OT: Chilean Tsunami Was Non-Event Here

But it was a beautiful day at the beach right around the corner of my house. Many people were on the bluffs, watching the ocean. Even the county sheriffs came (in 5 cars), just to watch the waves. Bright sunshine and warm weather.

We did see some unusually choppy actions, not the orderly wave sets we normally see. Nice way to spend a Saturday afternoon, watching the waves and gossipping with the neighbors while getting tanned...

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California's New Deficit Reduction Strategy: Cuss Free Week

If you violate, you drop a coin or two in a no-cuss jar. They actually passed the resolution.

California Assembly passes resolution for Cuss Free Week
(2/25/2010 San Jose Mercury News)

"SACRAMENTO — Feeling a little salty, Californians? Better get it out of your system while you can.

"Amid the ongoing — and occasionally tense — debate over how to clean up California's budget mess, lawmakers are trying to tidy something else, almost as unmanageable: our language. Thursday morning, the Assembly approved a ceremonial resolution turning the first week of March into "Cuss Free Week."

"With the Senate expected to follow suit next week, all Californians will be asked to bite back on four-letter words and a few choice compound phrases. WT (bleep)?, you ask. Don't sweat: Police officers won't be waiting with soap. That's not the point.

"According to sponsors of the measure — inspired by a Southern California teen whose creation of a "no cussing" school club sparked an international movement — it's more about minding the delicate sensibilities of those around you. Like your grandmother. "When we're at our grandmother's house," said Anthony Portantino, D-Pasadena, "we have respect and decorum."

"Aren't there more important things on government's agenda right now? Sure, Portantino concedes. But maybe a little civility is just the prescription to help "break through that logjam." To keep things honest, Portantino is handing out no-cuss jars to all 120 legislative offices in the Capitol — and to Gov. Arnold Schwarzenegger. Every time a naughty word slips out, a few coins get dropped in. He'd like us all to try it at home, too. How's that for a deficit-reduction strategy?"

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New CNN Poll: Fed Government Poses Immediate Threat to Citizens' Rights

56% thinks so, while 44% disagree.

From CNN Political Ticker today [emphasis is mine]:

"Washington (CNN) – A majority of Americans think the federal government poses a threat to rights of Americans, according to a new national poll.

"Fifty-six percent of people questioned in a CNN/Opinion Research Corporation survey released Friday say they think the federal government's become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. Forty-four percent of those polled disagree.

"The survey indicates a partisan divide on the question: only 37 percent of Democrats, 63 percent of Independents and nearly 7 in 10 Republicans say the federal government poses a threat to the rights of Americans.

"According to CNN poll numbers released Sunday, Americans overwhelmingly think that the U.S. government is broken - though the public overwhelmingly holds out hope that what's broken can be fixed.

"The CNN/Opinion Research Corporation poll was conducted February 12-15, with 1,023 adult Americans questioned by telephone. The survey's sampling error is plus or minus 3 percentage points for the overall survey."

No link to the full result yet.

My guess is that the current Obama administration has turned the heat on the proverbial pot a bit too high too quick, and the proverbial frogs (that's the rest of us, except for Democratic supporters) are noticing the heat after all these years.

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Now It's FBI. Obama Government Piling Up on Toyota

While the sham hearing continued on Capitol Hill, FBI raided three Toyota suppliers in an anti-trust investigation. The three suppliers are Denso Corp, Yazaki North America and Tokai Rika. Their Japanese parent companies supply Toyota in Japan.

FBI raids US headquarters of Toyota supplier Denso in antitrust probe (2/24/2010 AP via Los Angeles Times)

"NEW YORK (AP) — The FBI raided the U.S. offices of three auto suppliers to Toyota and other manufacturers as part of an antitrust investigation, the agency said Wednesday.

"The FBI's Detroit office said agents raided the offices of Denso Corp, Yazaki North America and Tokai Rika. All the raids took place Tuesday evening. There was no immediate indication the investigation involved the safety of the auto parts." [The article continues.]

Apparently, Japanese companies supplying a Japanese company is a punishable offense in the U.S.

Denso supplies Toyota with accelerator pedals that are superior to the ones supplied by CTS and trouble-free. Can't allow that, can we? (Read these excellent articles from The Truth About Cars "Complete Guide to Toyota's Gas Pedals")

Abject apology by the CEO of Toyota was stupid and unnecessary. Clearly he wasn't informed of "taking the fifth". Chicagoland thugs won't stop until they drive Toyota out of the country. The U.S. consumers will have less, inferior choices when it comes to choosing their cars and trucks.

""Where is the remorse?" scolded Rep. Marcy Kaptur, D-Ohio." (from AP article today)

Hahahahaha that's rich. What a circus.

The inept DPJ (Democratic Party of Japan) administration is bogged down with land transaction scandal of the party leader and probably has little time or inclination to spare to protest to the Obama administration.

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Toyota and Goldman Sachs: Who's Bad?

So... I don't quite understand. Toyota is bad and evil because it built cars that occasionally failed for unknown reasons. Goldman Sachs is brilliant because it designed CDOs that would fail so that they could bet against them. And oh by the way in that process Goldman may have helped crash the world economy into the deepest recession since the World War II.

Here we have Goldman Sachs, who, from all indications, created CDOs (collateralized debt obligations) specifically designed to FAIL. Goldman sold them to either gullible investors or co-conspirators (think Societe Generale), often with AIG's insurance (CDS, credit default swap). Goldman itself shorted those CDOs through AIG's CDS. Sure enough, CDOs crashed when 1) underlying MBS (mortgage backed securities) crashed because of sub-prime loan debacle; 2) index that supposedly tracked CDS started to show unusually high spreads, making the securities insured with those CDS drop in price; 3) AIG got downgraded, triggering the collateral requirement and downgrade of CDOs; 4) all of the above and probably more. (Read AIG-related article by David Fiderer at Huffington Post, if you think you can keep your blood pressure from shooting up.)

Goldman Sachs has gotten away with it.

Now we also have Toyota, subject of media and congressional circus right now, whose Japanese CEO naively admits guilt, saying he is sorry, that his company shouldn't have expanded this rapidly, that they were remiss in quality, etc - the usual, honorable thing to do in Japan and totally stupid thing to do in the U.S., where anything he says will be used against him and his company in a criminal prosecution which the Obama government is so intent on pursuing.

For Toyota to replicate Goldman's success, Toyota has to build a car specifically designed to fail, sell it and take out huge insurance policies on the car and the driver. An accident happens, and the insurer cannot pay because the payout is simply too huge. The government steps in to pay on behalf of the insurer. When someone raises the question of a faulty car built by Toyota, Toyota will say "People are simply jealous of our performance, because we're so good." And people will say "Oh OK, I guess you guys are really good."

FBI raided the offices of Toyota suppliers Tuesday night. For what criminal offense?

Some people may say "Well, in Toyota's case, people actually have died from the defect." People have died from the stock market and housing market plunge at least in part caused by the products and trading strategies by the likes of Goldman Sachs. I remember a few who committed suicide.

Still, Goldman Sachs has gotten away with it.

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SEC's New Rule for Short Selling Is a Non-Rule

The U.S. Securities and Exchange Commission (SEC) chairman Mary Shapiro announced a new rule to "restrict" short selling today, and it has been approved by 3-2 vote.

According to the announcement, this new rule will do the following:

"... a circuit breaker would be triggered any time a stock has dropped 10 percent in one day. At that point, short selling would only be permitted in a security if the price is above the current national best bid."

The circuit breaker, therefore, won't stop short selling even when the stock has dropped 10 percent. Short sellers will still be able to short as long as the price is above the current national best bid (sort of uptick rule, and SEC actually calls it "alternative uptick rule").

Creating the national best bid should be very easy for the outfits that can do "flash-trading" and "high-frequency trading", both of which SEC is supposed to have been investigating oh for such a long time. Instead, the agency is busy harassing Toyota.

With flash-trading and HF trading, it should be very, very easy to keep the drop within the 10% threshold while these quant traders short away the stock.

And this non-rule will be effective for the day the stock plunges 10 percent, and the day after.

Why does SEC even bother? Is it just to show that they are doing "something" to justify their salaries and benefits?

I have a feeling that this will join the list of "unintended consequence" very shortly. What unintended consequence I haven't yet figured out. One possibility is a no-bid market. Who wants to invest and trade in a market which is openly manipulated by meaningless regulations and by the likes of Goldman Sachs?

Another possibility is that investors/traders who are long the security may get trapped, unable to unload their shares. I am sure the brokerages and banks will have mechanisms to distinguish long sellers from short sellers, but somehow I can't seem to trust such mechanisms.

In a crash like we had in September-October 2008, you may want to dump your holdings as fast as you can, whatever the price, even if you may get a sizeable haircut. It was better to lose 10% by selling out than to lose 50, 60, even 70% several days, weeks, months later. Some stocks lost more than 90% before the market bottomed in March 2009.

This potential entrapment of long sellers is perfectly in line with another recent SEC ruling that will allow money market funds to refuse redemption in a crisis.

Capital and information want to flow in and out freely. Any effort to stop the free flow will eventually backfire.

After the damage is done, the government will say "Who could have known? But we meant well..." A lot of people (other than people with their heads in the sand, including government bureaucrats) will have known. Intention will be irrelevant.

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US Toyota Workers Stand Behind Their Man, Their Company

The Congressional hearing on Toyota's recall problems (aka "kangaroo court", aka "witch hunt" in the name of public safety, my foot) will have Toyota's CEO Akio Toyoda tomorrow.

Japan's Nikkei Shinbun reports that Toyota's US factory workers are in Washington D.C. to show their support for their CEO and for their company.

"The Congressional hearing on February 23 on Toyota's recall problems was an unusually popular event. The line of people wanting to attend the hearing was 50 meters long. 300 people showed up for 150 slots.

"Among them, there were people wearing shirts with Toyota logo. They were men and women who work in Toyota factories around the country. One of them, from a Toyota factory in Indiana, said to the reporter, "We are only a small portion of the Toyota employees. We want everyone to know that there are tens of thousands of Toyota employees supporting the company throughout the United States."

"Referring to Toyota's CEO Akio Toyoda, who is going to testify on February 24, she said, "I trust him to make the right decision. I want him to correct the wrong impression that Americans have gotten about Toyota over the recall problems."

"There are already people forming a line to attend the February 24 hearing."

CNN also reports that Toyota's US dealers staged a rally on Capitol Hill in support of the company and their brands which have exemplified quality worldwide.

Toyota dealers rally in defense of brand (2/23/2010 CNN International)

"Washington (CNN) -- More than 100 Toyota dealership owners and staff rallied on Capitol Hill Tuesday to defend their businesses and Toyota as Congress opened high-profile hearings into recent large-scale vehicle recalls.

""We take great pride in the fact that as of last night, together we've done over 690,000 recalls already and are pacing at 50,000 a day throughout the United States," Paul Atkinson, chairman of the Toyota National Dealer Council, said to the crowd. "My question for you is: How did we suddenly overnight become the villain?"

"... Tamara Darvish of Darcars Automotive was quick to point out more bad news for Toyota could mean more bad news for their network of 172,000 employees in the United States.

"Atkinson noted that, in the wake of last year's bailout of General Motors and Chrysler, they're now in competition with government-backed automakers for market share."

"... But a message of optimism also was a recurring theme at Tuesday's rally. AutoNation President and CEO Mike Jackson said he believes the drop in sales was largely due to the fact that many vehicles were taken off the market until they were repaired. He does not expect the brand to suffer in the long term.

""What's fascinating about the American people is that if they see a company that's done it right for decades, but has a bad moment and makes a mistake and owns up to it and commits to change and does everything possible to make it right, the American people will understand and forgive," he said."

That's the spirit.

Now, can you imagine GM (or Chrysler or Ford) factory workers and dealers coming to Washington D.C. to show support for the CEO and the company, defending their brand and quality? I can't.

Good for them, these Toyota US workers and dealers. I just don't buy the allegation that Toyota short-changed safety for the profit. That's not how they have made cars anywhere in the world, from what I once observed in a Toyota plant in Japan. Local Craigslist has a listing for night shift auto technicians at a Toyota dealership to fix the pedals.

Transportation Secretary LaHood today "testified that ... NHTSA's investigations of complaints about unintended acceleration have produced no evidence that electronic throttle systems are affected by electromagnetic interference, as some have speculated." (Wall Street Journal, 2/23/2010)

In other words, no one knows what causes unintended acceleration, but let's gang up on Toyota because it sells more vehicles than Government Motors and people actually like them, and we the government won't allow that.

My next car will be a Toyota.

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Chicagoland-Style Toyota Witch Hunt Intensifies

Don't they have better things to do?

Grand jury subpoena has been issued, and now SEC has joined the fray.

Toyota faces federal, congressional probe (2/22/2010 AP via Yahoo Finance)

"WASHINGTON (AP) -- Federal prosecutors have launched a criminal investigation into Toyota Motor Corp.'s safety problems and the Securities and Exchange Commission was probing what the automaker told investors, the company disclosed Monday. Newly released internal documents showed that Toyota officials visited with U.S. regulators years ago who "laughed and rolled their eyes in disbelief" over safety claims.

"The twin developments created new public relations challenges for Toyota plus the prospects -- however likely or unlikely -- of hefty federal fines or even indictments against executives in the U.S. and Japan. They also complicate Toyota's ability to discuss details driving its recall of 8.5 million vehicles because anything executives say could be used against the company inside a courtroom.

"Top Toyota executives were expected to testify at hearings Tuesday and Wednesday on Capitol Hill. One lawmaker said he believed Toyota misled owners about the repairs and relied upon a hastily-arranged study to reassure the public.

"In a new filing with the SEC, Toyota said it received the grand jury request from the Southern District of New York on Feb. 8 and got the SEC requests Friday.

"It wasn't immediately clear what U.S. laws Toyota might have broken. A subpoena would specify why prosecutors sought company documents, but Toyota would not comment beyond its disclosure with the SEC. A spokeswoman with the U.S. Attorney's Office for the Southern District of New York declined to comment, saying it does not confirm or deny its investigations as a matter of policy."

"...Legal experts said the fresh subpoenas could affect how Toyota executives respond to the questions from lawmakers.

"Eric Dezenhall, a crisis management consultant in Washington, said the subpoena might cause Toyota to limit its testimony because apologies are admissible in court. He predicted the company would walk a line between carefully phrased testimony and enough disclosure to describe the cars' mechanical problems and steps Toyota had taken to make the vehicles safer." [The article continues.]

Ms. Shapiro's agency is yet to do anything about naked short selling that probably precipitated the market crash in September-October 2008 which in turn crashed the global economy, or about so-called "flash-trading" (aka front-running) by big investment houses like Goldman Sachs. But she finds time to investigate Toyota.

This is getting beyond absurd.

No word about other companies with the same sticking pedal problems. No word about the company (CTS) who makes the accelerator assembly for Toyota and other major auto manufacturers including GM, Ford, Chrysler, and Honda that is known to cause the problem.

And how about this allegation by Wayne Madsen that CTS's accelerator may be negatively affected by military frequencies? (CTS supplies to the US military.)

But no. Obama-land is intent on doing all it can to squash Toyota by staging a show trial. With the subpoena, Toyota executives have little choice but take the fifth in the congressional hearing, and they will be painted by the obliging media as "guilty". Its union pals must be ecstatic.

When will Japan start dumping US Treasuries, I wonder?

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Obama's Health Care "Reform": What's New?

a lot more tax.

The White House has released its version of the health care reform bill, which is basically the Senate version with some so-called "compromise" to bait the Republicans. The president has declared that it will be voted in, using the Senate "reconciliation" process that requires only 51 votes instead of 60, unless GOP "cooperate" (meaning they capitulate to the president's bill).

It will cost $1 trillion over 10 years, and Obama claims it won't add to the federal deficit.

He is right. Because it will be funded by TAXPAYERS, whether they like it or not (61% of voters dislike it, and think it should be scrapped). The U.S. taxpayers will be forced to fund this monstrosity that will put IRS as the enforcer, penalties for individual and companies for not having a health insurance that is deemed "appropriate" by the government, tax investment income, tax branded prescription drugs and medical devices (they disingenuously call it "annual fee"), include "Cadillac tax", the government panel to decide on insurance premiums, and much more.

Probably the definition of "reform" has changed. It may not be "making it better", but "make a change, whether it is good or bad, but change nonetheless".

I am afraid the President is either several steps behind the general public, or he is tone-deaf. When Americans were more worried about deepening recession and job loss in early 2009, he declared health care "reform" and global warming legislation to be the top priorities. When Americans grew angrier at federal budget deficit and wasteful spending by his government, he decided to throw more money on job creation. When Americans feel they are totally tapped out and no more extra money to shell out to the government, he proposes, among other things, to tax even the unearned income so the taxpayers can pay for his health care reform which is really just an insurance "reform" which is not even a reform.

And his pitch? It won't add to the federal deficit.

SO WHAT? Americans don't have money for him.

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Op-Ex Crash Didn't Happen. Now What?

The alarming drop in the stock futures overnight didn't result in a huge drop in the regular hours Friday. After the initial drop, all major indices recovered into positive territories. And just like so many Op-Ex (option expiration) day, the market ended basically flat - killing both puts and calls but more puts than calls.

So what was the point of this Fed's exercise of announcing the discount rate hike on Thursday after hours, other than letting Goldman Sachs make a ton of money from fearful investors in the fter hours futures market (I'm guessing, of course)?

As soon as the rate hike was announced, the financial media, particularly CNBC, went on overdrive to spin it positive. It was unreal. Here's one from CNBC, in early Friday morning before the market opened:

Who's Afraid of the Fed? Market Actually Wants Rate Hikes
(Jeff Cox, 2/19/2010 CNBC)

"Forget the cosmetic move of raising the discount rate—the day the Federal Reserve really decides to start putting the brakes on growth could actually be a happy occasion for the stock market.

"Raising interest rates and stemming the flow of liquidity to the economy might otherwise be considered a barrier for stock market growth, but many investors are in fact eagerly anticipating that the move will add another level to investor confidence.

"Though the Fed announced a surprise hike in the discount rate that it charges banks to borrow money, the central bank continues to indicate that its more significant funds rates will stay near zero for the foreseeable future.

""Most people assume that the day the Fed starts tightening, the market goes down. That might be the short-term reaction," says Uri Landesman, head of global growth strategies for ING Investment Management. "I'm going to be happy because it's going to suggest to me that things are starting to get better.""

The article continues, so you can click the link above and be happy that everything will be alright.

I have a hard time swallowing the line. I don't see "the flow of liquidity into the economy", as this CNBC writer clearly does see. If he is defining "the economy" as Wall Street economy, then he may be right. But on Main Street, outside the big corporations, money and credit are not there. Banks continue their utmost effort not to lend to businesses and home buyers. They continue to cut back on credit to consumers. And they continue to prosper.

That's all the Federal Reserve cares, I'm afraid; that its member banks, particularly the big ones, continue to prosper. The Federal Reserve probably couldn't care less about Main Street economy, even if that's supposed to be part of their mandate. Of course they don't say that; instead they say the Federal Reserve must remain "independent" - meaning "independent of the fiscal policies of the government that includes economic well-being of the nation".

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More on Fed Discount Rate Hike - Effect on OpEx

So, just to show how "independent" the Federal Reserve is, the board of governors of the Federal Reserve raised the discount rate by 0.25% to 0.75%.

In front of the Option Expiration Day.

Why couldn't they wait until Friday's market close? I trade, so I totally share the sentiment of Karl Denninger in his post:

Fed Changes Terms In Front of OpEx Again
(2/18/2010 The Market Ticker)

[Here are the paragraphs that Denninger 'interprets' the Fed's statement in italic.]

We just made sure that anyone who was long into Options Expiration - which is tomorrow - especially on index options which cannot be hedged or traded now, is screwed. Just like in August of 2007 when we did the opposite. [Note: The announcement was made at 4:30 PM EST. The stock market closes at 4:00 PM, and options don't trade after hours.]

Of course we couldn't wait until Friday after the close when it wouldn't hose people - instead, we timed this for maximum pain.

We gave no warning either. Ha ha. You did wear your titanium plate in your pants, right?

[Referring to the discount rate hike which is effective tomorrow,] That's "right now", in case you didn't figure it out yet.

This is something we said we'd do, but heh, you gotta love our timing. We make a practice of burning people - a few years ago it was the shorts (who were right), this time it's the longs (who were also right - well up until this evening!

Denninger feels that "this release was intentionally timed to hurt people, just as was the August 2007 one". He continues:

"Bernanke and his pals ought to be run out of town on a rail for this sort of repeated abuse. They seem to think that the markets are their plaything, and all they're doing is destroying confidence with each and every move of this sort.

"It is not what you do, it is how you do it, and this sort of thing is just yet another reason why The Fed must be audited. The timing on this is too damn suspicious - never mind that someone sold a metric ton of SPY right in front of the announcement - literally by seconds, 2 million shares were unloaded."

He has an intraday chart of SPY in the post linked above.

The Fed is "independent" - does that mean it is free to openly mess with the market mechanism like this? I guess so.

I have very inadequate hedge against the market crash that some say will come tomorrow, and I couldn't unload options because options don't trade after hours. In other words, I am one of those who will potentially be "screwed", come tomorrow morning.

Thank you Ben and the hawks at the Fed, including this guy with excellent connections all over who wrote a peculiar op-ed piece on Wall Street journal back in September 2009 declaring the noble and courageous intent of the Fed to do what it thinks is right, regardless of the condition of the financial markets or the general economy.

Normalization? What's there to normalize? The financial markets and the economy are anything but "normal".

May you all rot in hell where the economy is forever trapped in a deflationary spiral no matter what they do. (I guess they could go to Japan right now instead.) Or I could wish them an inflationary spiral no matter what they do to rein in.

Or better yet, I wish them an economy that simply ignores whatever they do. They can squawk all they want, and it won't make a bit of difference.

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Now It's Federal Reserve's Fiat: Discount Rate Raised to 0.75%

supposed to curb carry-trades by member banks

Fed hikes discount rate to 0.75% (2/18/2010 Marketwatch)

WASHINGTON (MarketWatch) -- The Federal Reserve announced late Thursday that it was raising its discount rate in order to encourage banks to borrow from the private market for short-term credit instead of from the Fed.

"In a statement, the Fed said it would raise its discount, or primary credit rate, to 0.75% from 0.5% effective on Friday.

"Fed Chairman Ben Bernanke signaled last week that the Fed was mulling the move.

"Fed watchers had expected the move to come at the next Fed meeting in March. Today's action shows a sense of urgency on the part of the Fed officials.

"The Fed said the move is intended to "normalize" its operations as the financial crisis winds down.

"The change is not a tightening and does not signal any change in monetary policy, the Fed said.

"The change in the discount rate was approved by the Fed Board of Governors on requests from all 12 district bank boards.

"Former Fed Gov. Laurence Meyer drew attention to the possibility of a discount rate hike early this year. Meyer said Fed officials were unhappy that banks were engaging in a carry-trade or borrowing from the Fed at ultra-low levels and then reinvesting the money elsewhere."

My question is: WHY NOW?

My second question is: WHAT'S THE POINT?

After hours, stocks and index futures are reversing today's gains. Notable exception is US dollar. Thank you, Ben, for further complicating the Op-Ex week.

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Obama "Humphreys" the Deficit by Setting Up a Panel

by executive fiat to study how to reduce federal deficit.

What's "Humphrey", you ask? It's from Sir Humphrey Appleby, a fictional character in a British comedy, a staunch defender of the status quo, who advises a newbie Minister that they form a committee when they don't want to find out about anything.

Obama sets up deficit panel without help from Hill (2/18/2010 AP via Yahoo Finance)

"WASHINGTON (AP) -- President Barack Obama signed an order Thursday unilaterally creating a bipartisan commission to rein in unruly deficits after Congress rejected a similar body with considerably more enforcement power.

"In making the announcement, Obama said that unless lawmakers put aside partisan differences, the continuing red-ink trend could "hobble our economy."

"The federal deficit hit a record $1.4 trillion last year and could grow larger this year as the struggling economy puts a big dent in tax collections.

""It will cloud our future and it will saddle every child in America with an intolerable burden," he said before signing an executive order establishing the commission." [The article continues.]

Is this some kind of sick joke? This guy is surpassing FDR in terms of government spending; he just signed a bill that raised the debt limit by $1.9 billion which may carry us till the end of February; his 2011 budget is $3.8 trillion.

He IS the cause for "the continuing red-ink trend", and he is the one who "will cloud our future and saddle every child in America with an intolerable burden". The red-ink trend will continue not because of partisan differences but because of his government's spending.

I can tell him, so can the majority of this country, how to reduce deficit without wrecking the country's tax-paying middle class and without creating a panel stuffed with some august appointees.

Stop spending.

(By the way, speaking of executive orders, do you remember what Obama's last two executive orders were? One was to confer full diplomatic immunity to INTERPOL, and the other was to create the council of governors for national security.)

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Small Plane Crashes into IRS Building in Austin, Texas

That's after the pilot of the plane had set fire to his own house.

UPDATE: Man Sets House On Fire, Then Crashes Stolen Plane Into Austin Office Building (2/18/2010 KWTX.com)

"AUSTIN (February 18, 2010)—CNN is reporting that a man set his house on fire Thursday, stole a plane from the Georgetown airport and then crashed the aircraft into a multi-story building in Austin that houses Internal Revenue Service offices.

"CNN reported that NORAD launched two F-16s out of Ellington Air Force Base in Houston after the crash “out of an abundance of caution.”

"The plane was registered to Joseph Andrew Stack, the Federal Aviation Administration told an Austin TV station, whose house in north Austin burned Thursday morning.

"A neighbor rescued a woman and a girl from the burning house, according to Austin media reports." [The article continues.]

(... Oh wait, if that was his plane it wasn't a "stolen" plane as the headline indicates, was it?)

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Connection Between Toyota's Sticking Pedal Problem and US Military

It's two-fold.

Lewrockwell.com has an article on Toyota recalls that says, among others, President Obama and his Chief of Staff Rahm Emanuel decided to blow up Toyota's sticking pedal problem in order to pressure the new Japanese administration who wants U.S. military bases out of Okinawa.

It also says something very curious and interesting: Toyota's accelerator assembly made by an American company CTS, who also supplies to GM, Ford and to the U.S. military, is susceptible to "non-civilian" (i.e. "military") frequencies.

Here's the original article that Lewrockwell.com linked:

Obama waging economic warfare on several fronts, including Japan
(Wayne Madsen, 2/12/2010 Online Journal)

"(WMR) -- The Obama administration has expanded its economic warfare against other countries, first reported on January 18 by WMR in the case of an authorized financial campaign against Venezuela. The Obama administration, according to WMR’s Asian sources, is waging an economic warfare campaign, coupled with industrial sabotage, against Japan through a pre-planned operation directed against the Japanese automobile manufacturer, Toyota.

"WMR has learned that the Obama administration authorized the anti-Toyota campaign as a warning shot to Japan over its reformist government’s insistence that the U.S. pull its military troops out of Okinawa. WMR has learned that Obama and his chief of staff, Rahm Emanuel, have decided to turn the screws on Japan, not only for auto market leverage, but also to punish Japan over the insistence by Prime Minister Yukio Hatoyama and the newly-elected anti-U.S. military mayor of Nago on Okinawa to move the U.S. military off of Okinawa."

The article continues, and this is the part where he discusses CTS's accelerator assembly:

"Ironically, Toyota does not make the sensor-equipped accelerator pedal for its recalled vehicles. Elkhart, Indiana-based CTS (formerly known as Chicago Telephone Supply) manufactures the pedals for Toyota, as well as for Ford and GM. China’s Jiangling Motors has complained about sticking gas pedals from CTS and the firm has developed a reputation for faulty accelerator pedals and their associated sensors. CTS’s president and CEO is India-born Vinod Khilnani. Curiously, the Obama administration, which is flush with Indian-Americans at high levels, has not criticized CTS, especially since it supplied the very same accelerator pedals it manufactures for Toyota and GM to the U.S. military."

and

"The CTS-manufactured accelerator pedal used in Toyotas relies on an electronic pressure sensor. WMR has been informed by knowledgeable sources that the sensors are vulnerable to non-civilian frequencies. The Obama administration, fearful that military transmissions may be responsible for accelerator accidents, may have sought to jump the gun by blaming Toyota for the accelerator problems." [emphasis is mine]

I have no idea whether Mr. Madsen's sources are reliable or telling the truth. I wouldn't have noticed the article if it hadn't been featured at Lewrockwell.com.

By the way, that Obama administration's intent is political is evident by the fact that the US government is demanding the data for Toyota's European recalls. Since when has the National Highway Traffic Safety Administration started regulating internationally?

Is the agency demanding the international recall data from GM and Ford, too? Honda? I haven't heard about it. Have you? How about demanding the data from CTS?

Toyota will be fined if it doesn't submit the data within 30 to 60 days.

And the problem may have been caused by the U.S. military frequencies.

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Bomb Explodes Outside J.P.Morgan Office in Athens, Greece

from Reuters...

ATHENS, Feb 16 (Reuters) - A bomb exploded outside the JP Morgan offices in Athens on Tuesday, causing minor damage to the building, police said.

There were no immediate reports of injuries.

"It was a time-bomb at JP Morgan's offices in central Athens," a police official said. "The explosion damaged the outside door and smashed some windows."

The official said police cordoned off the area after a local newspaper had received a warning call. (Reporting by Renee Maltezou)

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AP: Foreign Demand for Treasury Securities Falls

but AP got the number 180-degree wrong for Japan...

AP Economics Writer Martin Crutsinger reports that:

"The Treasury Department reported that foreign holdings of U.S. Treasury securities fell by $53 billion in December, surpassing the previous record of a $44.5 billion drop in April 2009"; and

"The big drop in China's holdings meant that it lost the top spot in terms of foreign ownership of U.S. Treasuries, dropping to second place behind Japan.

"Japan also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China's December total of $755.4 billion."

Except Japan didn't reduce the holdings.

If you take a look at the Treasury Department's TIC chart, China did reduce its holdings from $789 billion in November to $755 billion in December 2009. However, Japan increased its holdings from $757 billion to $768 billion, an increse of $11 billion.


Aside from Japan, one notable country that increased its US Treasury holdings is United Kingdom. UK's Treasury holdings increased from $277 billion in November to $302 billion in December, $25 billion increase. UK increased the Treasury holdings by 132% in one year.

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Spanish Intelligence Suspects Coordinated Attack on Sovereign Debt

They are learning fast.

Spanish intelligence probing debt "attacks"-report
(2/14/2010 Reuters)

"MADRID, Feb 14 (Reuters) - Spain's intelligence services are investigating the role of investors and media in debt market turbulence over the last few weeks, El Pais reported on Sunday.

"Citing unnamed sources, El Pais said the National Intelligence Centre (CNI) was looking into "speculative attacks" on Spain following the Greek debt crisis.

""The (CNI's) Economic Intelligence division...is investigating whether investors' attacks and the aggressiveness of some Anglo-Saxon media are driven by market forces and challenges facing the Spanish economy, or whether there is something more behind this campaign," El Pais said."

Not that there's no reason to worry about Spain. On the contrary. Spain's budget deficit is 11.4% of GDP (note: US's number is 10.6% for 2010); many economists doubt the Spanish government's GDP growth projection of 3% by 2012.

Still, it is reminiscent of the "bear raids" on Bear Stearns and Lehman Brothers in 2008, both of whom collapsed under the intense attacks from certain investors taking naked long positions on the CDSs (credit default swaps) - holding only CDS without holding the underlying debt - and naked shorting of their stocks. These attacks coincided with certain media news that turned out later to be utterly false (news like "Goldman would not accept the counterparty risk of Bear Stearns", as reported by David Faber of CNBC).

The article's last paragraph indicates what kind of "attack" that the Spanish government may be investigating:

"Underscoring those doubts, the premium demanded by investors for buying Spanish rather than German government bonds ES10YT=RR has risen in recent weeks and the cost of insuring Spanish bonds against default by the government has also risen."

In other words, CDS on Spanish sovereign debt.

So who are the "investors" attacking Spain's debt? The usual suspects - Goldman Sachs, J.P.Morgan Chase, Citigroup, etc.? We can probably add Barclays and Deutsche Bank. Maybe HSBC, too. Throw in several big hedge funds, and we can't be very far from truth, can we?

But what could be their end-game? Unlike Bear Stearns and Lehman Brothers, they can't possibly bankrupt the PIIGS countries and still profit from it, can they? Or can they?

Or is it to make sure that PIIGS will be bailed out financially by Germany (who, by the way, rejected the creation of a European fund to bail out the fiscally troubled countries like PIIGS), so that they don't lose on their CDS or their cash flows?

Or is the end-game more geopolitical than just financial? Is the end-game to drain Germany economically and fiscally, by making sure the sovereign debt crisis happens and that it gets worse until Germany pays - whether by setting up a bailout fund or by gorging on the Greek imports as Financial Times' columnist and internationalist Martin Wolf urges?

If it is the last one, it could involve other parties than just greedy bankers.

Who wrote those CDSs on the sovereign debt of PIIGS anyway?

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UK Police Welcomes Armed Robot Drones Soon

This is getting to be too bleak and dismal a future for the rest of us.

Wired U.K. tells us what kind of assistance the Britain's 'coppers' are going to have: surveillance drones and armed robot drones. Not content having CCTV everywhere to monitor everyone, they will have drones to keep track of and attack, albeit non-lethal (supposedly), everyone that moves.

(Skynet cannot be too far away...)

Future police: Meet the UK's armed robot drones
(David Hambling, 2/10/2010 Wired UK)

"Police forces all over the UK will soon be able to draw on unmanned aircraft from a national fleet, according to Home Office plans. Last month it was revealed that modified military aircraft drones will carry out surveillance on everyone from protesters and antisocial motorists to fly-tippers [people who dump waste somewhere other than an authorized landfill], and will be in place in time for the 2012 Olympics.

"Surveillance is only the start, however. Military drones quickly moved from reconnaissance to strike, and if the British police follow suit, their drones could be armed -- but with non-lethal weapons rather than Hellfire missiles.

"The flying robot fleet will range from miniature tactical craft such as the miniature AirRobot being tested by Essex police, to BAE System's new HERTI drone as flown in Afghanistan. The drones are cheaper than police helicopters -- some of which will be retired -- and are as wide as 12m in the case of HERTI."

The article continues to explain what kind of "weapons" are being considered to be mounted on the drones. They include:

• LRAD (Long Range Acoustic Device), which was used against G20 protesters in Pittsburgh; it can permanently damage hearing.
• Light-based personnel immobilization device; think strobe light that can make you dizzy and disoriented, or worse, cause seizures.
• Double-barrelled 44mm Flash-Ball gun
• Taser, which has killed how many people by now?

The picture is iDrone, developed by a French company.



I can't wait to find out what the U.S. military and law enforcement have in store for us. After all, the U.S. has become such an expert in using drones, blasting funerals and wedding parties in Afghanistan and Pakistan.

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OT: Mavericks Huge Wave Pics from 2/13/2010

Click here to go to the slide show at San Jose Mercury News site... I watched the entire live feed yesterday. It is amazing that no one died, particularly when the waves crashed right into the Boneyard...

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