Thursday, September 29, 2011

 Bernanke admits jobs problem is a national crisis - and the FED can't do much

 Bernanke admits jobs problem is a national crisis - and the FED can't do much — RT 

Speaking from Cleveland, Ohio this week, Federal Reserve Chairman Ben Bernanke fielded questions from a crowd and opened up on the critical situation that is continuing to impact millions of Americans. "This unemployment situation we have, the jobs situation, is really a national crisis," Bernanke said from the InterContinental Hotel. "We've had now close to 10 percent unemployment for a number of years. Of the people who are unemployed, about 45 percent have been unemployed for six months or more.” And while Bernanke acknowledged that the Fed has attempted to do what they can to correct the problem, he also said that only so much can be done on his side to switch things up. "Monetary policy can do a lot but it's not a panacea. It can't solve all of the problems," Bernanke said on Wednesday.

This is a Suspicious News Brief.

The Invention Of Money

For those of you like me who don't really understand economics, this episode of This American Life from January might be the best 30 minutes of your life. It explains in simple terms how central banking works and how the Fed "went to crazytown" to try to avoid financial meltdown in 2007 and 2008. If your time is limited, click here to jump to Act II and listen to the rare and candid interview with members of the Fed who bought $1.25 Trillion in toxic assets.

Source: Public Radio International - This American Life
Ira Glass speaks with several members of the Planet Money team, who all found themselves—in the course of their reporting—independently asking the same stoner-ish question: What is money? Ira and Planet Money producer Jacob Goldstein discuss a pre-industrial society on the island of Yap that used giant stones as currency. The book that Jacob read about Yap is called The Island of Stone Money. (10 minutes)

A trip to a country where the fiction that is money completely fell apart. And in this same country, through a truly incredible piece of policy making, the government tricked a 150,000,000 people into believing their money had value again. Chana Joffe-Walt reports. (16 minutes)

Though the name of the Federal Reserve includes the word "federal," it's not actually part of the government. It's an independent institution tasked with something very simple, but very huge: Creating money out of thin air. And during this last financial crisis, the leaders of the Fed did things that they would never have considered doing in the past. Alex Blumberg and David Kestenbaum report on what the Fed usually does, and how, since 2008, it's taken a trip to what amounts to Fed Crazytown. (26 minutes)

This is a Suspicious News Brief. You can find the original story at Public Radio International - This American Life.

Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure

Source: ZeroHedge

The latest quarterly report from the Office Of the Currency Comptroller is out and as usual it presents in a crisp, clear and very much glaringformat the fact that the top 4 banks in the US now account for a massively disproportionate amount of the derivative risk in the financial system. Specifically, of the $250 trillion in gross notional amount of derivative contracts outstanding (consisting of Interest Rate, FX, Equity Contracts, Commodity and CDS) among the Top 25 commercial banks (a number that swells to $333 trillion when looking at the Top 25 Bank Holding Companies, a mere 5 banks account for 95.9% of all derivative exposure. The top 5 banks:

  • JP Morgan Chase with $78.1 trillion in exposure
  • Citi with $56 trillion
  • Bank of America with $53 trillion
  • Goldman with $48 trillion
  • HSBC with $3.9 trillion

As historically has been the case, the bulk of consolidated exposure is in Interest Rate swaps ($204.6 trillion), followed by FX ($26.5TR), CDS ($15.2 trillion), and Equity and Commodity with $1.6 and $1.4 trillion, respectively.

And that's your definition of Too Big To Fail right there: the biggest banks are not only getting bigger, but their risk exposure is now at a new all time high and up $5.3 trillion from Q1 as they have to risk ever more in the derivatives market to generate that incremental penny of return.

If any of the top four banks fails, the repercussions would be disastrous. And no, Frank Dodd's bank "resolution" provision would do absolutely nothing to prevent an epic systemic collapse.

Is Morgan Stanley Sitting On An FX Derivative Time Bomb?

While virtually every single bank has a preponderance of its derivative exposure in the form of plain vanilla interest rate swaps (on average accounting for more than 80% of total), Morgan Stanley, and specifically its Utah-basedcommercial bank Morgan Stanley Bank NA, has almost exclusively all of its exposure tied in with the far riskier FX contracts, or 98.3% of the total $1.793 trillion. For a bank with no deposit buffer, and which has massive exposure to European banks regardless of how hard management and various other banks scramble to defend Morgan Stanley, the fact that it has such an abnormal amount of exposure to the ridiculously volatile FX space should perhaps raise some further eyebrows...

This is a Suspicious News Brief. Read more at ZeroHedge.
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Wall Street cop faces probe over pepper spray

Source: Russia Today

As protesters cry foul over the NYPD's violent acts perpetrated at Occupy Wall Street demonstrators, the cop that infamously sprayed down a group of women in Manhattan last week with mace will become the subject of an internal investigation. In the days since NYPD Deputy Inspector Anthony Bologna released pepper spray on a group of female demonstrators rallying against big banks last Saturday, at least two videos of the incident have surfaced to the Internet.

This is a Suspicious News Brief. Read more at Russia Today.
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Thursday, September 22, 2011

GM's OnStar now spying on your car for profit even after you unsubscribe?

Source: Autoblog

If you're the owner of a fairly new General Motors product, you may want to take a close look at the most recent OnStar terms and conditions. As it turns out, the company has altered the parameters under which it can legally collect GPS data on your vehicle. Originally, the terms and conditions stated that OnStar could only collect information on your vehicle's location during a theft recovery or in the midst of sending emergency services your way. That has apparently changed. Now, OnStar says that it has the right to collect and sell personal, yet supposedly anonymous information on your vehicle, including speed, location, seat belt usage and other information. Who would be interested in that data, you ask?

This is a Suspicious News Brief. Read more at: Autoblog.
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Tuesday, September 20, 2011

U.K. Researchers to Test "Artificial Volcano" for Geoengineering the Climate

Source: Scientific American

Next month, researchers in the U.K. will start to pump water nearly a kilometer up into the atmosphere, by way of a suspended hose. The experiment is the first major test of a piping system that could one day spew sulfate particles into the stratosphere at an altitude of 20 kilometers, supported by a stadium-size hydrogen balloon. The goal is geoengineering, or the "deliberate, large-scale manipulation of the planetary environment" in the words of the Royal Society of London, which provides scientific advice to policymakers. In this case, researchers are attempting to re-create the effects of volcanic eruptions to artificially cool Earth.

The $30,000 test, part of a project called Stratospheric Particle Injection for Climate Engineering (SPICE), is inspired by the 1991 eruption of Mount Pinatubo in the Philippines. That volcano spewed 20 million tons of sulfate particles into the atmosphere, cooling Earth by 0.5 degree Celsius for 18 months. If the British feasibility tests are successful, the balloon-and-hose contraption could be used to inject additional particles into the stratosphere, thereby reflecting more of the sun's energy back into space, and hopefully curbing some of the effects of global warming.

October's tests will mainly focus on whether the balloon-and-hose design could be an effective method to deliver the sunlight-reflecting particles. At an airfield in Norfolk, England, that is no longer in use, a helium blimp will hoist a regular pressure-washer hose one kilometer off the ground. An off-the-shelf pressure washer will pump up 1.8 liters of tap water per minute, to a maximum of 190 liters, which will evaporate or fall down to the ground locally. The researchers will monitor the performance of the system, and use the data to design the larger 20-kilometer-high setup.

This is a Suspicious News Brief. Read more at Scientific American
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Saturday, September 17, 2011

Bloomberg warns high unemployment rate could lead to widespread rioting


"We have a lot of kids graduating college, can't find jobs. That's what happened in Cairo. That's what happened in Madrid. You don't want those kinds of riots here."

Bloomberg also said the damage may be done --especially to recent college grads --as the nation's unemployment rate hovers around 9 percent. "The damage to a generation that can't find jobs will go on for many, many years," Bloomberg said.

This is a Suspicious News Brief.
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Friday, September 16, 2011

Polish Finance Minister mentioned risk of war in Europe

Source: Warsaw Business Journal

At a speech before the European Parliament on Wednesday, Polish Finance Minister Jacek Rostowski said “Europe was in danger” and that if the euro zone collapsed, the European Union itself wouldn't be able to survive for long. But what really caused a stir were the FM's allusions to the possibility of war in Europe as a result of the current crisis.

“I recently met a friend who worked with me during the period of [economic] transformation and is now the president of a big Polish bank. He said, 'You know after such economic and political shocks, it rarely is the case that after ten years, there would be no catastrophic war. I am seriously thinking of getting my children an American green card.'”

Mr Rostowski concluded by saying European leaders “cannot allow that to happen.”

This is a Suspicious News Brief. Read more at the Warsaw Business Journal.
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Thursday, September 15, 2011

Ron Paul's Campaign Manager Died of Pneumonia, Penniless and Uninsured

First, watch the video and read the transcript of a question Wolf Blitzer asked Ron Paul during the last GOP debate on CNN:

Wolf Blitzer: You're a physician, Ron Paul, you're a doctor. You know something about this subject. Let me ask you this hypothetical question. A healthy 30-year-old young man has a good job, makes a good living, but decides I'm not going to spend 200 or $300 a month because I'm healthy, I don't need it. But something terrible happens, all of a sudden he needs it. Who will pay if he goes into a coma, who pays for that?
Ron Paul: In a society that you accept welfarism and socialism, he expects the government to take care of him.
Blitzer: What do you want?
Paul: What he should do is whatever he wants to do and assume responsibility for himself. My advice to him would have a major medical policy.
Blitzer: He doesn't have that and he needs intensive care for six months. Who pays?
Paul: That's what freedom is all about, taking your own risks. This whole idea that you have to prepare and take care of everybody --
Audience: [applause]
Blitzer: But congressman, are you saying that society should just let him die?
Audience: [shouts of "yeah!"]
Paul: I practiced medicine before we had Medicaid in the early 1960s when I got out of medical school. I practiced at Santa Rosa Hospital in San Antonio and the churches took care of them. We never turned anybody away from the hospital. And we've given up on this whole concept that we might take care of ourselves and assume responsibility for ourselves, our neighbors, our friends, our churches would do it. This whole idea -- that's the reason the cost is so high. The cost is so high because they dump it on the government, it becomes a bureaucracy. It becomes special interests, it kowtows to the special interests and the drug company, then on top of that you have the inflation, the inflation devalues the dollar. We have lack of competition. There's no competition in medicine. Everybody is protected by licensing. We should legalize alternative health care. Allow people to practice what they want."

Now you can read the following story in context.

Source: Gawker

At CNN's Tea Party-indulging debate on Monday, Ron Paul, a medical doctor, faced a pointed line of questioning from Wolf Blitzer regarding the case of an uninsured young man who suddenly found himself in dire need of intensive health care. Should the state pay his bills?

Paul responded, "That's what freedom is all about: taking your own risks. This whole idea that you have to take care of everybody—"

He never quite finished that point, letting the audience's loud applause finish it for him. So Blitzer pressed on, asking if he meant that "society should just let him die," which earned a chilling round of approving hoots from the crowd.

Paul would not concede that much outright, instead responding with a personal anecdote, the upshot being that in such a case, it was up to churches to care for the dying young man.

Back in 2008, Kent Snyder —Ron Paul's former campaign chairman —died of complications from pneumonia. Like the man in Blitzer's example, the 49-year-old Snyder was relatively young and seemingly healthy when the illness struck. He was also uninsured. When he died on June 26, 2008, two weeks after Paul withdrew his first bid for the presidency, his hospital costs amounted to $400,000. The bill was handed to Snyder's surviving mother (pictured, left), who was incapable of paying. Friends launched a website to solicit donations.

This is a Suspicious News Brief. Read more at Gawker
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What should the White House do? Panic!

Source: CNN

James Carville's advice to Obama: Panic!

"As I watch the Republican debates, I realize that we are on the brink of a crazy person running our nation. I sit in front of the television and shudder at the thought of one of these creationism-loving, global-warming-denying, immigration-bashing, Social-Security-cutting, clean-air-hating, mortality-fascinated, Wall-Street-protecting Republicans running my country. The course we are on is not working."

This is a Suspicious News Brief. Read more at CNN.
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Thursday, September 8, 2011

C.I.A. Demands Cuts in Book About 9/11 and Terror Fight

Source: New York Times

n what amounts to a fight over who gets to write the history of the Sept. 11 attacks and their aftermath, the Central Intelligence Agency is demanding extensive cuts from the memoir of a former F.B.I. agent who spent years near the center of the battle against Al Qaeda.

The agent, Ali H. Soufan, argues in the book that the C.I.A. missed a chance to derail the 2001 plot by withholding from the F.B.I. information about two future 9/11 hijackers living in San Diego, according to several people who have read the manuscript.

This is a Suspicious News Brief. Read more at the New York Times.

Tuesday, September 6, 2011

Debt after death: Banks chase down mourners

Debt collectors are especially abusive after a death. Creditors race to collect debts before all of the money has been drained from the estate. Creditors often make frequent and high-pressure calls to family members and executors of an estate. They often offer reduced interest rates, reduced balances and other incentives if payment or tranfer of debt happens quickly.

If you find yourself in this position, my advice is to just let all calls from unrecognized numbers go to voicemail and take your time deciding what to do. You should have at least 30 days from the time you receive written notice to respond. Don't feel obligated to pay an unsecured debt if the estate is unable to pay. Obviously consult a lawyer, but don't let the creditors pressure you into making rash decisions.

Source: CNN Money

Because it's likely the deceased carried multiple debts, creditors often race to be the first to collect money from the next of kin or the estate before it has all dried up, said Gerri Detweiler, a debt specialist at credit card research and comparison site

"The longer a creditor waits to get paid, the less their chance of getting paid," she said. "And unfortunately, they may find that it's easiest to elicit payment when bereaved relatives are still trying to sort everything out."

During her husband's wake, Deborah Crabtree said she had set up an answering machine and put it on speaker phone so that loved ones could leave their condolences, according to the complaint she filed against Bank of America. But instead of hearing only the voices of friends and family come through the speakers, she said a debt collector from Bank of America Home Loan Servicing called every 15 minutes and left harassing messages about the debts her husband had left behind that everyone in the house could hear.

Even after the wake, Crabtree said Bank of America collectors called her as many as 48 times a day --and even threatened to foreclose on her home, according to a lawsuit she filed last month against the bank.

This is a Suspicious News Brief. Read more at CNN Money.
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Monday, September 5, 2011

Are food prices approaching a violent tipping point?

Source: The Guardian

A provocative new study suggests the timing of the Arab uprisings is linked to global food price spikes, and that prices will soon permanently be above the level which sparks conflicts

Furthermore, it suggests there is a specific food price level above which riots and unrest become far more likely. That figure is 210 on the UN FAO's price index: the index is currently at 234, due to the most recent spike in prices which started in the middle of 2010.

Lastly, the researchers argue that current underlying food price trends - excluding the spikes - mean the index will be permanently over the 210 threshold within a year or two.

This is a Suspicious News Brief. Read More at The Guardian.

Requiem for the Dollar

Source: The Wall Street Journal

Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money. Is the massive printing of dollar bills to lift Wall Street (and the rest of us, too) off the rocks a kind of fraud? If the U.S. Senate so determines, it may send Mr. Bernanke back home to Princeton. But not even Ron Paul, the Texas Republican sponsor of a bill to subject the Fed to periodic congressional audits, is calling for the Federal Reserve chairman's head.

For most of this country's history, the dollar was exchangeable into gold or silver. "Sound" money was the kind that rang when you dropped it on a counter. For a long time, the rate of exchange was an ounce of gold for $20.67. Following the Roosevelt devaluation of 1933, the rate of exchange became an ounce of gold for $35. After 1933, only foreign governments and central banks were privileged to swap unwanted paper for gold, and most of these official institutions refrained from asking (after 1946, it seemed inadvisable to antagonize the very superpower that was standing between them and the Soviet Union). By the late 1960s, however, some of these overseas dollar holders, notably France, began to clamor for gold. They were well-advised to do so, dollars being in demonstrable surplus. President Richard Nixon solved that problem in August 1971 by suspending convertibility altogether. From that day to this, in the words of John Exter, Citibanker and monetary critic, a Federal Reserve "note" has been an "IOU nothing."

The lifespan of no monetary system since 1880 has been more than 30 or 40 years, including that of my beloved classical gold standard, which perished in 1914. The pure paper dollar regime has been a long time dying. In no phase of American monetary history was every banker so courageous and farsighted as Isaias W. Hellman, a progenitor of an institution called Farmers & Merchants Bank and of another called Wells Fargo. Operating in southern California in the late 1880s, Hellman arrived at the conclusion that the Los Angeles real-estate market was a bubble. So deciding—the prices of L.A. business lots had climbed to $5,000 from $500 in one short year—he stopped lending. The bubble burst, and his bank prospered. Safety and soundness was Hellman's motto. He and his depositors risked their money side-by-side. The taxpayers didn't subsidize that transaction, not being a party to it.

In this crisis, of course, with latter-day Hellmans all too scarce in the banking population, the taxpayers have born an unconscionable part of the risk. Wells Fargo itself passed the hat for $25 billion.

Gold is appreciating in terms of all paper currencies—or, alternatively, paper currencies are depreciating in terms of gold—because the world is losing faith in the tenets of modern central banking. Correctly, the dollar's vast non-American constituency understands that it counts for nothing in the councils of the Fed and the Treasury. If 0% interest rates suit the U.S. economy, 0% will be the rate imposed. Then, too, gold is hard to find and costly to produce. You can materialize dollars with the tap of a computer key.

A proper gold standard promotes balance in the financial and commercial affairs of participating nations. The pure paper system promotes and perpetuates imbalances. Not since 1976 has this country consumed less than it produced (as measured by the international trade balance): a deficit of 32 years and counting. Why has the shortfall persisted for so long? Because the U.S., uniquely, is allowed to pay its bills in the currency that only it may lawfully print. We send it west, to the central banks of our Asian creditors. And they, obligingly, turn right around and invest the dollars in America's own securities. It's as if the money never left home. Stop to ask yourself, American reader: Is any other nation on earth so blessed as we?

There is, however, a rub. The Asian central banks do not acquire their dollars with nothing. Rather, they buy them with the currency that they themselves print. Some of this money they manage to sweep under the rug, or "sterilize," but a good bit of it enters the local payment stream, where it finances today's rowdy Asian bull markets.

Thomson Hankey, a onetime governor of the Bank of England, wrote, "I cannot conceive of anything more likely to encourage rash and imprudent speculation... I am no advocate for any legislative enactments to try and make the trading community more prudent." Hankey believed in the price system. It might pain him to discover that his professional descendants have embraced command and control. "We should have required [banks to hold] more capital, more liquidity," Mr. Bernanke rued in a Senate hearing in 2009. "We should have required more risk management controls." Roll over, Isaias Hellman.

The thing to do, I say, is to restore the nets to the tennis courts of money and finance. Collateralize the dollar—make it exchangeable into something of genuine value. Get the Fed out of the price-fixing business. Replace Ben Bernanke with a latter-day Thomson Hankey. Find—cultivate—battalions of latter-day Hellmans and set them to running free-market banks. There's one more thing: Return to the statute books Section 19 of the 1792 Coinage Act, but substitute life behind bars for the death penalty. It's the 21st century, you know.

This is a Suspicious News Brief. Read more at The Wall Street Journal

Cyborg insects generate power for their own neural control

The bee population is shrinking and GM crops are causing stronger pests to evolve. These bugbots might just be the solution to our agriculture problems. Farmers could release squads of praying mantises to pollenate and patrol crops for pests.

Source: PhysOrg

For many years, researchers have been working on designing and fabricating micro-air-vehicles (MAVs), flying robots the size of small insects. But after realizing how difficult it is to create a tiny, lightweight flying vehicle capable of carrying a payload and being powered by a long-life onboard power source, some researchers have recently stopped trying to copy real-life insects and started using the insects themselves, with a few small tweaks.

So far, the neural control systems in cyborg insects have generally been powered by batteries. But now Aktakka and coauthors Hanseup Kim and Khalil Najafi from the University of Michigan (Kim is currently with the University of Utah), have developed an energy scavenger that generates power from the wing motion of a Green June Beetle during tethered flight. Two generators – one on each of the beetle’s wings – use piezoelectric devices to produce a total of 45 µW of power per insect. The researchers predict that this power could be increased by an order of magnitude through a direct connection between the generator and the insect’s flight muscles.

This is a Suspicious News Brief. Read more at PhysOrg.

Saturday, September 3, 2011

Gibson: Feds Want Guitar Woodwork Done By Foreign Labor

Source: Fox News

Gibson Guitar Corp. is claiming the Obama administration wants more of its woodwork erseas, as a bizarre battle heats up between the government and one of the s most renowned guitar makers.

According to search warrants associated with the latest raid, federal agents in June intercepted a shipment of Indian ebony apparently bound for Gibson in Tennessee. The documents noted that Indian law "prohibits the export of sawn wood," which can be used for fingerboards --but does not prohibit the export of "veneers," which are sheets of woods that have already been worked on. The search warrants alleged that the intercepted shipment was "falsely declared" as veneer, something that would have been legal. However, the documents said the ebony was in fact unfinished "sawn wood," supposedly illegal. This led to the raid on Gibson facilities late last month.

This is a Suspicious News Brief. Read more at Fox News.
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The race is on for Libya's oil, with Britain and France both staking a claim

Source: The Guardian

The starting pistol has been fired on bids by Britain and other western powers to secure a slice of the oil prize in Libya when France said it was "fair and logical" for its companies to benefit.

Rebel leaders had already made clear that countries active in supporting their insurrection –notably Britain and France –should expect to be treated favourably once the dust of war had settled. But they were anxious to shut down any suggestion that firm promises had already been made to carve up the country's only real wealth-providing industry with foreign powers or companies.

The new Tripoli government has denied the existence of a reported secret deal by which French companies would control more than a third of Libya's oil production in return for Paris's support for the revolution.

Chinese and Russian companies had a significant presence in the country but could face difficulties after being equivocal early on about the rebel plan to unseat Gaddafi.

Abdeljalil Mayouf, an executive at Libyan rebel oil firm Agoco told Reuters: "We don't have a problem with western countries like the Italians, French and UK companies. But we may have some political issues with Russia, China and Brazil."

This is a Suspicious News Brief. Read more at The Guardian.
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How US firms profited from torture flights

Source: Guardian

The scale of the CIA's rendition programme has been laid bare in court documents that illustrate in minute detail how the US contracted out the secret transportation of suspects to a network of private American companies. The manner in which American firms flew terrorism suspects to locations around the world, where they were often tortured, has emerged after one of the companies sued another in a dispute over fees.

As the 10th anniversary of 9/11 approaches, the mass of invoices, receipts, contracts and email correspondence –submitted as evidence to a court in upstate New York –provides a unique glimpse into a world in which the "war on terror" became just another charter opportunity for American businesses.

This is a Suspicious News Brief. Read more at The Guardian.
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