Economics and Propaganda

By Morgan Reynolds

[Posted November 12, 2003]

This talk was delivered at the Ludwig von Mises Institute's 2003 Supporters Summit, October 24, 2003.

Yes, it's true, I recently worked in a Bush administration for some 16 months as chief economist in the United States Department of Labor. I took a walk on the dark side, you might say, eager to sip from the cup of power. How could I do that? Let's just chalk it up to frustration over governmental policy, although it may have been more sinister. As Samuel Johnson observed in 1773 about human weakness: "Wickedness is always easier than virtue; for it takes the shortcut to everything."

Condemn me if you must, yet I saw economic policy and propaganda being made in close relief. My conclusion? The low opinion I held of government before I went to Washington was not elevated by participation in it. I saw a complete disconnect between reality—the economics of the business slump—politics, and proper policy. I repeat: there was a complete and total disconnect between economics and politics.

The more cynical of you here today will be nonplused by my observation. After all, FDR ridiculed the sign on his Treasury Secretary Henry Morgenthau's desk, "Does It Contribute to Recovery," with the rejoinder, "This is politics." The devious Mr. Roosevelt meant that the New Deal "was not about economic recovery, but about displacing business as the nation's predominant elite," according to Wall Street Journal columnist Robert L. Bartley (October 20, 2003). On the other hand, the more earnest among you realize that the continuing disconnect between intervention and our scientific knowledge of recessions is a disaster because "The main issues of present-day politics are essentially economic," as Mises observed.

Let us put this latest recession in context. (If we need definitions, a recession means a widespread, sustained decline in business output and employment while politics is the art of gaining, retaining and wielding governmental force in our representative democracy). When the Bush administration took office in January, 2001, a downturn was already underway. The president and his coterie said so and blamed Clinton but hushed up when accused of "talking down the economy."

That was a mistake—a dose of truth about the economy along the lines of the early '80s Reagan model would have worked better—but they learned an early lesson about psychology and confidence in Washington, D.C. Politics is all about (the) confidence (game) and prestige in the nation's capital. I was immediately struck by how Bush appointees greeted economic news with pompoms waving. Of course, "The people are most credulous when they are most happy," as economist Walter Bagehot (1826-77) put it.

Politicos and mainstream economists believe our fragile "capitalist" economy depends critically on sustaining "confidence." This month Martin Feldstein, once President Reagan's chief economic adviser, wrote in The Wall Street Journal (October 13, 2003): "Because confidence is so important for spending decisions, the declining number of jobs until September created the risk of a self-fulfilling prophecy of low demand and weaker employment. That's why the recent upturn in employment is particularly good news." Wall Street or Washington, D.C., these economists are all Keynesians now—they believe that spending and keeping it pumped up are the keys to prosperity. They know a lot that just ain't so, but they know enough is amiss in our "fundamentally sound economy" to have just named a "strong crisis manager," Timothy F. Geithner, as president of the New York Federal Reserve Bank.

Also, since September 11, 2001, a new war (or is it a portfolio of wars?) replaced the late, lamented end of the cold war and pushed the recession into a distant second place. So the public has cut the administration plenty of slack, though it may be exhausted come November 2004.

FDR did not invent "countercyclical" policy to "fix" a business slump. No, for that we can thank a Republican president, Herbert Hoover. The last so-called free-market recession was sharp but brief in 1920–1. The Harding administration followed federal tradition and stood by and did nothing because "everything was too high" after the world war and depression was something that "ran its course, like measles." There was political pressure to intervene, but the favored theory of earlier business crises carried the day one last time: "Businessmen got themselves into this mess, so let them get themselves out of it."

One of the activists urging intervention in 1921 was the Harding administration's "progressive" Secretary of Commerce, Herbert Hoover. When the roaring '20s ended with the stock market crash of October, 1929, the "Great Engineer" was in a much better position to administer his remedies. The "forward-looking" Hoover would take on the business cycle and stomp it flat with all the resources of government. The Wonder Boy recalled, "No President before had ever believed there was a governmental responsibility in such cases . . . therefore, we had to pioneer a new field" (Rothbard, p. 186).

The parallels between the Hoover and current Bush-Greenspan policies are remarkable:

Hoover inflated credit and bullied banks into inflating.

Signed the Agricultural Marketing Act to subsidize farming.

Pursued a "high-wage" policy, including corporate pledges to avoid cuts in wage rates and signed the Norris-LaGuardia Anti-injunction Act to empower labor unions.

Cut taxes heavily.

Pushed federal expenditures up by 42 percent in one year (!), driving the burden of total government up from 16.4 percent in 1930 to 21.5 percent of the gross private product.

Deliberately ran a huge deficit.

Started more major public works in four years than in the previous thirty.

Attacked the stock exchanges and urged the public to "invest on the basis of the future of the United States" rather than judging stocks according to earnings.

Signed the punitive Smoot-Hawley Tariff Act.

Lost the confidence of foreigners in the dollar, who began to pull out their gold.


After four years, the result of Hoover's "frenzied interventionism," was there for all to see: utter ruin, a ruin "unprecedented in length and intensity" (Rothbard, p. 295). At least he didn't resort to a shooting war. And what did our leaders in Washington, DC, learn? Hoover bragged: "We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever involved in the history of the Republic." Rexford Tugwell, one of FDR's "impudent nobodies," finally conceded in an interview forty years after the event (1974): 'We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover had started."

We know how counterproductive these interventions are. "Whenever government intervenes in the market, it aggravates rather than settles the problems it has set out to solve," remarks Murray Rothbard (p. 204). "This is a general economic law of government intervention." Rothbard concludes his book on America's Great Depression: "Bravely [Hoover] used every modern economic 'tool,' every device of progressive and 'enlightened' economics, every facet of government planning, to combat the depression. For the first time, laissez-faire was boldly thrown overboard and every governmental weapon thrown into the breach."

At least Hoover had to refute a then-respectable, rival laissez-faire theory of the "reactionary liquidationists." Today, reputable economists on Wall Street and inside the beltway do not advocate laissez-faire as the right corrective, though their economic understanding is hardly more respectable than that of the "monetary cranks."

What they know in Washington is "smart politics." Policies consist of happy talk, reassurance that all is well, it's all under government control, and extravagant use of the Hoover-FDR tools. "All governments are firmly committed to the policy of low interest rates, credit expansion, and inflation," wrote Ludwig von Mises. "When the unavoidable aftermath of these short-term policies appears, they know only of one remedy—to go on in inflationary ventures." But explaining this tragic situation goes beyond the direct policymakers. Two additional groups outside of Washington, D.C., deserve mention too: economists and the public.

First, economists have treated monetary problems in a superficial way, failing to integrate money into their theory of markets. They naively embraced the neutral theory of money, failing to appreciate how monetary manipulation necessarily distorts markets and causes booms followed by corrective busts.

Hence, Benjamin Strong, governor of the New York Federal Reserve Bank in the 1920s, could say ignorantly and without guilt, "I will give a little shot of whiskey to the Stock Market," just as our revered Dr. Alan Greenspan ("Sureprintsalot") or Larry Kudlow can today. No misunderstanding in economic science has done more harm than the role of money and credit in business boom and bust.

Second, the myopic public disposition for lower interest rates by allegedly costless credit expansion creates an irresistible temptation for politicians, bureaucrats and economists to comply. H.L. Mencken's theory of democracy surely applies all-too-well here: the public gets what it wants, good and hard.

http://www.mises.org/fullstory.asp?control=1367

One stock I really like:

http://finance.yahoo.com/q/bc?s=CDE&t=6m

You should have had it under 2 bux...

Anyhow if you didn't get some, take a position, add when it dips...

"To the moon, Alice."
by Jim Puplava & Eric King


Fundamental Review
by Jim Puplava



As an investment, it isn’t on anyone’s radar screen, at least not on the screens of the general public. Yet in the last three years, the price of the yellow metal has risen 54% from its nadir of $255.55 on April 2, 2001 to today’s 7-year high of $394.45. The last time we saw gold prices this high was back in May of 1996. The movement in the price of the metal is nothing compared to what has happened to the price of gold shares. The Amex Gold Bugs Index (HUI) has soared by an incredible 440% since January of 2001. The index is up 82% over the last 52 weeks and has surpassed even the gains in the NASDAQ this year. The HUI is up 53% this year compared to 47% for the NASDAQ.


http://www.financialsense.com/Market/archive/2003/1112.html


Must click for numerous charts and graphs...


Ahem...NOW can I get an ITOLUSO? Dig up my stock letter from Jan of 2001 or was it DEC99? Anyhow back around there I was going on about gold...even went so far as to get a list of mutual funds for some guys on the list who were affraid to invest in individual stocks...of course all the guys on the stock letter (okay not all just MANY) could only piss and moan about VDOT...


Just feeding my need to be right after being so terribly wrong about a couple penny stocks...seem to have the Macro down now working on the Micro...somebody said if I am confident about the Macro and ability to spot braod trends like B2B and Gold I should spend time in commodities...but that seems from what I can tell macro-micro because you can be right about the trend but wrong about the direction of things within the trend like now for example...we are in a Bear market...but right now inside this Bear we are having a hell of a Bull...

I always remeber that quote from ZEAL: "Breath-taking bear market rallies..."

Get gold on dips accumulate silver...


PS MDCE ain't dead yet...


PPS: Precious Metal Supply Deficits

On the gold and silver side, supply deficits have been going on now for well over a decade. This will be the 14th year that silver has run a supply deficit.

[How long do you think this can go on...? Another year, 5, 10? Get it now.]

Gold has been running a supply deficit equally as long. If it hadn’t been for central bank sales of gold at rock bottom prices, the price of gold would have been much higher years ago. However, the supply of gold in central bank vaults is now half empty. In the case of silver, aboveground stockpiles are being depleted in order to meet supply deficits and those stockpiles are becoming thinner and thinner each month. The only way to keep gold and silver prices down in through the paper markets in derivatives. That won’t work in the long run because the big boys have been buying for the last three years. That is what has driven up the price.

We are only in the first phase of this new bull market in metals. Institutional interest is nominal at this point and individual investors are content chasing tech stocks at exorbitant prices. As an investment, gold and silver investments are the furthest thing on investors' minds at the moment. Individual investors are still chasing the last bull market in equities, believing that a new bull market has arrived.

Whose Gonna Say Uncle???

[Click link for charts and graphs:

http://www.gold-eagle.com/gold_digest_03/petch111403.html ]


David Petch

This essay discusses the differences between the United States and China today with respect to market structure, and where things are heading. A combination of market analysis and biological observations are included to give a more accurate perspective of how the future may transpire.

Differences between the US and China

The items in this section are broken down numerically for easier referencing later in this article.

Currency and Debt

The US allows their currency to float (although intervention has occurred until the decline since 120) and the Chinese Renimbi is pegged to the US dollar at around 8.2:1. Quoting Ernest H Pregg (Manufacturers Alliance/MAPI, October 2, 2002) "In the case of China, the renimbi is fixed to the dollar, but is non-convertible on capital account. What this means in practice is that the export earnings in foreign exchange, plus FDI not utilized for purchases on current account, have to be sold to the central bank for renimbi at the fixed exchange rate. In effect official intervention is carried out through mandatory foreign exchange sales to the central bank rather than central bank purchases in the market, as take place in Japan and elsewhere. The net effect, nevertheless is currency manipulation through protracted large-scale purchases of foreign exchange by the Chinese central bank".

Any attempts by the US government or natural market forces to have a lower dollar will be more beneficial to the Chinese who will have their currency fixed. In effect the Bank of China controls the money transfer to its country, shielding trading fluctuations that may arise on an open market system. There is discussion among G-8 nations to try and force Chinas hand to allow the renimbi to float under natural market conditions +/- 20% of the current set value.

China as a country has a greater amount of domestic debt than foreign debt. The amount of foreign debt to GDP is small. Coupled to the fact that Chinas foreign reserves are higher than total foreign debt outstanding, the ability for repayment on loans is not high risk. 74% of the Chinese government debt is US dollar denominated, so any expansion in US currency will reduce the net value of the outstanding loans. The Chinese government has a high asset value (major Chinese banks, all land (leased by farmers) infrastructure, companies, etc), so debt can easily be repaid. Chinese debt at the level of the Central government is no concern…..it is the lower levels of government (townships) that have the majority of debt. For a more comprehensive reading on the Chinese debt, I would recommend the following link (www.worldscinet.com/cij/01/sample/S0219747203000062.pdf)

The United States government currently has a deficit 5% of the GDP. The total US debt is around $6.72 trillion dollars (www.publicdebt.treas.gov/opd/opdpenny.htm). The amount the government is on the hook for $44 trillion in pension funds, medicaid, medicare and other social programs etc. This is nearly four times the US gross domestic product (GDP). The total debt load on the country in the coming years is unmanageable and impossible to pay back. Prior to 1933 when Roosevelt made it illegal for people residing in the US to own gold, and 1971 when Nixon totally went off the Bretton-Woods system, inflation was relatively stable. The currency could only be expanded as the gold reserves of the nation could increase. A worthy read for a better understanding on this subject may be found at the following web address:

www.plata.com.mx/plata/plata/worldres.htm.

In 1948 the US government held twice the value of gold in their vaults as outstanding currency. Countries were exchanging so much gold for the US dollar Nixon had to step in and dishonor the Bretton Woods monetary arrangement that stated the US dollar could be redeemed for gold. The loss of a gold-backed currency paved the way to have a fiat currency, which could be expanded infinitely. The expansion of the US dollar helped to allow economic expansion for the bull market of the 1980's till 2000. Money entering the US creates an increase in the money supply, which is the classic definition of inflation. This causes a rise in prices, which makes the imports to the US less attractive. Foreign countries must then devalue their own currency relative to the US dollar in order to continue the supply of goods at an equivalent rate. The currency wars in Asia are the by-product of the US going off the Bretton-Woods system. The devaluation's of foreign currencies and expansion of the US trade deficit will only cease when there is a collapse in the current system. The cure will be discussed later as this essay proceeds.

Labor

The US population is approximately 300 million while China has 1.3 billion. Currently the US has 6% unemployment, while China has approximately 8%. The interior of China though has unemployment upwards of 40%. The percentages do not seem much in China, but given the population, this creates pressure to maintain a growing job stream. The salaries in China are a fraction of what the US commands, so major blue chip companies such as Hewlett Packard and IBM have relocated portions of their businesses in China. Figures 1 and 2 show yearly and weekly % unemployment in the USA. Since the markets topped in 2000, the % unemployment has slowly been increasing with most jobs heading to Asia or lost permanently through bankruptcies.







Since China entered the World Trade Organization, job creation has been the central task of the government in combating their relatively high unemployment.. One advantage China has over the US is a lower standard of safety requirements, less stringent human rights and salaries. Lower safety requirements and less stringent human rights allows China to get more work per person at a lower salary thus producing a product that is significantly cheaper than an equivalent manufactured in North America.

The most important basis for an economy to grow is one with manufacturing capacity. Since the 70's and 80's, China has been developing its infrastructure to make it more competitive. Earlier in the 20th century the US was the undisputed manufacturing site of the world. This shift in manufacturing capacity sets the stage for China emerging as a new global super power in this coming century. The removal of manufacturing jobs from the US has created a larger service industry to try and fill the void. The manufacturing sector is 10x more engaged in trade than the services sector. A reduction in the manufacturing capacity of a nation will have a significant reduction in the GDP of a nation. The current reduction in the US government revenues can be attributed to many factors, but a loss in the manufacturing sector is surely a contributing factor.

One of the key factors for China's entry into the WTO was a satisfaction of the human rights code. A great site to visit for a very thorough description describing conditions for China entering the WTO may be found at www.uschina.org/public/wto. Since China is a Communist country information and personal freedoms are essentially dictated by the governments position of the day. Human rights are still an issue and the author feels that they will still be an issue for a portion of this decade. Fifty percent of the Chinese population not having an adequate water supply is highly suggestive of the overall high poverty rate existing in that nation. Although voting elects forty percent of the officials at the village level, the electoral processes at the central level of government have yet to occur. The US trade deficit is fed by Chinas lower wages and other factors described above. Whenever a country develops new prosperity, wage increases, benefits, access to higher education and goods become hurdles later in the business cycle. At some point, China will have greater levels of civil unrest due to the desire for a higher standard of living.

The fly in the ointment of Chinas progression to a developed nation lies in its ability to maintain its economic strength. Walmart accounts for 1.3% of the US GDP and they obtain most of their manufactured items from China (nearly 70% of the worlds shoes are manufactured in China). The American quest for purchasing cheap products has fueled the erosion of their manufacturing sector and Chinas boom. Once the American economy heads into dire straits and the consumer stops making purchases, this will have negative feedback to the Chinese economy. Significant portions of the infrastructure in China are loan based, and failure to have constant output of products could reduce plant profitability causing the Chinese government to step in and take over control or plants. As mentioned previously, the Chinese government has more in assets than their annual GDP so China as a whole will stand to have more of a cushion from a severe economic downturn. China does face problems similar to the US with regard to pensions. In 2000, the pension debt was 20-30 times the current pension payment. Calculations suggest the US government face 44 trillion dollars in shortfalls. The American government does not have the asset base the Chinese government has, so absorption of these huge shortfalls most likely will be derived from issuance of more fiat currency or outright. How the issues will be dealt with in both countries is unknown. China has a higher level of poverty than the US, but poverty levels in the US could surge with the coming economic slowdown. The key to the success and survival of either country will be the level of the gold reserves. The US is likely to default on all debt at some point in the future if payment with an expanded currency is null and void. Most likely the US will not allow any transfer of its some 8000 tonne holdings to any country for debt payment. A new gold-backed currency will be issued and things start anew. Failure for debt payments will create strong resentment and global pockets of trading due to projectionist measures.

Oil, Ecology and Health of the Nations

With 1.3 billion people and counting, China has severe stresses on its own environment. The US has 300 million people but put more strain on other countries due to imports. The best method to gauge a countries population impact on a given unit of land is using a term coined "Ecological Footprint". An ecological footprint defines x hectares of land required to support one person in that country. The lower the hectare/person, the lower the smaller the ecological footprint for a given country (refer to www.ecouncil.ac.cr/rio/focus/report/english/footprint/ranking.htm for further details). Deficit values are possible if the land use required per person exceeds the available land. China has a deficit of -0.4 hectares/person while the US deficit is -3.6 hectares/person. Increases in the standard of living in China could raise their deficit value to a point of unsustainability due to their shear population size. The ecological constraints of the size of the ecological footprint of China will be the rate-limiting step in the growth and status of a developed nation. The US is likely to have a key reversal in their ecological footprint as they lose their status as a world superpower and their greenback loses reserve currency status. The US utilizes nearly 10x the land space per person compared to China and this will shift dramatically over the next decades.

Oil and gas are the energy for GDP. No oil and gas means no GDP. An increase in Chinas GDP would imply that a heavier use of oil and gas which could pose problems for the US in obtaining relatively cheap energy supplies (refer to www.ott.doe.gov/biofuels/energy_security.html for further information). In 2000, the US consumed 19.7 million barrels of oil per day, or one quarter of the total world oil production (the US economy represented 25% of the global economy in 2000 coincidentally). By 2002, China accounted for 68.5% of the increase in global primary energy consumption. China imported 69.4 million tonnes of crude oil in 2002, an increase of 15% year over year. The transfer of energy imports from the US to China over the coming years will represent the changing of the guard. How will the world function in the future if currencies are to be backed by gold? Nixon in 1971 took the US off the Bretton-Woods arrangement due to the feared depletion of the US gold reserves. If the Arabs demanded gold for oil Fort Knox would be empty. The history books will probably view George W.'s attack on Iraq as one of the most important strategic wars in the history of the US. With the US having a foothold in Iraq, they essentially control the oil fields, guaranteeing themselves a stable oil supply. Oil could be exchanged for American dollars rather than a direct exchange of gold. This would give the USA an edge over China as Iraq has 112 billion barrels of oil - the worlds second largest proven reserves (www.eia.doe.gov/emeu/cabs/iraq.html). Chinas growth may be regulated by control of the oil supply. Since the Chinese fixed their currency to the US dollar, oil traded with China via Iraq may be restricted to counter the effects of the cheaper Chinese imports.

My education background is in the field of science, so I may go into more detail on the following than is required. It does however have a very significant impact on how the economies of the two nations and others will develop throughout this century. The US has better regulation of health care and disease control than China. Country infrastructure develops prior to bonus features of a developed country like Medicare. Although AIDS has had resurgence due to people becoming ignorant to human immunodeficiency virus (HIV) globally, the levels in the US are fairly stable except the noted increase among homosexual men. China currently has 1 million people infected with HIV, but that number is expected to approach 10 million by 2010 (a conservative estimate). The danger with HIV lies with the fact it is a retrovirus. Retrovirus's nuclear material is RNA rather than DNA. When a virus enters a cell, an enzyme called reverse transcriptase converts the RNA into a DNA template allowing insertion into the host DNA. When a person is infected with HIV, drugs can be given to slow down the eventual death. Persons with multiple partners and unsafe sex practices pose the highest chance of becoming infected. With a large percentage of its population in poverty, China stands to have AIDS reach epidemic proportions in the coming decades. Medication for AIDS only delays the inevitable, and since it is sexually transmitted, the younger population stands to become the heaviest hit. This is does not bode well for a population curve that will have significantly larger proportions of elderly people depending upon the younger generation to fill the void. Some African nations have lost 40-60% of their populations. There are not enough people to tend to crops or fill working positions. This has had a devastating effect on the nations as a whole, but has lead to more sustainable land usage and increases in local animal populations. Although death is a tragedy, ecologically these situations lead to a cleansing and rebirth of the system. In an article by Carla Carlsdottir to the Seattle Times on May10, 1998, a description of people immune to AIDS is described:

"The mutation occurs in the gene for CCR5, a receptor on the surface of immune system cells called macrophages. The AIDS virus uses the CCR5 receptor as a molecular "docking bay," permitting it to land on, attach to and infect the cells. People devoid of the receptor (a condition that occurs when someone inherits the mutant gene from both parents) are essentially immune to HIV infection. People with one mutant and one normal version have fewer than normal numbers of CCR5 receptors on their macrophages. They can be infected with HIV, but if that happens, they tend to have a longer, more indolent course of the disease than people with two normal CCR5 gene". This mutation was found to have occurred in populations of Europe that were resistant to the Black Plague of Europe during 1347-1350 that killed 1/3 to 50% of the entire European population. The US has a high European population base, so there would be a greater chance of immunity occurring than the Chinese population base that was not exposed to the Black Plague of Europe nearly 700 years ago.

AIDS was mentioned in this essay due to the destruction it has over a 20-year period on a country population if left unchecked. Other diseases are also on the rise but are lifestyle or resistance driven from heavy antibiotic usage (none compare to the potentially tragic economic consequences if AIDS becomes an epidemic). A country that grows must have a strong population base to support the job structure. Pending how well AIDS is contained in China will ultimately determine how successful they are at transitioning to a new global superpower. If the handling of the SARS problem (severe acute respiratory syndrome) in China is any indication of how the Chinese government deals with internal issues (Chinese officials knew of SARS for months prior to global outbreaks, but did not disclose information for fears it may damage tourism to the country) then there is cause for alarm. An ultimate reduction in the population of China would have longer-term benefits to the nation as a whole (reason for the one child per family policy) but if AIDS is the method, there will be decades of misery before prosperity blooms again. The US has recently had AIDS increase amongst poorer persons mainly due to lack of education or desensitization to nearly two decades of AIDS awareness. A significant number of US citizens stand to contract HIV over the next decade, but not in the shear numbers that China is expected to.

How Debt Will Dictate Government Policy and Global Relations

An aging population will be an issue for China, but not nearly in so much as the US will face. The Chinese government has substantial assets relative to their total debts. The US government faces a potential 44 trillion dollars in debt for Medicare and social security programs. This number is astronomically beyond the current float of total US dollar currency. The US government supposedly has 8000 tonnes of gold equating to 92.6 billion dollars. If all of the gold ever mined is 120,000 tonnes, the net value of global gold is currently1.39 trillion assuming $360/ounce gold. The wise Richard Russell suggested the price of gold and the DOW will meet around 3000 for both. If true, the best the US government could hope for value of their bullion holdings would equate to 926 billion dollars…….an incredible shortfall to try and cover expenses. I have read that the US government will reprice gold at a ridiculously high value to pay off their debt. Based on the above, it is not even feasible or possible for the US to honor its debt unless the FED or the government interject and take over the corporations that have debt and monetize it. The absorption of debt into the government could simply be transfer a swap between fictitious departments and the debt is absorbed and canceled. If this is performed, the US government stands to absorb significant amounts of real estate, companies etc. Sit back and compare this prior statement the way the Communist government of China has positioned itself…….The US government inadvertently stands to transform its democratic structure into a Communist-type of regime. A government with the majority of control over a countries assets and companies will have negative psychological implications in the fabric of society. Social uprises and a demand for better living conditions spells a situation similar to the early 1920's when unions were just starting to get a footing in North America. This situation is now unavoidable, since the state will have no other means of looking after the elderly, sick and those reliant on government programs that must be financed somehow. With total control over the system money flows can be directed without a problem if they control the taps. This type of environment could be hyperinflationary due to a rapid increase in local currency, only to have deflation kick in and create a very bad depression.

The next question to ask is HOW WILL THE DEBT BE PAID?

The US can a) default on debt (b) expand its currency to create current debt levels easier to pay. No currency around the globe is backed by a gold standard. In fact most countries are expanding their fiat at an alarming rate. If currencies are expanded at an alarming rate, the possibility for hyperinflation exists. The problem with this scenario is people are already at maximum levels of debt. Increases in prices would slow consumer spending drastically. The velocity of money depends upon how fast it is circulated. If consumers do not spend, the velocity of money slows, and the economy slips into a recession.

The US greenback is the reserve currency, which is about to slowly be eroded over the next decade. As other countries repatriate the US dollar to their own or other currency, this will devalue it to levels that cause imports to become significantly expensive. Importing goods with nations not using the same currency could become financially straining which stands to have block economies around the world. The European Union was the first step in the direction of creating block currencies. The US will likely have Mexico, Canada, Iraq, Puerto Rico (maybe Britain) adopt a currency all participants share. This not only achieves currency instability but also keeps import prices relatively constant between different nations. How wills a democratic country with a socialist (deep down Communism) agenda function in a trading block?

Gold backed currencies keep inflation low and prices stable. When the price of gold (POG) was $35 between 1933 and 1970, inflation was present but somewhat subdued. When Nixon nixxed the Bretton Woods agreement, the relentless currency expansion that followed created heavy inflation. A fixed price of gold helped stabilize inflation, while the US currency expansion slowly dissociated the two. Washing the world with fiat paper washed a lot of memories on the importance of gold and silver for providing economic stability. The bull market from the 1980's through 2000 caused a switch from a gold price blow off to a stock blow-off. As the bull market continued in the equities prices rose and stocks were split to keep up with investment demand. Meanwhile, the POG slipped into the abyss to significantly undervalued levels. The $800 POG in today's dollars would equate to $3000 given no more currency expansion occurs.

Fully traded gold in China now makes it unlikely that the US government would try and confiscate gold from its citizens. If Communist China allows people of its nation to buy gold, any attempt by the US government to seize gold would give the impression they were a worse regime than a Communist government.

What Lies Ahead?

The road ahead is one of more negatives than positives. The US is going to be demographically challenged in the coming years. As more people leave the work force, there will be a higher stress put on the medical system. Throw in a 60% obesity problem and AIDS in the future, the downfall lies with the up and coming medical burden. All of the health care requires money, and money will be harder to attain. When the world does finally resolve all debt, most of it will be erased. This will bring out protectionism among nations (we are already witness to this) which will probably put the East against the west. Even if the US has 8500 tonnes of gold in Fort Knox, its dollar will be loathed, and no one will probably trust it (even if they do decide to back it with gold) for a long long time. Local trade blocks will probably form with trade being conducted exclusively within this block until walls of protectionism are slowly knocked down. So…..Whose gonna say uncle, will be it be China or the US? That is a very tough question, and impossible to answer.

The US does have a lot of debt at the government level all the way down to the people of the nation. The Chinese governments at lower levels have high levels of debt, but not as much at the national level.

The US has a better infrastructure in place to deal with prevention of AIDS and medical ailments than China.

The US government holds 8500 tonnes of gold while China holds 500 tonnes. The Chinese government holds hundreds of billions of US dollars in their currency reserves. A switch to holding bullion would drive down the US dollar. A switch to the US having a gold-backed currency would be a tough sell, since a lot of people will not trust the Americans for de-coupling the gold standard in 1971.

Both countries have nukes to sway foreign threats.
The US occupies Iraq, China does not.

The US has a lower population base than China.

Both countries are going to have to deal with an aging population.

China has developed itself into the manufacturing country of the nation, while the US lost this status from earlier in the past century.

I am assuming that it will take up to 2016 to 2020 before we are going to have a recovery at the social level. We had such a long bull market with rules and earning stretched to the limit. When a rubber band is pulled, it usually moves in the opposite direction just as hard. Things will definitely continue to get uglier before things get worse. Analysis of the above 8 points, I would have to place favor in China for a future economic engine and place of investment. The US peaked in its stock market and business expansion in 2000, and will probably fight the current bear market tooth and nail like Japan has done since 1989. All countries will suffer when the US recession does kick in and things take a turn for the worse. Times will be tough, but Japan and China should be the first nations to recover from the turn down. I think the US will be calling "Uncle" later in the coming decade, lets hope that country relations are maintained in a fair state so no repeats of history occur.

The best thing for individuals to protect themselves is own gold. Its store of value will be realized too late for most. I joined the gold party last year, well after many other astute individuals picked up on gold bottoming. It is still not too late. Elliott wave analysis is my forte, and based upon the Gold BUGS Index, we have a long ways to go before the markets top out, 2010 and beyond.



David Petch
Market Letters Digest
November 14, 2003


--------------------------------------------------------------------------------

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Dollar Dips, Burdened by Iraq, U.S. Data
Thursday November 13, 3:09 pm ET
By Kyle Peterson


CHICAGO (Reuters) - The dollar weakened broadly on Thursday as lackluster data on U.S. jobless claims and a moderately disappointing trade deficit number fueled doubts about the pace of U.S. economic recovery.


The greenback fell for a third straight day, fed by a host of factors, including geopolitical tensions, which damaged investor appetite for the currency.

[Didn't I just read that paragraph in the last post...]

"The market is going to require further validation of the economic recovery in terms of job growth. At this time, the quality of the recovery and geopolitical issues are coming into play. I think the dollar will continue to drift lower," said John McCarthy, director of foreign exchange at ING Capital.

In mid-afternoon New York trading, the euro rose around 0.78 percent against the dollar to $1.1728. Gains in the single European currency kept it supported against the yen as well, at 126.84.

Analysts cautioned that additional rapid euro gains soon may moderate as chart patterns emerge to offer markets a little guidance.

"I think we're going to find multiple resistance levels as we try to head higher," said Tim Mazanec, senior currency analyst at Investors Bank & Trust in Boston. "Although we're pushing higher, you shouldn't expect an abrupt move higher."

The dollar fell to 108.14 yen, down 0.61 percent on the day. Against the Swiss franc, the traditional safe-haven currency, the dollar was down 0.88 percent on the day at 1.3386 francs, its lowest in 10 days. Sterling rose 0.82 percent against the dollar to $1.6875.

"I think the market is peaking (against the dollar)," said Bob Priore, desk manager at Carr Futures in Chicago. "I think (the dollar) is ready for a little bit of a comeback."

[Because why?]

The U.S. trade deficit widened in September to $41.3 billion as the strengthening economy propelled imports from China and the rest of the world to record levels. The trade shortfall was slightly higher than the consensus forecast of $40.5 billion.

This puts further stress on the U.S. need to attract investment to plug the gap, and traders said it was one reason investors unwound long dollar positions built up in the past two weeks.

"It (the trade deficit) is a number that reflects stronger growth in the third quarter. This may be an indicator that continued growth in the U.S. will continue to stimulate the economy and widen the (current account) deficit, a negative effect for the dollar," said Michael Woolfolk, senior currency analyst, at Bank of New York.

First-time claims for U.S. unemployment benefits rose to 366,000 in the week ended Nov. 8 from a revised 353,000 the previous week. Market expectations were for a rise to 360,000.

The dollar's sluggish performance in the last few sessions has reflected questions again about the strength of the U.S. recovery, analysts said.

"More and more people are questioning the quality of the recovery, having been led by extraordinarily low interest rates and refinancings in the mortgage market. I think the recovery is not as broad-based and stable as many think it is," said ING's McCarthy.

PROBLEMS IN IRAQ

Escalating tensions in Iraq further dampened sentiment against the greenback. Analysts said the situation in Iraq highlighted concerns in investors' minds about the gaping U.S. trade and current account deficits, because of the costs of the war and potential pressure on capital investment flows.

But some analysts played down the impact of geopolitical tensions on the currency markets.

"The dollar may be weaker against the Swiss franc, but that is due to a host of other factors such as the data and the general weakening trend in the dollar. It doesn't really change the broader story that Iraq is a geopolitical problem," said Alan Ruskin, research director at 4CAST in New York. (Additional reporting by Gertrude Chavez in New York)


http://biz.yahoo.com/rb/031113/markets_forex_10.html

RPT-FOREX-Dollar falls as US data fails to impress
Reuters, 11.13.03, 10:09 AM ET

By Gertrude Chavez

NEW YORK, Nov 13 (Reuters) - The dollar retreated broadly on Thursday as weaker U.S. jobless claims and a moderately disappointing trade deficit number fuelled doubts about the quality of economic recovery in the United States.

The dollar dropped in a third straight day of dollar selling, fed by a host of other arguments as well, which were damaging investors' appetite for the greenback.

In early New York trading, the euro rose around 0.8 percent against the dollar to $1.1726 <EUR=>, the highest level since late October. It climbed against the yen as well to 126.92 <EURJPY=>.

The dollar fell to 108.21 yen <JPY=>, down 0.55 percent on the day. Against the Swiss franc, the traditional safe-haven currency, the dollar was down 0.8 percent on the day at 1.3388 francs <CHF=>, its lowest in 10 days. Sterling rose 0.9 percent against the dollar to $1.6885 <GBP=>.

The U.S. trade deficit widened in September to $41.3 billion, as the strengthening U.S. economy propelled imports from China and the rest of the world to record levels. The trade shortfall was slightly higher than the consensus forecast of $40.5 billion.

This puts further stress on the United States' need to attract investment to plug the gap, and traders said this was one reason investors unwound long dollar positions built up in the past two weeks.

"It (the trade deficit) is a number that reflects stronger growth in the third quarter. This may be an indicator that continued growth in the U.S. will continue to stimulate the economy and widen the (current account) deficit, a negative effect for the dollar," said Michael Woolfolk, senior currency analyst, at Bank of New York.

First-time claims for U.S. unemployment benefits rose to 366,000 in the week ended Nov. 8 from a revised 353,000 the previous week. Market expectations were for a rise to 360,000.

The dollar's sluggish performance in the last few sessions has raised questions again about the pace of the U.S. recovery, analysts said.

"More and more people are questioning the quality of the recovery, having been led by extraordinarily low interest rates and refinancings in the mortgage market. I think the recovery is not as broad-based and stable as many think it is," said John McCarthy, director of foreign exchange at ING Capital Markets LLC in New York.

PROBLEMS IN IRAQ

Escalating tensions in Iraq further dampened sentiment against the greenback. Analysts said the situation in Iraqhighlighted concerns in investors' minds about the gaping U.S. trade and current account deficits, because of the costs involved in the war and potential pressure on capital investment flows into the dollar.

Fresh attacks on U.S. soldiers in Iraq on Thursday underlined Washington's struggles there, with at least 156 U.S soldiers killed in action in the past six months.

In addition, a CIA report concluded ordinary Iraqis were increasingly supporting the attacks, casting doubts on Washington's ability to stamp out attacks and drum up support from other countries to police Iraq.

"Tensions in the Middle East could weigh on business confidence in the U.S," said Michael Klawitter, senior currency strategist at WestLB in London.

Meanwhile, the euro zone was showing signs of economic improvement, with its largest economy returning to growth in the third quarter. Germany pulled out of its second recession in two years, expanding by 0.2 percent.

France, which narrowly escaped a first-half recession that had ensnared Germany and Italy, grew 0.4 percent in July- September.

(Additional reporting by Justyna Pawlak in London and Manuela Badawy)

Copyright 2003, Reuters News Service

http://www.forbes.com/markets/currencies/newswire/2003/11/13/rtr1146753.html

US trade gap with China grows to record levels
By Christopher Swann in Washington
Published: November 13 2003 15:00 / Last Updated: November 13 2003 15:00


The US trade deficit in September swelled to $41.27bn from $39.52bn in August, as the gap with China ballooned to a monthly record.


But analysts warned against reading too much into the figures and said the slight rise in the deficit was unlikely to cause the rapid economic growth in the third quarter of the year to be heavily revised down.

On an underlying basis the US deficit with the rest of the world has been relatively stable in recent months. Many believe the low August figure may have been artificially suppressed by the electricity blackouts on the east coast.

The September deficit was also below the average in the three months to May of $42.15bn.

Nevertheless there were worrying elements in the figures for the US. The politically charged deficit with China in September reached a record $12.69bn from $11.7bn in the previous month. With the Christmas season approaching, the shortfall is expected to widen further. The figures chimed with figures from China today, showing a record surplus of $5.7bn with the rest of the world. See more on Chinese surplus

Alan Ruskin, director of research at the economic consultancy 4Cast in New York, said that pressure would continue to build on China to revalue the renminbi and move towards opening itself to imports.

The US deficit in technological goods was also a record at $3.9bn. "Although this is an erratic series, the rise may raise fears that countries such as China may be moving up the food chain in terms of what they can export," Mr Ruskin said.

The trade figures coincided with the release of data on US joblessness. New claims for unemployment benefit edged up to 366,000 from 353,000 the previous week, a figure which had been revised up by 5,000. But the figure was still below the 400,000, which analysts often use as a rule of thumb to indicate an improving labour market.

The 4-week average fell to 375,000 - the lowest since March 2001. "This suggests that November payroll figures could be reasonably strong," said Ian Morris, US economist at HSBC in New York.

Continuing claims for the week of November 1 rose to 3.53m from 3.48m, but the trend has been declining steadily since late June.


http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=106...

Enough of that I can post shrub lies all day long and you all read about them constantly and even if you don't it should be pretty clear by now we were lied to by the government not just shrub...

On to even more depressing news...

To Hell and back

By Bob Zimmerman
Online Journal Contributing Writer

November 13, 2003—Thanks to millions of real American patriots (peace, freedom, and environmental activists from every walk of life) the truth about the ugly goals of the murderous Bush regime are being widely recognized.

In the face of the raucous and near-constant barrage of Republican neocon lies and deceptions, as broadcast to us by the handful of fanatical right-wing billionaires that control our mass media, learning the truth about Bush is perhaps the greatest demonstration that our evolving democracy is still functioning.

Each day, on the Internet, on public radio and television, from the few remaining courageous journalists in the mass media, and from the many in the burgeoning alternative media, we learn more about the deceptions and depravities that are the core of the Bush vision for world domination by economic and military coercion. Recently, we learned that the same Bush that staged a chauffeured landing on an aircraft carrier is really a never prosecuted military deserter and the first president to don a military uniform while holding office. Were any of our troops in Iraq or elsewhere to desert from the military in the same way Bush did, they would face court martial, dishonorable discharge, and a lengthy prison sentence or a firing squad.

Let us examine some brand new Bush war propaganda. In a November 6, 2003, speech to the National Endowment for Democracy, Bush announced the outline of his plan for exporting freedom and democracy to the entire Middle East. Leaving aside the utter lunacy of such a course of action (the War on Terror is now a War of Terror, essentially forcible region-building when even our efforts at forcible nation-building have nearly always failed), Bush justified his overtly aggressive Middle East agenda by espousing his view of the essential principles of successful nations (he called them societies):

Bush said, "Successful nations recognize the rights of women." Why then is he actively engaged in repealing a woman's right to choose, and why did he invade Iraq where the rights of women were greater than in any other Arab nation?

Bush said, "Successful nations prohibit and punish official corruption, and invest in the health and education of their people." Why then is Bush not cooperating with the various agencies and commissions investigating corruption and criminality within his own administration? Why then does not Bush come clean about his family's ties to the bin Laden family, to their financing of the Nazi and Stalin dictatorships, and to their continuing involvement in the super-secret Carlyle Group? Why is Bush hiding the truth about 9/11, providing cover for the White House culprit that intentionally outed an undercover CIA agent, and why does he not reveal his deep ties to Enron and Kenneth Lay? Why does Bush not speak out against the profligate war profiteering within his regime and by his supporters? And why has Bush abandoned investing in the health and education of our people in favor of falsely attempting to export democracy to the Middle East?

Bush said, "Successful nations allow room for . . . independent newspapers and broadcast media." Why then is his administration actively engaged in paving the way for even greater right-wing media consolidation?

Bush said, "Successful nations protect freedom with the consistent and impartial rule of law instead of selectively applying the law to punish political opponents." Why then do Bush and Ashcroft use secret courts and prosecutors to punish their political opponents and why are they actively engaged in shredding our Constitution and Bill of Rights? Why then does Bush not speak out against the millions of people incarcerated in America for low-level nonviolent crimes while thousands of high-level corporate crooks remain free and even work within his regime at the highest levels?

Bush said, "Successful nations limit the power of the state and the power of the military, so that governments respond to the will of the people, and not the will of the elite." Why then does Bush only respond to the will of the 1 percent of America that is wealthy? Why then did Bush force the ill-considered USA PATRIOT Act on Congress just two-days after 9/11? And, perhaps most important, why is Bush pursuing elective foreign wars to export democracy to the Middle East when not one person on earth or in heaven ever voted to give him that power?
Just think about it. Everything Bush says and does is double-speak, bold-faced deceptions and lies that cover-up government behavior more dangerous to our way of life than anything we have previously experienced, and every bit as disgusting as Vietnam, slavery, and the genocide of Native Americans.

In early May 2003, Bush announced victory in Iraq. Is this man to be trusted with anything? In Iraq, our troops are being slaughtered; they want to come home, and they should be brought home. Bush must confess the error of his elective war.

Four more years is simply unthinkable. After defeating Bush, we must set about the serious business of evolving our own democracy, which has nothing to do with the export of it as if it were just another commodity. Democracy is an idea for a complex system of government that must spring from the hearts and minds of people who want it and will cherish it. Democracy is not a Big Mac; it is not a Wal-Mart; and it is definitely not anything that Bush/Cheney/Ashcroft/Rumsfeld and the rest of the neocon war-profiteers know anything about.

Four more years is not just unthinkable, it would be a stain our great nation must not tolerate. Bush has begun his self-propelled descent into Hell. And it is only in completing that journey or resigning from office that we wish him Godspeed.

Bob Zimmerman is the author of "The American Challenge:Twenty-One Winning Strategies for the 21st Century." Contact: Uxor Press at 415–383–8481, bobzimmerman@usa.com.

Text of email I sent Bob:


http://www.onlinejournal.com/Commentary/111303Zimmerman/111303zimmerman.html


Replace the word democracy with the word republic...

This is a republic not a democracy.

Democratic republic if you must, but I grow tired of the government and our leaders describing our nation as a democracy; it is not: it is a republic, and no, the two are not interchangeable.

America's Ministry of Propaganda Exposed -- Part One
By Gar Smith / The-Edge
November 7, 2003
A Strategy of Lies: How the White House Fed the Public a Steady Diet of Falsehoods


Colonel Sam Gardiner (USAF, Ret.) has identified 50 false news stories created and leaked by a secretive White House propaganda apparatus.
Bush administration officials are probably having second thoughts about their decision to play hardball with former US Ambassador Joseph Wilson. Joe Wilson is a contender. When you play hardball with Joe, you better be prepared to deal with some serious rebound.

After Wilson wrote a critically timed New York Times essay exposing as false George W. Bush's claim that Iraq had purchased uranium from Niger, high officials in the White House contacted several Washington reporters and leaked the news that Wilson's wife was a CIA agent.

Wilson isn't waiting for George W. Bush to hand over the perp. In mid-October, the former ambassador began passing copies of an embarrassing internal report to reporters across the US. The-Edge has received copies of this document.

The 56-page investigation was assembled by USAF Colonel (Ret.) Sam Gardiner. "Truth from These Podia: Summary of a Study of Strategic Influence, Perception Management, Strategic Information Warfare and Strategic Psychological Operations in Gulf II" identifies more than 50 stories about the Iraq war that were faked by government propaganda artists in a covert campaign to "market" the military invasion of Iraq.

Gardiner has credentials. He has taught at the National War College, the Air War College and the Naval Warfare College and was a visiting scholar at the Swedish Defense College.

According to Gardiner, "It was not bad intelligence" that lead to the quagmire in Iraq, "It was an orchestrated effort [that] began before the war" that was designed to mislead the public and the world. Gardiner's research lead him to conclude that the US and Britain had conspired at the highest levels to plant "stories of strategic influence" that were known to be false.

The Times of London described the $200-million-plus US operation as a "meticulously planned strategy to persuade the public, the Congress, and the allies of the need to confront the threat from Saddam Hussein."

The multimillion-dollar propaganda campaign run out of the White House and Defense Department was, in Gardiner's final assessment "irresponsible in parts" and "might have been illegal."

"Washington and London did not trust the peoples of their democracies to come to the right decisions," Gardiner explains. Consequently, "Truth became a casualty. When truth is a casualty, democracy receives collateral damage." For the first time in US history, "we allowed strategic psychological operations to become part of public affairs... [W]hat has happened is that information warfare, strategic influence, [and] strategic psychological operations pushed their way into the important process of informing the peoples of our two democracies."

Defense Secretary Donald Rumsfeld announced plans to create an Office of Strategic Influence early in 2002. At the same time British Prime Minister Tony Blair's Strategy Director Alastair Campbell was setting up an identical operation in London.


As soon as Pvt. Jessica Lynch was airlifted from her hospital bed, the first call from her "rescue team" went, not to military officials but to Jim Wilkinson, the White House's top propaganda official stationed in Iraq.
White House critics were quick to recognize that "strategic influence" was a euphemism for disinformation. Rumsfeld had proposed establishing the country's first Ministry of Propaganda.

The criticism was so severe that the White House backed away from the plan. But on November 18, several months after the furor had died down, Rumsfeld arrogantly announced that he had not been deterred. "If you want to savage this thing, fine: I'll give you the corpse. There's the name. You can have the name, but I'm gonna keep doing every single thing that needs to be done -- and I have."

Gardiner's dogged research identified a long list of stories that passed through Rumsfeld's propaganda mill. According to Gardiner, "there were over 50 stories manufactured or at least engineered that distorted the picture of Gulf II for the American and British people." Those stories include:



The link between terrorism, Iraq and 9/11

Iraqi agents meeting with 9/11 hijacker Mohammed Atta

Iraq's possession of chemical and biological weapons.

Iraq's purchase of nuclear materials from Niger.

Saddam Hussein's development of nuclear weapons.

Aluminum tubes for nuclear weapons

The existence of Iraqi drones, WMD cluster bombs and Scud missiles.

Iraq's threat to target the US with cyber warfare attacks.

The rescue of Pvt. Jessica Lynch.

The surrender of a 5,000-man Iraqi brigade.

Iraq executing Coalition POWs.

Iraqi soldiers dressing in US and UK uniforms to commit atrocities.

The exact location of WMD facilities

WMDs moved to Syria.

Every one of these stories received extensive publicity and helped form indelible public impressions of the "enemy" and the progress of the invasion. Every one of these stories was false.

"I know what I am suggesting is serious. I did not come to these conclusions lightly," Gardiner admits. "I'm not going to address why they did it. That's something I don't understand even after all the research." But the fact remained that "very bright and even well-intentioned officials found how to control the process of governance in ways never before possible."

A Battle between Good and Evil
Gardiner notes that cocked-up stories about Saddam's WMDs "was only a very small part of the strategic influence, information operations and marketing campaign conducted on both sides of the Atlantic."
The "major thrust" of the campaign, Gardiner explains, was "to make a conflict with Iraq seem part of a struggle between good and evil. Terrorism is evil... we are the good guys.

"The second thrust is what propaganda theorists would call the 'big lie.' The plan was to connect Iraq with the 9/11 attacks. Make the American people believe that Saddam Hussein was behind those attacks."

The means for pushing the message involved: saturating the media with stories, 24/7; staying on message; staying ahead of the news cycle; managing expectations; and finally, being prepared to "use information to attack and punish critics."

Audition in Afghanistan
The techniques that proved so successful in Operation Iraqi Freedom were first tried out during the campaign to build public support for the US attack on Afghanistan.

Rumsfeld hired Rendon Associates, a private PR firm that had been deeply involved in the first Gulf War. Founder John Rendon (who calls himself an "information warrior") proudly boasts that he was the one responsible for providing thousands of US flags for the Kuwaiti people to wave at TV cameras after their "liberation" from Iraqi troops in 1991.

The White House Coalition Information Center was set up by Karen Hughes in November 2001. (In January 2003, the CIC was renamed the Office for Global Communications.) The CIC hit on a cynical plan to curry favor for its attack on Afghanistan by highlighting "the plight of women in Afghanistan." CIC's Jim Wilkinson later called the Afghan women campaign "the best thing we've done."

Gardiner is quick with a correction. The campaign "was not about something they did. It was about a story they created... It was not a program with specific steps or funding to improve the conditions of women."

The coordination between the propaganda engines of Washington and London even involved the respective First Wives. On November 17, 2001, Laura Bush issued a shocking statement: "Only the terrorists and the Taliban threaten to pull out women's fingernails for wearing nail polish." Three days later, a horrified Cherie Blaire told the London media, "In Afghanistan, if you wear nail polish, you could have your nails torn out."

Misleading via Innuendo
Time and again, US reporters accepted the CIC news leaks without question. Among the many examples that Gardiner documented was the use of the "anthrax scare" to promote the administration's pre-existing plan to attack Iraq.

In both the US and the UK, "intelligence sources" provided a steady diet of unsourced allegations to the media to suggest that Iraq and Al Qaeda terrorists were behind the deadly mailing of anthrax-laden letters.

It wasn't until December 18, that the White House confessed that it was "increasingly looking like" the anthrax came from a US military installation. The news was released as a White House "paper" instead of as a more prominent White House "announcement." As a result, the idea that Iraq or Al Qaeda were behind the anthrax plot continued to persist. Gardiner believes this was an intentional part of the propaganda campaign. "If a story supports policy, even if incorrect, let it stay around."

In a successful propaganda campaign, Gardiner wrote, "We would have expected to see the creation [of] stories to sell the policy; we would have expected to see the same stories used on both sides of the Atlantic. We saw both. The number of engineered or false stories from US and UK stories is long."

The US and Britain: The Axis of Disinformation
Before the coalition invasion began on March 20, 2003, Washington and London agreed to call their illegal pre-emptive military aggression an "armed conflict" and to always reference the Iraqi government as the "regime." Strategic communications managers in both capitols issued lists of "guidance" terms to be used in all official statements. London's 15 Psychological Operations Group paralleled Washington's Office of Global Communications.

In a departure from long military tradition, the perception managers even took over the naming of the war. Military code names were originally chosen for reasons of security. In modern US warfare, however, military code names have become "part of the marketing." There was Operation Nobel Eagle, Operation Valiant Strike, Operation Provide Comfort, Operation Enduring Freedom, Operation Uphold Democracy and, finally, Operation Iraqi Freedom.

The "Rescue" of Jessica Lynch
The Pentagon's control over the news surrounding the capture and rescue of Pfc. Jessica Lynch receives a good deal of attention in Gardiner's report. "From the very beginning it was called an 'ambush'," Gardiner noted. But, he pointed out, "If you drive a convoy into enemy lines, turn around and drive back, it's not an ambush. Military officers who are very careful about how they talk about operations would normally not be sloppy about describing this kind of event," Gardiner complained. "This un-military kind of talk is one of the reasons I began doing this research."

One of the things that struck Gardiner as revealing was the fact that, as Newsweek reported: "as soon as Lynch was in the air, [the Joint Operations Center] phoned Jim Wilkinson, the top civilian communications aide to CENTCOM Gen. Tommy Franks."

It struck Gardiner as inexplicable that the first call after Lynch's rescue would go to the Director of Strategic Communications, the White House's top representative on the ground.

On the morning of April 3, the Pentagon began leaking information on Lynch's rescue that sought to establish Lynch as "America's new Rambo." The Washington Post repeated the story it received from the Pentagon: that Lynch "sustained multiple gunshot wounds" and fought fiercely and shot several enemy soldier... firing her weapon until she ran out of ammunition."

Lynch's family confused the issue by telling the press that their daughter had not sustained any bullet wounds. Lynch's parents subsequently refused to talk to the press, explaining that they had been "told not to talk about it." (Weeks later, the truth emerged. Lynch was neither stabbed nor shot. She was apparently injured while falling from her vehicle.)

Rumsfeld and Gen. Myers let the story stand during an April 3 press conference although both had been fully briefed on Lynch's true condition.

"Again, we see the pattern," Gardiner observed. "When the story on the street supports the message, it will be left there by a non-answer. The message is more important than the truth. Even Central Command kept the story alive by not giving out details."

Gardiner saw another break with procedure. The information on the rescue that was released to the Post "would have been very highly classified" and should have been closely guarded. Instead, it was used as a tool to market the war. "This was a major pattern from the beginning of the marketing campaign throughout the war," Gardiner wrote. "It was okay to release classified information if it supported the message."


--------------------------------------------------------------------------------

Gar Smith is Editor Emeritus of Earth Island Journal, Roving Editor at The-Edge (www.the-edge.org) and co-founder of Environmentalists Against War (www.envirosagainstwar.org).

http://www.earthisland.org/project/newsPage2.cfm?newsID=491&pageID=177&subSiteID=44

shrub lied.

How do you prove it in court?

Since shrub lied, she would be tewlling the truth and I think it would be hard to get court martialled for telling the truth about a smirking chimp who lied...and continues to lie...

And yet we don't impeach him.

History will judge us harshly.


Got this in my in box:

UNCENSORED GORE VIDAL


The take-no-prisoners social critic skewers Bush, Ashcroft and the whole damn lot of us for letting despots rule.


By Marc Cooper
>From L.A. Weekly


14 November, 2003


It's lucky for George W. Bush that he wasn't born in an earlier time and somehow stumbled into Americaís Constitutional Convention. A man with his views, so depreciative of democratic rule, would have certainly been quickly exiled from the freshly liberated United States by the gaggle of incensed Founders. So muses one of our most controversial social critics and prolific writers, Gore Vidal.


When we last interviewed Vidal just over a year ago, he set off a mighty chain reaction as he positioned himself as one of the last standing defenders of the ideal of the American Republic. His acerbic comments to L.A. Weekly about the Bushies were widely reprinted in publications around the world and flashed repeatedly over the World Wide Web. Now Vidal is at it again, giving the Weekly another dose of his dissent, and, with the constant trickle of casualties mounting in Iraq, his comments are no less explosive than they were last year.


This time, however, Vidal is speaking to us as a full-time American. After splitting his time between Los Angeles and Italy for the past several decades, Vidal has decided to roost in his colonial home in the Hollywood Hills. Now 77 years old, suffering from a bad knee and still recovering from the loss earlier this year of his longtime companion, Howard Austen, Vidal is feistier and more productive than ever.


Vidal undoubtedly had current pols like Bush and Ashcroft in mind when he wrote his latest book, his third in two years. Inventing a Nation: Washington, Adams, Jefferson takes us deep into the psyches of the patriotic trio. And even with all of their human foibles on display - vanity, ambition, hubris, envy and insecurity - their shared and profoundly rooted commitment to building the first democratic nation on Earth comes straight to the fore.


The contrast between then and now is hardly implicit. No more than a few pages into the book, Vidal unveils his dripping disdain for the crew that now dominates the capital named for our first president.


As we began our dialogue, I asked him to draw out the links between our revolutionary past and our imperial present.


MARC COOPER: Your new book focuses on Washington, Adams and Jefferson, but it seems from reading closely that it was actually Ben Franklin who turned out to be the most prescient regarding the future of the republic.


GORE VIDAL: Franklin understood the American people better than the other three. Washington and Jefferson were nobles - slaveholders and plantation owners. Alexander Hamilton married into a rich and powerful family and joined the upper classes. Benjamin Franklin was pure middle class. In fact, he may have invented it for Americans. Franklin saw danger everywhere. They all did. Not one of them liked the Constitution. James Madison, known as the father of it, was full of complaints about the power of the presidency. But they were in a hurry to get the country going. Hence the great speech, which I quote at length in the book, that Franklin, old and dying, had someone read for him. He said, I am in favor of this Constitution, as flawed as it is, because we need good government and we need it fast. And this, properly enacted, will give us, for a space of years, such government.


But then, Franklin said, it will fail, as all such constitutions have in the past, because of the essential corruption of the people. He pointed his finger at all the American people. And when the people become so corrupt, he said, we will find it is not a republic that they want but rather despotism - the only form of government suitable for such a people.


But Jefferson had the most radical view, didn't he? He argued that the Constitution should be seen only as a transitional document.


Oh yeah. Jefferson said that once a generation we must have another Constitutional Convention and revise all that isn't working. Like taking a car in to get the carburetor checked. He said you cannot expect a man to wear a boy's jacket. It must be revised, because the Earth belongs to the living. He was the first that I know who ever said that. And to each generation is the right to change every law they wish. Or even the form of government. You know, bring in the Dalai Lama if you want! Jefferson didn't care.


Jefferson was the only pure democrat among the founders, and he thought the only way his idea of democracy could be achieved would be to give the people a chance to change the laws. Madison was very eloquent in his answer to Jefferson. He said you cannot [have] any government of any weight if you think it is only going to last a year.


This was the quarrel between Madison and Jefferson. And it would probably still be going on if there were at least one statesman around who said we have to start changing this damn thing.


Your book revisits the debate between the Jeffersonian Republicans and the Hamiltonian Federalists, which at the time were effectively young America's two parties. More than 200 years later, do we still see any strands, any threads of continuity in our current body politic?


Just traces. But mostly we find the sort of corruption Franklin predicted. Ours is a totally corrupt society. The presidency is for sale. Whoever raises the most money to buy TV time will probably be the next president. This is corruption on a major scale.


Enron was an eye-opener to naive lovers of modern capitalism. Our accounting brotherhood, in its entirety, turned out to be corrupt, on the take. With the government absolutely colluding with them and not giving a damn.


Bush's friend, old Kenny Lay, is still at large and could just as well start some new company tomorrow. If he hasn't already. No one is punished for squandering the people's money and their pension funds and for wrecking the economy.


So the corruption predicted by Franklin bears its terrible fruit. No one wants to do anything about it. It's not even a campaign issue. Once you have a business community that is so corrupt in a society whose business is business, then what you have is, indeed, despotism. It is the sort of authoritarian rule that the Bush people have given us. The USA PATRIOT Act is as despotic as anything Hitler came up with - even using much of the same language. In one of my earlier books, Perpetual War for Perpetual Peace, I show how the language used by the Clinton people to frighten Americans into going after terrorists like Timothy McVeigh - how their rights were going to be suspended only for a brief time - was precisely the language used by Hitler after the Reichstag fire.


In this context, would any of the Founding Fathers find themselves comfortable in the current political system of the United States? Certainly Jefferson wouldn't. But what about the radical centralizers, or those like John Adams, who had a sneaking sympathy for the monarchy?


Adams thought monarchy, as tamed and balanced by the parliament, could offer democracy. But he was no totalitarian, not by any means. Hamilton, on the other hand, might have very well gone along with the Bush people, because he believed there was an elite who should govern. He nevertheless was a bastard born in the West Indies, and he was always a little nervous about his own social station. He, of course, married into wealth and became an aristo. And it is he who argues that we must have a government made up of the very best people, meaning the rich.


So you'd find Hamilton pretty much on the Bush side. But I can't think of any other Founders who would. Adams would surely disapprove of Bush. He was highly moral, and I donít think he could endure the current dishonesty. Already they were pretty bugged by a bunch of journalists who came over from Ireland and such places and were telling Americans how to do things. You know, like Andrew Sullivan today telling us how to be. I think you would find a sort of union of discontent with Bush among the Founders. The sort of despotism that overcomes us now is precisely what Franklin predicted.


But Gore, you have lived through a number of inglorious administrations in your lifetime, from Truman's founding of the national-security state, to LBJ's debacle in Vietnam, to Nixon and Watergate, and yet here you are to tell the tale. So when it comes to this Bush administration, are you really talking about despots per se? Or is this really just one more rather corrupt and foolish Republican administration?


No. We are talking about despotism. I have read not only the first PATRIOT Act but also the second one, which has not yet been totally made public nor approved by Congress and to which there is already great resistance. An American citizen can be fingered as a terrorist, and with what proof? No proof. All you need is the word of the attorney general or maybe the president himself. You can then be locked up without access to a lawyer, and then tried by military tribunal and even executed. Or, in a brand-new wrinkle, you can be exiled, stripped of your citizenship and packed off to another place not even organized as a country - like Tierra del Fuego or some rock in the Pacific. All of this is in the USA PATRIOT Act. The Founding Fathers would have found this to be despotism in spades. And they would have hanged anybody who tried to get this through the Constitutional Convention in Philadelphia. Hanged.


So if George W. Bush or John Ashcroft had been around in the early days of the republic, they would have been indicted and then hanged by the Founders?


No. It would have been better and worse. [Laughs.] Bush and Ashcroft would have been considered so disreputable as to not belong in this country at all. They might be invited to go down to Bolivia or Paraguay and take part in the military administration of some Spanish colony, where they would feel so much more at home. They would not be called Americans - most Americans would not think of them as citizens.


Do you not think of Bush and Ashcroft as Americans?


I think of them as an alien army. They have managed to take over everything, and quite in the open. We have a deranged president. We have despotism. We have no due process.


Yet you saw in the '60s how the Johnson administration collapsed under the weight of its own hubris. Likewise with Nixon. And now with the discontent over how the war in Iraq is playing out, don't you get the impression that Bush is headed for the same fate?


I actually see something smaller tripping him up: this business over outing the wife of Ambassador Wilson as a CIA agent. It's often these small things that get you. Something small enough for a court to get its teeth into. Putting this woman at risk because of anger over what her husband has done is bitchy, dangerous to the nation, dangerous to other CIA agents. This resonates more than Iraq. I'm afraid that 90 percent of Americans don't know where Iraq is and never will know, and they don't care.


But that number of $87 billion is seared into their brains, because there isn't enough money to go around. The states are broke. Meanwhile, the right wing has been successful in convincing 99 percent of the people that we are generously financing every country on Earth, that we are bankrolling welfare mothers, all those black ladies that the Republicans are always running against, the ladies they tell us are guzzling down Kristal champagne at the Ambassador East in Chicago - which of course is ridiculous.


And now the people see another $87 billion going out the window. So long! People are going to rebel against that one. Congress has gone along with that, but a lot of congressmen could lose their seats for that.


Speaking of elections, is George W. Bush going to be re-elected next year?

No. At least if there is a fair election, an election that is not electronic. That would be dangerous. We don't want an election without a paper trail. The makers of the voting machines say no one can look inside of them, because they would reveal trade secrets. What secrets? Isn't their job to count votes? Or do they get secret messages from Mars? Is the cure for cancer inside the machines? I mean, come on. And all three owners of the companies who make these machines are donors to the Bush administration. Is this not corruption?


So Bush will probably win if the country is covered with these balloting machines. He can't lose.


But Gore, aren't you still enough of a believer in the democratic instincts of ordinary people to think that, in the end, those sorts of conspiracies eventually fall apart?


Oh no! I find they only get stronger, more entrenched. Who would have thought that Harry Truman's plans to militarize America would have come as far as we are today? All the money we have wasted on the military, while our schools are nowhere. There is no health care; we know the litany. We get nothing back for our taxes. I wouldn't have thought that would have lasted the last 50 years, which I lived through. But it did last.


But getting back to Bush. If we use old-fashioned paper ballots and have them counted in the precinct where they are cast, he will be swept from office. He's made every error you can. He's wrecked the economy. Unemployment is up. People can't find jobs. Poverty is up. It's a total mess. How does he make such a mess? Well, he is plainly very stupid. But the people around him are not. They want to stay in power.


You paint a very dark picture of the current administration and of the American political system in general. But at a deeper, more societal level, isn't there still a democratic underpinning?


No. There are some memories of what we once were. There are still a few old people around who remember the New Deal, which was the last time we had a government that showed some interest in the welfare of the American people. Now we have governments, in the last 20 to 30 years, that care only about the welfare of the rich.


Is Bush the worst president we've ever had?


Well, nobody has ever wrecked the Bill of Rights as he has. Other presidents have dodged around it, but no president before this one has so put the Bill of Rights at risk. No one has proposed preemptive war before. And two countries in a row that have done no harm to us have been bombed.


How do you think the current war in Iraq is going to play out?


I think we will go down the tubes right with it. With each action Bush ever more enrages the Muslims. And there are a billion of them. And sooner or later they will have a Saladin who will pull them together, and they will come after us. And it won't be pretty.




It's all over the net now...Mr. Vidal might suffer from too many words not enough action...not unlike many of us...

Starting to have a lot of good days:

http://finance.yahoo.com/q/cp?s=^xau

COMPONENTS FOR ^XAU
Symbol Name Last Trade Change Volume
ABX BARRICK GOLD 21.19 4:02PM ET 0.95 (4.69%) 4,284,000
AEM AGNICO EAGLE 11.24 4:00PM ET 0.84 (8.08%) 1,548,800
AU ANGLOGOLD LTD 43.43 4:04PM ET 2.63 (6.45%) 1,433,800
DROOY DURBAN DEEP 2.78 4:00PM ET 0.29 (11.65%) 5,939,187
FCX FRPRT-MCM GD 40.35 4:01PM ET 1.87 (4.86%) 2,750,300
GFI GOLD FIELDS LTD 13.84 4:01PM ET 1.00 (7.79%) 3,729,500
GG GOLDCORP INC 16.17 4:02PM ET 0.89 (5.82%) 2,539,100
HMY HARMONY GOLD MNG 15.00 4:01PM ET 0.91 (6.46%) 2,328,200
KGC KINROSS GOLD 7.94 4:00PM ET 0.48 (6.43%) 2,388,600
MDG MERIDIAN GOLD 12.97 4:02PM ET 0.98 (8.17%) 970,200
NEM NEWMONT MINING 43.96 4:02PM ET 1.70 (4.02%) 8,698,200
PDG PLACER DOME INC 16.79 4:02PM ET 1.06 (6.74%) 3,931,800

All positive...look at little DROOY...all grown up now...

Plenty more to go as the years go by...caution advised as correections and dips may cause faint at heart to lose their ass but trend should be up long term...you should be in since like two years now...steady appreciation better than rocket up and rocket down...

Careful in the suckers rally...things sure look good...but...

Little more OIL:

Court Convicts 3 Ex-French Oil Executives
2 hours, 50 minutes ago Add Business - AP to My Yahoo!


[In the US nothing would be done much at all and whomever was richest would surely do no time...it's good to be rich in America and we let it happen...]


By LAURENCE FROST, AP Business Writer

PARIS - A French court convicted three former executives Wednesday of helping loot $350 million from the Elf oil company to finance lavish lifestyles, closing a chapter in a scandal that sullied the nation's political and business elite.
Former Elf chairman Loik Le Floch-Prigent, 60, and senior director Alfred Sirven, 76, were given five-year prison terms for masterminding the mass embezzlement in the late 1980s and early 1990s, when Elf was under state ownership.


Sirven, the company's former No. 2 official, was ordered to pay $1.16 million, while Le Floch-Prigent must pay $435,000.


Andre Tarallo, former head of Elf's hydrocarbons division, was sentenced to four years and fined $2.3 million.


Twenty-seven accomplices, among them other former Elf officials, also were convicted Wednesday. The company since has been absorbed into the Franco-Belgian energy group Total.


Wednesday's verdicts culminated almost a decade of legal action that shook the French establishment and tarnished its image globally.


Early in the case, Le Floch-Prigent and Sirven threatened to expose links between their misdeeds and French political leaders, but the two refused to name names in court and none of those alleged connections were established.


The three main defendants claimed much of the cash was paid out as "commissions" to foreign officials — especially in African countries where Elf was prospecting — and French political parties.


However, the court said personal gain was the primary motive behind the embezzlement.


"Every time these directors signed a contract, gave an agreement or took a decision ... the evidence has shown that they benefited from kickbacks from funds diverted to hidden accounts," presiding judge Michel Desplan said in a statement.


The judge earlier told the court that $199 million in stolen Elf funds were paid into secret accounts managed by Sirven.


"That's about the same figure as Elf's total net earnings for 1993," he added.


The court saved its sternest words for Le Floch-Prigent, saying he was "personally behind most of the misdeeds committed against the French oil company" during his 1989-1993 tenure.


Le Floch-Prigent used company cash to buy luxury properties in Paris and Normandy and fund a $5.3 million divorce settlement with ex-wife Fatima Belaid.


She was sentenced to three years in jail — of which two were suspended — and fined $1.2 million.


Le Floch-Prigent's lawyer, Maurice Lantourne, said his client accepted the court's decision.


"He said he wouldn't appeal, and he won't appeal," Lantourne said. "He wants to turn the page. It's a relief, paradoxically."





Lead prosecutor Catherine Pignon sought a five-year jail term for Le Floch-Prigent and eight-year terms for Sirven and Tarallo.

Sirven and Le Floch-Prigent already are serving time after losing appeals against separate convictions two years ago over the use of Elf money to "lobby" then-Foreign Minister Roland Dumas. They put Dumas' mistress on the payroll and funded her lavish perks.

The case effectively ended Dumas' career, despite his acquittal on appeal earlier this year.

The court said former director Alain Guillon and three other company officials also opened offshore bank accounts to siphon off Elf cash.

Guillon was jailed for three years and ordered to pay $2.3 million, while the others received suspended jail terms and lesser fines.

Andre Guelfi, who negotiated Elf contracts in ex-Soviet states, received a three-year suspended term and a $1.2 million fine on several counts of embezzlement, but was cleared of any wrongdoing over his contracts with former Elf subsidiary SNEA.

Guelfi now planned to sue the company for his unpaid dues, his lawyer, Pierre-Olivier Sur, said after the ruling.

In all, 14 former Elf officials and associates were jailed Wednesday, and another 16 were given suspended sentences. Seven were acquitted.

http://story.news.yahoo.com/news?tmpl=story2&u=ap/france_oil_scandal

UPDATE - Russian court refuses bail to Khodorkovsky
Tuesday November 11, 12:38 pm ET
By Larisa Sayenko


(Writes through, adds quotes from lawyer, politician)
MOSCOW, Nov 11 (Reuters) - Oil magnate Mikhail Khodorkovsky, whose arrest on charges of massive fraud has raised fears in the West for the future of Russian business, was denied bail by a Moscow court on Tuesday.

[There is so much more to this story than we can get here in the US media...hard to put it all together with the little spun stories from the Us press...]


Khodorkovsky, in his first public appearance since he was seized at gunpoint on a Siberian airfield on October 25, appeared confident as he spoke from inside a defendant's cage.

His lawyers said they would appeal, taking it to international courts if necessary. Analysts say the prosecution was provoked by Kremlin annoyance over the political activities of Khodorkovsky, who funded two liberal parties.

[No it was about control of OIL.]

The ruling was issued after a closed hearing at which Khodorkovsky, former head of oil giant YUKOS (YUKO.RTS), appeared briefly by video link.

Early in the session, Khodorkovsky smiled wryly when the judge said the hearing should be closed and ordered journalists and observers to leave, but he answered questions confidently.

"I support the position of my lawyers," said Khodorkovsky.

His lawyers said the case was unfounded.

"We intend to appeal this decision in the Supreme Court, and do not exclude taking it to the European Court of Human Rights in Strasbourg," Anton Drel told reporters outside the court. But Khodorkovsky, he said, was resigned to staying in jail.

"We understood that our arguments might not be heeded," he said. "He had no illusions."

President Vladimir Putin says the case, in which two other major YUKOS shareholders have been charged, is purely criminal and that the state is not attacking YUKOS or business, but Washington and the European Union (News - Websites) have expressed strong concern.

DRAGGED

Khodorkovsky, who quit as head of YUKOS last week, was removed from his plane when it stopped to refuel in Siberia. He can now be kept in prison without further recourse by prosecutors until December 30.

Since his arrest, YUKOS has lost more than a fifth of its value on Moscow markets -- plunging sharply after prosecutors froze some 40 percent of the company's shares on September 30. Its stock fell more than two percent after the court ruling.

The Prosecutor General's Office had already said it wanted to keep Khodorkovsky in jail until late December and few had expected the court to bow to the request to release him.

But Robert Amsterdam, one of Khodorkovsky's lawyers, told reporters in Oslo: "There is no reason under the Russian criminal code to keep him in jail...he is a political prisoner."

Khodorkovsky is rated Russia's richest man with a fortune estimated at $8 billion and observers were shocked to see the normally dapper Khodorkovsky locked up.

"To be honest, the sight of Russia's most powerful businessman sitting in a cage was not enjoyable. One can see it's very diffiicult for him," said Boris Nadezhdin, the deputy leader of the Union of Right-wing Forces party, which has spoken out in defence of the jailed magnate.

[Meantime Kenny-boy is having a difficult time trying to decide whether to go golfing in Florida or go skiing now that the snow is falling...]

Chris Granville, chief strategist at Moscow-based investment bank UFG, said prosecutors could argue that rich and powerful suspects "could use their wealth and influence to suppress evidence".

Lawyers for Platon Lebedev, a close ally of Khodorkovsky and a fellow YUKOS shareholder who was arrested in July, have failed repeatedly to secure his release on bail.


http://biz.yahoo.com/rf/031111/russia_yukos_court_5.html


Meantime Kenny-boy is having a difficult time trying to decide whether to go golfing in Florida or go skiing now that the snow is falling...

Dollar Dips in Data Void, Iraq Weighs
Wed Nov 12, 1:33 PM ET Add Business - Reuters to My Yahoo!


By Kyle Peterson

CHICAGO (Reuters) - The dollar weakened broadly on Wednesday as investors sought additional evidence that economic recovery in the United States is on a firmer path.


Geopolitical worries further weighed on the dollar, given news of 25 deaths in a bomb blast in Iraq (news - web sites) on Wednesday.


The euro was the biggest gainer so far, jumping over 1 percent against the yen and dollar as investors saw glimmers of an economic rebound in the euro zone. Analysts said the dollar was unable to capitalize on the strong U.S. jobs report last Friday.


"The failure of the dollar to extend those gains unsettled people," said Sean Callow, currency analyst at IDEAglobal. "I think the price action shows that people are reluctant to place too much money on the link between strong U.S. growth and currency appreciation."


At midday in New York, the euro was up 1.28 percent at $1.1654 . It also rose sharply against the yen, up 1.11 percent at 126.56 yen , after triggering a raft of automatic buy orders as key chart levels were crossed.


Sterling, meanwhile, climbed against the dollar to $1.6754 , drawing support from a hawkish inflation report from the Bank of England. Analysts said the BoE's inflation update signals the bank is comfortable hiking rates in line with market pricing.


"The sparse U.S. economic calendar and the market's renewed focus on terrorist threats have put pressure on the dollar," said Kathy Lien, chief fundamental strategist at Forex Capital Markets LLC in New York.


With no major U.S. data due for release on Wednesday, markets focused on Friday's comments by Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites), data on U.S. retail sales and consumer sentiment.


"We're seeing a continuation of the selloff that was sparked on Friday when the dollar failed to breach key resistance levels despite a strong October employment report," said Alex Beuzelin, senior market analyst at Ruesch International in Washington DC.


Growing trade tensions between the United States and its trading partners, a rising casualty toll in Iraq and sluggish equity markets also benefited the Swiss franc, which leaped over 1 percent against the dollar. The Swiss franc is seen as a "refuge currency" in times of global instability and violence.


The dollar fell against the Swiss franc to 1.3467 francs , hurt further by news Wednesday morning that at least 17 Italian military and at least 8 Iraqi citizens were killed in a blast in Iraq.


EURO ZONE RECOVERY?


While there is no single catalyst for the euro's robust performance, some analysts believe the price action reflects the increasingly positive data out of Europe.


For instance, Germany's influential ZEW index of investor expectations indicator on Tuesday jumped more than expected to 67.2, a 16-month high boosted by strong September orders.


"People are looking at a pickup in the euro zone. We do not expect it to recover as fast as the United States but definitely we see it improving next year," said Larry Brickman, currency strategist at Banc of America Securities in New York.


While the focus of global reflation in the last few months was Asia, analysts said that if the European data continues to improve, the euro zone may well be the next region that delivers the most growth surprise in the next month or so.


The Aussie dollar rose 0.3 percent against the greenback to US$0.7171 . The U.S. dollar fell to a 10-year low against the Canadian dollar under C$1.30 and softened against the New Zealand dollar, with the Kiwi buying US$0.6263 .


[I thought .76 seemed high high as it's been for ten years holy CRAP!...good for Hawaii as they may be more likely to visit this year with their dollar so strong...I think qwe will have a very merry x-mas, Americans affraid to leave the country translates to tourism being up...]


The dollar slipped moderately against the yen around 108.60 yen , with dealers nervous that Japanese authorities might intervene to stem the yen's recent rise against the greenback.

(Additional reporting by Gertrude Chavez in New York)

http://story.news.yahoo.com/news?tmpl=story&cid=580&e=3&u=/nm/20031112/bs_nm/markets_for...

DAILY WRAP UP G$395.00 S$5.32 O$30.89

Stocks advanced Wednesday for the first session in four as strength in tech stocks propelled gains on all the major benchmarks.

Interest in equities was also boosted by news that China had booked big orders with General Motors (NYSE: GM) and Ford (NYSE: F). IBM’s (NSYE: IBM) CEO Sam Palmisano told a gathering of customers that he sees more and more positive signs for the economy each day.

The Dow Jones Industrial Average surged 111.04 points or 1.14% to 9848.83. The tech-loaded Nasdaq composite rallied 42.36 points or 2.19% to 1973.11. The S&P 500 climbed 11.96 points or 1.14% to 1058.53. Volume on the NYSE was a mild 1.318 billion shares. At the Nasdaq, some 1.838 billion shares traded hands.

General Motors said it would export thousands of cars to the Chinese market, which is expected to become the third-largest global market for automobiles. The value of GM’s Chinese exports is forecast to top $1.3 billion over two years. GM shares climbed 1.57% to 42.72.

Ford’s (NSYE: F) debt was downgraded by Standard & Poor’s Wednesday, to the lowest level of investment grade debt. However, the rating agency said the credit outlook for the automaker was ‘stable.’ That designation cheered investors, who bid the stock 6.09% higher to $13.06.

Computer Sciences (NYSE: CSC), which provides computer systems management services for businesses and government agencies, surged 8.34% to $44.19. Excluding charges the company’s fiscal second quarter profit beat estimates a penny.

Federated Department Stores (NYSE: FD) reported third quarter earnings of $67 million or 36 cents a share. That figure came in ahead of Street forecasts, but failed to help the stock. The parent of Macy’s and Bloomingdale’s gave up 1.04% to $49.65.

The research firm Gartner Group said it foresees a 20% increase in chip sales in 2004. That news prompted gains throughout the semiconductor sector. Intel (NASDAQ: INTC), which is the number one global maker of semiconductors, rallied 2.07% to $34.10. Advanced Micro Devices (NYSE: AMD) surged 8.78% to $18.08.

KLA Tencor (NASDAQ: KLAC), a maker of testing gear for semiconductor manufacturing equipment, climbed 1.83% to $60.08.

Applied Materials (NASDAQ: AMAT) advanced 2.17% to $25.44 ahead of its earnings after the bell.

In analyst actions, printer maker Lexmark (NSYE: LXK) raced 5.86% to $77.26 after UBS upped its view of the company to “buy” from “neutral.” The brokerage cited substantial leverage for growth in the business market for laser printers and a more benign pricing environment for inkjet printers.

Microsoft (NASDAQ: MSFT), however, edged 0.7% to $25.98 as the software giant began closed-door hearings with European Union antitrust officials.

Shares of Dow component Merck (NYSE: MRK) revived after early losses. The drugmaker said it was halting late stage clinical trials of its experimental depression treatment, MK-0869 when it failed to demonstrate efficacy in treating the disease. Merck shares closed with a gain of 0.87% to $44.25.

In small cap trading, the Russell 2000 raced 12.09 points or 2.29% to 540.66, while the S&P600 index jumped 5.1 points or 1.98% to 262.30.

[Raced?]

Some of the small cap stocks making big moves included Friedman’s Inc (NYSE: FRM), which tumbled 39.03% to $7.31 on volume of 6,490,000. The jewelry retailer said it upped its reserves for doubtful accounts in its financing business to a range between 14% and 17%, from its previous allowance of 10.5%. As well, the company’s CFO was placed on a “leave of absence.”

VaxGen Inc. (NASDAQ: VXGN) slid 4.67% to $9.39 on volume of 4,540,371. The biotech firm said a Phase III clinical trial of its HIV vaccine missed its primary and secondary endpoints.

[Shoulda got a bunch of that under 4 bucks...didn't....shoulda shorted it when it was 12 bucks...didn't I are a good watcher...]

In commodities trading on the New York Mercantile Exchange, January contracts for light, sweet crude eased a penny to $30.89. January natural gas futures retreated 12.7 cents to $4.966. December gold futures rocketed $6.80 to $395.00.

In Canadian markets, equities climbed out of negative territory in afternoon trading as gold issues accounted for much of the upside activity on Bay Street. The influential financial stocks turned positive late in the session and technology issues managed slim gains.

The TSX composite added 25.09 points or 0.32% to 7797.33, and the small cap Venture index rallied 11.81 points or 0.74% to 1614.29.

The gold group on Bay Street – a component of the materials subgroup – raced 5.76% higher. Barrick Gold (TSX: T.ABX), which is the number one producer in Canada, gained 4.53% to $27.70.

The smaller gold producers were at the top of the list among actively traded issues on Bay Street. Wheaton River (TSX: T.WRM) surged 4.83% to $3.04, Bema Gold (TSX: T.BGO) sprinted 11.11% to $4.50, and Cambior (TSX: T.CJB) rocketed 4.46% to $3.98.

Shares of Air Canada (TSX: T.AC) continued to drop, as the market heeded warnings from the bankrupt carrier that its stock is likely to be worthless. The company’s shares slid 19.23% to 84 cents. Investors had a delayed reaction to the carrier’s plan to exit from bankruptcy protection with a new equity structure that would give just 0.01% to current shareholders.

In the financial group, Sun Life Financial (TSX: T.SLF) shed 0.19% to $31.89 and Bank of Nova Scotia (TSX: T.BNS) was off 0.46% to $64.60.


In corporate news, Onyx Software (NASDAQ: ONXS) announced it had made an offer for Vancouver’s Pivotal Software (TSX: T.PVT), a maker of customer relationship management solutions. The bid of US$2.25 per share tops a previous offer from Oak Investment Partners. Pivotal shares jumped 12.55% to $2.60.


Earnings were out from food firms Van Houtte and George Weston (TSX: T.WN). The latter firm said strength from its grocery chain Loblaw Co (TSX: T.L) helped boost the bottom line, although its earnings missed expectations. The company’s largest food processor said it made $213 million or $1.54 a share, versus year ago earnings of $190 million or $1.36 per share. Sales were up 3%, but the stronger Canadian loonie hurt the bottom line, as many of the company’s sales were to U.S. buyers. Analysts had expected, on average, earnings of $1.61 per share. George Weston shares slumped 3.16% to $99.50.

Coffee retailer Van Houtte (TSX: T.VH) said its quarterly earnings were higher as the result of expansion into Western Canada and better overall sales. The Montreal-based firm notched a profit of $4 million in the quarter ended October 11. That’s against earnings of $903,000 in the same period a year ago. However, 2002 earnings included a $3.9 million charge for integration of the firm’s computing systems. Shares of Van Houtte jumped 2.18% to $14.56.

Cable giant Shaw Communications (TSX: T.SJR.B) was up 0.16% to $18.85 after announcing plans to float a $250 million note offering. The proceeds from the offering will be applied to the company’s $350 million bank loan, which is due in February 2006.

The Canadian dollar was worth US$0.7665.

Shoulda bought a bunch a loonies when they were at .65...

Gold Hits 7-1/2 Year High, Nears $400
Wednesday November 12, 2:57 pm ET
By Alden Bentley

[Feeding my need to be right.]


NEW YORK (Reuters) - Gold bolted to a 7-1/2-year high in New York futures trade on Wednesday as investors diversified out of the dollar and speculators gunned for the psychological $400 an ounce barrier.


Rallies in gold and silver fed on each other, with the white metal posting an even bigger, 5 percent, gain.

"It just looks awesome," said one bullion trader.

At the COMEX division of the New York Mercantile Exchange, December gold broke above September's 2003 high after London trading wrapped up for the day, topping at $397.00 an ounce, its highest since March 1996.

The benchmark contract (0#GC:) settled up $6.80, or 1.75 percent, at $395.00, well above a session low of $387.80. Estimated volume was a busy 70,000 contracts.

A bombing at an Italian military police base in Iraq Wednesday killed at least 25, underscoring gold's recent safe-haven gains after the weekend suicide attack in Saudi Arabia which has been blamed on al Qaeda.

The euro's rise to a 13-day high at $1.1660 made it more attractive for European investors to buy dollar-priced gold.

"It is just a lack of selling in the market. The dollar continues to weaken. The Middle East, everything, is just pushing gold higher. It's the last currency that you can't debase," said Ian MacDonald, head of bullion trading at Commerzbank.

Spot gold (XAU=) rose to $395.85 and closed at $394.00/4.50, up from $387.60/8.10 late Tuesday.

A 0.89 percent gain in the Dow Jones industrial average did little to dull bullion's luster. Gold and silver mining shares far outperformed the broad market, with the benchmark XAU Index (Philadelphia:^XAU - News) hitting a 6-year high in Philadelphia.

The U.S. economy now appears to be in a self-sustaining recovery, so speculators are hunting for other excuses to keep buying gold, brokers said.

The benchmark contract is up more than $18 since bottoming at $376.50 on Friday, right after the U.S. Labor Department reported that non-farm payrolls ballooned and the unemployment rate fell last month, ending worries about a jobless recovery.

In COMEX options trade, there has been very strong interest in December $400 calls, which are bets that December gold will get to that price by the time options expire at the end of November. By conferring the right to buy the contract at $400, the options become more profitable the closer prices get to that popular strike price.

As prices rise, options desks must "delta" hedge these sales by purchasing futures, in case they have to deliver. This can accelerate upmoves as time runs out on the options.

"Everybody is waiting for the $400 (level) to be tested. Together with euro/usd, renewed fears about terror attacks and a very bullish chart pattern, this appears not too difficult," a trader in Germany told Reuters via e-mail.

December silver (0#SI:) soared 26.8 cents to $5.335 an ounce, rocketing from $5.065 to $5.35, its highest since Sept. 25. A frantic 40,000 lots changed hands. Spot silver (XAG=) rose to $5.30/32 from $5.05/07 at the prior close and the fix at $5.075.

NYMEX January platinum (0#PL:) rose $3.60 to $764.70. Spot platinum (XPT=) fetched $761.00/766.00. December palladium (0#PA:) eased 25 cents to $199.00. Spot (XPD=) was at $193.00/198.00.


http://biz.yahoo.com/rb/031112/markets_precious_comex_4.html

Hey popeye2015 post as much as you got on PMAR...

Took this off the other JFSAG board:


Prime Air inc.(PMARE) airport to open soon. Thathawiiguy check this one out, I posted about it a few years ago on rod's old vdot board. Well I am sure you know that Vancouver BC. won the 2010 winter game bid from the IOC. The road work is blasting away causing delays for travelers to Whistler on the Sea to Sky highway.

911 also brought long line ups at the US/CA border. Prime Air's airport in Pemberton just past Whistler on the Sea to Sky is The only possible way to cut down the travel time to the resort(short of a chopper).

Whistler has grown to point that even after the ski season is over many people come in the summer for hiking/mountain biking ect.

Prime has just got their Sec filings in order and should move back to the OTC.


Galvin flying service will run the airport for Prime Also a FOB for corporation/private air service.

D&D sites www.primeair.com / www.galvinflying.com .

popeye

Derivatives Market Grows 20% to $170 Tln, BIS Says

(Update1)

Nov. 12 (Bloomberg) -- The global market for derivatives traded outside exchanges grew 20 percent to a record $170 trillion in the first half of the year, led by contracts pegged to interest rates, the Bank for International Settlements said.

The market for derivatives, contracts based on underlying assets, is more than five times as big as global gross domestic product for 2002 as measured by the World Bank. Of the world's largest 500 companies, 92 percent use derivatives to insure against moves in borrowing costs, currencies or commodities, according to the International Swaps and Derivatives Association.

Interest-rate contracts grew 20 percent to $121.8 trillion from January to June, the BIS said. Derivatives based on currencies grew 20 percent.

``The interest-rate market will continue to grow,'' said Raphael Geys, UBS AG's London-based head of European fixed-income distribution, in an interview. ``Every corporate, government and asset manager should be looking at using interest-rate derivatives for proper risk management purposes.'' UBS ranked top in Risk magazine's 2003 survey of derivatives users.

Derivatives let holders bet on or guard against gains or declines in an underlying asset without having to own the asset. They can be tied to things ranging from gold to cocoa, with most based on interest rates and currencies. Swaps, agreements to exchange types of interest payments, make up the largest portion of the market.

Borrowing costs fell in the period, with the Federal Reserve cutting the benchmark U.S. interest rate to 1 percent in June, the lowest since 1958. Currencies also moved, with the euro rising 9.3 percent against the dollar.

`Vigorous Growth'

The figures ``point to continued vigorous growth in interest- rate swap contracts in the first half,'' the Basel, Switzerland- based BIS said in its twice-yearly derivatives report today. ``The strong growth in the market was visible in all market risk categories except gold.''

The BIS measures the contracts by notional amount -- the value of the underlying assets -- and not the money at risk. Gross market value, the market cost of all derivatives contracts, grew 24 percent to $7.9 trillion, the BIS said.

The over-the-counter derivatives market involves privately negotiated contracts between securities firms. Contracts done through exchanges, such as Frankfurt-based Eurex and the Chicago Mercantile Exchange, have standard sizes and maturities.

`Boom Times'

J.P. Morgan Chase & Co., the world's largest user of derivatives and the second-biggest U.S. bank, had derivatives with a face value of $33.1 trillion on June. 30, according to the U.S. government's Office of the Comptroller of the Currency. The total compares with $14.2 trillion at Bank of America Corp. and $12.8 trillion at Citigroup Inc.

The notional value of gold derivatives fell 4 percent and gross market value dropped 22 percent in the period.

``The gold price was on a dramatic rollercoaster ride through the first half of 2003,'' the report said. There was ``continual and extensive producer de-hedging. With extremely low interest rates, producers earn less on proceeds of forward sales of gold.''

After taking into account netting agreements, where banks offset their trades with one another, the amount at risk from counterparties defaulting on their derivatives contracts was $1.75 trillion at the end of the first half, the BIS said.

Among other trends, the BIS noticed there were ``boom times for the exchanges.'' Business on derivatives exchanges rose 61 percent in the period, the BIS said.

The Bank for International Settlements, formed in 1930, is used as a bank by central banks. It tracks financial markets, compiles and monitors securities figures, and regulates banks. The BIS currently has 55 member central banks.

Last Updated: November 12, 2003 05:28 EST

http://quote.bloomberg.com/apps/news?pid=10000103&sid=aR4pMAz.ogAA&refer=us

JFSAG:

I remember reading an article that talked about the psychology of round numbers...

400 in US

Rut there's others like the thr ruppee and the RMB and so fourth...would be interesting to see what the nearest round numbers are for India and China...

There was a time when I would have busted out my calculator and currency conversion charts but....

GOLD hit a high of $397.00 today and it ain't even close to being done yet long term that is; it won't close up there today...400 by Dec seems like a safe bet now, don't it...?

Remember when they were laffing at me when I got a bunch in the 270's

This bull is just starting...

Silver will come sooner or later and when it does it will be sharper and faster...

Couple articles out today:

http://www.321gold.com/editorials/russell/russell111203.html


http://www.sanmateocountytimes.com/Stories/0%2C1413%2C87~11271~1758967%2C00.html


BTW I expect much more than 36% over time...for both gold and silver...


You had ample time to get silver at 4.50 or so now it's 5.32 and I don't see the correction I want anytime soon...if we do get a dip back under $4.75: BUY.

Patriot Act said misused in Vegas


By Audrey Hudson
THE WASHINGTON TIMES



Federal investigators used the Patriot Act to seize the financial records of a Las Vegas strip club owner as part of a political corruption probe, an action critics of the law say violates its intent to catch financiers of terrorism.

"The attorney general didn't tell Congress that he needed the Patriot Act to raid nudie bars," said Laura Murphy, director of the Washington legislative office of the American Civil Liberties Union.

"He told Congress in no uncertain terms that the Patriot Act was needed to prevent another life-threatening catastrophe at the hands of terrorists," she said.

The FBI last week used the act to obtain subpoenas from a federal judge to seize from two stockbrokers financial information about Michael Galardi, a strip club owner suspected of bribing elected officials. Mr. Galardi opposes a ban on physical contact between topless dancers and customers.

Justice Department spokesman Mark Corallo said he could not discuss the specifics of the case, but emphasized that a provision of the law applies to money laundering. He called the provision a time-saving mechanism that requires probable cause and a federal judge's approval — a stricter standard than used by grand juries empowered to subpoena the information.

Section 314 of the Patriot Act allows financial institutions to "share" information on individuals and organizations "suspected of possible terrorist or money laundering activities" with law enforcement. No notification to the target is given and all liability is waived against the financial institution.

Neither Mr. Galardi nor his lobbyist, Lance Malone, have been indicted by the federal grand jury that subpoenaed the information as part of its investigation of corruption of public officials in southern Nevada.

Critics said law enforcement wanted the powers that the Patriot Act provides even before the September 11 terrorist attacks and predicted the act would be used for crimes other than terrorism and money laundering after its passage in 2001.

"The use of Patriot Act against a Sin City vice lord should give pause to anyone who says it has not been abused," Miss Murphy said. "The Justice Department's suggestion that lawmakers knew what they were getting into with the Patriot Act deserves a gold star in dishonesty."

Mr. Corallo said the specific provision of law being used was not requested by the Justice Department or the administration, but by Sen. Paul S. Sarbanes, Maryland Democrat and then-chairman of the Senate Banking, Housing and Urban Affairs Committee.

David Keene, chairman of the American Conservative Union, said the Patriot Act lowered constitutional safeguards and that the spirit of the law was misused in the Las Vegas case.

"This is the way it is going to be used the majority of the time," Mr. Keen said.

Historically, laws enacted to target specific criminal endeavors, such as the creation of the Racketeer Influenced and Corrupt Organizations Act (RICO) to target organized crime, have been utilized for prosecuting other crimes.

The National Organization for Women used RICO in 1986 in a lawsuit against Operation Rescue, a pro-life group, to prevent blockades of abortion clinics in Delaware and Wisconsin.

The case went all the way to the U.S. Supreme Court, which in a 1993 unanimous decision included the definition of "enterprise" as including a group of individuals, partnership, corporation, association or other legal entity. The court said the pro-life group "conspired to shut down abortion clinics through a pattern of racketeering activity."

Federal prosecutors have brought more than 250 criminal charges under the Patriot Act, with more than 130 convictions or guilty pleas in cases also dealing with currency smugglers, drug dealers, con artists, and to seize money hidden overseas by bookies, the Associated Press reported.

http://www.washtimes.com/national/20031111-105229-3871r.htm

Kasparov, Computer Tie in Chess Match
Tue Nov 11, 9:19 PM ET


NEW YORK - Garry Kasparov, the world's top-ranked chess master, played to a draw Tuesday against computer program X3D Fritz in the first of a four-game series.


The Russian grand master played wearing virtual reality glasses, calling out his moves, which were then posted on a virtual board.


Dubbed "Man vs. Machine," the match involved Kasparov voice-activating the chess pieces and using a joystick to rotate the virtual board in the air.


The two opponents played conservatively at first. But during the middle of the game, both players aggressively attempted to position their queens, the most powerful pieces on the board, to check each other's king, which would force an immediate defense of that piece to avoid losing.


Neither Kasparov nor X3D Fritz could maneuver their pieces to checkmate the other's king, and split the match for half a point each.


If he loses the match, Kasparov, 40, will earn $150,000. If he wins, he gets $200,000, and a draw earns him $175,000.


The next three games are scheduled for Nov. 13, 16 and 18.o v8593


Earlier this year, Kasparov played to a 3-3 draw against the Israeli computer Deep Junior in a six-game series.




http://story.news.yahoo.com/news?tmpl=story&u=/ap/20031112/ap_on_en_ot/virtual_chess_2

Grad student at center of Diebold controversy


ANTHONY CROSS/THE CHRONICLE Graduate student Justin Moore is waging a cyber protest against voting solutions provider Diebold, Inc.

by Andrew Collins
November 12, 2003

Fifth-year Duke computer science graduate student Justin Moore does not fit the stereotype of a whistle-blower.
The mild-mannered son of a public school teacher, he espouses simple civic duty but does not claim to be politically active. Indeed, he appears to be the calm antithesis of the overheated, proselytizing do-gooder who rails against Corporate America on college campuses throughout the country.

Yet, by a simple act of Internet disobedience, he has joined a small group of individuals united in protest against the allegedly incompetent and undemocratic practices of Diebold, Inc., the world's self-professed leading voting solutions provider.

Moore and a few dozen others across the country have used university websites to post revealing and possibly embarrassing internal memoranda from Diebold employees. The campaign is organized online and has elicited a bevy of cease-and-desist letters from Diebold, which claims the memoranda were stolen, according to The Chronicle of Higher Education.

Moore said he has not yet received word from Diebold's lawyers, but he is nervous given the "very, very stiff" penalties for copyright infringement that he could conceivably face.

"I do have a family; we do have a house," he said. "But I wouldn't be doing this if I didn't think... this is at the heart of our democracy."

The controversy surrounding Diebold began last spring when a team of computer scientists at Johns Hopkins University and Rice University undertook a security audit of the source code of the company's voting machine software, which Moore said was available to the public on the Internet. The computer scientists were stunned at the lack of adequate security for the software.

"Our finding was that the software was built very, very poorly," said Dan Wallach, assistant professor of computer science at Rice, who participated in the audit. "Nothing about the software indicates to us that the engineers understood the security threats that a voting system faces."

Wallach said any voter who walks up to a Diebold voting machine can cast multiple votes if he or she brings in a homemade "smart card." He also said problems could arise from poll workers' uninterrupted access to machines before and after an election.

Though Wallach said election irregularities had been alleged, he noted that without a paper record of votes, there is insufficient evidence to either substantiate or refute the accusations. "That's the core problem," he said, "that the electorate is required to trust that the voting machines work and there's no backup plan."

Diebold spokesperson David Bear denied that the company's voting machines were insecure or unsafe. He said the audit used an outdated, incomplete source code and that its findings did not take into account the checks and balances of an actual election.

Still, word spread throughout the close-knit tech community, and Diebold's public relations quagmire deepened when memoranda leaked to reveal what Moore called a startling pattern of neglect from the company. "At the worst, it looked like they were actively trying to cover up mistakes made during actual elections," he said.

The Chronicle of Higher Education reported that Diebold has contacted at least three institutions--Amherst College, the Massachusetts Institute of Technology, and the University of Missouri at Rolla--demanding that student-run sites containing the memoranda be taken offline. Amherst cut off the student's Internet access and Missouri-Rolla asked the student to remove the material. MIT could not be reached for comment.

But Moore said he has no plans to remove the memoranda from his web site and, after consulting with University legal counselors and Office of Information Technology Chief Security Officer Chris Cramer, is taking a wait-and-see approach.

Cramer, the University's agent for enforcing the Digital Millennium Copyright Act, said that while he receives a fair number of cease-and-desist notices regarding copyright infringement issues, he was of the opinion that Moore's publication of the memoranda was protected under the First Amendment of the U.S. Constitution. In any event, he said he would forward the matter to University legal counselors if Diebold sent a take-down notice. The Office of the University Counsel declined comment.

Moore, who is currently co-teaching a computer science course that addresses intellectual property and the Internet, said he is confident that he is functioning within the parameters of the law. "This is non-commercial political speech, which traditionally gets very, very high protection under the First Amendment," he said.


http://www.chronicle.duke.edu/vnews/display.v/ART/2003/11/12/3fb223fe965f1

Thanks to the many who wished Gail & me well & suggested various things to help with the flu, etc.

[This is the second to the last email I (the list) got from him.]

Gail still has some congestion but has managed to stave off the worst. However, I hit bottom like a ton of bricks and am resolved to ease back into harness -- I don't want a relapse. Probably fatigue was the most important factor for me, anyway. And I may have made a strategic blunder that contributed.

Sunday after I showered, I weighed 158 pounds fully dressed. From Tuesday through Saturday I lost in the neighborhood of ten pounds. That's about what I weighed when I graduated from high school forty years ago. Unfortunately, gravity has relocated things -- I'm not nearly the physical specimen I was when headed to Oklahoma State University on a wrestling scholarship.

I spent about three hours in the office Sunday then a couple of three and four-hour sessions yesterday. I plan to limit office time to between six and eight hours per day for the balance of the week so probably won't be overly responsive to email queries and plan to avoid the telephone as much as possible.

As much as anything, the strategy is intended to get me in reasonable physical shape for the Freedom Hall Seminar on November 15th & 16th.

While I was out of commission, others weren't. I have an unbelievable load of stuff on my desk. For example, it appears that one of the contributing researchers has cracked the nut with respect to the required withholding authorization certificate. This is a critical strategic issue that could significantly impact the whole income and employment tax withholding scheme.

Another may have made a critical breakthrough with respect to documenting underlying IRS presumptions for notices of lien and the like. It appears that he may have found a short track through the decoding maze that will positively document computer fraud.

Ralph Winterrowd of Alaska has completed significant work on injunctive relief that I'm convinced will prove to be effective. He is deploying the strategy against IRS agents, a bank and an employer via state court, so the strategy is just now being smoke-tested, but the basic research is applicable in both state and federal forums. Ralph dedicated most of a month to the project. I read several early editions of his memoranda but haven't had time to go through the final product. We'll cover most of the essentials at the seminar.

My secretary, Carol, just gave me a "you're doing something right" report. One of our clients just called to tell us we were successful at administratively removing IRS notices of federal tax lien filed separately against he and his wife.

Our standard procedure worked for them, but it doesn't work for others. Likewise on the garnishment issue. We stop many administrative notices of levy by merely notifying employers and financial institutions not to honor them as the client didn't sign consent forms required by the Treasury Financial Manual and the Internal Revenue Manual, but some employers and financial institutions, particularly if they are large enough to have in-house attorneys, elect to ignore the law even though notice is supported by actual authority exhibits. The attitude is, "Sue us..." or "You're beef is with IRS, not us..."

Ralph's work on injunctions is going to shorten the track on those issues.

Another issue Ralph has addressed with considerable clarity is distinction between "taxpayer" and "non-taxpayer."

The Internal Revenue Code has it's own definition of "taxpayer" at 26 U.S.C. § 7701(a)(14). Anyone liable for taxes imposed by internal revenue laws of the United States is a taxpayer; those who aren't, aren't taxpayers.

Status as taxpayer is a matter of law that must be determined by original status and the articles, transactions and financial activities of whoever is involved in the controversy. The Secretary of the Treasury bears the burden of proving taxpayer status, i.e., the liability for any given tax imposed by internal revenue laws.

This research is going to prove to be invaluable in both administrative and judicial forums. If IRS fails to bear the burden of proof to prove liability in record (requires findings of fact and conclusions of law), the non-taxpayer isn't required to go through all the administrative B.S. My thinking is still fuzzy enough that I don't recall the cases, but the U.S. Supreme Court has ruled that via the internal revenue laws, Congress doesn't suppose to deal with non-taxpayers. Non-taxpayers have every judicial remedy the Constitution secures. In other words, if IRS personnel involved with a case don't get right, sue the bastards.

We occasionally hammer away at "subject matter jurisdiction" being essential to a court's jurisdiction. Ralph's research has enabled us to frame a key question: Does the federal court have Article III jurisdiction?

Anyone who has ventured into federal courts knows that getting judges to acknowledge law and the like that they don't want to acknowledge is nearly impossible. Government attorneys routinely discount everything as "patriot" or "tax protestor" rhetoric while they pursue their objectives based on IRS' version of facts. Most federal judges accommodate the scam. One of the places we frequently see this is in summons show cause hearings. However, if "Article III jurisdiction" doesn't affirmatively appear in record, (1) the court is operating as an administrative court, and (2) the judge can be held personally liable.

The same principle applies in state courts only the key jurisdictional element depends on the judicial section of each state constitution. Ralph has been using this strategy in Alaska state courts for the last few months and it's like throwing a hot rock in the judge's lap. When judges see the possibility of finding themselves on the spitz, they avoid jumping into the fire. As research in this area is refined, federal judges are apt to be more reasonable, too.

When we originally set the target date for the November Freedom Hall Seminar I hoped Ralph could participate, but his schedule won't let him get here this time. We're planning to being him to Freedom Hall in late February or March. I will cover what I can at the November conference, but won't to go into the same detail Ralph will have developed by spring.

Three or four months ago I opened things up by posting memoranda I develop on any given subject to my open DanMeador subscriber list http://groups.yahoo.com/group/DanMeador/ & we began posting source documents on the Law Research & Registry web page. www.lawresearch-registry.org

The response has been tremendous. People other than those involved in closed research groups are making invaluable contributions. One of the critical problems, of course, is the same as in closed research groups -- information management. What do we have, where does each piece fit in the puzzle, and what are the implications of any given document, authority or whatever?

Information we're accumulating is growing like an Irish stew. The first thing you know the stew has outgrown the pot so you have to get a larger pot. Our pot has gotten large enough that it's more like a barrel. Unless there is some way of keeping track of ingredients and indexing what relates to what, the information excess is as bad as no information at all. We're rapidly getting to the point that there is going to have to be more time and effort dedicated to that project.

We're going to have quite a seminar, particularly if I have time to nail down two or three things that came in while I was sleeping and otherwise languishing on the couch in front of the television.

Late last week the IRS national office acknowledged my FOIA request for copies of state agreements, etc. The request has been transferred to the IRS office in Oklahoma City. Evidently originals of those documents are kept in the jurisdiction they apply to. Those of you who have used the model FOIA posted on the LR&R web page will probably be receiving comparable notice from the national office.

As you respectively get to the point you know for certain you will attend the November 15th & 16th seminar, be sure to notify Gail so she can get a reasonable head count. Let her know what accommodations you need, how many will be in your group, and anything else we need to know. Send to gaildmc@kayserv.net

Dan Meador


[And this was the last, dated NOV 2nd...]

The November 15th & 16th seminar scheduled for Freedom Hall is cancelled.

My Halloween treat was a run to the hospital emergency room. My two-week
physical bout with some pretty serious physical issues finally got to the point
I need more than home-care assistance.

There is a pretty good chance that I am going to live through the day and it even
appears that things will send me home in two or three days. However, at this
juncture I need to concentrate on recovering my health.

It will be impossible to focus on health needs and simultaneously put together
a seminar in less than two weeks.

We will probably reschedule for February or March 2004. I'll think more on the
subject this evening after OU and OSU settle our version of state football
bragging rights.

Dan Meador

Hello from Gail --
I seem to have gotten mixed up on instructions from Dan on how to send this out.

Some of you will be getting this e-mail a second time. I messed up on the first
and didn't send it out the way Dan said, so in order to make sure everybody receives
it, I am sending it again.

Sorry for the inconvenience to you folks that have it more than once. With the current
situation, I am a little mixed up. Dan is doing better today, but I don't expect him to come
home for a few more days.

s/Gail


[I even said out loud he better not get dead on us...]

I was worried about him and sure enough...you know oddly my congressperson Patsy Mink started asking the wrong questions of the GOV and the IRS "got the flu and died" and now Dan who has been beefing with the Gov and the IRS and was getting painfully close to the truth "gets the flu and dies..."


Two is only coincidence...


Who will pick up the ball...?


Anyhow this makes me sad. It's a rare man that will stand up. He will be missed. I spoke to him once by phone and had a lot of email back and forth...and always figured I get around to meeting him someday...


JFSAG I am going to find out what kind of "bug" got Dan and Patsy and if they were the same...

What a nicely sanitized story:

Island returns to natives

KAHOOLAWE ISLAND, Hawaii (AP) — Spotted with patches of dry grass and colored by thorny kiawe trees that thrive in the arid landscape, the red dirt of this former Navy target range supports little other vegetation and even less wildlife.
But the uninhabited 45 square miles of Kahoolawe are sacred to native Hawaiians, who say the island, untouched by tourists, connects them with the spirits of their ancestors.
Now, after spending 10 years and $460 million to clean up a half-century's worth of shrapnel and unexploded bombs, the Navy is returning control of Kahoolawe to the Hawaiians for the first time since the attack on Pearl Harbor.
The transfer will take place today — Veterans Day.
More than a decade after the last round of ammunition was fired, native Hawaiians are preparing for what they hope will be the rebirth of the island as a place where their cultural traditions can be celebrated.
"You can get a feel on Kahoolawe of what it was like to live on Hawaii at the time of our ancestors," said Davianna McGregor, a native Hawaiian with the cultural-preservation group Protect Kahoolawe Ohana. "It's important for us to have a place where we can practice our traditions, without it being a spectacle, without it being some kind of tourist attraction."
The island and its more than 600 archaeological and culturally significant sites are on the National Register of Historic Places. Those sites include old houses, religious artifacts, shrines, remnants of ranches and a centuries-old quarry.
The island will be set aside for cultural, education and archaeological activities, with no commercial development allowed, and access to Kahoolawe will be controlled by a state agency.
Six miles southwest of Maui, Kahoolawe is the smallest of the eight major Hawaiian islands. It is 11 miles long and seven miles wide. The Navy has controlled Kahoolawe since martial law was declared after the Japanese attack on Pearl Harbor, Dec. 7, 1941.
It was used as a target and training area until 1990, when President Bush ordered a halt to the exercises after years of protests and lawsuits by native Hawaiians. Congress later agreed to clean up the place and return it to local control.
Cleanup crews have already removed some 11,000 tires and about 9 million pounds of scrap metal, according to the Navy.

http://www.washingtontimes.com/national/20031110-112127-3778r.htm

Police, school district defend drug raid
Monday, November 10, 2003 Posted: 1:41 PM EST (1841 GMT)


Police raid a high school for drugs in Goose Creek, South Carolina.

CNN's Bill Hemmer talks with a South Carolina high school student involved in a police raid on her school last week. (November 10)


Some parents say what a high school principal in South Carolina did with the help of local police crossed the line. CNN's Wolf Blitzer explains



(CNN) -- After complaints from parents and students, police in Goose Creek, South Carolina, defended their decision Friday to send a team of officers, some with guns drawn, into a high school earlier this week for a drug raid that turned up no drugs.

[You'd think the men (cops) who ought to be citizens and fathers first might have had some reservations...guess not. Which is why you need absolute control and oversight of any "law enforcement agency" because left to their own devices they'll get out of control quickly...all in the name of enforcement...anybody old enough to remember when they were peace officers?]


The Berkeley School District north of Charleston, South Carolina, also defended its role in the incident, which has triggered outrage among some in the community.

Stratford High School students described Wednesday's incident as frightening.

"They would go put a gun up to them, push them against the wall, take their book bags and search them," Aaron Sims, 14, told CNN affiliate WCSC. "They just came up and got my friend, not even saying anything or what was going to happen. ... I was scared."

Sims said his mother was "a little angry," but his father understood and "thought it was necessary."

Lt. Dave Aarons of the Goose Creek Police Department said the raid, the first the department has done at a school, followed a police investigation into drug activity that began after a student informed school staff about drug sales on school property.

Police monitored video from school surveillance cameras for several days and "observed consistent, organized drug activity," he said. "Students were posing as lookouts and concealing themselves from the cameras."

When the principal saw more of the same suspicious activity on the school surveillance video, he asked for the officers to respond, Aarons said.

On Wednesday, 14 officers went to the school "and assumed strategic positions," he said.

Within 30 seconds, officers had moved to "safely secure the 107 students who were in that hallway," Aarons said. "During that time some of the officers did unholster in a down-ready position, so that they would be able to respond if the situation became violent."

"The school also designated faculty to secure the hallway to keep other students from entering," Aarons said.

Anytime narcotics and money are involved he said there is "the reasonable assumption that weapons will be involved. ... Our primary concern was the safety of the students (and) everyone else involved."

'School had no knowledge that weapons would be drawn'
Aarons said "12 to 14 students" were placed in handcuffs or plastic flexcuffs "due to their failure to respond to repeated police instructions to get on their knees with their hands on their heads," after one of the lieutenants explained to the students what was going on.

A canine unit was brought in and the dog responded positively to 12 book bags, which were then searched by school officials, said David Barrow, secondary school supervisor for the Berkeley School District. But no drugs were found and no arrests were made.

"The school had no knowledge that weapons would be drawn," Barrow said. "We understand students' and parents' and the community's concerns about this particular search. We will work internally and with local law enforcement to be sure these issues are addressed."

Still, he said, the school was concerned about possible drug sales on campus, and believed action was necessary.

Jared Weeks, 14, told WCSC that police were aggressive.

"They kind of pushed us against the wall and started searching us," Weeks said. "I didn't think all that was called for."

Weeks said he was "kind of nervous," but not scared "because I didn't have anything to hide."

He said there are a lot of drugs in the school, but that this sort of raid was unnecessary. "There is certain people that you know sell drugs," he said. "They could have just searched those people."

Aarons said police believe the drug-dealing students were tipped off.

[Foiled again!!!]

"I don't think it was an overreaction," he said of the raid. "I believe it was one tactical method by which we could safely approach the problem to ensure that everybody was safe."

He said the incident is being reviewed, as is every police operation.

http://www.cnn.com/2003/US/South/11/07/school.raid/index.html

BoonDoggle Afoot
by Norman Patterson


There is a new government boonDOGgle afoot. Can you believe the government wants compulsory dog training? Imagine having to send Fido to school.

This program has been adopted from other countries who have successfully trained dogs for years. In fact, it was so successful generations of dogs were affected. Social designers and manipulators of the USA observed and learned this method of mass dog control. They are planning to implement it here in our country.

One of the central tenants of this plan is to require you to turn your puppies over at an early and vulnerable age. It is traumatic to the young pup. This shock of being separated from its master is essential for conformity. Every year in the fall on the first day of dog-training classes owners will be seen standing on the street corners with their puppies in tow. Owners will try to prepare their young pups for this big day but alas, there will be many sad and pathetic yelps being heard as the traveling kennels roll down the street.

Some of these dogs will never recover from the trauma. This type of trauma will cause some of these dogs to revert back to their pre-paper trained days. Some will get sick, some will get listless, and some will not be able to stop yelping. What will they do for these puppies, medicate them to complacency?

In order for this program to work the dogs must spend a significant amount of time at training centers. They will be put in age-appropriate packs. In fact, their pack will become the central focus of their lives. How long before you have these pack-dependant dogs running around the neighborhoods, chasing cars, or harassing cats when they are not in these centers? I fear the social planners will use this as an excuse to get you to turn your dogs over for more and more time every year. By the time your dog finishes this program, he will be more likely to be pack dependant rather than dependent on you.

Every age-appropriate pack will have a trainer. These trainers are experts in behavior modification techniques. Puppies will be put through a series of training exercises throughout the day. They will be given rewards and punishments to further help them comply with the demands of the trainers. Before long these dogs will seek the approval and verbal affection of their trainers rather than their owners.

How would you like your puppy to be trained day after day to obey a trainer you barely know? Your influence over your puppy will diminish over time. Your dog will be taught to obey someone else. Every year there will be new trainers and new training techniques used on your poor unsuspecting pup. By the time some of these dogs finish this program they will be unruly, disobedient to their masters, and devoid of any motivation. That’s all we need in this country, packs on mindless dogs.

These dog trainers want to steal the most important formative years of your puppy’s life. They want to take your dog for most of the week. Not only that, they want to give training exercises when your canine is not at the training center. I ask you, if they have several hours of more training to do after they get home, when will we ever have time to enjoy our dogs. I fear by time these puppies get old enough they will want to spend what little time they have left with their pack from their training centers.

The social planners say it will be difficult initially to implement this plan. Many owners are fiercely loyal to their dogs. This is why they are trying to get laws passed requiring people to give up their pups. If they cannot get people to do it voluntarily, they will use the threat of governmental force. We will be taxed and taxed heavily for this program.

This program raises serious questions. Is it moral to take young puppies out of their homes at such early and impressionable time? Do they really need to have them for so much time? Isn’t it irresponsible for owners to give over to the government what they could do either themselves or in cooperation with other dog owners? Won’t these dogs become pack oriented and trainer dependant? How will they deal with packs of sexually mature dogs as they get older? Is our country able to handle the taxes it will take to pay for this?

I’m sure you have figured out by now I am joking about this boonDOGgle. The question remains, however. If our country wouldn’t put up with the government doing this to our dogs, why in the world would we allow this to be done to our children?

November 11, 2003

Norman Patterson [send him mail] received his M.Div. from Asbury Theological Seminary. He is an ordained unlicensed pastor no longer serving in 501(c)3 corporate "churches." He and his wife Debbie home school their four children in New Hartford, Connecticut.

Copyright © 2003 LewRockwell.com

http://www.lewrockwell.com/orig4/patteron-norman1.html

Arrested Russian Businessman Is Carlyle Group Adviser

By Greg Schneider
Washington Post Staff Writer
Monday, November 10, 2003; Page E04


The arrest of two of Russia's top businessmen in recent months was more than a distant headline for Washington's well-connected private equity firm, Carlyle Group.



Carlyle, known for the glittering roster of former statesmen among its partners and advisers, has ties to both Mikhail Khodorkovsky and Platon Lebedev, the jailed Russian tycoons.

Khodorkovsky, 40, Russia's richest man and former chief executive of Yukos Oil Co., serves as an adviser to Carlyle's Energy Group. He is among 15 luminaries who help the firm sort through investment opportunities in energy industries, along with former secretary of state James A. Baker III, former British prime minister John Major and Pulitzer-Prize-winning author Daniel Yergin.

Khodorkovsky was arrested last month by Russian authorities for alleged fraud and tax evasion. Because the billionaire is seen as a possible political rival to President Vladimir Putin, his arrest has unsettled the country's business community and worried foreign investors.

Carlyle spokesman Christopher W. Ullman declined to comment on the matter.

Sources close to the firm say Carlyle is taking a cautious look at the business climate in Russia. So far, Carlyle has no investments in Russia, and has not followed through on preliminary discussions about starting a buyout fund with Russian investment company Alfa Group, the sources said.

Lebedev, chairman of Group Menatep, a holding company that is a major shareholder in Yukos, was arrested in July on fraud charges. Lebedev had served as an adviser to Carlyle's European investment funds, but is no longer listed on the firm's Web site.

Neither man has played a significant role for Carlyle, the sources said. Carlyle does not disclose its compensation to advisers.

Meanwhile, the firm has lost the services of its most prominent associate: former president George H.W. Bush, who was senior adviser for Carlyle's Asia funds, retired last month, shortly after serving as the main draw at a dinner in Moscow to woo investors.


© 2003 The Washington Post Company

http://www.washingtonpost.com/wp-dyn/articles/A20638-2003Nov10.html

Your home: Worst-case scenario

Will rising interest rates unravel all of the gains of the recent housing boom?
November 10, 2003: 11:46 AM EST
By Sarah Max, CNN/Money Staff Writer


[ON CNN!!!!? I'm starting to hyper-ventilate again. But Seriously now you see that a crash in the housing market will be caused...click link for tables...]


BEND, Ore. (CNN/Money) - Interest rates are beginning to creep up again, and that could be bad news for homeowners.

The rate on 30-year fixed-rate mortgage loans rose to 5.98 percent in the week ended Nov. 6, and the trend could continue as a result of the rebounding economy and the deficit, which both have the effect of lifting rates.

For now, rates are at historically low levels. But John R. Talbott, a visiting scholar at UCLA's Anderson School of Business and author of "The Coming Crash in the Housing Markets," has a thesis that will leave you quaking from behind your picket fence.

He describes a worst-case scenario in which rising interest rates drive down home prices, leaving an alarming number of homeowners -- particularly those who've cashed out or borrowed against their equity -- holding more debt than their house is worth.


If they sell, they would actually owe money.

Under this scenario, foreclosure rates jump as high as 5 percent, pushing down home prices and wreaking financial havoc all the way to the top of the housing food chain at Freddie Mac and Fannie Mae. With the collapse of these financial behemoths, investors would lose money, taxpayers would be stuck paying for a bailout, and confidence in the banking industry would be as good as gone.

And your home? A 30 percent drop in home values isn't inconceivable, said Talbott.

"It's 1929 all over again," said Talbott, a former Goldman Sachs vice president. "This is big Depression-type stuff."

How rising rates affect home prices
To some, Talbott's theory sounds a little over the top. But considering the housing market's run, it's not unreasonable to think that fortunes could be lost just as quickly as they were made.


And though there's never been a nationwide decline in real estate prices, individual markets have suffered plenty -- see "Real estate horror stories."

Still, though most economists agree that rising interest rates will hurt home prices, it's tough to find one who thinks things will get quite so bloody.

Talbott contends that the relationship between rates and home prices is almost linear. In other words, a 30 percent increase in mortgage rates (from, say, 5.5 percent on a 30-year mortgage to around 7 percent) could mean as much as a 30 percent decrease in home prices.

The reason is the effect on a home's affordability. For example, a couple that could afford a $400,000 house when rates were less than 5.5 percent might only be able to pay $300,000 if rates go to 7 percent .

Others argue that the relationship isn't quite as direct. For one, when rising rates go hand-in-hand with an economic recovery, as they often do, better job prospects partially offset the effects of higher rates.

Also, when rates go up, buyers just opt for adjustable rate mortgages (ARMs), which have lower rates than fixed loans. "When rates started picking up after the last refi boom in 1993, people didn't leave the market, they just shifted into ARMs," said Eric Belsky, executive director of Harvard's Joint Center for Housing Studies.

According to David Stiff, director of economic research for Fiserv Case Shiller Weiss, rates went up 225 basis points (2.25 percentage points) in 1994. "Price appreciation really slowed but values didn't drop off," he said.

Douglas Duncan, chief economist for the Mortgage Bankers Association of America, estimates that if 30-year fixed mortgages jump past the 7 percent mark, home prices will decline 3-to-5 percent.

"You won't see any serious slowing unless rates jumped to 8 percent, in which case I'd expect a 10 percent decline in values," said Duncan.

Even then, he argued, prices would gradually come back as home buyers get used to a new, higher level of interest rates.

Some markets, some homeowners, more vulnerable
Some markets will surely feel more pain than others. "I'd be most concerned in places where housing affordability is an issue because the effects of rising interest rates are even more pronounced," said Stiff.

According to the National Association of Realtors affordability index, San Diego was one of the least affordable cities as of the end of 2002. There median-income families had only 69 percent of the income needed to buy a median-priced home.

In Peoria, Ill., on the other hand, families in the median had nearly three times the income needed to buy a median-priced home.

"In cheaper markets interest rates probably won't matter as much as the local economy," Stiff added. "These are places where new supply matches new demand, and you just have steady appreciation."

Similarly, not all homeowners will suffer the same. If you're not planning to move for years, a decline won't have as much of an impact.


But a decline could be a real problem for Americans who have taken advantage of the runup in prices to do cash-out refinancings. They could very well owe more than their house is worth -- bad news if they are forced to sell.

"People always say they won't move," said Talbott, "but, remember, people move for three bad reasons (divorce, job loss, and medical emergency) and one good one (job opportunity). Under all of those scenarios, they have no choice."

http://money.cnn.com/2003/11/07/pf/yourhome/rates_and_affordability/index.htm?cnn=yes

Are The Israelis Willing To
Start World War III?
Exclusive to American Free Press
By M. Raphael Johnson
11-8-3

According to a recent article by veteran British military analyst Joseph Vialls, Russia has sent the most advanced and feared missile in the world, owned only by Russia and China, the P270 Moskit, also known as the 'Sunburn,' to Damascus and Tehran. This can only be understood as a counter to the Israeli threats to use nuclear weapons against their enemies.

The Sunburn flies at an altitude of 60 feet and is nearly impossible to defend against. A few fired at Israel could make that state 'history.'

Add to this a new Russian air force installation near the Kyrgystan/Russia border, coupled with a Chinese base just over their western border with Kyrgystan, and Armageddon may be on the horizon. All Russian jets at this new base just outside of Bishkek are equipped with Sunburn missiles.

Vialls writes:

The gloves are off, and with America and Israel still unable to steal any oil from Iraq because someone keeps blowing the pipelines, Russian and Chinese firepower buildup suddenly slammed the door firmly shut on Caspian oil reserves in the old Soviet republics. For more than a decade American oil multinationals have been conducting 'joint ventures' in the former Soviet republics bordering the Caspian Sea, with the stated intent of pumping stolen crude oil out through Turkey, then on to western markets. Now this route has been blocked permanently, and America is in no position to do anything about it, because a large part of the U.S. conventional army is currently bogged down in Iraq, being shot at and killed on a daily basis.

For many who have been watching this region as a confrontation between the United States and Israel versus Russia largely over the control of the biggest gas and oil deposits in the world, a new front has been opened.

As a response to this checkmate, Sharon recently visited Putin on Nov. 3 to meet with him concerning the nuclear issue in Iran. Quickly, Sharon permitted Palestinians to return to their jobs and eased their travel restrictions.

Since the end of the Gorbachev era, the Russian oligarchs, nearly all Jewish by ethnicity (with the noticeable exception of Vladimir Potanin), have controlled nearly all key sectors of the Russian economy. This, of course, includes Russia's major ace-in-the-hole, oil and gas. The giant YUKOS conglomerate is presently one of the largest oil companies in the world, valued at about $40 billion.

YUKOS is the result of a 'loans for shares' deal brokered through the semi-coherent Boris Yeltsin in 1995. Here, the liberal Russian government swapped loyalty from the oligarchs in exchange for privatization at prices far below that of the market. This $40 billion giant was bought for about $300 million, thus looting the entire Russian economy for the benefit of a handful of Israeli citizens living in Russia.

When YUKOS' chair, Mikhail Khodorkovsky, was arrested at the end of last month, the American capitalist establishment went orbital. Forgetting the 1999 New York Times's expose on massive money laundering and fraud from YUKOS, the conservative establishment began to lionize oligarchy and, specifically, Khodorkovsky.

Recently, The Financial Times weighed in with a giggly piece from Chrystia Freeland, which referred to the oligarch as a 'democratic activist.' About a paragraph later, the writer said - without irony - that the oligarch's model for economics is the robber baron factories of the early American 20th century. Fox News, on Nov. 3, referred to YUKOS as the most progressive corporation in Russia.

According to a Nov. 3 Agence France-Presse story, Khodorkovsky made a deal with Jacob Rothschild this year that control of the YUKOS giant would pass to Rothschild in the event of Khodorkovsky's arrest. However, the Russian government has frozen all YUKOS assets for the time being.

It is significant that YUKOS's liberal pressure group, the Open Russia Foundation, is completely controlled by Rothschild now that its founder is in jail. As their official mission statement reads, "The motivation for the establishment of the Open Russia Foundation is the wish to foster enhanced openness, understanding and integration between the people of Russia and the rest of the world."

Their board of trustees includes Rothschild and Henry Kissinger. The Washington, D.C. launch of the organization included Sen. Ted Stevens (R-Alaska) and Librarian of Congress James Billington, one of the leading voices against Russian traditionalism in the academic establishment. Significantly, the Open Russia Foundation recently provided Yale University with substantial grants to study the Russian economy as well as providing the Carnegie Foundation with 3 percent of its entire operating budget.

It seems that the drive to control the globe's energy is progressing. The American empire's battles in Serbia, Central Asia, Iraq and Chechnya are one and the same war. Other than fighting Israel's enemies, these adventures are also wars to control Central Asian oil and natural gas (one of the main pipelines from the Caspian Sea went straight through Serbia). The control of this wealth by the United States and Israel necessitates bypassing Russian channels. This means that the Jewish oligarchy in Russia would become the central actor in world politics.

The Israeli/CIA complex was using Khodorkovsky to sell off the assets of YUKOS to Exxon/Mobil (as well as a smaller piece to Texaco), hence bringing Russia's pipelines into the hands of the western powers. The Nov. 5 New York Times also indicated that the Bush family's Carlyle Group was involved.

It was not long after Putin began threatening the YUKOS conglomerate that neo-conservative pundits such as William Kristol and Ariel Cohen began calling Putin a 'communist,' 'another Stalin' and 'tyrannical.'

The basis of these wild accusations, of course, is the fact that Putin stands in the way of Zionist domination.

From this, the roles of several other variables and players develop clearly. The State Department/Harvard University alliance was meant to 'deregulate,' or 'privatize' much of the Russian economy precisely to keep the Russian state out of the equation. Therefore, pro-Israel oligarchs (that is, Israeli citizens living in Russia) then benefited, placing most of the economy in their hands, and, by extension, Israel's.

Russia's response has been to clamp down on further foreign penetration into defense and other sensitive industries, and specifically, to target those believed to be working for both the CIA and Mossad and attempting to control Central Asian oil.

It needs to be reiterated that where the (CIA goes, Mossad goes as well. Israeli and American interests have come together in the dominance of the Central Asian region and therefore, so have liberal ideology, the Beltway set, neo-conservatism, Ivy League eggheads, Christian Zionism, the Rothschilds and the American media.) Afghanistan through the Caspian Sea through to Georgia, Azerbaijan and into the Balkans (not to mention pipelines leading to oil-hungry China), have become one single theater of war over trillions of dollars in oil and gas wealth, incorporating every single power center in global politics. The battle against the New World Order is being decided in Moscow.

Therefore, all anti-Russian alliances in the region, from Islamic fundamentalism to Slavic separatism to the George Soros 'Open Society' Foundation, are in the interests of the CIA/Exxon/Ivy League/NWO complex.

In Azerbaijan, for example, American elites have pushed for a 'democratic' state, that is, a state not under the control of pro-Moscow Heydar Aliev, thus leaving the country open to U.S. oil investment. Aliev, of course, is promoting Russian interests in the region, and thus, has become a ãtyrantä in the Beltway mind.

The American response to this situation within this region is to create the GUAAM pact, including, Georgia, Ukraine, Armenia, Azerbaijan and Moldova.

Cohen gives us a clue as to why this entity was brokered under NATO auspices: "The Baku-Tbilisi-Ceyhan Pipeline will export up to 1 million barrels per year of high quality Caspian crude oil by 2005." In other words, billions of dollars of oil are slated to be pumped through this region very soon, and the economic/military alliance of GUAAM is the means to ensure American control over it. This connects the Serbian, Afghan and Iraqi wars.

Russia's response to Israel's terror threats against most of the Islamic world is fully understood as both a political and economic question. Further, increasing cooperation between Russia and India, as well as China, are clear markers that Putin, one of the few actually competent leaders in world politics, is building an anti-imperialist and anti-NATO alliance with the aim of countering American/Zionist moves for the world's oil and gas wealth.

The interests, however, go even further than Zionist control over American foreign policy decision-making. Vialls writes on another topic: that the existence of the American/Zionist empire is based on the victory of American forces over the Russian and Islamic. Of course, both in Bosnia and Chechnya, the Mossad/CIA operatives have not hesitated to assist fundamentalists in fighting Slavic nationalism, largely because Slavicism is a greater threat with Putin firmly in the saddle. Islam, divided and leaderless, with a history of centuries of defeat and colonialism behind it, is only a potential force in world politics.

http://www.americanfreepress.net/11_07_03/
Countdown_to_Armageddon/countdown_to_armageddon.html


See also:

http://www.joevialls.co.uk/myahudi/sunburn.html

Me too. No matter how you look at it though our happy government's story doesn't hold up under even light scrutiny.

What happened? Don't know. But 12 guys with box cutters controlled by a guy in a cave in pipelineistan isn't it either...

Of interest:

ROTHCHILDS CONDUCT "RED SYMPHONY"
THE 20TH CENTURY UNVEILED

By: Henry Makow

Incredible and bizarre as it sounds, humanity is indeed the victim of a diabolical conspiracy.

War, depression and genocide in the past century were not accidental or inevitable but the result of a malevolent design.

Shocking evidence is a 1938 Stalinist police (NKVD) interrogation of a founder of the Communist International, Christian G. Rakovsky, 65, who was facing the firing squad for plotting to overthrow Stalin.

The 50-page transcript of his interrogation, dubbed "The Red Symphony," was not meant to become public. It confirms that the Rothschild-Illuminati planned to use Communism to establish a world dictatorship of the super rich.

This is perhaps the most explosive political document in modern history. It reveals why the Illuminati created Hitler and then sought to destroy him, and why Stalin made a pact with Hitler in 1939.

Christian Rakovsky was a veteran Communist insider. Born Chaim Rakeover in 1873, he studied medicine in France before becoming a revolutionary. He was the leader of a terror group that attacked government officials.

In 1919, Lenin put him in charge of the Soviet Ukraine government. He successfully kept the area for the Bolsheviks during the Civil War. Stalin appointed him Russian ambassador to Paris in 1925,

Rakovsky belonged to the powerful Trotskyite faction that took their orders from the Rothschilds. Many of this group were shot in Stalin's 1937 Communist Party purge.

MIDNIGHT INTERROGATION

Thus the circumstances of the midnight interrogation Jan. 26, 1938 were very dramatic.

What could Rakovsky say that would save his life?

Rakovsky appears to use the tactic of "deceiving with the truth." He wins trust by revealing the truth but leaves some of it out. He tries to impress Kus'min that he and Trotsky represent an invincible power he calls the "Capitalist-Communist Financial International."

He confirms that the "revolutionary movement" was designed to enlist support by pretending to serve mankind's moral and collective ideals. The real aim, however, is to divide society, undermine established authority and create totalitarian rule.

"Revolution" really means, "overturning" Western civilization.

"Christianity is our only real enemy since all the political and economic phenomena of the bourgeois states are only its consequences," Rakovsky says. (Griffin, p. 264)

Peace is "counter-revolutionary" since it is war that paves the way for revolution.

Rakovsky refers to the Illuminati as "they" or "them." He claims he does not know them but I suspect he does.

He explains that the "Illuminati" is a Masonic secret society dedicated to Communism. Significantly, its founder Adam Weishaupt took the name from "the second anti-Christian conspiracy of that era, gnosticism." (249)

HOW THIS GRIPPING ACCOUNT SURFACED

The interrogator was one of Stalin's cleverest agents, Gavriil Kus'min known as "Gabriel."

Apart from him and a hidden sound technician, a doctor Jose Landowsky was the only other person present.

Conscripted by the NKVD to help "loosen the tongues of detainees," Dr. Landowsky was sickened by the many tortures he witnessed.

The interrogation of Rakovsky, however, was cordial. Dr. Landowsky doubts if the mild euphoric he put in Rakovsky's drink had much effect.

The interrogation, conducted in French lasted from midnight until 7 a.m. After, Kus'min ordered Landowsky to translate the interview into Russian and make two copies.

The content was so mind boggling that Landowsky made an additional carbon for himself. "I am not sorry that I had the courage for this," he wrote. (279) (The Bolsheviks had shot Landowsky's father, a Tsarist colonel, during the 1917 revolution.)

A Spanish volunteer later found the manuscript on Landowsky's dead body in a hut on the Petrograd front during World War Two. He took it back to Spain where it was published as "Sinfonia en Rojo Mayo." in 1949.

A person with the nickname "Yamaguchi" has posted the first half of "Red Symphony" on the Internet.

The whole transcript was published in English in 1968 as "The Red Symphony: X-Ray of Revolution." You can find it in Des Griffin's "Fourth Reich of the Rich." (1988) I recommend this book.

REVELATIONS

Rakovsky gives his interrogator an astonishing inside view of modern history in order to prove that his sponsors control the world.

"Money is the basis of power," Rakovsky says, and the Rothschilds manufacture it thanks to the banking system.

The "Revolutionary Movement" was an attempt by Meyer Rothschild and his allies to protect and extend this monopoly by establishing a New World Order using the "revolutionary movement."

According to Rakovsky, "The Rothschilds were not the treasurers, but the chiefs of that first secret Communism...Marx and the highest chiefs of the First International ... were controlled by Baron Lionel Rothschild, [1808-1878] whose revolutionary portrait was done by Disraeli the English Premier, who was also his creature, and has been left to us [in Disraeli's novel 'Coningsby.']" (250)

Lionel's son Nathaniel (1840-1915) needed to overthrow the Christian Romanoff Dynasty. Through his agents Jacob Schiff and the Warburg brothers, he financed the Japanese side in the Russo Japanese War, and an unsuccessful insurrection in Moscow in 1905. Then he instigated the First World War, and financed the 1917 Bolshevik Revolution. Rakovsky says he was personally involved in the transfer the funds in Stockholm. (251-252)

The Jewish labour movement or "bund" was Rothschild's instrument. The Bund's "secret faction" infiltrated all the socialist parties in Russia and provided the leadership for the Russian Revolution. Alexander Kerensky, the Menshevik Prime Minister was a secret member. (253)

Leon Trotsky was supposed to become the leader of the USSR. Trotsky, a Jew, married the daughter of one of Rothschild's closest associates, banker Abram Zhivotovsky and became part of the "clan."

Unfortunately "national" Communists like Lenin (one-quarter Jewish) got in the way. Lenin overruled Trotsky and made peace with Germany (Treaty of Brest Litovsk, 1918.) This was not the Rothschild's plan.

World War One was supposed to end the way the Second World War did. Russia was supposed to overrun Germany in 1918 and assist local "revolutionaries" in establishing a "peoples' republic."

Trotsky was responsible for an attempt to assassinate Lenin in 1918 but Lenin survived. When Lenin had a stroke in 1922, Trotsky had Levin, Lenin's Jewish doctor finish him off.

At this critical moment, the unexpected happened. Trotsky got sick and Stalin was able to take power. In the crisis, the Trotskyites pretended to support Stalin and infiltrate his regime.

Radowsky characterizes Stalin as a "bonapartist," a nationalist as opposed to an International Communist like Trotsky.

"He is a killer of the revolution, he does not serve it, but makes use of its service; he represents the most ancient Russian imperialism, just as Napoleon identified himself with the Gauls..." (257)

CONTAINING STALIN

In order to control Stalin, international finance was forced to build up Hitler and the Nazi party. Radowsky confirms that Jewish financiers backed the Nazis although Hitler was not aware of this.

"The ambassador Warburg presented himself under a false name and Hitler did not even guess his race... he also lied regarding whose representative he was... Our aim was to provoke a war and Hitler was war...[the Nazis] received...millions of dollars sent to it from Wall Street, and millions of Marks from German financiers through Schacht; [providing] the upkeep of the S.A and the S.S. and also the financing of the elections..." (259-260)

Unfortunately for the bankers, Hitler also proved intractable. He started to print his own money!

"He took over for himself the privilege of manufacturing money and not only physical moneys, but also financial ones; he took over the untouched machinery of falsification and put it to work for the benefit of the state... Are you capable of imagining what would have come ...if it had infected a number of other states and brought about the creation of a period of autarchy [absolute rule, replacing that of the bankers]. If you can, then imagine its counterrevolutionary functions..." (263)

Hitler had become a bigger threat than Stalin, who had not meddled with money. Rakovsky's present mission was to convince Stalin to make a pact with Hitler and turn Hitler's aggression against the West. The purpose was for Germany and the Western nations to exhaust each other in battle.

Rakovsky urged the Russians to use the tactic of "deceiving with the truth." The Russians were to impress Hitler with their genuine desire for peace. Hitler was not to suspect that he was being set up for a war on two fronts.

Stalin was given a choice. If he agreed to divide Poland with Hitler, the West would declare war on only one aggressor, Germany. If he refused, the bankers would allow Hitler to depose him.

Kus'min demanded some high level confirmation. Rakovsky told him to see Joseph Davies, the US ambassador in Moscow, a fellow Freemason and representative of the International Communist Roosevelt administration.

Someone was sent to Davies who confirmed that "much would be gained" if Rakovsky got an amnesty. On March 2, 1938 a powerful radio message was sent to Moscow in the cipher of its London embassy.

"Amnesty or the Nazi danger will increase," it said." Davies attended Rakovsky's trial and gave him a Masonic greeting. On the same day, March 12 1938, Hitler marched into Austria.

Rakovsky's death sentence was commuted. Some believe he lived out his years under an assumed name. Another source has him shot in 1941.

Secret negotiations were begun with Hitler. The result was the Ribbentrop-Molotov pact signed in August 1939 just one week before the invasion of Poland.

The interrogation seems to have created an accord between Stalin and the Illuminati.

RUSSIA STRUGGLES IN ROTHSCHILD CLUTCH

Europe and the United States long ago succumbed to Rothschild Illuminati control. In Russia, there are still some death spasms.

Recently, Vladimir Putin arrested Mikhail Khordordovsky, the head of Russia's largest oil company "Yukos" and "the richest man in Russia."

Putin announced that Russia would seize his $12 billion 26% stake in the oil company, one of many national assets plundered in the reorganization of Communism 15 years ago.

Then we learn the shares already had passed to none other than banker Jacob Rothschild under a "previously unknown arrangement" designed for such a circumstance. The two have known each other for years "through their mutual love of the arts."

Rakovsky told Kus'min that the Illuminati never take political or financial positions. They use "intermediaries."

"Bankers and politicians are only men of straw.... even though they occupy high places and appear to be authors of the plans which are carried out..." (248-249)

Obviously Khodordovsky is an "intermediary" for Rothschild. So are Richard Perle, Henry Kissinger and Ariel Sharon who each spoke out against Putin's action. Perle, the architect of the Iraq war, called for the expulsion of Russia from the Group of Eight. Sharon expressed concern about "persecution of Jewish businessmen." Khodordovsky is Jewish as is Simon Kukes his successor. And Perle and Kissinger.

Many Jews serve the Illuminati and that is a cause of anti Semitism. But Tony Blair and George W. Bush serve it too and are not Jewish. The membership of the Bilderbergers and the Skull and Bones is mostly not Jewish. The Illuminati is an alliance between the Rothschilds, and the world's super rich united by Freemasonry, whose God is Lucifer.

Mankind, God's magnificent experiment, has been subverted and compromised. From the U.S. soldier in Iraq, to the taxpayer who pays the national debt, we are all "men of straw."

http://www.etherzone.com/2003/mako111003.shtml

Double whammy in stock fraud case

Short sellers trash, then sue, Santa Clara tech firm


There was something curious about the securities fraud case against Terayon Communications Co.

Shareholders sued the Santa Clara firm on April 13, 2000, one day after Terayon stock plummeted more than 25 percent. But the 58-page complaint was much too detailed for a last-minute lawsuit. It was certified for filing a full day before the stock's precipitous fall.

And the shareholders leading the San Francisco class-action included a fund run by Dallas investor Edward "Rusty" Rose III.

The political world knows Rose as George Bush's pal: A guest at Camp David, a prolific campaign-fund raiser and, with the president, a former managing partner of the Texas Rangers baseball team.

But in corporate boardrooms, he was "the Mortician," a tight-lipped, whip- smart financier who earned millions finding over-hyped companies, betting their stock would fall and then driving share prices down.

With Terayon, he was playing both sides of the fence.

As the company recently discovered, Rose and his associates sought profit by bad-mouthing Terayon until its stock dropped. They then sought damages through a shareholder class-action filed because, in essence, the stock had dropped.

At a time of jarring angst among investors made poorer by Enron, Tyco and other 401k-draining scandals, securities-fraud class actions often represent a last, best hope for legal retribution. They are designed to help innocent shareholders get their money back, and Rose's strategy, though not illegal, could seriously undermine that effort, say experts in securities law.

"It's just so blatant," says Professor Lynn Stout of UCLA law school. "They're trying to use the legal process for their own benefit and not for the benefit of fellow shareholders."

Thomas Bilek, an attorney for Rose's firm, sharply disagrees.

"They are honestly looking to do the right thing here," he says, "and see that shareholders get protected."

Attorneys for the shareholder class stress that investors who bet against stocks have been allowed in the past to lead suits on behalf of stockholders, but courts have never addressed the issues raised in this case -- a case that the San Francisco federal judge who presides over it has already called "utterly amazing."

"It disturbs me," declared Judge Marilyn Hall Patel during a hearing in September, "that the people who are going to drive the litigation are in fact the people who are betting on the stock going down."

Like many high-tech companies that roared to paper riches in the 1990s, Terayon's problems began when hype outpaced reality.

The company, founded in 1993 by Israeli brothers Zaki and Shlomo Rakib, designed and sold modems for transmitting data over cable TV lines. By 1999, it was elbowing for advantage in broadband, the high-stakes business of providing flash-quick Internet connections. The company's technology seemed better than the competition, but it had not yet received certification from CableLabs, the industry group that established uniform specifications for cable equipment.

Without CableLabs' blessing, Terayon's prospects were bleak, comparable to the fortunes of Betamax video tape in a VHS world. Survival depended on persuading the public that certification was virtually certain, a difficult task while CableLabs refused to commit.

So the company trod the line between exuding optimism and telling lies, and with its stock holding at about $35 a share in August 1999, investors seemed willing to listen.

But Rusty Rose and his colleagues had heard enough.

Rose, a Dallas native and graduate of Harvard Business School, founded Cardinal Investment Co. in 1974 and quickly gained notoriety as a short seller.

A short seller essentially borrows stock from a broker, sells it, then reimburses the broker with identical stock bought, say, a month later. If the stock has dropped in value over that month, the short seller profits. If not, he loses.

Short sellers typically grease the skids for a stock by knocking the company to journalists, financial analysts and government regulators. Although short sellers often get accused of disseminating false information, they sometimes elicit praise for publicizing wrongdoing and keeping the market honest.

The trick for them is to find an overvalued stock ready to fall, an arcane skill at which Rose grew so adept that he became a major dealmaker and member of Texas' elite. In 1989, when baseball officials needed a business heavyweight to join George W. Bush's bid for the Texas Rangers, they chose Rose.

Even after Bush left the Rangers in 1993, he and Rose remained friends, much to their mutual benefit. According to campaign-finance records, Rose contributed more than $40,000 to Bush's gubernatorial campaigns and raised more than $100,000 for his presidential run. When Bush's daughter Barbara needed a summer job, Rose's daughter Lela, a New York fashion designer, gave her one. When Barbara and her twin sister, Jenna, needed clothes for their father's inauguration, Lela designed their outfits.

Bush has hosted Rose at Camp David and, in 2002, appointed Rose's wife to the National Council on the Arts, which advises the chairman of the National Endowment for the Arts.

In August 1999, though, Rose and his firm were circling Terayon.

NASDAQ, the stock market on which the company traded, would rocket to its peak a mere six months later. Every technology stock, including Terayon, seemed an easy ticket to wealth.

But the financial newsletter Short Alert warned subscribers on Aug. 3 that limited prospects for the cable-modem industry meant Terayon was overvalued -- and ripe for selling short. After further investigation, Cardinal Investment took the advice, initially shorting 5,000 shares through Cardinal Partners, a fund that Cardinal ran.

Over the following month, Cardinal increased its bet against Terayon stock while growing more confidant that "the company was less than perceived," testified Cardinal partner James Traweek in a deposition. Confounding Cardinal's expectations, the stock continued to rise, reaching more than $40 a share on September 7.

The next day, CableLabs announced that Terayon's technology was "very likely (but not certain)" to gain certification if it met certain conditions. Cardinal suspected this lukewarm endorsement might disappoint shareholders and send the stock lower. But after Terayon expressed delight with the news, the share price rose to $43 -- and Cardinal swung into action.

On October 19, for example, Cardinal sent Wall Street Journal reporter Brenda Moore an eight-page memo outlining the "thesis" of Terayon's demise. The memo, later filed in court, included the names and telephone numbers of sources and a glossary of technology terms.

"We look forward to helping you in any and every way possible except going on the record," the cover letter said. "Furthermore we consider all our correspondences with you confidential."

On Dec. 29, the Journal ran an article under the headline, "Has Terayon Inflated the Prospects for Its Cable-Modem Technology?"

Apparently, the market didn't think so. On Dec. 30, Terayon shares reached almost $62, then doubled in price three weeks later.

It was shortly thereafter that the "Game Plan" was born.

On a January 2000 day in Dallas, with Cardinal and its clients facing tens of millions of dollars in potential losses and Rose demanding action, firm analyst Kent McGaughy scratched the words "GAME PLAN" at the top of a legal pad.

"What are the key levers we can pull?" McGaughy wrote before listing CableLabs, the Securities and Exchange Commission, federal prosecutors, financial journalists and others capable of flooding the market with negative information about Terayon.

"Dirt on Zaki, Schlomo, Ray," continued McGaughy, apparently referring to Terayon's top three officers at the time. "Get Rusty (Rose) to brainstorm."

In a deposition last June, McGaughy made light of his notes, saying he was "not exactly sure" what they meant, that he had been "brainstorming, trying to organize my thoughts." But court records show that over the first three months of 2000, as if someone were ticking down the items one by one, the game plan -- ambitious even for short sellers -- played out:

-- Rose and his colleagues made scores of phone calls to CableLabs, suggesting that Terayon had lied about receiving certification, a CableLabs official testified. The organization received so many calls from Cardinal and others that on Feb. 2, it wrote a confidential letter demanding that Terayon "cease and desist" from "making misleading statements." After talking to Terayon, CableLabs acknowledged in a second letter that the statements had been "more a matter of interpretation" than "misleading."

-- On Feb. 9, the day before Terayon says it received the cease-and- desist letter, a Cardinal partner began touting the missive on a Yahoo! message board. Terayon "has been lying all along," the partner wrote under the alias FredScott9. "These guys are going to be punished for their actions . . . by the SEC."

-- On Feb. 11, Cardinal sent the first of at least 10 letters to the SEC and the National Association of Securities Dealers accusing Terayon of "blatantly" lying "in every SEC document it has filed since it went public." The SEC asked Terayon about its public statements but did not pursue the matter further, according to the company's lawyers.

-- On Feb. 15, Cardinal e-mailed its "thesis" on Terayon to Fortune magazine reporter Bethany McLean, later credited with breaking the Enron story.

Thus began a lengthy correspondence about the cease-and-desist letter and Terayon's alleged "outright lies." On March 6, Fortune reported that the company may have overstated its chances for receiving CableLabs approval, and a Cardinal partner highlighted the article during a conference call with financial analysts.

-- In March, Rose sent federal prosecutor Bonnie Jonas Cardinal's letters to the SEC and a copy of the Fortune article, asking her to "keep my name and the name of our firm confidential." Rose had gotten Jonas' name from his daughter, Lela, who had met her at a bar in New York, Rose testified.

On March 9, Terayon's stock peaked at almost $278 a share. The "Game Plan" wasn't working.

Cardinal's financial risk appeared untenable. According to deposition testimony, the firm had sold short 400,000 Terayon shares, exposing it to losses of about $80 million. Rose alone was on the hook for $25 million. Cardinal was forced to hedge its bets by purchasing 6,000 shares of Terayon stock at almost $269 a share, a $1.6 million investment that might soften the blow if the share price continued to rise.

"It was," testified former Cardinal partner Robert Alpert, "a stressful period."

The final showdown with Terayon came late in the afternoon of April 11, during a conference call the company held to tell financial analysts what its quarterly earning would be

Among the cries of "great quarter" and other fawning comments rose the harshly critical voices of Joe Blow and other short sellers using phony names. One grilled Terayon about the Feb. 2 cease-and-desist letter from CableLabs, accusing executives of dumping stock while keeping the letter secret, a charge that Terayon denied. Cardinal's McGaughy, using the alias Paul Williams, accused Terayon of maintaining an overly cozy relationship with CableLabs.

That same day, Shlomo Birnbaum, the owner of 10 Terayon shares, signed a sworn statement authorizing the filing of a legal complaint that repeated almost verbatim the accusations contained in Cardinal's letters to the SEC. The complaint tied the negative news from the conference call to "an immediate decline in the price of Terayon stock," an event that would not occur until the following day.

On April 12, 2000, Terayon stock did drop, from almost $163 a share to under $120. It is unclear whether the decline occurred because of the conference call - or because the overall stock market plummeted that day, with the NASDAQ Composite Index suffering the second-largest point loss in its history.

In any event, Terayon investors sued the company on April 13 for securities fraud. Cardinal joined them the next day as a lead plaintiff, claiming that Terayon had duped it into paying too much for the 6,000 shares it had purchased as a hedge. In its sworn statement accompanying the complaint,

Cardinal never mentioned the hundreds of thousands of shares that it and its affiliates had sold short.

More than a year later, it appeared that Terayon might win vindication: CableLabs announced on August 31, 2001, that the next version of modem specifications would include Terayon's technology.

But in an order dated March 29, 2002, Judge Patel refused to dismiss the class-action complaint. She accepted the shareholders' preliminary showing that at least several of Terayon's statements about getting CableLabs' certification were misleading at the time they were made.

It would take another year for Terayon to discover what Cardinal had been up to, but on Aug. 4, 2003, the company asked Judge Patel to disqualify the firm as a lead party representing the interests of other shareholders.

Terayon's lawyers told Patel that as a short seller "who tried to drive down the price of Terayon stock," Cardinal had "conflicts of interest with the other members of the plaintiff class, who bought Terayon stock hoping that its price would increase."

In response, Cardinal accused Terayon and its executives of trying "to distract the court from their own culpability for securities fraud."

On Sept. 8, during a hearing on Terayon's request, Patel sounded receptive to the company's arguments, noting that Cardinal's partners "were doing just about everything they could to make sure the (stock) price went down."

But her sharpest comments concerned the puzzling events that led to Cardinal's lawsuit.

"I think it's utterly amazing," she told the opposing attorneys, "that we have this lengthy complaint, and with all of these excruciating details, and the stock just drops the day before."

It "raises some very serious questions."

Patel has yet to issue a ruling, but Bilek says Cardinal is just "trying to prevent this massive fraud" and isn't looking for trouble.

"Cardinal is more than willing to step down at any time," he said, "if the judge feels like it is not doing a good job."



--------------------------------------------------------------------------------
Short selling
A short seller essentially borrows stock from a broker, sells it, then reimburses the broker with identical stock bought at a later time. Here's a simple example of how it works.

You research a company and think the share price will drop so you decide to short 100 shares trading at $100 a share.

You borrow those shares from your broker for a month. You sell the shares for $10,000.

The share price can go down , or it can go up. No matter. You owe your broker 100 shares.

The share price falls to $50. You place an order with your broker for 100 shares, paying $5,000. You own these shares and use them to repay your broker for the borrowed shares.

That leaves you with a profit of $5,000 excluding commissions. What if the share price soars to $150? You still must return the shares you borrowed. However, buying 100 shares at $150 means that when you return the borrowed shares to your broker you have lost $5,000 plus commissions.

Thus if the stock drops in value over the month, the short seller profits.

If not, he loses.

That is why institutional short sellers typically try to drive down the value of a stock by knocking the company to journalists, financial analysts and government regulators.

Chronicle staff reports

Source: Yahoo! Finance; Fool.com



--------------------------------------------------------------------------------
As Terayon stock rises, Cardinal tries to talk it down
1999Aug. 3, $35.19: Financial newsletter warns that Terayon is overvalued. Cardinal later sells short 5,000 shares.Sept. 8, $40.88: CableLabs announces that Terayon's technology "very likely (but not certain)" to gain certification. Oct. 19, $40.38: Cardinal sends memo knocking Terayon to Wall Street Journal.Dec. 29, $62.37: Wall Street Journal runs article critical of Terayon.

2000Feb. 2, $113.37: Responding to calls from Cardinal and others, CableLabs tells Terayon to "cease and desist" misrepresentations.Feb. 9, $151.50: Cardinal partner begins slamming Terayon on Yahoo! message board.Feb. 11, $156.87: Cardinal sends first letter criticizing Terayon to SEC.Feb. 15, $141.50: Cardinal emails "thesis" to Fortune magazine.March 6, $229.94: Fortune runs story critical of Terayon.March 9, $277.62: Terayon stock peaks.April 11, $162.75: Terayon harshly criticized during conference callwith analysts. Legal complaint certified.April 12, $119.75: Terayon stock drops 26 percent.April 13, $118.62: Terayon sued for securities fraud.May 8, $61.56 (adjusted for split): Terayon stock split, 2 to 1.

E-mail Reynolds Holding at rholding@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2003/11/09/MNGO92TRV71.DTL

Who's No. 2? Toyota Outsells Ford
Monday November 10, 12:25 pm ET


DETROIT (Reuters) - For the first time, Toyota Motor Corp. (Tokyo:7203.T - News) gained the title of world's second-largest automaker in the third quarter, as it outsold Ford Motor Co. (NYSE:F - News) by 166,000 vehicles.
While Ford still holds the year-to-date sales lead by a slim margin, its forecast of lower fourth-quarter production might make it possible for Toyota to claim the title for all of 2003.

According to data from Toyota's financial results, it sold 1,576,000 vehicles worldwide in the third quarter, while Ford sold 1,410,000. Toyota's sales include its Hino and Daihatsu units, while Ford's sales include its foreign luxury brands -- Volvo, Jaguar, Land Rover and Aston Martin.

For the first nine months of 2003, Ford still ranks as the world's second-largest automaker--behind General Motors Corp. (NYSE:GM - News) --with a lead of about 28,000 vehicles, with 4,844,000 sold to Toyota's 4,818,000.

The third quarter is typically the weakest for U.S. automakers, as they shut down factories for vacations and new-model changeovers. But Ford's third-quarter global sales were down 15 percent, due to sluggish sales in Europe, the elimination of slow-selling models in the United States and the lack of new products --all problems Toyota has not had.

Through October, Toyota was the top-selling passenger car brand in the United States, with sales up 5.4 percent. The Ford brand, which held the title for many years, was down 7.6 percent over the same period.

While Ford has not projected sales for all of 2003, it has estimated its fourth-quarter production would fall 26,000 vehicles to 1.545 million.

Ford spokesmen did not immediately return calls seeking comment. The changes were first reported by trade magazine Automotive News on Monday.

http://biz.yahoo.com/rb/031110/autos_toyota_ford_1.html

Enron's Legacy: Losses for Utilities
Monday November 10, 1:26 pm ET

[Ken lay off playing golf...good thing it's Amerika, they don't put up with this kind of thing in Russia.]


NEW YORK (Reuters) - Power companies Reliant Resources Inc. (NYSE:RRI - News), and El Paso Corp. (NYSE:EP - News) on Monday posted hefty quarterly losses that were worse than year-ago results, hurt by a raft of restructuring costs and asset impairments.


The two Houston-based companies recorded losses as they continued to struggle with credit problems prompted by the collapse nearly two years ago of energy trader Enron Corp. (Other OTC:ENRNQ.PK - News)

A third power company, Westar Energy Inc. (NYSE:WR - News) of Topeka, Kansas, also posted a loss, compared with a year-ago profit, hurt by a big investment writedown.

Reliant Resources reported a loss of $916.3 million, or $3.11 per share, due to a nearly $1 billion write-down in its wholesale energy business. It also took a $37 million charge to settle allegations it tried to manipulate the energy market in California.

Excluding those items, however, Reliant had a profit of $218 million, or 74 cents a share, exceeding by 33 cents the average forecast of analysts polled by Reuters Research, a unit of Reuters Group Plc.

The strong third-quarter operating earnings, and a reaffirmation of 2003 earnings forecasts, boosted Reliant's stock by as much as 10 percent on the New York Stock Exchange (News - Websites) , making it one of the largest percentage gainers.

El Paso posted a quarterly loss of $146 million, or 24 cents a share, compared with a loss of $69 million, or 12 cents a share, as it struggles to raise cash and lower debt.

Results for the most recent quarter included restructuring costs, the impairment of assets and equity investments and discontinued operations.

EL PASO PRODUCTION SLOWS

Analysts were concerned about El Paso's slowing production business, which reported a 42 percent drop in earnings to $103 million, and the successful drilling of only one out of five deep-shelf wells.

"That's a big issue and the falloff in production is pretty dramatic," said Gordon Howald, an analyst at Credit Lyonnais Securities. "It doesn't give me a tremendous amount of comfort for what they can achieve in that business in 2004."

Westar, the largest electric utility in Kansas, reported a third-quarter loss after taking a big write-down on its investment in security services provider Protection One Inc. (NYSE:POI - News).

The company, which has been under pressure from regulators to restructure, posted a net loss of $81.3 million, or $1.12 per share, compared with a profit of $43.3 million, or 61 cents per share, a year earlier.

Excluding special items, the company posted earnings per share of 84 cents.

Westar is trying to sell money-losing Protection One. It said it currently expects the sale to reduce its debt by $500 million to $650 million.

Westar's critics have charged that the company's investment activities, particularly its Protection One stake, threaten its ability to serve power customers.

Shares of Reliant were up 45 cents at $5.68 Monday afternoon, after hitting a high of $5.73 earlier. El Paso shares fell 2 cents to $7.18 and Westar's stock fell 37 cents to $19.98.

http://biz.yahoo.com/rb/031110/utilities_earns_1.html

Well done:

http://www.themeatrix.com


http://www.themeatrix.com/action/


Which is why sloofy shouldn't eat too much "fast food."

Outrage Building in Mutual Fund Scandal

RACHEL BECK
Associated Press

NEW YORK - It was bad enough that mutual funds, the good guys of the investment world, got dragged into trading shenanigans. It's an absolute outrage that so many people knew about it and did nothing.

That's right, about 10 percent of mutual fund employees supposedly knew their customers were illegally trading.

That's right, some 30,000 letters were allegedly sent to Prudential Securities about its brokers' bad behavior.

That's right, the Securities and Exchange Commission got tipped off but took no action.

This scandal was so rampant and so widespread that it touched almost every corner of the business. But no one seemed to care.

Allegations of unfair practices and profiteering haven't stopped since New York Attorney General Eliot Spitzer announced his initial investigation in late summer. Now dozens of fund companies and brokerage firms are tangled in this mess, which has left a big stain on the whole industry.

But the wrongdoing taking place at these firms has been long in the making.

As Spitzer told Congress this week, the problems in the mutual fund industry are so pervasive that it is more than a matter of excising a few "bad apples" from the industry.

"It's beginning to appear that the entire crate is rotten," he said. "The problems are structural, they are systemic."

Preliminary data in a survey released this week by the SEC suggests that employees at about 10 percent of the fund companies knew some customers were violating the rules against "late trading" - an illegal practice of accepting buy and sell orders at the 4 p.m. price well after the market closes.

Half of the 88 largest mutual funds surveyed had arrangements that allowed select customers to use "market timing," which is short-term, "in and out" trading of funds that are intended to be longer-term investments. While market timing is largely legal, many funds prohibit it.

The SEC also examined records at 34 brokerage firms and found that almost 30 percent had assisted clients in performing market-timing trades and almost 70 percent were aware of customers who had tried to do it.

So hundreds, possibly even thousands of fund-company and brokerage employees knew about all this, yet most didn't come forward to put a stop to it.

Some say it simply has to do with greed.

"It's an attitude among employees. They think if the results are good, it doesn't matter how you got there," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. "For this and the other corporate scandals to continue on, it took a lot of people at the lower levels to say nothing about the wrongdoing."

And those that did speak up often weren't heard.

Authorities allege that Prudential Securities received as many as 30,000 warning letters from at least 68 mutual-fund companies trying to halt rampant market timing in their funds, but no appropriate action was taken.

According to recent news reports, an employee of big fund company Putnam Investments who was seeking to expose abuses at the firm was brushed off by attorneys in the Boston SEC office earlier this year. He had to go to Massachusetts securities regulators to be listened to.

On Monday, Juan Marcelino, the head of the SEC's Boston office, announced he was leaving "to minimize any further distractions for his staff."

"These were practices that so many people knew about, but where was the SEC?" asked Steve Thel, professor of securities law at Fordham University and former SEC lawyer. "Why wasn't anyone's antenna up?"

Investors can thank attorneys general in New York and Massachusetts for doing what so many others didn't, or wouldn't: They took tips from whistleblowers seriously and dug into all the questionable trading.

Without them, this would have continued to be a big secret - one that lots of people shared but no one did anything about.

---

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

http://www.miami.com/mld/miamiherald/business/7208560.htm?template=contentModules/printstory.jsp

Someone in Washington has a lot of explaining to do!

Believe me when I say that this was a weapon of staggering power, with an awesome shock wave to match. First the shock wave had to burst up through the 24” reinforced concrete floor of the lobby, then retain enough power to continue upwards and punch and even bigger hole through the 12” reinforced concrete lobby roof. Even after doing all of that work, the shock wave was still travelling fast enough to trash all of the reinforced laminated windows in the 25-floor condominium building next door to the hotel.

Within hours the Australian Federal Police were on the scene, reporting that the bomb was made of the same puny materials alleged to have killed more than 200 people in Bali on 12 October 2002. So there we were again, with Australian “experts” claiming that pathetically slow potassium chlorate detergent had just behaved like a sophisticated American bunker-busting micro nuke. Obviously puny potassium chlorate can do no such thing, and those who want a detailed description of this low explosive should click on the “Bali Bomb” link at the bottom of this page.

Most dangerous for the American Administration are rational and verifiable claims that the US Embassy and others in Indonesia had advance knowledge of the explosion, and took avoidance measures. Sky News has a man in Jakarta who interviewed hotel senior management, then reported, “Hotel bosses said staff and guests had been evacuated before the blast, which happened during the busy lunch hour”. Though they managed to evacuate the hotel and main areas, there was no time for the restaurant, where many of the fatalities occurred. This claim has been verified by Indonesian television, but was not even mentioned by the western corporate media. Why not?

http://www.joevialls.co.uk/transpositions/marriott.html