October 31, 2009

Bankrupting the Common People

Dow Jones Largest Fall Since April of 2009: Current Rally Based on V-Shaped Recovery Hopes and Sustained Spending; Credit Card Mail Offers Fall from 2.1 billion in Q3 of 2006 to 391 million in Q3 of 2009

October 31, 2009

mybudget360 - The Dow Jones Industrial Average falling 249 points on Friday was a significant turning point in this rally because it came on the back of a 200 point jump just the subsequent day. On Thursday the GDP numbers were released showing a strong 3.5 percent jump. Yet digging into the data, 1.6 percent of this growth was based on front loading auto sales (the 30 year average for the auto sector each quarter is between .1 and .2 percent) and massive government spending. Yet that is what stimulus is for. On Friday however, consumer spending and income fell leading to the reality that without the government, the average American is tapped out and is unable to juice up those credit cards anymore...

How the Average U.S. Consumer Spends Their Paycheck

Click on image to enlarge it (from Visual Economics, July 8, 2009).

Editor's Note: Why is the government focusing on health care reform when housing (34%), transportation (18%), food (12%), and household expenses [utilities, fuels, public services, operation, equipment and supplies] (14%) are higher. Healthcare is 5.7% of U.S. consumer expenditures; Americans spend just about the same on eating out (5.4%) and entertainment (5.4%).

One in 6 Americans Lives in Poverty, According to Revised Formula

October 20, 2009

Associated Press - The level of poverty in America is even worse than first believed.

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Sciences use for calculating the poverty rate.

The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.

That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.

According to the revised NAS formula:

--About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.

--About 14.3 percent of people 18 to 64, or 27 million, are in poverty, compared to 11.7 percent under the traditional measure. Many of the additional poor are low-income, working people with transportation and child-care costs.

--Child poverty is lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure. That's because single mothers and their children disproportionately receive non-cash aid such as food stamps.

--Poverty rates were higher for non-Hispanic whites (11 percent), Asians (17 percent) and Hispanics (29 percent) when compared to the traditional measure. For blacks, poverty remained flat at 24.7 percent, due to the cushioning effect of non-cash aid.

--The Northeast and West saw bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco...

Latest Bank Fee is for Paying Off Credit Card on Time Every Month

October 23, 2009

USA TODAY - You floss regularly, yield to oncoming traffic and use your credit cards judiciously, dutifully paying off your balance every month.

You may believe that your exemplary behavior shields you from unexpected credit card fees. Sadly, that is no longer the case.

Starting next year, Bank of America will charge a small number of customers an annual fee, ranging from $29 to $99. The bank has characterized the fee as experimental. But card holders who have never carried a balance or paid late fees could be among those affected.

Citigroup, meanwhile, has started charging annual fees to card holders who don't put more than a specific amount on their cards, typically $2,400 a year. Other banks are charging inactivity fees if customers don't use their credit cards during a specific period of time. You heard that right: You could be spanked for staying out of debt.

These fees are the credit card industry's response to credit card legislation that will, among other things, restrict credit card issuers' ability to raise interest rates on existing balances. Credit card issuers are looking for ways to raise income before the new rules take effect in February. During the first quarter, 27% of credit card offers included annual fees, up from 18% a year earlier, according to Synovate Mail Monitor, a credit card direct-mail tracking service.

Curtis Arnold, founder of CardRatings.com, says he expected credit card issuers to raise annual fees after the legislation was enacted. What he didn't expect, he says, "was that good customers were going to be hit."

Fortunately, if you've paid off your balance on time every month, you probably have a good credit score. And when you have good credit, you have more choices.

What to do if your card issuer starts charging an annual fee — or increases the fee you're already paying:
• Call and complain. Check your credit score first to make sure you're on solid ground, says Adam Levin, founder of Credit.com, a consumer website. If you have a good score and you've been a good customer, the lender may be willing to waive the fee to keep your business.

• Weigh the benefits of rewards against the annual fee. The days when you could get a rewards card with no annual fee are numbered, Arnold says. If your rewards card charges a fee, you'll need to figure out whether the value of the rewards exceeds the fee.

That's not always easy to do, particularly with cards that give you airline miles, says Chris Fichera, associate editor for Consumer Reports. Rewards miles often come with restrictions and expiration dates, making it difficult to figure out how much they're worth, he says.
"A lot of airline cards are not the best deal unless you can combine them with a frequent-flier plan," Fichera adds.
If you're not a frequent flier, Fichera says, you're probably better off using a card that gives you cash back. As long as you can estimate how much you spend, it's easy to figure out whether you'll get enough cash back to justify the annual fee.

• Leave. If your card issuer won't waive the fee, you'll have a choice: Pay the annoying fee or close your account. Unfortunately, this decision isn't as clear-cut as it sounds, because closing an account could hurt your credit score.

One of the factors used to calculate your credit score is what's known as the "credit utilization ratio," which is based on the amount of credit you have outstanding as a percentage of your total available credit. When you close a credit card account, the amount of your total available credit shrinks, which could lead to a higher utilization rate. This ratio accounts for 30% of your credit score.

In addition, closing an account you've owned a long time could affect your credit history, another factor used to calculate your score, Fichera says.

Still, if you aren't carrying balances on your other accounts and the card is relatively new, closing your account is worth considering. Even now, there are good deals out there, particularly for card holders with good credit, Arnold says. For example, the Fidelity Rewards American Express card pays 2% of cash back to a Fidelity account, with no limits on cash rewards and no annual fee.
If you don't care about rewards and just want a credit card that doesn't charge an annual fee, consider applying for a card through a credit union. Many credit union cards charge no annual fee and offer below-average interest rates. Associations, such as the USAA, which provides products and services for military personnel and their families, also offer good deals on credit cards, according to Consumer Reports.

One Industry That's Booming: Debt Collection

October 15, 2009

McClatchy Newspapers - ...Across the country, dozens of established collection agencies are expanding their operations and hiring collectors, managers and support staff to keep up with the rising tide of bad debt due to massive job losses.

As real estate values fall, homeowners can no longer tap their home equity to pay down debt. So antsy creditors are farming out more problem accounts to collectors after declaring them as charge-offs or losses.

With billions of dollars outstanding on millions of past due accounts, creditors want their money now and collection agencies with a track record of success are cashing in.
"As banks scramble to bring in money, they're going to go with the companies they feel most safe with," said Patrick Lunsford, the senior editor at InsideARM.com, which chronicles the accounts receivable industry. "They're not going to spend a lot of time trying out new collection agencies, so companies with the strongest business relationships are getting the work."
Last week, Financial Management Systems opened a 350-person call center in Rockford, Ill. Thirty-four people are already employed, and 100 will be on board by year's end.

Last month, Windham Professionals announced plans to add 140 employees to its 60-person operation in East Aurora, N.Y.

In Texarkana, Ark., West Asset Management recently added 100 new customer service employees to contact homeowners on the verge of foreclosure. Premiere Credit of North America just opened a second operations center in Indianapolis and began a $4 million expansion of its headquarters there.

Premiere, which specializes in student loan collections and government debt from traffic tickets to back taxes, bumped its workforce from 250 in January to 361 in August. It expects to employ more than 500 people in a few years.

The extra work has been a mixed blessing for the industry. There's more opportunity, but recovery rates are down because it's harder to collect during a recession when people don't have as much money.
"So it becomes a very tight management drill where agencies have to get enough collectors to work the accounts but, at the same time, to remain profitable, they have to bring more money in," Lunsford said...
For consumers, one benefit of the troubled economy is that more creditors are willing to accept payment plan arrangements and debt settlements for a portion of outstanding account balances.
"They figure they're better off getting something than nothing," Rapp explained. "So we try to be more accommodating on setting up payment plans that we tended to stay away from when the economy was a little better."

Reverse Mortgages Ripe for Abuse, Consumer Group Says

October 6, 2009

McClatchy Newspapers - Consumer advocates say a growing number of older homeowners and a new crop of eager lenders could steer the reverse mortgage industry down the same financial course that toppled the subprime mortgage market and left taxpayers footing the bill.

In order to avoid a repeat occurrence, a new report by the National Consumer Law Center urges Congress to enact new consumer protections to curb shady marketing tactics, deceptive advertising and other potential abuses in the popular reverse mortgage program.

Some of the problems include television advertisements that market the loans as a "government benefit" and financial incentives for loan processors known as "yield spread premiums."
"These are financial kickbacks that make loans more profitable for lenders and loan brokers, but more expensive for borrowers," Tara Twomey, the NCLC attorney who authored the report, said Tuesday.
In addition to banning these practices and requiring better data collection by lenders, the report also calls for a new standard that requires reverse mortgage professionals not to harm the financial interest of elderly borrowers.
"If these systemic problems in the reverse mortgage market are not addressed, this market could be another financial fiasco," Twomey said.
Homeowners who are 62 and older can use reverse mortgages to borrow against their home equity. The mortgages have become popular because the money doesn't have to be repaid until the home is sold or the borrower dies or permanently moves out. The extra cash can help seniors pay for medical expenses, home improvements or simply to live more comfortably.

Ninety percent of reverse mortgage loans are issued through the federally insured Home Equity Conversion Mortgage program, which issued only 157 loans in 1990 and more than 112,000 in fiscal 2008.

Future growth is imminent, said Sen. Claire McCaskill, D-Mo., because 10,000 people reach age 62 each day. And more than 12 million people 65 and older own their homes with no mortgage debt, representing nearly $4 trillion in home equity.

With nearly 78 million baby boomers born before 1964 fueling future growth in the coming decades, the reverse mortgage industry has been attracting many new lenders. These include some of the nation's largest banks, whose profits have been drying in the recession.

But of the 2,700 reverse mortgage lenders nationwide, 1,500 made their first loan in 2008, McCaskill said. That sudden, rapid growth, experts say, also has attracted shady loan professionals who once worked in the subprime mortgage industry.

Earlier this year at a field hearing held by McCaskill, a special agent with the Department of Housing and Urban Development's Office of Inspector General testified that fraud likewise had found its way into the reverse mortgage program. He said inflated home appraisals, which increase lender profits, have been found. And in some cases, friends, family and neighbors have cashed loan payment checks after borrowers have died.

Fraud and declining home values could end up costing taxpayers because reverse mortgages are insured by the federal government. When a borrower terminates the loan because of death or some other reason, the Federal Housing Authority insurance fund would be on the hook if the loan balance exceeds the value of the properties.

HUD insures more than $105 billion in Home Equity Conversion Mortgage loans. In addition, the Government National Mortgage Association, or Ginnie Mae, issued $700 million of Home Equity Conversion Mortgage mortgage-backed securities this year, but it's unclear what the securities are now worth because of falling home values...

Foreclosures Rise 5 Percent from Summer to Fall

October 15, 2009

The Associated Press - The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.

The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released Thursday by RealtyTrac Inc. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate - now at a 26-year high of 9.8 percent - isn't expected to peak until the middle of next year...

According to the RealtyTrac report, there were nearly 344,000 foreclosure-related filings last month, down 4 percent from a month earlier but still the third-highest month since the report started in early 2005.

It was the seventh-straight month in which more than 300,000 households receiving a foreclosure filing, which includes default notices and several other legal notices that homeowners receive before they finally lose their homes.

Banks repossessed nearly 88,000 homes in September, up from about 76,000 a month earlier.

On a state-by-state basis, Nevada had the nation's highest foreclosure rate in the July-September quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois.

It's Official: No Social Security Increase

October 15, 2009

ABC News - The news had been dreaded by seniors for months -- and today the government made it official: for the first time since 1975, there will be no cost-of-living adjustment (or COLA) for Americans receiving Social Security checks next year.

There will be no cost of living increase for more than 50 million Social Security recipients next year, the first year without a raise since automatic adjustments were adopted in 1975.

Under the law, social security payments are supposed to increase anually if U.S. consumer prices increase. But over the last 12 months, prices have declined. Specifically, the CPI-W -- the price index upon which social security adjustments are based -- has dropped 1.7 percent since September, 2008.

Many, including President Obama and the AARP, are calling for Congress to approve a $250 stimulus payment to seniors and other groups, including veterans and those receiving disability benefits, to compensate for the lack of a COLA.
"This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis," Obama said.

A Second Great Depression Is Still Possible

October 11, 2009

Financial Times - ...With deleveraging, households increase saving and re-pay debt. This is the second step and it is like stepping on the brake, which causes the economy to slow further, in a motion akin to a double dip. Rapid deleveraging, as is happening now, is the equivalent of hitting the brakes hard. The only positive is it reduces debt, which is like removing weight from the trunk. That helps stabilise activity at a new lower level, but it does not speed up the car, as economists claim.

Unfortunately, the car metaphor only partially captures current conditions as it assumes the braking process is smooth. Yet, there has already been a financial crisis and the real economy is now infected by a multiplier process causing lower spending, massive job loss, and business failures. That plus deleveraging creates the possibility of a downward spiral, which would constitute a depression.

Such a spiral is captured by the metaphor of the Titanic, which was thought to be unsinkable owing to its sequentially structured bulkheads. However, those bulkheads had no ceilings, and when the Titanic hit an iceberg that gashed its side, the front bulkheads filled with water and pulled down the bow. Water then rippled into the aft bulkheads, causing the ship to sink.

The US economy has hit a debt iceberg. The resulting gash threatens to flood the economy’s stabilising mechanisms, which the economist Hyman Minsky termed “thwarting institutions”.

Unemployment insurance is not up to the scale of the problem and is expiring for many workers. That promises to further reduce spending and aggravate the foreclosure problem.

States are bound by balanced budget requirements and they are cutting spending and jobs. Consequently, the public sector is joining the private sector in contraction.

The destruction of household wealth means many households have near-zero or even negative net worth. That increases pressure to save and blocks access to borrowing that might jump-start a recovery. Moreover, both the household and business sector face extensive bankruptcies that amplify the downward multiplier shock and also limit future economic activity by destroying credit histories and access to credit...

Steep Losses Pose Crisis for Pensions

October 11, 2009

Washington Post - The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.

The upheaval on Wall Street has deluged public pension systems with losses that government officials and consultants increasingly say are insurmountable unless pension managers fundamentally rethink how they pay out benefits or make money or both.

Within 15 years, public systems on average will have less than half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.

After losing about $1 trillion in the markets, state and local governments are facing a devil's choice: Either slash retirement benefits or pursue high-return investments that come with high risk.

The urgent need for outsize returns by these vast public pension funds, which must hit high investment targets year after year to keep pace with rising retirement costs, is in turn fueling a renewed appetite for risk on Wall Street.

Before the crisis, many public pension funds had experimented with risky trading techniques or committed more of their money to hedge funds and other nontraditional firms, which in turn invested some of it in complex mortgage securities. When these melted down, pension funds got burned.

Now, facing an even bigger funding gap, some systems are investing in the same securities, betting that a rebound in their value will generate huge returns...

Some pension experts say the funding gap has become so great that no investment strategy can close it and that taxpayers will have to cover the massive bill.

The problem isn't limited to public pension funds; many corporate pension funds have lost so much ground that they are also pursuing riskier investments. And they, too, could end up a taxpayer burden if they cannot meet their obligations and are taken over by the federal Pension Benefit Guarantee Corp.

Public systems still have enough to meet their current obligations. If governments take no action, retirees could keep drawing full benefits for the foreseeable future even under the most pessimistic projections.

But already, some funds are seeking to trim benefits to conserve money. Some governments have also proposed increasing the amount of public money paid each year into the funds. In practice, however, some political leaders have begun doing the opposite -- cutting annual contributions to pension funds -- as a way of balancing state and local budgets buffeted in the recession by falling tax revenue and rising costs...

Oil Hits 2009 High, Holds Above $75

October 14, 2009

CNNMoney - Oil prices surged above $75 a barrel Wednesday for the first time this year as the U.S. dollar remained weak and investors bet that global energy demand is poised to recover.

Crude for November delivery rose $1.03, or 1.39%, and settled at $75.18 a barrel, after climbing to a high of $75.40 a barrel earlier in the session. The last time oil prices ended trading above $75 was exactly one year ago when they settled at $78.63.

Wednesday was the first time oil rose above $75 a barrel in 2009 and comes after prices traded between $65 and $75 a barrel since May.
"The markets continue to get positive indications about the economy," said John Kilduff, an energy analyst at MF Global in New York. "We've broken out of the $65-$75 range and we're clearly headed for $80 a barrel."
Wednesday's advance came as the dollar slumped to a 14-month low on speculation that U.S. interest rates will remain low for a longer-than-expected time...

The Collapse of the U.S. Economy

Be Prepared for the Worst

October 31, 2009

Ron Paul - The large-scale government intervention in the economy is going to end badly.

I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan’s excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers...

MSM: Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash

October 31, 2009

Bloomberg — Billionaire investor Wilbur L. Ross Jr., said today the U.S. is in the beginning of a “huge crash in commercial real estate.”
“All of the components of real estate value are going in the wrong direction simultaneously,” said Ross, one of nine money managers participating in a government program to remove toxic assets from bank balance sheets. “Occupancy rates are going down. Rent rates are going down and the capitalization rate — the return that investors are demanding to buy a property — are going up.”
U.S. commercial property sales are forecast to fall to the lowest in almost two decades as the industry endures its worst slump since the savings and loan crisis of the early 1990s, according to property research firm Real Capital Analytics Inc. The Moody’s/REAL Commercial Property Price Indices already have fallen almost 41 percent since October 2007, Moody’s Investors Service said Oct. 19.

Billionaire George Soros, speaking today at a lecture organized by the Central European University in Budapest, said a “bloodletting” may be coming for leveraged buyouts and commercial real estate.
“The American consumer will no longer be able to serve as the motor for the world economy,” said Soros, 79.
His comments came in the same week that Capmark Financial Group Inc. filed for Chapter 11 bankruptcy protection after originating $60 billion in commercial property loans in 2006 and 2007.

Ross, the 71-year-old chairman and chief executive officer of WL Ross & Co. LLC, said in an interview on Bloomberg Radio that he would use “extreme caution” before putting money into commercial real estate, especially office space, because properties are losing tenants.

U.S. office vacancies hit a five-year high of almost 17 percent in the third quarter, while shopping center vacancies climbed to their highest since 1992, according to the property research firm Reis Inc.
“I think it’s going to take quite a while to work itself out,” Ross said.
As of Oct. 15, Ross said he had spent less than $100 million of at least $1.5 billion available to him under the Public-Private Investment Program, an investment pool of private and government money for purchasing distressed assets from financial institutions.

Ross used the funds he spent so far to purchase residential mortgage-backed securities, he said in a Bloomberg Television interview...

U.S. Economy: Consumer Confidence Down on Job Concern

October 27, 2009

Bloomberg - Confidence among U.S. consumers unexpectedly fell for a second month in October, reinforcing the views of Federal Reserve policy makers who say household spending will be restrained by rising unemployment.

The Conference Board’s confidence index dropped to 47.7, trailing the lowest economist forecast, from a revised 53.4 in September, a report from the New York-based private research group showed today. A measure of employment availability slid to a 26-year low.

The emerging recovery from the deepest recession since the 1930s may fall short of expectations without a sustained rebound in consumer spending, which accounts for 70 percent of the economy. A separate report showed an index of home prices rose in August, indicating the housing market, while stabilizing, may be getting a boost from government aid...

The share of consumers who said jobs are plentiful dropped to 3.4 percent from 3.6 percent, according to today’s report from the Conference Board. The proportion of people who said jobs are hard to get increased to 49.6 percent, the highest level since May 1983, from 47 percent.

The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 11.2 percent. The share expecting more jobs fell to 16.3 percent from 18 percent.

Buying plans for automobiles, homes and major appliances within the next six months all decreased this month, today’s report showed.

Government reports have shown that while companies are slowing the pace of firing they are reluctant to hire. The U.S. has lost 7.2 million jobs since the recession began in December 2007. Unemployment will top 10 percent in the first quarter of next year, according to a Bloomberg survey this month.

...“Household spending remained damped, constrained in part by job losses and consumer caution,” the minutes said of the directors’ views.

Fed policy makers next meet Nov. 3-4. At their last meeting, in September, the Federal Open Market Committee repeated its vow to keep its benchmark rate low for an “extended period.”

Home sales are getting a boost from an $8,000 tax credit for first-time home buyers and mortgage rates that have been held near historic lows by the Fed’s program to buy $1.2 trillion of mortgage-backed securities...

Sales may cool after the tax credit expires. Lawmakers are debating an extension of the credit, which is currently set to lapse on Nov. 30.

Obama and the Fiscal Crisis of the States

October 17, 2009

WSWS - The class character of the Obama administration is clearly indicated by one statistic: President Obama has made available more than $12 trillion in cash infusions, loans and guarantees to the financial industry, but for state governments that are facing massive budget deficits, Obama has thus far provided only one quarter of 1 percent of that amount in federal stimulus funds—about $30 billion.

The administration has refused to provide emergency aid to the states, including some of the largest in the country, such as California and Pennsylvania, which are on the brink of default. The White House is sitting by while states across the country lay off workers and slash spending on education, health care and other essential social programs.

The crisis confronting state governments is unprecedented. States that imposed large-scale layoffs, unpaid furloughs and wage cuts, closed offices for days at a time and slashed services in order to balance their budgets for the recently ended fiscal year are once again piling up deficits.

Tax collections gathered from April through June fell by 16.6 percent, breaking records dating back 50 years, according to a report released this week by the Nelson A. Rockefeller Institute of Government. Forty-nine states saw revenues decline in the quarter, 36 by double digits.

Preliminary data suggest that tax revenue for July and August likely fell by 8 percent, about the same as the decline for the fiscal year ending in July.
Most states approved their budgets for next year at the end of July. Little more than two months later, at least 18 face unanticipated operating deficits that will necessitate further cuts in state services.

The states’ budget crisis is caused, in large measure, by the impoverishment of the American working class. Layoffs and wage cuts have driven states’ income tax collections down by 27.5 percent from the previous year. Stressed workers have, unsurprisingly, spent less on consumer goods, thus reducing sales tax receipts by 9.5 percent, according to the Rockefeller Institute.

Declining home prices have slashed local property tax revenues, which largely finance the public schools.

Soaring unemployment is not only bankrupting the states; it is creating a social crisis without parallel since the Great Depression. Five states—Michigan, Nevada, Rhode Island, California and Oregon—have official unemployment rates above 12 percent, led by Michigan, with 15.3 percent.

This social crisis is placing unprecedented demands on state budgets. States typically provide around half of all funding for unemployment insurance, food stamps and Medicaid health coverage for the poor. They provide funding as well for public schools and colleges...

Budget Deficit in U.S. Widens to Record $1.42 Trillion on Crisis Spending

October 16, 2009

Reuters - The U.S. budget deficit hit a record $1.4 trillion in the just-ended fiscal year, the government said on Friday, as the deep recession and a series of bank rescues cut a gaping hole in public finances.

The tally was $162 billion smaller than the White House had forecast in August, but it still amounted to 10 percent of total U.S. economic output, the most for any budget shortfall since World War Two...

Don't Give $250 Bonus to Social Security Recipients

October 16, 2009

Jay Hancock's Blog - There are Americans who could use a one-time, $250 bonus appropriated by Congress and approved by the president. But it's very difficult to argue that Social Security recipients should be at the top of the list. Seniors didn't get their cost-of-living increase for Social Security this year because the inflation rate was negative. Now Washington is talking about giving them an increase anyway. Why? Hard to tell. But, heck, we're handing out billions to everybody else, anyway, so why not pander to grandma, too?

The bonus would cost $13 billion. President Obama has not said how it would be paid for. In any event it's a bad idea. This is the wealthiest generation of senior citizens in history. In addition to providing Social Security, the government covers their medical costs through Medicare. Last year's cost-of-living increase for Social Security was 5.8 percent. How many workers do you know who got 5.8 percent raises last year? Social Security checks automatically keep up with inflation. Many, many workers are falling behind inflation.The senior-citizen poverty rate in the United States has fallen to about 10 percent from more than 30 percent in the 1950s.

Washington needs to stop handing out money like candy. But if it's going to write checks, how about directing them to the 1 in 10 impoverished senior citizens instead of to every single Social Security beneficiary? Or to children in poverty (34 percent of all kids 18 and under in 2007, according to the Census Bureau)? Or to workers displaced by foreign trade?

In a few years, inflation will be back and so will the COLA increases for Social Security. But I doubt seniors or anybody else will think that's a good thing, either.

Commercial Loans Looming

October 16, 2009

Reuters — Bank regulators sounded the alarm this week about the commercial real estate (CRE) sector, telling a Senate banking subcommittee that it represents the "greatest challenge" facing banks.

Officials are close to finalizing guidance that would encourage banks to recognize potential losses in their commercial real estate portfolios and not simply renew troubled loans to delay loss recognition.
"Prices for both existing commercial properties and for land... have declined sharply in the first half of this year, suggesting that banks are vulnerable to significant further deterioration in their CRE loans," U.S. Federal Reserve Board Governor Daniel Tarullo told the Senate panel on Wednesday.
As of June, commercial real estate loans totaled more than $1 trillion, or 14.2 percent of all loans and leases in the banking industry, FDIC Chairman Sheila Bair said at the same hearing. She said that area will increasingly be a driver for bank failures during the remainder of this year and 2010.

Petrasic said it is largely community banks, not national banks, that have significant commercial real estate exposures that will continue to spiral downward in value.
"It will absolutely be the most critical factor going forward," he said.

Stag-Inflation: Japanese Employment Trends in the United States: Part-time, Dispatched and Contracted Workers. A Decline in the American Consumer Standard of Living. Why the U.S. is Not Japan and This is Not Good News.

October 15, 2009

mybudget360 - ...Since 1985 the U.S. Dollar Index has fallen a stunning 54 percent. With deficits as far as the eye can see, why are we to expect the Federal Reserve and U.S. Treasury to reverse course?... We can expect a declining standard of living over the next decade.

And how does this translate for the American consumer? More expensive goods and a more insecure employment environment. ...The Japanese Yen has gotten much stronger against the dollar, so we are now buying Toyota or Sony products with a weaker currency. In other words, we get less Toyotas with the same amount of dollars. And people seem to like their flat screens and foreign cars. Yet this is how we will pay for it because in the end there is no free lunch.

The same thing will happen with China. Slowly we will see prices creeping up. Yet localized items like real estate will remain weak because wages will move sideways since a larger part-time labor force will bring home less money. So people will need to make due with less money. Short of another real estate bubble, prices will move sideways or slightly lower. Think it can’t happen? Look at Japan and as we are pointing out, they had a higher buffer to resist the double bubble pop...

Dow Jones Industrials Pass 10,000 for 1st Time in a Year

October 14, 2009

AP - The Dow Jones industrial average has reclaimed 10,000 for the first time in a year.

The Dow crossed five figures in afternoon trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by the stock market's best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession.

Cheering erupted from traders on the floor of the New York Stock Exchange as stocks briefly moved above the psychological barrier. They fell back into the 9,990 range in the normal ebb and flow of trading.

Upbeat earnings reports from chip maker Intel Corp. and banker JPMorgan Chase & Co. Wednesday gave the Dow its final push past 10,000. The average has slipped back several points since crossing the milestone, but that's part of the normal ebb and flow of trading.

Investors are increasingly shaking off lingering doubts about the economy. However, analysts still warn that problems like rising unemployment and a weak housing market pose a threat to a solid recovery.

The Dow is now up 53 percent from its March low.

JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market's optimism as it easily beat Wall Street's expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.

Investors didn't seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.

Intel also beat analysts' estimates, reporting a smaller-than-expected decline in profit and sales after the market closed Tuesday. The leading chip maker said it expects sales in the final period of the year to top projections, raising hopes that the computer market is improving.

Together, the reports quieted fears that major U.S. companies won't be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.

A smaller-than-expected decline in retail sales last month also encouraged buyers, as did another rally in commodities prices. Gold hit a new record of $1,072 an ounce, while oil rose above $75 a barrel for the first time in a year. Treasury prices and the dollar fell as investors abandoned safe-haven assets.

The Dow rose 117.07, or 1.2 percent, to 9,988.13 after trading as high as 10,001.58. The Standard & Poor's 500 index rose 14.07, or 1.3 percent, to 1,087.26, and the Nasdaq composite index rose 25.12, or 1.2 percent, to 2,165.01.

Three stocks rose for every one that fell on the New York Stock Exchange, where 328 stocks hit new 52-week highs and only two hit new lows. Volume on the NYSE came to 660.1 million shares, compared with 562 million at the same time on Tuesday.

Dollar Devaluation: A Means to Cope with Debt

October 11, 2009

Infowars - From the euro perspective, the S&P peaked at 1700 in 2000, finally re-attained 1100 in the 2007 bubble, fell below 600 in March and now stands at 700 (see nearby chart). With most of the market capitalization of U.S. stocks held by Americans, the dollar devaluation has caused a massive decline in the U.S. share of global wealth...

In a sign that more banks are under great pressure from the recession, 34 financial institutions did not pay their quarterly dividends in August to the Treasury on funds obtained under the Troubled Asset Relief Fund (TARP). The number almost doubled from 19 in May when payments were last made, and also raised questions about Treasury’s judgment in approving these banks as “healthy,” a necessary step for them to get TARP funding.
“Perhaps the Treasury made assumptions that were a little bit too rosy,” says Walter Todd, who invests in banks at Greenwood Capital. “My question is also whether the Treasury is staffed adequately to handle this tremendous undertaking.”
The U.S. government ended its 2009 fiscal year with a deficit of $1.4 trillion, the biggest since 1945, the Congressional Budget Office reported.

The deficit amounted to 9.9 percent of the nation’s economy, triple the size of the shortfall for 2008.

The nonpartisan CBO said yesterday the government was squeezed on both sides of the budget ledger in the fiscal year that ended Sept. 30. Tax revenue fell by $420 billion, or 17 percent, to the lowest level in more than 50 years.

Individual income taxes, the biggest source of tax receipts, fell by 20 percent, the agency said. Corporate income taxes dropped by 54 percent, reflecting the slow economy. At the same time, federal spending rose by 18 percent, the CBO said. About half of the spending increase, $245 billion, was driven by the costs of bailing out the financial industry and taking over mortgage financiers Fannie Mae and Freddie Mac.

The spending increases and tax cuts included in the economic stimulus package approved in February added almost $200 billion to the 2009 deficit, the CBO said...

Used vehicle prices shot to an all-time high last month, spurred by falling inventories, according to a closely watched barometer of the second-hand car business.

For those in the market for a used car, that’s not necessarily bad news, said Tom Webb, chief economist at Manheim Consulting, which produces the index of the used car market. That’s because the value of trade-in vehicles are fetching record prices, he said.

But those buying their first car or who aren’t looking to trade in a vehicle will find themselves stuck paying the higher price, Webb said.

The Manheim Used Vehicle Value Index rose 6.9% in September to a record high of 118.5. The index is adjusted for vehicle mix and seasonality. A value of 100 represents used vehicle prices in January 1995.

The index reflects the wholesale, or trade-in, value of vehicles. But Webb said retail prices move “pretty much in lockstep” with wholesale values.

The main driver behind higher used car prices is falling wholesale vehicle supply, Webb said. This summer’s wildly popular cash for clunkers program sent new vehicle sales soaring, taking dealers by surprise and clearing out inventories.

Even though new car sales dropped off in September, auto factories struggled to catch up and inventories remained low. In addition, he blamed falling vehicle turnover from rental car companies, many of whom have taken a beating in the economic recession.

Home sellers cut their asking prices by a total of $28.4 billion to attract buyers as the real estate recovery stalled, Trulia Inc. said.

The average discount was 10 percent as of Oct. 1, the San Francisco-based real estate data provider said today. Homes listed for more than $2 million were cut the most, with owners taking an average of 14 percent off the original price. Luxury homes accounted for 25 percent of all of the reductions.

Sales of existing U.S. homes unexpectedly fell in August for the first time since March, according to the National Association of Realtors, signaling the recovery will be slow to gain speed. The median price dropped 12.5 percent from August 2008.

Consumers have to be slashing the prices of the homes they list,” Pete Flint, chief executive officer of Trulia, said in an interview. There’s a “significant inventory” of homes for sale. “You’re still going to see further price declines before the market stabilizes in 2010.

Half of the 10 states with the highest percentage of discounted homes are in the Northeast: Massachusetts, Rhode Island, Connecticut, New Hampshire and New Jersey.

A third of residences for sale in those states were reduced at least once, Trulia said. New York, California and Florida accounted for 35 percent of the total value of price cuts nationally. In Nevada, Idaho, Arizona, Wyoming, Hawaii, Utah and California, sellers have dropped an average of 13 percent off the original price, according to Trulia.

Inventories at U.S. wholesalers dropped in August for a 12th consecutive month, clearing the way for a pickup in orders as sales improve.

The 1.3 percent decrease in stockpiles was larger than anticipated and followed a revised 1.6 percent drop in July, figures from the Commerce Department showed today in Washington. Wholesale inventories have had the longest series of declines since records began in 1992. Sales climbed 1 percent, the biggest gain since June 2008.

Distributors will likely increase bookings after companies drew down inventories at a record pace in the first half of the year. The gains may give the world’s largest economy a boost in the early stages of a recovery as American factories rev up assembly lines to prevent stockpiles from dwindling even more...

The U.S. trade deficit unexpectedly narrowed in August as exports climbed to the highest level of the year and oil imports plunged.

The gap fell 3.6 percent to $30.7 billion from a revised $31.9 billion in July, the Commerce Department said today in Washington. A rebound in auto making contributed to a jump in exports to Canada, while a drop in the number of barrels of petroleum bought abroad swamped an increase in fuel prices.

More than $2 trillion in government stimulus programs are reviving demand from Asia to Europe, ensuring American factories benefit from growing sales overseas as the dollar falls. Gains in production and the need to replenish depleted inventories mean imports will probably also grow in coming months.
“The credit crisis has forged an even larger gap between the rich and poor, though it might not last for long,” writes Ian Mathias in today’s issue of The 5. “The richest 10% of Americans made at least $138,000 each this year, according to Census data released last week. That’s a record high 11.4 times the average income for the opposite end of the spectrum: the poverty line around $12,000. Pre-crisis multiples were closer to 11.2.

“The middle class is getting credit crunched too. The median household income has fallen $1,860 over the last year – wiping out a decade of slow gains – to $50,303.

“But if history is any guide, this trend may be near its peak. At present, about a quarter of America’s total income is earned by 1% of its population (amazing, eh?). That level has only been attained once in US history – ironically, 1928, right around the start of the last economic depression. What followed then was a 50-year trend in the other direction.

U.S. States Suffer "Unbelievable" Revenue Shortages

October 9, 2009

Reuters - The U.S. economy may be creeping toward recovery after the worst slowdown since the Great Depression, but many states see no end in sight to their diving tax revenues.

Tax revenues used to pay teachers and fuel police cars continue to trail even the most pessimistic expectations, despite the cash from the economic stimulus plan pouring into state coffers.
"It's crazy. It's really just unbelievable," said Scott Pattison, executive director of the National Association of State Budget Officers, and called the states' revenue situations "close to unprecedented."
Most states had been pessimistic in forecasting their tax revenues for the 2010 fiscal year, Pattison said. So far, collections have fallen below even those low targets.

Lower tax revenues could lead to higher taxes or another sharp reduction in services if receipts do not show signs of improvement before year-end, as every state but Vermont is required by law to balance their budgets.

That could mean fewer teachers, early prisoner releases, and fewer highway repairs as residents battle soaring unemployment.

States are coming off a terrible first quarter, which for most states began on July 1...

In the second quarter of calendar year 2009, total state revenue was down 18 percent compared with the period in 2008, according to the National Governors Association, which projects revenue will not return to pre-recession levels until 2014 or 2015.

The American Recovery and Reinvestment Act passed in February mitigated some states' financial pain by giving them more money for Medicaid, the health-care program for the poor run by states and partially funded by the federal government. The program can eat up large portions of states' budgets.

The act also created a state fiscal stabilization fund and dedicated money to education.
"If we didn't have that money, we would have been cutting more, which is hard to believe," Pattison said.
States would like the Medicaid boost continued after the stimulus expires next year.
"The states are very, very concerned about that cliff -- they're concerned about when this recovery money stops," Pattison said.

Next Bubble to Burst: Commercial Real Estate

October 9, 2009

Bloomberg - It takes several months to assemble a pool of commercial mortgages to package as bonds, and banks are reluctant to write new loans without a means to protect against price swings on the debt.

A single commercial mortgage-backed bond sold in 2007 could contain 200 loans on as many as 350 properties, according to data compiled by Bloomberg.

The U.S. government pushed to revive the market for commercial real estate amid a pullback in lending and a 36 percent drop in property prices from their October 2007 peak.

About $524 billion of commercial mortgages held by U.S. banks and thrifts are scheduled to come due before 2012, half of which probably won’t qualify for refinancing because they exceed 90 percent of the property’s value, according to distressed- assets investor Lone Star Funds.

At least $410 billion, or two-thirds, of commercial mortgages bundled and sold as bonds coming due by 2018 will have difficulty refinancing, according to data from Deutsche Bank AG.

Sales of U.S. commercial-mortgage-backed debt slumped to $12.2 billon last year from a record $237 billion in 2007 as the credit crisis sapped demand, choking off financing to borrowers with maturing debt, according to JPMorgan Chase & Co. data...

The delinquency rate for commercial mortgages bundled and sold as bonds was 4.34 percent last month, according to FTN Financial.

Goldman Sachs Group Inc. may sell the first commercial-mortgage bond since June 2008, taking advantage of an untapped Federal Reserve program.

The five-year, $400 million loan to Developers Diversified Realty Corp. made by a unit of the New York-based bank is secured by 28 shopping centers. Developers Diversified Realty Corp. It will be used to repay debt on those properties and others, and to reduce the outstanding amounts of credit facilities, Developers Diversified said yesterday in a statement.

Developers Diversified and Goldman Sachs are working with the Fed to qualify the loan for the central bank’s Term Asset- Backed Securities Facility (TALF) to unfreeze the $700 billion market for securities backed by commercial mortgages, according to the statement.
“An actual close at reasonable terms would be a significant positive for new-issue TALF which has been slow to get off the ground,” said Aaron Bryson, an analyst at Barclays Capital in New York.
The pipeline of issuers under TALF has shrunk as unsecured debt markets opened up to real estate companies, and this deal would mark the first since the Fed program was opened to newly issued commercial-mortgage-backed securities in June.

Postal Service Pares Closings List to 371 Stations, Branches

October 9, 2009

Bloomberg - The U.S. Postal Service, which expects at least a $5 billion deficit this year, pared the number of urban and suburban facilities it may shut to 371.

The agency reduced the list from 413 post offices and other facilities it was evaluating.

The Postal Service could save $20 million to $100 million by closing facilities, Postmaster General John Potter said yesterday in a speech at the National Press Club in Washington. He said post-office closures are only part of the changes the agency must make to return to profitability.

U.S. Job Openings Fall to Lowest Level in at Least Nine Years

October 9, 2009

Bloomberg - Job openings in the U.S. fell in August to the lowest level in at least nine years, signaling the economy hasn’t improved enough to prompt companies to take on more staff.

The number of unfilled positions fell by 21,000 to 2.39 million, the fewest since records began in 2000, the Labor Department said today in Washington. Openings were down by 2.4 million, or 50 percent, since peaking in July 2007.

The report showed hiring and firing both slowed in August, indicating last month’s acceleration in payroll losses may have been due to a lack of employment rather than a pick up in dismissals. Labor Department figures last week showed employers cut staff by a net 263,000 workers in September and the unemployment rate increased to the highest level since 1983.

Gold Surges to Record on Dollar's Decline

October 8, 2009

UPI and OfficialWire - Gold surged to a record $1,045 per ounce on the New York Mercantile Exchange, prompted by a weak U.S. dollar and a run on the commodity as an inflation hedge.

The dollar, on a six-month slide, fell to near lows for the year against the euro and the yen Tuesday, The Washington Post reported.

The weak dollar "is headed for also-ran status and will continue to lose its value against many other currencies and assets," equity strategist Peter Boockvar at Miller Tabak told the Post.

"The rest of the world wants the U.S. dollar to lose influence, but no one wants it to be abrupt," he said.

Cornell University economics professor Eswar Prasad said it would be "highly unlikely" the dollar would be replaced as the world's reserve currency soon.

"Over the next decade, though, we would expect to see other currencies play a much more significant role," he said.

Gold settled slightly lower Wednesday, trading at $1,043.80 in midday trading.

U.S. Sheds 263,000 Jobs in September, Unemployment Hits 9.8 Percent

October 2, 2009

AFP - The US unemployment rate rose in September to 9.8 percent as 263,000 jobs were cut, the Labor Department reported Friday.

The report on nonfarm payrolls, seen as one of the best indicators of economic momentum was far worse than expectations for a loss of 175,000 jobs and could hurt chances of a sustainable recovery from recession.

The number of job cuts rose sharply after a revised loss of 201,000 in August.

The jobless rate of 9.8 percent was in line with expectations.

The goods-producing sector lost 116,000 jobs in September including 64,000 in manufacturing. Even worse, the services sector shed 147,000 jobs with 39,000 of those in retailing.

Since the start of the recession in December 2007, the figures showed the number of unemployed persons has increased by 7.6 million to 15.1 million, and the unemployment rate has doubled to 9.8 percent, according to the Labor Department.

The latest official data showed the US economy contracted at a 0.7 percent pace in the second quarter, nearly emerging from the recession that slashed output by 6.4 percent in the first quarter.

Most economists expect growth to return in the third quarter but say the recovery could fade without job growth.

Dow Drops Over 200

October 1, 2009

CNBC - Stocks tumbled Thursday after a disappointing ISM report on manufacturing piled on to worries about the economic recovery.

The Dow Jones Industrial Average lost 203 points, or 2.1 percent — it’s worst decline since July 2, which was before the summer rally began. The S&P 500 fell 2.6 percent and the Nasdaq dropped 3.1 percent.

The Institute for Supply Management reported its gauge of manufacturing activity fell to 52.6 in September from 52.9 in August, short of expectations.

“This was a good report even if the ‘what have you done for me lately’ crowd tries to trash it,” Joel Naroff of Naroff Economic Advisers, wrote in a note to clients. Still, “it looks like firms are leaning on productivity gains rather than hiring new workers to generate the added production,” Naroff said.

That came after an earlier report showed initial jobless claims jumped by 17,000 last week, much more than expected. And ADP said private employers cut 254,000 jobs from their payrolls in September.

Employment is certainly on investors' minds ahead of the government's September jobs report, due out tomorrow before the bell. Economists surveyed by Reuters expect to see 180,000 jobs were dropped from nonfarm payrolls, after a loss of 216,000 in August.

The market shrugged off encouraging readings on housing and construction: Pending-home sales jumped 6.4 percent in August, the seventh straight month of gains. Economists had expected a gain of just 1 percent. Meanwhile, construction spending rose 0.8 percent that month, well above the 0.2-percent gain expected...

Government Corruption and Treason

Pelosi Says New Tax is 'on the Table'

October 6, 2009

The Hill - A new value-added tax (VAT) is "on the table" to help the U.S. address its fiscal liabilities, House Speaker Nancy Pelosi (D-Calif.) said Monday night.

Pelosi, appearing on PBS's "The Charlie Rose Show" asserted that "it's fair to look at" the VAT as part of an overhaul of the nation's tax code.
"I would say, Put everything on the table and subject it to the scrutiny that it deserves," Pelosi told Rose when asked if the VAT has any appeal to her.
The VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product.

Pelosi argued that the VAT would level the playing field between U.S. and foreign manufacturers, the latter of which do not have pension and healthcare costs included in the price of their goods because their governments provide those services, financed by similar taxes.
"They get a tax off of that and they use that money to pay the healthcare for their own workers," Pelosi said, using the example of auto manufacturers. "So their cars coming into our country don't have a healthcare component cost.

"Somewhere along the way, a value-added tax plays into this. Of course, we want to take down the healthcare cost, that's one part of it," the Speaker added. "But in the scheme of things, I think it's fair to look at a value- added tax as well."
Pelosi said that any new taxes would come after the Congress finishes the healthcare debate consuming most lawmakers' time, and that it may come as part of a larger overhaul to the tax code.

The Speaker also emphasized that any reworking of the tax code would not result in an increase in taxes on middle-class Americans.

Has President Obama, the Constitutional Lawyer, Committed Open Treason?

October 28, 2009

Infowars - “Has President Obama, the Constitutional Lawyer, Committed Open Treason?”

When the president of the United States, Barack H. Obama accepted rotating status as chairman of the United Nations Security Council, he committed high treason… not only a direct violation of article 1 section 9 clause 8 of the Constitution for the United States of America, which states emphatically:
“No title of nobility shall be granted by the United States; and no person holding any office of profit or trust under them, shall without consent of Congress accept of any present, emolument, office, or title, of any kind whatever, from any King, Prince, or foreign State.”
But this act by the President also has violated the 13th article of amendment that was duly ratified by March of 1819, but with secrecy and by active subterfuge, it was replaced by Lincoln’s 14th amendment right after the Civil War. This duly ratified original 13th amendment states the following:
“If any citizen of the United States shall accept, claim, receive, or retain any title of nobility or honour, or shall without the consent of Congress, accept and retain any present, pension, office, or emolument of any kind whatever, from any emperor, king, prince, or foreign power, such person shall cease to be a citizen of the United States, and shall be incapable of holding any office of trust or profit under them, or either of them.” http://www.amendment-13.org/
Article 1 section 9 describes what shall not be allowed, but, it puts forth no punishment for such actions on the part of an elected government official… the original 13th amendment however, which was proposed in 1810… and some would say was a large part of the reason for the War of 1812, not only states that an elected government official cannot accept this kind of gratuity or office, but also states, if so done, the official would lose all possibility of office present and future, as well as citizenship, and if the circumstances are grave enough could be tried for treason and ultimately hung.

In either case, I do not recall there having been a bill, resolution or memorial, put forth by Congress, granting this president its permission for accepting the position of chairman of the Security Council of the United Nations… Without this permission and open discussion about it, prior to the granting of the permission… President Barack H. Obama is in violation of article 1 section 9 clause 8 of the Constitution for the United States of America… at the very least.

The creation of the United Nations at the Presidio in San Francisco in 1945, was done by treaty power. It is not part of the United States in any way other than by treaty in the form of an international “Peace” treaty. The Constitution states that treaties are considered part of Constitutional law when they are enacted by an act of Congress and signed by the president.

They are not etched in stone however, and as with all treaties, as was addressed in 1803 by the Supreme Court in the landmark Marbury vs Madison, which states that a law (by law I mean act of Congress, and no treaty can become law without an Act of Congress), cannot void the Constitution. The Constitution however can void any law including treaties, if that law is repugnant to the Constitution.

When Obama took the position of Chairman of the UN Security Council… he violated Article 1 Section 9 Clause 8 by accepting leadership in an organization that is clearly at odds with the Constitution for the United States of America.

The instant the United Nations starts amending the Constitution by treaty power is the day that the United Nations should be carved off of the East Coast and floated out past the continental shelf and sunk in 2 miles of water, for good.

For further discussion and information, go here: http://forum.prisonplanet.com/index.php?topic=141900.msg856314#msg856314

Sen. Al Franken Stands Up to Support KBR Rape Victim and Others Like Her

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October 8, 2009

Crooks and Liars - Rookie Sen. Al Franken (D-MN) passed an amendment to a defense bill this week that would withhold government contracts from organizations like KBR if they restrict employees from taking rape and sexual assault cases to court...

In 2005, Jamie Leigh Jones was gang-raped by her co-workers while she was working for Halliburton/KBR in Baghdad. She was detained in a shipping container for at least 24 hours without food, water or a bed, and “warned that if she left Iraq for medical treatment, she’d be out of a job.” (Jones was not an isolated case.) Jones was prevented from bringing charges in court against KBR because her employment contract stipulated that sexual assault allegations would only be heard in private arbitration.

Sen. Al Franken (D-MN) proposed an amendment to the 2010 Defense Appropriations bill that would withhold defense contracts from companies like KBR “if they restrict their employees from taking workplace sexual assault, battery and discrimination cases to court.” Speaking on the Senate floor yesterday:

Franken said: The constitution gives everybody the right to due process of law … And today, defense contractors are using fine print in their contracts do deny women like Jamie Leigh Jones their day in court. … The victims of rape and discrimination deserve their day in court [and] Congress plainly has the constitutional power to make that happen.

On the Senate floor, Sen. Jeff Sessions (R-AL) spoke against the amendment, calling it “a political attack directed at Halliburton.”

Franken responded: “This amendment does not single out a single contractor. This amendment would defund any contractor that refuses to give a victim of rape their day in court.”

In the end, Franken won the debate. His amendment passed by a 68-30 vote, earning the support of 10 Republican senators including that of newly-minted Florida Sen. George LeMieux.

“He did what a senator should do, which was he was working it,” LeMieux said in praise of Franken. “He was working for his amendment.”
Appearing with Franken after the vote, an elated Jones expressed her deep appreciation.
“It means the world to me,” she said of the amendment’s passage. “It means that every tear shed to go public and repeat my story over and over again to make a difference for other women was worth it.”

Tea Partiers Turn On GOP Leadership

October 11, 2009

POLITICO - While the energy of the anti-tax and anti-Big Government tea party movement may yet haunt Democrats in 2010, the first order of business appears to be remaking the Republican Party.

Whether it’s the loose confederation of Washington-oriented groups that have played an organizational role or the state-level activists who are channeling grass-roots anger into action back home, tea party forces are confronting the Republican establishment by backing insurgent conservatives and generating their own candidates — even if it means taking on GOP incumbents.
“We will be a headache for anyone who believes the Constitution of the United States … isn’t to be protected,” said Dick Armey, chairman of the anti-tax and limited government advocacy group FreedomWorks, which helped plan and promote the tea parties, town hall protests and the September ‘Taxpayer March’ in Washington. “If you can’t take it seriously, we will look for places of other employment for you.”

“We’re not a partisan organization, and I think many Republicans are disappointed we are not,” added Armey, a former GOP congressman.
In Florida, where the national party has signaled its preference for centrist Gov. Charlie Crist in the GOP Senate primary, tea party activists are lining up behind former state House Speaker Marco Rubio in reaction to Crist’s public backing for President Barack Obama’s stimulus package.
“We were very disappointed with Gov. Charlie Crist when he supported the stimulus, the bailout, and he appeared publicly with President Obama,” said Everett Wilkinson, a South Florida-based organizer for Tea Party Patriots. “The opposition comes from Crist’s support for the largest spending plan ever and the environmental policies he’s pushing on the American people.”
Rubio has already made appearances at Florida tea parties, and protesters have been seen waving signs declaring, “Anybody but Charlie Crist.” He also has Armey’s endorsement, and Armey headlined a Dallas fundraiser for him several weeks ago.

Wilkinson said that the tax status of his Florida-based group limits what it can do to assist Rubio in the August 2010 primary. But he said the organization would launch an aggressive get-out-the-vote operation and issue a report card grading each candidate appearing on the ballot.

Tea party activists are also lining up behind challengers to GOP establishment-backed Senate candidates in Colorado and Connecticut. In California, former Hewlett-Packard CEO Carly Fiorina — like Crist, another National Republican Senatorial Committee-favored Senate contender — is the target of tea party animus in her primary against conservative state Assemblyman Chuck DeVore.
“My impression is that the support among tea partyers for DeVore is high,” said Mark Meckler, a California-based organizer for Tea Party Patriots. “I hear nothing but praise for the guy.”
Tea party organizers say their resistance to Republican Party-backed primary candidates has much to do with what they perceive as the GOP’s stubborn insistence on embracing candidates who don’t abide by a small government, anti-tax conservative philosophy.
“It’s an outgrowth of the frustration people have had with the Republican Party,” said Andrew Moylan, director of governmental affairs for the National Taxpayers Union, another group that has played a large role in organizing the tea party movement. “I think a lot of people have been angry at Republicans for betraying our trust.”

“I think the GOP establishment has ignored their constituents and the feelings of their constituents for years,” added Meckler.
It’s an unusual predicament for the Republican Party, since the conservative-oriented issues that animate Tea Party activists once seemed destined to make the movement a valuable auxiliary to the Republican Party.

While there’s little evidence of tea party activist support for Democratic candidates, the specific notion of electing a GOP majority hasn’t ranked high on their agenda either.

At the recent “Defending the American Dream Summit,” a conservative event held in Arlington, Va., a breakout session featuring tea party organizers saw panelists peppered with questions ranging from how to start up political action committees and 501(c)(3) organizations to whether it was necessary to hire lawyers.
“Nothing is going to change unless we can get politicians elected who can implement fiscally conservative policies,” Teri Adams of the Philadelphia-based Independence Hall Tea Party Association, which will be launching a political arm, told those in attendance.
In a handful of states, tea party activists have zeroed in on House Republican incumbents and have launched primary challenges in protest of their past support for the controversial Wall Street bank bailout.

One of those activists, Canyon Clowdus, an Army veteran who is taking on third-term conservative Rep. Mike Conaway (R-Texas), has blasted the incumbent for making “a horrible mistake” in voting for Troubled Asset Relief Program.
“He has put a financial burden on my four children that will amount to hundreds of thousands of dollars each,” Clowdus says of Conaway on his campaign website.

“I think it was a bad, bad political decision,” Armey said of the 34 Senate Republicans and 91 House Republicans who voted for the TARP bailout, “and if you talk to grass-roots activists, it has become a political test for them.”
Moylan agreed that TARP is “really kind of the flash point that started all of this.”
“People are paying attention and are willing to hold these people accountable,” he said.
For some, supporting insurgent campaigns or waging primary bids just isn’t a strong enough signal to send to a Republican Party that has abandoned core conservative policies.

Erick Erickson, founder and editor of the influential conservative blog RedState, has urged tea party activists to “put down the protest signs” and stage takeovers of local Republican parties.
“Grass-roots activists need to start infiltrating the party,” said Erickson. “The only way to start getting [the establishment] back is to start pounding them with every fist we have.”

War is Peace, Freedom is Slavery, Ignorance is Strength

October 9, 2009

In The Fallout - This morning, Americans were greeted with a shocking example of real-life Orwellian doublethink. We found out that Barack Obama was awarded the Nobel Prize for Peace.

Here is a list of President Barack Obama’s deeds in the pursuit of peace on Earth:
  • Issued an order to close the prison facility at Guantanamo Bay, but has not approved any plans to actually do so.

  • Oversaw a reduction in actual US troops in Iraq, only to replace them with private mercenaries.

  • Expanded the war in Afghanistan into Pakistan by increasing the number of air attacks in its border regions.

  • Increased the number of US troops in Afghanistan by tens of thousands, with many more on the way.

  • Established a US military presence on Colombian military bases.

  • Refused to lend even the most superficial support to the political opposition in Iran, even as the regime there publicly executed dissidents.

  • Stood idly by as police and National Guard troops engaged in one of the most vicious crackdowns against free-speech in recent memory while attending the G20 summit in Pittsburgh, PA.

  • Has spoken glowingly (particularly during his campaign) of China, and refused to criticize its government’s ever-lengthening list of human rights abuses.

  • Continues to allow Blackwater (now Xe) to be awarded defense contracts, even in light of reports of child prostitution rings being run out of its facilities in Iraq.
…and the list will continue to grow.

Recently his administration has begun beating the drums of war with Iran, not in defense of its oppressed citizens of course, but because of claims that the country is developing weapons of mass destruction–claims that stand in direct contrast to information provided by the International Atomic Energy Agency and even internal US intelligence reports. While there are legitimate reasons to engage in some kind of action against the current Iranian regime–WMD’s are the least of them. Clearly this President isn’t interested in aligning himself with free citizens of a truly liberated Iran, he prefers liberation of the Bush/Cheney variety–more commonly known as starving them with sanctions and then blowing the hell out of them.

What’s that you say? That sounds more like a list of deeds done in opposition to peace than a list of achievements that merit an award like the Nobel Peace Prize?

If that’s what you were thinking then congratulations, you, unlike so many other millions of people, are capable of actual independent thought! Anyone who isn’t completely drugged out of their mind, or pays attention to anything in the world around them, can clearly see that President Barack Obama has not done a single thing to promote peace anywhere in the world.

We free thinking people must ask, with all of this information–why was Mr. Obama given this prestigious award?

There is no easy answer to this question. The most likely explanation is rooted in Mr. Obama’s commitment to globalization and the United Nations. He believes very strongly that the UN is the key to global order, and has acted to bring the United States in line with UN doctrine. Sadly, that doctrine calls for substantial weakening in national sovereignty. It requires the acceptance of rules put in place not by our own elected representatives, but by unelected representatives of foreign powers–many of which are inherently corrupt.

True adherence to UN mandates can only lead to global governance by unelected individuals who have little to no respect for the US Constitution or the rights enumerated within it.

The Nobel Committee commented that the prize was awarded to Mr. Obama because he changed the climate of international relations through his commitment to diplomacy. Apparently these individuals view a commitment to diplomacy as a commitment to global governance–which Mr. Obama is quite clearly comfortable with, as he’s demonstrated by being the first sitting US President to actually chair the UN Security Council.

If this is a commitment to peace, then the Orwellian nightmare feared by so many is finally coming to pass. War is Peace, Freedom is Slavery to unelected UN bureaucrats, and Ignorance is most definitely Strength.

RFID, GPS Technology and Electronic Surveillance

Airport Strip-Search Machines “Tear Apart DNA”

October 31, 2009

Yahoo Tech - The latest airport security trend is the backscatter x-ray machine, touted as a powerful way to virtually frisk a traveler for contraband without the embarassment of a strip search.

Though touted as completely safe because the level of radiation is so low, travelers have been nervous about the devices — and not just because it shows off a nice outline of their privates to the people manning the machines — but because they remain scared of the health problems they might propose.

Looks like a little healthy paranoia might have been a good thing. While the conventional wisdom has held that so-called “terahertz radiation,” upon which backscatter x-ray machines are based, is harmless because it doesn’t carry enough energy to do cellular or genetic damage, new research suggests that may be completely wrong.

Specifically, researchers have found that terahertz radiation may interfere directly with DNA. Although the force generated is small, the waves have been found to “unzip double-stranded DNA, creating bubbles in the double strand that could significantly interfere with processes such as gene expression and DNA replication.”

I’m not a doctor, but that just doesn’t sound good.

The question now is whether this is or isn’t safe. Terahertz waves occur naturally in the environment, and we’re hit with them all the time. But should we bombard ourselves with them willingly every time we pass through an airport? No one knows how much terahertz radiation is OK for the body to absorb: Just like sunlight, a little may be fine, while a lot may be deadly. Where does the line get drawn?

Who knows? I, for one, am given a little pause by the news, and hope research continues on before these machines become commonplace.

‘Strip search’ scanners given OK by privacy watchdog
‘Strip search’ scans given green light

Health Link Markets Verichip Implant in Television Commercial, for Your Safety

October 23, 2009

The Health Link “Because” Campaign commercial

Health Link is the connection between you and your personal health record. Health Link utilizes a tiny, passive microchip (the nation’s first and only microchip cleared for use by the Food & Drug Administration) and a secure, private online database that links you to your personal health record. Your Health Link is always with you and cannot be lost or stolen.

Shape-Shifting Robot Blog Has Emerged From Your Nightmares

October 19, 2009

Escapist Magazine - iRobot’s flesh-like ChemBot will freak you out, but it also could save your life someday.

The ChemBot might look like something out of a bad dream, but it’s actually a multimillion dollar military project. The Defense Advanced Research Projects Agency (DARPA) and the U.S. Army Research Office contracted iRobot, creator of vacuum-robot Roomba, to design the soft, flexible, mechanical ooze last year. This video might be a little technical at first, but if you skip to the 2 minute mark you can see the results of iRobot’s work thus far.

iRobot is not a company that just makes house cleaning robots. It has been providing military and civil defense forces with helpful robots for a while now, including the iRobot Warrior, a “large and rugged robot designed to carry 150-pound payloads”, and the iRobot PackBot which has performed “thousands of dangerous search, reconnaissance and bomb-disposal missions” according to iRobot’s website.

DARPA’s main purpose for funding the ChemBot is to create something that can “traverse soft terrain and navigate through small openings, such as tiny wall cracks, during reconnaissance and search-and-rescue missions.” The ChemBot should be able to do just that through a mechanism called “Jamming,” which allows for the transition between solid-like and liquid-like states with only a small change in volume. The first half of this video explains how “Jamming” works.

The ChemBot feels like the first step towards the creation of actual human-like robots similar to Battlestar Galactica’s new Cylons. The creepy part about the ChemBot is how it looks as if it’s alive and breathing. Wars could probably be won just by rolling out a few dozen of these things in front of opposing forces to scare the bejeezus out of them. I definitely wouldn’t want to touch a one, they look all gross and sticky.

New York to Fight Terrorism with More Street-Corner Cameras, License Plate Readers, and “Weapons Sensors”

October 6, 2009

Christian Science Monitor - On the heels of breaking up an alleged bomb terror plot, New York is planning to place high-tech security cameras, license plate readers, and “weapons sensors” in midtown Manhattan.

Office workers and tourists – and possible terrorists – will have cameras watching their every move as they visit Macy’s, shop for diamonds at Tiffany & Co., or gawk in Times Square. The apparatus, paid for by some $24 million in Department of Homeland Security funding, will expand a similar effort already underway in lower Manhattan where cameras focus on the Federal Reserve, the New York Stock Exchange, and the Brooklyn Bridge.

Mayor Michael Bloomberg, announcing the program Sunday, said the goal is to detect terrorism threats and deter pre-operational surveillance. Sensors will try to detect chemical, biological, and radiological threats.

But some terrorism experts have questioned whether a camera network will deter terrorists. They also say that sensors are known to give off “false positives.”

Meanwhile, civil rights organizations are concerned that the project will be another encroachment on civil liberties.
The fear is [that] the NYPD without any oversight or public scrutiny is creating a massive surveillance system, when we don’t know if this is the best use of $125 million designed to keep us safe,” says Donna Lieberman, executive director of the New York Civil Liberties Union (NYCLU). The NYCLU has filed two lawsuits to try to get more public information about the program.
In March, New York Police Department (NYPD) commissioner Raymond Kelly indicated in testimony before the City Council that 1,000 police officers are involved in anti-terrorism work daily, and that he hoped to add 500 more cameras to the 500 already installed.

But there did not appear to be any discussion at the hearing about whether the effort is worthwhile or what kind of civil rights safeguards might be needed.
“There are legitimate arguments on all sides here,” says Frank Cilluffo, head of George Washington University’s Homeland Security Policy Institute in Washington. “What I would like to see is a broader discussion that brings in the average citizen.”
Probably the largest use of security cameras is in London, which has put what it terms a “Ring of Steel” of thousands of security cameras all around the city. But some security experts question their effectiveness.
“They won’t stop any terrorist,” says Bruce Schneier, chief security technology officer at BT (formerly British Telecom) and a widely-published author on security. “None of them is going to look at a camera and say ‘I better go get a real job.’”
The only time cameras reduce crime is in parking lots and laundromats, Mr. Schneier says.
“It only makes sense if the tactics and targets are few, but there are billions of targets ranging from shopping malls to restaurants and dozens of tactics,” he adds.
However, Brian Jackson, associate director of the Homeland Security Research Program at the Rand Institute in Washington, says the cameras create “the possibility for prevention” of an attack. He says cameras add a level of concern for the terrorists.
“Surveillance is one ingredient that gives the terrorists more opportunities to make a mistake and be discovered,” says Mr. Jackson.
As for using sensors that detect biological and radiological weapons, Mr. Cilluffo says they often give off false positives or false negatives.
“They tend to be only successful in events that can easily be contained like the State of the Union address or conventions,” he says. “Once they are in a more dynamic environment, I’m not sure where the science is on that.”
But the science of cameras is progressing fast, raising the possibility of even more “Big Brother”-like scenarios.
“Cameras are everywhere and you can see them,” says Schneier, “In ten years, you won’t even be able to see them.”

Glenn Beck Assures on Swine Flu Vaccine and Touts “Fantastic” Verichip Tracking Implants for Grandpa

October 12, 2009
Aftermath News

Andy Rooney promotes microchip implants for our convenience and safey