Sonic Weapon Against G20 Protesters

National Guard and Police are using tear gas and LRAD to disperse protesters at G20 in Pittsburgh. Welcome to new America, the change we can really believe in. It has really changed.

What is LRAD? It is "Long Range Acoustic Device" developed by American Technology Corporation for acoustic hailing and warning device (AHD). It is shown mounted on a vehicle, and you can hear the piercing noise. (The video clip was posted at Wikiprotest.com.)

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"According to the manufacturer's specifications, the equipment weighs 45 pounds (20 kg) and can emit sound in a 30° beam (only at high frequency, 2.5 kHz) from a device 83 centimetres (33 in) in diameter. At maximum level, it can emit a warning tone that is 146 dBSPL (1,000 W/m²) at 1 metre, a level that is capable of permanently damaging hearing, and higher than the normal human threshold of pain (120–140 dB). The maximum usable design range extends to 300 metres. At 300 metres, the warning tone (measured) is less than 90 dB. The warning tone is a high-pitched shrill tone similar to that of a smoke detector." (Wikipedia.org)

In Pittsburgh, they are using the device for crowd control, the device that could permanently damage hearing. The United States government is using a military weapon against its own citizens. "Military weapon?" you may ask. Well here it is, a segment from Discovery Channel from 2005 "Future Weapons - LRAD".

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Postal Gets A $4 Billion Break

In the last-minute wrangling in Congress to finish spending as much as they can before the new fiscal year starts, the U.S. Postal Service gets a $4 billion break.

A $4 billion bailout for the Postal Service? (9/24/09 Politico)

"The House voted Thursday to freeze Medicare Part B premiums for most elderly next year, even as Democrats moved to exempt the Postal Service from having to make $4 billion in payments due next week to cover retirement health benefits for its employees.

"The back-to-back actions reflect a flurry of last minute multi-billion-dollar fixes, often without warning, as the government approaches the new fiscal year beginning next Thursday, Oct. 1.

"At a meeting of House and Senate Appropriations Committee negotiators Thursday morning, the Postal Service language was incorporated into a stop-gap continuing resolution, or CR, that Congress must enact in the next week to keep the full government operations. As adopted, the postal agency, which now faces a liability of $5.4 billion due Sept. 30, would have to pay only $1.4 billion and would be allowed to effectively defer the remaining $4 billion until after 2017."

I fondly recall President Obama comparing the U.S. Postal Service to FedEx and UPS, when he was discussing the so-called "public option" or government insurance vs private insurance. If the public option is to be just as competitive and efficient and self-sustaining as the Postal Service, we (taxpayers) will have a problem. I don't think it's going to be mere $4 billion either.

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$787B Stimulus a Success for Government Employment

Remember the $787 billion so-called stimulus package (the formal name is "American Recovery and Reinvestment Act of 2009") that was passed back in February, under a Presidential threat of "catastrophe"?

Well it has indeed stimulated something: government employment.

Stimulus funds boost number of federal jobs
(9/23/09 USA Today) [emphasis is mine]

"WASHINGTON — The $787 billion economic recovery package also is stimulating growth in the federal government as agencies hire thousands of workers and spend millions of dollars to oversee and implement the package, according to government records and spokesmen.

"Fourteen of the top federal agencies responsible for spending under the American Recovery and Reinvestment Act say they've hired about 3,000 workers with stimulus money. That's helped fuel the continued growth of the federal government, which increased by more than 25,000 employees, or 1.3%, since December 2008, according to the latest quarterly report. During that time, the ranks of the nation's unemployed increased by nearly 4 million, Labor Department statistics show.

"Overall, there are about 2 million federal workers, the data show."

Their tasks?

"The new workers are tackling such tasks as managing stimulus-funded contracts, processing Social Security benefit claims and investigating possible cases of fraud and waste. They're overseeing about $288 billion in tax cuts and nearly $500 billion in federal spending, much of it in the form of transfers to state governments for education, health care and jobless benefits."

And this is just "federal". Starting October, Recovery.gov (which VP Joe Biden oversees) will start posting "job gains" in state and local level. Caveat emptor: reporting entities are not required to distinguish between the jobs created and the jobs "saved". They are to guess how many jobs would have been lost if it were not for the stimulus money.

Much like the Bureau of Labor Statistics does every month with their Birth/Death model.

U.S. to Post Reports on Stimulus Jobs Online
(9/23/09 Wall Street Journal) [emphasis is mine]

"WASHINGTON -- The administration next month will begin posting online reports on the number of jobs created and saved by the first tranche of funding in the economic-stimulus plan, part of an effort to ensure transparency in the administration of the program.

"But a Government Accountability Office report on Wednesday warned that the figures -- which would be supplied by recipients under the $787 billion program, including state and local governments -- might not be complete or totally accurate.

"Recipients won't be asked to differentiate between jobs created and jobs saved, officials said. They will have to give their best guess as to whether a job would have been lost had it not been for stimulus funding. They will also be allowed to use their own accounting methods, subject to federal government audits that are still being designed, said Recovery Act Implementation Senior Advisor Ed DeSeve."

I started thinking about a light bulb joke involving government officials and employees. I found several on the net. Here's my favorite so far:

Q: How many bureaucrats does it take to screw in a lightbulb?

A: Two. One tells the public that everything possible is already being done, and the other screws the new bulb into the water faucet.

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Senate Health Care Reform Bill Will Be Voted On Only With A Summary

in plain English.

Oh and it will also come with a complete Congressional Budget Office cost estimate of the bill before a committee vote on the legislation. But that's all you'll get.

So says the Senate Banking Committee chairman Max Baucus, who also wanted to tax Q-tips and tampons so that the uninsured Americans (and soon-to-be Americans) can get the government insurance.

Committee Spars over Transparency of Health Care Legislation
(9/23/09 Wall Street Journal)

"The Senate Finance Committee kicked off debate on its health bill today by sparring over a Republican proposal that would require lawmakers to post the legislation three days before they vote on it.

"The committee voted down an amendment by Kentucky Republican Sen. Jim Bunning to make the final legislative language available on the committee’s web site for 72 hours before members of the committee can vote on it. But it adopted a modified version of the amendment, proposed by Senate Finance Committee Chairman Max Baucus of Montana, that requires the committee to post a plain-English summary with a complete Congressional Budget Office cost estimate of the bill before a vote on the legislation.

"In a back-and-forth that took up much of the morning session, Bunning and other Republicans argued that the legislation was too critical not to see the details before the vote. “It’s the most important bill I’ve seen in 24 years,” Bunning said. Americans also have been seeking details of the bill and should be able to see it too, he said."

How they take Americans for fools. Of course the devil is always in the details, not in a plain-English summary, and the Democratic chairman should know it full well.

Remember the antic that House Speaker Nancy Pelosi used when the climate bill (H.R. 2454) was very narrowly passed back in June? The official copy of the bill was missing 300 pages on the day of the vote, and the 1000-page bill was dumped on the lawmakers who cared to read 10 hours before the session was to open.

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Austrian Economics Perspective on Boom and Bust

Ludwig von Mises wrote in Human Action, 60 years ago:

"The boom produces impoverishment. But still more disastrous are the moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse."

(quoted in the article "The Deflating Bubble" by Douglas E. French, FREE Market newsletter Vol. 27, No. 6, June 2009 by Ludwig von Mises Institute)

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FDIC Wants to Be Bailed Out

by banks, not by Treasury.

FDIC, whose DIF (deposit insurance fund) was meager $10 billion (see my post) at the end of June to cover close to $5 trillion deposits (and remember that was before the record bank closures in July and very costly closures in August. The fund must be very close to zero, if not negative already), wants to borrow money from the banks from which it collects deposit insurance fees.

FDIC could seek bailout from banks (9/22/09 AP via Yahoo Finance)

"WASHINGTON (AP) -- Regulators have approached big banks about borrowing billions to shore up the dwindling fund that insures regular deposit accounts.

"The loans would go to the fund maintained by the Federal Deposit Insurance Corp. that insure depositors when banks fail, said two industry officials familiar with the conversations, who requested anonymity because the plans are still evolving.

"Regulators also are considering levying a special emergency fee on all banks, charging regular fees early or tapping a $100 billion credit line with the U.S. Treasury, the officials said."

Let's say I am an insurance company. I insure your home, but times have been good and we are all prosperous so I will not collect insurance premiums from you for a decade. Don't worry nothing will happen. Then, Santa Ana wind blows and lightening strikes, and voila there's a massive fire in your area. Your home burns down. But I'll say, sorry, no money to give to you. In fact, I am broke. So I am going to borrow from you so that I can pay you and others. I'll pay you good interest on it, how about 25 basis points above the Fed funds rate? While I'm at it, I'll assess one-time emergency fee to replenish my insurance fund quickly. What do you say?

You would take me to court.

But wait, there is a possibility that this may be another disguised "rescue", actually, of big, national banks. There is also a possibility that this is a coordinated move with the Federal Reserve. Without the details known at this point, it is my pure conjecture. But here's what I see may be happening:

1st possibility: disguised "rescue" plan

FDIC would accept "loan" in the form of any type of asset from the big banks. Instead of cash or cash equivalent, the banks would give loans (of dubious quality) on their books as "loans" to FDIC, and FDIC would accept at face value and pay interest on the "loans" on top of it. (Where would that interest payment money come from?)

2nd possibility: coordination with the Fed to control excess reserves

The banks will create new loans to FDIC out of the excess reserves at the Federal Reserve. The Fed would be happy that the excess reserves are not escaping into the real economy to cause inflation. Banks would be happy that it would earn (probably) better interest than at the Fed, and their balance sheet get stronger with very safe loan to FDIC (ultimately backed by taxpayers). FDIC would be happy to have freshly minted money knowing it actually didn't cause much distress to the big banks anyway.

Just last month when FDIC issued the quarterly banking profile for the 2nd quarter (it is linked in my post), FDIC chairman Sheila Bair didn't sound much worried about the dwindling DIF, and kept repeating the mantra of "Our resources are strong. Your insured deposits are safe."

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Dr. Doom (Marc Faber) Says "Buy Stocks"

because U.S. dollar will be worthless.

Marc Faber, of The Gloom, Boom and Doom Report, says there are money-making opportunities in stocks, by going long.

In his interview with Yahoo Tech Ticker,

"However, in the near term, Faber sees plenty of money-making opportunities in stocks. Sure, prices aren't as cheap as they were in March, yet he's confident, "in this environment cash will become worthless." As a result, he says investors are, "better off being in equities," for the next two to three years."

He sees value in energy and mining stocks, and some more:

• Newmont Mining (ticker symbol: NEM)
• Nova Gold (NG)
• Chesapeake Energy (CHK)
• Exxon Mobile (XOM)
• Large-cap pharma like Pfizer (PFE), Johnson and Johnson (JNJ) as defensive play
• Airlines including Thai Airways
• Russian market
• U.S. real estate
  

(If the video doesn't work (as the embed code keeps disappearing after I paste it!!), click on the link to Yahoo Tech Ticker here and view it at Yahoo.)

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Something Brewing Again in Caucasus

Remember the tie-eating president of Georgia? In August last year, right on the day that Beijing Olympics started, Georgia began military maneuver in the autonomous region of south Ossetia, only to be swiftly and badly beaten back by Russia who was in the region as a peace-keeping force (thus the Georgian president's unusual diet).

Something is brewing there again right now, this time over another breakaway region of Georgia, Abkhazia. But whatever it is involves even wider region from Moldova to Azerbaijan that is neighboring Georgia and bordering Iran. The primary target, again, seems to be Iran.

Black Sea Crisis Deepens As US-NATO Threat To Iran Grows
(Rick Rozoff, 9/16/09 Centre for Research on Globalization)

"Tensions are mounting in the Black Sea with the threat of another conflict between U.S. and NATO client state Georgia and Russia as Washington is manifesting plans for possible military strikes against Iran in both word and deed.

"Referring to Georgia having recently impounded several vessels off the Black Sea coast of Abkhazia, reportedly 23 in total this year, the New York Times wrote on September 9 that "Rising tensions between Russia and Georgia over shipping rights to a breakaway Georgian region have opened a potential new theater for conflict between the countries, a little more than a year after they went to war." [1]

"Abkhazian President Sergei Bagapsh ordered his nation's navy to respond to Georgia's forceful seizure of civilian ships in neutral waters, calling such actions what they are - piracy - by confronting and if need be sinking Georgian navy and coast guard vessels. The Georgian and navy and coast guard are trained by the United States and NATO.

"The spokesman of the Russian Foreign Ministry addressed the dangers inherent in Georgia's latest provocations by warning “They risk aggravating the military and political situation in the region and could result in serious armed incidents.” [2]"

"In attempting to enforce a naval blockade - the International Criminal Court plans to include blockades against coasts and ports in its list of acts of war this year [5] - against Abkhazia, the current Georgian regime of Mikheil Saakashvili is fully aware that Russia is compelled by treaty and national interests alike to respond. Having been roundly defeated in its last skirmish with Russia, the five-day war in August of last year, Tbilisi would never risk actions like its current ones without a guarantee of backing from the U.S. and NATO." [emphasis is mine]

Remember the stock market crashed two months later last year. I'm not saying they were connected (although there are people who say they were). At least last year the Georgian conflict didn't blow up into a wider regional war involving Iran and Israel. This time, I'm not very sure.

Part of my uneasiness is the current U.S. administration under President Obama. Modus operandi of the administration seems to be to do everything all at once - blitzkrieg, or shock and awe - from economic "stimulus" (so far all it's stimulating is government spending) and cap and trade, health care "reform" to immigration reform to financial overhaul to global this and and that. Staying in Iraq and significantly increasing presence in Afghanistan and Pakistan. I wouldn't be surprised if they decide to open yet another front in Iran, because they think "they can".

The big arc connecting Romania/Bulgaria- Moldova - Ukraine - Abkhazia - Georgia - Azerbaijan - Armenia - Usbekistan - Khazakistan - Afghanistan - Pakistan, as described in the article, would seem like an effort to contain Russia as much as setting the stage for confrontation with Iran. Are we back in the days of Cold War? Then, I read this article today.

Zbig Brzezinski: Obama Administration Should Tell Israel U.S. Will Attack Israeli Jets if They Try to Attack Iran (9/21/09 Political Punch, ABC News)

Brzezinski even invokes USS Liberty.

In the update section of the article, there is a curious piece of information: "Russian President Dmitriy Medvedev told CNN that Israeli President Shimon Peres assured him that Israel would not attack Iran."

(More on Medvedev's interview in Reuter's article here.)

Just recently, Israeli Prime Minister Benjamin Netanyahu made a secret trip to Moscow to meet with Russian Prime Minister Vladimir Putin.

And Mr. Putin met with the U.S. business leaders after Obama Administration ditched the missile shield in Eastern Europe.

Looks like "the Great Game" is still on, after all these years.

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Fed Rejects Geithner Request for Study of Governance, Structure

and Ben Bernanke (after successfully campaigning for the second term) has been pushing his organization (Federal Reserve) hard as ready and fit to be THE regulator of the financial life of the entire nation (if not the world) and himself at its head to preside over commercial banks, investment banks, hedge funds, community banks and credit unions, insurance firms, credit card issuers, mortgage companies, and oh by the way consumers? Does that make sense to you?

Fed Rejects Geithner Request for Study of Governance, Structure
(9/21/09 Bloomberg)

"Sept. 21 (Bloomberg) -- The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.

"The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”

"Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”

"“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”" [emphasis is mine]

Aha.

The Federal Reserve Act was indeed passed by Congress two days before the Christmas Eve in 1913 and signed into law by President Woodrow Wilson the next day. Needless to say, not all Congressmen and Senators were in town. It is indeed NOT part of the executive branch, it is not part of any branch of the government. It is a PRIVATE banking cartel owned by the member banks.

Particularly since September 2008 the Federal Reserve has been inseparable from the Treasury Department in executing the financial rescue plans, almost without any oversight. It has been acting as if they were part of the government. Now they want to hide behind Congress?


Not so fast. Here comes H.R. 1207, the bill by Congressman Ron Paul to audit the Fed. The bill has 290 co-sponsors as of today and Barney Frank, chairman of the House Banking Committee has said there will be a committee hearing on September 25, according to the Bloomberg article.

A very good summary of the structure of the current Federal Reserve System and how it is governed has recently been presented by person from an unexpected quarter, by the way: Neil Barofsky, special inspector general of Treasury Department to oversee the TARP program. The July 21, 2009 quarterly report to Congress from his office has a concise summary of the Federal Reserve System, from page 130 to page 136, including the table summarizing various loan schemes created by the Fed.

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What Is Going on with Lehman Brothers?

Not with the company but the stock price.

Lehman Brothers still trades as a pink sheet, LEHMQ. The company has been in bankruptcy (Chapter 11) since last September. The stock, accordingly, was trading at 5 cents or less, with daily volume of a few million shares, until all of a sudden it went up 200% to 15 cents on August 28 with 73 million shares trading.

It is trading at 23 cents today, up 12%. It was up more than 20% earlier.

The move since late August is dismissed as nothing more than small, retail investors picking out the penny stocks hoping to win big to make up for the loss they have sustained in their investment.

Probably that is the case. However, I have this strange feeling that the firm may get resurrected. I have absolutely no proof, it's just my slight suspicion, probably irrational one, too.

If I am to plead my case for the Lehman resurrection, it is this recent post about two accountants discussing the unwinding of the unwindable derivative positions in Lehman Brothers London operation.

No major counterparty has come forward to settle their accounts with Lehman, after one year. Why? Maybe because their claims are not supported enough by documentation that would satisfy the bankruptcy judge? Instead of unwinding the positions so that the firm can be dissolved, might they end up keeping the firm intact with all remaining positions on its book, so that the counterparties are not harmed by the unwinding (if they owe Lehman)?

They may rather let Lehman Brothers exist as a "bad bank" that holds derivatives that have certain value but no one can figure out exactly what value and are unwindable. After all, Chapter 11 bankruptcy is for reorganization under the bankruptcy code.

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Solution to China's "Cancer Villages" Is Health Insurance??

and solution to economic crisis is welfare reform?

Reuters ran the article about the dire plight of Chinese peasants suffering debilitating and deadly disease (various forms of cancer) due to contaminated water from a state-owned mining operation nearby.

China's cancer villages bear witness to economic boom
(9/16/09 Reuters)

It's a heavy metal poisoning (cadmium, lead, zinc, etc) poisoning of the river that the villagers use for bathing and irrigation for rice crops, which are contaminated with heavy metals and which the villagers sell. They use well water for drinking, but the wells are all contaminated with heavy metals. How or why they continue to use the river water is totally beyond me, as it doesn't look like water. The article describes the water, "The river's flow ranges from murky white to a bright shade of orange and the waters are so viscous that they barely ripple in the breeze."

The article says this is the price that China is paying for its rapid economic expansion. It is indeed, as the Chinese government ignored the warning of environmental disaster from the developed countries as an affront to China's ability to grow. The government continues to ignore.

But what I want to focus on is the last part of the article about China's health care system (or lack thereof). I find it a bit odd to focus on the health care system when the first and foremost solution to be applied right away is to stop further contamination of water and soil immediately and start the remedial process. The very first thing that the government should do is to shut down the mining operation. Instead, the article says people continue to suffer because they don't have national health care safety net in the form of some kind of national health insurance scheme.

Huh?

Then I heard on the BBC Radio (which by the way has started to churn out very good programs in business and finance, again) a program on China's consumers that made me suspect that the major U.S. financial institutions (such as Morgan Stanley) are working very closely with the Chinese government to lay out the infrastructure for nationwide health insurance program and other social safety nets.

Business Daily: China's consumers (9/16/09 BBC Radio)

The program is about China's export and domestic consumption, discussing how Chinese could be induced to save less and spend more. 9 minutes into the program, Stephen Roach, chairman of Morgan Stanley Asia is interviewed. He says China needs much greater stimulus for internal private consumption by building social safety net. Social security, private pensions, medical insurance, and unemployment insurance.

Coincidence? I don't think so.

U.S. financial institutions are very good at what they do - smell a big, big wad of money and pile on to the opportunity. What more lucrative than working closely with a government that virtually controls all aspects of the nation's social, political, and economic life (they are still Communists, remember?)? Instead of getting back the clean water and soil, the Chinese peasants in the Reuter's article would get a government-mandated health insurance. The premium would be paid by the peasants from their meager earnings, with no guarantee that they would get the medical treatment that they need as there is no infrastructure yet. But the government would have a huge chunk of money in the "social safety net" available for investment.

Morgan Stanley's Roach and the Chinese official interviewed right after Roach are in perfect agreement. The logic is that if Chinese people feel they are well protected by the government (social security, health insurance, unemployment insurance, etc.) they will spend more instead of saving more to take care of themselves in times of trouble.

So the world still faces the biggest economic recession since the Great Depression. The U.S.'s priority is health care reform. Japan's priority is climate change. China's priority is welfare reform.

I want to invest in a country where the economic recovery is the first priority in an economic recession. If there is such a country left, that is.

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No Health Care for Illegal Immigrants Because Everyone Will Be Legal

Representative Joe Wilson was formally rebuked for shouting "You lie!" when the president was speaking about illegal immigrants and health care coverage in Congress last week.

You lied, Mr. President?

Well, technically no, you didn't. All you're saying now is there will be no coverage/credit for illegal immigrants because everyone will be made legal immigrants. President Obama spoke to the Congressional Hispanic Caucus Institute on Wednesday, Washington Times reports:

Obama: Legalize illegals to get them health care (9/18/09 Washington Times)

"President Obama said this week that his health care plan won't cover illegal immigrants, but argued that's all the more reason to legalize them and ensure they eventually do get coverage.

"He also staked out a position that anyone in the country legally should be covered - a major break with the 1996 welfare reform bill, which limited most federal public assistance programs only to citizens and longtime immigrants.

""Even though I do not believe we can extend coverage to those who are here illegally, I also don't simply believe we can simply ignore the fact that our immigration system is broken," Mr. Obama said Wednesday evening in a speech to the Congressional Hispanic Caucus Institute. "That's why I strongly support making sure folks who are here legally have access to affordable, quality health insurance under this plan, just like everybody else.

"Mr. Obama added, "If anything, this debate underscores the necessity of passing comprehensive immigration reform and resolving the issue of 12 million undocumented people living and working in this country once and for all.""

There you go. 12 million newly minted US residents who will likely to vote for him and his party when they become citizens. The article ends with a quote from VP of La Raza:

""It's the first time I've certainly heard, publicly, him talking more about legal immigrants," said Eric Rodriguez, vice president for research and advocacy at the National Council of La Raza (NCLR). "I think that was certainly positive progress. We were absolutely concerned about not hearing that." "

La Raza, by the way, has been accused of "Reconquista" - the right of Mexico to reclaim land in the southwestern United States. La Raza denies it. The organization now has its member in the Supreme Court.

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Missile Shield Call-Off in Exchange for Biz Deals?

President Obama "dismayed America's allies in Europe and angered his political opponents at home today when he formally ditched plans to set up a missile defence shield in Poland and the Czech Republic." (Dismay in Europe as Obama ditches missile defence, 9/17/09 Times Online UK)

The administration's move is clearly designed to placate Russia, whose cooperation is sought by the administration "on everything from nuclear weapons cuts to efforts to curb Iranian and North Korean weapons programmes" (9/17/09 Reuters).

What did Messrs Putin and Medvedev give to President Obama in exchange? Agreed to further sanctions on Iran and North Korea? Agreed to stay out of any potential armed conflict? I have a feeling Russia could care less on those.

Whatever the real "quid pro quo" was, what appeared in the news was that Putin will meet U.S. businessmen on Friday (9/17/09 Reuters).

"MOSCOW, Sept 17 (Reuters) - Russian Prime Minister Vladimir Putin will meet several top U.S. executives on Friday, including General Electric Co and Morgan Stanley, the Russian government said on Thursday.

"Putin's meetings with top Western executives are usually a precursor of major business deals."

Halting the missile shield to give U.S. businesses good deals in Russia? Reuter's article hints as much:

"Talks with the U.S. firms follow a U.S. government decision to halt the deployment of a missile shield defence system in Europe, a move received positively by the Russian government."

Mr. Putin will meet:

• David Bonderman, founding partner of one of the world's largest private equity firms, TPG
• Jeff Immelt, CEO of General Electric
• John Mack, CEO of Morgan Stanley who is stepping down in 2010

Washington Examiner is more sarcastic than Reuters:

"General Electric may be the company with the closest ties to the Obama administration (if not, GE is second only to Goldman Sachs), and here we see the company benefiting from an abrupt foreign policy change made by President Obama."

As Examiner's article points out, Immelt is President Obama's economic advisor. GE owns CNBC (the stock market cheerleader/greenshooter) and MSNBC, which Washington Examiner says is "the network famously friendly to Obama".

A free-market version of capitalism is just about dead, but another version of capitalism seems alive and well, as it always has been: crony capitalism.

(Has the House banned the word yet?)

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Student Loans Get Nationalized

Everyday, I wish the power grab by the federal government and/or this administration would miraculously stop. No such luck.

The government is already the biggest mortgage lender (FHA, Fannie Mae, Freddie Mac, Ginnie Mae); it owns two of the three domestic auto companies (GM and Chrysler); it owns a diversified insurance company (AIG); it still owns a significant chunk of nation's financial firms (including Citigroup, whose share price plummeted earlier this week on a rumor that the government is planning to dump 1/3 of Citi holdings as early as October).

Now it is set to own the student loan industry.

House Passes Sweeping Student-Loan-Market Overhaul
(7/17/09 Wall Street Journal) [emphasis is mine]

"WASHINGTON -- The House of Representatives approved legislation Thursday that would effectively end private-lender involvement in the student-loan market, establishing the federal government as the sole provider of college loans.

"The bill introduces sweeping changes to the U.S. higher-education system and serves as the third central plank of President Barack Obama's domestic agenda.

[The third central plank of Obama's agenda? HOW MANY PLANKS ARE THERE?]

"Similar to the continuing efforts at overhauling health care, the changes to the federal government's higher-education policies would have a serious effect on the bottom line for private-sector players currently serving the marketplace.

"The House vote was 253-to-171, largely along party lines.

"Under the legislation, all lenders would be cut out of the market for originating loans. There would still be a role for private banks and lenders to bid for a limited number of contracts to service the loans after they are made by the government."

Goodbye, Sallie Mae (SLM). Effective nationalization of the student loan market is ostensibly to save money by cutting the fees that the government pays to private lenders. Private lenders will be allowed bid to service a small portion of loans after the government originate them.

"The nonpartisan Congressional Budget Office said that ending fees paid to private lenders would save the taxpayer $87 billion over the next decade.

"An alternative proposal floated by a group of lenders including Sallie Mae would realize the same level of savings, the CBO said."

$87 billion in fees saved over a decade. $8.7 billion a year. This government is issuing debt to the tune of $1 trillion a year. $8.7 billion is a scant 0.87% of new debt each year. Would you call this a saving?

In order to function as the sole lender of college loans, the government will need to hire a lot of people, put in the IT infra that actually works. But the government is confident that it can handle:

"Having lined up additional contractors to handle the anticipated increase in direct-loan volume, federal officials say they are prepared. Absent an unanticipated breakdown in the system, industry observers say borrowers are unlikely to notice the shift."

We recently witnessed how efficient the government system was when the government played a role of one gigantic dealership to the whole nation. The computer system for the cash for clunkers program suffered numerous system breakdowns, and dealers still haven't gotten all their money due from the government.

I have this feeling that the so-called saving will be used for setting up a new federal student loan agency. The burden will be on the schools who will be forced to change their system to accommodate this federal college loan behemoth.

Under the House bill, the savings "would use the anticipated savings to increase grants for low-income students and boost funding for minority students." (From my limited experience with the local community college and state university, that's where most of the money is going already anyway.)

The government has taken over huge part of housing, banking, transportation, and insurance. And now, if you need a loan to send your kids to college, you will go to the federal government.

Soon, they will own the health care industry entirely (they already own a huge chunk) or at least they will try to, with the threat of "racism" and "civil unrest" against anyone who dare opposes.

If the government get their hands on the consumer staples industry somehow, then all the life's needs will be provided by the government. (Oh wait, what country is this? North Korea?) You can be assured that one of the consumer staples, food, will be more heavily controlled sooner or later by the government under Obama's Food Czar who happens to be an ex-executive of Monsanto, of genetically modified crop fame.

We will also find out soon enough if they will successfully grab the Internet and radio stations. (They are already trying.)

Brave new world.

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ONN: U.S. Condemned For Pre-Emptive Use of Hillary Clinton

Against Pakistan, ONN (Onion News Network) reports. (Warning: it's a joke, no matter how real it may or may not seem to you.)

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Cap and Trade = 15% Income Tax Hike

so says the Obama administration, it turns out.

Remember Cap and Trade? The House passed this controversial climate change bill H.R. 2454 (what isn't controversial these days?) back in June, with an extremely close vote (219-212).

Declan McCullagh of CBS News, who has recently written probing articles on health care "reform" and cyberspace regulation, reports that Cap and Trade would cost families $1761 a year, equivalent of 15% increase in personal income tax.

The information comes from the previously undisclosed documents by the Obama administration and Treasury, which were obtained under the Freedom of Information Act by the Competitive Enterprise Institute and released on Tuesday, according to McCullagh.

Obama Admin: Cap And Trade Could Cost Families $1,761 A Year
(Declan McCullagh, 9/15/09 CBS News)

"The Obama administration has privately concluded that a cap and trade law would cost American taxpayers up to $200 billion a year, the equivalent of hiking personal income taxes by about 15 percent.

"A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration's estimate, the cost per American household would be an extra $1,761 a year.

"A second memorandum, which was prepared for Obama's transition team after the November election, says this about climate change policies: "Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation." "

The article has a link to the documents obtained under FOIA, which I link here also.

GOP's estimate is about $3100 per family a year, or $366 billion a year. Democrats' number is $800 per family, or less than $100 billion a year. The Heritage Foundation says it will be $1500 per family a year by 2035.

Considering the government's track record in containing costs, we could safely jettison the lowest estimate.

""Heritage is saying publicly what the administration is saying to itself privately," says Christopher Horner, a senior fellow at the Competitive Enterprise Institute who filed the FOIA request. "It's nice to see they're not spinning each other behind closed doors."

""They're not telling you the cost -- they're not telling you the benefit," says Horner, who wrote the Politically Incorrect Guide to Global Warming. "If they don't tell you the cost, and they don't tell you the benefit, what are they telling you? They're just talking about global salvation.""

Wealth distribution within the U.S., and from the U.S. to the rest of the world, particularly poorer countries. But the one who is set to gain most is the government: 15% more tax revenue, not from the polluting industries who will get numerous subsidies, but from the consumers, rich and not so rich alike.

"Because personal income tax revenues bring in around $1.37 trillion a year, a $200 billion additional tax would be the equivalent of a 15 percent increase a year. A $100 billion additional tax would represent a 7 or 8 percent increase a year."

(But watch out, opponents of cap and trade, health care, or anything that's been proposed. According to the former president Jimmy Carter and numerous other pundits (the article linked was written by a neo-conservative), it seems you are racist and you don't even know it if you dare oppose President Obama's policies. To me as a non-native here, it is totally incomprehensible, though I've been trying to understand the rationale.)

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Lehman Brothers One Year After in London and Still Unraveling

On one-year anniversary of Lehman Brothers' bankruptcy, which many say triggered the global credit freeze and the stock market collapse, there were articles and commentaries about "what lesson we have learned (if any)". But the tone of most articles was rather muted, which I believe reflects a resilient stock market that has refused to go down since March low, and also reflects a growing consensus (right or wrong) that we're on our way to miraculous recovery with no jobs. Overall, the Lehman anniversary articles were rather pedestrian.

On the other hand, across the Atlantic, BBC Radio aired a very interesting program featuring two accountants sent to Lehman as administrators to sort out the mess and wind down the company's London-based operation. The "mess" is an understatement; as one of the accountants say near the end, "the most complex insolvency ever."

The accountants, Tony Lomas and Steven Pearson of PriceWaterhouseCoopers, speak to Steve Evans in the program Business Daily, aired on September 10. The interview is about 18 minutes long, and you can listen to the program by clicking the link (it opens in a new window).

They tell Evans that they still have over 400 Lehman people working with them. Lehman Brothers still has enormous balance sheet of over $1 trillion, loaded with very complex assets - derivatives and structured finance products, they say.

After one year, they are still in awe how complex and comprehensive the business environment is in a large financial institution like Lehman. And how unfathomable the risk is. They say they are just starting to unravel some of the complexities of the positions with some of the bigger clients.

"Almost a year on, we still have large household-name counterparties out there who have NOT reconciled their position with Lehman. They have not worked out exactly what they think Lehman owes them, or what they owe Lehman... Because of the complexities of the relationship, they still can't finalize what their position is with us, all these months on."

"All it happened here, is the market stopped believing. Suddenly this enormous organization that's been around for 100 years fell apart. It could have been a number of other market counterparties; it happened to be Lehman but it could have been a number of others. If we end up without vote of confidence again, you could have this sort of thing again..."

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The Attorney Who Read the Entire H.R. 3200 Health Care Bill

Here's the blog of a retired attorney who has read the entire H.R. 3200 The Affordable Health Care Choices Act of 2009. The author, Michael Connelly, teaches Constitutional law. (I found the link to his blog from LRC Blog entry by Thomas DiLorenzo - thank you.)

He has 3 posts on H.R. 3200 and health care "reform" (in fact there are only 3 posts in his blog as of today), and his conclusion seems to be: "It is as bad as you think."

The Truth About the Health Care Bills (8/12/09)
More About the Health Care Bills (8/21/09)
PRESIDENT OBAMA’S HEALTH CARE SPEECH (9/10/09)

In his "The Truth About the Health Care Bills", the author says [emphasis is mine]:

"Well, I have done it! I have read the entire text of proposed House Bill 3200: The Affordable Health Care Choices Act of 2009. I studied it with particular emphasis from my area of expertise, constitutional law. I was frankly concerned that parts of the proposed law that were being discussed might be unconstitutional. What I found was far worse than what I had heard or expected.

"To begin with, much of what has been said about the law and its implications is in fact true, despite what the Democrats and the media are saying. The law does provide for rationing of health care, particularly where senior citizens and other classes of citizens are involved, free health care for illegal immigrants, free abortion services, and probably forced participation in abortions by members of the medical profession.

"However, as scary as all of that it, it just scratches the surface. In fact, I have concluded that this legislation really has no intention of providing affordable health care choices. Instead it is a convenient cover for the most massive transfer of power to the Executive Branch of government that has ever occurred, or even been contemplated. If this law or a similar one is adopted, major portions of the Constitution of the United States will effectively have been destroyed."

In his posts he cites several examples which have been also covered by this blog. Nice to know my understanding coincides with the constitutional attorney :) He cites:

Heath Choices Commissioner: Obama appointee who will have access to personal, financial, and other information as he/she deems necessary; clear violation of the 4th Amendment

National health care ID card: whether you have a government plan or private plan. Backdoor national ID cards

Health care provided to illegal aliens (Section 246): all the section says is "that affordability credits to help them get insurance are not available to illegals. It does not say that they can’t participate in the overall program and get reduced cost insurance under the so-called “public option”. Nor is there anything in the bill that requires someone to verify their citizenship to get benefits from the Insurance Exchange in the program."

The last one is the issue that so irked Representative Joe Wilson that he shouted "You lie!" during the unusual Presidential address on health care "reform" on September 9. (U.S. presidents do not normally address the Congress other than at the state of the union address.)

But it doesn't really matter, as one of my friends remarked the other day. She used to volunteer at a local hospital, and said they (illegal aliens, undocumented immigrants, however you want to call them) don't pay a dime anyway. They already enjoy a free health care.

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Wag the Dog (and Pass Health Care Bills?)

Last Friday we had a boat-load of headlines screaming an imminent trade war between the U.S. and China. Over the weekend China's counter-attack started, accusing the U.S. of subsidizing the exporters.

Then the president this morning was speaking about how they (he and his team) saved the world from financial catastrophe. It is 1-year anniversary of Lehman Brothers' bankruptcy that many say triggered the global credit freeze which led to the global collapse of financial markets and trades.

But what's going on behind these headlines? While people's attention is being diverted, the Senate Finance Committee has been fast working on the health care bill. The chairman of the Committee (Max Baucus, D-Mont.) says his Committee's bill could be released as early as Tuesday (that's tomorrow).

Senate Finance Panel To Release Health Care Reform Plan This Week
(9/14/09 California Healthline) [emphasis is mine]

"On Friday, Senate Finance Committee Chair Max Baucus (D-Mont.) announced that his committee's health reform bill could be released as early as Tuesday, Politico reports (Budoff Brown, Politico, 9/11).

"Emerging from a meeting with the panel's so-called "Gang of Six" negotiators, Baucus suggested that it is time to proceed on completing a reform bill with or without Republican support.

"Baucus noted that a bipartisan deal still could be possible during the mark-up stage, slated to begin the week of Sept. 21, Roll Call reports.

"Baucus said, "We had a very good meeting today," adding, "Monday we'll meet in the hopes of reaching resolution. But again it's understood that we have to start making some decisions" (Drucker, Roll Call, 9/11)."

I didn't catch this news on Friday (the linked article below says the news was on Friday 9/11 on Politico and Roll Call), until I saw the headline today on C-Span.

Note the chairman Baucus's comment hinting that Democrats are ready to proceed without GOP's support. Normally it needs 60 votes to pass a bill in the 100-member Senate. There are 59 Democrats, 40 Republicans, one seat vacant in Massachusetts. There are a few Republican Senators who often vote with Democrats (Olympia Snowe of Maine, for one), so Democrats may indeed have the votes. To be sure of the passage, though, a procedure is more likely that allows them to pass the bill with simple majority and without filibuster.

That's called "reconciliation". This blog reported on the possibility back in June.

Reconciliation is a legislative process of the U.S. Congress (enacted by the Congressional Budget Act of 1974) intended to allow a contentious budget bill to be considered without being subject to filibuster. Reconciliation is the process more relevant to the Senate, as the House can pass rules to restrain debate.

Under reconciliation instruction, the debate is restricted to 20 hours, and the Senate can pass the bill with simple majority, instead of 60.

Now, you may ask "How come a procedure for a budget bill is used for the health care bill?" That what I asked myself. It turns out that since 1996 reconciliation can be applied to any legislation that could affect the budget (positively - reducing the deficit or negatively - increasing the deficit). In the case of the administration's health care bill, it is likely to impact the budget negatively (flip-flopping CBO notwithstanding) and therefore it's a fair game for reconciliation. (Wikipedia entry lacks citation though.)

Democratic leaders have already hinted at going it alone. President Obama himself said as much in his speeches last week, in which he berated the opponents as playing politics [and he isn't playing politics?] and tried to portray opposition as usual bickering in Washington. He is apparently oblivious to the townhall meetings across the country against health care "reform" as laid out by him and his party, and maybe didn't see the huge demonstration in Washington DC on September 12 as he flew over them in his Marine One helicopter. Just like his predecessor, he doesn't seem to care about poll numbers suggesting the majority of voters oppose his health care reform.

It's like the arcade game Whack a Mole. So many gophers are popping up at the same time and even if you are super-sharp and attentive one or two are bound to get away.

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What's in Glaxo's H1N1 (Swine Flu) Vaccine?

A list of components of GlaxoSmithKline H1N1 vaccine is making the rounds on the Internet, which seems to have originated at the blog "Case About Bird Flu". The original article is actually about Glaxo's H5N1 bird flu vaccine Prepandrix, but it has been disseminated as about H1N1 swine flu vaccine.

Before dismissing it as disinformation or hoax (the original article is neither, as it is talking about bird flu vaccine), let's take a look at the ingredients OTHER THAN FLU VIRUS itself. Glaxo may use the same or similar ingredients to create H1N1 vaccine that they used in H5N1 vaccine.

GlaxoSmithKline's press release says the H1N1 flu vaccine will use Glaxo's proprietary AS03 adjuvant system. Adjuvant formulation is used in order to boost higher immune response when using a smaller amount of antigen (i.e. H1N1 virus). This is important for drug companies like Glaxo and the governments who want to prepare a large number of doses as quickly as possible. Glaxo's press release describes the benefit as follows: "The vaccine containing the adjuvant system therefore helps to substantially increase the number of vaccine doses that can be provided for mass vaccination."

It goes on to say that the same adjuvant system AS03 is used in H5N1 pre-pandemic and pandemic bird flu vaccine, and shown to have "an acceptable safety and reactogenicity [capacity to cause adverse reaction] profile". Emphasis is mine. Note the word "acceptable".

So, it may still be useful to look at the ingredients of Glaxo bird flu vaccine to guess what may be in their swine flu vaccine. We know now for sure that AS03 adjuvant system is used. Let's start with AS03.

AS03: (Aka. "Adjuvant System 03") is a trade name for a Squalene based Immunologic adjuvant used in various vaccine product by GlaxoSmithKline (GSK). It may also be used in the A/H1N1 pandemic flu vaccine. (wikipedia.org)

So now, what is Squalene?

According to Dr. Russell Blaylock [emphasis is mine];

"Novartis, the second contender, also has an agreement with WHO for a pandemic vaccine. Novartis appears to have won the contract, since their vaccine is near completion. What is terrifying is that these pandemic vaccines contain ingredients, called immune adjuvants that a number of studies have shown cause devastating autoimmune disorders, including rheumatoid arthritis, multiple sclerosis and lupus.

"Animal studies using this adjuvant have found them to be deadly. A study using 14 guinea pigs found that when they were injected with the special adjuvant, only one animal survived. A repeat of the study found the same deadly outcome.

"So, what is this deadly ingredient? It is called squalene, a type of oil. The Chiron company, maker of the deadly anthrax vaccine, makes an adjuvant called MF-59 which contains an ingredient of serious concern--squalene. A number of studies have shown that squalene can trigger all of the above-mentioned autoimmune diseases when injected."

Squalene's property to stimulate and boost immune reaction, the very reason why it is used as adjuvant, is the problem itself, it seems:

"Because squalene, the main ingredient in MF-59, can induce hyperimmune responses and induce autoimmunity, a real danger exists for prolonged activation of the brain’s immune cells, the microglia. This type of prolonged activation has been strongly associated with such diseases as multiple sclerosis, Alzheimer’s disease, Parkinson’s disease, ALS and possibly vaccine-related encephalitis. It has been shown that activation of the systemic immune system, as occurs with vaccination, rapidly activates the brain’s microglia at the same time, and this brain inflammation can persist for long periods."

The danger is the prolonged brain inflammation caused by activation of brain's immune cells by squalene. In other words, your immune system may go overdrive and start attacking your own body due to artificially heightened stimulation by squalene.

Novartis's adjuvant MF59, Sanofi-Pasteur's AF03 are also squalene-based.

The rest of the ingredients for Glaxo's H5N1 bird flu vaccine, as listed in "Case About Bird Flu" blog, are as follows. Ingredients with possible adverse effects are in green:

alpha-tocopherol (a type of vitamin E)
aluminum adjuvant
disodium phosphate: food additive
formaldehyde
magnesium chloride
octoxynol 10: detergent
polysorbate 80 (Tween 80): food additive; part of AS03 adjuvant system
potassium chloride: it is used in executions by lethal injection.
potassium dihydrogen phosphate: used in fertilizer, food additive, fungicide
sodium chloride
sodium deoxycholate
thiomersal (thimerosol): this is MERCURY
vitamin E

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