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[sandi66]

Constitutional History Of US Foreign Policy: 222 Years Of Tension In Twilight Zone

Sunday, 19 September 2010 23:55

By Walter A. McDougall

In 1973, Congress passed the infamous War Powers Resolution (WPR), over Richard Nixon's veto. It was perhaps the most ambitious Congressional effort to bridle the President since the battle with Andrew Johnson over Reconstruction. The WPR is worth reading-once-then forgetting, because its convoluted, contradictory, and doubtless unconstitutional mix of instructions, restrictions, and ticking clocks has never been honored by any administration or upheld by any court. Presidents Gerald Ford, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush all dispatched U.S. forces into combat situations without paying more than lip service to the WPR. In 1990, following Saddam Hussein's invasion of Kuwait, President Bush stationed 100,000 personnel in Saudi Arabia. He sought no authorization and, in fact, informed just one member of Congress: Senator Sam Nunn (D., Ga.). When he then prepared Operation Desert Storm to liberate Kuwait, 54 Congressmen led by the chairman of House Armed Services Committee, Berkeley radical Ron Dellums (D., Calif.), filed for an injunction to stop the war. U.S. District Judge Harold H. Greene ran for cover. Noting that 54 fell far short of a majority, he judged the case "not ripe for judicial determination."[1]

Even if upheld, the War Powers Resolution could not possibly fulfill its intentions. First, no one wants the President to be prohibited from acting in emergencies. Second, the 60 or 90 day periods after which the President must get Congressional authorization do not begin until the President, at his leisure, reports the deployment. Third, once U.S. troops are in a combat zone it is not likely that Congress will publicly ensure the defeat of their mission! In the first Gulf War, the real clock was set by the U.N. Security Council whose Resolution 678 required Iraqi forces to withdraw from Kuwait by January 15, 1991. That put Congress under a deadline. Three days of frantic debate ensued until, on January 12, the sullen chambers voted to authorize force by 250 to 183 in the House and 52 to 47 in the Senate. House Speaker Tom Foley called it "the practical equivalent of a declaration of war." By then it was crystal clear that the War Powers Resolution was "a bad idea whose time has come and gone."[2]

Far from rolling back presidential authority in the wake of Vietnam and Watergate, Congress failed to prevent yet another big arrogation of Constitutional power by the least likely of presidents, Jimmy Carter. He suddenly announced that the United States would grant full recognition to the People's Republic of China on January 1, 1979. That was an act blessed by the Constitution itself. But as part of the package, Carter had to terminate the 1955 Mutual Defense Treaty with the Nationalist Chinese regime on Taiwan. That was a treaty ratified by two-thirds of the Senate. Did the President alone have the right to un-ratify? Senators led by Barry Goldwater (R., Ariz.) filed a Constitutional challenge, but the Court of Appeals ruled against it and the Supreme Court refused the case on the grounds that it "involves the authority of the President in the conduct of our national foreign relations."[3] (This time, however, Congress got a last laugh of sorts. Just as it learned after George Washington to attach amendments to treaties made by the President, so now it learned to pass laws that effectively amend treaties un-made by the President. Thus, did the April 1979 Taiwan Relations Act mandate the continued sale of weapons to the Taipei regime and, thus, give the Mutual Defense Treaty new de facto life.)

The rapidity with which the executive branch reasserted its "sole organ" status was perhaps most evident when Carter used his 1980 State of the Union address to add his own to the growing list of presidential edicts. He had begun his term as a post-Watergate, post-Vietnam Democrat who implicitly repudiated Harry Truman's heritage, as well as Richard Nixon's in his Notre Dame speech of 1977. But following the Soviet invasion of Afghanistan, he pledged in the Carter Doctrine to take whatever war measures necessary to defend the Persian Gulf states from aggression and ensure the free flow of oil. Thus, American power filled the vacuum created by Britain's retreat from her bases "east of Suez" in 1971 just as quickly and thoroughly as it had the eastern Mediterranean back in 1947. Only this time Congress was not even asked to vote.[4]

Ronald Reagan's administration acted as if the WPR simply did not exist. It dispatched 1,200 marines to Beirut, launched an invasion of Grenada, sent advisers to El Salvador, and funneled aid to the Afghan Mujahedin and Nicaraguan Contras, which the White House praised as "Freedom Fighters," resisting Communist regimes. In a column for TIME magazine, Charles Krauthammer later labeled the policy of assisting anti-Communist guerillas the Reagan Doctrine.[5] Democrats in Congress hated such noblesse oblige, especially on the part of an unabashedly conservative President. So they passed three amendments named for Congressman Edward Boland (D., Mass.) that prohibited aid to the Contras. Their increasingly tortuous terms, meant to close every conceivable loophole, were what gave National Security Council officials the bright idea of funneling secret funds from Iran to Central America. Reagan confessed the affair was wrong and assumed responsibility, but after the televised hearings, starring Colonel Oliver North, Congress emerged from the Iran-Contra Affair at least as embarrassed as the White House.

Meanwhile, a very interesting novelty had emerged in the "twilight zone" regarding the federal government's war powers. The executive branch, having successfully rendered the WPR anodyne, but also having recognized the real need for accountability and prudence in the wake of the Vietnam War, began to check and balance itself! In November 1984, Secretary of Defense Caspar Weinberger delivered a stunning speech to the National Press Club that laid out what immediately came to be known as the Weinberger Doctrine. Never again, he said, should an American President send forces into combat unless six severe conditions were met and only after all alternatives had been exhausted. The short-range cause of this initiative was Reagan's catastrophic deployment of U.S. Marines in Beirut, where 241 were killed by a terrorist bomb. The longer-range causes included the determination of the Joint Chiefs of Staff, not to mention the Congress and public, that there should be "no more Vietnams." Not surprisingly, the strongest internal opposition came from Secretary of State George Shultz, because effective diplomacy often requires the threat of force behind it. But for a number of years thereafter, the idea of the executive branch placing checks on itself got traction. Thus, General Colin Powell, in the run-up to the First Gulf War in 1991, added his own list of prerequisites that ought to be met prior to the dispatch of U.S. forces into overseas combat.[6]

After the 9/11 attacks, needless to say, Congress was thoroughly routed and even cautious voices in the executive branch were silenced. George W. Bush requested a resolution granting him authority "to deter and pre-empt any future acts of terrorism or aggression against the United States." The House Committee on International Relations changed "pre-empt" to "prevent" (which in any case could be construed to include preemption) and the resolution passed by votes of 420-1 and 98-0. It gave the President authority "to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons...."[7] The administration invoked that authority to overthrow the Taliban regime in Afghanistan, then invade Iraq in 2003, on the basis of flawed intelligence regarding Saddam Hussein's programs for weapons of mass destruction. Both operations provoked local counterinsurgencies that attracted international support. Both are ongoing under Barack Obama, who seems determined to play the role of Richard Nixon, prolonging an unpopular war in hopes of redeeming it, even as Bush had appeared to play the role of his fellow Texan Lyndon Johnson.
CONCLUSION: PERHAPS ALL SAIL AND NO ANCHOR ISN'T SO BAD

By now it should be pretty clear why a chapter in a book on the Constitution and foreign relations is simply entitled: "Why the President Almost Always Win in Foreign Affairs," and a recent article is entitled "Why Hawks Win." First, the executive almost always takes the initiative; second, Congress almost always acquiesces; third, the courts always demur on the grounds that war and diplomacy are in the domain of the "political branches."[8] For better or worse, the U.S. government has changed a great deal since the great Federalist lawyer James Wilson assured the Pennsylvania Ratifying Convention: "This system will not hurry us into war; it is calculated to guard against it. It will not be within the power of a single man, or a single body of men, to involve us in such distress."[9]

But before we praise or blame the assertive chief executives or passive legislatures and jurists who have wrought or acquiesced in great changes, we need to place them all in their historical contexts. Every change was a response to a challenge born of new circumstances at particular times. We may judge them to have been wise or foolish by their results, and worthy or unworthy of being precedents by the persistence of the challenges that inspired them. But we would be wise to listen to Louis Henken, who delivered the prestigious Cooley Lectures at the University of Michigan Law School on the Constitution's bicentennial. Henkin worried about presidential abuse of the war powers, yet held to the dictum "if it ain't broke, don't fix it" because a healthy "tension in the twilight zone" had enabled the federal government to adapt to America's role as a world power in an era of revolutionary change. He prescribed no major amendments to the Constitution and concluded that even if British critic Thomas Macauley was right that our Constitution is "all sail and no anchor," perhaps all it needs is a rudder.[10]

Perhaps, but that begs the question of who or what can serve as rudder of the American ship of state. Congress is unable or unwilling to do so, serving primarily as a squeaky brake that engages too late to prevent executive blunders but often in time to snatch defeat from the jaws of possible victory.[11] Courts are unable and unwilling to steer policy. So that leaves it up to the ultimate arbiters in our Constitutional system: the American people themselves. Presidents may abuse their war powers and/or commit malpractice in foreign affairs, but so long as they do not arrogate to themselves the power to suspend elections "for the duration," the voters are empowered to oust the people or party in charge every two or four years. Granted, public opinion is a rude instrument subject to all sorts of manipulation, short-sightedness, folly, and overreaction: Vox populi isn't vox dei. But in our system it is sovereign, which is why we have little choice but to trust Theodore Roosevelt's principle embedded in the Progressive "Bull Moose" Party platform of 1912: "We hold with Thomas Jefferson and Abraham Lincoln that the people are the masters of their Constitution, to fulfill its purposes and to safeguard it from those who, by perversion of its intent, would convert it into an instrument of injustice."[12]

Finally, before rendering judgment on 222 years of Constitutional adaptation, we need to perform one more pressing task, which is define what we now mean by war in an era of nuclear weapons, cold war, limited war, counterinsurgency, and terrorism by non-state actors. For instance, if the War on Terror is a war as traditionally understood, then preemptive strikes, restrictions on civil liberties, and semi-permanent nation-building operations in darkest Asia are clearly within presidential authority. But to that one could retort, if the War on Terror is a war as traditionally understood, then it ought to be declared by Congress and re-declared every two years. But to that one could retort, if the War on Terror is a truly a war, then against whom would Congress declare it? The world has moved so far from the era of blatant fascist aggression, not to mention staid monarchical wars, that our Constitutional language seems inadequate. Yet, its very sparseness and ambiguity allow us to hope that the United States may continue to adjust relatively quickly, if not smoothly, to whatever new challenges loom.

Justice Louis Brandeis put the point elegantly in a dissenting opinion of 1926. "The doctrine of the separation of powers," he wrote, "was adopted by the Convention of 1787, not to promote efficiency but to preclude the exercise of arbitrary power. The purpose was, not to avoid friction, but, by means of the inevitable friction incident to the distribution of governmental powers among three departments, to save the people from autocracy."[13] So stipulated! As long as "We the People" revere our Constitution it cannot harm our national interest, because the Constitution is our national interest, the very content of our Exceptionalism.





The above is an excerpt from a new monograph by Walter A. McDougall. This essay is excerpted from lectures delivered at the Annenberg Summer Teacher Institute, National Constitution Center, Philadelphia PA, July 27, 2010. In this excerpt, McDougall discusses the history of presidential responses to the War Powers Resolution. To access the monograph, visit: www.fpri.org/pubs/2010/McDougall.ConstitutionalHistoryUSForeignPolicy.pdf

Walter A. McDougall is the Alloy-Ansin Professor of International Relations and Professor of History at the University of Pennsylvania. He is Chairman of FPRI's Center for the Study of America and the West and co-chair of FPRI's History Institute for Teachers.

Notes

1. ^ David Gray Adler and Larry N. George, The Constitution and the Conduct of American Foreign Policy (University Press of Kansas, 1996), p. 42.
2. ^ Lehman, Making War; "come and gone" by Edward Keynes in Adler and George, The Constitution and the Conduct of American Foreign Policy, p 252).
3. ^ Goldwater v. Carter, 444 U.S. 996 (1979).
4. ^ Zbigniew Brzezinski drafted key sentences in the Carter Doctrine and modeled them on the words of the Truman Doctrine Carter had hoped to supersede: Brzezinski, Power and Principle: Memoirs of the National Security Advisor, 1977-1981 (Farrar, Straus, Giroux, 1983), p. 444.
5. ^ "The Reagan Doctrine," TIME (April 1, 1985).
6. ^ The Weinberg-Powell Doctrine included a list of conditions that must be met in advance of a deployment:
1. The United States should not commit forces to combat unless the vital national interests of the United States or its allies are involved.
2. U.S. troops should only be committed wholeheartedly and with the clear intention of winning. Otherwise, troops should not be committed.
3. U.S. combat troops should be committed only with clearly defined political and military objectives and with the capacity to accomplish those objectives.
4. The relationship between the objectives and the size and composition of the forces committed should be continually reassessed and adjusted if necessary.
5. U.S. troops should not be committed to battle without a reasonable assurance of the support of U.S. public opinion and Congress. (Some lists also mention international support.)
6. The commitment of U.S. troops should be considered only as a last resort.
7. ^ news.findlaw.com/wp/docs/terrorism/sjres23.es.html
8. ^ See the pithy political insights of Harold Hongju Koh, "Why the President Almost Always Win in Foreign Affairs" in Adler and George, The Constitution and the Conduct of American Foreign Policy, pp. 158-80; and the pithy psychological insights of Daniel Kahneman and Jonathan Renshon, "Why Hawks Win," in Foreign Affairs, January/February 2007.
9. ^ Jonathan Eliot, Debates in the Several State Conventions on the Adoption of the Federal Constitution, 4 vols. (1836), cited by Adler, "The Constitution and Presidential War-making: The Enduring Debate," Political Science Quarterly, Spring 1988, pp. 1-36.
10. ^ Letter to H. S. Randall, May 23, 1857, in G. O. Trevelyan, The Life and Letters of Lord Macauley (1875), pp. 409-10. The Cooley lectures were the basis for Henkin, Constitutionalism, Democracy, and Foreign Affairs (Columbia, 1990).
11. ^ An excellent book by William G. Howell and Jon C. Pevehouse, While Dangers Gather: Congressional Checks on Presidential War Powers (Princeton, 2007) argues that whereas the Congress speaks with many voices and must usually act indirectly to restrain executive assertion, it can nonetheless wield meaningful influence through hearings, protests, budgetary procedures, and especially the media and public opinion.
12. ^ teachingamericanhistory.org/library/index.asp?document=607
13. ^ Myers vs. United States, 272 U.S. 52, 293, in Glennon, Constitutional Diplomacy, p. 325.


FPRI

Founded in 1955, FPRI is a 501(c)(3) non-profit organization devoted to bringing the insights of scholarship to bear on the development of policies that advance U.S. national interests and seeks to add perspective to events by fitting them into the larger historical and cultural context of international politics.

The scholars of FPRI include a former aide to three U.S. secretaries of state, a Pulitzer Prize-winning historian, a former president of Swarthmore College and a Bancroft Prize-winning historian, and two former staff members of the National Security Council. We count among our trustees a former Secretary of State and a former Secretary of the Navy, a foundation president, and numerous active or retired corporate CEOs, lawyers, and civic leaders. www.fpri.org

www.eurasiareview.com/201009198352/constitutional-history-of-us-foreign-policy-222-years-of-tension-in-twilight-zone.html

[sandi66]

IS BANK OF AMERICA GOING TO GO BUST FOR BETTING WRONG ON THE GOLD MARKET?

Posted By: NaturalWisdom <Send E-Mail>
Date: Sunday, 19-Sep-2010 17:40:18

On Friday, Maritime Savings Bank of Wisconsin became the 125th U.S. bank to fail in 2010. A small community bank with just $350 million in assets, its failure was hardly noticed by Wall Street or in the mainstream press.

The midterm elections are but a few weeks away. Congressional incumbents up for re-election are desperately trying to hold onto their seats of power. The last thing they want is an economic meltdown triggered by a major bank failure - at least, not until after Nov. 2.

In his latest editorial about the economy, Jim Willie skewers former Fed chairman Alan Greenspan for his direct role in fomenting the asset bubbles that have come-and-gone over the past 15 years. He also provides justification why gold and silver prices had increased over the past decade and will continue to do so as long as the fiat money and banking systems exist in their current form.

In the last paragraph of his report, Jim Willie wrote that during this past summer, the London metal exchange had to be bailed out by the Bank of International Settlements because the exchange was rapidly losing its inventory of gold bullion that was being demanded by traders. He intimates that a major Wall Street firm like Bank of America could be on the chopping block because of losses caused by being on the wrong side of a rising gold market.

The Ominous Silent Canary
Submitted by Jim Willie
Editor, Hat Trick Letter
Thu, 16 Sep 2010



www.rumormillnews.com/cgi-bin/forum.cgi?noframes;read=183203

[sandi66]

Reader BS, fwd: "Bix Wier....Road To Roota Update....Important!!!!"

Posted By: hobie <Send E-Mail>
Date: Sunday, 19-Sep-2010 17:42:19 (Thanks, B.

Reader BS sends us this e-mail from Bix Weir with links to Max Keiser's Sept 17 interview with Jim Willie:

=====

Jim Willie of GoldenJackass.com has a recent interview with "On the Edge" with Max Keiser where he talks about some of the background battles that are heating up in the bullion world.

Here's the 3 part interview:

www.youtube.com/watch?v=IDuZmmz3dqg

www.youtube.com/watch?v=5OLyLifIkts

www.youtube.com/watch?v=MaWi5heq5mw

This "Dirty Dozen" he talks about is most likely the Good Guys as the "choke out" the Bad Guys continues.

We are VERY, VERY close to EVERYTHING blowing up.

Keep an eye on the end of September.

Bix



www.rumormillnews.com/cgi-bin/forum.cgi?noframes;read=183204

*********************

BIX WIER: VID: Jim Willie of GoldenJackass.com has a recent interview with "On the Edge" with Max Keiser

Posted By: watcher51445 <Send E-Mail>
Date: Sunday, 19-Sep-2010 19:31:18 BULK: Road to Roota Blast - Jim Willie Exposes Global Gold Run

Jim Willie of GoldenJackass.com has a recent interview with "On the Edge" with Max Keiser where he talks about some of the background battles that are heating up in the bullion world.

Here's the 3 part interview:

www.youtube.com/watch?v=IDuZmmz3dqg
www.youtube.com/watch?v=5OLyLifIkts
www.youtube.com/watch?v=MaWi5heq5mw

This "Dirty Dozen" he talks about is most likely the Good Guys as the "choke out" the Bad Guys continues.

We are VERY, VERY close to EVERYTHING blowing up.

Keep an eye on the end of September.

Bix


www.rumormillnews.com/cgi-bin/forum.cgi?noframes;read=183209

[sandi66]

Even the Little Guy Now Realizes that the Stock Market is Gamed, And Many Are Pulling Out Entirely




Sunday, September 19, 2010





As I noted in January:

Joseph Stiglitz says that Wall Street is hyping up the economy to sell more stock.

Has it worked?

Well, the stock market certainly has rocketed up from its March lows.

But many investors are still avoiding equities.




As Vincent Deluard - a strategist for TrimTabs Investment Research (25% of the top 50 hedge funds in the world use TrimTabs' research for market timing) - says:


We've never seen this before – such a huge rally, and the little guy is out.



In other words, the stock market rally is due almost entirely to hedgies, pension funds, banks and other institutional investors, and not every day investors.

It is even possible that the government itself has been propping up the stock market. And Bill Gross and Nouriel Roubini say that we have a Ponzi style economy.

TrimTabs notes that small investors pulled out $14 billion net from stock mutual funds from the beginning of last year through mid-December, on top of a net $245 billion withdrawn in 2008.

Given that, at the end of September, individuals held 80% of the $19 trillion in stock in U.S. companies, both private and public - according to the Federal Reserve (see this, for example)- recovery will not happen so long as the little guys are sitting on the sidelines.


TrimTabs notes that most of $592 billion taken out of money market mutual funds last year has gone into bond and bond-hybrid funds instead.


The little guy has not gotten back in since then.



Indeed, AFP notes that high-frequency trading and other scams by the big boys has so obviously destroyed a level playing field that the little guy is getting out of the stock market entirely:




Michael McCaslin is wary of investing his retirement funds in Wall Street. Its volatility and cryptic trading techniques make him feel lost and unsafe, he says.

"I tried to watch the market over the past couple of years, and you're just lost. I look at the market now and it's like Las Vegas, it's a gamble," the 65-year-old pensioner said.

***

Yet the extreme instability that has characterized the markets since the 2008 financial meltdown, often blamed on highly speculative trading, and the increased use of super-fast automated trading systems make Wall Street a tough environment for small investors.

And as a result, more Americans have fled the stock market in recent months.

***

"I don't have that ability, I am at the mercy of these people and with their automatic trading and the other things they can take advantage of, I don't know what can happen to the market because, you know, it can happen in milliseconds with the automatic trading," he said.

Often known as high frequency trading (HFT), the ultra-fast algorithms buy and sell millions of shares a day, executing deals within split seconds. They today account for more than 50 percent of daily trading volume.

HFT has come under increased scrutiny and criticism following the May 6 "Flash Crash" which saw market indexes dive by more than nine percent in minutes, only to rebound again after seconds.

The stock exchange's extreme volatility and complexity leaves average investors scared.


***


Even savvy traders find it almost impossible to master the stock market as trading increasingly becomes dominated by machines and fractured by a myriad of highly specialized and often little-known markets called black pools.

"How can I compete with a computer system that can put in 200, 300 trading orders in a second?" asks Troy Hanninen, a professional individual investor who works from his home in Missoula, Montana.

If Hanninen wants to buy stock at 35 dollars a share, computers will get them a fraction of a second before him at 34.999 dollars, he says.

"Ever since the domination of the computers came out, you have many individual traders like me struggle because of the ability of high frequency traders to sub-penny us... that issue has driven liquidity from the market."


***


"Retail broker-dealers have told us that their customers -- individual investors -- have pulled back from participating in the equity markets since May 6," she said.

The SEC's website has been flooded by letters from angry and frustrated investors in recent months.

"I recognize that there may be a variety of reasons for reduced participation in the equity markets, but the trend is troubling, particularly if concerns about equity market structure are playing even a small role in investor decision-making," [SEC head Mary] Schapiro said.



Tyler Durden - who has done more than anyone to expose high-frequency trading and related scams - has documented the recent outflows from the equities market in a series of essays. See for example this, this, this and this.

www.washingtonsblog.com/2010/09/even-little-guy-now-realizes-that-stock.html


ty joye

[sandi66]

Regulators close 6 banks, one in Ohio

September 19, 2010

WASHINGTON (AP) - Regulators on Friday shut down three Georgia banks and one each in New Jersey, Ohio and Wisconsin, boosting to 125 the number of U.S. bank failures this year amid the tough economic climate and growing loan defaults.

The Federal Deposit Insurance Corp. on Friday took over the Georgia banks: Bank of Ellijay, in Ellijay, with $168.8 million in assets; First Commerce Community Bank of Douglasville, with $248.2 million in assets; and Peoples Bank, based in Winder, with $447.2 million in assets.

The FDIC also seized ISN Bank in Cherry Hill, N.J., with $81.6 million in assets; Bramble Savings Bank of Milford, Ohio, with $47.5 million in assets; and Maritime Savings Bank, based in West Allis, Wis., with assets of $350.5 million.

Community & Southern Bank, based in Carrollton, Ga., agreed to assume the assets and deposits of Bank of Ellijay, First Commerce Community Bank and Peoples Bank. In addition, the FDIC and Community & Southern Bank agreed to share losses on $602.5 million of the three failed banks' loans and other assets.

Georgia, where the meltdown in the real estate market brought an avalanche of soured mortgage loans, has been one of the hardest hit states for bank collapses. The failures of the three banks Friday brought to 14 the number of Georgia banks that have fallen this year. Also high on the list of failure-heavy states are California, Florida and Illinois.

New Century Bank, based in Phoenixville, Pa., agreed to assume the assets and deposits of ISN Bank. New Century Bank does business as Customers Bank. The FDIC and New Century agreed to share losses on $64.8 million of ISN Bank's loans and other assets.

Foundation Bank, based in Cincinnati, is assuming the assets and deposits of Bramble Savings Bank.

And North Shore Bank, based in Brookfield, Wis., agreed to acquire all the deposits of Maritime Savings Bank and $177.6 million of its assets.

The failure of Bank of Ellijay is expected to cost the deposit insurance fund $55.2 million; that of First Commerce Community Bank, $71.4 million; that of Peoples Bank, $98.9 million; ISN Bank, $23.9 million; Bramble Savings Bank, $14.6 million; and Maritime Savings Bank, $83.6 million.

With 125 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 94 banks.

The pace has accelerated as banks' losses mount on loans made for commercial property and development.

www.marionstar.com/article/20100919/NEWS01/9190325

[sandi66]

Gold Market Update

By: Clive Maund

-- Posted Sunday, 19 September 2010

In recent days many commentators proclaimed that gold and silver have "broken out", but THIS IS NOT TRUE, so what is the current situation?

In the last update we looked at both the bullish and bearish case for gold and silver, what you might otherwise call the best and worst case scenarios. Some interpreted this as fence sitting, but it was no such thing - it was dispassionate pragmatic analysis the result of which is that we won't get caught by surprise whatever happens. However, whilst we have defined what will constitute a breakdown and know in advance what action to take should breakdown occur, we are now in the bullish camp and have been buying a range of selected stocks in expectation of an upside breakout which should lead to a powerful broad based advance.

We require 3 conditions to be be met to be sure that we have an upside sector breakout, which are expected to be synchronously fulfilled. First gold has to break out upside from its current potentially bearish Rising Wedge - new highs are NOT GOOD ENOUGH and to claim they are is amateurish. Second, while silver has undeniably broken out upside from a Triangle, IT HAS NOT BROKEN OUT YET TO CLEAR NEW HIGHS. Thirdly, as more ordinary investors are well aware, Precious Metals stocks indices HAVE NOT YET BROKEN OUT to new highs, although there is strong evidence is that they will do before long.

Let's be clear - we are not trying to "rain on anyone's parade" by making the above observations, we are simply "keeping one foot on the ground". Our outlook for the sector is now strongly bullish for the reasons which we will now set out. Fundamentally the outlook for gold and silver is rosy. There is an unstoppable global trend of competitive currency devaluation underway which is driven by balance of trade considerations and given that governments have this powerful core motivation to devalue their currencies, what better way to do it than simply to print more of the stuff, which means that you can avoid liquidity problems within your economy and placate grumbling workers unsettled by rising inflation by giving them pay rises, using massaged statistics to make sure that their pay rises don't keep up with inflation. The US is the "maestro" of both money creation, which is now absolutely necessary to service runaway debt and government spending, and fiddling statistics, like the CPI and the unemployment figures, the former to cheat people on fixed incomes out of fair cost of living increases and the latter to make things look better than they really are. Another major development of recent weeks in the PM sector is the dawn of a new era of takeover fever, as exemplified by Kinross's takeover of Red Back for a handsome sum and Goldcorp's purchase of Andean Resources for a cool $3 billion.

We don't wish to sound uncharitable but the plain, unvarnished truth is that most investors are idiots. Deep down you know that - most of you reading this have been big enough idiots in your time, as has the writer - if we are honest with ourselves we must own up to it. If aliens from another planet landed on earth and took a look at the long-term charts for junior mining stocks they would fairly conclude that earthlings are drunken lunatics, as a result of seeing the wild, insane gyrations of junior stock prices. They probably have alcohol on other planets, and if they are lucky, something resembling Jack Daniels, although of course it might be green in color. Want down to earth proof of how stupid investors can be? - you don't have to look far to find it. Three years ago silver in the ground was valued at $5, now it is valued at about 50 cents? - get the picture? - is the penny starting to drop? Now you understand why the majors are starting to go after the quality juniors - and what do you think is going to happen if gold accelerates to the upside and silver and PM stock indices break out to new highs and go on a tear? That's right - there will be a scramble by the majors to gobble up the quality juniors and also mid-cap companies with reserves already defined to add their grossly undervalued assets to their depleted inventories. This is why the charts of many junior mining stocks, which have been trampled into the dust in recent months, are now looking so bullish - they have MASSIVE upside potential, and are unlikely to drop even if gold and silver now correct back.

On its 3-year chart we can see that although gold has been rising to successive new highs in recent months, it has been losing upside momentum, as shown by the declining line of peaks in the MACD indicator. A potentially bearish Rising Wedge has been devoloping, breakdown from which would be expected to lead to a drop perhaps back as far as the major support level shown. Whilst acknowledging this reality, however, we are expecting the opposite to occur - gold is expected to negate the bearish implications of the Rising Wedge by the simple expedient of accelerating and busting out of the top of it. If it succeeds in doing this it should run quickly to the parallel return line shown, quickly meaning over the space of several months, which gives us an upside target for the move at about $1500. In addition, there is the possibility, particularly if the prospect of hyperinflation looms, that gold will continue to accelerate beyond the first parallel line towards or to the second, which would see it approach $2000, which given what is going on in the world is not an unreasonable valuation.

A few months back, with the deflation threat very real, it had looked like silver and the main PM sector stock indices were forming a Double Top with their highs of early 2008. Now, however, we can see on the 4-year chart for the HUI index that the pattern forming has morphed into a bullish Ascending Triangle, and that we are now VERY CLOSE TO A BIG MOVE. The Ascending Triangle is a bullish pattern that portends an imminent upside breakout - buyers are having to steadily raise their bids to get stock, hence the rising lower line of the Triangle, and the big overhanging supply resulting from trapped buyers in the large Head-and-Shoulders top reversal of late 2007 and early 2008 has now been almost totally exhausted. This zone of supply, the major resistance shown which is only the top part of the broad band of supply, is of immense technical importance made clear by the fact that the market has been hammering against the top of it for nearly a year now. Thousands of traders are waiting to see which way this breaks. Thus it is obvious that a clear break to the upside will bring traders and investors down off the fence in droves, and drive a huge rally. Likewise a breakdown would be expected to trigger a plunge, although this is considered much less likely on account of the Triangle being of the bullish Ascending type.

If the PM sector breaks out upside soon as expected how does this square with what is going on in the broad stockmarket? After all, it is hardly likely that the PM sector will rise strongly while the broad market is tanking, is it not? This is very true, and the conclusion that the PM sector is about to break out upside must surely mean that, at the least, the broad stockmarket will hold up. So let's now see what is going on the broad market be looking at a chart for the S&P500 index.

As many of you will recall we have been bearish on the broad market for months, with very good reason as it had looked like a Head-and-Shoulders top was forming, but it now looks like if we don't change our tune on this, and soon, we are going to be forced to "eat crow". On the 4-year chart for the S&P500 index we can clearly see the Head-and-Shoulders top, and while there is still the possibility that it will fulfill its earlier promise and lead to a breakdown and plunge, there are subtle but definite technical signs that the pattern is about to abort, which would lead initially to a run at this year's highs in the 1220. This fits with the fundamentals in the US, as while things may be increasingly grim for the guy on the street, the government has the printing press and can carry on doing what it finds easiest and has grown accustomed to in the recent past, which is solve any and all problems by the simple expedient of printing ever more money, what is graciously called Quantitative Easing, abbreviated to QE.

Even though it now looks like the US stockmarkets are going to abort their H&S top and break out upside soon, short-term charts show that with the market having arriving at a key resistance level, we could see a reaction back first, although any such reaction is expected to be minor. As we can see on our 6-month chart for the S&P500 index, although a bullish looking Head-and Shoulders bottom has formed since May (within the larger H&S top already described), the market has risen quite swiftly to the very clear line of resistance at the 1130 level and is now short-term overbought, with a couple of doji candlesticks in recent days indicating indecision and traders bailing out just because the market has arrived at this resistance, which is of course fair enough. So we shouldn't be surprised to see either consolidation or some reaction here in coming days, before the market turns up again and busts out upside.

Quite clearly, if US stock indices do soon abort their Head-and-Shoulders top, which on the S&P500 index would be signalled by a breakout above the Left Shoulder high at 1150, it will be a big green light for the PM sector to stage a major breakout to embark on a sustained and substantial uptrend. This is hardly surprising as the underlying drivers for such an advance will be more competitive devaluation and more QE, not just in the US but worldwide, which will lead to robust inflation down the road and ballooning commodity prices. If the low interest rate environment persists for much longer, the Precious Metals will have the ideal growth environment of rampant inflation and low rates, and even if rates do start to accelerate to the upside, which must happen sometime, this will crash the bloated and fragile US Treasury market, and hot money will then only have one place left to flee, and that is the commodity markets, especially the Precious Metals.


news.goldseek.com/CliveMaund/1284944400.php

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Why we go mad for gold
By LARRY GETLEN

Last Updated: 4:41 AM, September 19, 2010

Posted: 12:43 AM, September 19, 2010

Gold — that which “makes the ugly beautiful,” Moliere said — hit an all time-high of $1,277.50 an ounce this week. We may have long ago abandoned coins made from it, may have ditched the standard that governed our currency, but no substance looms larger in our imagination. The current gold rush — fueled by fear more than greed, and commodities markets not the sword — is only the latest example of the insanity inspired by Midas’ metal.

The Old Testament speaks of gold as the greatest of earthly riches; archaeologists that it was prized in even the earliest human civilizations. Some of the earliest writings, from around 3500 BC, consist of clay tablets from the Sumerian Empire that were marked by the ends of reeds. They are receipts for stocks of gold.

Empires rose and fell on the scarcity of gold. When the Egyptians found it in the kingdom of Nubia, they enslaved the men, women, and children; stripped them naked; threw them in the mines; and literally worked them to death, replacing them as quickly as they perished.

Julius Caesar, after conquering Gaul in 1st century BC, kidnapped and enslaved 100,000 from their population to mine gold back in Italy.

And when Spain’s King Ferdinand sent Christopher Columbus in search of the precious metal, he famously told him, “Get gold, humanely if possible, but at all hazards, get gold.”

Were it not for Ferdinand’s rapacious desire for the gleaming substance, Columbus would not have discovered America.

“When he gave that quote,” says Adam Wasserman, author of “Two Sides to the Coin — A History of Gold,” “he was saying, ‘ruthlessly exploit the natives to death just to get gold — getting gold is more important than their lives.’ ”

“That set in motion the extermination of civilizations that had been around for centuries,” notes Brian J. Kelly, director of the 2001 documentary, “Gold! The History of Man’s Greatest Obsession.” “The [obsession for gold] overrode the common sense of man peaceably co-existing with other cultures.”

That lust culminated in the exploration of the New World. In 1523, Francisco Pizarro, the Spanish conquistador, heard tales of a city of gold beyond the Andes Mountains. After almost a decade of preparation, he led a small fighting force in kidnapping the Incan emperor.

While the golden city turned out not to exist, the Incas were awash in gold, and Pizzaro agreed to accept five tons of it — a $50 million-$60 million value in today’s dollars — in exchange for the emperor’s release. After receiving his booty, Pizzaro and his men slaughtered over 5,000 Incas in a half-hour, then strangled the Incan emperor and burned his body.

When Spain later colonized Hispaniola (the Dominican Republic and Haiti), the enslaved natives were driven so hard that only 2,000 out of 100,000 survived, leading the Spanish to import slaves from Africa to continue mining.

Even in the 20th century, the British subjected German and Duth settlers in South Africa to starvation in order to conquer the land and mine its gold.

Why has one metal produced such devotion?

Some scholars say it’s religious — that beyond aesthetic value, early humans considered it heavenly because of its brilliance. Ancient Egyptians believed that gold had mystical properties and used it to build deities such as Horus, the falcon god.

“Gold was used considerably for religion — and was integral to propaganda over the masses — because its shiny appearance was considered to manifest the light of the sun god,” Wasserman says. “If you controlled the gold, you controlled the people.”

Scarcity only increased the desire. Something that the powerful could hoard made it an instrument of control.

“Governments warehoused large quantities of bullion — mostly gold and silver — to use in war,” says Nathan Lewis, author of “Gold: The Once and Future Money.” “In times of peace they would pile the stuff up, and in times of distress they would use it.”

Gold’s malleability also made it an ideal substance for creating coins, with the first gold coins likely popping up around 600 BC in Lydia, Asia Minor, which is located in what is now part of Turkey.

But for the world’s monarchs, practical financial need mixed with a narcissistic, oftentimes fanatical worship.

According to “The Power of Gold: The History of an Obsession” by Peter L. Bernstein, the Greek master sculptor Phidias used most of the gold in Athens — in effect, the city’s treasury — in the cloak of his statue of Athena at the Parthenon. The cloak’s gold had to later be removed to fund Athens’ war with Sparta.

When Roman Emperor Constantine converted to Christianity, he took the gold from all the pagan temples and used it to make himself a crown. Byzantine emperor Theophilus, who had a golden throne, built a golden tree to shade it, along with golden birds, lions and griffins to serve as adornment.

That gold remains an obsession today is a testament not just to its value, but to its unconquerable mystique.

“When you actually see gold bars rolling off an assembly line, it’s mesmerizing,” says Kelly, who witnessed this at New York’s Federal Reserve.

“It’s hypnotic to see it in such quantities. There are other minerals that are more valuable, like platinum, but they just don’t have the cachet that gold has.”

While we may no longer believe that gold is holy, the long history of the metal — the battles over it, the myth surrounding it — have made it retain its value, at least psychologically.

“There’s a commercial now with a red Ferrari. But is a red Ferrari naturally appealing, or is it because it’s marketed to us?” Kelly says.

“In a way, gold has been marketed as appealing since the dawn of time. It was given this very valuable connotation of being associated with religion and deities, and therefore its popularity has become a self-fulfilling prophecy.”

www.nypost.com/p/news/opinion/opedcolumnists/why_we_go_mad_for_gold_nrRkNxX6axwFI1ccCse8zK/1

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Gold at new high as recovery fears resurface

Gold prices rose to a record high at $1,283.25 an ounce on Monday as worries about the health of the global economy and more quantitative easing in the United States, boosted the metal's safe haven appeal.

8:57AM BST 20 Sep 2010

"There definitely seems to be an upward momentum," said James Moore, analyst at TheBullionDesk.com. "There is technical buying out there and $1,300 still seems to be the target everyone is looking for.

"The debt jitters in Europe seem to be back on the agenda. We've seen a few disappointing releases of data, particularly from the US and again the double-dip scenario has been back in people's minds."

Weak data out of the US on Friday helped push gold to a new all-time high at $1,282.75 an ounce. Underlying US inflation pressures were muted in August and consumer morale hit a 13-month low this month, keeping alive fears of deflation and spurring bets on further monetary easing.

On a thin economic calendar, investors await housing data from the United States for further direction as the session progresses.

The US Federal Reserve was not expected to make any new monetary policy moves on Tuesday, but the post-meeting statement will be closely parsed for signals on the debate about whether further large-scale asset purchases are needed to support the sluggish recovery.

"Rumours that the Fed may be looking to put some more money into the system to stimulate the economy ... obviously that has some inflationary impact further down the line," said Mr Moore.

"The Fed is going to be the key event and looking to the strength and tone of the statement."

www.telegraph.co.uk/finance/personalfinance/investing/gold/8012943/Gold-at-new-high-as-recovery-fears-resurface.html

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20 Sep, 2010, 01.20PM IST,REUTERS

Rupee leads Asian rally, yuan NDFs seen stronger

BANGKOK: The Indian rupee led small Asian currency gains against a defensive dollar on Monday in sluggish trade subdued by a Japanese public holiday, while gold consolidated near record highs. Market expectation of possible further Federal Reserve moves to increase the money supply weighed on the dollar.

Japan intervened to sell yen for the first time in six years last week, interrupting a decline in the dollar that began when talk of further quantitative easing by the U.S. central bank resurfaced last month. The yuan scored its biggest eight-day gain since January 2008 as China's central bank fixed its mid-point at a new post-revaluation high in the face of U.S. political pressure.

But trading turned cautious due to concerns China may slow the yuan's rise as it approaches the psychologically important 6.7000 level against the dollar, though traders remained convinced it would rise above 6.6 in the coming two to three months. The MSCI index of Asian shares outside Japan was up 0.38 percent in early afternoon. RUPEE The Indian rupee rose to a three-month high after the dollar fell in the offshore non-deliverable forwards markets.

Indian share market gains also lent support. The partially convertible rupee was at 45.66/67 per dollar at 0545 GMT after touching 45.60, its strongest since June 21 and 0.4 percent above Friday's close. "The rupee has gained today tracking the non-deliverable forwards which are lower and hence dragging the dollar lower versus the rupee in the spot as well," said Vikas Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank. One-month offshore non-deliverable forward contracts were at 45.80, weaker than the onshore spot rate.

The Reserve Bank of India raised key rates more than expected last Thursday and signalled that a tightening cycle that has brought rate hikes this year may be nearing an end. YUAN Short-dated dollar/yuan NDFs can drop a further 300-400 pips as investors saw more yuan gains in the near term amid mounting U.S. pressure on Beijing to let it strengthen, traders said. The mid-point fixing at a new post-revaluation high extended a string of stronger fixes starting last week.

DBS said markets expected stronger fixings this week leading up to the meeting of U.S. and Chinese leaders.. The mid-point has risen 1.2 percent against the dollar since Sept 8. Volume was largely on the short end of the curve with the impact of the stronger fixings fading beyond the 9-month tenors. "The short end of the curve has more room to fall in the coming days as that is where most of the offshore bets are positioned," a NDF trader said.

Three-month NDFs fell to a record low of 6.6880 against 6.6970 on Friday, implying yuan appreciation of 0.34 percent against 0.3 percent on Friday. PESO The Philippine peso rose 0.1 percent to around 44.20 per dollar in afternoon trade. "There's not much direction today after the appreciation on Friday," a Manila-based dealer said. Traders expected the peso to move in a 44.10-30 range against a relatively flat Asian market with Tokyo closed for a holiday. Bond yields were confined to a tight range as investors awaited the data for clues on government borrowing for the rest of the year.

economictimes.indiatimes.com/markets/forex/Rupee-leads-Asian-rally-yuan-NDFs-seen-stronger/articleshow/6590942.cms

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Bolder action is needed to exert monetary control

Monday, 20 September 2010 15:00

THE National Bank of Cambodia’s announcement last Thursday that it plans to crack down on illegal money changers represents an important – if minor – step on the road to better control of the riel after a turbulent few months of currency depreciation earlier this year. But there is still a very long way to go.

Of the 3,249 money changers recognised by the NBC, only 795 were registered with the central bank last year. The vast majority remained outside of government control. Of these, the most were in the provinces – some 2,859 – where exchange rates can vary dramatically depending on proximity to Cambodia’s borders and therefore the influence of foreign currencies.

The key for the Kingdom remains to try to standardise the rate against the dollar, baht and dong in particular and to generate greater power to control monetary policy at the central bank. Ultimately, the United States Federal Reserve still dictates Cambodia’s currency valuation to a large extent, given that 90 percent of money supply remains in dollars.

Exerting greater control of money changers, a step taken by Vietnam, which has made some inroads towards dedollarisation, is therefore a key step. But as the Asian Development Bank pointed out in July in its latest report on Cambodia’s progress towards greater use of the riel, Cambodia has to design a firm blueprint regarding its policy. At the moment that doesn’t seem to exist.

At the launch of the ADB report, Ministry of Economy and Finance Secretary General Hang Chuon Naron did not divulge the direction the government would take in a bid to exert greater control of the riel, despite numerous questions on the issue, a worrying sign there is still not a clear path towards dedollarisation.

That is understandable in many ways. An overly heavy-handed approach, such as that taken in Vietnam, can often be counterproductive. The dong dropped more than 5 percent in value against the greenback last year and has struggled again in 2010. But where does the riel go from here?

ADB dedollarisation specialist Jayant Menon has suggested the government has to begin using more sophisticated monetary tools than just the large dollar sell-offs we have seen this year – the use of government bonds and securities would be a good start.

Without control of the value of the riel and interest rates Cambodia will only continue to find itself powerless when the dollar strengthens substantially or when the banking sector is reduced to infighting, as was the case with Campu Bank’s decision to raise its loan rate last week.

An overnight central bank borrowing rate would normally address these problems as banks would have to operate within the realities of the internal interest rate climate and not according to policies directed by banking headquarters overseas. Unfortunately for NBC and the Ministry of Economy these headaches are complex and closely intertwined.

First steps are difficult to take, but at least the issue of money changers reflects a desire to take action. Nevertheless, if the central bank is ever going to exert real authority in the financial sector it will have to become a lot bolder.

www.phnompenhpost.com/index.php/2010092042125/Business/bolder-action-is-needed-to-exert-monetary-control.html

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European stocks rally on eve of Fed meet

September 20, 2010 - (AFP) – 3 hours ago

LONDON — European stock markets rallied on Monday on the eve of a key US monetary policy meeting which is expected to provide clues over the outlook for the world's biggest economy.

London's FTSE 100 index of top shares jumped 1.16 percent to 5,572.13 points nearing midday trade.

Frankfurt's DAX 30 climbed 0.65 percent to 6,250.13 points and in Paris the CAC 40 index advanced 0.95 percent to 3,757.47.

The Stoxx 50 index of leading eurozone companies gained 0.70 percent to 2,776.71 points.

There is already a large market focus towards tomorrow's Federal Open Market Committee (FOMC) announcement," said Joshua Raymond, analyst at trading firm City Index.

"The market is expecting no change on interest rates and there is likely to also been a 'watchful stance' on economic data before deciding upon extra stimulus to maintain the US recovery.

"Were the Fed to announce extra stimulus measures at tomorrow's meeting, this would give the markets a fairly big surprise, particularly in light of last month's strong non-farm and private payrolls data."

Members of the Fed's policymaking panel will gather for the last time before November's mid-term elections, with the economic outlook transformed since their last meeting from apocalyptic to vaguely promising.

In Europe, attention was also on the energy and banking sectors after US officials finally declared BP's broken well in the Gulf of Mexico "dead", and France's competition authority fined 11 big French banks over price fixing.

Shares in BP rose 1.65 percent to 409.7 pence although the British energy group still faces a long uphill battle to clean up the Gulf, a litany of lawsuits, billions of dollars in fines and shareholders angered by the firm's instability.

Meanwhile in Paris, France's competition authority said it had fined 11 French banks 384 million euros (503 million dollars) for colluding to fix a commission they charged for handling cheques.

In 2002, the banks -- including Societe Generale and BNP Paribas -- introduced a 4.3 euro cents commission per cheque, arguing that it was necessary to compensate for a loss of revenue which came after the cheque processing system was speeded up.

The share prices of the banks, which stopped charging the commission in 2007, were higher despite Monday's announcement.

Asian stock markets were mixed on Monday in quiet trade as dealers cashed in on recent gains while looking ahead to a Federal Reserve policy meeting in the United States. Markets in Japan were closed for a public holiday.

www.google.com/hostednews/afp/article/ALeqM5ht9K5yus_Kwsck_daWXAkE2FqeTw

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Treasurys Rise Ahead Of Fed Bond Buying, FOMC Rate Meeting

SEPTEMBER 20, 2010, 9:30 A.M. ET

NEW YORK (Dow Jones)--Long-dated Treasurys rose Monday ahead of a round of bond buying from the Federal Reserve and the central bank's meeting on interest-rate policy Tuesday.

The securities extended Friday's gains, which came after a key gauge of U.S. consumer prices was tamer than economists forecast while consumer sentiment on the economy fell to the lowest level since August 2009.

The data contrast with many recent reports that had been less dire than forecast, fueling debate on whether the central bank will expand monetary stimulus in the form of larger-scale purchases of Treasurys to prevent a double-dip recession and the risk of deflation. The split views have sparked wild swings in Treasury prices in recent sessions.

"The bond market is keyed on the Federal Open-Market Committee to see if they give hints on" further quantitative-easing measures, said Thomas Roth, executive director in the U.S. government bond trading group at Mitsubishi UFJ Securities (USA), Inc in New York. "I don't think they will say much more than they already have. They will do it if the economy goes downhill."

As of 9:14 a.m. EDT, the benchmark 10-year Treasury note was up 5/32 in price and its yield fell to 2.724%. The 30-year bond was 15/32 higher to yield 3.877%. Bond prices move inversely to their yields.

The FOMC is set to meet Tuesday to set interest rates. Policymakers will release their rate decision and an accompanying statement at around 2:15 p.m. EDT Tuesday.

The Fed is scheduled to buy Treasurys maturing between September 2016 and August 2020 mid-morning Monday, continuing its small-scale purchases started last month to keep long-term borrowing cost low for consumers and companies.

The focus is now on whether the central bank will carry out bigger purchases, like it did last year when the central bank spent $300 billion in the Treasury market.

Some investors argue the central bank needs to expand its monetary stimulus to fend off deflation and another economic downturn. Deflation boosts the value of Treasurys but it hurts the broad economy by discouraging consumer spending and eroding corporate profits.

But others countered that recent data suggested the economy is weak but not falling to a level that may trigger the Fed to buy Treasurys at a larger scale. Any such decision is unlikely from Tuesday's policy meeting, they said.

"I think there is the real risk the Treasury market will be disappointed by the lack of further action from the Fed and we could push to higher rates," said Christian Cooper, senior rates trader in New York at Jefferies & Co. "Certainly the possibility of a growth outlook downgrade would be supportive of Treasurys but I think the absence of additional accommodation will be the key driver of price action tomorrow and for the remainder of the week."

The 10-year note's yield, a key benchmark for consumer and corporate borrowings, has risen from 2.418% hit on Aug. 25, the lowest level since January 2009 and less than 50 basis points away from the record low hit in mid-December 2008.

online.wsj.com/article/BT-CO-20100920-706735.html

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September 16, 2010

Cobell and Pigford settlements. The bill also contains $4.6 billion to pay for settlement of both the Cobell and Pigford class action lawsuits. The Cobell settlement concerns the government’s
management and accounting for over 300,000 American Indians’ trust accounts, and the Pigford settlement ends a decades old discrimination lawsuit brought by black farmers against USDA.
This provision is estimated to cost $4.6 billion over 10 years.



ty Tommy and SiriusNews

finance.senate.gov/legislation/details/?id=1c237e70-5056-a032-52e9-ef5f959b7a76 click on H.R 4849 then go to page 20 of 23

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The Directorship 100

Jeffrey M. Cunningham, 09.20.10, 12:20 PM EDT

The veritable who's who of the American corporate governance community, the Directorship 100 reveals the most renowned boardroom influentials.

love to go to Washington--if only to be near my money. --Bob Hope

In compiling this year's Directorship 100, the National Association of Corporate Directors found that, as the famous comedian opined, all things financial lead to Washington, D.C.--at least in good old 2010. It is no surprise then that this year's version of the Directorship 100, the list of the most influential people in the boardroom, pointed at least indirectly at those who earned their influence in the voting booth or by advising those who did. The investor has spoken, and it seems she has spoken to her congressman.

No surprise either that Finance Chairmen Chris Dodd and Barney Frank, the authors of the financial legislation that became law, were re-elected to the list again this year. Nor that supremely activist SEC Chairman Mary L. Schapiro's appearance on our list was, unlike many SEC decisions, unanimous.

Even among our non-Washingtonians there lurks a sense of Beltway déjà vu: Paul O'Neill, a newcomer to the Directorship 100, was Treasury secretary to former President Bush, and joins our list as an advisor to Steve Schwarzman's Blackstone Group ( BX - news - people ). Similarly, H. Rodgin (Rodge) Cohen, Edward Herlihy and Anton (Tony) Valukas have earned government chops either defending, advising or otherwise playing a central role in the affaires du gouvernement of the credit crisis. So too are CEOs, among them Warren E. Buffett, Rex W. Tillerson and James L. Dimon. All had their say, sometimes more than they bargained for, at hearings, on and off the record.

Investors such as Ralph V. Whitworth, Roger W. Ferguson Jr. and David M. Rubenstein are no strangers to government as employees, testifiers or investors: Whitworth just turned his attention onto Occidental Petroleum ( OXY - news - people ) at the same time the government is looking closely at the sector. No list is complete without the media, and our list is composed of the absolutely quintessential: The New York Times' Andrew Ross Sorkin, CNBC's Becky Quick, Fortune's Carol J. Loomis, Bloomberg's Norman Pearlstine and Fox's recent hire Charles Gasparino are all closely followed by administration officials.

The Hill and the West Wing are of course well-represented, starting with the president himself and key members of his administration, including Valerie B. Jarrett, Rahm Emanuel, David Axelrod and Kenneth Feinberg. Not quite czars despite the sobriquet the media likes to place on them, they do exert a profound influence on the shape of the boardroom in these times.

All members of the Directorship 100, regardless of how they arrived here, have power and influence. Some of it is new, some of it is longstanding. Our modest job is to reveal those who exert the kind of influence that will permit the continued, if sometimes shaky, path that our system of capitalism is on, and the importance of corporate governance as a critical guidepost along the route. As the Bard wrote, "Be not afraid of greatness: Some are born great, some achieve greatness, and some have greatness thrust upon them." Whichever is your preferred route, these members of the Directorship 100 are having a profound impact on corporate governance.

Regulators and Rule-Makers

The Delaware Courts
Despite the push by the federal government to make corporate governance law, the most important business court in the land, by far, is still the Delaware Court of Chancery, headed by Chancellor William B. Chandler III, and his fellow Chancery judges, Vice Chancellors Leo E. Strine Jr., Donald F. Parsons Jr., John W. Noble, and the court's newest member, J. Travis Laster. Laster made waves last spring with a surprise ruling on so-called "freeze-out" tender offers. He ruled that in a transaction where the majority shareholder buys minority partners with a tender offer, the controlling shareholders receive "both the affirmative recommendation of a special committee and the approval of a majority of the unaffiliated stockholders."

Should the ruling be challenged, it would end up in the Delaware Supreme Court, captained by Chief Justice Myron T. Steele. More often than not, Steele has the last word on corporate governance law.

Andrew Cuomo, New York Attorney General
Andrew Cuomo is taking a page right out of the Eliot Spitzer playbook: parlaying a crusade against Wall Street banks like Citigroup, AIG and Goldman Sachs into a run for the governor’s mansion. Let’s hope he doesn’t emulate Spitzer in every way. While many executives complain that Cuomo’s tactics overlap the duties of the SEC, forcing them to walk a delicate line between state and federal securities law, his rebuke of credit ratings agencies was welcome in many corner offices. Like Spitzer, Cuomo was not afraid to make use of the Martin Act, a piece of New York legislation passed in 1921 that gives the attorney general broad powers to pursue financial fraud (certain defense counselors allege it is unconstitutional). And now that the attorney general-to-governor path seems to be well-worn, a host of candidates to replace Cuomo have cropped up, including Nassau County DA Kathleen M. Rice, a Democrat, and Republican Daniel M. Donovan, the DA of Staten Island.

Congress
Fresh from passage of the legislation that bears their name, Congressman Barney Frank and Senator Christopher Dodd will forever be associated with financial reform. Still to be determined is if they will be heralded or pilloried for the act they shepherded, as it could take several years to see if it is a playing field leveler or an overwrought burden on businesses. Either way, the act is a curtain call of sorts for Dodd, who announced he will not be seeking reelection in November. Dodd’s departure could open the door for Sen. Charles E. Schumer (D-NY)to play a more active role in sponsoring business legislation. Schumer deserves much of the credit (or blame, depending on your perspective) for many of the governance reforms that were enacted in the financial reform bill. Likewise, Congressman Henry A. Waxman (D-CA) has been a vocal proponent of changes to corporate compensation practices. As chairman of the House Committee on Energy and Commerce, Waxman is also expected to play a lead role in crafting a sweeping energy bill.

Should the Republicans take over the Senate in the midterm elections, Senator Richard Shelby (R-AL) would likely take over as chairman of the Senate Banking Committee. Shelby has been a vociferous opponent of the financial reform bill and an advocate for small business owners. His counterpart on the House Financial Services Committee is ranking member Rep. Spencer T. Bachus. The nine-term Congressman from Alabama, a devout fiscal conservative, faces re-election this fall.

Apart from the financial reform bill, Congress also appointed the Financial Crisis Inquiry Commission to assess the causes of the crisis. The 10-member commission is chaired by Democrat Philip N. Angelides, the former treasurer and candidate for governor of California. Also called the Angelides Commission, its final report is due to Congress in December.

The SEC
Under Mary L. Schapiro, the Securities and Exchange Commission has undergone drastic changes. With the stigma of being the agency that missed the Bernie Madoff scandal and failed to rein in excesses on Wall Street still lurking, Schapiro has moved aggressively to remake the Commission. Whether it was taking on Goldman Sachs or nearly doubling the number of investigators, there is no doubt that the SEC under Schapiro and her fellow commissioners, Kathleen L. Casey, Elisse B. Walter, Luis A. Aguilar and Troy A. Paredes, has a far more activist agenda than the one under predecessor, Christopher Cox. While the financial reform bill short-circuited the SEC’s efforts on proxy access, Schapiro had an important advisory role on the legislation.

The SEC will no longer provide companies with guidance on dismissing some proxy proposals on substantive grounds. That has led to many more resolutions making their way onto the proxy, including some that many would consider fringe issues. Another seismic change at the SEC was the creation of a Division of Risk, headed by Henry Hu. The division is intended to assess systemic risk in the financial markets. Another new face at the SEC is Richard C. Ferlauto, who was named to the Office of Investor Education and Advocacy. Ferlauto is no stranger to the Directorship 100, however, as he has made the list in past years for his role as head of governance at the American Federation of State County and Municipal Employees. Other recent additions include David M. Becker, who was appointed general counsel last year, and Meredith B. Cross, who was named director of the division of corporate finance. Both Becker and Cross are returning to the Commission. Brian V. Breheny also plays an important role in the SEC’s governance efforts as deputy director for Legal and Regulatory Policy in the Division of Corporation Finance.

Robert H. Herz, Chairman, FASB
Robert H. Herz was appointed chairman of the Financial Accounting Standards Board (FASB) in 2002 and is now in his second term. He has been a long-standing guardian of the nation’s accounting standards and has played an integral role in moving FASB closer to adopting international standards. This year Herz took part in FASB’s joint sessions with the International Accounting Standards Board (IASB) to detail nearly a dozen major accounting changes that will be finalized in 2011. Adopting a timeline set by the Group of Twenty Nations, the boards plan to adopt the new standards by mid-2011. Working at a fast pace, Herz and the FASB are changing standards that are long overdue for improvement. Herz is engaged in balancing convergence with the domestic concerns of U.S. investors and the public: “I am proud to say that so far my fellow board members and our staff, both FASB and IASB, have risen to the occasion.”

Daniel L. Goelzer, Acting Chairman, PCAOB
Daniel L. Goelzer was appointed by the SEC as a founding member of the Public Company Accounting Oversight Board (PCAOB) in 2002 and took over as acting chairman last year after Mark Olson stepped down. The Supreme Court ordered changes to the way PCAOB board members are removed but left the agency, established by the Sarbanes-Oxley Act to oversee the accounting firms that audit public companies, in tact. Prior to joining the PCAOB, Goelzer served as general counsel to the SEC and early in his career worked as an auditor in the Milwaukee office of Deloitte & Touche.

The Exchanges
After a roller-coaster trading day on May 6, 2010 that saw the largest intra-day point drop in the history of the Dow Jones—a so-called “flash crash”—leaders at the major exchanges were on high alert. Duncan L. Niederauer, CEO of NYSE Euronext, quickly reassured investors and concluded that the trading glitch was related to the fragmentation of markets and global trading volumes, not technical problems. In fact, he says that circuit breakers, which halted trading while order was restored, helped prevent trading activity from causing greater volatility. Niederauer has help overseeing the exchange from Deputy Chairman Marshall N. Carter. The NYSE is known as having some of the highest corporate governance standards of any exchange in the world. The job of continuing that tradition is partly charged to Scott R. Cutler who is U.S. listings chief.

Across town at the Nasdaq OMX, Robert Greifeld, president and CEO, is also responsible for upholding high standards of governance at the exchange’s 3,700 listed companies.

Bruce Aust, executive vice president of Nasdaq’s Corporate Client Group and leader of the Corporate Services program, has spearheaded Nasdaq’s expansion into corporate governance support services.

www.forbes.com/2010/09/20/directorship-100-boards-leadership-governance-directorship.html?boxes=leadershipchanneldirectorship



more on the original article: www.directorship.com/directorship-100-2010/2/

[sandi66]

GCG Named 'Best Claims Administrator' by the New York Law Journal

MELVILLE, N.Y., Sept. 20 /PRNewswire/ -- The Garden City Group, Inc. (GCG), one of the nation's largest claims administration firms, has been voted "Best Claims Administrator" by the New York legal community, according to the New York Law Journal's "Best Vendors of 2010" edition.

The prestigious journal polled lawyers and other legal professionals to determine the outcome. More than 2,000 votes were received from over 400 firms, and GCG came out on top as "Best Claims Administrator" in the Litigation Support category.

"As a company that places such a high priority on client service, it is a great honor for us to be recognized as best-in-class by the legal community," said David Isaac, chief executive officer, GCG. "For more than 25 years, we have always resolved to earn the confidence and respect of our clients, and will continue to offer the services and support necessary to retain this top position."

"I want to commend the GCG team for earning this highest of accolades, and thank our clients for trusting us to handle some of the profession's most complex assignments in both the Class Action and Bankruptcy arenas," added Neil Zola, GCG president and chief operating officer. "We will continue our commitment to provide clients with the highest levels of service, professionalism and excellence."

GCG is the recognized leader in legal administration services for class action settlements, bankruptcy cases and legal noticing programs, with more than 400 employees in offices coast-to-coast. The firm has handled many high-profile matters, including the General Motors bankruptcy, the $6.15 billion WorldCom settlement, the $3.05 billion Visa/MasterMoney Antitrust settlement and the $700 million Engle Trust Fund distribution.

About The Garden City Group, Inc. (GCG)

The Garden City Group, Inc. (GCG), a subsidiary of Crawford & Company, administers class action settlements, designs legal notice programs, manages Chapter 11 administrations, and provides expert consultation services. Visit GCG at www.gcginc.com.

About Crawford

Based in Atlanta, Ga., Crawford & Company (www.crawfordandcompany.com) is the world's largest independent provider of claims management solutions to the risk management and insurance industry as well as self-insured entities, with a global network of more than 700 locations in 63 countries. The Crawford System of Claims Solutions(SM) offers comprehensive, integrated claims services, business process outsourcing and consulting services for major product lines including property and casualty claims management, workers compensation claims and medical management, and legal settlement administration. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB.

www.prnewswire.com/news-releases/gcg-named-best-claims-administrator-by-the-new-york-law-journal-103281229.html

[sandi66]

American Justice in Occupied Iraq: Why Tariq Aziz Should Be Released

by Muriel Mirak-Weissbach /

September 20th, 2010

The appearance on August 5 of an interview with former Iraqi diplomat, Dr. Tariq Aziz in the Guardian was a minor bombshell, whose repercussions were to be felt worldwide. Like an underground explosion, the interview sent waves throughout international waters, rocking many boats and reaching far distant shores. It was not only what the former top Iraqi diplomat said ¡ª although his brief statements were of utmost relevance ¡ª but the mere fact that he was allowed to speak out in public which sent eerie signals across international diplomatic circuits.

Why?

Who Is Tariq Aziz?

Dr. Tariq Aziz served as Deputy Prime Minister between 1981 and 2003, and also at times as Foreign Minister. He is the highest ranking member of the former regime still in custody. After the invasion and occupation of Baghdad in 2003, he turned himself in to the U.S. authorities, unlike other members of the regime who fled. According to his own account, Dr. Tariq presented himself to the U.S. forces out of his own free will, on condition that his family be allowed to leave Iraq for Jordan, which permission was granted.

Instead of being welcomed by the U.S. forces for his spontaneous gesture and accorded humane treatment, he was thrust into prison, and held de facto incommunicado for years. He was allowed no family visits and no contact with lawyers. Finally, in 2008 he was put on trial, and in March 2009 was sentenced to 15 years in prison on charges of having participated in the execution of merchants who had violated state price controls in 1992. He was also given a 7-year-sentence for forced relocation of Kurds.

Earlier that month, he was found not guilty of killing Shi¡¯ites in 1999. Though afflicted by diabetes, a heart condition, and emphysema, he was denied adequate medical attention or treatment, and left to rot in a dungeon. Repeated appeals by his family, his lawyers, and the Vatican for his release on humanitarian grounds were impudently ignored by the U.S. authorities.

His first approach to the Vatican for help was made in December 2004, and went through Father Jean-Marie Benjamin, a priest who had arranged a momentous meeting between Tariq Aziz and Pope John Paul II a year earlier, in an effort to prevent the war. Fr Benjamin received unofficial approval from Cardinal Angelo Sodano, the Vatican Secretary of State, and organized a group of Italian lawyers to provide legal assistance to Aziz, a Chaldean Christian, free of charge.

In January 2007, Aziz sent a letter through his Italian lawyer, Giovanni di Stefano, to Pope Benedict XVI, requesting that the Vatican act as a guarantor for him so that he might stay in Italy while awaiting trial. When di Stefano was allowed to visit him in prison that month, he reported that his client was ¡°coughing up blood¡± and called for a doctor. In January of this year, he was hospitalized after falling ill. It was later reported that he had suffered a stroke. On July 14 he was transferred along with at least 55 other former government officials to Iraqi custody. Days later he was summoned to court again and charged with squandering public wealth.

It was as part of the process of U.S. ¡°withdrawal¡± and transfer of power to the Iraqi authorities that the 74-year-old Tariq Aziz entered his new prison regime. And under this new arrangement, politically shaped by the Iraqi government, he came to give an interview to a leading British daily. According to Guardian journalist, Martin Chulov, preparations for the interview had taken several months. One not-better identified minister of the Iraqi government facilitated contacts for the interview.

In this, his first (and perhaps last) direct encounter with a representative of the world press, Dr. Tariq had a lot to say ¡ª and none of it could have pleased government circles in Washington, London, Baghdad, or other world capitals involved in the military conflicts between 1991 and 2003. Aziz laid bare a number of crucial facts, and identified, in warning tones, the dangers that the declared policy aims of the belligerents ¡ª the U.S.-led coalition forces ¡ª harbored for the nation and the region.

First he declared his innocence of any ¡°crime against any civilian, military or religious man,¡± and asserted, ¡°I am proud of my life because my best intention was to serve Iraq.¡± He did acknowledge that ¡°There were mistakes ¡­ there were things that were not completely correct,¡± without further details. He refrained from expressing regrets or criticizing his former president: ¡°If I speak now about regrets,¡± he said, ¡°people will view me as an opportunist. I will not speak against Saddam,¡± he went on, ¡°until I am a free man. Wisdom is part of freedom. When I am free and can write the truth I can even speak against my best friend.¡±

The one regret he did have was that he had surrendered. He recounts that, after having said farewell to Saddam Hussein and assured him his support, he made contact with the U.S. forces ¡°through an intermediary¡±. ¡°If I could return to that time,¡± he told the Guardian, ¡°I wish I would be martyred. But the war was here and Baghdad had been occupied. I am loyal to my family and I made a major decision. I told the Americans that if they took my family to Amman they could take me to prison.¡± And that is what happened.

Regarding the occupation, he is quoted (it is not clear when in the interview, since it appears in the title), saying, ¡°Britain and the U.S. killed Iraq.¡± At the conclusion of his remarks, he said the occupying forces would be wrong to withdraw. ¡°He [The U.S. president] cannot leave us like this,¡± he said. ¡°He is leaving Iraq to the wolves. When you make a mistake you need to correct a mistake, not to leave Iraq to its death.¡±

His reference to what he would or would not say about Saddam Hussein might lead to speculation that, were he freed, he could be prevailed upon to denounce the former Iraqi president, essentially justifying ex post facto the horrendous wars and invasion from 1991 to 2003.

This is not, in my view, likely. Rather, what Tariq Aziz as a free man could tell the world is the true story behind those wars and embargo regimes. First: who looked the other way as Iraq prepared to invade Kuwait in 1990, and provided assurances that whatever actions it took against Kuwait¡¯s monetary and oil price warfare would be treated by the U.S. as an internal Arab affair? The protocol of a meeting between then-U.S. Ambassador April Glaspie and Saddam Hussein is on the record, but Tariq Aziz could fill in a lot of the blanks. 1 Going back even farther in time, he would be in a position to detail who encouraged Iraq to go to war against Iran in 1980, and who provided Baghdad the political, intelligence, and military backup, including chemical weapons. 2

But, to stick to Desert Storm, the first direct Anglo-American assault on the country: Dr. Tariq could lay out step by step how the war preparations were perceived in Baghdad. After all, he was the one delegated by Saddam Hussein to meet with then-Secretary of State James Baker III in Geneva, ostensibly in a last-ditch attempt to avoid war. What appeared in the world press following that fateful January 9, 1991 meeting was the news that Baker III had threatened Aziz that, unless Iraq withdrew from Kuwait toute suite, his country would be ¡°bombed back to the Stone Age.¡± Subsequent events confirmed that Baker was not bluffing.

Rendez-vous in Geneva

But what unfolded in that Geneva meeting was far more than what could be summarized in one vicious byte-sized threat by a superpower against a developing country. The full transcript of the meeting, which lasted for over 7 hours, is well worth studying, and in painstaking detail. 3 Now declassified, the official transcript reveals the real dimensions and contours of a conflict which had been falsely presented as a confrontation between the ¡°West¡± (U.N.-U.S.-U.K. et al) and a wily regional power (Iraq), to reestablish justice after the unlawful invasion of Kuwait. No, the substance of the discussions that day in Geneva was quite another. It had relatively little to do with Kuwait. The real issue was Israel and the Palestinian question.

Baker made clear he was there to ¡°communicate,¡± not ¡°negotiate.¡± The thrust of his ¡°communication¡± was that the crisis had begun with Iraq¡¯s August 2 invasion of Kuwait, ¡°an action condemned in twelve UNSC resolutions¡± which ¡°don¡¯t just condemn the act, they demand its reversal.¡± In a formulation he was to repeat several times, Baker stated, ¡°We cannot negotiate the terms of those resolutions.¡± And, ¡°the only question is by what path you leave Kuwait ¨C a peaceful withdrawal, or withdrawal by force.¡± Referring to the ¡°devastatingly superior fire-power and forces¡± that Iraq would face, were it to refuse, Baker pledged the conflict would ¡°be fought to a swift, decisive conclusion.¡±

At the opening of the talks, Baker had handed Aziz a letter from President Bush to Saddam Hussein, which presumably ¡°communicated¡± the same message. Aziz rejected the letter on grounds it was ¡°full of expressions of threat,¡± and uncivilized.

The argument put forth by Aziz was that the crisis did not begin on August 2, but had its origins in a more distant past. He said that the U.S. had intended all along to deploy its unquestionable military might. Prior to August 2, Aziz said, there had been ¡°full-scale propaganda against Iraq, abusing the Iraqi leadership,¡± and he cited a U.S. News and World Report article that characterized Saddam Hussein as ¡°the most dangerous man in the world.¡±

Furthermore, he said, ¡°An economic embargo was in effect¡± with contracts on grain and agriculture frozen as far back as January 1990. In addition, Iraq was being threatened by Israel. ¡°In March 1990,¡± he said, ¡°we expected an Israeli attack against Iraq. Israel threatened to attack our industrial and technological installations.¡± It was in response, then, that ¡°On April 2, Saddam Hussein said that if Israel attacked us, we would retaliate and burn half of Israel.¡± Most significantly, Aziz specified: ¡°We were talking about an Israeli nuclear hit.¡± He elaborated that Saddam had threatened to use ¡°binary chemical weapons¡± if Israel were to attack Iraq with nuclear weapons (emphasis added).

This was what the Iraqi president communicated to Senator Dole and others in Mosul at the time ¨C a fact Baker immediately questioned. (It was that April 2 statement by Saddam Hussein that apparently led to the charge that he was ¡°the most dangerous man in the world.¡±)

Referring to discussions he had had with U.S. leaders in October 1989 as well as to debate at the May 30, 1990 Baghdad Summit, Aziz summed up the situation as it appeared to Iraq at the time: ¡°So the picture in 1990 was one of Israeli threats to Iraq with the prospect of a war between Israel and Iraq, and an Israeli threat against Jordan, and an Israeli threat to the Palestinian people¡­.¡±

On top of this came the economic warfare launched by Kuwait, which had flooded the oil markets, triggering a drop in the oil price from $21 a barrel to $11 a barrel. Iraq was ¡°on the verge of economic collapse,¡± Aziz said. Despite an agreement struck at a meeting of oil ministers to return to quota levels, ¡°the Kuwaiti oil minister issued a statement after the meeting which said Kuwait would go back to the old position in two months¡¯ time.¡± Aziz concluded: ¡°What he was saying constituted war against Iraq.¡± Thus the move against Kuwait was in self-defense.

Significantly, it was at this point that Tariq Aziz made an interesting offer to Baker, to cooperate to reach a ¡°just, comprehensive and lasting peace for the whole region,¡± and added that, unless the Palestinian issue were resolved, ¡°our security in Iraq will continue to be threatened.¡± Aziz concluded his case by rejecting the double standard used by the US. ¡°There are other UN resolutions to be implemented,¡± he said, obviously referring to those condemning Israel¡¯s occupation of Palestinian lands. ¡°But there are no forces sent to implement them.¡±

Baker¡¯s response arrogantly ignored the entire content of the Iraqi¡¯s presentation, and seized only on the last point. ¡°We have no double standard on UNSC resolutions,¡± Baker barked, and proceeded to develop a formalistic interpretation of UNSC resolutions. ¡°You are aware that the resolutions of the Arab-Israeli conflict provide principles for negotiations. They don¡¯t require immediate unconditional withdrawal as do the resolutions on Iraq¡¯s invasion of Kuwait¡±(emphasis added). Not only on the formal level did Baker defend the double standard, but in substance; he went on to develop a full defense of Israel¡¯s actions, including the 1967 war.

¡°We don¡¯t pursue a double standard on enforcing UN resolutions,¡± he said, ¡°or on weapons of mass destruction.¡± Then came the astonishing assertion: ¡°You know Israel was the subject of aggression and occupied the territories as a result of a war waged against it; they occupied the territories as the result of defending against a war imposed on them.¡± Aziz¡¯s response was a classical understatement: ¡°I have great reservations about your description.¡±

Baker was adamant. When Aziz stated that ¡°Israel¡¯s occupation in 1967 was a result of flagrant military aggression against the Arab world,¡± Baker called on Dennis Ross to educate Aziz on the 1967 war, ¡°since he [Ross] has studied this.¡± Ross¡¯s studied version had it that Egypt was threatening Israel, and that therefore ¡°Israel didn¡¯t wait to be attacked. It hit Egypt, and asked Jordan to stay out of the war¡­.¡±

Several times during the meeting, Aziz proposed cooperation with the U.S. to prevent a new war and to jointly establish a new world order based on justice. Solving the Palestinian issue ¨C the ¡°mother of all problems¡± ¨Cwould be at the center of such a ¡°comprehensive settlement,¡± he said. Early in the conversation, Aziz referred to a proposal Saddam Hussein had made to Senator Dole to agree on the elimination of all weapons of mass destruction in the region, including Israel¡¯s. At the height of the crisis on August 12, 1990, Saddam, in fact, had announced that if Israel withdrew from the occupied territories, an arrangement could be found for Kuwait.

In an effort to settle the current crisis over Kuwait peacefully, Aziz proposed regional talks: ¡°if military action were to happen,¡± he argued, ¡°then all parties in the region will take part. Why not have them sit before the war? If these parties take part, after a while, the war will end¡­. But after it ends, will the region be left in peace? Will the region be left for more wars? If the answer is, there must be peace, those parties must sit together to make peace. So why not do it now?¡± And he added: ¡°Not just Iraq and the United States, but the other parties that will take part ¨C the US, Iraq, Saudi Arabia, Israel, and the others.¡± Yes ¨C he also said ¡°Israel.¡±

Baker responded with characteristic sarcasm, saying, well, if that were the case, then why hadn¡¯t all the parties ¡°sat together¡± on this or that or the other date in the past? Similarly, when Aziz proposed that he go to Washington to discuss the crisis directly with President Bush and report back to Saddam Hussein, Baker dismissed it as too little, too late.

Time and again in the talks, Aziz brought up the 1967 war, and Israel¡¯s occupation as well its annexations of Palestinian land, and complained that the U.S. had never upheld any relevant UNSC resolutions: ¡°The fact is that you have always given Israel political protection through your veto.¡± Baker repeatedly denied holding a double standard. The session broke up in an atmosphere of tense animosity.

In a later interview, Baker essentially admitted that the meeting had been a set-up, aimed at allowing the U.S. ¡°to be seen in the judgment of history as not having left any stone unturned in the pursuit of peace.¡± Asked if this were a ¡°plot to avoid the war,¡± Baker said no, since the decision had already been made. ¡°[T]he meeting with Tariq Aziz in Geneva permitted us to achieve congressional support for something that the President was determined to do in any event¡­.¡± 4

The Lessons of Geneva

Studying these documents confirmed me in my belief that Desert Storm had little or nothing to do with Kuwait, but everything to do with a U.S.-U.K.-Israeli commitment to a new policy for the region. That blueprint for a New World Order was the strategic plan adopted by Benjamin Netanyahu in 1996 as his government policy, known as the Clean Break. It entailed a break with the 1993 Oslo Accords negotiated with the Palestinians and a return to an aggressive policy of confrontation, occupation, settlements, and annexations. Regionally, it called for regime change in every country deemed hostile to Israel (Iraq, Syria, Lebanon, Iran), so as to allow it regional hegemony (and implicitly a nuclear monopoly). Since then, there has been regime change in Iraq, (which was the foremost Arab champion of Palestinian rights), and the Israeli wars against Lebanon and Gaza.

None of this is the stuff of academic debate. It is immediately relevant today. For the same Netanyahu, again prime minister in Israel, is hell-bent for leather on pursuing the strategic aims of Clean Break, this time by taking on Iran, the last target on the list, with the pretext of eliminating it as a potential nuclear military threat.

Reams of articles flooded the internet over the last months on this war danger, and a group of leading former intelligence and military personnel in the U.S. wisely issued a public demand to the White House that it prevent such an apocalyptic move. 5 This broad exposure of the Israeli war plan and intervention by U.S. intelligence officials directly addressing Obama had some effect. On August 19, the New York Times reported that Gary Samore, Obama¡¯s leading advisor on nuclear matters, had gone on record saying that it would take Iran a year to develop a weapons capability. But what was the purpose of this announcement? To signal to Israel to wait one more year.

Almost simultaneously, on August 20, U.S. Secretary of State Clinton said she was inviting Israel and the Palestinians to resume direct peace talks. The coincidence is striking; one hypothesis is that the war faction is staging peace talks to curry favor with the Arabs, all in preparation of the move against Iran ¨C one year from now.

Tariq Aziz and War Prevention

Tariq Aziz represents a valuable asset in the effort to stop a new war. Were he freed, through a concerted international campaign, he could speak out and educate world public opinion on what the nature of the Great Game in the region has been over the past three decades at least. Truth has a way of clearing the air. His personal testimony regarding developments involving Iraq, Iran, the U.S., the U.K., Europe, and regional forces since 1980 could blow the lid off the official cover stories related to the conflicts in that period.

Certainly this is the main reason why Aziz, unlike many other members of the Saddam Hussein regime, has been kept in custody, his guardians obviously waiting for him to exit this life and enter the next. Former colleagues of his, be it a former Foreign Minister, or an Information Minister, among many diplomats, are now resting comfortably (some as millionaires, I am told), in Dubai or Abu Dhabi or Amman. Perhaps they made a pact with Mephistopheles to refrain from writing memoirs, in exchange for an easy life in exile.

Tariq Aziz is not that sort of person. On the two occasions that I met him personally, in 1991 and in 1994 in Baghdad, while part of a humanitarian aid effort, I was impressed by his modesty, his intelligence, his personal commitment to defend his nation and people, and above all his deep disappointment that the U.S. ¡ª considered Iraq¡¯s ally over decades ¡ª had so betrayed their trust, and deliberately destroyed his nation. Tariq Aziz is a precious resource in the pursuit of truth and political justice.

Iraqi Internal Politics

Why was Tariq Aziz allowed to give the Guardian such an interview?

One can only make a few educated guesses on the basis of known facts. First, it occurred after his transfer to the Iraqi authorities, who appear to be treating him better than the Americans did. He mentions in the interview that he has comfortable quarters, friendly guards, and weekly telephone access to his family. Secondly, the interview appeared in the midst of a prolonged political crisis following parliamentary elections. Iyad Allawi, whose secular nationalist faction had won a slim majority over Prime Minister Nuri al Maliki¡¯s group, was also contacted by the Guardian, and informed of the upcoming interview. ¡°Tell Tariq Aziz that he is my friend and I think of him often,¡± Allawi is quoted saying. ¡°He is a good man and I know his family well. I wish him all the best and it is wrong to lock him up like this for so long. He is an old man.¡±

In an interview with the German weekly, Der Spiegel, published August 29, Allawi elaborated on his forecast for Iraq: either Iraq ¡°starts political reconciliation, builds full-blown state institutions and security forces and creates an independent foreign policy,¡± or Iraq will become prey again to civil war ¨C this time without multinational forces on the ground to prevent the worst.

Asked about Tariq Aziz¡¯s warning, that after the occupiers left, the country would be left to the wolves, Allawi answered: ¡°He means the predators that have been unleashed all over the Middle East, the lawless people and the terrorists who want to spill as much blood as possible on as many places as possible.¡±

Allawi¡¯s overall assessment of the failure of U.S. policy is devastating and on the mark. In Iraq, he said, ¡°The biggest mistake committed by the Iraqi government and the multinational forces was to let down the Sahwa forces ¡ª the tribal movement which was so decisive in the fight against al-Qaida. They have not been integrated; they have been disenfranchised and pushed back into despair and poverty. This will have consequences.¡±

Furthermore, U.S. strategy for the region has been a failure: in Afghanistan, ¡°it is a total failure. The problem here is not about America leaving Iraq and continuing its fight in Afghanistan. America has to rethink its strategy for the whole region from Central Asia to the Middle East. NATO will have to rethink its strategy and so will Europe.¡±

Regarding possible agreement on power-sharing, Allawi stressed that, since all power is invested in the Prime Minister, a way must be found to share that power between two political forces. He expressed optimism that Shi¡¯ite militia and political leader, Muqtadar al Sadr, whom he had opposed in the past, could and would play a positive role as a nationalist Iraqi.

His last comments dealt with Iran, and the enormous fear gripping the region that a new conflict, which he compared to the 1962 Cuba crisis, may break out. Allawi¡¯s advice to the U.S. et al: ¡°the world should engage and talk with Iran, and try to see and feel where the fears of Iran lie. The Iranians are logical people. We should try to convince them that proliferation does not serve their purpose in the end.¡± He concluded by saying a war over Iran¡¯s nuclear program was ¡°a very high possibility.¡±

Parallels to Iran

Both Tariq Aziz and Iyad Allawi have provided valuable insights into the past, present, and future of their tortured country. Although they do not make the connection in such an explicit form, the danger of new wars in the region is intimately linked to the policy followed since 1996 by the U.S., U.K., and Israel.

And the parallels to the current crisis are outstanding: just as Saddam Hussein in Tariq Aziz¡¯s account was denounced a public enemy number one for his threats to retaliate against a threatened Israeli nuclear attack, so today Iranian President Mahmoud Ahmadinejad is demonized for having allegedly threatened to wipe Israel off the map. This, nota bene, came in response to repeated Israeli threats to bomb Iran¡¯s nuclear facilities.

Iraq in both pre-war situations (1990 and 2003) was falsely accused of having weapons of mass destruction; today, against evidence to the contrary documented by the IAEA, Iran is condemned for its alleged nuclear weapons program. Just as Saddam Hussein had offered cooperation with the U.S. and others, to reach a regional peace settlement, based on a weapons of mass destruction free zone (including Israel) and a comprehensive peace between the Palestinians and Israel, so has the Islamic Republic of Iran repeatedly over the past seven years (at least) made concrete proposals for regional peace, security, and stability. The ¡°grand bargain¡± which Iran offered the U.S. under the Khatami presidency was not only rejected out of hand. Washington had the chutzpah to claim it had never received any such offer. Recent offers by Ahmadinejad for direct talks with the U.S. on all open issues have been ignored, and not only because his rhetorical style may be deemed offensive to the West.

So it is clear that the war party in the U.S., U.K., and Israel, which brought us the tragedies of Desert Storm and Enduring Freedom (sic), is intent on igniting another war which, this time, would incinerate the entire region. Shedding light on how previous such bloody adventures have been orchestrated and forced on an unassuming world public opinion is of utmost importance. Therefore, Dr. Tariq Aziz should be freed.

¡öThis article was first published in Global Research.
1.Sa¡¯adoon Al-Zubaydi, Saddam Hussein¡¯s official translator from 1987 to 1995 (who also attended the Geneva meeting), gave an interview to Activist¡¯s Reader n April 2004, entitled ¡°Lost in Translation,¡± ), in which he reported: ¡°I was present at all three meetings between Saddam and then U.S. Ambassador April Glaspie, during her three-year term. I can say with certainty that the Americans had. in fact, been notified of the intention to attack Kuwait, and responded with tacit acquiescence.¡± One meeting took place on July 25th, and ¡°Glaspie arrived breathless at the meeting¡­. But she had good news for us. It was a message for Saddam from President Bush [senior]. ¡®It is not U.S. policy to interfere in inter-Arab affairs,¡¯ she said to us in English.¡± [↩]
2.On Iran, Al-Zubaydi had the following to say: ¡°Saddam felt betrayed by Israel after the bombing of the nuclear reactor of Osiraq in June of 1981. ¡®I wage war on Iran, which is dangerous for the entire Middle East, and they repay me by stabbing me in the back?¡¯ he used to say.¡± He also recalled a meeting between Saddam and the U.S. assistant secretary of state for the Near East, Richard Murphy, about an Iraqi missile that had accidentally hit a U.S. frigate, killing 37. ¡°I remember my surprise,¡± translator Al-Zubaydi said, ¡°when I learned that at the time, there was extensive exchange of intelligence between Washington and Baghdad during the war against Iran.¡± In the Geneva meeting, Tariq Aziz also hinted at Iraqi-U.S. convergence in the Iran war: ¡°Had we failed in confronting Iran,¡± he said, ¡°you would have sent your forces to confront Iran, not Iraq. So our force was a force made to maintain the balance in the area and to protect the security, stability, and wealth of the region, including your interests.¡± [↩]
3.¡°US Department of State Memorandum of Conversation, Secretary James A. Baker III and Foreign Minister Tariq Aziz, Wednesday, January 9, 1991, Geneva, Switzerland, [↩]
4.Frontline The Gulf War: Oral History: James Baker, [↩]
5.¡°Obama has been Warned that Israel May Bomb Iran: Memorandum to the President from former Intelligence Officials,¡± by Veteran Intelligence Professionals for Sanity, Global Research, August 4, 2010. [↩]

dissidentvoice.org/2010/09/america%E2%80%99s-%E2%80%9Cjustice%E2%80%9D-in-occupied-iraq-why-tariq-aziz-should-be-released/

[sandi66]

Who is Timothy Geithner?
Economic Policy Journal ^ | Robert Wenzel

Posted on Tuesday, March 17, 2009 7:06:47 AM by AJMCQ

Morgan Reynolds, who served as chief economist for the US Department of Labor during 2001–2, George W. Bush's first term, has done a little fact checking on the new Treasury Secretary:

Who is Geithner? He is a creature of the eastern banking establishment and ruling class through and through. His résumé nicely matches his actions in handing out government money and guarantees to the "right people." Geithner’s father Peter is director of the Asia program at the Ford Foundation, a New World Order operation. Peter Geithner oversaw the "microfinance" programs developed in Indonesia by Ann Dunham-Soetoro, Barack Obama’s mother. Geithner’s maternal grandfather, Charles F. Moore, was an adviser to President Eisenhower and vice president of Ford Motor Company, according to Wikipedia. Geithner’s wife Carole Marie, like Geithner a 1983 graduate of Dartmouth College (Ivy League), is daughter of Mr. and Mrs. Albert Sonnenfeld of Princeton, N.J., a professor of French and comparative literature at Princeton University (Ivy League) for 27 years.

After Timothy Geithner graduated from Dartmouth he picked up an M.A. at Johns Hopkins in something called "international economics" and East Asian studies. That is the extent of Geithner’s formal training in economics, as far as I can tell. Then he worked for Kissinger and Associates for three years, a Rockefeller satrapy, before a series of government appointments, mostly at Treasury where he was Under Secretary for International Affairs under Robert Rubin of Goldman Sachs and Rockefeller’s notorious Council on Foreign Relations (CFR) and then Lawrence Summers of Harvard University (Ivy League), World Bank and CFR. Summers, of course, is currently Obama’s head of the National Economic Council. Want a solution for the financial and economic woes? Why, hire the same experts who caused the problem(s).

Geithner departed Treasury to join the International Monetary Fund and CFR in 2001–2. In October 2003 he was appointed president of the New York Fed where he subsequently arranged rescues of Bear Stearns, AIG and other well-connected,world-class losers, all in the best interest of the American people, of course.

Did you catch this:"Peter Geithner [Timothy's father] oversaw the 'microfinance' programs developed in Indonesia by Ann Dunham-Soetoro, Barack Obama’s mother" ?

Earlier, I reported that NYT identifies Peter Geithner, in Timothy's wedding announcement, as the "program officer in charge of developing countries for the Ford Foundation." This just smells to me like a spook cover. I said so back then, before I knew about the connection between Obama's mother and Geithner's father:

One side note. Geithner graduated from the International School of Bangkok, Thailand. His father appears to be a possible CIA agent... It makes you wonder how long "they" have been grooming Obama as the "agent of Change" president.

www.freerepublic.com/focus/f-news/2208130/posts

also

reposted www.economicpolicyjournal.com/2009/02/who-is-timothy-geithner_12.html


Who is Peter Geithner???

Peter F. Geithner is an advisor to the Asia Center at Harvard University and a consultant to the Asia Pacific Philanthropy Consortium, Rockefeller Foundation, Sasakawa Peace Foundation, and other organizations. He serves on the boards of the National Committee on United States-China Relations, the China Center for Economic Research (Peking University), the Center for the Advanced Study of India (University of Pennsylvania), Clemente (Holdings) Asia, Inc., and the Institute of Current World Affairs.
Mr. Geithner was with The Ford Foundation for 28 years, where he held program management positions mainly concerned with Asia. He was Director of Asia Programs from 1990 to 1996. Prior to assuming that position, he served for two and a half years as the Foundation’s first representative in Beijing, China. His earlier assignments with the Foundation included Program Officer in Charge, Developing Country Programs (New York), Representative for Southeast Asia (Bangkok), Deputy Head, Asia Pacific (New York), and Deputy Representative for India, Nepal, and Sri Lanka (New Delhi).

Prior to joining The Ford Foundation, Mr. Geithner served with the U.S. Agency for International Development in Zimbabwe, Zambia, and Washington, D.C. He was also Assistant to the President of a private international company, and served for four years as a Naval Aviator.

Mr. Geithner is a graduate of Dartmouth College (BA) and the Johns Hopkins University School of Advanced International Studies (MA). He is a member of Phi Beta Kappa, a recipient of the State Department Distinguished Service Award, and the Royal Thai Government Order of the White Elephant.


www.columbia.edu/cu/china/PeterG.html

[sandi66]

Monday, Sep 20, 2010 12:46 ET

Artifacts found in Iraqi Prime Minister Nouri al-Maliki's office
Loot stolen from National Museum during 2003 invasion and returned by U.S. troops turns up among kitchen supplies

More than 600 ancient artifacts that were smuggled out of Iraq, recovered and lost again have been found misplaced among kitchen supplies in storage at the prime minister's office, the antiquities minister said Monday.

The 638 items include pieces of jewelry, bronze figurines and cylindrical seals from the world's most ancient civilizations that were looted from the Iraqi National Museum in Baghdad after the 2003 U.S.-led invasion. After their recovery, the U.S. military delivered them last year to Prime Minister Nouri al-Maliki's office, where they were misplaced and forgotten about.

The artifacts, packed in sealed boxes, were misplaced because of poor coordination between the Iraqi government ministries in charge of recovering and handling archaeological treasures, said Tourism and Antiquities Minister Qahtan al-Jabouri.

He blamed "inappropriate handover procedures" but did not go into detail.

Iraqi and world culture officials have for years struggled to retrieve looted treasures but with little success.

Thieves carted off thousands of artifacts from Iraqi museums and archaeological sites in the aftermath of the 2003 invasion and in earlier years of war and upheaval. Many items ended up abroad. Collections that were stolen or destroyed at the National Museum chronicled some 7,000 years of civilization in Mesopotamia, including the ancient Babylonians, Sumerians and Assyrians.

Only a fraction of the items have been recovered.

Authorities only realized the items misplaced at the prime minister's office were missing when they began putting together a public display of recently recovered artifacts in Baghdad on Sept. 7.

The prime minister's office investigated, located the items and handed them over to the Antiquities Ministry on Sunday, al-Jabouri said.

"Sealed boxes were located in a storage among kitchen supplies," al-Jabouri said at a news conference. "They were opened and artifacts were found inside."

So far, 5,000 items stolen since 2003 have been recovered. More than 15,000 pieces from the National Museum are still missing.

www.salon.com/news/feature/2010/09/20/ml_iraq_antiquities_1

[sandi66]

Funding is a challenge for Iraq's $66bn projects
Hadeel al Sayegh

Last Updated: September 20. 2010 8:32PM UAE / September 20. 2010 4:32PM GMT


Iraq’s plans to build US$66 billion (Dh242.43bn) worth of housing and infrastructure projects as part of an agreement with Abu Dhabi development companies will face profound financing challenges, analysts say.

The projects would see the construction of 300,000 homes in six provinces, as well as two huge projects in Baghdad and Karbala. Bloom Properties, a company owned by National Holding of Abu Dhabi, and Al Maabar, a property development company owned by a consortium of the capital’s largest developers, have signed preliminary agreements to lead the projects, said Dr Sami al Araji, the head of the Iraqi National Investment Commission (NIC).




The developments will include healthcare and educational facilities, as well as large amounts of residential, commercial and retail space.

Iraqi banks are expected to play a role in financing the projects but the size of the commitment is equal to the country’s GDP of $65.8bn. The financing requirements are well beyond the total capital of the three banks disclosed as part of an initial syndicate to finance the projects – Rafidain Bank, Rasheed Bank and the Trade Bank of Iraq.




The proposed projects would be built over several years, in some cases decades, although the task of organising such a large investment will present major obstacles, said Ahmed Ahmed, the chief executive of the Al Fawz brokerage in Baghdad. The first phase of building 300,000 homes for low and middle-income Iraqis would cost $15bn and be built over two years, NIC said.

“These kinds of projects need to be financed through private banking transactions and through investments from the sovereign wealth funds in the Gulf as the Iraqi banking sector as a whole cannot take $15bn,” Mr Ahmed said. “For foreign investors, the biggest challenge still remains the security situation. Much of the larger foreign investors are in wait-and-see mode.”




A survey by the UK’s Economist Intelligence Unitlast month found 68 per cent of respondents said unacceptable levels of violence were the biggest risk to doing business in Iraq. However, 38 per cent – of whom almost half were with Gulf companies – said Iraq offered significant investment opportunities.

Iraqi sovereign entities and banks are not rated by agencies, making it even more challenging for foreign lenders to safely invest in projects and developments in the country. However, Iraq is buoyed by one of the largest oil reserves in the world. Once capacity is built up, it is expected to produce oil for export on the same scale as Saudi Arabia.




Iraq also faces a severe lack of infrastructure after more than seven years of conflict and internal strife and does not have a working mortgage market to help would-be buyers acquire property.

After signing a “letter of intent” with Bloom Properties at Abu Dhabi’s Emirates Palace on Sunday, Dr al Araji said a broad fund-raising effort would begin soon to offset the costs of the projects. Apart from the 300,000 units of public housing, the two other major projects, in Karbala and on the site of Baghdad’s Al Rashid Military Camp, are seeking foreign investors to finance construction.




The NIC is planning to directly sell housing units at a cost of about $50,000 each to Iraqi nationals, who will be required to pay 25 per cent of the cost and make the remaining payments over 10 years, said Dr al Araji. The housing push is part of a wider NIC plan to build a million homes over five years. The first phase will involve housing clusters in Baghdad, Basra, Mosul, Karbala, Najaf, Salahuddin and Anbar.



www.thenational.ae/apps/pbcs.dll/article?AID=/20100920/BUSINESS/709209948/1005

[sandi66]

Currency Crisis is Here: Gold and Silver is Sounding the Alarm

September - 21 - 2010

In the past week, gold prices have been breaking several all-time records, with the new-all time high at US$1,285 an ounce. The National Inflation Association created a short video to help people understand why gold and silver prices have surged recently, sounding the alarm, although the mainstream media doesn’t seem to be covering about it much. The video mentions three main reasons why gold and silver is sounding the alarm: the massive debt in western countries, Obama’s stimulus money, and the total failure of the Federal Reserve.


Food and energy price increases will soon follow. The combination of sky-high food and gasoline prices may be the final nail in the coffin of middle class American. It is predicted that traveling with physical gold as insurance may become a norm soon. In Europe, travelers are learning that the US dollar is upgradeable on the streets. The gold and silver price is no longer a mental speculation but rather a reality which mirrors the loss of confidence in the US dollar.

Even though gold price has reached a new all-time high, the NIA suggest we not make a mistake in what we are seeing. Marc Faber seems to agree. Despite the surge of gold and silver price, he still believes that gold is not expensive. At a CLSA Investors’ Forum 2010 in Hong Kong, Faber said, “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble.” (Source: LewRockwell.com)

Faber, continues to invest in precious metal and encourage other investors to do so too. However, considering that there will be strong corrections at times, he suggest investing in a consistent basis instead of all at once.

www.myloansconsolidated.com/2010/09/21/currency-crisis-is-here-gold-and-silver-is-sounding-the-alarm/

[sandi66]

A Conversation With George Soros

September 21, 2010

With thanks to Felix Salmon for arranging the invitation.

There’s an episode of House where he has to get rid of one of the people for his new team. By the end of the episode, the sharpest person in the group has said everything that we would have expected to hear from House—and is therefore summarily dismissed, since hearing one’s own opinions being spoken by someone else is less useful than being challenged.

I had a similar feeling with George Soros’s conversation last Wednesday morning with Chrystia Freeland, sponsored by Reuters and held in the NASDAQ building that, er, graces Times Square. So what follows isn’t everything Soros said, so much as what he said that either, (1) you wouldn’t already know from reading this blog or Paul Krugman, or (2) added details or touched on an interesting issue.

UPDATE: Krugman finds another similarity between himself and Mr. Soros.

The Recent Crisis and Its Causes

Soros declares that there was twenty-five to thirty years of a “Super Bubble,” which has now burst. It seems from the discussion that Soros believes the SuperBubble was worldwide. Recovery is being hindered by some policies—Germany’s talk about austerity was especially mentioned—by Soros sees strong hope in the Trade Shift that has accompanied the crisis. He noted that the “global economy is a lot better than the US economy,” and that he expects to see it continue growing even if the U.S. (or Europe, due to the German leadership, or even both) fall into a :double-dip.” (In this he is arguably more of an optimist than many.)

China I

Key to this shift has been the growth of bilateral relationships. He noted obliquely that these developed in part because many governments—most especially the Chinese, who have been “the great beneficiary of globalization”—do not want to change their capital controls, but sees them as facilitating the new paradigm. He expects that the next move will be that Hong Kong (with the HKD remaining independent of the RMB) will become as London did in the 1960s and 1970s, the intermediary of choice for the growing market (now China, then Europe).

There is a strong need to increase Chinese domestic demand, which he rightly expects is being partially facilitated by the recent wage increases. While there is a need to shift from the previous US-Chinese symbiotic relationship (essentially, bonds for exports), Mr. Soros is “not sure there will be” further advancement in that relationship without greater domestic Chinese consumption. He declared that the Chinese economy has become “the motor” of the world economy, but also noted that it is a smaller motor, so the world economy is not moving so fast.

Currencies

In that context, he was asked by a gentleman from Fidelity Capital if it is time to move from the USD to a “basket” as the World Reserve Currency. (As regular readers know, this is an issue near and dear to my heart.) Stating the obvious, Soros noted that having “a more neutral currency” (which may not be an exact quote) would be helpful in correcting the imbalances, which are largely due to the dollar being the International Reserve Currency.

He agreed that a basket Reserve Currency would improve the market. (I—and I suspect David Beckworth—might agree that it would provide for easier remedies, but I’m not convinced it would provide for a better market, since arbitrage opportunities and issues of asymmetric information would be more likely to skew outcomes.)

China II

Soros is very sympathetic to the Chinese people themselves. He notes that they work hard but that their labor is harnessed to an undervalued currency to the benefit of the State. He described the Chinese mercantile system as being “State Capitalism,” which he calls a “very powerful” model, while also noting that it is not so good as the previous “International Capitalism.”

Since he noted that “International Capitalism”; is synonymous with “the Washington Consensus,” this leaves him having d**ned China with very faint praise. (Though, in fairness, he is even more negative about Russia, which he described to Jim Holt as an example of unsuccessful State Capitalism, whose success or failure is primarily driven by the price of oil. He also sees a real possibility of China developing into an Open Society—another point on which he is rather an optimist.)

Where he is not positive about China is its Real Estate market, which is skewed in part due to the political structure. The Chinese version of mercantilism allows government officials to own three properties, which has been a very good way for those workers to get rich through selling and “trading up.”

The primary solution to this bubble, he believes, would be initiating a property tax, which would produce a carrying cost on properties and therefore mitigate the speculative aspects of the bubble. (Soros essentially notes that, as with the United States, labor is overtaxed and capital undertaxed in China. Since China has excess productive labor, the benefits flow to the state. Implicitly, the U.S.’s excess produced the differential model discussed above, which worked well for both parties for some fifteen (15) years.)

But all is not bread and roses in Soros’s view of China. An Indian journalist sitting next to me asked the obvious question: Has being a democratic country “hamstrung” India as compared to China? Soros came back to his key theme of the need for growth in Chinese domestic demand, noting that the Indian economy is more stable precisely because there is now domestic growth—growth that will be facilitated in China only as that State evolves both politically and economically.

He noted that the Chinese people, to date, have been willing to accept limits on their individual freedom for its benefit in growth, but he does not see other countries being willing to accept such limits on their own freedom to support China’s growth. If I ever had any doubt that Soros is a more devoted Popperian than I, it was eliminated in that moment.

Other Powers, and Some That Might Be

Soros spoke positively of Turkey (Dani Rodrik may have a counterpoint), negatively of Germany (from a policy perspective; when asked by a reporter from Crain’s what we will look back on and see as stupid, he replied that “fiscal rectitude, from a timing point of view, is wrong.”), and generally positively of the euro, declaring in response to a question about Ireland and Greece that “If anybody would leave [the Eurozone] it would be Germany.”

His key point about the Euro is one that is often found in the literature of financial crises, including the previous Great Depression: there is a European Central Bank, but there is not a central Treasury. But this appears to be de facto being remedied by the Solvency Crisis, with “back-up funds” being developed and used. Soros noted a key distinction that is often missed in discussions: there was not a crisis of the EUR, but rather a European banking crisis, which was exacerbated by policy disagreements between France and Germany. (Germany won, though his view of whether this victory will be relatively Pyrrhic is left as an exercise.)

Again, he looks to the Chinese as an indicator, who started putting their money—you know, that 4 Trillion RMB stimulus and the revenues that have followed it—into the EUR as soon as it reached around 1.20. The Chinese bought the EUR, the Chinese bought Spanish bonds, the Chinese stabilized the market. The Chinese did something no one else can do for them—bought another currency on the open market.

And this is the key to understanding Soros’s attitude toward Japan. You think this is easy, realism? The Japanese are correct to worry about their currency, Soros notes, because, while the RMB is the strongest currency in the world, you cannot own it because of capital controls that the Chinese government maintains because they do not want to have both rising wages and an appreciating currency in their export-based economy. Accordingly, per Soros, any appreciation of the RMB “has to be done in an orderly manner.” In the meantime, the Japanese did the only thing they could.

U.S. Politics

Mr. Soros was by no means a fan of the Obama Administration. Echoing Glenn Greenwald, he notes that the Obama Administration should have corrected the excesses, the abuse of power, of the Bush Administration. Despite this (and what follows), Soros believes Obama “may well be elected to a second term.”

As a matter of handling the banks through the crisis, Mr. Soros noted that the Administration should have injected Equity into the banks, but notes that he believes the Obama team found this politically unacceptable. The result is that the government effectively nationalized the banks’s liabilities and “allowed” them to “earn their way out of that hole,” through practices such as increasing consumer credit card rates.

(My memory of the events is somewhat different, since part of what the Fed received for its TARP funds were warrants on those banks—warrants that have subsequently been sold and counted as if the revenue against the original loans to make them appear more “profitable” in the eyes of several bloggers and financial journalists [including, for instance, Robert]. But certainly there was no AIG-like structure imposed, no U.S. equivalent of Northern Rock, no matter how much saner than would have been.)

To no one’s great surprise, Mr. Soros does not believe that Mr. Obama is “anti-business.”The biggest fault he found with the Administration’s approach to the crisis is that they depended on the “confidence multiplier” to make recession shallower and shorter than it otherwise would have been. The problem with a confidence multiplier is, of course, that when the results do not match the expectations, the “multiplier” becomes a disappointment, and therefore a drag on expectations going forward. Mr. Soros described this as what happened.

If this scenario is true, then the decision not to ask initially for a $1.2T stimulus, with a chance to end up with a better mix and higher absolute amount of actual stimulus funding, will go down as the tombstone for the Administration, not “just” a spanner in the possible continuation of the Administration’s economic team (h/t Mark Thoma on Twitter). But, hey, the recession has been over for more than a year, so things are getting better, with the upcoming elections more resembling the signpost of 1982 than 1932. At least in some timestream.

Gold

This one was pulled all over the place, so it should come as no surprise. Gold is, per Mr. Soros, the only active “bull market” right now. He is also not optimistic about the ending of that market. Gold is “the ultimate bubble”—may be going higher, but is certainly not safe and is not going to be forever.

Mr. Soros admits a similar attitude toward oil, but at least there the commodity has intrinsic value. As Vincent Fernando, CFA, notes, owning something other than gold at least gives you the possibility of “productive assets.”

Conclusion

I’ve left out a few things, including the roundelay that resulted when one journalist attempted to discuss Mr. Soros’s firm’s holdings in a company he said he didn’t the firm owns. But in general the feeling one gets when presented by Mr. Soros, the person, is that he is an optimist, perhaps incurably so. Things are rough, and they will probably continue to be rough for a while, but in the longer term, things are getting better for all.

I’m guessing he won’t be speaking at The March to Keep Fear Alive. But Mr. Colbert—let alone his predecessor at the Washington Monument—would do well to book him as a guest.

us.mc636.mail.yahoo.com/mc/welcome?action=&YY=72565209&ymv=0&noFlush&mcrumb=Qh/SzzBbvgH#_pg=compose&&ymv=0&.rand=568226409&clean&.jsrand=1454784

[sandi66]

Obama Hints at Changes to Economic Team

Published September 21, 2010

WASHINGTON—President Barack Obama raised the prospect of changes to his economic team Monday, saying his over-worked staffers were "going to have a whole range of decisions about family that'll factor into" their career decisions.

The White House said no changes were planned. "He was signaling nothing more than support for the tough decisions they have made together and the hard work that has gone into helping the economy get on a path to recovery," White House spokeswoman Jen Psaki said.

There has been speculation for months that Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers could take the fall for potentially bad election results—and the economy souring the national political mood against Democrats.

Two years into his first term, President George W. Bush forced out his first Treasury secretary and National Economic Council director after midterm elections.

The president's comments came during a town-hall-style meeting in Washington put on by business-news cable channel CNBC.

The event was heavy on economic-policy talk and the concerns of struggling Americans, and exemplified the difficult position Obama has found himself in 43 days before midterm elections that could set back his party in Congress.

Just weeks ago, Obama floated new economic-policy proposals including $50 billion in additional infrastructure spending, an expanded and permanent research and development tax credit for business and a generous tax incentive for new business investments. Those proposals are gaining little traction in Congress.

Meanwhile, lawmakers in Obama's own party are urging him to conduct more events highlighting his concern for the economy. But when he does, the president gets questions that highlight his political struggles—including several at the town hall from those who supported the president in 2008.

House Minority Leader John A. Boehner (R., Ohio) may have inadvertently given Messrs. Geithner and Summers a lift recently when he called for them to be fired, but such calls have also come from Democrats who said the two men are too close to Wall Street.

"I have not made any determinations about personnel," Mr. Obama said Monday.

Mr. Obama's budget director, Peter Orszag, has already left, as has his first head of the Council of Economic Advisers, Christina Romer.

Among the challengers at the town hall was a hedge-fund manager who said Wall Street executives "feel like we've been whacked with a stick" by the administration.

The president responded that most of his critics believe he has been too soft on Wall Street. His case in point: The White House has not been able to end the practice of taxing some hedge fund and private-equity earnings at the capital-gains rates rather than the higher income-tax rates.

"The notion that somehow me saying maybe you should be taxed more like your secretary when you're pulling home a billion dollars...a year I don't think is me being extremist or anti-business," the president said.

Mr. Obama expressed sympathy for those struggling with the stuttering economy and challenged tea-party activists to suggest specific ways to trim a government they say has grown too large and intrusive.

"It's not enough just to say, 'Get control of spending.' I think it's important for you to say, you know, I'm willing to cut veterans' benefits, or I'm willing to cut Medicare or Social Security benefits, or I'm willing to see taxes go up."

online.wsj.com/article/SB10001424052748703305004575504323541837124.html?mod=WSJ_hpp_MIDDLETopStories

[sandi66]

Yuan Climbs to Strongest Since 1993 as Obama Criticizes China

Tuesday, September 21, 2010



Sept. 21 (Bloomberg) -- The yuan strengthened for a ninth day, breaching 6.7 per dollar for the first time since 1993, after President Barack Obama criticized China for using an undervalued currency to gain an unfair trade advantage.

China's leaders haven't done "everything they said would be done" to allow appreciation, Obama said at an hour-long town hall discussion in Washington. Yuan forwards jumped the most since June as the dollar weakened against the euro. Foreign Ministry spokeswoman Jiang Yu today declined to comment on Obama's remarks about the Chinese currency.

"The yuan's quicker appreciation is related to the political game between China and the U.S. on currency policy," said Isaac Meng, a Beijing-based economist at BNP Paribas. "It's also related to the dollar's broad weakness because the yuan is managed against a basket of currencies."

The yuan rose 0.1 percent to 6.7079 per dollar as of 5:39 p.m. in Shanghai, earlier touching a high of 6.6987, according to the China Foreign Exchange Trading System. The U.S. currency slid 0.3 percent against the euro.

Twelve-month non-deliverable forwards for the yuan appreciated 0.5 percent to 6.5825 per dollar, reflecting bets the currency will strengthen 1.9 percent from the spot rate, according to data compiled by Bloomberg. That's the biggest gain projected by the contracts in almost three months.

The central bank set the daily reference rate stronger than 6.7 per dollar for the first time since July 2005, when it started managing the exchange rate against a basket of currencies. The currency is allowed to trade up to 0.5 percent either side of the daily fixing, set at 6.6997 today.

'Two-Way Street'

The yuan is "valued lower than market conditions say it should be" and that gives China "an advantage in trade," Obama said ahead of scheduled talks with Premier Wen Jiabao at this week's United Nations General Assembly in New York. "We are going to continue to insist that on this issue and all trade issues with China, it's a two-way street."

The yuan has appreciated 1.8 percent since June 19, when the People's Bank of China said it would pursue a more flexible exchange rate after keeping the currency at about 6.83 per dollar for almost two years.

"I still see upside in the yuan given Wen's going to New York soon," said Frances Cheung, a Hong Kong-based senior strategist at Credit Agricole CIB. "But I think nothing has fundamentally changed; China's still going to let the currency rise gradually."

Treasury Secretary Timothy Geithner said last week the U.S. will use every available tool to urge China to let the yuan rise more quickly. Calls to let the currency strengthen will grow as China faces swelling trade protectionism against its exports, Li Daokui, an adviser to the People's Bank of China, said Sept. 19.

China has reported trade surpluses of more than $20 billion for each of the last three months and the U.S. estimates it had a deficit of $119 billion with the Asian nation in the first half of 2010. The U.S. reported a trade gap with China of $227 billion for 2009.



www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/09/21/bloomberg1376-L92PI807SXKX01-348EQ9SDCK7SAJ2SUB0KRPF80P.DTL

[sandi66]

Gold & the Dollar Part Company

Published 9/21/2010



So gold is suddenly all about the dollar again. Or so you might think.

After its longest run of moving in tandem with the trade-weighted Dollar Index since midsummer 1991 (45 trading days; average correlation +0.58), the gold price in dollars resumed its commonly-assumed relationship with the greenback last Friday, moving opposite to the currency's forex fluctuations.

Tuesday then brought the first of the week's three new record highs. Only the Indian rupee, to date, has suffered a similar fate.

What next? History says to expect further dollar-led gold action ahead, at least in the headlines. Because any approach of the strong, positive correlation achieved this summer is typically followed by a stretch of strong negative correlation, with the dollar and gold moving in opposite directions.



But that doesn't mean non-dollar investors won't also see fresh gains or highs in gold, however – not with gold continuing what remains a powerful long-term uptrend against all major currencies, and not with central banks everywhere desperate to devalue their own money against the greenback.

"There's certainly investor nervousness about monetary policy around the world since the yen intervention," as Mitsubishi's new precious metals strategist Matthew Turner (formerly at the VM Group) tells Reuters.

"A lot of people are sensing a race to the bottom by central banks to print more of their currency, to reflate their economies, and gold is getting support from that."

The Bank of Japan is now actively selling yen to buoy the dollar, while the Bank of England has held real sterling interest rates below zero for 24 months running. Whatever the political rhetoric during May's Greek deficit crisis, France and Germany would rather see a weak than strong euro, while Beijing's new "flexibility" – a prelude, perhaps, to its new yen buying strategy – has so far delivered only a 1.4% rise in the yuan's dollar value since June.

That's barely a ripple compared with the yuan's 4.8% rise of Q1 2008, and nothing against the 5.5% rise in the kiwi, 8.7% rise in the Aussie, or 15% rise in the Swissie of the last 3 months.



Longer-term, as you can see, gold's bull market to date hasn't really been about any particular currency. It really is about all of them.

Gold has quadrupled and more against all the world's money since the start of 2000, as our Global Gold Index shows. (It maps the daily gold price in the world's top 10 currencies, weighted by size of economy and starting at 100 on New Year's Day 2000). And most critically for traders trying to second-guess the dollar gold price, throughout 2010 to date – and also across the last four decades as well – gold's correlation with the Dollar Index is statistically insignificant (+0.02 and minus 0.15 respectively).

www.resourceinvestor.com/News/2010/9/Pages/Gold--the-Dollar-Part-Company.aspx

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Rand stays firmer ahead of Fed meeting
The rand retained a firmer bias in range-bound trade at noon on Tuesday, tracking the strong euro, but the market is awaiting the interest-rate setting meeting of the US Federal Open Market Committee (FOMC) later today
I-Net Bridge
Published: 2010/09/21 12:31:51 PM




The rand retained a firmer bias in range-bound trade at noon on Tuesday, tracking the strong euro, but the market is awaiting the interest-rate setting meeting of the US Federal Open Market Committee (FOMC) later today.



At 11:49 local time the rand was bid at 7.0990 to the dollar, from 7.1293 at the previous close. It was bid at 9.3148 to the euro from 9.2973 before and at 10.9959 against sterling from 11.0551 at its previous close.



The euro was bid at US$1.3136 from $1.3065 overnight.



A trader said the local unit remained pretty much in a range, tracking the euro. "There is a possibility the rand could strengthen after the US rates decision," the trader said.



RMB currency analysts noted that the FOMC's policy meeting will probably outshine local events and could rouse the local currency, which remains trapped in a narrow range.



"Fresh data emanating from the US has been fairly balanced supporting our assessment of a moderation in the pace of US economic growth rather than an outright double-dip recession. Solid gains in retail sales coupled with a slight rebound in ISM manufacturing should dampen the possibility of additional quantitative easing, which we maintain would only be effective if adopted in response to additional fiscal stimulus," the analysts said.



RMB said that the Fed's downbeat assessment of the economy, expressed at August's meeting, is likely to remain unchanged as US consumption demand and investment growth remains muted. The absence of talk regarding a second round of asset purchases should provide some respite to the ailing US dollar and pose slight upside to US dollar/rand.



Dow Jones Newswires reports that the euro and the yen are stronger on Tuesday, the former because of successful bond and treasury bill auctions by euro-zone debtors and the latter because of end-of-quarter demand from Japanese exporters.



The dollar, meanwhile, was stuck in a fairly narrow range as investors squared positions just in case the U.S. Federal Reserve hints at further quantitative easing after its open market committee meeting later in the day.



Ireland's offering of €500m of 2014 bonds and €1bn of 2018 bonds proved a success, as did treasury bill auctions that raised €7.04bn for Spain and EUR390 million for Greece. In all three cases, the countries were able to raise funds with little difficulty at relatively competitive prices.


www.businessday.co.za/articles/Content.aspx?id=121653

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Ireland Sells 1.5 Billion Euros in Debt as Borrowing Costs Rise
By Louisa Fahy - Sep 21, 2010 6:16 AM ET

Ireland sold 1.5 billion euros ($2 billion) of bonds, easing concern that the country may need a European Union bailout.

Ireland sold 500 million euros of debt due in 2014 at an average yield of 4.767 percent, compared with 3.627 percent at the previous auction on Aug. 17, the National Treasury Management Agency in Dublin said today. It also auctioned 1 billion euros of 2018 securities at a yield of 6.023 percent, up from 5.088 percent in a June sale.

The extra yield investors demand to hold 10-year Irish bonds over similar maturity German narrowed on the sale after rising to above 400 basis points for the first time yesterday on investor concern that the cost of shoring up the country’s banks will hurt efforts to tame the European Union’ biggest deficit. Central bank Governor Patrick Honohan said yesterday that bank bailout costs remain “manageable” and shouldn’t derail the government’s deficit-cutting efforts.

The auction today was “great” for investors and “horrible” for taxpayers and the government,” said Willem Buiter, Chief Economist at Citigroup Inc. in an interview today. “From a technical point it was highly successful, over five times oversubscribed,” he said.

Demand

Investors bid for 5.1 times the amount of the 2014 bond offered, compared with 5.4 times last month. Demand for the 2018 security had a so-called bid-to-cover ratio of 2.9, the same as in June. The Irish 10-year bond yield fell 24 basis points to 6.25 percent as of 11:02 a.m. in London, narrowing its premium over bunds to 378 basis points.

The National Treasury Management Agency said the exchequer is now fully funded through the first half of 2011. The agency will hold its next auction on Oct.19.

“From a market point of view, this is seen as a stunning good result in terms of demand,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “Clearly we’re paying higher interest rates. You can’t go on paying a premium every single month for an auction. But the NTMA is well funded into next year. We’re comfortable in that position.”

Investors’ concerns about the fiscal health of some euro nations are resurfacing four months after the EU announced an almost $1 trillion rescue package to stamp out contagion from Greece’s debt crisis. The yield premium between Portuguese 10- year bonds and German bunds reached a euro-era record of 398 basis points yesterday. Yields on Spanish 12- and 18-month Treasury bills rose at an auction today. Greece sold 390 million euros of 13-week bills today to yield 3.98 percent, down from 4.05 percent at the previous sale on July 20.

Bank Bailout

Irish lenders have been hurt by the collapse of the country’s real estate market and a recession that led the economy to contract more than 7 percent last year. The government has injected almost 33 billion euros into banks and building societies, with two-thirds of that going to Anglo Irish Bank Corp., which was nationalized last year. While Anglo executives say the lender may need a total of about 25 billion euros, Standard & Poor’s said the figure may be as high as 35 billion euros.

A spokeswoman for the central bank in Dublin said yesterday that a final cost estimate for the Anglo Irish bailout is at “an advanced stage of readiness.”

Finance Minister Brian Lenihan in newspaper interviews this weekend rejected speculation that the cost of bailing out the banking system will force the country to turn to the EU and the International Monetary Fund for emergency funding.

No Rescue

“Our base case remains that the government will not turn to the EU and IMF for a funding package,” said Gillian Edgeworth, an economist at UniCredit in London. That “would change very rapidly in the event that the banking sector as a whole in Ireland experienced a significant deposit outflow,” she said.

Prime Minister Brian Cowen government has cut wages and raised taxes in a bid to bring the deficit from 13.6 percent of gross domestic product last year to within the EU’s 3 percent limit in 2014.

The economic crisis and growing cost of the bank bailouts has led some of Cowen’s allies to express doubts about his leadership style. Tom Kitt, a lawmaker for Ireland’s ruling Fianna Fail party, said the party should meet to discuss its leadership. Lenihan, flanking Cowen at a press conference in Dublin late yesterday, said bond markets haven’t been affected by doubts over Cowen’s future.

“The most important rumblings around here are the rumblings we are seeing in international markets,” Lenihan said. He criticized opposition parties for “unhelpful” comments about the possibility of negotiating with Anglo Irish bondholders.



www.bloomberg.com/news/2010-09-21/ireland-sells-1-5-billion-euros-in-debt-as-borrowing-costs-rise-fears-ebb.html

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BofA's Moynihan Puts Ex-Colleagues in Key Strategic Posts
By David Mildenberg - Sep 21, 2010 12:01 AM ET

Bank of America Corp. Chief Executive Officer Brian Moynihan, who has promised to change the lender’s culture while retaining most of its senior leadership, has installed three former colleagues at FleetBoston Financial Inc. at influential posts.

Moynihan hired former Fleet strategy head Terry Laughlin as a senior executive at the loss-plagued Countrywide unit. He recruited hedge-fund manager Mike Lyons as a strategy and planning executive to help shrink the bank’s $2.2 trillion balance sheet. Moynihan also promoted Lauren Mogensen to deputy general counsel and corporate secretary, where she intersects with Moynihan and the bank’s board.

Each of the three, none of whom report directly to Moynihan, have a longer history of working with him than with their supervisors. They were part of the team that helped then- Fleet CEO Terry Murray expand into the seventh-largest U.S. lender before Bank of America bought it for $48 billion in 2004.

“Those people are there to tell Brian what is going on and to make sure he doesn’t get stabbed in the back,” said Tony Plath, a finance professor at the University of North Carolina at Charlotte. “Having your loyalists installed at the key businesses is part of the culture of banks.”

Shareholder Returns

Moynihan, 50, is emphasizing execution instead of expansion at the Charlotte-based bank, and promised to focus on shareholder returns instead of gross earnings after his predecessor, Kenneth D. Lewis, bought the largest U.S. credit- card, mortgage and securities brokerage firms between 2006 and 2009.

Bank of America faces “one of the biggest challenges any merger or acquisition team has had to deal with,” said Page West, a professor of strategy and entrepreneurship at Wake Forest University’s Babcock Graduate School of Management. “Moynihan needs to have confidence in the people doing the work.”

The bank is firing as many as 400 employees in its global banking and markets division after a management review, a person briefed on the matter said yesterday. The review was led by Thomas Montag, who has run the unit since Bank of America bought Merrill Lynch & Co. in 2009.

Almost all the senior executives from credit-card issuer MBNA Corp. and home-lender Countrywide quit or were replaced by veteran Bank of America managers before Moynihan became CEO. Credit cards and home loan businesses contributed more than $20 billion of losses since 2008 at Bank of America as U.S. housing prices plummeted and the U.S. jobless rate rose as high as 10.1 percent.

Montag, Krawcheck, Noski

Of the 11 executives who report directly to Moynihan, just three -- Montag, Sallie Krawcheck and Charles Noski -- have been at the bank less than five years. Montag, who spent more than two decades at Goldman Sachs Group Inc., joined Merrill Lynch & Co. under former colleague John Thain before Bank of America bought the securities firm last year. Krawcheck joined the Merrill unit from Citigroup Inc. Noski, the bank’s chief financial officer, is a former CFO at Northrop Grumman Corp.

The group of 11 includes just one person who worked with Moynihan at Fleet, Chief Strategy Officer Anne Finucane. Her job is to shape Bank of America’s image with consumers, regulators and politicians.

Lyons worked under Moynihan at Fleet for two years in the 1990s before moving to Morgan Stanley. In 1995, he joined Maverick Capital, a New York hedge fund that has averaged a 14 percent annual return since its inception that year. He’s advising what assets and businesses to sell as part of Moynihan’s pledge to build a less complex company with a “fortress balance sheet.”

‘Eye for Talent’

Before joining Bank of America in August, Laughlin, 55, was CEO of OneWest Bank, the successor to IndyMac Bancorp., which was seized by the Federal Deposit Insurance Corp. in 2008. His job includes monitoring relations with mortgage investors who are demanding that Bank of America repurchase billions of dollars of soured mortgages.

Laughlin gave up his CEO post because he was intrigued by the challenge at Bank of America and wanted to work with Moynihan again, said William Mutterperl, an attorney at Reed Smith LLC in New York who was Fleet’s general counsel from 1985 to 2001.

Lyons and Laughlin “are very strong on the strategic planning side,” Mutterperl said. “Brian has an excellent eye for talent and he’s surrounding himself with some of the best people from the old Fleet.”



www.bloomberg.com/news/2010-09-21/bofa-chief-names-ex-fleet-comrades-laughlin-lyons-mogenson-to-top-roles.html

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Billionaire Munger Offers Us a False Choice: Alice Schroeder
By Alice Schroeder - Sep 20, 2010 9:00 PM ET

You’ve gotta love a man who speaks his mind, even when he’s wrong.

We “shouldn’t be pregnant doging about a little bailout” of the banks, Berkshire Hathaway Inc. Vice Chairman Charles Munger told students at the University of Michigan on Sept. 14.

That’s a strong statement, but Munger is one of those refreshing few who can be counted on to deliver his thoughts uncensored in words unminced.

Munger feels the bank bailouts were “required to save your civilization.” He suggested that burdening the economy with bank failures would have results similar to the economic collapse in Germany after World War I and led to the rise of Adolf Hitler. Meanwhile, “the culture dies” if you bail out individuals. People in economic distress should “suck it up and cope.”

Apart from what some might consider his tasteless hyperbole, the problem is the false dichotomy it presents. The choice wasn’t between the bailout or no bailout. It was between the bailout we financed, which didn’t resemble capitalism in any known form, and a bailout more intelligently executed.

No one made us bail out shareholders along with the banks’ bondholders. We didn’t have to preserve institutions that are still too big to fail in any meaningful sense of the term. We could have propped them up temporarily, then recapitalized them as smaller, more manageable entities, with former equity holders assuming the cost of the risk they assumed.

We missed the chance to reduce systemic risk by comprehensively rewriting regulation for the financial-services industry. Instead of withdrawing government guarantees, we increased them. So there are plenty of reasons to complain about the bailouts.

Munger in Chief

To give him credit, I’m pretty sure if we gave Munger unfettered dictatorial power, he would have structured the bailouts more intelligently than what actually took place. In his remarks, he wasn’t defending the form of the bailouts, only their size. If anything, “it should have been bigger,” he said.

Munger’s reference to a massive bailout needed to ward off another Germany-style hyperinflation also wasn’t necessarily hyperbolic. It echoed his partner, Berkshire Chief Executive Officer Warren Buffett, whose ongoing theme is that we’ve experienced an “economic Pearl Harbor.”

Both of these men look at the situation as impersonal oddsmakers. By this logic, if the damage from too much stimulus is tolerable, and the damage from too little stimulus is intolerable, the expected value of the outcomes reveals that we should run the lesser risk of overstimulating. This is throwing people off the lifeboat to keep it from sinking.

Money Talks

In spite of this logic, people may wonder whether Munger’s statements are influenced by Berkshire’s large holdings in Wells Fargo & Co. ($8.5 billion), the U.S.’s biggest home lender, as well as its $5 billion investment in Goldman Sachs Group Inc. It happens that Munger’s financial interests do line up with his words.

If that’s not a coincidence, it’s probably because he puts his money where his mouth is rather than the other way round. In choosing sides between the opposing interests that inevitably arise in commerce, Munger and Buffett identify with the lender, not the borrower; with the bank, not the depositor; and that’s how they invest.

It’s therefore not surprising that Munger focused on the vital role that banks play in society when he said that people should suck it up and cope. Maintaining the trust that binds creditors and debtors is essential to the security of a culture.

Bad Incentives

What’s unfortunate about this concern about bad incentives is that Munger didn’t extend it to qualify his support for the bank bailouts and the tremendous moral hazard they created. It may seem appropriate, in a Darwinian sense, to reward the thrifty savers by securing their deposits while leaving feckless borrowers to fend for themselves, until you consider that the banks were the worst abettors of the feckless borrowers.

As for trust, financial institutions have so much leverage with their customers these days that the relationship is rarely based on reciprocal values. It’s inappropriate that the requirement of trustworthiness should run in only one direction, in favor of the bank.

Munger’s prescription for the foreclosed masses suggests the result would be a form of justice that does us all a favor. Bailing out homeowners would be “shoveling out money to people who say ‘My life is a little harder than it used to be,’” Munger said.

I’m all for self-reliance, and this perspective on misfortune deserves some latitude, coming as it does from a man who was raised during the Great Depression. I find it refreshing that Munger speaks his mind and is fearless of being found politically incorrect. In the end, though, coming from a billionaire, “suck it up” veers a bit too close to “let them eat cake.”



www.bloomberg.com/news/2010-09-21/billionaire-munger-offers-us-a-false-choice-alice-schroeder.html

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Sovereign Credit-Default Swaps



PORTUGAL 5-YR375.87.30
+1.98%
ITALY 5-YR194.52.70
+1.41%
IRELAND 5-YR448.524.70
+5.83%
GREECE 5-YR852.7-35.10
-3.95%
SPAIN 5-YR236.7-1.10
-0.46%



This page provides a daily update of selected European credit-default swaps. Other essential rates can be found on the CNBC Bonds and Markets pages.

Note:
Credit-default swaps are derivative financial instruments that "swap" the credit exposure from one entity to another. In simple terms it is an insurance policy for an entity's debt obligations. The buyer of the swap holds the insurance, while the seller takes the risk. The listed number is the price, in thousands, to insure $10 million in debt.

Although the markets for such instruments are somewhat illiquid, the prices and their movements are used by some to gauge the perceived creditworthiness of a particular entity, in this case, the sovereign nations listed above.

www.cnbc.com/id/38451750

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Santander May Buy M&T Majority Stake
09-21-2010



U.S. commercial lender, M&T Bank, is planning to sell its majority stake to Banco Santander through a merger with the Spanish lender’s U.S. unit, Bloomberg reports. The deal will put Santander’s Sovereign Bank unit, which had pretax losses for the past three years, under the management of M&T CEO, Robert Wilmers.


Santander may initially acquire a minority stake in M&T, but will be allowed to increase its ownership to more than 50% within a few years. The banks are in informal talks with the U.S. Federal Reserve regarding the deal, which is expected to be structured as a stock merger.





*****************************



M&T Bank Is Said to Weigh Giving Up Majority Stake to Santander
By Zachary R. Mider, Jacqueline Simmons and Jeffrey McCracken - Sep 20, 2010 6:00 PM ET

M&T Bank Corp. may give up a majority stake to Banco Santander SA through a merger with the Spanish lender’s U.S. unit, while retaining some elements of control, according to people with knowledge of the matter.

The banks are in informal talks with the U.S. Federal Reserve to gauge how such a deal would be received, and expect to hear back within two weeks, said the people, who spoke on condition of anonymity because the talks are private. Many of the terms, including the timing of when Santander would get the majority stake, have yet to be worked out, the people said.

An agreement would allow Santander to put its Sovereign Bank unit, which had pretax losses for the past three years, under the management of M&T Chief Executive Officer Robert Wilmers, 76, and his team, the people said. Buffalo, New York- based M&T, which counts Warren Buffett’s Berkshire Hathaway Inc. among its biggest shareholders, steered through the financial crisis without posting a loss.

“M&T is, in our view, an extremely well-run bank,” said Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine, in a telephone interview. A deal placing M&T in control of U.S. operations would be favorable to M&T’s shareholders, “because we’d expect M&T to be able to drive its efficiencies into the combined companies to make the bank very profitable.”

M&T has a market value of more than $10 billion. Together, M&T and Sovereign, which are about the same size, would become the ninth-largest U.S. savings institution by deposits.

Compromise Floated

M&T and Santander have been in intermittent merger talks for months, with Santander seeking a takeover of M&T, and M&T aiming to combine with Sovereign without submitting to the control of the Spanish bank, the people said. The proposal being floated to federal regulators represents a compromise between those two positions, one of the people said.

M&T’s shares rose 5 percent to $91 yesterday in New York Stock Exchange composite trading. The stock is up 36 percent this year.

Spokesmen for M&T and Santander declined to comment. A spokeswoman for the Fed in Washington declined to comment.

The transaction would probably be structured as a stock merger, in which Santander trades its holding of the Sovereign unit for shares in M&T, said one of the people. Santander may start with a minority holding in M&T with an option that allows it to increase ownership to more than 50 percent within a few years, the people said.

Santander, based in the Spanish city of the same name, is in talks to acquire Allied Irish Banks Plc’s 22.5 percent stake in M&T, the people said. Catherine Burke, a spokeswoman for Allied Irish, declined to comment.

Acquisition Spree

Santander has been on an acquisition spree this year, agreeing to buy a portfolio of car loans from HSBC Holdings Plc for $4 billion, Allied Irish’s 70 percent stake in a Polish bank for $3.7 billion, and 318 bank branches from Royal Bank of Scotland Group Plc.

Sovereign had $72.6 billion of assets and $41.6 billion of deposits as of June 30, according to data from the Federal Deposit Insurance Corp. M&T had $67.3 billion of assets and $47.5 billion of deposits.

At Sovereign, where Santander bought a minority stake in 2005, losses and customer withdrawals forced it to seek a rescue from Santander, which bought the rest of it last year.

Wilmers negotiated protections to preserve control in at least one previous transaction. In 2002, he agreed to buy Allied Irish’s Allfirst Financial unit for stock and cash, giving the Dublin-based bank its holding and adding more than 700 branches. Under the deal, Allied Irish agreed to limit its stake to 25 percent and to add Wilmers to its board of directors.



www.bloomberg.com/news/2010-09-20/m-t-bank-is-said-to-consider-giving-up-majority-stake-to-banco-santander.html