China may cut its dollar holdings – CICC

China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation’s biggest investment banks.

The US government this week seized control of the two mortgage-finance companies, which account for almost half of the home-loan market in the world’s biggest economy, to prevent defaults from crippling them. China holds up to $400 billion in the two firms’ debt, CICC Chief Economist Ha Jiming said in a report Thursday.

“The crisis has made Chinese officials realize it’s a bad idea to put all their eggs in one basket,” wrote Hong Kong-based Ha. “This will likely lead to greater diversification of foreign exchange reserve investments.”

China held $447.5 billion of US agency bonds as of June 2008, according to the CICC calculations using disclosures by the US Treasury. It is likely to reduce the portion of reserves in dollar assets from the current 60 percent by purchasing more non-dollar assets with new reserves, he said.

Read moreChina may cut its dollar holdings – CICC

N.Y. Fed calls meeting to forestall Lehman collapse

SAN FRANCISCO (MarketWatch) — As U.S. Treasury officials made it clear the government will not bail out Lehman Bros., the Federal Reserve Bank of New York met Friday night with Wall Street executives in an effort to forestall the collapse of the investment firm and shore up rapidly weakening financial markets.

The New York Fed called the emergency meeting Friday evening with the heads of major financial institutions and the group reportedly plans to continue meeting throughout the weekend if necessary to come up with a plan to save the ailing Lehman Bros. (LEH:Last: 3.76, -0.46, -10.90%) and prevent further damage among financial companies.

Read moreN.Y. Fed calls meeting to forestall Lehman collapse

Terror Plan Would Give F.B.I. More Power

WASHINGTON – The Justice Department made public on Friday a plan to expand the tools the Federal Bureau of Investigation can use to investigate suspicions of terrorism inside the United States, even without any direct evidence of wrongdoing.

Justice Department officials said the plan, which is likely to be completed by the end of the month despite criticism from civil rights advocates, is intended to allow F.B.I. agents to be more aggressive and pre-emptive in assessing possible threats to national security.

It would allow an agent, for instance, to pursue an anonymous tip about terrorism by conducting an undercover interview or watching someone in a public place. Such steps are now prohibited unless there is more specific evidence of wrongdoing.

Read moreTerror Plan Would Give F.B.I. More Power

Bailouts Will Push US into Depression


Source: YouTube

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.

“We expect a depression in the United States. We expect a depression, very possibly, also in Europe,” Hennecke said on “Worldwide Exchange.”

The estimated $300 billion cost of the Fannie/Freddie bailout will probably be considered as a loss that the government will have to take, therefore passing it on to taxpayers, he explained.

“We already have $3 trillion of debt, as far as the U.S. government is concerned. These debt figures across the U.S. economy are rising very sharply.”

When the government can no longer pass the United States’ “immense debt” on to taxpayers, it will turn to the holders of U.S. dollars, leading to the eventual downfall of the currency, Hennecke said.

“Definitely, it (the dollar) is not a safe place to be invested in, as real inflation is closer to 10 or 11 percent than the actual inflation numbers given by the U.S. government,” Hennecke said on “Worldwide Exchange”.

Investors should avoid exposure to debt and stay away from leveraging on any investment or asset, including property, Hennecke advised, adding that “banks have been too highly leveraged in the past, private households, everybody.”

Hennecke’s stock allocations are mainly Asian-based, especially in the Chinese market as the country’s government has a large amount of cash and the macroeconomics are fundamentally strong.

He also suggested investing in gold, despite the recent fall in price.

11 Sep 2008

Source: CNBC

Ron Paul: US in Georgia for pipeline


Ron Paul

US Congressman Ron Paul says the United States is in Georgia not for democracy but to protect an oil pipeline bypassing Russia.

“We are not for democracy there – we are there to protect a pipeline. And that is tragic for me,” he said.

The remarks came as the US Senate Committee on Armed Services held a hearing to cast Moscow as an aggressor in the 5-day conflict in the Caucasus region but a rift among the members hampered decision making.

Another US congressman has accused Georgia of triggering the conflict despite the Bush administration’s taking side with Tbilisi.

“The recent fighting in Georgia and its breakaway region was started by Georgia. The Georgians broke the truce, not the Russians! And no talk of provocation can change that fact,” said Congressman Dana Rohrabacher.

Read moreRon Paul: US in Georgia for pipeline

Medvedev: Georgia attack is ‘Russia’s 9/11’


Mr Medvedev said he hoped lessons would be learned from August’s events

Russian President Dmitry Medvedev has described Georgia’s assault on South Ossetia as Russia’s 9/11.

He said the world had learnt lessons from the attacks in the US on 11 September 2001 and hoped the same would happen after events in the Caucasus.

Reports say Russian troops are showing signs of preparing to pull back from inside Georgia.

Read moreMedvedev: Georgia attack is ‘Russia’s 9/11’

Pakistan: Army ordered to hit back


Corps commanders discuss latest US strategy

RAWALPINDI: The Pakistan Army has been ordered to retaliate against any action by foreign troops inside the country, Geo News quoted ISPR spokesman Maj Gen Athar Abbas as saying on Thursday night.

Shakil Shaikh adds from Islamabad: Pakistan’s military commanders resolved to defend the country’s borders without allowing any external forces to conduct operations inside Pakistan.

Read morePakistan: Army ordered to hit back

Venezuela’s Chavez says US ambassador must leave

CARACAS, Venezuela – President Hugo Chavez said the U.S. ambassador has 72 hours to leave Venezuela and that he’s recalling his ambassador from Washington.

Chavez said Thursday night that he is asking U.S. Ambassador Patrick Duddy to leave in part to show solidarity with Bolivian President Evo Morales, who expelled Washington’s envoy in La Paz.

“They’re trying to do here what they were doing in Bolivia,” Chavez said.

“That’s enough … from you, Yankees,” he said, using an expletive.

Read moreVenezuela’s Chavez says US ambassador must leave

Jury decides that threat of global warming justifies breaking the law

The threat of global warming is so great that campaigners were justified in causing more than £35,000 worth of damage to a coal-fired power station, a jury decided yesterday. In a verdict that will have shocked ministers and energy companies the jury at Maidstone Crown Court cleared six Greenpeace activists of criminal damage.

Jurors accepted defence arguments that the six had a “lawful excuse” to damage property at Kingsnorth power station in Kent to prevent even greater damage caused by climate change. The defence of “lawful excuse” under the Criminal Damage Act 1971 allows damage to be caused to property to prevent even greater damage – such as breaking down the door of a burning house to tackle a fire.

The not-guilty verdict, delivered after two days and greeted with cheers in the courtroom, raises the stakes for the most pressing issue on Britain’s green agenda and could encourage further direct action.

Read moreJury decides that threat of global warming justifies breaking the law

Report: Oil Agency Ran Amok, Interior Dept. Inquiry Finds Sex, Drugs, Corruption

Government officials in charge of collecting billions of dollars worth of royalties from oil and gas companies accepted gifts, steered contracts to favored clients and engaged in drug use and illicit sex with employees of the energy firms, federal investigators reported yesterday.

Investigators from the Interior Department’s inspector general’s office said more than a dozen employees, including the former director of the oil royalty program, took meals, ski trips, sports tickets and golf outings from industry representatives. The report alleges that the former director, Gregory W. Smith, also netted more than $30,000 from improper outside work.

Read moreReport: Oil Agency Ran Amok, Interior Dept. Inquiry Finds Sex, Drugs, Corruption