest:

1. In September 2008, the mortgage resets hit $35 billion that
month. That was the exact time the financial crisis hit. When people
could not afford to refinance and began to default, the stock market
and banking industry crashed.

2. The eye of the storm: In the summer of 2009 mortgage resets were
low — around $15 billion a month. This is when optimists began to see
“green shoots” in the economy. The green shoots were the eye of the
storm. In 2010, as I see it, the second half of the financial
hurricane hits. By late 2011, the resets climb to nearly $40 billion a
month. The storm will not end until 2012.

3. The first half of the storm was primarily due to subprime
defaults. The second half of the storm will hit more solid homeowners.
The question is, can they weather the storm? Will Mac Mansion
foreclosures be next?

4. In America, there are over 40 million people who own more than two
homes. Can they afford to carry and refinance two or more mortgages?

5. Since home values have gone down, many homeowners will find they
owe more than their home(s) are worth. Will the bank be kind to them?

6. The time for using your home as an ATM is over. This is crushing
retailers and retail real estate. Shopping centers are in trouble.
Strip malls are empyting as shopkeepers close — permanently. This will
lead to the crash of the office, warehouse, and other commercial

My prediction: Obviously these are the best of times if you are a
buyer of distressed properties and the worst of times if you are a

Other things I am watching for in 2010:

1. Will China crash? America’s crash has hit China in the gut. The
Chinese are laying off millions of workers. Only massive government
bailout is keeping the economy afloat. The Chinese boom will
eventually go bust…but will it bust in 2010? Only time will tell.

2. When America stopped importing from China, China stopped importing
from the rest of the world. This affects Asian countries as well as
Australia, Brazil, and other suppliers of raw materials.

3. Fed Chairman Ben Bernanke is replacing toxic debt with new debt.
By protecting his friends in the mega-banks, he is turning the U.S.
into a zombie nation. The recession is over, but America is entering
an era we will be calling The New Depression, a period when the rich
become extremely rich but everyone else becomes poorer. Taxes will
kill anyone working for a paycheck.

4. The U.S. dollar will grow weaker. If the dollar strengthens, we
will have more unemployment because our goods become too expensive and
we will export less.

5. The deficit will increase. The bailouts for the rich are killing
the economy.

6. Israel may attack Iran. Israel will not tolerate Iran developing
nuclear power, even if Iran claims it is for peaceful purposes. If
there is an attack, oil prices will go through the roof.

7. Dead cat bounce. The current stock market rally will probably turn
into a dead cat bounce. If the Dow drops below 6500, 5,000 may be the
next stop.

The Best of Times

I know I sound painfully pessimistic. I know my predictions are bad
news for most people. Yet, for others, bad news is good news.

The following are the bright spots for people who are prepared.

Prediction #2: Gold, silver, and oil will continue to be safe
investments in 2010.

The following recaps the year-end prices of gold and silver:

2000 $ 273 $ 4.57
2001 $ 279 $ 4.57
2002 $ 348 $
2003 $ 416 $ 5.92
2004 $ 438 $ 6.79
2005 $ 518 $ 8.80
2006 $ 638 $12.78
2007 $ 838 $14.77
2008 $ 882 $11.33
2009 $1100 (approx) $17.50 (approx)

In 2009, the Dow rose approximately 18%. Gold rose approximately 25%.
Silver rose approximately 50%.

By the end of 2010, I predict gold will be at $1,775 an ounce, silver
at $24 an ounce, and oil at $85 a barrel. If Israel attacks Iran,
these predictions will be blown away.

Prediction #3: The next market to crash will be commercial real

Cash flow positive real estate will be even more affordable. 2010
through 2012 will be a real estate buffet for those with cash and
access to credit.

My Personal Investments

As I stated in 2002, “You have up to the year 2010 to become

The following are things I have done to prepare myself:

1. I started The Rich Dad Company in 1997 because I saw this crisis
coming. For the past three years, I have tightened internal controls
and prepared for global expansion via a franchise distribution system.
The company is debt free with strong income.

2. 2009 was my best real estate year to date. With the Fed handing
out large sums of money and pension funds looking for projects to
invest in, my real estate holding company has acquired tens of
millions of dollars for acquisition of bankrupt properties and
development projects. Development projects are affordable again, as
labor, material, and land costs are low and the government is generous
with 40-year, low interest, non-recourse loans. People still need a
roof over their heads.

3. My oil development projects have done well. We drilled three wells
and hit oil on two of them. Government tax breaks for oil exploration
remain generous, even for dry holes. Even if the economy crashes, we
will still burn oil.

4. I took 90% of my money out of the stock market in 2007. If the Fed
raises interest rates, the stock market and real estate market will

5. I loaded up on gold and silver between 1996 and 2004.

6. With the Fed printing trillions of dollars, cash is trash and
savers are losers. As soon as I have excess cash I invest in oil, real
estate, gold, and silver.

7. In a zero-interest-rate environment, debtors are winners…but only
if you have good debt…debt that’s paid by tenants.

In Conclusion

A few years ago, Japan was ‘King of the Financial World.’ Japan’s
economy was the world’s second largest economy — till the bubble burst
in 1990. Japan’s budget went into deficit in 1993. Since then, the
deficit has averaged 5.4 percent of GDP per year. As a result,
Japanese government debt is now 200 percentof GDP today. The U.S. is
following Japan, and China will follow the U.S.

We will not see much inflation because the Fed is not able to print
enough money to replace the losses from the burst of the credit
bubble. Also, factories have too much excess capacity due to lack of
demand, which means prices for consumer goods will remain low and
unemployment will remain high. Instead, we will see inflation in gold,
silver, oil, some stocks, some real estate sectors, and food — not
because values are going up but because the dollar is going down.

Welcome to The New Depression. And may these times be the best of
times for you.


Just who DO we trust?
February 3, 2010, 5:34PM

A hallmark in my world of anti-accomplishment, I finally got around to
seeing "Rising Sun," an early '90s crime thriller. The only reason I
give a damn is that long ago I shared a saloon table with a gal who'd
just seen it on the big screen and came away absolutely convinced of
its insight and canniness not only toward our economic future, but
that future's physical face.

With assured arrogance, and trendy anti-American disdain, she detailed
how, in a tomorrow not far away, we'd all be turning Japanese.
(Apologies to the The Vapors.)

I know movies are impressive - big, colorful, engineered to take us by
surprise and lead us to unexpected places. But her prattle was
ridiculous. It was as if "Rising Sun" - a movie, after all - had
allowed her a secret aperture to the coming paradigm, one overseen by
insistant Lords of Commerce hailing from shores more Eastern. Finally
seeing the movie, free on the Fox Movie Channel last night, I
understand the grounds for her delusion.

This movie has two things going for it: Wesley Snipes, vital and
charismatic before his career went all vampire-zombie, and Sean
Connery, who's always a welcome presence. Connery's cop character is
evidently Japan's roving ambassador of ass-kissing adoration.
Infuriatingly smug and omniscient, he's there not so much to
investigate the central murder as tell us all, through Snipes'
chronically fascinated everyman, just how wildly superior are Japanese
culture and business practices compared to hick-town U.S.A. They will
RULE THE WORLD in Toyotas, listening to Sony's, wearing expensive
Kenzo cologne. Hmm.

This extreme, in-our-face Nipponophilia obviously sourced from the
late Michael Crichton, who helped adapt the screenplay from his novel;
guess some Tokyo visits impressed him or maybe he was a big Atari fan.
Now... Crichton was a doctor and attorney. He made movies. He wrote
bestseller after bestseller - not one of them above the quality of
potboiler, but moneymakers all. Unless you're a mountain-climbing
Nobel-Prize winner and potential Antichrist married to a supermodel
who herself cured cancer, he was a daunting overachiever. But psychic?
Seer? Prophet of the socioeconomic future? Well... in that capacity,
he flopped. Badly. "Rising Sun" was released in 1993, the year Japan's
economy plunged into a 10-year economic tank from which it still
hasn't fully recovered. In that time, South Korea, China, even Taiwan
have emerged as the Asian powerhouses - and, in the region as well as
globally, are stiff competition for the sons of heaven. So it goes.

(Lemme put on my movie-critic hat for a moment: Aside from all the
'future shock' nonsense, the murder mystery itself is pinned to vast,
vast conspiracies run by deep-pockets Japanese corporations on the
American west coast. Any plot inconsistencies or unbelievable
coincidences are written off to the nefarious puppet-masters
controlling everything but jackrabbit population. Mighty convenient
for lazy film-makers, but for viewers, it proves turgid, routine
stuff. "Rising Sun" is ridiculous and unbelievable; even the car
chases are lame.

Another cuh-reepy element: The main murder at issue takes place during
a session of conference-table fornication; it's all recorded on video
disk and during the course of the investigation, we're "treated" to it
about 37 times. Can we say "voyeuristic"? A little! That's probably no
accident, since Crichton wrote a low-budget independent about that
very subject in the early '70s called "Extreme Close-Up". It was a...
thing... with him... evidently. If it's not your own particular
fetish, you'll feel your skin begin to crawl. I've got some vomitous
quirks of my own, but my hide just about peeled off my musculature.)

The American movie industry invented the industry, and from Edison's
Blackhawk Studios in Jersey to today's enfant terribles, did and does
dominate cinema entertainment globally. As such, Hollywood is part of
the Great Noise, the American media machine. This conglomeration of
news, entertainment - even sports and commercials - has become our
cultural guidepost, especially in the last century, when film added
sensual enticement in the dark, and television washed into our homes.
It's not hard to consider it taking over our perceptions, if not our
lives. It's pervasive, inescapable. We depend on it. Maybe too much.

Today, the news end of this titanosaur is all abuzz with reports from
all our intelligence agencies - all of 'em - that an al Qaeda attack
is "certain" within six months. CERTAIN! Mice!

It was all over the radio as I hustled my robust li'l PT Cruiser - a
lame, plastic Wii paddle of a car affording only vicarious driving
capability - through late drunks and early drudges on the 101. OK! I'm
already scared shitless! What else can they throw at me? I'm almost
glad I wasn't home, sick in bed (should'a been), because I knew I'd be
spending most of the day with MSNBC and CNN and they'd be scouring
every nook and cranny of this report's porous (flaky?) surface,
endlessly cutting between talking head experts passionately arguing
that we're in this long, long war on terror forever. FOREVER! Mice!

It's all amorphous. Nobody knows when the attack will come or in what
form the lethal agent will be - gunman or radiological "dirty bomb".
In a way, it's reminiscent of those History Channel Nostradamus shows,
where at least someone interviewed will spout that he or she got a
mysterious email in early 2001 about tall buildings, airplanes and
terror but... uh... they don't have the message now 'cause they didn't
recognize it's significance. About then, I'm always jolted by the
screeching sirens of my oversensitzed BULLSHIT detectors.

But we can be absolutely sure this story will be exhaustively covered.
Unlike others. Early last week, after months of silence and so
deliberately ignored it may well have been Michelle Triola Marvin's
post-palimony career, the anthrax case surfaced again. In a very good,
very sobering little op ed in the Washington Post, Edward Jay Epstein
destroyed the key piece of evidence suposedly implicating Dr. Bruce
Ivins, convicted in death by the FBI as the killer who committed the
late-2001 biological attacks through the nation's mail system.

Silicon was used in the 1960s to weaponize anthrax. Through an
elaborate process, anthrax spores were coated with the substance to
prevent them from clinging together so as to create a lethal aerosol.
But since weaponization was banned by international treaties, research
anthrax no longer contains silicon, and the flask at Fort Detrick
contained none. Yet the anthrax grown from it had silicon, according
to the U.S. Armed Forces Institute of Pathology. This silicon
explained why, when the letters to Sens. Leahy and Daschle were
opened, the anthrax vaporized into an aerosol. If so, then somehow
silicon was added to the anthrax. But Ivins, no matter how weird he
may have been, had neither the set of skills nor the means to attach
silicon to anthrax spores.

The FBI, in the 18 months since Ivins committed suicide, has
maintained he was the only perp in the case, and that he was the only
one with access to the anthrax. This is significant because, now,
we're left with only one piece of evidence against Ivins - his own
suicide. But we must keep in mind that the put-upon man, fragile to
begin with, had been relentlessly hounded by the agency, that his
friends and family had been chipped away from him by lawmen who'd
apparently already convicted him of the crimes.

In other words: We got nothing. It's back to square-one.

Expectedly, this has caused nary a ripple in the media-at-large. The
news industry helped render a guilty verdict in absentia for this
public enemy. It has, in all those months since, rested its case.

The anthrax attacks, killing five people and coming but weeks after
9/11, seemed to confirm what was already current in the Bush
Administration and its media acolytes: That Saddam Hussein was behind
this outrage, as he helped Mohammed Atta with his infamies. The only
conclusion possible was that unless this madman of Iraq was stopped,
he'd soon add nuclear weapons to his chemical/biological arsenal...
and radioactive cumulous would boil up from our cities.

As we sadly learned after invading and occupying Iraq, it was all
hogwash. In a pathetic postscript to all this garbage, last week
Saddam's cousin and "dirty war" specialist, Ali Hassan al-Majid, known
to freedom-loving peoples as "Chemical Ali" was executed in Iraq in
what probably was a legalized lynching as repellantly ugly as that of
Saddam himself three years ago.

But this cannot be overemphasized: For the interests, public and
private, who wanted to invade Iraq and begin the neoconservative
template for across-the-board regime change of Muslim nations
throughout the Middle East, the anthrax attacks were godsend.

Over at Antiwar.com, Justin Raimondo has another relentlessly
overlooked morsel, this time a detail about the Christmas Day panty
bomber. Seems a witness said Abdul Farouk Abdulmutallab was
accompanied to the airport by a well-dressed older guy who helped get
Abdulmutallab on the plane, telling an airport attendant "we do this
all the time". The witness, Kurt Haskell, then was snubbed by
investigators and even told by MSNBC that his story was nothing more
than an urban legend. Then other witnesses came forward to confirm his
account, and ABC News now reports Haskell's story is verified, in a
backhanded way, by investigators.

It doesn't bug me that Haskell's story didn't stick at first with
lawmen - or so they said. I've given up getting straight word from our
security and intelligence apparatus; they gave up issuing explanations
when the Sheriff of Nottingham approach to law enforcement was
revived. What really bothers me is the media's behavior. There was a
time when reporters would smell blood in the water around something
like this, and be all over it. Now, with a media as kiss-ass and
mewlish to authority as the old Soviet-era Pravda - nothing. Daddy say
'drop', we drop.

You'd think magazines like Vanity Fair, or the New Yorker, would jump
on live-wire anomalies like this, or the Sibel Edmonds allegations
about Rep. Jan Schakowsky having a lesbian affair with a Turkish
secret agent - something that sounds straight from the plot of a '70s
drive-in movie. It's been a year and a half since Ivins' suicide.
And... nothing. Maybe all the questions about these muffled tales are
"urban legends". Will they be verified and revived in the future...
long after it's too late?

Just how useless is our media?

Maybe this all to soften us up. Maybe, soon, our 3-D, stereo media
will offer us a video-game reality, not real, but much more
satisfying. We won't have to avert our eyes at the starving and the
burned, for the forgotten and tormented. We'll believe them when they
tell us it's all just a movie. But like "Rising Sun", sometimes movies
let us down.

They're like... fiction, y'know.


Born in Japan, but ordered out

By Blaine Harden
Sunday, January 17, 2010; A20

TOKYO -- Fida Khan, a gangly 14-year-old, told the court that
immigration authorities should not deport him and his family merely
because his foreign-born parents lacked proper visas when they came to
Japan more than 20 years ago.

During the past two decades, his Pakistani father and Filipino mother
have held steady jobs, raised children, paid taxes and have never been
in trouble with the law.

"I have the right to do my best to become a person who can contribute
to this society," Fida told a Tokyo district court in Japanese, the
only language he speaks.

But the court ruled last year that Fida has no right to stay in the
country where he was born. Unless a higher court or the Minister of
Justice intervenes, a deportation order will soon split the Khan
family, sending the father, Waqar Hassan Khan, back to Pakistan, while
dispatching Fida and his sister Fatima, 7, to the Philippines with
their mother, Jennette.

Aggressive enforcement of Japanese immigration laws has increased in
recent years as the country's economy has floundered and the need for
cheap foreign labor has fallen.

Nationality in Japan is based on blood and parentage, not place of
birth. This island nation was closed to the outside world until the
1850s, when U.S. warships forced it to open up to trade. Wariness of
foreigners remains a potent political force, one that politicians dare
not ignore, especially when the economy is weak.

As a result, the number of illegal immigrants has been slashed, often
by deportation, from 300,000 in 1995 to just 130,000, a minuscule
number in comparison to other rich countries. The United States, whose
population is 2 1/2 times that of Japan's, has about 90 times as many
illegal immigrants (11.6 million).

Among highly developed countries, Japan also ranks near the bottom in
the percentage of legal foreign residents. Just 1.7 percent are
foreign or foreign-born, compared with about 12 percent in the United
States. Japan held a pivotal election last year and voters tossed out
a party that had ruled for nearly 50 years. But the winner, the
Democratic Party of Japan, has so far done nothing to alter
immigration policy.

That policy, in a country running low on working-age people, is
helping to push Japan off a demographic cliff. It already has fewer
children and more elderly as a percentage of its population than any
country in recorded history. If trends continue, the population of 127
million will shrink by a third in 50 years and by two-thirds in a
century. By 2060, Japan will have two retirees for every three workers
-- a ratio that will weaken and perhaps wreck pension and health-care

These dismal numbers upset Masaki Tsuchiya, who manages a Tokyo
welding company that for seven years has employed Waqar Khan.

"If Khan is deported, it will not be possible to find anyone like him,
as many Japanese workers have lost their hungriness," said Tsuchiya,
who has urged Japanese immigration officials to rescind the
deportation order for the Khan family. "When the Japanese population
is declining, I believe our society has to think more seriously about

At the Ministry of Justice, immigration officials say they are simply
carrying out rules politicians make. The rules, though, are not
particularly precise. They grant wide leeway to bureaucrats to use
their own discretion in deciding who stays and who gets deported. Last
year, immigration officials granted "special permits" to 8,500
undocumented foreigners, with about 65 percent of them going to those
who had married a Japanese citizen.

Exercising their discretion under the law, immigration authorities
last year offered Noriko Calderon, 13, the wrenching choice of living
with her parents or living in her homeland. The girl, who was born and
educated in the Tokyo suburbs, could stay in Japan, the government
ruled. But she had to say goodbye to her Filipino mother and father,
who were deported after living illegally in Japan for 16 years.
Following tearful goodbyes at a Tokyo airport, Noriko remained in
Japan with an aunt.

Japan's growing need for working-age immigrants has not gone unnoticed
by senior leaders in government and business. Slightly relaxed rules
have admitted skilled professionals and guest workers. The number of
legal foreign residents reached an all-time high of 2.2 million at the
end of 2008, with Chinese accounting for the largest group, followed
by Koreans, Brazilians (mostly of Japanese descent) and Filipinos.

Still, experts say these numbers are far too low to head off
significant economic contraction. A group of 80 politicians said last
year that the country needs 10 million immigrants by 2050. Japan's
largest business federation called for 15 million, saying: "We cannot
wait any longer to aggressively welcome necessary personnel."

Yet the treatment of foreign workers already in Japan is
unpredictable. The government opened service centers last year to help
foreign workers who lost their jobs to recession. For the first time,
it offered them free language training, along with classes on social
integration. As that program got underway, however, the government
began giving money -- about $12,000 for a family of four -- to foreign
workers, if they agreed to go home immediately and never come back to

The Khan family's troubles began two years, when a policeman nabbed
Waqar Khan on his way home from work. He was detained for nine months.
Police in Japan often stop foreign-looking people on the street and
ask for residency documents.

The letter of the law was clearly against Khan and his wife. He had
overstayed a 15-day tourist visa by 20 years. She came into the
country on a forged passport.

But they have refused to sign deportation documents, arguing that
although their papers are bad, their behavior as foreigners has been
exemplary. Under Japanese law, foreigners are eligible to become
naturalized citizens if they have lived in the country for more than
five years, have good behavior and are self-sufficient.

The Khans also argue that their children, who regard themselves as
Japanese, are assets for Japan. "It is a bit weird that the country
needs children, but it is saying to us, go away," Khan said.

The family's lawyer, Gen'ichi Yamaguchi, has tried -- and so far
failed -- to convince immigration officials and judges that the Khans
are just the sort of hardworking, Japanese-speaking immigrants that
the country should embrace for the sake of its own future.

"During the bubble years, the number of illegal workers increased a
lot and the police looked the other way," Yamaguchi said. "Japan has
always looked at immigrants as cheap but disposable labor."

An appeals court is scheduled to rule on the Khan case in the first
week of February.

Special correspondent Akiko Yamamoto contributed to this report.



...and I am Sid Harth
2010-02-04 14:11:18 UTC
Booming Chinese economy snaps at Japan's heels DANIEL ROOK
January 21, 2010

China appears to be on the brink of overtaking beleaguered Japan as
the world's second-biggest economy after another blistering
performance in 2009, analysts said Thursday.

Asia's two biggest economies look to have ended 2009 in a tight race
but China, which grew 8.7 percent last year, is soon expected to
unseat its neighbour from the position it has held for more than 40

"It may have already overtaken Japan in 2009 and, if not, is likely to
do so this year," said Brian Jackson, a senior strategist at Royal
Bank of Canada in Hong Kong.

China on Thursday reported nominal -- unadjusted for inflation --
gross domestic product (GDP) for 2009 of 33.5 trillion yuan, or 4.9
trillion US dollars at today's exchange rates.

Japan posted nominal GDP of about 505.1 trillion yen, or 5.5 trillion
US dollars, in 2008 and its economy is expected to have shrunk by
roughly six percent last year, reducing the figure to about 5.2
trillion US dollars.

"If you look at nominal figures, the Japanese and Chinese economies
are now very close to each other in size," said Yoshikiyo Shimamine,
chief economist at Daiichi Life Research Institute in Tokyo.

Japan is scheduled to release its 2009 GDP figures on February 15.

With China expected to post another year of strong growth in 2010,
Japan seems likely to end this year in third place worldwide as it
struggles to cope with renewed deflation and a shrinking population,
experts said.

China returned to double-digit growth in the fourth quarter of 2009
with a red-hot expansion of 10.7 percent.

Without China's boom, Japan's economy would be even more sluggish
given that the two are major trading partners, analysts said.

Comparisons between the two countries are complicated by exchange rate
fluctuations. If the yen weakens further, that could hasten China's
ascent to world's number two behind the United States.

And China could overtake the United States as early as 2020,
PriceWaterhouseCoopers said in a report Thursday, underlining the
"seismic change" in global economic power.

By 2030, India could also take third spot to relegate Japan to fourth,
the business consultancy said.

But in terms of per capita GDP, China -- with a population of more
than 1.3 billion people -- trails far behind Japan, with about 128

On this basis, China ranked 104th in the world in 2008 with nominal
GDP per person of 3,259 US dollars, while Japan was 23rd at 38,457 US
dollars, according to the International Monetary Fund. Luxembourg was
top with 113,044 US dollars.

Japan's economy staged a stunning recovery from the ashes of World War
II and in the 1980s it was widely predicted to outstrip the United

But it suffered a decade of stagnation after an asset price bubble
burst in the early 1990s.

The country plunged back into recession in 2008 as its exports
collapsed due to a severe global downturn.

It returned to growth in the second quarter of 2009, exiting a year-
long downturn. But the recovery remains fragile with falling consumer
prices, high public debt and weak domestic demand all major concerns
for policymakers.

China meanwhile has achieved remarkable growth since opening up its
economy 30 years ago, growing at an average of more than nine percent
each year in the three decades since 1978 -- three times the world

Growth stalled in the second half of 2008 as the global crisis took
hold, but rebounded in the latter half of last year thanks in large
part to a massive government stimulus package.

© 2010 AFP

This story is sourced direct from an overseas news agency as an
additional service to readers. Spelling follows North American usage,
along with foreign currency and measurement units


...and I am Sid Harth
2010-02-04 14:14:37 UTC

Yen, Dollar Gain on Concerns Over Asia Recovery, Europe’s Debt
February 03, 2010, 11:58 PM EST

By Yasuhiko Seki and Ron Harui

Feb. 4 (Bloomberg) -- The yen and dollar strengthened against higher-
yielding currencies on speculation the Asia- Pacific region’s economic
recovery could slow and European nations will struggle to reduce their

Japan’s currency advanced versus 14 of its 16 major counterparts after
reports today showed Australian retail sales unexpectedly shrank and
New Zealand’s jobless rate rose to the highest level since 1999. The
euro was near a seven-month low against the dollar on speculation the
European Central Bank will refrain from ending emergency measures at a
meeting today as Greece struggles to contain its deficit.

“Emerging uncertainties about the Australian economy hurt sentiment
toward higher-yielding currencies,” said Masahide Tanaka, a senior
strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s
second-largest bank. “Lingering sovereign woes in Europe also helped
strengthen risk aversion.”

The yen rose to 126.21 per euro as of 1:24 p.m. in Tokyo from 126.42
yesterday in New York. It gained 0.8 percent to 63.43 against New
Zealand’s dollar, and climbed 0.4 percent to 80.04 versus the
Australian currency.

The greenback advanced 0.7 percent to 69.77 cents against the so-
called kiwi and added 0.3 percent to 88.03 versus the Australian
dollar. The U.S. dollar was at 90.90 yen from 90.98 yen in New York.
The euro traded at $1.3883 from $1.3893. It dropped to $1.3853 on Feb.
1, the weakest level since July 8.

Australian Sales

Australian retail sales fell 0.7 percent in December from November,
the Bureau of Statistics said in Sydney. Economists had forecast a
gain. New Zealand’s unemployment rate climbed to 7.3 percent last
quarter from 6.5 percent in the previous three months, Statistics New
Zealand said.

“It is quite a big miss on the monthly number and that’s probably
going to give the Aussie a weaker tinge,” Greg Gibbs, a currency
strategist with Royal Bank of Scotland Group Plc, said about the
Australian sales data. “The U.S. dollar is generally looking firmer
against other majors, and this is all shaping up for a bit of a wash-
out of longs in the Aussie.” A long position is a bet a currency will

The MSCI Asia Pacific Index of shares fell 1.1 percent, ending two
days of gains. The yen tends to strengthen during economic and
financial turmoil because Japan’s trade surplus makes it less reliant
on foreign capital. The dollar benefits from its role as the world’s
reserve currency.

The euro dropped for a second day against the Swiss franc on concern
Greece and other European nations will face increasing difficulty in
curbing their budget deficits.

‘Permanent Loss’

Greece’s largest union is set to approve its second strike this month,
showing Prime Minister George Papandreou’s parliamentary majority may
not be enough to implement his plan to cut the European Union’s widest
deficit. Greece, Portugal and Spain have suffered a “permanent”
decline in competitiveness since joining the euro, European Monetary
Affairs Commissioner Joaquin Almunia said yesterday.

“Almunia warned that Greece and Portugal have ‘quite big’ financing
needs,” analysts led by Hans-Guenter Redeker, London- based global
head of foreign-exchange strategy at BNP Paribas SA, wrote in a
research note today. “The euro-dollar is on the edge of its next leg

The European Central Bank will keep its main interest rate unchanged
at 1 percent after its meeting today, according to all 55 economists
surveyed by Bloomberg.

The euro weakened to 1.4709 franc from 1.4720. It dropped to 1.4636 on
Jan. 29, the lowest level since March 10.

Implied Volatility

Implied volatility on one-month euro-dollar options rose to 10.6
percent from 10.4 percent in New York yesterday. Wider fluctuations
increase the risk for carry trades, where money borrowed from
countries with low rates is used to invest for higher yields.

“Volatility is absolutely going to persist in the foreign- exchange
market,” Monica Fan, a senior currency product engineer at State
Street Global Advisors, said in a Bloomberg Television interview. “The
market’s been hit by a series of micro-geopolitical event risks.
Certainly investors are being forced to be much more nimble about the
types of strategies they are undertaking.”

--With assistance from Haslinda Amin in Singapore and Candice
Zachariahs in Sydney. Editors: Rocky Swift, Nicholas Reynolds

To contact the reporters on this story: Yasuhiko Seki in Tokyo at
+81-3-3201-7297 or ***@bloomberg.net; Ron Harui in Singapore at
+65-6212-1161 or ***@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at
+81-3-3201-2078 or ***@bloomberg.net.


...and I am Sid Harth
2010-02-04 14:22:10 UTC
What Bill Gross Really Thinks: The US Economy Is Screwed
The Pragmatic Capitalist | Feb. 3, 2010, 12:45 PM | 5,293 | 9

(This guest post originally appeared at the author's blog)

James Carville, the famed political strategist once said:

” I used to think if there was reincarnation, I wanted to come back as
the President, or the pope, or a .400 baseball hitter. But now I want
to come back as the bond market. You can intimidate everybody.”

In today’s world, the bond market runs through Bill Gross, the Founder
and CEO of PIMCO. The soft spoken Californian, former professional
blackjack player and billionaire, oversees over one trillion (with a
T) dollars in assets under management. He has been referred to as
the 4th branch of the U.S. government and with the bond market under
his thumb it’s not a stretch to say that he is the most powerful man
in the United States.

His current outlook for the U.S. economy is not particularly rosy
(read his latest outlook here). Gross recently coined the term “the
new normal” when talking about the post-crisis economy. He believes
the global economy has been effectively reset as investors take on
less risk, de-leverage the mountain of debt, regulation hampers growth
and de-globalization takes hold. He believes this is best presented
by the low expectations in the bond market where 10 year treasuries,
at 3.5%, are still positioned for very meager economic growth. He
says we are entering a sustained period of low growth and low

A year ago, Gross was seen as a co-conspirator of sorts in the
government bailouts. As the U.S. government began to take stakes in
financial institutions Gross jumped in head first with them. He piled
his firm’s assets into the riskiest of risky assets in what turned out
to be a brilliantly simple bet – the U.S. government won’t let these
assets fail therefore, we are wise to invest along side them. It
couldn’t have worked out much better for the bond king. He is
rumored to have netted $1.7B alone on the day of the Fannie and
Freddie bailouts. Some saw it as talking his book and asking for his
own bailout. Others see it as unrivaled power and brilliance.

Gross believes the U.S. economic recovery has been largely based on
the stimulus and that the economy could suffer a relapse when the
stimulus is finally removed. In preparation he says investors are
wise to move money into stable, conservative income generating
assets. He also says assets are likely to move from debt-laden
governments such as the U.S and U.K. into those who were more fiscally
responsible such as Germany and China.

So where is an investor to look for high quality, stable and
conservative fixed income assets in this low yield, high risk
environment? At the 2010 Barron’s roundtable Gross made a number of
suggestions. He currently likes the Reaves Utility Income fund
(ticker: UTG) which is a stable utility fund yielding 7.25%. He also
likes the PIMCO Corporate Opportunity a high yield corporate bond fund
that Gross himself manages. It yields a juicy 13%. In terms of
specific bonds Gross still likes to trade along side the government.
He recommends investors look into the GMAC 8% due 2031 and the AIG
8.25% due 2018.


Why China is Not an Economic Threat to the United States
Posted February 3rd, 2010 at 8:00pm

Recent reports of China’s economic growth contrasted with the U.S.
economic downturn have left Americans increasingly concerned that
China is becoming a new superpower, controls American finances and
will surpass the United States as the world’s leading power. The
reality is that the fundamentals of the American economy are stronger
than China’s, and U.S. prospects are better.

Let’s take exhibit A. It may appear that China contributes the most to
world GDP and leads global growth given its 10.7 percent growth last
quarter, as well as its 8.7 percent average growth last year. However,
that’s not an indicative measure of a strong economy.

Aside from the fact that China’s GDP numbers are illusory (largely
because of how the country calculates its GDP), a significant portion
of the growth China is experiencing is not creating wealth, it is
merely taking it from other countries. In other words, Chinese growth
is partly the result of detraction from, not addition to, world GDP,
which means much of its success is dependent upon others.

This is because of the way China’s economy is set up. China relies on
its trade surplus with the rest of the world as the lifeblood of its
economy. It exports vastly more than it imports. Seen in this light,
China sucks GDP from other countries in addition to creating its own.
Therefore, while it may be leading the world in GDP growth, to a
notable extent these GDP gains are the result of China using the world
to boost itself higher.

That does not mean, however, that China does not produce anything. To
the contrary, over the last couple of decades, China has contributed
to the world economy. While China’s production has historically met
consumer demand to keep prices low around the globe, the world-wide
recession is now causing China to oversupply due to weak global
demand, which could lead to deflation. This is hardly an indication of
a sound, robustly-growing economy. If China does not start developing
more of its own domestic economy for its people, trouble looms.

Further, China is not America’s banker, as many people believe.
President Obama’s stimulus package was bad policy, but the notion
that China is now funding our economy as a result is a fallacy.

America could get by without China funding its debt. What’s largely
unknown is that China officially holds less than 7 percent of U.S.
treasuries, and that Chinese bond purchases declined in 2009, to under
$100 billion, while our deficit soared to an all-time high of $1.4

Moreover, China does not buy our debt for our sake; it does so it
because it depends on an economy as large and sound as ours for its
own growth propelled through trade: The same set of rules that keep
its currency undervalued means, by law, it can’t spend at home the
huge pile of cash that it sits on.

In that respect, China is more directly tied to us than we are to
them. If the United States were to discontinue trade with China, it
would hurt them more than us.

Finally, China is not going to surpass the United States as the world
economic leader any time soon. We control about a fourth of the wealth
in the world – more than China, India, Japan and the rest of Asia
combined. Other indicators are just as definitive. The average
American earns close to fifteen times more than the average person in
China. If the United States keeps tax rates low, shows spending
discipline, and brings the deficit down to promote solid economic
growth, there is strong reason to believe that China will never
surpass the United States as the world’s largest economy.


CHART OF THE DAY: Guess What, The US Just Started Creating Jobs Again
Vincent Fernando and Kamelia Angelova | Feb. 3, 2010, 3:07 PM | 2,981
| 24

In case you missed it, U.S. job growth was buried in today's ADP
employment report.

While ADP reported and overall net loss of -22,000 jobs during
January, they at the same time reported that -37,000 jobs were lost in
construction. Another -16,000 jobs were lost in the category
'Financial Activities'.

Given that the U.S. just came off of a housing and finance bubble,
while we want new jobs to appear, hopefully they won't be in the
housing or financial industries, which probably still have a ways to
go before fully deflating from bubble-levels.

And actually, if you strip construction and financial jobs from the
ADP data, you see a refreshing picture of the rest of the U.S.

For the first time during this downturn, ADP jobs data, ex-
construction and finance, grew in January. The data implies that job
creation started in January for the rest of the American economy.
(Note we say 'implies' since ADP's available data was seasonally-
adjusted, thus subject to some estimation) Hopefully these new jobs
won't end up being part of a new bubble economy since we're still
trying to work off the old one.


Sindh Today – Online NewsOnline Sindh Newspaper

US to pressure China, other countries to open markets: Obama
February 3rd, 2010 SindhToday

Washington, Feb 4 (DPA) US President Barack Obama Wednesday said he
favoured free “reciprocal” trade and would put pressure on China and
other countries to open its domestic markets to competition.

“The approach that we’re taking is to try to get much tougher about
enforcement of existing rules, putting constant pressure on China and
other countries to open up their markets in reciprocal ways,” Obama
said during a conference in Washington with senators

from his own Democratic Party.

Obama also suggested countries like China were artificially keeping
down their currencies to boost exports, indirectly weighing into a
long-standing dispute between the two major powers.

“One of the challenges that we’ve got to address internationally is
currency rates … to make sure that our goods are not artificially
inflated in price and their goods are (not) artificially deflated in
price,” Obama said, though he did not specifically

mention China. “That puts us at a huge competitive disadvantage.”

Obama said trade with China and the rest of Asia remained critical to
the future growth of the US economy. Last week, Obama proposed
doubling US exports within five years in a bid to revive the
struggling labour market in the United States.

“I would not be in favour of revoking the trade relationships that
we’ve established with China,” Obama said, responding to such a
suggestion from Democratic Senator Arlen Specter. But he said: “We’ve
got to put our foot down and show that we’re serious about



...and I am Sid Harth
2010-02-04 14:30:13 UTC
Economic crisis looms for Japan amid financial and manufacturing

Pedestrians cross a street in Tokyo January 29, 2010. (Reuters)

By Blaine Harden
Washington Post Foreign Service
Thursday, February 4, 2010

TOKYO -- It's been a humbling few days for Japan.

Toyota, the nation's largest company, announced vehicle recalls on
three continents and shut down five assembly plants in the United
States, and its president told the world, "We're extremely sorry."

Standard & Poor's threatened to downgrade the Japanese government's
credit rating because Prime Minister Yukio Hatoyama is moving too
slowly to reduce the debt.

And China overtook Japan as the world's largest maker of cars,
according to an announcement from the Japanese Automobile
Manufacturers Association.

The triple whammy of manufacturing and fiscal problems is a harbinger
of what Japan faces in the coming years as its listless economy
meanders into an era of reckoning and national loss of face.

Within a year, Japan will probably lose to China its longtime status
as the world's second-largest economy. It is also expected to descend
into the uncharted waters of public indebtedness as government debt
swells to double the size of the country's gross domestic product.

'Quite doomed'

Although the alarming headlines grabbed the public's attention,
Japan's most fundamental economic ills have not. Like distant melting
glaciers, they have not alarmed voters, mobilized politicians or
triggered a national emergency response.

"I do think the current situation is quite doomed, but Japan does not
yet have a sense of crisis," said Hiroko Ogiwara, an economic
commentator and author of popular books that advise housewives on
money management.

The building blocks of Japan's future are collapsing, in the view of
many economists. Japan has fewer children and more senior citizens as
a percentage of its population than any country in recorded history,
but the government does little to encourage childbirth or enable

Even as the working-age population shrinks, only a third of Japanese
women stay on in the workforce after having a child, compared with
about two-thirds of women in the United States. Government spending on
education ranks near the bottom among wealthy countries.

Although the government has been talking for two decades about
weaning itself from dependence on exports, Japan's economy remains
addicted to exports for growth.

And deflation, the curse of the "Lost Decade" of the 1990s, is back
with a paralyzing bite. Prices and wages are falling as aging
consumers save their pension checks and wait for still-lower prices.

"It is a slow-motion implosion," said Takatoshi Ito, a professor of
economics at the University of Tokyo. "The current direction is
clearly unsustainable, and something has to be done. The more delayed
the response, the more sacrifices will have to be made. It is not good
for future generations."

Expert panels and detailed policy papers have been spelling out an
antidote for decades:

-- Raise the consumption tax and control benefits for senior citizens,
including pensions and access to health care.

-- Use the money to build day-care centers, improve public education
and create a framework of subsidies that reward young people for
bearing children and help mothers stay in the workforce.

-- Increase immigration so that by 2050, 10 million residents will be

The problem with these measures is that they are not very popular with
voters, especially those older than 65, who make up about 22 percent
of the population. These measures are likely to become less popular
over time: By 2050, 40 percent of the population is projected to be
older than 65.

"We haven't had a crisis big enough to force pensioners to see it is
in their own best interest to force politicians to do the right
thing," said Robert Feldman, head of economic research at Morgan
Stanley in Tokyo.

'Haven't bottomed out'

Feldman and many other analysts say Japan has the capacity to respond
to a crisis and to mobilize its human and industrial resources in a
highly focused way.

Out of the ashes of World War II, it organized a miracle of
manufacturing. After the oil shock of the 1970s, no industrialized
country squeezed more affluence out of less imported energy than

"We are quite strong in times of real peril," Ogiwara said. "But we
haven't bottomed out yet."

Japan's public debt is the highest among industrial countries as a
percentage of GDP, but it is probably not going to be the problem that
sinks the economy. For unlike the United States, which has borrowed
heavily from China, Japan borrows almost exclusively from its

Housewives and pensioners keep much of their money in bank savings
accounts. They don't mind ultra-low interest rates and are unlikely to
withdraw their money if Standard & Poor's blows a whistle on Japan's
sovereign rating.

"Japan is not Iceland," said Ito, the economics professor, referring
to the country that went bankrupt in fall 2008 when it could not meet
foreign-debt obligations.

Ito said that even in the extremely unlikely event that Japan defaults
on its debts, "it would not be an international crisis or a currency

But Ito and other economists also said the interest rates that the
Japanese government pays to borrow from its citizens are creeping
upward as the pool of Japanese workers and savers drains.

By 2060, Japan will have two retirees for every three workers, a ratio
that will dry up savings and could overwhelm pension and health-care


Fiscal worries drive euro lower; stocks fall
Natsuko Waki
Thu Feb 4, 2010 8:03am EST

LONDON (Reuters) - The euro hit a seven-month low against the dollar
on Thursday as concerns about Greece's fiscal problems spread to other
highly-indebted euro zone countries, while world stocks fell broadly.

Sterling jumped after the Bank of England halted its pro-growth
program of buying government bonds, as expected, taking the first step
toward normalizing policy. Both the BoE and the European Central Bank
left interest rates unchanged, underscoring generous liquidity
conditions would remain.

The premium investors demand to hold government debt issued by
peripheral countries such as Greece, Portugal and Spain rather than
benchmark German bunds rose again. The cost of insuring Portuguese
debt against default hit a record high.

The European Union said on Wednesday Greek plans to cut the budget gap
from 12.7 percent of gross domestic product in 2009 to below 3 percent
in 2012 would not be easy to implement but vowed to hold Athens to its

"The euro remains vulnerable and the market has now turned its
attention to Spain and Portugal. Rallies have been short-lived and I
am targeting a move toward $1.3745 in the short-term," said BNP
currency strategist Ian Stannard.

The euro fell as low as $1.3827, its lowest since early July while the
dollar .DXY rose 0.3 percent against a basket of major currencies.

The 10-year Portuguese/German government bond yield spread widened
nine basis points on the day to 154 basis points. The equivalent Greek
spread widened 12 basis points to 360 bps before coming back in while
the Spanish spread edged out to 93 bps from 91 bps.

Political tension in Portugal over a regional spending bill and a
climbdown by the Spanish government over pension reform added to the
woes of peripheral euro zone states facing huge challenges to curb
budget shortfalls.

"Small irregularities in fiscal or funding spheres are being picked up
by the market and magnified in spread moves," Nomura said in a note to
clients. "A case in point was yesterday's T-bill auction by Portugal."

Portugal added to investor jitters on Wednesday after it cut its
planned T-bill placement because yields spiked from January's
placement on Greek concerns. [

Portuguese five-year credit default swaps hit a record high of 216
basis points from 196.2 bps late on Wednesday. This means it costs
216,000 euros per 10 million euros of exposure. Greek and Spanish five-
year CDS also rose. MSCI world equity index .MIWD00000PUS fell 0.6
percent while the FTSEurofirst 300 index .FTEU3 lost 0.8 percent.

Banks took the most points off the index. Santander (SAN.MC), the euro
zone's biggest bank, lost 2.8 percent after traders pointed to
concerns over the outlook for crisis-hit Spain and worries the bank is
not doing enough to address its property exposure despite results
beating forecasts.

U.S. stock futures fell around 0.5 percent, pointing to a weaker open
on Wall Street.

Japanese stocks fell 0.5 percent .N225 with Toyota Motor (6753.T)
sliding further on its recall woes.

Emerging stocks .MSCIEF dropped 1.2 percent.

U.S. crude oil fell almost 1 percent to $76.24.

Bund futures rose 16 ticks.

(Additional reporting by Neal Armstrong, editing by Mike Peacock)


...and I am Sid Harth
2010-02-04 23:34:55 UTC
By Rod Nickel

WINNIPEG, Manitoba, Feb 4 (Reuters) - The Canadian economy is looking
up and should recover its lost ground this year, well ahead of Japan
and Europe, though possible storms lie ahead, Bank of Canada Governor
Mark Carney said on Thursday.

"My message is relatively straightforward: the thaw is coming," he
said. "The recovery has begun. After a brutal economic winter, spring
is within sight."

The optimistic signs in his speech were enough for Scotia Capital to
suggest he was carving an independent exit strategy, possibly hiking
rates before some other advanced economies, though this was not a
unanimous view.

"On net, we read this as a speech that reinforces the notion that the
need for emergency levels of stimulus is over," Scotia economists
Derek Holt and Karen Cordes wrote, suggesting hikes by the third
quarter and quite possibly earlier.

The comments had limited market impact, with Canadian stocks and the
currency tumbling on fears about debt-laden European economies.

Carney said Canada's labor market appeared to have stopped bleeding,
businesses expect to make modest fixed investments this year, the
private sector should be the sole contributor to Canada's domestic
demand growth next year and real output should reach pre-crisis levels
by the third quarter of 2010.

By contrast, it will be 1-1/2 years before Europe and Japan reach
their pre-crisis levels, he said.

The central bank has promised to keep interest rates at rock bottom
through the middle of this year, assuming inflation remains tame. In a
subsequent news conference Carney said current monetary policy was
still appropriate.

However, while he said he did not think there was a housing bubble, he
also cautioned Canadian households against borrowing too much since
interest rates will at some point have to rise.

He also warned a sustained global recovery could be jeopardized unless
there was major fiscal consolidation in the United States and
elsewhere, higher U.S. household savings, policy-induced domestic
demand in China and other nations, and higher exchange rates in
countries with big surpluses.

"Should these conditions fail to materialize over the medium term, two
equally troubling paths for the global economy are possible," Carney

There would be a return to unsustainable current account imbalances,
which would build financial imbalances again, he said, or there would
be years of fiscal contraction and sluggishness that could lead to
deficient demand and sharp global disinflationary pressures.

Speaking before this weekend's meeting in Canada of the Group of Seven
leading industrialized nations, he said it was important that all
countries lay out credible paths back to fiscal sustainability in the
not-too-distant future. [ID:nN04101777]

Though Canada's economy is in many ways in better shape than its
advanced competitors, he qualified its productivity performance in the
past decade as abysmal, and tepid future productivity could mean the
economy's rate of potential growth is closer to 2 percent than the
usual 3 percent.

The performance of the labor market and productivity growth will be
important influences on monetary policy, Carney said.

BMO Capital Markets senior economist Michael Gregory read his comments
on the implications of productivity as hawkish but balanced by dovish
comments on the challenges Canada's corporate sector is having in
making needed adjustments. (Writing by Randall Palmer; editing by
Jeffrey Hodgson)


A Look at Global Economic Developments

Published: February 4, 2010
Filed at 2:21 p.m. ET

A look at economic developments and activity in major stock markets
around the world Thursday:

ATHENS, Greece -- Stock markets sank in Greece, Portugal and Spain
amid worries over the European Union's debt woes, with Greek customs
and tax officials walking off the job in opposition to cutbacks aimed
at digging the government out of a budget crisis that has shaken the
entire EU.

The 48-hour Greek customs strike is expected to choke imports until
next week, with fuel supplies the most likely to suffer. Lines of
trucks were already forming at the country's borders, with customs
workers allowing through only those carrying perishable goods or

The government of Socialist Prime Minister George Papandreou is under
intense pressure from markets and other EU governments to bring its
budget deficit down from 12.7 percent of economic output last year to
2 percent in 2013.

A Greek default would be a serious blow to the shared euro currency,
but Greece and the EU have insisted that will not happen. Doubts about
Greece's finances have also affected market sentiment toward the debt
of Portugal and Spain, two other eurozone countries struggling with

Markets appear worried that political resistance to cutbacks will keep
Greece and Portugal from sticking to their plans.

Greece's main composite index was down 3.3 percent, while Spain's IBEX
slid 5.9 percent and Portugal's PSI 20 slumped 5 percent.

The euro plunged towards $1.37, hitting its lowest since May.

FRANKFURT -- The European Central Bank kept its main interest rate
unchanged at the record low of 1 percent for the ninth month running
and gave its cautious backing to the Greek government's attempt to get
a grip on its borrowing.

Bank President Jean-Claude Trichet said it was ''absolutely crucial''
that the Greek government stick to its plan to get the budget deficit
down from a staggering 12.7 percent of the country's gross domestic
product in 2009 to below 3 percent in 2012.

Stock markets sank in Europe. The FTSE 100 index of leading British
shares closed down 2.2 percent, Germany's DAX slid 2.5 percent and the
CAC-40 in France ended 2.8 percent lower.

HONG KONG -- Asian stocks mostly retreated. Japan's Nikkei 225 stock
average fell 0.5 percent with Toyota continuing to drag on the market
as the world's largest automaker grappled with a global recall. Hong
Kong's Hang Seng tumbled 1.8 percent, Shanghai's main index fell 0.3
percent but South Korea's market added 0.1 percent.

LONDON -- The Bank of England kept its main interest rate unchanged at
the record low of 0.5 percent and said it will not be asking the
government for the authority to pump more newly created money into the
barely recovering British economy.

The rate-setting Monetary Policy Committee (MPC) voted to keep its
asset purchase program unchanged at 200 billion pounds ($317 billion)
but said it will continue to monitor the scale of the program and
could ask the government to make further purchases.

The program boosts the money supply in the economy, thereby lowering
interest rates across lending markets.

PARIS -- The International Monetary Fund stands ready to help Greece
solve the debt crisis that has alarmed bond markets and rocked the
credibility of the European Union's shared currency, the head of the
multinational lending agency said.

Dominique Strauss-Kahn said he didn't believe Greece was heading for
bankruptcy and expressed confidence that the government of Prime
Minister George Papandreou would take the ''necessary but extremely
difficult'' steps to solve the crisis.

''We are there to help,'' Strauss-Kahn said. ''If we're asked to
intervene, we will.''

BERLIN -- German industrial orders fell 2.3 percent on the month in
December amid a broad slip in demand.

BRUSSELS -- European employers called on EU leaders to act now to plug
a gap in skilled workers by increasing training programs and doing
more to attract well-educated migrants.

North Korean officials reopened hundreds of markets two months after a
major economic upheaval sparked riots and left scores starving in the
impoverished communist nation, an activist said .


UPDATE 1-U.S., China must lead global rebalancing-euro zone
Thu Feb 4, 2010 2:35pm EST
(Adds details from euro zone document)


By Jan Strupczewski

IQALUIT, Canada, Feb 4 (Reuters) - The United States and China will
have to lead a rebalancing of global growth as the world economy
slowly emerges from a downturn, the euro zone will tell G7 financial
leaders this weekend according to a document prepared for the meeting.

Finance ministers and central bank governors from the Group of Seven
(G7) industrialised nations meet Friday and Saturday in the small town
of Iqaluit in north Canada. The G7 includes the U.S., Canada, Japan,
France, Germany, Britain and Italy.

The document, which sums up the agreed views of the 16 countries using
the euro, said global trade and savings imbalances, which deepened the
global economic downturn, have decreased during the crisis, but were
still a medium-term challenge and need to be unwound in an orderly

"Looking further ahead imbalances will widen again -- driven by the
recovery of oil prices and global trade -- although at a lower level
compared to the period before the crisis, with the exception of China
where the current account surplus will continue to increase in dollar
terms," the document said.

"The United States and China will have to take a central role in the
rebalancing of global growth," said the document, which was obtained
by Reuters.

To achieve this, the United States should boost domestic savings, cut
its budget gap and improve financial regulation.

"Beyond the current short-term counter-cyclical requirements, fiscal
consolidation should remain the main objective," the document said.

Unless U.S. fiscal and monetary stimuli are withdrawn once economic
recovery is well established, it said, expansionary policies could sow
the seeds of instability, including the building up of bubbles.

China needs to boost domestic consumption by improving its social
safety nets.

"A reformed taxation of state-owned enterprises' profits would
increase tax revenues, which could, in turn, be used to finance
increased state spending on social safety nets without jeopardising
longer-term fiscal sustainability," it said.

China should also allow its yuan currency, now effectively pegged to
the dollar, to appreciate, the document said.

"Its current exchange rate policies may induce a return to large
global imbalances and may drive up asset prices which could jeopardise
China's financial stability."

Beijing could start rebalancing its growth model next year, it said.

"The 12th five-year plan starting in 2011 should aim at laying the
foundations of a different Chinese growth model, which relies less on
export-led growth and more on private consumption."


The document said G7 countries should coordinate and clearly
communicate in advance their plans to withdraw fiscal stimulus to help
control inflation, among other things.

"Increasing budget deficits and public debt could weigh on the
economies going forward. Clearly communicated medium- to longer-term
policy frameworks are an essential component for stabilising
expectations," it said.

It said inflation in the euro zone, which the European Central Bank
wants to keep below, but close to, 2 percent over the medium term, was
likely to rise moderately near term.

"The outlook further out is for relatively subdued inflation rates, as
the sizeable slack in the product and labour markets can be expected
to restrain inflation."

The world economy was improving but that was partly due to government
support. "Looking forward, moderate optimism is warranted on the back
of recent macro-economic indicators and normalising financial
markets," it said.

"Overall, available leading indicators suggest a modest resumption of
growth in the coming months, while Asian continues to show dynamism,"
it said.

But it cautioned the recovery could run out of steam if private demand
did not kick in once fiscal stimulus is gone.

"This is particularly worrying given that unemployment is expected to
stay high in the short term, precautionary saving has increased,
private sector deleveraging continues and also given the negative
wealth effects as a result of the crisis," it said.

"The pace of recovery is expected to be gradual and growth subdued,
while risks remain given the high unemployment rates and the recent
increase in commodity prices," it said.


Volatile markets were another threat to stable growth.

"Market volatility, in particular in the foreign exchange market, as
well as the possible build up of new asset bubbles, could destabilise
the nascent global recovery by placing growth on an unbalanced path
and trigger unwelcome protectionist reactions," the document said.

In remarks to Japan, the euro zone document said medium-term fiscal
consolidation was a key challenge.

"As the risk of a protracted recession dissipates, ambitious fiscal
consolidation should be considered," it said.

It also said that over the medium term, higher Japanese interest rates
would help correct current account imbalances and anchoring inflation


...and I am Sid Harth
2010-02-04 23:52:52 UTC
12 Countries With The Highest & Lowest Tax Rates

Seemingly everyone has an opinion about taxes. As one of the largest
economic and political issues of any country, the subject of how high
taxes are (and upon which segment of society they predominantly fall)
can be counted on to engender heated debates among politicians,
academics, and ordinary citizens. However, beneath all the heated
rhetoric and opinions are hard facts and numbers. Certain tax rates in
certain countries correlate with certain outcomes, regardless of
whether these are acknowledged by various strains of financial
opinion. Today, Business Pundit takes an honest look at twelve
countries — six with the highest tax rates, and six with the lowest —
and examines other facets of those economies with an eye toward
possible correlations.

The Highest Tax Rates


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As will be seen throughout this article, most of the world’s highest
tax rates can be found in western European nations. Belgium tops the
list, with a marginal tax rate that goes as high as 54%. Despite such
a high tax rate, Belgium ranks relatively highly on various economic
measures. NationMaster.com, for instance, reports that Belgium’s $392
billion GDP ranks 18th out of 203 countries, and exports over $322
billion worth of goods and services yearly. However, other statistics
show Belgium’s high tax rate coming back to haunt it. The
International Monetary fund ranks Belgium 18th on its list of Gross
Domestic Product based on purchasing power parity, at $36,416. It is
also noted that Belgium was “likely to have negative growth, growing
unemployment, and a 3% budget deficit.” Canada’s Trade Commissioner
Service similarly reported “a slowdown of the activity in all sectors”
during the last two quarters of 2008. In sum, it seems that Belgium’s
high tax rates stifle economic vitality to some extent, despite the
social safety net it provides.


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Clocking in just beneath Belgium is Germany, with a 53.2% marginal tax
rate on average income workers. Despite having the largest national
economy in Europe (and the fourth largest in the world measured by
nominal GDP), Germany has effectively traded off having a
comprehensive social safety net against more robust economic growth.
Its GDP measured by PPP is $35,539 according to the International
Monetary Fund – 21st on the list, behind Belgium. As recently as 2007,
TheNewEditor.com reported that Germans were emigrating at their
highest rate since the 1940’s, resulting in a “brain drain” on the
nation’s brightest and most motivated people. As a result of “high
taxes and bureaucracy, thousands of Germans have upped sticks for
Austria and Switzerland, or emigrated to the United States” — 155,290
during the year in question, which rivals “levels last experienced in
the 1940s during the chaotic aftermath of the Second World War.”
Furthermore, emigrants are generally said to be highly motivated and
educated, while those immigrating to Germany are increasingly poorer
and less educated — perhaps more inclined to consume Germany’s
generous social benefits.


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With a marginal tax rate of 46.6 on average workers, Finland has the
fourth highest such rate in the world. However, unlike many similarly
taxed countries, Finland has managed to have a stronger overall
economy despite its taxation. Unemployment currently sits at 6.8% –
surprisingly low given the current economic crisis and double-digit
unemployment in the United States. Additionally, Finland’s $36,320 GDP
per capita ranks 20th on the International Monetary Fund’s list. The
CIA Factbook likewise states that Finland has “a highly
industrialized, largely free-market economy with per capita output
roughly that of the UK, France, Germany, and Italy.” It is also worth
noting that Finland has been one of the best performing economies in
the entire European Union in recent years, owing in no small part to
the country’s having avoided the worst of the banking crisis.


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Denmark clocks in as having the fourth highest tax rate in the world
at 44.4%. On the surface, high taxes have not had the chilling effect
on Denmark that they appear to be having on other highly taxed
nations. An ABC News story, for instance, reports that “Danes Rank
Themselves as Happy and Content” – indeed, the happiest nation on
Earth – despite the tax burden they bear. Furthermore, the high taxes
mean that “a banker can end up taking home as much money as an artist”
so that “people don’t chose careers based on income or status.”
However, outsiders are skeptical of whether high taxes impose a bigger
burden than is acknowledged. The New York Times (hardly an enemy of
high taxation) reported in 2007 – the same year of ABC’s story – that
Denmark’s tax structure was worsening a labor shortage. As in Germany,
the Times found that “the Danish labor force had shrunk by about
19,000 people through the end of 2005″ (significant in a country of
less than 6 million) because “Danes and others had moved elsewhere.”
To its credit, Denmark does boast the 16th highest GDP per capita at
$37,304 – impressive for a small and highly taxed nation.


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As of 2006, the highest tax rate in Italy has been roughly 43%.
Unfortunately, Italy also has the lowest GDP per capita of any country
covered so far — $30,631, good for 27th on the International Monetary
Fund’s list. Various economic indicators portray Italy negatively, not
the least of which is debt as a percentage of GDP being higher than
100%, according to EconomicsHelp.org. Italy also appears to have a
sluggish male work population. According to Mint.com’s article on
bizarre tax breaks around the world, Italy once toyed with the idea of
offering males 30 and over a tax incentive to leave their mother’s
homes and start their own lives. The problem, Mint writes, is ” is
apparently so bad that a third of all men over 30 live at home” in
Italy. Naturally, this segment of the population is not participating
in economic growth by having their own homes or apartments, utility
bills, and the like. The case could be made that overly generous
government benefits have softened the population’s will to work.


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Finally, no discussion of highly taxed nations would be complete
without including France. With a top marginal tax rate on average
workers of about 40% (and a top tax on high-income workers of nearly
50%), France is long-known for sacrificing economic growth to social
benefits handed out by government. As Charles Wheelan writes in his
book Naked Economics, “France is a good place to be a struggling
artist, and a bad place to be an Internet entrepreneur.” Despite being
the fifth largest economy in the world, France’s GDP per capita stands
at just $34,205 – only 23rd on the IMF’s ranking. A study done several
years ago by the Organization for Economic Cooperation and Development
found that “France’s tax burden as a percentage of gross domestic
product last year rose to 43.7%, from 43.4% a year earlier”, according
to ThisFrenchLife. A 2009 Wall Street Journal piece likewise finds
France’s popular universal healthcare system “has been in the red
since 1989″, with an expected 2010 shortfall of €15 billion.

The Lowest Tax Rates


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Perhaps unsurprisingly, the country with the lowest marginal tax rate
on average income workers — Switzerland, at 20% — also boasts the
world’s 7th highest GDP per capita at $43,196. The UK’s Times Online
called attention to Switzerland’s “benign tax system” in a 2009
article about the nation’s “low tax high life” that invites people to
escape 50% tax rates by moving there. Contrary to general assumptions,
the Times explains, Switzerland has found a way to maintain a high
standard of living alongside an extremely low personal income tax
rate. BusinessWeek likewise reported in 2009 that Switzerland was
“openly and legally urging multinationals to relocate” — and
succeeding, while other nations buckled beneath staggering debt.
Switzerland’s low tax rates have not stopped it from having some of
the leading universities in the world, a highly educated work force
and less than 3% unemployment as of 2009.


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The United States is still relatively tax-friendly, with a marginal
tax rate of around 27% on average income workers. As the world’s
largest economy by far, the economic vitality and high standards of
living in the U.S. speak for themselves. The United States boasts the
7th highest GPD per capita in the world at $47,440 and serves, in the
words of Wikipedia, as “the epicenter of world trade.” Total GDP stood
at over $14 trillion for 2008, which is more than three times that of
the world’s second largest economy (Japan). American citizens also
have the highest income per hour worked of any nation surveyed. By any
objective measure, the United States and its relatively low tax rates
offer the best of both worlds — reasonable social safety nets, and
extraordinary economic capacity stemming from essentially free market
policies. The standard of living in the US is evidenced by
consistently being the most immigrated-to nation on earth — 38,355,000
immigrants currently call the US home, more than double that of
Russia, which is second on the list.


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Australia, with a 31.5% marginal tax rate on average income workers,
manage to clock in at 17th on the IMF’s GDP per capita ranking with
$36,918. The island nation is bouncing back surprisingly strong from
the worldwide economic meltdown, with the BBC reporting on January 14,
2010 that had fallen to 5.5% at a time when similarly situated nations
are struggling with double-digit unemployment. According to Deputy
Prime Minister Juliar Gillard, the BBC’s findings “provide further
evidence of how Australia has outperformed virtually every other
advanced economy during the global recession.” With a tax rate similar
to that of the United States, Australia has long provided incentives
for the hard work, entrepreneurship and risk-taking that are
fundamental to sustained economic growth and high standards of


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Canada is taxed in a manner similar to that of the United States,
imposing a 31.2% marginal tax rate on average income workers. Despite
a $39,098 GDP per capita (good for 13th on the IMF’s list), Canada has
struggled amidst the current economic crisis. The Canadian
government’s statistical agency, Statistics Canada, reported on
January 8, 2010 that the national unemployment rate sat at 8.5% –
slightly below the double-digit rate of the U.S., but still troubling.
Canada-based CBC News also reported in early 2009 that the
International Monetary Fund had “slashed Canada’s GDP growth for 2009
and 2010.” Like Japan and several other nations so far discussed,
Canada maintains universal healthcare coverage for all its citizens in
addition to other social programs. Canada has also, according to
Reuters, ruled out raising taxes to ease the national deficit, but
rather, would “constrain public spending” instead.


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Japan is an interesting case on several fronts. Despite being the
second largest economy on Earth, Japan’s GDP per capita is just 24th
on the International Monetary Fund’s list, at $34,116. Canada’s
Parlimentary Research Service offers some answers. One explanation for
Japan’s recently diminished economic vitality could be that “Japan was
the country with the lowest government revenue-to-GDP ratio (31%) and
the second-highest government net debt-to-GDP ratio (78%).”
Nonetheless, it’s 33% marginal tax rate on average income workers
represents one of the lowest in the world. Japan’s unemployment rate
also stood at a manageable 5.5% as of late October 2009, according to
the BBC. To its credit, Japan boasts a strong standard of living,
including a hybrid system of public and government-subsidized health
insurance for all its citizens.

United Kingdom

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With a 32% marginal tax rate imposed on average income workers, the UK
still qualifies as a relatively low-taxed nation, but only amidst the
rest of highly-taxed Western Europe. With a GDP per capita of $36,358
(19th on the IMF’s ranking), Great Britain stands as the sixth largest
economy in the world by this measure. The United Kingdom provides
universal healthcare to its citizens, as do most industrialized
nations in Europe, and Poverty.org reports that roughly 21% live below
40% of the country’s median income. The country is also a major
financial hub in the world economy, with London housing various
important stock exchanges and investment banks. Unemployment is
manageable at 7.8%, as of the fourth quarter of 2009, compared with
double-digit employment in many similarly situated nations. All told,
London continues to offer one of the higher standards of living in the
world, owing in part to its relatively low taxes and focus on economic


The National DebtPosted by Leo Cecchini on Thursday, February 4th
2010 A strange coalition is forming across the political spectrum.
Groups from the ultra-right to the ultra-left find themselves sounding
the same alarm about the steadily growing national debt or
specifically the federal government’s debt. It now stands at $11
trillion and promises to rise to an estimated $14 by 2011. The growth
will be due to the major infusions of funds by the Feds in the effort
to overcome the recession and create new jobs.

By now you have all heard the dire warnings about “indenturing” our
children and grandchildren. Now we have the bond rating agency Moody’s
suggesting that the USA will lose its triple A rating. Well if the USA
with its “amber waves of grain” is looking like a risky investment who
or what is sound? Our national debt is guaranteed by the “full faith
and credit” of the USA. To put it in a nut shell, there is no greater
guarantee. When the US goes out of business, the show is over. And no
one suggests that the US will go out of business.

No, what this concern should yield is a higher interest rate to carry
the debt. But guess what, the cost is actually going down. The
national budget for 2010 calls for $164 billion to service the
national debt which is almost all interst costs. This is a sharp drop
from the $240 billion budgeted in 2008, since the cost for the Feds to
borrow has declined, not increased during the “Great Recession.” Of
course this is counterintuitive, but the reason is, that in the wake
of the “Financial Meltdown of 2008,” investors moved most of their
funds into “cash,” which in reality means into US Treasury bills, i.e.
federal debt. So many clamoring to buy US T bills drove the rate down
(demand outstripped supply).

The cost to carry the debt is a bit misleading since maybe half the
federal debt is owned by the government itself, mainly by the Social
Security and Medicare trust funds. There is no budgeted cost here,
rather there is the guarantee that the Feds will cough up the dough to
pay Social Security pensions and Medicare costs in the future.

The lesson learned, however, is that federal debt is not viewed like
other debt where the cost to borrow goes up as the debt increases.
Here the cost of borrowing is determined by how much “cash” one holds
in his investment portfolio.

Now much is made about foreign holdings of US debt. To put the issue
in numbers, foreigners hold about $3.4 trillion of our national debt.
That represents about half of the “public” part of the debt, i.e. that
not held by the government itself, or roughly 25% of the total debt.
But the concern is how long will these foreign investors continue to
hold and buy our national debt?

It would be useful here to compare the US national debt with that of
other countries. The most common comparison here is national debt as a
percentage of national income as measured by the GDP. The percentage
for the USA is now at 75% and this will rise to exceed 100% during the
Obama Administration. The next largest economy in the ranking of the
most developed countries is Japan where the national debt stands at
199% of GDP. Perhaps that is why Japanese investors own 22% of the US
debt held by foreigners. Others in this group -Germany, France and
Italy - have ratios similar to the USA. So the level of US
indebtedness compared to other major economies does not suggest any
reason per se to move one’s holdings to another nation’s currency.

This leaves China to ponder. Chinese investors, mainly its central
treasury, hold 27% of the US deb held by foreigners placing it more or
less than on a par with Japan. These two countries are thus the main
foreign players by far. China has a national debt to GDP ratio of less
than 20%. But the Chinese want to keep surplus foreign holdings in
those other currencies, not its own money. Given the debt to GDP
ratios of the other major economies it does not make much sense to
move to those currencies. Even more important, no other currency
exists in the mega-quantities offered by the US Dollar.

In a previous blog on our national debt I calculated that, at the
current cost of borrowing, the US could reasonably carry a national
debt of $28 trillion. Current government projections suggest that we
could reach this level by the year 2020. So by my calculations we
could handle the debt projected for 2020 now, which is good forward

Of course, an increase in the cost to the Feds for borrowing would
alter this scenario. But this will only come if there is a massive
movement of funds out of public debt into private debt which is what
the Obama recovery plans seek to achieve. And if private investment is
up, the Feds will not have to engage in massive deficit spending to
prime the engine, thus reducing, or eliminating, growth in the
national debt.

Sounds like a plan.




IF PIIGS COULD FLY .I love when Europeans come onto the site and
lecture us about how to run our affairs. The European economy is in
worse shape than the U.S. The truth is that Europe, Japan and the US
are all screwed. Too much debt, too much spending, too many
entitlements, too much delusion, too little brains, too little
courage. There is no escape.

If PIIGS Could Fly
By Niels Jensen

The Absolute Return Letter - February 2010

"A democracy is always temporary in nature; it simply cannot exist as
a permanent form of government. A democracy will continue to exist up
until the time that voters discover that they can vote themselves
generous gifts from the public treasury. From that moment on, the
majority always votes for the candidates who promise the most benefits
from the public treasury, with the result that every democracy will
finally collapse due to loose fiscal policy..."

Alexander Fraser Tytler, Scottish lawyer and writer, 1770

Travelling with John Mauldin

It was always naïve to believe that a crisis so deep and profound was
going to go away with a whimper; however, an increase of more than 50%
in global equity prices can be very seductive, and nine months of
virtually uninterrupted gains have led many to believe that the
problems of 2008-09 are now largely behind us.

Well, not quite everybody. Friend and business partner John Mauldin
remains a sceptic. I have had the pleasure of travelling across Europe
with John over the past week or so and, as the week progressed, my
mood swung decisively towards a state where Prozac would probably be
the most appropriate remedy.

Now, John and I do not agree on absolutely everything. For example, I
believe – and have believed for a while – that he is too bearish on
equities. But, before we go there, allow me to share with you the
essence of John's views which can be summed up quite nicely by two
charts, courtesy of BCA Research.

In John's opinion – and I do not disagree – we are still only in the
second or third innings of the de-leveraging process (chart 1). Years
of excessive debt accumulation cannot be reversed in 18 months, and it
will take at least another 5-6 years to play out, possibly longer.

The other part of John's argument – and again it is hard to disagree –
is that it remains an open question how much de-leveraging has in fact
taken place. As you can see from chart 2, US sovereign debt has risen
as fast as private debt has declined (and the picture is similar in
many other countries), providing support for the argument that all we
have achieved so far is to move liabilities from private to public
balance sheets, effectively burdening tomorrow's taxpayer.

The basket case named Greece

In the last few days, developments in Greece have totally overshadowed
other events. As I write these lines, the 10-year Greek government
bond trades a shade under 7%, now yielding a whopping 370 basis points
more than the corresponding Bunds. At the same time, and not at all
surprisingly, Greek credit default swaps – measuring the cost of
insurance against a Greek sovereign default – have exploded (chart

When I was in Zurich with John last week, I bumped into the famous
Swiss investor, Felix Zulauf, who pointed out to me that Greece has in
fact been in default in 105 of the last 200 years, so never say never.
Having said that, Greece cannot be allowed to default, as the
implications would be catastrophic. Bond investors would immediately
pick apart the next country in line, and it is almost certainly going
to be one of the other PIIGS – Portugal, Italy, Ireland or Spain.
Bailing out Greece is just about manageable, but having to save all of
them would overwhelm the EU. Swift action must therefore be taken,
moral hazard or not.

Back in early January, the research team at Danske Bank in Copenhagen
produced a most interesting research paper[1], revealing how desperate
the fiscal outlook is for many EU members. Table 1 illustrates the
path of debt-to-GDP between now and 2020, assuming no change to
current policy.

Now, we all know what cannot happen, will not happen. There is a
reason the EU, via its stability pact, set the debt-to-GDP ceiling at
60% for its euro zone members. Obviously, with the low interest rates
we currently enjoy, one could argue that a higher debt-to-GDP ratio
could be sustained, and that is essentially correct as long as
interest rates remain low; however, you leave yourself seriously
exposed, should rates rise which they almost certainly will as
sovereign debt increasingly becomes junk. .

Danske Bank then went one step further in its analysis. In order to
illustrate the magnitude of the problem, they calculated how
aggressive the fiscal tightening would have to be in order for the
euro zone member states to comply with the stability pact by 2020.
Table 2 below indicates how much the deficit must be reduced every
year for the next five years in order to bring debt-to-GDP to 60% by
2020. Greece, being in the most precarious position, would need to
shave 4% off its budget every year. We all know that is not going to
happen because that would spell depression.

In the short term, Greece needs to find over €50 billion before the
end of the year to refinance debt which is about to mature. The
question is not so much whether it will fail in its endeavour but what
price it will have to pay. An already fragile Greek fiscal situation
could be further undermined, if Greece is forced to pay 7% going
forward which it can hardly afford.

Is Spain next?

Towards the end of last week it became apparent that there might be
some appetite for rescuing Greece, although few details are currently
available. However, I am not convinced that there is a strong
consensus in favour of a rescue package. Most of the positive vibes
have come from Spain, whereas Germany and France have been decidedly
less forthcoming. It is perhaps not surprising that it is the Spanish
who seem most eager to bail Greece out, considering that they could
very well be the next victim of the bond market's invisible hand.

In the last few days, Spain has gone out of its way to demonstrate its
commitment to greater fiscal discipline in general and to the
stability pact in particular. The government has just proposed for the
retirement age to be increased from 65 to 67 (to be introduced
gradually from 2013), and a fiscal programme designed to reduce the
annual deficit to 3% of GDP by 2013 has been presented. The problem
for Spain is that words are cheap. Few commentators believe that 3% is
a realistic target given the depth of Spain's problems at the moment.
Don't hold your breath.

The outlook is very grim

The outlook goes from murky to unbelievably grim, if one includes off-
balance sheet items such as social security, pension and health
liabilities, which have been promised to us over the years by well
meaning but financially inept governments (see chart 4). As Societe
Generale's Dylan Grice puts it:

"I don't see how our governments can pay these liabilities. EU and US
net liabilities add up to around $135 trillion alone. That is four
times the capitalization of Datastream's World equity index of about
$36 trillion, and forty times the cost of the 2008 financial

I also note that Greece, not included in the chart, stands at 875%
debt-to-GDP when including off-balance sheet items!

The bond market will ultimately determine when enough is enough. As
President Clinton's campaign strategist James Carville once put it:

"I used to think if there was reincarnation, I wanted to come back as
the President or the Pope or a .400 baseball hitter. But now I want to
come back as the bond market. You can intimidate everyone."

It can play out in a couple of different ways. Either bond investors
will go on strike until they feel that they are being sufficiently
rewarded for the higher risk associated with sovereign debt following
the credit crunch or governments will implement budget curtailments
designed to bring the debt escalation under control again, but that
will be detrimental to economic growth. My bet is that the latter
outcome will ultimately prevail but not until the bond market forces
the hand of our governments.

The end game for Japan?

The first country to really feel the pinch could very well be Japan;
in the bigger context, Greece is just the appetizer. Japan's debt-to-
GDP ratio has grown from 65% in the early 1990s when their crisis
began in earnest to over 200% now. Fortunately for Japan, the high
savings rate has allowed shifting governments to finance the deficit
internally with about 93% of all JGBs held domestically[3]. This is
the key reason why Japan gets away with paying only 1.3% on their 10-
year bonds when other large OECD countries must pay 3-4% to attract

Now, predicting the demise of Japan has cost many a career over the
years. Despite the ever rising debt, and contrary to many expert
opinions, the yen has been rock solid and bond yields have remained
comparatively low. I often hear the argument from the bulls that the
Japanese situation is sustainable because they, unlike us, are a
nation of savers. Wrong. They were a nation of savers.

Looking at chart 5, it is evident that the demographic tsunami has
finally hit Japan. The savings rate is in a structural decline and the
Ministry of Finance in Tokyo may soon be forced to go to international
capital markets to fund their deficits. I very much doubt that non-
Japanese investors will be as forgiving as the Japanese, and that
could force bond yields in Japan in line with US and German yields.
Herein lies the challenge. Japan already spends 35% of its pre-bond
issuance revenues on servicing its debt. If the Japanese were forced
to fund themselves at 3.5% instead of 1.3%, the game would soon be up.

Why stock markets go up

Despite the grim outlook, the world's stock markets have produced
brilliant returns over the past nine months. This has provoked some of
the best and brightest in our industry (most recently Mohamed El-
Erian, CEO of Pimco[4]) to declare that there is a dis-connect between
the economic reality and the picture painted by Wall Street.

I am not convinced. Firstly, global equities reached extremely
depressed levels back in February 2009, and the recovery, however
muted it may ultimately turn out to be, has stopped the bleeding in
most large companies, giving investors an excuse to accumulate stocks
again (smaller companies is a different story altogether, but that is
a story for another day). What matters to the likes of Coca Cola,
Rolls Royce and Volkswagen is not so much how the domestic economy
performs, because the leading lights of industry today are becoming
increasingly detached from the domestic economy. Ever more important
to those companies is the global stage, and the global outlook is
considerably more upbeat than, say, the US, UK or German growth

Secondly, equities usually do very well in the very late stages of
recession and early stages of recovery. I refer to our July 2006
Absolute Return Letter for an in-depth analysis of this, which you can
find here.

Thirdly, valuations are not prohibitively high. Many bears refer to
the stock market (whether European or US) as being very expensive at
current levels, but that is plainly untrue. Based on 2010 projected
earnings, most OECD markets are either in line with or 10-20% below
historical averages (see table 3). Only in emerging markets can you
reasonably argue that current P/E levels are not cheap relative to the
long term average.

In 2009 there have been massive flows of capital towards emerging
markets – and towards Asia in particular – and valuations have been
driven up as a result. It is hard to argue that those markets are yet
in bubble territory, if one uses the valuations in table 3 as a
benchmark; however, by pegging their currencies to the US dollar,
Asian countries have effectively adopted a monetary policy which is
entirely unsuitable for economies growing as fast as they do. That is
how bubbles have been created in the past and why Asian equity markets
should be monitored closely for signs of overheating in the months to


Summing it all up, the fate of global equity markets is very much in
the hands of bond investors. Under normal circumstances, this is the
best time to be in equities. But these times are not normal, so do not
expect that the outstanding performance of 2009 will be repeated in
2010. If international bond markets calm down again – and that may
happen, at least temporarily – equities can probably post further (but
modest) gains in 2010; however, the end game is approaching. If bond
investors do not revolt in 2010, they probably will in 2011, so
playing the economic recovery through equities is a dangerous game.

As far as the bond market is concerned, as often pointed out by Martin
Barnes at BCA Research, if you want to know where the next crisis will
be, then look at where the leverage is being created today. And
nowhere is there more leverage being created at the moment than on
sovereign balance sheets. What is happening is an experiment never
undertaken before. As John Mauldin puts it, we are operating on the
patient without anaesthesia.

The big challenge will be to get the timing right. These situations
can run for longer than most people imagine. Japan's crisis has been
widely predicted for almost a decade now, and the ship appears to be
as steady as ever. As I suggested earlier, the key to predicting the
timing of Japan's demise – because there will be one – may very well
be embedded in the savings rate, which could quite possibly turn
negative in the next few years.

The Dubai crisis taught us that markets are in a forgiving mode at the
moment and, before long, Greece could very well find some respite from
its current problems. But then again, ultimately, governments will
find – just like millions of households have found over the years –
that you cannot spend more then you earn in perpetuity. The enormous
debt levels being created at the moment will haunt us for many years
to come and we may have to wait a long time to see the PIIGS fly


1"Table 2

below indicates how much the deficit must be reduced every year for
the next five years in order to bring debt-to-GDP to 60% by 2020.
Greece, being in the most precarious position, would need to shave 4%
off its budget every year. We all know that is not going to happen
because that would spell depression."

I will stipulate to "we all know that's not going to happen." But the
second phrase, "because that would spell depression."?

Is this one of those things "everybody knows"? Or is there any hard
evidence that government reduction in budget causes depressions?

Written 19 hours ago Leave a ReplyScreen name (optional): Defaults to
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Kill Bill ReplyVote10"A democracy is always temporary in nature; it
simply cannot exist as a permanent form of government. A democracy
will continue to exist up until the time that corporations discover
that they can buy themselves generous gifts from the public treasury.
From that moment on, the minority interests will donate campaign funds
to all candidates that will give a great ROI from the public treasury,
with the result that every democracy will finally collapse due to
loose fiscal policy..." -=Alexander Fraser Tytler, Scottish lawyer and
writer, 1770=- FIXED IT!


How financial innovation causes bubbles
Feb 4, 2010 06:16 EST

Stephen Gandel has a good, thought-provoking interview with Roy Smith,
a former Goldman banker whose book is available in the UK. His way of
looking at both bubbles and busts as being driven by liquidity I think
has a lot to be said for it:

There is now about $140 trillion in market capitalization in the
word’s financial markets looking for investments. That money can now
move around very easily. But even if a relatively small portion of
that money goes after something — say, mortgages — it can quickly
cause a bubble and a crisis. So all this good work we have done in the
past few years to make our capital markets more efficient and open has
also made them very hazardous, and we haven’t done anything yet to
address that problem.

Here’s Smith’s verdict on the history of Wall Street:

The net result has been a positive for users of capital markets, which
can be accessed more cheaply than ever before. But the success of the
market has resulted in a vast accumulation of capital in tradable form
that is now capable of wrecking whole economies. In 2000 and 2007,
financial bubbles did great damage, and the monster is still out

Up until now, I’ve thought that the harmfulness of financial
innovation was largely a function of its role in enabling regulatory
arbitrage. But Smith’s idea I think is stronger. Financial innovation,
on this view, is in large part the art of turning illiquid assets into
liquid assets. And once an asset is liquid, it’s susceptible to highly-
dangerous booms and busts.

The point is that it’s pretty much impossible to have a bubble in
something which doesn’t have a liquid asset class supporting it.
There’s a good reason that the very concept of a bubble is associated
with stocks: stocks are one of the most liquid asset classes in the
world. The carry trade is essentially the art of creating bubbles in
liquid currency markets. The invention of the mortgage-backed security
allowed trillions of dollars to flow into the housing market, where a
huge bubble formed. There was a veritable frenzy of trading in Dutch
tulips, when they were in a bubble. (Can someone help me out with the
Japanese property bubble of the 1980s? What was the driving force
behind that?)

It’s not like you can’t lose money where there isn’t a speculative
frenzy, of course: banks and insurance companies have been going bust
for centuries, after misjudging creditworthiness or losing a gamble
when some tail event finally happened. And a lack of liquidity can be
just as bad as a surplus of it: if a country has exchange controls and
high interest rates, a huge proportion of the money in that country
eventually ends up being lent in some form or another to the
sovereign, which when it eventually defaults can cause massive
economic devastation.

But as Smith says, a world with over $100 trillion in liquidity is by
its nature a world prone to bubbles: a tiny slosh of that money in a
certain direction can cause massively destabilizing effects in
formerly-sleepy corners of the market. And the explosive growth of
ETFs, which can turn all manner of fixed-income, commodity, and
currency asset classes into liquid and bubble-prone stocks, only makes
matters worse.

The monster is still out there — and the monster is growing, as
sovereigns with trillions of dollars of disposable wealth at their
disposal look for asset classes to invest that wealth in, and as Wall
Street continues to extoll its ability to corral multi-billion-dollar
financing deals by doing clever things in the capital markets. What’s
more, it’s far from clear that regulators even have the ability to
identify bubbles, let alone to prevent them growing to destabilizing
levels. George Soros said in Davos that he loves identifying bubbles
and then jumping on the bandwagon and making lots of money. Can
anybody hope to stop him?

14 comments so far

Feb 4, 2010 12:31 pm EST
Does this mean Tobin tax or any sort of transaction tax should be
looked at as it would likely reduce liquidity?
For Japan, wasn’t it exporters’ cash that fuelled the property bubble?
The riches earned abroad from Japan’s relentless international
expansion were recycled at home in the real estate part of the

Posted by fxtrader14 |
Feb 4, 2010 1:25 pm EST
On Japan see the book by Christopher Wood: The Bubble Economy: Japan’s
Extraordinary Speculative Boom of the ’80s and the Dramatic Bust of
the ’90s

Posted by david3 |
Feb 4, 2010 1:45 pm EST
Felix – property by itself is not a particularly liquid asset, but the
instruments created in this instance enabled agents to make it more

I think this is along the same lines as what Buttonwood has referred
to in the Economist a number of times: In recent years there has been
very little real wealth creation, but a lot of creation of claims on

Posted by edepicier |
Feb 4, 2010 4:22 pm EST
Oh yeah, the Japanese real estate bubble back in the ’80s. What drove
it I haven’t a clue, but I do recall two notable occurences from it:
1) at one point, a square mile of property in Tokyo was worth more
than ALL the real estate in America, which sounds fantastic and 2)
property buyers were taking out multi-generational mortgages. Fancy
that, paying off a mortgage your grandfather incurred! Talk about

Posted by Gotthardbahn |
Feb 4, 2010 5:03 pm EST
Increasing the liquidity of the rest of the economy is the whole point
of banking.

The fundamental rule of banking is borrow short, lend long. The
banking sector is fundamentally illiquid. The rest of the economy,
then, becomes fundamentally more liquid with a banking sector.

Unfortunately, as noted, with liquidity come new risks. This is one
reason good regulations and regulators are a necessary component of

Posted by wcw |
Feb 4, 2010 6:22 pm EST
the other problem, Felix, is ONE SIDED liquidity – it is difficult to
get short real estate – which fuels the bubble

Posted by KidDynamite |
Feb 4, 2010 6:26 pm EST
Volker is right – the only financial innovation has been the ATM (ok,
on-line banking, too). Everything else is just re-packaging of risk so
that it becomes unrecognizable. Risk doesn’t disappear just because it
is chopped up into tiny little pieces and spread outlike manure in a
filed, it just becomes harder to track, which makes it easier for
people to profit from the ones who are unable to recognize the risk.

What causes the bubbles is when enough people believe the risk has
disappeared or has been reduced, and asset values are distorted. The
“innovation” actually leads to increased instability, as bets are made
using inaccurate information (e.g., believing the companies that rated

What people refer to as financial innovation is innovative only for
the select few who are able to profit from it, but for the rest of the
world, those “innovators” are just parasites who have extracted value
from the system while weakening it.


Posted by OnTheTimes |
Feb 4, 2010 6:29 pm EST
“There’s a good reason that the very concept of a bubble is associated
with stocks: stocks are one of the most liquid asset classes in the

Bubbles can be associated with anything from oil (recently as last
year) to housing (does anyone remember?), tulip bulbs, and so forth.

Posted by yr2009 |
Feb 4, 2010 6:41 pm EST
What is the definition of a bubble? How do I measure a bubble?

Posted by Boabdil |
Feb 4, 2010 7:28 pm EST
You measure a bubble when credit is plentiful, hyperinflation in
demand swamps supply. The exact timing of the peak is unknown but is
characterized by hyperinflation in quantity supplied swamping demand
and coincides with an eerie silence followed by a stampede for the
exit followed by what we are experiencing now…deflation.

Posted by csodak |
Feb 4, 2010 8:45 pm EST
Was Enron “financial innovation”? Is it “financial innovation” for
dishonorable bankers to whisk up a bunch of toxic and in some cases
fictitious mortgages, bury them amongst a load of