This is what Canada-north America is saying..........
- the
UnitedStates finds itself in the anomalous position of being
unable to pay for its own elevated living standards or its wasteful,
overly large military establishment. Its government no longer even
attempts to reduce the ruinous expenses of maintaining huge standing
armies, replacing the equipment that seven years of wars have destroyed
or worn out, or preparing for a war in outer space against unknown
adversaries. Instead, the Bush administration puts off these costs for
future generations to pay or repudiate. This fiscal irresponsibility
has been disguised through many manipulative financial schemes (causing
poorer countries to lend us unprecedented sums of money), but the time
of reckoning is fast approaching…“It is virtually impossible to overstate the profligacy of what our
government spends on the military. The Department of Defense's planned
expenditures for the fiscal year 2008 are larger than all other
nations' military budgets combined. The supplementary budget to pay for
the current wars in Iraq and Afghanistan, not part of the official
defense budget, is itself larger than the combined military budgets of
Russia and China. Defense-related spending for fiscal 2008 will exceed
$1 trillion for the first time in history. The U.S. has become the
largest single seller of arms and munitions to other nations on Earth.
Leaving out President Bush's two on-going wars, defense spending has
doubled since the mid-1990s. The defense budget for fiscal 2008 is the
largest since the second world war.”
Bank bail-outs to be kept secret
- “The Bank of England has imposed a permanent news blackout on its
£50bn-plus plan to ease the credit crunch. Ferocious and unprecedented
secrecy means taxpayers will never know the names of the banks that
have been supported through the special liquidity scheme…“Requests under the Freedom of Information Act are to be denied.
Details will be kept secret even after 30 years - the period after
which all but the most sensitive state documents are released. Any Bank
of England employee leaking the names of institutions involved will
face court action for breach of contract…“The scheme, drawn up by King and approved by Chancellor Alistair
Darling, aims to improve banks' liquidity by temporarily swapping
bundles of mortgages and credit card debt for Treasury bills, which are
short-dated Government debt that matures within nine months. The scheme
will run for three years so these bills will be replaced by new ones
when required.”
Cutoffs and Pleas for Aid Rise With Heat Costs
- “After struggling with soaring heating costs through the winter,
millions of Americans are behind on electric and gas bills, and a
record number of families could face energy shut-offs over the next two
months, according to state energy officials and utilities around the
country...“Under the federal aid program, at least 5.8 million households
will have received grants to help with heating bills in this fiscal
year, ending Sept. 30, which is an increase of 3.7 percent from last
year, according to figures to be issued Friday by the Energy Assistance
Directors’ Association.“This is the highest number in 16 years, Mr. Wolfe said. And the
numbers would have been higher if some states had not been forced to
reduce the number of aid recipients by increasing grants or tightening
eligibility requirements — in effect choosing to provide more aid to
fewer people.”
The coming tidal wave: Bank sees 6.5 million foreclosures
- “The investment bank Credit Suisse is now predicting that 6.5 million
American homeowners -- that's one out of every eight that has a
mortgage -- will end up in foreclosure over the next five years.“In a report this week titled ‘Foreclosure Trends: A sobering
reality,’ Credit Suisse predicts home prices will continue to fall
throughout 2008 and 2009, causing a huge wave of foreclosures.”
Brazil bans rice exports, protests in Peru - “Africa, Latin America to be short 500K tons of rice as Brazil becomes latest country to ban rice exports."“Brazil has banned the export of rice over fears that a supply
crunch and rising global prices could threaten food supplies at home.
Reinhold Stephanes, Brazil's agriculture minister, said the move was in
response to a number of other countries, mostly in Asia, who have also
banned rice exports, causing an imbalance in the global rice market.
The move came the same week as the World Food Programme said its budget
deficit as a result of soaring food prices hit $755 million.”
UK's super-rich 'getting richer'
- “The top 1,000 richest people in the country now have more than
£400bn between them, it estimates - up almost £53bn in the last year…“Philip Beresford, who has compiled the list since it was first
published in 1989, said: ‘Until now, the 11 years of Labour government
have proved a boon for the super-rich, rarely seen before in modern
British history.’”It's So Much Worse Than You Think
- “For months, we've been experiencing a liquidity crisis that has
locked up credit markets. It's now apparent that the debt market was a
disaster waiting to happen ... and that the collapsing housing market
was all that was needed to end the wait.“The problem is, if you look at the catalyst for this crash, you'll
see that the correction may have just begun. As of November, housing
was 8.4% off its peak. That's right, a mere 8.4% decline has caused
financials to melt down, homebuilders to go bankrupt, and the panicked
Federal Reserve to ignore its inflation-fighting mandate and push
through interest-rate cuts -- despite the highest inflation rates since
1990.“But how bad could it get? Well, Goldman Sachs -- noteworthy for
being the one big investment bank that was smart enough not to get
burned by securitized mortgages -- has predicted that if there's no
recession, the housing market will probably fall by 15%. If there is a
recession, Goldman thinks prices could fall by 30%. That's a heck of a
lot more than the current 8.4% decline.”
click to enlarge source“So, using Goldman's 15% estimated decline, 21% of people with
mortgages would owe more money than their house is actually worth. If a
recession develops -- which, frankly, seems likely to me -- and the
market falls 30%, then nearly two of every five mortgages would be
under water.”
Peak Civilization and the Winter of Our Disconnect
- “The first headlines of food rationing in America are buzzing across
the internet as I write this article. They underscore the unequivocal
reality that collapse is going to compel us to feed ourselves or quite
simply, we will perish. I believe that food security is the most
urgent, the most immediate issue to which we must attend at this moment
of Peak Civilization. For months, this website has been informing
readers about food storage and preservation
and other aspects of preparedness. It is now time, if you have not
already done so, to organize groups of citizens in your neighborhood,
schools, churches, and community centers to plant and maintain gardens.
In addition, collapse is compelling us to rapidly mobilize our
neighborhoods and communities to not only accumulate our own supply of
stored water but to organize citizens to work with local public water
utilities to ensure that they remain public and are not privatized.”
Stocks decline as consumer confidence falls to 26-year low
- “The Reuters/University of Michigan consumer sentiment index came in
at 62.6 for April, down from 69.5 a month earlier — and the lowest
reading since the early 1980s — as Americans contended with rising
energy and food prices. Consumers' flagging mood is worrisome for Wall
Street because consumer spending accounts for about 70 percent of U.S.
economic activity.”
The Biofuels Scam, Food Shortages and the Coming Collapse of the Human Population
- “So, to repeat, the food bubble is now starting to implode. What does
it all mean? It means that as these economic and climate realities
unfold, our world is facing massive starvation and food shortages. The
first place this will be felt is in poor developing nations. It is
there that people live on the edge of economic livelihood, where even a
20% rise in the price of basic food staples can put desperately-needed
calories out of reach of tens of millions of families. If something is
not done to rescue these people from their plight, they will starve to
death.“Wealthy nations like America, Canada, the U.K., and others will be
able to absorb the price increases, so you won't see mass starvation in
North America any time soon (unless, of course, all the honeybees die,
in which case prepare to start chewing your shoelaces...), but it will
lead to significant increases in the cost of living, annoying consumers
and reducing the amount of money available for other purchases (like
vacations, cars, fuel, etc.). That, of course, will put downward
pressure on the national economy.“But what we're seeing right now, folks, is just a small
foreshadowing of events to come in the next couple of decades. Think
about it: If these minor climate changes and foolish biofuels policies
are already unleashing alarming rises in food prices, just imagine what
we'll see when Peak Oil kicks in and global oil supplies really start
to dwindle.”
Customers in line for billions as banks lose unfair charges case
- “UK banks could be forced to return billions of pounds of overdraft
fees to consumers after a high court judge said the fees could be
challenged by the Office of Fair Trading…“According to the OFT, banks receive up to £3.5bn a year in
unauthorised overdraft fees - nearly £10m a day. They charge up to £39
for a bounced cheque, standing order or direct debit, and critics of
the system say this does not reflect the actual cost incurred by the
banks, which could be as little as £2…“He said up to £9bn could now be reclaimed by bank customers.”
Food Rationing Confronts Breadbasket of the World
- “Many parts of America, long considered the breadbasket of the world,
are now confronting a once unthinkable phenomenon: food rationing.
Major retailers in New York, in areas of New England, and on the West
Coast are limiting purchases of flour, rice, and cooking oil as demand
outstrips supply. There are also anecdotal reports that some consumers
are hoarding grain stocks.”
Saudi King says keeping some oil finds for future
- “Saudi Arabia's King Abdullah said he had ordered some new oil
discoveries left untapped to preserve oil wealth in the world's top
exporter for future generations, the official Saudi Press Agency (SPA)
reported.“‘I keep no secret from you that when there were some new finds, I
told them, 'no, leave it in the ground, with grace from god, our
children need it',’ King Abdullah said in remarks made late on
Saturday, SPA said.”
IRS Audits of Big Companies Fall to All-Time Low
- “The FY 2007 audit rate for the nation's largest corporations has
plunged to its lowest level in the last 20 years, less than half what
it was in FY 1988 ... The historic collapse in audits for the
corporations with $250 million or more in assets was especially notable
during the last two years when the rate dropped from 43% in FY 2005, to
34% in FY 2006 and then to an all-time low of 26% in FY 2007.
click to enlarge source“But along with the declining number of audits for the largest
corporations, the IRS data point to a second significant finding: the
thoroughness of these essential audits has been dropping. One example
of this broad problem can be seen by the fact that the typical amount
of time auditors spend on each of the large corporate audits is down by
20% over the last five years.”
How New Global Banking Rules Could Deepen the U.S. Crisis
- “But despite all the sober and deep thought that went into them, many
regulators, academics, and financial analysts are increasingly
concerned that the new regulations will end up making today's financial
crisis worse rather than better. BaselII is intended to keep banks safe
by requiring them to match the size of their capital cushion to the
riskiness of their loans and securities. The higher the odds of
default, the less they can lend, all else equal.“Here's the problem. Today, many banks already face so many risks
that implementing Basel II as written will put them in a capital
squeeze. They will either have to reduce risk by cutting back on
lending, or sell more shares to give themselves a bigger capital
buffer, or both. If the banks do lend less, it could cause an even
steeper economic decline, which would lead to more defaults and cause
banks to ratchet back even more, and so on in a downward spiral.”
Governor Schwarzenegger Proposes Mass Teacher Lay-Off In Public School
- “The Governor of California has proposed cutting nearly $5 billion
dollars from California’s education system, sparking the distribution
of “pink slips” to over 20,000 teachers this past week. Close to 90,000
more could be sent out.“With California on the brink of financial crisis the state’s
governor must look for areas to trim the fat, so to speak. According to
an area news report the state’s $16 billion USD budget failure put the
governor is a crunch, proposing a nearly $ 5 billion USD CUT in school
funding.”
Hedge fund managers get billion-dollar paydays
- “Hedge fund managers, those masters of a secretive, sometimes
volatile financial universe, are making money on a scale that once
seemed unimaginable, even in Wall Street's rarefied realms…“The richest hedge fund managers keep getting richer — fast. To
make it into the top 25 of Alpha's list, the industry standard for
hedge fund pay, a manager needed to earn at least $360 million last
year, more than 18 times the amount in 2002. The median American
family, by contrast, earned $60,500 last year.“Combined, the top 50 hedge fund managers last year earned $29
billion. That figure represents the managers' own pay and excludes the
compensation of their employees. Five of the top 10, including Simons
and Soros, were also at the top of the list for 2006. To compile its
ranking, Alpha examined the funds' returns and the fees that they
charge investors, and then calculated the managers' pay…“With a combined $2 trillion under management, the hedge fund
industry is coming off its richest year ever — a feat all the more
remarkable given the billions of dollars of losses suffered by major
Wall Street banks.“In recent months, however, scores of hedge funds have quietly died
or spectacularly imploded, wracked by bad investments, excess borrowing
or leverage, and client redemptions — or a combination of those events…“Since 1913, the United States witnessed only one other year
of such unequal wealth distribution — 1928, the year before the stock
market crashed, according to Jared Bernstein, a senior fellow
at the Economic Policy Institute in Washington. Such inequality is
likely to impede an economic recovery, he said.”
emphasis added by chycho
US Fed Responsible for the Credit Crisis
- “There has been a lot of talk in the news recently about the Federal
Reserve and the actions it has taken over the past few months. Many
media pundits have been bending over backwards to praise the Fed for
supposedly restoring stability to the market. This interpretation of
the Fed's actions couldn't be further from the truth.“The current market crisis began because of Federal Reserve
monetary policy during the early 2000s in which the Fed lowered the
interest rate to a below-market rate. The artificially low rates led to
over investment in housing and other malinvestments. When the first
indications of market trouble began back in August of 2007, instead of
holding back and allowing bad decision-makers to suffer the
consequences of their actions, the Federal Reserve took aggressive,
inflationary action to ensure that large Wall Street firms would not
lose money. It began by lowering the discount rates, the rates of
interest charged to banks who borrow directly from the Fed, and
lengthening the terms of such loans. This eliminated much of the stigma
from discount window borrowing and enabled troubled banks to come to
the Fed directly for funding, pay only a slightly higher interest rate
but also secure these loans for a period longer than just overnight.“After the massive increase in discount window lending proved to be
ineffective, the Fed became more and more creative with its funding
arrangements. It has since created the Term Auction Facility (TAF), the
Primary Dealer Credit Facility (PDCF), and the Term Securities Lending
Facility (TSLF). The upshot of all of these new programs is that
through auctions of securities or through deposits of collateral, the
Fed is pushing hundreds of billions of dollars of funding into the
financial system in a misguided attempt to shore up the stability of
the system.“The PDCF in particular is a departure from the established pattern
of Fed intervention because it targets the primary dealers, the largest
investment banks who purchase government securities directly from the
New York Fed. These banks have never before been allowed to borrow from
the Fed, but thanks to the Fed Board of Governors, these investment
banks can now receive loans from the Fed in exchange for securities
which will in all likelihood soon lose much of their value.“The net effect of all this new funding has been to pump hundreds of
billions of dollars into the financial system and bail out banks whose
poor decision making should have caused them to go out of business.
Instead of being forced to learn their lesson, these poor-performing
banks are being rewarded for their financial mismanagement, and the
ultimate cost of this bailout will fall on the American taxpayers.
Already this new money flowing into the system is spurring talk of the
next speculative bubble, possibly this time in commodities.“Worst of all, the Treasury Department has recently proposed that
the Federal Reserve, which was responsible for the housing bubble and
subprime crisis in the first place, be rewarded for all its
intervention by being turned into a super-regulator. The Treasury
foresees the Fed as the guarantor of market stability, with oversight
over any financial institution that could pose a threat to the
financial system. Rewarding poor performing financial institutions is
bad enough, but rewarding the institution that enabled the current
economic crisis is unconscionable
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