Jan 28

The first Boeing Co. 787 airplane is assembled at the company’s manufacturing plant in Everett, Washington on May 19, 2008. Photographer: Kevin P. Casey/Bloomberg News

Jan. 28 (Bloomberg) — Boeing Co. said it plans to cut 10,000 jobs, or about 6 percent of its workforce, after a strike and program delays led to a fourth-quarter loss and a global recession began to erode demand for aircraft.

The job reductions, disclosed on a conference call today, include 4,500 that were previously announced in the commercial- plane half of Boeing’s business. Earlier the Chicago-based company reported a net loss of $56 million, or 8 cents a share, after a year-ago profit.

Boeing faces a potential increase in canceled or deferred orders this year as airlines cope with a drop in travel demand and tight credit. Almost a third of the world’s carriers are likely to defer deliveries this year, up from 8 percent three months ago, a survey released last week by UBS Investment Research showed.

The planemaker also must carry development costs on the delayed 787 Dreamliner, which is now due to reach the first customer in early 2010, about two years later than planned. An eight-week machinists strike that ended Nov. 2 added to the delays and stripped $1.8 billion from full-year earnings.

The company delivered 50 aircraft in the quarter, 70 fewer than planned, hurting revenue by $4.3 billion and setting it further behind rival Airbus SAS, the only larger commercial-plane maker. Boeing is also the second-largest defense contractor.

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Jan 27

The Israeli army has been urged to sack Rabbi Avi Ronzki over the booklet

The Israeli army’s chief rabbinate gave soldiers preparing to enter the Gaza Strip a booklet implying that all Palestinians are their mortal enemies and advising them that cruelty is sometimes a “good attribute”.

The booklet, entitled Go Fight My Fight: A Daily Study Table for the Soldier and Commander in a Time of War, was published especially for Operation Cast Lead, the devastating three-week campaign launched with the stated aim of ending rocket fire against southern Israel. The publication draws on the teachings of Rabbi Shlomo Aviner, head of the Jewish fundamentalist Ateret Cohanim seminary in Jerusalem.

(“My Fight” can be literally translated into German as “Mein Kampf” (Adolf Hitler).

Related article: UN council urged to look at Israel’s conduct in Gaza (Reuters):
Richard Falk, a special U.N. investigator sent to the Middle East by the Geneva-based U.N. Human Rights Council, has said there was evidence that Israel committed war crimes in the Gaza Strip and there should be an independent inquiry.

Falk, who is Jewish, has compared the situation in Gaza to that of the Warsaw Ghetto during the World War Two, where the Nazis systematically starved and murdered Jews. Israel denies committing any war crimes during its assault on Gaza.

In one section, Rabbi Aviner compares Palestinians to the Philistines, a people depicted in the Bible as a war-like menace and existential threat to Israel.

In another, the army rabbinate appears to be encouraging soldiers to disregard the international laws of war aimed at protecting civilians, according to Breaking the Silence, the group of Israeli ex-soldiers who disclosed its existence. The booklet cites the renowned medieval Jewish sage Maimonides as saying that “one must not be enticed by the folly of the Gentiles who have mercy for the cruel”.

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Jan 27

There’s still a lot of blue sky in Boeing’s plans for directed-energy weapons like the Laser Avenger. (Credit: Boeing)

Updated 2:40 p.m. with details on how the laser damaged the UAV and on the Laser Avenger’s targeting system.

Boeing is seeing a glimmer of progress in its work toward fielding laser weapons.

The defense industry giant on Monday said tests of its Laser Avenger system in December marked “the first time a combat vehicle has used a laser to shoot down a UAV,” or unmanned aerial vehicle. In the testing, the Humvee-mounted Laser Avenger located and tracked three small UAVs in flight over the White Sands Missile Range in New Mexico and knocked one of the drone aircraft out of the sky.

Boeing didn’t go into much detail about the shoot-down. In response to a query by CNET News, it did say this much about the strike by the the kilowatt-class laser: “A hole was burned in a critical flight control element of the UAV, rendering the aircraft unflyable.”

While decades of Hollywood imagery may conjure up a vision of a target disintegrating in a sparkle of light, the actual workings of the laser beam are probably more prosaic. For instance, the beam from Boeing’s much, much larger Airborne Laser, which is intended to disable long-range missiles in flight, uses heat to create a weak spot on the skin of the missile, causing it to rupture in flight. Boeing hopes to conduct the first aerial shoot-down test with the much-delayed 747-based Airborne Laser later this year.

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Jan 27

Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars.

In a striking example of how the global financial crisis and high food prices have strained the finances of poor and middle-income nations, countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil.

Related article: Credit Crisis Hits Poorer Nations Harder As They Barter for Food (Washington Independent)

The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up.

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Jan 27

ACTORS and directors have warned the BBC they will not work for the corporation again if it does not broadcast the Gaza charity appeal.

In a letter written to Mark Thompson, the BBC’s director-general, the actors Tam Dean Burn and Pauline Goldsmith, and the directors Peter Mullan and Alison Peebles, said they were “appalled” by the refusal to show the Disasters Emergency Committee (DEC) appeal.

Their ultimatum came as the satellite broadcaster Sky also decided yesterday it would not screen the DEC film. Like the BBC, it said it wanted to protect the impartiality of its news reports.

Related article: Tony Benn to BBC: If you won’t broadcast the Gaza appeal then I will myself

Gaza is in the grip of a humanitarian crisis, with its 1.5 million population urgently needing food, water, medicine and shelter, after Israel’s three-week assault.

The BBC said yesterday it had received about 15,000 complaints about its decision not to screen the appeal for the DEC, which represents several charities.

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Jan 27

President Obama leads US drive to topple Robert Mugabe in Zimbabwe (Times Online)

Halliburton to pay record $559m to settle bribery case (Times Online)

Citigroup going through with $50 mln plane order-source (Reuters):
NEW YORK, Jan 26 (Reuters) – Citigroup Inc (C.N), which has received $45 billion of capital from the U.S. government, is going through with plans to buy a $50 million jet but a U.S. senator called the deal absurd and wants the Obama administration to block it.


Week of mass strikes set to paralyse France in protest against against Sarkozy’s reforms (Guardian):
Nicolas Sarkozy this week faces the first mass-protests over his handling of the financial crisis as unions prepare to paralyse France in a general strike uniting train-drivers, air traffic controllers, journalists, bank staff and even ski-lift operators. “Black Thursday” is the first general strike since the French president’s election in 2007. All the leading unions have joined forces to protest that the government’s stimulus plans should focus less on companies and more on workers’ job-protection and purchasing power.

AP IMPACT: US bets execs can save banks, this time (AP):
WASHINGTON (AP) — It’s one of the ironies of the U.S. financial bailout: The banking executives now managing billions in taxpayer money are the same ones who oversaw the industry’s near collapse.

A Russian billionaire who apparently fell out with the Kremlin over his tax bill has become the latest oligarch to flee Russia and start a new life of exile in Britain.

Mobile phone oligarch flees Russia for new life in Britain (Guardian):
A Russian billionaire who apparently fell out with the Kremlin over his tax bill has become the latest oligarch to flee Russia and start a new life of exile in Britain.

Nomura posts $3.8bn fourth quarter loss (Financial Times)

Tata’s Corus to Cut 3500 Jobs in UK, Netherlands (Bloomberg):
Jan. 26 (Bloomberg) — Corus, Europe’s second-largest steelmaker, will cut 3,500 jobs as it reduces production following a collapse in demand from builders and carmakers.

Corning slashes 3500 jobs (CNN Money):
NEW YORK (CNNMoney.com) — High-tech glass and ceramics maker Corning Inc. announced Tuesday it will cut 3,500 jobs, or 13% of the company’s workforce, by the end of 2009.

IBM cutting over 2800 jobs, labor group says (MarketWatch)

South Carolina unemployment rate rises to 9.5 percent in Dec. (Forbes)

NY financier Cosmo held on Ponzi scheme charge (Reuters)

UN crime chief says drug money flowed into banks (Reuters)

UN Official Wants to Prosecute Bush, Rumsfeld for Torture (The New American)

Police report crime spikes related to economy (USA Today)

Google plans to make PCs history (Guardian):
Google is to launch a service that would enable users to access their personal computer from any internet connection, according to industry reports. But campaigners warn that it would give the online behemoth unprecedented control over individuals’ personal data.

93-year-old froze to death, owed big utility bill (AP):
BAY CITY, Mich. – A 93-year-old man froze to death inside his home just days after the municipal power company restricted his use of electricity because of unpaid bills, officials said. Marvin E. Schur died “a slow, painful death,” said Kanu Virani, Oakland County’s deputy chief medical examiner, who performed the autopsy.

Forecasters see historic drop in retail sales (MSNBC)

Pelosi says birth control will help the US economy (Telegraph)

IMF chief turns up heat on China over yuan (Times Online):
The head of the International Monetary Fund turned up the heat on China over its exchange rate policies yesterday, arguing that it was clear that the Chinese yuan was “significantly undervalued”.

Global recession costs 80,000 jobs a day (Guardian)

Israeli soldier and Palestinian killed (Guardian)

Tony Benn:Liberty is crucial to democracy (Guardian):
This is not an issue of left or right – we must all ensure that government doesn’t rule over people but serves them

Turritopsis nutricula: the world’s only ‘immortal’ creature (Times Online)


Jan 27

The headquarters of mortgage lender Fannie Mae is shown in Washington September 8, 2008. REUTERS

NEW YORK (Reuters) – Fannie Mae and Freddie Mac could tap the government for up to $51 billion in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest providers of funding for U.S. residential mortgages.

The storm of rising delinquencies and falling securities values that led to the government’s seizure of the companies in September accelerated in the last quarter, requiring Fannie Mae and Freddie Mac to seek more of the stop-gap measures organized by the U.S. Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009.

Fresh losses in the most recent quarter will probably be the harshest on Freddie Mac, which holds a larger portfolio of risky mortgage securities, including subprime bonds. The McLean, Virginia-based company said on Friday it may have to seek $30 billion to $35 billion in capital from the Treasury in the form of senior preferred stock.

Washington-based Fannie Mae said late on Monday that the Federal Housing Finance Agency, the regulator, may request $11 billion to $16 billion, based on estimates for fourth-quarter results.

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Jan 27

ISRAELI soldiers fighting in the Gaza Strip offensive this month were ordered to kill themselves rather than be captured, and if necessary to kill any Israeli soldier they saw being taken into captivity, the Yediot Achronot newspaper has reported.

“No matter what happens, no one will be kidnapped,” the paper quotes one company commander telling his troops before the fighting began. “We will not have a Gilad Shalit 2.”

Corporal Shalit, the Israeli soldier taken prisoner three years ago, is being held by Hamas, which is demanding the release of more than 1000 Palestinian prisoners, including hundreds convicted of terrorism, in exchange for his release.

The newspaper quotes similar orders given in different Israeli field units, which reportedly reflect a new army policy.

In the past, there were standing orders, known as “Hannibal mode”, for firing at a vehicle taking Israeli troops into captivity to disable it and permit a rescue team to reach it, even at risk to the captive soldiers inside the vehicle. The new orders tighten those instructions, reportedly by permitting the vehicle to be blown up.

A soldier in a commando unit that operated behind Hamas lines said his unit was equipped with “special weapons”. “We were instructed to use them also against any vehicle carrying a kidnapped soldier,” he said.

And an Israeli company commander told the newspaper he had instructed his men to resist being taken prisoner “even if this costs you your life”.

Israel’s Channel Ten television station broadcast a recording of a battalion commander instructing his men just before they invaded the Gaza Strip, in which he says one of Hamas’s main goals was to capture soldiers to exchange for imprisoned terrorists. “No soldier from the battalion will be kidnapped, even if that means he blows up on his own grenade together with whoever wants to take him,” the commander says.

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Jan 27

Source: San Jose Mercury News

Posted: 01/26/2009 08:00:00 PM PST

Deadline is real: 5 days to fix California’s budget

Five days are left to cut a deal on the state budget. If not, on Sunday, California, the world’s eighth-largest economy, will become the world’s biggest deadbeat.

Related article: California prepares to stop paying bills (WorldNetDaily)

Having raided every state fund and borrowed the max, the state will start issuing IOUs. College students won’t get Cal Grants. Counties will borrow from reserves to cover social services. State contractors won’t get paid, and taxpayers won’t get refunds. The state already has shut down billions of dollars worth of construction projects. By April, as bills mount up, California, for all practical purposes, will stop functioning as a state.

It’s shameful that things have come this far, but there’s still time to stop things from getting worse – if enough Republicans, at least three in the Assembly and three in the Senate, agree to balance severe cuts to state services with new or higher taxes. Doing so, however, will risk retribution from the rabid right of their party.

All is not totally bleak. House Democrats’ version of President Barack Obama’s $825 billion stimulus includes $10 billion in immediate relief to California, in Medicaid payments for the poor and education aid. That would lop off a quarter of California’s $40 billion deficit. It pays to have friends, like House Speaker Nancy Pelosi, in high places.

But $10 billion won’t necessarily translate into fewer cuts or taxes. Gov. Arnold Schwarzenegger’s proposed budget included $10 billion in phantom solutions: an improbable $5 billion in borrowing against future lottery proceeds and $5 billion in money shifting that’s probably unconstitutional.

So $30 billion in hard choices remains regardless – and less than a week to make them.

Source: Bloomberg

Schwarzenegger Says Deal Is Close as Cash Runs Short

Governor Arnold Schwarzenegger of California attends the inauguration ceremony of U.S. President Barack Obama at the Capitol in Washington on Jan. 20, 2009. Photographer: Ken Cedeno/Bloomberg News

Jan. 26 (Bloomberg) — California Governor Arnold Schwarzenegger said legislative leaders are closing in on an agreement to eliminate the $42 billion budget shortfall threatening to leave the state out of cash as soon as next week.

“We are getting closer and closer,” he said during a press conference. “We’re getting there, but it will still take a few more days to get there.”

Schwarzenegger, a Republican, told reporters in Sacramento the state won’t have enough money to pay for all of its bills “within the next week or 10 days.” With that in mind, Schwarzenegger said he and lawmakers were working.

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Jan 27

Home prices in big US cities fell at a record 18.2 per cent in the year to November as the stricken housing market showed no signs of bottoming out.

The drop followed an 18 per cent year-on-year decline in the prior month, itself a record, as prices fell more steeply in a wider array of cities including Boston and New York, according to the closely watched Case-Shiller index released on Tuesday.

At the same time, US consumer confidence fell to a new low in January, falling to 37.7 from 38.6 the prior month.

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Jan 27

John Alfred Paulson, president of Paulson and Co., speaks during a hearing of the House Committee on Oversight and Government Reform on Capitol Hill November 13, 2008. Photographer: Brendan Smialowski/Bloomberg News

Jan. 27 (Bloomberg) — Paulson & Co., the hedge fund run by billionaire John Paulson, made at least 295 million pounds ($420 million) since September by short selling Royal Bank of Scotland Group Plc.

Paulson held a short position of 0.87 percent in Edinburgh- based RBS on Sept. 19, according to regulatory filings. The shares traded at 213.5 pence at the time, and Paulson’s disclosure indicates he borrowed and sold almost 144 million RBS shares with plans to buy them back at a lower price. He reduced his short position to less than 0.25 percent, or about 98.6 million shares, as of Jan. 23, according to a filing yesterday.

Related article: Paulson reaps £270m ‘shorting’ RBS (Financial Times)

“They took positions in U.K. banks and their bearishness has been handsomely rewarded,” said Leigh Goodwin, a London-based analyst at Fox-Pitt Kelton Ltd. who has an “in-line” rating on RBS. “They timed their exit well.”

Paulson would have made 295 million pounds, assuming it still had a 0.25 percent short position on Jan. 23, when RBS closed at 12.1 pence. RBS, which said this month it will take as much as 20 billion pounds of writedowns in 2008 and post the biggest loss in U.K. history, is down 94 percent since Sept. 19. Paulson & Co. said its funds made more than $3 billion for the firm in 2007 by judging that the U.S. housing market and subprime mortgages would collapse.

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Jan 26

Two years ago, Iceland was top of the UN living index. Now it is in the frontline of the global economic crisis after the failure of its banks, reports Sophie Morris in Reykjavik

Reykjavik: Iceland must confront the fact that it has been blighted by a man-made disaster

Source: Meltdown: Iceland on the brink (Independent)

When Iceland’s ruling coalition broke apart Monday, it became the first government to fall as a result of the world financial crisis. It may not be the last.

Iceland’s case is unique because the tiny country’s entire banking system collapsed in October, decimating the value of the life savings of most residents on the island. Still, other countries in Europe are experiencing political unrest because of the global economic downturn.

Related articles:
Iceland sends jumpers to help the UK (BBC News)

How Iceland went from world’s biggest hedge fund to pariah in in global markets (Guardian)
Iceland’s government topples amid financial mess (AP)
Waking up to reality in Iceland (BBC News)

In Latvia last week, a riot ensued after 10,000 protesters marched on parliament. Demonstrations also turned violent in recent weeks in Bulgaria, Lithuania and Greece.

“I think we are still headed sharply downhill in the world economy and the U.S. economy, and I don’t pretend to know how far,” said Ralph Bryant, a former director of the Federal Reserve Board’s Division of International Finance and a senior fellow at the Brookings Institution. “Every country in Europe is troubled by these things.”

“Very little has been done,” he said. “I don’t say nothing has been done, but it’s moving very, very slowly.”

Frustration turns to violence

Iceland’s government fell after the U.S.-educated prime minister, Geir Haarde, couldn’t reach a deal on sharing power with another party in his coalition.

That came after Haarde last week called for elections in May, ahead of those scheduled for 2011, after weeks of protests by Icelanders upset about soaring unemployment and rising prices. Haarde announced Friday that he has cancer and would not seek another term.

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Jan 26

“Tony Crescenzi, chief bond-market strategist at Miller Tabak & Co. in New York, says foreign investors might also get spooked if they conclude that the Fed is monetizing the government’s debt — in effect, printing money — by buying Treasuries.”

“Bernanke himself, in his 2003 speech, said monetization of the debt risked faster inflation — something bond investors, foreign or domestic, wouldn’t like.”

Because the U.S. government can’t raise taxes much higher it has to finance its debt and all those ‘not working’ bailouts and stimulus packages by issuing an enormous amount of Treasuries. This is nothing more than a promise of a tax hike in the future, because that debt has to be paid back one day plus interest.

Countries like China, Japan and Saudi Arabia have to believe in the solvency of the U.S. to buy those Treasuries, but since the U.S. Treasury will issue record amounts of treasuries in the coming years the trust that the U.S. might be able to pay its debt back wanes.

Since those countries are now also in serious trouble themselves their appetite for U.S. Treasuries will decline dramatically.

If the Fed is now buying those Treasuries by ‘printing money’ – which increases the money supply = the definition for inflation – then it will create massive inflation.

Inflation is really nothing more than a hidden tax:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes

That is why the governments of the world love Keynesianism – Obamanomics stimulus packages – so much.

The Fed calls this monetary policy ‘quantitative easing’ (= creating money out of thin air).

It should be called stealing or high treason instead.

The Fed and the government will create hyperinflation and destroy the dollar.

The Greatest Depression is coming.

Gerald Celente: The Collapse of 2009; The Greatest Depression
Peter Schiff: The World Won’t Buy Unlimited U.S. Debt
Jim Rogers: Obama administration run by people who caused the latest financial problems
Paul Craig Roberts On The U.S. Leadership: “They Are Criminals” – The Potential Here Is Far Worse Than The Great Depression
Ron Paul on Glenn Beck: Destruction of the dollar
Peter Schiff: We are the United States of Madoff
Peter Schiff: We are on the verge of another major crisis
Peter Schiff: US Dollar is on the verge of collapse; This is hyperinflation; This is Zimbabwe

Source: Bloomberg

Ben S. Bernanke, chairman of the U.S. Federal Reserve, gestures to a staff member following an open board of meeting on credit-card practices in Washington on Dec. 18, 2008. Photographer: Brendan Smialowski/Bloomberg News

Jan. 26 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke and his colleagues may try once again to cure the aftermath of a bubble in one kind of asset by overheating the market for another.

Fed policy makers meeting tomorrow and the day after are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield. Behind the potential move: a desire to reduce long-term borrowing costs at a time when the Fed can’t lower short-term interest rates any further because they are effectively at zero.

The risk is that central bankers will end up distorting the Treasury market, triggering wild swings in prices — and long-term interest rates — as investors react to what they say and do. “It sets forth a speculative dynamic that is very unstable,” says William Poole, former president of the Federal Reserve Bank of St. Louis and now a senior fellow at the Cato Institute in Washington.

The Treasury market has “some bubble characteristics,” Bill Gross, the manager of Newport Beach, California-based Pacific Investment Management Co.’s $132 billion Total Return Fund, said in December on Bloomberg Television. He echoed that sentiment last week.

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Jan 26

Globally shaken: Some $5 trillion has been wiped off pensions around the biggest markets in the world

The worldwide pension crisis took a severe turn for the worse in 2008 as new research reveals that the value of global retirement funds collapsed by 19% or $5trillion (£3.8trillion) over the year.

According to consultancy, Watson Wyatt, in 2008, global institutional pension funds, in the 11 major markets plummeted from $25trillion to around $20trillion.

Roger Urwin, at Watson Wyatt, said: ‘The pensions system is being tested on every level. The ramifications of this global economic crisis will be played out for many years to come.

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Jan 26

The time has come to issue one of my sternest warnings to date: Bank of America and Citigroup could fail despite the most radical government rescues of all time.

Right now, after recent close calls with instant death, these two megabanks are on life support, receiving massive transfusions of government capital. But they’re still hemorrhaging, and no one in Washington has found a cure.

Already, they have received capital injections of $90 billion ($45 billion each).

Already, this bailout is larger than the total combined capital of PNC Bank, Suntrust Bank and State Street Bank – all among America’s ten largest.

Yet, ironically, that $90 billion is still a drop in the ocean compared to their massive exposure to risky assets.

The shocking facts revealed in the banks’ own balance sheets and in the OCC’s Quarterly Report demonstrate the enormity of problem:

Massive Risks at America’s Megabanks
(bill. of dollars)
B of A Citi B of A + Citi JPM
Total assets
1,831 2,050 3,881 2,251
All derivatives 38,186 39,979 78,165 91,339
Credit default swaps 3,291 2,467 5,758 9,250
Exposure to defaults by trading partners 177.6% 259.5% 400.2%

Fact #1. Too big to save. Bank of America Corp. and Citigroup, Inc. have combined assets of $3.9 trillion, or 43 times the size of the Treasury bailout funds they’ve received to date.

Fact #2. Bigger losses ahead. Even before any further declines in the economy, an unusually large portion of their assets are already in grave jeopardy – commercial real estate loans going sour, credit cards loans tanking, auto loans sinking, and residential mortgages turning to dust. Now, as the economy continues to tumble, avoiding much larger losses will be almost impossible.

Fact #3. Big derivatives players. Bank of America and Citigroup are the nation’s second and third largest high-rollers in the derivatives market, with a combined total of $78 trillion in these bets outstanding. That’s over ten times the derivatives that Lehman Brothers had on its books when it failed last year.

Fact #4. They’ve bet far too much on each other’s failure. Bank of America and Citigroup are also the second and third largest participants in the most dangerous derivatives of all – credit default swaps. These are the big bets that financial institutions make on the failure of other major companies.

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Jan 26

“In the wake of Mr Thain’s dismissal last week, sales and trading chief Tom Montag, his top deputy, received a promotion. Mr Montag’s department was responsible for at least half of Merrill’s $15bn loss in the fourth quarter.”

“People familiar with the matter point out that a clause in Mr Montag’s contract specifies that, if his authority was diminished in certain ways, he would be allowed to leave the bank with a hefty severance package.”


Bank of America played a role in Merrill Lynch’s controversial decision to pay $4bn in bonuses in December just as mounting losses were threatening to derail BofA’s takeover of the Wall Street firm, according to people close to the situation.

BofA has said that the payment of $4bn in compensation in a fourth quarter in which Merrill racked up $15bn in losses was sanctioned by John Thain, Merrill’s chief executive.

Ken Lewis, BofA’s embattled chief executive, ousted Mr Thain on Thursday after news of the bonus payments appeared in the Financial Times. BofA told the FT last week that Mr Thain had made the decision to pay bonuses in December instead of January and it had been “informed” of the move. The bank said Merrill was an independent company until the deal closed on January 1.

However, a person familiar with Mr Thain’s actions said the ousted chief had at least two conversations with BofA’s chief administrative officer, J. Steele Alphin, one of the bank’s most senior executives, before a December 8 board meeting at which Merrill’s bonus payments were approved.

This person said Mr Alphin recommended, and Mr Thain accepted, a proposal to change Merrill’s incentive compensation mix – 60 per cent cash and 40 per cent stock – to conform with BofA’s system of 70 per cent cash and 30 per cent stock. The stock portion of the payouts was made January 2, the day after the deal closed, in BofA stock.

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Jan 26

Jan 26 (Reuters) – Lending at many of the largest U.S. banks fell in recent months, the Wall Street Journal said, citing an analysis of banks that recently announced their quarterly results.

Ten of the 13 big beneficiaries of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP), saw their outstanding loan balances decline by a total of about $46 billion, or 1.4 percent, between the third and fourth quarters of 2008, according to the paper.

Those 13 banks have collected the lion’s share of the roughly $200 billion the government has doled out since TARP was launched last October to stabilize financial institutions, the paper said.

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Jan 26

An employee uses a hammer to store pre-cast bars of gold in a box at a plant of bar manufacturer Argor-Heraeus SA in the southern Swiss town of Mendrisio. REUTERS/Arnd Wiegmann/Files

NEW YORK/LONDON (Reuters) – Gold climbed above $900 an ounce on Monday to the highest level in more than three months as interest in bullion as a haven from risk and a weaker dollar against the euro spurred buying.

Spot gold was at $906.90 an ounce at 1:52 p.m., up 0.9 percent from the last trade $898.10 on Friday. Earlier, it peaked at $915.30, its firmest level since October 10.

U.S. gold futures for February delivery settled up $13.00, or 1.5 percent, at $908.80 an ounce on the COMEX division of the New York Mercantile Exchange.

Gold priced in euros reached an all-time high of 701.55 an ounce, and in sterling of 661.55 pounds, as fears over the global economic slowdown and volatility in other asset prices spurred buying.

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Jan 26

After less than a week in office, Barack Obama’s approval rating plunges 15 points (Daily Mail):
Barack Obama might have been in office for less than a week, but the euphoria is beginning to wane.
The new President’s approval ratings have fallen from a stratospheric 83 per cent to a more modest – although still impressive – 68 per cent.

US may ditch twice-yearly talks China (Telegraph):
Strained relations between the US and China are likely to increase in the coming months as a number of senior officials in President Barack Obama’s administration are believed to be keen to axe bi-annual economic meetings between the two superpowers.

Obama administration warns public to expect rise in US casualties (Guardian):
The Obama administration is to double the number of US troops in Afghanistan to 60,000 and when asked in a television interview if the US public should expect more American casualties, Biden said: “I hate to say it, but yes, I think there will be. There will be an uptick.”

Geithner to Press Mortgage, Bank Relief in Growing Rescue Plan (Bloomberg):
Jan. 26 (Bloomberg) — President Barack Obama’s financial rescue plan will be unveiled soon and is likely to be larger and more ambitious than originally planned as the economy and banking system worsen.

Report: U.S. Soldiers Did ‘Dirty Work’ for Chinese Interrogators (ABC News):
U.S. military personnel at Guantanamo Bay allegedly softened up detainees at the request of Chinese intelligence officials who had come to the island facility to interrogate the men — or they allowed the Chinese to dole out the treatment themselves, according to claims in a new government report.

Obama to put Bush car pollution policies into reverse (Guardian)

Barack Obama to tighten Wall Street regulations (Telegraph)

RAF ‘ordered to shoot down UFOs’ (Telegraph)

A chill wind blows through Davos as global crisis bites (Telegraph)

Evo Morales hails ‘new Bolivia’ as constitution is approved (Guardian)

Dutch bank sheds chief executive and 7000 other jobs (Guardian):
The bank, one of Europe’s biggest, took immediate action by shedding its chief executive, Michael Tilmant, after what it said was the worst quarter for equity and credit markets for a quarter of a century. It is due to post an underlying loss of €3.3bn, including €2bn in structured products, for the final three months of 2008. ING, which employs 130,000 globally,

Barclays bullish despite £8bn credit crunch hit (Guardian)

Corporate cuts spread as 6000 face axe (Telegraph):
Corporate Britain is preparing itself for one of the bloodiest weeks of the economic downturn so far with up to 6,000 redundancies set to be announced across the manufacturing, retail and services sectors.

Companies in US to Slash More Jobs, Business Economists Say (Bloomberg)

Wall Street investment banks have a way of snookering commercial rivals (Telegraph)

Report: Toyota’s output seen down 25 percent (AP)

Toyota Denies Report Global Output May Fall 20% on Recession (Bloomberg)

Caterpillar Moves to Cut 20000 Jobs (New York Times)

Bad news: we’re back to 1931. Good news: it’s not 1933 yet (Telegraph):
Barack Obama inherits an economy already contracting at an annual rate of 6pc, much like the mid-Depression year of 1931 (-6.4pc). This may beat Germany (-7pc) Japan (-12pc) and Korea (-22pc) over the fourth quarter. But that merely underlines the dangers ahead as the collapse of global trade chokes the mini-boom in US exports, setting off another stage of the crisis.

Tens of thousands face hunger amid Liberian insect plague: official (AFP)

Deaths as thousands riot in Madagascar (Telegraph)


Jan 26

“It is unacceptable that staff of international aid agencies with expertise in emergency response are still not given full access into Gaza, and that the crossings are not fully operational for humanitarian and commercial flows of goods and people,” said Charles Clayton, head of the Association of International Development Agencies.

Samir Sawafiri pointed at several dozen hungry chickens scavenging for food between the crushed bodies of nearly 65,000 other birds strewn across a destroyed farm in Zeitoun in Gaza City.

“They are all that is left and I have nowhere to put them,” he said. The poultry farms around Zeitoun used to be the Gaza Strip’s main provider of eggs, according to Oxfam. Little but twisted metal and crumbling concrete now remains of the poor suburb on the eastern outskirts of Gaza, one of the areas hit hardest during the war.

“I evacuated on January 9,” Mr Sawafiri said. “Three days later, on January 12, tanks came with bulldozers and levelled the fields. They wanted to spoil the economy – that is the only answer. There is no justification for what they did.” Israel says that Zeitoun is a known Hamas stronghold, and that militants used its fields to launch Qassam rockets into Israel.

International aid groups say that while Israel’s continuing restrictions on the flow of goods and relief workers into the devastated enclave is hampering emergency efforts, the destruction of Gaza’s agriculture means that harvests are likely to fail and the Strip will depend more on handouts.

Related articles:
The newspeak of Israeli propagandists (Guardian)

Hamas insists it will not free Israeli soldier as part of Gaza truce (Telegraph)
Hamas offers $52m handouts to help hardest-hit Gazans (Guardian)

In its efforts to choke Hamas, Israel has also frozen the flow of cash into Gaza, meaning that people have no money to buy basics. There are strict curbs on iron and concrete imports to prevent the militants rebuilding bunkers and rocket arsenals. But that also means that the 100,000 people who the UN says are homeless are once again refugees, as were their grandparents, who flooded Gaza after the 1948 Israeli war of independence.

Aid groups say only 100 or so trucks are being allowed in every day, while even before the fighting at least five times that number was needed.

In addition, there is pilfering. “There is quite a bit missing,” one UN worker said. “On some trucks it is 15 to 20 per cent of the goods. We don’t know who is taking it – the Palestinians or maybe Egypt, or Israel.” Another aid worker said that gunmen had been involved in some of the aid diversion. “We are well aware that hijackings do take place,” he said.

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Jan 26

The world faces “the real risk of a food crunch” if governments do not take immediate action to address the agricultural impact of climate change and water scarcity, according to an authoritative report out on Monday.

Chatham House, the London-based think-tank, suggests that the recent fall in food prices is only a temporary reprieve and that prices are set to resume their upward trend once the world emerges from the current downturn.

“There is therefore a real risk of a ‘food crunch’ at some point in the future, which would fall particularly hard on import-dependent countries and on poor people everywhere,” the report states. “Food prices are poised to rise again,” it adds.

The warning is made as agriculture ministers and United Nations officials gather from Monday in Madrid for a UN meeting on food security likely to conclude that last year’s food crisis, with almost 1bn people hungry, is far from over.

The UN will warn ministers in Madrid that “as the global financial crisis deepens, hunger is likely to increase” under the impact of rising unemployment and lower remittances, according to three officials briefed ahead of the meeting.

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Jan 26

Paul King, mine manager, inspects a Caterpillar Inc. haul truck at the Australian Bulk Minerals iron ore mine at Savage River in Tasmania, Australia, on Nov. 6, 2008. Photographer: Carla Gottgens/Bloomberg News

Jan. 26 (Bloomberg) — Caterpillar Inc., Sprint Nextel Corp. and Home Depot Inc. led companies today announcing at least 72,500 job cuts as sales withered and construction slowed amid a global economic recession that may persist through 2009.

The biggest layoffs were at Peoria, Illinois-based Caterpillar. The world’s largest maker of construction equipment said it’s cutting 20,000 jobs after fourth-quarter profit fell by almost a third.

Pfizer Inc., the New York-based drugmaker that’s acquiring competitor Wyeth for $68 billion, said it will close five factories and eliminate 19,000 jobs, or 15 percent, of the combined company’s workforce.

The firings came as American jobless claims hit a 26-year high, reaching 589,000 in the week ended Jan. 17, as shrinking demand for products and services forced companies to lower costs.

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Jan 26

ZURICH (Reuters) – Political leaders and central bankers will dominate this week’s annual Davos forum as a chastened business elite is sidelined in the drive to reboot the world economy, improve global security and slow climate change.

More than 40 heads of state and government — almost double the number last year — will be joined by 36 finance ministers and central bankers, including the central bank chiefs of all the G8 group of rich countries except the United States.

Related article: DAVOS-US bankers avoid glitz of Davos, image a concern (Reuters)

About 1,400 business executives will also be in Davos but fewer top bankers and captains of industry are expected as they struggle to keep their businesses afloat — and themselves in a job, mindful of the event’s glitzy image in more austere times.

“The pendulum is swinging back to governments now we’re grappling with recession,” said Thomas Mayer, Deutsche Bank economist. “We’re going into a period where more government involvement will mean lower growth and higher inflation.”

Russian Prime Minister Vladimir Putin will open the four-day meeting on Wednesday in the Swiss Alpine resort that is being organised under the title “Shaping the Post-Crisis world.”

Also present will be Chinese Premier Wen Jiabao, German Chancellor Angela Merkel, Japanese Prime Minister Taro Aso and Prime Minister Gordon Brown as well as Valerie Jarrett, a senior adviser to new U.S. President Barack Obama.

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Jan 26

Related articles:
19 Jan 2007: Brown wants a ‘new world order’ (BBC NEWS)

: Gordon Brown New World Order Speech (YouTube) (!)
– Jan 22, 2008:
Brown’s secret talks on ‘new world order’ (NZ Herald)
– 11 Nov 2008: Gordon Brown calls for new world order to beat recession (Telegraph)
– 26 Jan 2009:
Leaders to flock to Davos to discuss economic crisis (Reuters)

– Problem: A staged crisis
– Reaction: People ask for more “security”.
– Solution: A “New World Order” where people will give up their freedom in exchange for “security”, which in reality is total control by the elite.

Before it was a ‘terrorism crisis’, now it’s a ‘financial crisis’.

Next will be the financial collapse of the U.K. and the U.S.

People will beg for leadership and a New World Order.

Gordon Brown

LONDON (AFP) – Prime Minister Gordon Brown said Monday the financial crisis must not be an excuse to retreat into protectionism and instead be viewed as the “difficult birth-pangs of a new global order”.

In a speech, he will urge countries to avoid “muddling through as pessimists” and “make the necessary adjustment to a better future and setting the new rules for this new global order”, according to his office.

Official data confirmed Friday that Britain is in recession. Days earlier, the government unveiled a new package of measures to help the flow of credit in the economy, but Brown has argued global action is needed for a quick recovery.

He will warn Monday that the crisis has given the world a choice: “We could allow this crisis to start a retreat from globalisation.

“As some want, we could close our markets — for capital, financial services, trade and for labour — and therefore reduce the risks of globalisation.

“But that would reduce global growth, deny us the benefits of global trade and confine millions to global poverty.

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Jan 25

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
– New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
– CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about. – CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
– The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
– The Economist

1 of 4:

17. Januar 2009
Source: YouTube

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Jan 25

Today millions will leave the cities to return to their rural family homes for the new year celebrations. But this year Beijing hopes the newly jobless revellers will stay there – to prevent a fresh wave of unrest in the cities

They surged into the grimy streets around the factory: first scores, then hundreds, then more than a thousand, as word spread and tension loaded the stale, grey air. The boldest overturned a police van and smashed up motorcycles, then tore through the building destroying computers and equipment. The mood was exhilarated, angry and frightened.

“It happened so quickly … There were maybe 500 involved and another 1,000 watching them. People were yelling: ‘It’s good to smash’,” said a witness.

But the riot late last year at the Kai Da factory in Dongguan, amid the grim industrial sprawl of the Pearl River Delta, was not an isolated incident. It was one of tens of thousands of protests, many erupting from the same mixture of economic grievances, resentment of police and swirling rumour.

The numbers have been climbing steadily for years. But as the Chinese New Year dawns and the global economic crisis deepens, the government fears that mass unrest could challenge its control of the country, threatening a communist regime that has embraced capitalism with spectacular results.

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Jan 25

Jan. 26 (Bloomberg) — Gold investors were the most bullish ever in a Bloomberg News weekly survey, predicting gains as investors seek a haven from economic turmoil.

Twenty-eight of 31 traders, investors and analysts surveyed from Mumbai to Chicago on Jan. 22 and Jan. 23 advised buying the metal. Gold futures for February delivery jumped 6.7 percent last week to $895.80 an ounce in New York. Three survey respondents said to sell, and none were neutral. That’s the most bullish response since Bloomberg News began conducting the surveys in April 2004.

Gold climbed 5.5 percent in 2008, the eighth straight annual gain, as the Standard & Poor’s 500 Index fell 38 percent. The S&P index sank 2.1 percent last week, the third straight weekly decline. Some investors buy the precious metal as a store of value in times of financial turmoil.

Related articles:
COMMODITIES-Gold shines at $900; oil and copper surge (Reuters)

Nervous investors turn back to gold; price nears $900 (Los Angeles Times)

Traders surveyed on Jan. 15 and Jan. 16 correctly predicted gold’s advance last week. The survey has forecast prices accurately in 146 of 246 weeks, or 59 percent of the time.

Last week’s survey results: Bullish: 28 Bearish: 3 Neutral: 0

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Jan 25

Here comes ‘terrible’ (CNN Money):
The week ahead: Investors gear up for a deluge of weak earnings and the biggest plunge in GDP in 26 years.

Report: IBM quietly lays off North American staff (CNET News)

GM, Ford, Chrysler Lost About 988 Auto Dealers During 2008 (Bloomberg)

Cities, towns expect to fire thousands (Boston Globe)

Downturn Accelerates As It Circles The Globe (Washington Post):
The world economy is deteriorating more quickly than leading economists predicted only weeks ago…

Obama’s team turn to EU bank for inspiration (Independent)

Obama Sides With Bush in Spy Case (Wired):
The Obama administration fell in line with the Bush administration Thursday when it urged a federal judge to set aside a ruling in a closely watched spy case weighing whether a U.S. president may bypass Congress and establish a program of eavesdropping on Americans without warrants. (More change!)

Pakistan Urges Obama to Halt Drones (ABC News)

Afghan President Condemns US Raid He Says Killed 16 Civilians (Voice of America)

Obama’s partisan, profane confidant reins it in (IHT):

Official: £40000 loss for every taxpayer (Guardian):
Latest City figures reveal that the plummeting stock market and plunging house prices have wiped out £1.2 trillion of Britain’s national wealth

Fed up companies plan to launch their own lender (Independent):
City law firm Taylor Wessing is believed to be working on a plan to create a bank backed by six leading UK listed corporates disenchanted with the failing lending institutions in the Square Mile.

Inquests into Troubles deaths to be kept secret (Guardian):
Under new laws, key parts of inquests into the deaths of people killed by British security forces in Northern Ireland during the Troubles will be held in secret, without the scrutiny of juries.

Bank of England goes for broke with asset buying (Telegraph)

Corus to axe 3500 jobs as crash hits steelmakers (Times Online):
BRITAIN’s largest steelmaker, Corus, is poised to cut up to 3,500 jobs this week in one of the biggest blows yet to the faltering manufacturing sector.

GKN to offer ‘token dividend’ as it slashes workforce by thousands (Telegraph):
GKN, the British car and aircraft parts maker, is expected to announce this week that it has cut several thousand jobs, with more to cuts to come, as the deepening recession inflicts further pain on the manufacturing industry.

IMF set to slash global growth forecast (Financial Times)

Third Bank Is Seized This Year (New York Times)

State lawmakers bet gambling can help with budgets (AP)

Economy in U.S. Probably Contracted Most Since 1982 as Spending Collapsed (Bloomberg)

Home Price Declines Compound US Economic Decline (VOA)

Flood of foreclosures: It’s worse than you think (CNN Money):
Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate.

Madoff’s UK investors set to sue (Times Online)

A shameful war: Israel in the dock over assault on Gaza (Independent)

Iran vows to pay for Gaza aid as children return to UN schools (Telegraph)

Tunnel vision sees Gazans dig for victory (Scotland on Sunday)

China Reports 6th Case of Bird Flu This Year (Voice of America)

Car dealers try to survive as economy, sales drop (AP)

Chocolate prices set for further increases (Financial Times)

12 Die in Storms in Western Europe (New York Times)


Jan 25

PARTS of the United Kingdom have become so heavily dependent on government spending that the private sector is generating less than a third of the regional economy, a new analysis has found.

The study of “Soviet Britain” has found the government’s share of output and expenditure has now surged to more than 60% in some areas of England and over 70% elsewhere.

Related article:
Soaring closures raise fears of ghost town shopping centres across UK (Times)

Experts believe the recession will tighten the state’s grip still further as benefit handouts soar and Labour directs public sector organisations to create jobs to soak up unemployment.

In the northeast of England the state is expected to be responsible for 66.4% of the economy this year, up from 58.7% when a similar study was carried out four years ago. When Labour came to power, the figure was 53.8%.

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Jan 25

Shorter hours would be preferable to mass unemployment, say government sources

Bentley Motors in Crewe has already been forced to reduce production to three days a week AFP

The prospect of the three-day week returned to haunt Britain yesterday as it emerged that ministers are considering paying firms to cut hours in order to survive the recession.

Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat. But as the country comes to terms with the reality of a recession, it emerged that the Government is looking at compensating employees, through their firms – thereby drawing comparisons with the shutdowns of the 1970s.

Don’t miss:
Britain on the brink of an economic depression, say experts (Telegraph)
City Minister Lord Myners: Banking System Was Close to Collapse (Times)

While the move would safeguard jobs, it would mean that the financial crisis is on a much larger scale, further undermining confidence in the economy with the suggestion of Britain grinding to a halt.

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Jan 25

Tony Benn accuses the BBC ON AIR of capitualating to the Israeli Government by refusing to air an appeal for the Gazan people by the Disaster Emergency Commitee (DEC) he then broadcasts the Address himself much to the consternation of the interviewer.

Source: YouTube

Disasters Emergency Committee Gaza humanitarian appeal:
Launched by UK charities on 22 January to raise money for Gaza aid relief and reconstruction

Participants: Action Aid, British Red Cross, Cafod, Care International, Christian Aid, Concern Worldwide, Help the Aged, Islamic Relief, Merlin, Oxfam, Save the Children, Tearfund, World Vision.

Disaster Emergency Commitee (DEC)
Gaza Crisis
PO BOX 999

Information on 0370 60 60 900 or at DEC website.

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Jan 25

“Among the men reinstated Saturday was Richard Williamson, a British-born cleric who in an interview last week said he did not believe that six million Jews died in the Nazi gas chambers. He has also given interviews saying that the United States government staged the Sept. 11 attacks as a pretext to invade Afghanistan.”

VATICAN CITY – Pope Benedict XVI, reaching out to the far-right of the Roman Catholic Church, revoked the excommunications of four schismatic bishops on Saturday, including one whose comments denying the Holocaust have provoked outrage.

Richard Williamson, one of the bishops, during a TV interview.

The decision provided fresh fuel for critics who charge that Benedict’s four-year-old papacy has increasingly moved in line with traditionalists who are hostile to the sweeping reforms of the Second Vatican Council in the 1960s that sought to create a more modern and open church.

Related article: Pope stirs up Jewish fury over bishop (Guardian)

A theologian who has grappled with the church’s diminished status in a secular world, Benedict has sought to foster a more ardent, if smaller, church over one with looser faith.

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Jan 24

We’re asking others to sacrifice for our ‘stimulus.’

Barack Obama has spoken often of sacrifice. And as recently as a week ago, he said that to stave off the deepening recession Americans should be prepared to face “trillion dollar deficits for years to come.”

But apart from a stirring call for volunteerism in his inaugural address, the only specific sacrifices the president has outlined thus far include lower taxes, millions of federally funded jobs, expanded corporate bailouts, and direct stimulus checks to consumers. Could this be described as sacrificial?

What he might have said was that the nations funding the majority of America’s public debt — most notably the Chinese, Japanese and the Saudis — need to be prepared to sacrifice. They have to fund America’s annual trillion-dollar deficits for the foreseeable future. These creditor nations, who already own trillions of dollars of U.S. government debt, are the only entities capable of underwriting the spending that Mr. Obama envisions and that U.S. citizens demand.

These nations, in other words, must never use the money to buy other assets or fund domestic spending initiatives for their own people. When the old Treasury bills mature, they can do nothing with the money except buy new ones. To do otherwise would implode the market for U.S. Treasurys (sending U.S. interest rates much higher) and start a run on the dollar. (If foreign central banks become net sellers of Treasurys, the demand for dollars needed to buy them would plummet.)

Don’t miss: Jim Rogers: I Would Sell All Government Bonds

In sum, our creditors must give up all hope of accessing the principal, and may be compensated only by the paltry 2%-3% yield our bonds currently deliver.

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Jan 24

Don’t miss:
Lindsey Williams: The Dollar And The US Will Collapse; Saudi Arabia And Dubai Will Fall; US Will Be Third World Country; The Greatest Depression Is Coming
Ron Paul on Glenn Beck: Destruction of the dollar
Jim Rogers: I Would Sell All Government Bonds
Jim Rogers: US creditor nations to shun Treasuries
Time to Sell Treasuries, Biggest Korean Fund Says
U.S. Treasuries bubble about to blow: Societe Generale
The Bond Bubble – Marc Faber, Peter Schiff, Max Keiser
Peter Schiff: We are the United States of Madoff
Peter Schiff: The World Won’t Buy Unlimited U.S. Debt
China’s US bond appetite to slow: economists
Willem Buiter warns of massive dollar collapse

1 of 4:

Source: YouTube

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Jan 24

City Minister Lord Myners attacks bankers for greed and arrogance

A furious onslaught on banking’s “masters of the universe” has been unleashed by Gordon Brown’s City Minister.

Too many top bankers fail to realise they are grossly over-rewarded and have no sense of society, Lord Myners says in an interview with The Times.

With figures yesterday pointing to a longer and deeper recession than feared, lasting into 2010, Lord Myners says that banks have been mismanaged and delivers the strongest attack so far on those responsible.

He also reveals that the banking system was close to collapse before the first bailout was announced.

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Jan 24

Britain is heading for economic depression for the first time since the 1930s, economists have warned.

Families must brace themselves for a slump of far greater severity and longevity than the recessions of the 1980s and 1990s, they warned. They said the current crisis will be of a scale to rival the biggest peace-time crisis in modern history – the Great Depression.

The warning was delivered by economists and politicians after the Office for National Statistics revealed that the economy shrank by 1.5 per cent in the final three months of 2008 alone.

The contraction follows a 0.6 per cent fall in gross domestic product (GDP) – the most comprehensive measure of Britain’s wealth generation – during the previous three months. This means Britain fulfils the criteria for a technical recession – two successive quarters of negative output.

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Jan 24

An army of accountants is combing through the books, trying to establish just how much the toxic assets of the bailed-out banks are actually worth. At stake, says the Government, is the future of Britain’s economy.

Toxic asset: Sir Fred Goodwin of RBS has seen his reputation collapse Photo: REUTERS

Before he was unceremoniously fired as chief executive of Royal Bank of Scotland, Sir Fred Goodwin often said that he had turned the 280-year-old institution into “a sausage machine”.

RBS, like other banks, was buying and selling pre-packaged parcels of debt, which started out as mortgages and loans but were put through a corporate mincer and wrapped into packages containing small pieces of hundreds, if not thousands, of loans. Rather like sausages, no one could be entirely sure what was in them – but as long as they paid a decent rate of interest and the bonuses kept flowing, no one cared.

As we all now know, those parcels had been bulked up with sub-prime loans, which became effectively worthless “toxic assets” when the US housing market crashed.

Confirmation yesterday that the bankers’ avarice has officially plunged Britain into recession added to the growing bewilderment as to exactly why we are on the hook for almost £1 trillion in bail-outs and guarantees.

No one even knows exactly how many of these toxic assets British banks are holding, and how much more it might cost the taxpayer to get out of this unholy mess – which is why an army of accountants is about to begin the daunting, if not downright impossible, task of tracking down and putting a value on all the debts of all the banks in which the taxpayer has taken a stake.

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Jan 24

GENEVA, Jan 23 (Reuters) – Zimbabwe’s cholera epidemic is “far from under control” and could exceed 60,000 cases over the next week, the Red Cross warned on Friday.

Torrential rains are expected to spark major flooding and exacerbate the water-borne outbreak that has killed 2,773 people among 50,000 infected since August, the United Nations said.

Related articles:
Zimbabwe slaughters elephants for army (Daily Nation)
Desperate Children Flee Zimbabwe, for Lives Just as Desolate (New York Times)
South Africa: Another Meeting Set on Zimbabwe Crisis
(New York Times)

“The outbreak in Zimbabwe is only increasing in scale, it’s claiming more lives,” Dr. Tammam Aloudat, senior health officer at the International Federation of Red Cross and Red Crescent Societies, told journalists in Geneva.

The World Health Organisation (WHO), a U.N. agency, warned in December that up to 60,000 people could be infected if the country’s worst cholera epidemic spiralled out of control.

“It is difficult to predict where the outbreak will peak. It might even go beyond that nightmare scenario,” Aloudat said.

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Jan 24

The Fed: Life after zero (CNN Money):
NEW YORK (CNNMoney.com) — The Federal Reserve has a two-day meeting next week to discuss what to do with interest rates. That’s two days more than the central bank needs.

False Fears of Deflation in Dangerous Inflationary Waters
(American Institute for Economic Research)

Tim Geithner: Too Close to Goldman Sachs to Be Treasury Secretary, Critic Says (Yahoo Finance)

China Rejects Currency Manipulation Charge (New York Times)

China denounces US currency accusation (Reuters)

Obama Signals Tough Restrictions on Banks in Rescue Package (Bloomberg)

McCain Now Obama’s No. 1 Senate Ally (NewsMax):
GOP Sen. John McCain is positioning himself to be one of President Barack Obama’s strongest supporters, effectively giving Democrats the votes they need to override any GOP attempt to block the new administration’s legislative agenda.

Intelligence Agencies’ Databases Set to Be Linked (Wall Street Journal)

California jobless rate jumps to 9.3 percent (Reuters)

‘Stealth tax’ on recession victims (Independent)

Lights go out across Britain as recession hits home (Guardian)

Minister unleashes savage attack on ‘masters of the Universe’ over recesssion (Daily Mail)

City Minister Lord Myners attacks bankers for greed and arrogance (Times Online)

Venture Capital Fell 33% Last Quarter to Lowest Level Since ’05 (Bloomberg):
Jan. 24 (Bloomberg) — Venture-capital investment dropped 33 percent in the fourth quarter of 2008, hammered by a recession that drove software deals to their lowest levels in a decade and cut access to capital for alternative energy firms. Total investment in startup companies fell to $5.4 billion, the lowest total since early 2005,

Schlumberger sheds 5,000 after oil price fall (Financial Times):
Schlumberger, the world’s biggest oil services company, on Friday said it would reduce its staff by 5,000 worldwide as it reported a 17 per cent drop in fourth-quarter earnings following the collapse of oil prices.

Bank of America holders sue over Merrill purchase (BusinessWeek)

Pressure builds on BofA’s Lewis (Financial Times)

Taro Aso gives Japanese £100 each to spend way out of recession (Times Online):
The move, which he has described as “the best economic measure of all”, involves a handout of at least 12,000 yen (£100) to every citizen over the age of 18. The prospect of the windfall has unleashed a national wave of speculation about how the money might best be spent, and the eccentric world of Japanese retail is pushing hard to attract the cash. (What can you say???)

Big Inflation Coming (Gold Seek)

US allows use of embryonic stem cells (Financial Times)

FDA approves human embryonic stem cell study (CNN)

Frogs are being ‘eaten to extinction’ with one billion taken from wild each year (Daily Mail)


Jan 24

Barack Obama gave the go-ahead for his first military action yesterday, missile strikes against suspected militants in Pakistan which killed at least 18 people.

Four days after assuming the presidency, he was consulted by US commanders before they launched the two attacks. Although Obama has abandoned many of the “war on terror” policies of George Bush while he was president, he is not retreating from the hunt for Osama bin Laden and other al-Qaida leaders.

The US believes they are hiding in the tribal areas along the border with Afghanistan, and made 30 strikes last year in which more than 200 people were killed. In the election, Obama hinted at increased operations in Pakistan, saying he thought Bush had made a mistake in switching to Iraq before completing the job against al-Qaida in Afghanistan and Pakistan.

The US marine corp commander said yesterday that his 22,000 troops should be redeployed from Iraq to Afghanistan. Gen James Conway said “the time is right” to leave Iraq now the war had become largely nation-building rather than the pitched fighting in which the corps excelled; he wanted the marines in Afghanistan, especially in the south where insurgents, and the Taliban and al-Qaida, benefit from both a nearby safe haven in Pakistan and a booming trade in narcotics.

Obama has warned that he is prepared to bomb inside Pakistan if he gets relevant intelligence about the whereabouts of Osama bin Laden. He had also said he would act against militants along the border if the Pakistan government failed to.

The US missiles were fired by unmanned Predator drones, which hang in the sky gathering intelligence through surveillance and, when commanded and directed by remote control, to launch attacks.

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