March 31, 2010

Food and Energy Purchases Make Up 36% of the Average Consumer's Budget

The Coming Inflation Wave

March 31, 2010

Fortune - Whether the American economy is in an inflationary or deflationary environment sounds like it should be a fundamental and settled question. But due to the unprecedented financial crisis, the answer is actually subject to intense debate among economists.

Making economic projections is far from a scientific process, so it's not surprising to find valid arguments on both sides of the divide. The economists who are right will help investors drive returns over the next three years.

How do we measure the level and duration of inflation to know whether it will help or hurt? In basic terms, inflation is a rise in prices of basic goods and services over a given period of time. In the United States, the government generally tracks inflation using the Consumer Price Index, or CPI.

Besides measuring inflation, CPI is also used to set income rates for more than 80 million people on entitlement programs. 48 million people on social security, 22 million food stamp recipients, and 4 million civil service retirees, have benefits tied to the CPI.

When inflation increases, so do their benefits. These payments are among the largest non-defense obligations in the federal budget. Not surprisingly, then, the government tends to understate inflation and has changed the way the CPI is calculated nine times since 1996.

Another common inflation metric is the Federal Reserve's core inflation, which it uses to measure overall inflation. The Fed excludes food and energy prices to smooth out short-term volatility. However, based on government data, food and energy purchases make up 36% of the average consumer's budget. The Fed's inflation graph might look nice and smooth, but it's probably not the best indicator for how your wallet feels when paying bills or buying groceries.

So, conventional measures of inflation are imperfect at best. Which may embolden economists who dispute the idea that we are in an inflationary environment. They argue that our economy is too slack to be inflationary.

With a 9.7% February unemployment rate (the worst for February since 1983) and capacity utilization is at 72.7% (7.9 percentage below the average from 1972 to 2009), the thinking is, what's there to inflate? If employment and utilization of industry are low, then so are supply and demand which help set pricing levels. How, then, can prices possibly inflate?

Despite this argument, and primarily due to aggressively accommodative monetary policy in the United States and around the globe, we believe inflation is here, and poised to accelerate as all the slack in global economies begins to tighten. Measures of inflation for major nations around the globe give support to our conclusions: most of the G20 nations are reporting higher than normal inflation rates.

While we take some issue with the U.S. government's calculation of inflation, even federal economists have reported inflating prices this year. The January CPI came in at 2.6% and February reported at 2.1%. We expect March figures to accelerate even further.

The U.S. treasury and currency markets have also showed inflation signs for months, with the dollar up and the price of treasury bonds down. Also, as we recently noted to our clients, fixed versus floating interest rate swaps have turned negative for the first time in over a decade.

This means investors are aggressively betting that floating interest rates will increase, because the Fed, as it becomes more concerned about inflation, tends to raise interest rates to try and slow it down.

Back in the treasury market, 30-year treasuries have gone from yielding 3.73% to yielding 4.72% over the last year. That increase has happened for shorter-term treasuries -- the short end of the yield curve -- as well. And all these increases have happened despite the fact the Fed has maintained its target rate at 0 -- 0.25%. Bond yields, in other words, are already accounting for inflation.

chart_inflation.top.gif

Finally, in the chart above, we've plotted the Journal of Commerce Industrial Price Index over the last year. This index charts the price of key commodities that are used in industrial production. The chart is up and to the right, screaming inflation. Commodity inflation will likely lead China to report its first trade deficit in March in 6 years!

As they say, the markets don't lie, people do (or government statistics as the case may be). Based on the evidence above, we're sticking with our inflation call -- until the markets, and the data, tell us different.

RFID, GPS Technology and Electronic Surveillance

US Military Plans to Track Roads from Sky

March 21, 2010

IBNLive - Military scientists in the US are developing what they claim is a "spy in the sky" – a remote-controlled airborne detection system which can bounce radar off buildings to follow a vehicle though a city.

According to the 'New Scientist', Pentagon's Defence Advanced Research Projects Agency is developing the new radar system, which sees around corners and down into "urban canyons" -- in fact, it can track vehicles across an entire city using just a few uncrewed aircraft.

Traditional radar relies on direct line of sight, so it's often tricky to track a vehicle that keeps nipping behind buildings. But the military scientists believe that by using buildings as mirrors, the Multipath Exploitation Radar will be possible to identify a target vehicle from radar reflections.

The agency is exploring how Multipath Exploitation Radar (MER) might work by driving vehicles around a simulated urban area and collecting returns from an overhead radar. The scientists are aiming to combine the radar data with a three-dimensional map of the test environment to calculate how the radar reflects off and between vehicles and buildings. This process should highlight which signals in the returning radar data can be used to plot the target vehicle's path, they say.
"MER is expected to be compatible with the radar systems currently used to track vehicles," a DARPA spokesman was quoted as saying.
The team anticipates that using reflected radar will cover more ground than a line-of-sight system, making it possible to monitor a city of about 1000 square kilometres, such as Baghdad, with just three airborne radars.

The three-dimensional model of a city needed to make sense of the reflection pattern could be created using LIDAR, the optical surveying technology which is routinely carried on aircraft.

MER makes use of Ku-band radar -- frequencies of between 12 and 18 gigahertz. It is sensitive enough to produce distinct signatures for apparently similar vehicles, by detecting slight differences, such as the angle of an aerial or a wing mirror.

DARPA is also looking to develop an algorithm which would enable the system to track multiple vehicles.

Ain Sume of the Swedish Defence Research Agency says the "sound, well-known physical principles" behind MER make it feasible. His team built a radar system that detects people around a corner by using reflections from the opposite wall.

But Sume reckons it will take some time to turn DARPA's plans into a viable system. Key challenges include maintaining a radar lock as the view shifts from line-of-sight to reflection and back, and establishing a unique radar "fingerprint" for each vehicle.

New RFID Tag Could Mean the End of Bar Codes

March 26, 2010

Wired - Lines at the grocery store might become as obsolete as milkmen, if a new tag that seeks to replace bar codes becomes commonplace.

Researchers from Sunchon National University in Suncheon, South Korea, and Rice University in Houston have built a radio frequency identification tag that can be printed directly onto cereal boxes and potato chip bags. The tag uses ink laced with carbon nanotubes to print electronics on paper or plastic that could instantly transmit information about a cart full of groceries.
“You could run your cart by a detector and it tells you instantly what’s in the cart,” says James M. Tour of Rice University, whose research group invented the ink. “No more lines, you just walk out with your stuff.”
RFID tags are already used widely in passports, library books and gadgets that let cars fly through tollbooths without cash. But those tags are made from silicon, which is more expensive than paper and has to be stuck onto the product as a second step.
“It’s potentially much cheaper, printing it as part of the package,” Tour says.
The new tag, reported in the March issue of IEEE Transactions on Electron Devices, costs about three cents to print, compared to about 50 cents for each silicon-based tag. The team hopes to eventually bring that cost below one cent per tag to make the devices commercially competitive. It can store one bit of information — essentially a 1 or a 0 — in an area about the size of a business card.

That’s not much compared to computer chips, but Tour says this tag is just a “proof of concept.” Study coauthor Gyoujin Cho of Sunchon National University, along with a team from the Printed Electronics Research Center of the Paru Corporation in Suncheon, Korea, are working to pack more transistors into a smaller area to ultimately squeeze 96 bits onto a 3-square-centimeter tag. That would be enough to give a unique identification code to each item in a supermarket, along with information like how long the item has been on the shelf, Tour says.

The tags were made possible by the creation of semiconducting ink, which contains carbon nanotubes that will hold an electrical charge. A transistor needs to be completely semiconducting to hold information, Tour says. If there are any bits of conducting metal — which moves electric charges around easily — mixed in, the information-holding charge will leak out quickly.

The mixture of nanotubes created in Tour’s lab includes both semiconducting nanotubes and conducting nanotubes. Separating out the conducting nanotubes is “a horrid experience,” Tour says. “They’re very painful to separate.” So instead, the team devised a way to coat the conducting nanotubes in a polymer to protect the electric charge and allow the ink to be purely semiconducting.

Once they had the ink, Cho and his colleagues built roll printers to transfer ink to the final material. The tags are printed in three layers, and one of the remaining hurdles to making the tags store more memory in less space is to improve the alignment of those layers, Cho says.
“The work is impressive,” comments Thomas N. Jackson of Penn State University in University Park, who is also developing flexible electronics.
He thinks it will be difficult to compete with silicon, which is well established in the realm of consumer products packaging. But similar technology could be used to do things silicon can’t do, he says, such as make smart bandages that can sense infections or freshness-sensing food packaging.

And for those who would rather not have their food broadcast radio waves after getting it home, fear not. Tour says the signals can be blocked by wrapping groceries in aluminum foil.

U.S. Government Biometrics Agency Has DoD Responsibilities

There is Now a U.S. Biometrics Agency Fully Integrated into DoD Activities

March 30, 2010

Secrecy News - As of last week, there is now a U.S. Government national security agency called the Biometrics Identity Management Agency (BIMA). It supersedes a Biometrics Task Force that was established in 2000.

Though nominally a component of the Army, the biometrics agency has Defense Department-wide responsibilities.

The Biometrics Identity Management Agency leads Department of Defense activities to prioritize, integrate, and synchronize biometrics technologies and capabilities and to manage the Department of Defense’s authoritative biometrics database to support the National Security Strategy,” according to a March 23 Order (pdf) issued by Army Secretary John M. McHugh that redesignated the previous Biometrics Task Force as the BIMA.
Biometrics is generally defined as “a measurable biological (anatomical and physiological) [or] behavioral characteristic that can be used for automated recognition.”
“Biometric data [are] normally unclassified,” according to a 2008 DoD directive (pdf). “However, elements of the contextual data, information associated with biometric collection, and/or associated intelligence analysis may be classified.”

“Biometrics-enabled Intelligence [refers to] intelligence information associated with and or derived from biometrics data that matches a specific person or unknown identity to a place, activity, device, component, or weapon that supports terrorist / insurgent network and related pattern analysis, facilitates high value individual targeting, reveals movement patterns, and confirms claimed identity.”

“Biometrics is an important enabler that shall be fully integrated into the conduct of DoD activities to support the full range of military operations,” the 2008 directive stated.

“Every day thousands of [biometric] records are collected and sent to the Department of Defense (DOD) Automated Biometric Identification System (ABIS) to store and compare against existing records,” a 2009 DoD report (pdf) said. “The technology is improving such that a submission from theater [e.g., in Afghanistan] can be searched in the DOD ABIS and a response sent back to theater in less than two minutes.”

“Realtime positive identification of persons of interest enables Coalition forces to target, track, and prosecute known or potential adversaries,” the DoD report said.

Companies Sell Junk Bonds to Private Equity Firms to Fund Bankruptcy Exit

Companies Sell Junk Bonds to Private Equity Firms to Fund Bankruptcy Exit

Cash-strapped companies emerging from bankruptcy have turned to investors -- not banks -- to help fund their return.

March 30, 2010

Reuters - High-yield bonds may be "junk" but they can be golden for bankrupt companies seeking cash to fund their exit from bankruptcy and pay down debt.

Reader's Digest Association Inc and chemicals maker Lyondell Chemical Co are two formerly bankrupt companies that have tapped the high-yield market to benefit from ravenous demand from investors for higher interest payments. There will likely be more to come.
"We have at least another year of a very favorable backdrop to issue high-yield bonds," said Margaret Patel, senior portfolio manager with Evergreen Investments, who manages more than $1 billion in Boston.
When emerging from bankruptcy, companies need cash to pay down old debt, such as debtor-in-possession loans, and to fund ongoing operations. This financing, called exit financing, has traditionally come from banks.

But banks dramatically curtailed such lending in response to the U.S. economic recession and credit crunch. While there are signs of renewed lending, companies may still turn to high-yield bonds for the benefits they provide, including fewer restrictions on the loan terms and more time to repay.

While companies may pay higher interest on new junk bonds, it buys them wiggle room as the work through any lingering operational issues, strategists said.
"If companies can extend maturities and pay down bank debt, it makes a lot of sense," said Patel. "This is a way to ensure their liquidity in case the market (worsens). It's opportunistic cash raising."
Reader's Digest, in February, used the high-yield market to raise $525 million in bankruptcy exit financing, cutting interest expenses by $30 million annually. The interest rate is 9.5 percent.

Lyondell, meanwhile, sold $2.25 billion of senior secured notes yielding 8 percent to fund its bankruptcy exit.
"As long as liquidity is good, and until the bank loan market becomes fully functional, I think people will continue" to sell junk bonds to finance bankruptcy exits, said Sabur Moini, manager of the Payden High Income Fund in Los Angeles.
In the meantime, new money is pouring into the junk bond market.

Junk bond sales have surged to records every month since December as companies contend with "wall of maturity" over the next few years, prompting a rush to refinance debt ahead of the quickly approaching repayment deadlines. In February, U.S. high-yield bond sales posted their busiest month on record, with $15.8 billion of new issuance, strategists said.

For bankrupt companies, "high-yield is a real option," said Mark Podgainy, senior director in the New York office of Getzler Henrich & Associates.
"How long will the market be favorable for that to take place? For this year, as long as Fed keeps rates low."
Investors, too, have incentives to snap up the junk bonds of formerly bankrupt companies.
"Yield," said Podgainy. "Everyone's looking for yield."
Benchmark 10-year Treasury notes are yielding about 3.86 percent. As of March 26, the average junk bond yielded 5.8 percentage points more than Treasuries according to Bank of America and Merrill Lynch data.

Reader's Digest senior floating rate notes, issued at 97 cents on the dollar, have risen to 101.25 cents, according to high-yield research firm KDP Investment Advisors. Lyondell notes now trade at 103.25 cents on the dollar, KDP said.
"It's pretty hard to live off what you'd make in a certificate of deposit or a Treasury bond," said Dwayne Moyers, chief investment officer of SMH Capital Advisors in Fort Worth.
Buying junk debt of companies exiting bankruptcy "is definitely something we'd look at because the bankruptcy process pretty much cleanses the company," said Moyers.

Junk Bonds and Corporate Takeovers By Private Equity Firms of the Elite

September 15, 2009

America.gov - ... The LBO (leveraged buyout) was “created in hell by the devil himself.”

The corporate raiding frenzy subsided in the 1990s after Drexel’s demise was followed by heavy losses for junk bond investors generally. The 1990s boom in technology stocks absorbed larger and larger amounts of investors’ money until that speculative stock surge collapsed in 2000. After a few years, however, a new wave of corporate acquisitions swelled up. It was led by private investment funds whose clients pooled their capital and borrowed additional funds to purchase companies whose profits and stock market prices had slumped, creating possible bargains for the investors.

In 1992, private equity investments totaled just $21 billion. In 2006, private equity firms bought control of 654 U.S. companies for a total of $375 billion, evidence of the constant turnover in American business that Schumpeter would have instantly recognized.

Financiers Flock to Private Equity Firms to Sidestep Tougher Regulations

• Bonus tax deters expat financiers from returning to Britain
• HSBC and Barclays warn of an impending exodus of bankers

January 25, 2010

The Guardian - Many of London's investment bankers are seeking to quit the industry in favour of private equity firms and hedge funds to escape heavy regulation and public censure for the financial crisis, according to a leading firm of City headhunters.

Heidrick & Struggles, which has recruited some of the highest-paid figures in the City, said it was snowed under with requests from middle-ranking and senior staff who wanted to switch to other areas of the financial services industry.

But the firm said fears that bankers were queueing up to leave London was a myth with most senior finance staff declaring they want to stay in London despite the tax on bonuses and an increase to 50% in the top rate of tax.

Chris Gaunt, a principal in the firm's financial services unit, said:

"People are asking to be taken out of banks for jobs in other parts of the industry. Hedge funds and private equity are top of the list."

"We are not seeing anyone looking to leave London, or at least only in small numbers, but we are seeing people wanting to leave banking," he said.
Gaunt said the 50p tax rate, which applies to incomes of more the £150,000 from this April, was deterring bankers located overseas from a move back to ­Britain.
"Brits overseas are much more reluctant to move back. For instance, it is almost impossible to lure back someone from a large financial centre like Hong Kong at the moment," he said.
His experience over the last month supports the growing confidence in the commercial property sector that London's financial district will successfully overcome threats from rival centres.

Office rents in the West End are already back to their peak of 2007, while City rents are beginning to pick up after enduring two years of sliding rates. However, threats from banks that they could relocate some or all of their main businesses overseas are unlikely to abate.

Last week, HSBC boss Michael Geoghegan said:
"I know a large number of bankers are moving out of the UK."
He was quickly followed by warnings from Barclays that London stood to lose some of its brightest and best financiers following the tax hike on highly paid workers in the UK.

Geoghegan also said the "strange" one-off bonus tax imposed by Alistair Darling in his pre-budget report last year will affect large banks' businesses. He echoed Gaunt's view that traders and corporate financiers will want to move out of the spotlight currently shining on banks into less-regulated and potentially more ­profitable firms.
"All will move to what I call shadow banking or twilight banking, where they will not be regulated, and I think that is a risk and it may well lay the foundations for a future problem in financial services," warned Geoghegan.
Private equity firms and hedge funds have suffered from the financial crisis with many shedding jobs or going out of business.

But most analysts believe those firms that have come through the ­'recession are well positioned to benefit from the upturn.

March 30, 2010

Government Takeover of Health Care

Obama Signs Final Health Care Changes, Defends Overhaul

March 30, 2010

Reuters – President Barack Obama made another push to sell his healthcare overhaul to a skeptical public on Tuesday, calling it a victory over special interests that will improve the lives of middle-class Americans and defending the "courage" of legislators who backed it.
"This day affirms our ability to overcome the challenges of our politics and meet the challenges of our time," Obama told a college audience outside Washington, as he signed into law final changes to the sweeping plan approved by lawmakers last week, along with reforms in college student loan programs [see story below].
The signing capped a year-long struggle between Democrats and Republicans that has set the stage for a bitter campaign for control of Congress in November. Republicans have vowed to make the healthcare bill the centerpiece of the election fight as they seek to repeal it.

Obama defended legislators who voted for the bill, the most sweeping shift in U.S. social policy in decades, and took aim at what he said were misleading attacks.
"Courage is an essential ingredient in any landmark legislation, particularly when the attacks are as fierce and unrelenting and inaccurate as they have been over the past year. I just want to commend members of Congress who had the courage to do what's right," he said.
But opinion polls show Obama and his Democrats will have to work hard to promote the 10-year, $940 billion overhaul.

Nearly two-thirds of Americans say the healthcare overhaul costs too much and expands the government's role too far, according to a USA Today/Gallup survey published on Tuesday.

Sixty-five percent of Americans believe the reforms cost too much, and 64 percent say they bring too much government involvement into a private industry, the poll said.

In an interview that aired on Tuesday, Obama acknowledged that adjustments will be needed in the law to reduce costs.
"I think it is a critical first step in making a healthcare system that works for all Americans," Obama said in an interview on NBC's "Today" show. "It is not going to be the only thing. We are still going to have adjustments that have to be made to further reduce costs."
U.S. companies have started to tally up the financial hit they say they will take because of the law.

The government still pays subsidies to large companies to help pay for prescription drug benefits for their large ranks of retirees, but the new law does not allow the corporations to also deduct the amount of the subsidies from their taxable income. Corporate America calls the change a tax increase, but the White House says it merely closes a tax loophole (see next story).

Factbox: Details of Final Healthcare Bill

Health Overhaul to Hit Corporate Profits

March 30, 2010

Reuters - U.S. companies have started to tally up the financial hit they say they will take as a result of the U.S. healthcare overhaul signed into law last week by President Barack Obama.

The government continues to pay subsidies to large companies, including AT&T Inc, Caterpillar Inc and Deere & Co, to help pay for prescription drug benefits for their large ranks of retirees.

However, the revamped law no longer allows companies to deduct the amount of the subsidies from their taxable income. Corporate America complains that the change amounts to a tax hike, while the White House says it essentially closes a tax loophole.

Not all big companies are warning of trouble. General Electric Co, for example, says it does not expect a "significant material impact" on its first-quarter results.

But a number of large U.S. employers have started detailing the expected hit to their bottom line. The latest warnings came from Prudential Financial Inc, which said on Monday that it would take a $100 million charge in the first quarter, and Allegheny Technologies Inc, which expects a $5 million charge.

The tally so far:
  • AT&T said it would record a $1 billion noncash charge for the first quarter and evaluate prospective changes to the healthcare benefits it offers to both active and retired workers, according to a filing with the U.S. Securities and Exchange Commission.

  • In a regulatory filing, Caterpillar described the regulatory change as a tax hike. It said accounting standards require the world's largest maker of earth-moving equipment to book a $100 million after-tax charge to reflect the change during the first quarter.

  • Deere, a maker of farm equipment, said it expects to record a $150 million charge, mostly in its current fiscal second quarter. The expense was not included in the company's earlier 2010 forecast, which called for net income of about $1.3 billion.

  • No. 2 life insurer Prudential said it expects a $100 million charge during the first quarter.

  • 3M Co, which makes products ranging from Post-It notes to optical films for flat-panel televisions, will record a one-time non-cash charge of up to $90 million, or 12 cents per share. It said its January forecast of 2010 earnings did not include the impact of the healthcare law.

  • Diversified U.S. manufacturer Honeywell International Inc in January estimated that healthcare reform would trim its first-quarter earnings by 4 cents to 5 cents per share. A Honeywell spokesman said last week that the company had not updated the earlier cost estimate and would continue to review the legislation.

  • AK Steel Holding Corp will record a non-cash charge of about $31 million in the first quarter due to a reduction in the value of its deferred tax asset as a result of a change to the tax treatment of Medicare Part D reimbursements.

  • Valero Energy Corp said it expects to take a charge of $15 million to $20 million in the first quarter due to the new healthcare legislation, and said it expects further tax costs to be calculated later.

  • Metals processor Allegheny looks for a first-quarter one-time, non-cash charge of about $5 million, or 5 cents per share, due to the new healthcare law.

Collapse of the U.S. Economy

Why Are American Jobs Heading Overseas?

March 30, 2010

eHow - Many Americans fear that companies eliminating U.S. jobs and moving them to overseas locations is a permanent fixture of the modern economy. This trend, sometimes referred to as "offshoring," has eliminated many American manufacturing jobs for decades. More recently, a growing number of so-called "white collar" jobs in information technology and other sectors once considered immune to this trend have relocated to India, China and other countries. Companies move jobs overseas for a variety of reasons, including labor costs and the quality of workers overseas.

Labor Costs

For many companies, overseas locations offer labor forces willing to work for lower wages than American workers. This factor has led to many manufacturing companies closing their U.S. factories and relocating their operations to Latin America, Asia and other locations. For decades, many American cities saw their manufacturing bases dry up, while workers in overseas factories produced the apparel, shoes, industrial goods and consumer electronics that Americans once produced. The relocation of American manufacturing operations overseas lowered labor costs and increased profits for many U.S. companies, while lowering prices for American consumers.
Unfortunately, American workers who once had reliable, well-paying manufacturing jobs found themselves scrambling for other work--often taking jobs that paid less and offered less generous benefits.

Educated Work Force

American firms move jobs overseas for reasons other than the lower labor costs in other countries. In the past decade, many information technology firms began offshoring jobs in this sector, attracted by the better-educated work force in places such as India and China. The U.S. education system trails other nations in producing college graduates with the scientific and mathematical knowledge needed for success in the modern information-based economy. Further, continued technological improvements around the world, such as the digitization of information and the improved bandwidth, have made it easier for software, medical technology and other companies to relocate operations overseas.

Study

A 2004 white paper from Sen. Joseph Lieberman of Connecticut cited a series of factors driving employers to move U.S. jobs overseas. Reasons included improved high-speed technology, low-cost labor in other countries, educated labor forces, favorable business climates overseas and proximity to large consumer markets in such countries as India and China, two leading beneficiaries of the offshoring of U.S. jobs.

Tax Break

A 2005 article from the Brookings Institution in Washington, D.C., suggested that the U.S. tax code may actually encourage companies to move American jobs overseas. Authors Lael Brainard and Robert E. Litan pointed to a provision that allows companies to defer taxes on foreign earnings as a possible incentive for businesses to move operations and jobs out of the United States.

Size

The authors of the Brookings Institution article noted that little reliable data exist to measure precisely the number of jobs that have moved overseas. They cited a report by Forrester, an Information technology consulting firm, which suggested that the number of jobs relocated overseas could grow to more than 3 million by the year 2015.

Prevention/Solution

Brainard and Litan suggested a series of policy prescriptions in response to the trend of moving American jobs overseas. These include removing tax code provisions that may encourage offshoring, as well as reducing the nation's over-reliance on employer-paid health insurance, which drives up business costs and provides another incentive to relocate. They also recommended action to improve the American education system at all levels, ensuring that American students from elementary school to college receive sufficient instruction in mathematics, the sciences, engineering and technology.

Real, Uglier American Unemployment

Real, Uglier American Unemployment

February 18, 2010

Dissident Voice - Can you trust national averages? As bad as the jobless data you hear are, you have not been told the whole truth. If you think the terrible impact of America’s Great Recession is shown by an official unemployment rate of about 10 percent, think again.

Economic inequality and the myth of Reagan trickle down logic are shown by new data from the Center for Labor Market Studies at Northeastern University in Boston. The report noted:
“What has been missing from the public debate over the labor market crisis is an honest and detailed analysis of which American workers have been most adversely affected by the deep deterioration in labor markets.”
The researchers found a correlation between household income and unemployment rate in the last quarter of 2009: Look carefully at these numbers and see how unemployment rises as income drops:



Ten times worse unemployment in the lowest class than in the highest class! Truly amazing and disheartening, don’t you think? And you can also infer that in some hard hit geographical areas the poorest people and people of color are being even more adversely impacted. And don’t think for a minute that things have really improved in 2010.

The report summed up the situation:
A true labor market depression faced those in the bottom…of the income distribution; a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top.”
People at the top remain winners no matter how bad the whole economy. Why? The wealthy Upper Class controls so much of the political system and benefit from countless government policies. They may lose something in an economic meltdown but not enough to suffer significantly.

Conversely, those at the bottom of the economic system with no political power are experiencing something as bad as the Great Depression, with no end in sight.

What pundits don’t emphasize is that government policies that do not target lower income groups are a failure and disgrace. Worse than destroying the middle class, we are creating a Lower Class like that found in third world countries. Indeed, compared to places like China and European nations, America’s poor are suffering about as badly as anyone on the planet, except for a few dismal places like Haiti. Needing food handouts, losing homes, missing health insurance, and lacking jobs mock the American Dream.

Wait; there is even more bad news. When underemployment is factored in — part time workers that want to work full time, and those who have stopped looking but want a job — the picture gets even worse. In the lowest group, the underemployment rate was 20.6 percent, compared with just 1.6 percent in the highest group. So the total in the lowest class is 51.4 percent (3.7 million people) compared to 4.8 percent in the wealthy class (530,000 people). Also consider that last November nearly 20 percent of all men between 25 and 54 did not have jobs, the highest figure since the labor bureau began counting in 1948.

Now you know why the constantly noted official jobless rate for the nation of 10 percent and 17 percent when underemployment is counted are a joke, or is it a purposeful deception, like a truth bubble?

How can jobs be created for the lower economic classes? You hear very, very few new ideas from politicians. It comes down to federal spending that better targets job creation to the lower income groups, and waiting for more general consumer spending, especially by the more affluent, to create more low level jobs, mostly in service areas. But we need specifics and better legislation.

Consider this green energy fiasco. A huge amount of federal stimulus money provided for building wind farms. It is creating jobs in China to build wind turbines, not in America. In fact, 80 percent of such federal funding is going overseas. All because Congress and the White House did not ensure a made-in-America requirement. Was a backroom deal made to keep China happy so that they would keep loaning us money?

When the poorest people suffer so disproportionately as compared to the wealthiest, perhaps only violent revolution will fix America’s dysfunctional, broken and delusional democracy. Will President Obama cite the above frightening data in any public forum to make the case for stronger federal efforts? What do you think?

The high numbers for the lower income people mean that no amount of government action, in even five years or more, will solve jobless problem, because no amount of economic growth can possibly create enough new jobs. The US would have to produce 10 million new jobs just to get back to the unemployment levels of 2007 – impossible for many years. So, politicians will keep making things look better by citing the national average.

RFID, GPS Technology and Electronic Surveillance

The Marketing of Internet Spying Boxes to the Feds

March 24, 2010

Wired - That little lock on your browser window indicating you are communicating securely with your bank or e-mail account may not always mean what you think its means.

Normally when a user visits a secure website, such as Bank of America, Gmail, PayPal or eBay, the browser examines the website’s certificate to verify its authenticity.

At a recent wiretapping convention, however, security researcher Chris Soghoian discovered that a small company was marketing internet spying boxes to the feds. The boxes were designed to intercept those communications — without breaking the encryption — by using forged security certificates, instead of the real ones that websites use to verify secure connections. To use the appliance, the government would need to acquire a forged certificate from any one of more than 100 trusted Certificate Authorities.

The attack is a classic man-in-the-middle attack, where Alice thinks she is talking directly to Bob, but instead Mallory found a way to get in the middle and pass the messages back and forth without Alice or Bob knowing she was there.

The existence of a marketed product indicates the vulnerability is likely being exploited by more than just information-hungry governments, according to leading encryption expert Matt Blaze, a computer science professor at University of Pennsylvania.
“If the company is selling this to law enforcement and the intelligence community, it is not that large a leap to conclude that other, more malicious people have worked out the details of how to exploit this,” Blaze said.
The company in question is known as Packet Forensics, which advertised its new man-in-the-middle capabilities in a brochure handed out at the Intelligent Support Systems (ISS) conference, a Washington, D.C., wiretapping convention that typically bans the press. Soghoian attended the convention, notoriously capturing a Sprint manager bragging about the huge volumes of surveillance requests it processes for the government.

According to the flyer:
“Users have the ability to import a copy of any legitimate key they obtain (potentially by court order) or they can generate ‘look-alike’ keys designed to give the subject a false sense of confidence in its authenticity.”
The product is recommended to government investigators, saying:
“IP communication dictates the need to examine encrypted traffic at will.” And, “Your investigative staff will collect its best evidence while users are lulled into a false sense of security afforded by web, e-mail or VOIP encryption.”
Packet Forensics doesn’t advertise the product on its website, and when contacted by Wired.com, asked how we found out about it. Company spokesman Ray Saulino initially denied the product performed as advertised, or that anyone used it. But in a follow-up call the next day, Saulino changed his stance.
“The technology we are using in our products has been generally discussed in internet forums and there is nothing special or unique about it,” Saulino said. “Our target community is the law enforcement community.”
Blaze described the vulnerability as an exploitation of the architecture of how SSL is used to encrypt web traffic, rather than an attack on the encryption itself. SSL, which is known to many as HTTPS, enables browsers to talk to servers using high-grade encryption, so that no one between the browser and a company’s server can eavesdrop on the data. Normal HTTP traffic can be read by anyone in between — your ISP, a wiretap at your ISP, or in the case of an unencrypted Wi-Fi connection, by anyone using a simple packet-sniffing tool.

In addition to encrypting the traffic, SSL authenticates that your browser is talking to the website you think it is. To that end, browser makers trust a large number of Certificate Authorities — companies that promise to check a website operator’s credentials and ownership before issuing a certificate. A basic certificate costs less than $50 today, and it sits on a website’s server, guaranteeing that the BankofAmerica.com website is actually owned by Bank of America. Browser makers have accredited more than 100 Certificate Authorities from around the world, so any certificate issued by any one of those companies is accepted as valid.

To use the Packet Forensics box, a law enforcement or intelligence agency would have to install it inside an ISP, and persuade one of the Certificate Authorities — using money, blackmail or legal process — to issue a fake certificate for the targeted website. Then they could capture your username and password, and be able to see whatever transactions you make online.

Technologists at the Electronic Frontier Foundation, who are working on a proposal to fix this whole problem, say hackers can use similar techniques to steal your money or your passwords. In that case, attackers are more likely to trick a Certificate Authority into issuing a certificate, a point driven home last year when two security researchers demonstrated how they could get certificates for any domain on the internet simply by using a special character in a domain name.

“It is not hard to do these attacks,” said Seth Schoen, an EFF staff technologist. “There is software that is being published for free among security enthusiasts and underground that automate this.”
China, which is known for spying on dissidents and Tibetan activists, could use such an attack to go after users of supposedly secure services, including some Virtual Private Networks, which are commonly used to tunnel past China’s firewall censorship. All they’d need to do is convince a Certificate Authority to issue a fake certificate. When Mozilla added a Chinese company, China Internet Network Information Center, as a trusted Certificate Authority in Firefox this year, it set off a firestorm of debate, sparked by concerns that the Chinese government could convince the company to issue fake certificates to aid government surveillance.

In all, Mozilla’s Firefox has its own list of 144 root authorities. Other browsers rely on a list supplied by the operating system manufacturers, which comes to 264 for Microsoft and 166 for Apple. Those root authorities can also certify secondary authorities, who can certify still more — all of which are equally trusted by the browser.

The list of trusted root authorities includes the United Arab Emirates-based Etilisat, a company that was caught last summer secretly uploading spyware onto 100,000 customers’ BlackBerries.

Soghoian says fake certificates would be a perfect mechanism for countries hoping to steal intellectual property from visiting business travelers. The researcher published a paper on the risks (.pdf) Wednesday, and promises he will soon release a Firefox add-on to notify users when a site’s certificate is issued from an authority in a different country than the last certificate the user’s browser accepted from the site.

EFF’s Schoen, along with fellow staff technologist Peter Eckersley and security expert Chris Palmer, want to take the solution further, using information from around the net so browsers can eventually tell a user with certainty when they are being attacked by someone using a fake certificate. Currently, browsers warn users when they encounter a certificate that doesn’t belong to a site, but many people simply click through the multiple warnings.

“The basic point is that in the status quo there is no double check and no accountability,” Schoen said. “So if Certificate Authorities are doing things that they shouldn’t, no one would know, no one would observe it. We think at the very least there needs to be a double check.”
EFF suggests a regime that relies on a second level of independent notaries to certify each certificate, or an automated mechanism to use anonymous Tor exit nodes to make sure the same certificate is being served from various locations on the internet — in case a user’s local ISP has been compromised, either by a criminal or a government agency using something like Packet Forensics’ appliance.

One of the most interesting questions raised by Packet Forensics’ product is how often do governments use such technology and do Certificate Authorities comply? Christine Jones, the general counsel for Go Daddy — one of the net’s largest issuers of SSL certificates — says her company has never gotten such a request from a government in her eight years at the company.

“I’ve read studies and heard speeches in academic circles that theorize that concept, but we never would issue a ‘fake’ SSL certificate,” Jones said, arguing that would violate the SSL auditing standards and put them at risk of losing their certification.

“Theoretically it would work, but the thing is we get requests from law enforcement every day, and in entire time we have been doing this, we have never had a single instance where law enforcement asked us to do something inappropriate.”
VeriSign, the net’s largest Certiicate Authority, echoes GoDaddy.
“Verisign has never issued a fake SSL certificate, and to do so would be against our policies,” said vice president Tim Callan.
Matt Blaze notes that domestic law enforcement can get many records, such as a person’s Amazon purchases, with a simple subpoena, while getting a fake SSL certificate would certainly involve a much higher burden of proof and technical hassles for the same data.

Intelligence agencies would find fake certificates more useful, he adds. If the NSA got a fake certificate for Gmail — which now uses SSL as the default for e-mail sessions in their entirety (not just their logins) — they could install one of Packet Forensics’ boxes surreptitiously at an ISP in, for example, Afghanistan, in order to read all the customer’s Gmail messages. Such an attack, though, could be detected with a little digging, and the NSA would never know if they’d been found out.

Despite the vulnerabilities, experts are pushing more sites to join Gmail in wrapping their entire sessions in SSL.

“I still lock my doors even though I know how to pick the lock,” Blaze said.

Undercover Feds on Social Networking Sites Raise Questions

March 16, 2010

Wired - The next time someone tries to “friend” you on Facebook, it may turn out to be an undercover fed looking to examine your private messages and photos, or surveil your friends and family. The Electronic Frontier Foundation has obtained an internal Justice Department document that describes what law enforcement is doing on social networking sites.

The 33-page document shows that law enforcement agents from local police to the FBI and Secret Service have been logging on to MySpace and other sites undercover to communicate with suspects, read private postings and view photos and videos that are restricted to a user’s friends.

The document also describes techniques for verifying alibis — such as checking messages posted by a suspect on Twitter disclosing his whereabouts at the time a crime was committed — and uncovering information that might point to illegal activity, such as photos depicting a suspect with expensive jewelry, a new car or even a weapon.

The document says evidence from social networking sites can:
· Reveal personal communications
· Establish motives and personal relationships
· Provide location information
· Prove and disprove alibis
· Establish crime or criminal enterprise

The investigative techniques were part of a slide presentation titled “Obtaining and Using Evidence from Social Networking Sites” (.pdf) given last year by John Lynch, deputy chief of the Justice Department’s Computer Crime and Intellectual Property division to describe how valuable social networking sites can be to give law enforcement access to non-public information. The cops can also map social relationships and networks, among other things. The document does not include guidance or cautionary notes on how to conduct an investigation responsibly using these services, though it acknowledges the problematic nature of using an assumed identity to open an account with a social networking site.

“Can failure to follow [terms of service] render access unauthorized?” the document asks. “If agents violate terms of service, is that ‘otherwise illegal activity’?”
Agents who create fake accounts to communicate with suspects under an assumed identity could create a conundrum for the Justice Department, which prosecuted Lori Drew in 2008 for essentially doing the same thing. Drew was charged with computer fraud and abuse for violating MySpace’s terms of service when she conspired with two others to create a fake MySpace account under the identity of a teenage boy in order to communicate with a teenage girl named Megan Meyer.

The account was used to bully Meyer, who then committed suicide. Drew was found guilty of three misdemeanors by a Los Angeles jury, but the judge eventually overturned the convictions on grounds that the federal law was constitutionally vague.

Facebook’s terms of service prohibit users from providing false personal information to the site, as does MySpace.

In the offline world, agents involved in an investigation can’t impersonate a suspect’s spouse, child, parent or best friend, the Associated Press notes. But online they can.

“This new situation presents a need for careful oversight so that law enforcement does not use social networking to intrude on some of our most personal relationships,” said Marc Zwillinger, a former federal prosecutor told the news outlet.
The document also discusses the value to prosecutors of using social networking sites to obtain information on the background of defense witnesses, though it cautions that the same sites could be “potential pitfalls” in that defense attorneys could also use them to background prosecution witnesses.

Another document obtained by EFF is a syllabus for a training course for employees of the Internal Revenue Service describing the use of social networking sites and Google Street View to investigate taxpayers (.pdf). The syllabus notes, however, that IRS employees are prohibited from using deception or fake online accounts to obtain information about taxpayers and generally limits employees to using publicly available information.

“In civil matters, employees cannot misrepresent their identities, even on the Internet,” the document states. “You cannot obtain information from websites by registering using fictitious identities.”

Cell Phones and a Cashless Society

Big Time Mobile Phone Banking Services Expansion Planned for the Philippines in 2010

January 26, 2010

MABS Program Philippines - The Rural Bankers Association of the Philippines projects a substantial increase in mobile phone banking services this year as G-Xchange, Inc. plans to activate Globe Telecom’s nationwide sub distributer network of over 18,000 cash-in and cash-out outlets.

Combined with the mobile phone banking services developed by USAID-supported RBAP-MABS program, this will provide the rural banks with a virtual ATM network that more than doubles the current count of about 8,000.

“We see this as an opportunity to leapfrog the rural banking sector’s outreach in the countryside and we are gearing up to accomplish this in 2010,” said RBAP President Joseph Omar Andaya.
RBAP also has an application pending with Bangko Sentral ng Pilipinas to utilize its own closed-loop merchant network. This network will provide cash-in and cash-out locations for RBAP banks’ clients in areas that the sub distributor network does not reach.
“We are confident that we can seek approval this year from the BSP to significantly expand our outreach to not only our clients but to also provide banking services to the under-banked and unbanked sector,” President Andaya added.
Since 2004, the RBAP-MABS Program has been in partnership with GXI in the development and implementation of mobile phone banking applications and mobile commerce services for rural banks and their clients. More than 885 rural bank branches and other banking offices of more than 60 rural banks are now offer mobile phone banking services from the comfort of their homes, businesses, or just on the road.

These services include Text-A-Payment for loan payments, Text-A-Remittance, Text-A-Deposit, Text-A-Withdrawal, and Text-A-Sweldo for salary services for local companies. The accredited rural banks also offer GCASH Remit, a GXI product that allows for remittances locally or abroad, with all sending fees paid by the remitter.

Mobile phone banking transactions within the rural banking sector grew by 45% in 2009. Since 2006, the cumulative amount of mobile phone banking transactions in the accredited rural banks already exceeded 5 billion pesos as of December 2009. RBAP also has a pending application within the BSP to offer Smart Money Money-In and Money-Out services and expects to receive approval soon.

“This is definitely going to be the year that mobile phone banking services in the rural banking sector reach new milestones.”

March 29, 2010

A Day's Wages for a Loaf of Bread

Inflation is Going to Get Worse

March 29, 2010

USA WatchDog - One of my consistent views on this site is “real” inflation is much higher than what the government is telling us. For example, recently the Bureau of Labor Statistics announced February’s inflation number (CPI) was “unchanged” at a 2.1% annual rate. Over the years, the BLS has changed the way it calculates inflation by using accounting gimmicks that understate what most people would consider the true cost of living. So, the government inflation numbers of today make inflation look much lower than it really is for main street America.

One of my readers, David from Salem Alabama, is under no illusion the inflation genie is captured in the bottle. David admits he is a “dollar store junkie”, and shops at places such as “Dollar General and Big Lots, etc.” Here is an excerpt from a recent email to me from David on what he is seeing first hand:
“. . .There IS inflation big time!!
  1. Cat food: was 5 cans for a $1.00, NOW are 3 cans
  2. Dog food: 5 oz was $.33 per can, NOW $.55 to $.65; BIG can was $.65 to $.75 NOW a $1.00 or more…

  3. Boxes of flavored rice: was 2 boxes for a $1.00, NOW ONE box for $1.00 or $1.15 ??

  4. A basic candy bar: was 3 for a $1.00, NOW is 2 for a $1.00 or $.65 each

  5. Sam’s flavored water: was $.50, NOW $.65

  6. ‘Ruffles’: Wal-Mart $4.38, regular price $4.99, BUT the bag is VERY small now and price was; a few months ago, about $3 for the same thing !! ??

  7. AND: have you ’seen’ the shrinking rolls of toilet paper too?? You get my drift??

  8. AND: That CPI basket of 30 items is full of BS!! WHAT is the real cost of things!! . . .”
What David has documented is the real cost of living or inflation.
According to John Williams of shadowstats.com, the inflation rate in February is running at 9.4% annually. That is the “real cost of things!” (Williams calculates the inflation rate the way BLS did it in 1980.) In a recent report, Williams said:
“. . . evidence continues to mount of higher prices across a much broader spectrum of products and services. . . . eventually — within six-to-nine months — the broader inflation issues also should surface in official reporting.”
Government calculations can distort the public’s perception of inflation. It is nowhere better demonstrated than in the price of gold. According to shadowstats.com:
“. . . the 1980 gold price peak ($850) would be $7,494 per troy ounce in terms of SGS-Alternate-CPI . . .” (figured the way BLS computed inflation in 1980, which is the same way shadowstats.com computes inflation now)
Shadowstats.com also predicts:
“The just-enacted, effective government takeover of the healthcare and health insurance industry will damage the economy, widen the federal deficit and likely contribute directly to consumer inflation.”
According to former Congressional Budget Office director Douglas Holtz-Eakin, the reason the new health care legislation will cause the economy to tank is government red ink will explode in the next 10 years. Instead of saving $138 billion, as the president claimed, the country will go deeper in debt by adding “additional deficits of $562 billion,” says Holtz-Eakin. (Click here for the full report.)

Because of the sinking economy, the government will, once again, feel compelled to start a new round of bailouts for the banking system and states. So far, nearly 40 banks have failed this year. With continuing commercial and residential real estate foreclosures, dozens more will be taken over by the FDIC at taxpayer expense.

Also, many states face severe budget problems such as California, Illinois and New York, to name a few. In an election year, these states will all receive billions of bucks in bailout money.

All of this new borrowing and money printing could cause a massive sell-off of the dollar. That means imported goods like oil would rocket up in price. According to shadowstats.com:

“. . . that could move the U.S. into the early phases of hyperinflation in the months ahead.”
So, look for the economy to slow down, especially when companies such as AT&T are projecting the new health care reform will cost it an additional $1 billion a year. And, look for inflation to pick up because the borrowing, bailouts and money printing are simply going to continue.

Population Reduction and Control

It Has Nothing to Do with Healthcare

March 24, 2010

NewsWithViews.com - We know the Obama healthcare overhaul has nothing to do with healthcare. It’s all about control, and specifically population control.

In 1973, the Supreme Court found for Roe in an unbelievable 7 to 2 decision that abortion was legal. Since then 50 million babies have been murdered in their mother’s wombs in the United States of America, where LIFE, liberty and the pursuit of happiness is promised in the Declaration of Independence.

In 1934, President Franklin D. Roosevelt created the Committee on Economic Security (CES). The CES was assigned the task of studying the need for an economic security system to provide income for the elderly and disabled. Care for those unable to work was traditionally provided by family members or, in limited cases, by the government. Roosevelt recognized the need for a national system. In January 1935, the CES issued a report to President Roosevelt outlining a plan for a national program of economic security. This plan ultimately became the Social Security Act (SSA), which was passed by Congress on August 14, 1935. It has become a government “Ponzi” Scheme.

In the summer of 1965, President Lyndon Baines Johnson signed into law Medicare and Medicaid, representing part of his “war on poverty.” At his elbow was former President Truman who was the first to suggest “healthcare” for all Americans in 1945. Needless to say, this too is a form of Ponzi Scheme.
Here we are 37 years after legalized abortion, 45 years after the “Great Society,” and 75 years after Social Security was enacted. Had 50 million babies not been murdered, they probably would have been working Americans today that could have helped to fund the government Ponzi Schemes for the now retiring Baby Boomer generation. But of course, that was not part of the plan.

The real plan is population control. Now that the Baby Boomers are old enough to be a drain on the already insolvent Social Security and Medicare, the world order planners need a program to quickly eliminate the costs of this huge portion of the population.

And how do they accomplish this plan? Quite simply, government controlled health care will guarantee rationing, especially to the elderly whose last years are the most costly. Eliminate the care, and the elderly pass more quickly without the drain on the government Ponzi Schemes. The plan is to eliminate the huge and costly group of Baby Boomers who are now draining Social Security and Medicare.

Here’s what former Senator Tom Daschle said in his book, Critical:

“. . . The elderly have a responsibility to die, knowing that they are not going to survive their chronic illnesses, so that society can save money and pump funds into care for the younger, more worthy recipients.”
(I wish Tom would go first)

The elimination of the population of the world was started long ago by Thomas Malthus who lived from 1766 to 1834. In 1798, Malthus wrote an essay that basically stated population would continue exploding to the point where the earth could not support nor properly feed the burgeoning population. Malthus said that by 1890 there’d be standing room only in the world. Prior to Malthus, population was considered by governments to be an asset.

It was Ben Franklin that inflamed Malthus by mentioning in a talk that the colonies were growing at a rate of 3% a year. He couldn’t imagine sufficient grains being grown to feed the people at the exponential rate of growth, especially of the poor. He felt such a fate could only be avoided by severe measures. The death rate in his country of England was declining because of the Industrial Revolution and better housing and nutrition. Malthus proposed to undo all this. He wanted to encourage forms of destruction to the population by overcrowding, filth, and the hopes of a return of the plague.

Malthus’s diabolical views are most repulsive; and, as an Anglican minister, I believe he enjoyed funerals more than baptisms. His views were accepted by many, especially one Francis Galton, a cousin of Darwin. He proposed a policy of active “eugenics,” meaning “good births.” He wanted more children from the fit upper class and fewer or none from the poor so that evolution of humanity would prosper.

Then along came Margaret Sanger, the founder of Planned Parenthood. Although Malthus was content to wait for natural diseases to check numbers, and he opposed contraception and abortion, Sanger on the other hand wanted to totally stop the “unfit” from conceiving children. She desired the government to “sterilize the feeble-minded and insane.” Perhaps some have seen the documentaries of those in the 20s and 30s who were simply deaf and were sterilized as they were thought mentally deficient.

Sanger’s original organization, called the American Birth Control League, had clinics all over America to “serve” the poor and disabled. Her project attracted those who were wealthy eugenicists of the day. She wanted to create “a race of thoroughbreds.” Her supporters included Rockefeller, Duke, Scaife, Lasker, Sulzberger and Dupont.

Of course the Nazis well adopted the eugenics policies of the United States and “quality” control of breeding in Europe. We all know what happened in the concentration camps. Despite Hitler, John D. Rockefeller III drew up the draft charter of the Population Council in 1954.

Rockefeller and other men of great wealth placed control of population on the national agenda, inasmuch as they were watching rapid growth in Latin America, Africa and Asia because of the elimination of infectious diseases and the teaching of missionaries.

With his own money, Rockefeller set up the Population Council in 1952. It still exists, and the elimination of huge portions of humanity is considerable. Unfortunately, along with his fellow super-rich friends, he worked quietly behind the scenes to convince the U.S. Federal government to sign on to his agenda.

Rockefeller joined with Hugh Moore, and Moore used a book by William Vogt (the national director of Planned Parenthood) entitled, “The Road to Survival,” to stimulate controversy and frighten people into fear of an explosion of mankind. Rockefeller’s old friend William Draper, was appointed by President Eisenhower to chair a committee to study foreign aid, and at this point both Moore and Rockefeller seized their chance. Moore saturated the financier, Draper with the horrors of overpopulation, and argued about economic aid being wasted because of population growth. So, in 1959, the Draper Report came out and it was the first official government report to endorse population control.

Thus was the beginning of the most anti-God, anti-Biblical programs that were not only adopted in America, but throughout the world. I could list countless epidemics and infectious diseases that have eradicated millions, as well as wars and government tyrants who have killed their own people by the millions.

Here are just a few statements by those who believe in population control (albeit never of the elite) and environmental protections:

“In order to stabilize the world population, we need to eliminate 350,000 people a day. It is a horrible thing to say, but it’s just as bad not to say it.” – Jacques Cousteau, in an interview published in the UNESCO Courier, November 1991.

“We need compulsory birth regulation…[through] the addition of temporary sterilants to water supplies or staple food.” – Paul Ehrlich, professor of population studies and biology at Stamford University and author of “The Population Bomb.”

“AIDS is not a malediction, but the welcome and natural remedy to reduce the population of the planet. Should human beings disappear, I surely wouldn’t mind.” (I’d like him to go first) – David Foreman, co-founder of the radical environmental movement Earth First! And co-founder of the Wildlands Project, as quoted in European newspapers, June, 1987. As an aside 31 million in India are dead from AIDS, 18 million in China, and by 2025, an expected 90 to 100 million in Africa.

“If I were reincarnated, I would wish to be returned to earth as a killer virus to lower human population levels.” – Prince Philip, husband of Queen Elizabeth II, writing in a foreword to “If I Were An Animal.”

“Right now there are just way too many people on the planet. A total world population of 250-300 million people, a 95% decline from present levels would be ideal.” – Ted Turner who voiced the reason behind the mass spraying of deadly substances over the masses.
(Once again, you go first Ted!)

Corrupt governments worldwide have murdered millions upon millions in the 20th century: Stalin, Hitler, Pol Pot, Idi Amin, Mao, Lenin, Chowchesko, etc. etc. ad nauseum.

Those of you that know American history, and have watched our decent from a representative republic into a dictatorial socialistic state, already know the depths of depravity that have occurred here on American soil. In Deuteronomy 30:19, the God of the Bible says, CHOOSE LIFE. Our government today is continuing population control and thus control of the smaller populace via their unconstitutional “healthcare” reform, which has everything to do with control of the populace and destruction of the best healthcare industry in the world.

U.S. Government Will Begin Selling the 7.7 Billion Shares of Citigroup It Received in Exchange for $25 Billion It Gave the Bank from the Public Treasury

Treasury Says It Will Begin Selling Citi Shares

March 29, 2010

Reuters – The Treasury Department said Monday it will begin selling the stake it owns in Citigroup Inc., which could result in a profit to the government of about $7.5 billion.

The government received 7.7 billion shares of Citigroup in exchange for $25 billion it gave the bank during the 2008 credit crisis [the Treasury paid $3.25 a share for its $25 million stake]. It said it will sell the shares over the course of this year, depending on market conditions. Like any investor, the government will likely hold on to its shares if prices fall steeply. However, Citi shares have steadily been rising with the broader market in recent months, which means the Treasury Department stands to pocket a hefty profit.

The government has been trying to unravel the investments it made in banks under the $700 billion Troubled Asset Relief Program, or TARP, that came in at the height of the financial crisis. Citi, one of the hardest hit banks during the credit crisis and recession, received a total of $45 billion in bailout money, one of the largest rescues in the program.

Of the $45 billion, $25 billion was converted to the government's ownership stake in the bank [New York-based Citi repaid the other $20 billion it owed the government in December].

The Treasury had been planing to sell 20 percent of its stock [7.7 billion shares] at the time when Citi was selling new shares late last year. At a price of $3.15 a share, the government would have lost $158.7 million on the sale, so it opted not to participate in the deal at that time but to unload all of its 7.7 billion shares over the course of this year.

Citi shares fell 8 cents to $4.23 in morning trading Monday. The government would make about $7.5 billion in profit on its stake in Citigroup if it sells the stock for that price.

When Citigroup agreed to repay the $20 billion in loans it still owed the Treasury Department, the pair also agreed the Treasury would sell the common stock it owned in the New York bank throughout 2010.

The Treasury owns about 27 percent of Citigroup's outstanding stock, based on the number of shares that were outstanding on Jan. 31.

Even after it sells its stake in Citigroup, the Treasury Department will still hold warrants to purchase future shares in the bank.

The Treasury said Monday that Morgan Stanley will handle the sale of the shares.

Washington Post: Citi Sale “Would Amount to a Validation of Bailout”

March 29, 2010

Washington Post - Among the banks that rule Wall Street, Citigroup got a bailout that was bigger than the rest. Now the company is about to pay a king’s ransom for its federal rescue.

The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today’s prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history.

On paper, the government’s 27 percent stake has grown in value to $33 billion. The size of the deal in the works has Wall Street buzzing. Only the stock offering by Japan’s Nippon Telegraph and Telephone, which raised $36.8 billion in 1987, was larger, according to Thomson Reuters.

Leading financial firms, including J.P. Morgan Chase, Morgan Stanley and Goldman Sachs, are vying to be chosen as the deal’s underwriters to gain the prestige of managing a historic stock sale as well as the fees from investors who buy the shares. To improve their chances, some banks, such as Goldman Sachs, are offering their services to the Treasury Department at almost no cost, industry officials familiar with the matter said ...

March 28, 2010

Gates-linked Vaccine Group Wants $4.3 Billion to Ramp Up Child Immunization Campaigns

Gates-linked Vaccine Group Wants $4.3 Billion

March 18, 2010

Associated Press - A global vaccine initiative launched with the help of Bill Gates is seeking $4.3 billion in new funding to ramp up child immunization campaigns against deadly diseases such as hepatitis B, diarrhea and pneumonia in the developing world.

The Geneva-based GAVI alliance, launched a decade ago as a partner of the Bill and Melinda Gates Foundation, said governments and other donors could help save 4.2 million lives if they meet the funding demands through 2015.

It will make its appeal for the cash at a meeting next week in The Hague, Netherlands. The group already has $2.7 billion in the bank for its programs over the next five years, meaning its total budget would be about $7 billion.
"Vaccines are a lifelong investment," said Judith Kallenberg, who manages GAVI's donor relations. "If you prevent disease, you don't have to treat it."
GAVI's call for money comes less than two months after the Microsoft co-founder and his wife pledged to donate $10 billion over the next decade to research new vaccines and bring them to the world's poorest countries. The Gateses said their funds would produce higher immunization rates and aim to make sure that 90 percent of children are immunized against dangerous diseases such as diarrhea and pneumonia in poorer nations.

Current rates of immunization against these diseases are very low in many African countries.

GAVI spokesman Jeffrey Rowland said it was unclear if his organization would get any part of the Gates funds, but noted that it received $1.5 billion from the Gates foundation over the last 10 years.

In his January announcement in a joint news conference with GAVI, Gates praised the work of the organization, but the foundation's donation is aimed primarily at developing and getting new vaccines to developing countries, while GAVI works primarily on the distribution side.

Rowland said GAVI's new funds could help save 1 million child deaths from pneumonia and diarrhea, which are the cause of 40 percent of the deaths of children under 5 in poor nations.

The group plans a massive immunization campaign against rotavirus, which causes deadly diarrhea, and pneumococcal infections that lead to meningitis and pneumonia.

It said it would begin delivering rotavirus vaccines produced by GlaxoSmithKline and Merck that recently have been approved by the World Health Organization; and pneumococcal vaccines by GSK and Pfizer that should soon be approved.

Vaccines are often an effective way to spend money to improve public health, because they can even be delivered in poor countries lacking functioning health systems.

GAVI said it has helped immunize over 250 million children this decade. That has saved over 5 million children from premature deaths, it claims.

The Collapse of the U.S. Economy

National Bankruptcy Will Repeal Obamacare

March 22, 2010

RonPaul.com - Ron Paul tells it like it is: There is no “right” to healthcare. Obamacare will be repealed by a national bankruptcy. The IRS is hiring new agents to steal more money. Central economic planning has failed. A much bigger economic crisis is coming. And, every country in the world is technically bankrupt.

Student Loan and College Education Scam

Yet Another Government Takeover: Student Loan Edition

March 23, 2010

Rep. Cathy McMorris Rodgers (R-WA) - This week will be a defining moment for Congress and our country. As Democratic leaders map out their health care end game, we as elected officials have a choice to make: Will people control their lives, or will government?

The stakes of the health care debate are clear. On the table is a bill that would put the federal government in charge of one-sixth of the American economy and, perhaps even more stunningly, the way Americans get medical care. Yet far too few Americans realize there is another government takeover in the offing – this one in how Americans pay for college.

First, some history. Since 1965, the Federal Family Education Loan Program has helped tens of millions of students and parents by providing low-cost, federally guaranteed loans. This public-private partnership offers students and schools choice and competition among loan providers, as well as essential value-added benefits such as college outreach, debt management and financial literacy.

For these reasons, FFELP has consistently been the more popular choice among colleges and universities. It leverages the innovation and competitive forces of the private sector with congressionally mandated benefits and protections that keep interest rates and fees low.

Yet right now, the Majority in Congress and the President want to make it more difficult to pay for college by putting the government between you and the money you need to pay for higher education.

The Administration wants to end FFELP in favor of a 100 percent Direct Loan program. Under this approach, the federal government will become the sole originator and collector of student loans, forcing the roughly 4,000 schools who have chosen FFELP to the government-run alternative.

Stunningly, they plan to perpetrate this government takeover by quietly tucking it into the infamous health care plan now careening toward a final vote. It is the culmination of nearly two decades of Democratic plotting to crowd out the private sector and federalize approximately $100 billion in annual borrowing.

In an ironic twist, the Direct Loan program was first conceived as a “government option” rather than a complete government takeover. For a decade and a half, the government-run Direct Loan program was available to schools as an option, alongside FFELP. Not surprisingly, schools voted with their feet – roughly four out of five colleges in America have consistently chosen FFELP.

Not satisfied with the unpopularity of the Direct Loan government option, Democrats have now decided to make it the only option for colleges and their students. The relentless pursuit of a government option for health care was a transparent attempt to do to medicine what Democrats are now doing to student lending: putting bureaucrats in charge over the wishes of the American people.

Until the global credit markets collapsed, FFELP loans were financed exclusively with private sector capital. Congress has temporarily injected federal funding and purchase agreements to cover a portion of FFELP originations in the current economic downturn, but when the economy recovers, there is no reason the FFELP could not return to a model that leverages private capital to finance the largest single source of student financial aid.

In contrast, Direct Loans are financed with Treasury borrowing. This poses a risk for taxpayers and places a stunning amount of long-term debt on the books at a time when America is borrowing more than ever from China and our other foreign creditors. If the Majority has its way and ends FFELP in favor of a government-run lending scheme, the Department of Education will become one of the country’s largest banks—originating more than $100 billion in federal student loans each year.

During these tough economic times, we should be doing everything we can to make education more accessible. Ending a proven, and successful, student loan system in favor of a one-size-fits-all government program only will make it more difficult for American students to receive a 21st century education, ultimately putting our nation at a competitive disadvantage. The Democrats’ thirst for a bigger, more intrusive federal government is putting both health care and college lending at risk. What’s next?

Government Takeover of Retirement Assets

FDIC Playing With Fire by Soliciting State Pension Money to Buy Toxic Assets

The FDIC's New Policy of Soliciting State Pension Plans to Pour Hard Cash into Purchases of Failed Bank Assets Takes Shape

March 27, 2010

CentristNet - The Federal Deposit Insurance Company (“FDIC”) has recently initiated a risky new policy: soliciting and facilitating public pension fund purchases of failed bank assets that are presently on the FDIC’s balance sheet after seizure.

Apparently, the FDIC’s fund is deep into the red (over $20 billion), and a decision has been made to tap the two trillion dollars in public pension funds around America to take “toxic assets” off the FDIC books and replenish the FDIC’s fund, thereby relieving the pressure on the FDIC . Bloomberg reports:

March 8 (Bloomberg) — The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.

Direct investments may allow funds such as those in Oregon, New Jersey and California to cut fees for private-equity managers, and the agency to get better prices for distressed assets, the people said. They declined to be identified because talks with regulators are confidential.

Pension funds, of course, are designed to provide funds for workers as they retire and such funds are capitalized by withholding from worker paychecks, and in the case of public pension funds, from government worker paychecks.

The first state pension fund to actually pour money into FDIC-held failed bank assets pursuant to the FDIC’s solicitations could be the State of Oregon, ponying up $100 million in perhaps the first deal of many to come. Jay Fewel, a senior investment officer at the Oregon State Treasury, confirmed that bank regulators are looking for “the support of state pension funds to solve the crisis surrounding ongoing bank failures”. The Oregonian explains the familiar “get rich quick” sales pitch being served up by the FDIC and investment bankers looking to leverage state pension fund money:

In a deal being pitched as a home-run investment opportunity for the state pension fund, Oregon’s public pensioners may be about to buy stakes in several of the 700 troubled banks around the country that are wallowing in bad loans.

The citizen’s council that oversees the Oregon Public Employees Retirement Fund gave its approval last week — subject to final fee negotiations — to invest $100 million in a bank holding company being organized by Sageview Capital, whose partners bring deep experience in the world of leveraged buyouts.

According to a presentation to the Oregon Investment Council by Harrison and Sageview partner Scott Stuart, the FDIC is so anxious to recapitalize troubled banks that it is willing to cover 80 to 95 percent of buyers’ loan losses as well as the costs incurred in restructuring loans.

That’s a potentially lucrative deal for discount bidders who can clean up problem loans and get the bank into growth mode before selling it. Stuart suggested that it wasn’t unrealistic to think Oregon could double its money over several years.

“The government is handing out free money,” enthused council member Dick Solomon, a Portland accountant. “Maybe we should get in line.”
So a “desperate” FDIC is facilitating a private equity firm’s solicitation of Oregon state pension fund money to purchase failed bank assets off of the FDIC’s books. Oregon may be the first in a long line of state pension funds who jump at chance to get in on the FDIC action as the “government is handing out free money.” Such sentiments are almost certainly unrealistic, and fantasy claims that a state pension fund “could double its money over several years” could be relied upon by state pension funds, like Oregon’s, New Jersey’s and California’s, to justify pouring massive portions of the hard cash under their control into FDIC-solicited failed bank asset purchases.

Apparently the FDIC likes the idea of selling failed bank assets off to state pension funds because such government pension funds have a “longer [time] horizon” and won’t be concerned about losses in the next decade or so:
Private-equity managed funds typically promise they’ll return funds to their investors in about 10 years. Pension funds are aiming to fund retirements that are decades away and thus can hold on to investments longer, which would help ease the FDIC’s concern, said one of the people.

FDIC guarantees may soften the risk of investing public pension money in distressed banks, Whalen said. When the FDIC sells a failed bank, it typically shares a portion of the loan losses.

“Financially sophisticated people do not assume that banks have recognized all of their real estate losses,” Kramer said, adding that it can still be a bad deal if a buyer overpays for a deposit franchise or if loans perform worse than expected. “We are in the early innings for commercial real estate.”

It appears that the FDIC is trying to avoid selling to private-only funds, who are looking at a 10 year investment window, and instead sell to public pensions, which “are aiming to fund retirements that are decades away and thus can hold on to investments longer, which would help ease the FDIC’s concern”.

Reading between the lines, it appears that the FDIC knows it cannot sell certain failed bank assets to private equity funds because such private firms won’t buy at the higher prices the FDIC wants as the 10-year return on investment is unattractive to private investors.

State pension funds, however, are great because they don’t care about a 10-year return; instead, they’re only worried about “decades away” valuation and accordingly can be solicited to buy some of the FDIC’s failed bank assets at higher prices than private-only funds.

This conduct by the FDIC is quite risky to the solvency of public pension funds as even the failed bank assets already marked down on the FDIC books now could fall further if the commercial real estate market deteriorates further, which some see as likely in 2010 and beyond. Indeed, the entire new policy of the FDIC to solicit government pension fund money into the risky proposition of buying up failed bank assets could be seen as attempting to tap into the “equity” of the United States (2 trillion in public pension funds) to cover bad debt that no one else will buy.

Zero Hedge is also concerned about this possible new trend in FDIC solicitation of public pension money:
My thoughts on public pension funds investing in failed banks? I think any way they do it, it’s a recipe for disaster. I can just see the private equity sharks raising funds to bid on failed banks. And even if pension funds take direct control of these failed banks, do they really know what’s lurking on their books and how to operate a bank? I shudder to think at what will happen to these investments if we enter a protracted period of weakness in commercial real estate.
Another independent expert, Chris Whalen, managing director of Institutional Risk Analytics of Torrance, California, sees unnecessary risk for state pension funds in any FDIC purchase deal. Regarding failed bank assets, Whalen notes that:
“If they are really interested in playing this area, they should put their money into a larger bank that’s already playing here,” Whalen said. “If you look at the risk-reward and the distraction involved, it’s not worth it” to back a new bank, he said.
Another financial expert, Richard Suttmeier, points out that a reasonable solution to the FDIC fund shortfall is to use repaid TARP funds from the big banks to replenish the fund. The problem of finding hard cash to purchase “toxic assets” that remain after a bank’s failure continues to lurk in the background as the elephant in the room. Sadly, voices of reason like Whalen’s and Suttmeier’s will probably be drowned out by exuberant claims of “free money” and “double its money” from the private hedge fund managers looking for state pension fund clients and from the FDIC in its desperation to find new sources of hard cash to take those infamous “toxic assets” off of the FDIC’s hands. One can only hope that FDIC’s momentous decision to tap the 2 trillion in state pension fund money to buy up toxic assets will garner some public attention and debate as the implications for millions of state and local workers could reverberate for years to come.