Tuesday, January 19, 2010

200 Bank Failures Expected in 2010

Washington has so thoroughly botched its supervision of the banking industry that 200 banks are likely to fail this year — easily surpassing last year’s 140 bank failures … inevitably involving the greatest bank losses in history … and already costing the FDIC ten times more than the great S&L and banking crisis of the 1980s did.

I am not basing these conclusions on conjecture. They come straight from official sources. Specifically …

In her testimony before the Financial Crisis Inquiry Commission on Thursday, FDIC Chairman Blair attacked the Fed under Greenspan for causing the housing bubble and subsequent debt crisis with its highly stimulative, low interest rate policy of the 2000s.

She slammed virtually all of Washington for allowing banks to establish a huge, high-risk “shadow banking system.”

And she made it abundantly clear that, without sweeping, far-reaching reforms, we risk another devastating debt crisis.

Each of her conclusions is abundantly obvious and thoroughly documented. What she did not mention, however, are the following equally obvious facts:

Obvious fact #1. The Fed under Bernanke is now pursuing an even more stimulative, lower interest rate policy than it did under Greenspan, threatening to create even larger bubbles and more devastating busts …

Obvious fact #2. In just the last two years, between bank bailouts and easy money, Washington has done more to encourage the growth of the shadow banking system than in all previous years combined, and …

Obvious fact #3. Despite all the talk and testimony, the nation’s powerful banking lobby virtually guarantees that, in the absence of another Wall Street meltdown, the chance of sweeping reforms is virtually nil.

So here’s America’s financial dilemma in a nutshell:

Without sweeping reforms, the nation is doomed to repeat history with another debt disaster. But without another debt disaster, the nation’s political will for sweeping reforms is dead or dying.

In the meantime, the aftershocks of the 2008 debt crisis are getting worse, as the latest news clearly illustrates …

171 actual total failures: In addition to the 140 banks and S&Ls that failed in 2009, 31 credit unions went under, bringing the total tally to 171.

Worse than the 1980s: If you’re among those who think today’s banking crisis isn’t nearly as bad as the great S&L and banking crisis of the 1980s, think again. The average bank failing today is six times larger than it was back then, producing far greater losses. Moreover, each bank failure is costing the FDIC about TEN times more than it did in the 1980s crisis, according to the Meridian Group of Seattle. As a result …

Worst FDIC losses of all time: The FDIC lost more money in bank failures ($36 billion) than it lost in the ENTIRE five-year banking crisis from 1987 through 1992 ($29.6 billion). And in 2010, with the number of failures likely to increase, the losses will be even larger.

Big banks still losing billions with consumers: Until last week, the consensus opinion on Wall Street was that the troubles at the BIG banks were over; that to close this chapter in history, the only task remaining was a mop-up operation at smaller regional and community banks around the country.

That theory was shattered on Friday when JPMorgan Chase revealed it was forced to add $1.5 billion to its consumer loan loss reserves. The big problem: When it took over Washington Mutual last year, the biggest failed S&L of all time, it inherited a cesspool of mortgages that are now going bad at an accelerating pace. Other big consumer banks — like Citigroup and Bank of America — likely face similar woes.

The trading profits of big investment banks are a bubble: What most Wall Street bank analysts still don’t seem to recognize is that the giant trading profits they’ve been so enthusiastic about are generated by the same low-interest Fed policy that created the housing bubble — and is now in the process of creating MORE bubbles.

Without the Fed’s largesse, without the low-cost financing, and without the big risk appetite it generates, most of the big bank trading profits would have been impossible. More to the point: Just as soon as the Fed finally executes an exit plan, the bulk of those profits are likely to turn to losses.

What To Do

First and foremost, do not let up your guard when it comes to keeping your money safe. Yes, I know. With all the talk of the “end” to the crisis and Treasury bills paying virtually nothing, it’s tempting to venture away from safe harbors.

But how much more yield can you get by doing so? If you switch from Treasury bills to bank CDs, for example, the most you can gain is a small fraction of a percent. And if you switch from bank CDs to low-rated corporate debt, the extra yield you get is even less attractive.

In sum …

At this early stage so soon after the worst debt crisis since the Great Depression, the TRUE RISK of putting your money in higher yielding savings vehicles is still very high. Nevertheless, banks and other borrowers are asking you to take that risk WITHOUT paying you more than pennies for it.

My recommendation: Tell them to go fly a kite!

For your keep-safe funds, use strictly short-term Treasuries or equivalent.

Second, if you do other business with a bank or if you still want to keep some part of your savings in bank CDs … at least be sure to avoid the banks most likely to fail and stick with the ones most likely to survive. (For the latest Weiss Lists of the weakest banks and S&Ls, click here. For the strongest, click here.)

Third, bear in mind that, when it comes to your investment decision-making, TIMING is everything.

Last year, the stepped-up pace of bank failures did not derail the weak-but-continuing recovery in the U.S. economy. And for now, that’s bound to remain the case. As soon as we see signs that’s about to change, we’ll do our best to alert you. Until then, we stick with our current posture: Continue to invest, but do so with great caution.

Good luck and God bless!

Martin

More evidence of terror threat than US admits: report

Top US national security officials failed to fully appreciate mounting evidence that Al-Qaeda might be preparing a new attack on the United States and of the dangers posed by extremists linked to Yemen, The New York Times reported Monday.

Earlier this month, the administration of President Barack Obama presented its findings about a failed Christmas Day attempt to blow up a Detroit-bound US airliner.

But a detailed review of the episode shows that there were far more warning signs than the administration has acknowledged, the newspaper said.

In September, a United Nations expert on Al-Qaeda warned policy makers in Washington that the type of explosive device used by a Yemeni militant in an assassination attempt in Saudi Arabia could be carried aboard an airliner, the report said.

In early November, US intelligence authorities say they learned from a communications intercept of Al-Qaeda followers in Yemen that a man named "Umar Farouk" -- the first two names of the jetliner suspect, Umar Farouk Abdulmutallab -- had volunteered for a coming operation, The Times noted.

In late December, more intercepts of Al-Qaeda operatives in Yemen, who had previously focused their attacks on the region, mentioned the date of December 25, and suggested that they were "looking for ways to get somebody out" or "for ways to move people to the West," the paper pointed out, citing an unnamed senior administration official.

And an Al-Qaeda figure made ominous threats against the United States, according to the report.

"We carry prayer beads, and with them we carry a bomb for the enemies of God," a man describing himself as an Al-Qaeda fighter from Yemen announced in a video released on Al Jazeera satellite television, according to The Times. "The issue is between us and America and its allies, and beware, those who stand in the ranks of America."

The US intelligence network was clearly listening in Yemen and sharing that information, the paper said. Yet the inability to pull the data together or correctly interpret it produced the "systemic failure" that Obama has referred to.

Blackwater/XE behind terrorist bombings in Asia and Africa?

(WMR) -- WMR’s intelligence sources in Asia and Europe are reporting that the CIA contractor firm XE Services, formerly Blackwater, has been carrying out “false flag” terrorist attacks in Afghanistan, Somalia, the Sinkiang region of China, Pakistan, Iran, and Iraq, in some cases with the assistance of Israeli Mossad and Indian Research and Analysis Wing (RAW) personnel.

Fingers are being pointed at Blackwater/XE and Mossad operatives for the motorbike bomb in Tehran that killed Tehran University nuclear physicist Dr. Moussad Ali-Mohammadi.

On January 12, a bomb attached to a motorbike outside of Ali-Mohammadi’s house went off while the professor was leaving for work. The bomb, which instantly killed pro-reform Ali-Mohammadi, was remotely triggered by a team that was later linked to a U.S.-base group called the Iran Monarchy Association, which favors restoring the son of the late Shah, Mohammad Reza Pahlavi II, to Iran’s “Peacock Throne.” The Iran Monarchy Association is believed to be a CIA front organization.

There are also reports that Blackwater/XE personnel are in Somalia and have carried out terrorist bombings in Mogadishu that have been blamed by the United States and the puppet transitional government of Somalia on the Al-Shabab Islamic irregular forces as a pretext for a wider Blackwater role in the country.

Blackwater is also believed to be transiting between Somalia, the breakaway republic of Somaliland, and Yemen. WMR has learned of Blackwater counter-insurgency personnel working alongside Yemeni security forces in joint operations against Huthi rebels in the predominantly-Shi’a region of northern Yemen. U.S. Joint Chiefs of Staff Chairman Admiral Michael Mullen recently stated that there were no plans to station U.S. troops in Yemen but he studiously avoided mentioning a counter-insurgency role for U.S. private military contractors.

Blackwater maritime security personnel have also been active in the Gulf of Aden region against so-called Somali “pirates,” who are, in reality, Somali fishermen who are exacting tribute because of over-fishing of Somali waters by foreign fishing fleets and the dumping of toxic waste in Somali waters.

A number of terrorist bombings in Pakistan have been blamed by Pakistani Islamic leaders on Blackwater, Mossad, and RAW. Blackwater has been accused of hiring young Pakistanis in Peshawar to carry out false flag bombings that are later blamed on the Pakistani Taliban, also known as Tehreek-i-Taliban Pakistan. One such bombing took place during the Ashura procession in Karachi last month.

The terrorist attacks allegedly are carried out by a secret Blackwater-XE/CIA/Joint Special Operations Command forward operating base in Karachi. The XE Services component was formerly known as Blackwater Select, yet another subsidiary in a byzantine network of shell and linked companies run by Blackwater/Xe on behalf of the CIA and the Pentagon.

On December 3, 2009, the Pakistani newspaper Nawa-i-Waqt reported: “Vast land near the Tarbela dam has also been given to the Americans where they have established bases for their army and air forces. There, the Indian RAW [Research and Analysis Wing] and Israeli Mosad are working in collaboration with the CIA to carry out extremist activities in Pakistan.”

Blackwater/XE is also thought to be carrying out terrorist roadside bombings in Algeria, once the exclusive domain of the mercenary French Foreign Legion, to justify a greater American security presence in Algeria, ostensibly to protect natural gas pipelines in the country.

Blackwater/XE and agents of the Mossad and RAW are also reportedly active in sponsoring Islamist terrorist groups active in Uzbekistan, Tajikistan, and the Xinjiang-Uighur Autonomous Region (XUAR) of China for a variety of reasons. For the United States, the operations are to ensure those nation’s support for the U.S. “counter-terrorism” operations in central Asia. For India, there is a desire to pin blame for support for Uighur and other central Asian Islamist guerrilla movements on Pakistan in order to drive a wedge between Beijing and Islamabad. For Israel, the support helps in continuing close security relationships between Tel Aviv and Beijing and the Muslim Central Asian “stans.”

RAW has also been smuggling radical Islamic literature to Uighurs in Xinjiang. All of the literaure has the imprimatur of Pakistan. RAW uses Indian consulates in Jalalabad and Kandahar in Afghanistan to help U.S. covert teams to carry out bombings that are blamed on the Taliban and Pakistani Inter-Service Intelligence (ISI) interlocutors. Blaackwater/XE personnel based in Quetta, the capital of Pakistan’s Baluchistan province, have also been active in supporting cross-border raids by an Iranian Baluchi terrorist group called Jundullah. Nawa-i Waqt also reported that two Baluchi separatist groups, the Baluch Liberation Front and the Baluch Liberation Army, “have their headquarters in London and Israel respectively.”

Previously published in the Wayne Madsen Report.

Copyright © 2010 WayneMadenReport.com

Wayne Madsen is a Washington, DC-based investigative journalist and nationally-distributed columnist. He is the editor and publisher of the Wayne Madsen Report (subscription required).

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2010: Giant Gathering Storm Clouds

The year 2008 bore my mark as the year the system broke. A public article addressed the issues, laid out before the breakdown occurred in September of that year. The consequences for the many failures, the desperate nationalizations, the hasty scrambles to put financial sewage under USGovt ownership, the realization of TARP as a vast slush fund for illegitimate bank rescues, the official monetization plans put forth to prevent bond implosions, and much more occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and the threats must again be laid out. A prelude was offered in an mid-December article entitled "Full Circle of Govt Debt Default" (CLICK HERE) where a global sovereign debt ruin in vicious circle was displayed the sequence that started in the Untied States and will end in the Untied States. Rather than make specific forecasts of extreme events, a list is presented much like a smorgasbord. The odds are 100:1 in favor at least one extreme event occurring in this current calendar year in my view. The odds are very high in favor of several events taking place this year. The key here is that a great many extremely damaging and highly disruptive events loom like giant gathering storm clouds that meet, complete with lightning displays. More terrestrial types might consider that a great many land mine explosives lie in the wide pathways ahead. At least a few extreme craters will be formed. A few financial edifices will be toppled. Great changes come, especially to the global power structures. This time around, the stakes are bigger, and entire nations will face debt failure and national realignment. The ripple effects will reshape the global financial system.

The blind, the deficient, and the compromised fail to fully appreciate and detect the meaning of the Dubai debt default or the Iceland financial failure. They actually believe these busts have been dealt with by the very strength of the capitalist system. These default failures signify a continuation of the credit market crisis that never went away. Instead, accounting fraud was legalized. Instead, bloated bank toxic balance sheets were permitted. Instead, sovereign debt finance by monetary expansion was endorsed, i.e. monetization. Instead, stock equity sales to the nitwits incapable of reading balance sheets was widespread. Instead, broader statistical gimmickry of economic data was installed. Not a single meaningful reform has taken place on US soil, which guarantees the continuation of the credit crisis is assured. No substantial reduction of US home loan balance sheets. No return of US manufacturing. No liquidation of dead US banks. No removal of Goldman Sachs from control of the USDept Treasury. No disclosure of US Federal Reserve disbursements of over $1 trillion. No steps to restore the Glass Steagall Act to create firewalls between the financial sectors. No effort to prosecute for $trillion bond fraud. No initiative to bring to light the deep criminal lace to Fannie Mae and AIG, now protected under USGovt aegis. No attempt to rein in military spending and endless wars. No movement to create a monetary system with a currency other than the current debt denominated $20 bill coupons. Instead, with much greater force, enthusiasm, and recklessness, the financial system hurtled deeper into the Weimar chambers of commerce. Worse, most steps simply apply greater doses of precisely what caused the problems with debt overload and excessive monetary expansion. Worse doubly, most reforms grant even more power to those responsible for the breakdowns and fraud perpetration. The Untied States is being recognized internationally as a rogue nation moving headlong toward communism, run by powerful syndicates, whose most prominent foreign policy is explained by military hardware.

There is no shred of the capitalist structural makeup remotely evident outside of Asia. We see cronyism systems in the West, but worse, we see syndicate systems with alleged cords of criminality. The discredit of the central bank franchise system is barely noticed by the mainstream, which applauds the printing press monetary operators without recognition of the repeat of Weimar chapters. Just today, the New York Times formally posed the question of how the US Federal Reserve can prevent the next asset bubble when it missed the last one. It actually misses all asset bubbles, creates them all, and denies the existence of each during formation. The signature signals of a failed central bank is a lasting 0% rate and heavy monetization, called euphemistically Quantitative Easing so as to make economist failure sound like some wondrous medical prescription in high falluting nomenclature. How about the US Financial Reform being called Economicus Moribundus and the vast printing of money in monetary policy being called Whisky Delugius?

Let's review a rather lengthy list of potential events. These are not wild raving pronouncements. Each has some critical mass of likelihood. Each event is presented like an ugly perverse budding shoot on the charred landscape, easily representing an element of the Paradigm Shift. The global shift is almost totally missed by the American leaders, the press networks, and the people. My interpretation is that they live inside the US Dome of Perception, and hardly ever pay attention to matters pertaining to the USDollar. They instead regard it as a constant factor, quite erroneously. The list to follow includes matters often considered sacred, due to the sanctity and inertness of sovereign governments and their debt. The event closest to the Untied States is the dreadful dismemberment of Mexico, which is Greece on steroids and cocaine with the temperature turned up and the violence turned up, where the law enforcement and military have both been compromised and infiltrated. It is a tight race between the US and Mexico as to which nation is more overrun by crime syndicates. The difference is the US has white collar crime, while Mexico violent crime.

The following events are presented as potential disasters looming, spanning the full spectrum, each with triggers in numerous arenas. These are potential disasters, not presented as forecasts, but rather as a list to beware for nasty highly disruptive eruptions. They are loaded with a geopolitical streak, in keeping with Paradigm Shift that signifies a powerful set of changes in altered power. The one common trait all the following potential events have is that they are systemic game change agents. The globe will be reshaped by each and every event that comes to pass. They are not listed in any order of likelihood, since they are all very much at risk of occurrence, and integrally interconnected to a frightening degree. Each would heap tremendous damage, disruption, and devastation, upon occurrence. One should note that if one or two events occur, then others might occur with domino effect from the chain reaction of chaos and opportunity. Note for instance, how the Dubai default resulted in Greek Govt debt downgrade, with no connection except possibly some ancient Greek statues in marble lined parlors in Dubai edifices. The ripple effects will be felt for a full year, just like Lehman, Fannie Mae, and AIG in the United States, just like Northern Rock, Royal Bank of Scotland, and Lloyds in England. The triggers have been ignited, and constant fallout comes. The process never stopped, only the perception that it had stopped. The process can only stop when liquidation and reform occur. Neither is remotely evident.

Use the following scale for grading risk and effect. The likelihood of the event happening will be shown as a percentage, with 0% the lowest and 100% a certainty. The impact for each and every stated event would indeed be huge, extreme, and dangerous. Many different sources have provided lists of extreme events for the new current year, a tradition. Much lies in common for those who choose to think ahead, instead of employing the common practice of putting a new less credible layer of deception on the current landscape. The best among all the sources seen in my view has been the Business Insider. Thanks to my own circle of colleagues and confidants, who provided at least a couple of events listed.

EXTREME WARNINGS FOR EXTREME TIMES
Saudi Royals fall: The Saudi Arabian royal family would lose government control to the Islamic Fundamentalists and is replaced. Scores of old royals escape loaded with hundreds of billion$ in assets, conjuring up memories of the Shah of Iran. Disruptions and instability spread across the entire Persian Gulf. A clampdown of fundamentalist groups in other Gulf nations invites backlash. Occupation forces in Iraq face renewed resistance. (chance: 20%)

China gains full naval military capability: The Chinese Military would attain aircraft carrier force with three carrier groups. In expert circles they call it blue water capability. With this potential, including long range strike potential, the balance of power in Asia is altered. Pressures are put as a result toward changed alliances in key nations considered loyal to the West. Certain strategic points gain attention, as focus is trained on the Mallacan Straits, the Panama Canal, the Suez Canal, the Bosporus Straits, the access routes to the Bering Sea, Australia, and South America. (chance: 30%)

Russian cuts off natural gas to Eastern Europe: Russia would enter a deep dispute with Eastern European nations, in particular Ukraine, and cuts off the flow of natural gas. Disputes center on return to the Russian fold from the independent factions encouraged by the Untied States motivated by the many Color Revolutions. Caught in the middle, at the end of the distribution lines, is Central Europe, whose ties forged by Germany to Russia remain healthy and strong. Russia later forges an alliance with Central Europe that results in some stability, as it becomes clear that Russia has come of age as a peacemaker with further ramifications in time. (chance: 50%)

Greece defaults on its debt: Great problems would result for the parent European Union, sure to fracture. Germany lets it go, does not cover the Greek debt, but employs plausible deniability on minimal offered assistance. A chain reaction begins, to reach the other vulnerable nations. Portugal, Italy, and Spain teeter upon the event, soon to suffer their own defaults, none aided. Even France suffers the ignominy of default, but is aided by Germany in the end, unlike the PIGS nations. The crux of the matter is refinance rollover of debt, which fails. The non-German EuroBonds then rise in yields, enough to force a split in the Euro currency to form the Nordic Core Euro. Default nations revert to their old former currencies and suffer massive devaluations. (chance: 80%)

Mexico fails as a state: The conditions in Mexico would become fully recognized and openly discussed. Two factors are front & center. The rise of the drug cartels in their control of the nation in numerous aspects is already global news. The unexpected net import of crude oil that ruins the nation's federal finances is not yet global news. The former has been understood, but the loss of oil exports takes the region by total surprise. Hyper-inflation then hits Mexico, which prints money to alleviate the federal budget shortfall. Chaos results on numerous levels. Supply disruption hits the US southern refineries. (chance: 70%)

Credit crisis relapse hits the US banks: The Untied States would suffer a relapse into a second round of bank failures, debt defaults, institutional liquidations, corporate deaths, and market disruptions. The proximal cause is the spread and continuation of the property decline, home foreclosures, and commercial defaults. Numerous bank analysts continue to harp on commercial mortgage loss risk after a 40% price decline, so far covered up by phony accounting rules. Impaired assets sit as bank assets. A trigger is the USFed removal from mortgage bond support, coupled with a powerful second downwave in housing prices from Option ARMortgages. A solution is put forth for wide USGovt purchase of housing inventory and the official advent of Fannie Mae as landlord. The supply chain is disrupted in extreme ways, as commercial paper grinds to a halt, and a deeper recession takes root. (chance: 40%)

The US supply chain suddenly suffers disruptions: The economic supply chain would be crippled by its two primary points of vulnerability. The finance credit lines are tied to wounded commercial paper markets. The actual tangible output supply comes from industries that struggle in credit flow, unstable prices, burdensome regulations, worker shortages, and constricted metal supply. Certain trucking firms have already shut down. Gasoline refineries are below their 1990 capacity. Mexican oil supply is soon to end. The lack of trained skilled experienced workers is chronic. (chance: 40%)

Fannie Mae is revealed as a slush fund, toxic bond haven, and object of grand criminal fraud coverup: Leaks would lead to calls for further Congressional investigations of mortgage bond fraud and past presidential pilferage. At the same time, various alerts would be given that the USGovt is harboring a black hole certain to cost over $2 trillion in additional bailouts, maybe up to $4 trillion. The prospect of wide USGovt home ownership from default sparks research reports and great scrunity, even clamor by younger members of Congress. The unlimited credit line to back USAgency debt securities has opened the door to a nasty effect on perception of USTreasury debt, as global perception of the actual USGovt debt ramps up 50%. Discussion of default rises. (chance: 40%)

The real 911 story comes out: The full seamy story would be revealed with many participants named. No further comment except that nation then would become deeply divided in reaction, and international isolation would result. The beneficiaries become the object of scrunity, criticism, and investigation. Attention turns to the swine flu vaccination and global Cap & Trade green taxes, each of which faces the harsh eye of investigation in Europe. (chance: 20%)

Iran is attacked: Great controversy would result from the direct attack of its nuclear facilities and other targets. Controversy would stir from scattered unconfirmed reports of involvement by various nations. Retaliation by Russia and China, long promised, then comes in hidden ways not fully understood. In the aftermath, the banks in the Mideast region are subjected to great scrutiny by several global players, especially one US ally nation. (chance: 10%)

Japan suffers a financial & economic crisis: A recession would take grip, spreading to its financial markets. Reduced export trade eliminated the trade surplus long ago. The Japanese Govt Bond then jumps higher by 2% or 3% in bond yield. The rising Yen currency consequently runs up 20% to 30% from the reverse of the Yen Carry Trade. Their export trade grinds to a near halt, and major conglomerate banks announce insolvency. Then China steps in. (chance: 40%)

UKGovt suffers a debt downgrade: The United Kingdom would be the first major industrialized nation to lose its high credit rating. The UKGilt bond yields then rise above 6% without pause. The threat of sovereign debt default is debated. The British Pound currency falls, which perversely aids the USDollar. Shock waves extend to the Wall Street financial center. Later, scrutiny comes to the USTreasury for its own downgrade and default risk. (chance: 50%)

Talk swirls for eliminating some central banks: Debate would focus on the central bank role as cause for asset bubbles, and extensions to the faulty nature of money itself. Analysts would cite money free from anchors of asset backing. However, awareness rises of the impracticality of central bank elimination, since debt liquidation and cleared decks cannot occur without global depression. In the background is rampant discussion of syndicate involvement and the risks of retaliation by the secretive banker organizations. (chance: 10%)

China faces a degree of chaos: Falling export trade, faltering bank reserves, empty commercial buildings, rising unemployment, idle factories, stalled construction projects, and restive population would contribute to a national crisis that struggles to be told amidst press controls. Armed with a $2500 billion war chest of reserves, China begins to convert assets into tangible rescues, aid, and welfare. The Chinese crisis then ignites a global sale of USTreasurys. As an offshoot to the chaos, the colonization of America then begins, as China cashes in on its USAgency Mortgage Bonds. It exploits it cut deal of Eminent Domain conversion of bonds into property. (chance: 20%)

Food prices soar in the US: The divergence between official crop forecasts would clash with the reality of crop failures and profound shortages this summer. Being the greatest food production source, the US crisis spreads globally. The deCarbonnel threat is realized, as foreign nations sell US$-based assets in order to finance food supply purchases. China enters the fray as a buyer of distressed farm property, amidst accusations of carpetbagger. (chance: 80%)

JPMorgan is object of persistent rumors of gigantic credit derivative losses: The slowly rising USTreasury Bond long-term yield would cause deep painful losses to JPMorgan. Their abuse of Interest Rate Swap contracts becomes a topic of debate. The monetization of USTreasurys becomes a topic of debate. The ability for the USGovt to control its deficits and auxiliary (hidden) losses becomes a topic of debate. Even bond fraud within JPM hallowed halls becomes a topic of debate. To cover the losses, monetary inflation grows out of control, and a USDollar decline ensues, taking the DX dollar index below the 70 level. (chance: 40%)

London metals exchange shuts down: The venerable London Bullion Market Assn would close, unable to fulfill gold orders. The varied stories continue regarding unorthodox practices from the London metals exchange in the month of December, like redemption of gold contracts in cash, like outsized demands for gold delivery mainly by Chinese entities but increasingly by the Swiss, like satisfaction of gold contracts with Street Tracks GLD shares, and much more. Scrutiny with assays upon high volume delivery have been standard since the tungsten gold story emerged, an indirect confirmation often ignored. The supply chain with intermediaries suddenly halts, as they too have no gold bullion to supply the LBMA. Companies shut down. Lawsuits result. Prosecutions begin. Midlevel officials are arrested. Some turn state's evidence. The gold price enters a state of extreme confusion, with vast discrepancies between paper gold price and physical gold price. (chance: 70%)

GOLD & SILVER START A NEW YEAR
Like after a stormy night, the new year has arrived much like a new market with fresh perspectives. The end of tax loss selling, accompanied by tax gain offsets, has come. The beneficial effect is equally shared between gold and silver, although the percentage gain from the recent reversals this week is larger for silver. Not shown in the two graphs is the upward jump in today's prices. They extended gains, with gold reaching the 1135 level, and silver reaching the 18.1 level. The most important factors to keep in clear focus are why gold is rising in a powerful upward trend in the first place. They have not changed. There is no end in government spending, from the Untied States, the UK, Europe, and Japan. There is no meaningful reform of any kind, surely no remedy unless one considers padding banker balance sheets with taxpayer funds as pre-requisite for remedy. There is only a rampant rabid race to grow the money supply, to produce federal deficits, to expand the central bank balance sheets. The real adjusted cost of money is negative after price inflation. The 0% official rates have become fixtures, as central banks look increasingly incompetent in justifying their continuation.

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Notice the sharp reversals since the new January month began. Long-term moving averages remain in the uptrend, despite the orchestrated December correction. Investment demand is skyrocketing, a story barely told in the Western press. The wide band for the silver price hints of a strong price rise toward the 20 level on the next upswing. It has already begun. The tumultuous 2010 year, identified by at least a few key critical events listed above, will send the gold & silver prices soaring. Those who believe the hype in the previous month by the mainstream biased press will regret not climbing aboard. This will be the year of magnificent crises that change the face of the global financial structures. Debt will be dumped like a broken Vegas gambler. Paper money will be discarded like yesterday's newspaper. With the crude oil price at almost $83 per barrel, where are the Deflation Knuckleheads now? They led some gold investors to exit before the push from $900 to $1200. They remain legends only to the image in their own mirrors. The crude oil price might actually come down somewhat in the coming month or two, from scads of vessels loaded and sitting at sea. But gold & silver are set to continue a powerful upward thrust in price, as the perversion of money has become a desperate broad global pursuit. Most major currencies face serious debasement. This is a great opportunity to join the Precious Metals Locomotive after a pit stop. Targets are gold at $1375 and silver at $22.25 per ounce.

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Copyright © 2010 Jim Willie, CB

WOW if ever there was a reason to audit the fed...




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Part IV









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Alps sprinkled with summer snow

Flurries of snow have been falling all morning in the Australian alps after a cold front forced temperatures to drop to below zero.

The weather bureau's Stephen King says there have been some light falls of snow on the mountains, but says that in itself is not unusual.

"The only thing unusual about it I guess is that we had 45 degrees Celsius [temperatures] this time last week and now it's snowing," he said.

"These cold air outbreaks, we tend to get them all year around. You would have remembered, I think it was in 2006, we had snow on Christmas Day. We tend to get one or two of these situations every summer."

Alice Chilcott from the Thredbo resort says the peaks are dusted white and the rain turned to snow for around 15 minutes in Jindabyne this morning.

She says although summer snow is fairly common, it was surprising after 30-plus temperatures last week.

"We often get snowfalls throughout February, but whenever it comes it still surprises everyone," she said.

"You listen to the report and you think it will never come, but then suddenly you wake up and it's white.

"But that's the mountains, it changes every day and it keeps us on our toes."

Executive Orders – The Hallmarks Of Fascist Tyranny

(Rense) – The Executive Branch of our federal government has become a 500 pound tick that’s being fed by a 50 pound dog (the American people) due to presidential Executive Orders (EOs).

By J. Speer-Williams

EOs – not to be confused with Eos, the supernaturally beautiful goddess of Greek mythology – have become an ugly fact of American life, ever since our terrible conflagration known as the American Civil War.

An Executive Order (EO) is an order made by a president that has the full force and effect of any laws constitutionally passed by congress, and signed by the president.

In a representative democracy, laws are made by duly elected representatives, not by a head of state, by mere edict, with no debate, or samplings of public opinion, such as EOs are made into law: The former is known as “rule by law,” the latter as “rule by men.”

When establishing our Constitutional Republic, our founding fathers instituted the principle of government known as the Rule of Law (as opposed to the Rule of Men), which was intended to be a safeguard against arbitrary governance, and the unconstitutional edicts imposed by would be tyrants, which were not in accordance with written, publicly disclosed laws and enforced within legally established guidelines and procedures made by congress and signed into law by our chief executive, the president.

When a president tries to effect one of his Executive Orders into being a national law, he is attempting to circumvent congress, and contravene our Constitution, and move us closer to being a country ruled by men rather than a nation ruled by laws.

This whole unconstitutional seizure of congressional power was done slowly, over time, incrementally, and began innocuously enough as mere directives, or memos, to the offices of the executive branch of our federal government. George Washington was the first to set the dangerous precedent of issuing orders that had the full force and effect of legislative law, with his directive that forbade Americans from trading, or even associating with any of the countries in Europe, who were then at war.

It’s not that Washington idea was bad; what was illegal was Washington, single-handedly, made a law, when he had no legal authority to do so, either in the Constitution, or in any statute law passed by congress. Making laws was meant to be the job of congress; vetoing or signing and then enforcing laws the job of the president.

Washington, in effect, took the law into his own hands, and violated our principle of the Rule of Law, the very basis of a republican form of government. Allowing Washington to create a law, he could by rights only legally enforce, is akin to letting our police establishment create the laws they are commissioned to enforce, and begins the destruction of our “separation of powers,” another fundamental in any real constitutional republic.

Freedom and living by the Rule of Law have been rare commodities during the long and tumultuous history of Earth; and perhaps, America has enjoy the longest run of any nation to have been so ruled. But since Washington’s time, our Constitution has been breached in thousands of ways, until at last, we’ve become a nation ruled by the law of men … very elite and secret men, who have long controlled the Office of the Presidency.

Very few Executive Orders (or Directives) were issued by the fourteen presidents that followed Washington. It was Lincoln’s “dictatorship” that began the onslaught of laws issued by one man, but secretly supported by hidden men.

Yes, the Great Emancipator controlled the Union like a dictator, exercising autocratic rule by claiming “war powers”after the attack on Fort Sumner, South Carolina; and then, running the federal government through Executive Orders, Lincoln utterly by-passed the US congress. Without Ole Abe there might not have been a war that denuded America of over one million of its finest men, when the entire population of the United States was not much more than thirty million people.

It is reported that Lincoln made many enemies, ranging from newspaper editors to the Chief Justice of the Supreme Court, as he repeatedly broke the fundamental law of our land. Lincoln even had editors arrested, and went so far as to draft a warrant for the arrest of Chief Justice Roger Taney, all because they objected to Lincoln throwing our country into the hands of those who would rule our country by men rather than by laws.

Ever since Lincoln’s administration, he has been both the model and excuse for almost all modern presidents to make up their own laws, to the point such gross violations of our Constitutions are now widely and routinely accepted.

Our 26th president, Theodore Roosevelt, widely considered one of our greatest presidents (who is even enshrined on Mt. Rushmore, as was Lincoln) used the White House as his “bully pulpit,”and from there
issued more EOs than all 25 presidents (other than Lincoln) who preceded him. Roosevelt even formed a national police force, an idea that had always been rejected by American congresses, and was deeply abhorred by our founding fathers.

By calling his national police force a mere “investigative bureau” of his federal branch of government, Roosevelt was able to avoid wide public resistance; in those days, Americans were wisely antipatheic to national police forces. Today, however, there is scarcely a citizen who would suggest we do away with Roosevelt’s FBI, or even curb their bestial practices.

William Howard Taft and Woodrow Wilson, who followed Roosevelt as presidents were no better than Teddy in obeying our Constitution.

Democratic President Wilson even imprisoned some 5,000 Americans, who opposed his World War I, the war he had promised to avoid if he were elected president. It was Wilson who was the first to declare “National Emergencies,” in order to assume even more powers not granted by either our congress or our Constitution.

Democratic President Franklin D. Roosevelt (distant cousin to Teddy Roosevelt), our 32nd president, was presented by his “advisors” with a most clever way for presidents to assume even more dictatorial powers, with the mere labeling of domestic problems as “Wars.” In this way, presidents could cite the unconstitutional “war powers,” brought into acceptance by Lincoln, in their pretended wars on drugs, poverty, CO2, or any phony excuse used to expand presidential powers.

Franklin D. Roosevelt ended up issuing over 3,000 Executive Orders, thus destroying much of what was left of the American democracy.

In only one term of office, President Jimmy Carter had the nerve to add about 24,500 pages of EOs to those he had already issued, during his last 90 days in office.

Not to be out done, Democratic President Bill Clinton added another 30,000 pages of EOs, during his last 90 days in office.

The Federal Register and the Cato Institute gives us the numbers of Executive Orders ( not the number of pages) issued by 20th century presidents: Theodore Roosevelt – 1,006; William H. Taft – 698; Woodrow Wilson – 1,791; Warren G. Harding – 484; Calvin Coolidge – 1,253; Herbert Hoover – 1004; Franklin D. Roosevelt – 3,723; Harry S. Truman – 905; Dwight D. Eisenhower – 452; John F. Kennedy – 214; Lydon B. Johnson – 324; Richard M. Nixon – 346; Gerald R. Ford – 169; Jimmy Carter – 320; Ronald Reagan – 381; George Bush – 166, Bill Clinton 364; and the numbers of EOs signed by presidents continue from there.

But there are also Presidential Directives, that are a form of EO, that are issued by presidents with the advise and consent of the unelected National Security Council, which have the full force and effect of constitutionally passed laws. But the real kicker is these Presidential Directives are classified, using the old “National Security” ruse. This is how America, now, officially tortures human beings in military bases all over the world … torture in the name of every American, living or dead.

Additionally, back in 1916, Democratic President Wilson began creating many of our federal agencies, by the use of EOs, each of which has ballooned to about the size of a large foreign government, each of which is headed by un-elected directors, each issuing their own thousands of orders and directives, that have the full force and effect of constitutionally passed laws.

One such agency, the Internal Revenue Service has issued a tax code that is over 60,000 pages long, and growing.

Moreover, Americans today are burdened with thousands of pages of President Review Directives (PRDS), Presidential Decision Directives (PDDs), National Security Reviews (NSRs), National Security Directives (NSRs), National Security Presidential Directives (NSPDs), and even Homeland Security Directives, all having the full force and effect of law, and all in addition to EOs.

In order to maintain the illusion of a democracy, we are still allowed a presidential election every four years; and no one president can serve more than two four year terms. But, it’s not any one president who has become a dictator, it is the Office of the Presidency, and those faceless autocrats who control the presidency that has become dictatorial, without many of us ever knowing it.

No, we are hardly a democracy. Our beloved United States of America has become a fascist dictatorship, and will remain so, until the majority of Americans come to realize the sad state of our ship of state.

Source: Rense

The Wages of Fear in Israel and the US

A country programmatically gripped by fear – yes, that’s us for more than eight years now. Fear of terrorism to be exact, even as truly terrible things happened in this land and elsewhere, from hurricane Katrina in 2005 to last week’s devastating Haitian earthquake, which should have put our fears into perspective. But no such luck.

Since 9/11, the thought of "terrorism" has seized the U.S. by the throat. People who are terrified of flying for fear of a terrorist attack are perfectly willing to drive a car to the nearest mall without a passing worry, even though traffic fatalities indicate that this is a relatively dangerous act. There were a staggering 34,000 fatal crashes in the U.S. in 2008, 12.25 fatalities for every 100,000 Americans, and carmakers are now intent on featuring ever more immersive Internet-linked "infotainment systems" on dashboards. These are sure to up the distraction level and lead to more deaths on the highway, and yet the country is barely focused on this fact. And mind you, despite all the attention, not one American died in a terrorist attack on an airplane last year. In fact, Nate Silver of the Web site FiveThirtyEight.com recently crunched a few numbers and came up with the following: "the odds of being on [a] given [airplane] departure which is the subject of a terrorist incident have been 1 in 10,408,947 over the past decade."

But keep in mind that fear, wherever directed, is a remarkably profitable emotion to exploit. Just think of those controversial full-body-scan machines now being installed in airports at a cost of up to $170,000 each. One promoter of them is former Department of Homeland Security (DHS) Secretary Michael Chertoff, "who now heads the Chertoff Group, which represents one of the leading manufacturers of whole-body-imaging machines, Rapiscan Systems." He’s part of a growing "full-body-scanner lobby" of ex-Washington politicos just made for our moment.

Every jolt of terror, in other words, is a jolt of profit for some company or set of companies. After a while, those jolts of fear become repetitive adrenaline rushes for a whole set of interests which, in the American system, soon hire lobbyists, corner senators and congressional representatives, retain law and publicity firms, and live well as long as people remain terrified.

If these last years tell us anything, it’s that money follows fear. By 2006, for instance, the Department of Homeland Security, that second Defense Department, a huge, unwieldy bureaucracy created from the terror of terror, already had a mini-homeland-security-industrial complex growing up around it; and that, in turn, was part of a global security business aimed at "thwarting terrorists" then worth an estimated $59 billion. (If we had news media worth their salt and DHS was a real beat, we would undoubtedly have more recent, far more striking figures for this.)

At the comical (but also profitable) end of this spectrum of fear were all those places like Old MacDonald’s Petting Zoo, the Amish Country Popcorn factory, and the Mule Day Parade that were put into the DHS’ National Asset Database as "potential terror targets," opening up the possibility that they might receive DHS money to protect them. "The database," reported the New York Times, "is used by the Homeland Security Department to help divvy up the hundreds of millions of dollars in anti-terrorism grants each year." Consider just the Weeki Wachee mermaids at Weeki Wachee Springs in Hernando, Fla. In 2005, the St. Petersburg Times reported that the Weeki Wachee staff was "teaming up with the Hernando County Sheriff’s Office to ‘harden the target’" – as they attempted to access DHS anti-terrorism funds "allocated to the Tampa Bay region." (“‘I can’t imagine [Osama] bin Laden trying to blow up the mermaids,’ [marketing and promotion manager John] Athanason said. ‘But with terrorists, who knows what they’re thinking. I don’t want to think like a terrorist, but what if the terrorists try to poison the water at Weeki Wachee Springs?’”)

All of this might be dismissed as a joke, if American life weren’t filled with phantasmagoric terrors that are also money machines. Everywhere that fear rules, from the U.S. to Israel, there are people exploiting and making money off it – and it’s in the nature of the beast for them to want the gift-that-never-stops-giving to go on forever. On this Martin Luther King Day, TomDispatch regular Ira Chernus takes a deep, dark look into what fear does to Americans and Israelis alike and the ways in which it drives us all. Tom

Martin Luther King’s Legacy and Israel’s Future

Stepping beyond fear
by Ira Chernus

Every year, apologists for Israel’s occupation of Palestine eagerly await Martin Luther King Day. Then they trot out these words, spoken by Dr. King shortly before his death: "When people criticize Zionists they mean Jews; you are talking anti-Semitism.”

King, who repeated the themes that really mattered to him – justice, freedom, human dignity, nonviolence – over and over again, mentioned anti-Semitism only once, in an informal question-and-answer session. Nobody asked him what he meant, and he never explained. (A lengthy letter of "his" expounding on the theme has been proven a hoax.) Yet, year after year, Israel’s apologists rush to use those once-spoken words as the capstone for a line of reasoning which goes something like this: Israel uses violence in the "disputed territories" to protect its own security. If you criticize that violence, you don’t care about Israel’s security; so you don’t care if Israel ceases to exist; so you are against Zionism. And Martin Luther King himself said that that’s anti-Semitism. In other words, only anti-Semites oppose Israel’s occupation policies.

Of course it’s perverse. It’s hard to imagine King ever endorsing such an illogical justification – or any justification – for the violent abrogation of a whole people’s freedom and dignity.

Still, it bothers me that the great man actually did, even once, say that anti-Zionism is anti-Semitism. How could someone whose intellectual rigor I admire make such an error in reasoning, one that could easily be used, even while he was still alive, to rationalize Israel’s occupation of Palestinian lands?

Yes, some people who criticize Zionism are anti-Semitic. But millions of Jews themselves opposed Zionism, especially in its early years. Jews have developed some of the most trenchant critiques of Zionism precisely because they loved their own people and saw Zionism as a threat to Judaism and Jewish values.

I don’t happen to agree with them. I respect Zionism as a movement of national self-determination. (If we accord that right to the Palestinians and every other national group, why not to the Jews?) But I’m one of many Zionists who have objected vigorously as Israel swallowed up the Occupied Territories, because in the long run military occupation is bound to increase the threat to Jews and, no less important, to Jewish values. Although King associated us with anti-Semitism only indirectly and unwittingly, his words have done us a disservice, too.

There’s no way that I, or any of the Jewish critics of Israel – Zionist or not – could be called anti-Semitic. Many non-Jews, driven by moral and intellectual concerns, have added to the thoughtful critiques of Zionism with no tinge of anti-Semitism in their words.

How could MLK not know any of this? He certainly wasn’t naïve or uninformed about foreign affairs. For years, he had been eloquently praising the rising tide of colonized people who were demanding self-determination. And when he finally decided it was "a time to break silence" and voice his opposition to the U.S. war in Vietnam, he showed how well he could master the facts of a foreign conflict.

Though much of that 1967 speech was an eloquent denunciation of military violence in general, and especially that practiced by his own government ("the greatest purveyor of violence in the world today"), a significant part of it was a detailed recounting of Vietnamese history, an explanation of how the war must have looked to the Vietnamese people. Few of us protesting the war back then knew nearly as much about what was happening or could have explained so lucidly just why the war was wrong in political as well as moral terms.

How a man who could get it so right on Vietnam could get it so wrong on anti-Zionism remains a mystery.

King, Zionism, and the Cycle of Fear

If, however, we leave aside King’s offhand comment about anti-Zionism and anti-Semitism, and consider instead his words about the horrors of American state violence and violence in general, which reflected his most deeply held values, we can see Israel’s state violence in a new light that illuminates the deep, often unnoticed links between violence and irrational fear.

When he broke his silence on Vietnam, King denounced the "morbid fear of communism" that had turned Western nations into "arch anti-revolutionaries," willing to "adjust to injustice." "Our only hope today," he preached, "lies in our ability to recapture the revolutionary spirit and go out into a sometimes hostile world declaring eternal hostility to poverty, racism, and militarism."

That, as he had learned from Gandhi and taught to millions, would require a spirit of love strenuously applied to overcome fear. King had read Gandhi; he had also visited India and spoken with many ardent Gandhians. So he grasped the spirit of these words the Mahatma wrote: "Fear and love are contradictory terms." "In order to be fearless we should love all and adhere to the path of truth.”

King agreed with Gandhi that fear was a crucial source of evil. "There is one evil," he said, "that is worse than violence, and that’s cowardice." He also understood the Mahatma’s view that fear was the opposite of love, the opposite of nonviolence, and so often itself the source of violence. By the last night of his life, he had embraced this Gandhian philosophy almost ecstatically. After prophesying his own death, he famously concluded: "So I’m happy, tonight. I’m not worried about anything. I’m not fearing any man!"

King had lived surrounded by whites who were moved to violence by irrational fears of people of color. He dedicated his life to overcoming his own fear so that, through love, he could overcome the fears of his oppressors. In 1967, he finally overcame his fear of harming the civil rights movement and bravely denounced America’s war in Vietnam, which was motivated (as he saw it) by an irrational fear of communism.

King’s blind spot (and even the greatest people have them) was in not recognizing that Israel’s violence against Palestinians, too, was – and still is – similarly motivated by irrational fear. One of the great tragedies of Zionism has, in fact, been its striking inability to escape the fear that gave it birth – a fear well justified in late 19th-century Europe, Zionism’s birthplace, at a time when anti-Semitism was indeed rampant. Today, however, with the Jewish state possessing massively preponderant military power in the Middle East, it no longer makes sense to base Jewish identity on fear, to imagine anti-Semitism lurking behind every well-meaning critique of Israeli policy.

Those of us who follow the path of the great Jewish philosopher and dissident Zionist Martin Buber, who still believe Zionism can in principle be moral, see fear as not merely unjustified but destructive and self-destructive. It fosters policies that only lock Israelis as well as Palestinians into an endless cycle of insecurity.

King apparently never recognized (or at least never said publicly) that fear, not anti-Zionism, was the true threat to the Jewish people. It’s hard to blame him. He was far too busy with more immediate concerns to spend much time studying the Israeli-Palestinian conflict.

Israel’s Fear

If a man as fearlessly committed to truth as MLK could make such a mistake, how much more easily can other Americans, including American presidents, fall prey to the same mistake. The current president has made a huge mistake in dealing with the Israeli-Palestinian conflict. Now he finds himself hostage to a tragic cycle of fear.

At first, Obama came out swinging against Israeli policy like no president since Dwight D. Eisenhower. Soon after taking office, he insisted (according to his secretary of state) on a total, permanent halt to the expansion of Jewish settlements in the occupied West Bank.

It was a sensible step. Settlement expansion is rapidly shrinking the size of a future Palestine to a point where a viable state will be impossible. Without a viable Palestinian state, the Middle East cauldron will continue to boil, generating anger and tensions that threaten not only the security of the region, but U.S. security interests as well. That’s why a total settlement freeze is still supported by some factions in the administration.

But Obama and his advisers apparently underestimated the pushback they would get from Israeli leaders who always have their eyes on their own political futures. No one can say what Israeli Prime Minister Benjamin Netanyahu and his cabinet members really believe, but it’s easy to see the political points they score by pushing the panic button over the so-called "dangers" of giving in to Obama’s demands. All they have to do is raise ever-present fears of Jewish weakness and victimization, as Defense Minister Ehud Barak did when he complained that with the Obama administration "focusing solely on settlement building … Israel felt that it was being driven to its knees and delivered to the other side."

As Henry Siegman, former head of the American Jewish Congress, wrote in the New York Times, Netanyahu’s message that "the whole world is against Israel and that Israelis are at risk of another Holocaust … is unfortunately still a more comforting message for too many Israelis." Siegman observed that this fear (which he called "pathological") “is invoked most frequently by Israelis themselves. The term for it in Israel is a ‘galut [diaspora] mentality,’ the tendency of Diaspora Jewry to see itself as friendless, isolated, and always at the edge of a looming pogrom."

It’s a mentality long rooted in Zionism, and now growing in Israel, where Ha’aretz columnist Bradley Burston notes "a new Israeli approach which borrows from the very worst of our aging instincts. It says: We’re moral, our enemies are out to exterminate us along with our state, that’s all you need to know… Concede nothing… Give no ground. Ever.”

Another Israeli pundit brought the issue directly back to King’s insight about the link between violence and fear. Doron Rosenblum described Netanyahu and Barak as representing "two outstanding traits of Israeliness: aggressiveness and paranoia. … They reflect two sides of the same coin – the fear of being considered weak and, the only thing that’s worse, being considered naive."

A year ago, two Israeli researchers released a study with numbers to back up these impressions. They found that Israeli Jews are generally moved more by fear than anything else in viewing their conflict with the Palestinians. That leads them to "a selective and distorted processing of information aimed at preserving conflict-beliefs."

Obama Held Hostage to Fear?

Here in the U.S., Jews working to resolve the Palestinian-Israeli conflict via a just peace also see fear as a great obstacle. Jeremy Ben-Ami, executive director of the pro-Israel, pro-peace lobby J Street (who has his own roots deep in Israeli life) feels fear is the biggest factor holding back the Jewish state when it comes to making a genuine peace. Yes, Israelis need security guarantees they can believe in, says Ben-Ami, meaningful guarantees that if they give up land they will get peace.

The only way to get such assurances, though, would be through good-faith negotiations. And only strong and active American leadership in the diplomatic process can make those negotiations happen. That’s why J Street and a number of other Jewish-American groups supported Obama’s call for an immediate and total freeze on settlement construction as a first step toward peace talks.

But they face stiff opposition from American Jews still stuck in what J Street Policy Director Hadar Susskind calls "the Israel closet." Torn between thought and feeling, they remain locked into the fear they grew up with, he says. "Their heads support a strong American role in helping Israel make peace with its neighbors, but their kishkes [guts] are uncomfortable with the idea of anyone ‘telling Israel what to do.’"

Worried that Jews will look weak and pushed around, some of the biggest U.S. Jewish organizations denounced Obama’s demands on Israel. They found allies among Christian Zionists (whose influence on U.S. Middle East policy is often underrated) and, very likely, factions in the U.S. government (mostly military and intelligence) who want to placate the Israelis for their own pragmatic purposes as they try to contain the terrors of "terrorism."

Yielding to their collective pressure, Obama backed off his stern demand, letting the Israelis off with only a promised temporary halt to just some expansion. Since he offered no cogent explanation for this retreat, he’s left us free to speculate on the political scare he got from that inside-the-beltway coalition.

It is at least likely that the president and his advisers feared the coalition’s clout as they endured a long, hot summer of attacks on their health-care reform, the one fight the administration feels it has to win. Whatever the reasons may be, Obama consigned the prospect of real peace negotiations in the Middle East to defeat, at least temporarily.

If the administration sticks to its current cautious line, it will go on holding itself – and Middle East peace – hostage to the irrational fears of others. Israelis and Americans need a lasting peace to enhance their security. Palestinians desperately need a lasting peace simply to escape their daily suffering. Yet all are trapped in the synergy of mutually reinforcing fears.

Breaking Free

The situation is, however, not hopeless. Not yet, anyway. If the administration’s political fears can be eased, it may still find its backbone on the Israel-Palestine issue. And one pivotal group could swing the balance: the U.S. Jewish community.

Just as King found the courage he needed back in 1967 when it was "time to break silence" on a terrible war, more and more Jews are breaking the silence that has ruled the American Jewish community when it comes to Israel’s share of responsibility for the continuing conflict. J Street is only the most prominent among the many recent American Jewish voices for peace. They are all joining a movement that’s growing far faster than anyone could have imagined only a few years ago.

J Street’s Susskind sums up that movement – and sounds a lot like King – when he calls on Jews to "step out of the Jewish closet and say: ‘We love Israel, but that doesn’t mean we’ll remain silent when we disagree.’ It’s time for all of us who grew up loving Israel and praying for peace to stop letting the mythical notion that American Jews speak with a single voice keep us from supporting Israel’s security and future by calling for peace."

On this Martin Luther King Day, then, American Jews face a choice. They can dwell on one casual, misinformed, easily misinterpreted remark that King made and use it to justify continued Israeli intransigence and violence. Or they can remember the words in which he summed up a lifetime of nonviolence, on the last night of his life – "I’m not fearing any man!" – and call on their own government to demand at least a start toward ending the conflict: a genuine halt to all settlement expansion.

If enough American Jews, and enough of their non-Jewish allies, find that courage, Obama and future presidents will have the political cover they need to demand of Israel the steps it must take to begin a real journey toward security and peace.

Ira Chernus is professor of religious studies at the University of Colorado at Boulder. Read more of his writing on Israel, Palestine, and the U.S. on his blog.

Copyright 2010 Ira Chernus

Government Takeover of 401(k)s and IRAs?

Bloomberg reports that the Obama Administration is considering measures to encourage Americans to convert their 401(k)s and IRAs into Government-provided annuities. The story has attracted a lot of negative commentary in the blogosphere:

(Hat Tip: InstaPundit.)

The Global Warming Scandal Heats Up

There has been no let up with the debate on Climate Change and the Global Warming Scandal that seems to be ignored on the most part by mainstream media. Yet today there has been another devastating blow to the IPCC and one of their most important claims that the Himalayan glaciers would melt by 2035.

The IPCC has been forced to admit that the claim made was actually taken from an article published in 1999. The article was based around a telephone interview with an Indian scientist who has admitted that he was working from pure speculation and his claims were not backed by research. Adding more embarrassment to the whole story is the fact that it seems to have been nothing more than a group of 10 authors misreading a date and bring that melting glaciers forward by more than 300 years.

Astonishingly, this 300 year mistake seems to have escaped notice by the IPCC and they ran with this as one of their key claims. Considering the fact that the IPCC was set up by the United Nations to ensure that the worlds leaders had the latest and best scientific evidence available, it seems almost absurd that a mistake like this could be allowed to go unnoticed and then allowed to become a key claim for the Global Warming Scandal.

It’s the latest news to hit the headlines and throws yet more negative light on the IPCC who are still feeling the effects of the Climategate emails that were leaked to the public last year.

MLK assassinated by US government: King family civil trial 1999 decision. Why didn’t you know this?

Martin Luther King’s family and his attorney, William F. Pepper, won a civil trial that found US government agencies guilty in the wrongful death of Martin Luther King. The 1999 trial, King Family versus Jowers and Other Unknown Co-Conspirators, is the only trial ever conducted on the assassination of Dr. King. The King family’s attempts for a criminal trial were denied, as suspect James Ray’s recant of what he claimed was a false confession was denied.

King’s family and Mr. Pepper allege that Dr. King’s speech calling upon America to end the Vietnam War, Beyond Vietnam: A time to break silence, and his plan for a 500,000 camp-in for Washington, D.C. in the summer of 1968 were a threat to dominant and fascist political factions within US government.
The King Center, managed by his family, provide the outline and partial transcript to the trial here. Closing statements are here. A transcript of a talk given by Mr. Pepper explaining the trial and his book with detailed documentation, An Act of State, is here (2-page summary here). I also recommend David Ratcliffe’s review of the book, Jim Douglass’ coverage of the trial, reviewing Edward Rynearson's resources, and watching Mr. Pepper’s talk on the subject below. I also suggest Robert Kennedy’s assassination was also a government-supported assassination to suppress war dissent.
“For a quarter of a century, Bill Pepper conducted an independent investigation of the assassination of Martin Luther King, Jr. He opened his files to our family, encouraged us to speak with the witnesses, and represented our family in the civil trial against the conspirators. The jury affirmed his findings, providing our family with a long-sought sense of closure and peace, which had been denied by official disinformation and cover-ups. Now the findings of his exhaustive investigation and additional revelations from the trial are presented in the pages of this important book. We recommend it highly to everyone who seeks the truth about Dr. King's assassination.” — Coretta Scott King, Dr. King's wife.
Hundreds of writers have documented US corporate media collusion with US government to disinform the American public with wars and supporting policy of fascism. Corporate media’s refusal to cover this trial and report upon it is a revealing case study.
Policy response: Gandhi and Martin Luther King advocated public understanding of the facts and non-cooperation with evil. I’m among hundreds who advocate:
  1. Understand the laws of war. These were legislated after WW2 and are crystal-clear that only self-defense, in a narrow legal meaning, can justify war. The current US wars are not even close to being lawful. Those involved with US military, government, and law enforcement have an oath to protect and defend the US Constitution, not “always place the mission first.” To fulfill their oath they must immediately refuse and end all orders associated with unlawful wars and military-related constant violation of treaties.
  2. End the transfer of trillions of American taxpayer money to banksters and admitted as “lost” by our military. End poverty through global cooperation to achieve the UN Millennium Goals by developed countries investing 0.7% of their income. Support global security through cooperation, dignity, justice, and freedom. Create a US Department of Peace to help.
  3. Communicate. Trust your unique, beautiful, and powerful self-expression to share as you feel appropriate. Understand that while many people are ready to embrace difficult facts, many are not. Anticipate that you will be attacked and prepare your virtuous response in the spirit of competition, just as you do in other fields.
  4. Prosecute the war leaders for obvious violation of the letter and spirit of US war laws. Because the crimes are so broad and deep, I recommend Truth and Reconciliation (T&R) to exchange full truth and return of stolen US assets for non-prosecution. This is the most expeditious way to understand and end all unlawful and harmful acts. Those who reject T&R are subject to prosecution.
Please share this article with all who can benefit. If you appreciate my work, please subscribe by clicking under the article title (it’s free). Please use my archive of work to help build a brighter future.
Comments policy: I welcome questions and comments that are civil and pertain to the article topic. Impolite and impertinent comments will be deleted.
Please consider that I’m among hundreds of writers who have documented our own government’s disclosure of propaganda programs to support their wars. I suspect my articles are under such propagandistic attack from comments that use typical rhetorical fallacies to distract readers from the facts. I invite readers to sharpen their ability to discern such propaganda. They are characterized by a combination of: never addressing the facts, diverting attention through unsubstantiated belief in an alleged expert, irrelevant data, straw-man attack that distorts the facts, ad hominem attack of insults to the messenger, vile comments to repulse readers, and lies of omission and commission.
I will use such comments to point-out the propaganda or delete them at my discretion. Again, all relevant and polite questions and factually accurate comments are welcome. As a professional educator I’m in agreement with my experience and research: we learn best from multiple perspectives in mutual commitment to understand the facts, see those facts from diverse points-of-view, and consider various policy proposals of what we should do.

The RRSP Mirage

Too many personal plans are coming up way short. The push is on to reinvent Canada's deal with retirees.

Can Canada restitch the fraying financial safety net citizens count on when we stop working?

On Dec. 17, federal and provincial finance ministers will meet in Whitehorse for talks focussing on retirement and pension reform. Hopes are high for an historic moment -- the dawn of "Pensioncare."

Fears are equally high -- that the history will have more to do with squandered opportunities and fumbled balls.

Triggering this confab is the growing consensus that Canada needs to figure out a way to get pensions for people who don't have them, and to shore up the retirement savings for people who aren't accumulating what they expected.

It is now clear that the Registered Retirement Savings Plan (RRSP) system has failed to secure the futures of enough middle class workers and, in the words of one C.D. Howe Institute researcher, has "defrauded" lower income workers.

Proponents of RRSPs stress the tax-sheltered vehicle empowers individuals to take control over their financial futures. But not even one in three people who can take advantage do so. "Almost $500 billion in unused RRSP contribution room is being carried forward," calculates Monica Townson, whose primer on Canada's pension problem for the Tommy Douglas Research Institute was published in October of this year.

If RRSPs aren't getting it done for enough people, what about the private pensions some workers get from employers to top up their payouts from the Canadian Pension Plan (CPP)? If you get such benefits, consider yourself lucky. You belong to a dwindling minority.

While Canada has enjoyed a well-earned reputation for taking care of its elders, "the fundamental fact remains that many workers in their 40s and 50s today -- and especially younger Canadians -- can expect a much less comfortable and secure retirement than those who are now in their 70s and 80s," warns Andrew Jackson, national director of social and economic policy with the Canadian Labour Congress. If policies don't change, say a number of experts interviewed for this series, a growing percentage of the coming generation of retirees will plunge into poverty.



And so the finance ministers are jetting to Whitehorse in the dead of winter. Some believe the timing and location are indicative of the Harper government's muted enthusiasm for a topic that could no longer be avoided. With companies going bankrupt, pension schemes floundering, pension coverage declining and the baby boom cohort approaching retirement age, public concern is undeniable. The provinces of Nova Scotia, Ontario, Alberta and B.C. have all fielded reports on pension reform, and the latter two are on the verge of initiating a regional pension scheme.



Meanwhile, the Canadian Labour Congress, the Canadian Association of Retired Persons and the C.D. Howe Institute have unveiled public pension proposals that would significantly augment the current system. Financial experts ranging from Don Drummond, chief economist for the Bank of Nova Scotia, to David Dennison, president and CEO of the Canada Pension Plan Investment Board, have expressed support. The federal Liberals and NDP are on board. No wonder the CLC's Joel Harden calls it a "Tommy Douglas moment."



In response, Prime Minister Harper has appointed Alberta MP Ted Menzies, parliamentary secretary to Finance Minister

Jim Flaherty, to head a pension initiative. The two will meet with their provincial counterparts in Whitehorse to sketch the way forward.

There are some clear and important differences between the various plans to be floated at that meeting, as we will explain in coming installments of this series, "Finding a New Pension Fix." First, though, a closer look at why RRSPs are failing the futures of too many.

The fading RRSP dream

The problem with the current situation does not lie with government pension offerings -- CPP, OAS (Old Age Security) and GIS (Guaranteed Income Supplement) -- which in general have proven to be adequately funded and efficiently run. The problem is that these provide limited income and were never intended to do anything other than augment private pensions and personal savings.



Meanwhile, both of these elements are in decline, if not indeed crisis. Beyond the fear that the current roster of failing pension plans is just the tip of the iceberg, there is the inescapable fact that the iceberg itself is melting: only 23 per cent of private-sector employees are currently enrolled in a plan, the lowest proportion since the 1950s.



The decline of private-sector pension plans isn't a complete accident, either. While public sector unions made pensions a priority, in many cases bargaining away higher wages and other benefits to secure them, other employers and employees accepted the idea that saving for retirement could also be accomplished via the Registered Retirement Savings Plan, which was introduced in 1957.



Somewhat ironically, to the extent that the program has been criticized at all, it has been for being too rich a benefit to the generally middle- and upper-income Canadians who could afford RRSPs and -- at one time, anyway -- embraced them. In the 1990s, with the stock market booming, "Freedom 55" seemed well on its way to replacing "Peace, order and good government" as the national ideal. 



Since then the dream has gradually died. RRSP contributions peaked in 1997, and by 2008 fewer than 30 per cent of those eligible made a contribution. The advent of a lost decade for stock prices perhaps played a part, as did a rise in residential real estate prices, which convinced some people that they were living in their pension plan. But perhaps also, Canadians began to twig to the dirty little secret of the RRSP: try as one might, it is almost impossible to generate a healthy return -- and therefore a secure retirement -- because the system is rigged against individual investors.

Who really profits from RRSPs?



A tantalizing hint of this surfaced in September during a dispute between Ontario's McGuinty government and the financial services industry, which objected to the prospect that sales tax harmonization would apply to mutual fund investments. In response, officials in the McGuinty government threatened to release a document on the negative effects of high management fees.



While some observers objected that the McGuinty government was indulging in threats and blackmail, others wanted to see the smoking-gun document. That has not been released, but there is plenty of research into the shortcomings of mutual funds, especially in the U.S., but also in Canada, which has some of the highest management expense ratios in the world.



A 2007 article in Canadian Investment Review by Rob Bauer, a finance professor at the University of Maastricht, and Keith Ambachtsheer, director of the Rotman International Centre for Pension Management at the University of Toronto, is particularly relevant. The article quantifies the cost to Canadians of mutual fund investments by comparing them to equivalent pension fund investments. 



How yawning is the gap? In the case of Canadian equity funds (historically the most common type of mutual fund purchase), during the period 1996 to 2004 Bauer and Ambachtsheer pegged the difference at 3.8 per cent a year in the case of so-called no-load funds, and even more for funds that charge additional sales fees.



The disparity is somewhat attributable to the investing record of mutual funds (on average somewhat poorer than institutionally managed pension funds), but mostly to their high management fees. Canada's management fees are among the highest in the world. The fees are high partly because mutual funds are generally smaller than pension funds, and therefore have higher overhead, but also to pay for marketing and sales commissions, not to mention the imperative to return a profit.



Over time a difference of that magnitude becomes truly monumental.

A startling disparity in returns


As an example, consider the case of someone who at 25 began investing $2,000 a year in a mutual fund that delivers annual returns of 4 per cent. At 65 he or she will have accrued $197,653.07 -- which would then pay out $12,165.54 a year in a 25-year annuity returning the same 4 per cent.



But if the same $2,000 a year had been invested with a pension fund that returned 8 per cent (an additional 4 per cent a year as indicated by Bauer and Ambachtsheer), the equivalent amount would be $559,562.08 -- generating an annual annuity payout of $48,535.20, assuming a continuing 8 per cent return over the same 25-year term.



Of course, there is no law saying Canadians must invest their RRSPs in mutual funds. It's just that there are few other viable options available to small investors. It is possible to make an end run around high management expenses by investing instead in index funds or ETFs, whose expense ratios can be as low as 0.15 per cent (and are almost always below 1 per cent, compared to the 2 and 3 per cent charged by mutual funds). But these as well produce returns inferior to those of most institutionally managed pension funds. Under some circumstances, such as during the recent market turmoil, they can trail the performance of even mutual funds.



It's also possible to buy simple GICs or to concentrate on bonds. Especially over the past ten years, default strategies along those lines have worked out relatively well. Yet even taking into account the stock losses of the past year and a half, most pension funds, with their enormous pools of capital, diverse investment baskets and ultra-low management ratios, will still have come out ahead of the individual investor.



Making matters worse, there is also the tendency of individual RRSP investors to be (put on the shoe that fits): ignorant, negligent, apathetic, impressionable, excitable and erratic when it comes to investment decisions. As well, investing is something most people are not trained in and would rather not be doing, so they may fail to (again with the shoes) research their options, weigh their risks, read their contracts or even open their statements. Or they may do these things, but badly.

What, then, does the distribution of RRSP winners and losers look like? The average sized RRSP saved by Canadians today is about $60,000. At current interest rates, that amount rolled into an annuity will pay a mere $200 a month.

A 2003 paper published by the C.D. Howe Institute found that about one in five households headed by people nearing retirement had no savings. But author Richard Shillington reserved his greatest pity for those he called "futile savers," the one in three who had less than $100,000 in savings, having put aside on average $23,000. These people would be eligible for GIS, but the sacrifice they'd made to scrape up small RRSPs would yield them almost nothing. "The primary beneficiary of this saving," wrote Shillington, "will be the federal and provincial governments because most of the income from it will be confiscated by income-tested programs and income taxes. To the extent that these households were misled, they have been defrauded."

'Confidence shaken'

At the moment, however, it isn't just the lower earners who are feeling ripped off by the promise they could expect a comfortable, RRSP-cushioned retirement right on schedule. A poll last month found that 37 per cent of Canadians are now planning to delay their retirement, up from 28 per cent just a year ago. "Many Canadians may have had their confidence shaken by events of the past year," concluded Jack Courtney, assistant vice-president of the Winnipeg-based Investors Group, which commissioned the poll by Harris/Decima.

What's going to be on the table in Whitehorse are a number of proposals aimed at restoring that confidence, as well as the security of Canadians suddenly realizing their retirement years may be in jeopardy.

Next: A labour-backed plan to double the CPP pension amount for the coming wave of retirees.  [Tyee]