Wednesday, October 14, 2009

Tentative Inspection Program Would Allow Russia to Visit U.S. Nuclear Sites

The plan, which Fox News has learned was agreed to in principle during negotiations, would constitute the most intrusive weapons inspection program the U.S. has ever accepted.


















Tuesday, October 13, 2009


Russia and the United States have tentatively agreed to a weapons inspection program that would allow Russians to visit nuclear sites in America to count missiles and warheads.

The plan, which Fox News has learned was agreed to in principle during negotiations, would constitute the most intrusive weapons inspection program the U.S. has ever accepted.

Foreign Minister Sergey Lavrov, who met with Secretary of State Hillary Clinton, said publicly Tuesday that the two nations have made "considerable" progress toward reaching agreement on a new strategic arms treaty.

The 1991 Strategic Arms Reduction Treaty, or START, expires in December and negotiators have been racing to reach agreement on a successor.

Clinton said the U.S. would be as transparent as possible.

"We want to ensure that every question that the Russian military or Russian government asks is answered," she said, calling missile defense "another area for deep cooperation between our countries."

On another critical issue, Lavrov declared that it would be counterproductive to threaten Iran with more sanctions over its nuclear program -- as he resisted efforts by Clinton to win agreement for tougher measures should Iran fail to prove its program is peaceful.

Clinton visited Moscow on her first trip since becoming America's top diplomat, in an effort to gauge Moscow's willingness to join the U.S. in imposing sanctions.

Clinton said the U.S. agreed it was important to pursue diplomacy with Iran.

"At the same time that we are very vigorously pursuing this track, we are aware that we might not be as successful as we need to be, so we have always looked at the potential of sanctions in the event we are not successful and cannot assure ourselves and others that Iran has decided not to pursue nuclear weapons," she said at a joint news conference.

Iran insists it has the right to a full domestic nuclear enrichment program and maintains it is only for peaceful purposes, such as energy production.

President Obama -- who visited Russia in July -- has vowed to "reset" U.S.-Russia relations. On Tuesday, Clinton apologized for missing that meeting because of a broken elbow.

"But now both my elbow and our relationships are reset and we're moving forward, which I greatly welcome," she said.

She was to meet with Russian President Dmitry Medvedev later Tuesday.

Fox News' Dana Lewis and The Associated Press contributed to this report.

Tuesday, October 13, 2009

A Modern Day Founding Father?

Ron Paul sounds strikingly like Thomas Jefferson, Benjamin Franklin, George Washington, and other founding fathers. Don't believe me? Study American history and the words of the founders and you will quickly come to the same conclusion.

- Founders Nation

Ron Paul During a 2008 Republican Debate

He Doesn't Sound So Stupid Anymore...

Interesting Exchange between Business Owner and Govenor of Michigan

The EU Seeks a President

The Lisbon Treaty, once ratified, would for the first time create the office of President of the European Union.


(AP) President Tony Blair? Don't laugh, it could happen.

Former British Prime Minister Tony Blair is seen in a July 24, 2007 file photo. Blair is considered a leading candidate for the newly-created post of president of the EU.

The former British prime minister may be coming back, this time in a presidential role. Two years after leaving Downing Street, Blair has emerged as a strong candidate for the soon-to-be-created post of European president.

The role - in effect, the president of the European Union - will be appointed by the heads of state of the 27-nation bloc after a new EU reform treaty is signed and ratified. That process received a major boost this weekend with approval from Irish voters.

The powers of the new position remain unspecified and to a large extent it will be defined by the first person in the role. A key question is whether that will be a largely unknown bureaucrat or a luminary like Blair.

There are already signs that Blair, 56, is receiving strong consideration, and he has the formal support of British leaders despite the long-standing rivalry between Blair and his taciturn successor, Prime Minister Gordon Brown.

Robert Worcester, chairman of the Ipsos MORI polling firm in England, said Blair's unannounced candidacy will be helped by his popularity in the United States and in continental Europe even though his standing at home is low.

"He's very, very popular in the United States and very popular in Europe, but not at home," said Worcester. "At home, he hasn't been forgiven for his support of the war in Iraq, for his saying there were weapons of mass destruction."

The position could be created as early as this month, although EU officials have given no firm date.

The youthful, articulate Blair became prime minister after a landslide victory in 1997 and served 10 years before he stepped down to quell a Labour Party revolt. He has traveled the world ceaselessly since leaving office, taking on an official role in the Middle East peace process while also teaching in the United States and giving lucrative speeches.

Unlike other candidates for the post, who tend to be lesser known European bureaucrats, Blair enjoys worldwide name recognition and is on a first-name basis with many world leaders, enjoying a celebrity status that would likely confer immediate credibility on the new post.

But Blair's candidacy for the job - some British papers say his former chief of staff is working behind the scenes to muster support - could alienate Conservative Party leaders who expect to take power at Britain's next general election, which must be held by June next year.

They don't like the idea of Blair rising, one more time, even as they prepare to administer the coup de grace to Labour leadership, which has stalled badly under Brown.

London Mayor Boris Johnson, a Conservative stalwart, on Monday warned of a British backlash to the possible appointment of Blair.

He said many Britons would resent Blair "suddenly pupating into an intergalactic spokesman for Europe," without a public vote.

Other prospective presidential candidates are being considered as well, although they don't enjoy Blair's star status. Still, that may be preferable to European heads of state looking to appoint a figurehead who won't outshine them, or steal too much media attention.

Outgoing German Foreign Minister Frank-Walter Steinmeier has been mentioned, along with Greek Foreign Minister Dora Bakoyannis, former Austrian Foreign Minister Ursula Plassnik, Dutch Prime Minister Jan Peter Balkenende, Luxembourg Prime Minister Jean-Claude Juncker and former Finnish Prime Minister Paavo Lipponen.

The new president will be selected during private conversations among the leaders of the 27 EU nations without any public review.

The Lisbon Treaty, designed to boost Europe's voice on the world stage as it competes with the United States, Russia and emerging powers like China and India, also creates a top foreign policy position.

Anand Menon, director of the European Research Institute at the University of Birmingham, said the new president is likely to clash with the foreign policy chief as they jockey for power in new positions with largely undefined powers.

"There seems to be a head of steam building up for Blair, but there is unease about him as well, because of Iraq, because of the euro, and because of his ambition, which some people see as a drawback," said Menon.

Some European leaders oppose Blair, Menon said, because he failed to make good on his early promise to bring Britain "into the heart of Europe" and did not adopt the European currency, the euro, or take actions to join other European Union institutions.

Belgium, the Netherlands and Luxembourg have drafted a profile of the next EU president and are circulating it around EU capitals. Diplomats say it calls for someone with the "stature of a head of state" who is an ardent proponent of increased European integration, who has a broad world view and will listen to all 27 nations - not just the big four.

Diplomats say Sweden, now holding the EU presidency, wants an early decision on the appointment of an EU president at the Oct. 29-30 EU summit in Brussels that Swedish Prime Minister Fredrik Reinfeldt will chair.

But that would only be possible if the Czech Constitutional Court has ruled on a complaint by some senators who want a review of the Lisbon treaty.

Tuesday, September 29, 2009

Officials: Fed will need to boost rates quickly




















By Jeannine Aversa, AP Economics Writer
On Tuesday September 29, 2009, 7:00 pm EDT

WASHINGTON (AP) -- To prevent inflation from taking off, the Federal Reserve will need to start boosting interest rates quickly and aggressively once the economy is back on firmer footing, Fed officials warned Tuesday.

"I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity" to when the Fed was slashing rates to battle the recession and the financial crisis, said Richard Fisher, president of the Federal Reserve Bank of Dallas.

Although Fisher has a reputation for being one of the Fed's toughest inflation fighters, it marked the second such warning by a central bank official in recent days. Fed member Kevin Warsh on Friday said the central bank will need to move swiftly when the time comes to raise rates.

Charles Plosser, president of the Federal Reserve Bank of Philadelphia and also a hawk against inflation, waded into the debate in a speech Tuesday in Easton, Pa., saying the Fed may need to act "well before" unemployment -- now at a 26-year high of 9.7 percent -- returns to normal. The Fed, he said, will need to be on guard "to prevent the Second Great Inflation."

It's all part of a high-wire act that the Fed has to perform as the economy transitions from recession to recovery.

If the Fed raises rates and reels in the unprecedented support too soon, it could short-circuit the rebound. If the central bank waits too long to rein in its stimulus, inflation could be unleashed.

"The wind-down process needs to begin as soon as there are convincing signs that economic growth is gaining traction and that the lending capacity of the banking system is capable of expansion," according to excerpts of a speech Fisher delivered in Dallas. That also was similar to Warsh's comments last week.

Some investors found Warsh's comments confusing, especially coming just two days after the Fed decided to hold its key bank lending rate at a record low near zero and pledged to keep it there for an "extended period." Most economists read that to mean the Fed would keep rates at super-low levels through this year and into part of 2010.

Warsh's comments led some investors to believe that rate increases could come sooner. The last time the Fed raised rates was in June 2006, around the time that the housing bubble reached its peak.

The notion that central banks should act forcefully -- versus gradually -- in raising rates after a financial crisis was a subject of discussion at a Fed conference in Wyoming in August.

When the decision is made to boost rates, they will need to be "increased aggressively," argued Carl Walsh, a professor of economics at the University of California, Santa Cruz, and an expert on monetary policy. "Committing to a gradual increase in the policy rate is not justified."

Consumers, businesses and investors must feel more confident that prices won't spiral higher in the future, so their inflation expectations don't become "unanchored," Walsh said last month.

On other matters, Fisher said Tuesday that despite some signs of improvement, the housing market is "still on life support."

The Fed last week announced it was slowing down a program intended to lower mortgage rates and aid the housing sector. "The market for housing will not become truly robust until market forces replace the prostheses of government support," Fisher said.

Still, home prices rose for the third straight month in July. The Standard & Poor's/Case-Shiller home price index of 20 major cities rose 1.2 percent from June. Though 13.3 percent below July a year ago, the annual price declines have slowed in all 20 cities for the sixth straight month, according to data released Tuesday.

Quote of the Day


The genius and foresight of our founding fathers cannot be overstated. Check out this quote from Thomas Jefferson on the dangers of a central banking system:


"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

-Thomas Jefferson

Monday, July 20, 2009

USDA Defends Purchases and Stimulus Spending


Statement from Agriculture Secretary Tom Vilsack

"Through the Recovery Act, the U.S. Department of Agriculture has made $100 million available to the states for The Emergency Food Assistance Program (TEFAP), which acquires food that is distributed to local organizations that assist the needy – including food banks, food pantries, and soup kitchens.

Read Full Statement...

Wondering where your 'Stimulus' dollars are going?

Here is a small example of your tax dollars 'hard at work'...Just a bunch of Pork!

Sorry..bad pun...

RECOVERY.GOV // AWARDED: $2,531,600 FOR 'HAM, WATER ADDED, COOKED, FROZEN, SLICED, 2-LB'

RECOVERY.GOV // AWARDED: $1,191,200 FOR '2 POUND FROZEN HAM SLICED'

RECOVERY.GOV // AWARDED: $351,807 FOR 'REPLACE AND UPGRADE THE DUMBWAITER'

RECOVERY.GOV // AWARDED: $1,562,568 FOR 'MOZZARELLA CHEESE'

RECOVERY.GOV // AWARDED: $5,708,260 FOR 'PROCESS CHEESE'

RECOVERY.GOV // AWARDED: $16,784,272 FOR 'CANNED PORK'

RECOVERY.GOV // AWARDED: $1,444,100 FOR 'REPAIR DOOR BLDG 5112'

RECOVERY.GOV // AWARDED: $541,119 FOR 'INSTALL TRAFFIC SIGNAL'


Come on! Your not really surprised....are you!?!

White House Delays Release of Budget Update




















Jul 20 11:02 AM US/Eastern
By TOM RAUM


WASHINGTON (AP) - The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today's bleak landscape.

Read article...

Sunday, July 19, 2009

Ronald Reagan addresses Socialized Medicine

For those of you who think Universal Healthcare is a fairly new idea, listen to my boy Ronnie address the subject as a private citizen back in 1961.

Feds to set wages

Thomas Lifson

The long battle of the statists to set wage levels may be near realization, thanks to a skillful use of rope-a-dope tactics by the Obama administration. The latest version of the notorious card check legislation reportedly drops the feared card check provision, but includes a Trojan Horse provision that lets the feds set wages and other contract terms. Jennifer Rubin spotted it, and Mickey Kaus picked it up from her, commenting:

Read entire article..

Obama & Co. see current Majority as "opportunity" to force Socialized Healthcare

Obama: "We might not have this opportunity again for generations"

Friday, July 17, 2009

Socialist America sinking

By Patrick Buchanan
Posted: July 16, 2009

























After half a century of fighting encroachments upon freedom in America, journalist Garet Garrett published "The People's Pottage." A year later, in 1954, he died. "The People's Pottage" opens thus:

"There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom."

Garrett wrote of a revolution within the form. While outwardly America appeared the same, a revolution within had taken place that was now irreversible. One need only glance at where we were before the New Deal, where we are and where we are headed to see how far we are off the course the Founding Fathers set for our republic.

Taxes drove the American Revolution, for we were a taxaphobic, liberty-loving people. That government is best that governs least is an Americanism. When "Silent Cal" Coolidge went home in 1929, the U.S. government was spending 3 percent of gross domestic product.

And today? Obama's first budget will consume 28 percent of the entire GDP; state and local governments another 15 percent. While there is some overlap, in 2009, government will consume 40 percent of GDP, approaching the peak of World War II.

Tell Congress to stop spending America into the ground! Sign the WND petition demanding lawmakers stop the bailouts, stimulus bills and march toward socialism and national destruction.

The deficit for 2009 is $1.8 trillion, 13 percent of the whole economy. Obama is pushing a cap-and-trade bill to cut carbon emissions that will impose huge costs on energy production, spike consumer prices and drive production offshore to China, which is opting out of Kyoto II. The Chinese are not fools.

Obama plans to repeal the Bush tax cuts and take the income tax rate to near 40 percent. Combined state and local income tax rates can run to 10 percent. For the self-employed, payroll taxes add up to 15.2 percent on the first $106,800 for all wages of all workers. Medicare takes 2.9 percent of all wages above that. Then there are the state sales taxes that can run to 8 percent, property taxes, gas taxes, excise taxes and "sin taxes" on booze, cigarettes and, soon, hot dogs and soft drinks.

Comes now national health insurance from Nancy Pelosi's House. A surtax that runs to 5.4 percent of all earnings of the top 1 percent of Americans, who already pay 40 percent of all federal income taxes, has been sent to the Senate. Included also is an 8 percent tax on the entire payroll of small businesses that fail to provide health insurance for employees.

Other ideas on the table include taxing the health benefits that businesses provide their employees.

The D.C.-based Tax Foundation says New Yorkers could face a combined income tax rate of near 60 percent.

In the Declaration of Independence, Thomas Jefferson called George III a tyrant for having "erected a multitude of new offices, and sent hither swarms of officers to harass our people and eat out their substance."

What did George III do with his Stamp Act, Townshend Acts or tea tax to compare with what is being done to this generation of Americans by their own government?

While the hardest-working and most productive are bled, a third of all wage-earners pay no U.S. income tax, and Obama plans to free almost half of all wage-earners of all income taxes. Yet, tens of millions get Medicaid, rent supplements, free education, food stamps, welfare and an annual check from Uncle Sam called an Earned Income Tax Credit, though they never paid a nickel in income taxes.

Oh, yes. Obama also promises everybody a college education.

Coming to America to feast on this cornucopia of freebies is the world. One million to 2 million immigrants, legal and illegal, arrive every year. They come with fewer skills and less education than Americans, and consume more tax dollars than they contribute by three to one.

Wise Latina women have more babies north of the border than they do in Mexico and twice as many here as American women.

As almost all immigrants are now Third World people of color, they qualify for ethnic preferences in hiring and promotions and admissions to college over the children of Americans.

All of this would have astounded and appalled the Founding Fathers, who after all, created America – as they declared loud and clear in the Constitution – "for ourselves and our posterity."

China saves, invests and grows at 8 percent. America, awash in debt, has a shrinking economy, a huge trade deficit, a gutted industrial base, an unemployment rate surging toward 10 percent and a money supply that's swollen to double its size in a year. The 20th century may have been the American Century. The 21st shows another pattern.

"The United States is declining as a nation and a world power with mostly sighs and shrugs to mark this seismic event," writes Les Gelb, president emeritus of the Council on Foreign Relations, in CFR's Foreign Affairs magazine. "Astonishingly, some people do not appear to realize that the situation is all that serious."

Even the establishment is starting to get the message.

Sunday, July 12, 2009

The Fed Must Be Stopped



July 12, 2009


Written by: Ron Paul

Our country currently finds itself in the midst of the worst economic crisis since the 1930s and, as during all economic crises, people search for the answer as to why this has happened. Not only have large financial firms been affected, but also mainstays of American industry such as GM and Chrysler, all the way down to the Mom & Pop stores on Main Street. The easy way out is to blame the traditional scapegoats: foreign governments, fraudulent businessmen, and greedy speculators. But the real villain is far more sinister; the organization entrusted with maintaining a stable dollar and touted as the guarantor of economic stability – the Federal Reserve.

In the United States, monetary policy has been the domain of the Federal Reserve since its inception in 1913. Since that time we have had a number of cyclical recessions, each one following a boom caused by the Federal Reserve's loose monetary policy. The problem with the Federal Reserve is that it interferes with market pricing functions. Interest rates are a price just like any other and arise because of the fact that people prefer to consume in the present rather than in the future. The extent to which people defer present consumption is reflected in interest rates, which in a free market are determined by the spontaneous interactions and decisions of millions of people.

Fed intervention to set prices throws markets and interest rates out of equilibrium. When the Federal Reserve pushes interest rates below what the market rate would be, everyone wants to borrow money for long-term projects. Shortages of loanable funds would occur, except that the Federal Reserve has the ability to create bank balances out of thin air. The Fed can create a bank ledger on paper, or on a computer, establish a balance of millions or billions of dollars, and then spend these dollars out into the economy.

Loans become cheap, and the result of these lower interest rates is an economic boom which eventually manifests itself as a bubble. Beginning in 2001, the Federal Reserve pushed interest rates to as low as one percent, which after adjusting for inflation meant that the real interest rate was negative, so businesses were actually making money by taking out loans. This was the fuel for the housing bubble and the reason there are 19 million empty houses today.




















Because of this awesome power to create money out of thin air, the Fed has jumped in to stabilize ailing financial firms by pledging over $7 trillion through various guarantee programs and credit facilities. This is equivalent to over half of the entire nation's GDP. Over $1 trillion of this is already in play, propping up banks and other institutions that should be allowed to fail. All of this has taken place with no oversight by Congress. The Fed was created by Congress, and it is unconscionable that we have allowed it to act in such a way without our oversight. Currently the Federal Reserve's credit facilities, open market operations, and agreements with foreign governments and central banks are all exempt from any sort of audit or oversight. Earlier this year I introduced the Federal Reserve Transparency Act, HR 1207, that would remove all restrictions on Federal Reserve audits and call for a f ull audit of the Federal Reserve System to be completed by the end of 2010. At this writing, 245 of my fellow Congressmen have cosponsored this bill and we hope to have hearings in the near future. In the Senate, Republicans Jim DeMint, Mike Crapo and David Vitter have cosponsored S. 604, companion legislation introduced by Bernie Sanders. I am very encouraged by the tremendous growing momentum on Capitol Hill.

Our Founding Fathers never intended for a single entity such as the Federal Reserve to have this much power. In fact, there is no authority in the Constitution for the federal government to create a central bank, to enact legal tender laws, or to print paper money. The Tenth Amendment is quite clear that “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The states themselves are prohibited from emitting bills of credit, i.e. paper money, arising from the Founders' negative experiences with paper money during the Revolutionary War. Cheap, un-backed, easily counterfeited paper money nearly lost the Revolution, until the government returned to minting gold and silver coins. Unfortunately, like too many other lessons learned by the Founders, the painful experiences of paper money have been forgotten by those living in the pres ent. We even ignore the experiences of Germans in the 1920s, Argentines in the 1980s, and Zimbabweans over the past decade. The Fed doubled the monetary base last fall in a matter of months, and God help us if any of this high-powered money begins to make its way through the economy.

An audit of the Fed is only the first step towards returning to where our Founders intended this country to be. The Founders knew that paper money could ruin a country, and drafted the Constitution in such a way that they thought would ensure sound, commodity-backed currency. Unfortunately, the Constitution was dispensed with long ago, and we find ourselves now suffering under an unconstitutional regime of un-backed paper money. Until we abolish the Federal Reserve and return to a stable currency that is not able to be manipulated to create boom and bust cycles, we will continue down the path of economic ruin.

Congress Ron Paul serves the fourteenth district of Texas and is honorary chairman of Campaign for Liberty. His new book, End the Fed (Grand Central Publishing) will release on September 16th and is available for pre-order on Amazon.

Tuesday, June 16, 2009

Why we are Doomed

This video should make anyone think twice about listening to anything that Chairmen of the Fed Ben Bernanke says, or what any of the clowns in Washington say for that matter. They are either lying to us to cover up there true intentions OR they are the single most incompetent group of knuckle dragging politicians to ever weasel their way into leadership of a Country. Either way, we only have ourselves to blame for it!

This is a compellation of statements Ben Bernanke has made from 2005-2007 that will have you 100% certain America is doomed if we continue to value what this moron says.

Tuesday, April 14, 2009

Federal agency warns of radicals on right

A Note from the Editor:
It is both telling and, one would imagine, quite intentional that this report, "warning" of an increase in "Right wing radicals", was released by the Department of Homeland Security just one day before millions of Americans are scheduled to gather around the country to peacefully voice their disapproval of the Federal governments unprecedented encroachment into the private sector and never-ending economic bail-outs using Tax-payer dollars. Deliberate Intimidation? You be the judge. As for this writers opinion....."something wicked this ways comes".




Washington Times
Tuesday, April 14, 2009

The Department of Homeland Security is warning law enforcement officials about a rise in "rightwing extremist activity," saying the economic recession, the election of America's first black president and the return of a few disgruntled war veterans could swell the ranks of white-power militias.

A footnote attached to the report by the Homeland Security Office of Intelligence and Analysis defines "rightwing extremism in the United States" as including not just racist or hate groups, but also groups that reject federal authority in favor of state or local authority.

"It may include groups and individuals that are dedicated to a single-issue, such as opposition to abortion or immigration," the warning says.

The White House has distanced itself from the analysis. When asked for comment on its contents, White House spokesman Nick Shapiro said, "The President is focused not on politics but rather taking the steps necessary to protect all Americans from the threat of violence and terrorism regardless of its origins. He also believes those who serve represent the best of this country, and he will continue to ensure that our veterans receive the respect and benefits they have earned."

The nine-page document was sent to police and sheriff's departments across the United States on April 7 under the headline, "Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment."

It says the federal government "will be working with its state and local partners over the next several months" to gather information on "rightwing extremist activity in the United States."

The joint federal-state activities will have "a particular emphasis" on the causes of "rightwing extremist radicalization."

Homeland Security spokeswoman Sara Kuban said the report is one in an ongoing series of assessments by the department to "facilitate a greater understanding of the phenomenon of violent radicalization in the U.S."

The report, which was first disclosed to the public by nationally syndicated radio host Roger Hedgecock, makes clear that the Homeland Security Department does not have "specific information that domestic rightwing terrorists are currently planning acts of violence."It warns that fringe organizations are gaining recruits, but it provides no numbers.

The report says extremist groups have used President Obama as a recruiting tool.

"Most statements by rightwing extremists have been rhetorical, expressing concerns about the election of the first African American president, but stopping short of calls for violent action," the report says. "In two instances in the run-up to the election, extremists appeared to be in the early planning stages of some threatening activity targeting the Democratic nominee, but law enforcement interceded."

When asked about this passage, Secret Service spokesman Ed Donovan said, "We are concerned about anybody who will try to harm or plan to harm any one of our protectees. We don't have the luxury to focus on one particular group at the exclusion of others."

Congressional debates about immigration and gun control also make extremist groups suspicious and give them a rallying cry, the report says.

"It is unclear if either bill will be passed into law; nonetheless, a correlation may exist between the potential passage of gun control legislation and increased hoarding of ammunition, weapons stockpiling, and paramilitary training activities among rightwing extremists," the report said.

The FBI was quoted Monday as saying that, since November, more than 7 million people have applied for criminal background checks in order to buy weapons.

The Homeland Security report added: "Over the past five years, various rightwing extremists, including militias and white supremacists, have adopted the immigration issue as a call to action, rallying point, and recruiting tool."

The report could signify a change in emphasis for Homeland Security under former Arizona Gov. Janet Napolitano. A German magazine quoted Ms. Napolitano as rebranding "terrorism" as "man-made disasters." Since its inception in 2003, the department has focused primarily on radicalization of Muslims and the prospect of homegrown Islamist terrorism.

In January, the same DHS office released a report titled "Leftwing extremists likely to increase use of cyber attacks over the coming decade."

"These types of reports are published all the time. There have actually been some done on the other end of the spectrum, left-wing," Ms. Kuban said.

A similar headline was used in a report issued in January, Ms. Kuban said, although she could not provide the content of the headline.

Ms. Kuban said she did not know how long the new report had been in the making.

"The purpose of the report is to identify risk. This is nothing unusual," said Ms. Kuban, who added that the Homeland Security Department did this "to prevent another Tim McVeigh from ever happening again."

The Homeland Security assessment specifically says that "rightwing extremists will attempt to recruit and radicalize returning veterans in order to exploit their skills and knowledge derived from military training and combat."

Jerry Newberry, director of communications for the Veterans of Foreign Wars, said the vast majority of veterans are patriotic citizens who would not join anti-government militias.

"As far as our military members go, I think that the military is a melting pot of society. So you might get a few, a fractional few, who are going to be attracted by militia groups and other right-wing extremists," he said.

"We have to remember that the people serving in our military are volunteers, they do it because they love their country, and they believe in what our country stands for," he said. "They spent their time in the military defending our Constitution, so the vast majority of them would be repulsed by the hate groups discussed in this report."

The Homeland Security report cited a 2008 FBI report that noted that a small number of returning military veterans from the wars in Iraq and Afghanistan have joined extremist groups.

The FBI report said that from October 2001 through May 2008 "a minuscule" number of veterans, 203 out of 23,000, had joined groups such as the Ku Klux Klan, Aryan Nations, the National Socialist Movement, the Creativity Movement, the National Alliance and some skinhead groups.

"Although the white supremacist movement is of concern to the FBI, our assessment shows that only a very small number of people with prior military experience may have an affiliation with supremacist groups," FBI spokesman Richard Kolko said Monday when asked about the FBI report.

A 2006 report from the Southern Poverty Law Center, an organization that monitors white supremacists like the Klan, said that white-power groups had an interest in the kind of training the military provides.

Mark Potok, director of the center's intelligence project, said the Homeland Security report "confirms that white supremacists are interested in the military. There is some concern, and there should be, about returning veterans, one need only think of the example of Timothy McVeigh, who was in the first Iraq war."

Mr. Potok added that he was generally pleased with the report.

"Basically, the report tracks fairly closely with what we have been saying for some time now. They mention us a couple of times, though not by name," he said.

Saturday, March 28, 2009

G20 Meets In Europe




Note From the Editor:

Buckle up everyone! I think its about to get much....much worse as the " world leaders" prepare to meet in London for the G20 summit. I get all warm and fuzzy inside just thinking about the brilliant and oh-so-helpful ideas that will come out of that gathering!

The fun has already started. See Below.



LONDON/BERLIN (Reuters) - Tens of thousands of people marched in capital cities across Europe on Saturday to protest about the economic crisis and urge world leaders to act on poverty, jobs and climate change at a G20 summit next week.

Chanting "tax the rich, make them pay," protesters marched through London waving banners saying "People before Profit," at the start of a week of protests that reflected growing public anger over bankers' pay and their role in the crisis.

Leaders from the world's 20 biggest economies meet in London on Thursday to discuss how tighter regulation of financial markets, billions of dollars in stimulus measures and credit lines for international trade can help the world economy recover from the deepest recession since the 1930s.

In Britain, trade unions, aid agencies, religious groups and environmentalists joined together under the slogan "Put People First" to demand reforms to make the world's economy fairer.

One group carried a traditional Chinese dragon with the head of a devil papered with dollar bills, calling it "The G20 Monster." Others waved signs reading "Jobs, Justice, Climate."

While the atmosphere was generally carnival-like, some marchers jeered when they passed British Prime Minister Gordon Brown's Downing Street offices. Police said up to 35,000 people took part in the march and subsequent rally in Hyde Park.

"This is going to be a summer of rage for the working class," said marcher Bryan Simpson, 20, a clerk from Glasgow.

U.S. Vice President Joe Biden said the protesters should "give us a chance" and listen to what politicians plan to do.

"Hopefully we can make it clear to them we are going to walk away from this G20 meeting with some concrete proposals," he told reporters in Chile.

British Prime Minister Gordon Brown said he understood people's concerns, adding, "That is why the action we want to take (at the G20) is designed to answer the questions that the protesters have today."

BLACK COFFIN

The British protest was mirrored in other major EU nations.

About 15,000 people marched through Berlin with black-clad protestors throwing rocks and bottles at police, setting off fireworks and smashing a police car window. Police said several arrests were made.

Up to 14,000 assembled in Germany's financial capital Frankfurt, police said, as part of a two-city demonstration.

About 6,000 demonstrators, mostly students and trade union members, marched in Rome to protest about a meeting of G8 labor ministers in the city.

Most of the marchers were peaceful, carrying placards and chanting "We won't pay for the crisis" and other slogans, but one small group smashed the glass front of a bank, and daubed "give us our money back" on the wall in red paint.

Fire-crackers were let off and banks, insurance companies and estate agents were also covered in paint.

"There has been a total failure of creative finance and of an economy based on the exploitation of workers, financial speculation and tax evasion," said protester Mario Giannini.

In Vienna, police said some 6,500 marched through the Austrian capital under slogans such as "Make The Rich Pay" and "Capitalism Kills." There was no violence.

In central Paris, a few hundred demonstrators gathered in a protest under the slogan "We will not pay for their crisis."

While some G20 protesters in London have adopted slogans such as "Hang a Banker" and "Storm the Banks," organizers of the London march said they had wanted a peaceful day.

A London police spokesman said there was only one arrest, for drunken behavior. However, police have canceled leave in the capital to cope with further protests planned by anarchists.

U.N. 'Climate Change' Plan Would Likely Shift Trillions to Form New World Economy


By George Russell
Friday , March 27, 2009


A United Nations document on "climate change" that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy, likely involving trillions of dollars in wealth transfer, millions of job losses and gains, new taxes, industrial relocations, new tariffs and subsidies, and complicated payments for greenhouse gas abatement schemes and carbon taxes — all under the supervision of the world body.

Those and other results are blandly discussed in a discretely worded United Nations "information note" on potential consequences of the measures that industrialized countries will likely have to take to implement the Copenhagen Accord, the successor to the Kyoto Treaty, after it is negotiated and signed by December 2009. The Obama administration has said it supports the treaty process if, in the words of a U.S. State Department spokesman, it can come up with an "effective framework" for dealing with global warming.

The 16-page note, obtained by FOX News, will be distributed to participants at a mammoth negotiating session that starts on March 29 in Bonn, Germany, the first of three sessions intended to hammer out the actual commitments involved in the new deal.

In the stultifying language that is normal for important U.N. conclaves, the negotiators are known as the "Ad Hoc Working Group On Further Commitments For Annex I Parties Under the Kyoto Protocol." Yet the consequences of their negotiations, if enacted, would be nothing short of world-changing.

Getting that deal done has become the United Nations' highest priority, and the Bonn meeting is seen as a critical step along the path to what the U.N. calls an "ambitious and effective international response to climate change," which is intended to culminate at the later gathering in Copenhagen.

Just how ambitious the U.N.'s goals are can be seen, but only dimly, in the note obtained by FOX News, which offers in sparse detail both positive and negative consequences of the tools that industrial nations will most likely use to enforce the greenhouse gas reduction targets.

The paper makes no effort to calculate the magnitude of the costs and disruption involved, but despite the discreet presentation, makes clear that they will reverberate across the entire global economic system.

Among the tools that are considered are the cap-and-trade system for controlling carbon emissions that has been espoused by the Obama administration; "carbon taxes" on imported fuels and energy-intensive goods and industries, including airline transportation; and lower subsidies for those same goods, as well as new or higher subsidies for goods that are considered "environmentally sound."

Other tools are referred to only vaguely, including "energy policy reform," which the report indicates could affect "large-scale transportation infrastructure such as roads, rail and airports." When it comes to the results of such reform, the note says only that it could have "positive consequences for alternative transportation providers and producers of alternative fuels."

In the same bland manner, the note informs negotiators without going into details that cap-and-trade schemes "may induce some industrial relocation" to "less regulated host countries." Cap-and-trade functions by creating decreasing numbers of pollution-emission permits to be traded by industrial users, and thus pay more for each unit of carbon-based pollution, a market-driven system that aims to drive manufacturers toward less polluting technologies.

The note adds only that industrial relocation "would involve negative consequences for the implementing country, which loses employment and investment." But at the same time it "would involve indeterminate consequences for the countries that would host the relocated industries."

There are also entirely new kinds of tariffs and trade protectionist barriers such as those termed in the note as "border carbon adjustment"— which, the note says, can impose "a levy on imported goods equal to that which would have been imposed had they been produced domestically" under more strict environmental regimes.

Another form of "adjustment" would require exporters to "buy [carbon] offsets at the border equal to that which the producer would have been forced to purchase had the good been produced domestically."

The impact of both schemes, the note says, "would be functionally equivalent to an increased tariff: decreased market share for covered foreign producers." (There is no definition in the report of who, exactly, is "foreign.") The note adds that "If they were implemented fairly, such schemes would leave trade and investment patterns unchanged." Nothing is said about the consequences if such fairness was not achieved.

Indeed, only rarely does the "information note" attempt to inform readers in dollar terms of the impact of "spillover effects" from the potential policy changes it discusses. In a brief mention of consumer subsidies for fossil fuels, the note remarks that such subsidies in advanced economies exceed $60 billion a year, while they exceed $90 billion a year in developing economies."

But calculations of the impact of tariffs, offsets, or other subsidies is rare. In a reference to the impact of declining oil exports, the report says that Saudi Arabia has determined the loss to its economy at between $100 billion and $200 billion by 2030, but said nothing about other oil exporters.

One reason for the lack of detail, the note indicates, is that impact would vary widely depending on the nature and scope of the policies adopted (and, although the note does not mention it, on the severity of the greenhouse reduction targets).

But even when it does hazard a guess at specific impacts, the report seems curiously hazy. A "climate change levy on aviation" for example, is described as having undetermined "negative impacts on exporters of goods that rely on air transport, such as cut flowers and premium perishable produce," as well as "tourism services." But no mention is made in the note of the impact on the aerospace industry, an industry that had revenues in 2008 of $208 billion in the U.S. alone, or the losses the levy would impose on airlines for ordinary passenger transportation. (Global commercial airline revenues in 2008 were about $530 billion, and were already forecast to drop to an estimated $467 billion this year.)

In other cases, as when discussing the "increased costs of traditional exports" under a new environmental regime, the report confines itself to terse description. Changes in standards and labeling for exported goods, for example, "may demand costly changes to the production process." If subsidies and tariffs affect exports, the note says, the "economic and social consequences of dampening their viability may, for some countries and sectors, be significant."

Much depends, of course, on the extent to which harsher or more lenient greenhouse gas reduction targets demand more or less drastic policies for their achievement.

And, precisely because the Bonn meeting is a stage for negotiating those targets, the note is silent. Instead it suggests that more bureaucratic work is needed "to deepen the understanding of the full nature and scale of such impacts."

But outside the Bonn process, other experts have been much more blunt about the draconian nature of the measures they deem necessary to make "effective" greenhouse gas reductions.

In an influential but highly controversial paper called "Key Elements of a Global Deal on Climate Change," British economist Nicholas Lord Stern, formerly a high British Treasury official, has declared that industrial economies would need to cut their per capita carbon dioxide emissions by "at least 80% by 2050," while the biggest economies, like the U.S.'s, would have to make cuts of 90 percent.

Stern also calls for "immediate and binding" reduction targets for developed nations of 20 percent to 40 percent by 2020.

To meet Stern's 2050 goals, he says, among other things, "most of the world's electricity production will need to have been decarbonized."

By way of comparison, according to the U.S. Department Of Energy, roughly 72 percent of U.S. electrical power generation in 2007 was derived from burning fossil fuels, with just 6 percent coming from hydro-power and less than 3 percent from non-nuclear renewable and "other" sources. And even then, those "other" non-fossil sources included wood and biomass — which, when burned, are major emitters of carbon.

Friday, March 27, 2009

'Mandatory youth service' bill advances: Has an authoritarian feel




















With almost no public attention, both chambers of Congress in the past week advanced an alarming expansion of the Americorps national service plan, with the number of federally funded community service job increasing from 75,000 to 250,000 at a cost of $5.7 billion. Lurking behind the feel-good rhetoric spouted by the measure’s advocates is a bill (HR 1388) that on closer inspection reveals multiple provisions that together create a strong odor of creepy authoritarianism. The House passed the measure overwhelmingly, while only 14 senators had the sense and courage to vote against it on a key procedural motion. Every legislator who either voted for this bill or didn’t vote at all has some serious explaining to do.

Last summer, then-candidate Barack Obama threw civil liberties to the wind when he proposed “a civilian national security force that’s just as powerful, just as strong, just as well-funded” as the regular military. The expanded Americorps is not quite so disturbing, but a number of provisions in the bill raise serious concerns.

To begin with, the legislation threatens the voluntary nature of Americorps by calling for consideration of “a workable, fair, and reasonable mandatory service requirement for all able young people.” It anticipates the possibility of requiring “all individuals in the United States” to perform such service – including elementary school students. The bill also summons up unsettling memories of World War II-era paramilitary groups by saying the new program should “combine the best practices of civilian service with the best aspects of military service,” while establishing “campuses” that serve as “operational headquarters,” complete with “superintendents” and “uniforms” for all participants. It allows for the elimination of all age restrictions in order to involve Americans at all stages of life. And it calls for creation of “a permanent cadre” in a “National Community Civilian Corps.”

But that’s not all. The bill also calls for “youth engagement zones” in which “service learning” is “a mandatory part of the curriculum in all of the secondary schools served by the local educational agency.” This updated form of voluntary community service is also to be “integrated into the science, technology, engineering and mathematics curricula” at all levels of schooling. Sounds like a government curriculum for government approved “service learning,” which is nothing less than indoctrination. Now, ask yourself if congressmen who voted for this monstrosity had a clue what they were voting for. If not, they’re guilty of dereliction of duty. If yes, the implications are truly frightening.

UPDATE:

Between being first officially "reported" to the House and being voted on by the full House, bill managers stripped one whole section of the measure that created a Congressional Commission on Civil Service, thus removing the section that contained the language cited above concerning "a workable, fair, and reasonable mandatory service requirement for all able young people" and a possible requirement for "all individuals in the United States" to perform such service. The section could be restored during the Senate-House conference committee meeting. A new, separate bill containing that language has since been introduced in the House.

Tuesday, March 24, 2009

U.S. Government Seeks Expanded Power to Seize Firms





















The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury's role, are still in flux.

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The administration's proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed's other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

Geithner plans to lay out the administration's broader strategy for overhauling financial regulation at another hearing on Thursday.

The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.

"We're very late in doing this, but we've got to move quickly to try and do this because, again, it's a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they're systemic," Geithner said last night at a forum held by the Wall Street Journal.

The powers would parallel the government's existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government's plans.

Sunday, January 18, 2009

Rick Warren Lauds Obama Choice Of Openly-Gay Pastor For Inaugural Prayer



Question from the Editor: Can anyone tell me what is wrong with the following story!? I want to hear from the readers on this. Please leave your comments below.

Pastor Rick Warren, demonstrating his recently discovered and ever-increasing political savvy, has issued a statement lauding President-elect Obama's choice of openly-gay Pastor Eugene Robinson for the Sunday night Inaugural kickoff prayer. From the statement, issued to Christianity Today:

"President-elect Obama has again demonstrated his genuine commitment to bringing all Americans of goodwill together in search of common ground...I applaud his desire to be the president of every citizen."
Obama announced Warren's role in the Inauguration in December of last year, and there has since been relentless criticism from various gay-rights groups and others, due to the conservative pastor's anti-gay actions and statements.

Warren has gone to great lengths to make his inaugural appearance more politically palatable to such critics by obscuring any signs of homophobia -- for example, by removing from the Saddleback Church website the statement, "someone unwilling to repent of their homosexual lifestyle would not be welcome at Saddleback." But such efforts have failed, at least in the eyes of his critics, to recreate the man as the bastion of tolerance and acceptance that he now claims to be.

Indeed, just this month David Brody of the Christian Broadcast Network dredged up a skeleton Warren perhaps missed: a video from the Saddleback "News and Views" video site wherein Warren describes same-sex marriage as a "humanitarian crisis".

Notably, his detractors include his fellow inaugural participant, Pastor Robinson. As Robinson told Beliefnet:

" He's done some good things. The difficult thing is that he's said, and continues to affirm, some horrendous things about homosexuality -- comparing it to incest, bestiality, that kind of thing. This is not a choice that really represents everyone. This choice was just really, really unfortunate.

It's about this particular venue and the role that he has in praying for all of America, and I'm just not sure he'd pray to God the same way I would."

Warren, presumably playing it safe, is no longer accepting interview requests, as reported by the New York Times Thursday. However, in his Beliefnet interview, Robinson expressed a desire to sit down with Warren and engage him on issues, making Warren's statement a likely welcome overture.

Obama: "We Need A New Declaration Of Independence"


































Note From the Editor: In publishing this article, I am in no way endorsing its remarks or sycophantic tone. My intent is to merely emphasize how far we have already traveled down a devastatingly dangerous road. Pay particular attention to the words Barack Obama chooses in his speech and the manner in which he is being portrayed by the writer. It is as if we are crowning a King as opposed to the swearing in of a public servant who has been hired by the People as the Constitution intended.


(CNN) -- Barack Obama's historic train ride to Washington on Saturday drew large, cheering crowds of people who braved freezing weather and gathered along the tracks in cities and small towns along the way in hopeful anticipation of getting a glimpse of the nation's next president.

In Baltimore, Maryland, alone, about 40,000 people stood shoulder-to-shoulder in the cold to greet Obama as he stopped on his way to his Tuesday inauguration.

His welcome was raucous and animated, as the sea of people cheered, waved and took pictures. Tears rolled down one woman's face as Obama spoke. "We love you, Obama!" another yelled out. "I love you back," Obama answered calmly, eliciting a roar from the crowd.

The same emotions were expressed up and down the tracks on the 137-mile journey, a trip that started in Philadelphia, Pennsylvania, and retraced the train ride Abraham Lincoln took on his way to becoming president in 1861. Watch Obama share the love »

As he did so often during his campaign, Obama drew upon American history in his remarks to pose a parallel to the country's current challenges. He noted the struggles of the colonials, the "first patriots," against the British.

"They were willing to put all they were and all they had on the line," Obama told the crowd in Baltimore. "Their lives, their fortune, and sacred honor for a set of ideals that continue to light the world: that we are all equal. That our rights to life, liberty and the pursuit of happiness come not from our laws but from our Maker."

Later he said, "the American Revolution was, and remains, an ongoing struggle in the minds and hearts of the people."

And, as in Philadelphia, Obama alluded to, but did not name, the president who inspired his train journey. The soon-to-be president used a call-to-action uttered by Lincoln in his inaugural address in 1861, an appeal to Americans' "better angels."

Obama, who will take up what he called the country's "enormous" challenges in fewer than 72 hours, noted that they will probably not be solved quickly.

"There will be false starts; there will be setbacks," he said. "There will be frustrations and disappointments. I will make some mistakes. But we will be called to show patience even as we act with fierce urgency."

He added, "So, Baltimore, starting now, let's take up in our own lives the work of perfecting our union," an appeal that brought forth a loud rumble of approval.

Obama arrived later in Washington, where he will take the oath of office Tuesday. He did not have a speaking event there Saturday.

Before getting on board the train in Philadelphia, the president-elect implored Americans to commit to a new declaration of independence -- rejecting ideology and bigotry -- as he acknowledged that the nation faces severe challenges.

"Only a handful of times in our history has a generation been confronted with challenges so vast," he said at a town hall meeting in Philadelphia's 30th Street Station.

"An economy that is faltering. Two wars: one that needs to be ended responsibly, one that needs to be waged wisely. A planet that is warming from our unsustainable dependence on oil."

"What is required is a new declaration of independence, not just in our nation but in our own lives -- from ideology and small thinking, prejudice and bigotry -- an appeal not to our easy instincts but to our 'better angels,' " he said, using a phrase from Lincoln's inaugural address.

The train stopped in Wilmington, Delaware, to pick up Vice President-elect Joe Biden and his family and then headed to Baltimore, Maryland, on its way to Washington.

The train made its first "slow roll" in Claymont, Delaware, allowing Obama to wave at cheering residents gathered near the tracks. Claymont is also the town where Biden's family moved in 1953, when he was 10 years old. iReport.com: Is the train coming to your town? Send us your photos

Security for Obama's train ride was tight. Law enforcement officers from 40 jurisdictions provided protection from the ground. The U.S. Coast Guard was stationed on waterways along the route as well.

The Federal Aviation Administration established "moving" flight restrictions that prevented private pilots, news helicopters, balloonists and others from getting anywhere near the train.

The FAA is imposing additional airspace restrictions in Washington on Sunday during pre-inaugural activities and from 10 a.m. to 6 p.m. Tuesday, the day of the inauguration. Watch how security will protect Obama on way to Washington »

Nearly 2 million people are expected to hit the streets of Washington on Tuesday. Police will shut bridges across the Potomac River into the city, along with a huge chunk of downtown. People coming from Virginia will have to walk or take public transport, such as the area's Metro subway system. Read about the times and places for inaugural events »

Two of the major routes coming into the city -- Interstates 395 and 66 -- will be closed to inbound traffic, at least for private vehicles.

Amtrak said it has increased the number and length of trains running to Washington on Inauguration Day. Tickets are still available but are going fast, it said. Watch more on inauguration transportation and security plans »

Security officials also say charter buses, taxis and car services are an option for those attending.

Saturday, January 17, 2009

Rescue of U.S. banks hints at nationalization


By Edmund L. Andrews

Friday, January 16, 2009
WASHINGTON: Last fall, as Federal Reserve and Treasury Department officials rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks.

They may no longer have that luxury. With two of the nation's largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are "too big to fail" and yet unable to function as the sinking economy erodes their capital.

Particularly in the case of Citigroup, the losses have become so large that they make it almost mathematically impossible for the government to inject enough capital without taking a majority stake or at least squeezing out existing shareholders.

And the new ground rules laid down by Obama's top economic advisers for the second half of the $700 billion bailout fund, as explained in a letter submitted to Congress on Thursday, call for the government to play an increasing role in the major activities of the banks, from the dividends they pay to shareholders to the amount they can pay executives.

"We are down a path that this country has not seen since Andrew Jackson shut down the Second National Bank of the United States," said Gerard Cassidy, a banking analyst at RBC Capital Markets. "We are going to go back to a time when the government controlled the banking system."

The approximately $138 billion aid package on Thursday for Bank of America — including injections of capital and absorbed losses — as well as a $300 billion package in November for Citigroup both represented displays of financial gymnastics aimed at providing capital without appearing to take commanding equity stakes.

Treasury and Fed officials accomplished that trick by structuring the deals like insurance programs for big bundles of the banks' most toxic assets.

Instead of investing tens of billions of taxpayer dollars in exchange for preferred shares in the banks, which has been the Treasury Department's approach so far with its capital infusions, the government essentially liberated the banks from some of their most threatening assets.

The trouble with the new approach, analysts say, is that it is likely to conceal the amount of risk that taxpayers are taking on. If the government-guaranteed securities turn out to be worthless, the cost of the insurance would be much higher than if the Treasury Department had simply bailed out the banks with cash in the first place.

Christopher Whalen, a managing partner at Institutional Risk Analytics, said the approach also covers up the underlying reality that the government is already essentially the majority shareholder in Citigroup.

"There's nobody else out there to invest in them," Whalen said. "We already own them."

Ben Bernanke, chairman of the Federal Reserve Board, outlined the elements of what could become the Obama administration's new approach to bank rescues in a speech on Monday.

Speaking to the London School of Economics, but addressing American audiences as much as European ones, Bernanke warned that the U.S. government had no choice but to put more money into banks and other financial institutions if it had any hope of reviving the paralyzed credit markets.

Known officially as the Troubled Asset Relief Program, or TARP, the rescue program has infuriated lawmakers in both parties, who complain that Treasury Secretary Henry Paulson Jr. has doled out money to banks without demanding accountability in return. Obama and his top economic advisers convinced enough lawmakers that shoring up the banks was essential to preventing a broader financial collapse, and offered written assurances that they would address the lawmakers' biggest complaints.

But Bernanke proposed an array of alternative approaches to dealing with the banks in the months ahead, and all of those options reflected a fundamental shift from the original assumptions of the Bush administration.

Paulson had insisted that the government would be investing only in healthy banks, some of which might take over sicker rivals. The Treasury would invest taxpayer dollars in exchange for preferred shares, which would pay a regular dividend and come with warrants that would allow the government to profit from increases in company stock prices.

By contrast, Bernanke proposed various ways to fence off the troubled assets, from nonperforming loans to mortgage-backed securities that investors had stopped buying at almost any price.

Bernanke's options included guarantees for bank assets, which was at the heart of the rescue packages for Bank of America and Citigroup. Citigroup received its rescue package in November, but it is expected to report additional losses on Friday that could top $10 billion.

In both of those deals, the U.S. government set up a complicated arrangement that would limit the banks' losses on hundreds of billions of dollars worth of their worst assets.

Citigroup's deal in November covered $300 billion in assets. Citigroup agreed to absorb the first $29 billion in losses. The Treasury agreed to take a second round of losses up to $5 billion, and the Federal Deposit Insurance Corporation agreed to take a third round of losses of up to $10 billion. The Federal Reserve then agreed to lend Citigroup money at low interest rates for the value of the remaining assets.

As a second option, Bernanke and other Fed officials have proposed putting a bank's impaired assets into a separate new "bad bank." The effect would be much the same as providing a federal guarantee: the bank would be able to free itself from the need to set aside reserves for extra losses.

Both the idea of a government "wrap" and a government-backed "bad bank" have the virtue of protecting the bank's common stockholders from being wiped out by the government.

By contrast, the Bush administration's original approach to recapitalizing banks — injecting capital in exchange for preferred shares with warrants to convert to common stock — had the effect of squeezing out the common shares. That was because any losses would have to first wipe out common stockholders before the bank could stop paying dividends on preferred shares.

"One of the problems with TARP has been a result of the government not wanting to own the banks," said Fred Cannon, chief equity strategist at Keefe, Bruyette & Woods. "If you get losses, there is less common stock. What we are hopefully moving toward, to the extent that the government guarantees some of the assets, is a structure that protects common shareholders and allows the company to go out and raise common shares through the market."

But a growing number of analysts warned that the approach may be too clever, because it gives policy makers too many ways to conceal true problems at banks and true risks to taxpayers.

"What we have is a weird, shadow nationalization," said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a consulting firm in Washington. "The government does not want to and should not want to own banks. But if they get forced into that situation, they should resolve that situation. Here, what you have is a huge diversified financial services industry with recognized losses and looming losses in every aspect of its operations. There's nothing straightforward about it."

Stimulating Our Way to Rock Bottom

















By Ron Paul



With attention turning to the next big economic stimulus package, questions are still swirling about our economic troubles. How did we get here? How do we get out? As usual, Washington has all the wrong answers. According to many politicians, we got here by not spending enough, not consuming enough, and not regulating enough. Now government, like some mythical white knight, is going to ride in to save the day by blanketing the economy with dollars, hiring an army of new bureaucrats, creating make-work jobs, and sending everyone some form of a bailout check. The debate seems to focus on whether this will cost enough to save the economy, or if this is just a "down payment" with much more government spending to come. Talk like that would be comical, if the results weren't going to be so tragic.

The results will be worsening economic woes until we learn our lesson. But instead Congress is behaving like drug addicts who must hit rock bottom before they are ready to face reality. They are playing foolish games with the economy now because they are thinking only of political expedience. This talk of job creation is a perfect example.

Contrary to the belief of many, the goal of the economy is not job creation. Jobs can be a sign of a healthy economy, as a high energy level can be a sign of a healthy body. But just as unhealthy substances can artificially give the addict that burst of energy that has nothing to do with health, artificially created jobs just exacerbate our problems. The goal of a healthy economy is productivity. Jobs are a positive outcome of that. A "job" could be to dig a hole one day, and fill it back up the next, or perhaps the equivalent at a desk. This does no one any good. But the value in that paycheck ultimately has to come from taxing someone productive. Some think this round-robin type of economic model is supposed to get us somewhere.

Politicians and bureaucrats have already done their fair share to ensure that jobs in the private sector are prohibitively complicated and expensive to create. They are now shocked that the economy is shedding jobs, and want to simply create hundreds of thousands of jobs to make up for the job losses, through another so-called economic stimulus package. The private sector must be permitted to do that, but instead they are massively burdened with taxes and webs of red tape and regulation. Washington's bandaids will only prolong this agony. The Austrian school of economics teaches that only a free market economy, unencumbered by onerous government controls, creates long-term prosperity. Politicians, however, tend to be notoriously short-sighted.

I am left with these questions - who is going to be left standing to tax in the private sector to pay for all these public sector make-work jobs? Is Washington really to be considered some sort of savior for creating unproductive jobs in place of the productive jobs they eliminated?

We are at an economic dead-end and those in power are in denial. The truth is our economic problems are due to loose monetary policy, central economic planning, and the parasitic expenses of government. Unless we assess these problems honestly, we unfortunately have a long way to go until, like the junkie, we hit rock bottom.

Ron Paul is a Republican United States Congressman from Texas and a former 2008 U.S. presidential candidate.