And you will be presented the bill in form of higher prices.
Forget CDOs and other inventions of the great credit bubble. That’s all old hat. Investment bankers are moving on to an area of securities trading that is potentially even more lucrative, and what’s more, even has a social value – saving the planet. Or supposedly so, anyway. I’ve long had my suspicions about the great carbon trading bubble, and I’ve had them pretty much confirmed by a brilliant article which has been drawn to my attention by one Mark Schapiro in Harper’s magazine.
According to Mr Schapiro, carbon trading is now the fastest growing commodities market on earth. Since Kyoto signatories bought in to the cap and trade concept in 2005, there have been more than $300bn carbon transactions, prompting several investment banks, including Goldman Sachs and Barclays, to set up their own carbon trading desks. But that’s just the start. If President Obama and his supporters can institute a cap-and-trade system in the United States – and that’s a big if for this increasingly marooned presidency – demand could explode into a $2 to $3 trillion market.
And here’s the great thing about it. Unlike traditional commodities markets, which will eventually involve delivery to someone in physical form, the carbon market is based on lack of delivery of an invisible substance to no-one. Since the market revolves around creating carbon credits, or finding carbon reduction projects whose benefits can then be sold to those with a surplus of emissions, it is entirely intangible.
Britain is at risk of a Government deficit crisis worse than that of Greece, sparking serious fears over the economic stability of the country.
Economists said that the scale of the shortfall in the budget could this year mount to above £180 billion Photo: PA
In surprise news which sent the pound sliding on Thursday, official figures showed that the Government borrowed £4.3 billion last month.
It was the first time since 1993 that the public finances had gone into the red in January – a month in which tax revenues usually push the Exchequer into the black.
Economists said that the scale of the shortfall in the budget could this year mount to above £180 billion – higher than even the Chancellor’s forecast of a record £178 billion.
Such a deficit would, at 12.8 per cent of British gross domestic product, be even greater than the deficit faced in Greece, which is facing a full-scale fiscal crisis and may need to be bailed out by fellow euro nations or the International Monetary Fund.
The public borrowing figures coincided with further bad news from the housing market, as the Council of Mortgage Lenders reported that mortgage lending dropped last month by 32 per cent, hitting the lowest monthly total in a decade.
The Bank of England also reported a decline in lending to businesses, indicating that the economic slowdown is far from over.
The poor economic figures came as a major blow for the Chancellor, Alistair Darling, coming a month ahead of the Budget, which he had hoped would provide proof that the economy was finally on the mend.
The news also came ahead of Gordon Brown’s unofficial launch to the Labour election campaign, which the Prime Minister hopes to base on his party’s economic record and policies. (ROFL!)
(NaturalNews) It’s being called the largest research fraud in medical history. Dr. Scott Reuben, a former member of Pfizer’s speakers’ bureau, has agreed to plead guilty to faking dozens of research studies that were published in medical journals.
Now being reported across the mainstream media is the fact that Dr. Reuben accepted a $75,000 grant from Pfizer to study Celebrex in 2005. His research, which was published in a medical journal, has since been quoted by hundreds of other doctors and researchers as “proof” that Celebrex helped reduce pain during post-surgical recovery. There’s only one problem with all this: No patients were ever enrolled in the study!
Dr. Scott Reuben, it turns out, faked the entire study and got it published anyway.
It wasn’t the first study faked by Dr. Reuben: He also faked study data on Bextra and Vioxx drugs, reports the Wall Street Journal.
As a result of Dr. Reuben’s faked studies, the peer-reviewed medical journal Anesthesia & Analgesia was forced to retract 10 “scientific” papers authored by Reuben. The Day of London reports that 21 articles written by Dr. Reuben that appear in medical journals have apparently been fabricated, too, and must be retracted.
After being caught fabricating research for Big Pharma, Dr. Reuben has reportedly signed a plea agreement that will require him to return $420,000 that he received from drug companies. He also faces up to a 10-year prison sentence and a $250,000 fine.
He was also fired from his job at the Baystate Medical Center in Springfield, Mass. after an internal audit there found that Dr. Reubenhad been faking research data for 13 years. (http://www.theday.com/article/20100…)
Business as usual in Big Pharma
What’s notable about this story is not the fact that a medical researcher faked clinical trials for the pharmaceutical industry. It’s not the fact that so-called “scientific” medical journals published his fabricated studies. It’s not even the fact that the drug companies paid this quack close to half a million dollars while he kept on pumping out fabricated research.
The real story here is that this is business as usual in the pharmaceutical industry.
Dr. Reuben’s actions really aren’t that extraordinary. Drug companies bribe researchers and doctors as a routine matter. Medical journals routinely publish false, fraudulent studies. FDA panel members regularly rely on falsified research in making their drug approval decisions, and the mainstream media regularly quotes falsified research in reporting the news.
Fraudulent research, in other words, is widespread in modern medicine. The pharmaceutical industry couldn’t operate without it, actually. It is falsified research that gives the industry its best marketing claims and strongest FDA approvals. Quacks like Dr Scott Reuben are an important part of the pharmaceutical profit machine because without falsified research, bribery and corruption, the industry would have very little research at all.
Low-cost, more efficient solar cells mostly plastic
Photomicrograph of a silicon wire array embedded within a transparent, flexible polymer film. Credit: Caltech/Michael Kelzenberg
PORTLAND, Ore. – By growing arrays of silicon wires in a polymer substrate, researchers have demonstrated what they say are flexible solar cells that absorb up to 96 percent of incident light.
California Institute of Technology (Caltech) researchers said the wires are made up of 98 percent plastic, potentially lowering the cost of photovoltaics by using just 1/50th the amount of semiconductor material used today. In tests, the experimental solar cells demonstrated over 90 percent quantum efficiency, compared with 25 percent for the best silicon solar cells.
“By developing light-trapping techniques for relatively sparse wire arrays, not only did we achieve suitable absorption, but we also demonstrated effective optical concentration,” claimed Harry Atwater, director of Caltech’s Resnick Institute.
The silicon wires measure just 1 micron in diameter, but can be as long as 100 microns and can be embedded in a transparent polymer. Light is converted into electricity only inside the wires, but light not immediately absorbed bounces around inside the matrix until it enters another wire. The result, researchers said, is both high concentration and high efficiency in the material.
Solar cells based on the technique could potentially be very inexpensive to manufacture since only 2 percent of the materials are expensive semiconductors while the remainder is made from inexpensive plastic.
William Potter and his mum Lynn Potter
PACKMOORE, England, Feb. 17 (UPI) — A 3-year-old British boy has become one of the youngest-ever members of the world’s largest organization for people with high IQs.
David Potter and Lynn Goldstraw of Packmoore, England, said their son, William Potter, was accepted to Mensa after scoring an IQ of 140 on the organization’s tests, placing him in the 99.6 percentile among Britons, the Daily Mail reported Wednesday.
“He could count to 20 before he was 2 and knew his alphabet and colors and shapes,” Goldstraw said. “When in his pushchair, he’d read car number plates. Now when we go in the car, he’s in the back with a map on his knee.”
“He reads the signs and tells you when to turn,” she said. “He’s like a sponge. You only have to tell him something once and he remembers it. I think a lot of it is about spending time with him.”
Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash
On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman’s role in precipitating the global financial crisis.
The bank had already set aside a tidy $16.2 billion for salaries and bonuses – meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a “bailout tax” on banks. Maybe this wasn’t the right time for Goldman to be throwing its annual Roman bonus orgy.
Not to worry, Blankfein reassured employees. “In a year that proved to have no shortage of story lines,” he said, “I believe very strongly that performance is the ultimate narrative.”
Translation: We made a shitload of money last year because we’re so amazing at our jobs, so fuck all those people who want us to reduce our bonuses.
Goldman wasn’t alone. The nation’s six largest banks – all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry – set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry. But in reality, not much had changed. “What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?” asks Eliot Spitzer, who tried to hold Wall Street accountable during his own ill-fated stint as governor of New York.
Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America’s populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what’s the difference if some fat cat in New York pockets $20 million instead of $10 million?
The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits – Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation – is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?
The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.
We just made sure that anyone who was long into Options Expiration – which is tomorrow – especially on index options which cannot be hedged or traded now, is screwed. Just like in August of 2007 when we did the opposite.
The Federal Reserve Board on Thursday announced that in light of continued improvement in financial market conditions it had unanimously approved several modifications to the terms of its discount window lending programs.
Of course we couldn’t wait until Friday after the close when it wouldn’t hose people – instead, we timed this for maximum pain.
Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities. The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy, which remains about as it was at the January meeting of the Federal Open Market Committee (FOMC). At that meeting, the Committee left its target range for the federal funds rate at 0 to 1/4 percent and said it anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.
We gave no warning either. Ha ha. You did wear your titanium plate in your pants, right?
The changes to the discount window facilities include Board approval of requests by the boards of directors of the 12 Federal Reserve Banks to increase the primary credit rate (generally referred to as the discount rate) from 1/2 percent to 3/4 percent. This action is effective on February 19.
That’s “right now”, in case you didn’t figure it out yet.
In addition, the Board announced that, effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight. Primary credit is provided by Reserve Banks on a fully secured basis to depository institutions that are in generally sound condition as a backup source of funds. Finally, the Board announced that it had raised the minimum bid rate for the Term Auction Facility (TAF) by 1/4 percentage point to 1/2 percent. The final TAF auction will be on March 8, 2010.
This is something we did warn about, and in addition we’re giving notice. See? Hope you don’t get a margin call in the morning – BOOYA!
Easing the terms of primary credit was one of the Federal Reserve’s first responses to the financial crisis. On August 17, 2007, the Federal Reserve reduced the spread of the primary credit rate over the FOMC’s target for the federal funds rate to 1/2 percentage point, from 1 percentage point, and lengthened the typical maximum maturity from overnight to 30 days. On December 12, 2007, the Federal Reserve created the TAF to further improve the access of depository institutions to term funding. On March 16, 2008, the Federal Reserve lowered the spread of the primary credit rate over the target federal funds rate to 1/4 percentage point and extended the maximum maturity of primary credit loans to 90 days.
The Federal Reserve has officially begun the US “exit strategy” from its emergency economic support measures of the past two years, raising the rate at which American banks can borrow money.
Ben Bernanke – it is first time one of the “big three” central banks has tightened policy since the crisis began Photo: AP
The US central bank, chaired by Ben Bernanke, raised the so-called discount rate from 0.5pc to 0.75pc at the request of its 12 regional member banks.
The move is highly significant, marking the first time one of the “big three” central banks has tightened policy, rather than merely mooting it, since the crisis begun. Although Mr Bernanke had flagged it as a possibility a week ago, saying that he would consider such a move “before long”, the decision caught some investors by surprise, with Dow futures falling 65 points to 10,310, coming as it did after normal market hours, and unconnected to a scheduled meeting of the Federal Open Markets Committee (FOMC).
The change was the first move in US interest rates since December 2008, when the Fed lowered the discount rate – the price at which banks emergency money from the Fed – to 0.5pc and lowered its main federal funds interest rate to a range of 0-0.25pc.
“Cyber war!” flashes on the screen at an Internet security conference
(AFP) WASHINGTON — Former top US officials staged a digital doomsday simulation on Tuesday in which a huge cyberattack crashes cellphone networks, slows Web traffic to a crawl and plunges major cities into darkness.
Dubbed “Cyber ShockWave,” the elaborate exercise was held in a Washington hotel room transformed for the day into the White House Situation Room, where the president and his advisers typically meet to address national emergencies.
Former president George W. Bush’s Homeland Security chief Michael Chertoff played the role of National Security Advisor as the “cabinet” sought to respond to a nightmare scenario drawn up by former CIA director Michael Hayden.
As the “crisis” escalated, the officials discussed various actions including calling out the National Guard, nationalizing the utility companies and staging a retaliatory strike if the authors of the cyberattack become known.
George Soros doubled his investment in the world’s largest gold fund – just weeks before claiming investing in the precious metal is now the “ultimate bubble”.
George Soros buys gold despite dubbing it ‘ultimate bubble’
Mr Soros – a legend in investing circles for his $10bn (£6.37bn) bet against the pound in 1992 which forced sterling out of the European exchange rate mechanism – increased his stake in the SPDR Gold Trust in the last quarter of 2009.
Regulatory filings show that his $8.8bn investment vehicle, Soros Fund Management, raised its stake in exchange-traded fund SPDR by 3.7m shares to 6.2m shares in the three months ending December 31, 2009.
The new shares were bought at a price of $421m, taking his total holding in the fund to $663m at the end of December.
In addition, Mr Soros’s investment vehicle owns 11,000 call options that will permit it to buy an extra 1.1m shares should gold prices move higher.
Soros Fund Management also increased its stake in Canadian-based gold producer Yamana Gold, buying 60,880 shares to take its total position to 85,880 shares, worth $973,314 at the end of December.
According to the filings in Blake J Robbins v Lower Merion School District (PA) et al, the laptops issued to high-school students in the well-heeled Philly suburb have webcams that can be covertly activated by the schools’ administrators, who have used this facility to spy on students and even their families.
The issue came to light when the Robbins’s child was disciplined for “improper behavior in his home” and the Vice Principal used a photo taken by the webcam as evidence. The suit is a class action, brought on behalf of all students issued with these machines.
If true, these allegations are about as creepy as they come. I don’t know about you, but I often have the laptop in the room while I’m getting dressed, having private discussions with my family, and so on. The idea that a school district would not only spy on its students’ clickstreams and emails (bad enough), but also use these machines as AV bugs is purely horrifying.
Schools are in an absolute panic about kids divulging too much online, worried about pedos and marketers and embarrassing photos that will haunt you when you run for office or apply for a job in 10 years. They tell kids to treat their personal details as though they were precious.
But when schools take that personal information, indiscriminately invading privacy (and, of course, punishing students who use proxies and other privacy tools to avoid official surveillance), they send a much more powerful message: your privacy is worthless and you shouldn’t try to protect it.
Taxman targets 100,000 top earners to claw back millions
More than 200 years after rules on tax status were introduced to meet the cost of the Napoleonic wars, a new battle is being waged against Britons and foreign workers.
Scrutiny of the tax affairs of wealthy individuals, foreign workers, entrepreneurs and celebrities has gathered pace since the Labour Government came to power. High earners are being pursued with new vigour by the authorities, which are under immense pressure to bolster Treasury coffers and deliver hundreds of millions of pounds.
Their persistence is paying off. According to data obtained under the Freedom of Information Act by McGrigors, a law firm and tax investigation specialist, compliance activity focusing on high-net-worth taxpayers and wealthy foreigners resident in Britain by Revenue & Customs (HMRC) has yielded astonishing results: in 2008-09, tax teams netted £373 million. Four years before that they collected only £81 million.
The figures represent the work of the Revenue’s expatriate and complex personal returns teams, now replaced by one dedicated team. Launched last year, the high-net-worth unit is made up of about 500 staff, each dealing with just ten wealthy taxpayers.
The department has not specified the level of wealth for individuals to fall under scrutiny, but accountants suggest it could be in excess of £10 million. Figures published in 2007 showed that while about 400 people earned more than £10 million a year in Britain, only 65 of them paid income tax.
(CNN) — An Austin, Texas, resident with an apparent grudge against the Internal Revenue Service set his house on fire Thursday and then crashed a small plane into a building housing an IRS office with nearly 200 employees, officials said.
Federal authorities identified the pilot of the Piper Cherokee PA-28 as Joseph Andrew Stack, 53.
Two people were injured and one person was missing, local officials said. There were no reported deaths.
A message on a Web site registered to Stack appears to be a suicide note.
“If you’re reading this, you’re no doubt asking yourself, ‘Why did this have to happen?’ ” the message says. “The simple truth is that it is complicated and has been coming for a long time.”
In the lengthy, rambling message, the writer rails against the government and, particularly, the IRS.
If you’re reading this, you’re no doubt asking yourself, “Why did this have to happen?” The simple truth is that it is complicated and has been coming for a long time. The writing process, started many months ago, was intended to be therapy in the face of the looming realization that there isn’t enough therapy in the world that can fix what is really broken. Needless to say, this rant could fill volumes with example after example if I would let it. I find the process of writing it frustrating, tedious, and probably pointless… especially given my gross inability to gracefully articulate my thoughts in light of the storm raging in my head. Exactly what is therapeutic about that I’m not sure, but desperate times call for desperate measures.
We are all taught as children that without laws there would be no society, only anarchy. Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all. We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals represented by its founding fathers. Remember? One of these was “no taxation without representation”. I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood. These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.
While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind. Nor, for that matter, are they the least bit interested in me or anything I have to say.
Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.
South Carolina Rep. Mike Pitts has introduced legislation that would mandate that gold and silver coins replace federal currency as legal tender in his state.
As the Palmetto Scoop first reported, Pitts, a Republican, introduced legislation this month banning “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin” in South Carolina.
In an interview, Pitts told Hotsheet that he believes that “if the federal government continues to spend money at the rate it’s spending money, and if it continues to print money at the rate it’s printing money, our economic system is going to collapse.”
“The Germans felt their system wouldn’t collapse, but it took a wheelbarrow of money to buy a loaf of bread in the 1930s,” he said. “The Soviet Union didn’t think their system would collapse, but it did. Ours is capable of collapsing also.”
The lawmaker believes that a shift to an economy based on gold and silver coins would give the state a “base of currency” should that collapse come. As one expert told the Scoop, however, his bill would likely be ruled unconstitutional because it “violates a perfectly legal and Constitutional federal law, enacted pursuant to the Commerce Clause of the U.S. Constitution, that federal reserve notes are legal tender for all debts public and private.”
In addition, since gold and silver regularly fluctuate in value, they could not easily function as stable currency.
But Pitts maintains that his state is better off with something he can hold in his hand and barter with as opposed to federal currency, which he described to the Scoop as “paper with ink on it.” He says he resents what he considers the federal government’s intrusions on states’ rights.
Though he did not offer a timeframe, Pitts told Hotsheet that he anticipates a nationwide economic collapse “if our federal government continues the course it’s been traveling under the previous administration and this administration.”
France yesterday put in its bid for an unlikely prize, becoming the first western country to make even Australia look liberal when it comes to state powers of internet censorship.
In the teeth of fierce opposition both inside and outside parliament, the National Assembly approved, by 312 votes to 214 against, a first reading of a bill on Internal Security – the quaintly titled “LOPPSI 2”.
LOPPSI – otherwise known as Loi d’Orientation et de Programmation pour la SÈcuritÈ IntÈrieure (pdf)- is a ragbag of measures designed to make France a safer place. Like similar UK legislation – most notably the various Criminal Justice acts brought in over the last decade – LOPPSI brings together a number of apparently unrelated proposals which would severely restrict individual rights in all walks of life.
Last week, for instance, the Assembly agreed to include within the new law a measure that would allow Prefects to sign off on a curfew for children aged under 13, out unaccompanied between the hours of 11 pm and 6 am.
The bill also includes measures that would increase police spend on “security”, create additional penalties for counterfeiting and ID theft, increase CCTV surveillance, and widen access to the Police DNA database.
However, it is in the online area that some of the most radical proposals are to be found, with the criminalisation of online ID theft, provision for the police to tap online connections in the course of investigations, and most controversially of all, allowing the state to order ISPs to block (filter) specific internet URLs according to ministerial diktat.
It has also been suggested that the state should have the right to plant covert trojans to monitor individual PC usage.
Whilst the latter measures are put forward on the grounds of child protection, critics have been quick to point out that, in the absence of any judicial oversight mechanism, this is a power just waiting to be abused.
Not that we already have more than enough censorship!
Google says it will not “voluntarily” comply with the government’s request that it censor YouTube videos in accordance with broad “refused classification” (RC) content rules.
Communications Minister Stephen Conroy referred to Google’s censorship on behalf of the Chinese and Thai governments in making his case for the company to impose censorship locally.
Google warns this would lead to the removal of many politically controversial, but harmless, YouTube clips.
University of Sydney associate professor Bjorn Landfeldt, one of Australia’s top communications experts, said that to comply with Conroy’s request Google “would have to install a filter along the lines of what they actually have in China”.
As it prepares to introduce legislation within weeks forcing ISPs to block a blacklist of RC websites, the government says it is in talks with Google over blocking the same type of material from YouTube.
Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.
Paul Craig Roberts
The media has headlined good economic news: fourth quarter GDP growth of 5.7 percent (“the recession is over”), Jan. retail sales up, productivity up in 4th quarter, the dollar is gaining strength. Is any of it true? What does it mean?
The 5.7 percent growth figure is a guesstimate made in advance of the release of the U.S. trade deficit statistic. It assumed that the U.S. trade deficit would show an improvement. When the trade deficit was released a few days later, it showed a deterioration, knocking the 5.7 percent growth figure down to 4.6 percent. Much of the remaining GDP growth consists of inventory accumulation.
More than a fourth of the reported gain in Jan. retail sales is due to higher gasoline and food prices. Questionable seasonal adjustments account for the rest.
Productivity was up, because labor costs fell 4.4 percent in the fourth quarter, the fourth successive decline. Initial claims for jobless benefits rose. Productivity increases that do not translate into wage gains cannot drive the consumer economy.
Housing is still under pressure, and commercial real estate is about to become a big problem.
The dollar’s gains are not due to inherent strengths. The dollar is gaining because government deficits in Greece and other EU countries are causing the dollar carry trade to unwind. America’s low interest rates made it profitable for investors and speculators to borrow dollars and use them to buy overseas bonds paying higher interest, such as Greek, Spanish and Portuguese bonds denominated in euros. The deficit troubles in these countries have caused investors and speculators to sell the bonds and convert the euros back into dollars in order to pay off their dollar loans. This unwinding temporarily raises the demand for dollars and boosts the dollar’s exchange value.
The problems of the American economy are too great to be reached by traditional policies. Large numbers of middle class American jobs have been moved offshore: manufacturing, industrial and professional service jobs. When the jobs are moved offshore, consumer incomes and U.S. GDP go with them. So many jobs have been moved abroad that there has been no growth in U.S. real incomes in the 21st century, except for the incomes of the super rich who collect multi-million dollar bonuses for moving U.S. jobs offshore.
Without growth in consumer incomes, the economy can go nowhere. Washington policymakers substituted debt growth for income growth. Instead of growing richer, consumers grew more indebted. Federal Reserve chairman Alan Greenspan accomplished this with his low interest rate policy, which drove up housing prices, producing home equity that consumers could tap and spend by refinancing their homes.
George Soros, chairman and founder of Soros Fund Management LLC, speaks at an open discussion at the University of Hong Kong in Hong Kong, on Feb. 3, 2010. (Bloomberg)
Feb. 17 (Bloomberg) — Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9 percent to a record.
The $25 billion New York-based firm became the fourth- largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the U.S. Securities and Exchange Commission yesterday. Its investment was worth about $663 million, the fund’s largest single investment, as of Dec. 31.
Soros joined China Investment Corp. and central banks including those in China and India in acquiring gold. China Investment, the $300 billion sovereign wealth fund based in Beijing, took a 1.45 million-share stake in the SPDR Gold Trust worth $155.6 million, according to a SEC 13F filing posted on Feb. 5.
“The dollar is weak and people are just shifting their money into a safer haven,” Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd., said from Tokyo today. “Central banks are adding gold to their reserves and we’re going to see more people adding gold to their investment portfolio as they shift into safer stuff.”
Quantitative easing (= creating money out of thin air = printing money = increasing the money supply = creating inflation.) works!
Inflation is a hidden tax on monetary assets.
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes
Rise in value-added tax had ‘significant impact’ on CPI
LONDON (MarketWatch) — British consumer prices in January rose 3.5% compared to the same month last year, requiring Bank of England Governor Mervyn King to pen an explanatory letter to the Treasury.
The Office for National Statistics said a rise in the value-added tax back to 17.5% in January after the expiration of a temporary cut to 15% had a “significant impact” on the inflation rate.
The outcome was hardly a surprise. King, in a news conference last week following the release of the central bank’s latest quarterly inflation report, had once again highlighted expectations for a near-term surge in inflation driven in part by the expiration of the VAT break. Read about the BOE’s inflation expectations.
In an open letter released after the data, King wrote that that the Bank of England’s Monetary Policy Committee expects the January rise in annual U.K. consumer inflation to be a “temporary deviation” from the 2% target. King said the situation was comparable to two previous occasions when he has had to pen letters to the chancellor explaining missed targets.
Weak spending has created a “substantial margin of spare capacity” in the economy that is expected to bear down on inflation over time. King said the MPC is committed to taking “whatever actions are necessary” to ensure the inflation outlook remains in line with the 2% target.
King is required to write a letter to Chancellor of the Exchequer Alistair Darling if inflation misses the 2% annual target by more than a full percentage point.
In a reply, Darling noted that the MPC’s remit allows it to “look through short-term movements in inflation” and said the committee’s long-term outlook for inflation is similar to the forecast set out in the Treasury’s December Pre-Budget Report. Read the letters.
The ONS said consumer prices fell 0.2% between December and January, the smallest decline on record.
Economists surveyed by Dow Jones Newswires had forecast a 0.2% monthly rise and a 3.7% year-on-year increase.
The British pound rose 0.2% versus the U.S. dollar to change hands at $1.5693.
In last week’s inflation report, the BOE projected inflation would fall back below target in coming months after a temporary spike higher.
“While the inflation numbers look worrying at first glance, “we do buy the BOE view that the inflation rate will dip over the remainder of the year,” said Peter Dixon, U.K. economist at Commerzbank.
The VAT expiration was a one-time event, while the inflationary impact of a weaker pound was mainly an issue for 2009, Dixon said, with import prices stabilizing after a surge in late 2008.
William L. Watts is a reporter for MarketWatch in London.
Feb. 16, 2010, 6:33 a.m. EST
By William L. Watts, MarketWatch
WASHINGTON — The government said Tuesday that foreign demand for U.S. Treasury securities fell by the largest amount on record in December with China reducing its holdings by $34.2 billion.
The reductions in holdings, if they continue, could force the government to make higher interest payments at a time that it is running record federal deficits.
The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009.
The big drop in China’s holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.
Japan also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China’s December total of $755.4 billion.
In the October 2009 print edition of the UK Column, we reported in our article BBC Hides Truth of Girls Sexual Abuse Ordeal the shocking ordeal of Downs Syndrome girl, Hollie Greig, who was horribly abused by an Aberdeen paedophile ring, over a period of ten years. After investigating and planning a documentary, the BBC abruptly dropped the case, despite admitting that Hollie was a reliable and accurate witness. It is important to stress that both the police and qualified medical experts have described Hollie as a competent and entirely honest witness.
From the age of just six, Hollie was repeatedly sexually abused by her father, Denis Charles Mackie. Later, Mackie began sharing his daughter with a gang of paedophile swingers that has been operating in Aberdeen for many years. The identities of a further seven child victims are already known. There is no question that the gang are well-connected, efficiently organised and totally ruthless. Our frightening story is that they are protected by individuals of high standing within the Scottish establishment.
In 2000, after 14 years of terrified silence, Hollie eventually told her mother, Anne, about the abuses. Formal statements were made to Grampian Police, providing all the horrifying details and the names of the abusers. They included a senior Scottish Sheriff, a policeman, social workers, a nurse, a solicitor, an accountant, a fire officer, married couples and others. Some of the rapes were carried out at the homes of these individuals, including that of the Sheriffs sister. Other children were sometimes involved, including children of the paedophiles themselves.
The latest chapters in this astonishing and horrifying story about Hollie, and the seven other abused children, have taken place over the past few weeks. The key issues are a continued refusal by Grampian police to fully investigate the overwhelming evidence for the paedophile rapes, and a wall of silence by the Scottish establishment.
Whilst there has been some general Scottish media coverage, notably in The Firm and the Aberdeen Press and Journal, the media has been largely silent on what must be one of Scotlands worst top level paedophile scandles. A key figure in the press silence is the Lord Advocate, in her former role as Procurator Fiscal in Aberdeen, when in 2000 she is alleged to have effectively buried the case. Was this to prevent her associate and most influential member of the paedophile ring, Sheriff X, from being investigated, along with the other named members of the fifteen-strong rape gang?
HONG KONG (MarketWatch) — Australia’s seemingly bulletproof economy could soon face fallout from high debt levels and purportedly misguided policies designed to pump up asset prices, according to an outspoken skeptic of the nation’s housing boom.
Economist Steve Keen of the University of Western Sydney, who claims to have accurately foreseen the global financial crisis, said he’s been dismayed by what he sees as a growing nationwide housing bubble stoked by government efforts to forestall economic pain.
Keen points to a first-time homebuyer subsidy program, various other stimulus programs, and a 4-percentage-point reduction in interest rates — policies introduced in the wake of the 2008 crash and which he termed “The Boost” — as having helped fueled a new housing boom and a 6% rise in mortgage debt last year.
“The Boost has … given Australia a dubious distinction when compared to the rest of the OECD. Yes, we are the only country that avoided a technical recession; but we are also the only country where debt levels are rising once more compared to GDP, rather than falling,” Keen wrote in comments posted on his Web site, keenwalk.com.au.
Lithium-ion batteries used in the current generation of plug-in vehicles depend on dwindling supplies of lithium
PARIS — A nanoscale material developed in Britain could one day yield wafer-thin cellphones and light-weight, long-range electric cars powered by the roof, boot and doors, researchers have reported.
For now, the new technology — a patented mix of carbon fibre and polymer resin that can charge and release electricity just like a regular battery — has not gone beyond a successful laboratory experiment.
But if scaled-up, it could hold several advantages over existing energy sources for hybrid and electric cars, according to the scientists at Imperial College London who developed it.
Lithium-ion batteries used in the current generation of plug-in vehicles are not only heavy, which adds to energy consumption, but also depend on dwindling supplies of the metal lithium, whose prices have risen steadily.
The new material — while expensive to make — is entirely synthetic, which means production would not be limited by availability of natural resources.
Another plus: conventional batteries need chemical reactions to generate juice, a process which causes them to degrade over time and gradually lose the capacity to hold a charge.
The carbon-polymer composite does not depend on chemistry, which not only means a longer life but a quicker charge as well.
Because the material is composed of elements measured in billionths of a metre, “you don’t compromise the mechanical properties of the fibers,” explained Emile Greenhalgh, an engineer at Imperial College and one of the inventors.
As hard a steel, it could in theory double as the body of the vehicle, cutting the weight by up to a third.
The Tesla Roadster, a luxury electric car made in the United States, for example, weighs about 1,200 kilos (2,650 pounds), more than a third of which is accounted for by batteries, which turn the scales at a hefty 450 kilos (990 pounds). The vehicle has a range of about 300 kilometers (185 miles) before a recharge is needed.
“With our material, we would ultimately lose that 450 kilos (990 pounds),” Greenhalgh said in an interview. “That car would be faster and travel further.”
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