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Fliers to Be Rated for Risk Level
New System Will Scrutinize Each Passenger, Assign Color Code
By Sara Kehaulani Goo
Washington Post Staff Writer
Tuesday, September 9, 2003; Page A01
In the most aggressive -- and, some say, invasive -- step yet to protect air travelers, the federal government and the airlines will phase in a computer system next year to measure the risk posed by every passenger on every flight in the United States.
The new Transportation Security Administration system seeks to probe deeper into each passenger's identity than is currently possible, comparing personal information against criminal records and intelligence information. Passengers will be assigned a color code -- green, yellow or red -- based in part on their city of departure, destination, traveling companions and date of ticket purchase.
Most people will be coded green and sail through. But up to 8 percent of passengers who board the nation's 26,000 daily flights will be coded "yellow" and will undergo additional screening at the checkpoint, according to people familiar with the program. An estimated 1 to 2 percent will be labeled "red" and will be prohibited from boarding. These passengers also will face police questioning and may be arrested.
The system "will provide protections for the flying public," said TSA spokesman Brian Turmail. "Not only should we keep passengers from sitting next to a terrorist, we should keep them from sitting next to wanted ax murderers."
The new system, called Computer Assisted Passenger Pre-screening System II (CAPPS II), has sparked so much controversy among both liberal and conservative groups that the TSA has struggled to get it going. Delta Air Lines backed out of a testing program with the agency earlier this year, and now the TSA will not reveal which airlines will participate when it tests a prototype early next year. If all goes as planned, the TSA will begin the new computer screening of some passengers as early as next summer and eventually it will be used for all domestic travelers.
"This system is going to be replete with errors," said Barry Steinhardt, director of the American Civil Liberties Union's technology and liberty program. "You could be falsely arrested. You could be delayed. You could lose your ability to travel."
In the two years since the Sept. 11, 2001, terrorist hijackings, air security has taken a high priority, and the government has spent $9 billion on improvements. Thousands of explosives-detection machines now scan checked luggage at airports across the nation. A new force of federal airport screeners staffs checkpoints, though next year some airports may revert to private screeners. Cockpit doors have been reinforced, and hundreds of airline pilots now carry guns. In addition, the force of undercover air marshals has been expanded, and as many as 5,000 federal immigration and customs agents will be trained to bolster the force on a temporary basis when the government perceives a heightened threat.
Still, many holes in security persist. Airports and aircraft still appear easy to penetrate, illustrated last month by an accidental landing of several boaters on the airfield at John F. Kennedy International Airport. Air cargo remains vulnerable, as virtually none of the items stowed alongside luggage in the aircraft hold are screened for explosives. Government officials continue to assess how best to respond to the possibility of a shoulder-fired missile attack at a commercial airliner, which they maintain is a serious threat.
In the coming months, major airports in Los Angeles, Seattle, Denver and Dallas will embark on extensive construction projects to build explosives-detection machines into conveyor-belt systems that sort checked luggage being loaded onto planes. (Other airports, including Washington's, are waiting in line for hundreds of millions of dollars in government funding.)
Clearly, the TSA says, the job of protecting the nation's skies is not done.
"Given the dynamic nature of the threat we deal with, it would be impossible to predict when the work would be finished" on air security, said TSA spokesman Robert Johnson. "We don't think it will ever end."
The government says the most significant change in security is still to come in the form of CAPPS II. The current computer screener program was developed by U.S. airlines in the mid-1990s in response to government and public pressure to improve air security after terrorists blew up Pan Am Flight 103 over Lockerbie, Scotland.
The existing system identifies certain passengers as risky based on a set of assumptions about how terrorists travel. For instance, passengers are flagged for additional screening if they bought a one-way airline ticket, or if they paid with cash instead of a credit card. Passengers who present a threat under these and other criteria are issued boarding passes that bear a coding of "SSS" or "***."
But the TSA, recognizing that the system is outdated and easy to fool, wants to replace it and put the government in the role now played by the airlines in making security assessments.
Under the new program, the airline will send information about everyone who books a flight to the TSA, including full name, home address, home telephone number, date of birth and travel itinerary. If the computer system identifies a threat, the TSA will notify federal or local law enforcement authorities. The agency has not indicated the number or type of personnel needed to oversee the program.
The TSA will check each passenger in two steps. The first will match the passenger's name and information against databases of private companies that collect information on people for commercial reasons, such as their shopping habits. This process will generate a numerical score that will indicate the likelihood that the passenger is who he says he is. Passengers will not be informed of their color code or their numerical score. The second step matches passenger information against government intelligence combined with local and state outstanding warrants for violent felonies.
Airlines like the system because they think it will reduce time passengers spend at security checkpoints and lower the likelihood that they will be delayed for their flights. The TSA said the program is expected to flag fewer people than the current computer screening system. The agency intends to test the program in several phases to ensure that it works as promised.
"If it delivers the way it's envisioned, it's going to be a significant, positive change," the TSA's Johnson said. "It's going to be a lot fewer people [flagged], but we think it will be the right people."
David A. Keene, chairman of the American Conservative Union, worries that the computer screening program will go beyond its original goals. "This system is not designed just to get potential terrorists," Keene said. "It's a law enforcement tool. The wider the net you cast, the more people you bring in."
As the government takes a new, large role in one aspect of screening, it is rolling back its presence in another. By late 2004, some airports are expected to replace the federal screening force with private screeners. A security law passed after the terrorist attacks allows airports to "opt out" of the government's federal screening workforce in November 2004. Many airports, frustrated with the staffing cuts and the inability to control the number of screeners at each station, believe they might have more control over the operations if a private company were in charge.
"I've been in various meetings with many airport managers who are saying, 'We don't want as much government control around,' " said James McNeil, chief executive of McNeil Technologies Inc., which provides security screeners at the airport in Rochester, N.Y., one of five test airports that employ private screeners. McNeil said he has talked to 20 to 30 airports that are interested in his services. A large association of the nation's airports estimates that many small airports will opt out of government screeners next year because their limited flight schedules require that screeners work flexible hours. The government will still have a role in security because the private screening companies will operate under contracts managed by the TSA.
If many airports, particularly large hubs that handle a major portion of the nation's 30,000 daily flights, choose to revert to the private screening force, some aviation industry leaders have wondered what that will mean for the TSA.
The agency, created just months after the terrorist attacks, has already seen some of its authority stripped. The Federal Air Marshal Service has moved to a law enforcement division within the Department of Homeland Security, as has the agency's explosives unit. Some of its security directors claim they are still out of the loop on some of the agency's latest intelligence on air security.
Johnson, the TSA spokesman, hinted that the agency's future is unclear.
"We've got a department-level organization now created for that sole purpose [of fighting terrorism] and it only makes sense, where necessary, to economize and coordinate," Johnson said. "There will always be a need to provide the best aviation security possible at airports. Whether it's under one flag or another, it really makes no difference."
© 2003 The Washington Post Company
http://www.washingtonpost.com/ac2/wp-dyn/A45434-2003Sep8?language=printer
Gold I said: Gold Rises on Speculation of Increased Demand as Stocks Fall
Sept. 9 (Bloomberg) -- Gold futures in New York rose close to a seven-year high, topping $383 an ounce, on speculation of increased demand from investors seeking an alternative to the stock market.
Gold has risen 10 percent this year, benefiting from lower stock prices and a drop in the dollar, which makes the precious metal cheaper for buyers using euros and yen. The Standard & Poor's 500 stock index fell 0.8 percent, the second decline in three sessions.
``People are a little skeptical about stocks after the rally we've seen this year,'' said Michael Spano, an independent trader in New York who manages a portfolio that includes about $19 million in gold futures. ``People are taking gold for what it is, which is a safe investment.''
Gold for December delivery rose $7.20, or 1.9 percent, to $383.40 an ounce at 10:33 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the highest for a most-active contract since November 1996.
The rally accelerated after prices rose above $379.90, the six-year closing high on Feb. 4, triggering buying by commodity funds that use historical price patterns to make investment decisions, said Carlos Perez-Santalla, president of Hudson River Futures in New York.
Gold may reach $400 within the next month, Spano said.
The euro advanced 0.4 percent against the dollar, while the yen was 0.3 percent higher, making dollar-priced gold cheaper for buyers using those currencies.
Commodity Rally
Commodities from copper to cotton have gained this year as investors anticipated a recovery in the world economy will spur demand for raw materials. Gold is often seen by investors as a haven from accelerating inflation that can accompany economic growth.
``There is a new constituency of buyers, funds and investors in the New York market who haven't been seen before,'' said Kelvin Williams, marketing director at Johannesburg-based AngloGold Ltd., the world's second-biggest gold producer. It's a ``view by them on the economy. It's not only gold. It's platinum, zinc, nickel -- the buying has been across a broad spread of commodities and particularly enthusiastically into gold.''
Some speculators have been buying commodities such as gold, platinum and nickel on expectations that they will benefit from increasing demand in an economic recovery.
Hedge funds and other speculators raised their gold holdings to 122,847 contracts in the week ended Sept. 2 from 100,227 contracts the previous week. That's their largest number of contracts since at least February 1983.
Mining Stocks Rally
The Philadelphia Gold and Silver Index, which tracks the shares of 12 mining companies, rose 2.73, or 2.9 percent, to 96.09. Denver-based Newmont Mining Corp., the world's largest gold producer, rose $1.27 to $40.17, after touching $40.41, the highest price since October 1997.
Contributing to gold's gains were legal proceedings in which a rare-coin deal alleged bullion prices were being held artificially low, Perez-Santalla said.
Barrick Gold Corp. and J.P. Morgan Chase & Co. will face a U.S. trial over allegations by rare coin dealer Blanchard & Co. that they manipulated the price of gold. Judge Helen Berrigan of the Eastern District of Louisiana denied a request by Barrick, the world's third-largest gold producer, and J.P. Morgan, the second-largest U.S. bank by assets, for a summary judgment in the case, Blanchard said in a statement on Business Wire.
Last Updated: September 9, 2003 10:48 EDT
http://quote.bloomberg.com/apps/news?pid=10000087&sid=acXU_rKgQm9k&refer=top_world_news
Fed 'strike force' targeting tax reformers?
Activists say teams of IRS agents in 'campaign to silence' them
Posted: September 12, 2003
1:00 a.m. Eastern
By Jon Dougherty
© 2003 WorldNetDaily.com
"Tax honesty" activists say they are being targeted for reprisals by "strike force" teams comprised of Internal Revenue Service agents and Department of Justice officials for attempting to force the federal government to answer key questions about the legality of the income tax.
Bob Schulz, founder of the tax-reform group We the People, says the teams, "with the assistance of federal judges, [have] been actively engaged in a coordinated, nationwide campaign to silence all people who have been openly asking the government to answer tough questions about the origin, authority, and operation of the income tax system."
Bob Schulz
The formation of the teams was first broached during Senate Finance Committee hearings April 5. Those hearings, chaired by Sen. Charles Grassley, R-Iowa, examined groups and individuals who some lawmakers alleged were defrauding taxpayers with "schemes, scams and cons."
According to a transcript of those hearings, the strike-force concept was discussed between attorney and San Francisco Examiner columnist Robert L. Sommers and Sen. Max Baucus, D-Mont. Editor's note: You must have Adobe Acrobat to open and view this .pdf file.
At Baucus' request, Sommers explained the teams would consist of "maybe 10 people" and include computer programmers and attorneys. Their goal would be to search the Internet daily for "new tax scams" and, when found, move quickly to get the site shut down, either voluntarily or through court action.
"… You have to understand, these people get into the system and clog it up," Sommers said. "They get the IRS agents, the examiners. They sit there and they frustrate them."
The IRS says the Constitution and Congress give it the authority to collect income taxes. Besides reams of tax law, the 16th Amendment granted Congress the "power to lay and collect taxes on incomes. …" Many activists, however, question the validity of the amendment's ratification, as well as its scope.
One American who has already been targeted is Irwin Schiff, a popular figure in the tax-reform movement. Fifteen armed IRS agents raided his Las Vegas anti-tax business in February, carting off documents and boxes of records.
Irwin Schiff
In June, the U.S. District Court for the District of Nevada ordered Schiff, as well as business associates Cynthia Neun and Larry Cohen, to stop "engaging in … fraudulent or deceptive conduct" relating to Schiff's business, which was advising people they did not owe income taxes. Editor's note: You must have Adobe Acrobat to open and view this .pdf file.
"He has written more books on the subject of the income tax than any other American, selling over 500,000 copies," says information on Schiff's website. "Hundreds of thousands (if not millions) of Americans no longer pay income taxes because of the information contained in his books."
The 35-page court order, dated June 16, says Schiff and his associates were "promoting through consulting services, websites and tax-scam packages the filing of 'zero-income' federal tax returns … directing customers to inundate the IRS, federal courts and the Department of Justice with frivolous lawsuits and IRS hearings."
"The complaint alleges that defendants recruit customers to the zero-income tax return scheme by falsely stating income earned by individuals is not subject to federal income-tax laws," said the order.
The government accused Schiff of "promoting abusive tax shelters, aiding and abetting understatement of tax liability, preparing any part of a return or claim for refund that includes an unrealistic position," and other violations of federal tax law.
Though Schiff's website is still in operation, the court ordered him to post its ruling on his site – a suggestion made to the Senate Finance Committee by Sommers.
"I … think anything dealing with that site, any injunctions, anything else needs to be right on that website as well …," Sommers testified before the panel.
Joseph Banister, a former IRS special agent, says his former employer is "non-responsive, unable to withstand scrutiny, tyrannical, and oblivious to the rule of law and the U.S. Constitution."
"I had taken this job thinking I'd be wearing the white hat, and I slowly found out I was not wearing the white hat," Banister said in a 1999 interview with WorldNetDaily. "So something had to change."
He has questioned whether paying income tax is mandatory, whether the 16th Amendment was properly ratified, and whether income taxes pay for government or interest on the national debt.
So has Schulz, Schiff and a host of other tax reformers. The IRS says it has addressed the issues, but critics say the agency has dismissed such questions as "frivolous," and that it hasn't really answered them.
In fact, Schulz first came to national prominence in July 2001 in a dramatic attempt to get such questions answered. He began what became a three-week hunger strike to have those and other questions answered, stopping only when IRS and Justice Department officials agreed to attend a forum sponsored by his organization – an agreement from which the government ultimately reneged.
Others have also tried to get answers from the government. During the April hearings, one witness – Bethesda, Md.-based financial planner and insurance analyst J. J. MacNab – asked senators why the government didn't simply answer the questions posed by the tax reformers.
"They have concerns and they truly believe they have a right to address them," she said during testimony. "They have asked on numerous opportunities for the IRS to review their materials and tell them they were wrong. Let the IRS do that. If they are trying so hard to get attention, give it to them."
But the panel moved on. MacNab's request was ignored.
Schulz did not indicate he was being targeted by a so-called strike force, but one thing is clear: His group is readying a lawsuit against the federal government, charging the income tax is unconstitutional. After being shunned, he's going forward with both barrels.
Another thing is equally clear: The IRS has it in for anyone promoting the view that Americans don't owe income taxes.
"No matter how some things are sliced, they're still baloney," the agency says in a warning to consumers about "tax scams." "Remember that if it sounds too good to be true, it probably is."
Related stories:
Woman triumphs over IRS in tax case
Activist: 'Stop paying federal income taxes'
National sales tax gains momentum
Group plans 'fair tax' convention
'Truth in Taxation' forum ends in D.C.
Congressman cancels tax forum
Tax group urges Americans: 'Wait to file'
Tax hearings rescheduled for next year
Tax reform hearings postponed
Activists refute IRS claims
IRS bashes 'frivolous tax arguments'
IRS special agent challenges system
http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=34553
Comment from WRH:
For years tax reformers have asked the US Government to verify that the 16th Amendment, on which the personal income tax is based, was properly and legally ratified as required in the Constitution. Doubts about the ratification are based not only on several provable cases of misreporting of state legislature results but on the fact that Secretary of State Philander Knox avoided using the word "ratified" in his letter to Congress, choosing instead to declare the 16th Amendment "in effect".
The official response to a request to verify the ratification by showing the required number of bills of ratification by the necessary states has been met with silence, then abuse and ridicule, and even a law making questioning of the 16th Amendment before a tax court punishable with a fine.
Doubts about the legality of the current tax system was bolstered by a recent court case in which jury acquitted the defendant because the US Attorney had failed to actually prove to the taxpayer that there was a law requiring the filing of tax returns and the payment of an income tax on wages. Now we see where goon squads are being deployed to silence tax reformers. Clearly, if the tax laws were on the up and up, it would be cheaper, faster, and politically advisable to simply document the laws and their constitutionality to the public, which government is required to do for all of its actions at all times. That the government is pursuing this "alternative" approach to the asking of questions suggests that they have something to hide yet again.
Bush resignation hailed by world leaders
Text of too-good-to-be-true address to the nation
[Washington] The surprise resignation of the forty-third President of the United States, George W. Bush, on the second anniversary of the terrorist attack on America, was hailed by chiefs of state throughout the world. Mr. Bush announced that after "two years of bloodshed, economic devastation, and spreading fear in America and abroad," he saw no choice but to accept that, "I have held a title which I did not win, and for which I have proven unqualified."
The text of the former President's September 11 address to the nation follows:
"My fellow Americans:
I come to you tonight with a heavy heart. Two years ago today, thousands of innocent Americans were murdered by terrorist maniacs.
In the script I've been handed, I'm now supposed to tell you that America is safer today, and that the world is kinder and nicer and happier, because of I'm such a brilliant general in the War on Terror.
But who are we kidding? Yesterday, Osama released his new hit video. The terrorists are having a picnic ever since I turned over our foreign policy to Saudi Arabia and Exxon-Mobil.
And here's the point in my speech where my handlers would have me tell you about how I've been praying hard, making it sound like I just got off the phone with the Lord. I don't know about you, but I find it pretty darn offensive, downright blasphemous, to drag the Lord's name into every cheap campaign speech and chest-pounding war threat. Osama says he talks to God too. Let's leave Him out of the politics from now on, OK?
Look, in my speech this past Sunday, I used the word "democracy" about 11 times when talking about Iraq. It's democracy Florida-style, I suppose. Except we're not fixing the vote this time... we aren't letting these people vote at all. "Iraqis aren't prepared for democracy." That's what Dick Cheney and Saddam Hussein told me.
So we're blowing 100 billion bucks we don't have to colonize a country we don't want. Rummy tries to explain it to me each morning -- oil this and oil that -- but I just don't see it. And one of our kids dying there every day -- where are their parents, anyway? My dad didn't let that happen -- he got me out of the service. Didn't I look neat in that fly-boy suit?
And, let me tell you, I just looked at our nation's piggy bank. Uh-oh.
When I arrived, the last guy left me $4 trillion and said, "Be careful with all that cash in this neighborhood." Well, I have to level with you, America: it's all gone. The cupboard's bare and this year alone we blew half a trillion more dollars than we have in our bank account. Man, I can't believe I went through all that dough stone sober.
And what did we get for it? A Fatherland Security Department that's trying to read the labels on everyone's underpants. Think about it, all this Total Information Awareness KGB stuff: two years ago Americans were the victims - but my government has made Americans the suspects. I don't know about you, but this guy Ashcroft scares the bejeezus out of me.
And today I'm told that over nine million Americans are out of work. That's not so bad: I haven't done much work in my lifetime either. But my mama explained to me that not everyone's daddy can lend them an oil well to tide them over.
It's like I can't get anything right. The lights are going out in Ohio and the North Pole is melting. I don't get it. I appointed all those regulators that Ken Lay told me to, and I got rid of all the rules that got in the way of patriotic Polluter-Americans... and what's the upshot? America the Beautiful is looking like she's had a pretty rough night. Won't be long before the whole country smells like Houston.
And now the stock market's floating face down in the swimming pool -- despite everything I've done for those guys on Wall Street. Even my plan to give every millionaire an extra million seems to have backfired. Greenspam says I've created "business risk." Says I spook investors. But when I asked Greenspam for a solution, all he did was hand me a bag of pretzels.
Hey, I can take a hint. OK, I'm over my head on this one. I look back over these last years, and what have I got to show you for it: two years of bloodshed, economic devastation, and spreading fear in America and abroad.
When I ran for this office, I said the issue was, "character." And just look at the characters around me. I've gotten all their resignations today. And while I've got some character left, here's my own good-bye note too. Let's face it: I have held a title which I did not win, and for which I have proven unqualified. You know it. And I know it.
It's at this point in the speech where I'm supposed to say, "And may God bless America." God better, because Dick Cheney won't. Don't panic: I'm not turning over this sacred office to Mr. Contracts-R-Us.
Instead, I've petitioned the United States Supreme Court to pick a President for us. Those guys picked the last one, why not the next one?
And so, my fellow Americans, you can take this job and..."
Here, Mr. Bush's words became unintelligible. As usual. Greg Palast is author of the New York Times bestseller, The Best Democracy Money Can Buy.
http://www.workingforchange.com/article.cfm?ItemID=15623
MI: Possible Armed Standoff in the Making
By The Sierra Times
Alanson, MI - "I've had enough. I'm going to fight!" Charlevoix County Businessman, Lyle Barkley, has been ordered to remove two manufactured homes from a 4-acre parcel in Bay Township by September 18. Barkley says he will not comply with the illegal and unconstitutional order of the court but will defend his property with arms if necessary. Barkley, 55, owns B&B Excavating in Boyne City. He is presently bulldozing fortifications around his property in preparation for the standoff he promises will come if officials attempt to remove the homes from his land.
His cause has drawn the attention of Rick Stanley, leader of an organization called Mutual Defense Pact 2d American Revolution Militia who offers to send more than 600 armed defenders to Barkley's aid once the standoff has begun.
Barkley contacted Norm Olson, a well-know Michigan Militia figure for help up until Stanley's organization arrives. Olson has urged citizens throughout Michigan to become aware of what is taking place and to speak out in an attempt to forestall or stop armed conflict. "Lyle Barkley is unlikely to run. He's preparing to defend. I admire his spirit," Olson said in a news release Thursday, but added, "This situation stinks of crooked politics, corruption, and favors. Barkley was given permission. He acted accorded to the permits, and then, when his homes were on the property, the permits were withdrawn and the homes 'red-tagged.' Something about this isn't right."
Background: Lyle Barkley received authorization to place two 12x60 manufactured homes (mobile homes) on 4 acres in Bay Township. Permits were granted by the County. Once on the property, Barley began a building project to join the two homes via an enclosed walkway. It was then that former township supervisor, "Bud" Chipman filed a complaint to stop further construction and have the homes removed. (Chipman was recalled from his position. Reason unknown).
County Court Judge May found in favor of Chipman's complaint and issued an order to Barkley to remove the homes by September 18th.
Barkley's decision: To bulldoze revetments and redoubts for defenders.
More as this develops...
http://www.sierratimes.com/03/09/12/article_mi_standoff.htm
Long & completely worth it:
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Richard Daughty
The Mogambo Guru
The Daily Reckoning
Sep 12, 2003
The Treasury continues to issue debt in staggering amounts, and I use the word "staggering" to indicate its effect on me, and as one part of my brain after another shuts down from the shock, I am wandering around the room bumping - ouch! - into things. Finally falling to the floor in a stupor, I feel consciousness slipping away as the blood begins pooling in the abdominal core, and I flash to the movie "2001" where Hal, the evil computer, is being systematically shut down. With a fabulous heroic effort I use the last, lingering bit of purposeful action that I can muster to simultaneously sing, in a voice that is lower and lower and slower and slower, "Daisy, Daisy, give me your answer true" and to use my index finger to shakily write in the dust on the desk, "Since January 2002 the Treasury has issued $900 billion in new debt," hoping that forensic crime-scene people will see that cryptic note and realize that I was not murdered with poison, but instead succumbed to the shock of my own government committing murderous monetary madness. Now, to those of you who are hip to this kind of thing, you will instantly recognize "murderous monetary madness" is not only perfectly descriptive of what the Fed is doing, but is also an alliterative phrase that I use just so that future historians can say, "The guy was a complete moron, but boy, could he alliterate!" But as the world dissolves into inky blackness, I note with horror that I have actually written, "Open the pod bay door, Hal" and realize that I am doomed. I instinctively mouth the word "Rosebud," hoping against hope that switching from "2001" to "Citizen Kane" will prove to be a more memorable last moment.
In the banks, Total Reserves has definitely starting tracking upward, and is now at the highest level since February 1999. Now, there may be many reasons why reserves are increasing, but the traditional reason is that loans are going bad, and they need a bigger cash cushion to keep their statistics from falling into a zone that would indicate to stockholders that there is some problem. Or maybe the banks are loath to make any loans since potential borrowers are less and less credit-worthy, and thus cash is piling up instead of being loaned out. Maybe both. Or maybe something else that goes "bump in the night."
And the hoard of government securities accumulated by the banks has suddenly taken a big drop, too, and is now, suddenly, back to where it was at the beginning of the year. And when I take a look at the open interest on bond futures, I note that they are at surprising lows, which indicates that nobody is making bets that they will want to take ownership of bonds in the near future. And for good reason, I say.
Wynne Godley, from the Levy Economics Institute, wrote a very interesting essay entitled "The US Economy; A Changing Strategic Predicament." Mr. Godley argues that "A new strategic predicament is on the horizon as a result of the exceptionally large and growing balance of payments deficit." He notes that nobody seems to be paying any attention to this problem, including, of course, Alan Greenspan, who has made, and I quote "no reference whatever to the balance of payments. The models embodying the 'New Macroeconomics' which have suddenly become so influential do not even contain a foreign sector nor any representation of stocks of foreign debt which the US is now rapidly accumulating." I will add that neither the models nor Mr. Greenspan's mangled oracular pronouncements contain references to the fact that everybody in the country is up to their ears in debt, either. Or that it takes every penny of disposable income to make the minimum monthly payments on the mountain of debt they already owe.
Mr. Godley deduces that his "default conclusion" is that the US economy will enter a prolonged period of "growth recession." He naturally comes to the obvious conclusion that an imbalance of trade will be ameliorated only when exports start outpacing imports. Well, duh, huh? He includes a chart that shows how the configuration of balances during the nineties was "...quite unlike anything that had happened before." So what happened that caused the imbalances to be unlike anything that had happened before? Us, or we, I am not sure which is correct, idiotic Americans going on a debt-accumulation spree, although he is much more refined in his choice of words, and uses the more professional-sounding phrase, "The expansion of aggregate demand was driven by an unprecedented growth of private expenditure relative to income. By the end of the boom, private expenditure was far in excess of disposable income, an excess made possible by a huge accumulation of debt, both by the personal sector and by corporations."
I will take unusual liberties here, since I don't know any of these guys personally, and so if they come to my house to yell at me up for saying and doing things the Mogambo Way I can easily handle them with my standard excuse, namely "Me no speakee English, him move, me live here now," and I will use my editorial freedom to insert in parentheses my scathing Mogambo-ese interpretation of each phrase. "The Fed has just published a comforting assessment (the Fed is lying through its teeth) of the present financial position of households (greedy morons are up to their collective ears in debt) that emphasizes that, with interest rates so low (the Fed has pounded down interest rates to artificially and grotesquely low levels in a desperate attempt to bail everybody out of the mess that they got into, thanks to the idiots at the Fed who promulgated this mess in the first place with obscene monetary stimulus for over a decade), the burden of debt service is generally quite tolerable (the number of people starving to death in the streets is still pretty low). We have no quarrel with the Fed's assessment of the present position (we leave that to the Mogambo, who seems to take a perverse delight in doing just that thing, almost as much as I seem to delight in referring to myself in the third person), but personal expenditure cannot be financed for ever by a growing flow of net lending - that is by a continuing rise in the rise in debt (only an idiot, a university economist, or a government economist believes that you can keep borrowing more and more money forever).
Mr. Godley asks the question, "Is it conceivable that the private sector will provide the motor for expansion by plunging deeply once again into deficit? This seems improbable if only because of the unusually high level of debt which has already been incurred both by corporations and by the personal sector.
"The argument put forward here is an entirely different one - that the developing balance of payments deficit is going to act as formidable drag on demand. The present hemorrhage from aggregate demand, at 5 per cent of GDP, is already far in excess of anything that has ever been experienced before (in modern times) though this is still being masked by the highly unusual private deficit (implying private expenditure in excess of income) which is likely to go further into reverse.
"So what gives? In my view, the most likely outcome, particularly in the early part of the period under review, is simply that the US economy will not recover properly but rather will enter a long, depressing era of 'growth recession' with increasing unemployment and the ever present risk - with corporate and personal debt so high - of financial implosion."
Financial implosion. Sounds ugly. So how about the current Treasury plan, expounded relentlessly by John Snow, to devalue the dollar so as to ramp up exports? Well, Mr. Godley attacks that suggestion, too. "It seems that surplus countries (e.g. Japan and China) are accumulating mountainous reserves which they have been using to prevent any natural rebalancing process from taking place." This is how they are keeping the dollar artificially strong, so that their own currencies remain weak, so that they can keep exporting cheap stuff to us doofus Americans to buy with our artificially strong dollars, and also perversely lending us the money with which to do it, out of the proceeds of those very sales! "It is unclear what, if any, limits there are to this process. And it is doubtful whether a fall in the dollar, however large, could in practise generate the required (enormous) rise in net exports given that the market is so stagnant."
He sums up with the dolorous assessment, "There would appear to be only one antidote to this predicament; U.S exports must rise faster than imports by very large amounts and for a long period of time." Of course, I immediately leap to my feet to observe that he just said that possibility was, to use his own words, doubtful.
But there are, of course, problems. "It would be madness for the U.S to base its economic strategy on the assumption that it will be hauled out of stagnation by a discontinuous and autonomous expansion in foreign parts. At present, not merely is the rest of the world itself locked into a stagnation, it is looking to the U.S economy to be the motor which will fuel its own growth."
Summing up, he says, "...given present national and international policies... there will be no proper recovery from the recent recession, and that this stagnation will eventually have grave consequences for the rest of the world." Sounds so candidly Austrian, doesn't it?
Speaking of debt, consumer installment debt went up in July at a 4.1% annual rate, as we continue to spend beyond our incomes. The new total outstanding is, and I am writing this out for you so as to perhaps let it make the appropriate impact, one trillion, seven hundred and seventy four billion, four hundred millions of dollars. That comes out to $17,774 for every private-sector worker in America.
I deliberately do not include workers whose paychecks come from a government, as their money has to eventually come from the private sector worker, who will have to end up paying both his own bills and those of the government workers, who are also spending all of their incomes and then some. The difference is that the government workers will agitate to get their government bosses to get them some hefty raises, which will, of course, have to also be paid by the poor private sector workers, who will agitate to get pay raises, but who will then be laid off.
Nelson Hultberg wrote an article on the 321gold website entitled, "Apocalypse This Way Comes." I never met this guy, but he has earned a warm spot in my heart because he quoted what I think is one of the most profound paragraphs in the whole of economics literature, and one that I have quoted so many times that I stopped doing it only because I got embarrassed to keep flogging it. But thanks to Mr. Hultberg, I can present it again, but not as something from me, but from him, so if you have some problems with my endlessly repeating it over and over and over, I say "Hey! Don't come whining to me! Write this Hultberg fella and complain to him. I'm just the messenger here!"
Anyway, the quote is, "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." [Human Action, p. 572.]
Not content to leave it there, although he very well could have as far as I am concerned, Mr. Hultberg flexes his considerable intellectual muscle and characterizes four trends as the Four Horsemen of the Apocalypse. They are, and I quote: "1) Keynesian monetary policy, 2) Demopublican political control, 3) the Pax Americana mindset, and 4) the Kondratieff Cycle."
For those of you who do not recognize the word "Demopublican" it is, at least in the way I use it, a highly pejorative term that indicates that both the Democrat Party, traditionally a clueless and relentlessly socialist and communist-inspired bunch of touchy-feely jackasses who actually believe, against the weight of thousands of years of actual experience, that large and intrusive governments are good for a society and economy, and the Republican Party, who are newcomers to that particular idiocy but rapidly making up for lost time, are now evil twins who are going to destroy the USA with their shared loathsome agenda. Just like it has ruined every other economy where it has been tried. Nowadays, there is very little difference between the two political parties, although, I am sorry to say, the Republicans have a distinct police-state viciousness about them. Ergo, Demopublicans.
But the characterization of these forces as the Four Horsemen of the Apocalypse is appropriate in so many ways, especially as regards the notion that they cannot be stopped. Erudite reader Carol Freinkel wrote me an interesting letter which said almost the exact same thing. Only she referred to the concept of Nemesis, which was the Greek god of retribution. She writes, "The basic concept is that of Nemesis as an implacable force that, once set in motion, cannot be deterred, only (perhaps) delayed. When I look at the charts showing the US budget deficit, trade deficit, debt levels and foreign ownership of debt, I see Nemesis. Forces have been set in motion that will lead to massive changes that will occur whether or not people believe in them, that will have devastating, far-reaching consequences that can no longer be prevented."
So, there you have a whole bunch of things to blame for what is going to happen, which are all pretty much the same thing with different names. "Doctor! Doctor! I'm dying of cancer!" To which the doctor replies, "It is called a malignant carcinoma. You are dying of a malignant carcinoma." To which the patient replies "Gee, thanks! I feel better knowing that!"
Zawya, otherwise known Asia Pulse Pte Ltd as far as I can tell, put out the news that "Generally speaking, Asia is the main market of China's silver export, receiving over 90 per cent of China's total silver export. China's mineral silver output has increased at an average annual rate of 9.5 per cent over the past 10 years to top 2,219 tons in 2002, ranking fifth in the world after Mexico, Peru, Australia and the United States. Generally speaking, Asia is the main market of China's silver export, receiving over 90 per cent of China's total silver export."
Perhaps this has something to do with the recent rise in silver, eh?
The rise in gold, on the other hand, is easily explained: the dollar is rapidly becoming trash, meaning worth little more than the paper on which it is printed, anybody who owns anything denominated in dollars is going to get financially killed, and gold is the only safe place to put money, unless you happen to be one of those fortune tellers who knows what currency and economy will replace the American one.
Bob Wood, one of the local boys around here that manages money and actually spends time doing his job and reading financial publications, instead of acting like me and spending all his time worrying about poor J Lo and Ben and wondering if they again will find love and true happiness, sent me an e-mail about something he read in the Financial Times, since he knows that I am deathly afraid of how the Chinese are going to eat our lunch, which I think about every time I have Chinese food for lunch, which just goes to show you how these things intertwine.
To wit: China is planning to issue dollar and Euro-denominated government bonds. Now this, to me, cowering in my reinforced-steel bunker, is proof positive of how the Chinese are smarter than we are, and that is why they ARE going to eat our lunch.
The plan is simplicity itself. The yuan is currently pegged at 8.3 to the dollar. They issue these dollar-denominated bonds, and get 8.3 yuan for each dollar that somebody invests in these bonds. Then they de-peg the yuan from the dollar. The dollar plunges in value, and now they have a lot of debt where they got 8.3 yuan that they can now literally pay back at pennies on the yuan! Now, personally, I know how it is when people laugh at me in ill-disguised contempt, since I hear it every time I go outside, or venture to the store, or merely open my mouth and say anything at all, and it sounds like "Hahaha!" But I am not sure how it sounds when Chinese people laugh in contempt at anybody so stupid as to buy those bonds, so I will merely write it backward as "Ahahah!"
But until they manage to offload a bunch of this new debt, and thereby saddle some stupid American investors with that toxic junk, then the chances of a revaluation of the yuan is unlikely. Remember, the Chinese sellers of all of this dollar-denominated debt will only prosper with this blatant scheme if they manage to sell the debt BEFORE they devalue.
Plus, the history of the world for the last fifty years is the history of American checkbook diplomacy, and so the Chinese know, as the Palestinians know, as the North Koreans know, everyone knows, that all they have to do is drag their feet and sooner or later Washington will start making some highly lucrative deals with them, otherwise known as raw bribery, where we will simply buy their cooperation. Then they will take the money, renege on the deal, and we will come crawling back and make another, even more lucrative deal, to buy their cooperation again. And again. And again.
Flipping through the channels on TV looking for a Bewitched episode, hopefully starring Serena, Samantha's highly attractive vixen cousin, I happened to alight on a talking-head show interviewing a Democrat who is a California state senator, who shall remain nameless, and who is the poster child for everything that is wrong with politicians in general and Californian politicians in particular. He says things like "We can solve the budget crisis if we sit down and talk." He kept saying it with that aggravating smug sincerity that characterizes politicians, as if problems with money, or anything, can be solved by talking. They can't. They are always CAUSED by talking, almost always by guys like him who talk of nothing but how big their hearts are, and how much they feel everyone's pain, and how they want to help everybody, but they can only be solved by government reducing somebody's income in order to increase somebody else's income.
Let me make this one point extremely clear, and it seems impossible to overemphasize this point, although in typical Mogambo fashion I will happily beat it into the ground for so long, and so loudly, and with so many crude obscenities, that perhaps it WILL be possible to overemphasize this point. But anyway, as a way of providing initial emphasis, I will enclose it in quotation marks, even though it is obviously not a quote, but is merely, as I said, a way of providing an indication of emphasis. "Budget problems can only be solved by reducing somebody's income." And that will always cause other problems, so it seems to be perhaps true that budget deficits cannot be solved at all, ever. And now, thinking about it for a minute, I can't think of a government budget problem that was ever solved, so maybe government budget problems ARE insoluble! Ain't that a kick in the head!
But getting back to the point, there are only two things you can do to address a budget problem. You can cut spending or you can raise taxes. But, and I note for the record, both of them have the exact same end result; somebody's income is cut. If you cut spending, then you directly cut somebody's income. If you raise taxes, then you take money away from somebody, and therefore you, again, reduce somebody's income.
As the genius little economists that you are, I know the reason that you are all waving your hands excitedly in the air, wanting me to call on you so that you can show me how smart you are. You are dying to make the point that raising taxes will, as I said, reduce somebody's income, but it will also increase somebody else's income, namely the recipient of the taxes when the money is spent as part of some government program. So, in the final analysis, one income is cut and one income is increased. And therefore, you say, mathematically it is a wash. And now you are wondering how I am going to get out of this apparent enigma.
Well, I am not, as all of that is true. The only difference is WHERE the money is going. If you spend it on things that you want, then the economy grows along those lines. If the government spends the money, then the economy grows along those lines. Now, all you have to do is figure out which is healthier in the long run.
And for that, all we have to do is trudge forlornly down to the library and look at a few books in the history section. Doing so, we look at the whole of human history, and we will immediately notice that there is no example of a successful economy where the government did all the spending, but that there are lots and lots of examples of successful economies where the people directed the spending of their money. THAT is the big difference. Now I don't know how YOU define "big difference," but for me I mean the difference between blissful economic success where happy people whistled happy tunes and happy puppies cavorted in the happy sun-dappled streets, and abysmal failure where the angry, miserable people spent most of their days praying for an early death, which they perceived would be vast improvement.
As if to add fuel to my fire, a guy named Christopher Mayer wrote an essay on the Mises.org website entitled "Sumner's Forgotten Classic." He starts out the essay with one nice quote from William Graham Sumner, which is "History is only a tiresome repetition of one story." And what is this tiresome repetition? Let's let Mr. Mayer tell us;
"Sumner was referring to the seemingly endless attempts to harness the power of the State to further one's own ends at the expense of other people. The desire to live at the expense of other men is a constant theme that runs through all of human history."
And that means taxing one set of people to give it to another set of people, which is the whole point of the Democrat agenda, who invented this ridiculous idea. And this brings us back to another point which seems to have escaped the Democrats, for whom no pejorative term that impugns their intelligence is too inflammatory, since every time they open their mouths they embarrass themselves with something even more stupid than something they said just ten minutes ago. I will enclose it in quotes to provide that hint of emphasis. "You cannot tax a business, as the business will merely pass along the tax by raising the price of the goods and services that the business produces." In the final analysis, the final customer pays all of the taxes that are levied on businesses, and so the only effect of taxing businesses is to force prices higher, which hurts the customers, who are the taxpayers, and to enable the growth of a bigger and more crippling government through the attendant higher taxation, which also hurts the taxpayers in the end. So taxing businesses is suicidal, in the long run.
And, continuing on in that regard, there is increasing agitation for an increase in the minimum wage, at least around these parts, as I gather from the Letters to the Editor in the paper. The consensus is that wages ought to be at least about, oh, say, a dollar an hour or so higher. This increase in wages will, so the loony Leftists declare, alleviate all the problems of the poor and the not-so-poor but-still-deserving-of-government-help. If only that were true.
So, let's look at it from the side of us money-grubbing capitalist swine who actually own and run the businesses, which we manage to do when we aren't too busy sucking the blood out of the proletariat workers and terrorizing miscellaneous groups of minorities, because you know what kind of people we are if you ever read one of the Leftist newspapers in this country, and those are about the only kind of newspapers and reporters that there are anymore.
But since turnabout is fair play, I will now dishonestly characterize us grasping, rapacious Republican bloodsuckers as pathetic widows and orphans who have investing our last precious few pennies of our meager savings into businesses, so we can hopefully afford an income stream that will provide enough to buy cold gruel and a lump of coal or two to keep from freezing in our drafty little hovels. Now, when the greedy, grubby proletariat workers get government to step in and force us business-owning widows and orphans to pay more money to the workers, they are directly taking money right out of our pockets, and thus taking the meager crust of day-old bread out of our mouths. So, in order to put bread back into our mouths, and the mouths of our pathetic ragamuffin children, we have to raise prices. When we do that, we get some of our money back, and therefore we get some of that missing bread back in our mouths, and the mouths of our children whose screams of starvation are allayed for yet another little while. But not all of it, because we poor pathetic widows and orphans also have to pay the higher prices that OTHER businesses are now charging, since they also had to raise prices to cover their higher payroll costs. And the tax bite is also higher, thanks to the progressivity of the tax tables. So we running-dog capitalist vampires, oops, I mean us widows and orphans, and the nasty, grasping workers, and everybody else, is a net-net loser.
And so I am calling on all the other widows and orphans who own the stock of businesses to rise up and expose the workers as the overpaid gluttons that they are. These shiftless lazy peasants only have to pay the costs of getting to work, and in return they make something like $35,000? My God! These losers say that they want a raise, when already their expenses to get to work run to a few lousy thousands of dollars, maybe $5,000 a year, and that investment yields $35,000? Wow! What a return on investment! We widows and orphans should be so lucky!
Now let's look at it from the perspective of us poor widows and orphans who own the businesses. We have everything on the line, as everything we have in this world is invested in these businesses. And for that gigantic risk we are barely turning a profit, and now the workers want to take even that little bit of money away?
Well, I say it is time that us widows and orphans wise up against the tyranny of the workers! And the first thing we need to do it to recall all the Leftist politicians, a la this whole Gray Davis thing.
Finally, somebody besides me is showing some interest in the huge explosion in people who are being paid by the government. In an article in the 9/4/03 WSJ entitled "Despite Bush's Credo, Government Grows" Oh, not the direct employees, but the legions of people who are contractors and recipients of grants. And we, actually meaning me, have the Brookings Institution to thank for their interest.
Stephen Moore, of the Club For Growth, said "We are now seeing the biggest expansion in government since Lyndon Johnson was in the White House. It is pretty much an across-the-board mushrooming of government."
According to the little chart provided, it appears that the number of contractors is about 42% of actual employees, which already number in the tens of millions.
And since none of the people providing quotes addressed the state's contractors, let me jump up in my highchair, spilling my strained peas and pablum all over the front of my bib that says "I'm a good boy!" and announce that the problem is just as bad, or worse, than the federal problem.
The French and the Germans are leading the charge to allow the EU to violate, again, the Growth and Stability Pact that requires that governments keep their deficits at less than 3% of GDP, which is the same stupid idea that the American and Japanese government are pursuing. They are already running about 4% of GDP, and even that is not enough to suit these guys, probably since we hotshot Americans are running deficits that dwarf that percentage.
It is being called a New Deal-style initiative, which to students of history ought to be enough to cause nightmares. The New Deal that FDR and that whole generation of commie-think socialist pinko creeps crammed down the throats of America lead directly to where we are today.
At least the European Central Bank came out and said they were acting like the bozos that they are. Whew! We here in America could use a little of that caution, but instead we have Alan Greenspan and his loathsome Federal Reserve, who are doing everything that they can think of to make sure that the dollar, America economy and everything we hold near and dear, are destroyed. At least they don't whine about how I never even send them a Christmas card.
Speaking of the French and the EU and their willful disregard of the Growth and Stability Pact, there was an article in Monday's WSJ that froze the blood in horror, at least that is what happened to me. It was entitled "Europe's Central Bank May Have Leader To Match Greenspan." A guy named Jean-Claude Trichet, who is currently the governor of the Bank of France, is scheduled to take over the EU from Wim Duisenberg in November. Getting beyond the renowned communist bent of France, the chilling thrust of the article is made clear by the paragraph, "Mr. Trichet is already a trusted peer of Mr. Greenspan. A strong Greenspan-Trichet partnership could greatly improve policy coordination among the rich nations known as the Group of Seven."
I will not elaborate on this any more, as this is more than enough to know that I will be having nightmares for weeks and weeks. But I am consoled that the horrors that will result from another Alan Greenspan being foisted on the world are in my dreams, because I have gold, which will keep that horror from intruding on my real, waking life. Most others will, because they do not own gold, soon have those horrors in both worlds.
The pension insurance guarantee program hit another new deficit record, hitting $5.7 billion as of July 31. That means that the taxpayer is going to be hit with yet another whack to the head as the government comes up with the money for yet another bailout. It has been said that the fund is already in more deficit than they have ever paid out in the whole history of the guarantee organization. But this is only the beginnings of the bailouts that will be required as we proceed into the future.
Richard Russell, he of the superstar Dow Theory Letters newsletter, has increased his recommended allocation of gold to, and I quote, "at least" a third of assets. His pithy phrase is "The U.S. is inflating its head off and depreciating the dollar's head off."
Ron Paul, the Congressman from Texas who is the only guy in the whole of Congress who understands economics, has written a fabulous piece entitled "Paper Money and Tyranny." Originally published by Agora Publishing, it appears on the Daily Reckoning website and many other fine sites, and if you are able to read it on some other site, then you know you can trust those guys. I strongly recommend that you read it, because you obviously have the time to do so since you have enough time to read my stupid newsletter, learn it, because it will demonstrate that you are an intelligent being, and live it, which will make you wealthy, and which includes always voting for people whose views coincide with it and voting against those whose erroneous views do not. Which translates directly into voting against every dim-witted jackass that is currently infesting Congress and the White House, except Ron Paul. And remember, that's MISTER Ron Paul, as our way of demonstrating profound respect. The rest of the members of the Washington cesspool may be correctly referred to as "Bozos."
The Guardian, a British publication, writes, "The prolonged heat wave has devastated crops across Europe, leaving some countries facing their worst harvests since the end of the second world war." They also dryly note that "Last year was the third time in four years that global wheat, rice and maize production failed to meet demand, forcing governments and food companies to release stocks from storage." As a result, British bakers have warned retailers that wholesale prices will likely rise by up to 15% because of the rising cost of flour.
But, not to worry, because our government will come up with a way to prove that the higher cost of food is not inflationary, but is just your imagination. And so, if the slow-learning British and the other European weenies would only get with the program and have Alan Greenspan and Michael Boskin come over there and show them how it is done, they, too, will be able to show that by simple mathematical wizardry, that they can make the 15% increase in the price of bread disappear completely!
Over here, the success of their program is obvious when you note that you never read anything, anywhere, about the double-digit percentage price increases in damn near everything. "Out of sight, out of mind." It is only when you look into your wallet at the end of the month, and you wonder, "Where in the hell did all the money go?" Ugh.
---Mogambo Sez: The SP500 is nearing a P/E of 34. This is historically even outside of the range normally referred to as "preposterous," and will almost certainly be regarded in the future as the last, dying blow off rally of the ridiculous equity-cult, which is, I am profoundly sorry to say, only one of many bizarre and incestuous cults operating in the USA and the world.
Richard Daughty
Sep 11, 2003
The Mogambo Guru Lives!
http://www.321gold.com/editorials/daughty/daughty091203.html
Report: More Homeowners Late on Mortgage
Wed Sep 10,10:22 PM ET Add Business - AP to My Yahoo!
By JEANNINE AVERSA, Associated Press Writer
WASHINGTON - More homeowners were behind on their mortgage payments in the last quarter as job losses put a strain on some households' budgets.
The seasonally adjusted percentage of mortgage payments 30 or more days past due for all home loans rose to 4.62 percent in the April to June quarter, up sharply from 4.52 percent in the first three months of this year, the Mortgage Bankers Association of America reported Wednesday in its quarterly survey. The survey covers roughly 34 million mortgage loans.
The second quarter's delinquency rate was the highest since the third quarter of 2002, when the delinquency rate was 4.66 percent. The delinquency rate does not include loans that are in the process of foreclosure.
"The delinquency uptick we've seen here is related to unemployment," said Doug Duncan, the association's chief economist. The economy lost 181,000 jobs during the April to June quarter.
Although the nation's unemployment rate fell to 6.1 percent in August, jobs were cut for the seventh month in a row. Even as the economy has displayed signs of rebounding, the job market remains sluggish and is likely to be the last part of the economy to heal, economists said.
The mortgage bankers survey painted a mixed picture of how homeowners are handling their mortgage obligations.
The percentage of mortgages that started the foreclosure process in the second quarter of this year dipped to 0.32 percent from 0.37 percent in the first quarter.
And the share of home loans in the foreclosure process also fell to 1.12 percent in the last quarter, down from a record high of 1.20 percent in the first quarter.
Foreclosures typically lag behind delinquencies, Duncan said. Given the rise in delinquencies in the second quarter, the current July-to-September quarter is likely to see a slight increase in foreclosures, Duncan said. "We'll probably see a little uptick in it," he said.
In the middle of June, rates on benchmark 30-year mortgages slid to 5.21 percent, the lowest level in more than four decades. Since then, mortgage rates have been climbing. That has slowed home-mortgage refinancing but isn't expected to derail home sales, which are on track to set record highs this year, economists say.
http://story.news.yahoo.com/news?tmpl=story&u=/ap/20030911/ap_on_bi_ge/late_mortgages_2
Get silver kids, when (not if) interest rates increase the defaults will increase the housing bubble bursts and the dominoes start falling. This won't be "soon" but will be sooner than some think...the fed will stave it off for a while, possibly several years...AG dies and I bet things go south quick...
30-, 15-Yr Mortgage Rates Drop
Thu Sep 11, 1:35 PM ET Add Business - Reuters to My Yahoo!
WASHINGTON (Reuters) - Average interest rates on U.S. 30- and 15-year fixed-rate mortgages plunged this week after reaching their highest levels in more than a year last week following a report that showed little improvement in the labor market, Freddie Mac said on Thursday.
Thirty-year mortgage rates averaged 6.16 percent in the week ending Sept. 12, down from 6.44 percent a week ago, the highest level since 6.49 percent in the week ended July 19, 2002, Freddie Mac said.
Fifteen-year mortgages also fell in the latest week to an average of 5.46 percent, from 5.77 last week, the highest since 5.84 percent in the Aug. 2, 2002 week.
One-year adjustable rate mortgages followed the downward trend, dropping to an average of 3.87 percent from 3.98 percent last week, according to Freddie Mac.
"The release of the August jobs report showed a continuation of the jobless recovery, which served to stem some of the enthusiasm in the Treasury bond market," Frank Nothaft, Freddie Mac chief economist, said in a statement.
"This, of course, caused interest rates, including mortgage rates, to ease back from the highest level we had seen in a year," he said.
A government report last week showed Americans were having a difficult time finding jobs. The number of workers on payroll outside the farm sector reached 93,000 in August from 49,000 in July. The unemployment rate fell, but only to 6.1 percent from 6.2 percent in the previous month.
Freddie Mac said lenders charged an average of 0.6 percent in fees and points on 30- and 15-year mortgages as well on as the ARM, all unchanged from last week.
A year ago, 30-year mortgages averaged 6.18 percent, 15-year mortgages 5.59 percent and the ARM 4.32 percent.
Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities for investors or holds them in its own portfolio.
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030911/bs_nm/economy_mortgages_dc_1
This never happened either:
WORKERS AT ISRAELI OFFICE RECEIVED ADVANCE NOTICE OF THE 9-11 TERROR ATTACK
SOURCE: HA'ARETZ (ISRAELI NEWSPAPER) ENGLISH LANGUAGE EDITION
THIS STORY WAS ALSO CONFIRMED IN THE WASHINGTON POST
www.haaretzdaily.com/hasen/pages/ShArt.jhtml?itemNo=77744&contrassID=/has%5C
ODIGO SAYS WORKERS WERE WARNED OF ATTACK
By Yuval Dror
Odigo, the instant messaging service, says that two of its workers received messages two hours before the Twin Towers attack on September 11 predicting the attack would happen, and the company has been cooperating with Israeli and American law enforcement, including the FBI, in trying to find the original sender of the message predicting the attack.
Micha Macover, CEO of the company, said the two workers received the messages and immediately after the attack informed the company's management, which immediately contacted Israeli security services, which brought in the FBI. "I have no idea why the message was sent to these two workers, who don't know the sender. .......And I don't know if our information was useful in any of the arrests the FBI has made," said Macover. Odigo is a U.S.-based company whose headquarters are in New York, with offices in Herzliya.
Lucky Joo's
Governor Jim Gilmore today announced that Zim-American Israeli Shipping Co., Inc. has officially opened its United States headquarters in Norfolk’s Lake Wright Executive Park. Zim-American Israeli Shipping Co. announced in April that it would invest $6.2 million to locate in the new building and would hire 235 people to work in this facility. The firm completed its move to Norfolk from New York City’s World Trade Center two weeks before the September 11th terrorist attacks.
http://yesvirginia.org/news/news.aspx?newsid=377
Clue.
Bush's 'perfect storm'
Robert Novak (archive)
September 11, 2003
WASHINGTON -- Sen. Jim Bunning of Kentucky, the only senator in the Baseball Hall of Fame, is as tough and aggressive a politician as he was a pitcher. He showed it last week during a closed-door session of Republican senators with Pentagon officials. "What the hell is going on with this supplemental (appropriations bill)?" Bunning demanded. The normally articulate Deputy Defense Secretary Paul Wolfowitz had no reply.
Bunning was joined by Sens. Jeff Sessions of Alabama, James Inhofe of Oklahoma and Jon Kyl of Arizona in complaining about lack of information on how much Iraq is going to cost. The senatorial attitude was not improved Sunday night when President Bush requested an additional $87 billion, well above what had been hinted. What's politically significant is that these four Republicans are hard-core conservatives and Bush loyalists who believe they have been misled by the Pentagon.
Amid such complaints, Republicans on Capitol Hill were stunned last Saturday when the Zogby Poll reported that Bush's national approve-disapprove ratio has slipped into negative territory for the first time (with only 45 percent saying he is doing a good job). That couples with continued job losses across the country and the rising cost of Iraq, in blood and treasure. On top of that, GOP senators are depressed that Democrats are winning the judicial confirmation war. A worried freshman Sen. Lindsey Graham of South Carolina puts all this together and calls it "the perfect storm" (adding that Republicans should handle each issue "quickly and decisively, and hope that Democrats overplay their hand").
In nearly half a century of Congress-watching, I frequently have observed senators of a president's own party head for the lifeboats when any storm -- perfect or not -- approaches. Today's Senate Republicans have not reached that point, but fear and anxiety among them is palpable.
Most of the danger is directed at the Defense Department's management of the Iraqi reconstruction. Senate Foreign Relations Committee Chairman Richard Lugar, who has an excellent relationship with the president, is described by friends as feeling the Pentagon misled him. The committee's second ranking Republican, Sen. Chuck Hagel, feels even more strongly about it. So does Sen. John McCain, who had buried the hatchet with George W. Bush to vigorously support the Iraqi intervention.
Defense Secretary Donald Rumsfeld has become the scapegoat for all that has gone wrong in Iraq and is paying the price for disdaining from establishing good relations with U.S. senators for more than two and one-half years. Those senators get an earful about Rumsfeld from the uniformed military, whose criticism in private echoes what retired Marine Gen. Anthony Zinni has declared publicly. The unconfirmed rumor mill from the Pentagon to the Senate has Rumsfeld leaving early next year.
The jobless recovery has bothered the Republican senators much more since getting home and talking to their constituents last month. That was shown at their first luncheon last week, when Chief Deputy Whip Robert Bennett gave one of his regular reports on the economy. He was optimistic about revival of the stock market.
That did not please Sen. George Voinovich, who has been elected statewide in Ohio four times and is up for re-election there next year. Characteristically blunt, Voinovich told Bennett: "I don't give a damn about the stock market. But I do care about jobs." Voinovich's reluctance to support the president's tax cuts may make suspect his negativism, but the same concern about jobs is shared by the big majority of GOP senators who were enthusiastic about the Bush tax program.
Nobody is suggesting that George W. Bush is duplicating his father's nonchalance after the Gulf War in sliding to defeat against Bill Clinton. Nor do they have specific policy advice beyond playing straight with Congress on how much the war against terrorism will cost (though they blame Rumsfeld for the lack of transparency).
Bush political adviser Karl Rove always has predicted a close presidential election for 2004, just as he did for 2000. Republican senators now realize Rove was not kidding, and they no longer laugh at Howard Dean challenging Bush for the presidency. Pollster John Zogby calls this a 50-50 country and Bush a 50-50 presidency. Given those odds, arrogance and deception are too great a burden at either the White House or Pentagon.
©2003 Creators Syndicate, Inc.
http://www.townhall.com/columnists/robertnovak/rn20030911.shtml
Vote To Re-elect Bush? Well... No Thanks
Voters are less and less interested in re-electing President Bush. Check out these recent figures. The Zogby poll has just 40 percent saying he deserves re-election and 52 percent saying it's time for someone new -- a 12 point deficit for Bush, 9 points worse than he fared in mid-August. In the Ipsos/Cook Political Report poll, only 38 percent are willing to say they would definitely vote to re-elect Bush, while 36 percent would definitely vote for someone else and 24 percent would consider someone else. And, in the latest CNN/Time poll, a shockingly low 29 percent say they would definitely vote for Bush in '04, compared to 41 percent who say they would definitely vote against him (25 percent might vote for or against).
Significantly, in the latter poll, independents -- a rough proxy for swing voters -- are notably more negative about Bush than the public as a whole. More independents disapprove of Bush's job performance (49 percent) than approve (45 percent). By 48 percent to 42 percent, independents believe Bush has done more to divide than unite the country. By 55 percent to 39 percent, these voters do not believe the phrase "compassionate conservative" describes Bush. And twice as many independents say they definitely plan to vote against Bush (44 percent) than say they definitely plan to vote for him (22 percent). Wow.
Why are voters losing enthusiasm for the president who, not so long ago, seemed politically invincible? It's pretty simple. They think the economy is doing badly, the situation in Iraq is deteriorating and the country overall is going in the wrong direction. Given this, American voters' pragmatism (go with what works; reject what doesn't) is now leading them away from Bush and making them less willing to cut him slack, simply because he performed well right after 9/11.
Take the direction of the country. The latest Democracy Corps poll has only 36 percent of likely voters saying the country is going in the right direction, while 54 percent say it is off on the wrong track (59 percent of independents). That 18-point gap between right direction and wrong track is triple the gap observed by the Democracy Corps in late July.
Take the economy. It should come as no surprise people are dissatisfied, given the most recent Labor Department jobs report that showed the economy shedding 93,000 jobs in August, 437,000 short of the administration's own projections for the month. The economy has lost 2.7 million jobs since Bush took office, 600,000 since the beginning of the year and 225,000 since the Bush's latest tax cut package was passed in late May. (The basic facts are in the invaluable JobWatch feature from the Economic Policy Institute, which Public Opinion Watch highly recommends.)
No wonder that 55 percent now say they want to go in a different direction on the economy, compared to 39 percent who want to continue in Bush's direction. And no wonder that voters now favor the Democrats over the Republicans on the economy by a healthy 15 points.
Take the situation in Iraq and national security. On Iraq specifically, opinion is clearly shifting against Bush. In the ABC News poll, Bush's approval rating on Iraq has sunk to 49 percent (with 47 percent disapproval), down 7 points since August 24. By almost 20 points (57 percent to 38 percent), the public now believes the number of casualties in Iraq is unacceptable, given the goals versus the costs of the war. And by 48 to 40 percent, the public now says the long-term risk of terrorism to the United States will increase as a result of the Iraq war. That's a stark contrast to mid-April, when people believed by 2:1 that the war would decrease the long-term risk of terrorism.
While Bush still retains a significant advantage on general national security concerns, even that advantage is eroding rapidly, according to the Democracy Corps poll. For example, the Republicans famously had a 40 point advantage over the Democrats in November 2002 on the issue of keeping America strong. That's largely why they did so well in the '02 election. But now that advantage has more than cut in half, down to 16 points. Intriguingly, this is exactly the same Republican advantage registered by a Democracy Corps poll right before 9/11.
And when it comes to foreign policy, the Democrats have not only made gains, they are approaching parity. The Republican advantage over the Democrats on foreign policy is now only 6 points and it is dead even between continuing in Bush's direction on foreign policy or going in a significantly different direction. It is also about even between continuing in Bush's direction on foreign policy or going in a different direction on respect for the United States in the world and close to even (4 point Bush advantage) on relations with countries around the world. And on the specific issue of Iraq, where Bush's policies once commanded such high support, there is now a large group of Americans (41 percent) who would prefer to go in a different direction, rather than stay the course with Bush.
Of course, the Democrats still have much work to do in the national security area to make their critique stick (for example, by 30 points, voters say they want to continue in Bush's direction on fully funding homeland security, despite the well-documented fact that this area has been dramatically underfunded by the administration). In this regard, the Democracy Corps memo, "Passing the National Security Threshhold", has much useful advice for Democrats. But Public Opinion Watch has said for a long time that if the Democrats could cut the GOP's advantage on national security in half and open up a substantial lead on the economy, they had an excellent chance of knocking off Bush in '04. Well, we're there.
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Harris Interactive poll of 1,003 adults for Time/CNN, released September 5, 2003
Greenberg Quinlan Rosner poll 1,004 likely voters for Democracy Corps, released September 5, 2003
Ipsos/Cook Political Report poll of 766 registered voters, released September 5, 2003
Zogby poll of 1,013 likely voters, released September 6, 2003
TNS Intersearch poll of 1,004 adults for ABC News, released September 8, 2003
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GOP Targets Hispanics
The Cummings article describes the GOP's efforts to moderate its image so as to appeal to groups suspicious of the party, particularly Hispanics. But just how likely are Hispanics to be won over by these appeals? The latest evidence we have on this question is from a CBS/The New York Times poll, conducted in mid-to-late July that included a large Hispanic oversample to facilitate comparison of Hispanics with the overall population and various subgroups.
The poll shows that, on almost every important indicator, Hispanics are more, and frequently much more, anti-Republican and pro-Democratic than the overall population. And they are especially pro-Democratic when compared to whites.
Here are some figures from the poll. Bush's approval rating among Hispanics is 52 percent. That compares to 54 percent among the overall population and about 59 to 60 percent among non-Hispanic whites (Public Opinion Watch's estimate on whites; bizarrely, The Times supplies data for Hispanics, non-Hispanic blacks and all non-Hispanics, but not non-Hispanic whites, so data from this group must be inferred from the other data given). Moreover, Bush's favorability rating among Hispanics is only 37 percent, compared to 46 percent for all adults and 52 to 53 percent among whites and just 21 percent of Hispanics are willing to say, at this point, that they would probably vote to re-elect Bush.
And what is the Democratic party's favorability rating among Hispanics? A rather healthy 60 percent, with just 22 percent unfavorable; the Republican party gets an anemic 40 percent favorability rating, with 39 percent unfavorable. In addition, Hispanics' partisanship is 2:1 Democratic and, by 49 percent to 21 percent, Hispanics think Democrats are more likely to care about the needs of Hispanics. Hispanics also favor Democrats by 30 points on creating new jobs, by 24 points on education, by 23 points on ensuring a strong economy and by 22 points on sharing their moral values.
Underscoring their proclivity for Democrats, Hispanics also say, by an incredible 75 percent to 16 percent margin -- by almost 60 points! -- that they would rather have a bigger government providing more services than a smaller government providing fewer services. The public as a whole favor smaller government by 48 percent to 40 percent.
Finally, Hispanics aren't even that supportive of the war with Iraq, contrary to various anecdotal reports in the press. By 49 percent to 40 percent, Hispanics do not think removing Saddam from power was worth the loss of American life and other costs; that compares to 54 percent to 39 percent among the general public who do think that removing Saddam was worth the costs.
Conclusion: the GOP can target Hispanics, but, based on these and other data, they are unlikely to succeed anytime soon.
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Bush Watchword: Tolerance
by Jeanne Cummings
The Wall Street Journal, September 3, 2003
http://www.tompaine.com/feature2.cfm/ID/8840
Shadia Drury gets to the bottom of neoconservatism.
There is a growing awareness that a reclusive German émigré philosopher is the inspiration behind the reigning neoconservative ideology of the Republican Party. Leo Strauss has long been a cult figure within the North American academy. And even though he had a profound antipathy to both liberalism and democracy, his disciples have gone to great lengths to conceal the fact. And for the most part they have succeeded -- as the article by James Atlas in The New York Times and the article by Seymour Hersh in The New Yorker indicate. This picture of Strauss as the great American patriot, who was a lover of freedom and democracy is pure fabrication. Nothing could be further from the truth.
The trouble with the Straussians is that they are compulsive liars. But it is not altogether their fault. Strauss was very pre-occupied with secrecy because he was convinced that the truth is too harsh for any society to bear; and that the truth-bearers are likely to be persecuted by society - specially a liberal society - because liberal democracy is about as far as one can get from the truth as Strauss understood it.
Strauss's disciples have inherited a superiority complex as well as a persecution complex. They are convinced that they are the superior few who know the truth and are entitled to rule. But they are afraid to speak the truth openly, lest they are persecuted by the vulgar many who do not wish to be ruled by them. This explains why they are eager to misrepresent the nature of Strauss's thought. They are afraid to reveal that Strauss was a critic of liberalism and democracy, lest he be regarded as an enemy of America. So, they wrap him in the American flag and pretend that he is a champion of liberal democracy for political reasons - their own quest for power. The result is that they run roughshod over truth as well as democracy.
It should however be pointed out that being a critic of liberalism or democracy or both does not make one automatically an enemy of America. On the contrary, freedom and democracy can only be strengthened by intellectually confronting their critics. Strauss has no special antipathy for America. He is the enemy of liberty in general. It was for love of America that he wished to save her from her disastrous love affair with liberty, as I will explain.
Strauss's preoccupation with secrecy was no doubt connected to the fact that he did not feel at home in America. He realised how much his ideas were at odds with America's liberal modernity. He felt that in America, everything that does not fit the mould, everything that does not conform to public opinion, was ostracised. In a letter to a friend, Strauss complained that the academic atmosphere in America was oppressive, and that it was very difficult to publish. As a man forced to emigrate from his native Germany, learn a new language by watching television, and forced to conduct his scholarly life in this newly acquired language, Strauss must be the subject of our sympathy. But Strauss's American disciples continue to complain that they are oppressed, beleaguered, and ostracised by the liberal academy, and the equally liberal media. But surely, these are crocodile tears.
The Straussians are the most powerful, the most organised, and the best-funded scholars in Canada and the United States. They are the unequalled masters of right-wing think tanks, foundations, and corporate funding. And now they have the ear of the powerful in the White House. Nothing could have pleased Strauss more; for he believed that intellectuals have an important role to play in politics. It was not prudent for them to rule directly because the masses are inclined to distrust them; but they should certainly not pass up the opportunity to whisper in the ears of the powerful. So, what are they whispering? What did Strauss teach them? What is the impact of the Straussian philosophy on the powerful neoconservatives? And what is neoconservatism anyway?
Strauss is not as obscure or as esoteric as his admirers pretend. There are certain incontestable themes in his work. The most fundamental theme is the distinction between the ancients and the moderns - a distinction that informs all his work. According to Strauss, ancient philosophers (such as Plato) were wise and wily, but modern philosophers (such as Locke and other liberals) were foolish and vulgar. The wise ancients thought that the unwashed masses were not fit for either truth or liberty; and giving them these sublime treasures was like throwing pearls before swine. Accordingly, they believed that society needs an elite of philosophers or intellectuals to manufacture "noble lies" for the consumption of the masses. Not surprisingly, the ancients had no use for democracy. Plato balked at the democratic idea that any Donald, Dick, or George was equally fit to rule.
In contrast to the ancients, the moderns were the foolish lovers of truth and liberty; they believed in the natural rights to life, liberty, and the pursuit of happiness. They believed that human beings were born free and could be legitimately ruled only by their own consent.
The ancients denied that there is any natural right to liberty. Human beings are born neither free nor equal. The natural human condition is not one of freedom, but of subordination. And in Strauss's estimation, they were right in thinking that there is only one natural right - the right of the superior to rule over the inferior - the master over the slave, the husband over the wife, and the wise few over the vulgar many. As to the pursuit of happiness - what could the vulgar do with happiness except drink, gamble, and fornicate?
Praising the wisdom of the ancients and condemning the folly of the moderns was the whole point of Strauss's most famous book, Natural Right and History. The cover of the book sports the American Declaration of Independence. But the book is a celebration of nature - not the natural rights of man (as the appearance of the book would lead one to believe), but the natural order of domination and subordination.
In his book On Tyranny, Strauss referred to the right of the superior to rule as "the tyrannical teaching" of the ancients which must be kept secret. But what is the reason for secrecy? Strauss tells us that the tyrannical teaching must be kept secret for two reasons - to spare the people's feelings and to protect the elite from possible reprisals. After all, the people are not likely to be favourably disposed to the fact that they are intended for subordination.
But why should anyone object to the idea that in theory the good and wise should rule? The real answer lies in the nature of the rule of the wise as understood by Strauss.
It meant tyranny is the literal sense, which is to say, rule in the absence of law, or rule by those who were above the law. Of course, Strauss believed that the wise would not abuse their power. On the contrary, they would give the people just what was commensurate with their needs and capacities. But what exactly is that? Certainly, giving them freedom, happiness, and prosperity is not the point. In Strauss's estimation, that would turn them into animals. The goal of the wise is to ennoble the vulgar. But what could possibly ennoble the vulgar? Only weeping, worshipping, and sacrificing could ennoble the masses. Religion and war - perpetual war - would lift the masses from the animality of bourgeois consumption and the pre-occupation with "creature comforts." Instead of personal happiness, they would live their lives in perpetual sacrifice to God and the nation.
Irving Kristol, a devoted follower of Strauss and father of neoconservatism, was delighted with the popularity of the film Rambo. He thought it was an indication that the people still love war; and that means that it will not be too difficult to lure them away from the animalistic pleasures that liberal society offers. There is a strong asceticism at the heart of the atheistic philosophy of Leo Strauss that explains why those with religious inclinations are attracted to it.
Strauss loved America enough to try to save her from the errors and terrors of Europe. He was convinced that the liberal democracy of the Weimar Republic led to the rise of the Nazis. That is a debatable matter. But Strauss did not openly debate this issue or provide arguments for his position in his writings. I am inclined to think that it is Strauss's ideas, and not liberal ideas, that invite the kinds of abuses he wished to avoid. It behoves us to remember that Hitler had the utmost contempt for parliamentary democracy. He was impatient with debate and dispute, on the grounds that they were a waste of time for the great genius who knew instinctively the right choices and policies that the people need. Hitler had a profound contempt for the masses - the same contempt that is readily observed in Strauss and his cohorts. But when force of circumstances made it necessary to appeal to the masses, Hitler advocated lies, myths, and illusions as necessary pabulum to placate the people and make them comply with the will of the Fürer. Strauss's political philosophy advocates the same solution to the problem of the recalcitrant masses. Anyone who wants to avoid the horrors of the Nazi past is well advised not to accept Strauss's version of ancient wisdom uncritically. But this is exactly what Strauss encouraged his students to do.
Strauss's students have left the academy in quest of political power. They complain that they are persecuted in the academy because they are illiberal. But in truth, it is not because they are illiberal that they are held in contempt; it is because they are ill-equipped to handle philosophical debate. Strauss's secretive or esoteric style of writing is inimical to philosophical dispute within the academy. He was convinced that there can be no disagreement among the wise. They instinctively recognise the truth. And those who deny it are unfit for the company of the wise. This explains why his students are a cultish clique, which is comfortable only when preaching to the converted and consorting with the like-minded. All the while they fool themselves into thinking that they are the exclusive few who see the unadulterated truth, which is concealed from the eyes of the uninitiated. Not surprisingly, they are not well regarded within the academy. But it is not entirely their fault. They are poorly trained, because Strauss's philosophy is ill-suited for academic life. It aspires to action. Its goal is not to understand the world, but to change it. And now that they are closely allied with the powerful neoconservatives in Washington, they have a chance to make their vision a reality.
So, what is neoconservatism? And how does it propose to change the world in accordance with Straussian political philosophy? 'Neo' comes from the Greek neos, which means new. And, what's neo about neoconservatism? Well, for one thing, the old conservatism relied on tradition and history; it was cautious, slow and moderate; it went with the flow. But under the influence of Leo Strauss, the new conservatism is intoxicated with nature. The new conservatism is not slow or cautious, but active, aggressive, and reactionary in the literal sense of the term. Inspired by Strauss's hatred for liberal modernity, its goal is to turn back the clock on the liberal revolution and its achievements.
Allan Bloom, author of The Closing of the American Mind, Strauss's best known student, was a professor at the University of Toronto. His best selling book demonised the sixties - the age of civil rights for black Americans, and greater freedom and equality for women. Irving Kristol also demonised the sixties. And Francis Fukuyama, student of Allan Bloom, and vanguard of the neoconservative intellectuals, refers to the sixties as "The Great Disruption," the title of his recent book. Supposedly, all these Strauss-inspired writers believe that the new found freedoms of the sixties are the root of all evil, because freedom invites licentiousness, and licentiousness is a harbinger of social decay - divorce, delinquency, crime, and creature comforts. And there is a sense in which they are right - freedom is a treasure that is quickly lost if it is not wisely used. The trouble is that neoconservatives have zero tolerance for human vices or follies, and as a result, they are unwilling to give liberty a chance.
So, what is to be done? How can America be saved from her dangerous fascination with liberty? Irving Kristol came up with the solution that has become the cornerstone of neoconservative policies: use democracy to defeat liberty. Turn the people against their own liberty. Convince them that liberty is licentiousness - that liberty undermines piety, leads to crime, drugs, rampant homosexuality, children out of wedlock, and family breakdown. And worse of all, liberalism is soft on communism or terrorism - whatever happens to be the enemy of the moment. And if you can convince the people that liberty undermines their security, then, you will not have to take away their liberty; they will gladly renounce it.
In an essay entitled "Populism Not to Worry," Irving Kristol argued that Americans should embrace populism, or the rule of the majority, despite the reservations of the Founding Fathers. The latter feared the tyranny of the majority, and institutionalised safeguards to protect the liberty of individuals and minorities. But Kristol and the neoconservatives want to dismantle these very safeguards against majority rule. Kristol tells us not to worry. Why not? Apparently because the neoconservatives believe that America has been ruled by an unwise liberal elite for over two hundred years, and they are willing to gamble that the people will be wiser, which is to say, more likely to endorse conservative policies. Inspired by the same ideology, the Alliance party in Canada is willing to take the same gamble. But, luckily for Canada, it is sagging badly in the polls.
With the neoconservatives in power in the US, it will be difficult to conceal the real nature of neoconservative policies. The "stealth campaigns" are not likely to be as effective. The policies are by now very clear: no gay rights, no liberated women, no uppity blacks, lots of prayer in the schools, a strong commitment to the death penalty, and the re-criminalisation of abortion. The latter is particularly important. Of course it will keep the women at home and out of the way so that world can be ruled by men in the proper manly fashion; but that's not all. More importantly, it will keep women busy having babies - lots of babies. In this way, women will become useful once again; they will return to their vocation as factories for soldiers - and we need lots of soldiers, for we will have plenty of wars to fight, if the neoconservatives have their way. And it seems they have.
The neoconservative goal is reactionary in the classic sense of the term. It is nothing short of turning the clock back on the liberal revolution. And it will use democracy to accomplish its task. After all, Strauss had no objections to democracy as long as a wise elite, inspired by the profound truths of the ancients, was able to shape, invent, or create the will of the people. In his interpretation of Plato's myth of the cave, Strauss maintained that the philosophers who return to the cave should not bring in truth; instead, the philosophers should seek to manipulate the images in the cave, so that the people will remain in the stupor to which they are supremely fit.
It is ironic that American neoconservatives have decided to conquer the world in the name of liberty and democracy, when they have so little regard for either.
http://evatt.labor.net.au/publications/papers/112.html
Tribes, traditions and two tragedies
By Syed Saleem Shahzad
KARACHI - In Afghanistan and Iraq, the United States once fought against the former USSR and Iran, albeit through proxies. Ironically, now, the US finds itself fighting real wars in both Afghanistan and Iraq, although this time round the middlemen have been cut out, and the enemy is much less defined, and infinitely more difficult to fathom. Crucially, though, the US appears to be applying the same tactics that it adopted for its proxy wars, even though the ground realities have changed.
The resistance movement in Iraq has very much established itself in the heart of almost all the important cities, including Baghdad, Basra, Tikrit, Mosul and even in Kirkuk, the latter two in the Kurdish north.
The resistance movement in Afghanistan, meanwhile, is also scattered across large parts of the country, apart from the capital Kabul, although it is rooted in rural areas and the mountains, and it is stronger in the southeast and along the border areas with Pakistan.
Opposition to the US-led military presence in Afghanistan comes mainly from a rapidly-regrouping Taliban, ousted from government at the end of 2001, mujahideen veteran Gulbuddin Hekmatyr's Hizb-e-Islami Afghanistan (HIA), and fighters of Osama bin Laden's International Islamic Front, all grouped under the banner of the Saiful Muslemeen (the Sword of Muslims).
Operationally though, different area commanders have been controlling combat operations in their respective areas. As a result, the resistance movement has not been as effective as it could have been as it has lacked central direction. Recent reports, however, indicate that Mullah Omar, the Taliban leader, has personally taken over overall command.
The resistance movement has been aided by a break down of law and order in the Pashtun belt, as the writ of Kabul does not reach that far. In this environment of lawlessness approaching anarchy, the Taliban guerrillas have found perfect hiding places.
At the heart of the US problems in Afghanistan is that it has failed completely in winning any allegiance among the local population, apart from the north of the country. Here, the non-Pashtun North Alliance, which, with strong US support led the drive to oust the ethnic Pashtun Taliban in late 2001, does have some roots in the country, and by default, the US is welcomed.
It is in the Pashtun areas of Afghanistan where the problems lie, however. In the early days of the US-inspired invasion against the Taliban, the US hired Pashtun commanders such as Abdul Haq and Haji Abdul Qadeer, who had been in exile in the United Arab Emirates and doing business in Peshawar, respectively.
Such men lacked popular support, and managed only to rally a few troops. Abdul Haq, in fact, was captured and executed by the Taliban. After this, heroin addicts and other dregs in the Pakistani border cities of Quetta and Chaman were rounded up and marched into Kandahar, the Taliban stronghold, under the shelter of US air support. At this stage the Taliban finally decided to retreat, and the US's riff-raff proxies were elevated into local administrative positions.
It is of no surprise, then, that these people have proved less than capable, and easily swayed by the re-emerging Taliban - hardly a permanent arrangement for good governance.
In retrospect, the US authorities in Afghanistan ignored some important facts:
The Taliban were respected in many segments of Afghan society. Indeed, they had been invited in the early 1990s by the Pashtuns to eliminate the warlordism and anarchy that was pulling the country apart in the power vacuum left by the departure of the Soviets in 1989.
Many of the Taliban, after all, although educated in the madrassas (religious schools) of Pakistan, were sons of the soil.
When the Taliban retreated, they were readily given protection by the Pashtun tribes to which they belonged.
The US adopted a policy from the inception, by supporting the Tajik and Uzbek-dominated Northern Alliance, which implied that the Pashtun were not necessarily the dominant power in Afghanistan. This ignored the fact that in the history of modern Afghanistan (from Nadir Shah's period in the mid-18th century) all the power pillars have emerged from Pashtun tribes, except for two brief occasions (in the early 20th century - Bacha Saqa - and Professor Burhanuddin Rabbani becoming president in 1993). Never has a non-Pashtun remained head of state for any length of time.
And the US, considering that the Taliban were Pashtun, turned a blind eye to the massacres of Pashtuns in the cities of Kunduz and Mazar-i-Sharif by the Northern Alliance. Later events have helped the ground situation change in favor of the Taliban:
After the assassination of Haji Abdul Qadeer in July last year, his brother Haji Din Mohammed was installed as the governor of Nagarhar. He has negotiated a ceasefire with the Taliban and agreed that once the Taliban movement sufficiently consolidates its position in southeastern Afghanistan and reaches Jalalabad (as per tradition), his forces will give them a safe passage to Kabul to take on the Northern Alliance-dominated administration of Hamid Karzai.
Malick Hazrat Ali has allowed Hekmatyr's HIA to operate and establish training camps in the Jalalabad region.
All Pashtun tribes have agreed in principle that they will not fight each other and will support any movement that makes it possible to topple the Northern Alliance government in Kabul.
These facts are certainly known to US decision-makers on Afghanistan. How they respond is another matter. Pakistani authorities have in the past suggested that the US engage "moderate" elements within the Taliban.
Initially, the US viewed this as a ploy by Pakistan to deceive the US and buy time. After all, Pakistan's Inter-Services Intelligence (ISI) was instrumental in nurturing and bringing the Taliban to power, and it would dearly love to regain its lost strategic ground in the country.
But US intelligence had a change of heart, and it now sees the benefits in courting the erstwhile enemy, although it has made it clear that Mullah Omar will not be a part of any kiss and make up.
Asia Times Online sources close to these developments say that the first contact a few months ago between the US and the Taliban in Quetta foundered over the issue of Mullah Omar. However, within a few weeks, the ISI came up with another batch of Taliban, who, apart from Mullah Abdul Razzak, a Pakistani who was a defense minister in the Taliban regime, were much lower profile than the first group. They agreed to establish a forum under the name of Jaishul Muslim, and without Mullah Omar. Observers see this as a last-ditch attempt by the US to establish the semblance of a sufficiently stable government so that they can pull their troops out of the country, with at least some justification that they have done their job.
Unfortunately, without key leaders like Mullah Omar, this endeavor is destined to fail.
Similarly, the US's efforts in Iraq to win the support of credible local allies appear doomed.
The US has set up bodies like the Iraq Development and Reconstruction Council (IDRC) and other small organizations that have no footing in Iraq. These proxy networks are good at showing welcoming local faces to the US forces, but they are hardly the platform for good, stable governance in the long run.
Like in Afghanistan, the Sunni Arabs (although outnumbered by Shi'ites) have been the traditional rulers of the region for generations, and cannot be ignored. The order of society for a long time was: Sunnis as the ruling elite, ethnic Turkomen and Kurds used in the military, and the Shi'ites sidelined communities, such as the Marsh Arabs, and other rural, semi-literate groups that blindly followed the sermons of their clerics.
During Saddam Hussein's rule over the past decades this main order of society remained largely unaltered, except Saddam began to develop Shi'ite areas and open up opportunities for them in the Ba'ath Party. However, after the Iranian revolution (1979) and the subsequent Iran-Iraq war in the 1980s, the situation changed.
Shi'ite clerics issued religious decrees banning Shi'ites from government jobs and called Saddam's regime un-Islamic and secular, and those who were a part of it were called infidels (munkir). Nevertheless, many Shi'ites in government cut their ties with the religion, rather than give up their positions.
This gave birth to a completely new generation of Shi'ites who were part of ruling party, and who espouse doctrines such as Arab union and anti-Semitism.
The US administration, however, appears to think in black and white terms, as it were, of Shi'ites and Sunnis constituting two completely separate entities. And as the majority in the country (about 65 percent) they are being given majority representation - for instance, the US-appointed 25-member Governing Council - without consideration of the power of Sunni tribes. (The largest clan in which both Shi'ite and Sunni tribes are included is headed by a Sunni.)
As a result, the Sunni elite are being excluded, which does not lend itself future stability.
British authorities during the empire days had a keen understanding of the tribal systems in South Asia, as well as in the Arab world. In countries like India they made the Nawabs and the feudal lords responsible for raising armies, as they did in Yemen and Iraq. In return, they paid royalties and privy purses to the tribal chiefs. At the same time, these chieftains were made to understand that they were important and significant, so they always supported the government.
Once the sun set on the British empire, most countries abandoned colonial traditions, including that of chieftains raising armies. Except in Iraq. Saddam continued the practice with his concept of jaishul badviya , which guaranteed tribal chief as one of the pillars of power.
Up against the US's awesome military might (apart from those who were bought off) most of the Iraqi army (much like the Taliban in Afghanistan) melted away in the face of certain defeat to take protection with their tribes. Now they are re-emerging to take on the occupation forces, and with the full support of the tribal chiefs who have lost not only their power, but also their payouts for suppling soldiers for the army.
So, as in Afghanistan, in Iraq the tribal role behind the resistance has been underestimated, if not misunderstood altogether. Chaos and anarchy are the only possible outcomes from such ill-informed policy.
(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
http://www.atimes.com/atimes/Middle_East/EI12Ak03.html
Rising gold price outshines its world economic influence
By Kevin Morrison
Published: September 11 2003 5:00 / Last Updated: September 11 2003 5:00
Gold has traditionally been regarded as a safe haven in times of global uncertainty. The approach of today's second anniversary of the September 11 attacks on the US has triggered a rally in the gold price as fears of more terror attacks take hold. Bullion's price closed at a seven-year high of $381.05 in London earlier this week.
Gold's role in the world economy has been in decline over the past two decades. The gold standard was abolished as a currency peg in 1968. Its biggest user, the jewellery market, has remained static for years and there has been no new industrial use for the metal in decades. Central banks have also been reducing their holdings.
The financial importance of the metal has fallen with the growth of fixed interest, equities and derivative products. Annual gold production is worth about $24bn (£15bn) a year, which is dwarfed by the moneychanging hands in the foreign exchange, bond and equity markets. But changes to the structure of the gold market are helping to fuel price rises.
Many view the gold price as a barometer of international confidence. It rises in times of war: it hit its highest level in more than six years in February just ahead of the war in Iraq and has held its ground in the run-up to the anniversary of the terror attacks.
Gold mining shares are likewise enjoying a revival. A benchmark gold share indicator, the Gold Bugs index on the American Stock Exchange, hit its highest point since June 1996 this week. But even though gold shares are doing well, they have still been outperformed this year by the technology-laden Nasdaq index.
The gold price has risen 10 per cent since the start of August, outperforming other commodities such as oil, the price of which also reflects geopolitical fears.
Analysts are pointing to market fundamentals. One reason for gold's gain is the 41 per cent fall in the US dollar against the euro since mid-2001. The dollar's fall was counterbalanced by a similar rise in the gold price. But the relationship between the dollar and gold has diverged over the past three months. Gold was about $40 lower from its current level when the dollar hit its record low against the single currency in June.
Another reason is the buoying effect of large investment inflows into gold futures and options traded on the New York Mercantile Exchange, the world's biggest commodities futures exchange. Investors have bought gold derivatives that account for more than a quarter of the world's annual production.
Inflation may play a part in the current rise. Alan Greenspan, the Federal Reserve chairman, signalled that the pruning of US central bank rates was near an end when the Fed cut rates to 1 per cent on June 25. Since then metals prices have risen strongly. Platinum touched a fresh 23-year high this week. Silver hit a three-year peak on Tuesday, copper last week reached its highest point since March 2001 and nickel has not been higher since May 2000.
Central bank gold sales were until four years ago viewed as a big threat to the gold market.When Gordon Brown, the British finance minister, announced the proposed sale of more than half of the Bank of England's 715-tonne holding in 1999, he provoked outcry among gold producing countries. The gold price fell to a 20-year low of $252. Mr Brown's move led to the Central Bank Gold Agreement in September 1999 under which 15 European central banks agreed to conduct orderly sales of 400 tonnes a year for four years. This agreement expires in a year's time and a new pact is expected to be signed before the September 2004 deadline.
But one of the biggest influences on lifting the gold price is the move by gold producers to buy back long-term gold sale contracts, which is akin to miners buying gold. This is in response to the demands of institutional investors who are averse to the price-warping effect of gold hedging. Hedging typically takes the form of forward sales that enable the producer to lock in a price in the future. The effect is unlikely to be enough to bring back the golden days of the late 1970s when the price soared to $800 an ounce.
"Producers have been the biggest single buyers of gold in the past 18 months, this cannot go on for ever," says Andy Smith, an analyst at Mitsui Global Precious Metals. "Soon the price will have to adjust to reflect the underlying supply and customer demand."
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=105...
As gold, so silver...
The US Trade Deficit and "Phony" Deflation
Richard Benson
September 11, 2003
The Federal Reserve, under the current administration, is permitting the US money supply to "rip" by artificially holding short term interest rates well below the rate of official CPI. The US is running 5% budget deficits, Euro land 4%, and Japan 8% these government deficits are larger than savings which means that without the creation of highly inflationary new money and credit, there would be absolutely "no growth!"
China is printing new money at a 20% rate and Japan has vowed to not let its currency appreciate, even if it has to print enough new money to buy every US bond and note the US Treasury needs to finance our $500 billion budget deficit.
The Fed Chairman has made it his current quest to fight "deflation." Given the massive printing effort of the world's central banks, the efforts to fight deflation are beyond cynical. What's really going on?
Obviously, Asia doesn't want to "trade" on a level playing field and they want to force their currencies "down" and continue to help the American Consumer spend more than they earn. They will finance our Federal and Trade deficits, as long as we help them build the latest and most efficient factories and ship our jobs to the other side of the Pacific. By letting Asia hold their currencies down by 30% - 50% below the "free market rate," in the US it appears we are importing deflation, while China, Japan and the rest of Asia, accumulates a massive hoard of US Dollar reserves.
With Asian currencies artificially held down, to the US it would appear like we are importing deflation. Meanwhile, Asia and the rest of the world are reflating and printing money like crazy. At first blush, this deflation is a paradox - in reality, the deflation is both phony and temporary. However, the phony deflation is extraordinarily convenient and gives Greenspan a cover to keep short term US interest rates depressed and money growth high. The moment the US dollar and Asian currencies are allowed to "float" and seek the level that brings trade back into balance, the prices of Asian goods, causing deflation, will soar. Import prices will go to normal and we will see a tremendous amount of "missing inflation" the phony deflation will vanish and the deflation paradox will be over. This will not be a good day for Alan Greenspan and interest rates.
At present, inflation in services is running at a 3.5% - 4% rate and the only reason that inflation looks tame is because manufactured import prices are artificially held at 30% to 50% below where they should be and holding the core CPI down. Can you imagine what will happen to interest rates when the dollar sinks, and the CPI is seen to really be rising at 4% to 5%?
Not only are Asians eager to take work from lazy Americans and Mexicans who don't want to work for $10 a day, but they are delighted to become America's biggest creditors. At present, the United States, through its rising trade deficits, has built up debts abroad of over $3 Trillion dollars, and we are adding to the total at a rate of $500 billion a year. Asia has been willing to finance America's consumption orgy and federal deficits because they are building up massive currency reserves, held primarily in US Dollar assets. Being a banker to the world's super power that controls Mid-East oil, looks like it is in Japan's and China's short term interests. China and Japan need oil and other commodities and building up dollar reserves that the world will take in payment for now is almost as good as building up strategic reserves of these commodities which will be essential to running their industrial complex.
The reason our beloved Fed Chairman is so cynical in selling us on "deflation," is that not only will there be an inflationary shock from the Dollar going down against our trading partners, but at some point those massive dollar reserves building up overseas are going to be exchanged for something of value; something real. Not only will a sharp drop in the dollar cause a sudden "Pop" in inflation, but when foreigners want to swap their dollars for something real, there will be another surge of inflation. The Fed Chairman knows this and talk of deflation is a delaying tactic hoping to postpone the dollar crash until a new Administration and Fed Chairman can get all the credit for creating far too much money and credit.
Indeed, the "Deflation Myth" may end sooner than later. The US is growing, but not creating jobs. The incumbent President is extremely vulnerable on this political issue and in the mid-term election he showed his practical side, and "protected steel." When the day comes that either our current President puts "jobs first" to be re-elected, or a new US President fulfills his campaign promise to do the same, the current game of the Deflation Paradox will be long over. The only reason the Asians are willing to add to their dollar reserves is because we are sending them jobs. The only reason it makes sense to keep reserves in dollars, is because the dollar is "artificially" strong. Secretary of Treasury Snow was sent to China to make it look like the Administration was "talking tough" on letting the Yuan float. In reality, the deal is we'll just talk, as long as the Chinese are willing to buy more US Treasury bonds. Both sides know that if the rules of the game are changed, the US will be in for a currency and economic shock. For China and the rest of Asia, dollar foreign exchange reserves are viewed as valuable and strategic. If the dollar is to be devalued, the reserves must be diversified from the dollar. The dollar devaluation becomes more likely if the US is forced to allow other powers to have a say in dividing up Iraq's oil, and pressure before the election drives the US President to actually act instead of talk.
With the US Trade Deficit at $500 billion, getting out of the dollar while you can is the only sane thing to do. Moreover, since other major currencies are inflating, all the currencies are ugly; the dollar just wins the "Ugly Contest."
Getting into the Euro, Yuan, or Yen are cyclical plays. The game suddenly becomes, "he who sells the Dollar first wins" and with the Fed holding short term interest rates at 1%, it cost speculators almost nothing to borrow dollars to short against foreign currencies, or buy real assets. Getting into gold, silver and commodities, looks like a much better long term secular play, as the "Deflation Paradox" is about to end.
Richard Benson
September 10, 2003
President
Specialty Finance Group, LLC
Member NASD/SIPC
2505 S. Ocean Boulevard - Suite 212
Palm Beach, Florida 33480
1 800-860-2907
eMail: rbenson@sfgroup.org
http://www.321gold.com/editorials/benson/benson091103.html
What Can $87 Billion Buy?
The Center for American Progress is a nonpartisan research and educational institute based in Washington, D.C.
On September 7th, President Bush asked Congress for an additional $87 billion for the war in Iraq, acknowledging that the engagement in Iraq is going to cost many hundreds of billions of dollars. This was a surprise considering that prior to the war, the administration dismissed such estimates, and even fired its top economic adviser, Lawrence Lindsey, for suggesting those estimates were correct. To get some perspective, here are some real-life comparisons about what $87 billion means.
$87b Is More Than The Combined Total Of All State Budget Deficits In The United States
The Bush administration proposed absolutely zero funds to help states deal with these deficits, despite the fact that their tax cuts drove down state revenues. [Source: Center on Budget and Policy Priorities]
$87b Is Rougly The Total Of Two Years Worth Of All U.S. Unemployment Benefits
The U.S. spends about $50 billion a year on unemployment insurance. At least 1.1 million people have exhausted all of their unemployment benefits without finding a job, and yet Congress has refused to extend benefits. [Source: Center on Budget and Policy Priorities]
$87b Is Enough To Pay The 3.3 Million People Who Have Lost Jobs $26,363 Each
The unemployment benefits extension passed by Congress at the beginning of this year provides zero benefits to "workers who exhausted their regular, state unemployment benefits and cannot find work." All told, two thirds of unemployed workers have exhausted their benefits. [Source: Center on Budget and Policy Priorities]
$87b Is More Than Double The Total Amount The Government Spends On Homeland Security
The U.S. spends about $36 billion on homeland security. Yet, Sen. Warren Rudman (R-N.H.) wrote "America will fall approximately $98.4 billion short of meeting critical emergency responder needs" for homeland security without a funding increase. [Source: Council on Foreign Relations]
$87b Is 7 Times What The Government Spends On Title I For Low-Income Schools
President Bush proposed a budget of just $12 billion for Title I, leaving a $6.2 billion hole in what he promised to spend on Title I in his No Child Left Behind Bill. [Source: House Appropriations Committee]
$87b Is 87 Times The Amount The Federal Government Spends On After School Programs
President Bush proposed a budget that reduces the $1 billion for after-school programs to $600 million -- cutting off about 475,000 children from the program. [Souce: House Appropriations Committee]
$87b Is About 9 Times What The Federal Government Spends On Special Education
Legislation authorizes the federal government to pay 40 percent of the cost of special education, but because of budget shortfalls, it only pays roughly 18 percent (or $9.9 billion), driving up local property taxes. [Source: House Appropriations Committee]
$87b Is More Than 10 Times What The Government Spends On All Environmental Protection
The Bush administration requested just $7.6 billion for the entire Environmental Protection Agency. This included a 32 percent cut to water quality grants, a 6 percent reduction in enforcement staff, and a 50 percent cut to land acquisition and conservation. [Source: Natural Resources Defense Council]
$87b Is 8 Times The Total For Pell Grants -- The Major College Program In The U.S.
In 1975, when the Pell Grant program was established, it financed about 84 percent of the cost of attending a four-year public college. Today, that share is down to about 40 percent, and under Congress’s current proposal to freeze Pell Grant funding at about $10 billion, it would drop to 38 percent. [Source: House Appropriations Committee]
$87b Is More Than The Total Cost Of The First 3 Years Of The Medicare Pres. Drug Proposal
[Source: Congressional Budget Office]
$87b Is Enough To Give Every Man, Woman And Child In America $300
"[We] want to control spending. And I hope Congress lives up to their words. When they talk about deficits, they can join us in making sure we don't overspend. They can join us and make sure that [they are] focused those items that are absolutely necessary to the American people." - President Bush, Jan. 6, 2003
http://www.tompaine.com/feature2.cfm/ID/8857
Enjoy the spin:
http://slate.msn.com/id/2087984/
U.S. Mortgage Delinquencies Rose in Second Quarter
Wed Sep 10, 2:27 PM ET
By Deborah Lagomarsino
WASHINGTON -- More U.S. households were behind on their mortgage payments in the second quarter, but fewer home loans were in foreclosure, the Mortgage Bankers Association of America said Wednesday.
The seasonally adjusted delinquency rate for all mortgage loans on one- to four-family residential properties rose to 4.62% in the second quarter of 2003 from 4.52% in the first quarter, MBA said. In the second quarter of 2002, the delinquency rate was 4.77%.
The rise in past-due loans was driven mainly by an increase in the percentage of loan payments overdue by 90 days or more. In the second quarter, 0.84% of all loans fell into this category, up from 0.76% in the first quarter.
"The uptick in seriously delinquent loans [those 90 days or more past due] is a sign that the length of the sluggish economic recovery has been causing problems for some borrowers," the MBA said.
However, fewer loans were in the foreclosure process during the second quarter than in the first quarter. In the second quarter, 1.12% loans were in foreclosure, down from 1.20% at the end of the first quarter, the MBA said.
The percentage of loans entering the foreclosure process also fell, declining to 0.32% in the second quarter from 0.37% in the first quarter.
"Despite a very healthy housing market in most of the country, the overall economy remained weak, though growing, in the second quarter," said Doug Duncan, MBA's senior vice president and chief economist.
"The trends of record consumer bankruptcies and significant job losses, along with war-related business uncertainties and related rising energy prices, prevented a robust improvement in the performance of the mortgage portfolio," he said.
Mr. Duncan predicted that as the economy firms, there will be fewer delinquencies and foreclosures.
"The resumption of strong economic growth will ultimately increase employment and should lead to lower levels of delinquencies and foreclosures in future quarters," Mr. Duncan said.
Delinquency rates rose for all three types of mortgage loans - conventional, Federal Housing Authority and Veterans Administration - in the second quarter, the MBA said.
The past-due rate for conventional loans rose to 3.14% in the second quarter from 3.10% in the first quarter. Within that category, the delinquency rate for prime loans - made to borrowers of normal credit quality - slipped to 2.60% in the second quarter from 2.62% in the first quarter.
Past-due rates for subprime mortgages, which are home loans to riskier borrowers, rose in the second quarter to 12.99% from 12.40% in the first quarter.
For FHA-guaranteed mortgage loans, the delinquency rate rose to 12.59% in the second quarter from 11.65% in the first quarter, and for VA-guaranteed mortgage loans, the delinquency rate rose to 8.24% from 7.89%.
The MBA's second-quarter survey includes nearly 34 million loans.
-By Deborah Lagomarsino, Dow Jones Newswires; 202-862-9255; deborah.lagomarsino@dowjones.com
http://story.news.yahoo.com/news?tmpl=story&u=/dowjones/20030910/bs_dowjones/200309101427001248
Not a big deal yet...
Wanna know why silver won't come down?
Because I didn't get enough under 4.50 that's why...
Meantime Sloofy waits...
DCA and hope they take it down again...
Blue Movies Proliferate in Post-Saddam Iraq
http://channels.netscape.com/ns/news/story.jsp?id=200309102135000223216&dt=20030910213500&w=...
Not really of import but JFSAG.
What up with FASC? I've been watching that one for literally years now...
Expecting news...or what?
Dear Investorplace Member,
Today, stocks got creamed for the second day in a row.
Tech got hit particularly hard -- with the NASDAQ dropping nearly
3%.
More evidence, as I've been telling you, that a new -- and huge
-- shockwave is taking dead aim on Wall Street.
Most investors -- giddy with the rally and eager to make up for
lost time -- have been throwing money at all the WRONG stocks.
In a perfect environment, you might get way with that -- for a
while. But the environment is NOT perfect -- not by a long shot.
Yet most investors are, once again, blindly buying beaten-down
companies that look "cheap." Ignoring high P/Es. Even gambling on hundreds of companies with no profits at all.
[Sound familliar?]
And that's a huge mistake!
Mark my words, one day soon we'll get a piece of unexpected bad
news. And that will trigger a rush -- a stampede -- out of these
stocks. And investors -- perhaps you -- will be left with big
losses yet again.
==================
How to Protect Yourself
(and Prosper)
==================
You've got to own what I call A-grade stocks -- and make sure you
dump the Ds and Fs.
Let me tell you why.
>From February 1998 -- when I first started issuing these ratings
-- my A-grade stocks have racked up 349.77% gains.
[HLSH is up 22x meantime he's up 3.5x...read JFSAG for free or pay for his advice...I do 10 25 36 and mostly sit in cash while buying gold and silver...catch a wave now and then...no need to be "in" all the time.]
Over that same time period, my D and F-grade stocks combined for
a miserly 0 .14% gain.
I have found that most investors own a lot more D & F stocks than
the A-grades that can make you filthy rich. How about you?
Those 349.77% profits are the DOCUMENTED performance of my
A-grade stocks. Proof positive that our quantitative and
fundamental analysis -- heavy on computer modeling and honed over
two decades -- works quite well indeed!
Let me briefly explain further.
My staff and I use our proprietary models to grade over 5,000
individual stocks on:
* The company's business fundamentals -- considering such
variables as earnings and sales growth, profit margins,
return-on-equity and cash flow.
* A quantitative analysis that measures how well the stock has
been performing relative to risk.
* And a full risk assessment, based on the volatility of the
stock.
As you might expect, this takes a lot of computing power. But
the end result is pretty simple.
Each stock gets a grade of A, B, C, D or F -- with specific
advice to buy, sell or hold. And my Blue Chip Growth Letter
readers consistently bank excellent profits.
[I just started looking at PE's...again...]
==========================
Which Stocks Do You Want to Own?
===========================
Our A-grade stocks earned 349.77% over the timeframe referenced.
Our B-grade stocks earned 140.73%. (Hmmm. I think we're onto
something.)
Our C-grade stocks earned 44.00%. (Do you see the pattern?)
Our D and F-grade stocks combined for a miserly 0 .14% gain.
Do you own any C, D or F stocks? You can find out when you
subscribe with full access to our huge database. The only work
you do is enter ticker symbols for instant analysis.
Do you want to own more A-grade stocks -- the sort that rose
349.77% since February 1998?
Sincerely,
Louis Navellier
Blue Chip Growth Letter
Fully edited fully abridged version. For infomational use only... FYI JFSAG FWIW ETC
Good man...like I said one day at a time. Pick some winners while yer at it...
See this on HLSH:
http://biz.yahoo.com/rb/030910/congress_healthsouth_1.html
Stock didn't seem to mind...
Jobs:
International Paper to Cut 3,000 Jobs
http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=4&u=/nm/20030910/bs_n....
Gateway to lay off 1300 workers
http://www.kansascity.com/mld/kansascitystar/business/6730425.htm
Thousands more and that's just today...
Job Axe Swings at Int'l Paper, 3Com, Levi
Wed September 10, 2003 03:13 PM ET
NEW YORK (Reuters) - White- and blue-collar workers around the world suffered a day of blood-letting on Wednesday, as International Paper Co.IP.N and other large U.S. corporations announced thousands of job cuts.
The latest layoffs followed last week's government data showing U.S. jobs were slashed in August at the fastest rate since March. Corporations are still relying on cost cuts to shore up profits in a time of stagnant revenues.
"The pressure for large companies to grow the bottom line is enormous," said Diane Swonk, chief economist at Bank One in Chicago. "I think we will start to see more hiring on a larger scale at the turn of the year."
World's largest forest products company International Paper announced plans on Wednesday to cut 3,000 jobs, or 3.5 percent of its global work force. The layoffs include about 450 positions at its operational headquarters in Memphis, Tennessee.
Privately held Levi Strauss, the famed San Francisco-based jeans maker that has struggled against sluggish sales and a heavy load of debt, said it plans to cut 650 jobs, or 5 percent of its 12,400-person workforce. The cuts include about 350 salaried positions in the United States, the company said.
3Com Corp.COMS.O , which makes gear used by corporations to direct Internet traffic, said on Wednesday it will slash one-third of its workforce, or 1,000 jobs. The move, which 3Com called a bid to counter weak technology spending, came two days after optimistic investors helped push the tech-laden Nasdaq to the highest level in more than a year on Monday.
3Com, based in Marlborough, Massachusetts, said it will close its only remaining manufacturing plant in Dublin, Ireland and shift those operations to contract manufacturers.
Not long ago former SEC chairman Arthur Levitt warned that "America's investors have been ripped off as massively as a bank being held up by a guy with a gun and a mask."
Now we find out it was an inside job ... no guns and masks necessary. They even smiled while they were secretly robbing us blind ... our own mutual fund managers, the very people we thought had a fiduciary duty to protect us.
But what's all the fuss, folks? This is old news; they've been doing this for years. They just got nabbed this time. Yet, suddenly the New York attorney general is everybody's hero.
"God bless Eliot Spitzer," gushed Stephen Cutler, head of the SEC's enforcement division, one of Chairman William Donaldson's minions.
"I commend the attorney general for helping to shine a bright light on the murky world of mutual fund fees," trumpeted sweet-talking Congressman Richard Baker.
What a bunch of phonies. The truth is, Baker, Cutler, Donaldson and the SEC hate Spitzer. For example, since July 19 Baker's been the hatchet man pushing a new bill specifically designed to cut the legs out from under Spitzer by limiting the enforcement powers of state attorneys general.
Except Spitzer beat them to the punch. Once again he caught them with their pants down, failing to do their job. They're red-faced, desperately trying to cover up their embarrassment. Now they're forced to take actions against big political donors that they have been protecting for years. But don't count on more than a couple of band-aids.
Their hypocrisy should fool nobody.
Nobody's protecting America's investors
Under all this drama, investors are being forced to confront a very nasty truth: nobody really cares about protecting us. That's really what this massive fraud has exposed. Nobody puts investors first. Not the SEC. Not Congress.
And certainly not your greedy fund managers. They see investors as docile "cash cows" to be milked at will by this huge, silent conspiracy, which favors and protects big political donors (like Wall Street and the fund industry) at the expense of America's 95 million Main Street investors.
Unfortunately, the Canary Hedge Fund fraud is only a minor symptom of the pervasive cancer eating away at the fund industry's "conspiracy of silence," as Jack Bogle calls it. Spitzer has only exposed one small corner of the festering, lethal scab gutting the integrity of the fund industry.
Congress did make a big show about reform earlier this year. It was a perfect opportunity for an investor revolution because massive reforms were on the table. But the public never got excited (like now). So the fund-industry lobby had an easy time quietly sabotaging it.
We've been following the drama closely. A year ago we reported on 25 conflicts of interest in the fund industry. Our list was prepared from information provided by several investor advocates, former Treasury and SEC officials and the work of Arthur Levitt, Jack Bogle and other power-players.
From January through July we followed the progress of the proposed Mutual Fund Integrity and Fee Disclosure Act as it moved through the House Financial Services Committee.
Then, at the eleventh hour, it fizzled. Bogle, who was initially enthusiastic, said: "If a journey of a thousand miles begins with a single step, I'd say this legislation still leaves us many hundreds of miles to go."
After Congress got its photo-op for the re-election campaign, the bill was tabled. Suddenly the sham was over. Congress simply passed the responsibility back to the SEC, which has been doing nothing about these matters for years.
We may get band-aids, but Congress and lobbyists have placed the industry beyond meaningful reforms, while greedy fund managers continue skimming money off the top.
SEC inaction protects big donors
Spitzer's latest move is no isolated bit of evidence. We've seen other signs that the SEC isn't interested in protecting Main Street investors. The fact is, SEC is either incompetent or secretly trying to undermine individual investors for purely political reasons. Neither scenario is encouraging.
Remember how Spitzer embarrassed the SEC by spearheading a $1.4 billion settlement with Wall Street's bad boys. The SEC wasn't doing its job prosecuting Wall Street's crooked analysts, so Spitzer stepped in and upstaged the SEC.
Then Spitzer brought charges against Morgan Stanley for failing to disclose that its brokers got extra payola for pushing their in-house funds. The SEC was nowhere on that issue either.
And last week even the Oklahoma attorney general got in the act, bringing charges against Bernie Ebbers, the CEO whose alleged criminal conduct brought WorldCom down.
I asked Jack Bogle what he thinks about this scandal. He's more optimistic than I am: "This scandal is for real, and will have a major and continuing impact on the industry. In a sense, it's a blessing."
But don't get your hopes up too high. The pressure to reform will blow over. And when the smoke clears the crooks without "guns and masks" will still be in control of our funds and money.
Money talks
Besides, there's just too much special interest lobbying money involved that's corrupting these insiders. Remember, Senators, Congressmen and the White House need money. And lobbyists want favors. Especially lobbyists working for fund managers with questionable ethics.
At most you'll see some noisy damage control to shut up Spitzer supporters. But mark my words, a year from now we'll be back to "normal" with the fund industry cheating investors by using clever new gimmicks. And they'll still be protected behind their secret "conspiracy of silence" by armies of politicians, lobbyists and a do-nothing SEC.
You watch: For the next few months Congress and the SEC will flood us with chest-pounding rhetoric about helping the little guy.
But in the end all they'll do is plug the two gapping holes exposed by Spitzer (illegal market timing and trading privileges given to the big-time players). Meanwhile, so many of the other 25 needed reforms will get lost in the noise.
Here's a final thought that's bound to gag you ... remember, this was an "inside job." That means all the huge sums of money the fund industry lobbyists are spending to buy protection from the politicians comes out of your pocket. How's that for irony.
I think this came from CBS Market Watch....I stole it from another board and I think he stole it from somewhere else...
Data: EPS Forecasts Soar but Revenue Lags
Mon Sep 8, 8:16 PM ET Add Business - Reuters to My Yahoo!
NEW YORK (Reuters) - While U.S. corporate earnings seem to be rebounding following a three-year-long slump, the gains appear to be driven by streamlining initiatives rather than a boom in sales, recent data shows.
For the third quarter, earnings per share among components of the Standard & Poor's 500 index are expected to be up roughly 12 percent from year-ago levels, according to Wall Street analyst estimates compiled by Reuters Research, a unit of Reuters Plc (RTR.L)
Revenue forecasts, however, are only up about 1.2 percent.
On average for the fourth quarter, EPS estimates are up nearly 20 percent, while revenue forecasts are up only 2.3 percent.
"While 2003 revenue is somewhat improving, it is not at the rate corporate profits are growing, which have benefited mostly from cost cutting initiatives," said Jerry Czarzasty, global estimates manager at Reuters Research.
On a more encouraging note, however, profit warnings are down from year-ago levels, and more companies are raising profit forecasts.
Last month, about 20 percent of earnings pre-announcements were negative, down from nearly 25 percent in the year-ago period.
At the same time, 19.2 percent of earnings pre-announcements in August were positive, up from 16.8 percent last year.
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030909/bs_nm/corporate_earnings_dc_1
No such thing as a jobless recovery.
GMO import ban caught in crossfire
10:23 10 September 03
NewScientist.com news service
From tomorrow, countries will have a right under international law to ban imports of food containing genetically modified organisms (GMOs) that they think could be unsafe. Or maybe not.
The UN's Biosafety Protocol - which allows bans where governments fear imported GMOs in food may have an "adverse effect" on biological diversity or human health - comes into force on Thursday. But as it does, the right to impose bans is being attacked by a US action launched in August against the European Union.
The US claims a five-year-old European ban on food containing GMOs is a breach of another set of international rules - the World Trade Organization's requirements for free trade.
The dispute, which will be decided by the WTO's dispute panel, is shaping up to be a face-off between the competing goals of free trade and safeguarding the environment. Friends of the Earth campaigns director Liana Staples condemns the US action: "It is just the latest Bush government-led attempt to bulldoze over other countries' rights to protect their people and the environment."
But US trade representative Robert Zoellick says the EU ban is "unsupported even by the EU's own scientific studies". The dispute promises to be a major talking point at the WTO meeting starting today in Cancun, Mexico.
Collision course
The Biosafety Protocol, agreed between most of the world's governments in 2000, formed an addition to the 1992 Biodiversity Convention. It seemed to legitimise a five-year-old EU ban on imports of GM foods from the US and elsewhere.
But the US never signed the convention, and so is not a party to the protocol. It called the EU ban an illegal infringement of trade and began the WTO action. In so doing, say environmentalists, it is setting the two treaties on a collision course.
The EU says the US complaint is now irrelevant. In August, EU ministers set new rules that should allow imports of products containing GM material, provided they are properly labelled and the sources of the GMOs are fully traceable. But the US disagrees, saying that in practice the rules would be impossible to meet.
Hunger and poverty
The controversy will be further inflamed on Thursday when Tewolde Egziabher, one of the architects of the Biosafety Protocol, marks its coming into force by speaking at the upper house of the British parliament.
Egziabher, director of Ethiopia's Environmental Protection Authority, will argue that the US action is designed to intimidate African countries. They want to use the protocol to set up their own systems for regulating imports of GM food, including US food aid.
Before leaving Addis Ababa, Egziabher said: "We resent the way that the image of the hungry in developing countries has been used to force a style of agriculture that will only exacerbate problems of hunger and poverty."
And he added that Ethiopia, as a centre for the natural genetic diversity of the world's grain crops, has special reason to oppose "the hasty introduction of GM crops". His fear is that GMOs might contaminate the country's wild grains, from which early food crops were bred.
Fred Pearce
http://www.newscientist.com/news/news.jsp?id=ns99994147
The War On Terror And You
By
Lisa Fabrizio
As an aficionado of U.S. history, one of the many things I've always admired was the level of sacrifice exhibited by ordinary citizens in times of turmoil. The very founding of our nation would have been impossible had not a great number of Americans boycotted, among other things, British tea and clothing. Imagine today's Americans voluntarily giving up coffee or imported cars and you would understand the magnitude of that sacrifice.
In today's War on Terror, many people wonder what they, the average citizen can do. The first and most important thing is to unequivocally support our troops. The second is to understand both their mission and our enemy. The mainstream media, eager to repeat their "success" during the Vietnam era, seek to undermine the American public's morale by tilting their coverage to reflect only the most negative aspects of this conflict. Almost worse than this is the lack of reportage of the aims and intents of those sworn to our destruction.
One such under-reported story concerns a planned September 11th celebration in London by an extremist Muslim group called Al-Muhajiroun, their second commemoration in as many years. To their credit, NBC News ran a story by Lisa Myers titled, "London Islamic group plans celebration." In and around England's capital city are colorful posters depicting "The Magnificent 19" hijackers alongside Osama bin Laden and the mortally-wounded World Trade Center towers.
The sponsoring group's spokesman, Sheik Omar Bakri, mouthing the usual Islamist rhetoric that 9/11 was an act of self-defense said, "many Muslims worldwide will be celebrating the comeuppance of the U.S.A.." He then added, "If God did not permit that (9/11) to happen, (it) would never happen." Mr. Bakri failed to explain how God permitted the U.S.A. to save countless Muslims from ethnic cleansing in the Balkans or to free millions more in Kuwait and Iraq from the tender mercies of Saddam Hussein.
The Left in this country has produced a myriad of "Why We Deserved It" material, all pointing the finger at our decadent lifestyle and support of Israel's 'genocide' against Palestine. While it's true that these are among the charges cited by our enemies to justify the current jihad, the press never goes on to explain the ultimate goal of the jihadists. That would be the total domination of the world by the Khilafah (Islamist rule) and subjugation to the laws of Sharia, which include the penalties of death by stoning for adulterers and amputation for thieves. The proof, for those interested in things like avoiding a global Islamist takeover, is only a mouse-click away. From the Al-Muhajiroun, Shari'ah Magazine, Issue 2, on whether the bombing of U.N. headquarters in Baghdad was justified (hint, it was):
Let it be known therefore that all regimes, government and bodies (implementing man made law) in the world today are rejected by Muslims and that the only legitimate authority recognised in Islam on the state level, is that of the Islamic State i.e. Al-Khilafah, which must be established by Muslims and which will carry the message of Islam to the world-striving for the total domination of the world by Islam, through its divine foreign policy of Jihad.
And, from Issue 2, in anticipation of the anniversary of the 'great day' itself:
Two years on then, it seems that during their customary 1 minutes (sic) in New York and elsewhere on September the 11th 2003, Muslims worldwide will again be watching replays of the collapse of the Twin Towers, praying for the reverberations to continue until the eradication of all man-made law and the implementation of divine law in the form of the Khilafah.
In a must-read document called "Letter to the American People," from last November, and believed by most experts to be written by Osama bin Laden himself, the terror chief answers two questions; why do they fight us and what do they want from us? It is both a fascinating and chilling 4,000 word insight into the mind of a modern-day monster.
The 'why we fight you' portion is a standard rehash of grievances one can hear nightly from Dan Rather or read almost any day in the pages of the New York Times. The 'what we want from you' section however, is much more interesting and almost never reported. He lists seven "conditions" to be met--starting with, of course, our conversion to Islam, and concludes with, "If you fail to respond to all these conditions, then prepare for fight with the Islamic Nation."
Our brave troops around the globe have been engaged in that fight since 9/11 against those who clearly seek a 'pre-emptive' regime change of the non-Islamic governments of the world, including their unwitting dupes in the U.N.. Now that it is obvious to all that Al Qaeda and other Islamist groups are (and have been) on the ground in Iraq and active in combat against those troops, the support of the American people at home is paramount to our victory in this life-or-death struggle.
In a rare moment of clarity during which he explains why American civilians are legitimate targets, bin Laden says:
Therefore, the American people are the ones who choose their government by way of their own free will; a choice which stems from their agreement to its policies. The American people have the ability and choice to refuse the policies of their Government and even to change it if they want. This is why the American people cannot be not innocent of all the crimes committed by the Americans (and Jews) against us.
In his own twisted way, bin Laden is correct--traditional rules of warfare notwithstanding. Every one of us is a potential casualty in this new war we fight, but we should also be actively engaged in the ways described by Osama above--particularly when it comes to electing leaders who understand the conflict and are committed to victory.
Throughout our glorious history, we've been blessed with just such leadership. On June 17, 1775, Joseph Warren; physician, soldier and patriot, though commissioned a Major General in the Continental Army, fought and died as a private soldier in the Battle of Bunker Hill at the age of 34. Three months earlier, he addressed the people of Boston at the annual Boston Massacre observance:
Our country is in danger, but not to be despaired of. Our enemies are numerous and powerful; but we have many friends, determining to be free, and heaven and earth will aid the resolution. On you depend the fortunes of America. You are to decide the important question, on which rest the happiness and liberty of millions yet unborn. Act worthy of yourselves.
To comment on this article or express your opinion directly to the author, you are invited to e-mail Lisa at FabLi@aol.com .
http://toogoodreports.com/column/general/fabrizio/20030910.htm
Click it or ticket
Walter Williams (archive)
September 10, 2003 / Print / Send
Imagine you're having a backyard barbeque. A cop walks in and announces, "This is a random health and safety check to see whether you've removed the skin from the chicken before you served it." Though delicious in taste, we all know that chicken skin contains considerable unhealthy fat. If you're caught serving chicken skin, the cop gets your ID and issues you a $50 ticket.
If something like this were to occur, most Americans -- I hope -- would see such an action as ludicrous, offensive and a gross violation of our liberties. But not so fast. Let's think about it. Each year, obesity claims the lives of 300,000 Americans and adds over $100 billion to health-care costs. Doesn't that give government the right to dictate what we eat? If you're the least offended by the notion of government dictating our diets, pray tell me how it differs in principle from seatbelt laws and especially the new federal enforcement program called "Click It or Ticket."
Under the Transportation Equity Act for the 21st Century, the federal government is spending $500 million to aggressively enforce seatbelt laws. According to a July Consumers Research article written by Eric Peters titled "The Federal Government Wants You to Buckle Up," about 11,000 law enforcement agencies across the country have set up random checkpoints and have issued hundreds of thousands of tickets to unbelted drivers and passengers.
Just as in my barbeque scenario, their justification is our health and safety. After all, the 2002 highway death toll was 42,815 and, according to a U.S. Department of Transportation National Highway Traffic Safety Administration (NHTSA) study, "The Economic Impact of Motor Vehicle Crashes on America's Roadways," seatbelt usage could have prevented an estimated 9,200 fatalities.
"Click It or Ticket" represents another bold step along the road to serfdom. History knows of no totalitarianism agenda where noble goals weren't used as justification. Nazis used "for the good of the German Volk" and the Soviets used "for the good of the proletariat" as their justification. Health and safety have become the American justification for attacks on liberty.
In a free society, each person owns himself. As such, he has the broad discretion to make his own choices regardless of what others think of the wisdom of his choices. He has the right to take chances with his own health and safety. However, if an American doesn't own himself, and it's Congress that owns him, he doesn't have those rights. Thus, the "Click It or Ticket" program is simply Congress' way of caring for its property, the American people.
Whether seatbelt usage is a good idea is beside the point, for daily exercise, nutritious meals, eight hours sleep, and cultural and intellectual enrichment might also be good ideas. The point is whether government has a right to coerce us into taking care of ourselves.
If eating what we wish is our business and not that of government, then why should we accept government's coercing us to wear seatbelts? America's tyrants might answer, "We just haven't gotten around to dictating diets yet."
Some might argue, but falsely so, that the problem with people exercising their liberty to drive without seatbelts, ride motorcycles without helmets or eat in unhealthy ways is that if they become injured or sick, society will be burdened with higher health-care costs. That's not a problem of liberty but one of socialism.
There's no liberty-based argument for forcing one person to care for the needs of another. Under socialism, one is obliged to care for another. A parent-child relationship emerges between the citizen and the government. That was not the vision of our Founders.
©2003 Creators Syndicate, Inc.
http://www.townhall.com/columnists/walterwilliams/ww20030910.shtml
Falls woefully short and isn't srtong enough in his argument. This is a capitalist republic not a socialist republic...
WHICH METAL WILL SHINE: SILVER OR GOLD?
Does it matter which metal is purchased, silver or gold? The interesting reality is that it does matter. Celebrated investors such as Warren Buffett, Bill Gates and George Soros have been demonstrating with their wallets, a firm belief in the shimmering metal, silver. In fact, Warren Buffet has invested over $500 million in silver with his purchase of 129 million ounces. Bill Gates, invested $10 million of his personal estate into the Pan American Silver company. Lastly, George Soros and his brother own 26% of the Apex Silver Mines (8.) Why do these distinguished financiers desire to own solid positions in silver interests, as opposed to gold? Because, silver is remarkably undervalued and is rebounding after 100 years of lower prices.
Indeed, there are numerous arguments in favor of silver as the metal of investing choice, far too many for the scope of this article. Yet this point is critical, when metals gained popularity in the past, one ounce of gold could purchase 16 ounces of silver. Currently, one gold ounce can buy 70+ silver ounces! This indicates that silver represents a 5 fold, or 500%, discount relative to gold.
CONCLUSION
Clearly, the answer to the statement: to buy or not to buy precious metals--is yes. Technical analysis is suggesting that an incredible shift is occurring within the trend of precious metals prices. The centuries long decline in metals prices appears to have reached its conclusion and a new trend of higher prices is emerging. Fundamental analysis is revealing that the price of silver is recovering from a recent 100 year low and is as much as 500% less expensive than its shinny cousin - gold. Additionally, the specter of higher commodities prices and the potential for significant inflation is looming overhead, like The Sword of Damocles.
Undoubtedly, given the conditions outlined in this text, one investment can pledge capital safety while offering substantial profits: silver. Perhaps a line from William Shakespeares' timeless work, Julius Caesar, best captures the incredible opportunity manifesting within the silver market: "There is a tide in the affairs of men -- Which, taken at the flood, leads on to fortune"(9).
The whole thing with nifty neat charts and graphs:
http://www.gold-eagle.com/editorials_03/waltzek091003.html
End of the credit line?
America could be in for a nasty shock if foreign investors decide to stop bankrolling its massive trade deficit, writes William Keegan
Tuesday September 9, 2003
A hegemonic economy can do what it likes - or can it? The widespread assumption in the financial markets until recently was that the Bush administration can go on piling up record trade deficits and there is not much the rest of the world can do about it.
Indeed, what the rest of the world does, especially the east Asian part of it, is to recycle hundreds of billions of dollars straight back to New York, in the form of purchases of bonds and Treasury bills.
This arrangement, we are told, produces bliss all round. The US consumer carries on consuming more than he or she produces; the US government carries on borrowing as if there were no tomorrow; and countries such as Japan and China do not have to revalue their currencies, thereby retaining the international competitiveness that sustains the remarkable Chinese growth rate and Japan's slow recovery from recession.
Such is the putative convenience of this process that some commentators have even begun to suggest that Treasury secretary John Snow's recent trip to east Asia - when he did not have much success in persuading governments to revalue their currencies - was just a charade to please those in the US heartlands who are worried about losing jobs to the supercompetitive east.
I wonder. It seems to this distant observer - but regular visitor to the US - that the jobless recovery is a big issue over there. However much the consumer benefits from cheap Asian imports, in the end citizens and voters want jobs, and they hold the government responsible. Hence the famous Clinton remark, now an almost unbearable cliché: "It's the economy, stupid." In this context, one of the paradoxes of the phenomenon known as globalisation is the way US multinationals own many of the companies which manufacture in, and export from, mainland China, thereby profiting - literally - from low-cost labour and an extremely competitive exchange rate.
But how long can the willing recycling of trade surpluses continue? The limits of economic hegemony seem to have occurred to the US administration as it contemplates a $4bn (£2.5bn) monthly bill for military operations in Iraq and estimates that rebuilding Iraq next year could cost $75bn. Suddenly, having gone to war against the wishes of continental Europe, Washington wants the "cheese-eating surrender monkeys" and others to share the bill.
At the same time the combination of escalating US budget deficits and a falling bond market has aroused fears in financial circles about US dependence on foreign funds. As for the Asian investors themselves, there were suggestions in yesterday's Financial Times that flows may not be so generous in the future.
There are precedents for the denting of assumptions that the hegemonic economic power can go on blissfully borrowing indefinitely. Britain in the heyday of empire, and during its long decline from hegemony, found that its economy could be vulnerable to sudden withdrawals of funds that were deposited in London.
In 1979 the US economy itself was hit by a crisis of confidence, which involved a slowdown and withdrawal of foreign inflows. These are early days, and recent reports may prove to be alarmist. But the Bush administration, whose economic policy is obviously dominated by electoral considerations, could get nasty shock if foreign investors began to demand a significantly higher price for their funds.
http://www.guardian.co.uk/economicdispatch/story/0,12498,1038689,00.html
Art's Desire:
http://www.artsdesire.info/
Click Gallery and let it load; you get a slide show...
CNN = “Contains No News” e
A Long History of Voting Irregularities
compiled by Bev Harris in her upcoming book Blackbox Voting
Bug list excerpts from the actual Diebold programming files:
• bug in VIBS causing Straight Party races not to work properly.
• problem with race stats results not being sent correctly.
• bug in BallotDLG when ballot with the votes appears after touching Start button or any where else on the screen couple of times.
• Fix bug with candidate totals
• Richard Miholic, a losing Republican candidate for alderman was told that he won. He was among 15 people in four races affected by ES&S vote-counting errors in the Chicago area.
• An Orange County California election computer made a 100 percent error. The Registrar of Voters Office initially announced that a school bond issue lost by a wide margin when in fact it was supported by a majority of the ballots cast. The error was due to a programmer reversing the “yes” and “no” answers in the software used to count the votes.
• According to the Wall Street Journal, in the year 2000, an ES&S optical scan machine in Allamakee County Iowa was fed 300 ballots and reported four million votes.
• A computer program that was specially enhanced to speed Kane County's election results to a waiting public did just that — unfortunately, it sped the wrong data. Voting totals for a referendum proposal said it had lost when it actually was approved. For some reason, software which worked earlier without a hitch waited until election night to get it wrong.
• In Polk County Florida, County Commissioner Marlene Duffy Young lost the election to Bruce Parker, but regained the seat after a court-ordered hand recount. After the recount, county commissioners unanimously voted to ask for a grand jury probe. Testifying were Todd Urosevich, a vice president with American Information Systems Inc., the company that sold the county its ballot-counting equipment. The machines had given the election to Parker (a Republican) but a hand recount revealed that Young (a Democrat) had won. Todd Urosevich said his machines were not responsible for the miscount.
• A grand jury was convened in Stanislaus County California to determine what caused computerized voting machines to misreport election results. The grand jury concluded that an ES&S computerized counting system miscalculated the votes for three propositions. A hand recount of the ballots resulted in Measure A, a state proposition, being reversed. ES&S machines had reported that it lost badly, but it had won. According to Karen Matthews, county clerk recorder and registrar of voters, the problem occurred because of a incorrect programming in the counting system produced by ES&S.
• In Union County, Florida a programming error caused machines to read 2,642 Democratic and Republican votes as entirely Republican. The vendor, ES&S, accepted responsibility for the incorrect programming.
• Among the problems outlined by the Democratic Party in the infamous Florida election in 2000: A faulty “memory card” in a polling machine, which counts and reports the tally by modem, resulted in a DeLand precinct's reporting that presidential candidate Al Gore had negative 16,022 votes. The computerized vote tally gave the Socialist Workers Party candidate almost 10,000 votes — about half the number he received nationwide.
• In Conroe, Texas congressional candidate Van Brookshire wasn't worried when he looked at the vote tabulation and saw a zero next to his name. After all, he was unopposed in the District 2 primary and he assumed that the Montgomery County Elections Administrator's Office hadn't found it necessary to display his vote. He was surprised to learn the next day that a computer glitch had given all of his votes to U.S. Rep. Kevin Brady, who was unopposed for the nomination for another term in District 8. A retabulation was paid for by ES&S, the company that made the programming mistake. The mistake was undetected despite mandatory testing.
• In Tennessee, a computer snafu temporarily stopped the Shelby County vote count after generating wildly inaccurate results and forcing a second count that continued into the morning. State Sen. Roscoe Dixon huddled with other politicos around a single copy of the latest corrected election returns that quickly became dog-eared and riddled with circles and "X"s. “This system should have been checked,” Dixon said.
• Pamela Justice celebrated her re-election to the school board in Dysart, Arizona. But because of incorrect programming in the county's computer, the computer had failed to count 1,019 votes. When those votes were added in, Justice lost the election to her opponent, Nancy Harrower. “We did an accuracy test before election day and the computers worked fine,” said Karen Osborne, county elections director
• In a Salt Lake City Republican primary election, 1,413 votes never showed up in the total. A software programming error caused a batch of ballots not to count, even though they had been run through the machine like all the others. When the 1,413 missing votes were counted, it reversed the election
• 1971, Las Vegas Nevada — A precedent was set for seating a candidate challenging incorrect voting machine tallies. Machines declared Democrat Arthur Espinoza Republican to be the winner, but Hal Smith challenged the election when he determined that some votes had not been counted due to a faulty voting machine. After unrecorded votes were tallied, Smith was declared the winner.
• 1986, Atlanta, Georgia — Wrong candidate declared the winner. Incumbent Donn Peevy was running for state senator in the old District 48, which straddled Barrow and Gwinnett counties. The machines said he lost the election. After an investigation revealed that a Republican elections official had kept uncounted ballots in the trunk of his car, officials also admitted that a computerized voting program had miscounted. Peevy insisted on a recount. "When the count finished around 1 a.m., they walked into a room and shut the door,” recalls Peevy. “When they came out, they said 'Mr. Peevy, you won.' That was it. They never apologized. They never explained.
• 1994, New Orleans Louisiana — Voting machine tests performed and videotaped by candidate Susan Barnecker immediately after the election demonstrated that votes she cast for herself were electronically recorded for her opponent. This test was repeated several times with the same result. (The video footage of this incident can be seen on Dan Hopsicker’s documentary video The Big Fix, 2000, Mad Cow Productions).
• November, 1996, Bergen County, New Jersey — Democrats told Bergen County Clerk Kathleen Donovan to come up with a better explanation for mysterious swings in vote totals. Donovan blamed voting computers for conflicting tallies that rose and fell by 8,000 or 9,000 votes. The swings perplexed candidates of both parties. For example, Cassano, the Republican freeholder had beaten Guarino by about 7,000 votes as of the day after the election but the lead evaporated later. One candidate actually lost 1,600 votes during the counting. "How could something like that possibly happen?" Guarino asked. "Something is screwed up here."
• November 1996, Guadalupe County Texas — Officials discovered a voting computer counted more votes in the presidential election than the number of ballots cast.
• July 1996, Clark County Nevada — According to a Las Vegas Review-Journal article, a technician removed thousands of files from the tabulation sector of the program during the vote count "to speed up the reading of the count." Reconfiguring a computer program that effects the tabulation of votes is prohibited without prior state verification.
• December 1997, Akron Ohio — Scrambled votes: Ed Repp won the election — no, cancel that, a software programming error was discovered — Repp actually lost. (Oh look, twins!) Another programming error in the same election resulted in incorrect vote totals for the Portage County Board election. (Make that triplets!) Turns out the bond referendum results were wrong too.
• August 1997, Oklahoma — Computers gave the election to the wrong candidates, twice. The private company hired to handle the election for the Seminole Nation announced results for tribal chief and assistant chief, then decided that their computer had counted the absentee ballots twice, so they posted a second set of results. Tribal officials then counted the votes by hand, producing yet a third, and this time official, set of results. Each of the three sets of results had a different set of candidates moving on to the runoff election.
• 1984 Tucson, Arizona — 826 legitimate ballots were discarded in Oro Valley due to a computer error. The error wasn’t discovered until after the deadline for counting them.
• 1996 Tucson, Arizona — Software programming mixed up the votes cast for two Republican Supervisor candidates.
• 1997 Tucson, Arizona — More than 8,300 votes in the City Council race were initially left uncounted because of defective ballots, which were provided by the voting machine company.
• 1997 Tucson, Arizona — The city had to hand-count 79,000 votes because of a manufacturing defect in the ballots, provided by the voting machine company.
• 1998 Tucson, Arizona — 9,675 votes were missed in the tabulation. After canvassing, officials realized that no votes were recorded for 24 precincts even though voter rolls indicated thousands had voted at those polling places. Global Elections Systems tried to figure out why the computer failed to record the votes.
• July 1998, Cobb County Georgia — On-the-spot reprogramming was done (after votes were cast) because the computer would not read any votes cast for state representative Sharon Cooper. "The computer couldn't find her votes at all." said Paul Ruth, applications manager of the county's information services department.
• November 1998 Franklin County, Ohio — One candidate was incorrectly credited with 14,967 votes; another received 6,889 in error. Congress Pryce and Kasich gained 13,427 votes and 9,784 votes, respectively, after election officials hand-checked vote totals in 371 machines that were affected by a software programming error.
• November 1998, Washoe County Nevada — A breathtaking number of snafus in the Washoe County registrar's office caused candidates in Reno to liken the election to the movie, "Groundhog Day," with every day starting all over to repeat itself. Count votes. Computer failure. Go to court. Count more votes. Software programming error. More counting. Back to court. And so on
• September 1998, Kansas City Kansas — Republican John Bacon, a staunch conservative, celebrated a resounding victory over moderate Republican Dan Neuenswander. Two weeks later Neuenswander learned that the race was actually dead even, which should have qualified him for a recount except that the deadline had passed. No one offered any explanation why it was 24 votes not 3,018 that separated Dan from John
• August 1998, Memphis Tennessee — In the governor’s race, a software programming error in Shelby County began generating inaccurate results. Votes went to the wrong candidates. Computer cartridges containing 295 individual precinct results were taken to a central location, because the scanner couldn’t read the cartridges. The system that was shut down was posting the incorrect results to newsrooms across the city that had computer links to the data. At least one television station broadcast the bogus results. Which brings up a question: Why were newspaper and TV hooked directly up to computerized voting machines?
• November 1999, Onondaga County — Computers gave the election to the wrong candidate, then gave it back. Bob Faulkner, a political newcomer, went to bed Tuesday night confident he helped complete a Republican sweep of three open council seats. But after Onondaga County Board of Elections staffers rechecked the totals Faulkner had lost to Democratic incumbent Elaine Lytel. Just a few hours later, election officials discovered a software programming error had given too many absentee ballot votes to Lytel. Faulkner took the lead.
• November, 2000 San Francisco, California — In polling place 2214, machines counted 416 ballots, but there were only 362 signatures in the roster, and the secretary of state found only 357 paper ballots.
• April 2002, Johnson County Kansas — Johnson County's new Diebold touch screen machines, proclaimed a success on election night, did not work as well as originally believed. Incorrect vote totals were discovered in six races, three of them contested, leaving county election officials scrambling to make sure the unofficial results were accurate. Johnson County Election Commissioner Connie Schmidt that internal checks revealed that the system had under- and over-reported hundreds of votes. Schmidt said the voting machines worked fine, they just tabulated wrong. "The machines performed terrifically," said Robert J. Urosevich, president of Diebold Election Systems. "The anomaly showed up on the reporting part." The problem, however, was so perplexing that Schmidt asked the Board of Canvassers to order a hand re-count to make sure the results were accurate. Unfortunately, the touch screen machines did away with the ballots, so the only way to do a hand recount is to have the machine print its internal data page by page. Diebold tried to re-create the error in hopes of correcting it. "I wish I had an answer," Urosevich said. In some cases, vote totals changed dramatically.
• November 2002, Palm Beach Florida — A Florida woman, a former news reporter, discovered that votes were being tabulated in 644 Palm Beach precincts, but only 643 precincts have any eligible voters. An earlier court case in Florida found the same discrepancy, and the reason for it was never satisfactorily explained.
• August 2002, Clay County Kansas — A squeaker — no, a landslide — oops, we reversed the totals — and about those absentee votes, make that 72-19, not 44-47. Software programming errors, sorry. Oh, and reverse that election, we announced the wrong winner — The machines said Jerry Mayo ran a close race but lost, garnering 48 percent of the vote, but a hand recount revealed Mayo won by a landslide, earning 76 percent of the vote.
• September 2002, Union County, Florida — A programming error caused machines to read 2,642 Democratic and Republican votes as entirely Republican.
• November 2002, Dallas Texas — When 18 machines were pulled out of action in Dallas because they registered Republican when voters pushed Democrat, the judge quashed an effort to investigate the accuracy of the tally.
• November 2002, Scurry County Texas — When Scurry County poll workers got suspicious about a landslide victory for Republicans, they had a new computer chip flown in and also counted the votes by hand — and found out that Democrats actually won by wide margins, overturning the election.
• March 2002, Medley Florida — Voting machines gave the election to the wrong candidate. The cause was attributed to a software programming error by voting machine technician. County Elections Supervisor David Leahy said he was concerned because the computer did not raise any red flags, and humans had to spot the error.
• November 2002, Baldwin County Alabama — No one at ES&S can explain the mystery votes that changed after polling places had closed, flipping the election from the Democratic winner to a Republican in the Alabama Governor's race. "Something happened. I don't have enough intelligence to say exactly what," said Mark Kelley, of ES&S. Baldwin County results showed that Democrat Don Siegelman earned enough votes to win the state of Alabama. All the observers went home. The next morning, however, 6,300 of Siegelman's votes inexplicably disappeared, and the election was handed to Republican Bob Riley. A recount was requested, but denied.
• November 2002, North Carolina — Computer misprogramming overturned the result: In North Carolina, a mistake in the computer program caused vote-counting machines to skip over several thousand party-line votes, both Republican and Democratic. Fixing the error turned up 5,500 more votes and reversed the election.
• November 2002, Gretna Nebraska — This crushing defeat never happened: Vote-counting machines failed to tally "yes" votes on the Gretna school-bond issue, giving the false impression that the measure failed miserably. The measure actually passed by a 2-1 margin. Responsibility for the errors was attributed to ES&S, the Omaha company that provided the ballots and the machines. 97
• November 2002, South Carolina — A software programming error of 55 percent: In South Carolina, and it caused more than 21,000 votes in the squeaker-tight race for S.C. commissioner of agriculture to be uncounted
• February 2003, Everett, Washington —If there was any doubt that Republicans were right to ask for a recount of some Snohomish County absentee ballots from November's general election, it was erased by one sobering number: 21.5 percent of the ballots cast in 28 selected precincts were not counted. The Snohomish County Auditor's Office recounted 116,837 absentee ballots Thursday after county officials discovered that the optical scan ballot-counting machines had miscounted
"Gimme five (electoral) commissioners, and I'll make them voting machines sing `Home Sweet Home.'" — Gov. Earl Long, Louisiana
Sources and links:
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View the Kara Sinkule email here
And the contradictions by all involved - Michael Barnes (Kara's boss), Dr. Williams, and Diebold themselves
Black Box Voting web site
Who are we?
Contact information:
Denis Wright
denis_wright@workersrighttovote.org
404 932-8870
Contact the author: Pamela Troy
http://workersrighttovote.org/more.htm
Voting Machine Companies Come Under Scrutiny
In a groundbreaking effort, writer Bev Harris of Talion.com and journalist Lynn Landes of EcoTalk.org are compiling extensive information on the voting machine companies operating in the United States.
Voting machine companies are privately held and extremely secretive. They form a web of overlapping ownership, financing, staff, and equipment that makes it difficult to separate one from the other. These companies are also owned by individuals and organizations with vested interests.
According to U.S. Senator Chuck Hagel's (R-NE) press office, in 1995 Hagel resigned as CEO of American Information Systems (AIS), the voting machine company that counted the votes in his first Senatorial election in 1996. In January 1996 Hagel resigned as president of McCarthy & Company, part of the McCarthy Group that are one of the current owners of Election Systems and Software (ES&S), which itself resulted from the merger of AIS and Business Records Corporation. According to Bev Harris, Hagel is still an investor in the McCarthy Group. ES&S is now the largest voting machine company in America and one of its largest owners is the ultra-conservative Omaha World-Herald Company.
According to Nebraska's Elections Office, ES&S is the only voting machine company certified to count votes in the state. Twenty percent of the vote in Nebraska is hand-counted.
ES&S claims to have counted 56% of the vote in the last four presidential elections. Bob and Todd Urosevich founded its predecessor AIS in the 1980's. Bob is now president of Diebold-Global, while brother Todd is a vice president at ES&S. Business Records Corp. which was merged with AIS to become ES&S, was partially owned by Cronus, a company that seems to have a lot of connections to the infamous Hunt brothers from Texas, as well as other individuals and entities, including Rothschild, Inc.. Right wing Republicans Howard Ahmanson (who financed AIS) and Nelson Bunker Hunt have both heavily contributed to The Chalcedon Institute, an organization that mandates Christian "dominion" over the world.
Sequoia Voting Systems appears to be the second largest voting machine company, accounting for about 1/3 of the voting machine market. As of May 2002, Sequoia was purchased by Great Britain's De La Rue from Ireland's Jefferson Smurfit Group, who retain a 15% share. Smurfit was just bought by Madison Dearborn Partners, a private equity investment firm. De La Rue owns 20% of the Great Britain's national lottery. In 1995 the Security and Exchange Commission filed charges against four employees of Sequoia, alleging that they inflated revenue and pre-tax profits. In 1999 the Justice Department filed federal charges against employees of Sequoia alleging that during a 10-year period $8 million in bribes were paid out. Louisiana's Commissioner of Elections Jerry Fowler had run up some big gambling debts in Atlantic City, according to reporter Daniel Hopsicker. In all, 22 people were indicted, 9 plead guilty. Fowler went to jail, but Pasquale "Rocco" Ricci of New Jersey got one year of home detention.
Advanced Voting Solutions is the new name of another voting company, Shoup Voting Solutions. Their current top management, Howard Van Pelt and Larry Ensminger, were executives for Diebold-Global until last year. Officers of Shoup Voting Machine Co. were indicted for allegedly bribing politicians in Tampa, Florida in 1971, according to the San Francisco Business Times. Ransom Shoup was convicted in 1979 of conspiracy and obstruction of justice related to an FBI inquiry into a lever machine-counted election in Philadelphia. Shoup got a three-year suspended sentence. Meanwhile, Philadelphia has bought new voting machines from Danaher-Guardian, which appears to only sell voting machines formerly known as the "Shouptronic."
Danaher-Guardian is owned by billionaire brothers Steven M. and Mitchell P. Rales, who were described by columnist Jack Anderson in 1988 as "a pair of corporate raiders out of Washington DC." Again, Danaher-Guardian appears to only sell formerly Shouptronic voting machines.
Diebold-Global's current president, Bob Urosevich, was the co-founder of American Information Systems which became ES&S. As mentioned before, Diebold-Global's top managers, Howard Van Pelt and Larry Ensminger, recently moved to Advanced Voting Solutions-Shoup.
Oregon has rejected voting machines altogether and handles its entire election through the mail. (Correction: Mailed-in ballots are counted on optical scanners.) The state of Washington offers the mail-in option, and Colorado is considering mandatory mail-in voting.
For more information:
Lynn Landes
(215) 629-3553
lynnlandes@earthlink.net
www.EcoTalk.org
http://www.ecotalk.org/pressrelease.htm
Asia's Hello Kitty consumers lap up credit
By John Mulcahy
In 1998 South Koreans lined up to donate their gold jewelry in a profound display of voluntary economic sacrifice. Sacrifice seems no longer the order of the day. The country is suddenly reeling from a consumer credit binge, and nor is it alone. South Korea is the champion of credit-card growth, but double-digit annual growth in credit-card receivables has been recorded in Thailand, Taiwan, India, Singapore, Hong Kong and Malaysia over the past five years.
For generations, Asians have been the world's most thrifty savers, with an average savings rate across Asia outside Japan of 31.6 percent of gross domestic product (GDP) in 2002, according to the Asian Development Bank (ADB). As late as 1997, the Chinese were saving an astonishing 75 percent of their total income. The only countries in Asia with savings rates below 20 percent are Pakistan, at 12.7 percent of GDP, and the Philippines, at 16.8 percent.
The implications of the current rampant consumerism are unknown, but they could be cause for serious concern. Growth in credit-card usage everywhere in Asia has been consistently outstripping GDP growth and, according to consultants McKinsey, the growth in credit cards has been accompanied by rapid growth in defaults. In Hong Kong, personal bankruptcy has become a recognizable household finance strategy, with personal bankruptcies in 2002 more than 28 times the number in 1998. Japanese-owned AEON famously used the Hello Kitty brand to expand its market penetration. These cards, issued almost instantaneously, allowed AEON to leapfrog many of its competitors' market share. In Thailand, GE Capital used a different ploy, offering private-label credit cards, giving it access-by-proxy to a huge customer base.
It appeared from these successes that credit cards were an easy way to make money. Younger consumers, unconstrained by their parents' traditional aversion to risk and credit, and driven by peer pressure to accelerate consumption, have changed the landscape for credit-card issuers. But the headaches from the binge are painful, and there is no quick fix. Legal systems are not equipped to deal with the phenomenon of consumer-credit delinquency, and there is a limited culture of personal bankruptcy.
A McKinsey report advocates the establishment of regional credit bureaus, which are currently used in Asia only to share negative information, such as late bill payments and loan defaults. "But for bureaus to make a true assessment of a borrower's risk, they must also have access to positive information, including current outstanding loans, available credit limits and payment histories," McKinsey says.
The firm makes the point that banks can limit the total debt of individuals to a reasonable multiple of their incomes by sharing information about existing loans through a bureau. But "if some institutions fail to work with it, individuals can always exceed that limit by borrowing from those that don't participate".
In a way, Asia's wayward private borrowers can be understood, if not forgiven. As the dust settles on the Asian financial crisis and attention is turned to the next growth phase, the stock of non-performing loans is in excess of US$2 trillion. This burden on the region's banks remains a ticking time bomb, as in many cases the banks have resumed lending without adequately dealing with the gaps on their balance sheets.
Perhaps the only good news on the consumer-credit front is the fact that China has not yet embraced this form of lending. China is still struggling to cope with its huge corporate-debt problem, and compounding this with a consumer-credit crisis would pose serious questions about China's capacity to deal with its overall credit problems. Not that China's entrepreneurs are unaware of the opportunities in the credit-card market, of course. This year it was reported that a fake-credit-card ring had been cracked, as police seized more than 17,000 MasterCard and Visa credit cards. It is estimated that fewer than 5 percent of court judgments in China are enforced, and these are all corporate borrowers. There is no tradition, at least in the past 50 years, of banks using courts to enforced credit agreements.
Debtors throughout Asia have exploited weak legal systems. Thailand's antiquated system, requiring creditors to prove insolvency before enforcing arbitration, has seriously delayed debt consolidation and workouts.
The consumer-credit binge runs contrary to long-established conventional wisdom, which states that Asian individuals are risk-averse, and prefer cash to credit. They have learned very quickly, and official data seem to support the notion that Asian consumers are more wary of credit than their US counterparts. Up to 2001 there were no Asian countries with credit-card penetration rates approaching the 82 percent of the United States. By 2003, however, both South Korea and Hong Kong reported rates of credit-card use similar to the US, while credit-card usage has increased quickly throughout the region.
In South Korea, Standard Chartered's head of the consumer financing sector, in announcing the bank's intention to offer consumer banking services, said recently that the Korean market was "very attractive" because it represented 50 percent of Asia's consumer-loan growth. However, South Korea's consumer-debt defaults have been rising, due partly to the overall slowdown in the economy, but also to the tighter regulation, ending the practice of "card kiting", where holders of multiple credit cards use one card to repay outstanding debt on another.
South Korea's consumer boom, and indeed growth in consumption throughout Asia, has been seen as the solution to slower global growth. But aggressive marketing by banks and other financial institutions, desperate to replace corporate business lost to equity and other capital sources, has created the two-edged sword of consumer credit.
An ADB report notes that South Korea's "household debt surged to three-quarters of GDP as at end-2002, from less than half in 1999". Thailand's rapid expansion in private investment, according to the ADB (13.3 percent in 2002 from 4.7 percent the previous year), "appears to be related to housing construction rather than productive capacity".
It could be argued, of course, that after the investment binge of the 1990s, driven by easy capital and cheap credit, the last thing Thailand or its Asian neighbors need is more capacity. But the question is whether the excessive expansion of consumer credit will come back to haunt Asia, as its corporate-credit binge did five years ago.
The end of Asia's asset-price inflation boom in 1997 produced a commercial-credit crisis that shattered the region's reputation for savings-driven economic expansion. Non-performing loans as a proportion of GDP among Asian countries range from around 10 percent in the Philippines to well over 50 percent in China. In Thailand and Malaysia, bad debts represent more than 40 percent of GDP.
Traditionally, Asian banks accepted deposits from the region's thrifty individual depositors, lending the funds to corporate borrowers with little apparent regard for effective risk management. The collapse of corporate balance sheets across the region after the 1997-98 crisis persuaded the banks to shift their lending focus to consumers. Described more than a year ago as "the single most powerful theme in Asian financial services", consumer lending has been the flavor of the year in 2002 and 2003. But these institutions have been discovering that the high rewards of consumer lending (gross margins on credit-card lending are 5 percent-plus) are accompanied by extremely high risk.
Private-consumption spending is cited as a key driver of economic growth in Thailand, Indonesia, Malaysia and other Asian countries. Aggressive pump-priming through monetary-policy measures (interest-rate reductions) and in some cases relaxation of consumer-credit controls have added an official imprimatur to the banks' inclination to explore retail markets as an alternative to the sluggish corporate credit environment.
The ADB notes that the strong growth in Indonesia's bank credit since 2002 has been due almost entirely to the consumer sector. The banks' loan-deposit ratio has risen sharply over that time, although it is still comparatively low at 45 percent. This high level of liquidity in the banking system reflected in the low loan-deposit ratio is reflected in high capital adequacy ratios (more than 20 percent), but the growth in consumer credit in Indonesia suggests the risks that have manifested themselves in South Korea and Hong Kong may in due course be repeated elsewhere in the region.
The pace of growth in household lending suggests it is likely there will be such negative consequences in due course. Up to the end of the 1990s, household credit represented 25-30 percent of bank lending. It is now estimated that this ratio has risen to 40 percent, and there is every sign it will continue to expand.
The consequences of this policy shift, without adequate credit controls, are already evident. In a single year - 2001-02 - default rates reported by South Korean banks on bank-issued credit cards rose to 12.2 percent from 7.3 percent. To put that into perspective, the increase in the default rate (4.9 percentage points) will have wiped out the profits on the credit-card business for these banks. In Hong Kong, where consumers have battled against collapsing asset prices and deflation for the past five years, the charge-off ratio for credit cards is about 12 percent. By comparison, the charge-off rate in the United States is about 7.5 percent.
It has long been accepted that there is a direct correlation between the delinquency rate of credit-card debt and the growth in volume. In other words, the sine qua non is that the more people who are issued credit cards, the greater the default ratio. It is inconceivable that the banks so aggressively issuing credit cards - in several markets credit cards are sent unsolicited to prospective holders - are unaware of this obvious link. It is simply a restatement of the Law of Diminishing Returns. And yet in Hong Kong, one of the more sophisticated banking markets in Asia, consumer bankrupts typically owe 42 times their monthly income in unsecured debt, according to McKinsey, double the debt of the average consumer bankrupt in the United States.
As Asia finally starts its recovery from the deep and prolonged crisis of the late 1990s, the South Korean example shows that there may be another credit crunch around the corner - and this time it may be even more difficult to extract payment from the defaulters.
(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
http://www.atimes.com/atimes/Asian_Economy/EI10Dk01.html
As Bush spreads lies throughout the land, dissenters are corralled into “Free Speech Zones” –- is this America?
By Mick Youther
Did you see the coverage of Prime Minister Tony Blair arriving to testify at the Royal Courts of Justice last week? The street was a mob scene with police, security vans, motorcycles, and protesters. The protesters greeted Blair by chanting “Shame on You.” and banners accusing him of using “weapons of mass deception.” “Bliar” T-shirts and Pinocchio-style noses were the fashion of the day for the protesters collecting signatures demanding Blair's resignation. All and all, it was rude, rowdy, disgusting display of British democracy in action. America doesn’t have to worry about that kind of ugly scene anymore.
• “Anyone with an anti-Bush sign is relegated into what is euphemistically called a Free Speech or Demonstration Zone -- a swath of land usually off the main thoroughfare and chained off so as to make it virtually impossible for the targets of the protest to read the signs or hear the chants.”
--Robyn E. Blumner, St. Petersburg Times, 10/13/02
• “We were not allowed anywhere near any kind of position where the president, or the media which follows him, would see or hear us…. The effort being made to hide political opposition in this country is more than cowardly. It's un-American.”
--Peter Buckley, candidate for Congress in Oregon
• “You may have seen the item yesterday about demonstrators against President Bush being herded inside a fence at Neville Island for his Labor Day visit. Police called this enclosure the designated free-speech area, though anyone who had signs praising the president was evidently OK to line the island's main street for the motorcade.”
--Brian O'Neill Pittsburgh Post-Gazette September 5, 2002
• “We're not prejudiced against who you're protesting for or against. We don't designate a protest area based on the message.”
--Jean Mitchell, Secret Service spokeswoman
• “I asked him if it was the content of my sign, and he said, ‘Yes, sir, it's the content of your sign that's the problem.’ And so it's just become a matter of procedure that the Secret Service is clearing the area of anybody that would have a message that would be contrary to George Bush's policies.”
--Brett Bursey,activist arrested for holding a "No War for Oil" sign outside a Free Speech Zone
One of the more disturbing aspects of all this is the willingness of local authorities to follow the Bush Administration’s lead and harass peaceful protesters. They give excuses, “We’re just doing our job,” or the more infamous -- “We are just following orders.” Neither excuse is acceptable.
• “When I asked the officer why we were not allowed on the sidewalk like the people walking to the picnic and residents holding pro-Bush signs, he simply said, ‘Orders.’”
--Regis T. Sabol, New Deal Publications
• “When we asked why [we would be arrested if we did not move to a cordoned-off area out of sight of the crowds] we never got a clear answer; something like being a threat to national security, or something to that effect. He was just ‘doing his job.’”
--Dorothy Wolden, Northland Chapter of Grandmothers for Peace, 8/29/03
We cannot allow Bush & Co. to spread their campaign of lies across America while we stand quietly behind the dumpster on the other side of the building. They can visit our communities, but that doesn’t mean they own them. Maintaining security is one thing, but a sign that says “Bush is a Liar” is no more dangerous than one that says “Bush in ’04.”
We need to let our local elected officials know, in advance, that our local authorities had better not take part in any Gestapo tactics orchestrated by Federal agents. Their job is to protect and defend the Constitution, not suppress peaceful protests against Bush & Co.
Demand that your representatives in Congress pass legislation that will put an end to “Free Speech Zones.” When it comes to peaceful assembly and protest, America is the Free Speech Zone.
• “Congress shall make no law … abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
--Constitution of the United States, The Bill of Rights, Article I
• “Terrorism cannot take away your freedom. That's impossible. It is only George W. Bush and his government that can, and in doing so, he is making sure the terrorists have won."
--Wade Inganamort, PrisonPlanet.com
• "We need to do more than be passive observers of history, because the decisions being made right now are our future....”
--High school sophomore Sol Kelley-Jones, representing Students for an Informed Response
Mick Youther is an Instructor in the Department of Phsyiology at Southern Illinois University in Carbondale, IL.
Posted Tuesday, September 9, 2003
[You may have also noted they control the airwaves. Hear any protest songs on the radio? Did you notice? Makes it seem like everybody is behind the shrub. Ain't Amerika great?]
http://www.interventionmag.com/cms/modules.php?op=modload&name=News&file=article&sid=489
Congressman Too Truthful
by: Congressman Ron Paul - House of Representatives
203 Cannon - Washington D.C. 20515
The other day, I made a huge "gaffe" on national TV: I told the truth about the crimes of the U.S. Government.
As you can imagine, the ceiling fell in, and a couple of walls too. Congressmen are supposed to support the government, I was told. Oh, it's okay to criticize around edges, but there are certain subjects a member of the House of Representatives is not supposed to bring up. But I touched the real "third rail" of American politics, and the sparks sure flew.
I was interviewed on C-SPAN's morning "Washington Journal," and I used the opportunity, as I do all such media appearances, to point out how many of our liberties have been stolen by the federal government. We must take them back. The Constitution, after all, has a very limited role for Washington, D.C.
If we stuck to the Constitution as written, we would have: no federal meddling in our schools; no Federal Reserve; no U. S. membership in the U.N.; no gun control; and no foreign aid. We would have no welfare for big corporations, or the "poor"; No American troops in 100 foreign countries; no Nafta, GATT, or "fast-track"; no arrogant federal judges usurping states rights; no attacks on private property; and no income tax. We can get rid of most of the cabinet departments, most of the agencies, and most of the budget. The government would be small, frugal, and limited.
That system is called Liberty. It's what the Founding Fathers gave us. Under liberty, we built the greatest, freest, most prosperous, most decent country on earth. It's no coincidence that the monstrous growth of the federal government has been accompanied by a sickening decline in living standards and moral standards. The feds want us to be hamsters on a tread mill working hard, all day long, to pay high taxes, but otherwise entirely docile and controlled. The huge, expensive, and out-of control leviathan that we call the federal government wants to run every single aspect of our lives.
Well, I'm sorry, but that's not America. It's not what the Founders gave us. It's not the country you believe in. It's not the country I believe in. So, on that TV interview, I emphasized not only the attacks on our property, but also the decline of our civil liberties, at the hands of the federal police. There's not supposed to be any federal police, according to the Constitution.
Then I really went over the line. I talked about the Waco massacre. Bill Clinton and Janet Reno claimed those 81 church members including 19 children, burned down thier own Church, killed themselves, and good riddance. So they put a few survivors on trial, and threw them in prison for 40 years.
We're not supposed to remember that the Bureau of Alcohol, Tobacco, and Firearms--talk about an unconstitutional agency--rather than arrest David Koresh on his regular morning jog, called in the TV stations for a big publicity bonanza, and sent a swat team in black masks and black uniforms to break down his front door, guns blazing. They also sent in a helicopter gun ship, to shoot the roof of a church full of innocents.
The Branch Davidians resisted, and after a heartless siege of almost two months, and after cutting off food, water, electricity, and playing horrible rock and roll through huge speakers 24 hours a day, the Feds sent in tanks to crush the walls of the church, and inject poisonous CS gas.
Now, CS gas is banned and under the Paris Convention on Chemical Warfare. The U.S. could not use it in war. But it could and did use it against American civilians.
After the tanks did their work on the church, the place burst into flames, and all 81 people--men, women, children, and babies--were incinerated in a screaming horror. Did some feds set the fire? Did the flammable CS gas ignite, since without electricity, the parishioners were using lanterns? Did a tank knock over a lantern, striking one of the bales of hay being used against the thin walls as a defense against bullets? Or did the Davidians, as Clinton and Reno claim, kill themselves?
A new documentary- -Waco: Rules of Engagement--may show, throughout FLIR infrared photography, FBI snipers killing the Davidians by shooting through the back of the church, where no media cameras were allowed. This film won a prize at the Sundance Film Festival. It was made by people who took government's side, until they investigated.
Whatever the truth, there's no question that an irresponsible federal government has innocent blood on its hands, and not only from Waco. And the refusal of corrupt perverse liberals to admit it means nothing.
It my interview, in answer to a caller's question, I pointed out that Waco, in the federal murders at Ruby Ridge'--especially the FBI snipers shot that blast apart the head of the young mother holding her baby caused many Americans to live in fear of federal power. Then uttered the sentiment that caused the media hysteria: I said that a lot of Americans fear that they too might be attacked by federal swat teams for exercising their constitutional rights, or merely for wanting to be left alone.
[How many of you only half jokingly have teased me or been concerned that something might happen to me because of the letters I write or the posts I make? That's called tyranny. You have fear, they have control. Have no fear and read the documents upon which this republic was founded.]
Whoa! You've never seen anything like it. For days, in an all-out assault, I was attacked by Democrats, unions, big business, establishment Republicans, and of course the media, in Washington in my home state of Texas. Newspapers foamed at the mouth, calling me a "right-wing extremist". (Say, isn't that what George III called Thomas Jefferson?)
I was even blamed for the Oklahoma City bombing! And by the way, I don't believe we've gotten the full truth on that either. All my many opponents were outraged that a congressman would criticize big government. "If you don't like Washington, resign!" said a typical big-city newspaper editorial.
But the media, as usual, were all wet. (Do they ever get anything right?) The average Congressman may go to Washington to wallow in power, and line his pockets with a big lobbying job for a special interest (so he can get keep ripping-off the taxpayers). But that's not why I'm in Congress. It's not why I left my medical practice as a physician. It's not why I put up with all of the abuse. It's not why I refuse a plush Congressional pension.
I'm in this fight for reason. I want to hand on to my children and grandchildren, and to you in your family, a great and free America, an America true to her Constitution, an America worthy of her history. I'll not let the crooks and clowns and criminals have their way. I'm in Congress to represent the ideas of Liberty, the ideas that you and I share, for the people of my district, for the people of Texas, for the people of America. That's why I'm working to stop federal abuses, and to cut the government: its taxes, its bureaucrats, its paramilitary police, its spending, its meddling overseas, and every single unconstitutional action it takes. And not with a pair of nail scissors, but with a hammer and chisel. Won't you help me do this work?
Not much of the federal leviathan would be left, if I had my way. But you'd be able to keep the money you earn, your privacy would be secure, your dollar would be sound, your local school would be tops, and your kids wouldn't be sent off to some useless or vicious foreign war to fight for the U.N.. But Jefferson and the other Founders would recognize our government, and our descendants would bless us. By the way, when I say cut taxes, I don't mean fiddle with the code. I mean abolish the income tax and the IRS, and replace them with nothing.
Recently, I asked a famous Republican Committee Chairman--who's always talking about getting rid of the IRS--why engineered a secret $580 million raise for the tax collectors. "They need for their computers," this guy told me. So the IRS can't extract enough from us as it is! The National Taxpayers Unions says I have the highest pro-taxpayer rating in Congressional history, that I am the top "Taxpayer's Best Friend". You know I won't play the Capitol Hill games with the Capitol Hill gang, denouncing the IRS while giving the Gestapo more of your money. Or figuring out some other federal tax for them to squeeze out of you. I also want to abolish the Federal Reserve, and send Alan Greenspan out to get a job.
[That's just crazy talk!!! Right?]
The value of our dollar in the level of our interest rates are not suppose to be manipulated by a few members of the power elite meeting secretly in a marble palace. The Federal Reserve is unconstitutional, pure and simple. The only constitutional money is gold and silver, not notes redeemable in them. Not fed funny money. Without the Federal Reserve, our money could not be inflated at the behest of big government or big banks. Your income in savings would not lose their value. Just as important, we wouldn't have this endless string of booms and busts, recessions and depressions, with each bust getting worse. They aren't natural to the free market; there caused by the schemers at the Fed. President Andrew Jackson called the 19th centuries Fed " The Monster" because it was a vehicle for inflation and all sorts of special-interest corruption. Let me tell you, things haven't changed a bit. I also work to save our schools from D.C. interference. Thanks to the feds, new curriculums not only smear the Founders as "racist, slave owning elitists," they seek to dumb down all our students so they will all be equal. "Look-say" reading and the abolition of phonics has the same purpose, and so does the new "fuzzy" math, in which there at no right and no wrong answers. That must be what they use in the U.S. Treasury! It's certainly what they use in the U.S. Congress.
But ever since the beginning of federal aid to education and accelerating with the establishment of the rotten Department of Education, SAT scores have been dropping. Schools, with few exceptions, are getting worse every year. To save our kids, we must get the sticky fingers of the feds off our local schools, and let parents rule. That's what the Constitution says, and the Bible too.
And then there's my least favorite topic, the U.N.. World government is obviously unconstitutional. It undermines our country sovereignty in the worst way possible. That's why I want us out of the U.N., and the U.N. itself taking a hike. After all, the U.N. is socialist and corrupt (many votes can be bought with a "blond and a case of Scotch" one U.N. ambassador once said). It costs many billions, and it puts our soldiers in U.N. uniforms under foreign commanders, and sends them off to unconstitutional, undeclared wars. When Michael New, one of the finest young men I've ever met, objected to wearing U.N. blue, he was kicked out of the American Army. What an outrage! Not one dime for the U.N., and not one American soldier! Not Haiti, not in Bosnia, not in Somalia, not in Rwanda. I know its radical, but how about devoting American military efforts to defending America, and only America?
Such ideas, said one newspaper reporter, make me a maverick, who will never go far because he won't go along to get along. Darn right! What does "go far" mean? Get a big government job? To heck with that. And I won't sell my vote for pork either. When I walked through the U.S. Capitol this morning, I got angry. The building is filled with statues and paintings of Jefferson, Madison, and the other Founders. Those great men sacrificed everything to give us a free country, and a Constitution to keep it that way. When I was first elected, I placed my hand on the Bible and swore an oath to uphold the Constitution. That's exactly what I'm fighting for. Such ideas drive the liberals crazy. That's why I badly need your help. I've been targeted nationally for defeat. The Democrats, the AFL-CIO, the teachers union, big business PACs, the trial lawyers, the big bankers, the foreign aid lobbyists, the big media, and the establishment Republicans want to dance on my political grave. The Fed, the Education Department, in the U.N. are anxious to join in. They can't stand even one person telling the truth. And they're terrified when that truth gains the people support.
Right now, four well funded Democrats are competing to try to beat me, and Republican is rumored to have been offered money at a secret meeting in Mexico(!) if he would try to knock me off in a primary. Won't you help me stay up here to fight? Frankly I'm in trouble if you don't. My Texas district has 22,000 square miles (not a misprint). I've got to travel all over it, set up small offices to be manned by volunteers, advertise, pay phone bills, and distribute video and audio tape to the people to get around the big media lies. As I know from my last election, which I won by the skin of my teeth, the media will carry any smear, repeat any libel, throw any piece of mud, no matter how untrue. In fact, the less true, the more they like it. They are determined to silence me.
http://www.geocities.com/Heartland/7006/truthful-paul.html
HOW THE GOVERNMENT IS USING A SHELL GAME TO FOOL YOU
By JOHN CRUDELE
September 9, 2003 -- WAS the nation's productivity miracle a hoax?
The supposed rise in productivity was the silver lining in the economic cloud of the last three years. Fed chief Alan Greenspan has spoken proudly of it, saying the United States was becoming a more efficient producer of goods.
But the slip of a tongue may call the whole productivity miracle into question.
Here's part of what Sen. Robert Bennett, chairman of the Joint Economics Committee, had to say on CNBC on Friday.
Bennett, a Republican, was discussing how he didn't believe the U.S. was bleeding jobs and that it was simply a calculation mistake, then he got off the topic.
"If you go back into the '90s and Alan Greenspan's examination of where the economy was, the productivity numbers that he was getting through traditional means all indicated productivity was down. And Greenspan gathered the economists . . . and the Fed together and said this cannot be right."
"They said, 'We are doing it the way we've always done it, so the numbers have to be right.' And [Greenspan] challenged them and said if you look at the other data they make it very clear that productivity has got to be going up.
"They went back and recalculated and discovered that their productivity numbers had been wrong for months if not years," Bennett concluded.
So, let me get this straight.
The Fed chairman doesn't like an economic statistic, so he tells some lowly economists to take a mulligan and do the calculations over. Amazingly, they discover exactly what the Fed wants them to discover - the politically important productivity miracle.
The Soviets had a habit of calculating their wheat crops in such a sloppy manner until the starving citizens wouldn't take it anymore.
As Wall Street continues to re-inflate the bubble, this one troubling question lingers for the those who are blowing air into stocks: Why aren't any jobs being created if the economy is improving as much as it is?
You already know what I think about the government's employment figures - they aren't trustworthy. Let me put it more bluntly: They stink.
But when you have a seventh straight month of job losses - including the 93,000 positions eliminated in August - you have to figure that, at the very least, the trend is accurate.
Washington says the economy is growing at better than 3 percent a quarter, as measured by the gross domestic product. Expectations are that the figure will improve during the period that ends Sept. 30.
Growth like that should be producing 200,000 to 300,000 new jobs each and every month. So, not only are we not adding to payrolls but we are still declining.
Perplexed big thinkers like the folks down at the New York Federal Reserve are publicly wondering if there is something new (and wrong) happening to the economy. I suggested in a column a few weeks back that the economy is "broken," because of a lot of historical actions and reactions that I don't want to repeat here.
But here's an even better answer to the missing jobs question: Maybe the economy really isn't growing as fast as Washington would have you believe. (I know you don't want to hear this, but it's better than believing a lie.)
I've written about this before. The subterfuge is quite simple.
The government comes up with the GDP number by taking the amount it thinks the economy is expanding and then subtracting the rate of inflation. In the first quarter of 2003, for instance, the growth rate was 1.4 percent after an annualized inflation of 2.4 percent was subtracted.
If the inflation rate had been zero, then growth would have been 3.8 percent.
You got that?
The 3.1 percent growth that was reported in the quarter ended in June assumes annualized inflation of only 0.8 percent.
Has inflation actually dropped that much - from 2.4 percent in the first quarter to just 0.8 percent? Where? Home prices? Gasoline? Heating oil? Insurance? College costs?
You get the point: Most big-ticket items are still rising steadily in cost.
Yet Washington thinks inflation fell from an already unbelievably low annualized rate of 2.4 percent earlier this year to an incomprehensibly low 0.8 percent.
If the government had used the same inflation rate that it did in the first quarter, the last three month's annual economic growth would have been just 1.5 percent (compared with 1.4 percent in the first quarter).
Maybe there are no jobs being created because economic growth is still dismal.
* Please send e-mail to:
jcrudele@nypost.com
http://www.nypost.com/business/5265.htm