Sunday, January 31, 2010

Saturday, January 30, 2010

Sign Petition to SAVE DEMOCRACY from the Jaws of Greedy Corporations

Congressman Alan Grayson has started a "SAVE OUR DEMOCRACY" petition, in wake of the Supreme Court's foolish decision to allow corporations to use their bountiful coffers to buy American elections.
Last week, five Supreme Court Justices stabbed at the heart of democracy, our electoral system. They overturned over 100 years of statute and precedent, and declared that corporations can spend all the money that they want to buy elections. In fact, these five men in robes declared, they have a constitutional right to do so.
Foreigners cannot vote in our elections, so they should not be allowed to spend unlimited money to buy votes either. If we do not limit foreign influence, we will soon have ‘the Distinguished Member from Russia’ or ‘the Esteemed Senator from Saudi Arabia.
Now, we have to fight. We have filed six bills to reverse this assault, the "Save Our Democracy" platform. Sign this petition today, and show your support for saving our democracy. Together, we will move these bills forward and prevent the sale of our government to the highest bidder.
We cannot have a government that is bought and paid for by huge multinational corporations. We need a government of the people, by the people, and for the people. I hope you'll join me.
Read more on the legislation he is planning on introducing, to counter the Supreme Court's decision here
SIGN REP. ALAN GRAYSON'S PETITION HERE (Fill in the red box on the right)
"Civil disobedience is not our problem. Our problem is civil obedience. Our problem is that people are obedient all over the world in the face of poverty and starvation and stupidity, and war, and cruelty"
--Howard Zinn, a Great American Patriot, who passed away this week.

China Sticks It to the U.S. on Iran - You go Girl!

After having a wardrobe malfunction in her rush to embrace the french "hunk" Sarkozy, Hillary Clinton is now proceeding to throw a hissy fit - albeit over a different issue: China's decision to not tow the U.S. line of imposing tougher U.N. sanctions on Iran. The New York Times reports that:
Secretary of State Hillary Rodham Clinton warned China on Friday that it would face economic insecurity and diplomatic isolation if it did not sign on to tough new sanctions against Iran for its nuclear program, seeking to raise the pressure on Beijing to fall in line with an American-led campaign.
As a way of background, recently the U.S. Senate and the House have both passed bills imposing tougher sanctions on Iran's gasoline suppliers. While Iran is an exporter of crude oil, it does not have refining capacity, and is forced to import much of its gasoline from other nations such as India and China. The U.S. sanctions would prohibit U.S. firms as well as foreign firms with business interests in the U.S., from exporting gasoline to Iran. Additionally the sanctions would also prevent firms from providing goods or services that enhance Iran’s ability to maintain or expand its domestic production of refined petroleum. In other words Indian and Chinese energy companies that do business with Iran will be barred from doing business in the U.S. In fact Chevron which has a tie up with India's Reliance Petrochemicals has opposed U.S. sanctions, mainly because Reliance sells gasoline to Iran.
Now the U.S. sanctions on Iran while restrictive do not do the full job of a 100% gasoline embargo, for the simple reason that China/India/any other nation for that matter, could use a smaller domestic refiner with no business interest in the U.S., to ship gasoline to Iran. To close this loophole Hillary Clinton is taking U.S. sanctions on Iran global, by attempting to get them passed at the U.N. This way they will be binding on all nations.
This is the move China is staunchly opposing. China a permanent member of the security council has the right to veto any such sanctions at the U.N. And China has good reasons to be thoroughly pissed off with U.S. bullying:
  1. The US is evaluating a weapons sale to Taiwan worth $6.4bn, which includes patriot missiles and black hawk helicopters. The Chinese Vice-Foreign Minister He Yafei has labeled the move as having a "serious negative impact" on co-operation between the US and China.
  2. The Google fracas together with Obama and Hillary's "freedom of Internet" speeches, have only made matters worse.
  3. Worse still, China is having to hold trillions of dollars that the U.S. Fed is hell-bent on sending to the shredder.
  4. And perhaps most damning: according to Hank Paulson's soon to be released memoirs: in 2008 Russia had urged China to dump Fannie, Freddie bonds. According to Paulson "The report was deeply troubling -- heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets. I waited till I was back home and in a secure environment to inform the president." Luckily for the U.S. economy, China declined Russia's proposal.
We may not be so lucky next time. The nation is economically bankrupt and existing on the good graces of foreign creditors especially China that together hold 50% of our debt. But Hillary et. al. seem not to have got the "don't piss off your creditor" memo. In fact she seems to be taking a page from Hank Paulson's rule book, and threatening Armageddon if China does not comply:
“We understand that right now, that is something that seems counterproductive to you, sanction a country (Iran) from which you get so much of the natural resources your growing economy needs,” Mrs. Clinton said, referring to the Chinese, in comments after a speech on European security. “But think about the longer-term implications.”
In case Beijing missed the urgency of her appeal, Mrs. Clinton remarked that a nuclear-armed Iran would risk setting off an arms race in the Persian Gulf, and that it could provoke a military strike from Israel, which she said would regard a nuclear Iran as an “existential threat.”
Now we do not support Iran's mullah led regime, but just as we saw in the lead-up to the Iraq war, sanctions are the first step to war. As Ron Paul explains " This policy of sanctions is pure isolationism. It is designed to foment war by cutting off trade and diplomacy. Too many forget that the quagmire in Iraq began with an embargo. Sanctions are not diplomacy. They are a precursor to war and an embarrassment to a country that pays lip service to free trade".
And what happens if even after imposing sanctions, the Iranian government does not topple? Israel will definitely strike Iran then. (In fact as we will show in our upcoming post, Israel is ALREADY preparing for a strike that will most likely come in the second-half of 2010). There is a very high probability that the Iranian people will band together in the face of a perceived foreign threat of sanctions, and actually support their government.
Also Iran is nowhere close to having a nuclear bomb, and even if it did have a bomb it cannot be an existential threat to Israel which is already armed to the teeth with way many more nukes than Iran. In addition, because of the implicit backing of the U.S., Israel has far superior military capabilities than Iran. All talks of existential threat by Israel are pure bogus, just like the WMD threat that caused us to bomb Iraq and kill millions of innocent Iraqi's.
Now there are many policies of China we do not support, but on the issue of Iran, China is taking the right stance and we support their decision to stand up to the West's bullying. We need to step back from this dangerous game with immensely catastrophic consequences. It is time to stop all the war mongering on behalf of Israel.

The Battle of the Titans: JP Morgan Vs. Goldman Sachs

Author: Ellen Brown in Global Research
We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Geithner/Summers/Rubin). Left strewn on the battleground could be your pension fund and 401K.
The late Libertarian economist Murray Rothbard wrote that U.S. politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.
In 2000, the Rockefellers and the Morgans joined forces, when JPMorgan and Chase Manhattan merged to become JPMorgan Chase Co. Today the battling banking titans are JPMorgan Chase and Goldman Sachs, an investment bank that gained notoriety for its speculative practices in the 1920s. In 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund similar to a Ponzi scheme. The fund failed in the stock market crash of 1929, marring the firm's reputation for years afterwards. Former Treasury Secretaries Henry Paulson, Robert Rubin, and Larry Summers all came from Goldman, and current Treasury Secretary Timothy Geithner rose through the ranks of government as a Summers/Rubin protégé. One commentator called the U.S. Treasury “Goldman Sachs South.”
Read more here

Friday, January 29, 2010

A Split has Developed Between the House of Morgan & Goldman Forces

Author: Bob Chapman of The International Forecaster
Paul Volcker is back and things are about to change in Washington. A split has occurred between the paper forces of Goldman Sachs and JP Morgan Chase. Mr. Volcker represents Morgan interests. The Morgan side is tired of Goldman’s greed and arrogance. Volcker cannot be called old school or anachronistic. He represents sanity in an insane financial world even though he is an integral and powerful part of the elitist structure. He represents a change in gears and approach. The present administration and the Democratic Party has lost its moorings and is in on a path of political suicide. They have tried to get passed impossible legislation that the American people do not want, and they will abandoning those positions, because they are no longer tenable. The election of Scott Brown in Massachusetts was a major defeat for all administration programs. As you will see Mr. Obama and fellow Democrats will start sounding like popular conservatives and populist talk show hosts, as they attempt to win back their center. That is where Paul Volcker fits in. He is back and major changes are about to take place financially and politically.
Goldman Sachs, Citigroup and others in their greed have lost touch with economic and financial reality and they looted the system. Not that JP Morgan chase was blameless, they did their looting and damage to the system as well, but not in the high handed arrogant way the others did. The recall of Volcker is an attempt to reverse the damage as much as possible. That means the influence of Geithner, Summers, Rubin, et al will be put on the back shelf at least for now, as will be the Goldman influence. It will be slowly and subtly phased out. One of the things we have always believed is that Volcker was never out of touch. He is brilliant, brash, irreverent and successful.
Read more here

China Giving U.S. Commerce Secretary a Massive Headache - May We Suggest Some Acupuncture, Followed by Soothing Herbal Tea?

CNBC is reporting that, the U.S. Commerce Secretary has got a massive headache listening to all the whining complaints about China, from U.S. corporations. Their gripe: "Uncle Sam please is turning protectionist". According to CNBC:
Chinese policies that promote domestic firms and create barriers against foreign ones could cause American companies to lose interest in China, U.S. Commerce Secretary Gary Locke said on Thursday. Locke's warning to Beijing against backsliding on economic openness and the rule of law came amid rising complaints about trade from both partners in a bilateral trading relationship worth more than $330 billion last year.
He also criticized a Chinese government plan to promote "indigenous innovation" by giving Chinese companies that use Chinese intellectual property an advantage in bidding on government procurement projects. Major U.S. business groups wrote to Locke, Secretary of State Hillary Clinton and other administration officials this week to complain about the initiative.
The Chinese plan "significantly disadvantages" U.S. and foreign companies in bidding on contracts worth an estimated $85 billion annually and violates market-opening pledges Beijing made in 2009 commercial talks, Locke said.
Mr. Locke settle down in a comfy arm chair. After you have had your acupuncture session and herbal tea we suggest you read the following:
In case you forgot China is only taking a page out of the United States government playbook: Barack Obama's $787bn 2009 stimulus plan, promoted the use of American goods and labor. Last February BusinessWeek detailed this, "The clearest attempt to wall off foreign companies from U.S. spending came in a "Buy American" provision. That rule requires that only U.S. iron, steel, and other manufactured goods be used for public buildings and public works funded under the bill. This sparked a debate about whether such rules in a global economy amount to protectionism".
Much to China's dismay, the Obama administration has imposed tariffs on imports of Chinese tires and steel products:
Now there is an important distinction to be made here: The U.S. of course imports a lot of stuff from China, most of which is made by American corporations for American consumption/exports to other nations (using cheap Chinese labor) - so of course there will be NO U.S. import tariffs on any of this stuff. But tariffs are being imposed on those products made by a Chinese company for which there is a strong domestic industry in the U.S., e.g. steel and tires. And the U.S. has every right to do so, because the focus is to keep Americans employed. The Chinese government is no different. It has the same domestic priorities, which is to keep Chinese citizens employed in domestic industries.
After the Asian financial crisis in 1997, Asian economies learnt bitter lessons that they have not forgotten.
The two lessons they learnt were 1) the need to promote domestic industrial development instead of depending on foreign corporations/imports and 2) stashing huge amounts of foreign reserves to adequately defend their currencies. During the Asian financial crisis, foreign capital and industrial investment by foreign corporations was withdrawn as quickly as it was put in. That left Asian economies grappling with a sudden lack of capital in their economies, and vanishing jobs (as industries departed) which greatly exacerbated the downturn.
One good example is the case of foreign banks. When a foreign bank such as Citigroup, enters an emerging market it takes in local deposits and lends the money out into the local economy. Now consider that foreign banks are the only ones present in the country and an economic crisis hits. Most of these foreign banks waste no time shutting shop and calling in the loans made to local companies. Lending dries up, at a time when funds are needed the most, jobs disappear and the economy crumbles. This is precisely what happened during the Asian crisis, which is why most Asian government have limits on the amount of deposits a foreign bank can take in.
The same logic extends to other industries. India and China the largest Asian economies, have therefore vigorously promoted domestic industries such as steel, shipping, mining, oil and gas exploration etc. This provides local employment which will not be held hostage by a foreign corporations penchant to get up and leave whenever a crisis hits. Both nations have been very protective of opening up many key domestic markets to foreign competition, and they are not about to change that policy anytime soon. (As a aside: William Engdahl in his recent interview (which we have posted today) has an interesting discussion on how to the U.S Treasury engineered the Asian financial crisis, which was then further exacerbated by ridiculous IMF policies.)

What all this boils down to, is that we will see the following trends unfolding in the near future (next 2-5yrs):
  1. Faced with a deepening world-wide economic crisis, nations will increasingly turning PROTECTIONIST.
  2. Trade barriers are only going to INCREASE in future.
  3. Every nation will strive to defend LOCAL industries from foreign competition so that they can save LOCAL jobs.
  4. Free trade is DEAD.
  5. "Exports as the engine for growth" mantra is soon going to be DEAD. Anyone relying on exports entirely, is going to be a dead duck.
  6. The key to controlling trade deficits will be to CUT IMPORTS (and not grow exports) by moving industries back on-shore. Barack Obama has moved in this direction by announcing an end to tax breaks for companies shipping jobs overseas.
  7. Every country where possible will give priority to local companies. If their own domestic industry cannot produce goods, only then imports/foreign corporations will be allowed entry in those markets.
  8. Greater LOCAL PRODUCTION followed by LOCAL CONSUMPTION will be the new normal.
  9. Trade controls will also be followed by CAPITAL CONTROLS as fiscal situation of many nations including the U.S. deteriorates. Movement of capital across borders is going to get restricted.

Interview:The Gods of Money and the Death of the American Century

The Corbett Report interviews acclaimed economist and geo-political analyst William Engdahl, where he covers the following topics:
  1. Afghanistan as a military theater exists mainly, to counter the ambitions of China & Russia.
  2. According to Benazir Bhutto, former Prime Minister of Pakistan, Osama Bin Laden was killed by Pakistani intelligence shortly after 9/11. But the U.S. Government perpetuates the Bin Laden myth simply to maintain a presence in Afghanistan.
  3. The U.S. Treasury engineered the Asian Financial Crisis.
  4. Obama is nothing but Bush-Cheney in sheep's clothing.
  5. U.S. economy has FAILED and is going down like Titanic.
  6. The current economic meltdown has its genesis in decisions made in 1939 (before WWII) to establish an American Empire.
  7. The American Empire was based on the plunder of Africa, Eastern Europe and East Asia.
Access the interview here.
His exceptional life works include the following books:

Thursday, January 28, 2010

Ron Paul: USA is Bankrupt, Quit Buying Bombs or We're Done

The policy of "perpetual spending on war to make us SAFE" is preposterous, because it is this very policy that makes us LESS SAFE - Ron Paul

Forget About Finding a Job in the U.S.A. - Move to China

Rule By The Rich
Author: Paul Craig Roberts in Paul was Assistant Secretary of the Treasury during President Reagan’s first term.
The election of Republican Scott Brown to the U.S. Senate by Democratic voters in Massachusetts sends President Obama a message. Voters perceive that Obama’s administration has morphed into a Bush-Cheney government. Obama has reneged on every promise he made, from ending wars, to closing Gitmo, to providing health care for Americans, to curtailing the domestic police state, to putting the interests of dispossessed Americans ahead of the interests of the rich banksters who robbed Americans of their homes and pensions.
But what can Obama do other then spout more rhetoric?
The Democrats were destroyed as an independent party by jobs offshoring and so-called free trade agreements such as NAFTA. The effect of "globalism" has been to destroy the industrial and manufacturing unions, thus leaving the Democrats without a power base and source of funding.
Obama and the Democrats cannot be an opposition party, because Democrats are as dependent as Republicans on corporate interest groups for campaign funding.
The Democrats have to support war and the police state if they want funding from the military/security complex. They have to make the health care bill into a subsidy for private insurance if they want funding from the insurance companies. They have to abandon the American people for the rich banksters if they want funding from the financial lobby.
Read more here

How is Decimating Education Not a "Systemic Crisis"?

The San Francisco Chronicle is reporting that San Francisco's school Superintendent Carlos Garcia is having to make the tough decision to cut $56m in school funding to bridge a $113m budget shortfall. The paper quotes Superintendent Carlos Garcia describing the cuts as "horrible and deplorable" that rival those experienced during the Great Depression.
His plan, presented to the school board Tuesday night, would eliminate up to 400 district positions, including 100 teachers resulting from an increase in K-3 class size, from 22 students to 25. Garcia also called for decimating summer school, teacher training and other programs; shrinking paychecks across the board through unpaid furloughs; cutting busing, especially for high school students; cuts to school programs for under served students; and cuts to STAR/Dream School funding for struggling schools.
"I absolutely take no pride in what I'm going to share with you," he said earlier in the day. "There are things in here that go against my beliefs." Art, music, libraries, physical education and High School Exit Exam help would be among the many things to be affected along with the district administrators, teachers or other staff members who run those programs.
The district faces the huge shortfall because of state cuts to education over the past few years combined with the state's decision not to provide cost-of-living increases last year, this year and probably even next year based on the governor's proposed budget.
Clearly GOD is on Lloyd Blankefein's side and NOT with America's children. Bankers after all are "god's chosen people". Why else would they get $145 BILLION in bonuses, while school teachers get laid off because a district has a $56 million shortfall. Or could it be that the teachers and students unlike our bankers are not "America's Best and Brightest" and therefore undeserving of a bailout?
Bernanke and Timmy G have justified the taxpayer funded trillions that flowed to Wall Street to stem a "systemic crisis". Is decimating education not a "systemic crisis" as well? Can America truly compete in a technologically driven global economy, if its slashes education funding to schools and universities? When the nation can find unlimited money to bailout Wall Street, not to mention $1 trillion in annual defense spending to fight purposeless wars, why not for education? How about slashing 10% off defense and providing for our schools?
Folks should note that no governments in India or China are passing such stupid budget decisions. They understand that when faced with a choice between funding unnecessary defense projects or providing for their economic future, they choose the latter.
In any economy CAPITAL is a scarce resource, so it is up to us to deploy it intelligently into the most productive assets, that will provide us with the best return on our investment. Would education for our children not be a better asset to invest in, rather than a war or senseless Wall Street bailouts? Is it not time to start a war AGAINST "cutting education funding"? That would be a just cause worth fighting for.

Wednesday, January 27, 2010

Tim Geithner to Go Under the Knife - Answer for AIG Handling

Timmy G is scheduled for some staged grilling by the House Committee on Oversight and Government Reform today at 10am. The Committee hearing can be watched live here. And here is Geithner's prepared testimony. A quick read is recommended to understand the magnitude of the collapse facing the world. Underscores once again the need to have a safety investment in real assets such as gold. What is preventing the same crisis from happening again? Absolutely Nothing. There have been NO reforms to correct the rapid run downhill. And now some wisdom from Timmy G himself:
Without assistance the AIG parent holding company would have been forced to file for bankruptcy protection like Lehman, resulting in a default on over $100bn of debt, as well as trillions of dollars of derivatives.
Ah those wonderful derivatives...

China to the US: WTF? Accuses US of Online Warfare in Iran

As we have discussed before, the Google internet controversy is a part of a larger geo-political strategy employed by the U.S. Government. The fact is that U.S. - China relations are beginning to deteriorate, and a covert economic WAR is certainly brewing under the surface. This is evidenced by the increasing vitriolic response from the Chinese, to Hillary Clinton's speech on internet freedom last week. According to a report in the Guardian:

The United States used "online warfare" to stir up unrest in Iran after last year's elections, the Chinese Communist party newspaper claimed today, hitting back at Hillary Clinton's speech last week about internet freedom.
An editorial in the People's Daily accused the US of launching a "hacker brigade" and said it had used social media such as Twitter to spread rumours and create trouble.
"Behind what America calls free speech is naked political scheming. How did the unrest after the Iranian election come about?" said the editorial, signed by Wang Xiaoyang. "It was because online warfare launched by America, via YouTube video and Twitter microblogging, spread rumours, created splits, stirred up and sowed discord between the followers of conservative reformist factions."
Yes, all these accusations are true and Google the owner of YouTube, is most certainly in the know. Recall that during the Iranian protests last year, the state department requested that Twitter, (which was being used by anti-Iranian government protesters) not close down for scheduled maintenance. In addition, Henry Kissinger went on TV and nearly admitted that the U.S. is trying to overthrow the Iranian government by "working for regime change from the outside" (read staged domestic revolt). It is no wonder therefore that:

Several social media sites, including YouTube, Facebook and Twitter, have been blocked in China in the last year. The editorial asked rhetorically whether obscenity or activities promoting terrorism would be allowed on the net in the US. "We're afraid that in the eyes of American politicians, only information controlled by America is free information, only news acknowledged by America is free news, only speech approved by America is free speech, and only information flow that suits American interests is free information flow," it added.
Clinton's direct challenge to China, in a speech that had echoes of the cold war with its references to the Berlin wall and an "information curtain", led Beijing to warn that US criticism could damage bilateral relations. Clinton called on China to hold a full and open investigation into the December attack on Google.
US diplomats sought to reach out to the Chinese public by briefing bloggers in China on Friday. They held a similar meeting during Barack Obama's visit in November.

Why Exports are NOT the Answer, As a Way Out of This Crisis

Author: The Benign Patriot
The conventional establishment economic view is this: If we have a trade deficit, the way to correct it is to export more. Obviously this would be true, except that the main point and problem is being totally ignored.
The real problem is not that we export too little, but that we import far too much! We’ve simply become far too dependent on the production of others elsewhere. We don’t need more trade. We need much less trade than we have today. We ship products from the other side of the world, at great material and environmental costs, that we should be making right here.
Why not save on shipping, and produce jobs that produce for us! That is the question nobody seems inclined to ask. We did it before. It worked. We thrived and prospered as a nation and a people. Why not do it again?
There are two main sources of our trade deficit. (1) We use a lot more petroleum-based energy than we produce, so we import vast quantities of oil. We got the big wake-up call on this back in the early 1970s when OPEC slapped an oil embargo on, and we found out what gas lines are. Only now, 35 years later, we are finally beginning to talk semi-seriously about “energy independence.” It’s about time! Of course they talked about it back in the 1970s too.
Read more here

US Unemployment Being Outsourced to China, making Hu-Jintao Very Nervous

This video was sent to us by one of our readers (we have seen it before and may have posted it earlier), but we are posting it again since we believe it is a must watch. A rapidly weakening U.S. consumer, has caused widespread factory closures and unemployment across China. In addition from 2005-2008, China had been revaluing the yuan upwards against the dollar, but it stopped the process when the worldwide financial crisis hit. The rapid pace of yuan revaluation in 2008, coupled with the financial crisis caused more than 50% of Chinese toy manufacturers to go bust, unable to keep costs under control.
To top it the Obama administration's rhetoric for China to free up speech, coupled with world-wide pressure for it to let the yuan float upwards (killing their exports); has sent the Chinese leadership into a tizzy. Unemployed Chinese workers complaining and organizing through blogs, Twitter, YouTube or Facebook is the first step to a people's revolt. China is hell bent on avoiding that.

Tuesday, January 26, 2010

President Obama: Proposing to Rein in the Deficit Without Addressing Military Spending is Downright Reckless

President Obama has just woken up from his full time job of a celebrity movie star. It is now slowly dawning on him that he is also the President of the world's military superpower - the United States of America. Please pardon him for getting confused. After spending much of last year giving Obama family centerfolds and interviews to People magazine - a glorified tabloid, and appearances on the Colbert report, where he commanded Stephen Colbert to "shave his head", we don't blame him for getting confused.
Now we are sorry to be a little harsh here, but frankly all this cutesy business is getting to us. First it is seriously appalling that the President of the United States, has reduced himself to the role of a movie star, appearing in People magazine of all places, talking about where he took Michelle for a date, when both he and Michelle Obama should be doing more to alleviate the dire economic crisis facing millions of Americans. Bringing the Office of the President to People magazine or the Colbert Report (which we love, by the way) is just cheapening it and making a mockery of it.
The American people put him in office so that they could get real "change" and not a cute photo-op. There are millions of folks out there having to rely on food stamps, who have no jobs, whose homes are getting repossessed, veterans begging on the streets, but so far we have seen no real attempt at reining in health care costs, the out of control military budget or reckless Wall Street practices. Not even a real plan to create jobs.
What is even more aggravating is that in response to the public outcry, he has only NOW, paraded out Volcker whom he had earlier sidelined. In addition, the President is foolishly proposing a 3 year budget freeze on domestic programs such as education, nutrition and air traffic control but proposing NO CUT on military spending, which amounts to ~$1 trillion annually ($700bn outright defense spending + $300bn indirect spending allocated to military projects from other government programs). According to the New York Times:
The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.
Is adding $8.75 trillion to the current $12.3 trillion of U.S. government debt over the next ten years, deficit control? Proposing to be serious about reining in budget deficits, without addressing the 500 pound military spending gorilla, is fool-hardy, reckless and myopic. In 2008 global military expenditure stood at $1.46 trillion of which the U.S. accounted for a whopping 41.5% i.e. about $606bn (see chart below). Compare this with China's military budget of about $84bn in 2008.
Why does an already reining military superpower need to spend nearly $1 trillion in defense every year, all to stop a puny underwear bomber from attacking the nation once in 8 years? Can we not be smart about addressing the terrorist threat? Do we have to shred our currency to be SAFE? What kind of safety is that when we have completely destroyed our currency and economy?

Where is the President who once said:
"We are not here to fear the future, but to SHAPE it?"
-Barack Obama
Can we have him back please?

Monday, January 25, 2010

CAUTION Congress & Corporations: A People's REVOLUTION is NOW Officially Underway

Author: The Firecracker Report
  • Bernanke Goes From HERO to ZERO
  • Why China Will NOT be the Next Superpower
  • The EASIEST way to CREATE Jobs is to Get THEM BACK from China
The Massachusetts people's revolution is echoing loudly across the world, and the trend has now surfaced in Japan. Similar to Massachusetts, more and more voters in Japan are categorizing themselves as independents, choosing to take a stance on real issues, rather than blindly aligning themselves with any one political party simply on ideological grounds (more on Japan below). This trend while lost on the U.S. media which remains foolishly divided along political lines (Fox vs. MSNBC), has nevertheless shaken up the leadership of both the Democrats and the Republicans. They have suddenly woken up to the unfortunate reality that neither party has an ideologically motivated voter base, they can rely on come election time. In an unprecedented change voters are choosing "idealism" over ideology.
Democrat and Republicans: Sitting "Stuffed Turkeys"
Over the last 3 decades both political parties in the U.S. became accustomed to acting like overstuffed turkeys, differentiating themselves not on real economic issues but on bloated jargon. And who could blame them - up until 2007 America was the land of plenty (compared to the rest of the world) and the world's unchallenged superpower. The vast majority of Americans, sufficiently dumbed down and unaccustomed to facing economic hardships, choose to vote either along ideological lines such as: gay rights, christian values, abortion and taxes, or on entirely frivolous issues such as: American "culture" (championed by Bill O'Reilly), pseudo-family values (which candidate cheated on his wife i.e. Bill Clinton vs. George Bush), should gays serve in the military, gender (a man's vs. a woman's ability to lead), race (white vs. everyone else), a candidate's good looks, or simply whether the President is "someone one can have a drink with". Remember George W. Bush's election slogan "Compassionate Conservatism"? Those two words never did conveyed ANY real meaning, they simply amounted to mindless verbose jargon. But they got Bush elected.
A Tectonic Shift in Voter Priorities - CAUTION Congress and Corporations: A People's REVOLUTION is NOW Officially Underway
The economic crisis has set off a massive "earthquake" in the voters mind and has led to a tectonic shift in voter priorities. A visit to a less fortunate country will reveal, that voters there, are scarcely concerned with the gender, race or religion of their leadership (e.g. India the world's most populous democracy is de facto ruled by Sonia Gandhi, a woman of Italian birth, who happens to be a Christian in charge of a largely Hindu nation), sexual orientation of their military, pseudo family values/culture. They have far deeper and greater issues to worry about: such as putting food on their family's table, having a decent paying job, being able to afford an education for their children, saving enough for retirement, access to affordable healthcare and a fair legal system.
Faced with unprecedented economic decline, the American voter is no different and is now in the process of reorganizing his/her priorities. No amount of "green shoots happy talk" will suffice to hide the harsh reality facing Americans - no savings, no jobs, outsourcing, plunging home values, foreclosures, rising food and gas prices and unaffordable healthcare. An apathetic and out-of-touch Congress willing to tax the electorate and then promptly turning around and transferring the proceeds to the military industrial complex to pay for fighting purposeless wars, or impudently giving taxpayer money to bankers who pay themselves fat cat bonuses, is now in SERIOUS danger of being voted out of office, regardless of party affiliation. (On this vein we would like to point out that because the U.S. military has outsourced most of its functions to corporations, much of the ~$1 trillion in annual defense spending by America goes directly to enrich the pockets of CEOs and management of these corporations. A better WASTE of taxpayer dollars is hard to find, except perhaps in the banker bailout).
Bernanke Goes from Hero to "Zero"
To top this, the reckless tribe of "voodoo" economics following Fed officials, who until now were happily putting the U.S. dollar through the shredder, have been shaken out of their smug utopia. Ben Bernanke's world has been turned upside down by Massachusetts. In a span of less than a month he was reduced from "HERO" (TIME magazine named him Person of the Year) to "ZERO" (already facing deep derision of the American people and now opposition from a Congress which has finally heard the American voters cry). Even so we believe that Bernanke will ultimately be sworn into a second term, because his fingers are too deep in the money printing mess to extricate easily. Nevertheless he has been put on notice.
It is then perhaps most opportune for the fat cat corporate overlords of America, that the Supreme Court filled with "anti-Constitutional and anti-Democracy junkies", decided to end the last vestige of American democracy by sending it to the guillotine. In affording a "Corporation" the SAME rights as a "Person" the Supreme Court has given the likes of Goldman Sachs and Big Oil the power to effectively VETO a democratically elected Congress, and make them do their bidding.
The issues facing the American electorate are indeed profound but its citizens slowly and surely are now awakening. They are choosing to get informed and educated on real issues and are displaying increasing independence from associating with any one political party. Real issues take priority and anyone who ignores this trend will do so at their own peril. Even corporations such as Fox News, MSNBC or CNBC (which aligns itself with Wall Street) will not be spared. The same goes for TIME magazine, the Financial Times which named Goldman Sachs' CEO as person of the year and the Wall Street Journal. Interestingly, Fox News is most likely having serious issues as evidenced by their courting of the Saudi royal investor Al-Waleed bin Talal. Most American corporations traditionally run to him when they can't raise funds from elsewhere (e..g. Citigroup).
A People's REVOLUTION is NOW underway and this trend will not be restricted to America. Because the economic crisis has engulfed the world, citizens around the globe are waking up to WHAT REALLY MATTERS. No country will be spared, including China.
Why China Will NOT Be the Next Superpower
China's export dominated economy is closely integrated with that of the world's including America. While erudite analysts will point out that China is increasingly moving its exports away from America and Europe and towards other nations such as Australia, they fail to understand that it really does not matter who China exports to. The mere fact that their economy is dependent on exports is the real problem. For the next trend to emerge across the world will be local production and consumption. Consider the United States: Corporations here will be forced to relocate factories back to the U.S, either through 1) a people's boycott of foreign produced goods or through 2) the U.S. Congress passing laws or imposing higher taxes on imports. When Governments are faced with increased joblessness, they turn protectionist to stem a people's revolt. The EASIEST way to CREATE jobs is to get them back from China. Moreover what people miss is the simple fact that U.S. corporations based in China produce good sold mostly to Western consumers (Americans and Europeans). The Chinese/Indians simply do not have the purchasing power to buy most of those goods. Their lower wages cause their price point to be much lower. So American corporations will have to to go back to earning lower operating margins/profits and producing goods sold to Americans, in America. Ditto for Europe. Protectionism will engulf the world. Relying on exports is therefore NOT the answer to an economic recovery. Producing goods locally, to create local jobs, and which will be consumed domestically will be the new trend.
If China begins to lose its exports due to industrial relocation back to the home base, then even a small percentage change will cause millions of Chinese youth to lose jobs. Remember than China has 1 billion people, so it needs to create millions of jobs every year to keep its youth employed. Just in 2008 there were massive riots in China as workers protested against factory closure. Moreover if China allows the yuan to float, it will most certainly appreciate against the dollar, compounding China's problems by eroding its currency edge to produce cheap exports.
This above dynamics coupled with China's brutal suppression of its people will prove to be its real Achilles heel. Like much of the world, China is also going to be engulfed in civil unrest. For this reason alone we are bearish on China attaining world supremacy anytime soon. And it is for the good of the world. The world needs to move towards democracy, free access to information, equality and justice for all. The Chinese government right now does not embrace any of these principles. Having said that the U.S. Government should stop interfering in China's affairs, their attempts to do so have NEVER helped and only serve to create more strife in the world. They should instead focus on minding their own business.
Japan Getting Ready to Say "Sayonara U.S. Military Bases"
So coming back to Japan, the BBC news is reporting that the Japanese government under pressure from its people, is considering closing U.S. military bases in Japan. According to the report:
Japan's Prime Minister Yukio Hatoyama has said the result of a weekend mayoral poll could fuel a major rethink about US military bases in Japan. Residents of the Japanese city of Nago, on Okinawa, chose a candidate opposed to the hosting of an American air base.
The new mayor of Nago, Susumu Inamine, had campaigned against any expansion of US military presence in the area. He beat the incumbent, Yoshikazu Shimabukuro, who supported the base, by winning 52.3% of the vote. Mr Inamine, an independent, ran with the support of Mr Hatoyama's ruling Democratic Party.
National daily newspaper Asahi said in a front-page editorial on Monday: "It wasn't just Shimabukuro that was defeated in the election. The biggest loser was Japan's post-war military base strategy."
Correspondents said the prime minister's comments highlighted the difficulties involved in fulfilling an agreement with the US to relocate the base against strong local opposition.
Japan signed a deal with the US four years ago that was part of a broader realignment of American troops.
A key part of the plan was to relocate the Futenma air base, home to about 2,000 Marines, to the smaller city of Nago. Okinawa is home to most of the 47,000 American troops based in Japan.
The "Status quo" is no longer that - the world is undergoing a rapid transformation - a revolution is underway.

Sunday, January 24, 2010

Manchurian Candidates:Supreme Court Allows China and Others Unlimited Spending in US Elections

By Greg Palast
Our future elections, while nominally a contest between Republicans and Democrats, may in fact come down to a three-way battle between China, Saudi Arabia and Goldman Sachs.
In today's Supreme Court decision in Citizens United v. Federal Election Commission, the Court ruled that corporations should be treated the same as "natural persons", i.e. humans. Well, in that case, expect the Supreme Court to next rule that Wal-Mart can run for President.
The ruling, which junks federal laws that now bar corporations from stuffing campaign coffers, will not, as progressives fear, cause an avalanche of corporate cash into politics. Sadly, that's already happened: we have been snowed under by tens of millions of dollars given through corporate PACs and "bundling" of individual contributions from corporate pay-rollers.
The Court's decision is far, far more dangerous to U.S. democracy. Think: Manchurian candidates.
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Saturday, January 23, 2010

Americans Regard Sexual Infidelity as Far More Serious Than Invading Countries

Paul Craig Roberts in Paul is an economist and was the Assistant Secretary of the Treasury in the Reagan Administration.
Here in Great Moral America we only hold accountable celebrities and politicians for their sexual indiscretions. Tiger Woods is paying a bigger price for his girlfriends than Bush or Cheney will ever pay for the deaths and ruined lives of millions of people.
Americans Are Hell-Bent on Tyranny
Obama’s dwindling band of true believers has taken heart that their man has finally delivered on one of his many promises—the closing of the Guantanamo prison. But the prison is not being closed. It is being moved to Illinois, if the Republicans permit.
In truth, Obama has handed his supporters another defeat. Closing Guantanamo meant ceasing to hold people in violation of our legal principles of habeas corpus and due process and ceasing to torture them in violation of US and international laws.
All Obama would be doing would be moving 100 people, against whom the US government is unable to bring a case, from the prison in Guantanamo to a prison in Thomson, Illinois.
Are the residents of Thomson despondent that the US government has chosen their town as the site on which to continue its blatant violation of US legal principles? No, the residents are happy. It means jobs.
The hapless prisoners had a better chance of obtaining release from Guantanamo. Now the prisoners are up against two US senators, a US representative, a mayor, and a state governor who have a vested interest in the prisoners’ permanent detention in order to protect the new prison jobs in the hamlet devastated by unemployment.
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Why Does The U.S. Have An Empire In Asia?

Paul Craig Roberts in Paul is an economist and was the Assistant Secretary of the Treasury in the Reagan Administration.
The US government is now so totally under the thumbs of organized interest groups that "our" government can no longer respond to the concerns of the American people who elect the president and the members of the House and Senate. Voters will vent their frustrations over their impotence on the president, which implies a future of one-term presidents. Soon our presidents will be as ineffective as Roman emperors in the final days of that empire.
Obama is already set on the course to a one-term presidency. He promised change, but has delivered none. His health care bill is held hostage by the private insurance companies seeking greater profits. The most likely outcome will be cuts in Medicare and Medicaid in order to help fund wars that enrich the military/security complex and the many companies created by privatizing services that the military once provided for itself at far lower costs. It would be interesting to know the percentage of the $700+ billion "defense" spending that goes to private companies. In American "capitalism," an amazing amount of taxpayers’ earnings go to private firms via the government. Yet, Republicans scream about "socializing" health care.
Republicans and Democrats saw opportunities to create new sources of campaign contributions by privatizing as many military functions as possible. There are now a large number of private companies that have never made a dollar in the market, feeding instead at the public trough that drains taxpayers of dollars while loading Americans with debt service obligations.
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How Wall Street is Destroying Private Medicine

Paul Craig Roberts in Paul is an economist and was the Assistant Secretary of the Treasury in the Reagan Administration.
At my annual check-up, my doctor handed me a sheet explaining the reasons for office fee increases for Medicare Patients. It is worth reporting at length.
Medicare fixes the prices for Medicare patients’ health care. All office charges for Medicare, including office visit charges, have been set by the Federal government since 1984. In real terms (adjusted for inflation), these fixed prices are less today than they were three decades ago.
During the last four years, there have been large decreases in Medicare reimbursements for laboratory services provided in-house by private physicians. Payments for in-office blood work, for example, have been cut 35 to 47 percent. Yet, a physician’s overhead continues to increase as a result of uncontrollable costs, such as property taxes, building insurance, electricity, maintenance, malpractice and workers compensation insurance.
As one result, my doctor had to close both the x-ray unit and the state and federally licensed medical laboratory on his premises. Now patients are inconvenienced by having to go to other locations for services that formerly were provided by the doctor at lower cost. A one day medical check-up is now a multiple day event and more expensive.
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How an Obama Appointee & Harvard Law Professor is Murdering the First Amendment: The Rule of Law Has Been Lost

Paul Craig Roberts in Paul is an economist who was the Assistant Secretary of the Treasury in the Reagan Administration.
What is the greatest human achievement? Many would answer in terms of some architectural or engineering feat: The Great Pyramids, skyscrapers, a bridge span, or sending men to the moon. Others might say the subduing of some deadly disease or Einstein’s theory of relativity.
The greatest human achievement is the subordination of government to law. This was an English achievement that required eight centuries of struggle, beginning in the ninth century when King Alfred the Great codified the common law, moving forward with the Magna Carta in the thirteenth century and culminating with the Glorious Revolution in the late seventeenth century.
The success of this long struggle made law a shield of the people. As an English colony, America inherited this unique achievement that made English-speaking peoples the most free in the world. In the first decade of the twenty-first century, this achievement was lost in the United States and, perhaps, in England as well. As Lawrence Stratton and I show in our book The Tyranny of Good Intentions: How Prosecutors and Law Enforcement Are Trampling the Constitution in the Name of Justice, (2000), the protective features of law in the U.S. were eroded in the twentieth century by prosecutorial abuse and by setting aside law in order to better pursue criminals. By the time of our second edition (2008), law as a shield of the people no longer existed. Respect for the Constitution and rule of law had given way to executive branch claims that during time of war government is not constrained by law or Constitution.
Government lawyers told President Bush that he did not have to obey the Foreign Intelligence Surveillance Act, which prohibits the government from spying on citizens without a warrant, thus destroying the right to privacy. The U.S. Department of Justice ruled that the President did not have to obey U.S. law prohibiting torture or the Geneva Conventions. Habeas corpus protection, a Constitutional right, was stripped from U.S. citizens. Medieval dungeons, torture, and the windowless cells of Stalin’s Lubyanka Prison reappeared under American government auspices.
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Friday, January 22, 2010

Ron Paul: "We Need to Take Out The CIA"

A short new video of an excerpt of a recent Ron Paul speech at the Campaign for Liberty Regional Conference in Atlanta, Georgia, earlier this week.

Supreme Court Goes Rogue, Allows Corporations to Overthrow Democracy

The Huffington Post
A bitterly divided Supreme Court vastly increased the power of big business and unions to influence government decisions Thursday by freeing them to spend their millions directly to sway elections for president and Congress. The ruling reversed a century-long trend to limit the political muscle of corporations, organized labor and their massive war chests. It also recast the political landscape just as crucial midterm election campaigns are getting under way.
In its sweeping 5-4 ruling, the court set the stage for a wave of likely repercussions – from new pressures on lawmakers to heed special interest demands to increasingly boisterous campaigns featuring highly charged ads that drown out candidate voices. The election-season blizzard of ads on Americans TV screens is bound to increase.
While the full consequences of the decision were hard to measure, politicians made clear whom they believed benefited. Democrats, led by President Barack Obama, condemned the decision while Republicans cheered it. Still, more labor and corporate money in the political system could dilute the role of both political parties. And the decision seeded the ground for further challenges to an already weakened system of campaign finance regulations.
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Thank You Massachusetts, But Karma is a Bitch and We Now Have Yet Another Dud in The Senate

In the end it came down to desperate voters in Massachusetts having to elect the highly questionable Scott Brown to the U.S. Senate, that caused Obama to come out from his Presidential honeymoon suite and attempt to tackle the corruption on Wall Street. Unfortunately in electing Brown, Massachusetts voters may have inadvertently elected the very person who is completely opposed to Wall Street reform.
It turns out that Scott Brown's meteoric run to the Senate was heavily funded by none other than Wall Street. According to Think Progress donors to Brown's campaign included FreedomWorks, a Wall Street front led by Dick Armey who represented AIG, Lehman and Merrill Lynch as a corporate lobbyist. In addition the Club for Growth another Wall Street funded group which has opposed a financial truth commission, ran ads in support of Brown. As a result of Wall Street's generous efforts we are now left with yet another Dud in the Senate, willing to step in to kill crucial financial reform.
Regarding President Obama's speech today, we are left with the following observations:
  1. First the speech was most definitely a much needed step in the right direction.
  2. Paul Volcker has finally moved to the center stage, and his sane voice is finally getting heard above those of Wall Street's best buddies Larry Summers and Tim Geithner.
  3. We applaud Obama's move to label the financial reform as the "Volcker Rule" - a smart move that will help silence potential Republican opposition to the President's bank reform plans. Anyone attempting to voice opposition to anything Volcker says, will have a difficult road to travel, because of the immense credibility enjoyed by Volcker in the eyes of ordinary people. Because of this we feel hopeful that the proposed bank reform will probably have a better chance of surviving the legislative process than the health care bill.
  4. Having said that, we are left with the feeling that the Obama plan to rail against Wall Street was hurriedly put together in wake of the Massachusetts disaster. Complete with strategically staged photo-ops with Volcker, it seemed as a strong attempt to boost the President's credibility. Which leaves us to wonder, would all this have come to pass had the Democrats won Massachusetts? Why has President Obama taken an entire year to propose one sensible reform? Does he really have the courage to follow through on his anti-Wall Street rhetoric? Will he start back pedalling/cut-side deals (like he did with healthcare companies), at the slightest hint of opposition from Wall Street or the Republicans?
  5. Also what are the President's plans around the Fed? Will he allow for a full and complete audit of the Fed? Does the President still support making the Fed the sole regulatory body (a highly unpopular move which has the support of Tim Geithner and Larry Summers)? Does the President still support establishing a Consumer Protection Agency as championed by Sheila Blair, or will he listen to Wall Street and scrap it?
  6. Simon Johnson a former chief economist at the IMF made some interesting observations on Obama's speech: "The serious debate with big finance is just beginning; it will get very nasty, hundreds of millions of dollars will be spent, and everyone, in the end, must take a side. What we need is for sensible legislation to come to the floor of the Senate and for all senators to go on the record, in detail. A public debate of historic proportions -- the kind that shaped this republic -- will set up the Democrats for the midterm elections. If you would like to run on a pro-too-big-to- fail platform, go ahead. As we drill down into the details of ideas for breaking the economic and political power of oversized banks, we need this litmus test against which serious suggestions should be judged: Does a proposal, at the end of the day, imply that Goldman Sachs should break itself up into at least four or five independent pieces, with the biggest being no more than 1 percent of gross domestic product, or roughly $150 billion? If the answer is yes, we are making progress in moving our financial system back toward where it was in the early 1990s, when it worked fine (and Goldman was a world-class investment bank) and was much less threatening to the global economy. If the answer is no, we are merely repainting -- ever so gently -- the deckchairs on the Titanic.

When There is No Moral/Ethical Framework, The Market Ends Up Devouring All Other Sectors, and Finally Itself

A thought-provoking interview with Jim Wallis, author of the book Rediscovering Values: On Wall Street, Main Street, and Your Street.

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Thursday, January 21, 2010

Could it Be that Obama is Waking From His Slumber - Plans to Implement Volcker's Suggestions on Bank Reform

This news just came out tonight. The WSJ is reporting that tomorrow President Obama is planning to propose new bank reforms based on Paul Volcker's suggestions. The reforms will include:
  1. New scale restrictions on the size of the country's largest financial institutions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal competitive forces.
  2. Place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place "firewalls" between different divisions of financial companies to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits.
  3. Rules could also keep banks out of the business of running hedge funds, investing in real estate or private equity, all businesses that have become important, profitable parts of these banks. The collapse of two highly leveraged hedge funds began the process that led to the collapse of Bear Stearns.
  4. The White House proposal would seek to return the "spirit of Glass Steagall," meant to limit large banks from becoming too big and complex that create enormous risk.
We hope President Obama has the courage to follow through, and does not begin back pedalling once the banking lobby takes over the airwaves in opposition.

U.S. Government Juicing Up the Stock Market? - More Evidence of Futures Market Manipulation

Excellent interview with Charles Biderman of TrimTabs Research, where he outlines his theory that the Fed is probably juicing up the stock market through futures trading. We at the Firecracker Report have evidence this in our report titled S&P Futures/ETFs Being Used to Ramp up Equity Markets - Market Manipulation Evidence from Intraday Trading Profiles. Since the futures market allow for up to 100x leverage, it is really easy to pump the underlying asset class be it commodities (e..g. oil), stocks or bonds.

It Takes a Pillage: Total Cost of the Wall Street Bailout = $13.3 Trillion

With all the media-spin focused on the TARP, most folks mistakenly assume that the Wall Street bailout cost the tax-payers $700bn, and now that the bankers have returned the funds, things are back to normal. Nomi Prins an ex-banker from Goldman Sachs, who is out with a new book It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street meticulously accounts for the trillions spent in the Wall Street bailout. According to her the total cost of the bailout so far has been $13.3 Trillion. Some of her latest statistics are captured below. For the detailed Bailout Tally Report click here.

TOTAL BAILOUT: $13.3 TRILLION ($20.1 TRILLION Including Fannie and Freddie Support)


U.S.-China Military Tensions Grow

By Rick Rozoff of Stop NATO Blog
Even though the U.S. military budget is almost ten times that of China’s (with a population more than four times as large) and Washington plans a record $708 billion defense budget for next year compared to Russia spending less than $40 billion last year for the same, China and Russia are portrayed as threats to the U.S. and its allies. China has no troops outside its borders; Russia has a small handful in its former territories in Abkhazia, Armenia, South Ossetia and Transdniester. The U.S. has hundreds of thousands of troops stationed in six continents.
While Gates was in charge of the wars in Afghanistan and Iraq and responsible for almost half of international military spending he was offended that the world’s most populous nation might desire to “deny others countries the ability to threaten it.”
On December 23 of last year Raytheon Company announced that it had received a $1.1 billion contact with Taiwan for the purchase of 200 Patriot anti-ballistic missiles. In early January the U.S. Defense Department cleared the transaction “despite opposition from rival China, where a military official proposed sanctioning U.S. firms that sell arms to the island.”
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Wednesday, January 20, 2010

Massachusetts a Harbinger for a NEW Independent Third Party

Scott Brown, a little know Republican senator and tea party darling, has managed to steal the prized Massachusetts senate seat that had been held by Ted Kennedy for the last 50 years. It is not that Scott Brown, who in an earlier life posed nude for Cosmopolitan Magazine (see Colbert video below), brings anything new to the table. Rather, his ascendancy indicates the intense frustration bubbling underneath the papering of the economic crisis. What is truly fascinating is that Scott Brown branded himself as an independent, even though he ran under the Republican ticket. According to the New York Times:
Mr. Brown ran strongest in the suburbs of Boston, where the independent voters who make up a majority in Massachusetts turned out in large numbers.“Tonight the independent voice of Massachusetts has spoken,” Mr. Brown told his cheering supporters in a victory speech, standing in front of a backdrop that said “The People’s Seat.” Mr. Brown was able to appeal to independents who were anxious about the economy and concerned about the direction taken by Democrats, now that they control both Beacon Hill and Washington.
Brown's win came not only in an ultra-liberal state where Barack Obama had carried 62% of the votes in 2008, but also in spite of his less than stellar positions on many issues such as support for water boarding and the suggestion that Obama was born out of wedlock (thus hinting at his illegitimacy for Presidency).
Moreover although, Massachusetts represents a huge loss for the Democrats, it should however NOT be construed as a win for traditional Republicans, mainly because Brown contested on an "independent candidate" platform. The real lesson to be drawn from Brown's win is that American's are increasingly disenchanted with BOTH political parties and the movement for a NEW independent third is currently underway.
Both Democrats & Republicans continue to hold the nation in a paralysed state as they engage in traditional partisan bickering and doggedly hold on to outdated belief mantras such as "free-markets" and "unrestrained government support for Wall Street, defense and the military establishment but no spending/help for "main street". They remain completely clueless to the needs of regular Americans, who are suffering from intense joblessness and high indebtedness, who are left with meager assets/savings to tide them over, not to mention the fact that in America if you don't have a job you also do not have access to affordable healthcare.
As a result both the Democrat and Republican parties are fracturing right down the middle - The Democrats having supported Barack Obama's unnecessary wars that the country can ill-afford, coupled with their inability to reign in Wall Street are facing a severe backlash from the progressive liberals within the party. Similarly the Republican party which is left with no effective leadership at its helm is facing a backlash from its fiscally conservative voters. Having failed to rein in fiscal spending and Wall Street excesses they are facing mutiny within their ranks from the conservative tea party folks, some of whom have found refuge under Sarah Palin, Glenn Beck and the other Fox cohorts umbrella.
This ground swell movement for an independent third party in 2012 is only going to grow. For now many independents are taking refuge under the Republican umbrella, but look for them to separate once the movement gathers steam.
And oh...we ascribe a very low probability that Obama will roll out of his slumber and take some sensible measures to rein in Wall Street such as 1) repeal Glass Steagall as recommended by Volcker, 2) impose leverage restrictions on banks, 3) impose restrictions on banker bonuses and use that money to build bank capital reserves to protect against future crisis, 4) install a consumer protection agency and 5) impose higher margin requirements on futures and commodity trading to reign in excessive speculation. Instead we fully expect more of the same i.e. short term populist measures such as imposing a financial crisis tax on banks, which will not only fail to address the root cause of the problem but will also be paid for by the shareholders and not the greedy banksters.

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Drinking Poison to Quench Thrist

By Andy Xie (ex-Asia Chief Economist, Morgan Stanley) in China International Business 
Financial markets didn't wait for the smoke to clear from the Dubai debt crisis before jumping back into the happy days of shorting the dollar and piling into everything else. After the massive government bailouts in the last crisis, the markets don't have any doubt that there would be bailouts the next time. This no-downside psychology is making each market correction shorter and shallower.
The zero-interest rate environment and rapid monetary growth are scaring conservative savers into becoming budding speculators. By threatening to destroy the value of cash and by subsidizing speculation with low interest rates and bailouts, good guys really finish last. It may be better surfing the speculative waves than staying put. One may die in a speculative crash, but holding onto cash when governments are hell-bent on printing money to solve every problem seems like certain death.
The Dubai crisis wasn't even the most important event last month. The confirmation of Ben Bernanke and Obama's announcement of the surge-and-withdraw decision for the Afghan War were both more important. Both indicate that the most important decisions in the world are focused on sustaining existing trends despite catastrophic consequences in the long term.
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