Saturday, June 13, 2009

Digital TV Conversion

My TV turned into a white noise generator as of yesterday. I don't have a digital converter box, and I don't have any intention of buying one. I don't have cable or satellite TV service (I can't afford it). So my perfectly working, tiny 13-inch analog TV will be sitting on top of the counter as a memento from a by-gone era.

FCC, TV stations, and electronic stores sound almost disappointed that they don't have a flood of hysterical TV viewers calling and demanding to know what happened and what to do.

There are about 100 million households in the U.S., and about 2.5 million household are still not prepared, according to the article linked above. (That number seems awfully small to me, considering the government estimate in 2005 was 21 million.) Anyway, if the article is correct, a small percentage. But here's what I find interesting in the article:

"Any set hooked up to cable or a satellite dish is unaffected by the end of analog broadcasts, but around 17 million U.S. households rely on antennas. Nielsen Co. said poor and minority households were less likely to be prepared for Friday's analog shutdown, as were households consisting of people younger than 35."

Poor and minority households were less likely to be prepared, as were households consisting of people younger than 35.

You would think younger people are on top of anything digital, wouldn't you? Maybe they don't watch TV anymore to get the news or even watch shows. There's this thing called the Internet and cell phone.

The legislation to convert analog TV signal to digital signal was passed in 2005 by the way ("Digital Television Transition and Public Safety Act of 2005"), as the result of what looks like a successful lobbying from the industries involved. For more, please read this article from It looks like the digital TV conversion was almost incidental; the main concern of the bill was to free up more bandwidth for security and law enforcement.

It couldn't have come at the worse timing. The country is in deep recession, with increasing number of people counting pennies to cut cost and save. And now you either buy a new digital TV, subscribe to cable or satellite TV, or buy this converter box (and most likely a digital antenna too). You have to spend. (The coupon does not cover the entire cost.) Besides, this conversion program is already generously funded by taxpayers through the original legislation and again through the recently-passed stimulus package (even though the original legislation is funded through the end of 2009 fiscal year).

I wonder where these converter boxes are made. At this point, TVs are almost all made in Asia, so the safe bet is that the converter boxes are also made somewhere in Asia. Well it has at least secured some employment over there.

For those of you who haven't converted and still wish to do, here's the site I found that explains pitfalls as well as what to do. Pitfalls like a need for digital antenna in addition to the converter box, digital channel's reception threshold, and UHF vs VHF. (Did you know that you may lose your digital signal even if you've been using the converter box already? You may, because many digital TV stations are moving to a different signal frequency.)

Are You Ready for the End of Analog Broadcast TV? (6/12/09, HDGuru)

Next Czar: Urban Demolition Czar?

I have a hunch, just a hunch, that it is indeed the next czar to join so many others. Urban Demolition Czar. Doesn't it have a nice ring of power and authoritarianism combined with almost video-game like fun and excitement?

US cities may have to be bulldozed in order to survive
(6/12/09, Telegraph):

"Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

"The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

"The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

"Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

"Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

"Most are former industrial cities in the "rust belt" of America's Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis."

There you go. Mr. Kildee has been already approached by the Obama admin, and he has already picked his first 50 targets. The announcement of newly annoin.. appointed czar cannot be too far away.

"The city is buying up houses in more affluent areas to offer people in neighbourhoods it wants to demolish. Nobody will be forced to move, said Mr Kildee.

""Much of the land will be given back to nature. People will enjoy living near a forest or meadow," he said. Mr Kildee acknowledged that some fellow Americans considered his solution "defeatist" but he insisted it was "no more defeatist than pruning an overgrown tree so it can bear fruit again". "

The first thing I thought about when I first read this article yesterday was: Agenda 21.

United Nation Agenda 21, signed by the United States in 1992, is basically about how we should change just about every aspect of our life (live, eat, move) to save the mother planet Earth. It involves "equitable" development (think wealth transfer) as well as "sustainable" development (think depopulation). If you think this is about one of those empty promises by a big organization like U.N., you are mistaken. But I will leave you to do further research.

It seems perfectly in line with the direction this new administration seems to be heading: more government control over ever-increasing aspects of private lives and private enterprises, because they know what's good for the rest of us.

But this urban demolition derby, it is absolutely juicy.

Think redevelopment agency; think eminent domain targeting of entire opposition districts, payoffs to/from green and affordable housing developers. It's a dream come true for "smart growth" proponents - everyone should, no, can, no, must live above the bus depot, WPA-like organization for the 25% unemployment coming among the young to tear it all down and recycle all those door knobs, .. endless possibilities. (Sort of like FDR's WPA that created jobs to catalog 350 different ways to cook spinach.)

(And remember, those old houses in Detroit, Philadelphia, Memphis, etc. are probably full of asbestos and lead paint. Probably it will cost much more to demolish than to keep them. But so what if will cost more, we just issue more debts and print more money. Besides, these people will acquire the essential skills and knowledge of "green" demolition.)

So after 10 years of tearing down cities, with 20 million kids with no other job prospects in a downsized economy, what to do with them next?

With finely-tuned demolition skills they can spread the gospel to other parts of the world, can't they? Yes, we can. Downsized economy will be everywhere in the world, since this current recession/depression is very much global.

Or they can settle for "green" jobs in the U.S., I suppose. There are lots of possibilities here, too. Neighborhood green compliance monitoring and enforcement, garbage container policing to see there is no recyclable items in the garbage bins (Brits are already doing it; this alone would merit another post), or how about carbon police (darn, Australians are already doing it. Come on America, you are behind the curve...).

Mr. Rahn Emanuel put so eloquently, "You never want a serious crisis to go to waste." Ms. Hillary Clinton echoed, "Never waste a good crisis."

Friday, June 12, 2009

Case of Counterfeit US Treasuries in 2002

The news of two "Japanese" in their 50s arrested in Italy for possessing undeclared US Treasury bonds ($134 billion, about 1/4 of total Japanese holding) and attempting to carry them into Switzerland has been reported widely in the US.

It looks to me like a usual business between Japanese "yakuza" and foreign counterparts, whether it is Italian Mafia, Russian Mafia, or Chinese Triad. If that's the case, it is highly likely these Treasuries are counterfeit.

It has happened before, on a much bigger scale.

According to old Kyodo News on April 7, 2002, two Japanese in their mid 40s, a Japanese American businessman, and a real estate broker in Hong Kong were indicted by the Hong Kong Police for the possession of counterfeit US Treasury bonds ($370 billion, if they were genuine). Two Japanese and the Japanese American were arrested in a Hong Kong hotel for the possession of the counterfeit Treasuries, and the real estate broker was arrested when he came to the hotel to meet them; he had 88 counterfeit US $100 bills on him. One of them is said to have admitted that they had arranged a meeting with a certain group in Guanzhou in China.

I couldn't locate the original news, as Kyodo has changed the site. The link that points to Kyodo news is broken, but the article summary above is here. (In Japanese. They put the year first on the date, by the way. Year-Month-Day format.)

What the @#$% Happened in September-November 2008: Part I

For your weekend reading pleasure.

These are the headlines and some snippets from the articles on the front pages of Investor's Business Daily in September, October and November 2008. This is Part I.

I saved the front pages of IBD newspaper which I was subscribing to at that time. Not for any particular reason, but even back then, I felt, as a lot of others did, something was irreparably, irreversibly changing in the U.S. financial market. It felt like the last days of the market, and maybe they were.

(I have a Dow Jones daily chart of September 08 in my other blog's post. It opens a new window.)

Since I'm reading off the physical newspaper pages, the indices' numbers are those of the day prior to the date; the same goes for the news headlines.

September 9, 2008 (Tuesday)
(S&P 500 Index 1,268, Dow Jones Industrial 11,511, Nasdaq 2,520)

  • U.S. Takeover of Fannie, Freddie Still Doesn't End Troubled Saga
  • Builders And Banks Rally Over Seizure of Freddie, Fannie
  • Fannie's stock tumbled 90%, Freddie 83%
  • Picture of anxious specialists on NYSE floor
  • Lehman Brothers Down On Uncertainty: the stock lost 13%
  • Delivery Firms Reduce Speed To Save Fuel: UPS eliminates left turn
  • S&P cuts Wamu to junk
  • Russian troops were still in Georgia
September 16, 2008 (Tuesday)
(S&P 1,192, Dow 10,917, Nasdaq 2,179)

  • Stocks Dive On Wall St. Woes, S&P Off 4.7% to 3-Year Low (1192.70)
  • Lehman Failure Tests Limits of U.S. Bailouts, "Moral hazard" seen as driving force behind credit system's excesses
  • Picture of a Lehman Brother's Market Maker with her hands over her brow
  • (Lehman Brothers filed for bankruptcy on September 15, Merrill Lynch sold to Bank of America.)
  • Crude Oil Plunges Below $100: the first sub-$100 since March 4.
  • The acquisition of Merrill "creates the premier financial company in the world. It was an opportunity of a lifetime." - Ken Lewis, Bank of America CEO and chairman
September 17, 2008 (Wednesday)
(S&P 1,213, Dow 11,059

  • AIG Falls As Rumors About Insurer Swirl; Many Banks Climb
  • AIG Falls Day and Night, Goldman Not So Golden
  • Fed Keeps Interest Rate Steady at 2% After Pushing $50 Bil To Banking System
  • Picture of Presidential helicopter flying over Galveston Texas, after Hurricane Ike
  • "The Fed's non-action [not cutting the rate further] suggests that things might have reached a bottom," said Richard Yamarone, Argus Research's director of economic research.
September 18, 2008 (Thursday)
(S&P 1,156, Dow 10,609, Nasdaq 2,098)

  • Stocks Dive Despite AIG Bailout, worldwide stock markets plunged
  • Credit Default Swaps At Meltdown's Heart, Everybody's A Suspect
  • Congress Consideres Ways To Aid Market And Ailing Economy
  • Chart of CDR Counterparty Risk Index showing huge spike on AIG bailout
  • Buyout rumors swirl around Morgan Stanley and WaMu
  • Fed Maneuvers Fail to Placate World Markets: Who's Holding Toxic Assets?
  • Treasury Steps In To Finance Fed: The first auction on Wed netted $40 bil. Treasury officials insisted the Fed isn't short of resources
  • Market Woes Whip Up Gold, Oil: gold blasted to its biggest one-day gain ever, vaulting $70 to settle at $850.50
  • SEC Clamps Down On Short Sales: new limits on naked short selling

September 19, 2008 (Friday)
(S&P 1,206, Dow 11,019, Nasdaq 2,199)

  • Market Takes Heart From Talk of Fund To Hold Bad Assets [That was the beginning of TARP]
  • Government May Absorb Banks' Sour Securities; S&L Crisis RTC Is the Model
  • Fed Adds $105 Bil To U.S. System, another $180 bil made available to lend to banks [Discount Window]
  • Congress Lies Low To Avoid Bailout Blame; Lawmakers fear wrath of voters as cost of crisis soars to $ 1 tril or more
  • Gold Surges, Reverses, Crashes on Treasury plan to create RTC-like entity. Gold fell $50 in one hour.
  • Shares of Morgan Stanley, Goldman Sachs went free-fall on Thursday, then violently reversed when the news of short sale ban in Britain reached the U.S. Morgan Stanley's share went to $11, ended the day at $22. Goldman Sachs, low $85, closed at $108.
  • Putnam's Prime Money Market Fund folded, a day after Reserve Primary Fund broke a buck
  • Picture of President Bush, making a statement regarding the Federal Reserve's action

September 22, 2008 (Monday) [but paper was issued on September 20, Saturday, as IBD always does)
(S&P 1,255, Dow 11,388, Nasdaq 2,273)

  • Paulson announces bailout plan on Friday, gives few details
  • Stocks Buy Into Rescue Plan, S&P Soars 4% as U.S. Acts. Government backs money funds ($50 billion), bans shorting financials (799 of them); big mortgage trust seen.
  • Questions Abound Over Bailout; Who, What And How Much? Devil will be in the details; Dems likely to demand aid for ailing homeowners.
  • "There will be ample opportunity to debate the origins of this problem. Now is the time to solve it." - President Bush
  • "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy" - Treasury Secretary Hank Paulson
  • "We've got to deal with the foreclosure issue. This plan must include that." - Chris Dodd, Senate Banking Committee chairman
  • S&P 500 5-day chart titled "From Meltdown to Rebound" [hindsight is 20-20]

How's that for one week and a day?

The day I remember most vividly is September 18, Thursday (the news of the day under September 19, of course). The market was constantly selling off, and the selloff suddenly accelerated around 12:00pm. It was like a dark abyss opened up in front of you. Then, all of a sudden around 1:00pm, it violently reversed, paused for a while, then went crazy when the rumor of financial bailout by the government started to float in.

(I read on the net some time later that when that abyss opened up and Goldman's stock was free-falling, someone somewhere on the Goldman's floor played Star Spangled Banner on the internal broadcast system. Many traders stood up with their hand over their chest. "... and the home of the brave" - the music ended, and suddenly the market started to reverse to the wild cheers from everyone. Too good to be true, perhaps. But this is what I remembered reading.)

The next day, Friday, the market continue to go up thanks to bailout talk and ban on shorting (not just naked shorting) on financials, managed to end the week, up. I remember that day, too. The trading of SKF, double short financial ETF was suspended for several hours. When it opened, it gapped down to $87 from the previous close of $115, although it managed to end the day exactly at $100.

Treasury Announces $25 Billion Recovery Zone Bonds

Latest from the U.S. Treasury Department. It almost feels like we're back in 1930s in the U.S., or in Europe after the World War II.

Treasury Announces $25 Billion in Direct Allocations of Recovery Zone Bonds
(6/12/09, U.S. Department of Treasury) [emphasis is by me]

"WASHINGTON--As part of the Obama Administration's efforts to stimulate economic growth and jumpstart the availability of financing critical for economic recovery, the U.S. Treasury Department announced $25 billion in bonds authority available under the Recovery Zone Bonds program. Created by the American Recovery and Reinvestment Act (Recovery Act), Recovery Zone Bonds are targeted to areas particularly affected by job loss and will help local governments obtain financing for much needed economic development projects, such as public infrastructure development."

That's about the size of the budget deficit in the state of California, by the way.

"Creating the conditions for economic recovery requires addressing the challenges facing state and local governments," said Treasury Secretary Tim Geithner. "State budgets have been scaled back and local services cut at a time when they are most needed. Turning things around requires innovative strategies, which is what the Recovery Act has provided in the form of the Recovery Zone Bonds. The new financing tools provided by Recovery Zone Bonds will help state and local governments obtain the funds needed to revitalize our communities."

The Recovery Act included $25 billion for two new types of Recovery Zone Bonds – $10 billion for Recovery Zone Economic Development Bonds and $15 billion for Recovery Zone Facility Bonds. Recovery Zone Economic Development Bonds are one type of taxable Build America Bond that allow state and local governments to obtain lower borrowing costs through a new direct federal payment subsidy, for 45 percent of the interest, to finance a broad range of qualified economic development projects, such as job training and educational programs. Recovery Zone Facility Bonds are a type of traditional tax-exempt private activity bond that may be used by private businesses in designated recovery zones to finance a broad range of depreciable capital projects."

In summary, money is for qualified projects in designated recovery zones:

  • $10 billion for taxable Recovery Zone Economic Development Bonds for state and local governments to obtain lower borrowing cost via direct federal payment subsidy;
  • $15 billion for tax-exempt Recovery Zone Facility bonds for private businesses in designated recovery zones.
"To make this program as easy as possible for state and local governments to administer and use, the Treasury Department has also detailed the bond volume cap allocations at the local level for counties and large cities. The total state allocations and the complete list of direct county and large city allocations can be found here. "

Attention to detail: down to county and city level. For those who don't want to click the link above, here are some samplings at the state level (the first number is Recovery Zone Economic Developement Bond, the second Recovery Zone Facility Bond). Not surprisingly, certain states get more than others, with almost all counties within the state get the allocation. But all 50 states get allocation; the standard amounts that every state gets seem to be $90 million for Economic Development Bond, and $135 million for Facility Bond:
  • AL: 244,676,000, 367,014,000
  • AK: 90,000,000, 135,000,000
  • AZ: 90,000,000, 135,000,000
  • CA: 806,225,000, 1,209,338,000 (City of Los Angeles, LA County get huge chunk)
  • CT: 90,000,000, 135,000,000
  • FL: 538,485,000, 807,727,000
  • GA: 355,785,000, 533,677,000
  • IL: 666,972,000, 1,000,457,000 (City of Chicago, Cook County get huge chunk)
  • IN: 313,081,000, 469,621,000
  • KS: 90,000,000, 135,000,000
  • LA: 90,000,000, 135,000,000
  • MD: 208,860,000, 313,291,000
  • MA: 222,676,000, 334,013,000
  • MI: 773,050,000, 1,159,575,000
  • MS: 90,000,000, 135,000,000
  • MO: 229,143,000, 343,715,000
  • NV: 90,000,000, 135,000,000
  • NY: 370,098,000, 555,147,000
  • OH: 422,637,000, 633,955,000
  • RI: 100,882,000, 151,322,000
  • TN: 231,417,000, 347,126,000
  • TX: 90,000,000, 135,000,000
  • UT: 90,000,000, 135,000,000
  • VT: 90,000,000, 135,000,000

Thursday, June 11, 2009

IRS Wants to Tax Use of Company Mobile Phones

Where there's a need, a DIRE NEED (such as a gigantic budget deficit and equally gigantic spending plans), they will find a way, ANY WAY.

The Internal Revenue Service wants to tax your cellphone that you get as part of your company benefit.

Tax Man's Target: The Mobile Phone (6/12/09 Wall Street Journal):

"The use of company-issued mobile phones could trigger new federal income taxes on millions of Americans as a "fringe benefit," spurring efforts by the wireless industry and others to kill the idea.

"The Internal Revenue Service proposed employers assign 25% of an employee's annual phone expenses as a taxable benefit. Under that scenario, a worker in the 28% tax bracket, whose wireless device costs the company $1,500 a year, could see $105 in additional federal income tax.

"The IRS, in a notice issued Monday, said employees could avoid tax liability if they showed proof they used personal cellphones for nonbusiness calls during work hours. The agency also could decide on a set number of phone minutes as "minimal personal use" that would be untaxed."

Or the employers could use a statistical sampling to determine the percentage of typical personal use of a corporate cell phone.

Bud the IRS is only enforcing the existing law, mind you.

"Under a 1989 law, workers who use company-provided mobile phones for personal calls are supposed to count the value of those calls as income and pay federal income taxes accordingly."


""The idea that you should keep a log saying, 'I made a call saying I will be late for dinner again,' that's a totally cumbersome and burdensome requirement that most employers and employees are not going to comply with," said Jot Carpenter, vice president of government affairs for CTIA-The Wireless Association, a trade group of cellphone-equipment manufacturers and service providers."

"Wireless companies also argue the IRS rule is outdated. Rates have declined so dramatically in the past decade -- with night and weekend calls free under many plans -- that it makes little sense for the IRS to assess employee benefits by nickels and dimes."

"John Harper, the mayor of Rowlett, Texas, said his town wrestled with whether to declare as worker income a portion of the 100 cellphones provided to city employees, but decided it was too much work.

""I'm all for collecting taxes for the government," he said, "but let's not end up costing us more to do it than the tax you ultimately collect.""

Mr. Harper, I totally agree with you. But you're forgetting something. The IRS would rather have the tax money that they currently do not have at all, even if that means possible decreased usage of corporate cell phones that will lead to possible decreased revenues at cell phone companies which will result in less corporate tax revenues for the IRS. A government agency is not known for thinking about a rippling effect of its action. Besides, all the trouble of collecting the usage data and preparing the paperwork, that's taxpayers' problem, not the IRS's problem.

So another tiny step for the United States to be more like those sophisticated (read "rigid", if you like) European countries. Another leeway (the government sees it as "loophole" for "cheaters") is being possibly closed.

H.R. 1207 Audit the Fed Bill Update 6/11/09

As of June 11, 2009, the bill has 222 cosponsors. There are 435 Representatives in the House.

Update - HR 1207 - 222 co-sponsors (6/11/09,

30-Year Treasury Bond Auction Result June 11, 2009

The stock market cheered, at least initially when the auction result was announced, and Dow Jones Industrial Average shot up to 8,877 before it came back down to end at 8,770, only 31 point above yesterday's close.

So the bond auction went better than what was already a very low expectation. But did it?

Today's auction was an "reopening" auction. According to Treasury Department,

"In a security reopening, the U.S. Treasury issues additional amounts of a previously issued security. The reopened security has the same maturity date and coupon interest rate as the original security, but with a different issue date and usually a different purchase price."

This year,

  • 30-year bond new issues were auctioned on February 12 and May 7; and
  • Reopening issues were auctioned on March 12 and today, June 11.
So, for reopening issues, what's important to look at seems to be the PRICE: How much the bidders are willing to bid down (or up, never say never). Of course that reflects in High yield number, Median yield number, Allotted at High, etc.

Here's a comparison table of the four issues of 30-year bond this year. I've noticed three things: 1) The reopening issues were more popular than the new issues; 2) the reopening issues are cheaper in price; 3) the price of the reopening issues this time was much cheaper than the price in March.

My conclusion: there's not much to celebrate. Foreign investors flocked to today's reopening because they can buy the Treasury bond at 4.25% coupon interest rate at 7% discount in price.

In March reopenings, they bid down the price by less than 2%. This time, they bid down by almost 7%. Two times don't make a trend, but they can be the start of the inflationary trend.

There are more reopenings to come, in 10-year note, 30-year bond, 5-year TIPS, 10-year TIPS, and 20-year TIPS. Just by writing this I get tired. I can't imagine how fatigued the bond market will have become by the year end. And this has to be repeated next year, probably year after next.

(Another interesting question to ask is this. Which foreign countries bought them today? Was it Chinese, or Japanese? Or Russians? Or was it Caribbean Banking Centers?)

US Government Wants to Control Private Sector Compensation

This noise has been getting louder and louder, particularly since the new administration came to town.

US government seeks to rein in executive pay (6/11/09 AP): [emphasis is mine]

"The Obama administration is taking a half-step toward taming U.S. executive pay. Some lawmakers prefer a fuller stride.

"Democrats on the House Financial Services Committee [that is "Fannie and Freddie are fundamentally sound" Barney Frank's committee] said Thursday the administration's efforts to hector the private sector into reining in executive pay might not go far enough.

"The administration contends that excessive compensation contributed to the U.S. financial crisis, but rejects direct intervention in corporate pay decisions."

Excessive compensation contributed to the U.S. financial crisis.... Did it? How about other "contributing" factors? The government's policies over the past 20 years - loose monetary policy, loose (non-existant) regulation of financial industry, misguided (in retrospect) housing policy, etc., and the Federal Reserve that enabled the government by providing cheap money and credit.

(High risk, high reward. They want to turn that into high risk low reward and low risk low reward. What fun is that?)

Oh, never mind. I forgot. It all happened before the current government came into existence. Never mind also that almost all Congressmen/women and Senators who voted for that highly unpopular bailout bill back in September 08 have been voted back in by the constituents with very short memory. It must be still different, because we have a new President.

Let's get back to the article:

"Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said administration guidelines call on all publicly held companies to link compensation to long-term performance, not short-term gains.

"We believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," Sperling said."

Here we come. At all publicly held firms. Why should it be the government's business to force all publicly held companies to link compensation to long-term performance? Better aligned with long-term value? Whose long-term value? The firms', or the government's?

"While the administration has approached the issue with caution, a top Republican said the plans amounted to "incessant government intervention."

""The president cannot continue his heavy-handed meddling in the private sector and expect it to function, much less flourish," said Rep. Tom Price, chairman of the Republican Study Committee.

"Alabama Rep. Spencer Bachus, the top Republican on the committee, added: "We need to get government out of businesses.""

Republicans? What Republicans? Representative Tom Price doesn't seem to get it yet; the president may not want the private sector to function, much less flourish (see this post and link in the post). Why would he assume the president wants it to function and flourish?

And here comes the Pay Czar. All please rise. If you work for one of these companies - Citigroup Inc., Bank of America Corp., General Motors Corp., Chrysler LLC, American International Group Inc., GMAC LLC and Chrysler Financial - you'd better be nice. He can nullify your pay package that you and your employer duly agreed upon, if he thinks you are earning too much.

(Where are Fannie and Freddie? Shouldn't they be part of the seven?)

"The administration named Kenneth Feinberg, a lawyer who oversaw payments to families of Sept. 11, 2001 terrorist attack victims, as a "special master" with power to reject pay plans he deems excessive at the seven companies with the biggest injections of public money. Feinberg also would have authority to review compensation for the top 100 salaried employees at those companies."

Mr. Feinberg is also overseeing the payment from the fund created in the aftermath of Virginia Tech shooting in 2007.

OT: Microwave on USB Port

I WANT ONE OF THESE. 100 British Pound? Bring it on!

"It is the world's smallest, portable microwave and can be powered via a link to the USB port on a laptop computer.

"The turquoise device -called the Beanzawave - has been created in partnership with Heinz to allow workers tied to their desks to create a warm snack, or hot drink, to see them through the day.
"Apart from its size, the key breakthrough is the use of a combination of mobile phone radio frequencies to create the heat to cook both on the outside and within in under a minute.

"The main drawback, with component prices at current levels, is the fact that the mini-micro would carry a hefty price of around £100."

Hefty? US$160, 15,600 Japanese yen, what's hefty about that for a gadget junkie?

Amazing what a free enterprise can do even during the severest recession in 70 years - making something that people want to buy. (Judging from the response from the readers of Mail, I'm not alone in wanting to have this thing.)

Wednesday, June 10, 2009

Ron Paul Interview on CNN May 27, 2009 (Video)

(5:31 PM PST Update) Ron Paul's "Audit the Fed" bill (H.R.1207) apparently now has 207 co-sponsors, including House Minority Leader John Boehner (here's the link). 10 more co-sponsors to attain House MAJORITY.

Ron Paul on CNN American Morning on May 27, 2009.

[President Obama] contradicts himself. He wants to spend more money but admits that we don't have any money. The question is, where does he get the money? We can't tax people any more, they are overtaxed and the economy is weak.

The common-sensical thing to do is to cut spending, but nobody wants to cut spending. Just this week President promised $100 billion to IMF and he says we we don't have money? It makes no sense. People are outraged, they can't figure out what we are doing in Washington. I can't figure out. They seem to live in a different world, they are not living with reality.

History shows that once you get a certain amount of debt run up by our government, it is never paid back. We've passed that point. Debt is always liquidated. The only question is how you liquidate debt. The governments liquidate the debt by devaluing the currency and paying back their debt with currency that has no value. That's what they are working on, they want inflation. They are begging and pleading for inflation.

Dollar will be devalued, within a year or two, or three, but it will come, and it will be a lot worse than what we've just gone through. Everybody else has fiat currency, too. You can't create $2 trillion deficit in a year and not expect the value of the dollar to go down.

Signs of life in the economy? I think a lot people believe that, but people are totally dreaming about it. You can look at the spurts in 1930s but usually led to bigger trouble down the road. Unemployment was 18% by 1939, so it never improved, with all this interference in the 30s.

We are doing the same thing again, and we have a much bigger problem this time. We haven't liquidated the debt, we haven't liquidated the mal-investment. We still have 19 million uninhabited houses.

Even the bankruptcies have become politicized. The government is dictating what the law should dictate in GM bankruptcy. It's the lack of regulations that we need. Free enterprise and sound money didn't bring on this problem. It is interventionism, corporatism and crony capitalism, this is what gave us our problem.

We will going to remain in this mess until we realize what we need is more freedom, sounder money, get the government out of the way, let the debt be liquidated and get rid of the mal-investment. We don't need more of the same that created our problem.

10-Year Treasury Note Auction Result Is In

And judging by the market reaction, it is not good. Both stock market and bond market are sinking deeper.

I frankly don't know what the traders were expecting, for them to get disappointed like this. The key numbers of the auction is posted in the right-hand column, next to this post. (Here's the original announcement.)

Foreign participation was slightly better than the last auction, and bid to cover ratio is also higher than the last. What spooked the traders may be the yield.

Over 46% of the auction was allotted at the high yield at 3.99%.

In the last auction, only 22% of the auction was allotted at the high yield. Right before the auction result announcement, 10-year note yield was 3.94%.

Higher foreign participation demanding the higher yield for the risk they are taking.... Hmmm, it looks like bond vigilantes are intensifying their attack.

Russia Set to Reduce US Treasury Exposure

Today is the much dreaded day of 10-year Treasury note auction. In anticipation of not so steller result (particularly after Chinese students laughed at the US Treasury Secretary), the yield on 10-year note has popped above 3.9%, and the 30-year bond yield is 4.71%.

The stock market is also under pressure, probably from this impending auction. Dow Jones Industrial Average is down about 30 points to 8,732, S&P 500 down 4 to 937. Nasdaq is the worst performer, down 22 points (-1.21%) to 1,837.

The bond market doesn't need any more negative news right now, but it got one this morning. It came from Russia, the 5th largest foreign holder of US Treasury securities. (If you exclude Carribean Banking Centers and Oil Exporters, Russia is the third largest holder. Here's the link to the lateset TIC from the Treasury Department.

Russia to Sell US Treasurys, Buy IMF Bonds (6/10/09, CNBC):

"Russia will reduce the share of U.S. Treasurys in its foreign exchnage reserves, the world's third-largest, a senior central bank official said on Wednesday, driving the dollar broadly lower."

"Russia holds about 30 percent of the reserves, worth $404.2 billion, in Treasurys. Central bank First Deputy Chairman Alexei Ulyukayev said it would buy bonds issued by the International Monetary Fund and also up the share of reserves held in bank deposits."

"Ulyukayev said Russia had increased its investment in liquid treasuries during the peak months of the crisis and was now ready to cut it...."


The Russian holdings of US-dollar denominated assets including Treasuries and agency bonds fell to 41.5% as of Jan 1, 2009, from 47% a year earlier. Their Euro holdings increased from 42.4% to 47.5% during the same period, but as the net position, US dollar was still 47%, Euro 41%. (See this article for more detail.)

Russia also holds 523.7 tonnes of gold reserve, 4% of the total reserve. Russia and China already expressed interest (see my post) in yet-to-be-issued IMF bond/note.

One more hour to go before Treasury announces the auction result...

Supreme Court Rolled Over In One Day on Chrysler

The Supreme Court rolled over in one day.

Supreme Court Justice Ruth Bader Ginsburg put a temporary hold Monday on the deal to sell Chrysler to save it from collapse. Then the Justices on Tuesday evening without dissent removed a legal obstacle to sale of the troubled auto industry giant, Chrysler.

According to the Supreme Court Justices (from their order, posted on SCOTUSblog; emphasis by me):

So, holding Chrysler's secured debt in the State pension fund and facing the possibility of "irreparable injury" to the fund because of this hasty deal brokered by the Auto Task Force led by an investment banker who defaulted on debt owed to Cerberus (soon-to-be-kicked-out Chrysler's owner) means ... NOTHING.

The bankruptcy court judge Gonzalez has done everything he possibly can to accommodate the administration in quick dismantling and sale of Chrysler. And now the Supreme Court. The judicial branch of the US government has rolled over to do the bidding of the executive branch. GM bondholders can simply forget about appealing to any judiciary.

In the Legislative branch of the government in the current incarnation, Democrats have the majority in both House and Senate and pretty much can do what they want. They are doing it, which is to roll over to the Executive branch. Even in the previous incarnation, they passed the $700 billion bailout bill against overwhelming opposition from the taxpayers.

The Executive branch has been busy creating its own "government" with numerous "czars" who cover all aspects of the formal government. And it is doing whatever it wants, pretty much.

So now what? (I just have a bad feeling that this won't end well.)

Tuesday, June 9, 2009

Case of "Diminishing" Volume in Stock Market

There's a considerable chatter about "declining" volume in the stock market. It is often cited as a reason for the imminent market correction to the downside, because "volume is drying up".

I had the same feeling about the market. Instead of "feeling" it, I tried to find out. I thought, "Maybe the money is going to the US Treasuries, as Primary Dealers are required to absorb such a large amount of Treasuries every single week..." I went to the New York Federal Reserve's site. They have the average trading volume of US government securities transactions by Primary Dealers (you can enter your query right here). I downloaded the data for the past 1 year and plotted a graph. Yes, the trading volume did pick up at the end of May, but it was the level of June last year. According to New York Fed, the average daily turnover was $570 billion in 2007.

So I went to check the daily trading volumes on New York Stock Exchange, S&P 500, and Nasdaq. They are indeed low end of the elevated level seen since September 08, but if today's volume level occurred in 2007 it would be considered high. Nasdaq in particular looks just as robust. The volume charts for the indices are for 2 year, daily. The blue lines are drawn at today's (or the most recent, in case of Treasuries) volume.

I don't know what to think now. It's possible that all the liquidity has gone to dark pools, and we have no way of knowing (yet).

But just by looking at these charts, you could argue that the volume on the stock exchanges and the turnover of Treasuries are going back down to the pre-crash normal.

Drop Dead, American Business

Bloomberg's article "Obama Tells American Businesses to Drop Dead: Kevin Hassett" (6/8/09) is a commentary by the director of economic-policy studies at the American Enterprise Institute, a major (neo)conservative think tank considered influential, along with left-leaning Brookings Institute and conservative Heritage Foundation.

Mr. Hassett says in the article:

"I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout."

"The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate."

"U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home."

The Obama admin wants to term that as a loophole for tax cheaters.

Mr. Hassett calls Obama's stance "inexplicable".

"So the question is, why does Obama advocate a policy that so flies in the face of everything that economists have learned?..."

"I have to admit I am at a loss. Maybe it is good politics to bash American corporations, and Obama isn’t really serious about making this change happen. But if the change is enacted, and domestic corporate taxes aren’t reduced to offset the big tax hike, the result will be a flight from the U.S. that rivals in scale the greatest avian arctic migrations."

It's because "he can", Mr. Hassett. It's been a "shock and awe" economic version, which visibly started back in September 2008 and has vastly accelerated under the new administration.

Microsoft is threatening to move some jobs overseas. Transocean, an oil rig company, moved its headquarters to Switzerland. A commentator from former Soviet Union calls America "red" and advice Russian companies to "flee the land of the red". Productive capital will flee, just as it did during the FDR's reign.

The stock market is struggling again today with 30 minutes of trading left, though it has managed to pull out of the negative territory. It almost feels like it is fighting with the government and its ever-increasing threat of more regulations and law changes.

Extras in War Bill H.R.2346

Supplemental Appropriations Act of 2009 (H.R. 2346), otherwise widely referred to as "war funding bill", has already passed the House and the Senate, and currently is in a negotiation phase to reconcile the differences between the House version and the Senate version.

Not just the amount, which was originally $90 billion, has increased to over $100 billion as the bill went through Congress, but it seems to have acquired quite a lot of "extras" attached to the bill that are getting some media attention (such as here, and here).

So, after finally obtaining the bill number from someone's blog, I went to the Library of Congress THOMAS to take a peek at the text of the bill and see what are the extras. (Here's the link for THOMAS, but the system times you out so often you have to keep entering the search query. This link won't time you out but doesn't reflect the provisions that are struck out.)

Department of Commerce
$40 million economic development assistance program

Department of Justice
Salaries and expense money for various departments

Executive Office of the President and Fund Appropriated to the President
$1.5 billion for pandemic preparedness and response including swine flu

Judiciary, SEC
Salaries and expense

Department of Homeland Security
Salaries and expenses for US Customs, Immigration, Coast Guard

$30 million for Operation Stonegarden [Doesn't this sound like there's something sinister in the background? Why is a disaster-relief agency engaged in border patrol? Here's more on this FEMA operation.]

Department of Health and Human Services
$82 million for refugee and entrant assistance

Legislative Branch
$72 million for Capitol Police

Department of State
$655 million for worldwide security protection

Bilateral Economic Assistance
$2.8 billion for economic support fund for Afghanistan, Iraq, Somalia, Congo (bulk of it is for Afghanistan)

General Provisions
$285 million for global financial crisis to help developing countries [How could we help when our house is in disorder?]
$3.7 billion for International Development Association [That's part of World Bank to combat poverty in the world.]
$356 million for debt relief under International Development Association

Climate change mitigation and greenhouse gas accounting
Treasury Secretary to make sure that multilateral development banks adopt and implement greenhouse gas accounting

Additional assistance to Georgia
$42 million

Other Matters
Increase IMF quota by 4.9 billion SDR (= $7.6 billion; US$1 is SDR 0.645799)
loan to IMF up to 75 billion SDR (=$116 billion)
Authorize Treasury Secretary to instruct the US executive director of the Fund to sell up to 12,965,649 ounces (367 metric tons or 405 short tons) of the Fund's gold (that would result in $12 billion proceeds)

Detainee Photographic Records Protection Act of 2009
A covered record (a photograph that was taken between September 11, 2001 and January 22, 2009 and duly certified by Secretary of Defense) shall not be subject to disclosure under the Freedom of Information Act.

As the bill is in the negotiation stage, many provisions are being struck out. The above information is likely to change; some of it may be already obsolete, while new provisions may be being added.

The contention seems to be IMF and Detainee Photographic Records Protection Act. Many lawmakers find it hard to approve both.

Neither is related to supplemental appropriation for wars, is it?

Nor greenhouse gas accounting, nor salaries at SEC.

(Business is indeed as usual on Capitol Hill. Don't they know we are broke?)

10 Banks Allowed To Repay TARP

(Update 8:39 am PST) So Tim Geithner released the statement but he didn't name the banks? The banks who have said they are repaying the TARP are (according to Bloomberg):

  • J.P. Morgan Chase
  • Morgan Stanley
  • American Express
  • Bank of New York Mellon
  • BB&T
  • Capital One
  • Northern Trust
  • State Street
  • US Bancorp

According to various news sources (here's one), the Treasury Department is likely to announce as early as Tuesday morning 10 banks that will be allowed to repay TARP money. ["Allowed"...]

The names of the banks unofficially mentioned are:
  • J.P. Morgan Chase
  • Goldman Sachs
  • American Express
  • State Street
  • Bank of New York Mellon
  • Morgan Stanley
The names of the banks unofficially pronounced "doomed", tethered to the government for a foreseeable future, are:
  • Bank of America
  • Citigroup
Bank of America could have avoided at least half the trouble by not buying Merrill Lynch, no matter how Ken Lewis was threatened by the Bernanke-Paulson duo. Citigroup might have been better off today if it had acquired Wachovia's good assets with FDIC's help.

According to this article from AP,

"Simon Johnson, a former chief economist at the International Monetary Fund, said putting Citigroup and Bank of America at a disadvantage might be part of the government's plan.

""Both banks need to downsize, so this is going to cause them to lose talent if the constraints are effective," said Johnson, now at the Massachusetts Institute of Technology's Sloan School of Business. "That may be, given the political constraints, the most effective way to reduce systemic risk."'

So does that mean they will be the banking equivalent of Chrysler and GM, being reduced to a government's tool to achieve its policy goals? On top of that, they will be managed by 3 different Presidential czars (Economic, Bailout, Pay) possibly 4 (Bank), who will come before the government official, Treasury Secretary Geithner.

Who's missing among big names?
  • Wells Fargo

Monday, June 8, 2009

Why Natural Gas Is Lagging And Why It May Soon Outperform Oil

The price of crude oil has doubled from the bottom ($35.13) reached back in December. Coal, as measured by the coal ETF (KOL), bottomed earlier in November, at $9.43; since then it has almost tripled. The last of widely used energy resources that come from under the ground, natural gas, on the other hand, ended down today at $3.73, not very much off its April low ($3.25).

What gives?

This nice chart comes from Energy Information Administration, which provides energy-related statistics for the US government.

Natural gas is the second largest energy source consumed in the US. Petroleum is the first, and coal the third. However, unlike petroleum whose main usage is for transportation (70%) or coal whose main usage is for electric power generation (91%), use of natural gas is equally divided between industrial, residential/commercial, and electric power generation. Within residential/commercial, commercial makes up over 40%. Nearly 50% of natural gas consumption comes from industrial and commercial.

Conclusion: natural gas price has been hit hard by the recession we're in.

The price of oil is almost always cited as a barometer of some sort for whether or not the US and global economy is improving. However, the industrial use of petroleum only makes up 25% of total usage. It seems to me that natural gas is a better indicator of the health of the productive part of economy, and that indicator seems to be saying we have some way to go till we see a recovery.

The bottom for natural gas may be in, though, if you look at the chart of natural gas futures (I posted it on my other blog ). If and when the economy recovers, I think we may have natural gas shortage.

Here's an article from Bloomberg (6/8/09)
Natural Gas Cheapest to Oil Since 1992 Signals Gain: [emphasis is mine]

"Natural gas lost 73 percent in 11 months as the U.S. fell into the deepest recession in 50 years and drillers failed to idle rigs fast enough to control inventories. Stockpiles are 22 percent larger than the five-year average, the Energy Department said. Oil costs 18 times more than gas, the biggest gap since 1992, when the collapse of communism cut supplies from Russia, according to data compiled by Bloomberg.

"Now, gas drillers are tightening their grip on production just as the economy shows signs of improving. The number of U.S. rigs plunged 56 percent in nine months, the steepest drop in two decades, Baker Hughes Inc. said. Gas may rise 38 percent in the second half, while oil will gain 22 percent, according to Bloomberg analyst surveys."

A little caution: the recovery may turn out to be L-shape (i.e. flat-lining, no recovery)...

(11:33PM PST: Oh never mind.. I just read Ambrose Evans-Pritchard's article on Telegraph "The depression quietly deepens" - you can read it too by following the feed link on the left column segment of this blog "Telegraph Ambrose Evans-Pritchard". Now I'm thoroughly depressed.)

Hints of What Kind of Country US Is Fast Becoming

This from Zero Hedge on June 8:
Obama Claims TARP Issue Is Out Of Supreme Court's Authority, which is based on this post from SCOTUS Blog (Supreme Court of the United States Blog):

U.S. says TARP issue out of Court’s reach (6/8/09, SCOTUS Blog):

"The Obama Administration argued Monday that no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP) funds. The Indiana debt holders, U.S. Solicitor General Elena Kagan wrote, simply have no right to raise that issue, thus putting it out of the reach of the courts."

Emphasis is mine. The administration is saying we have no right to question the government in Chrysler bailout, and no court has authority to hear us.

This from Washington's blog on May 20:
Obama is considering doing something that even Bush didn't try: Preventive detention of people who will never get a trial:

Quoting New York Times article on May 20,

"President Obama told human rights advocates at the White House on Wednesday that he was mulling the need for a “preventive detention” system that would establish a legal basis for the United States to incarcerate terrorism suspects who are deemed a threat to national security but cannot be tried.."

"The other participant said Mr. Obama did not seem to be thinking about preventive detention for terrorism suspects now held at Guantánamo Bay, but rather for those captured in the future, in settings other than a legitimate battlefield like Afghanistan."

Do you see a pattern here?

Didn't the President teach constitutional law, or at least say he did? (Which country's constitution was he teaching?)

Do you want to run as fast as you can, as far away as you can, while you can?

Treasury Primary Dealers Under Pressure?

This week, the US Treasury Department is set to auction $157 billion worth of Treasury securities. There seems to be an increasing angst in the market: who is going to buy all these debts and how?

Primary Dealers are the banks, both US and foreign, who are required to bid at Treasury auctions. The current Primary Dealers, as released by the New York Fed, are as follows:

  • BNP Paribas Securities Corp.
  • Banc of America Securities LLC
  • Barclays Capital Inc.
  • Cantor Fitzgerald & Co.
  • Citigroup Global Markets Inc.
  • Credit Suisse Securities (USA) LLC
  • Daiwa Securities America Inc.
  • Deutsche Bank Securities Inc.
  • Dresdner Kleinwort Securities LLC
  • Goldman, Sachs & Co.
  • HSBC Securities (USA) Inc.
  • J. P. Morgan Securities Inc.
  • Mizuho Securities USA Inc.
  • Morgan Stanley & Co. Incorporated
  • RBS Securities Inc.
  • UBS Securities LLC.

In addition to weekly auctions of various Treasury bills (4 to 52-week), longer-term Treasury notes and bonds are sold every 2 weeks. 3-year note, 10-year note and 30-year bond are usually sold in the same week, so are 2-year note, 5-year note and 7-year note. This week, it is 3-year, 10-year, 30-year combo.

Just to give you an idea of how much debt is being issued, take 3-year note as an example:

In 2009, 5 auctions have been completed; there are 7 more to go. Each auction sells between $32 to 35 billion worth of 3-year note. So, by the end of this year Treasury will have sold between $384 and 420 billion. In 2008 there were two 3-year note auctions that sold $53 billion total.

How about 5-year note?

Treasury auctions 5-year note every month. This year, the size of each auction is well over $30 billion. In 2008, it was between $15 and 28 billion. In 2007 it was between $14 and 16 billion. In two years, the size of each auction doubled.

Or 7-year note, which is offered for the first time this year:

So far this year 4 auctions have been completed, with each auction selling $26 billion. There are at least 5 more auctions scheduled.

Or 10-year note:

Treasury is set to auction 10-year note every month this year. 10-year note was auctioned every month also in 2008, but prior to 2008 it was auctioned only 8 times a year. This year's auction size is between $16 and 22 billion. In 2008 it was between $10 and 20 billion. In 2006 it was between $9 and 15 billion. In 2000, there were only 4 auctions, in which $46 billion total was auctioned.

In May alone, Treasury auctioned $172 billion worth of Treasury note and bond. $172 billion times 12 months equals $2 trillion. And this is not counting Treasury bills (4-week, 13-week, 26-week sold every week - about $30 billion each, 52-week once a month, about $25 billion).

So who has the money to buy all these debts? Or who wants to buy them? Foreigners are dropping out of longer-dated Treasuries. Will the primary dealers be able to continue buying them and selling to someone else, without becoming insolvent themselves? (Some say these banks are already insolvent.) Or will we start to see the primary dealers refuse to buy Treasuries? The Federal Reserve's $300 billion pledge to purchase Treasuries over the 6-month period (starting March) won't be anywhere near sufficient, I'm afraid.

Sunday, June 7, 2009

OT: Cliburn Won by Blind Japanese Pianist

Nobuyuki Tsujii from Japan, blind from birth, shared the first prize at Van Cliburn International Piano Competition (read the article in the Dallas Morning News here). I listened to his playing, and I'm afraid I share the same view as the Dallas Morning News reviewer. Well-played by a very good student of piano, that's that, no more.

I was going to post the video of his playing, but I can't bring myself up to the task. Instead, here's one of my favorite pianists: Ivo Pogorelich, playing Chopin Scherzo No. 3, Op. 39 in 1980 Chopin Competition:

It Will Be An Act Of War, Mr. President

According to New York Times article, the administration is considering a way to intercept North Korea's air and sea shipment suspected of carrying weapons or nuclear technology. It also wants to reverse President Bush's decision to remove North Korea from a list of states that sponsor terrorism (i.e. back to "Axis of Evil" for North Korea). According to the article:

U.S. Weighs Intercepting North Korea Shipments (6/7/09, New York Times)

"... The reference to interdictions — preferably at ports or airfields in countries like China, but possibly involving riskier confrontations on the high seas — was made by Secretary of State Hillary Rodham Clinton. She was the administration’s highest-ranking official to talk publicly about such a potentially provocative step as a response to North Korea’s second nuclear test, conducted two weeks ago."

With Middle East and Af-Pak having the Presidential czars placed on top of her (Dennis Ross and Richard Holbrooke, respectively), what's left for Mrs. Clinton that is of some importance seems to be North Korea. (Is it my imagination that Mrs. Clinton and her husband seem a little marginalized in the new administration? Mr. Clinton has been named a UN special envoy to Haiti, not the most prestigious or prominent position that the former President would have liked.)

So, it will possibly be another war, in addition to Iraq and Af-Pak:

"North Korea has repeatedly said it would regard any interdiction as an act of war, and officials in Washington have been trying to find ways to stop the shipments without a conflict. Late last week, James B. Steinberg, the deputy secretary of state, visited Beijing with a delegation of American officials, seeking ideas from China about sanctions, including financial pressure, that might force North Korea to change direction."

As mentioned in the previous post on North Korea, blockade is an act of war. Are you ready for three, simultaneous wars, Mr. President? And this one will inevitably involve the US's East Asian allies, with the heaviest blow probably to be suffered by South Korea.

China, Japan, and South Korea combined hold 46% of US Treasury securities held by foreigners. (Data: Treasury Department, as of March 2009)

Federal Reserve to Hire Lobbyist to Counter Skepticism

The Federal Reserve, whose chairman recently expressed concern over the growing federal deficit, intends to hire a lobbyist to counter skepticism on Capitol Hill over the Fed's ever-increasing influence.

The lobbyist the Fed plans to hire, Linda Robertson, did the lobbying for Enron. She also worked under three Treasury Secretaries - Lawrence Summers, Robert Rubin, and Lloyd Bentsen.

Fed Intends to Hire Lobbyist in Campaign to Buttress Its Image (6/5/09, Bloomberg)

"The Federal Reserve intends to hire a veteran lobbyist as it seeks to counter skepticism in Congress about the central bank’s growing power over the U.S. financial system, people familiar with the matter said.

"Linda Robertson currently handles government, community and public affairs at Johns Hopkins University in Baltimore, and headed the Washington lobbying office of Enron Corp., the energy trading company that collapsed in 2002 after an accounting scandal. She was also an adviser to all three of the Clinton administration’s Treasury secretaries.

"Robertson would help the Fed manage relations with lawmakers seeking greater oversight of a central bank that has used emergency powers to prevent Wall Street’s demise."

This alone shows, to me, very eloquently, that the Federal Reserve is NOT PART OF THE GOVERNMENT but basically a private industry group, a cartel. The banking cartel wants to reassure the ever-skeptical and critical Congress that the increasing power of the Fed over the financial and economic system is a good thing, nothing to worry about. Audit the Fed? Oh don't worry and don't waste your time and resource, we know what we're doing...

After a disasterous performance by the Federal Reserve vice chairman Donald Kohn, the Fed should worry about the general public slowly but surely catching on. Here's a video clip of Mr. Kohn grilled by a Florida Democrat Alan Grayson over the Fed's balance sheet. (SO WHERE HAS THE MONEY GONE, Mr. Kohn?)