Is the next down turn

right around the corner?

Will the commercial R. E. market

be the biggest nail in our coffin?

Commercial mortgage failure at 20-year high in U.S.: report

Mon Jul 20, 2009 9:33am EDT

(Reuters) - Commercial mortgages at U.S. banks have been failing at the fastest rate in nearly 20 years, the Wall Street Journal said, citing its own analysis.
Losses on loans used to finance commercial spaces would possibly reach about $30 billion by the end of 2009 at the current rate, the article said.
The estimated $30 billion is based on financial reports filed by more than 8,000 banks for the first quarter, the paper said.
The commercial real-estate market, valued at about $6.7 trillion, represents 13 percent of the U.S.'s gross domestic product, according to the paper.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by David Cowell)

Citi takes big step to giving US 34 pct stake

Thu Jul 23, 2009 2:49pm EDT

* Bank completes $25 bln preferred stock exchange
* Shares rise
NEW YORK, July 23 (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) on Thursday said it has completed a $25 billion securities exchange, a key step toward eventually giving the U.S. government a 34 percent equity stake in the bank.
The New York-based lender is conducting a series of exchange offers on $58 billion of securities, as part of a federal bailout designed to bolster the bank's capital.
Public and private investors are exchanging up to $33 billion of securities for common stock, while the government is exchanging up to $25 billion of its own securities.
Citigroup is conducting the exchange offers after heavy losses led to a series of federal bailouts, including $45 billion of taxpayer money, for the third-largest U.S. bank.
The bank is the most troubled of the nation's largest lenders, after credit losses and writedowns led to $37.5 billion of net losses in the 15 months ended in December.
Citigroup said private holders of $12.5 billion of convertible preferred securities agreed to swap them for securities expected to convert to common stock.
The government matched this by swapping $12.5 billion of its own non-convertible preferred shares for the securities.
An exchange offer for publicly held preferred securities, also with a government match, is set to expire on Friday.
Both offers are expected to close late this month.
In afternoon trading, Citigroup shares rose 3 cents to $2.83 on the New York Stock Exchange (Reporting by Jonathan Stempel; editing by John Wallace)

Japan to order Citi suspend some business

Thu Jun 25, 2009 1:03pm EDT

* Japan to punish Citi re money laundering oversight
* Business suspension order for some of retail business
* FSA to announce punishment on Friday - sources (Adds details from paragraph 5)
By Taro Fuse and David Dolan
TOKYO, June 26 (Reuters) - Japan's financial regulator will order Citigroup (C.N: Quote, Profile, Research, Stock Buzz) to suspend some of its retail business in Japan for lax oversight of money laundering controls, two people familiar with the matter said on Thursday.
The Financial Services Agency will announce the punishment on Friday, said the sources, who declined to be identified because the information is not yet public.
It was not immediately clear how long the suspension would last, or what operations would be affected.
A spokesman for Citigroup in Japan declined to comment, while the regulator was not immediately available for comment.
It will not be the first time that the U.S. bank has run foul of Japanese regulators. In 2004 Citigroup was forced to shut down its private banking business for violations that also included loose money-laundering controls. That incident prompted then-chief executive Charles Prince to make a public bow of apology in Japan, the traditional sign of remorse for Japanese executives and politicians.
The U.S. bank has been forced to sell off assets globally to raise cash after suffering more than $85 billion in losses on toxic assets.
The bank said last month it would sell its Japanese brokerage and key investment units to Sumitomo Mitsui Financial Group (8316.T: Quote, Profile, Research, Stock Buzz), Japan's third largest bank, for $5.9 billion.
It is also looking to sell its Japanese asset management arm, Nikko Asset Management. [ID:nBNG457249] (Reporting by Taro Fuse and David Dolan; Editing by Rodney Joyce)

Bank of America credit losses soar, profit falls

Fri Jul 17, 2009 9:57pm EDT
By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp, the largest U.S. bank, posted a quarterly profit that topped Wall Street forecasts but warned of a fresh surge in soured loans to credit card, mortgage and business customers.
Soaring credit losses may add to pressure on Chief Executive Kenneth Lewis as the U.S. Congress and regulators ramp up scrutiny of the bank's ability to manage risk and its controversial purchase of Merrill Lynch & Co, and that tough economic conditions could hurt results into 2010.
"Growth in charge-offs and nonperforming assets still scares the daylights out of me," said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia.
Second-quarter net income applicable to common shareholders fell 25 percent to $2.42 billion, or 33 cents per share, from $3.22 billion, or 72 cents, a year earlier.
Before preferred stock dividends in both periods, profit fell 5 percent to $3.22 billion. Net revenue on a taxable equivalent basis rose 60 percent to $33.09 billion.
Analysts on average expected profit of 29 cents per share on revenue of $33.26 billion, according to Reuters Estimates.
Lewis on a conference call predicted that "profitability in the second half of the year will be much tougher than the first half" because of an expected absence of one-time gains. Such gains helped boosted first-half net income to $7.47 billion.
Second-quarter results included an unspecified tax benefit and $9.1 billion of pretax gains from selling a stake in China Construction Bank Corp and putting a processing unit into a joint venture with First Data Corp. The bank took a $760 million charge to bolster a U.S. deposit insurance fund.
CEO SEES INCREASE IN LOSSES MODERATING
Bank of America set aside $13.38 billion for bad loans for a second straight quarter, and net charge-offs totaled $8.7 billion, up 25 percent from the prior three-month period.
Total reserves increased $4.63 billion to $35.78 billion, and nonperforming assets surged 21 percent to $30.98 billion.
"It was expected to be difficult in the quarter, and it is," said Richard Bove, an analyst at Rochdale Securities in Lutz, Florida.

In addition to their power

over government based

on government financing

and personal influence,

bankers could steer governments

in ways they wished them to

go by other pressures.

Carroll Quigley

Can The Economy Recover?
By Paul Craig Roberts
Global Research, July 21, 2009
Information Clearing House - 2009-07-15

There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”
The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities. ( know more at )

Global Power and Global Government:

Evolution and Revolution of the

Central Banking System Part 1
By Andrew Gavin Marshall
Global Research, July 21, 2009
Introduction

Humanity is on the verge of entering into the most tumultuous period in our history. The prospects of a global depression, the likes of which have never been seen before; a truly global war, on a scale never before imagined; and societal collapse, for which nations of the world are building totalitarian police states to control populations; are increasing by the day. The major global trend forecasters are sounding the alarms on economic depression, war, a return to fascism and a total reorganization of society. Through crisis, we are seeing the reorganization of the global political economy, and the transformation of capitalism into a totalitarian capitalist world government. Capitalism has never stayed the same through its history; it has always changed and will continue to do so. Its changes are explained and analyzed through political-economic theory, both mainstream theory and critical. The changes are undertaken over years, decades and centuries. The next phase of capitalism is one in which the world moves to a state-controlled economic system, much like China, of totalitarian capitalism.
The global political economy itself is being reorganized into a world government body, consisting of one center of global power where the socio-political-economic power of the world is centralized in one institution. This is not a conspiracy theory; it is a reality. Nor is this a subject confined to the realm of “internet conspiracy theorists,” but in fact, the concept of world government originates and evolves throughout the history of capitalism and the global political economy. Mainstream and critical political-economic theory has addressed the concept of world government for centuries. ( know more at )

Stephen Foley:

Why CIT should not be bailed out

Saturday, 18 July 2009Share PrintEmailText Size NormalLargeExtra Large
US Outlook: You've got to feel a twinge of sympathy for the bosses of CIT Group, the New York-based small business lender which was fighting for its survival yesterday.
The day that Citigroup and Bank of America, which received tens of billions of dollars in bailout money and hundreds of billions more in government guarantees, were reporting better-than-expected results, CIT was appealing to the mercy of its own lenders, struggling to reverse a run on the bank and repair its finances.
Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has said no to simply guaranteeing CIT's debts, something that might have allowed it to refinance, but which she believes would have exposed the taxpayer to too much risk. This despite pleas from CIT's 950,000 customers, which rely on the bank for short-term funding of their businesses.
The government is right to be standing back. This is no Lehman Brothers, no General Motors.
CIT's customers, retailers and their suppliers do face real inconvenience if the bank goes under. Instead of waiting for customers to pay their invoices, these businesses usually get the money upfront from CIT, who collects from the customer later. There will be some short-term pain from cutting CIT out of the equation, and some imprudent managers might find they have a funding gap that is too large to bridge.
But many businesses have been calling customers to arrange payment directly, and most customers have little interest in seeing their suppliers go under just as they are stocking up for Christmas. They will find creative ways to cope and, when they can't, CIT's rivals may step into many breaches. For the financial system and for commerce, this is a headache rather than a heart attack.

Prescription for Disaster
By Peter Schiff

The health care bill unveiled this week by the House of Representatives (with the full support of the Obama administration) is one of the worst pieces of legislation ever drafted. If passed, it will reduce the quality and increase the cost of health care in America. But more importantly, it will severely undermine our already weak economy. To burden a country currently in the throes of a violent recession with such a bureaucratic albatross clearly illustrates the scarcity of economic intelligence in Washington.

In the first place, specifically taxing the rich to pay for health care for the uninsured is the wrong way to think about tax policy and is an unconstitutional redistribution of wealth. While the government has the constitutional power to tax to “promote the general welfare,” it does not have the right to tax one group for the sole and specific benefit of another. If the government wishes to finance national health insurance, the burden of paying for it should fall on every American. If that were the case, perhaps Congress would think twice before passing such a monstrosity.

In the second place, the bill is just plain bad economics. For an administration that claims to want to create jobs, this bill is one of the biggest job-killers yet devised. By increasing the marginal income tax rate on high earners (an extra 5.4% on incomes above 1 million), it reduces the incentives for small business owners to expand their companies. When you combine this tax hike with the higher taxes that will kick in once the Bush tax-cuts expire, and add in the higher income taxes being imposed by several states, many business owners might simply choose not to put in the extra effort necessary to expand their businesses. Or, given the diminishing returns on their labor, they may choose to enjoy more leisure. More leisure for employers means fewer jobs for employees. ( Known is power )

Our politicians have forgotten about us

A letter from a Senator

____

Dear Mr. Babcock:

Thank you for contacting me to express support for legislation to increase transparency at the Federal Reserve. I appreciate your interest in monetary policy and welcome the opportunity to respond.

The Federal Reserve was originally established in response to the country's need for a sound and independent central bank to manage decisions relating to U.S. monetary policy. I understand your concern with some of the unprecedented steps that the Federal Reserve has taken recently to ease the flow of credit and stabilize financial markets.

On March 16, 2009, Senator Bernard Sanders (I-VT) introduced the "Federal Reserve Sunshine Act of 2009" (S. 604), which would require the U.S. Comptroller General to audit the Federal Reserve System before the end of 2010. This bill has been referred to the Senate Banking, Housing, and Urban Affairs Committee. Representative Ron Paul (R-TX) has introduced a similar bill (H.R. 1207) in the House of Representatives. Please know that I will keep your support for this legislation in mind should it come before the full Senate.

While I recognize the importance of accountability in the operations of the Federal Reserve, I strongly believe that monetary decisions should be made independent of political influence or motives. You may be interested to learn that I supported an amendment to the Congressional Budget Resolution (S. Con. Res. 13) offered by Senator Sanders requiring the Federal Reserve to disclose how it has disbursed emergency economic assistance to financial institutions during this severe economic crisis. Be assured that I am carefully monitoring the actions taken by the Federal Reserve to help stimulate our economy and unfreeze credit for businesses and homeowners.

Once again, thank you for writing. I hope that you will continue to share your views with me. If I can be of any further assistance, please contact my

Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours,
Dianne Feinstein

United States Senator

My answer

Dear　Madam Senator,

Thank you for your response to me previous e-mail in regards to recent legislation to increase transparency at the Federal Reserve.

I am sorry but I must correct you to certain facts on the origins of the Federal Reserve, here are some facts from WIKIPEDA. http://en.wikipedia.org/wiki/Federal_reserve

“Centralized banking was met with much opposition from politicians, who were suspicious of a central bank and who charged that Aldrich was biased due to his close ties to wealthy bankers such as J.P. Morgan and his daughter's marriage to John D. Rockefeller, Jr. Aldrich fought for a private bank with little government influence, but conceded that the government should be represented on the Board of Directors. Most Republicans favored the Aldrich Plan,[10] but it lacked enough support in the bipartisan Congress to pass because rural and western states viewed it as favoring the "eastern establishment".[11] Progressive Democrats instead favored a reserve system owned and operated by the government and out of control of the "money trust," ending Wall Street's control of the American currency supply.[10] Conservative Democrats fought for a privately owned, yet decentralized, reserve system, which would still be free of Wall Street's control. [10] The Federal Reserve Act passed Congress in late 1913[12][13] on a mostly partisan basis, with most all Democrats in support and most Republicans against it.[14] The plan that was adopted as the Federal Reserve Act had similarities to the Aldrich plan, but the balance of public and private control was modified.[11][14]”


You state that the Federal Reserve was originally established in response to the country's need for a sound and independent central bank to manage decisions relating to U.S. monetary policy. I should be so bold as to remind you that the Federal Reserve has only increasingly caused fiscal mismanagement to the nation as a hole, not to mention the anguish it has brought to million of families across our once great nation. Madam Senator, what will you say when the commercial real estate market collapses and the banks like CITI group and B of A find them selves in filing for bankruptcy? I urge you to think about your position in regards to the Federal Reserve transparency act.

Might I remind you that if you are again such transparency I must break with the democratic party and find political redress with another party.

Thank you very much for your time and energy in regards to this matter.

Everything is moving up (rubbish)

__

Japan's June trade surplus widens but short of estimates
By John Letzing, MarketWatch

SAN FRANCISCO (MarketWatch) -- The Japanese government on Thursday posted preliminary data reflecting a trade surplus in June for the fifth straight month, rising almost five-fold from the year-ago period, even though the figure nonetheless fell shy of economists' estimates.

Japan's Ministry of Finance said the trade surplus totaled 508 billion yen ($5.4 billion), a 388% leap over the surplus in June 2008.

That figure was a bit worse than the 593 billion yen surplus expected by economists polled by Dow Jones Newswires and the Nikkei.

Exports in June fell 35.7%, while imports tumbled 41.9%, according to the data.

_

( this mean 35.7% less is being bought by the rest of the world from

Japan while at the same time Japanese are buying 41.9% less of the

worlds goods sounds like a world depression to me)

_

The June figures represent the fifth straight monthly surplus for Japan. In May the surplus was 299.8 billion yen.

Who will win the battle for the soul

of the US Federal Reserve?

America's 96-year-old central bank is considered too independent by those who want it under tighter government control. Stephen Foley reports
Sunday, 19 July 2009Share PrintEmailText Size NormalLargeExtra Large
It is shaping up to be a ferocious fight. Ranged on one side is the entire Republican membership of the US House of Representatives. On the other are many of the most influential economists in the land. In the middle is mild-mannered Ben Bernanke, the chairman of the Federal Reserve. After months of phoney wars and petty skirmishes, this is the big one – the battle for the soul of the Fed.

Leading the charge, in his 19th-century pith helmet, is the unlikely figure of Ron Paul, the libertarian congressman who, for a generation, has been knocking about on the fringes of his party, arguing that it was a terrible error to have created the Fed in the first place, back in 1913. Suddenly, he seems to be surfing a mood among part of the political class. It is time, he says, to bring some political accountability to the over-mighty central bank. ( learn more at )

UK economy set for biggest fall since 1945
By Margareta Pagano, Business Editor
Sunday, 19 July 2009

The UK economy is forecast to shrink by 4.5 per cent in 2009 – the biggest fall in a single year since 1945. This gloomy prognosis comes from leading forecaster the Ernst & Young Item Club, the only one to use the Treasury's own forecasting model, and paints a materially tougher outlook than the consensus.
Peter Spencer, chief economic adviser to Item, said yesterday: "The economic patient has been in trauma, but thanks to the paramedics at the Treasury and the Bank of England who pumped billions of pounds worth of medicine into the economy, the patient has been stabilised for now. But it remains unclear how quick and complete recovery will be, and there is still a serious chance of a relapse."
But Item predicts that the sharp contraction this year will be followed by a modest recovery of 1.7 per cent next year. Professor Spencer warned that recent hopes of green shoots are "running ahead of reality", and predicted that we will not see a sustainable improvement in the UK economy until world trade starts to pick up. "Unfortunately," he said, "it is hard to see any very solid grounds for sustained optimism at the moment." He also said GDP could fall by as much as another 3 per cent if the threat of swine flu is as bad as the worst predictions.
The outlook is so tough, he added, because credit conditions remain so tight, while the current lack of competition in the banking sector means that lending to consumers and companies continues to be expensive.
"Capital remains short and expensive for the banks, and there is currently little sign of any extra lending to either companies or consumers. Banks are saying that they will expand lending more aggressively over the next three months, but it seems unlikely they'll come close to meeting the demand for credit," said Professor Spencer.
Item also predicts interest rates will stay at 0.5 per cent into next year and then will only increase by very small amounts for about 18 months. Despite efforts by the Bank to pump money into the economy through its quantitative easing (QE) programme, corporate liquidity and borrowing is still weak and net lending to the housing market remains close to zero.
Unemployment numbers, however, are not as high as predicted, as companies have reacted in a positive fashion to cutbacks by offering part-time work and other incentives to staff.
It is not just slower growth that the economy faces; it is also deflation, at least as measured by the Retail Price Index. It is now running at minus 1.8 per cent annually and seems likely to dip further. The key month will be September, for this is when the Treasury uses the RPI figure to set pensions, benefits and so on. The Treasury's forecast for the RPI in September is in the minus 2.5 per cent to minus 3 per cent range. Pensioners won't be hit, as the Chancellor has said he will raise the state pension by 2.5 per cent in 2010, regardless of the RPI. But the Treasury can save money, at least in one instance, by requiring housing associations to reduce rents, from April 2010, as many tenants are subsidised by the state.
Housing association rent increases are set by a formula of RPI plus 0.5 per cent. The associations wanted the formula altered so that if the RPI went negative they would not have to cut rents. But, on Friday, just as Parliament goes into recess, the Treasury slipped out that it will set an RPI "floor" of minus 2 per cent for rent-setting, so associations will need to reduce rents up to 2 per cent in the event of a negative RPI. This will cause real problems for social housing, undermining business plans, reducing service delivery and provision of new homes, and even threatening the viability of some associations.

Worst yet to come:

White House economic advisor
Jul 11 07:44 PM US/Eastern

When it comes to the economic crisis, the worst is yet to come, top White House economic advisor Lawrence Summers said Saturday.
"I don't think the worst is over," Summers told the Financial Times. "It's very likely that more jobs will be lost. It would not be surprising if GDP has not yet reached its low."
Despite his worried outlook, Summers, director of President Barack Obama's National Economic Council, acknowledged a change in the economic environment.
"What does appear to be true is that the sense of panic in the markets and freefall in the economy has subsided and one does not have the sense of a situation as out of control as a few months ago," he said.
The US Commerce Department is scheduled to publish on July 31 its first gross domestic product (GDP) estimates for the second quarter, and economists are expecting a continuation of the decline that began last winter.
Indicators published last month suggested that the US economy had overcome the worst of the crisis, with a 5.5 percent GDP annual rate in the first quarter, after the previous quarter's 6.3 percent decline.
A survey of economists conducted by The Wall Street Journal this week found that 54 percent said the US recession that began in December 2007 will be over by summer's end.
But the poll also found that economists expect the US unemployment rate, currently at 9.5 percent, will rise to 10 percent by the end of the year and remain at that level until around June 2010.
The comments by Summers echoed the cautious approach to economic projections taken by most Obama administration officials of late.
Obama himself emphasized at the end of this week's G8 summit in Italy that "recovery is still a way off."
"It would be premature to begin winding down our stimulus plans and... we must sustain our support for those plans to lay the foundation for a strong and lasting recovery," he told a post-summit press conference.

Bernanke Terrified Over Commercial Real Estate,

Seeks Still More Power Over Consumers

When a member of the Fed admits a problem, especially chairman Bernanke, you can rest assured the problem is far worse than what they admit.

Such is case today as Bernanke Says Commercial Property May Pose Risk for Economy.
Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market.

Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S.

It “may be appropriate” for the government and Congress to consider “fiscal” steps to support the industry, Bernanke said today. Ideas for fresh support for the market could include government guarantees for commercial mortgages, Bernanke also said today, while noting no proposal on the subject has emerged.

U.S. commercial property prices fell 7.6 percent in May from a month earlier, bringing the total decline to 35 percent since the market’s peak, Moody’s Investors Service said in a report this week. Commercial properties in the U.S. valued at more than $108 billion are now in default, foreclosure or bankruptcy, almost double than at the start of the year, Real Capital Analytics Inc. said earlier this month. ( know more at )

Attack on working class continues

Bonus boom time returns to Wall Street

Pay-packets will beat pre-crisis levels,

say banking titans, as profits rocket.

But critics are spitting tacks
By Margareta Pagano, Business Editor
Sunday, 19 July 2009

It was back to normal on Wall Street last week, as though the banking crisis of the past year had never happened. Goldman Sachs declared second-quarter net profits rocketing up 89 per cent to $3.4bn (£2.1bn), while rival JP Morgan saw quarterly profits more than triple from $394m to $1.47bn.

But even bigger news was that bonuses are back big-time and Wall Street titans Goldman was predicting that pay this year is set to beat the boom levels enjoyed even before the financial crisis. If Goldman can maintain the growth levels reported so far this year, then staff are set to share total pay and bonuses of more than $22bn, which will mean they will earn huge amounts, just as they did in 2006 and 2007. In the event, Goldman's bankers will share $6.6bn for this period and they have set aside $11.4bn for pay for the first six months of the year. If the second half proves as good, it will pay out roughly $770,000 for each of the 29,400 workers – and maybe as high as $900,000 for the year.

Meredith Whitney, the star analyst who called the top of the banking industry in October 2007 when she warned that Citigroup was facing a capital shortfall of up to $30bn, added to the euphoria when she advised clients to get back into the share-buying market – and specifically back into Goldman Sachs. Not only did Whitney, now a bit of a media star in the US, tell CNBC viewers to expect the "mother of all mortgage quarters", but she predicted that Goldman would soar at least 30 per cent, so even she was surprised at just how good the results would be from fixed income, currencies and commodities trading.

Not everyone is celebrating. Financial analyst Max Keiser accused Goldman of running the US government, while US lawmakers attacked the firm for paying out juicy bonuses so shortly after the investment bank was rescued by the taxpayer. Mr Keiser, in the US magazine The Deal, described Goldman as "scum" and claimed it controls the Federal Reserve and Treasury, caused the financial crisis, and front-runs on every deal on the New York Stock Exchange.

But Goldman, used to such vitriol after a recent attack by Rolling Stone magazine, is defiant, arguing it has paid back the $10bn in taxpayers' funds it borrowed from the TARP scheme and paid out dividends to taxpayers. Analysts say Goldman chief executive Lloyd Blankfein has played a blinder by sticking to a business model which everyone deemed dead and broken only a few months ago. While rivals such as Morgan Stanley have cut back on risks, Goldman traders have been out making markets in their traditional areas.

At JP Morgan, chief executive Jamie Dimon reported equally fabulous figures, with record profits from trading and stock underwriting. JP Morgan put aside $14bn to pay its 229,000 staff for the first half and $6bn for the 25,700 investment bankers.

Even the UK felt the benefit – Wall Street's bonanza boosted UK banking stocks as investors anticipated banks would outperform expectations – shares in Barclays rose 9 per cent last week, while shares in RBS, due to report next month, are up over 7 per cent.

Breaking News
_

Berscanky perfects his I am not really here pose

Reducing Government Secrecy:

Finding What Works

Although people have been complaining about abuse of the national security classification system for decades, such complaints have rarely been translated into real policy changes.

More than half a century ago, a Defense Department advisory committee warned that “Overclassification has reached serious proportions.” But despite innumerable attempts at corrective action over the years by official commissions, legislators, public interest groups and others, similar or identical complaints echo today. What is even more interesting and instructive, however, is that a few of those attempts did not fail. Instead, they led to specific, identifiable reductions in official secrecy, at least on a limited scale.

For example, the Interagency Security Classification Appeals Panel (ISCAP) that was created in 1995 has consistently overturned the classification of information in the majority of documents presented for its review. And the Fundamental Classification Policy Review that was performed by the Department of Energy in 1995 eliminated dozens of obsolete classification categories following a detailed review of agency classification guides. These and just a few other exceptional efforts demonstrate that even deeply entrenched secrecy practices can be overcome under certain conditions.

In an effort to identify some of those conditions, I wrote a paper entitled “Reducing Government Secrecy: Finding What Works” (pdf). It has just been published in the Yale Law and Policy Review, volume 27, no. 2, Spring 2009.

Among other things, the experience of the ISCAP underscores the importance of extending declassification authority beyond the agency that imposed the classification in the first place. It would be useless to restore “the presumption against classification” in cases of “significant doubt,” as President Obama suggested on May 29, if that presumption applied only when such doubt arose in the mind of the classifier. But if classification were to be overruled by doubt in the minds of other persons — ISOO overseers, Inspector General auditors, judges in FOIA proceedings, and others — significant changes would be enabled.

However, systemic classification reform simply will not happen without careful independent review of agency classification guides, which specify exactly what information is to be classified. The DoE Fundamental Classification Policy Review proves that such a review, including public participation and input, is both possible and highly effective. It needs to be replicated at other classifying agencies.

The White House has announced an online process for receiving public comments and recommendations for changes to classification and declassification policies. Discussion of declassification policy begins today here.

At Long Last - Fed Explains Exit Strategy
( don't believe this load of crap. If they know how to get out of this mess why didn't they see this depression coming!)

After months of hemming and hawing Fed Chairman Ben Bernanke has finally detailed The Fed’s Exit Strategy in an Op-Ed in the Wall Street Journal.
The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the financial crisis nearly two years ago, the Federal Reserve has reduced the interest-rate target for overnight lending between banks (the federal-funds rate) nearly to zero. We have also greatly expanded the size of the Fed’s balance sheet through purchases of longer-term securities and through targeted lending programs aimed at restarting the flow of credit.

My colleagues and I believe that accommodative policies will likely be warranted for an extended period. At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road. The Federal Open Market Committee, which is responsible for setting U.S. monetary policy, has devoted considerable time to issues relating to an exit strategy. We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner.

The exit strategy is closely tied to the management of the Federal Reserve balance sheet. When the Fed makes loans or acquires securities, the funds enter the banking system and ultimately appear in the reserve accounts held at the Fed by banks and other depository institutions. These reserve balances now total about $800 billion, much more than normal. And given the current economic conditions, banks have generally held their reserves as balances at the Fed. ( know more at )

Is the Bear Market's Most

Violent Decline Right Around the Corner?

Meet Wave 3:

The Superhero of All Waves

Is the most powerful of all waves right around the corner? See an idealized impulse wave 3 in bull and bear markets.

The short answer is "YES."

The long answer will help you anticipate where and when … First, let's describe wave 3. If wave 3 was a superhero, he'd probably be The Flash (though he could be The Hulk). Like The Flash, there's no mistaking wave 3's characteristics:It gets to where it's going in a hurry.It usually catches everyone by surprise, andYou'll know it when you see it.

Robert Prechter describes third waves in his seminal book with A.J. Frost, The Elliott Wave Principle:
"Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. … Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series."
But to truly appreciate the power and lightening-speed of third waves – and be prepared to anticipate one – you must first know how to identify the waves that precede it, namely wave 2.Here's what Prechter writes about wave 2 in The Elliott Wave Principle (two words have been reversed to apply to bear markets):"At this point, investors are thoroughly convinced that the (bull) market is back to stay. Second waves often end on very low volume and volatility, indicating a drying up of (buying) pressure."If you're thinking the description of wave 2 seems eerily similar to today's environment, you're right. On February 23, Robert Prechter's Elliott Wave Theorist recommended aggressive speculators close their short positions to avoid being caught in a "sharp and scary" rally. Just a few trading days later, the market began a multi-month rebound – wave 2. BUT … Volume has steadily decreased since that rally began in early March. Volatility is on the rise. And perhaps most noteworthy of all: The investment herd – more specifically, the financial media – has jumped to proclaim the "worst is over." All the classic characteristics of bear-market rallies are there. Even a quick online search turns up headlines like:"Worst of the recession is over" ~ July 7"Econ Crisis Not Over, But Worst Has Passed" ~ July 8"June job bounce could mean worst is over" ~ July 7"Wall St's fear gauge suggests the worst is over" ~ June 28Recognizing the personality of wave 2 allows you to prepare for what's next, a move you really want to look out for, wave 3 – The Flash. Third waves move far and fast. They make good opportunities for aggressive speculators, but they can become a death knell for longer-term investors' portfolios.
Steve Hochberg's Short Term Update closely analyzes the subdivisions of wave 2 so you can prepare for the resulting wave 3 opportunity – or get out of its way entirely. Try Short Term Update risk-free today. Get the best deal when you bundle it with the comprehensive Financial Forecast Service.

Not a good sign

_

Japan's crude steel output tumbles

record 40.7% in 1st half of 2009+
Jul 21 02:40 AM US/Eastern
2009+ (AP) - TOKYO, July 21 (Kyodo)

Japan's crude steel production in the January-June period plunged 40.7 percent from a year earlier to 36.69 million tons due mainly to slumping demand from automakers amid the global economic downturn, marking the sharpest ever fall for a half year, an industry body said Tuesday.
The decline was the sharpest on a half-year basis since the Japan Iron and Steel Federation initiated the statistics in 1948.
The half-year output was the lowest in 41 years. It declined for the second straight six-month period.
Crude steel output in June alone fell 33.6 percent from a year before to 6.89 million tons for the ninth consecutive month of decline. From the previous month, however, the June output scored a 6.3 percent increase.

Paulson reveals US concerns

of breakdown in law and order
By Stephen Foley in New York

Friday, 17 July

The Bush administration and Congress discussed the possibility of a breakdown in law and order and the logistics of feeding US citizens if commerce and banking collapsed as a result of last autumn's financial panic, it was disclosed yesterday.
Making his first appearance on Capitol Hill since leaving office, the former Treasury secretary Hank Paulson said it was important at the time not to reveal the extent of officials' concerns, for fear it would "terrify the American people and lead to an even bigger problem".
Mr Paulson testified to the House Oversight Committee on the Bush administration's unpopular $700bn (£426bn) bailout of Wall Street, which was triggered by the failure of Lehman Brothers last September. In the days that followed, a run on some of the safest investment vehicles in the financial markets threatened to make it impossible for people to access their savings.
Paul Kanjorski, a Pennsylvania Democrat, asked Mr Paulson to reveal details of officials' concerns, which were relayed to Congress in hasty conference calls last year. The calls included discussion of law and order and whether it would be possible to feed the American people, and for how long, according to Mr Kanjorski.
"In a world where information can flow, money can move with the speed of light electronically, I looked at the ripple effect, and looked at when a financial system fails, a whole country's economic system can fail," Mr Paulson said. "I believe we could have gone back to the sorts of situations we saw in the Depression. I try not to use hyperbole. It's impossible to prove now since it didn't happen."
The Oversight committee is investigating the takeover of Merrill Lynch by Bank of America, a deal forged in the desperate weekend that Lehman Brothers failed, and which later required government support because of Merrill's spiralling losses.
Mr Paulson defended putting pressure on Bank of America when it had last-minute doubts about the deal in December. Not to have done so could have rekindled the "financial havoc" the bailout had calmed.

Watch Peter Schiff
Telling you the truth

Replacing the Dollar:
China's Big Plans for Its Currency
By Michael Schuman / Hong Kong

China's swipes at the U.S. dollar have been spilling out of Beijing with almost mundane regularity. Every time there is an international economic summit, it seems that some Chinese mandarin reiterates the now familiar complaint that the greenback needs to be replaced as the world's de facto reserve currency. China usually suggests some "supranational" currency as a dollar substitute, to protect it against instability that could arise from any one country's errant economic policies. A favorite suggestion is the use of Special Drawing Rights (SDRs), the unit of account at the International Monetary Fund.

But Beijing's leaders may also see China's own currency, the yuan (also known as the renminbi), as a possible alternative to the dollar. There are indications that China intends to make the yuan a greater factor in international trade and investment, a development that, if successful, would have major implications for the global financial system. HSBC economist Qu Hongbin believes that the yuan could become one of the top three currencies in the world by 2012, with some $2 trillion in trade transacted in the Chinese currency each year. "The internationalization of the renminbi has become a leading item on the policy agenda" in Beijing, Qu concluded in a recent report. (See pictures of the global financial crisis.) ( learn more at )

The Economy Is Even Worse Than You Think

The average length of unemployment is higher

than it's been since government began

tracking the data in 1948
By Mortimer Zuckerman
Global Research, July 14, 2009The Wall Street Journal

The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:- June's total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.
- More companies are asking employees to take unpaid leave. These people don't count on the unemployment roll.
- No fewer than 1.4 million people wanted or were available for work in the last 12 months but were not counted. Why? Because they hadn't searched for work in the four weeks preceding the survey. ( learn more at )

The Bailout War III: Corporatism and Finance

We are experiencing an attempted corporatist coup. It’s the same old disaster capitalist battle plan: trigger the disaster, in this case the financial crisis; shock, confuse, and frighten the people with Too Big To Fail and an unending litany of miserable economic news; use this chaotic environment to push through a plan which would never have any chance of success if the people could calmly understand and deliberate on it. The finance elite claim to be capitalists seeking a “free market”, but what they really want is a free-fire zone. They want to be free of all government oversight, free of all antitrust, consumer, of labor protection, free of any obstacle to the most predatory and anticompetitive practices, free of environmental regulations, free of any limit on socializing the costs of externalities, free of any regulation aimed at economic stability, free of all social responsibility, and of course free of taxes and anything else which in any way compromises feudal accumulation. At the same time they want the full cooperation and protection of the public bureaucracy, police, courts, prisons, and military, which are all to be deputized in the service of private profit even as they are paid for with public funds. Feudalism masquerades as capitalism, but it seeks rent rather than innovation (though Orwell-style this is called “innovation”, just as swindler “talent” is called talent as such). Banks, insurance companies, and the real estate industry , who together comprise what Michael Hudson calls the FIRE trust, use debt creation not for productive loans or to raise living standards but to inflate bubbles in real estate, stocks and bonds, luxury novelty markets and so on. They concentrate in a trust to enforce a de facto central economic planning power where all losses are socialized. The “free market” function of the FIRE trust is really a fake rentier function, enabled by the government, which shouldn’t exist at all. Corporatism is pure gangsterism. Corporatism as an ideology and an agenda seeks to topple democratic capitalism and replace it with a de facto unaccountable autocratic government which serves as a wealth conveyor from the public to a rentier elite. Elected representatives and public officials are first captured with bribes and threats and then selected for ideology and obedience. A complaisant media cooperates. The result is an industry/government/media cabal which wages a civil war from above, treating the public and the public domain as a mine and a dump. (learn more at )

Citigroup losses masked by Smith Barney gain
By Joseph A. Giannone
Fri Jul 17, 2009 3:23pm

* Smith Barney deal yields $11.1 bln pretax gain
* Citicorp earned $3.06 billion, fueled by trading
* Citigroup shares little changed
* Credit costs surge 81 pct to $12.4 billion (Adds detail, background, writes through)

NEW YORK, July 17 (Reuters) - Citigroup Inc (C.N) on Friday said loan losses surged again in the second quarter, yet gains from selling most of its Smith Barney brokerage helped the company report the highest profit among big U.S. banks.
Citigroup, twice deemed too big to fail by the U.S. government during the past year, recorded an $11.1 billion pretax gain from selling Smith Barney into a joint venture with Morgan Stanley's (MS.N) brokerage unit. Citi received a 49 percent stake in the venture and cash.
The deal boosted Citi's net income to $4.28 billion, or 49 cents a share, compared with a year-earlier loss of $2.50 billion, or 55 cents. That surpassed the $2.7 billion profits reported this week by both Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N).

Six Reasons to Abolish the Fed

In Dismantling the Temple, William Greider lists Six reasons why granting the Fed even more power is a terrible idea:
1. It would reward failure. Like the largest banks that have been bailed out, the Fed was a co-author of the destruction. During the past twenty-five years, it failed to protect the country against reckless banking and finance adventures. It also failed in its most basic function--moderating the expansion of credit to keep it in balance with economic growth. The Fed instead allowed, even encouraged, the explosion of debt and inflation of financial assets that have now collapsed. The central bank was derelict in enforcing regulations and led cheers for dismantling them. Above all, the Fed did not see this disaster coming, or so it claims. It certainly did nothing to warn people.

2. Cumulatively, Fed policy was a central force in destabilizing the US economy. Its extreme swings in monetary policy, combined with utter disregard for timely regulatory enforcement, steadily shifted economic rewards away from the real economy of production, work and wages and toward the financial realm, where profits and incomes were wildly inflated by false valuations. Abandoning its role as neutral arbitrator, the Fed tilted in favor of capital over labor. The institution was remolded to conform with the right-wing market doctrine of chairman Alan Greenspan, and it was blinded to reality by his ideology (see my Nation article "The One-Eyed Chairman," September 19, 2005).

3. The Fed cannot possibly examine "systemic risk" objectively because it helped to create the very structural flaws that led to breakdown. The Fed served as midwife to Citigroup, the failed conglomerate now on government life support. Greenspan unilaterally authorized this new financial/banking combine in the 1990s--even before Congress had repealed the Glass-Steagall Act, which prohibited such mergers. Now the Fed keeps Citigroup alive with a $300 billion loan guarantee. The central bank, in other words, is deeply invested in protecting the banking behemoths that it promoted, if only to cover its own mistakes.

4. The Fed can't be trusted to defend the public in its private deal-making with bank executives. The numerous revelations of collusion have shocked the public, and more scandals are certain if Congress conducts a thorough investigation. When Treasury Secretary Timothy Geithner was president of the New York Fed, he supervised the demise of Bear Stearns with a sweet deal for JPMorgan Chase, which took over the failed brokerage--$30 billion to cover any losses. Geithner was negotiating with Morgan Chase CEO and New York Fed board member Jamie Dimon. Goldman Sachs CEO Lloyd Blankfein got similar solicitude when the Fed bailed out insurance giant AIG, a Goldman counterparty: a side-door payout of $13 billion. The new president at the New York Fed, William Dudley, is another Goldman man.

5. Instead of disowning the notorious policy of "too big to fail," the Fed will be bound to embrace the doctrine more explicitly as "systemic risk" regulator. A new superclass of forty or fifty financial giants will emerge as the born-again "money trust" that citizens railed against 100 years ago. But this time, it will be armed with a permanent line of credit from Washington. The Fed, having restored and consolidated the battered Wall Street club, will doubtless also shield a few of the largest industrial-financial corporations, like General Electric (whose CEO also sits on the New York Fed board). Whatever officials may claim, financial-market investors will understand that these mammoth institutions are insured against failure. Everyone else gets to experience capitalism in the raw.

6. This road leads to the corporate state--a fusion of private and public power, a privileged club that dominates everything else from the top down. This will likely foster even greater concentration of financial power, since any large company left out of the protected class will want to join by growing larger and acquiring the banking elements needed to qualify. Most enterprises in banking and commerce will compete with the big boys at greater disadvantage, vulnerable to predatory power plays the Fed has implicitly blessed.
Greider was talking about reasons not to give the Fed more power, but the reasons read more like a list of why the Fed should be abolished.

There are far more than 6 reasons. Consider his first point.

1.1 The Fed rewards failure
1.2 The Fed was a co-author of the destruction. During the past twenty-five years, it failed to protect the country against reckless banking and finance adventures.
1.3 The Fed allowed, even encouraged, the explosion of debt and inflation of financial assets that have now collapsed.
1.4 The Fed did not see this disaster coming. It certainly did nothing to warn anyone.

You can literally take any of his six points and come up with additional reasons.

Point number 6 is certainly an abbreviated version of my Fed Uncertainty Principle.
Uncertainty Principle Corollary Number Two:

The government/quasi-government body most responsible for creating this mess (the Fed), will attempt a big power grab, purportedly to fix whatever problems it creates. The bigger the mess it creates, the more power it will attempt to grab. Over time this leads to dangerously concentrated power into the hands of those who have already proven they do not know what they are doing.
The article is a long and mostly worthwhile read but unfortunately as is often the case in these matters, Greider comes to horribly incorrect conclusions about what should be done.

On Page 4 Greider states:
In this emergency, Bernanke essentially used the Fed's money-creation power in a way that resembles the "greenbacks" Abraham Lincoln printed to fight the Civil War. Lincoln was faced with rising costs and shrinking revenues (because the Confederate states had left the Union). The president authorized issuance of a novel national currency--the "greenback"--that had no backing in gold reserves and therefore outraged orthodox thinking. But the greenbacks worked. The expanded money supply helped pay for war mobilization and kept the economy booming. In a sense, Lincoln won the war by relying on the "full faith and credit" of the people, much as Bernanke is printing money freely to fight off financial collapse and deflation.

If Congress chooses to take charge of its constitutional duty, it could similarly use greenback currency created by the Federal Reserve as a legitimate channel for financing important public projects--like sorely needed improvements to the nation's infrastructure. Obviously, this has to be done carefully and responsibly, limited to normal expansion of the money supply and used only for projects that truly benefit the entire nation (lest it lead to inflation). But here is an example of how it would work.

The reform of monetary policy, in other words, has promising possibilities for revitalizing democracy. Congress is a human institution and therefore fallible. Mistakes will be made, for sure. But we might ask ourselves, If Congress were empowered to manage monetary policy, could it do any worse than those experts who brought us to ruin?
Letting Congress Manage Money Supply Is Pure Insanity

If there is one institution that could do a worse job at managing money supply than the Fed it would have to be Congress. Legislators have made a mess of everything from Fannie Mae, to Medicaid, Medicare, Social Security and literally every program they touch. Medicare and Medicaid were projected to cost $12 billion and we are at $400 billion and counting, and Congress even blew something as simple as ethanol. It awarded subsidies but ethanol producers went bankrupt anyway. We need less government interference in the free markets not more.

Sadly, Greider proved he does not even know what inflation is!

Suggesting that money supply growth be "limited to the normal expansion ... lest it lead to inflation" is ridiculous because monetary expansion is inflation (at least up to the point of a credit collapse such as we are in now). The reality is there does not need to be any monetary expansion at all.

Furthermore, government bureaucrats have no way of knowing or understanding what "projects that truly benefit the entire nation". Congress knows as much about what would benefit the nation as my neighbor's cat. Just imagine how many earmarks there would be if Congress could simply print money to pay for them.

The key is no one should be in charge of money supply or interest rates. We do not need a Fed at all and most importantly we do not need a Congress deciding how much money to print. What we do need is a balanced budget amendment to the constitution to rein in Congressional spending and of course we also need to abolish the Fed.

Hey I am not happy about a bad economy. I just

want you to understand what is truely happening

to you and the people you care about. I want you

to know what people are doing to you, what

people do in your name and how they are trying

to control the world while making you pay for it

( banker bailout ). Read, think, act.

The Keynesian Revolution and
the Neo-liberal Counter-revolution

By Dr. Eric Toussaint

Global Research, July 15, 2009

As a result of the depression of the 1920s and 1930s, a new wave of critics tackled the neo-classical creed on a largely pragmatic basis. This new wave was international and involved political leaders and economists from differing belonging to various currents backgrounds: enlightened bourgeois thinkers, socialists and Marxists. In a context of mass unemployment and depression, proposals came forward for major public works, for anti-cyclical injections of public money, and even for bank expropriations. Such proposals came from a wide variety of sources: Germany's Doctor Schacht; the Belgian socialist Deman; the founders of the Stockholm School, backed by the Swedish social democrats; Fabian socialists and J.M. Keynes in Britain; J. Tinbergen in the Netherlands; Frisch in Norway; the Groupe X-crise in France; Mexican president Lazaro Cardenas (1935-1940); adepts of Peronism in the Argentina of the 1930s; US president Roosevelt (elected in November 1932) and his New Deal.The entire range of proposals and pragmatic policies was partially summed up in Keynes's 1936 work General Theory of Employment, Interest and Money.The Keynesian revolutionThe preparatory work carried out by Keynes (1883-1946), laying the groundwork for the General Theory, was fuelled by the need to find a solution to the spreading crisis of the capitalist system. Moreover, this solution had to be compatible with the continued survival of the system. The work was partially the result of a wide-ranging collective process wherein groups and individuals ended up in different Keynesian camps, often very much at odds with one another. Some leaned more towards Marxist positions, such as the Briton Joan Robinson and the Pole M. Kalecki, who had actually formulated the key components of the General Theory before Keynes. Others grew progressively closer to the very tenets of liberalism and neo-classical economics that Keynes decried.
learn more at

Congressman Barney Frank

the Judas Iscariot

for the American people Holding up

(audit the fed bill) Federal Reserve

Transparency Act of 2009

NSA warrantless surveillance controversy

From Wikipedia, the free encyclopedia

The NSA warrantless surveillance controversy concerns surveillance of persons within the United States incident to the collection of foreign intelligence by the U.S. National Security Agency (NSA) as part of the war on terror. Under this program, referred to by the Bush administration as the "terrorist surveillance program",[1] part of the broader President's Surveillance Program, the NSA is authorized by executive order to monitor, without warrants, phone calls, e-mails, Internet activity, and text messaging, and other communication involving any party believed by the NSA to be outside the U.S., even if the other end of the communication lies within the U.S.
The exact scope of the program is not known, but the NSA is or was provided total, unsupervised access to all fiber-optic communications going between some of the nation's major telecommunication companies' major interconnect locations, including phone conversations, email, web browsing, and corporate private network traffic.
Shortly before Congress passed a new law in August 2007 that legalized warrantless surveillance, the Protect America Act of 2007, critics stated that such "domestic" intercepts required FISC authorization under the Foreign Intelligence Surveillance Act.[2] The Bush administration maintained that the authorized intercepts are not domestic but rather foreign intelligence integral to the conduct of war and that the warrant requirements of FISA were implicitly superseded by the subsequent passage of the Authorization for Use of Military Force Against Terrorists (AUMF).[3] FISA makes it illegal to intentionally engage in electronic surveillance under appearance of an official act or to disclose or use information obtained by electronic surveillance under appearance of an official act knowing that it was not authorized by statute; this is punishable with a fine of up to $10,000 or up to five years in prison, or both.[4] In addition, the Wiretap Act prohibits any person from illegally intercepting, disclosing, using or divulging phone calls or electronic communications; this is punishable with a fine or up to five years in prison, or both. [5] ( learn more at )

Drum roll please, and the real

unemployment number for California

is 20.3 %

A rising tide of social misery
David Walsh

WSWS July 16, 2009

Contrary to Obama administration and media claims about the recession “easing,” millions of working people in America are losing their jobs, earnings and health care benefits at an accelerating pace.
While executives at Goldman Sachs, JPMorgan Chase and other financial giants prepare to pay themselves billions of dollars this year in salaries and bonuses, life has continued to become more and more difficult for a broad layer of the population.
The New York Times pointed out on Wednesday that in California and a number of other states, “one out of every five people who would like to be working full time is not now doing so.”
The official jobless rate of 9.5 percent excludes both those who have stopped looking for jobs because local conditions are so bleak and those obliged to accept part-time employment.
If these unemployed and underemployed were included, the real jobless rate in the country’s most populous state, California, for example, would be 20.3 percent, according to the Times. In Oregon it would be 23.5 percent, in Michigan and Rhode Island, 21.5 percent, and in South Carolina, 20.5 percent. The figure would be just below 20 percent in Tennessee, Nevada and a number of “states that have relied heavily on manufacturing and housing.”
Given that the Bureau of Labor Statistics’ national jobless rate is skewed, for political reasons, to minimize the actual conditions, various analysts step in and attempt to come up with a “real unemployment” number.
The Center for Labor Market Studies at Boston’s Northeastern University places the current jobless rate at 18.2 percent, higher than the official figure on the eve of World War II. John Williams of Shadow Government Statistics puts the “Alternative Unemployment” rate at 20.6 percent. Other analysts calculate an “Effective Unemployment” figure of 18.7 percent. Whatever the precise number, the army of unemployed is large and swelling. A great many lives have already been devastated. ( learn more at )

No One Saw This Economic Crisis Coming?

A research paper, published in June by Dirk J. Bezemer, Groningen University, addresses this question and says the answer is that many saw it coming but those with the power to act did nothing. Bezemer contends that the problem is that economic policy is executed using macro equilibrium models and what is needed to establish economic policy that can anticipate crises, such as we have now, and take actions to head them off, are micro accounting cash-flow models. The entire paper can be read here. First, let me show you a table that Bezemer has prepared lisiting some of those who saw it coming. Table is in two parts for graphics processing reasons.


In a lengthy appendix, Besemer analyses in detail what each of the individuals did over extended periods of time to highlight the then incipient crisis.

Besemer says that those who foresaw the coming crisis share the general characteristic that they viewed the economy through an accounting models lens. He wrote,

They are ‘accounting’ models in the sense that they represent households’, firms’ and governments’ balance sheets and their interrelations. If society’s wealth and debt levels reflected in balance sheets are among the determinants of its growth sustainability and its financial stability, such models are likely to timely signal threats of instability.

Models that do not – such as the general equilibrium models widely used in academic and CentralBank analysis – are prone to ‘Type II errors’ of false negatives – rejecting the possibility of crisis when in reality it is just months ahead. Moreover, if balance sheets matter to the economy’s macroperformance, then the development of micro-level accounting rules and practices are integral to understanding broader economic development. This view shows any clear dividing line between‘economics’ and ‘accounting’ to be artificial, and on the contrary implies a role for an ‘accounting of economics’ research field. Thus this paper aims to encourage accountants to bring their professional expertise to what is traditionally seen as the domain of economists - the assessment of financial stability and forecasting of the business cycle." ( learn more at )

On the Edge with Max Keiser - 17 July 2009 (pt1 of 4)

On the Edge with Max Keiser - 17 July 2009 (pt2 of 4)

On the Edge with Max Keiser - 17 July 2009 (pt3 of 4)

On the Edge with Max Keiser - 17 July 2009 (pt4 of 4)

Green Bull Sh*t or a Recovery without jobs


Latest headline from the front

( Reality bites, let's get ride of the

people who caused this crap)



FACTBOX-U.S. bank failures in 2009

Friday, 17 Jul 2009 11:52pm EDT
WASHINGTON, July 17 (Reuters) - Following is a list of U.S. bank failures so far this year, according to the Federal Deposit Insurance Corp:

5-CIT talks to bondholders; bankruptcy still feared

Friday, 17 Jul 2009 11:49pm EDT
* CIT shares moderate gains, bonds up Friday (Recasts to update status of talks)

Two California banks closed - FDIC

Friday, 17 Jul 2009 11:09pm EDT
WASHINGTON, July 17 (Reuters) - Bank regulators closed two California banks -- Vineyard Bank in Rancho Cucamonga and Temecula Valley Bank in Temecula -- on Friday, the 56th and 57th U.S. banks to fail this year as the struggling economy and falling home prices take their toll on financial institutions.

SemGroup cash too tied up with Goldman - oil makers

Friday, 17 Jul 2009 10:27pm EDT
NEW YORK, July 17 (Reuters) - A group of oil producers says bankrupt oil and gas company SemGroup LP [SEMGP.UL] does not have enough cash on hand to pay them the hundreds of millions of dollars they say they are owed because its cash is restricted in a deal with Goldman Sachs.

Bank of America, GE weigh on recovery optimism