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Post by sandi66 on Mar 30, 2011 14:50:02 GMT -5
G-20 Criticism of Fed Easing May Be Muted at Meeting in China March 30, 2011, 6:22 AM EDT March 30 (Bloomberg) -- Chinese criticism of the Federal Reserve for flooding the world with money may get little traction among Group of 20 finance chiefs meeting in China as Europe’s debt crisis and Japan’s disaster take precedence. U.S. Treasury Secretary Timothy F. Geithner, French President Nicolas Sarkozy, Chinese Vice Premier Wang Qishan and European Central Bank President Jean-Claude Trichet will gather in Nanjing for a one-day seminar on the international monetary system tomorrow. A Chinese state economist called for an end to the dollar’s dominance in a paper posted on a website yesterday, blaming the U.S. for fueling inflation. A 9.0-magnitude earthquake in Japan, armed NATO intervention in Libya, and the heightened prospect of a bailout of Portugal are among developments since Sarkozy proposed the meeting seven months ago. At the same time, the Fed plans to end its $600 billion of Treasury purchases in June and officials have signaled that additional quantitative easing is unlikely as the American economy is showing signs of strengthening. Criticism of U.S. monetary policy is “so yesterday,” said Chris Rupkey, chief financial economist at Bank of Tokyo- Mitsubishi UFJ in New York. “World leaders and monetary officials have a lot more important things on their plate.” Xu Hongcai, an official at the China Center for International Economic Exchanges, revived complaints in his paper, saying U.S. monetary policies boosting global liquidity are the root cause of surging oil and commodity prices. His organization is helping to host the Nanjing event. Capital Flows Officials including French Finance Minister Christine Lagarde will discuss topics including “shortcomings in the international monetary system” and dealing with volatile capital flows, according to the schedule for the conference in Nanjing, a city on the Yangtze River about 170 miles (270 kilometers) from Shanghai. German Deputy Finance Minister Joerg Asmussen said the event isn’t intended to deliver short-term fixes and is part of preparing for a G-20 meeting in Cannes in November that should yield more substantive results. He spoke in an interview yesterday en route from Berlin to Beijing. The latest meeting comes after Portugal’s 10-year bond yield advanced to a euro-era record, unrest in the Middle East and North Africa pushed crude oil over $100 a barrel, and the Group of Seven nations this month triggered the biggest fall in Japan’s yen in more than two years. A weaker currency may help Japanese exporters to weather a disaster spanning nuclear leaks and the annihilation of northeastern towns. Currency Intervention Jim O’Neill, chairman of Goldman Sachs Asset Management International, said it will be “fascinating” to see how a Chinese delegation including central bank Governor Zhou Xiaochuan reacts to any discussion of the G-7 move. China itself intervenes to limit gains by the yuan, drawing criticism from trading partners including the U.S. The currency traded at 6.5604 per dollar as of 10:23 a.m. in Shanghai today after touching a 17-year high of 6.5552 on March 22. Germany’s Asmussen said a more flexible currency would be in China’s interest and “this clearly is what they are very carefully pursuing.” China has been one of the biggest critics of U.S. monetary policy, blaming it for driving up commodity prices and stoking inflation, which reached a 28-month high of 5.1 percent in China in November. The Fed, which sets monetary policy independent of Geithner’s Treasury Department, has initiated two rounds of quantitative easing to support growth after the financial crisis. Commodity Costs “Some countries have further eased their monetary policies in order to spur economic recovery and that has caused rising global commodity prices,” Chinese Premier Wen Jiabao told chief executives gathered on March 21 at the Great Hall of the People in Beijing. In an interview this week, Goldman’s O’Neill asked whether the Fed’s critics would rather see a permanently damaged American economy or a U.S. recovery where “one of the consequences might be higher commodity prices.” O’Neill, who will speak in Nanjing in a panel on liquidity management moderated by U.K. Chancellor of the Exchequer George Osborne, said he expects possible changes to the International Monetary Fund’s Special Drawing Rights to be discussed. In 2009, Zhou suggested in a policy paper that SDRs may be the basis for a new global currency. German Finance Minister Wolfgang Schaeuble said yesterday that he expects “quite some movement” this year in the discussion of exchange-rate issues and said talks may move from the G-7 to the G-20, or a sub-group consisting of the G-7 plus Brazil, Russia, India and China. He spoke to reporters as he travelled to Beijing. Sarkozy’s Agenda While French officials said there will be no group statements or decisions, Sarkozy’s own agenda in China includes pushing industrial projects such as Areva SA nuclear-power plants, Airbus SAS planes and Alstom SA high-speed trains. Tomorrow’s event also reflects the French leader’s desire to organize a new “Bretton Woods” during his presidency of the G-20 to address what he has called imbalances in the global monetary system. He first raised the possibility of such a meeting in August and pressed the Chinese to act as hosts. Bretton Woods, New Hampshire, was the site of a 1944 meeting which led to the establishment of the World Bank and International Monetary Fund. “I think in some sense maybe the axis of discussion for this G-20 is going to be helping the Chinese assume a bit more prominence at the global table,” said Cliff Tan, head of emerging-markets research at Societe Generale SA in Hong Kong. www.businessweek.com/news/2011-03-30/g-20-criticism-of-fed-easing-may-be-muted-at-meeting-in-china.html
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Post by sandi66 on Mar 31, 2011 5:14:55 GMT -5
Broke in America: The Housing Meltdown Continues [ ... article in newsletter below ] And more thoughts...
Speaking of America's central bank, our colleague in London, John Stepek, says the Fed is going broke:
Let's start with the balance sheet. A bank's assets are mainly loans made to individuals, businesses, even governments. Loans are assets because they are money owed to the bank.
Now let's talk about the other side of the balance sheet - the liabilities. Most of the money a bank lends to customers comes from money that the bank itself borrows. It can borrow from you and me through the savings we deposit. It may also borrow from companies that place cash on deposit. And the bank may borrow from investors - insurance companies, pension funds, even other banks. All of these are liabilities - debts the bank owes to someone else.
The other main item on the liabilities side is capital. Suppose the bank collected all the money owed by the borrowers. And then repaid all the money it owes. Capital is the money left over. It is the bank's true value.
The balance sheet must always balance. So capital + debt = assets.
Banks make money by lending at higher interest rates than they pay to borrow. Borrowers want long-term loans, usually at fixed interest rates. On the other hand, depositors want easy (short-term) access. And depositors often prefer variable interest rates.
So this is the crucial role banks play in the economy. They take short- term variable rate savings, and recycle them into longer-term, fixed- rate loans.
And this is where the problems of the world's third-largest bank start.
How a bank goes bust
From the point of view of a bank, when interest rates rise, the value of a fixed-rate loan falls. The bank receives less income from that fixed-rate loan than it could now get elsewhere.
And interest rates on US ten-year government bonds have indeed been rising. Since last August, they've risen by about one percentage point.
Now, accounting rules dictate what happens next. Under certain conditions, banks must mark down the value of these loans. That's called "marking to market". And when it happens, capital also falls - otherwise the balance sheet doesn't balance any more.
But the world's third-largest bank doesn't follow the same accounting rules as every other bank. It refuses to restate the value of its assets. That's why they're surely worth less than the reported figure. In fact, if I'm right, the bank has no capital left. It has zero value. It's bust.
I can't prove this. But here's why I think I'm right.
$1.14 trillion (45%) of this bank's assets are fixed-rate loans of ten years or more. Let's suppose the ten-year bonds pay interest of 4%. If the yield rises to 5%, the price falls by about 8% (bond prices fall as yields rise). If yields rise to 6%, the price falls by 16%.
I don't know exactly when the bank made these loans. So I don't know the current yields or prices. But I do know that US government bond yields have risen by one percentage point since last August. And I think they'll keep going up.
So it's a fair bet that the bank's ten-year loans are worth less than it paid for them. An 8% loss on $1.14 trillion is $91 billion. And that excludes any losses on the $1.41 trillion of shorter loans that it holds, which are also affected.
This bank has been lending like the credit crunch never happened
Of course, bank capital (as well as loss reserves) is designed to cushion against such losses. Since the credit crisis, most banks have reduced their lending, boosted reserves and raised more capital.
But not this bank. It carried on lending like the crisis never happened. Worse still, it has no loan loss reserves. And it's not raised a cent of extra capital.
Want to guess how much capital the bank holds against its $2.55 trillion in assets? $53 billion. That's just 2% of total assets. So a 2% fall in the value of those assets would wipe out every last dollar of capital. So it may already be insolvent. If not, it soon will be.
Have you guessed which bank I'm talking about? It's the US Federal Reserve Bank itself.
The Fed is bust - and that's not just my opinion
I'm serious. It may be the US central bank, but it's still a bank like all the rest.
Most of its assets are US government bonds, bought as part of its quantitative easing (QE) programmes.
Its liabilities include about $1 trillion of notes and coins in circulation. There are also $1.4 trillion of deposits owing to US commercial banks, which are required to hold reserves at the Fed. There are also some deposits owed to the US Treasury. And there's $53 billion in capital.
So the Fed can go bust just like any other bank. And I'm not the only one saying it. William Ford, a former president of the Atlanta Federal Reserve, one of the 12 member banks of the Fed itself, broke ranks to warn about it on 11 January.
Ford points out that the Fed can hide insolvency because it does not mark its assets to market. So we'll only know that it's bust when it sells some bonds. Only then would it have to take the losses from selling them for less than it paid.
Of course, the Fed going bust would be very embarrassing. So you can be sure it will be quietly bailed out behind closed doors. In fact, if the bailout is timed to coincide with the losses, we might not even notice.
Who will bail out the Fed?
Why does this matter to you? Well, guess who would rescue the Fed? The US Treasury, a department of the US government, would have to inject extra capital to restore solvency. But the US government is not exactly flush these days.
So how would they get the money? They'd issue more bonds. And the Fed would buy them as part of its QE programme.
So let's be clear. The Fed goes bust. So it lends money to the US government (i.e. it buys US bonds), and the US Treasury gives it back to the Fed as capital. So the Fed is printing money to bail itself out. What do you think this will do for investor confidence in the US government and the dollar?
I'm pretty sure that the value of US Treasury bonds and the dollar will be worth less afterwards. And that's why you should have 8-12% of your portfolio in gold. It is sound money in an era when most currencies are not. It is insurance against further debasement of paper money. Regards,
Bill Bonner for The Daily Reckoning
The Daily Reckoning U.S. Edition Home . Archives . Unsubscribe The Daily Reckoning | Wednesday, March 30, 2011
Being prepared for when the pendulum swings back to the gold standard... The voices of dissent continue as civil unrest spreads to Syria... Plus, Bill Bonner on the weather in LA, and whether the people there are "oke" with going broke... -------------------------------------------------------
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From Tunisia to Syria Tracing the Path of Social Upheaval Across the Middle East and North Africa Joel Bowman Reporting from Buenos Aires, Argentina...
Are you watching all this, Fellow Reckoner? Now it's Syria's turn on the hotplate. Has the world gone mad? More to the point, was it ever sane to begin with? In any case, it is a breathtaking show put on for all the world to watch. Who would want to miss it? What a time to be alive!
But before we get too carried away, before we get into the juicy details, let's just take a step back for a moment. This period of history is so brimming with events to inspire laughter and sorrow and everything in between. We want to be sure we give each case their just deserts.
Let's start where all good tales of intrigue start, at the beginning...
Imagine you're a down-on-your-luck, 26-year old college grad unable to find work in Tunisia. Your friends all have similar problems, so it's no use crying to them...you've got to earn some cash of your own. So, what do you do? How about making a little on the side selling some fruit and veg? Sounds like a viable plan, eh?
Nope. No dice. When the local authorities confiscated Mohamed Bouazizi's produce (for selling without a street license) back in December, the young Tunisian was so angry he promptly set himself on fire. Overreaction? Well, self-immolation might not be the first thought that pops into most people's heads, but what do we know? We're not an out of work 26-year old Tunisian college grad trying to make a buck. And we haven't had the bulbous thumb of an oppressive dictator on our head since we were a baby.
In any case, the event awakened a long-dormant undercurrent of anger, precipitating a wave of civil unrest that eventually took down the Tunisian government, ending the multi-decade authoritarian rule of US- backed president, Zine El Abidine Ben Ali. And this was just the beginning. Soon after the crowds in Tunisia began singing their songs of freedom, the tune spread to Egypt, Libya and across the Red Sea to Yemen, Saudi Arabia, Jordan and beyond.
Freedom, after all, is a catchy tune.
And now we see that Syria's House of Assad is on the back foot. The Assad family have been ruling the roost for four decades. That, for much of Syria's young population, is more than their entire lifetime. According to the figures, approximately one-third of Syria's 23 million people are under 14 years of age. That makes for a lot of teenage angst in the very near future.
Iran's chief Arab ally may be, as The Wall Street Journal puts it, "a latecomer to the spring of Muslim discontent," but it is wasting no time making up for its tardy arrival. According to some human rights groups, more than 60 people have been killed as security forces cracked down on the demonstrations spreading around the country.
In his first public speech since revolts began there almost two weeks ago, Syrian President Bashar Assad blamed "conspirators" for the violence washing over his (for now) land, for what the papers are calling an "extraordinary wave of dissent against his authoritarian rule."
As usual, the papers have got it all front-to-back. There is nothing "extraordinary" about slaves rising up against oppressive masters. They always rise up...eventually. What is most extraordinary, at least to our thinking, is how long people will take it on the chin before saying "enough is enough," before they bring their gloves up, either to defend themselves...or to land a counterpunch.
"We don't seek battles," Assad said in a televised speech on Wednesday, before adding, somewhat provocatively, "But if a battle is imposed on us today, we welcome it."
If the people are unhappy in Syria, if they are longing for freedom across the Middle East, they were a long time silent about it. Brutal regimes have been running the place for decades. Then again, stealth is oppression's best weapon; it creeps in slowly, like a silent, invisible, lethal gas. Good people stand aside and do nothing and then, before you know it, you wake up one day to find half the population being forced to dress in cloth bags and the other half too stupefied and/or terrified to do anything about it.
We have no idea whether Mr. Bouazizi is destined to become the Archduke Ferdinand of the 21st century, or how many militaristically enthusiastic nations will find the conflicts in that troubled part of the world too irresistible to refrain from joining. We do know, however, that repressed anger is generally not a healthy thing...not for individuals, and certainly not for entire generations of young men and women with a spark of freedom in their hearts.
It is curious, then, that the various goings on in the Middle East (and North Africa...and Japan...and along Europe's periphery) barely inspire a whimper from the markets. Not even the scalawag shenanigans concocted in the oak-paneled halls of government buildings in Washington DC raise a questioning eyebrow from the mainstream media. The Dow Jones Industrial Average is still cruising, as if on autopilot, some 800 points above where it began the year. Neither manmade nor natural disasters seem capable of disturbing its terminally ascendant flight pattern.
But, not unlike the stealthy creep of oppression, market crashes tend to remain unseen too...until the moment they become all-too obvious, when it is already too late.
"But that doesn't mean investors should fail to prepare for financial calamities...or the demise of paper currencies," writes Addison in today's guest essay. More from Mr. Wiggin below...
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The Daily Reckoning Presents When Gold Becomes Money Again AddisonWiggin On the night our documentary I.O.U.S.A. made its nationwide premiere in August 2008, the film was followed up by a live panel discussion, broadcast via satellite. Our friend David Walker, the former US comptroller general and "star" of the film, took part...along with several other luminaries.
At one point, the question was asked: Might America's trading partners one day sell off their US Treasury holdings?
Impossible, said Warren Buffett. In fact, he insisted, they couldn't...because they'd need to convert it into some other currency, which would be little better than the dollar. No one else chimed in to challenge the assertion.
"Buffett's answer assumes that there is no alternative," author, friend and local Baltimore resident Bill Baker writes in his 2009 book Endless Money: The Moral Hazards of Socialism, "because for generations, all the world's currencies have been backed only by the promise that governments would accept them in payment of taxes.
"But that ignores a currency that has been used effectively by man for thousands of years: gold. China and other countries might exchange their US dollars for it now."
Indeed, China is quietly building its gold reserves. They totaled 600 metric tons in 2004. Then in April 2009 came an announcement they'd grown to 1,054 metric tons. And the buzz from Beijing is that the central bankers want to grow that stash another tenfold.
Meanwhile, China has trimmed its US Treasury holdings for three months in a row. The January total was $1.15 trillion - down 1.75% from October.
These are the first steps toward what Baker sees as the "remonetization" of gold - coming soon to a country near you.
History is a pendulum.
"Once gold and silver had been written into the Constitution," Baker says, "no one might have thought that it would be replaced by paper within 60 years." But the pendulum swung, the Union issuing its infamous greenbacks during the Civil War.
Then the pendulum swung back, the greenbacks' critics were "able to successfully push for an agenda of gold resumption. But before the London Economic Conference of 1933, the world would be shocked by Roosevelt's rejection of the gold standard." The pendulum swung again.
Now, "a series of crises such as was the case in Rome might ultimately bring the pendulum back toward gold," Baker writes.
In other words, we're approaching the end of the Great Dollar Standard we wrote about in The Demise of the Dollar. The only world anyone below the age of 40 has ever known - in which all the world's currencies float freely against each other - is nearly over.
And Baker is investing accordingly.
In late 2010, he began accumulating shares of a tiny gold miner called Orezone. "Our cost basis is 78 cents, and now it's $3.61," Baker tells us on a wintry afternoon in his office on the outskirts of Baltimore. "I've sold off two-thirds of the shares that I own, and it's still one of our largest positions. I can't keep it down!"
It's a good problem to have. And Baker has it because he's willing to go further afield than your typical money manager...as far afield as Burkina Faso.
We'll pause here to place it on a map, so you can get your bearings. (If you were a geography geek growing up, you might remember it as Upper Volta.)
"I read these other quarterlies from these hedge fund managers," Baker tells us, surrounded by family pictures, CDs of composers like Brahms and rafts of company research. "They'll get really absorbed in the macroeconomic picture, but they don't really know what they're doing, so they just buy GLD [the gold ETF].
"Or they'll hire two all-star Canadian analysts. Then I look at what they own, and they own Gabriel Resources because John Paulson owns it. It's safe. Or they bought some big South African company because it's cheap based on reserves in the ground when they ran it through their stock screener.
"They don't have a coherent philosophy about really kicking the tires and really finding these companies that people don't know about."
Baker does. His firm, Gaineswood Investment Management, has taken sizeable positions in tiny gold miners working well off the beaten paths of the Americas, Australia and South Africa.
Burkina Faso is smack in the middle of a geological formation called the Birimian Trend...the richest source of growth for gold miners in recent years.
Even better is how many miners in West Africa have consolidated their holdings. "In Canada, you might have a district filled up with 12 companies. One company might have each block, or half a block. But in West Africa, these guys own all of it. They've got a lot of time, a lot of land, and now they've raised a lot more money, so they can keep going after it...and we'll keep getting these upside surprises.
"That's our philosophy, to find opportunity where, for example, this one outfit has found 1.2 million ounces of gold. But with all the new discoveries they're making, they'll probably come out and say we have 2, 2.5, and next year they'll say, well, we have 3, 3.5, 4... and it isn't over yet, because of this whole giant region that's been unexplored."
Before we go any further, we'd better make something clear: Bill Baker isn't your typical gold bug. Nor is he your typical stock market bear.
"The timing or eventuality of financial calamity is unable to be forecast," Baker writes in Endless Money. "At best, it might be like a hurricane warning: The tempest may strike here, it may hit there, it may be downgraded to a tropical storm or it may go elsewhere entirely."
But that doesn't mean investors should fail to prepare for financial calamities...or the demise of paper currencies. Financial calamities are becoming increasingly likely in this overly indebted world of ours...and the death of paper currencies is becoming increasingly certain. The best time to prepare is ahead of time.
Regards,
Addison Wiggin, for The Daily Reckoning
Joel's Note: Did you already see Addison's email about Ron Paul's "lost" gold bible? If not, you might want to check it out here. Addison is keen to rush a copy to as many Fellow Reckoners as possible. It's a 200-page guide that could just save your skin when this monetary house of cards inevitably comes crashing down. Again, Details Here.
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Bill Bonner Broke in America: The Housing Meltdown Continues Bill Bonner Reckoning from Los Angeles, California...
She likes the free, fresh wind in her hair Life without care She's broke, and it's "oke" Hates California, it's cold and it's damp That's why the lady is a tramp
Well, it's not cold and it's not damp. Instead, LA is warm and sunny, with springtime flowers popping out all over.
And yesterday, the Dow rose 81 points, while the price of gold slipped a little.
So what else is new?
We never thought we liked LA. But we may change our mind. Daughter Maria took us around yesterday. We wandered around Venice Beach and then through Hollywood. The town is much nicer than we remembered it. Many of the houses, shops and apartment buildings are getting a makeover. They remind us of the Soho area of Buenos Aires - young, hip, and lively.
"This isn't like the rest of America," Maria explained. "Just drive an hour to the East and you'll see what we mean. That's the real America. Here, the town is full of immigrants...pretty girls who want to hit it big in Hollywood...Russians, French, English...all sorts of girls. And there are a lot of men...you know, men who take a little too much care of themselves. You see them at parties. They also have a project. They always have contacts. They always have a cell phone and spend a lot of time talking. But nothing ever happens.
"But I love LA. I don't know if I could live anywhere else."
There are a lot of girls with the fresh wind in their hair here...
And a lot of people who are broke. Whether it is "oke" or not...we don't know.
But here's the latest on America's housing meltdown:
AP - Damage from the housing bust is spreading to areas once thought to be immune.
In at least 14 major US metro areas, prices have fallen to 2003 levels - when the housing bubble was just starting to inflate. Prices will likely drop further this year, making many people reluctant to buy or sell. That would push down sales and prices more.
The depressed housing industry is slowing an economy that has shown strength elsewhere. And it's starting to hurt those who bought years before the housing boom began. In some cities, people who have paid their mortgages for a decade have little or no home equity.
Prices have tumbled in familiar troubled spots, such as Las Vegas, Cleveland and Detroit. But they're also at or near 10-year lows in Denver, Atlanta, Chicago and Minneapolis - cities that weren't as swept up in the housing boom and bust.
"It's been tough on the lower class but it's filtering up," said Paul Dales, senior US economist with Capital Economics. "It may be only a matter of time before it hits the wealthy."
Just about the only major market weathering the second wave of the housing downturn is Washington. Home prices there have risen 11 percent in the past two years. A Daily Reckoning note: the zombies are doing just fine, thank you. It's the rest of the nation that suffers. Money flows from the people who earn it to the protected financial sector...and to the feds themselves. Is it any wonder that profits in finance are back to their 2007 level? Or that, overall, debt is now even higher? Or that people in the zombie capital are actually richer today (thanks to automatic wage hikes in the federal government, plus property value increases)?
But people in LA? In Chicago? In Dubuque or Baton Rouge?
They're broke.
And more thoughts...
Speaking of America's central bank, our colleague in London, John Stepek, says the Fed is going broke:
Let's start with the balance sheet. A bank's assets are mainly loans made to individuals, businesses, even governments. Loans are assets because they are money owed to the bank.
Now let's talk about the other side of the balance sheet - the liabilities. Most of the money a bank lends to customers comes from money that the bank itself borrows. It can borrow from you and me through the savings we deposit. It may also borrow from companies that place cash on deposit. And the bank may borrow from investors - insurance companies, pension funds, even other banks. All of these are liabilities - debts the bank owes to someone else.
The other main item on the liabilities side is capital. Suppose the bank collected all the money owed by the borrowers. And then repaid all the money it owes. Capital is the money left over. It is the bank's true value.
The balance sheet must always balance. So capital + debt = assets.
Banks make money by lending at higher interest rates than they pay to borrow. Borrowers want long-term loans, usually at fixed interest rates. On the other hand, depositors want easy (short-term) access. And depositors often prefer variable interest rates.
So this is the crucial role banks play in the economy. They take short- term variable rate savings, and recycle them into longer-term, fixed- rate loans.
And this is where the problems of the world's third-largest bank start.
How a bank goes bust
From the point of view of a bank, when interest rates rise, the value of a fixed-rate loan falls. The bank receives less income from that fixed-rate loan than it could now get elsewhere.
And interest rates on US ten-year government bonds have indeed been rising. Since last August, they've risen by about one percentage point.
Now, accounting rules dictate what happens next. Under certain conditions, banks must mark down the value of these loans. That's called "marking to market". And when it happens, capital also falls - otherwise the balance sheet doesn't balance any more.
But the world's third-largest bank doesn't follow the same accounting rules as every other bank. It refuses to restate the value of its assets. That's why they're surely worth less than the reported figure. In fact, if I'm right, the bank has no capital left. It has zero value. It's bust.
I can't prove this. But here's why I think I'm right.
$1.14 trillion (45%) of this bank's assets are fixed-rate loans of ten years or more. Let's suppose the ten-year bonds pay interest of 4%. If the yield rises to 5%, the price falls by about 8% (bond prices fall as yields rise). If yields rise to 6%, the price falls by 16%.
I don't know exactly when the bank made these loans. So I don't know the current yields or prices. But I do know that US government bond yields have risen by one percentage point since last August. And I think they'll keep going up.
So it's a fair bet that the bank's ten-year loans are worth less than it paid for them. An 8% loss on $1.14 trillion is $91 billion. And that excludes any losses on the $1.41 trillion of shorter loans that it holds, which are also affected.
This bank has been lending like the credit crunch never happened
Of course, bank capital (as well as loss reserves) is designed to cushion against such losses. Since the credit crisis, most banks have reduced their lending, boosted reserves and raised more capital.
But not this bank. It carried on lending like the crisis never happened. Worse still, it has no loan loss reserves. And it's not raised a cent of extra capital.
Want to guess how much capital the bank holds against its $2.55 trillion in assets? $53 billion. That's just 2% of total assets. So a 2% fall in the value of those assets would wipe out every last dollar of capital. So it may already be insolvent. If not, it soon will be.
Have you guessed which bank I'm talking about? It's the US Federal Reserve Bank itself.
The Fed is bust - and that's not just my opinion
I'm serious. It may be the US central bank, but it's still a bank like all the rest.
Most of its assets are US government bonds, bought as part of its quantitative easing (QE) programmes.
Its liabilities include about $1 trillion of notes and coins in circulation. There are also $1.4 trillion of deposits owing to US commercial banks, which are required to hold reserves at the Fed. There are also some deposits owed to the US Treasury. And there's $53 billion in capital.
So the Fed can go bust just like any other bank. And I'm not the only one saying it. William Ford, a former president of the Atlanta Federal Reserve, one of the 12 member banks of the Fed itself, broke ranks to warn about it on 11 January.
Ford points out that the Fed can hide insolvency because it does not mark its assets to market. So we'll only know that it's bust when it sells some bonds. Only then would it have to take the losses from selling them for less than it paid.
Of course, the Fed going bust would be very embarrassing. So you can be sure it will be quietly bailed out behind closed doors. In fact, if the bailout is timed to coincide with the losses, we might not even notice.
Who will bail out the Fed?
Why does this matter to you? Well, guess who would rescue the Fed? The US Treasury, a department of the US government, would have to inject extra capital to restore solvency. But the US government is not exactly flush these days.
So how would they get the money? They'd issue more bonds. And the Fed would buy them as part of its QE programme.
So let's be clear. The Fed goes bust. So it lends money to the US government (i.e. it buys US bonds), and the US Treasury gives it back to the Fed as capital. So the Fed is printing money to bail itself out. What do you think this will do for investor confidence in the US government and the dollar?
I'm pretty sure that the value of US Treasury bonds and the dollar will be worth less afterwards. And that's why you should have 8-12% of your portfolio in gold. It is sound money in an era when most currencies are not. It is insurance against further debasement of paper money. Regards,
Bill Bonner for The Daily Reckoning
ty joye
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Post by sandi66 on Mar 31, 2011 5:16:09 GMT -5
An Anonymous Attack on the “Global Banking Cartel” By Addison Wiggin 03/14/11 Baltimore, Maryland – On one front after another, the Federal Reserve is coming under siege. On Saturday, to begin, the hacker group calling itself “Anonymous” issued a video manifesto calling for “a relentless campaign of nonviolent, peaceful civil disobedience.” “We aim to break up the global banking cartel centered at the Federal Reserve, International Monetary Fund, Bank of International Settlements [sic] and World Bank,” Anonymous says. The group has been around for years, but made its biggest impact last fall, when WikiLeaks began releasing its stash of State Department cables. As Amazon, PayPal, Visa and MasterCard all cut off their business ties with WikiLeaks, Anonymous launched “distributed denial of service” attacks – basically slamming their websites with so much traffic until they were forced to shut down. “As a first sign of good faith,” says the manifesto, “we demand Ben Bernanke step down as Federal Reserve chairman.” This morning, Anonymous released some emails given to them by a former employee at Bank of America. The emails are separate from the BoA documents that WikiLeaks is sitting on. The emails haven’t been independently verified…but they appear to show that, among other things, loan numbers were routinely falsified with the intent of putting mortgage holders in default. You think the “robo-signing” scandal was a big deal? Wait until this one gets legs. Anonymous is nothing if not ambitious. And they have a rising tide of public anger on their side. Then, on the same day the tsunami devoured 100 miles of Japanese coastline, New York Fed chief William Dudley – a 21-year vet of Goldman Sachs – stepped out of his bubble to explain Fed policy to real people in Queens. It might not have been the first time Dudley attempted to gain the trust of the hoi polloi, but we’re pretty sure it’ll be the last. The details here were reported widely. We divined the scene from a Reuters report. First Dudley swore up and down that inflation was no problem. “When was the last time, sir,” came a reply from the audience, “that you went grocery shopping?” Dudley boldly proceeded to explain the concept of “core CPI” – the cost-of-living measure designed for people who don’t eat or consume energy. Heh, we know firsthand how well that goes over… Then in a brilliant stroke, he pointed to Apple’s shiny new iPad 2 to illustrate his point. “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he gamely explained. “You have to look at the prices of all things.” “I can’t eat an iPad,” someone yelled from the crowd. How big a leap is it from “I can’t eat an iPad” to “douse myself with gasoline and light my body on fire in the street”, we wondered while reading the report. Depends entirely on who’s listening, we suspect. Addison Wiggin for The Daily Reckoning dailyreckoning.com/an-anonymous-attack-on-the-global-banking-cartel/
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Post by sandi66 on Mar 31, 2011 5:36:32 GMT -5
MPAA Applauds U.S. Government for Domain Seizures The domain seizures by The Department of Justice (DOJ) and Homeland Security’s Immigration and Customs Enforcement (ICE) have been widely reported in recent months. While a lot of people, press and politicians have criticized the actions, the MPAA and its partners are very pleased with the outcome. The Hill reports that a group of movie outfits sent a letter to the responsible outfits, applauding their great work. “Operation In Our Sites has not only put illegal sites out of business, but has raised public awareness about this specific form of crime on the Internet. Most importantly, these enforcement efforts have resulted in most of these entities ceasing their illegal activity,” the MPAA and other film industry outfits write. “Movies and TV programs, some of the biggest draws on the Internet, are in many ways the ‘canary in the coal mine.’ Stealing and illegally selling this content may appear to be victimless crimes or a harmless form of theft, but they are neither,” the letter adds. “If it is not made clear that this kind of activity is illegal, it has the potential to become the harbinger of even more forms of illegal activity on the Internet.” In addition to praising the Government for the domain seizures, the movie outfits are also pleased with the white-paper published by President Obama’s so-called “IP Czar” Victoria Espinel two weeks ago. In the paper Espinel calls on Congress to make changes in order to make it easier to clamp down on copyright infringement. Did we really expect to hear something else? torrentfreak.com/mpaa-applauds-u-s-domain-seizures-110331/
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Post by sandi66 on Mar 31, 2011 5:46:08 GMT -5
CIA officers working with Libya rebels CIA officers are coordinating with antigovernment fighters and sharing intelligence, but the Obama administration is undecided whether to supply weapons. Leading lawmakers from both parties are against the idea. March 31, 2011 Reporting from Washington— CIA officers are on the ground in Libya, coordinating with rebels and sharing intelligence, U.S. officials say, but the Obama administration has not yet decided whether to take the further step of providing weapons to those trying to oust Moammar Kadafi. The issue of whether to provide the ragtag rebel forces with arms has been controversial in Washington. On Wednesday, two key lawmakers — a Republican and a Democrat — came out against the idea. "We don't have to look very far back in history to find examples of the unintended consequences of passing out advanced weapons to a group of fighters we didn't know as well as we should have," said Rep. Mike Rogers (R-Mich.), in an apparent reference to U.S. aid to Afghan guerrillas fighting the Soviet Union during the Carter and Reagan administrations. Photos: Rebels pushed back to Benghazi, Libya -------------------------------------------------------------------------------- FOX59 Fan Rewards: Play blackjack and earn points to redeem for contests & prizes! -------------------------------------------------------------------------------- "We need to be very careful before rushing into a decision that could come back to haunt us," said Rogers, who chairs the House Intelligence Committee and who has supported the U.S. intervention in Libya so far. Rep. C.A. "Dutch" Ruppersberger of Maryland, the ranking Democrat on the committee, echoed that in an interview. "I think at this point we need more information," he said. "We don't know enough about who they are." Rogers issued his statement shortly before a meeting of the committee in which administration officials briefed congressional leaders about the status of CIA activities in Libya. Later Wednesday, the White House issued a statement repeating that "no decision has been made about providing arms to the opposition or to any group in Libya." The White House had no comment on a report by Reuters that said President Obama had signed a presidential finding authorizing secret aid to the rebels within the last three weeks. U.S. officials familiar with covert actions noted that a presidential finding can authorize a variety of steps that may or may not ultimately be taken. Members of Congress who would have been briefed on the finding would neither confirm nor deny its existence on Wednesday. The CIA has been in rebel-held areas of Libya since shortly after the U.S. Embassy in the capital, Tripoli, was evacuated in February, U.S. officials say. Agency officials have been meeting with rebels to learn more about them, and in some cases they are providing them with information about Kadafi's forces. The CIA officers in Libya are part of a contingent of operatives from Western nations. The public got a hint of the activity March 6, when several British special forces officers and a member of the intelligence service were detained by rebels and released. In the early days of the U.S.-led wars in Afghanistan and Iraq, teams of CIA officers and U.S. special operations troops entered secretly, coordinated with opposition groups and used handheld equipment to call in and aim airstrikes against the government armies. In Afghanistan, that was enough to topple the Taliban. In Libya, the U.S. has been leading an international effort to protect civilians by enforcing a no-fly zone and bombing Libya's military forces, but the coalition says it has not been coordinating with the rebels seeking to oust Kadafi's government. Rebel leaders, however, have said they are in contact with allied military representatives in Europe to help commanders identify targets for the air assault. The CIA sees no significant role being played by Islamic extremists among the rebels, U.S. officials say, but a NATO admiral told Congress this week that there were "flickers" of Al Qaeda sympathizers among the movement. Obama has made clear that the U.S. has not ruled out providing military assistance to the opposition. The rebels have been routed in recent days by Kadafi's better-armed forces, even as allied warplanes are bombing Kadafi's tanks and ammunition storage depots. House members said the issue of arming the rebels did not come up at their meeting. The White House is required to notify Congress when the president authorizes covert action, but it only has to tell a small group known as the "Gang of Eight," made up of members of the party leadership and leaders of the intelligence oversight committees. On Wednesday, officials briefed a larger group of lawmakers. www.fox59.com/news/nationworld/la-fg-cia-libya-20110331,0,1298053.story
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Post by sandi66 on Mar 31, 2011 8:37:28 GMT -5
Vatican Seeks to Clamp Down on Its Finances Under Pressure From Regulators, New Rules Aim to Make Bank's Transactions More Transparent, Fight Money Laundering. March 31, 2011 VATICAN CITY—The Vatican is scrambling ahead of a Friday deadline to finalize new rules for how the Holy See will monitor the movement of funds in and out of Vatican walls and punish money launderers. VATICAN CITY—The Vatican is scrambling ahead of a Friday deadline to finalize new rules for how the Holy See will monitor the movement of funds in and out of Vatican walls and punish money launderers. Pope Benedict XVI late last year bowed to the demands of the international financial community and announced the Vatican would create a watchdog to police its bank's opaque finances and bring to justice anyone who commits financial misdeeds on Vatican territory. As the watchdog formally comes into power on Friday, regulators and banks in Italy and abroad will be watching closely to see if the new measures have teeth. Among them, officials have drafted a measure that would require all Vatican departments to inform the watchdog when they transfer funds inside the Vatican or abroad, disclosing the sender, recipient and nature of the transaction, according to a person familiar with the matter. It isn't clear if that will be introduced along with other rules on Friday, as it is still being reviewed, the person said. Under a rule that will be unveiled Friday, people entering Vatican City will for the first time be required by gendarmes to declare whether they are carrying large sums of cash or other liquid assets, the person said. Until now, the Vatican's financial system has functioned with few of the strict regulations that govern many of the world's banks. At the heart of the Holy See's crackdown is the Vatican bank, formally known as the Institute of Religious Works. The bank was a discreet channel for getting money to Catholics living under oppressive Soviet regimes during the Cold War. In the 1980s, the bank became embroiled in a fraud scandal headlines when the Italian bank's chief was found hanging from involving Italian bank Banco Ambrosiano—a case that grabbed Blackfriars Bridge in London, an incident that remains a mystery. The Vatican refused to allow its top bankers to be questioned by Italian prosecutors. In late 2009, however, the pope hired an economist, 66-year-old Ettore Gotti-Tedeschi, to run the Vatican bank, with a mandate to shake up its secretive practices. The modern Vatican has little experience in bringing criminals to justice. In 1929, Italy and the Vatican signed a pact in which Rome recognized the Holy See's sovereignty but also allowed popes to shield Vatican officials from investigations and prosecutions by foreign governments by invoking diplomatic immunity. There is no prison inside the world's smallest state. Under the new rules, the Vatican will send people convicted by Vatican courts to prisons in Italy, said the person familiar with the matter. Without a full-fledged criminal-justice system in place, the Vatican's financial overhaul faces an uphill struggle, some analysts say. "The adequacy of these [new Vatican] laws has not yet been assessed," says Rick McDonell, executive secretary of the Paris-based Financial Action Task Force, or FATF, which sets international anti-money-laundering standards and which encouraged the Vatican to overhaul its financial system. "The challenge will be the effective implementation and enforcement of the laws." Cardinal Attilio Nicora, the Vatican watchdog's new chairman, has scoured the financial industry for auditors and other experts, but the prospect of working at the Vatican on an exclusive basis—for a fraction of the pay—makes it hard to lure them away, Vatican officials said. Soon after Mr. Gotti-Tedeschi's appointment, the Bank of Italy started looking into the Vatican bank's ties with Italian banks, reporting suspicious transactions to Italian prosecutors. The Vatican bank doesn't have branches outside Vatican walls, and for decades Italian banks processed transactions on its behalf without demanding any information about Vatican bank clients. This allowed those clients—ranging from Swiss Guards to Vatican cardinals—to funnel funds in and out of Italy's banking system under a cloak of anonymity. In 2010, the Bank of Italy warned that commercial banks shouldn't carry out Vatican bank transactions unless it disclosed information about the identity of its clients. According to court documents, Italian lenders such as Intesa Sanpaolo SpA, UniCredit SpA and Credito Artigiano SpA threatened to stop—a move that would have effectively paralyzed Vatican business, from investments in sovereign bonds to charity funding in Africa and Vatican employees' salary payments. The banks declined to comment. "The water was already up to our throats," Mr. Gotti-Tedeschi later told prosecutors, according to a court transcript. To resolve the issue, Mr. Gotti-Tedeschi needed the Vatican bank to comply with international financial standards defined by the Financial Action Task Force and the Organization for Economic Cooperation and Development. When he flew to Paris for meetings with both organizations, however, officials warned him that the Vatican bank was skirting international money-laundering rules and needed a major regulatory overhaul to get up to speed, according to people present. Pressure rose in September when Italian prosecutors put Mr. Gotti-Tedeschi under investigation, saying the bank allegedly violated Italy's anti-money-laundering laws by not disclosing the nature of a €23 million ($32 million) transfer of Vatican funds from Credito Artigiano to Vatican accounts at two other banks. Prosecutors ordered the funds frozen. The Vatican and Mr. Gotti-Tedeschi said there was nothing untoward about the transfer. But in a major break with custom, the pope agreed to let Mr. Gotti-Tedeschi be questioned by Italian prosecutors. The investigation is continuing. In November, the pope summoned Vatican cardinals to the papal palace and announced he was creating a watchdog to oversee their finances. "The pope moved with immediacy on this, because there was a serious risk for the image of the Church," said Cardinal Gianfranco Ravasi, who was at the meeting. online.wsj.com/article/SB10001424052748704062604576105872515838508.html
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Post by sandi66 on Mar 31, 2011 8:42:29 GMT -5
Vatican Bank President: Western Economy Has Lost Meaning and Purpose Wednesday, 30 Mar 2011 03:15 PM The president of the Vatican bank has said the economy in the West has lost its meaning and purpose because man has distanced himself from God and truth. Reviewing a book called “The Disease of the West” by Italian economist Marco Panara in the Vatican newspaper, Ettore Gotti Tedeschi said that the “real disease” of the West is “the nihilism that has uprooted man from any absolute truth and led him to become a materialist, pursuing a satisfaction that is ever more materialistic.” “The disease of Western man,” he added, “is his distance from God and the tendency to drown his anxieties in consumerism.” Although he mostly praised the book, he differed with Panara’s conclusion that capitalism needs to be renewed. “The instruments described in [Panara’s] book — technology, finance, outsourcing — are all good but do not work if they are misused,” said Gotti Tedeschi. “And that happens when you forget that they are tools in the hands of man, who must not only know how to use them, but must be able to give them a meaning, a purpose.” He warned of a “political collapse” if this isn’t heeded which could even “put democracy at risk.” To avoid falling into that trap, he said it was important to “renew man,” as proposed by Pope Benedict XVI in his encyclical Caritas in Veritate. “To do that,” he said, “it takes good priests more than good economists or good industrialists.” The Italian financier made several other interesting points in his review — headlined “The damage of only materialistic growth, the West and the loss of work” — arguments which aren’t often aired in the mainstream press. He pointed out that in a world that renounces natural growth (falling birthrates and therefore real growth of GDP), the only way forward is to consume more and try to increase buying power. But he noted that actual purchasing power “decreases as taxes grow in order to pay the costs of an ageing population.” “To increase purchasing power one can seek to increase productivity,” Gotti Tedeschi explained, “but it is easier to reduce prices of goods, producing them where labor is cheaper — that is, outsourcing production to countries with low costs and re-importing the goods at prices much lower than those produced at home.” Gotti Tedeschi highlighted the strange trend this has caused: producing countries that “are not consuming” and consuming countries (those in the West) “that are not producing.” Jobs are being lost, he wrote, particularly in manual labor, as there is an ever increasing push towards efficiency (greater use of technology, privatization, liberalization of markets) in the West to compete with low-cost production in the East. But he welcomed Panara’s reminder of the other economic mistakes of the past 50 years: the errors of “statism, protectionism, welfarism, and then from consumerism, until the excesses of consumerism, to unsustainable debt.” He added that strategies to compensate for the current economic crisis and loss of labor “haven’t been pursued by the West,” perhaps because it’s happened so fast, but also — in Gotti Tedeschi’s view — because of a need to rediscover meaning and purpose in the economy. Not everyone fully agrees with his thesis, however. Benjamin Harnwell, chairman of the Institute for Human Dignity, a think tank, believes that rather than capitalism, the West's economic troubles should be blamed on the mistaken belief that government can “run” an economy, rather than individuals cooperating through the free market. But he did agree with the Vatican bank president that society won't survive if man does not temper his own desires and affections, especially from material things. “In this, he is undoubtedly correct, but let's not forget the role of the world's central banks in directly and deliberately facilitating this can-have attitude,” Harnwell told Newsmax. “A few mea culpas on behalf of the banking profession would not go amiss." Gotti Tedeschi, a father of five who used to be a director of Santander bank, has consistently blamed the current economic crisis on the decline in the birth rate. Noting that the Western world's population growth rate is at 0 percent (two children per couple), he believes this has led to a profound change in the structure of society, with less productivity and an ageing population, leading to the inability of governments to reduce taxes. www.newsmax.com/EdwardPentin/Pentin-Panara-materialism-Vatican/2011/03/30/id/391202
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Post by sandi66 on Mar 31, 2011 8:47:31 GMT -5
March 30, 2011, 5:53 PM ET. Has The Vatican Got AML Religion?. Facing a Friday deadline, the Vatican is scrambling to finalize measures to police funds that pass through its walls and bring money-launderers to heel, The Wall Street Journal reports. The question now is whether the measures will have any teeth. Pope Benedict XVI late last year bowed to the demands of the international financial community and announced the Vatican would create a watchdog to monitor its bank, known as the Institute for Works of Religion, and enforce anti-money laundering rules in Vatican territory. One of the measures under consideration would require all Vatican departments to inform the watchdog when they transfer funds inside the Vatican or abroad, disclosing the sender, recipient and nature of the transaction, a person familiar with the matter told the Journal. A rule to be introduced Friday will require people entering Vatican City to declare whether they are carrying large sums of cash or other liquid assets, the person said. The Vatican will send people convicted of money laundering by Vatican courts to prisons in Italy, said the person familiar with the matter. Italian banks had never requested information about Vatican bank clients, but they started making those requests in the face of tighter anti-money laundering laws. Soon after the the pope appointed 66-year-old Ettore Gotti-Tedeschi to chair the institute, the Bank of Italy started looking at the bank’s ties to other Italian banks, reporting suspicious transactions to prosecutors. In 2010, the Bank of Italy warned that commercial banks shouldn’t carry out Vatican bank transactions because they were too high-risk. To resolve the matter, Gotti-Tedeschi met with members of the Financial Action Task Force and the Organization for Economic Cooperation and Development. They told him the Vatican bank was skirting international money-laundering rules and needed a major regulatory overhaul. In September, Italian prosecutors placed Gotti-Tedeschi under investigation because the bank allegedly violated Italy’s anti-money-laundering laws by not disclosing the nature of a €23 million ($32 million) transfer of Vatican funds from Credito Artigiano to Vatican accounts at two other banks. The Vatican and Gotti-Tedeschi said there was nothing improper about the transfer. blogs.wsj.com/corruption-currents/2011/03/30/has-the-vatican-got-aml-religion/?mod=google_news_blog
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Post by sandi66 on Mar 31, 2011 8:54:56 GMT -5
SEC Sued for Negligence Mar. 30 2011 - 4:52 pm | 140 views | 0 recommendations | 0 comments By TIMOTHY SPANGLER Investors in the Allen Stanford Ponzi scheme are suing the Securities and Exchange Commission, claiming that the US regulator should have done more to identify and stop the fraud. In a lawsuit filed earlier this week, the investors alledge that the SEC’s negligence and misconduct caused their losses. A report by the SEC’s own inspector general laid blame for the failure at the regulator’s Fort Worth office. Despite repeated suspisions of fraud, SEC officials failed to inspect Stanford for several years. Stanford’s operations were seized by US officials in 2009. Total losses by investors who purchased “certificates of deposit” from Stanford’s bank, based offshore in Antigua, are believed to amount to more than $7 billion. The SEC has declined to comment on the lawsuit. Stanford is currently in jail awaiting trial on criminal charges. He has denied any wrongdoing. Last week, he dropped his own $7 billion lawsuit against the US government, which had alledged that regulators and prosecutors had abused their authority and engaged in malicious prosecution. blogs.forbes.com/timothyspangler/2011/03/30/sec-sued-for-negligence/
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Post by sandi66 on Mar 31, 2011 9:01:35 GMT -5
SEC halts fraudster’s effort to divert settlement funds Dorsey & Whitney LLP Thomas O. Gorman USA March 29 2011 . Author page » The SEC obtained an emergency order halting the diversion of settlement payments from the Receiver of the Tom Petter’s Ponzi schemes. The money was intended to compensate defrauded investors of the feeder funds. The man who operated the feeder funds and helped facilitate the Petter’s fraud was poised to obtain the money until the SEC won a freeze order. Absent the order investors would have been paid nothing. SEC v. Quan, Case no. 0:11-cv-00723 (D. MN Filed March 24, 2011). Defendant Marlon Quan is a hedge fund manager who operated Acorn Capital Group, LLC and Stewardship Investment Advisors, LLC, companies used to manage several hedge funds and both of whom are defendants. From 2001 through 2008 Mr. Quan raised over $459,077,561from at least 165 investors. Those investors and entities invested in Mr. Quan’s hedge funds. During that period Mr. Quan and his entities were paid over $93 million in fees. From the beginning Mr. Quan’s funds fed millions of dollars of investor money to fraudster Tom Petters. Mr. Petters claimed to operate funds in which investor money was supposedly used to finance the purchase of merchandise for re-sale to “big box” retailers such as Wal-Mart and Costco. In reality Mr. Petters operated a massive Ponzi scheme, the assets of which have been seized by a Court appointed Receiver. During its operation however the Petters funds received millions of dollars from Mr. Quan and his funds in return for promissory notes. When soliciting funds from investors Mr. Quan furnished them written materials which assured that the big-box retailers were making payments into a lock box which was controlled by one of his entities. He also told investors that a major accounting firm was retained to examine the books of the entities controlled by Mr. Petters, that there was insurance against default and that proper due diligence had been undertaken. These representations were false according to the Commission. In 2007 when the Petters entities began to default on their notes Mr. Quan and his entities commenced a cover-up, concealing the truth from their investors. Those steps included falsely assuring investors that the Quan funds were in sound financial condition when in fact they were not. Perhaps the ultimate fraud began as the Receiver for the Petters entites authorized the payment of $14 million which, according to the complaint, “belongs to the investor-victims of the Defendants’ fraud.” Instead, a Quan controlled entity negotiated a deal to obtain control of the funds and distribute them to others, including to Mr. Quan’s attorneys. The fund investors would receive nothing. The SEC’s complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Advisers Act Sections 206(4). The emergency order entered by the Court at the request of the SEC froze the settlement funds, preserving the money for the defrauded investors. www.lexology.com/library/detail.aspx?g=3dceb231-8cd3-4db3-8b88-93bfcc65abe2
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Post by sandi66 on Mar 31, 2011 9:20:57 GMT -5
Schapiro's SEC Seen Ineffectual as Republicans Race to Scuttle Dodd-Frank By John J. Curran and Jesse Hamilton - Mar 31, 2011 12:01 AM ET On a stormy night in October 2009, Mary Schapiro, the newly appointed head of the U.S. Securities and Exchange Commission, returned to her alma mater, Franklin & Marshall College in Lancaster, Pennsylvania, to be inducted into the hall of fame for student athletes. Receiving her award, she grasped the podium, confessed she was near tears and spoke of how she had never even seen a lacrosse game before attending college. “But I knew if I worked hard and persevered, I might ultimately play,” she said. She competed for four years and served as captain of the team in her senior year, when it went 7-4. She also lettered in field hockey, Bloomberg Markets magazine reports in its May issue. Today, Schapiro, 55, faces challenges a good bit nastier than a muddy lacrosse game. As she hits the halfway point of her five-year term as head of the SEC, she must deal with a sprawling legislative mandate to rewrite regulations affecting the financial industry while, at the same time, trying to erase the stain of the SEC’s failure to uncover Bernard Madoff’s Ponzi scheme. Oh, yes, and Congress has effectively frozen her budget. Not since Joseph Kennedy was appointed the first SEC chairman by President Franklin D. Roosevelt in 1934, in the shadow of a stock market crash that had shattered investor confidence, has the agency’s leadership faced such a broad call to action. Kennedy might have been speaking for Schapiro when he described his challenge as “one of the most difficult and one of the most delicate tasks ever given to a governmental agency.” ‘A Bit Overwhelming’ Taking stock of her lot, Schapiro is more understated. “It can feel a bit overwhelming at times, but we just have to take it one step at a time and get it done,” she says. She has tempered that can-do attitude with warnings that the volume of work and the lack of additional funding will cause the SEC to miss deadlines as it writes up to 100 new rules designed to curb fraud and excessive risk taking in the financial industry. And it could get worse from there. “The real crunch comes after the rules are in place and we have to operationalize them,” she told the Senate Banking Committee in late February. “We lack the resources to do that.” Representative Scott Garrett, the new Republican chairman of the House subcommittee on capital markets, counters that the commission, like every federal agency, is already bloated. He wants to reduce, not increase, its budget. Representative Barney Frank, the Massachusetts Democrat who was chief sponsor of the financial regulation bill together with former Senator Christopher Dodd, says the real goal of Garrett and the other Republicans who took charge of the House in January is to derail Dodd-Frank. ‘De-reregulating’ “They are looking to de-reregulate the financial markets,” Frank says. Limited resources aside, Schapiro and her enforcement chief, former federal prosecutor Robert Khuzami, have kept the SEC in the news by filing lawsuits against high-profile financial players. SEC lawyers helped the Justice Department build its insider-trading case against hedge-fund mogul Raj Rajaratnam, now on trial in federal district court in Manhattan. While the SEC doesn’t have the power to bring criminal prosecutions, agency lawyers can appear in the courtroom to help question witnesses. Days before the trial of Rajaratnam started in early March, the SEC filed a civil suit against Rajat Gupta, former head of McKinsey & Co. and former Goldman Sachs Group Inc. (GS) director, alleging that Gupta had funneled inside information about Goldman’s finances to Rajaratnam. Gupta denies wrongdoing. Goldman Sued Goldman itself was the object of an April 2010 SEC suit, alleging that it had committed fraud when it sold investors a mortgage security without disclosing that bearish hedge fund Paulson & Co. helped pick the loans. Goldman paid a record $550 million fine and acknowledged that its marketing materials contained incomplete information. Schapiro also announced on March 2 that the SEC was writing regulations that would allow it to challenge the bonuses paid to the top executives of Wall Street banks, brokerage firms and hedge funds. Lynn Turner, former chief accountant at the SEC, says that however tough Schapiro is on bonuses and inside traders, she can’t overcome her failure to sue the executives he holds responsible for the market crash. “Name me one executive at Merrill Lynch the SEC has held accountable, or name me one at Bear Stearns or at Lehman Brothers,” Turner says. “Here you have the worst financial crisis in history and you can’t name one.” Fannie, Freddie The SEC isn’t finished pursuing top executives from the financial crisis. In mid-March, Daniel Mudd, the former CEO of Fannie Mae, confirmed that he had received a Wells notice from the SEC, indicating a pending enforcement action. Richard Syron, former CEO of Freddie Mac, also got a notice, according to two people briefed on the matter. The two government-backed mortgage giants have stayed afloat only with the help of more than $150 billion of bailout money. The bonus controls are another measure mandated by the Dodd-Frank financial regulatory law, passed in July 2010. Formally called the Wall Street Reform and Consumer Protection Act, Dodd-Frank also foisted onto the SEC a mandate to conduct studies on 20 open-ended questions, including whether or not to have credit ratings on structured financial instruments such as securitized mortgage loans. ‘An Imperfect Law’ As the SEC staff works to implement the law, the agency’s commissioners are highlighting the challenges. “The act is an imperfect law,” Commissioner Kathleen Casey, one of two Republican Party members on the five-member commission, told an audience of corporate directors in January. “It is vague in some areas; it sets forth timelines that are in some cases unrealistic. And in some areas, the law is unworkable.” Her concerns include new SEC rules expanding shareholders’ right to challenge management. Harvey Pitt, SEC chairman from 2001 to 2003 under President George W. Bush and now head of Washington-based consulting firm Kalorama Partners LLC, doesn’t mince words on what Dodd-Frank means for the commission. “The SEC has been set up for failure,” he says. “Congress was eager to say, ‘We’ve addressed the financial crisis,’ and they didn’t worry about how effectively they had addressed the crisis. We needed smarter regulatory reform than we got.” He says Dodd-Frank’s requirement that the SEC write rules to regulate the derivatives market by September 2011 is unnecessarily rushed, and he calls a mandate that it set up an investor advocate office superfluous. New Trading Rules “The SEC is the investor advocate, so why do we need a special office for that?” he asks. Schapiro has also had to address long-standing SEC issues not covered by Dodd-Frank. She made it a high priority to formulate a new series of trading rules and limitations to prevent a repeat of the May 2010 market meltdown, when 340 stocks listed on the New York Stock Exchange dove more than 60 percent in minutes, for reasons no official could immediately explain, before recovering later in the day. Schapiro is also overseeing a broad reorganization of the commission’s enforcement division, which had wilted under restrictions imposed by her predecessor, Christopher Cox. He ruled that the division’s lawyers had to seek approval from the commissioners before negotiating agreements on corporate fines, which delayed resolution of some cases for many months. Penalties Under Cox During Cox’s tenure, the dollar value of penalties decreased every year, falling from $1.5 billion in 2005 to $256 million in 2008. Schapiro and Khuzami have portrayed the insider cases as the tough new face of an SEC determined to root out financial crime. Khuzami himself led the March 1 press conference announcing the suit against Gupta, who was also a director of Procter & Gamble Co. (PG) “Gupta was honored with the highest trust of leading public companies, and he betrayed that trust by disclosing their most sensitive and valuable secrets,” Khuzami said. “The SEC allegations are totally baseless,” says Gupta’s lawyer, Gary Naftalis. “Mr. Gupta has done nothing wrong and is confident that these unfounded allegations will be rejected by any fair and impartial fact finder.” The insider-trading cases have done little to mute the continuing cry from Congress and media commentators for punishment of the executives who brought down the financial system through the manufacture of high-risk debt instruments. Insider Trading “Insider trading is really flash,” says Peter Henning, a former SEC enforcement attorney and Justice Department prosecutor who now teaches law at Wayne State University in Detroit. “If you look at some of the biggest numbers, like Raj, you’re talking about $50 million. But Lehman is the biggest bankruptcy in history, and it alone has cost over $1 billion in legal and other professional fees.” The public anger reached as far as the February Academy Awards ceremony, where a film about the financial meltdown called “Inside Job” won the award for best documentary. In his acceptance speech, director Charles Ferguson lamented that Wall Street hadn’t really been held to account. “I must start by pointing out that three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong,” he said. Schapiro and enforcement chief Khuzami say the government is restricted both by the law, which requires knowledge and intent to file fraud charges, and the agency’s continued funding constraints. Quashing a Budget Rise The Dodd-Frank law authorized the SEC budget, which was $1.1 billion in 2010, to rise to $1.3 billion in 2011 and $2.25 billion by 2015. House Republican leaders are determined to quash any increase. In mid-February, President Barack Obama requested $305 million more than last year’s SEC budget even as he agreed to freeze or cut spending across most other agencies. Congressman Garrett says neither the SEC nor its sister agency, the Commodity Futures Trading Commission, needs more money. “A dramatic spending increase to fund the SEC and the CFTC, as envisioned by the authors of the Dodd-Frank legislation, would further the mindset that our nation’s problems can be solved with more spending, not more efficiency,” Garrett said in a January statement. House Disagreement Garrett has proposed to reduce the SEC budget to the 2008 level of $906 million. He won’t necessarily get his way. Fellow Republican Jo Ann Emerson, head of a House appropriations subcommittee considering the SEC’s budget, said at a March 15 hearing she opposed a rollback in the SEC budget to 2008 levels. “They’ve got a huge mission here,” she said. “They need the tools to do their job.” The SEC has given ammunition to its funding opponents. In April 2010, the office of Senator Charles Grassley, Republican of Iowa, said it was investigating a report that 33 SEC staff had been disciplined over five years for watching pornography on their office computers. Then in July of the same year, the agency signed a 10-year lease for an additional 900,000 square feet (83,600 square meters) of office space in downtown Washington, even though it didn’t yet have the funds to expand its staff. Becker Controversy In March, Schapiro landed before the House Oversight Committee over her decision to allow the SEC’s general counsel, David Becker, to participate in deliberations about how Madoff victims should be compensated, even though his mother had amassed $2 million in a Madoff account that he and his brothers inherited. “I wish that Mr. Becker had recused himself, absolutely,” Schapiro told the committee. Becker, who has been sued by Madoff fraud trustee Irving Picard, left his post in late February. A Dodd-Frank-mandated review of the SEC by Boston Consulting Group Inc., released in March, finds that the SEC is about 400 employees short of what it needs to manage its new workload, which includes oversight of hedge funds, derivatives, credit-ratings firms and municipal bonds. “Without sufficient human resources, the agency will be unable to complete the requirements of Dodd-Frank while maintaining its current activities,” the report says. Staff Pressures The SEC staff, which numbers 3,800, is already showing the strain. A survey by the U.S. Office of Personnel Management, released in late February, says that when employees were asked in 2008 whether they had sufficient resources to do their job, 59 percent said they did. In the new survey, only 44 percent said they had such resources. Henry Hu is one person who got a close-up view of the overworked SEC. In September 2009, Schapiro appointed Hu, a professor of business law at the University of Texas Law School, to head the SEC’s new division of Risk, Strategy and Financial Innovation, known as Risk Fin. Hu, who left the SEC to return to academia in January 2011, gave a December speech on his experience at the Hedge Funds New York conference sponsored by Bloomberg. He described the frenetic pace of work as reminiscent of the famous skit from “I Love Lucy,” in which Lucy and Ethel work on a chocolate candy production line and frantically try to keep up with the conveyor belt. “The SEC is doing the best it can under very challenging conditions,” Hu says. “It was already faced with tight resource limitations and then Congress imposed new rules and studies on top of that without giving any additional money.” Schapiro Too Quiet Arthur Levitt, who led the SEC from 1993 to 2001, the longest run for any SEC chairman, says Schapiro, while smart and accomplished, has been too quiet as support has waned in Congress for stronger regulation. “I wish Mary had had the personality to create the broadest possible public and political engagement as soon as the administration and the Congress began to backtrack almost a year ago,” he says. Adds former SEC Chairman William Donaldson, “It’s just not her style to cry bloody murder.” Levitt sits on the board of Bloomberg Inc., the general partner of Bloomberg LP, parent of Bloomberg News. Brooksley Born, who was chairwoman of the CFTC from 1996 to 1999, sees parallels between Schapiro’s situation and the time she tried to push forward legislation to make over-the-counter derivatives more transparent. She says the effort failed due to pushback from Treasury Secretary Robert Rubin, Federal Reserve Chief Alan Greenspan and Levitt. She thinks gender bias may have played a role then and now. Gender Issues “The financial services industry is male dominated still, and it may be a little easier to discredit a female voice because of that,” she says. Born, now a partner in the Washington office of law firm Arnold & Porter, served last year on the Financial Crisis Inquiry Commission, created by Congress to examine the financial breakdown. If it’s possible to be a born regulator, Mary Schapiro fits the bill. After graduating from Franklin & Marshall with a degree in anthropology, she attended George Washington University law school, where she met her husband, Charles Cadwell, now an attorney at the Urban Institute, a Washington think tank. They have two teenage daughters, Anna and Molly. Schapiro’s first job after law school was as a staff attorney with the CFTC. In 1984, she jumped to the Futures Industry Association, where she worked until President Ronald Reagan made her a commissioner of the SEC in 1988. She was 33. She served until 1994. NASD Head In 1995, President Bill Clinton appointed Schapiro head of the CFTC, a job she held until 1996, when she joined the National Association of Securities Dealers as president. In 2007, she led NASD into a merger with the NYSE’s regulatory arm to form the Financial Industry Regulatory Authority, or Finra, the largest nongovernment securities industry regulator in the country. Schapiro’s total compensation in her final year at Finra added up to $3.26 million. When she left in 2009 to head the SEC, she got a lump sum pension distribution of $7.6 million. At NASD and Finra, Schapiro had a reputation as being soft on enforcement, says Turner, who was chief accountant at the SEC around that time. Fines levied by Finra declined in each of the last three years she was there, from $125.4 million in 2005 to $28 million in 2008, according to Finra data. Turner says her weak enforcement record didn’t hurt her career at all. ‘Smart and Tough’ “It’s probably why the financial industry liked her for the SEC job,” he says. That wasn’t the impression President-elect Obama gave when he nominated her in December 2008. “Mary is known as a regulator who is both smart and tough, so much so that she’s been criticized by the same industry insiders who we need to get tough on,” he told the press on the day she was nominated. When she returned to the SEC after 15 years -- at a government salary of $163,000 -- Schapiro says she saw quickly that the agency was ill-equipped to attack what Obama in his nomination speech called Wall Street’s “culture of greed.” “I was a bit taken aback when I returned by how far we had fallen behind the financial industry’s technology,” she says. The agency, for example, had very limited knowledge of real-time trading action taking place off the exchanges -- a fact that became clear in the May 6, 2010, market plunge. A report later concluded that the incident was caused by the abrupt sale of shares via programmed trades and high-frequency traders. Real-Time Information Schapiro has since moved to create a consolidated audit trail that would give the SEC real-time trading information for both the NYSE and electronic platforms. Schapiro’s other important focus when she took over the SEC was enforcement. She hired Khuzami to take over the biggest division less than two months after Madoff confessed that he’d operated a giant fraud under the SEC’s nose for more than 15 years. Khuzami was brought in to change the culture. “We have retooled the division to make it more targeted, quick, insightful and proactive,” he says. Khuzami also joined hands with the Department of Justice to offer suspects in financial wrongdoing deferred prosecution in return for cooperation. ‘Demoralizing’ “Chairman Cox did a pretty good job of demoralizing parts of the agency, and I think Khuzami has lifted things up,” says James Cox (no relation), professor of corporate and securities law at Duke University. Khuzami also moved to create specialized units within the division, including teams focused on “market abuse” and structured products, which Schapiro says have been highly effective. “We look back on it now and it seems obvious,” Schapiro says. “Rather than having an enforcement attorney work on insider trading one month, then market regulation the next month, let’s help them build expertise in one area, get them tools and training, bring in outside experts. It’s really been quite transformational.” By traditional metrics, the changes are paying off. In 2010, penalties collected by the enforcement division were up $800 million over 2009, while disgorgements -- the surrender of ill-gotten gains -- rose $200 million. And, as Schapiro likes to point out, the SEC is, in effect, a great deal for taxpayers. In 2010, she says, the SEC paid $2 billion in penalties and disgorgements to wronged investors. Two Dollars for One “That’s two dollars for every dollar the agency costs the taxpayer,” she says. Most of that money was collected from institutions such as Bank of America Corp., Citigroup Inc. and Goldman Sachs. As Turner and other critics point out, the commission’s record against individuals involved in the financial crisis is less impressive. In October, the SEC settled a case against Angelo Mozilo, former head of mortgage bank Countrywide Financial Corp., hitting him with $22.5 million in penalties and $45 million in disgorgement for misleading investors as the subprime-mortgage crisis emerged. It turned out that Mozilo had been indemnified by Countrywide, which in July 2008 was bought by Bank of America. The bank will pay more than half of Mozilo’s tab. “There have been attempts over the years to deny similar indemnification rights in our settlements, and those efforts didn’t fare well in the courts,” Khuzami says. “That’s a fact of life we have to live with.” Rattner Case The SEC was also criticized for being too soft on Steven Rattner, former head of the hedge fund Quadrangle Group LLC, who the agency sued over his alleged involvement in a New York scandal in which investors paid middlemen for the chance to manage money for the state pension fund. Rattner settled with the SEC for $3 million in penalties and $3.2 million in disgorgement, without admitting or denying wrongdoing. New York Governor Andrew Cuomo, who was the state’s attorney general at the time, refused to join the settlement, saying the SEC terms were far too lenient. “This is not justice,” he said. Cuomo pressed his own suit against Rattner under New York’s powerful Martin Act and settled for $10 million. The SEC has also had bad luck in the courts. In September 2009, the agency moved in federal court to conclude a case in which Bank of America was accused of failing to disclose to its shareholders bonuses that Merrill Lynch & Co. had agreed to pay to its executives just prior to its purchase by BofA in 2008. ‘Façade of Enforcement’ When the $33 million settlement was presented to Judge Jed Rakoff in U.S. District Court in New York, he rejected the terms, calling it “a contrivance designed to provide a facade of enforcement.” Six months later, the SEC went back to court with a revised $150 million penalty and the judge approved it. In August 2010, a proposed SEC settlement with Citigroup over its failure to disclose its exposure to subprime mortgages was rebuffed by New York U.S. District Judge Ellen Huvelle. The SEC later went back to court, spelling out specific corrective measures Citigroup was taking, and the judge approved the settlement. The public’s appetite to punish the nation’s financial kingpins is based on anger and emotion, Khuzami says. ‘A Nation of Laws’ “But we are a nation of laws, and that often means proving knowledge and intent. Our task is to distinguish that which is illegal from that which resulted from bad judgment or poor investment decisions or faulty risk management,” he says. While taking its licks over its enforcement effort, the agency soldiers on with its attempt to fulfill its Dodd-Frank obligations. The legislation calls for 243 separate sets of new rules and 67 studies, divided among various agencies, including the CFTC, the Federal Reserve and the Federal Deposit Insurance Corp. More of that work falls on the SEC than any other agency, with many of the rules to be completed by mid-July and to take effect in September. The SEC is required to come up with a dozen new rules related to credit-ratings companies alone, reviewing and recommending changes in the firms’ methods for evaluating structured financial instruments and other arcane products of the investment banking industry. Each rule is opened for public comment, then undergoes multiple revisions before being voted on by the commission. Derivatives Challenge Schapiro says the agency’s most daunting task is to write new rules governing derivatives -- financial instruments such as futures contracts and credit-default swaps whose value is derived from that of an underlying commodity or security. Dodd- Frank requires that many derivatives previously traded privately, or over the counter, be placed on exchanges and regulated like other securities. “It’s the biggest challenge,” Schapiro says. “It’s a massive undertaking, where you are really creating a whole new regulatory regime from a blank slate.” The SEC currently has about 75 people working on the new derivatives rules, and Schapiro expects to have about 10 finalized by the end of 2011. “As challenging as the rule-writing phase has been, I think it will pale in comparison to the implementation challenges -- both to the agencies and the regulated entities,” says Annette Nazareth, a former SEC commissioner who departed a year before Schapiro arrived. Whistleblower Conundrum One new Dodd-Frank creation, the whistleblower program, is already in effect. Informants who blow the whistle on wrongdoing in their financial firms are entitled to 10 to 30 percent of the amount recovered. While the law went into effect in July 2010, the SEC’s poverty has prevented the agency from staffing the office. Schapiro named a coordinator only in February, and he will rely on existing SEC staff. Former SEC Chairman Pitt worries that the SEC will be overwhelmed with tips from employees of financial companies trying to collect multimillion-dollar government rewards. (A whistleblower in the $550 million Goldman Sachs case could have collected as much as $165 million.) “Somebody has to separate the wheat from the chaff,” he says. “Somewhere, somebody has to step back and say, ‘We’re piling all these responsibilities on, creating all these new provisions, but how do we expect the agency to cope?’” Four Deadlines Missed While the budget battle rages, the SEC struggles. It has already missed four rule-related deadlines and is also late on two studies. Schapiro is busy seven days a week. “I work on weekends, but from home,” she says. That’s an improvement over her first year as chairman, when, she says, “I got home for dinner no more than six or seven times.” Now she spends more time with her family. She says that when CFTC Chairman Gary Gensler came to her office for a derivatives-related meeting on his birthday, Schapiro and her daughters baked cupcakes for him. The relentless pace of work is taking a toll on the SEC staff. Barbara Roper, director of investor protection at the Consumer Federation of America, who makes frequent visits to SEC headquarters, sees troubling signs. “They are working under enormously challenging conditions,” she says. “You go over there and the people look exhausted.” As the deadlines arrive for dozens of additional Dodd-Frank provisions, the staff will lose more sleep. If help doesn’t arrive soon, Schapiro says, investors could wind up losing something more precious: fair and honest markets. www.bloomberg.com/news/2011-03-31/schapiro-sec-seen-ineffectual-amid-dodd-frank-funding-curbs.html
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Post by sandi66 on Apr 1, 2011 6:22:52 GMT -5
YUAN to RISE, Conflicts ON GLOBAL REBALANCING CENTRAL GOAL OF G-20!! April 1, 2011 Due to the recent move of the G-20 by placing a central goal of “global rebalancing” which leads to trade –deficit and as a result countries like US saves more and import less as recently Obama has also introduced the agenda of cutting down the oil imports, whereas the countries like China imports more and saves less. This global rebalancing move in practice has become the central forum for pressuring China to lets its currency appreciate faster. On April 1st at NANJING, China—Top officials at a meeting of the world’s major developed and emerging economies offered starkly different views on exchange rates and other elements of the international monetary system, underlining the challenges facing efforts to find a new global financial architecture. While the Participants at the meeting voiced agreement that “the International Monetary Fund’s role should be larger, that capital controls can be useful in some circumstances, and that China’s currency should eventually be included in the IMF’s special drawing rights, or SDRs, a synthetic currency some see as an alternative to the dollar”. And since no specific G-20 proposals were debated at the session. The officials, including French President Nicolas Sarkozy and Chinese central bank Gov. Zhou Xiaochuan, differed widely on the means and the speed for achieving those goals, and on which elements of the global financial system most need change. And while the rebalcning of G-20 is still under conflicts, the claim of new monetary system “We’ll fix the money system!” Does stand to answer that as unlikely as it is the Chinese will allow the Yuan to float in the near future, it is even more unlikely that the US government will balance its budget. As these two problems must feed off of each other, they must end at the same time to prevent an imbalance. www.newsi.es/yuan-to-rise-conflicts-on-global-rebalancing-central-goal-of-g-20/884012/
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Post by sandi66 on Apr 2, 2011 11:57:21 GMT -5
Preview: The Next Housing Shock April 1, 2011 8:38 AM As more and more Americans face mortgage foreclosure, banks' crucial ownership documents for the properties are often unclear and are sometimes even bogus, a condition that's causing lawsuits and hampering an already weak housing market. Scott Pelley reports, Sunday, April 3, 7 p.m. ET/PT. Folks, For those of you who care about your homes and your fellow friends and neighbors, please share this link and watch 60 minutes this weekend. You are going to see the new future of America' housing. Don't know about you, but the fight is on and is getting hotter out there. People are not going to take it anymore. Enough is enough by letting the conman and the criminals getting away with murder on the innocent of people. The majority of people are very nice and naive when it comes to finances and their homes. We had lived in a society ruled by the banksters for over hundreds of years. I hardly ever seen or heard finances taught at schools in the U.S. Most kids graduate from Hi-school without even knowing how to balance a check book. I had spoken with recent grads and even college students about finances and they admitted no knowing much what I was talking about. For the last 20 years with computer games and the internet and now face book, our new generation still doesn't know anything about banking, about loans, and even how to purchase a home. Unfortunately, they only know how to go to school, get good grades, get a diploma, get a job, get a girlfriend, get married, have kids, get a house by having good credit, then face reality that they have a responsibility for the rest of their lives, to find out like we did, we had been scammed, taken advantage by the wise conman of the American Society pointing his finger at you and saying "I want you". I also noticed that we live in a society where many people don't care. They think this is a problem for the deadbeats that got a home that could not afford and this is why the banks are taking their homes. They know so little or nothing about MERS, Securitization, and Wall St. Almost 100% of the people never read or understand their loan documents. They don't even know they have MERS in their notes or in their Deed of Trust. The fact is that the lenders lied to all of us by no disclosing material facts in the loan documents. They broke the most essential rules of TILA and RESPA. Millions of people don't even bother to check with the county records the chain of title to find out who recorded their notes. I experienced many clients that are paying their mortgage to a party that they don't owe them the debt. Imagine for minute, billions of dollars going to a party that you don't owe them a dime. Imagine millions of homeowners paying their mortgage to a servicer just because they received a notice in the mail to send the mortgage payment to a P.O. Box somewhere in America. Now imagine you paid your mortgage off and when you expect to get the Deed of reconveyance, you get a note saying they do not have the deed because they don't know who the investor of your mortgage loan is. And you thought all along that you own your home free and clear, Ha! Now the question is, what are you going to do about it? Do you have any money left to hire an Attorney? Do you know what to do and where to go for help? Do you think the Government would care and will help you? How about the Feds, the Banks, the Government Agencies, or maybe the fellow man next door? Good luck with that. I lived in America for over 30 years and I hardly see anyone who knows their neighbor. Yes, you may talk to few people now and then, but do you really know your neighbor? Good luck with that and God Bless You! Reply to this comment .by chitown2020 April 2, 2011 11:53 AM EDT These crimes were committed and are hidden in the THE ORIGINATION FRAUD. All of these crimes are FEDERAL CRIMES prosecutable under the RICO ACT. Deceptive practice in the LIARS LOANS, and the way the loans were structured but they also committed securities fraud and bundled up good and bad loans and sold them as AAA when they knew WE WOULD ALL FAIL when the defaults came and the HOUSING BUBBLE BURST. THAT IS WHEN THEY ROBBED THE AMERICAN PEOPLE BLIND. Hiding behind the scenes of Fraudclosures, U.N. BLACK OPS AKA THE NEW WORLD ORDER. They hold all land in America in fee simple because of treasonists inside of the halls of CONgress and inside of our own Government structure. You may look on any fraudclosure complaint which states: Interest subject to the mortgage: fee simple. The U.N. used American treasonists as perps to commit the crime of the century. RESCIND OUR LOANS.WE WERE ROBBED. Reply to this comment .by chitown2020 April 2, 2011 11:31 AM EDT The robo-signing scandal is alot bigger than the mainstream media ever made it out to be. This is all the direct result of the biggest Ponzi Scheme robbery of our wealth in history. This scandal is a/k/a FORECLOUSREGATE. The whole Government is corrupted and trying to cover up the truth. We The People were intentionally set up to fail, defrauded and robbed on a massive scale by none other than the GSE's FANNIE/FREDDIE.The banksters and Wall Street aided and abetted in these crimes against the American People. By FANNIE/FREDDIE investing in these loans that caused an UNCONSTITUTIONAL CONFLICT OF INTEREST and the banks/servicers/attorneys fraudclosing DO NOT OWN these loans.THE GSE's FANNIE/FREDDIE are hiding behind them becuae they KNOW THEY BROKE THE LAW. THE JUDGES, CONGRESS, POLICEMANS and FIREMANS PENSIONS ARE ALSO ALL FULLY INVESTED IN THE FRAUDULENT MBS's. This is why there is no justice for WE THE PEOPLE. This Ponzi Scheme was hatched in the backrooms of CONgress by TREASONISTS. RESCIND OUR LOANS, GIVE THE STOLEN HOMES BACK TO THE PEOPLE AS WELL AS OUR STOLEN WEALTH. Reply to this comment .by GuyFawkes134 April 2, 2011 1:25 AM EDT I personally have found over 300 documents that are bogus and fraudulent in the King County Recording office. I have turned them over to KOMO 4, no news report on them. I have turned them over to our Attorney General, we get a paltry term sheet out of the investigation so far. The homeowners are the ones who have been screaming until our faces are turning blue...all the while every single government agency has been trying to sweep this under the rug. The pile of crap that sits underneath that rug is getting so big that now people are tripping and falling and it won't be contained. It has taken us homeowners three F***ing years for some news agency to have the guts to really report this. Thank you CBS. Reply to this comment .by DisgustedinCFL April 1, 2011 6:16 PM EDT Judges, Defense Attorneys, ProSe Homeowners..... have uncovered thousands of these fraudulent docs. Everyone knows which banks and which firms are commiting these FELONIES yet not one person has been been even charged with a CRIME, much less been punished. The FL Atty General has investigated... Her answer was to have one guilty party (attorney Marshall Watson)write a paper swearing he would never do it again and that he would abide (from now on) to rules he should have been doing in the first place. He got caught FORGING documents and CAUSED people to wrongfully lose their homes. Yes he had to pay a small fine relative to the money he has earned through his illegal enterprise but the FL Atty Gen'l acts like he got caught chewing gum in class. Reply to this comment .by Resin-Smoker April 1, 2011 1:49 PM EDT Sounds like the bank CEO's need to be held directly accountable with jail time... Until those in power are held accountable things will not improve. www.cbsnews.com/video/watch/?id=7361457n&tag=contentMain;contentBodyty SYGY
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Post by sandi66 on Apr 3, 2011 3:05:19 GMT -5
63 Documents the Government doesn't want you to read April 1, 2011 Pro wrestler turned politician, Jesse “The Body” Ventura, will be on the east and west coasts signing copies of “63 Documents the Government Doesn’t Want You To Read.” The book is co-authored with activist, environmentalist and author Dick Russell. The pair have collaborated on two other bestselling books — “Don’t Start the Revolution Without Me!” and “American Conspiracies.” Ventura is the former governor of the state of Minnesota and the host of the television show “Conspiracy Theory with Jesse Ventura” on truTV. Russell is also the author of “On the Trail of the JFK Assassins” and “The Man Who Knew Too Much.” Ventura and Russell’s “63 Documents the Government Doesn’t Want You To Read,” will be released by Skyhorse Publishing on April 4, 2011. You can pre-order your copy on Amazon today. Signing Tour 4/4/11 7:00 PM at Borders Books – Columbus Circle. New York, NY. 4/5/11 7:00 PM at BookEnds – East Ridgewood Avenue. Ridgewood, NJ. 4/6/11 7:00 PM at Barnes & Noble – Union Turnpike. Fresh Meadows, NY. 4/7/11 7:00 PM at Barnes & Noble – Route 3 East. Clifton, NJ. 4/11/11 7:00 PM at Barnes & Noble – 3rd Street. Santa Monica, CA. 4/13/11 7:00 PM at Borders Books – Torrance Blvd. Torrance, CA. 4/15/11 7:00 PM at Book Soup – Sunset Blvd. West Hollywood, CA. About the book: There’s the Freedom of Information Act, and then there’s Ventura’s way. The official spin on numerous government programs is flat-out bullshit, according to Jesse Ventura. In this incredible collection of actual government documents, Ventura, the ultimate non-partisan truth-seeker, proves it beyond any doubt. He and Dick Russell walk readers through 63 of the most incriminating programs to reveal what really happens behind the closed doors. In addition to providing original government data, Ventura discusses what it really means and how regular Americans can stop criminal behavior at the top levels of government and in the media. Among the cases discussed: • The CIA’s top-secret program to control human behavior • Operation Northwoods—the military plan to hijack airplanes and blame it on Cuban terrorists • The discovery of a secret Afghan archive—information that never left the boardroom • Potentially deadly healthcare cover-ups, including a dengue fever outbreak • What the Department of Defense knows about our food supply—but is keeping mum Although these documents are now in the public domain, the powers that be would just as soon they stay under wraps. Ventura’s research and commentary sheds new light on what they’re not telling you—and why it matters. Pre-order the Book from Amazon.com www.cmn.tv/books/63-documents-the-government-doesnt-want-you-to-read/
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Post by sandi66 on Apr 3, 2011 9:46:30 GMT -5
How Far Are We From a Gold Standard? | by: Soner Kistak April 03, 2011 According to The Concise Encyclopedia of Economics, the notion of a gold standard can be defined as: A commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold... National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price. A country under the gold standard would set a price for gold and would buy and sell gold at that price. This effectively sets a value for the currency. The "gold standard" executions might either be done fully or partially. For example, the Swiss franc was based on a partial 40% legal gold-reserve requirement between 1936 and 2000. On the separate subject of monetary supply, there are many terms to define and measure the money supply. While there are conflicting opinions as to their usefulness, many of us come across terms such as M1, M2, M3 etc. Despite running into the risk of oversimplifying and being wrong, one can simplistically explain these terms as follows. The most restrictive, M1, only measures the most liquid forms of money; it is limited to currency actually in the hands of the public. This includes checking accounts travelers checks, and other deposits against which checks can be written. M2 includes all of M1, plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds. Equally importantly, M3 includes all of M2 (which includes M1) plus large-denomination ($100,000 or more) time deposits, balances in institutional money funds, repurchase liabilities issued by depository institutions, and eurodollars held by U.S. residents at foreign branches of U.S. banks and at all banks in the United Kingdom and Canada. It can be clearly seen that M3 is the broader measure than M1. For some reason (which I do not fully understand), US monetary authorities have been giving less importance to the tracking of M3 in recent years. However, in my opinion, M3 is a broad and comprehensive measure that gives a holistic sense of the overall money supply. Having said this, it is important to note that the M3 measure is not easily available for every economy; often times, it is estimated by private rather than public institutions. In the context of a gold standard and money supply, it might be interesting to assess the current situation. Obviously, taking the ratio of money supply to available gold reserves can give us a feeling of how far we are from a theoretical gold standard.To be fair, at this juncture it is important to note that the world is now a much different place than it was thirty years ago. A couple of important things happened in the last thirty years: Since the beginning of the 2000s, many countries, such as the UK and Switzerland, have sold some of their gold holdings, quoting "the intrinsic laziness of gold". For this reason, UK gold reserves are currently much lower than the European reserves. With the financial revolution and innovation in the Thatcher and Reagan years, money supply has substantially multiplied. Having covered enough of the historical developments and concepts, we can now make some observations on the current situation: As can be seen from the below table, the US currently holds around 261 million ounces of gold. The country's money supply (M3) to gold reserves ratio is around 28. This is significantly more than the 1980 ratio of around 8. A similar ratio is observed for eurozone countries. The ratio in their case is around 27. Switzerland seems to be the country with the most favourable money supply to gold reserves ratio. Its ratio approximately stands at 17. This perhaps explains the present acceptance of the Swiss franc as a safe and reliable currency. With regards to the Asian countries: Despite their huge dollar reserves, China and Japan lag behind their Western counterparts in gold reserve holdings. As the holder of some 2.8 trillion dollars of reserve, China could well diversify its reserves into gold, strengthening the backing of its money supply with gold. In sum, the current situation clearly shows that having a strict gold standard is no longer feasible. Given the huge increase in the money supply over recent decades, globally available gold would not be sufficient enough to have a full gold standard execution. Instead, a partial gold standard execution - coupled with strict fiscal and monetary policies - could re-establish the credibility of fiat currencies which were negatively impacted by the 2008 financial meltdown. seekingalpha.com/article/261527-how-far-are-we-from-a-gold-standard
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Post by sandi66 on Apr 3, 2011 10:27:32 GMT -5
Shutdown would be tricky for IRS, commissioner says By Bernie Becker - 03/31/11 12:28 PM ET The head of the IRS said Thursday that a government shutdown during tax season would be a challenge the agency has never confronted before — and one that would become more complicated as the April filing deadline draws closer. Doug Shulman, the IRS commissioner, also signaled at a House Ways and Means subcommittee hearing that his agency was discussing how to address a potential shutdown with the Obama administration, though he did not spell out any details of those talks. “We run a $13 billion financial services operation, so the idea of stopping it for a few days or a few weeks is strange,” Shulman said, adding that he was hopeful, based on ongoing negotiations, that a shutdown could be averted. “Our old plan was: We deposited checks, we didn’t process returns. That was a plan that was built in ’95 when there wasn’t so much electronic filing, and now we’re closely looking at it,” he added. The deadline to file taxes this year is April 18, and the federal government is currently funded through April 8. The government shutdowns during the Clinton administration occurred in fall and winter months. During his time before the Ways and Means oversight subpanel, Shulman waded even deeper into the discussion of the federal budget, declaring that cuts the House passed for this fiscal year would have “potentially devastating effects” on the agency and defending the increased funding for the agency requested in President Obama’s fiscal 2012 budget. Shulman indicated the budget increase for 2012 would more than pay for itself, in part because of a modernizations that would lead to faster processing of tax forms. As for this year’s funding levels, the House cuts, approved in February, would reduce the IRS budget by roughly $600 million from fiscal 2010 enacted levels — which Shulman said would result in the loss of $4 billion worth of tax revenue, due to decreased collection. The IRS budget for fiscal 2010 was more than $12 billion. Under questioning from Rep. Xavier Becerra (D-Calif.), Shulman added that enforcement would probably take the biggest hit under the cuts, but that services throughout the agency would take a hit. “Those are just big, big cuts that would have to be jammed into a six-month window. So we'd have to have across-the-board cuts," the commissioner said, raising the specter of having to furlough employees for long stretches. Shulman also indicated that he wanted Congress to hammer out funding levels for the rest of the fiscal year, signaling that dealing with a series of short-term spending measures for this fiscal year had placed added stress on the agency. He also called the current tax code too complex, reiterating that he traditionally uses a paid preparer to file his taxes. Lawmakers on both sides of the aisle have called for tax reform. Top tax writers in both the House and the Senate have signaled their interest in the issue, as has the Obama administration. “The vast majority of my employees’ time and resources is spent trying to serve the American people and help them wade through tax complexity,” Shulman said, adding: “Anything you can do to simplify the code certainly helps our agency. thehill.com/blogs/on-the-money/domestic-taxes/153055-irs-commissioner-government-shutdown-during-tax-season-would-be-new-ground
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Post by sandi66 on Apr 3, 2011 10:47:05 GMT -5
23 members of Congress receive farm subsidies Sun Apr 3, 2011 3:38PM Whether it's $30 billion, $60 billion or $100 billion, slashing the federal budget means cutting back on a lot of programs. But farm subsidies are not facing the axe, and having nearly two dozen lawmakers receiving such financial support may have something to do with it. The Environmental Working Group has determined that at least 23 representatives and senators, or their family members, applied for farm subsidy payments between 1995 and 2009. Seventeen were Republicans and six belonged to the Democratic Party, with the GOP taking in more than $5.3 million, compared to only $489,856 for Democrats. The biggest beneficiaries of farm subsidies in the current Congress have been: Rep. Stephen Fincher (R-Tennessee) $3,368,843 Rep. Vicky Hartzler (R-Missouri) $469,292 Rep. Kristi Noem (R-South Dakota) $443,748 Sen. John Tester (D-Montana) $442,303 Rep. Tom Latham (R-Iowa) $330,046 Fincher, Hartzler, Noem and Tester are all first-term members of Congress. Five crops -- corn, cotton, rice, wheat and soybeans -- account for 90% of the government's farm subsidies and 74% of subsidies go to the top 10% of farms. According to the Department of Agriculture, 62% of U.S. farmers don't receive any direct federal payments. www.presstv.ir/usdetail/172894.html
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Post by sandi66 on Apr 3, 2011 11:00:36 GMT -5
Is this the first ever portrait of Jesus? The incredible story of 70 ancient books hidden in a cave for nearly 2,000 yearsBy Nick Pryer Last updated at 12:15 PM on 3rd April 2011 Comments (218) Add to My Stories The image is eerily familiar: a bearded young man with flowing curly hair. After lying for nearly 2,000 years hidden in a cave in the Holy Land, the fine detail is difficult to determine. But in a certain light it is not difficult to interpret the marks around the figure’s brow as a crown of thorns. The extraordinary picture of one of the recently discovered hoard of up to 70 lead codices – booklets – found in a cave in the hills overlooking the Sea of Galilee is one reason Bible historians are clamouring to get their hands on the ancient artefacts. If genuine, this could be the first-ever portrait of Jesus Christ, possibly even created in the lifetime of those who knew him. Discovery: The impression on this booklet cover shows what could be the earliest image of Christ The tiny booklet, a little smaller than a modern credit card, is sealed on all sides and has a three-dimensional representation of a human head on both the front and the back. One appears to have a beard and the other is without. Even the maker’s fingerprint can be seen in the lead impression. Beneath both figures is a line of as-yet undeciphered text in an ancient Hebrew script. Astonishingly, one of the booklets appears to bear the words ‘Saviour of Israel’ – one of the few phrases so far translated. The owner of the cache is Bedouin trucker Hassan Saida who lives in the Arab village of Umm al-Ghanim, Shibli. He has refused to sell the booklets but two samples were sent to England and Switzerland for testing. A Mail on Sunday investigation has revealed that the artefacts were originally found in a cave in the village of Saham in Jordan, close to where Israel, Jordan and Syria’s Golan Heights converge – and within three miles of the Israeli spa and hot springs of Hamat Gader, a religious site for thousands of years. Precious: This booklet shows what scholars believe to be the map of Christian Jerusalem According to sources in Saham, they were discovered five years ago after a flash flood scoured away the dusty mountain soil to reveal what looked like a large capstone. When this was levered aside, a cave was discovered with a large number of small niches set into the walls. Each of these niches contained a booklet. There were also other objects, including some metal plates and rolled lead scrolls. The area is renowned as an age-old refuge for ancient Jews fleeing the bloody aftermath of a series of revolts against the Roman empire in the First and early Second Century AD. The cave is less than 100 miles from Qumran, where the Dead Sea Scrolls were discovered, and around 60 miles from Masada, scene of the last stand and mass suicide of an extremist Zealot sect in the face of a Roman Army siege in 72AD – two years after the destruction of the Second Temple in Jerusalem. It is also close to caves that have been used as sanctuaries by refugees from the Bar Kokhba revolt, the third and final Jewish revolt against the Roman Empire in 132AD. The era is of critical importance to Biblical scholars because it encompasses the political, social and religious upheavals that led to the split between Judaism and Christianity. It ended with the triumph of Christianity over its rivals as the dominant new religion first for dissident Jews and then for Gentiles. In this context, it is important that while the Dead Sea Scrolls are rolled pieces of parchment or papyrus containing the earliest-known versions of books of the Hebrew Bible and other texts – the traditional Jewish format for written work – these lead discoveries are in book, or codex, form which has long been associated with the rise of Christianity. The codices seen by The Mail on Sunday range in size from smaller than 3in x 2in to around 10in x 8in. They each contain an average of eight or nine pages and appear to be cast, rather than inscribed, with images on both sides and bound with lead-ring bindings. Many of them were severely corroded when they were first discovered, although it has been possible to open them with care. The codex showing what may be the face of Christ is not thought to have been opened yet. Some codices show signs of having been buried – although this could simply be the detritus resulting from lying in a cave for hundreds of years. Unlike the Dead Sea Scrolls, the lead codices appear to consist of stylised pictures, rather than text, with a relatively small amount of script that appears to be in a Phoenician language, although the exact dialect is yet to be identified. At the time these codices were created, the Holy Land was populated by different sects, including Essenes, Samaritans, Pharisees, Sadducees, Dositheans and Nazoreans. One lucky owner: Hassan Saida with some of the artefacts that he says he inherited There was no common script and considerable intermingling of language and writing systems between groups. Which means it could take years of detailed scholarship to accurately interpret the codices. Many of the books are sealed on all sides with metal rings, suggesting they were not intended to be opened. This could be because they contained holy words which should never be read. For example, the early Jews fiercely protected the sacred name of God, which was only ever uttered by The High Priest in the Temple in Jerusalem at Yom Kippur. The original pronunciation has been lost, but has been transcribed into Roman letters as YHWH – known as the Tetragrammaton – and is usually translated either as Yahweh or Jehovah. A sealed book containing sacred information was mentioned in the biblical Book of Revelations. If genuine, it seems clear that these books were, in fact, created by an early Messianic Jewish sect, perhaps closely allied to the early Christian church and that these images represent Christ himself. One plate has been interpreted as a schematic map of Christian Jerusalem showing the Roman crosses outside the city walls. At the top can be seen a ladder-type shape. This is thought to be a balustrade mentioned in a biblical description of the Temple in Jerusalem. Below that are three groups of brickwork, to represent the walls of the city. A fruiting palm tree suggests the House of David and there are three or four shapes that appear to be horizontal lines intersected by short vertical lines from below. These are the T-shaped crosses believed to have been used in biblical times (the familiar crucifix shape is said to date from the 4th Century). The star shapes in a long line represent the House of Jesse – and then the pattern is repeated. This interpretation of the books as proto-Christian artefacts is supported by Margaret Barker, former president of the Society for Old Testament Study and one of Britain’s leading experts on early Christianity. The fact that a figure is portrayed would appear to rule out these codices being connected to mainstream Judaism of the time, where portrayal of lifelike figures was strictly forbidden because it was considered idolatry. If genuine, it seems clear that these books were, in fact, created by an early Messianic Jewish sect, perhaps closely allied to the early Christian church and that these images represent Christ himself. However another theory, put forward by Robert Feather – an authority on The Dead Sea Scrolls and author of The Mystery Of The Copper Scroll Of Qumran – is that these books are connected to the Bar Kokhba Revolt of 132-136AD, the third major rebellion by the Jews of Judea Province and the last of the Jewish-Roman Wars. The revolt established an independent state of Israel over parts of Judea for two years before the Roman army finally crushed it, with the result that all Jews, including the early Christians, were barred from Jerusalem. Wonder: The cave in Jordan where the metal books were discovered The followers of Simon Bar Kokhba, the commander of the revolt, acclaimed him as a Messiah, a heroic figure who could restore Israel. Although Jewish Christians hailed Jesus as the Messiah and did not support Bar Kokhba, they were barred from Jerusalem along with the rest of the Jews. The war and its aftermath helped differentiate Christianity as a religion distinct from Judaism. The spiritual leader of the revolt was Rabbi Shimon Bar Yochai, who laid the foundations for a mystical form of Judaism known today as Kabbalah, which is followed by Madonna, Britney Spears and others. Yochai hid in a cave for 13 years and wrote a secret commentary on the Bible, the Zohar, which evolved into the teaching of Kabbalah. Feather is convinced that some of the text on the codices carry the name of Rabbi Bar Yochai. Feather says that all known codices prior to around 400AD were made of parchment and that cast lead is unknown. They were clearly designed to exist for ever and never to be opened. The use of metal as a writing material at this time is well documented – however the text was always inscribed, not cast. The books are currently in the possession of Hassan Saida, in Umm al-Ghanim, Shibli, which is at the foot of Mount Tabor, 18 miles west of the Sea of Galilee. Saida owns and operates a haulage business consisting of at least nine large flatbed lorries. He is regarded in his village as a wealthy man. His grandfather settled there more than 50 years ago and his mother and four brothers still live there. Saida, who is in his mid-30s and married with five or six children, claims he inherited the booklets from his grandfather. However, The Mail on Sunday has learned of claims that they first came to light five years ago when his Bedouin business partner met a villager in Jordan who said he had some ancient artefacts to sell. The business partner was apparently shown two very small metal books. He brought them back over the border to Israel and Saida became entranced by them, coming to believe they had magical properties and that it was his fate to collect as many as he could. The arid, mountainous area where they were found is both militarily sensitive and agriculturally poor. The local people have for generations supplemented their income by hoarding and selling archeological artefacts found in caves. More of the booklets were clandestinely smuggled across the border by drivers working for Saida – the smaller ones were typically worn openly as charms hanging from chains around the drivers’ necks, the larger concealed behind car and lorry dashboards. In order to finance the purchase of booklets from the Jordanians who had initially discovered them, Saida allegedly went into partnership with a number of other people – including his lawyer from Haifa, Israel. Saida’s motives are complex. He constantly studies the booklets, but does not take particularly good care of them, opening some and coating them in olive oil in order to ‘preserve’ them. Masterpiece: Later versions of Christ, including Leonardo Da Vinci's interpretation in his fresco The Last Supper, give Jesus similar characteristics The artefacts have been seen by multi-millionaire collectors of antiquities in both Israel and Europe – and Saida has been offered tens of millions of pounds for just a few of them, but has declined to sell any. When he first obtained the booklets, he had no idea what they were or even if they were genuine. He contacted Sotheby’s in London in 2007 in an attempt to find an expert opinion, but the famous auction house declined to handle them because their provenance was not known. Soon afterwards, the British author and journalist Nick Fielding was approached by a Palestinian woman who was concerned that the booklets would be sold on the black market. Fielding was asked to approach the British Museum, the Fitzwilliam Museum in Cambridge and other places. Fielding travelled to Israel and obtained a letter from the Israeli Antiquities Authority saying it had no objection to their being taken abroad for analysis. It appears the IAA believed the booklets were forgeries on the basis that nothing like them had been discovered before. None of the museums wanted to get involved, again because of concerns over provenance. Fielding was then asked to approach experts to find out what they were and if they were genuine. David Feather, who is a metallurgist as well as an expert on the Dead Sea Scrolls, recommended submitting the samples for metal analysis at Oxford University. The work was carried out by Dr Peter Northover, head of the Materials Science-based Archaeology Group and a world expert on the analysis of ancient metal materials. The samples were then sent to the Swiss National Materials Laboratory at Dubendorf, Switzerland. The results show they were consistent with ancient (Roman) period lead production and that the metal was smelted from ore that originated in the Mediterranean. Dr Northover also said that corrosion on the books was unlikely to be modern. Meanwhile, the politics surrounding the provenance of the books is intensifying. Most professional scholars are cautious pending further research and point to the ongoing forgery trial in Israel over the ancient limestone ossuary purporting to have housed the bones of James, brother of Jesus. The Israeli archeological establishment has sought to defuse problems of provenance by casting doubt on the authenticity of the codices, but Jordan says it will ‘exert all efforts at every level’ to get the relics repatriated. The debate over whether these booklets are genuine and, if so, whether they represent the first known artefacts of the early Christian church or the first stirrings of mystical Kabbalah will undoubtedly rage for years to come. The director of Jordan’s Department of Antiquities, Ziad al-Saad, has few doubts. He believes they may indeed have been made by followers of Jesus in the few decades immediately following his crucifixion. ‘They will really match, and perhaps be more significant than, the Dead Sea Scrolls,’ he says. ‘The initial information is very encouraging and it seems that we are looking at a very important and significant discovery – maybe the most important discovery in the history of archaeology.’ If he is right, then we really may be gazing at the face of Jesus Christ. www.dailymail.co.uk/news/article-1372741/Hidden-cave-First-portrait-Jesus-1-70-ancient-books.html
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Post by sandi66 on Apr 3, 2011 15:32:41 GMT -5
Israeli pres. heads to Washington to meet Obama Sun Apr 3, 2011 6:38PM Share | Email | Print Israeli President Shimon Peres is heading to the United States to hold talks with U.S. President Barack Obama on regional developments. Peres, who holds a largely ceremonial position, is reportedly hoping to further ease the often tense relations between Obama and Israeli Prime Minister Benjamin Netanyahu. Washington has failed to coax Israel into imposing a freeze on illegal Israeli settlements and Palestinians have refused to hold talks while Israel builds on their lands. HIGHLIGHTS Peres will meet Obama on Tuesday for talks, which the White House said is planned to focus on U.S.-Israeli security cooperation, the recent uprisings in the Middle East and the ongoing Israeli-Palestinian standoff. He is also set to hold meetings with Vice President Joe Biden and Congressional leaders. He is also to meet U.S. Secretary of State Hillary Clinton on Monday, his office said. AFP FACTS & FIGURES The U.S. has almost vetoed all United Nations Security Council resolutions critical of Israel. Since 1982, the U.S. has vetoed 33 UN Security Council resolutions that were critical of Israel. Antiwar Earlier, the U.S. had offered Israel 20 F-35 fighter planes in exchange for a 90-day West Bank building moratorium. An offer Israel rejected. Israel receives about $3 billion from the U.S. in direct foreign assistance each year, which is roughly one-fifth of America's foreign aid budget. ifamericansknew.org The U.S. has been equipping Israel with the most advanced weapons. Israel has received more U.S. military assistance than any other country in the world. The United States gives Israel access to intelligence that it denies its NATO allies and has turned a blind eye towards Israel's acquisition of nuclear weapons. Guardian The U.S. House and Senate Appropriations Committees approved Obama's request for another $3 billion in military aid to Israel in the 2011 budget. There are more than 50 U.S.-based lobbying groups that support Israeli policies in the United States in various ways. The American Israel Public Affairs Committee (AIPAC) advocates for pro-Israel policies to the Congress and Executive Branch of the U.S. www.presstv.ir/usdetail/172922.html
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Post by sandi66 on Apr 5, 2011 12:31:06 GMT -5
www.vanityfair.com/online/daily/2011/03/william-d-cohan-on-goldman-sachs-how-secret-merger-talks-with-mellon-bank-led-to-jon-corzines-demise.html William D. Cohan on Goldman Sachs: How Secret Merger Talks with Mellon Bank Led to Jon Corzine's Demise by Vanity Fair March 31, 2011, 12:01 AM Photograph from AP Images. In an excerpt from his upcoming book, Vanity Fair contributing editor William D. Cohan explains how Jon Corzine and Henry Paulson’s reign at Goldman Sachs was an unmitigated disaster. He reveals here for the first time that in 1998 Corzine initiated talks about a merger with Frank Cahouet, C.E.O. of Mellon Bank, without informing Paulson or the Goldman Management Committee, a “major political misstep” that Paulson used to his advantage. “Goldman’s Alpha War” begins with the chaos left in the wake of chairman Stephen Friedman’s 1994 retirement during a period of tremendous losses for the firm. Friedman admits that Corzine and Paulson—two men with similar rural-Illinois upbringings and drastically conflicting temperaments—became senior partners by default. “There was no one, or virtually no one, other than Corzine or Paulson who would have had any votes for the job from someone other than themselves or from someone other than their best crony,” he says. “What you could safely say is, there would have been no broad support for anyone other than those two, and Corzine was accepted by most people as a part of the solution. Remarkably, though, even by people who felt that way, it was ‘But you have to have someone strong paired with him.’ I recollect no one other than Corzine being comfortable with Corzine alone. And most people thought Hank was the strongest one to be partnered with him.” Paulson tells Cohan he didn’t focus on their differences at first. “When you’re boiling in oil, in the middle of a crisis, the challenges are so consuming there is no time for anything else,” he says. But as business improved and an I.P.O. loomed, Corzine’s desire to expand the firm irritated Paulson. “Jon wanted to do business in every country, everywhere, and wanted to be big,” one partner says. “He was like the guy going through a cafeteria, and he wanted to take everything and put it on his tray. That concerned people.” “The differences between Corzine and me became huge,” Paulson tells Cohan. “I was tired of bumping my head against a wall.” Cohan reports that Paulson was thinking of leaving when he discovered that Corzine was being evasive about his talks with Mellon. “Corzine told Paulson about the meeting, that it was ‘very preliminary’ but that it ‘made a lot of sense,’ and that he thought he and Cahouet would be co-C.E.O.’s and Paulson would have the ‘much bigger role’ of being head of the combined firms’ commercial- and investment-banking businesses,” Cohan writes. It was Corzine protégé Chris Flowers who gave Paulson the details of the conversations. “Chris had explained to me that my stock would be worth $850 million after we got done [with the merger],” Paulson recalls. “I remember they thought that would really do the trick [of getting me to go along with the deal].” Paulson told Corzine he wanted to come along to the next meeting with Cahouet, but Corzine insisted “he was merely going to listen and take notes,” Cohan writes. When Paulson asked what had transpired at the second meeting, Corzine said: “I just listened. I didn’t get into any details.” Paulson summoned Flowers to a Sunday meeting and got a different report: “Flowers explained that Corzine had made a merger proposal to Cahouet, including specifics on the economics of the deal, the exchange ratio, and who would be leading which business units,” Cohan writes. When the Management Committee asked Corzine about his conversations with Cahouet at a meeting the next morning, he didn’t respond. “He gave a limp leg and basically said nothing,” one partner who was there recalls. Paulson called Flowers into the room to provide the details Corzine was hiding. “Jon got so mad and angry, he ran out of the Management Committee and into his office,” the partner says. “Corzine’s allies on the committee got angry with Paulson,” Cohan reports. “One person said, ‘You guys shouldn’t have done that. You’ve embarrassed him and now what if he quits or something?’” someone who was there tells Cohan. “The majority of the Management Committee members were so irate at Corzine for discussing a merger with Mellon without their knowledge or consent—and then not coming clean about it—that they decided to prevent him from engaging in any future strategic discussions at all,” Cohan writes. “The committee gave that responsibility to Paulson exclusively. Not a word of this decision leaked beyond the Management Committee itself. The discussions with Cahouet and Mellon were terminated immediately.” Cohan reports that Paulson threatened to leave Goldman if Corzine remained the company’s sole C.E.O. “There was no way the firm could afford to lose him on the eve of the long-awaited I.P.O.,” he writes. “A majority of the committee demanded that Paulson take the reins of the firm from Corzine. John Thain, the C.F.O., a onetime close ally of Corzine’s and then named in his will as one of the executors of his estate, was asked to speak with him about the committee’s decision.” The May issue of Vanity Fair will be on newsstands in New York and Los Angeles on Thursday, March 31, and nationally on April 5. www.vanityfair.com/online/daily/2011/03/william-d-cohan-on-goldman-sachs-how-secret-merger-talks-with-mellon-bank-led-to-jon-corzines-demise.html ty joye
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Post by sandi66 on Apr 5, 2011 17:55:12 GMT -5
dailyreckoning.com/dollar-rallies-as-bernanke-announces-hes-doing-his-job/ Dollar Rallies As Bernanke Announces He’s Doing His Job By Chuck Butler 04/05/11 St. Louis, Missouri – Last night was a stinker of a night, as Big Ben Bernanke decided to do a Bullwinkle and pull a rabbit out of his hat, and tell an audience that “inflation must be watched extremely closely.” Like that’s something new! UGH! Shouldn’t a central bank (that is, if you really feel one is needed) would be “watching inflation closely at all times”? So, he was telling people that he was doing his job, and the markets took it as some great indication that interest rates will rise in the US sooner than expected… Really? And this “new thought on rates” comes from what Big Ben said last night? Really? Well, I’ll be a monkey’s uncle! Folks, this is nothing more than a tempest in a teapot, and the markets will realize that sooner or later they have egg all over their face, and that interest rates aren’t going anywhere (Fed Rates) sooner! We all know that yields on Treasuries have risen, and mortgage rates are inching higher. So… What’s the Big Deal? Well, as I said, the markets took this comment by Big Ben, and ran with it, which meant, buying dollars… The currency rally we had watched for a few days, came to an abrupt halt… But, the slippage hasn’t been too bad, but then, US traders will be arriving at their desks in a couple of hours, and it will be interesting to see if they take this bait, hook, line and sinker, like the foreign traders did. Oh, and should I remind traders that later in the comment, Big Ben said, “inflation gains are likely transitory.” Now, does that sound like someone who’s committed to a thought that inflation is rising, and that interest rates are going higher? I don’t think so… Well… Things here in the US continue to be pretty shaky… It was reported yesterday that 44.18 million people received food stamps in January…. That’s up from the previous reading of 43 million. I find this to be a real problem for me to talk about, because on one hand, there are people who obviously need to eat, but on the other hand, one has to wonder how much fraud is involved in this program, and then we have to get down to the root of the question of whether it’s the government’s job… But that’s a discussion for another day… But you see why I have a problem talking about the food stamps program… And the fact that it adds to the deficit spending in this country. Speaking of deficit spending… Reader Scott, sent me this, and I just had to go yell at the wall after reading it… (CNSNews.com) – The US Treasury has released a final statement for the month of March that demonstrates that financial madness has gripped the federal government. During the month, according to the Treasury, the federal government grossed $194 billion in tax revenue and paid out $65.898 billion in tax refunds (including $62.011 to individuals and $3.887 to businesses) thus netting $128.179 billion in tax revenue for March. At the same, the Treasury paid out a total of $1.1187 trillion. When the $65.898 billion in tax refunds is deducted from that, the Treasury paid a net of $1.0528 trillion in federal expenses for March. That $1.0528 trillion in spending for March equaled 8.2 times the $128.179 in net federal tax revenue for the month. Now, doesn’t that just make you want to yell at the walls, too? But, we have the ratings agencies downgrading Portugal’s rating… UGH! Sure, Portugal’s debt rating needs to get downgraded, but does that really carry as much weight as the need to downgrade the US’s rating? I guess I need to back off there… The ratings agencies do a very good job… OK… Are you laughing as hysterically as I am right now? I tried to be nice, but it just didn’t work! But if you think the story above about the US spending 8.2 times their net revenue in March is something… Hey kids, check this out! In a letter to Congressional members, US Treasury Secretary Tim Geithner decided to give them a piece of his mind… “The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations. Default by the United States is unthinkable.” Really Tim? Well… Why not send a memo over to the White House and Congress and ask them to stop deficit spending? Because that’s the only way the US is going to avoid that problem! Well… The dollar rally overnight wasn’t across the board, as the Swiss franc (CHF) got back on the rally tracks after the downgrade of Portugal, and the star performer of the night was…. Drum roll please… The British pound sterling (GBP)! Geez Louise, what in the world got the pound sterling on the rally tracks, I hear you asking… Well, grasshoppers, it seems that manufacturing is trending higher, thus putting the inflation meter in red territory… And the markets all believe the Bank of England (BOE) is ready to confront those inflation pressures… Just not this Thursday when the BOE meets! The Reserve Bank of Australia (RBA) left rates unchanged last night, as suspected. Even though a rate hike was not expected, the Aussie dollar (AUD) lost some ground after the announcement. The statement after the rate announcement was very similar to March’s statement, with the RBA holding to the view that inflation will remain around 2-3%… In my mind, this is central bank parlance for: rates are on hold for now… The Aussie dollar also saw some slippage on the worse-than-expected trade balance for February… The markets had expected a surplus of A$1.2 billion, but instead a deficit of A$ 205 million printed. So, the recent trend of a narrowing trade deficit in Australia has a hiccup…or at least I hope it’s just a hiccup! The Aussie dollar’s kissin’ cousin across the Tasman, kiwi (NZD), received a boost overnight, when the Finance Minister (English), said that he “would be surprised if another rate cut is needed”… You may recall that the Reserve Bank of New Zealand (RBNZ) cut rates last month to assist the earthquake torn country… Maybe this will be enough to keep the markets and trader from pricing in another rate cut. This just came across the screens… The People’s Bank of China raised benchmark lending and deposit rates one-quarter of a percentage point, in yet another attempt to apply the brakes to the Chinese economy… Which, by the way, hasn’t collapsed, like a TON of pundits claimed it would do last year… Just thought I would make that point, and then go on… Nothing else to look at here… Move along… The price of oil stopped rising yesterday, falling from the $108 handle…. But the slippage has been small, so there’s nothing to get all warm and fuzzy about here… However, with the price of oil backing off some, the Canadian dollar/loonie (CAD), Norwegian krone (NOK), and even the Russian ruble (RUB) get marked down… But, I don’t see this as a long-term trend or anything like that… Again, it’s another hiccup… Well… This afternoon, we’ll get to see the meeting minutes from the last FOMC meeting… The only thing I would look for are dissenting comments from Big Ben’s stance of carrying out QE2… I wonder if the Fed Heads out on the road, talking tough, fade in the FOMC meetings… Fed Head Hoenig, certainly doesn’t, but what about the rest of them? Then there was this, in an overview of a piece from The Economist… “The Federal Reserve’s policy of driving down interest rates wasn’t intended to hurt retired senior citizens who depend on interest-paying investments, but it did, according to The Economist. There is a growing divergence between the interests of working and nonworking Americans. ‘The Fed’s task will grow ever more difficult as more Americans age into the latter group, and that is a matter of grave concern for those in the former, as Japan’s working-age population can certainly attest.’” To recap… Big Ben Bernanke turned the tables on the currency rally last night, when he mentioned that “inflation was being watched very closely.” The dollar rally wasn’t across the board though, as Swiss francs and pound sterling rallied for different reasons. The RBA left rates unchanged, and Australia’s trade deficit got a surprise that wasn’t good for the Aussie dollar. And… The US spend 8.2 times their net revenue in March… Deficit spending at its best, eh? Chuck Butler for The Daily Reckoning Chuck Butler Chuck Butler is President of EverBank® World Markets and the author of the popular Daily Pfennig newsletter, which is reposted here at The Daily Reckoning. With a career in investment services and currencies extending over 35 years, Mr. Butler oversees all aspects of customer service and the trading desk for EverBank World Markets. A respected analyst of the currency market, Mr. Butler has frequently made appearances or been quoted by the national media. These include the Wall Street Journal, US News and World Report, MarketWatch, USAToday, CNNfn, Bloomberg TV, CNBC, and the Chicago Tribune. Mr. Butler was previously the Chief International Bond Trader and Director of Risk Management for Mark Twain Bank, and has held significant positions in the investment industry since 1973. For additional information visit EverBank Special Report: Ben Bernanke’s Dirty Secret… Head of the Fed Ben Bernanke is kicking the printing presses into overdrive to “save the economy.” But by doing so, he’s stuffing his dirty paw into YOUR pocket and handing your hard-earned wealth to his Washington and Wall Street chums. Now’s the time to get the scoop on what inflation REALLY means for the economy and you… Click here to watch this presentation now! us.mg2.mail.yahoo.com/dc/launch?.gx=1&.rand=5plmd50jov0c6ty joye
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Post by sandi66 on Apr 5, 2011 22:12:11 GMT -5
Courts could close for several days if more funding not approved 8:09 p.m. EDT, April 5, 2011 Fearing the governor will withhold emergency funding to keep state and county courts operating, the state's chief judges have put together a draconian plan that could shutter the court system in every Florida county for four days next week, and 10 days in May. Details of their plan have not yet been hammered out, but during those court blackout days, there'd be no trials and only a minuscule number of hearings, said Circuit Judge Preston Silvernail, chief judge in Seminole and Brevard counties. "Trial judges throughout the state of Florida are similarly situated," Silvernail said late Tuesday as he drove home from Tallahassee. Chief judges from circuits throughout the state and state court budget writers met Monday in Tallahassee and recommended cuts to their own budgets through the end of the fiscal year. But statewide, courts need about $50 million to continue operating full-time through June 30. According to Orange-Osceola Chief Judge Belvin Perry Jr., the problem is Gov. Rick Scott. The Florida House and Senate have agreed to loan the court system enough money to operate through the end of the fiscal year but the deal must also be approved by Scott. The deadline is Friday. Scott has not given his answer and after getting one set of questions answered by court officials, responded with another set of questions, Perry said. If the governor does not sign off on the loan, the courts will be forced to close Monday through Thursday of next week and for 10 days in May, Perry said. Perry said Supreme Court Chief Justice Charles Canady would decide what emergency functions courts could provide on days when workers are furloughed. There'd be no trials, traffic court or routine hearings of any kind, Silvernail said. Divorces would go unfinalized, and no one would resolve disputes about child custody, child support or visitation. He said the only court action taking place would likely be: •First appearances – hearings to determine whether police were justified to arrest suspects taken into custody the previous 24 hours. •Emergency hearings on whether parents should be allowed to keep children they're accused of abusing or neglecting. •Judges deciding whether to sign court orders giving protection to people claiming to be the victims of domestic violence. •Perry said judges likely would still be required to sign warrants for law enforcement. Courts statewide are funded by filing fees, which have been pumped up in recent years because of a glut of foreclosure suits. But the number of those suits has fallen sharply in recent months as mortgage companies have scrambled to find documents to authenticate individual loans, fallout from allegations of loan officer "robosigning." It's possible there'll be no blackout dates, according to Perry and Silvernail. If Scott authorizes the full loan by 4 p.m. Friday, the court system should operate largely as normal. On those court blackout dates, court employees would not be paid. That includes judges, their secretaries – called judicial assistants – court reporters and scores of clerical and administrative employees who coordinate trials and keep the court system running. "We don't have slave labor in the state of Florida," Perry said. "People don't work for free." www.orlandosentinel.com/news/os-court-funding-crisis-20110405,0,7737884.story
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Post by sandi66 on Apr 6, 2011 6:19:39 GMT -5
Letter to the Ruling Class by Jesse Venture Apr 1st 2011 You control our world. You’ve poisoned the air we breathe, contaminated the water we drink, and copyrighted the food we eat. We fight in your wars, die for your causes, and sacrifice our freedoms to protect you. You’ve liquidated our savings, destroyed our middle class, and used our tax dollars to bailout your unending greed. We are slaves to your corporations, zombies to your airwaves, servants to your decadence. You’ve stolen our elections, assassinated our leaders, and abolished our basic rights as human beings. You own our property, shipped away our jobs, and shredded our unions. You’ve profited off of disaster, destabilized our currencies, and raised our cost of living. You’ve monopolized our freedom, stripped away our education, and have almost extinguished our flame. We are hit… we are bleeding… but we ain’t got time to bleed. We will bring the giants to their knees and you will witness our revolution! Sincerely, The Serfs. weaintgottimetobleed.com/ty joye
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Post by sandi66 on Apr 6, 2011 6:20:38 GMT -5
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Post by sandi66 on Apr 6, 2011 10:15:16 GMT -5
HELL EXPLAINED BY A CHEMISTRY STUDENT - THIS STUDENT RECEIVED AN A+
The following is an actual question given on a University of Arizona chemistry mid term, and an actual answer turned in by a student. The answer by one student was so 'profound' that the professor shared it with colleagues, via the Internet, which is, of course, why we now have the pleasure of enjoying it as well :
Bonus Question: Is Hell exothermic (gives off heat) or endothermic (absorbs heat)?
Most of the students wrote proofs of their beliefs using Boyle's Law (gas cools when it expands and heats when it is compressed) or some variant.
One student, however, wrote the following:
First, we need to know how the mass of Hell is changing in time. So we need to know the rate at which souls are moving into Hell and the rate at which they are leaving, which is unlikely.. I think that we can safely assume that once a soul gets to Hell, it will not leave. Therefore, no souls are leaving. As for how many souls are entering Hell, let's look at the different religions that exist in the world today.
Most of these religions state that if you are not a member of their religion, you will go to Hell. Since there is more than one of these religions and since people do not belong to more than one religion, we can project that all souls go to Hell. With birth and death rates as they are, we can expect the number of souls in Hell to increase exponentially. Now, we look at the rate of change of the volume in Hell because Boyle's Law states that in order for the temperature and pressure in Hell to stay the same, the volume of Hell has to expand proportionately as souls are added.
This gives two possibilities:
1. If Hell is expanding at a slower rate than the rate at which souls enter Hell, then the temperature and pressure in Hell will increase until all Hell breaks loose.
2. If Hell is expanding at a rate faster than the increase of souls in Hell, then the temperature and pressure will drop until Hell freezes over.
So which is it?
If we accept the postulate given to me by Teresa during my Freshman year that, 'It will be a cold day in Hell before I sleep with you,' and take into account the fact that I slept with her last night, then number two must be true, and thus I am sure that Hell is exothermic and has already frozen over. The corollary of this theory is that since Hell has frozen over, it follows that it is not accepting any more souls and is therefore, extinct..... ....leaving only Heaven, thereby proving the existence of a divine being which explains why, last night, Teresa kept shouting 'Oh my God.'
ty joye
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Post by sandi66 on Apr 6, 2011 13:56:01 GMT -5
George Washington, our nation's first president and leader of the American Revolution! Abe Lincoln, honorable leader pulled our nation through its darkest time! Alexander Hamilton, founding father, first secretary of the treasure and leader of the constitutional convention! Andrew Jackson, "Old Hickory " fought the British in New Orleans ! Ulysses Grant, Union army general, lead the North through the Civil War! Ben Franklin, Genius inventor, political theorist, and leading author of the constitution. Scroll down Finally, we have someone to put on the food stamp! Obama's policies will put more people on welfare than any president before him so this placement is most appropriate. Unlike the Nobel Peace Prize, for which he did nothing, this is an "honor" he richly deserves. www.realthinktank.com/2010/02/fw-where-to-put-obama-picture.html
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Post by sandi66 on Apr 7, 2011 5:51:20 GMT -5
Government Shutdown Threatens 800,000 U.S. Workers as Obama Seeks Solution By James Rowley - Apr 7, 2011 12:01 AM ET In the event of a government shutdown, the National Institutes of Health won’t admit new patients, some taxpayers will wait longer for refunds and any furloughed civil servants with federally issued BlackBerrys must turn them off. A failure by Congress to extend the government’s spending authority, which expires tomorrow, would force the closure of national parks, monuments and museums. Federal agencies -- such as the National Labor Relations Board -- that don’t protect lives, property or national security also would be shuttered. As Democratic and Republican leaders in Congress seek agreement on a spending measure for the rest of the 2011 fiscal year, the Obama administration has warned of economic disruption from even a short shutdown. More than 800,000 “non-essential” federal workers -- out of a civilian workforce of 2.1 million -- would be furloughed until new spending legislation was passed. Agencies have drafted contingency plans for who would work and who wouldn’t. The prospect of a government shutdown, however limited it may be, has placed pressure on the Obama administration and congressional leaders to settle their dispute over $30 billion or more in cuts from the federal budget through September before a suspension -- as of midnight tomorrow -- of all but essential federal services. Leaders of both parties are bracing for the blame that will be attached to their failure to resolve what the White House has described as minimal differences. “People are going to have to understand that a shutdown would have real effects on everyday Americans,” President Barack Obama said last night after a meeting with congressional leaders at the White House, where he expressed confidence that a shutdown can be averted. Elected Officials Elected officials, including members of Congress and the president, would get paid during a shutdown unless Congress changes the law. Unlike the president and legislators, though, military personnel and federal employees who are deemed “essential” would receive no paychecks. Although troops and the civilian employees who continue to work would get paid for their service after government financing is restored, there is no guarantee that Congress would make furloughed workers whole. “You should plan accordingly,” says a sample letter to non-essential employees prepared by the House Administration Committee that also advises furloughed workers not to log on to government e-mail and to turn off their government-issued BlackBerrys. $174 Million Per Day The cost of back pay for furloughed government workers would be $174 million for each day the government is closed, according to data compiled by Bloomberg Government analyst Scott Anchin. The U.S. military’s operations in Afghanistan, Iraq and Libya would continue under the Feed and Forage Act, which guarantees payment of its expenses. The 1861 law “was designed for the cavalry troop that was going through Dodge City and needed to get ammunition for its rifles and food for men and horses,” said John F. Cooney, a former government budget official. It’s “a standing promise” by Congress to “fund any bill troops run up” to defend themselves, he said. Medicare, Social Security Medicare and Social Security would continue to pay benefits to elderly Americans because they don’t depend on year-to-year spending measures from Congress, said Cooney, who was deputy general counsel of the Office of Management and Budget under President Ronald Reagan. The Social Security Administration plans to continue sending checks during a shutdown and accept new applications for benefits, said spokesman Mark Hinkle. As long as there is money in the Medicare trust fund, Medicare beneficiaries would continue to receive checks, said an administration official who briefed reporters yesterday. The trust fund would only be depleted if there is a lengthy government shutdown, said the official, who spoke on condition of anonymity. The Internal Revenue Service will continue sending refunds to taxpayers who file their returns electronically, Commissioner Douglas Shulman said yesterday. Online filings accounted for 70 percent of all tax returns last year, he said. Taxpayers who filed by mail may have to wait longer to get their money because Shulman says the IRS won’t process their refunds during a shutdown. The IRS would also suspend tax audits, said the administration official. Financial Markets The political drama in Washington has not disrupted the prevailing calm in financial markets. Yields on two-year Treasury securities rose 2 basis points yesterday to 0.83 percent. That is still below the average yield of 2.59 percent in the last decade, according to Bloomberg Bond Trade prices. Those prices reflect expectations by investors that when political leaders “come to the edge of the precipice, a more rational approach should prevail,” said John Lonski, chief economist at Moody’s Capital Markets Group. As White House officials warned of devastating economic consequences, some Republicans attempted to downplay the impact of a shutdown. “There is no such thing as an actual government shutdown,” Representative Michele Bachmann of Minnesota told a crowd of Tea Party protesters outside the Capitol yesterday. “It is a government slowdown.” Economic Impact The economic impact would depend on its duration and whether government workers are repaid. “If they’re not losing their income or some of it is made up, then you have a situation where impacts are minor, relatively,” said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. There is no precedent for Congress reimbursing the hundreds of thousands of federal contractors or their employees who may be laid off during a shutdown. “A government shutdown would be devastating to small businesses, their employees and their communities,” said Terry Williams, a spokesman for the National Association of Small Business Contractors in Washington. Contractors such as SAIC Inc. (SAI), AeroVironment Inc. (AVAV) and Comtech Telecommunications Corp. (CMTL) face greater financial risk than rivals because they must report earnings after April 30, according to a Lazard Capital Markets LLC report. It will be difficult for such companies to “pick up all that lost revenue” by April 30, Michael Lewis, the report’s author, said in a telephone interview. Economic Data Delay A shutdown would delay release of U.S. economic data, such as the scheduled April 12 release of Labor Department figures on March import prices, Commerce Department numbers on the February trade balance and the Treasury’s budget for last month. Closures of the Small Business Administration and the Federal Housing Administration would suspend processing of business loans and government-insured home mortgages, the administration official said. FHA-insured mortgages account for about 30 percent of the home-loan market, compared with 12 percent during the last two shutdowns in late 1995 and early 1996. And researchers at the National Institutes of Health would not be allowed to start new clinical trials of experimental treatments or admit new patients, said the administration official. Open for Business The Treasury Department will conduct its regular schedule of securities auctions, a government official said yesterday on condition of anonymity. The Federal Reserve Board and its 12 regional banks will continue to operate because the Fed finances its operations from its bond portfolio. Also unaffected would be air-traffic control operations, airplane safety inspections and maintenance of airport communications, Randy Babbitt, head of the Federal Aviation Administration, told a congressional subcommittee. The FBI’s criminal investigations will likely be “unhindered,” though a shutdown would force the bureau to postpone training and new initiatives, director Robert Mueller told a House subcommittee yesterday. All 116 federal prisons would remain open and criminal investigations and prosecutions would continue, said Justice Department spokeswoman Jessica Smith in an e-mail. The agency would be forced to “stop or significantly curtail” civil litigation, outreach to crime victims and managing grants. The federal court system will use fees paid by litigants and criminal defendants to remain open for about two weeks, said spokesman Dick Carelli. The State Department’s passport and visa services will likely be curtailed, said spokesman Mark Toner. U.S. embassies “will continue to provide services” of an emergency nature to Americans abroad, he said. National parks, monuments and Smithsonian Institution museums would close to visitors. The National Zoo in Washington would continue to employ keepers and veterinarians to care for the animals. The animals “need to have their keepers” for food and “vets on duty” in case they get sick, said spokeswoman Linda St. Thomas. “What they won’t have is visitors.” www.bloomberg.com/news/2011-04-07/government-shutdown-threatens-800-000-as-obama-seeks-solution.html
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Post by sandi66 on Apr 9, 2011 5:13:26 GMT -5
Lawmakers reach 'historic' deal to avoid gov't shutdown Story Created: Apr 8, 2011 at 7:42 PM MDT Story Updated: Apr 8, 2011 at 10:59 PM MDT WASHINGTON (AP) - Perilously close to a government shutdown, President Barack Obama and congressional leaders reached a historic agreement late Friday night to cut about $38 billion in spending and avert the first federal closure in 15 years. Obama hailed the deal as "the biggest annual spending cut in history." House Speaker John Boehner said that over the next decade it would cut government spending by $500 billion - and won an ovation from his rank and file, tea party adherents among them. "This is historic, what we've done," agreed Senate Majority Leader Harry Reid, D-Nev., the third man involved in negotiations that ratified a new era of divided government. They announced the agreement less than an hour before government funding was due to run out, instantly turning hundreds of thousands of furlough notices for federal workers into historical relics. The shutdown would have closed national parks, tax-season help lines and other popular services, though the military would have stayed on duty and other essential efforts such as air traffic control would have continued in effect. On side issues - "riders," the negotiators called them - the Democrats and the White House rebuffed numerous Republican attempts to curtail the reach of the Environmental Protection Agency. They also sidetracked their demand to deny federal funds to Planned Parenthood. Under the accord, the issue will come to a vote in the Senate under terms guaranteed to end in its defeat. Anti-abortion lawmakers succeeded in winning a provision to ban the use of federal or local government funds to pay for abortions in the District of Columbia. One of Boehner's priorities, a program that lets District of Columbia students use federally funded vouchers to attend private schools, was included. In addition, the Senate will vote on proposals to deny federal funding to implement the year-old health care law. It is certain to fall short of the required 60 votes but will place Democrats on the record. The long-term deal in hand, lawmakers raced to pass an interim measure to prevent a shutdown, however brief, and keep the federal machinery running for the next several days. The Senate acted within minutes, and even though it took the House longer. White House Budget Director Jacob Lew issued a directive saying that in view of the agreement, "agencies are instructed to continue their normal operations." The deal came together after six grueling weeks and an outbreak of budget brinksmanship over the past few days as the two sides sought to squeeze every drop of advantage in private talks. In one dramatic moment, Obama called Boehner on Friday morning after learning that the contours of the emerging deal they had reached with Reid in the Oval Office the night before had not been reflected in the pre-dawn staff negotiations. The White House was baffled. The whole package was in peril of falling part. According to a senior administration official, Obama told Boehner that they were the two most consequential leaders in the United States government and that if they had any hope of keeping the government open, their discussions had to be honored and could not altered by staff. The official described the scene on condition of anonymity to reveal behind-the-scenes negotiations. Despite the accomplishment, officials noted it marked only a first step. Republicans intend to pass a 2012 budget through the House next week that calls for sweeping changes in Medicare and Medicaid and would cut domestic programs deeply in an attempt to gain control over soaring deficits. And the Treasury has told Congress it must vote to raise the debt limit by summer - a request that Republicans hope to use to force Obama to accept long-term deficit-reduction measures. "We know the whole world is watching us today," Reid said earlier in a day that produced incendiary, campaign style rhetoric as well as intense negotiation. Reid, Obama and Boehner all agreed a shutdown posed risks to an economy still recovering from the worst recession in decades. But there were disagreements aplenty among the principal players in an early test of divided government - Obama in the White House, fellow Democrats in control in the Senate and a new, tea party-flavored Republican majority in the House. "Republican leaders in the House have only a few hours left to look in the mirror, snap out of it and realize how positively shameful that would be," Reid said at one point, accusing Republicans of risking a shutdown to pursue a radical social agenda. For much of the day, Reid and Boehner disagreed about what the disagreement was about. Reid said there had been an agreement at a White House meeting Thursday night to cut spending by about $38 billion. He said Republicans also were demanding unspecified cuts in health services for lower income women that were unacceptable to Democrats. "Republicans want to shut down our nation's government because they want to make it harder to get cancer screenings," he said. "They want to throw women under the bus." Boehner said repeatedly that wasn't the case - it was spending cuts that divided two sides. "Most of the policy issues have been dealt with, and the big fight is about spending," he said. "When will the White House and when will Senate Democrats get serious about cutting federal spending?" By midday Friday, 12 hours before the funding would run out, most federal employees had been told whether they had been deemed essential or would be temporarily laid off in the event of a shutdown. Obama canceled a Friday trip to Indianapolis - and a weekend family visit to Colonial Williamsburg in Virginia - and kept in touch with both Boehner and Reid. The standoff began several weeks ago, when the new Republican majority in the House passed legislation to cut $61 billion from federal spending and place numerous curbs on the government. In the weeks since, the two sides have alternately negotiated and taken time out to pass interim measures. Originally, Republicans wanted to ban federal funds for Planned Parenthood, a health care services provider that is also the nation's largest provider of abortions. Federal funds may not be used to pay for abortions except in strictly regulated cases, but supporters of the ban said cutting off government funds for the organization - currently about $330 million a year - would make it harder for it to use its own money for the same purpose. Democrats rejected the proposal in private talks. Officials in both parties said Republicans returned earlier in the week with a proposal to distribute federal funds for family planning and related health services to the states, rather than directly to Planned Parenthood and other organizations. Democrats said they rejected that proposal, as well, and then refused to agree to allow a separate Senate vote on the issue as part of debate over any compromise bill. Instead, they launched a sustained campaign at both ends of the Capitol to criticize Republicans. "We'll not allow them to use women as pawns," said Sen. Patty Murray, a fourth-term lawmaker from Washington who doubles as head of the Democratic senatorial campaign committee. For Congress and Obama there are even tougher struggles still ahead - over a Republican budget that would remake entire federal programs, and a vote to raise the nation's debt limit. www.kboi2.com/news/national/119515404.html
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Post by sandi66 on Apr 9, 2011 8:17:16 GMT -5
Boehner the big winner in budget talks: Analyst CBS News' John Dickerson says House Speaker gained most gravitas, Tea Party fared well, Obama not so much April 9, 2011 (CBS News) House Speaker John Boehner emerged the star when tense negotiations among congressional leaders wound up heading off a government shutdown, in the eyes of CBS News political analyst John Dickerson. "He's the big victor, indeed," Dickerson told "Early Show on Saturday Morning" co-anchor Jeff Glor. ... The number of people (among Republicans) unhappy with the Speaker is small. ... The priorities that Speaker Boehner had are the priorities you have to have when you're trying to get your members together, get something that can actually pass, and negotiate with the other house of Congress, and with the White House. "Republicans are often saying, 'Look, we only control just the House of Representatives. There are these other two big forces in Washington.' Given that there are those two other big forces, John Boehner got a lot of spending reductions that Republicans wanted, [and] moved Democrats much closer to where the Republican position was. So it was a big, big night for him." President Obama, Glor noted, praised the deal. But was he a winner here? "It is rather awkward for him," Dickerson responded. "Earlier in the week, when he gave a news conference, he seemed irritated that he had to get involved at all in this sort of bickering between the two houses of Congress. He got involved. He was certainly pressuring Speaker Boehner at various points. "But if we compare this to the deal that the president struck at the end of last year, on the Bush tax cuts, [where] he was able to say, 'Look, Republicans got what they wanted in the tax cuts, and we got other things for lower income Americans, and things that progressives and liberals would like,' - in this case, what he got was just that the deal wasn't as bad as they thought it was going to be. "There aren't a lot of things in here that the president can say, 'I won these things.' He can only say, 'I kept these bad things from happening.' " Tea Party members, Dickerson noted, also "didn't get everything they wanted. But they certainly were on John Boehner's mind all the time, and that's one of the reasons he really stuck to his guns here, and pushed this to the last minute. And they will also be trying to prove that they are still as powerful as they were since they didn't get all of the cuts they wanted. So, yes, this will be something we'll be talking about in this (upcoming) larger budget battle (over the next fiscal year and beyond), for sure." As talks continued down to the wire Friday, the two sides had one news conference after another, blaming the other side for the wrangling that appeared destined to close Uncle Sam for business. But Dickerson says that not only won't result in any lingering damage, it could actually help the political landscape in Washington. "The public pronouncements and finger-pointing and accusations, that's the sort of baseline - that's the thing that still exists. And so that is what we'll go back to now on this bigger fight, about the large budget. We've been fighting now only about a tiny sliver of it, from last year's business. "Now we have a question about the entire priorities of government, what its role is, and these very, very hot-button issues like entitlements and how we take care of the poor - I mean, every issue that is involved in government. One thing that's good that came out of this negotiation is that you now have the leaders of government, they know each other, they've been in a tough spot, and that will help when these bigger issues come forward." www.cbsnews.com/stories/2011/04/09/earlyshow/saturday/main20052414.shtml
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Post by sandi66 on Apr 10, 2011 9:51:45 GMT -5
Next on the Agenda for Washington: Fight Over Debt Published: Sunday, 10 Apr 2011 | 10:35 AM ET The down-to-the-wire partisan struggle over cuts to this year’s federal budget has intensified concern in Washington, on Wall Street and among economists about the more consequential clash coming over increasing the government’s borrowing limit. Congressional Republicans are vowing that before they will agree to raise the current $14.25 trillion federal debt ceiling — a step that will become necessary in as little as five weeks — President Obama and Senate Democrats will have to agree to far deeper spending cuts for next year and beyond than those contained in the six-month budget deal agreed to late Friday night that cut $38 billion and averted a government shutdown. Republicans have also signaled that they will again demand fundamental changes in policy on health care, the environment, abortion rights and more, as the price of their support for raising the debt ceiling. In a letter last week, Treasury Secretary Timothy F. Geithner told Congressional leaders the government would hit the limit no later than May 16. He outlined “extraordinary measures” — essentially moving money among federal accounts — that could buy time until July 8. Once the limit is reached, the Treasury Department would not be able to borrow as it does routinely to finance federal operations and roll over existing debt; ultimately it would be unable to pay off maturing debt, putting the United States government — the global standard-setter for creditworthiness — into default. The repercussions in that event would be as much economic as political, rippling from the bond market into the lives of ordinary citizens through higher interest rates and financial uncertainty of the sort that the economy is only now overcoming, more than three years after the onset of the last recession. Given the short time frame for action and the prospect of an intractable political clash, leaders in both government and business are already moving to avert a crisis that most likely would be “a recovery-ending event,” as Ben S. Bernanke, the Federal Reserve chairman, testified recently in the Senate. He described a sequence of events that “would cascade through the financial markets,” provoking another credit crisis like that in 2008 and causing interest rates to jump. Mr. Geithner has been meeting privately with senior lawmakers of both parties to underscore the economic stakes. At the White House, Mr. Obama’s chief economic adviser, Gene Sperling, peeled away from the spending fight in recent weeks to turn nearly full time to developing the administration’s strategy for the debt-limit debate. Central to that, administration officials say, is whether Mr. Obama initiates bipartisan talks on a long-term debt-reduction plan that tackles taxes, military spending and fast-growing entitlement programs like Medicare and Medicaid. Executives of the nation’s largest financial institutions in recent days met with Mr. Geithner, House Speaker John A. Boehner, Republican of Ohio, and other lawmakers, arguing for the importance of raising the debt ceiling. Jamie Dimon, the chief executive of JPMorgan Chase, told them that his bank had devised contingency plans to protect its global business in the event of a default. “If anyone wants to push that button, which I think would be catastrophic and unpredictable, I think they’re crazy,” Mr. Dimon said recently at the United States Chamber of Commerce. The United States is one of the few nations that limits its debt by law, and votes in Congress to raise the ceiling, something that happens every few years, are perhaps the least popular that lawmakers face. Financial and government leaders alike have grown accustomed to some political brinkmanship over raising the cap, confident that Congress ultimately would do so, usually with the party holding the White House supplying most votes. (So it was that Mr. Obama, as a Democratic senator in 2006, voted against a Bush administration request to raise the debt limit; it passed with mostly Republican votes.) What makes this year different, people in both parties say, is the large number of Congressional Republicans, including the many newcomers who gave the party a House majority, who are strenuously opposed to government spending, and egged on by the activist Tea Party movement to use the leverage of the debt-limit vote to make their stand. “We want to see real structural, cultural-type changes tied to this debt ceiling. We’re not interested in a one-off kind of savings, or anything small,” said Representative Mick Mulvaney, a first-term Republican from South Carolina. “There has got to be game-changing kinds of changes to get us to vote for it.” He dismissed warnings about default as “just posturing,” and said Democrats should bear the responsibility for passing any measure to increase the borrowing limit. “It’s their debt,” he said. “Make them do it. That’s my attitude.” In fact, the debt was created by both parties and past presidents as well as Mr. Obama. Of the nearly $14.2 trillion in debt, roughly $5 trillion is money the government has borrowed from other accounts, mostly from Social Security revenues, according to federal figures. Several major policies from the past decade when Republicans controlled the White House and Congress — tax cuts, a Medicare prescription-drug benefit and wars in Iraq and Afghanistan — account for more than $3.2 trillion. The recession cost more than $800 billion in lost revenues from businesses and individuals and in automatic spending for safety-net programs like unemployment compensation. Mr. Obama’s stimulus spending and tax cuts added about $600 billion through the fiscal year that ended Sept. 30. Though the recent standoff that consumed Washington over spending for the 2011 fiscal year ended without a government shutdown, the messy process and 11th-hour settlement have stoked trepidation about the debt-limit fight to come. If Republicans and Democrats found it so hard to compromise over a few billion dollars, the thinking goes, how can they ever come together on a multi-year, multitrillion-dollar plan to cut the debt within weeks or months? “If I were still Treasury secretary, it would worry the hell out of me,” said James A. Baker III, who served in that office for President Ronald Reagan, during a time when the total federal debt nearly tripled over his two terms. “But it doesn’t worry me as a good Republican, and one who wants to finally see some fiscal responsibility in this country.” Mr. Baker, long known as a deal-maker, said Republicans were right to say, “O.K., we’ll increase the debt limit, Democrats, if you will enact enforceable spending restraint.” Neither the White House nor Congressional leaders are certain how they will get enough votes to raise the limit. The White House and Democrats in Congress will urge passage of a “clean” debt limit increase, without amendments, though they acknowledge that cannot pass in the Republican-controlled House. While the House is the focus of most concern, passage in the Democratic-controlled Senate will be a challenge as well. Republican conservatives there, reinforced by Tea Party adherents elected last November, vow to filibuster any increase in the debt limit, which would require a 60-vote supermajority to overcome. The Republican leader, Senator Mitch McConnell of Kentucky, has privately urged the conservatives not to filibuster, without success, say three people familiar with the talks. He argued that if Republicans did not filibuster and just 50 votes were needed for passage, the Republicans could try to force all the votes to come from the 51 Democrats — including 17 who are up for re-election. But if 60 votes are required because of a filibuster, ultimately some Republicans would have to vote for the increase lest the party be blamed for a debt crisis. In the House, Mr. Boehner said after the November elections that his new members would have to deal with the debt limit “as adults.” But with many Tea Party-backed Republicans feeling that they already compromised more than they wanted on the current year’s budget, it is not clear how receptive the freshman Republicans will be to a deal this time. The just-concluded budget fight has spawned talk that the White House and Congress will perhaps resort to a series of short-term extensions of the debt limit while they bargain over a debt-reduction plan or some other mandatory budget restraints. The question is, how might global financial markets react? “We’ve never seen that before,” said Robert E. Rubin, the Treasury secretary under President Bill Clinton and a longtime Wall Street executive. “But I know this: It’s not a risk I’d take.” After this week, Congress recesses until early May, returning just two weeks before Treasury hits the debt ceiling. Even stretching the deadline for action to July, there would be little time to reach a debt-reduction accord. So attention is turning to a bipartisan “Gang of Six” in the Senate. The senators, three from each party, have met for 10 months to negotiate a comprehensive plan on taxes, entitlement programs and military spending. They have considered recommendations made by Mr. Obama’s bipartisan fiscal commission in December. “It would be nice to have it in a package form by the debt-limit” debate, said Senator Saxby Chambliss, a Republican of Georgia. But even if the six agree, he added, “hitting everyone else with something this major, it’s going to take some time to be digested. Plus you’ve got to go through the various committees.” House Republicans in effect outlined their starting position last week, when, amid the fight over 2011 spending, they unveiled their budget for the 2012 fiscal year and beyond. It would cut $6 trillion over 10 years, mostly from projected spending for Medicare and Medicaid. But those savings would be offset by about $4 trillion in tax cuts. The result, according to the Congressional Budget Office, would be continued annual deficits until 2040 — necessitating more votes to raise the debt limit, even under House Republicans’ plan, for decades to come. www.cnbc.com/id/42519339
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