June 26, 2012

Stockton, California, Could Go Bankrupt; Spain is Now the Biggest Worry for Europe

Stockton, Calif., Could Go Bankrupt

June 24, 2012

Stop Asking for More Help, Germany Tells Greece

Stop Asking for More Help, Germany Tells Greece

June 24, 2012

Reuters - Greece's new government should stop asking for more help and instead move quickly to enact reform measures agreed to in return for previous bailouts from its European partners, German Finance Minister Wolfgang Schaeuble said on Sunday.

Schaeuble told Bild am Sonntag in unusually blunt language that Greece has forfeited much of Europe's trust during the sovereign debt crisis, as reflected in an opinion poll covering the euro zone's four biggest nations and published in the paper.

"The most important task facing new prime minister (Antonis) Samaras is to enact the program agreed upon quickly and without further delay instead of asking how much more others can do for Greece," said Schaeuble, a close ally of Chancellor Angela Merkel and Europe's most powerful finance minister.

Greece's new three-party coalition government said on Thursday it would renegotiate the terms of the 130-billion-euro bailout deal that is helping the country avoid bankruptcy.

The coalition's platform particularly challenges euro zone paymaster Germany, which has offered to adjust the lifeline's terms to make up for time lost as a result of two Greek elections since May, but refuses to revise it radically.

Greece wants a two-year extension to the 2014 deadline for it to cut its budget deficit to 2.1 percent of national economic output, from 9.3 percent in 2011. The extension would require an extra 16 to 20 billion euros in foreign funding.

"The ball is now in Greece's court," said Schaeuble. "It's in their hands to win back the confidence of the people of Europe. They're only going to accomplish that with concrete actions and deeds."

The poll of 4,000 people in Germany, France, Spain and Italy showed 78 percent of Germans and 65 percent of French people wanted Greece to leave the euro zone, with 51 percent in Spain and 49 percent in Italy also backing a Greek exit.

Big majorities in all four countries, which have a combined population of 254 million, did not expect that Greece would ever repay its bailout loans.

The poll, conducted by the Ifop Institute for Bild am Sonntag and leading newspapers in France, Spain and Italy, showed only small minorities in the four states want to scrap the euro and return to their respective national currencies.

"The poll shows two things," Schaeuble said. "An overwhelming majority want the euro ...and secondly it shows how much trust Greece has forfeited among Europeans."

The new government must now work to fix its public finances while negotiating with euro zone leaders who are losing patience with Athens after two multi-billion-euro bailouts since 2010 that have failed to stem the crisis.


Samaras, 61, was sworn in on Wednesday after elections last Sunday ended weeks of uncertainty that rattled financial markets and threatened to push Greece out of the euro zone.

New Democracy narrowly defeated the radical leftist SYRIZA bloc, which wants to tear up the latest bailout deal and austerity program, which it blames for driving the economy ever deeper into recession.

The government will also seek to extend the payment of unemployment benefits to two years from one, to offer benefits to the self-employed without work, and to limit public sector lay-offs. Lenders want the public sector payroll cut by 150,000.

In a separate interview on Sunday published in Der Spiegel news magazine, Schaeuble again ruled out any form of collectivized debt such as euro bonds and defended the German government's hard line on that.

"It's because you cannot separate the responsibility for decision-making from the liability," he said when asked why Germany was so adamantly opposed. "That's true for almost everything but especially when it comes to money.

"Anyone who has the chance to spend someone else's money will do that," he added, before telling the reporter: "You'd do that and so would I. The markets know that. And so from that point of view they wouldn't be convinced by euro bonds."

June 23, 2012

Congress Negotiating to Head Off a July 1 Doubling of Interest Rates on Federal Loans to 7.4 Million College Students

Negotiators Closing in on Student Loan Deal

June 23, 2012

AP - Congressional bargainers appeared to be closing in on a compromise that would head off a July 1 doubling of interest rates on federal loans to 7.4 million college students and end an election-year battle between President Barack Obama and Congress.

Senate aides from both parties said Friday the two sides were moving toward a deal on how to pay the measure's $6 billion price tag, the chief source of partisan conflict.

The goal is to push legislation through Congress next week so the current 3.4 percent interest rate on subsidized Stafford loans can be preserved for another year. A 2007 law gradually reduced interest rates on the loans but required them to balloon back to 6.8 percent this July 1 in a cost-saving maneuver.

On another front, the two sides were also close to an agreement to overhaul federal transportation programs, according to House and Senate aides from both parties. Negotiations were expected to continue through the weekend, with votes expected next week on either a major transportation bill or an extension of current programs, said the aides, who spoke on condition of anonymity to discuss details of the talks.

Obama said Saturday in his weekly radio and Internet address there was "no excuse for inaction."

"Right now, we are seven days away from thousands of American workers having to walk off the job because Congress hasn't passed a transportation bill. We are eight days away from nearly seven and a half million students seeing their loan rates double because Congress hasn't acted to stop it," Obama said. "This makes no sense."

For weeks, Obama has ridiculed Republicans for not moving quickly to prevent student loan interest rates from doubling, a stance that Democrats have hoped will boost his support among young voters who broadly backed him in the 2008 election. With college costs and student debt growing steadily, the issue ties directly into concerns about the economy and jobs that polls show dominate voters' worries.

Though some rank-and-file GOP lawmakers have opposed letting the government set the rates, Republican presidential challenger Mitt Romney and GOP congressional leaders have backed the one-year extension. The remaining dispute has been over how to pay for it.

Republicans have accused Obama of creating a phony issue and drawing out the battle in an attempt to reap political points. In late May, they proposed several options to pay for the measure, all of which were culled from budget savings Obama himself had proposed in the past, but they said the White House was ignoring them.

"Even though the White House refuses to respond to our bipartisan approach, Senate Democrats are finally working with us, and a solution is within reach — despite the president's failure to act," said Don Stewart, spokesman for Senate Minority Leader Mitch McConnell, R-Ky.

The talks have involved aides to McConnell and Senate Majority Leader Harry Reid, D-Nev. Democrats said the White House has been kept abreast of the talks, while Republicans said House Speaker John Boehner, R-Ohio, has been kept informed but hasn't participated in the negotiations.

According to Democratic aides, negotiators are approaching a deal to cover the bill's costs by charging companies more to insure pensions and changing rules so companies take fewer tax deductions for their pension contributions. Reid proposed both of those ideas this month.

They said additional money would come from a list of options McConnell has offered, probably one to limit federal subsidies of undergraduates' loans to six years. The government does not begin charging interest on Stafford loans until after students graduate, which can take longer than six years.

"While we're not there, we're well down the road. I think we can get something done," Reid told reporters Thursday. He said McConnell and Boehner "are compromising just as we are and hope we can get something done."

If allowed to double, the higher 6.8 percent rate would apply only to new subsidized Stafford loans for undergraduates approved starting on July 1 and would not affect existing loans.

According to the Education Department, 7.4 million students are expected to get new Stafford loans in the year beginning July 1, with each borrowing an average $4,226. A doubling of interest rates would add about $1,000 to the costs of the average loan, which students typically pay off over 10 or more years.

The Federal Reserve Bank of New York said last month that student loan debt grew this year to $904 billion, even as other types of consumer debt were falling.

Flashback: Food Speculation by Hedge Funds, Pension Funds and Investment Banks Prompt Further Inflation; Much Cooler-than-normal Water Temperatures in the Pacific, Which Traditionally Lead to Extreme Weather Around the World, Add to Food Price Uncertainties

The Triple Crown of Global Cooling:
  1. Cooling North Pacific sea surface temperatures (Pacific Decadal Oscillation or PDO),
  2. Extremely low solar activity, and
  3. Increased volcanic eruptions.

Worldwide Food Crisis Looms as Forecasters Predict Record High Prices

October 29, 2010

Prevent Disease - Rising food prices and shortages could cause instability in many countries as the cost of staple foods and vegetables reached their highest levels in two years, with scientists predicting further widespread droughts and floods.

Although food stocks are generally good despite much of this year’s harvests being wiped out in Pakistan and Russia, sugar and rice remain at a record price.

Global wheat and maize prices recently jumped nearly 30% in a few weeks while meat prices are at 20-year highs, according to the key Reuters-Jefferies commodity price indicator. Last week, the US predicted that global wheat harvests would be 30m tonnes lower than last year, a 5.5% fall. Meanwhile, the price of tomatoes in Egypt, garlic in China and bread in Pakistan are at near-record levels.

“The situation has deteriorated since September,” said Abdolreza Abbassian of the UN food and agriculture organisation. “In the last few weeks there have been signs we are heading the same way as in 2008.

“We may not get to the prices of 2008 but this time they could stay high much longer.”

Former U.N. Secretary-General Kofi Annan said more protests in other developing nations appear likely.

“We are going through a very serious crisis and we are going to see lots of food strikes and demonstrations,” Annan told reporters in Geneva.

However, opinions are sharply divided over whether these prices signal a world food crisis like the one in 2008 that helped cause riots in 25 countries, or simply reflect volatility in global commodity markets as countries claw their way through recession.

“A food crisis on the scale of two or three years ago is not imminent, but the underlying causes [of what happened then] are still there,” said Chris Leather, Oxfam’s food policy adviser.

“Prices are volatile and there is a lot of nervousness in the market. There are big differences between now and 2008. Harvests are generally better, global food stocks are better.”

But other analysts highlight the food riots in Mozambique that killed 12 people last month and claim that spiraling prices could promote further political turmoil.

They say this is particularly possible if the price of oil jumps, if there are further climatic shocks – such as the floods in Pakistan or the heatwave in Russia – or if speculators buy deeper into global food markets.

“There is growing concern among countries about continuing volatility and uncertainty in food markets,” said Robert Zoellick, president of the World Bank. “These concerns have been compounded by recent increases in grain prices.

“World food price volatility remains significant and in some countries, the volatility is adding to already higher local food prices.”

The bank last week said that food price volatility would last a further five years, and asked governments to contribute to a crisis fund after requests for more than $1bn (£635m) from developing countries were made.

“The food riots in Mozambique can be repeated anywhere in the coming years,” said Devinder Sharma, a leading Indian food analyst.

“Unless the world encourages developing countries to become self-sufficient in food grains, the threat of impending food riots will remain hanging over nations.

“The UN has expressed concern, but there is no effort to remove the imbalances in the food management system that is responsible for the crisis.”

Mounting anger has greeted food price inflation of 21% in Egypt in the last year, along with 17% rises in India and similar amounts in many other countries. Prices in the UK have risen 22% in three years.

The governments of Kenya, Uganda, Nigeria, Indonesia, Brazil and the Philippines have all warned of possible food shortages next year, citing floods and droughts in 2010, expected extreme weather next year, and speculation by traders who are buying up food stocks for release when prices rise.

Food prices worldwide are not yet at the same level as 2008, but the UN’s food price index rose 5% last month and now stands at its highest level in two years.

World wheat and maize prices have risen 57%, rice 45% and sugar 55% over the last six months and soybeans are at their highest price for 16 months.

UN special rapporteur on the right to food, Olivier de Schutter, says a combination of environmental degradation, urbanization and large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.

“Worldwide, 5m to 10m hectares of agricultural land are being lost annually due to severe degradation and another 19.5m are lost for industrial uses and urbanization,” he says in a new report.

“But the pressure on land resulting from these factors has been boosted in recent years by policies favouring large-scale industrial plantations.

“According to the World Bank, more than one-third of large-scale land acquisitions are intended to produce agrofuels.”

But the World Development Movement (WDM) in London warned that food speculation by hedge funds, pension funds and investment banks was likely to prompt further inflation.

According to the US Commodity Futures Trading Commission, speculators on the trading floor of the Chicago Exchange bought futures contracts for about 40m tonnes of maize and 6m tonnes of wheat in the summer.

Longtime hedge fund manager Mike Masters, who has worked with WDM, said:

“Because there is already much more capital available in the world than hard commodities, speculators can increase the price of consumable commodities, like foodstuffs or energy, much higher than traditional consumers and producers can react.

“When derivative markets are linked to commodity markets, this nearly unlimited capital from the financial sector can cause excessive price volatility.”

US government reports of much cooler-than-normal water temperatures in the Pacific, which traditionally lead to extreme weather around the world, last week added to food price uncertainties.


June 21, 2012

Moody's Downgrades 15 Major Global Banks

Credit Suisse Cut 3 Levels as Moody's Downgrades Biggest Banks

June 21, 2012

Bloomberg - Credit Suisse Group AG's credit rating was cut three levels by Moody's Investors Service, Morgan Stanley was reduced two levels and 13 other banks were downgraded in moves that may shake up competition among Wall Street's biggest firms.

Credit Suisse, the second-largest Swiss bank, received the maximum reduction that Moody's said in February it may make during a review of global banks with capital markets operations. Morgan Stanley and UBS AG (UBSN), the other firms singled out for such a steep cut, were lowered two steps instead.

"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital-markets activities" Moody's Global Banking Managing Director Greg Bauer said today in a statement.

The downgrades may force banks to post additional collateral to trading partners in derivatives deals while boosting the companies' borrowing costs. Moody's said when it announced the review that it was seeking to reflect the banks' reliance on fragile confidence in funding markets and increased pressures from regulation and a difficult market environment.

The ratings firm said Feb. 15 it was reviewing grades for 17 banks. Moody's cut Macquarie Group Ltd. (MQG) and Nomura Holdings Inc. (8604) one level each in March. It also started a review of lenders in more than a dozen European nations and already has reduced grades in Spain, Germany, Italy, Sweden, Austria and Denmark.

Competitive Changes

The downgrades may affect the competitive landscape in derivatives that aren't centrally cleared, a business that provides about 15 percent of the industry's trading revenue, Kinner Lakhani, a Citigroup Inc. (C) analyst, wrote in an April 30 note. Banks with the largest cuts may lose revenue from such long-term derivatives, Charles Peabody, an analyst with Portales Partners LLC, said in a June 4 interview on the "Bloomberg Surveillance" radio program.

"Right now there are a lot of internal bank policies that if you're doing a longer-term structured derivative, you want the counterparty to be A-rated or above," said David Konrad, an analyst at KBW Inc. in New York. Because Moody's is downgrading the entire banking industry rather than one or two firms, "a lot of those policies may be rewritten over time."

A three-level cut for Morgan Stanley (MS) could cost it $400 million in annual trading revenue from those types of derivative deals, estimated Brad Hintz, an analyst at Sanford C. Bernstein & Co., before Moody's released its decisions.

More Collateral

The downgrades also may hasten obligations to post additional collateral and termination payments. New York-based Morgan Stanley said last month it may face payments of $9.61 billion in the event of a three-level cut from Moody's and two grades by Standard & Poor's, according to a filing based on March 31 data. The total included $7.21 billion in collateral.

Credit Suisse said in its annual report that a three-level downgrade in the bank's long-term debt ratings would result in additional collateral requirements or termination payments under certain derivative instruments of 4.5 billion Swiss francs ($4.7 billion), as of Dec. 31. UBS said it would face 2.1 billion francs of collateral calls from a two-level cut.

Banks' large liquidity buffers will make collateral requirements "manageable," Amit Goel, a Credit Suisse analyst, wrote in a May report.

‘New World'

"Pre-crisis bank ratings used to be clustered together," Lakhani wrote. "In the new world, dispersion has increased. Markets tend to discriminate more between issuers at lower ratings -- in terms of funding costs. Over time, this could provide a competitive edge for higher-rated firms," including HSBC Holdings Plc. (HSBA) and JPMorgan Chase & Co. (JPM)

Morgan Stanley's stock fell on June 4 to what was then its lowest close since December 2008 as investors weighed a potential credit-rating cut. The shares have rallied 15 percent since then through yesterday.

Moody's wrote on Jan. 19 that credit profiles of global lenders are weakening as governments struggle with their finances, and economic uncertainty and higher funding costs persist. When Moody's places a company's ratings on review for a downgrade, it typically decides whether to cut them within three months.

The ratings firm said Feb. 15 it was reviewing grades for 17 banks and securities firms with what it called "global capital-markets operations." That's when it put Morgan Stanley, Bank of America Corp. (BAC), Citigroup, Goldman Sachs Group Inc. (GS), JPMorgan and Royal Bank of Canada (RY) on review for downgrades.

‘Deliberate Approach'

Moody's has said all the reviews will be wrapped up by the end of this month, after it delayed its rating actions on the largest banks, which had previously been scheduled for mid-May.

"Moody's is taking an appropriately deliberate approach during this review process and will conclude when it is confident that all relevant information has been received and analyzed," the firm said in an April 13 statement.

Events that have occurred since the review was announced, including developments in the European debt crisis and JPMorgan's $2 billion trading loss, have forced Moody's to take longer with its decisions, said David Hendler, an analyst at CreditSights Inc. in New York. Morgan Stanley Chief Executive Officer James Gorman said this week that the review has been "a long process to be hanging out there in the wind."

Companies have spoken out against the Moody's review, citing the firm's methodology and approach. UBS Chief Financial Officer Tom Naratil said his firm's financial position is "completely inconsistent" with one that would have its short- term rating cut from P-1.

'Somewhat Stunning'

Gorman said it would be "somewhat stunning" if his firm was cut three levels given the bank's increased capital and liquidity. Goldman Sachs CFO David Viniar has said that he and other executives "strongly disagree" with Moody's approach.

"If you look at every single credit metric there is for Goldman Sachs and frankly for many of our competitors, none of the actions they've talked about are warranted," Viniar said during an April 17 conference call with analysts and investors after the company reported first-quarter results. "We are, as you know, we're quite analytical. And when we do all of the analysis, we cannot figure out why they are where they are."

David Knutson, a Chicago-based credit analyst with Legal & General Investment Management, said Moody's is in a difficult business because it collects fees from the banks.

"When you upgrade someone, I imagine they're happy to sign the check because they earn it back in lower rates," Knutson said. "When you downgrade them, signing that check is a much harder thing to do."

June 20, 2012

China, India Step Up Global Role with IMF Fund

China, India Step Up Global Role with IMF Fund

June 20, 2012

AFP - After years of pressure to take a greater role in global affairs, China and India have stepped up by contributing to a new IMF emergency fund -- from which the United States is absent.

China, India and other emerging economies made commitments to a fund during a summit in Mexico of the Group of 20, a club formed during the 2008 global economic crisis that aims to give a bigger say to developing powers.

China lent $43 billion to a new firewall being set up by the International Monetary Fund to help nations escape contagion from woes still afflicting the global economy.

The pledges made China the third largest contributor after Japan and Germany. The IMF said that commitments to the firewall now totaled $456 billion (360 billion euros), more than it initially anticipated.

The United States and other Western nations have long pushed China to be, in the words of World Bank president Robert Zoellick, a "responsible stakeholder."

US officials have often charged that Beijing sought to enjoy the prestige of a top power but assume the responsibilities of a poorer nation when convenient.

"It's a breakthrough in terms of countries committing resources," Australian Prime Minister Julia Gillard told reporters. "This is an important outcome which Australia has been advocating strongly for."

Indian Prime Minister Manmohan Singh pledged $10 billion but called for swift progress on promised reforms at the Washington-based lender, which along with the World Bank is dominated by the West.

"India's contribution reflects our recognition that as a responsible player in the global community, we must play our part," Singh told reporters after the summit on the beach resort of Los Cabos.

But the United States, the world's largest economy, has not committed any money to the firewall. The only other Group of 20 nations that have not made specific pledges are Argentina, Canada and Indonesia, according to the IMF.

President Barack Obama's administration has argued that Europe has the capacity to fund its own recovery.

But contributors have made clear that the firewall is not just for Europe. Foreign officials say Obama does not believe he could win approval for more funding from Congress, where skepticism of foreign commitments runs deep.

Few nations have publicly called on the United States to do more.

The United States remains the largest overall contributor to the IMF and in 2009 approved a $100 billion credit line for another IMF crisis fund, a move criticized by some of Obama's conservative adversaries.

In turn, China has hardly trumpeted its contribution. Chinese officials in Los Cabos did not speak about it and China's state-controlled media took pains to stress that it was a loan that builds interest, not a gift.

While the firewall may appear to be an arcane issue, Chinese officials are often careful to walk a fine-line on issues that nationalist Chinese could perceive as a developing country benefiting wealthier nations such as Greece.

Nina Hachigian, a senior fellow at the Center for American Progress, a left-of-center Washington think tank, said China's contribution goes "in the 'plus' column when we consider whether China is a 'responsible stakeholder'."

But she said that China was not taking a major risk, as it has plentiful foreign reserves and is offering a loan rather than a gift.

"Despite the tricky domestic politics of using foreign reserves to help richer nations, Beijing knows that China's economic health is dependent on those nations being able to afford to buy its goods," she said.

"We can never expect nations to act against their own self-interest -- that is not the test of responsibility," she said.

"What we hope for is that they consider whether their actions strengthen the international system and are consistent with other countries' interests as well. China passed this test of responsibility in this case."

India has also faced calls to play a more active global role but, with a vastly different political economic and political system than China's, it has much better relations with the West.


U.S., Israel Made Flame Virus to Thwart Iran; Iran Considers Halting High-grade Uranium Enrichment: Ahmadinejad

U.S., Israel Made Flame Virus to Thwart Iran: Report

June 20, 2012

AFP - The United States and Israel collaborated to create the Flame computer virus as part of an effort to slow Iran's suspected nuclear weapons drive, The Washington Post reported Tuesday.

The newspaper, citing "Western officials with knowledge of the effort," said the sophisticated malware was designed to spy on Iran's computer networks and send back intelligence used for an ongoing cyberwarfare campaign.

The Post said the US National Security Agency and CIA worked with Israel's military on the project.

A number of reports had linked Israel and the United States to Flame and another virus called Stuxnet which caused malfunctions in Iran's nuclear enrichment equipment.

US officials have not publicly discussed the matter except to say that they are focused on cyber efforts as part of defense and intelligence.

"This is about preparing the battlefield for another type of covert action," one former high-ranking US intelligence official told the Post.

The Russian security firm Kaspersky, first credited with discovering Flame, said last week the malware had strong links to Stuxnet.

Kaspersky said its research shows the two programs share certain portions of code, suggesting some ties between two separate groups of programmers.

The New York Times reported June 1 that President Barack Obama accelerated cyberattacks on Iran's nuclear program and expanded the assault even after the Stuxnet virus accidentally escaped in 2010.

The cyberattack, aimed at preventing Iran from developing nuclear weapons and keeping Israel from launching a preventive military strike, sowed widespread confusion in Iran's Natanz nuclear plant, the Times said.

Iran Considers Halting High-grade Uranium Enrichment: Ahmadinejad

June 18, 2012

Reuters - President Mahmoud Ahmadinejad appeared to indicate that Iran would be prepared to stop high-grade uranium enrichment - a demand of the United States and its allies - if world powers agreed to meet its needs for the fuel.

"From the beginning the Islamic Republic has stated that if European countries provided 20 percent enriched fuel for Iran, it would not enrich to this level," Ahmadinejad stated in comments published on his presidential website.

Meeting to discuss Iran's nuclear program in Moscow on Monday, world powers are to push for the suspension of its high-grade uranium enrichment activities over fears Iran is seeking to develop nuclear weapons capability. Tehran denies this.

Greek Parties Agree to Form Coalition Government

Greek Parties Agree to Form Coalition Government

June 20, 2012

AP - The three parties that back Greece's commitments to bailout creditors have agreed in principle to form a coalition government and are negotiating the final details, officials said Wednesday.

The agreement follows protracted negotiations between the conservative New Democracy party, the Socialist PASOK and the smaller Democratic Left party, after a national election on Sunday. New Democracy won the vote but needs other parties to form a majority coalition.

Democratic Left spokesman Gerasimos Georgatos said his party is committed to joining a government headed by the conservatives.

"We are offering a vote of confidence, not a vote of tolerance," he said. "We will be part of the government. That means that even if we disagree on a specific draft law, we will not withdraw our support or bring down the government."

The parties are still discussing the new government's policy platform and who will be given cabinet positions.

"We will have a government today," said a PASOK spokesman, who asked not to be named as the talks are still under way.

Creation of a pro-bailout coalition with a strong parliamentary majority would end weeks of political uncertainty in Greece that has affected markets worldwide. A inconclusive election on May 6 had led to protracted, failed talks on forming a new Greek government and threatened to plunge Europe deeper into its financial crisis. The June 17 vote raised fears that anti-bailout parties would win and end up having Greek leave the 17-nation eurozone.

Greek stocks rose Wednesday on expectations a government can be formed, gaining more than 2 percent.

In both elections, Greek voters angry at years of income cuts, deteriorating state services and galloping unemployment voted strongly for parties promising to end the hardship by tearing up the country's pledges for continued austerity and reforms. However, the anti-austerity standard bearer — the radical left Syriza party — finished a narrow second in Sunday's election that gave New Democracy 129 of Parliament's 300 seats.

But this time, the conservatives can form a strong parliamentary majority of 179 legislators with the third-placed PASOK and Democratic Left.

Earlier Wednesday, hundreds of poverty-stricken Greeks queued in a central Athens park for free vegetables. Cretan farmers handed out some 2,700 10-kilo packages of produce, in cooperation with the capital's municipal authorities.

June 19, 2012

Russia and Syria Deny an Iranian Media Report that Syria Would Host Russian, Chinese and Iranian Military Forces for Joint Exercises

Russia, Syria Deny War Games with China and Iran

June 19,2 2012

Reuters - Russia and Syria on Tuesday denied an Iranian media report that Syria would host Russian, Chinese and Iranian military forces for joint exercises.

Iranian news agency Fars said 90,000 troops and hundreds of ships, tanks and warplanes from the four countries would take part in the war games on land and sea in Syria soon.

The Russian Defense Ministry called such reports "disinformation" and the Russian news agency Interfax quoted an adviser to Syrian President Bashar al-Assad as saying it was not true.

"There will be nothing like that. This is one of those (pieces of) false information that are distributed about (Syria)," Interfax quoted Bouthaina Shabaan, the adviser who was in Moscow on Tuesday, as saying.

Interfax said Shabaan was referring to a report on al-Arabiya television that was similar to the Fars article.

UN Expert Slams Censorship by Israel, Palestinians

UN Expert Slams Censorship by Israel, Palestinians

June 19, 2012

AP - The government of Israel, the Palestinian Authority in the West Bank and Hamas in Gaza are all unduly limiting free speech through restrictive laws, intimidation and censorship, a U.N. human rights expert said Tuesday.

The global body's independent investigator on freedom of expression, Frank La Rue, said the measures have had a chilling effect on the work of journalists and peaceful activists, and urged Israel and the Palestinians to uphold international standards on free speech.

"I am concerned by the recent attempts to limit criticism of Israel regarding its policies and practices of occupation, and questioning of Israel as a Jewish state," La Rue said as he presented his report to the U.N. Human Rights Council in Geneva.

He cited a law adopted last year that allows Israeli authorities to fine publicly-funded institutions that commemorate the so-called "Nakba," or catastrophe, an Arabic term used by Palestinians to describe the displacement of hundreds of thousands of non-Jewish residents during the war surrounding Israel's creation in 1948.

"The law severely undermines their right to freely express their opinion, preserve their history and culture, and to their right to commemorate the Nakba, which is an integral part of their history," said La Rue.

He also questioned an Israeli law that makes it a civil offense to call for a boycott against Israel and its products, as well as those produced in the settlements in the West Bank.

"Calling for or participating in a peaceful boycott is a legitimate form of expression which is internationally recognized," La Rue said in his report. "Moreover, given that lawsuits can be brought against individuals without any proof of damages, it creates further incentives for self-censorship, including on the Internet, to avoid litigation."

He voiced similar criticism of a bill to amend Israel's defamation law, which would sharply increase fines without the need to prove damages.

"If adopted, it will create a significant chilling effect and will discourage investigative journalists, human rights NGOs and individuals expressing critical views," said La Rue.

Israel should also drop the practice of having a military censor review articles on issues of national security prior to publication, he said.

Israeli diplomats in Geneva didn't comment on the report because the country has officially suspended its work with the 47-nation rights council, which Israel accuses of being biased against it.

But in Jerusalem, Foreign Ministry spokesman Yigal Palmor noted the government "fully cooperated" with La Rue.

"We will study his report carefully and seriously," he said. "We remain totally committed to freedom of speech for all, and we will examine very closely the recommendations with the aim of making whatever improvements may be necessary."

La Rue also criticized the Western-backed Palestinian Authority for requiring publishing licenses and censoring publications according to broad and vague rules. He also expressed concern at reports that Facebook users were harassed for posting unfavorable comments about Palestinian President Mahmoud Abbas.

Palestinian government spokesman Ghassan Khatib said the report would be dealt with "positively and seriously."

Palestinian law "guarantees the freedom of the press, and normally we exert all our efforts to guarantee that," he said.

Khatib also said there has been a "major improvement" in press freedom over the past four years.

"However, there have been individual, rare cases, but they were solved because of the power of the civil society and public opinion," he said.

In Gaza, the ruling Hamas faction, which seized control of the coastal strip from Abbas' forces five years ago, has introduced a new requirement for foreign journalists to name a local contact, which could lead to self-censorship, La Rue said. He criticized the excessive force used by Hamas to disperse peaceful protests and cited "arbitrary arrests and detention of protesters and journalists monitoring demonstrations."

Hassan Abu Hashish, chairman of Hamas' Gaza government press office, called the report "slander."

"Freedom of the media and freedom of speech in the Gaza Strip is well ahead of other Arab countries and the West Bank," he said.

U.S. Government Plans Surveillance from the Skies with Thousands of Drones Patrolling by the End of This Decade and Law Enforcement Agencies Are Arming the Drones

Talk of Drones Patrolling U.S. Skies Spawns Anxiety

June 19, 2012

AP — The prospect that thousands of drones could be patrolling U.S. skies by the end of this decade is raising the specter of a Big Brother government that peers into backyards and bedrooms.

The worries began mostly on the political margins, but there are signs that ordinary people are starting to fret that unmanned aircraft could soon be circling overhead.

Jeff Landry, a freshman Republican congressman from Louisiana's coastal bayou country, said constituents have stopped him while shopping at Walmart to talk about it.

"There is a distrust amongst the people who have come and discussed this issue with me about our government," Landry said. "It's raising an alarm with the American public."

Another GOP freshman, Rep. Austin Scott, said he first learned of the issue when someone shouted out a question about drones at a Republican Party meeting in his Georgia congressional district two months ago.

An American Civil Liberties Union lobbyist, Chris Calabrese, said that when he speaks to audiences about privacy issues generally, drones are what "everybody just perks up over."

"People are interested in the technology, they are interested in the implications and they worry about being under surveillance from the skies," he said.

The level of apprehension is especially high in the conservative blogosphere, where headlines blare "30,000 Armed Drones to be Used Against Americans" and "Government Drones Set to Spy on Farms in the United States."

When Virginia Gov. Bob McDonnell, a Republican, suggested during an interview on Washington radio station WTOP last month that drones be used by police domestically since they've done such a good job on foreign battlefields, the political backlash was swift. NetRightDaily complained:

"This seems like something a fascist would do. ... McDonnell isn't pro-Big Government, he is pro-HUGE Government."

John Whitehead, president of the Rutherford Institute of Charlottesville, Va., which provides legal assistance in support of civil liberties and conservative causes, warned the governor,

"America is not a battlefield, and the citizens of this nation are not insurgents in need of vanquishing."

There's concern as well among liberal civil liberties advocates that government and private-sector drones will be used to gather information on Americans without their knowledge. A lawsuit by the Electronic Frontier Foundation of San Francisco, whose motto is "defending your rights in the digital world," forced the Federal Aviation Administration earlier this year to disclose the names of dozens of public universities, police departments and other government agencies that have been awarded permission to fly drones in civilian airspace on an experimental basis.

Giving drones greater access to U.S. skies moves the nation closer to "a surveillance society in which our every move is monitored, tracked, recorded and scrutinized by the authorities," the ACLU warned last December in a report.

The anxiety has spilled over into Congress, where a bipartisan group of lawmakers have been meeting to discuss legislation that would broadly address the civil-liberty issues raised by drones. A Landry provision in a defense spending bill would prohibit information gathered by military drones without a warrant from being used as evidence in court. A provision that Rep. Rush Holt, D-N.J., added to another bill would prohibit the Homeland Security Department from arming its drones, including ones used to patrol the border.

Scott and Sen. Rand Paul, R-Ky., have introduced identical bills to prohibit any government agency from using a drone to "gather evidence or other information pertaining to criminal conduct or conduct in violation of a regulation" without a warrant.

"I just don't like the concept of drones flying over barbecues in New York to see whether you have a Big Gulp in your backyard or whether you are separating out your recyclables according to the city mandates," Paul said in an interview, referring to a New York City ban on supersized soft drinks.

He acknowledged that is an "extreme example," but added: "

They might just say we'd be safer from muggings if we had constant surveillance crisscrossing the street all the time. But then the question becomes, what about jaywalking? What about eating too many donuts? What about putting mayonnaise on your hamburger? Where does it stop?"

Calabrese, the ACLU lobbyist, called Paul's office as soon as he heard about the bill.

"I told them we think they are starting from the right place," Calabrese said. "You should need some kind of basis before you use a drone to spy on someone."

In a Congress noted for its political polarization, legislation to check drone use has the potential to forge "a left-right consensus," he said.

"It bothers us for a lot of the same reasons it bothers conservatives."

The backlash has drone makers concerned. The drone market is expected to nearly double over the next 10 years, from current worldwide expenditures of nearly $6 billion annually to more than $11 billion, with police departments accounting for a significant part of that growth.

"We go into this with every expectation that the laws governing public safety and personal privacy will not be administered any differently for (drones) than they are for any other law enforcement tool," said Dan Elwell, vice president of the Aerospace Industries Association.

Discussion of the issue has been colored by exaggerated drone tales spread largely by conservative media and bloggers.

Scott said he was prompted to introduce his bill in part by news reports that the Environmental Protection Agency has been using drones to spy on cattle ranchers in Nebraska. The agency has indeed been searching for illegal dumping of waste into streams but is doing it the old-fashioned way, with piloted planes.

In another case, a forecast of 30,000 drones in U.S. skies by 2020 has been widely attributed to the FAA. But FAA spokeswoman Brie Sachse said the agency has no idea where the figure came from. It may be a mangled version of an aerospace industry forecast that there could be nearly 30,000 drones worldwide by 2018, with the United States accounting for half of them.

Fear that some drones may be armed has been fueled in part by a county sheriff's office in Texas that used a homeland security grant to buy a $300,000, 50-pound ShadowHawk helicopter drone for its SWAT team. The drone can be equipped with a 40mm grenade launcher and a 12-gauge shotgun. Randy McDaniel, chief deputy with the Montgomery County Sheriff's Office, told The Associated Press earlier this year his office had no plans to arm the drone, but he left open the possibility the agency may decide to adapt the drone to fire tear gas canisters and rubber bullets.

Earlier this year Congress, under pressure from the Defense Department and the drone manufacturers, ordered the FAA to give drones greater access to civilian airspace by 2015. Besides the military, the mandate applies to drones operated by the private sector and civilian government agencies, including federal, state and local law enforcement.

Reps. Ed Markey, D-Mass, and Joe Barton, R-Texas, co-chairs of a congressional privacy caucus, asked the FAA in April how it plans to protect privacy as it develops regulations for integrating drones into airspace now exclusively used by aircraft with human pilots. There's been no response so far, but Acting FAA Administrator Michael Huerta will probably be asked about it when he testifies at a Senate hearing Thursday.

Even if the FAA were to establish privacy rules, it's primarily a safety agency and wouldn't have the expertise or regulatory structure to enforce them, civil liberties advocates said. But no other government agency is addressing the issue, either, they said.

June 16, 2012

Drones, Computers New Weapons of U.S. Shadow Wars

Drones, Computers New Weapons of U.S. Shadow Wars

June 6, 2012

AP - After a decade of costly conflict in Iraq and Afghanistan, the American way of war is evolving toward less brawn, more guile.

Drone aircraft spy on and attack terrorists with no pilot in harm's way. Small teams of special operations troops quietly train and advise foreign forces. Viruses sent from computers to foreign networks strike silently, with no American fingerprint.

It's war in the shadows, with the U.S. public largely in the dark.

In Pakistan, armed drones, not U.S. ground troops or B-52 bombers, are hunting down al-Qaida terrorists, and a CIA-run raid of Osama bin Laden's hide-out was executed by a stealthy team of Navy SEALs.

In Yemen, drones and several dozen U.S. military advisers are trying to help the government tip the balance against an al-Qaida offshoot that harbors hopes of one day attacking the U.S. homeland.

In Somalia, the Horn of Africa country that has not had a fully functioning government since 1991, President Barack Obama secretly has authorized two drone strikes and two commando raids against terrorists.

In Iran, surveillance drones have kept an eye on nuclear activities while a computer attack reportedly has infected its nuclear enrichment facilities with a virus, possibly delaying the day when the U.S. or Israel might feel compelled to drop real bombs on Iran and risk a wider war in the Middle East.

The high-tech warfare allows Obama to target what the administration sees as the greatest threats to U.S. security, without the cost and liabilities of sending a swarm of ground troops to capture territory; some of them almost certainly would come home maimed or dead.

But it also raises questions about accountability and the implications for international norms regarding the use of force outside of traditional armed conflict. The White House took an incremental step Friday toward greater openness about the basic dimensions of its shadowy wars by telling Congress for the first time that the U.S. military has been launching lethal attacks on terrorist targets in Somalia and Yemen. It did not mention drones, and its admission did not apply to CIA operations.

"Congressional oversight of these operations appears to be cursory and insufficient," said Steven Aftergood, an expert on government secrecy issues for the Federation of American Scientists, a private group.

"It is Congress' responsibility to declare war under the Constitution, but instead it appears to have adopted a largely passive role while the executive takes the initiative in war fighting," Aftergood said in an interview.

That's partly because lawmakers relinquished their authority by passing a law just after the Sept. 11 terrorist attacks that essentially granted the White House open-ended authority for armed action against al-Qaida.

Secret wars are not new.

For decades, the CIA has carried out covert operations abroad at the president's direction and with congressional notice. It armed the mujahedeen in Afghanistan who fought Soviet occupiers in the 1980s, for example. In recent years the U.S. military's secretive commando units have operated more widely, even in countries where the U.S. is not at war, and that's blurred the lines between the intelligence and military spheres.

In this shroud of secrecy, leaks to the news media of classified details about certain covert operations have led to charges that the White House orchestrated the revelations to bolster Obama's national security credentials and thereby improve his re-election chances. The White House has denied the accusations.

The leaks exposed details of U.S. computer virus attacks on Iran's nuclear program, the foiling of an al-Qaida bomb plot targeting U.S. aircraft, and other secret operations.

Two U.S. attorneys are heading separate FBI investigations into leaks of national security information, and Congress is conducting its own probe.

It's not just the news media that has pressed the administration for information about its shadowy wars.

Some in Congress, particularly those lawmakers most skeptical of the need for U.S. foreign interventions, are objecting to the administration's drone wars. They are demanding a fuller explanation of how, for example, drone strikes are authorized and executed in cases in which the identity of the targeted terrorist is not confirmed.

"Our drone campaigns already have virtually no transparency, accountability or oversight," Rep. Dennis Kucinich, D-Ohio, and 25 other mostly anti-war members of Congress wrote Obama on Tuesday.

A few dozen lawmakers are briefed on the CIA's covert action and clandestine military activity, and some may ask to review drone strike video and be granted access to after-action reports on strikes and other clandestine actions. But until two months ago, the administration had not formally confirmed in public its use of armed drones.

In an April speech in Washington, Obama's counterterrorism chief, John Brennan, acknowledged that despite presidential assurances of a judicious use of force against terrorists, some still question the legality of drone strikes.

"So let me say it as simply as I can: Yes, in full accordance with the law — and in order to prevent terrorist attacks on the United States and to save American lives — the United States government conducts targeted strikes against specific al-Qaida terrorists, sometimes using remotely piloted aircraft, often referred to publicly as drones," he said.

President George W. Bush authorized drone strikes in Pakistan and elsewhere, but Obama has vastly increased the numbers. According to Bill Roggio of The Long War Journal, an online publication that tracks U.S. counterterrorism operations, the U.S. under Obama has carried out an estimated 254 drone strikes in Pakistan alone. That compares with 47 strikes during the Bush administration.

In at least one case the target was an American. Anwar al-Awlaki, an al-Qaida leader, was killed in a U.S. drone strike in Yemen in September.

According to a White House list released late last year, U.S. counterterrorism operations have removed more than 30 terrorist leaders around the globe. They include al-Qaida in East Africa "planner" Saleh Ali Saleh Nabhan, who was killed in a helicopter strike in Somalia.

The drone campaign is highly unpopular overseas.

A Pew Research Center survey on the U.S. image abroad found that in 17 of 21 countries surveyed, more than half of the people disapproved of U.S. drone attacks targeting extremist leaders in such places as Pakistan, Yemen and Somalia. In the U.S., 62 percent approved of the drone campaign, making American public opinion the clear exception.

The U.S. use of cyberweapons, like viruses that sabotage computer networks or other high-tech tools that can invade computers and steal data, is even more closely shielded by official secrecy and, arguably, less well understood.

Sen. John McCain, R-Ariz., has been a leading critic of the administration's handling of information about using computers as a tool of war.

"I think that cyberattacks are one of the greatest threats that we face," McCain said in a recent interview, "and we have a very divided and not very well-informed Congress addressing it."

Defense Secretary Leon Panetta and national security officials often talk publicly about improving U.S. defenses against cyberattack, not only on U.S. government computer systems but also against defense contractors and other private networks linked, for example, to the U.S. financial system or electrical grid. Left largely unexplained is the U.S. capacity to use computer viruses and other cyberweapons against foreign targets.

In the view of some, the White House has cut Congress out of the loop, even in the realm of overt warfare.

Sen. James Webb, D-Va., who saw combat in Vietnam as a Marine, introduced legislation last month that would require that the president seek congressional approval before committing U.S. forces in civil conflicts, such as last year's armed intervention in Libya, in which there is no imminent security threat to the U.S.

"Year by year, skirmish by skirmish, the role of the Congress in determining where the U.S. military would operate, and when the awesome power of our weapon systems would be unleashed has diminished," Webb said.

June 13, 2012

Russia Defends Weapons Sales to Syria

Syria is but a chess piece being used as a platform by larger powers. Regime change is the unwavering interest of the US-led NATO block in collaboration with the feudal Persian Gulf Monarchies of the Gulf Cooperation Council (GCC). This is being accomplished by using Qatar-owned media outlets such as Al-Jazeera to project their version of the narrative to the world and by arming radical factions of the regions Sunni-majority population against the minority Alawi-Shia leadership of Assad. - The Road To Tehran Goes Through Damascus, NileBowie.blogspot.com, February 15, 2012

Russia Defends Weapons Sales to Syria, Says U.S. Arming Rebels

June 13, 2012

Reuters - Russia's foreign minister on Wednesday defended his country's sale of arms to Syria and accused the United States of supplying rebels with weapons to fight against the government.

U.S. Secretary of State Hillary Clinton said on Tuesday Washington was worried Russia may be sending attack helicopters to Syria and described as "patently untrue" Moscow's argument that its arms transfers to Syria are unrelated to the conflict there.

"We are not violating any international law in performing these contracts," said Sergei Lavrov, in response to a question about Clinton's comments at a news conference during a visit to Iran.

"They are providing arms and weapons to the Syrian opposition that can be used in fighting against the Damascus government," he said on Iranian state television, speaking through an interpreter.

Russia is one of Syria's principal defenders on the diplomatic front and, as a permanent member of the U.N. Security Council with the power to veto resolutions, has stymied efforts by Western powers to pressure President Bashar al-Assad into stepping down.

Lavrov said Russia's position was based on concern for the Syrian people and the country's integrity, rather than personal preference for Assad.

"I have announced time and again that our stance is not based on support for Bashar al-Assad or anyone else ... We don't want to see Syria disintegrate."

Russia is resisting Western and Gulf Arab pressure to take a harder line against Assad, rejecting calls for sanctions and proposing a conference bringing together global and regional powers including Iran.

Iranian Foreign Minister Ali Akbar Salehi said the Syrian crisis could not be resolved by external powers.

"The Islamic Republic of Iran has announced many times: the issue of Syria needs to be dealt with in Syria by Syrians, not through the interference of others"

The United States says it does not believe Iran, Assad's closest regional ally, is ready to play a constructive role in Syria, where the United Nations says government forces have killed more than 10,000 people since March 2011.

Europe's Crisis: What Happens in Greece's Presidential Election Will Have a Global Impact

The European Tipping Point: What Will Greece Do?

June 13, 2012

CNBCHow is it that a small nation with only 11 million people and an economy not even one-tenth of the United States could be so important?

Because the stability of the global economy hangs in the balance as Europe awaits the results of the Greek presidential election on June 17. The election is seen as a proxy for a much larger question: Do the Greeks want to stay in the euro zone - or not?

Meanwhile this week European leaders are scrambling to come up with money and a plan for stabilizing Spanish banks.

Even in the midst of the U.S. election season when domestic politics would normally be paramount, President Obama discussed Greece at a recent news conference.

"We recognize the sacrifices that the Greek people have made, and European leaders understand the need to provide support if the Greek people choose to remain in the euro zone," he said. "But the Greek people also need to recognize that their hardships will likely be worse if they choose to exit from the euro zone."

It is an unprecedented situation in modern economic times. "For the first time since it began in 1999, one of the 17 nations that use the euro will in essence be deciding whether they want it anymore or not," says Peter Boockvar of Miller Tabak.

If the answer is no, economists and leaders across the world fear a potential "Lehman moment" and the potential unraveling of the entire euro project. The cost to the European economy alone could be as much as Euro360 billion, according to one Wall Street analyst, Patrick Legland of Societe General. If there were a follow-on contagion effect in Italy and Spain, he says European stocks would fall as much as 50 percent, and the damaging results wouldn't be confined to the European continent.

Martin Wolf of the Financial Times tells CNBC that he fears we could see a repeat of the worldwide Depression of the 1930s.

An additional thorny issue is that while the rest of the world may see the election as a referendum on euro zone membership, it is possible the Greek people do not. The head of one of the leading parties in Greece is campaigning on the idea that the country can repudiate the tough terms of a bailout from their European partners and still remain in the euro zone.

Alexis Tsipras, the head of the Coalition for the Radical Left (Syriza) has told voters and CNBC the fear in Europe of the potential economic fallout from a Greek exit gives his country leverage to renegotiate a much more lenient set of terms.

Twice in the last two years Greece has received huge loans of at least Euro100 billion each from the other countries in the European Union and the IMF . But in exchange for those loans the Greeks have had to follow a strict set of "austerity measures," including cutting the number of government workers, cutting the remaining workers' salaries by as much as 50 percent, slashing retirees' pensions by 30 percent, raising taxes and fees dramatically, and eliminating collective bargaining rights.

The measures are deeply unpopular in a country where the constitution once prohibited the firing of a government worker. (In theory it still does, but loopholes have been used to get around that.) For two years, massive demonstrations have engulfed the country on a frequent basis as the population deals with unemployment above 20 percent and above 50 percent for young people. Tsipras' message - that the country can renege on the bailout agreement and yet still receive the bailout money - has great appeal and in the last published polls; he had 30 percent of the vote.

But polls also say that the Greek people overwhelmingly want to stay with the euro. The other leading party in the country, New Democracy (ND), led by Antonio Samaris, has painted the election as a choice between staying in the euro (by voting for him), or leaving the euro by voting for Tsipras. One of New Democracy's political ads airing this week on TV in Greece shows a classroom sometime in the future with a teacher saying "Cyprus, Belgium, Portugal, Spain, France - these countries are in the euro zone." Then a student asks, "And Greece? Why isn't Greece in the euro zone sir, why?" More voices, one after the other: "Why?

Why? Why?" and then a voice-over: "With our children's future we don't play games" as it does a slow zoom into the teacher's face, who looks strikingly similar to the leader of the opposition party, Alexis Tsipras.

European leaders have all maintained that for Greece to continue receiving bailout money, it must stick to the previous agreement, and that renegotiation is not an option. But at the same time, they've made enough comments to suggest there could be room for leniency, clouding the message.

If a future Greek government refuses to comply with the previously-agreed bailout terms, and European leaders refuse to give them the next tranche of aid, Greece will have not have enough money to function. The situation will almost certainly cause the country to abandon using the euro and return to printing their own currency.

The effects on Greece would be devastating. Dr. Lucas Papademos, the former technocratic Prime Minister of Greece, warned recently of gross domestic product declining another 20 percent on top of the 20 percent it has already fallen, along with inflation shooting up by 50 percent.

What is unclear is the effect on the rest of the world. Economists fear contagion - the spread of financial panic to other countries like Italy and Spain. Hence, why leaders scrambled this past weekend to ensure there would be money available to back up Spain's vulnerable banks in case of capital flight in the wake of the elections.

Polls indicate the outcome of the election is too close to call, leading to an edgy week for investors.

June 11, 2012

Sununu Defends Romney’s Call to Cut Teachers, Firefighters and Police Officers

John Sununu Defends Romney’s Call for Fewer Teachers, Says It Was Not a ‘Gaffe’

June 11, 2012

The Ticket - Former New Hampshire Gov. John H. Sununu, a surrogate for Mitt Romney's presidential campaign, defended the presumptive Republican nominee's comments that the nation should have fewer teachers, firefighters and police officers, saying there was "wisdom" in Romney's remarks.

"There are municipalities, there are states where there is flight of population, and as the population goes down, you need fewer teachers. As technology contributes to community security and dealing with issues that firefighters have to issue, you would hope that you can as a taxpayer see the benefits of the efficiency in personnel you can get out of that," Sununu said during an interview on MSNBC's "Jansing & Co." Monday, prefacing that he was speaking "as a taxpayer" and not a representative of the Romney campaign.
"There may be others who run away from those comments, but I'm going to tell you that there are places where just pumping money in to add to the public payroll is not what the taxpayers of this country want."

Sununu was referring to comments Romney made during a speech Friday in Salt Lake City, Utah in which he criticized Obama for calling for more government hiring on the state and local level and for saying during a press conference earlier that day that "the private sector is doing fine."

"He wants to hire more government workers. He says we need more fireman, more policeman, more teachers. Did he not get the message of Wisconsin?" Romney said, referring to the failed recall effort of Wisconsin Republican Gov. Scott Walker. "The American people did. It's time for us to cut back on government and help the American people."

The Obama campaign seized on Romney's comments with an Web ad, and the media labeled it a "gaffe" for referring specifically to fireman, policemen and teachers--employees exempt from Walker's union reform efforts that led to his attempted recall. But Sununu said Monday that in certain areas of the country there should "absolutely" be fewer teachers.

"If there's fewer kids in the classroom, the taxpayers really do want to hear that there will be fewer teachers, absolutely. You've got a lot of places where that is happening," he said during the MSNBC interview. "You've got a very mobile country now where things are changing. You have cities in this country in which the school population peaked ten, fifteen years ago, and yet the number of teachers they have maintained has not changed. I think this is a real issue and people ought to stop jumping on it as as gaffe and understand there's wisdom in the comments."

Spain Becomes the Fourth — and Largest — of the 17 Countries that Use Europe's Common Currency to Request a Bailout; Spain's Grinding Economic Misery Will Get Worse This Year

Spain Relieved, Angry Over Humiiating Bank Rescue

Spain relieved, angry over humiliating $125B rescue for nation that was Europe's economic star

June 10, 2012

AP - Spain's grinding economic misery will get worse this year, despite the country's request for a European financial lifeline of up to €100 billion ($125 billion) to save its banks, Prime Minister Mariano Rajoy said Sunday.

A day after the country conceded it needed outside help following months of denying it would seek assistance, Rajoy said more Spaniards will lose their jobs in a country where one out of every four are already unemployed.

"This year is going to be a bad one," Rajoy said Sunday in his first comments about the rescue since it was announced the previous evening by his economy minister.

The conservative prime minister added that the economy, stuck in its second recession in three years, will still contract the previously predicted 1.7 percent in 2012 even with the help.

Spain on Saturday became the fourth — and largest — of the 17 countries that use Europe's common currency to request a bailout. This is a big blow to a nation that a few years ago took pride as the continent's economic superstar only to see it become the hot spot in the eurozone debt crisis. Its economy is the eurozone's fourth largest after Germany, France and Italy.

Although Spain has not yet said how much money it would seek, the Eurogroup — finance ministers of the 17-country eurozone, of which Spain is a member — said in a statement Saturday that it was prepared to lend up to €100 billion. The funds, which will come from one of three pools of emergency financing eurozone countries can access, will be sent to the Spanish government's Fund for Orderly Bank Restructuring (FROB), which would then use the money to strengthen the country's teetering banks.

Across the country, Spaniards reacted with a mixture of anger and relief to the news. The full amount of the eurogroup's lifeline amounts to €21,000 of new debt for each person — almost equal to the average salary in a country of 47 million where the unemployment rate for those under age 25 is 52 percent.

The country is already reeling from deep austerity cuts Rajoy has imposed over the last six months that have raised taxes, made it easier to hire and fire workers, and cut deep into cherished government programs, including education and national health care.

"It's obviously a shame," said civil servant Luisa Saraguren, 44, as she strolled on a sunny Sunday morning with her young daughter. "But this bailout was fully predictable, and the consequences of this help are going to be a lot bigger compared to the cuts we've been living with already."

Rajoy took pains to avoid the word bailout Sunday, saying Spain's rescue package is a line of credit that its most troubled banks will be able to tap. The assistance will not come with the outside control over government macroeconomic policy like that imposed Greece, Ireland and Portugal when their public finances were bailed out.

He said interest rates on the loans will be considerably lower than the rate near 7 percent that Spain has been forced to pay recently on the international debt markets, a level that forced the other countries to seek bailouts. The government will be responsible for collecting repayments from the banks, with interest, and returning the money to the Eurogroup, although interest rates and loan duration details have not yet been revealed.

German Finance Minister Wolfgang Schaeuble said Spain's debt to GDP ratio was more favorable that even Germany's, with Spain at 78 percent of GDP and Germany's at 82 percent.

"Spain is making the necessary reforms to improve its competitiveness and to limit its fiscal policy to a sustainable deficit. By the way, Spain's overall debt (ratio) is lower than Germany's," Schaeuble said.

The bailout also spurred Irish opposition finance spokesman Michael McGrath to criticize his government for not having negotiated better terms, saying it needed "to start fighting Ireland's corner in a more vigorous and forceful way."

Spain hopes to regain the economic credibility it has lost by shoring up its banks. This should result in credit being restored so businesses and individuals shut off from loans can start borrowing and the economy will grow again, Rajoy insisted, again without saying when.

Europe's widening recession and financial crisis have hurt companies and investors around the world. Providing a financial lifeline to Spanish banks is likely to relieve anxiety on the Spanish economy — which is five times larger than Greece's — and on markets concerned about the country's ability to pay its way.

Spain's government will make a formal approach for aid once independent audits of the country's banking industry have been carried out.

It is not yet clear whether the money will come from the EU's €440 billion European Financial Stability Facility, the new €500 billion European Stability Mechanism, or a combination of the two.

The deal is to be underwritten by the Spanish state, which will use the FROB as its mechanism to funnel the loan to banks in need. Opposition leader Alfredo Perez Rubalcaba said he had discussed the loan with Rajoy and added that for it not to increase the national deficit the entire amount borrowed will have to be paid back to the treasury by the banks, "including the corresponding interests."

Economy minister Luis de Guindos said 30 percent of the banking system needed recapitalization. The IMF in its financial stability assessment report said, without listing names, that Spain's two large internationally active banks "are well diversified." It is understood that these are Banco Santander and BBVA.

It said seven former savings banks that have received state support "rely significantly on FROB for capital and liquidity support" and that other medium and small private sector banks which account for approximately 11 percent of domestic banking were also exposed to the real estate and construction sector.

Spain's financial problems are not due to Greek-style government over-spending. The country's banks, particularly its savings banks or "cajas," got caught up in the collapse of a real estate bubble in 2008 that got worse over the past four years. However, as Spain's leaders have struggled for a solution to their banking crisis, the country's borrowing costs have soared close to the level that forced the governments of Greece, Portugal and Ireland to seek rescues.

Some of Spain's banks are struggling with toxic real estate loans and assets amid fears the problem will get worse as more jobless people can't pay their mortgages. The Bank of Spain says the toxic loans and assets total around €180 billion. Nationalized lender Bankia SA, which has requested €19 billion in aid, has €32 billion in toxic assets. Around four other banks serving the domestic market were assessed by the IMF report to have large exposure to corporate and retail real estate lending.

"I could never get my mind round the scale of consumption in Spain over the past 20 years, having known it in the 1960s when it was still extremely poor," said Paul Preston, a history professor and expert on Spain with the London School of Economics. "Lots of people enjoyed the consumer boom, but not everybody. Now everybody's having to pay for it."

Rajoy blamed Spain's woes on the previous Socialist administration of Jose Luis Rodriguez Zapatero without mentioning him or his government by name. Zapatero was ousted by Rajoy in a landslide in November by voters outraged over the Socialist handling of the economy.

"Last year Spain's public administration spent €90 billion more than it took in. This can't be maintained. We can't live like that," Rajoy said.

But Socialist Party leader Rubalcaba said Rajoy should acknowledge that Spain is now in bailout territory.

"The government is trying to make us believe that we've won the lottery, that the Three Kings of Orient have arrived, and that isn't so," Rubalcaba said.

After his news conference, Rajoy defended his decision to jet off an hour later to Poland to see Spain's famed national football team take on Italy in the Euro 2012 competition. He said he would be on the ground in Gdansk only for the game before flying back to Madrid on Sunday night.

"I'll be there 2 ½ hours and then I'll leave," Rajoy said. "I think the national team deserves it."

Rajoy was seen cheering as Cesc Fabregas equalized to give Spain a 1-1 draw against Italy.

June 10, 2012

Wisconsin May Vote Romney for President

RNC Chairman: 'Light Blue' Wisconsin Can Turn Red for November

June 8, 2012

ABC NewsRNC Chairman Reince Priebus said that after Scott Walker's recall victory this week, "light blue" Wisconsin "can turn red under the right circumstances."

"The momentum is clearly shifting in our direction," Priebus, a Wisconsinite himself, said on a conference call. "It's no doubt that Wisconsin will be a tough battle and a tough fight, but I'm pleased to say the energy and excitement for that fight is on the Republican side."

The RNC has 23 offices in the state; they will now shift from focusing on the recall to "Mitt Romney's operation," according to RNC political director Rick Wiley, who also spoke on the call.

"And with that we throw Wisconsin into a presidential battleground and that path to 270 becomes very visible, very quickly," Wiley said, referring to how many electoral votes are needed to win the presidency.

They touted their ground operation, saying they made 4. 5 million calls on behalf of Walker, and beat the Democrats on everything from absentee ballots to door knocking, something they say will continue through November.

Although Wisconsin is a reliably blue state in presidential elections, Priebus said the Republicans have now "perfected" their ground operation and Wiley said they will target students on college campuses all over the country including Wisconsin. The 18-to-25-year-old demographic is obviously something the Obama campaign is counting on, but Wiley said they will pursue those voters as well.

"It was the cool thing to do on 2008 campuses to vote for Barack Obama and that sentiment is just not there anymore," Wiley said.

When asked by reporters what to think of Tuesday's exit polls in the Badger State that put Obama up by six points ahead of Romney, Priebus said Obama may have a hard time rallying Democratic support after he chose not to campaign with Milwaukee Mayor Tom Barrett. The president, he said, "left them at the altar."

Reacting to President Obama's comments from Friday morning when he said the "private sector is doing fine" Priebus joined the scores of Republicans calling the president "tone deaf."

A reporter on the call pointed out that Mitt Romney has had more than his fair share of foot-in-mouth moments from "being able to fire people" or saying he is "not concerned with the very poor." Could the Republican National Committee really try to pounce on one comment in that light?

Priebus answered, "Absolutely."

Obama has since clarified his comments saying Friday afternoon, "It's absolutely clear the economy is not doing fine."