JP Morgan Chairman: California Is A Greater Risk Than Greece

Jamie Dimon, chairman of JP Morgan Chase, has warned American investors should be more worried about the risk of default of the state of California than of Greece’s current debt woes.

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Governor Arnold Schwarzenegger is desperately trying to reduce California’s $20bn deficit Photo: BLOOMBERG

Mr Dimon told investors at the Wall Street bank’s annual meeting that “there could be contagion” if a state the size of California, the biggest of the United States, had problems making debt repayments. “Greece itself would not be an issue for this company, nor would any other country,” said Mr Dimon. “We don’t really foresee the European Union coming apart.” The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state’s $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

Earlier this week, the state’s legislature passed bills that will cut the deficit by $2.8bn through budget cuts and other measures. However the former Hollywood film star turned politician is looking for $8.9bn of cuts over the next 16 months, and is also hoping for as much as $7bn of handouts from the federal government.

Earlier this week, John Chiang, the state’s controller, said that if a workable plan to reduce the deficit and increase cash levels is not reached soon, he will have to return to issuing IOU’s, forcing state workers to take additional unpaid leave and potentially freezing spending.

Read moreJP Morgan Chairman: California Is A Greater Risk Than Greece

President Obama signs one-year extension of Patriot Act

Related article: US Senate votes to extend Patriot Act


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President Barack Obama turns to leave after speaking to the media about the recent earthquake in Chile outside the Oval Office of the White House in Washington Saturday, Feb. 27, 2010. Obama called the earthquake “devastating,”and said the U.S. has resources in position to deploy should Chile ask for help.
(AP)

WASHINGTON — President Barack Obama has signed a one-year extension of several provisions in the nation’s main counterterrorism law, the Patriot Act.

Provisions in the measure would have expired on Sunday without Obama’s signature Saturday.

The act, which was adopted in the weeks after the Sept. 11, 2001 terror attacks, expands the government’s ability to monitor Americans in the name of national security.

Three sections of the Patriot Act that stay in force will:

– Authorize court-approved roving wiretaps that permit surveillance on multiple phones.

– Allow court-approved seizure of records and property in anti-terrorism operations.

– Permit surveillance against a so-called lone wolf, a non-U.S. citizen engaged in terrorism who may not be part of a recognized terrorist group.

Obama’s signature comes after the House voted 315 to 97 Thursday to extend the measure.

Read morePresident Obama signs one-year extension of Patriot Act

US: Jobless Benefits Start Ending TODAY

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NEW YORK (CNNMoney.com) — Depending on extended unemployment benefits to see you through the Great Recession?

You’d better not: The Senate failed to push back the Feb. 28 deadline to apply for this safety net.

Starting Monday, the jobless will no longer be able to apply for federal unemployment benefits or the COBRA health insurance subsidy.

Federal unemployment benefits kick in after the basic state-funded 26 weeks of coverage expire. During the downturn, Congress has approved up to an additional 73 weeks, which it funds.

These federal benefit weeks are divided into tiers, and the jobless must apply each time they move into a new tier.

Because the Senate did not act, the jobless will now stop getting checks once they run out of their state benefits or current tier of federal benefits.

Read moreUS: Jobless Benefits Start Ending TODAY

Cybersecurity Bill To Give President Obama New Emergency Powers

The president would have the power to safeguard essential federal and private Web resources under draft Senate cybersecurity legislation.

According to an aide familiar with the proposal, the bill includes a mandate for federal agencies to prepare emergency response plans in the event of a massive, nationwide cyberattack.

The president would then have the ability to initiate those network contingency plans to ensure key federal or private services did not go offline during a cyberattack of unprecedented scope, the aide said.

Ultimately, the legislation is chiefly the brainchild of Sens. Jay Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine), the chairman and ranking member of the Senate Commerce Committee, respectively. Both lawmakers have long clamored for a federal cybersecurity bill, charging that current measures — including the legislation passed by the House last year — are too piecemeal to protect the country’s Web infrastructure.

Read moreCybersecurity Bill To Give President Obama New Emergency Powers

CHILE EARTHQUAKE: 8.8 Magnitude Quake Hits Chile, 1,000 Times More Powerful Than The Haiti Earthquake

A milder earthquake hit Japan:

Japan Earthquake: Tsunami Warnings Downgraded After 7.0 Quake Off Japan Coast (Huffington Post)


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Rescuers searched for victims and survivors after an apartment complex collapsed in Concepcion.

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A woman sat in front a quake-damaged house in Talca, Chile. Residents were also jolted by at least 20 aftershocks measuring over 5.0 on the magnitude scale, with one topping 6.9.

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A photo of Santiago, Chile after the quake. Uploaded by Twitter user @Gonzalezcarcey.

UPDATE: 8:25 a.m. — 1,000 times more powerful than the Haiti earthquake– From the New York Times:

Phone lines were down in Concepcion as of 7:30 a.m. and no reports were coming out of that area. The quake in Chile was 1,000 times more powerful than the magnitude 7.0 earthquake that caused widespread damage in Haiti on Jan 12, killing at least 230,000, earthquake experts reported on CNN International.

UPDATE: 8:00 a.m. — 78 and rising — AP now reports that the death toll is at 78 and rising. Officials have no information yet on number of injured.

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“Calm after #terremoto. Impressive to see Divine Church Providence without cupola.” Photo uploaded to Twitpic by Twitter user @HMartinez.

UPDATE: 6:43 a.m. — 47 dead — Reuters now reports that 47 people have died in the quake.

President Michele Bachelet has declared a “state of catastrophe,” according to the Associated Press:

SANTIAGO, Chile – A massive 8.8-magnitude earthquake struck Chile early Saturday, collapsing buildings, killing at least 16 people and downing phone lines. President Michele Bachelet declared a “state of catastrophe” in central Chile and said the death toll was rising.Tsunami warnings were issued over a wide area, including South America, Hawaii, Australia and New Zealand, Japan, the Philippines, Russia and many Pacific islands.

“We have had a huge earthquake, with some aftershocks,” Bachelet said, appealing from an emergency response center for Chileans to remain calm. “Despite this, the system is
functioning. People should remain calm. We’re doing everything we can with all the forces we have. Any information we will share immediately.”

Bachelet said early reports were that 16 people had been killed, and “without a doubt, with an earthquake of this magnitude, there will be more deaths.”

In the 2 1/2 hours following the 90-second quake, the U.S. Geological Survey reported 11 aftershocks, of which five measured 6.0 or above.

She urged people to avoid traveling in the dark, since traffic lights are down, to avoid causing more fatalities.

The quake hit 200 miles (325 kilometers) southwest of the capital, Santiago, at a depth of 22 miles (35 kilometers) at 3:34 a.m. (0634 GMT; 1:34 a.m. EST), the U.S. Geological Survey reported.

The epicenter was just 70 miles (115 kilometers) from Concepcion, Chile’s second-largest city, where more than 200,000 people live along the Bio Bio river, and 60 miles from the ski town of Chillan, a gateway to Andean ski resorts that was destroyed in a 1939 earthquake.

In Santiago, the capital, modern buildings are built to withstand earthquakes, but many older ones were heavily damaged, including the Nuestra Senora de la Providencia church, whose bell tower collapsed. An apartment building’s two-level parking lot also flattened onto the ground floor, smashing about 50 cars whose alarms and horns rang incessantly. A bridge just outside the capital also collapsed, and at least one car flipped upside down.

In the coastal city of Vina del Mar, the earthquake struck just as people were leaving a disco, Julio Alvarez told Radio Cooperativa in Santiago. “It was very bad, people were screaming, some people were running, others appeared paralyzed. I was one of them.”

Bachelet said she was declaring a “state of catastrophe” in 3 central regions of the country, and that while emergency responders were waiting for first light to get details, it was evident that damage was extensive.

UPDATE: 5:56 a.m. — 17 dead — At least 17 people have died in Chile’s earthquake, according to radio reports from Santiago. Reuters:

Local radio said 17 people were killed and President Michelle Bachelet confirmed six deaths, saying more were possible. Telephone and power lines were down, making a quick damage assessment difficult in the early morning darkness.”Never in my life have I experienced a quake like this, it’s like the end of the world,” one man told local television from the city of Temuco, where the quake damaged buildings and forced staff to evacuate the regional hospital.

UPDATE: 4:49 a.m. — Live broadcast — A USTREAM webcast of CNN’s live coverage of the Chile earthquake:

Read moreCHILE EARTHQUAKE: 8.8 Magnitude Quake Hits Chile, 1,000 Times More Powerful Than The Haiti Earthquake

Europe: Quantifying The Donors And Moochers – Without Germany, The EU Would Not Exist

With the dramatic emergence of intra-EU bickering between various “banana-eating countries” and “tax cheats”, it is easy to lose sight of the forest for the banana trees. While it is subjective to say who owes whom what, one thing that is very objective, is whose money is critical to sustaining the European Union.

And here there is no doubt: without Germany, the EU would not exist. The country, which receives €78 billion from the EU annually, pays out more than double that, or €164 billion, for a net impact of (€1,045) per capita.

Surely the Germans would be just as happy to see this money retained by their economy instead of going to assorted hangers-on. And speaking of the latter, one of the biggest recipients, with a net benefit of €2,284 per person, is Greece, which pays just €15 billion a year to the EU but receives nearly triple, or €40 billion.

We wonder just how Greece will plug that particular hole should the EU dissolve after the recent escalation in rhetoric threatens to royally piss off the Germans.

(Click on image to enlarge.)

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Graphic via FSTeurope.com

Read moreEurope: Quantifying The Donors And Moochers – Without Germany, The EU Would Not Exist

IMF Head Dominique Strauss-Kahn Proposes New Reserve Currency

IMF’s Strauss-Kahn suggests IMF may one day provide global reserve asset

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Dominique Strauss-Kahn

Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.

“That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now,” he said in a speech on the future mandate of the 186-nation Washington-based lending organization.

Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF’s special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.

Read moreIMF Head Dominique Strauss-Kahn Proposes New Reserve Currency

US officials puzzle over millions of dollars in cash, well over $1 billion a year, leaving Afghanistan by plane for Dubai

KABUL — A blizzard of bank notes is flying out of Afghanistan — often in full view of customs officers at the Kabul airport — as part of a cash exodus that is confounding U.S. officials and raising concerns about the money’s origin.

The cash, estimated to total well over $1 billion a year, flows mostly to the Persian Gulf emirate of Dubai, where many wealthy Afghans now park their families and funds, according to U.S. and Afghan officials. So long as departing cash is declared at the airport here, its transfer is legal.

But at a time when the United States and its allies are spending billions of dollars to prop up the fragile government of President Hamid Karzai, the volume of the outflow has stirred concerns that funds have been diverted from aid. The U.S. Drug Enforcement Administration, for its part, is trying to figure out whether some of the money comes from Afghanistan’s thriving opium trade. And officials in neighboring Pakistan think that at least some of the cash leaving Kabul has been smuggled overland from Pakistan.

“All this money magically appears from nowhere,” said a U.S. official who monitors Afghanistan’s growing role as a hub for cash transfers to Dubai, which has six flights a day to and from Kabul.

Meanwhile, the United States is stepping up efforts to stop money flow in the other direction — into Afghanistan and Pakistan in support of al-Qaeda and the Taliban. Senior Treasury Department officials visited Kabul this month to discuss the cash flows and other issues relating to this country’s infant, often chaotic financial sector.

Read moreUS officials puzzle over millions of dollars in cash, well over $1 billion a year, leaving Afghanistan by plane for Dubai

Obama Administration Using Accounting Gimmicks That Would Make Enron ‘Blush,’ Says Republican Lawmaker

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Fannie Mae headquarters in Washington, D.C
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(CNSNews.com) – Rep. Jeb Hensarling (R-Texas) says the Obama administration is using an accounting “gimmick” in its budget by not including the debt owed by mortgage firms Fannie Mae and Freddie Mac.

“The accounting gimmicks that are used today would make an Enron and WorldCom accountant blush,” Hensarling told reporters. “The American people know that under the policies of this administration-under the policies of this Congress-we are drowning in a sea of red ink.”

Hensarling, a member of the House Financial Services Committee, joined a group of House Republicans Tuesday in announcing the introduction of a bill that would require President Obama’s Office of Management and Budget to include the liabilities of Fannie and Freddie in the national debt calculation.

The two companies are defined as government-sponsored enterprises (GSEs) whose portfolios include trillions of dollars in American mortgages, many of which are now “under water.” The federal government took control of the mortgage giants in 2008, as they neared financial collapse.

Billions of taxpayer dollars ($61 billion for Fannie Mae and $51 billion for Freddie Mac) has been spent so far to keep the GSEs solvent. Just this week, Freddie Mac reported a $7.8 billion loss in the final three months of 2009, but said it will not require another taxpayer infusion at this time.

Hensarling on Tuesday suggested that the administration is under-reporting the nation’s debt by failing to account for the potential liability incurred if Fannie and Freddie go deeper into the red.

The potential liabilities incurred by Fannie and Freddie, Hensarling said, would amount to “the mother of all bailouts.”

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Headquarters of the federally chartered mortgage giant, Freddie Mac, in McLean, Va.

“When the final chapter is written on the history of our financial debacle, it will show that the cause was the government policies that cajoled, incented (sic) and mandated financial institutions to lend money to people to buy homes that, ultimately, they could not afford,” Hensarling said. “At the epicenter of those federal policies was Fannie Mae and Freddie Mac, and before all the dust settles in the final accounting, they will prove to be the mother of all bailouts.”

Rep. Spencer Bachus (R-Ala.), the ranking member of the House Financial Services Committee, estimated that the unfunded liabilities of Fannie and Freddie could exceed $5 trillion.

Under Republican’s proposed bill, the White House Office of Management and Budget would have to treat the GSEs’ estimated liabilities as part of the federal debt, and those liabilities along with the rest of the debt would have to remain under the debt ceiling.

Congress recently voted to raise the debt ceiling above $14 trillion dollars for the first time to accommodate other spending.

Read moreObama Administration Using Accounting Gimmicks That Would Make Enron ‘Blush,’ Says Republican Lawmaker

Bizarre? Now this is bizarre! Audit the Fed banksters NOW!

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Elite puppet Fed chairman Ben Bernanke

From yesterday’s exchange between Ron Paul and Ben Bernanke:

Ron Paul: …a lot of cash was passed through – and a lot of people suppose it was passed through the Federal Reserve – when there was a provisional government [in Iraq] after the 2003 invasion. That money was not appropriated by the Congress as required by law…

Ben Bernanke: Congressman, these specific allegations you’ve made are absolutely bizarre, and I have no knowledge of anything remotely like what you just described.

Let’s ask Rep. Henry Waxman (July 2009)

Henry Waxman: In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York had to pack 281 million individual bills … onto wooden pallets to be shipped to Iraq. The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad…

Bizarre? Yes, I think something very bizarre is going on.

Read moreBizarre? Now this is bizarre! Audit the Fed banksters NOW!