Tuesday, August 17, 2010

Stocks, Housing and Economy, Mass Delusion American Style

"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." - Charles Mackay- Extraordinary Popular Delusions and the Madness of Crowds

The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:


  1. Buy stocks for the long run
  2. Homes are always a great investment
  3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs and Markets:

"Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional - more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy - and everything else - are of this nature. They are forms of self medication, superstitious lip service we pay to the powers of the dark, like touching wood....or throwing salt over your shoulder. "Stocks for the long run," "Globalization is good." We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don't know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd."

Stocks for the Long Run
The book Stocks for the Long Run was written by Jeremy Siegel in the mid-1990's. The premise is that if you just buy and hold stocks over a 20 to 30 year period, you will always make money. This was exactly what the Wall Street witch doctors ordered. They pounded this message into the brains of every American incessantly in their advertising campaigns, literature and propaganda. It became an unquestioned truth. Just one problem. It isn't the truth. Valuations matter. The Dow Jones was at the same level in 1982 as it was in 1966. On an inflation adjusted basis, the Dow did not get back to the 1966 level until 1990. That is 24 years of no return in the stock market. The American public ignored the true facts and piled into equities during the late 1990s. The result was one of the greatest examples of mass delusion in history. The internet bubble drove the NASDAQ market to a peak of 5,048 in March 2000. Today it sits at 2,180. Ten years after the bubble burst, the NASDAQ is still down 57% from its peak.

Delusional Americans all over the country believed in the new internet paradigm. Fools thought "bricks and mortar" retailers were dead. Morons quit their jobs so they could get rich day trading. Wall Street hucksters took advantage of this hysteria by attaching .COM to every ridiculous IPO they shilled to the American public. Wall Street knew these companies were pieces of crap, but they churned out the IPOs as quickly as possible while the getting was good. The Wall Street oligarchs made billions and the delusional American public got screwed. You would think that average Americans would have learned their lesson after this experience. They did not. They continued to buy into the Wall Street lies about stocks being a sure path to riches. The fact is that the S&P 500 is currently at the same level it was in March 1998. On an inflation adjusted basis, it is 25% below the level of 1998. You don't hear this information on CNBC because the oligarchs that control the media need the delusion to continue in order to harvest more riches from the ignorant masses.

Home Sweet Home
“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” - David Lereah - Chief Economist for National Association of Realtors - 2005

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” - Ben Bernanke - 2005

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” - Ben Bernanke - 2005

Why was it that two supposedly brilliant, highly trained economists, with countless degrees and high paying positions could be so very wrong? Were they just mistaken or were they purposefully encouraging a national delusion? With the bursting of the internet bubble in 2000 - 2002, Americans immediately proceeded to the next bubble. Alan Greenspan was an almost God like figure in the early 2000s. He had "saved" the economy countless times during his 15 year reign of terror at the Federal Reserve. When he spoke, the American people listened. After the internet bubble and 9/11, he proceeded to reduce interest rates to 1% for an extended period of time. He then gave the all clear sign to Americans to take out adjustable rate mortgages. Lastly, Mr. Free Markets decided that banks and mortgage brokers could police themselves. The result was the greatest housing bubble in US history and a near collapse of the worldwide financial system.

Sane economists like Robert Shiller saw it for what it was. He calmly pointed out that home prices had pretty much tracked inflation for over 100 years. A 100% increase in home prices over the course of 3 years was irrationally exuberant. He was scorned and ridiculed by the delusion propagators at the NAR, the cheerleaders on CNBC, the Wall Street money changers, the Federal Reserve stuffed suits, and the corrupt politicians in Washington DC. The usual drivel about positive demographics, low interest rates, strong income growth, and limited land to develop were spewed out by the corporate media complex. The beneficiaries of this mass delusion were the Wall Street banks that created mortgage products and derivatives faster than Obama spreads our wealth around.

Mass delusion is always encouraged by those who benefit most from the mass delusion. David Lereah has admitted that he lied about the housing bubble because he was employed by realtors. Realtors made millions in commissions. Appraisers made millions in fees by inflating appraisals. Mortgage brokers made millions by encouraging people to lie on mortgage applications. Wall Street whores made billions by creating toxic packages of mortgages and selling them to Irish nuns, old ladies and clueless municipal administrators. The ratings agencies made hundreds of millions in fees for slapping AAA ratings on toxic derivatives. Politicians got rich from political "contributions" from Fannie Mae, Freddie Mac, Wall Street, and the NAR. Any reasonable human being could look at the chart above and see that this would end badly, but Americans wanted to be deluded. They choose to believe. The housing market has now been falling for five years, with another five years to go. Ben Bernanke has reduced interest rates to zero. I wonder how that will work out.

Who Benefited from Globalization?

“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.” - Mark Twain

From the time that Bill Clinton signed the NAFTA agreement in 1994, globalization has been touted by those in power as beneficial to all Americans. How could free markets and free trade be a bad thing? Corporate America, Wall Street, and the mainstream corporate media have blared the propaganda of globalization benefits from their loudspeakers. In theory, globalization appears to be a positive concept. It describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The truth is that globalization is not inherently good or inherently bad. The idea is that each country has its own strengths and weaknesses. Each country will take advantage of their strengths and rely on other countries to help mitigate their weaknesses. This will result in increased trade, a larger world market, and economic progress for all. One small problem. Trade is not really free. Every country on earth protects various industries. Every country on earth manipulates their currency in order to get an edge. Every country on earth invokes tariffs to protect their national interests.

Bill Bonner and Lila Rajiva address the difficulties of globalization and "free trade" in Mobs, Messiahs and Markets:

"Unfair trade is yet another of the dodgy slogans festooning the spectacle of globalization like tinsel slithering around a pole dancer. How can different regulations and practices in different countries constitute unfairness? Isn't the essence of trade that different countries have different things to offer - whether cheap labor, or better technology, or more bountiful natural resources, or more welcoming business environments? If all countries had exactly the same things to offer each other, there would be no reason to trade at all. But what "fair" trade advocates are really advocating, of course, is unfair trade! They want to make sure their foreign competitors divest themselves of the very advantages that they bring to trading."

"We notice, for instance, that when Americans in Detroit lose jobs to other Americans in California, they might grumble a bit. But, by and large, they accept it as part of the nature of things. They move, or retrain, or change jobs. But when they lose their jobs to Japanese in Osaka or Indians in Bangalore, then a cry goes up. Unfair trade, howl the trade unions; race to the bottom, scold the social activists; yellow - or brown - peril, shriek the xenophobes and racists."

It seems the American middle class was sold a false bill of goods. They bought the Big Lie that globalization would benefit them. They bought into the delusion that even though their high paying manufacturing jobs sailed away to China and India, they could maintain their lifestyle through brain work, easy credit, cheap goods made in China by the people who took their jobs, and the ever increasing value of their homes. Noam Chomsky notes the fallacy of this delusion:

"The dominant propaganda systems have appropriated the term "globalization" to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental."

Again, one must seek out who benefits from the delusion of globalization. The crony capitalists, Wall Street oligarchs, and corporate fascists who control the puppet strings in this country have benefited greatly from the Big Lie. Over 5 million manufacturing jobs have been off-shored since 2000. These good paying jobs are never coming back. Millions of service sector jobs continue to be shipped overseas. The global conglomerates like GE, HP, Oracle, IBM, and Boeing continue to rake in billions of profits, distributing millions to its high paid executives, while gutting middle class America. The ruling oligarchs convinced Americans to take advantage of cheap goods and easy credit, to buy electronics, cars, appliances, new kitchens, and take the vacations of their dreams. This Big Lie has left the American consumer with $2.5 trillion of non-mortgage debt and the lowest level of home equity in history. Retailers like Wal-Mart, Target, Home Depot, and Best Buy reaped billions in profits as Americans whipped out one of their 10 credit cards to buy HDTV's, economy bags of tube socks, iPads, iPods, stainless steel refrigerators, and Dell computers. Small town America’s mom and pop economy was gutted by Big Box retailers selling the globalization delusion. The biggest beneficiaries of the globalization delusion were the Wall Street banks. They control 80% of credit card market and have reaped billions in interest at rates exceeding 20%, while sucking $20 billion per year in late fees from the clueless public. Wall Street bankers have rewarded themselves for their brilliance in destroying the middle class by reaping multi-million dollar bonus packages.

Vincible Ignorance

“Most ignorance is vincible ignorance. We don't know because we don't want to know.” - Aldous Huxley

Based on all available evidence, it seems the American public wants to be misled. They have chosen ignorance over knowledge and understanding. They want to believe their corrupt leaders. They want to believe that things always work out in the long run. They want to believe that the economy is about to get better. They don't want to think about unsustainable debt, unfunded liabilities, saving for retirement, or Simon Cowell leaving American Idol. Americans desperately want to be deluded into another bubble, but there are no evident bubbles left to blow. The existing American delusion is that the current fiscal path will not lead to the utter destruction of our once great Republic.



America resembles a 40 year old aging baseball icon with two bad knees, a pot belly, receding hairline and delusions that he is still the ball player he was at 24. He doesn't realize that his skills are shot, as he flails at curveballs in the dirt thrown by 21 year old kids. The rest of the league knows he is washed up, but he refuses to accept reality. America isn't even running on fumes at this point. It is running on delusions. Politicians think they have saved the country from a Depression by adding $3 trillion to the National Debt and allowing Wall Street banks to pretend they are solvent. Americans have been deluded by the ruling oligarchs that a $700 billion bank bailout, an $800 billion pork filled stimulus plan, the Federal Reserve buying $1.2 trillion of toxic mortgages, and the Treasury forcing taxpayers to pick up a $400 billion tab for Fannie Mae and Freddie Mac’s bad loans has actually solved a problem created by too much debt.
The American herd has gone mad. A few people have regained their senses, but the vast majority still exhibits the behavior of sheep being led to slaughter. The ruling oligarchs have utter contempt for the average American, but they fear the masses. In order to retain their power and wealth, they gladly hand out two years of unemployment payments, food stamps, and welfare payments to keep the masses sedated. The working middle class foots the bill. Corruption abounds and is sustained by the passage of more laws and regulations. The sociopathic powers that control the levers of power in this country need to be brought to justice if this country has any chance at survival. The den of vipers and thieves have trampled on the Constitution, speculated with the country's funds, risked blowing up the financial system, committed fraud on a massive scale, and continue to rape and pillage the American citizens. Vincible ignorance by the American people is no longer a legitimate excuse. The criminals on Wall Street and Washington DC must be routed out and Americans must awaken from their delusional state before it is too late. I weep for the liberty of my country.

And you run and you run to catch up with the sun, but it's sinking
Racing around to come up behind you again
The sun is the same in a relative way, but you're older
Shorter of breath and one day closer to death

Pink Floyd - Time

By James Quinn

Climate scientists in race to predict where natural disaster will strike next

Conference in Boulder will step up world's efforts to establish an early warning system for extreme weather events

landslide victim
A woman grieves near her relative's body after dozens of people were killed in landslides in China's Gansu province last week. Photograph: Aly Song/Reuters

The world's leading climate scientists will gather this week in the United States to hammer out plans to set up an early warning system that would predict future meteorological disasters caused by global warming.

The meeting, in Boulder, Colorado, has been arranged at diplomatic level amid fears that storms, hurricanes, droughts, flooding and other extreme weather events now threaten to trigger widespread devastation in coming decades. A series of meteorological catastrophes have dominated headlines in recent weeks, while scientists have warned that figures so far for this year suggest 2010 will be the hottest on record.

Recent events include a record-breaking heatwave that has seen Moscow blanketed with smog from burning peatlands, the splintering of a giant island of ice from the Greenland ice cap, and floods in Pakistan that have claimed the lives of at least 1,600 people and left 20 million homeless.

Scientists say events like these will become more severe and more frequent over the rest of the century as rising greenhouse gas emissions trap the sun's heat in the lower atmosphere and bring change to Earth's climate and weather systems. However, their ability to pinpoint exactly where and when the worst devastation will occur is still limited. The aim of the Colorado meeting is to develop more precise predictive techniques to help pinpoint the location and severity of droughts, floods, and heatwaves before they happen and so save thousands of lives.

"The events in Moscow and Pakistan are going to focus our minds very carefully when we meet in Colorado," said Peter Stott, head of climate monitoring at the UK Met Office. "On both sides of the Atlantic we have been monitoring what has been going on with the aim of understanding their precise causes so that we can provide better warnings of future disasters."

The meeting in Boulder will be the first full session of Ace, the Attribution of Climate-related Events, which has been set up by scientists from the world's three leading meteorological organisations: the US National Centre for Atmospheric Research (NCAR), the UK Met Office and the US National Oceanic and Atmospheric Administration (NOAA).

The aim, said Stott, would be to develop a modelling package that would allow scientists to forecast the kind of events that the world has been witnessing over the past few weeks – before they struck. The fact that the Foreign Office has been closely involved in setting up Ace reveals how seriously the issue is taken by politicians.

Meteorologists have developed remarkably effective techniques for predicting global climate changes caused by greenhouse gases. One paper, by Stott and Myles Allen of Oxford University, predicted in 1999, using temperature data from 1946 to 1996, that by 2010 global temperatures would rise by 0.8C from their second world war level. This is precisely what has happened.

But although meteorologists have developed powerful techniques for forecasting general climatic trends – which indicate that weather patterns will be warmer and wetter in many areas – their ability to predict specific outcomes remains limited. It is this problem that will be tackled, as a matter of urgency, at the Ace meeting in Boulder.

An example of the complexity that faces meteorologists is provided by the weather system that scorched Moscow, said Stott. "Moscow has a stable high pressure system over it, much like the one that brought a heatwave to Europe in 2003. However, for a while the land around the city acted as a natural air conditioner, keeping the air cool through evaporation of moisture from the ground. But the land eventually dried out and there was no more cooling. Hence the soaring temperatures."

To forecast an event like that, scientists need to be able to quantify all the variables involved and also develop a very precise model of the land surface, added Stott.

"These are the sorts of things we need to understand. We need to be able to forecast events weeks or months ahead of their occurrence so people can mitigate their worst impacts. We also need to consider the longer-term context and see if we need to build better sea defences at a particular location and assess how high dykes or walls need to be. Certainly, one thing is clear: there is no time to waste. The effects of global warming are already upon us."

The Worst Case Scenario

by Egon von Greyerz – Matterhorn Asset Management

[Note: Although I disagree with some minor techinical points with the below analysis, I believe that it overall paints a fairly accurate picture in terms of the current economy and what could happen in one type worst case scenario-RW]

No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But this will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer.

The End of an Era

The hyperinflationary depression that many western countries, including the US and the UK, will experience is likely to mark the end of an era that has lasted over 200 years since the industrial revolution. A major part of the growth in the last 100 years and especially in the last 40 years has been built on an unsustainable build-up of debt levels. These debt levels will continue to swell for another few years until the coming hyperinflation in the West leads to a destruction of real asset values and a debt implosion.

In the last 100 years the Western world has experienced a historically unprecedented growth in production, in inventions and technical developments leading to a major increase in the standard of living. During the same period government debt, as well as private debt have grown exponentially leading to a major increase in inflation compared to previous centuries.

Until the early 1970s the growth in credit to GDP had been going up gradually since the creation of the Fed in 1913.. But from 1971 when Nixon abolished gold backing of the dollar, virtually all of the growth in the Western world has come from the massive increase in credit rather than from real growth of the economy. The US consumer price index was stable for 200 years until the early 1900s. From 1971 to 2010 CPI went up by almost 500%. The reason for this is uncontrolled credit creation and money printing. Total US debt went from $9 trillion in 1971 to $59 trillion today and this excludes unfunded liabilities of anywhere from $70 to $110 trillion. US nominal GDP went from $1.1 trillion to $14.5 trillion between 1971 and 2010. So it has taken an increase in borrowings of $50 trillion to produce an increase in annual GDP of $13 trillion over a 40 year period. Without this massive increase in debt, the US would probably have had negative growth for most of the last 39 years.


Total US debt to GDP is now 380% and is likely to escalate substantially.

The coming hyperinflationary depression and the credit and asset implosion that is likely to follow will most probably lead to the end of a 200 year era of growth for the Western world. If only the excesses from the 1970s were corrected we might have a circa 20 year decline. But more likely we will correct the era all the way back from the industrial revolution in the 18th century and this could take 100 years or more.


So after the tumultuous and very painful times that we are likely to experience in the next few years, the West will have a sustained period of decline. All the excesses in the economy and in society must be unwound. These abnormal and unreal excesses are not just corporate executives, bankers, hedge fund managers or sportsmen earning $10s to $100s of millions but also a total collapse of ethical and moral values as well as a breakdown of the family as the kernel of society.

Most people believe and hope that this major trend change could not happen today with all the measures that governments have at their disposal. But very few people comprehend that it is precisely the government interference, controls and regulations as well as money printing that have created the problems in the first place. Power corrupts, and the more pressure a government is under the more they intervene. Because they believe that their interference in the economy will save the country – read Obama, or the world – read Gordon Brown. Little do they understand that each interference, each regulation or each dollar or pound or Euro printed will exacerbate the problems of the economy manifold.

Governments now have two options; continue to spend and print money like the US or introduce austerity programmes like Europe. Whichever way they chose will not matter since they have reached the point of no return. The economy of the West cannot be saved by any means. But governments both in the US and in Europe will still apply the only method they know which is to print money.

Facebook 'dislike' scam warning

Facebook users are being targeted in a scam that offers them a chance to install a "dislike" button.

The scam tricks users into allowing a rogue application to access their profile page, which then posts spam messages.

It also attempts to lure people into completing an online survey, for which the scammers are paid money.

The social network already offers a "like" button that allows people to rate other user's comments and posts.

Graham Cluley of security firm Sophos said it was the latest in a series of "survey scams" that included links to a video purporting to show an anaconda vomiting up a hippo.

"One thing we commonly see is that the message starts 'OMG, shocking video'," he said.

"And they appear to come from your Facebook friend, giving it a ringing endorsement."

Unknown apps

The dislike button scam prompts people to download an application with the message: "Download the official DISLIKE button now."

When users click on the link it prompts them to install a rogue application, which does not function as a dislike button.

Once a user has given it permission to access their profile, it updates the user's page with a link and a message: "I just got the dislike button, so now I can dislike all of your dumb posts lol!!!"

Start Quote

We always encourage people to not click on links that appear suspicious - even if posted from a friend”

End Quote Facebook spokesperson

"Many people are giving permission for completely unknown apps," Mr Cluley told BBC News.

The surveys appear to be from genuine companies, he said.

"As far as we can tell, they appear to be legitimate," he said. "It could be that the firms are not policing their affiliates properly."

The scam finally points users towards a Firefox add-on that installs a "dislike" button.

Mr Cluley said the add-on also appears to be legitimate.

Ron Sharpp, CEO of FaceMod, the maker of the add-on, told BBC News that his company was "in no way affiliated with the online scams".

He said the firm had been sent "several support e-mails" asking about the surveys.

"In response, we've taken efforts to remind our users that those are not official posts and warning users not to download any version of our add-on from an alternate source," he said.

In addition, the company has issued a warning via its Facebook page.

A spokesperson for Facebook said it also regularly warns users about rogue applications.

"We always encourage people to not click on links that appear suspicious - even if posted from a friend," a spokesperson said.

The site has a "very quick process in place" to make sure that links and rogue applications were taken down quickly, they added.

"They can report any posts to us. We can make sure that we take down any application or all of the links across Facebook."

But Mr Cluley said that although Facebook could respond quickly, it should police the development of rogue applications more closely.

"Anyone can write a Facebook app - these scams are constantly springing up," he said.

The Best Gold Interview of 2010

Jeff Clark, Casey's Gold & Resource Report

Much of what passes for “insider” information these days is often conspiracy-edged or largely conjecture. True inside information is actually hard to come by. So what follows is the refreshingly candid and uncut version of my talk with a first-hand participant in the murky and little-understood world of gold bullion, mints, and bullion dealers.

Customarily, when considering a company for a potential recommendation, I hold a series of discussions with management. It was during one of these vetting procedures that I spoke with Andy Schectman of Miles Franklin – and heard some disturbing reports about supply that every investor should know. Andy is a bullion seller, so you’re welcome to take his comments with a grain of salt. On the other hand, what he sees week after week and what he hears from his high-level industry contacts might just make you pull back on that salt shaker and re-inventory the number of ounces you own...


Jeff Clark: Andy, tell us about the kinds of contacts you have in the industry and where you get your information.

Andy: I’m associated with two of the six primary mint distributors in the United States. There are only six primary precious metal distributors here because the qualifications are very difficult to meet. Aside from having $100 million in annual sales, you have to extend a $50 million line of credit to the U.S. Mint, and very few companies can do that. So in working with these companies, I’m privy to information that many others aren’t.

Jeff: So, what have you been hearing from them about supply for physical gold and silver?

Andy: I think in order to properly characterize what’s happening in the industry, it's important to start from a big-picture perspective, which is that by and large the masses in this country are not involved in precious metals. In my experience, the move we've seen in gold over the last decade has primarily been from international investment – sovereign wealth funds in the Orient, petrodollars in the Middle East, India buying from the IMF, Russia and Japan accumulating, etc.

Most U.S. investors have lived through nothing but prosperity and good times, where they perhaps didn’t think they needed to own gold – but I think the rest of the world isn't as optimistic about the future. So when you talk about supply, it's important to acknowledge that most people in this country don't own any gold and silver. To me, that's what should really alarm people.

Jeff: Tell us how you would characterize supply right now.

Andy: Fragile. Availability of product changes almost weekly.

But it’s worse than that. When the market plunged 1,000 points in one day last month, two German banks bought about 35,000 or 40,000 one-ounce coins and cleaned out the Royal Canadian Mint overnight. Think about that: two banks cleaned out one of the world’s preeminent mints in one day.

Then you have the Austrian Mint recently announcing they were running into supply issues. And the U.S. Mint has been the model of inefficiency for the last several years. They have been either reluctant or unable to meet demand when it comes to Gold Buffalos, Platinum Eagles, and fractional Gold Eagles. They issue dribs and drabs of them, but certainly not enough to meet demand.

Jeff: And they frequently run out.

Andy: They frequently run out, they frequently have delivery delays, and it's a situation where very quickly we could see major disruption in the supply chain.

Jeff: We saw supply constraint in 2008, where dealers were running out of product. Do you think we’re headed there again?

Andy: I do. In 2008, when gold dropped from $1,000 to $700 very quickly, all product worldwide disappeared. Within weeks the U.S. Mint was shut down. The Canadian, Austrian, and Australian Mints were all eight to 12 weeks back-ordered or shut down. The Australian Mint stopped taking any new orders in July or August for the rest of the year. The Rand Mint, for the first time ever, sold out of all its product. One wealthy Swiss businessman flew his own 747 there and cleaned them out.

So product was impossible to get, but not just from the primary mints; even the refiners that made 100-ounce silver bars couldn't get them. No one could get anything, and it was a very scary time if you owned a gold company. There were many days I sat at my desk wondering how I was going to get product tomorrow, and there were times we couldn't take orders whatsoever. And that comes from a company that’s done over $100 million in sales, is a member of the certified exchange, and that has contacts that run very deep in the industry – and I couldn’t get anything.

A friend of mine who owns a very prominent gold and silver company in Colorado has a store front, and back then he told me, "I want to put a sign on my window that says, ‘All we do is buy, we don’t sell,’ because one person will come in there and clean me out and there’s nothing to be had.”

So what I think is ahead comes from that experience. If you factor in that very, very few people in this country have even held a gold coin – let alone own any gold, or understand the reasons to own it, or will even accept the arguments for owning it – I think the primary distinguishing characteristic of this market will be that people won’t be able to get product when they want it. The rising price in and of itself will not be the main hurdle. For the most part, people will overcome price, because they’ll want to own it. The real issue will be getting product in a timely fashion, and that will become difficult for the average American.

Jeff: What about supply from those selling coins and bars who bought at lower levels? Doesn’t that increase the available supply?

Andy: This is what I believe is a distinguishing feature of this market: there is a total absence of a secondary market. There isn’t one. Period. In years past, we used to do a lot of business with people wanting to sell. Today, virtually no one is selling their coins back to us. In fact, for every 100 transactions we have, maybe one is a seller – the other 99 are buyers. Our largest supplier, who provides over 60% of all bullion to the U.S. market, told me earlier this month they have days without one single buy back. And this is from the largest supplier in the U.S.

Jeff: Why do you think no one’s selling?

Andy: People are afraid. They’re afraid of what's happening geopolitically, economically, fiscally, and want to hold on to their gold. As they should, because this is exactly the kind of circumstance gold is for.

So I would argue that as gold and silver creep higher, there will be more and more buying and less and less selling. And less selling means less product for buyers.

When you look at the fact that there is no secondary market, and then you throw into the mix that the mints are already running into production problems, and then add the troubles in Europe, which could easily spread, I think it’s easy to see how demand could outstrip supply. I assure you, there's an awful lot of gold acquisition going on in other countries – the Swiss and Germans, for example, see the handwriting on the wall. They were buying everything up when the European crisis broke. It was bedlam for awhile.

And if all of a sudden people here wake up and feel they really need to own gold but can’t get it, we’ll be right back where we were in 2008.

But to your point, yes, nobody is selling anything right now and almost anything you buy will be dated 2010. That’s because there are no backdatedcoins to be had virtually anywhere. Maybe 20 here or 50 there, but nothing on a meaningful basis.

Jeff: It sounds like regardless of what’s going on in America, global supply could be in jeopardy if this trend continues.

Andy: Absolutely, especially with the fact that there is no secondary market. Really, the people who enter the game late are going to be at the mercy of the mints. And if the mints run out of supply, or just stopped selling for whatever reason, it's “game over” for those who want to accumulate. Right now there's as good a supply as I've seen in a couple years, and that's at a time when we've already witnessed the Royal Canadian Mint running out of gold for a week or so, the Austrian Mint also running out of product, and the U.S. Mint rationing Silver Eagles for a short time.

Jeff: And you’re calling this a good supply market?

Andy: Yes. It’s as good as we've seen in a couple years.

Jeff: That's scary.

Andy: I don’t think you’re exaggerating by saying that. And the message is, “Buy now while it's still available.” I know it may sound like I'm trying to sensationalize it, but I'm really not. Based on what I know, it’s my opinion that if 5% of this country put 5% of their money into gold, there would be nothing left tomorrow morning. Supply is that small compared to the tremendous amount of money that's out there.

Here’s another example. I had a meeting with a money management company here in Minneapolis that manages some of the oldest money in the entire country, literally billions of dollars. And when I spoke with them, I discovered the principals of the firm had never held a gold coin. They asked me questions that were as rudimentary as what I would get from a complete novice. By the end of the conversation, they said they would start with a $5 million order. I later learned this was a small order for just one of their clients. It was just dipping a toe in the water for these people.

Well, it won’t take too many of these kinds of people waking up to gold to drain the supply chain. Most of the wealth in this country is driven through money managers, and at some point these people will tell their managers, "I don’t care what the price or premium is, get me gold." When they come knocking in large numbers like that, the supply chain will dry up overnight. I know this to be true. If we see an event that drives money managers to buy physical gold, the supply will be gone.

Jeff: Some of that money is already going into the ETFs.

Andy: Yes, but not when you consider the total capital that’s available. And keep in mind that the prospectus for GLD and SLV state that, more or less, you can’t take possession of the metal. So, do you “own” gold if you have shares in GLD or SLV, or any ETF, for that matter? If you can’t put the coin or bar in the palm of your hand, the answer is no.

Jeff: Are you seeing any difference between gold and silver? Is one more difficult to come by than the other?

Andy: We've seen a lot of demand for silver, probably more so than gold, and the U.S. Mint has already rationed Silver Eagles once this year. Junk silver bags are becoming much harder to get. And I think the higher gold goes, the faster silver will disappear. At some point the American public will realize they should have some gold and silver, and we could see a situation where the gold price could get out of reach for some investors. Those people will turn to silver and, as a result, it will probably be tougher to get than gold.

Jeff: If supply gets scarce, do you expect premiums to shoot up?

Andy: Absolutely. In 2008 the premiums were astronomical. Silver Eagles were $5.50 to $6 over spot. Gold Eagles were $100 to $150 over spot. The premiums went parabolic. That could easily happen again.

Jeff: And that was due to constrained supply.

Andy: Yes. When the price fell off the table, everything disappeared quickly. That’s counterintuitive, I know, because logic would dictate that as the price of something falls, demand is waning. But as the price fell, I think it became more attractive to large interests around the world, and everything got gobbled up fast.

Looking ahead, I can tell you that the only way you'll see premiums stay where they are is if the mints are able to keep up with demand, and based on what I see I would argue there is no way they can. They can’t even keep up now. On top of that, as I stated, people aren’t going to sell their gold this time unless they absolutely have to, so there won’t be any supply coming from sales.

Jeff: So your message to someone who owns little or no physical metal now is what?

Andy: Acquire as many gold and silver ounces as you can. In the end it’s not about price paid, it's about number of ounces. View the supply issue as critically as you would the price, because I believe that more than anything else, the lack of available supply will mark this industry.

Jeff: Excellent advice, Andy. Thanks for your input.
----

In U.S., Confidence in Newspapers, TV News Remains a Rarity

WASHINGTON, D.C. -- Americans continue to express near-record-low confidence in newspapers and television news -- with no more than 25% of Americans saying they have a "great deal" or "quite a lot" of confidence in either. These views have hardly budged since falling more than 10 percentage points from 2003-2007.

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The findings are from Gallup's annual Confidence in Institutions survey, which found the military faring best and Congress faring worst of 16 institutions tested. Americans' confidence in newspapers and television news is on par with Americans' lackluster confidence in banks and slightly better than their dismal rating of Health Management Organizations and big business.

The decline in trust since 2003 is also evident in a 2009 Gallup poll that asked about confidence and trust in the "mass media" more broadly. While perceptions of media bias present a viable hypothesis, Americans have not over the same period grown any more likely to say the news media are too conservative or too liberal.

No matter the cause, it is clear the media as a whole are not gaining new fans as they struggle to serve and compete with growing demand for online news, social media, and mobile platforms. The Pew Project for Excellence in Journalism's annual report on the State of the News Media, released in March, found for a third straight year, only digital and cable news sources growing in popularity, while network news, local news, and newspaper audiences shrink. These findings align with a similar 2008 Gallup poll that found cable and Internet news sources growing in popularity while all others held steady or declined.

While it is unclear how much respondents factored in the online and cable offshoots of "newspapers" and "television news" when assessing their confidence in these institutions, their responses do not provide much encouragement for the media more broadly. Confidence is hard to find, even among Democrats and liberals, who have historically been the most trusting of the news media. While 18- to 29-year-olds express more trust in newspapers than most older Americans, Gallup polling has found they read national newspapers the least. Younger Americans also expressed more confidence than older Americans in several other institutions tested, including Congress, the medical system, and the criminal justice system, suggesting younger Americans are more confident in institutions in general.

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Implications

With nearly all news organizations struggling to keep up with the up-to-the-minute news cycle and to remain profitable in the process, Americans' low trust in newspapers and television news presents a critical barrier to success. The Pew report asserts that 80% of new media links are to legacy newspapers and broadcast networks, making clear that traditional news sources remain the backbone of the media. But so long as roughly three in four Americans remain distrustful, it will be difficult to attract the large and loyal audiences necessary to boost revenues.

Survey Methods

Results for this Gallup poll are based on telephone interviews conducted July 8-11, 2010, with a random sample of 1,020 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.

For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.

Interviews are conducted with respondents on landline telephones (for respondents with a landline telephone) and cellular phones (for respondents who are cell phone-only). Each sample includes a minimum quota of 150 cell phone-only respondents and 850 landline respondents, with additional minimum quotas among landline respondents for gender within region. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted by gender, age, race, education, region, and phone lines. Demographic weighting targets are based on the March 2009 Current Population Survey figures for the aged 18 and older non-institutionalized population living in continental U.S. telephone households. All reported margins of sampling error include the computed design effects for weighting and sample design.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit http://www.gallup.com/.

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Tom Fitton: Why is Washington ignoring its biggest corruption scandal?

Too few in Washington have been digging into the scandals behind the collapse of the “government-sponsored entities” (GSE's) Fannie Mae and Freddie Mac and their role in helping trigger the global financial crisis.

Their collapse has cost taxpayers $146 billion thus far. Freddie Mac sought an additional $1.8 billion in taxpayer support just last week. There is no end in sight, as the Obama administration, through executive fiat, has placed no upper limit on the taxpayer liability for these two monstrosities.

One reason official Washington isn’t too interested in Fannie and Freddie is the role political corruption played in their collapse in 2008. That's why Judicial Watch filed a Freedom of Information Act (FOIA) lawsuit against the Obama administration requesting documents related to campaign contributions made by Fannie and Freddie over the last several election cycles.

We figure since American taxpayers are on the hook for trillions of dollars, potentially including nearly $1 trillion alone for Fannie and Freddie, we deserve to know how and why this financial collapse occurred and who in Washington, D.C. is responsible.

The “transparent” Obama administration disagrees.

The Federal Housing Finance Agency (FHFA), the agency responsible for Fannie and Freddie, responded to our FOIA lawsuit by telling us that all of the documents we seek are not "FOIA-able!"

Here's the exact language the Obama agency used in its court filing: "...Any records created by or held in the custody of the Enterprises reflecting their political campaign contributions or policies, stipulations and requirements concerning campaign contributions necessarily are private corporate documents. They are not 'agency records' subject to disclosure under FOIA."

You and I are paying the tab for the collapse of Fannie and Freddie, but we are not allowed to ask any questions about why it happened. The Obama administration is saying, in effect, "None of your business." This whole scandal blows out of the water any notion that Obama is keeping his promises of transparency.

I don't see anything ambiguous about the government's relationship with Fannie and Freddie. The two agencies are now completely owned and operated by the federal government and are therefore subject to FOIA law.

Now, let's stop and think for a second. Why would the Obama administration be so intent on keeping records related to Fannie and Freddie's campaign contributions secret? Well, take a look at the list of the top recipients of Fannie and Freddie campaign contributions from 1989 through 2008, and I think you'll have a pretty good idea.

Obama is second on the list sandwiched between Democratic heavyweights Sen. Chris Dodd, D-CN (first) and Sen. John Kerry, D-MA, (third). The president rocketed to the near-top of the chart with only four years under his belt in the U.S. Senate!

The truth is no one in Washington wants the American people to know all the sordid details regarding Fannie and Freddie, Obama included. The list of recipients of Fannie/Freddie cash includes a lot of "R's" and "D's." It seems politicians of every stripe were on the take from Fannie and Freddie. And now we're all paying for it, literally.

Separately, we uncovered documents showing that Congress was made aware of the massive problems at Fannie Mae and Freddie Mac over the last six years. Yet liberals, led by Rep. Barney Frank, D-MA, (another beneficiary of Fannie/Freddie campaign cash largess and chairman of the House Committee on Financial Services), repeatedly blocked attempts to rein in Fannie Mae and Freddie Mac.

Our groundbreaking legal effort to open up Fannie and Freddie is not just about political corruption — it also about accountability. Largely through Freddie and Fannie the Obama administration has taken control of the U.S. mortgage market and its attendant liabilities — which means you, I, our children, and grandchildren are potentially on the hook for trillions of dollars.

This unprecedented takeover of the private sector is being done by government entities that the Obama administration says are not subject to any open records request. Let’s hope, for the sake of accountable government, that the courts disagree.

Dems may use food-stamp money to pay for Michelle Obama's nutrition initiative

Democrats who reluctantly slashed a food-stamp program to fund a state-aid bill may have to do so again to pay for a top priority of first lady Michelle Obama.

The House will soon consider an $8 billion child-nutrition bill that’s at the center of the first lady’s “Let’s Move” initiative. Before leaving for the summer recess, the Senate passed a smaller version of the legislation that is paid for by trimming the Supplemental Nutrition Assistance Program, commonly known as the food-stamp program.

The proposed cuts would come on top of a 13.6 percent food-stamp reduction in the $26 billion Medicaid and education state-funding bill that President Obama signed this week.

Food stamps have made multiple appearances on the fiscal chopping block because Democrats have few other places to turn to offset the cost of legislation.

Party leaders raided the budget to find off-setting tax increases and spending cuts to pay for their top legislative priorities, including the roughly $900 billion healthcare law. Congressional pay-as-you-go rules require lawmakers to offset all non-emergency spending.

Democrats have turned to the food-stamp program because funding increases enacted in the stimulus package last year were already scheduled to phase out over time. The changes proposed in the state-aid and nutrition bills would simply cut off that increase early, in March 2014. Because the cuts would not take effect for more than three years, Democratic leaders have voiced the hope that they will be able to stop the cuts in future legislation.

But House liberals are balking now, saying that while they swallowed the food-stamp cuts to pay for urgent funding for Medicaid and teachers, they will not vote for more cuts in the child-nutrition bill. In a letter sent this week to Speaker Nancy Pelosi (D-Calif.), 106 House Democrats urged the Speaker to take the House version of the child-nutrition bill, which does not slash food stamps, rather than the Senate version.

“This is one of the more egregious cases of robbing Peter to pay Paul, and is a vote we do not take lightly,” the lawmakers, led by Reps. James McGovern (D-Mass.) and Keith Ellison (D-Minn.) said of their vote on the state-aid bill.

The House version of the child-nutrition bill, authored by Rep. George Miller (D-Calif.), passed the Education and Labor Committee earlier this year, but lawmakers must find a way to pay for it before it comes to the floor for a vote. “Chairman Miller is working to find other ways to pay for this bill,” a spokeswoman said when asked if cuts to the food stamp program would be used.

A House leadership aide noted that the food-stamp decrease approved in the state-aid bill will not take effect right away and will leave the program at the same funding level it was at before the stimulus law was signed. “That doesn’t mean many Democrats are not concerned about the issue, but this is a process which gives us time to deal with immediate issues (like jobs) and helping the economy grow, while giving you time to deal with the food-stamp issue,” the aide said.

The nutrition bill is clearly a priority for Michelle Obama, who has made a push for healthy eating — one of her signature policy issues at White House. When the House version of the nutrition bill won committee approval in July, it marked the first time she weighed in publicly on pending legislation.

The Obama administration has not directly addressed the debate over the food-stamp cuts, but it is backing the Senate bill. “We strongly supported the Senate action and look forward to working with the House to get a final bill onto the president’s desk,” an administration official told The Hill.

The $4.5 billion Senate bill would expand eligibility for school meal programs, establish nutrition standards for all food sold in schools and provide a 6-cent increase for each school lunch to help cafeterias serve healthier meals. The $8 billion House version includes more money for expanding access to school lunches for children in low-income households.

The deeper food-stamp reductions in the Senate version would set an earlier date — in November 2013 — for eliminating the increased benefits passed last year. A family of four would see their benefits reduced by $59 a month, or about 9 percent. The bill would also cut funding for nutrition-education programs aimed at low-income neighborhoods and households.

“It’s very sad. I think it’s just illustrating what dire straits our federal government budget is in,” said Sheila Zedlewski, director of the Urban Institute’s Income and Benefits Policy Center. “It’s unprecedented to raid one safety net program to feed another.”

Euro zone inflation at 20-month high

Consumer prices in the 16 nations that use the euro increased 1.7 per cent in July from a year earlier after rising 1.4 per cent in June, the fastest inflation since November 2008.

Accelerating price increases may complicate the European Central Bank's gradual exit strategy from its non-standard measures as tighter monetary policy could damp the economic rebound later in the year.

Slower growth in the US and China may crimp euro-area exports, a mainstay of the recovery so far, and fiscal-austerity measures across Europe may curb domestic spending in the region.

"The inflation rate is closing in on the ECB's comfort zone," said Laurent Bilke, an economist at Nomura International and former ECB forecaster. "Whether the ECB will be worried about it depends entirely on how it thinks the economy will evolve."

Energy prices increased 8.1 per cent in July from a year earlier, today's report showed, compared to a 6.2 per cent gain in the prior month. Core inflation, which excludes energy and other volatile components, accelerated to 1 per cent last month from 0.9 per cent in June.

Oil prices have increased 8 per cent over the past two months just as the euro's recent advance adds pressure on companies to cut prices by making European exports less competitive abroad. The single currency has gained 4 per cent against the dollar in the past two months, paring annual losses to 9 per cent.

The central bank aims to keep annual price gains just below 2 per cent and president Jean-Claude Trichet said he will announce next month how the ECB will scale back its program of unlimited loans to banks, a plan the Frankfurt-based bank implemented in 2008.

Mr Trichet will have to gauge the timing of when to tighten policy. Pulling back too soon could choke off credit and roil markets, while acting too late could stoke inflation.

For now, the economy shows signs of weathering a stronger euro and the Greece-led fiscal crisis. The euro-area economy expanded at the fastest pace in four years in the second quarter, data showed on August 13th.

Adding to signs an export-led recovery is feeding into the wider economy, growth in Europe's services and manufacturing industries accelerated in July and economic confidence rose to the highest in more than two years.

From the prior month, July consumer prices declined 0.3 per cent, today's report showed.

This is how they plan to KILL us!



Street artist braves deadly Moscow smog to create amazing 3D waterfall on capital's streets

Street artist Edgar Mueller has spent three 'terrifying' days transforming a Moscow pavement into a jaw-dropping waterfall scene.

The world renowned artist from Germany used acrylic paints to create the 3D artwork, which is the first project of his new series named Unconditional Love.

Passers-by have enjoyed stepping into the realistic scene which can be viewed in 3D through a specially-built lens.

Plunging: The pavement outside a Moscow mall has been transformed into a realistic waterfall scene

Plunging: The pavement outside a Moscow mall has been transformed into a realistic waterfall scene

Mueller decided to work outside a mall in Moscow despite the choking smog from forest fires that are raging near the city.

He described the experience as 'almost unbearable'.

Mueller said on his website: 'The media reported on the disaster that was caused there by the forest and peat fires.

Work in progress: Edgar Mueller, front middle, and his team take a break from working on the 3D street painting. It took them three days to complete the project

Work in progress: Edgar Mueller, front middle, and his team take a break from working on the 3D street painting. It took them three days to complete the project

'I decided nevertheless to fly to Moscow, which I have to admit was somewhat naive.

'The conditions that we found there were terrifying.

'On the way to the hotel I was already wondering whether we should quickly take the next plane home - away from here! The air was intolerable.'

Illusion: Passers-by use a specially designed lens to view the scene in 3D

Illusion: Passers-by use a specially designed lens to view the scene in 3D

forest fire outside moscow

Toxic: A forest fire outside Moscow at the weekend as lethal smog descends on the Russian capital

Mueller worked from early morning and had to wear a face mask to protect himself from dust in the air.

At times he had to retreat indoors due to the carbon monoxide.

Mueller, who uses the ground as his canvas, added; 'I was fascinated by the surreal situation.

'The smog made the colours look pale and the horizon looked particularly blurred.'

Originally, the self-taught artist had planned to create a 'holiday scene' inspired by a trip in Croatia - but then decided it was no longer appropriate because of the situation in Moscow.

Mueller has previously painted a giant waterfall in Canada and a stunning cave in London.

10 Signs The U.S. is Becoming a Third World Country

The United States by every measure is hanging on by a thread to its First World status. Saddled by debt, engaged in wars on multiple fronts with a rising police state at home, declining economic productivity, and wild currency fluctuations all threaten America's future.

The general designations of the ranking system for world status date back to the 1950s, and have included countries at various stages of economic development. Since the Cold War, the definition has come to be synonymous with repressive countries where a wealthy class of ruling elites segment society into the haves and have-nots, many times capitalizing on the conditions that follow an economic crisis or war.

While much of the world is still mired in poverty, the reduced cost of innovative tools such as computing and connectivity ironically puts traditional Third World countries at the forefront of a new lean-and-mean economy that is based on ideas of empowerment for the disenfranchised. For better or worse, the world is leveling due to Globalism. However, America and other over-leveraged countries face this re-balancing of the globe at a time when they have dwindling resources. We can speculate about who and what is to blame for America's fantastic fall, but for the purposes of this article we shall focus on the obvious signs that the United States is beginning to resemble a Third World country.


30,000 Section 8 wait for 455 vouchers
1. Rising unemployment and poverty: Unemployment numbers, food stamps, and home foreclosures continue to reach new record highs. The ugly reality of those numbers was recently on display when 30,000 people showed up to apply for public housing in East Point, GA for 455 available vouchers. Fights broke out, people were fainting from the heat while in line, and riot police showed up to handle the angry poor.

2. Economic dependence: The United States finished 2009 with a debt-to-GDP ratio of 85%, according to the International Monetary Fund (IMF). The current trend projects the United States to finish 2010 at 94% and 2011 at 98%. The 90% level has become the IMF's make-or-break point for countries hoping to grow their way out of debt. If the government debt load climbs above 90% of GDP, economic growth slows so much that growth is no longer a viable solution for reducing that debt, and the IMF insists on austerity measures. Surpassing this debt threshold has also caused China's lead credit rating agency to cut America's credit rating.

Smoker faces £2,500 fine... for dropping cigarette ash on pavement

An elderly widow has been threatened with a £2,500 fine by council officials – for dropping cigarette ash on the pavement.

Sheila Martin, 70, was smoking at a bus stop when a warden pounced and handed her the £75 fixed penalty for littering.

The cash-strapped grandmother refused to pay and has now been warned it could rise to £2,500.

Disbelief: Sheila Martin, 70, said she doesn't understand why the council is being so heavy-handed

Disbelief: Sheila Martin, 70, said she doesn't understand why the council is being so heavy-handed

Mrs Martin, from Oldbury, West Midlands, was hit with the original fine by the Sandwell council warden after visiting her daughter on May 25.

She said: ‘I still can’t believe what happened. I was sat at a bus stop quietly enjoying a cigarette and from nowhere a warden appeared and accused me of littering.

‘I was only smoking a cigarette. It is one of the few things I can afford to buy myself.’

Mrs Martin claims she was so shocked that she later suffered an asthma attack at home and was knocked unconscious for three hours after falling over.

Enlarge Final warning: The letter informing Mrs Martin her fine will be increased to £2,500 if she doesn't pay the initial £75

Final warning: The letter informing Mrs Martin her fine will be increased to £2,500 if she doesn't pay the initial £75

She said: ‘I’ve always been a law-abiding person, so this was all a big shock to me and I just keeled over.

‘I haven’t been the same since and have only got by thanks to the help of my friends and neighbours.

‘It feels like I am being victimised.’

Mrs Martin had initially refused to pay the £75 fixed penalty charge. But she has seven days to cough up or she will be summoned to court and could face a fine of up to £2,500.

‘It all seems so heavy handed,’ she said.

‘I can’t work out why the council would be so vindictive over such a petty matter. I’m so upset and angry.’

Sandwell Council dished out 2,200 penalty fines last year, compared to just 336 in neighbouring Dudley.

Councillor Derek Rowley, Sandwell’s cabinet member for safer neighbourhoods, refused to comment on Mrs Martin’s case.

He said: ‘In general terms, however, our wardens do not issue fixed penalty notices for dropping cigarette ash.

‘They do for dropping cigarette butts, which are specifically classed as litter under the Environmental Protection Act.

‘The council takes a dim view of littering because the people of Sandwell tell us they want clean streets.’

China Overtakes Japan as World's Second-Biggest Economy

China surpassed Japan as the world’s second-largest economy last quarter, capping the nation’s three- decade rise from Communist isolation to emerging superpower.

Japan’s nominal gross domestic product for the second quarter totaled $1.288 trillion, less than China’s $1.337 trillion, the Japanese Cabinet Office said today. Japan remained bigger in the first half of 2010, the government agency said. Japan’s annual GDP is $5.07 trillion, while China’s is more than $4.9 trillion.

China led the world out of last year’s global recession with an economy that’s more than 90-times bigger than when leader Deng Xiaoping ditched hard-line Communist policies in favor of free-market reforms in 1978. The country of 1.3 billion people will overtake the U.S., where annual GDP is about $14 trillion, as the world’s largest economy by 2027, according to Goldman Sachs Group Inc. chief economist Jim O’Neill.

China’s surpassing of Japan “is a marker of its increasingly dominant role in the global economy,” said Eswar Prasad, a senior fellow at the Brookings Institution and former head of the China division at the International Monetary Fund. “The resilience of China’s growth during the crisis enabled a number of other countries, particularly commodity-exporting economies, to ride on its coattails.”

The benchmark Shanghai stock index rose 2.1 percent at the 3 p.m. close today, climbing the most this month.

Tricky Comparison

China overtook the U.S. last year as the biggest automobile market and Germany as the largest exporter. The nation is the world’s No. 1 buyer of iron ore and copper and the second- biggest importer of crude oil, and has underpinned demand for exports by its Asian neighbors.

While China’s output was also larger in the fourth quarter of 2009, Japan’s GDP rebounded to exceed China’s in the first quarter, according to data compiled by Bloomberg News. According to IMF data using purchasing-power-parity calculations to adjust for exchange-rate differences, China overtook Japan in 2001.

Quarterly comparisons between China and Japan are “a little tricky because they do not take account of different seasonal patterns between the two countries,” said David Cohen, head of Asian forecasting at Action Economics in Singapore.

China’s economy is cooling as the government trims credit growth from last year’s record $1.4 trillion and discourages multiple-home purchases to cool surging property prices. July industrial output rose the least in 11 months, retail sales growth eased and new loans climbed less than estimated. China Petroleum & Chemical Corp. said last month that its crude-oil processing increased at a slower pace in the second quarter as fuel demand faltered.

Property Collapse

The country’s property market is beginning a “collapse” that will hit the nation’s banking system, Kenneth Rogoff, a Harvard University professor and former chief economist of the IMF, said July 6.

Still, China is on course to overtake the U.S. as the world’s largest economy around 2020, PricewaterhouseCoopers said in a January report.

With China’s growth surging 10.3 percent in the second quarter from a year earlier and Japan expanding 2 percent, the “gap is going to widen” in future, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. “It is not likely that Japan will retake the No. 2 spot given the likely growth rates.”

Four of the world’s top 10 companies by market capitalization are from China, including PetroChina Co., Industrial & Commercial Bank of China Ltd., China Mobile Ltd. and China Construction Bank Corp.

Agricultural Bank

Agricultural Bank of China Ltd. boosted the size of its initial public offering to $22.1 billion this month after selling more stock in Shanghai, making it the world’s largest first-time share sale. The IPO made the nation home to four of the world’s 10 biggest banks by market value, half a decade after the country’s first major state-owned lender went public.

China may be the biggest IPO market in 2010 as companies are likely to raise 500 billion yuan ($74 billion) in Shanghai and Shenzhen, PricewaterhouseCoopers forecast last month.

Since introducing free-market policies, China has lifted 300 million citizens out of poverty, according to the United Nations. The country remains a developing nation, with its per capita gross national income ranked 127th in the world at $2,940 at the end of 2008, behind Angola and Azerbaijan, according to the World Bank.

Cultural Revolution

In the first three decades of Communist Party rule before Deng took power, China’s economy was hobbled by the chaos of the Great Leap Forward, a failed attempt to transform the agrarian nation into an industrial powerhouse, and the Cultural Revolution, a decade of political upheaval led by Mao Zedong’s Red Guards.

“China has a large population, a weak economic foundation, relatively few resources and a large poverty population, which remains our basic situation,” Ma Jiantang, head of China’s statistics bureau, said in January. “Therefore, while we take note of our expanding size of economy and enhancing economic strength, we should also have a sober understanding that China remains a developing nation.”

China’s future influence on the global economy will increase, said Shen at Mizuho. The country’s “double-digit” expansion will contribute a third of global growth this year, the Organization for Economic Cooperation and Development said in March.

“Japan had a huge impact on the global commodities market and foreign direct investment flows in the 1980s” as China is doing now, Shen said. “The major difference is that China’s population is 10-times bigger than Japan’s, its economy is still growing at above 9 percent per year, and Chinese investors are just beginning to invest abroad. You can imagine that China’s impact will be so much bigger.”

--Kevin Hamlin, Li Yanping. With assistance from Marco Babic and Sunil Jagtiani in Singapore, Russell Ward and Keiko Ujikane in Tokyo and Zhang Shidong in Shanghai. Editors: Stephanie Phang, Cherian Thomas

What Should A Poor Warmongering Neoconservative Do?

An Israeli Attack on Iran would reduce Barack Obama to a One-Term President

By Juan Cole

August 13, 2010 "Information Clearing House" -- What should a poor warmongering Neoconservative do? This political grouping includes WASPS such as former CIA director James Woolsey and former UN ambassor John Bolton, but at its core is politically active and extremely wealthy Jewish former Democrats who broke with their party in the 1980s to become war hawks in Republican administrations, and most of whom are rooted in Rightwing Zionism as exemplified in the thought of prominent fascist theorist Vladimir Jabotinsky. (They are almost mirror images of the general American Jewish community, 79 percent of which voted for Barack Obama, which is skittish about foreign wars and liberal on social issues).
The Neoconservative faction is in the political wilderness in the United States. Eager to play the role in Iran that the enormous floods have played in Pakistan, of paralyzing and destroying much of a thriving country, eager to reduce the shining city of Isfahan to rubble and displace its population into massive tent cities, they find their path blocked at every turn.

Always much happier when the militant and aggressive Likud Party is in power in Israel, they are nevertheless impatient with what they see as the timidity of Prime Minister Binyamin Netanyahu, compared to the reckless warmongering of the previous Kadima Party and its Labor ally (who managed to set back the Lebanese economy a decade in 2006 and to reduce the large penal camp of Gaza to further misery and rubble).

Despite being willing to stop in at an occasional cocktail party, President Obama could not care less what the Neoconservatives say, want or do. Few have been appointed from their ranks to high and influential positions in the Obama administration, in contrast to W.’s, where they held the 8 key positions that allowed them to help push the US into a decade of rampaging wars. The American public, having been tricked by their fallacious arguments and cynical propaganda into the Iraq War, does not want to hear from them. They no longer get much television time. Their main project of today, an aggressive war on Iran, is a non-starter with the current White House, its generals, intelligence officials, and most importantly with a public already unemployed, beggared and indebted to the tune of $13 trillion, in part because of the Neocons earlier mad adventures– a public that has also lost over 4000 dead and tens of thousands wounded and permanently disabled warriors over a pack of Neocon lies.

But being a Neocon means never having to say you are sorry, or that you were wrong, and it means never giving up on the dressing up of illegal and aggressive wars as Necessary and Right and Bright Shining Cities on a Hill that will Make the World Safe for “Democracy” and more importantly for Apartheid Israel.

Thus, in 1998 at the height of their impotence, the Neocons got up a hawkish letter with the support of the Republicans in Congress, insisting that President Clinton go to war against Iraq. It was absurd and monstrous. Iraq had been reduced to a poor weak fourth-rate power, its economy devastated, its children dying in droves, by US and UN sanctions pushed by the Neocons and their allies. Only five years later, under a different administration, they got their wish.

The Neocons’ life experience, then, is that aggressive warfare is never really off the table. Even a liberal internationalist like Obama can be pressured, and if he will not yield, be weakened and wounded and the way paved for a leader more pliable to their plans. A war that they pine for the way a teenager pines for a first love, a mass grave they dream of the way a retiree dreams of a Hawaiian resort, an orgy of destruction visited on ancient wonders that they dream of the way a world-class architect dreams of constructing a new city– all these things are really at most just 5 years away if the right political moves are made.

They have more assets than is visible on the surface. They have perhaps half of America’s 400 billionaires on their side. They have the enormous military-industrial complex on their side. They have the Yahoo complex of besieged lower middle class White America on their side. They have the Israel lobbies on their side. They have important segments of the Oil and Gas lobbies on their side. They have the whole American tradition of permanent war on their side. They should not be underestimated.

It is not so hard to get up a war. You position the war as inevitable. As Right. As Necessary. You reimagine the poor weak ramshackle enemy as a science fictional superpower, months away from possession of a Neutron Bomb that could Destroy the Universe. It has to be done. We are in danger.

Although not exactly himself a Neocon (he says he is for a two-state solution and says he is on the fence about an Iran war), Cpl. Jeffrey Goldberg of the Israeli army, where he was a prison camp guard during the first Intifada or Palestinian uprising, and who masquerades as a journalist over at the Atlantic, has fired a shot in the building campaign for destroying Iran. This war propagandist deliberately spread the bald-faced lie that Saddam had close ties to al-Qaeda, and goes on insisting that Iraq had weapons of mass destruction capabilities in the face of mountains of evidence to the contrary. He is either dishonest or so blindered by ideology that it comes to the same thing. Goldberg says he is “ambivalent” about an “American” attack on Iran in “2010.” But these are weasel words. What would be different in 2011? In fact, this way of speaking puts a time limit on “ambivalence,” after which conviction presumably kicks in. His ambivalence, he says, extends to whether Israel should attack Iran unilaterally, though he is convinced by his ‘interviewing’ that it likely will. It reminds me of all the caveats and ambivalences in Ken Pollack’s book ‘Gathering Storm,’ which was used by warmongers nevertheless to help get up the Iraq War.

Goldberg knows that Obama is not actually going to war against Iran. Despite what he says, Bibi Netanyahu, the prime minister of Israel, is for all his bluster far too personally indecisive to take such a major step (and certainly not without an American green light; Bibi thinks Clinton had him undermined and moved out of office for obstructing the Oslo accords, and does not want to risk the same fate for causing trouble for Obama in Iraq and Afghanistan). How Goldberg could miss this truism in Israeli politics is beyond me.

Goldberg is trying to make an Iran war seem highly likely if not inevitable, if not now then in the near future (say, within 5 years?).

But contrary to Goldberg’s conclusions, Gareth Porter finds that high Israeli intelligence and military figures entertain the severest doubts about a war on Iran. Could Goldberg really not find these voices that Porter dug up so effortlessly?

The Iran war hawks also almost certainly underestimate Iran’s conventional weapons capability of foiling any Israeli air strike.

There is no room for ‘ambivalence’ here, especially of the Pollack sort that actually leads straight to war. The stupidity of an air raid on Iran is easy for the clear-eyed to see. There is no evidence Iran has a nuclear weapons program as opposed to a civilian nuclear energy program. The centrifuge technology being used can be dispersed and an air strike is likely to be only a minor setback in the program. And, Iran is a major country of 70 million with extensive petroleum and gas resources. It has means of replying to any attack that can be subtle and effective. Mahan Abedin showed here recently how there can be no ‘limited war’ against Iran.

Obama’s plans for a decisive and timely withdrawal from Iraq would be completely ruined by an attack on Iran, which would reactivate the Shiite militias at a time when the US military is weak and open to attack. Obama would not have that achievement to run on in 2012. The Iranians can behind the scenes be major spoilers for the Afghanistan War, which already is not going well for Obama.

A Netanyahu attack on Iran would reduce Barack Obama to a one-term president, which may be what Goldberg and his fellow conspirators are really aiming for. That success would after all allow them to keep to the 5-year timetable for another Asian land war.

Juan R. I. Cole is Richard P. Mitchell Collegiate Professor of History at the University of Michigan. For three decades, he has sought to put the relationship of the West and the Muslim world in historical context. www.juancole.com