- Global Banking

Overdose： The Next Financial Crisis

nospam@example.com (Angelo) — Wed, 01 Sep 2010 19:37:02 -0600

Greece to Endure Privatization at Hands of IMF

nospam@example.com (Angelo) — Mon, 16 Aug 2010 18:50:46 -0600

Source: Yahoo/AFP

Greece is in the grip of deepening recession, official data showed on Thursday, as a stinging austerity programme agreed with the EU and IMF in exchange for a debt rescue package begins to bite.

The national statistics office said the downward spiral accelerated in the second quarter as a barrage of wage and pension cuts plus tax rises sapped consumer demand.

A "significant" fall in consumption and lower investment saw the economy shrink 1.5 percent, it said, following a contraction of 0.8 percent in the first quarter to extend a recession that began in the middle of 2009.

The latest figures put the economy on track for a forecast contraction of 4.0 percent this year.

On a 12-month comparison, Greek output was down 3.5 percent in the second quarter after a fall of 2.3 percent in the first.

Worse still, and promising more pain to come, unemployment shot up to 12 percent in May from 8.5 percent a year earlier, with more than 600,000 people out of work, the statistics office said.

Athens agreed a 110-billion-euro (142-billion-dollar) rescue deal with the European Union and International Monetary Fund in May to cover its borrowing needs until 2012 as it was pushed to the brink of default.

The markets had turned against Greece whose public deficit and total debt had soared way past EU limits, pushing up its funding costs to unsustainable levels as the crisis appeared to threaten the whole eurozone project.

As part of the quid pro quo, Athens agreed to sweeping economic reforms and a draconian series of spending cuts and tax increases which sparked a series of protests across the country, including six general strikes.

Traders say a four-percent hike in sales tax between March and July, coupled with the highest inflation figures in 17 years, has had a disastrous effect on business.

"The government must urgently reconsider its tax policy," the chairman of the Athens chamber of commerce and industry, Constantinos Michalos, told Mega television station.

A leading trader association this week reported that 17 percent of businesses in central Athens have shut down because of the crisis.

A fresh round of social unrest in expected later this year when the government attempts to implement additional reforms to boost competitiveness by lifting decade-old restrictions in a number of sectors.

As part of the EU-IMF accord, Greece must liberalise the energy sector which is currently dominated by state electricity operator PPC and overhaul the state railways organisation OSE which is 10 billion euros (12.8 billion dollars) in the red.

Both PPC and OSE unionists have pledged to fight back.

Prime Minister George Papandreou acknowledged this week that the measures which have dented his administration's ratings are harrowing.

"The transition will not be easy but these changes are long overdue," he told the Christian Science Monitor in an interview.

"There is, of course, pain ... (but) the vast majority of Greeks recognise that such changes are necessary."

Papandreou also said Athens intended to return to markets as early as next year if possible.

Remote Management Allows ATM's To Be Hijacked

nospam@example.com (Angelo) — Mon, 02 Aug 2010 21:31:34 -0600

Source: Yahoo News

Computer security researcher Barnaby Jack jokes that he has resorted to hiding cash under his bed since figuring out how to crack automated teller machines remotely using the Internet.

The New Zealand native on Saturday demonstrated his "ATM jackpotting" discovery for an overflow crowd of hackers during a presentation at the infamous DefCon gathering in Las Vegas.

"You don't have to go to the ATM at all," Jack told AFP after briefing fellow software savants. "You can do it from the comfort of your own bedroom."

Jack proved his findings using two kinds of ATMs typically found in corner stores, bars or other "stand-alone" venues in the United States but said the flaw likely exists in machines at banks.

Banks use "remote management" software to monitor and control their ATMs, and Jack used a weakness in that kind of code to take control of machines by way of the Internet.

He found a way to bypass having to submit passwords and serial numbers to access ATMs remotely. Once in the machines, he could command them to spit out cash or transfer funds.

He could also capture account data from magnetic strips on credit or bank cards as well as passwords punched in by ATM users.

"When you think about ATM security you generally think about the hardware side; is it bolted down and are the cameras in position," Jack said.

"This is the first time anyone has taken the approach of trying to attack the underlying software. It is time to find software defenses rather than hardware defenses."

Jack did his research on ATMs he bought on the Internet. He also found master keys for stand-alone machines available for purchase online, meaning hackers could walk up and tinker with ATM software, he added.

"We shouldn't dwell on the walk-up attack, because no physical access is required," Jack said. "They have a flaw that lets me bypass all authentication on the device on the Internet, and I am the ATM at that stage."

He didn't reveal specifics of the attack to hackers even though the ATM makers were told of the flaw and have bolstered machine defenses.

"I might get my butt in hot water if I released the code," said the IO Active software security researcher who did the ATM hack 'as a hobby.'

"I was careful not to release the keys to the kingdom."

Jack said he doesn't know if criminals have exploited the software flaw "in the wild" but that it is tough to be certain.

"It is not an easy attack to replicate but I am not naive enough to think I am the only one who can do it," Jack said, admitting he has grown wary of ATMs. "I just keep my cash under the bed now, mate."

Drugs and the Economy - The Bank Connection

nospam@example.com (Angelo) — Mon, 02 Aug 2010 13:50:41 -0600

The Immutable Bylaws of Business

nospam@example.com (Angelo) — Thu, 29 Jul 2010 23:17:37 -0600

Canadian Real Estate Begins Decline - Middle Class Is At Serious Risk

nospam@example.com (Angelo) — Thu, 22 Jul 2010 14:22:49 -0600

Housing in Canada is seen by most as money in the bank, but that equity can quickly evaporate, and from all the indicators that I've been looking at for the last several months, the decline is now underway...

Source: The Greater Fool

...Perhaps the greatest financial irresponsibility of this generation was to give hundreds of thousands of people with little money billions of dollars at rates which will reset 200% or 300% higher. This alone is reason to believe we are headed for a multi-year housing melt.

Slagging sales and rising listings now, price crumbles by Christmas, desperate sellers in 2011, vultures in 2012, then three years of mortgage renewals as VRM victims meet interest rate reality. If you think there’ll be housing bargains in a year or two, just wait for 2014. You’ll be able to buy houses and write the womenfolk into the offer.

But perhaps I’m a tad conservative. I received this note hours ago from a guy who was an investment banker at Morgan Stanley in Manhattan, chopping toxic mortgage paper at the height of the US housing bubble:

“Straight from the horse’s mouth, the Toronto Real Estate Board, Toronto prices in May averaged $446K, and in the first two weeks of July they’ve crashed down to $427K, putting Toronto prices on a pace to hit $340,000 in 1 years time— but in my experience, the acceleration of the downward trajectory will increase exponentially once the mortgage holders attempt to get out of their mortgages. I foresee prices breaking below $400K by Christmas, and then a steady progression towards below $300K for most of 2011.

He continues: “Canada will see the same housing crisis as the States has been, and for the naysayers, must I remind them that Canada did and does have subprime mortgages— 0/40 & 5/35 mortgages (with the 5% downpayment amortized across the mortgage essentially resulting in 0-down mortgages), artificially and historically unprecedented interest rates, and a general mentality that Canada is different, that housing prices can only go up. But we all know how that ended in the States. In Spain. In Australia. In Japan. In Ireland.”

Yesterday US Fed chairman Ben Bernanke rattled markets when he told Congress the American economy faces “unusually uncertain prospects.” That spoiled a perfectly good stock rally, sank our dollar and dashed hope that recent bad economic news was a fluke. The reality is sinking in that even after tanking interest rates to zero, paying people to buy houses, bailing out whole industries and spending $1.5 trillion buying back crappy mortgages and government bonds, Washington is stymied.

Now I mention these things because you should know them. Most people don’t. They’re busy buying Capri pants and riding mowers.

Credit’s been so easy to come by in our society, so normal and accepted, so routine and innocuous, that we’re now addicted. Using other people’s money to buy houses cars and plasma TVs has made us immune to the fact we don’t generate enough ourselves, that we’re living beyond our means.

...

The housing market, and the Canadian middle class, is at serious risk. There’ll be no job-filled recovery here while the US stumbles. No chance mortgage rates will ever sink back below 2%. No planes full of rich Chinese or Iranian greater fools to save us. Instead, next year’s headlines will be about negative equity and the TV casts will feature first-time sellers stunned they’re losing everything.

This is the pornography of debt, thanks to the lust for houses.

Scotiabank Abuses Cancer Patient Trying To Reclaim Her Silver

nospam@example.com (Angelo) — Mon, 19 Jul 2010 10:22:01 -0600

The naked shorting in the metals market means that there is far more paper silver and gold than there is physical. For those looking to exit paper certificates and take possession of the physical the lesson from the story below might just be that the ability to make that transaction may be drawing to a close. The explosion in the metals market resulting from this long held practice of naked shorting, if not contained by some form of heavy handed state intervention, will cause tremors worldwide while bringing collapse to the institutions involved in this ongoing fraud.

Source: The Globe and Mail

In the end, nothing else would do for Scotiabank but that Amar Patel – 73 years old, bald from chemotherapy, in the throes of metastatic breast cancer – should drag her aching bones down to the bank’s head office in downtown Toronto.

The trip from her airy apartment above the Indian Rice Factory, the landmark restaurant she founded in 1970 and has run ever since, was an agony of no fewer than five transfers – from the hospital bed in her living room to a commode, from commode to the chair lift for the first set of stairs, from that chair to the next chair lift for the second set, from that chair to a walker, from walker to the car.

This exercise took 59 minutes and the best efforts of her son Aman, daughter-in-law Deepa and restaurant employee Chandan Sindhwal.

I should note that despite her illness and pain, Mrs. Patel, who hadn’t been out of the apartment for almost two months, was gracious, beautiful in a red-striped caftan and, but for occasional moans when the car hit a rough patch of road, remarkably uncomplaining.

All she wanted was to do was take delivery of the silver the bank was holding for her in the form of the certificates she’d bought decades earlier.

It was, or ought to have been, an uncomplicated transaction.

Another major financial institution, TD Bank, managed to handle the same transaction within a couple of days, and delivered the bullion to Mrs. Patel’s local branch for pickup.

By this Thursday, Mrs. Patel had done the following to obtain Scotiabank’s agreement to give her what is rightfully hers:

In early March, Aman, a Toronto criminal lawyer, had attended the downtown headquarters to explain his mom’s situation. He suggested that either a bank official go to her apartment to witness her signature (he even offered to pick up and drive back the official) or consider meeting his mother in the car outside the bank to save her a bit of the journey: Both requests were rejected.

On March 17, Aman faxed the silver certificates to his mom’s local Scotiabank branch and then drove his mother there; they were advised she would have to attend the King/Bay office downtown.

For a time, Mrs. Patel gave up; she was hoping she could tackle it in a few weeks or months, when she was better and had her strength back.

When that didn’t happen, she hired a Bay Street lawyer and, through him, signed a power of attorney appointing Aman as her attorney.

In early July, Scotiabank asked first to “pre-inspect” the POA, then demanded the original; then pronounced it unacceptable because it wasn’t sealed; then insisted that a notarized copy, with covering letter from the lawyer, be produced; finally, the notarized POA had to be submitted to the home branch, then the bank’s legal department.

Even with these various approvals finally in place, Aman was told (being a lawyer, he has notes of all these conversations and e-mails) that the bank could still deny the transaction if it was deemed not to be in Mrs. Patel’s “best interest.”

So she hired another lawyer, this time to help her get what was hers.

Then the bank said it had to decide if the transaction was to be for the benefit of the attorney, from a business point of view. In other words, Scotiabank would decide if the transaction made business sense – not Mrs. Patel, or her lawyer, or Aman, who had her POA.

This Thursday, having heard nothing from the bank about whether it would honour the now-approved and vetted POA, Aman called and got Judy McBride, the head of customer service at King and Bay Streets. She told him the bank would not honour the POA, and that Mrs. Patel had to come down in person.

Aman again explained how weak his mother was, to no avail.

That afternoon, Aman, his wife and Chandan managed to carry out the five transfers and get Mrs. Patel in the car.

Once they arrived downtown, Aman went in to ask, one last time, if Scotiabank would at least dispatch people outside to do the signing in the car; absolutely not, came the answer.

They got Mrs. Patel into the commode chair and into the lovely, high-ceilinged headquarters with its polished marble floors they went.

Ms. McBride asked a number of questions, in my presence. Among them, “Do you understand what this transaction is that is taking place? We’re taking your certificates and giving you the actual bullion? Why would you want to do that? It’s more difficult for you to cart around.”

At this point, Aman’s seemingly endless store of patience was exhausted and he said, mildly I thought in the circumstances, “That’s none of your business.”

Ms. McBride said that it was, that “simply putting a POA in place doesn’t give carte blanche,” that the bank had a responsibility too, and asked Mrs. Patel, “Why would you need the physical metal?”

Ms. McBride said the bank “reserves a right to ask questions” because, she said, “We need a comfort level.”

Bank spokesman Joe Konecny denied the bank ever insisted Mrs. Patel had to come in person, said they were “willing to act” on the POA, but that “a heightened level of due diligence was required for a number of reasons,” among them, bizarrely, that the transaction wasn’t initiated at her home branch, although that branch had directed her downtown.

In any case, after about an hour, Mrs. Patel finally got her silver.

But it must have been a mortifying experience for this very dignified woman to make such a trip in her bedclothes, and the whole thing struck me as a profoundly condescending and arbitrary intrusion of bank functionaries into Mrs. Patel’s and her family’s business. And what if her son wasn’t a lawyer who knew how to fight back? What if she’d had a stroke and wasn’t able to sign the documents?

Wall Street's Rules

nospam@example.com (Angelo) — Fri, 16 Jul 2010 11:48:30 -0600

A decent synopsis of the non-reform 'financial reform' touted by Obama's administration as being "tough on Wall Street."

The End Game and the Illusory Gold Bubble

nospam@example.com (Angelo) — Wed, 14 Jul 2010 17:32:45 -0600

Protect ye thine assets, lest you be flanked by the pirates and left empty of treasure...

Source: 24hgold

When the end-game began, gold was $35 per ounce. Today, gold is $1200. When the end-game is over, gold will be far higher.

Midway through 2010 we are approaching the end of the end-game, the resolution of the monetary imbalances that began in 1971. For more than 2500 years, gold was money: but, in 1971 that changed. After 1971, money was no longer connected to gold. For the first time in history, money had no intrinsic value.

After the Bretton Woods Agreement in 1945 until 1971, the world’s currencies were anchored to the US dollar which was convertible to gold. Thus, directly or indirectly, all currencies could be exchanged for gold; but on August 15, 1971 the US cut the ties between the US dollar and gold; and all currencies became fiat.

It was as if someone removed a pin from the axle of international commerce when the US dollar was no longer convertible to gold. Previously, the US dollar was linked to gold, and other currencies were linked to the dollar. Everything was stable. It is no longer so. Once the pin connecting gold and paper money was removed, everything changed. The axle of international commerce began to vibrate and lately it’s been getting much worse. The fear is that the wheels are now about to come off.

Page 9, How to Survive the Crisis and Prosper in the Process

THE BEGINNING OF THE END-GAME

The cutting of ties between money and gold set in motion the extreme monetary instability that was to characterize the 1970s. In 1960, the US prime rate was 5 %. At the end of the decade, the rate was 6.75 %. But when money became fiat in 1971, US rates became extremely volatile, vacillating between 4.50 % and 21.50 % during the next ten years.

In my article America at the Crossroads and the War on Gold, I pointed out the role of former Fed chairman Paul Volker in destabilizing the monetary system. Believed by most to be a “hard-money hero”, Volker was, in fact, the very opposite.

Volker, as under-secretary of the Treasury in 1971, played a critical—and largely unknown role—in the removal of gold from the international monetary system and is therefore responsible for much of the monetary chaos which has since ensued:

From 1969 to 1974 Mr. Volcker served as under-secretary of the Treasury for international monetary affairs. He played an important role in the decisions leading to the U.S. suspension of gold convertibility in 1971, which resulted in the collapse of the Bretton Woods system.

http://en.wikipedia.org/wiki/Paul_Volcker

Appointed as Chairman of the Federal Reserve by President Carter in 1979, Volker was at the helm when inflationary forces he had earlier unleashed almost destroyed the US economy in 1979-1981.

Volker’s draconian raising of interests rates in 1980 was necessary to quell the inflationary fires he had lit in 1971; and although successful, Volker’s role is not dissimilar from others who put out fires they themselves start.

THE END-GAME ACCELERATES

While it was Paul Volker who set the end-game in motion, it was Alan Greenspan, his successor at the Fed, who would greatly accelerate the process by putting US financial markets beyond the reach of government regulators.

Volker was replaced by Greenspan as Fed Chairman because Volker wouldn’t dismantle existing financial regulations as desired by the Reagan White House and Wall Street investment banks. As Nobel Prize winner Joseph Stiglitz later explained:

Paul Volcker, the previous Fed Chairman known for keeping inflation under control, was fired because the Reagan administration didn't believe he was an adequate de-regulator.

In Alan Greenspan, Wall Street got the Fed chairman they wanted, someone who would provide them with an unending flow of central bank credit and who would turn a blind eye as to what they would do with it. Alan Greenspan was Wall Street’s wet dream come true.

During his 19 year tenure as Fed Chairman, Alan Greenspan ushered in an era of loose credit producing massive profits for Wall Street along with two of the largest bubbles in history, the US dot.com and US real estate bubbles.

Greenspan with consummate political timing resigned as Fed Chairman just before his extraordinary credit bubble collapsed. However, a third, even larger bubble which Greenspan nurtured, still has yet to burst. This is the government bond bubble, by far now the largest bubble in history

The enormous government bond bubble was “Fed” by the excessive issuance of credit made possible by the removal of gold from the monetary system, thereby allowing governments to freely borrow what they had just printed.

Once Volker controlled the fires of runaway inflation in 1980/1981, the issuance of government credit and debt exploded upwards under Greenspan’s tenured aegis at the Federal Reserve.

This soon-to-be fatal rise in US debt would not have been possible had the US dollar been tied to gold. This is why both bankers and governments who profit and live by debt oppose a return to the gold standard or any attempt to again tie their currencies to gold.

…a gold standard and a redeemable currency…enables a people to keep the government and banks in check. It prevents currency expansion from getting ever farther out of bounds until it becomes worthless…

Professor Walter E. Spahr, Chairman of the Department of Economics, NYU, 1927-1956

Banker John Exter, present when Volker cut the ties between the US dollar and gold, later commented on the consequences of Volker’s historic decision: The final link between the dollar and gold was broken. The dollar became nothing more than a fiat currency and the Fed [and especially the banks] were then free to continue monetary expansion at will. The result..was a massive explosion of debt

Today, the debt is due and owing and repayment is increasingly in doubt. Economics isn’t rocket science. It’s cause and effect and since the introduction of debt-based money, the primary cause of economic expansion has been credit.

The consequence of credit is its deadly effluvia, debt; and when the issuance of credit can no longer service or roll-over constantly compounding debt, parcus nex, economic death, otherwise known as the end game, ensues.

The enormous amount of government debt—total sovereign debt now totals $34 trillion dollars—can never be repaid. The end of the end-game will come when investors collectively realize this is so. That realization has not yet happened. When it does, for most it will be too late.

THE ILLUSORY GOLD BUBBLE

Some believe gold is a bubble. It is not. The price of gold, however, tracks a bubble and that is why it is mistaken for one.

The real bubble is government debt, not gold. Government debt is a bubble that hasn’t yet burst; one that has grown even more rapidly in the last two years as almost all nations went far deeper into debt after the 2007/2008 global collapse.

..sovereign debts grew by almost 30% in just two years. Sovereigns became the majority of worldwide debt. Several countries doubled their debts from 2007 to 2009 (BIS data)

http://www.calculatedriskblog.com/2010/07/how-large-is-outstanding-value-of.html

This recent meteoric rise in government debt has been matched by a corresponding rise in the price of gold. When government borrowing rose after 2007, the price of gold also rose, from $700 to $1200 per ounce, almost precisely tracking the rise in government debt.

…the ballooning size of the US Treasury’s debt, which hit a record $12.8-trillion last month, has been a steady linchpin supporting the historic rally in the gold market over the past decade. As a general rule of thumb, every $1- trillion of fresh debt issued by the Treasury equates with a $125 /ounce increase in the price of gold. As long as the Fed and G-20 central banks continue to peg ultra-low interest rates, - and G-20 governments continue to flood the debt markets with huge quantities of IOU’s, - it translates into monetization, and the trajectory for the gold market would stay bullish.

http://www.sirchartsalot.com

When the government debt bubble bursts—and it will—gold will not collapse as will bonds and other paper IOUs. When it happens, the collateral damage to the US dollar and fiat currencies may well be fatal and the price of gold—the only safe haven in such times—will explode upwards.

The recently revealed Bank of International Settlement 382 ton gold swap is evidence of gold’s value in such times. Hinted at by Julian D.W. Phillips in his insightful article, Gold Is Back As Money, Michael J. Kosares connected the dots in his post, BIS Swap Signifies A Threat To Europe, Not To Gold, by pointing out that the swap was probably conducted with Portugal..

Portugal, whose gold reserves equal ( or rather equaled) 382 tons, badly needs to refinance its debt and when investors no longer trust sovereign bonds, gold is far more preferable as collateral than a government’s promise to repay.

Note: In the swap, the BIS most likely used commercial banks as intermediaries in order to disguise central bank use of gold as financial collateral.

The European debt crisis marks the beginning of the end of the government debt bubble. Only a false sense of confidence is now supporting sovereign bond markets. In the spring of 2010 that confidence was shaken; and, someday, it will disappear entirely.

We live in interesting times. We are in the end-game.

Buy gold, buy silver, have faith.

Israel Loses Turkey, Gains Greece

nospam@example.com (Angelo) — Mon, 12 Jul 2010 12:30:15 -0600

Greece wants the economic pressure removed, it is being crushed by 'the markets', so the alignment of the Greek political process with the global financiers wishes is not surprising by any means.

Source: DEBKAfile

Israel has finally moved on from its fractured relationship with Turkey - notwithstanding the impression conveyed by some US and Israeli circles that the damage is not beyond repair. This week, the Israeli Minister of Trade and Labor Minister, Binyamin Ben-Eliezer made last-ditch bid to save the relationship by initiating a meeting in Zurich with Turkish Foreign Minister Ahmet Davutolu. It went badly and was hotly debated at the Israeli cabinet meeting Sunday, July 4. Prime Minister Binyamin Netanyahu said he thought it was worth a try, but most ministers said that given Ankara's harsh hostility, it should never have taken place.

Meanwhile, as Western and Turkish media outlets harped on Israel's loss of its only Muslim ally in the Middle East, Jerusalem was busy acquiring a new strategic partner: Greece, a NATO member like Turkey with plenty of Middle East interests, has shown interest in stepping into Turkey's shoes and investing in stronger military and intelligence ties.

DEBKA-Net-Weekly 450 reported on June 25 from sources in Athens and Jerusalem that this development was not so much planned in Jerusalem as initiated by Greek Prime Minister George Papandreou, who boasts many Jewish and Israeli friends and business contacts, some of whom hold high political and intelligence positions in Israel. He saw Athens' chance to slot into Ankara's place in Jerusalem and transform their present diplomatic, economic, military and intelligence ties into a thriving strategic alliance, that would carry the same advantages to both sides as did Israel's former relations with Turkey.

According to some sources, Papandreou also hopes this alliance will help ease some of his country's financial woes.

...

This notion was not the direct outcome of Israel's break with Turkey or the clash aboard the Turkish Mavi Marmara on May 31 between Israeli commandos and pro-Palestinian Turkish activists. It has been evolving for some time, first broached in the summer of 2008 when Papandreou allowed 100 Israeli F-15 and F-16 fighter-bombers to pass through Greek Mediterranean air space for practicing long flights and in-flight fueling.

The distance between Israel and Greece there and back is 1,900 kilometers, identical to the distance between Israel and Iran.

The Greek prime minister went out of his way to be of assistance, making available to the Israeli Air Force the crews and advanced S-300 PMU1interceptor missile batteries Athens purchased from Russia back in 2000. They were allowed to practice bombing sorties against these batteries, in case Moscow decided to sell them to Iran and Syria.

The severe financial crisis besetting Greece this year enhanced the friendly ties between Athens and Jerusalem. While European Union countries spent long months discussing whether to bail Greece out and save it from collapse (eventually granting a €110 billion package), Papandreou turned to Jewish financial titans in Europe and the United States for help to keep the Greek economy afloat.

Market Manipulation On Display

nospam@example.com (Angelo) — Fri, 09 Jul 2010 08:54:21 -0600

U.S. Marks 3rd-Largest, Single-Day Debt Increase

nospam@example.com (Angelo) — Thu, 08 Jul 2010 18:27:06 -0600

Source: Washington Times

The nation's debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.

The one-day increase for June 30 totaled $165,931,038,264.30 - bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.

Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years - an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.

"What matters is the overall trend line, and the overall trend line is shooting up," said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call.

Fears over red ink have stalled key parts of Mr. Obama's agenda in Congress in recent weeks, including his push for another round of stimulus spending. Just last week, House Democrats had to use a tricky parliamentary tactic to pass an emergency war-spending bill, aid for teachers and new spending caps.

U.S Workforce Shrank by 652,000 in June

nospam@example.com (Angelo) — Mon, 05 Jul 2010 21:35:03 -0600

Source: The Telegraph

"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.

Washington's fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

No Sympathy From the IRS

nospam@example.com (Angelo) — Fri, 25 Jun 2010 22:19:48 -0600

So you've just lost your way of life....you're now jobless....you risk lifelong sickness to earn a fraction of your average salary out on the oil cleanup....and the IRS comes knocking.

Related Story - Gulf boat captain shoots himself on boat's deck

Source: AP

The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.

Under current law, BP payments for lost wages are taxable -- just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.

BP officials have agreed to create a $20 billion fund for spill victims, as well as a $100 million fund to support displaced oil rig workers.

The IRS issued the guidance today to help spill victims sort through the law's complexities. The agency has posted tax information for oil spill victims on its website and plans to hold forums in seven Gulf Coast cities on July 17 to help victims with tax troubles or questions.

"As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it," IRS Commissioner Doug Shulman said. "We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution."

"We'll do everything we can under current law to help taxpayers," Shulman added.

Rep. Charlie Melancon, D-La., introduced a bill this week to exempt from taxes all BP payments to spill victims, though its prospects for becoming law were uncertain.

"Compensation from BP will help, but during this uncertain time Louisianians will need to stretch every dollar and should not have to worry about setting aside a portion of the payments for taxes," Melancon said in a statement.

Ken Hoagland, chairman of the National FairTax campaign, an anti-tax group, said, "These modest payments are just putting food on the table and should not be taxed."

The IRS has a number of programs to help people who make a good-faith effort but cannot afford to pay their tax bills. Agents can postpone collections in certain hardship cases or allow delinquent taxpayers to skip installment payments if they have made timely payments in the past.

Debt: Imperial Power and Control

nospam@example.com (Angelo) — Thu, 24 Jun 2010 17:37:48 -0600