Obama - quite who is he at war with ? , Michelle, Bernardine and home grown radicalised terrists

If you don't read the WSWS you might start with this ....

Obama outlines policy of endless war
By Bill Van Auken
16 July 2008

Any misconception that Barack Obama is running in the 2008 election as an “antiwar” candidate should have been cleared up Tuesday in what was billed by the Democratic presidential campaign as a “major speech” on national security and the US war in Iraq.

Speaking before a backdrop of massed American flags at the Reagan Building in Washington, Obama made it clear that he opposes the present US policy in Iraq not on the basis of any principled opposition to neo-colonialism or aggressive war, but rather on the grounds that the Iraq war is a mistaken deployment of power that fails to advance the global strategic interests of American imperialism.

What emerges from the speech by the junior senator from Illinois is that the November election will not provide the American people with the opportunity to vote for or against war, but merely to choose which of the two colonial-style wars that US forces are presently fighting should be escalated. mehr >>

Writing in Foreign Affairs a year ago (published by those highly interesting folks at the Council on Foreign Relations - Chairman Peter G Paterson ) , Obama stressed that the lesson of the Iraq debacle was the necessity to prepare for new US wars. "We must use this moment both to rebuild our military and to prepare it for the missions of the future," he stressed. "We must retain the capacity to swiftly defeat any conventional threat to our country and our vital interests. But we must also become better prepared to put boots on the ground in order to take on foes that fight asymmetrical and highly adaptive campaigns on a global scale." Don't say you didn't realise .....

Meanwhile for those who seem to have lost (or misunderstood) the reference to afro haired, Kalshnikov toting, cammo be-trousered, Michelle Obama on the Noo Yorker cover this week ...

Here is a picture of Michelle Obama with her friend Ex Weatherwoman and Sidley Austin Partner Bernardine Dohrn at a political rally.see Monday, April 28, 2008 Obama. Ayers Rocks.

Bernardine (on the right) is the wife of Weatherman Bill Ayers and mother of his 2 children. She went to prison on various charges - Dohrn and Ayers became legal guardians of the son of former members of the Weather Underground, Kathy Boudin and David Gilbert, after they were convicted of murder of a security guard and 2 police officers during a 1981 Brinks armoured car robbery.

We have yet to turn up a single news story that mentions the Obama connection with these fascinating folks who were involved with The Weathermen in bombing the Pentagon, the US Capitol, the New York Police Benevolent Association, the New York Board of Corrections, as well as the offices of multinational companies.

Mr Clarence Mitchell - a mystery, wrapped inside an enigma

One can only assume that the collective settlement of Mr Murat's claims against the UK Press will not help the future (but let us hope succccessful) career of Mr Clarence Mitchell the Cabinet Press guru ,who turned up so rapidly at the scene of Miss McCann's disappearance in Pria da Luz last year.

His ever helpful, entertaining and detailed briefings to the Press must have helped them greatly in pursuing aspects of the case which may perhaps led the Press into by-ways and blind alleys that they might perhaps not have imagined.

Saturday, May 26, 2007 Clarence Mitchell - busy spokesman ... but who for .. and why ? is a good place to start and Monday, June 11, 2007 Madeleine's parents face tough questions from Hessischen Rundfunk's Sabina Muller a more interesting tale of PR wizardry.

This was a fascinating (hagi)biography produced at the BBC Online last September by Laurie Margolis, which makes interesting reading to anyone unfamiliar with Clarence's stellar career.

They really should check that Holy Water

Last year in Ireland 160 priests died and only 9 were ordained. 228 nuns died in 2007 and only 2 took their final vows.

Phorm - act today .... Barbican all day.

Phorm Protest

Just a reminder that the Phorm Protest takes place tomorrow in London outside BT's AGM at the Barbican Centre. The purpose of the event is to protest against plans by BT Group PLC, Virgin Media and Car Phone Warehouse to deploy intrusive technology across their broadband networks for the purpose of profiling the behaviour of their customers, with the intention to sell this to Phorm Inc. (formerly 121Media) and used for their Open Internet Exchange (OIX) service.

The purpose of the protest is twofold:

1. To raise public awareness on the issues surrounding behavioural advertising and threats it places on privacy.

2. To present the City of London Police with a case file based on covert trials carried out by BT and Phorm (then 121Media) in 2006/2007. The Covert Trials In 2006 and 2007 Bt and Phorm (then 121Media) carried out two covert trials of this technology (called PageSense in 2006, ProxySense in 2007 and WebWise in the present) which means they did not seek the consent of their customers. These trials constituted criminal and civil offenses under various laws. You can read more information about this here plus a legal analysis of the trials here .

Baroness Miller is kindly giving a speech at 1:15pm as well as a few other people including Alex Hanff in the noon-2pm period.

The protest starts at 10am and will continue through to the late afternoon.

Alex will be presenting the CoL Police with a dossier of evidence calling for an investigation of the BT Covert Trials in 2006/2007.

Alex had a meeting with CoL Police last week and they have agreed to look at the dosier officially (as opposed to just passing the buck) so that is at least some progress.

More details here https://nodpi.org/category/events/ and here http://www.theregister.co.uk/2008/02/29/phorm_roundup/
Phormwatch
e-mail: phormwatch at fastmail dot net
Homepage: http://phormwatch.blogspot.com/

Instructions how to get there ..

See post Monday, March 03, 2008 Phorm - we can feel the Spring Surge - take action NOW and also Sunday, March 02, 2008 Just when you thought it was safe to browse the Web. .. Phorm is run by Kent Ertegrul, a serial entrepreneur alumnus of blue chip St Paul's School, London and holds a Bachelor's degree in Politics from Princeton University.

He started his career in investment banking, working at JP Morgan, Credit Suisse and Morgan Stanley before going into business on his own. His past ventures include selling joyrides on Russian fighter jets - Migs Etc.

Previously, his most notable foray online was as the founder of PeopleOnPage, an ad network that operated earlier in the decade and which was blacklisted as spyware by the likes of Symantec and F-Secure.Security firm F-Secure describes PeopleOnPage's software here.

It says: "The spyware collects a user's browsing habits and system information and sends it back to the ContextPlus servers. Targeted pop-up advertisements are displayed while browsing the web."Each installation is given a unique ID, which is sent to the ContextPlus server to request a pop-up advertisement." ContextPlus was the rootkit that PeopleOnPage used to harvest data and hide its presence.

The similarities between this business model and that which could be kicked off by Phorm in the coming months are striking.

UPDATE Wednesday 2.00 pm BST BT have been using Google blogsearch function to hoover up blogiste comment , they called by recently.

aangirfan , sniffing out the truth with her nose to the grindstone

aangirfan has been on her holidays and has returned with some stunning roundups, which anyone interested should take a look at ;

International Paedophile rings - THE ZANDVOORT NETWORK, JERSEY, DUTROUX, PORTUGAL..... and Jersey children raped, tortured, murdered and burned... grisly stuff but with some increasingly fascinating connections being exposed.

She has maintained a file on Lockerbie for years - IRAN TO BE FRAMED FOR LOCKERBIE? DID THE CIA BRING... sameold, same old, but finally the truth is half emerging.

The Russian-Israeli Mafia in the US and UK plus the odious Con Coughlin and MI6-Mossad propaganda? Tony's crony Boris Berezonsky AKA UK citizen Platon Elenin with a handy Israeli passport and the very odd case of JIC Chairman Spy, Alex Allan, found 'with blood everywhere.' not forgetting Mossad in the UK (who of course don't operate...)

Most unlkely of all...Britain must act to prevent an attack on Iran

Co-op land in the divvy as Ronnie Cohen's Apax give Somerfield away - Lovering the "hot deal maker" with egg all over his fat happy face

In November 2005 Gordon Brown's friend, Ronnie Cohen and his Apax Partners took over struggling Somerfield plc in a £1.1 Bn. all-cash take-over offer with Barclays Capital (they already owned 12.4%) , and Iranian-born Robert Tchenguiz and his younger brother Vincent who fled from the Shah in 1979. They have just 4% share of the UK food market

The star studded management team (see below) were happy to quickly unload (for an undisclosed sum) the old loss making (£40Mn a year) Kwik Save just 3 months later, in February 2006 with 171 stores and 4,000 employees to BTTF the optimistically entitled Back to the Future consortium led by Peacock Group's Chief Executive Richard Kirk which includes Paul Niklas, the former managing director of Formica. (Sunday, March 04, 2007 Ronnie Cohen, Gordon Brown, Israel, There is no Israeli Lobby )

Somerfield is Headed by John Lovering (D. Tel " regarded as one of private equity's canniest deal-makers ??)as Chairman who is also and Chairman of Debenhams and led several consumer-focused private-equity transactions including Fitness First, Laurel High Street, Homebase, Odeon Cinemas, Birthdays Group and Peacock. He was Chief Operating Officer at Tarmac plc and Finance Director at Sears plc. and by Februaru 2006 he had appointed a strong team of retail mega stars.

CEO Paul Mason (42) was the European President of Levi Strauss and previously CEO of Matalan Plc (Jan 2002 - March 2003) and President and Managing Director of Asda Wal Mart (2000 - 2001) and had been with B & Q.

Colin Smith ,Trading and Marketing Director (50) who joined from Tesco where he had been for along time.

John Cleland Retail Director (40) was the Commercial Managing Director of B&Q since January 2005. Prior to this he was Senior Vice President Operations at Wal-Mart, Japan and Retail Managing Director at Wal-Mart UK .

Some stores were closed, others (12) were sold to Sainsbury's and lot of money spent on re-vamping and store design.

140 Texaco fuel stations were bought from Texaco Chevron in 2007 and Somerfield have been busy "integrating thei brand" which means tripling store size, format and brand tofit the overall Somerfield brand. This lifted floor space from 83,000 sq ft to about 250,000 sq ft. The cost was not made public but intelligent guesses were in the region of £100Mn.

The stores have been up for sale for some time and interets expressed and Somefiled have been mentioning figures of up to £2.5Bn.. anyway the Co-op, (worlds largest with 1.5 million economically active members) their principal competitor and fifth biggest food retailer, is said to have finally offered £1.6 Bn. take it or leave it, which Ronnie choking on his Dubonnet has accepted - well Barcap are desperate for some cash in their till - there is every possibility they have extractedsome dosh on a sale and leaseback on the property of course.

On the face of it this looks as if Ronnie Cohen and his pals and the ever smiling Mr Robert Tchenguiz will just have washed their face during their brief ownership.

This is good news for the Co-op, it will extend their national spread, move them into more prosperous areas and bring fuel into the mix, yielding revenues and boosting footfall. Last year they turned over £9.4bn with 87,000 employees serving around 10 million customers a week through food, healthcare, travel, funeral care and financial services and paid a £19 Mn divvy to customers in 2006 which on 26th June they announced would be doubled this year to £38 Mn..

£550,000 of this divvy, to rounding down is given to community groups. They are of course very active in sourcing fair trade foods.

Meanwhile all eys are on ITV to see if Ronnie decides that now they are at a give away price of 42 p his pal Ronnie Lauder, and co- owner of Central European Media Enterprises Ltd. (CME) (NASDAQ/ Prague Stock Exchange: CETV) who have TV interests in East Europe , Ukraine (Studio 1+1, Studio 1+1 International, Kino etc ) decide to gobble them up. See Thursday, August 30, 2007 Igor Kolomoisky and Ronie Lauder kiss and make up at CETV and for the whole history see here.

Trebles all round in Balloon Street tonight for the lads.

For a brief history of the origins of the Co-op Movement go here

UPDATE : Times Online - Co-op wraps up £1.6bn takeover of Somerfield

Somerfields QOLI unaffected by Co-op divvy -

Whilst undertaking some research on the Co-op / Somerfield deal our under - employed research department discovered this Somerfield press release on 11th March 2008.

Hart in Hampshire (on the River Hart - pop 87,500, 32,500 households) comes out top of Somerfield’s Quality of Life Index (QOLI) closely followed by Wokingham (in Berkshire) and Surrey Heath (in Surrey) in the unique study which examined factors including income, job security, health, fear of crime and debt.

Access to London is key for the QOLI , as all of the top 10 ranking local authorities are within 50 miles of central London and all of the top 20 are within 75 miles.

Coming top for job security and having the second highest average household income of £33,738 (44 per cent above the national average*) means Hart residents are financially very secure - they also have the highest life expectancy in the UK. Richmond-upon-Thames has the highest average household income of £35,019 - which is probably less than local celeb Mick Jagger's take home pay.

Hart's top position coincides with the second lowest fear of crime in the UK (after Isles of Scilly) and third place for good health.

Somerfield’s Quality of Life Index was compiled by exploring the individual differences between Britain’s towns and cities. This first-of-its-kind micro-examination of UK neighbourhoods was carried out by combining findings from the British Household Panel Survey (BHPS), TGI and MOSAIC types.

Wealth was measured by looking at individual income, health by total hospital admissions (more chance of being hit by a golf ball than stabbing by a hoody) and prevalence of good and bad health. Wokingham and Surrey Heath had the cleanest bill of health in the UK - and some damn fine golf courses. This was combined with other key indicators such as job security, examined by unemployment rate and concern of redundancy. Fear of crime and level of debt were also analysed to create a score for overall life satisfaction.

It's a fair bet that you won't find many Co-op stores thriving in these areas ... just a guess.



The chart - as Gemma Garrett says, just click to enlarge.

Information Commissioner gets his defence in early - showdown due on the Data Communications Bill - a bas la surveillance !!

Richard Thomas is a lawyer. he was first appointed the Information Commissioner in November 2002 by the Queen which term she graciously extended to next November. Sounds like an all round good egg. Answerable to Parliament - like say the Auditor General . Previously Director of Public Policy at blue chip City lawyers , Clifford Chance; Director of Consumer Affairs at the Office of Fair Trading; Head of Public Affairs and Legal Officer at the National Consumer Council and Solicitor with the Citizens Advice Bureau Service and Freshfields.

Freshfields maybe, but he is certainly heading for stormy waters,(and probably pastures new if Gordon Brown has a hand in it) based upon the rather tart ( but wholly welcome) remarks he made today when launching his annual report.

When Gordon Brown played at being a Queen for a day and introduced his own Queen's speech he mentioned en passant a Data Communications Bill which had been clothed with some detail in May. Basically, the Authorities (Police , spooks, GCHQ, HMCR, etc.,) can (and frequently do) ask telco's to provide them with details of citizens, telephone cals, texts, e-mails and sundry other uses of of fixed and cellular wireless telecomms... chasing serious criminals, bomb throwing terrists, people who want their child in a particular school etc.,

Now they , want to save the telco's all that hassle of requests and actually doing the work for them .Wizard money saving wheeze is they will simply hoover up carrier details of every single telephone conversation, text, e-mail, file transfer, dowloan and store in a handy database. Some folks say that's 57 Billion datasets annually they can fiddle about with, maybe even share with other folks and keep forever.

Well Information Commissioner, Richard Thomas, is warning today this would (in his words) be, ‘a step too far’

Any government run database holding the telephone and internet communications of the entire population would raise serious data protection concerns he says., clearly and unambiguoulsy, pre-empting detauls of any any Data Communications act that the real Queen might unveil later this year when the underpaid MP's are back from their well earned hols, shooting grouse and such.

Such a database Richard Thomas says would be ‘a step too far for the British way of life’.

“I am absolutely clear that the targeted, and duly authorised, interception of the communications of suspects can be invaluable in the fight against terrorism and other serious crime. But there needs to be the fullest public debate about the justification for, and implications of, a specially-created database – potentially accessible to a wide range of law enforcement authorities – holding details of everyone’s telephone and internet communications. Do we really want the police, security services and other organs of the state to have access to more and more aspects of our private lives? "


Richard Thomas doesn't stop with this database. he believes that ,"there has not been sufficient parliamentary or public debate on proposals to collect more and more personal information without proper justification, and cites the continued expansion of the DNA database and the centralised collection and retention of data from Automatic Number Plate Recognition (ANPR)", cameras as two recent examples. (Although you will never know quite who was driving Chief Constable's Todds Police Range Rover between his flat (festooned with dozens of celebbrity starfucker photos of the CC and celebrity pals) in Manchster and the foot of Snowdon in the pretty village of Lanberis, or where it went on the day he was killed.) Interestingly a litttle known factoid is that "The Surveillance Studies Network noted the findings of a Home Office research study that the 13 CCTV schemes it assessed had "little overall effect on crime levels"

Richard Thomas says: “We welcomed last month’s report from the all-party Home Affairs Committee warning of the dangers of excessive surveillance. I entirely agree that before major new databases are launched careful consideration must be given to the impact on individuals’ liberties and on society as a whole. Sadly, there have been too many developments where there has not been sufficient openness, transparency or public debate.”

On top of this the battling IC 's office is today serving enforcement notices against HMRC and MoD following recent high profile data breaches. The notices require both departments to provide progress reports documenting in detail how the recommendations have been, or are being, implemented to improve Data Protection compliance. Failure to comply with an Enforcement Notice is a criminal offence.

PS : The ICO received 2,646 freedom of information complaints over the last year and closed 2,658. Three hundred and ninety-five formal Decision Notices were issued and of these, 30% ruled in favour of the complainant while 25% upheld public authorities’ original decisions. In 45% of cases the ICO upheld some elements of the complaint in favour of the complainant and agreed with the public authority on others.

PPS : We look forward to freedom loving David Davis's views on the concept of the Data Communications Act as outlined above... as well as David Cameron, Ed Vaizey, Grey Panther Lady Dame Jane Baroness Pauline Neville Jones

PPPS: The IC do commission some excellent work , for example ..Professor Ross Anderson of the Foundation for Information Policy Research (FIPR) referred to work undertaken in connection with FIPR's report for the Information Commissioner on children's databases, which looked at a range of crime reduction initiatives:

Yes, there may be some placebo effect from having large numbers of closed circuit television cameras around, but the analysis of the crime statistics which we cite tends to show that although they are good at reducing crime in car parks they are not so good at reducing crime in town centres and there is a very serious question about whether far too much money has been spent on these and not enough money on other crime reduction initiatives.

UPDATE : Daily Mail Wednesday 16th June 'Big Brother' warning over Government database that records EVERY phone call and e-mail in Britain

Daily Telegraph 'Big Brother' database of all phone calls and emails condemned by watchdog

John Bolton : text book case of how having no power can drive a man crazy

Probably we should be grateful to Rupert Murdoch for having taken over the Wall Street Journal so crazies like John Bolton , who used to be the USA Ambassador at the UN, can publish things like his op/ed in the WSJ today, Israel, Iran and the Bomb Bomb. Bomb. Bomb. Iran...

An irreversible, turning point was reached he claims , when Iran stage managed their military missile fireworks and adjusted their rattling sabres last week.

Using two faced greasy wog diplomatic charm with the cheese eating surrender monkeys (how do you say the name of Javier Solana, without spitting ?) and exploiting military might is an exclusive privilege of the US , so naturally he feels it's pretty bad when someone steals Uncle Sam's thunder.

Not only this, these sand niggers are just buying time to ," produce deliverable nuclear weapons" - say, like ..er .. Israel did for so long.

But warns John ..." a shadow may fall: targeted military action, either Israeli or American."

5 years of failed diplomacy by the EU-3 (Britain, France and Germany), and Iran is 5 years closer to delivering Armageddon - which is where Israel (with a lot of US help) is today.

Hey .. Look what is coming down the Pike, wake up you guys !!! The limp wristed Bushies are on their way out and the newbies will need 6 months to get their act together - that's another 12 months of inaction ( presumably whilst the dithering cheese eating surrender monkeys share their canapes with Khamaini and his mullahs).

Sanctions (John reveals), have just been a stone in their shoe , " Iran's real economic woes stem from nearly 30 years of mismanagement by the Islamic Revolution." .. and everyone else's when they blockade Hormuz ?

More sanctions ..." will simply be too little, too late." Like say Zimbabwe John ?

Regime change , a good idea before, fomenting internal discontent even, they are now a busted flush. (Is this the lesson John has eventually learn from the masterful changing of the regime in Iraq, Afghanistan , Maliki and Kharzai are just such pussy cats ? Mind you those Albanian gangstas are still toeing the line in Kosovo... well, so far.)

So ..."Israel is now at an urgent decision point: whether to use targeted military force to break Iran's indigenous control over the nuclear fuel cycle at one or more critical points." We bomb the German suppliers of high purity magnesium ? The Swiss bearing suppliers for the centrifuges ?

He admits this won't resolve the problem that these damn sand niggers really, really want those nukes ... it also provides however "the potential to buy considerable time"....presumably for regime change ... fomenting more discontent.....

The alternative is we will have both Israel and Iran with nuclear weapons, the most deeply unattractive alternative of all. Apparently...

The urgency has passed the EU-3 cheese eating surender monkeys by and that quasi Muslim terrist Chicago gangsta Barack Obama and his terrist moll (that's at least something the New Yorker got right eh ? John ?).

Look, let's face it says John , "There was a time when the Bush administration might itself have seriously considered using force, but all public signs are that such a moment has passed." Even good old boy ( and boy do we mean old) John McCain's response is to build a sooper , dooper, new , really, really hi-tech Raytheon missile shield.

Wake up John boy old man, shields are ex post facto, they are after the event, they only work when these sand niggers have got the missiles...Goddam it, doesn't anyone around here get it ? Why does nobody listen ?

Dammit we can rely on the Israeli's - they said they would bomb that shed in the Syrian desert. What did they do ? Why Goddam they bombed it. They levelled it. End of. Mission accomplished. (Pollard ? The AIPAC spies ? ..lies .. bad apples everywhere ..not true patriots)
Goddam it who cares what price gas costs ? Well for sure John doesn't ... but then he has never been elected has he ? ..."When the real source of the threat, not just a surrogate, nears the capacity for nuclear Holocaust, can anyone seriously doubt Israel's propensities, whatever the impact on gasoline prices?"

Look, we are going to be blamed for any strike anyway , so let's see how we can provide what .." cooperation the U.S. will extend to Israel before, during and after a strike on Iran. "

Whooop de doo boys ... "place no obstacles in Israel's path, and facilitate its efforts where we can."

PS : AIPAC .. Will this do ? Shalom, salaam , Peace , whatever, send the cheque to the usual account .. John

You now need US$1.6036 to buy 1 Euro

At the time of Mission Accomplished US$1 - 1Euro.

Korova Jacqui Smith gets a good tolchocking from the malchick droogs opposite in ultra-violence khorosho

Kebab loving Jacqui Smith variously described as Home Secretary has obviously been getting her ideas from Stanly Kubrick / Alan Burgess

In 2 public TV interviews, this weekend, including one with Sky News's bulky Adam Boulton on Sunday, she was asked by Boulton: "One of those proposals is that people caught carrying knives should be taken to see people in hospital that have been stabbed or to meet the families of victims. Is that correct?" Smith replied: "It is."

Smith said yesterday she wanted those responsible for knife crimes to go on weapons awareness workshops at which they would see graphic images of the impact of knife crime. "We are not, and I have never said we are, proposing to bring young people into wards to see patients."

Set in a dystopian sometime future, Clockwork Orange features a disturbingly adult and violent 15 year old, Alex. His droogs Pete, Georgie and Dim, who roam the streets at night, committing violent crimes ("ultraviolence") for enjoyment speaking in Burgess's inventive bastardized Russian / Slovenian Nadsat.

Alex gets 14 years for murder. As an assistant to the chaplain he plays with an interest in religion, and amuses himself by reading the Bible for its lurid descriptions of "the old yahoodies (Jews) tolchocking (beating) each other", imagining himself taking part in "the nailing-in" (the Crucifixion) of Jesus.

Alex hears about an experimental rehabilitation programme called "the Ludovico Technique", of Drs Brodsky (Bad Cop) and Branom (Good Cop) which promises that the prisoner will be released upon completion of the two-week treatment, and will not commit crimes afterwards.

Alex becomes the first guinea pig in the crazy full scale Ludovico Technique of aversion therapy. Alex is given a drug that induces extreme nausea while being forced to watch graphically violent films for two weeks. One of the films has a soundtrack of Alex's beloved Beethoven's Ninth Symphony, (some of the first Moog music) and through his pleading to stop the music, they refuse. It is for your own good and that the music is the "punishment element".

Later the ardent insensitive and excited clinicians demonstrate the Ludovico Technique 's success in front of an audience (including the prison chaplain): a man taunts and abuses Alex is abused and taunted , unable to defend himself as each time he tries he becomes nauseated (He must lick the man's boots to appease him). Then a beautiful, naked woman (Jacqui Smith ?) is shown him, but Alex is unable to think of touching her without feeling ill.

Maybe Mad Max Mosley has had an effect on her ?

Well it was an original idea .. but not hers - maybe she should be locked up to watch Clockwork Orange non-stop for 42 days, whilst we think of something to charge her with ...even if it is only Bed and Breakfast.

Singin' in the Rain - when Lord Patel taught in a detention centre in the 70's the inmates claimed his was the best part of the film ... catchy number.

Bank of England warns "There's NOTHING we can do ...er .... right ....."

This is what Lord King Chairman of the Bank of England said in his annual speech to the great and the good of the City of London at the Mansion House just over one year ago on the 16th June 2007...

"Our central view remains that inflation will fall back this year as the rises in domestic gas and electricity prices last year drop out of the annual comparison, and the recent cuts in prices feed through to household bills."

PS : Mervyn has a pension pot of £4.8million, which should be worth nearly £180,000 a year on retirement...which cannot come too soon.

Peter G Peterson , the Blackstone Group and selling it all away to China.... but Ex Comptroler General has the correct analysis of the problems ...

Peter G Peterson founded the Blackstone Group with Stephen A. Schwarzman with $400,000 in seed capital. "Blackstone" is a wordplay on the founders' names, Stephen A. Schwarzman and Peter G. Peterson. Schwarz is German for black. Peter, or Petra in Greek, means stone or rock.

On June 21, 2007, The Blackstone Group went public. Their IPO was to raise $4 billion on March 22, 2007 by selling 133.3 million shares priced at $31.00 per unit. The stock began trading on the NYSE on July 22, 2007.

The Chinese State Investment Company took 10 % stake ($3 billion) stake. By the way the People's Bank of China announced today that total reserves at the end of June reached $1.809 trillion (around 45-50% of annual GDP). This breaks down to $153.9 billion growth in the first quarter of 2008 and a $126.6 billion growth in the second.

Anyway this made Mr Peterson very, very, rich. So, as the Peter G Paterson Foundation website says, he set about giving the money back.

It also made his co-partner very, very rich but if you read Friday, July 13, 2007 Tax cuts for the very,very rich - how it works... and where some of the money goes you will find he has a fucking expensive wife with a fucking expensive lifestyle....

A philanthropist and student of philanthropy, as well as a longtime advocate for securing America's fiscal future, Pete decided to devote much of his new fortune - $1 billion - to a foundation that would tackle some of the critical challenges threatening the nation's well-being. Among them: large and growing budget deficits, dismal national and personal savings rates, and a ballooning national debt that endangers the viability of Social Security, Medicare, and our economy itself.

For too long, these issues have been the increasingly costly gorilla in the room. Policymakers of all stripes know they are unsustainable, and yet they've been politically untouchable, with special interests and career-minded elected officials lined up to block efforts to address them. The media and the business community seem to share Washington's short-sightedness, preferring to focus on today instead of covering and investing in the future.

Pete decided to invest much of his personal fortune in an unprecedented effort blah, blah read the est of this self promtional stuff on his tax dodging Foundation website.....Finally, Pete decided that this foundation would make a special effort to inform and engage the people who are most threatened by the collective reluctance to address these issues: young adults.

Pete's dedication to America stems from his own life story, a classic tale of the American dream. He is the son of a Greek immigrant who moved to America as a teenager with no money, no knowledge of English, and only a third-grade education. Taking a job as a railroad dishwasher, he slept and ate in a caboose and saved his wages, eventually opening an all-night restaurant in Kearney, Nebraska. He sent his son to college. From there, Pete went on to succeed in the corporate world, serve in the Cabinet, and on one summer morning, become an instant billionaire.

The Foundation is dedicated to securing the future of all Americans, and to reversing the recent loss of faith that our children will have better lives than we do. By promoting responsibility today and opportunity tomorrow, we will do our best to keep the country strong and keep this very American dream alive.

Tonight Lord Patel cannot make a screening in "downtown" Washington laid on for the Press about I.O.U.S.A WHICH IS HIS BIG IDEA ..

Our Vision
To keep America strong and the American Dream alive by promoting responsibility and accountability today to create more opportunity tomorrow.

Go to the website and see the movie trailer ... we've even got a scrappy crappy screen shot for you .. guess what ? The US of A is in hock to China.!!!!!..Guess what ..he thinks that's a bad idea and wants to change it.

Skadden represented Morgan Stanley & Co. Inc. and Citigroup Global Markets as the lead underwriters in The Blackstone Group's initial public offering.Skadden is representing Fresenius AG, a health care company in Germany, in its approximately US$5 billion acquisition of APP Pharmaceuticals, Inc., a provider of pharmaceutical products which we wrote about last week.

Skadden (AKA Skadden, Arps, Slate, Meagher & Flom LLP) a big Washington / global outfit and no doubt involved in Peter's IOUSA have spent quite some time looking at this post ... there's a surprise.

We now discover that IOUSA is exoplained on Wikipedia ....I.O.U.S.A. is a 2008 documentary film directed by Patrick Creadon.

It is scheduled to compete in the Documentary Competition at the 2008 Sundance Film Festival.
The film focuses on the shape and impact of the United States National Debt. The film focuses on Robert Bixby, director of the Concord Coalition, and David Walker, 55 the U.S. Comptroller-General, as they travel around the United States on a tour to let communities know of the potential dangers of the National Debt. This is a tour carried out through the Concord Coalition, and is known as the "Fiscal Wake-Up Tour." In February 2008, Walker announced that he would be resigning from his post as Comptroller General of the office of Goverment Accountability to become the president and CEO of the newly established Peter G. Peterson Foundation. His term was supposed to end in 2013. He states that he feels he can more freely draw attention to the serious issues the U.S. is facing from this position.

Walker said. “My new position will provide me with the ability and resources to more aggressively address a range of current and emerging challenges facing our country, including advocating specific policy solutions and courses of action.”

There are some excellent clear and well illustrated Presentations from Former Comptroller General David Walker to be found here especially recommended Saving Our Future Requires Tough Choices Today

Here is a fascinating slide - remember the GAO serves Congress...

Klaus Töpfer ex German Minister of the Environment - "It would be disastrous if we were to consider a future with nuclear energy once again"

Klaus Töpfer, the 69- year- old former head of the United Nations Environment Program, spent 11 years a member of former Chancellor Helmut Kohl's cabinet. He spearheaded environmental policy as Minister of Environment and introduced ground breaking environmental regulations and laws such as the law on the life-cycle economy and the packaging recycling system "Green dot".

He was Federal Minister of Regional Planning, Building and Urban Development as well as Coordinator of the Transfer of Parliament and Federal Government to Berlin from 1994 to 1998. He held office as Federal Minister of the Environment, Nature Conservation and Nuclear Safety from 1987-1994 - when he took up this office he stated "We must invent a future without nuclear energy."

Prior to becoming a member of the German Federal Cabinet he was State Minister of Environment and Health of the Federal State of Rhineland-Palatine (1985-1987) and State Secretary at the Ministry of Social Affairs, Health and Environment for the same state (1978-1985).

He also initiated several laws to ban the use of environmentally harmful substances such as SO2 and ozone depleting substances. He actively contributed to the success of the Earth Summit in Rio de Janeiro in 1992 and was a forerunner in the negotiations for the United Nations Framework Convention on Climate Change and the establishment of the Global Environment Facility (GEF). In 1998, Töpfer went to Nairobi to serve as director of the United Nations Environment Program. He currently works as a consultant, advising the Chinese government on climate policy issues and teaching sustainable development at prestigious Tongji University in Shanghai.

Der Speigel interviewed him to discuss discusses the new nuclear energy consensus, the global hunger for energy and the leading role played by Germany in creating a world without atomic power.

You can read the interview in full here .... Here are some quotable quotes ...

"a dramatic rise in the global thirst for energy, especially in countries like China and India, has led to exploding prices in the West. The emerging nations want to participate in economic growth. As a result, people in industrialized nations like Germany are now afraid that they will no longer be able to drive their cars, pay for electricity and heat their homes. I stand by my words: We must invent a future without nuclear energy, "

"We need to face the fact that energy will never be as cheap as it once was."

"You know, many conveniently overestimate the importance of nuclear energy in protecting the climate. Conversely, the risk that nuclear material could end up in the wrong hands is often underestimated. That's my main argument against nuclear energy: the proliferation of weapons-grade nuclear material."

"it's high time that we hurry up and develop alternatives to nuclear energy. US President George W. Bush warned against a third world war, because Iran is seeking to develop nuclear weapons. North Korea bluffed hard with the nuclear threat. And French President Nicolas Sarkozy is offering relatively unstable North African countries nuclear power plants. Time is running out."

SPIEGEL asks the question :" If the nuclear power plant operators had their way, they would extend the operating life of their plants by 30 years, in line with the international standard of 60 years. How much of an extension would you permit?"

Töpfer: "We should not give in just because America and France are urging us to abandon the path we have chosen. I am familiar with the concern that extending operating life would only be used to push back efforts to develop renewable energy sources. This absolutely cannot be allowed to happen."

"As cabinet minister, I was responsible for Germany's nuclear power plants for seven-and-a-half years, so I'm not exactly like a blind man explaining color. No one is unprincipled enough to operate a nuclear power plant or extend its operating life when he knows that it's unsafe. Of course, there is always a residual risk with any nuclear reactor. Besides, the question of disposal of nuclear waste also remains unresolved. That's why I'm so concerned about the fact that so few young people are interested in these technologies."

"It would be disastrous if we were to consider a future with nuclear energy once again, simply for the sake of possibly extending the operating lives of plants by a few years. Germany has been a leader in the development and promotion of renewable forms of energy. Now it's time to prove that a flourishing economy can develop an energy supply without nuclear energy. If we don't do it, who will?"

Who benefits from Mr Paulson's Lost Weekend ?

The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities. (see table at bottom of post) For detail on China see Holdings of U.S. Securities: Implications for the U.S. Economy - Updated May 19, 2008 latest figure = US$1 Trillion - note that Hong Kong + Macao also own US$200Bn of US securities

FreedomWorks President Matt Kibbe commented (11/7/08), "The prospectus for every GSE bond clearly states that it is not backed by the United States government. That's why investors holding agency bonds already receive a significant risk premium over Treasuries.

"A bailout at this stage would be the worst possible outcome for American taxpayers and mortgage holders, who have been paying a risk premium to these foreign investors. It would change the rules of the game retroactively and would directly subsidize the risks taken by sophisticated foreign investors."

"A bailout of GSE bondholders would be perhaps the greatest taxpayer rip-off in American history. It is bad economics and you can be sure it is terrible politics."

Mike Steinhardt at (Desperately) Seeking Alpha points out a warning he made last July...

The Bush Administration via US Housing and Urban Development Secretary Alphonso Jackson is trying to get China to buy more government-backed mortgage bonds - specifically more Ginnie Mae offerings.

Bloomberg Josephine Lau - U.S. Urges China to Buy Mortgage-Backed Securities In an article that started "The Bush administration is urging China's central bank to buy more government-backed mortgage bonds in an effort to sustain financing for U.S. home loans." she pointed out that ...

"China held $107.5 billion in U.S. mortgage-backed securities as of June 2006, up from $3 billion three years earlier, according to HUD's Web site. The figures include securities offered by Ginnie Mae, Fannie Mae and Freddie Mac, HUD said, without detailing the holdings in each agency. "

U.S. Department of Housing and Urban Development Secretary Alphonso Jackson was in Beijing to meet central bank Governor Zhou Xiaochuan and Minister of Construction Wang Guangtao in Peking apparently to "tap China's $1.33 trillion of foreign-currency reserves, the world's largest, after surging defaults on subprime mortgages caused the near-collapse last month of two hedge funds run by Bear Stearns Cos. "

On the back of this he advised folks (as does Lord Patel ) to read his comments on 3rd June 2008 at hedgefolios on what he calls The Ultimate Counterparty

It is copied here because it puts the finger on the spot. Now that Lord Patel's crack team of tea leaf and chicken entrail gazers finally unwound what the credit default swaps market is - basically a version of musical chairs paid with IOU's totalling US$45 trillion dollars in which he trick is to leave the game having milked the " false belief that the risks of default in the subprime tranche were compensated by the higher cash flows and the supposed certainty and smoothing provided by the Alt-A and prime tranches" just long enough to leave someone else holding the last IOU - who now the US public is discovering , very, very late in the game ,is the US taxpayer , who is rescuing, amongst many others, the Chinese Government from ill judged (?)investments in GSE bonds. (For a slightly more elaborate view (with pictures and graphs)of the irgins and growth of the CDS market see The Next Shoe to Drop: Credit Default Swaps (CDS) and Counterparty Risk - Beware what lies beneath!

It must have been evident that the decline in the value of the dollar is , as Mike Steinhardt says..." reflects investor confidence in our government and that it will be able to make good on its promises when needed."

Here is the piece to read and ruminate upon. Don't write and complain.Get in touch with your Congressman.

For far too long, Counterparty risk was ignored throughout the world’s fixed income and structured credit instruments. The markets expanded on this underlying concept of insurance where there were no limits to what could be created (or how much of it) so long as we could say that risk was mitigated. The CDO market could expand exponentially because of the false belief that the risks of default in the subprime tranche were compensated by the higher cash flows and the supposed certainty and smoothing provided by the Alt-A and prime tranches. And even if they were wrong, the bigger failsafe was said to be the monoline insurance that would make good on any payment disruptions in the underlying CDO. After all, the monoline had AAA ratings that would all but crush any hint of counterparty risk. We are paying the price for that ignorance now.

But that is not the only example. Just consider the counterparty effects on the municipal bond market. Additionally, there are elements of counterparty risk in the Asset Backed Commercial Paper market when the assumption that liquidity from investors would continue forever and that the big banks providing backup commercial paper lines of credit would soak up the volume if it ever would be needed. In a sense, those banks and their AAA ratings and backup facility were providing the role of counterparty that kept yields low and volume high. Can ABCP issuers still count on them being there? Can ABCP investors feel confident that they will be there to cover the rollover risk?

The biggest example that is still being ignored is the entire Credit Default Swap market. Every once in a while we see hints of the losses that will eventually hit, but they are always downplayed. Never mind that it is the embodiment of counterparty risk and has a notional amount of approximately $45 trillion. Somehow the lovers of CDS feel it is immune to loss simply because it is designed to counter counterparty risk. Eventually we will suffer from that ignorance.

There are multiple tiers where moral hazard meets counterparty ignorance. The higher it goes, the bigger the consequences. The ultimate counterparty? The United States Government.

Look at our currency. To me, the decline in the dollar reflects investor confidence in our government and that it will be able to make good on its promises when needed. More and more, our government is either called upon or volunteers to provide the ultimate insurance. When it comes to banks needing liquidity, the Fed makes sure they get as much as they need. Is there any reason to believe they will not continue to do so? After all, it is the lender of last resort. And if a bank fails? The FDIC supposedly insures that depositors will get their money back. Is there any reason to believe they won’t? If mortgages fail and foreclosures mount, we now have the Dems putting together a proposal for the government to create a new HOLC and provide the ultimate backstop. There may be no limit to what a government can do to prop up an economy but there are consequences for it.

When I see the problems with GSE debt now getting publicity, it really rests on the Ultimate Counterparty. If investors are losing their appetite for agency debt and need an assurance that they have the full faith and credit of our government before they will hold them, we are facing the Ultimate Counterparty risk.

Readers are advised, if they wish to pursue this further to read the notes "What If China Reduces its Holdings of U.S. Securities?" pages 12-16 this gives a flavour - and evidence that someone, somewhere in Washington has thought about this ....

"A potentially serious short-term problem would emerge if China decided to suddenly reduce their liquid U.S. financial assets significantly. The effect could be compounded if this action triggered a more general financial reaction (or panic), in which all foreigners responded by reducing their holdings of U.S. assets. The initial effect could be a sudden and large depreciation in the value of the dollar, as the supply of dollars on the foreign exchange market increased, and a sudden and large increase in U.S. interest rates, as an important funding source for investment and the budget deficit was withdrawn from the financial markets. The dollar depreciation would not cause a recession since it would ultimately lead to a trade surplus (or smaller deficit), which expands aggregate demand.(Empirical evidence suggests that the full effects of a change in the exchange rate on traded goods takes time, so the dollar may have to “overshoot” its eventual depreciation level in order to achieve a significant adjustment in trade flows in the short run.) However, a sudden increase in interest rates could swamp the trade effects and cause a recession. Large increases in interest rates could cause problems for the U.S. economy, as these increases reduce the market value of debt securities, cause prices on the stock market to fall, undermine efficient financial intermediation, and jeopardize the solvency of various debtors and creditors. Resources may not be able to shift quickly enough from interest-sensitive sectors to export sectors to make this transition fluid. The Federal Reserve could mitigate the interest rate spike by reducing short-term interest rates, although this reduction would influence long-term rates only indirectly, and could worsen the dollar depreciation and increase inflation."

Don't worry however(Page 17)they have an answer .... "In January 2007, Secretary of Treasury Henry Paulson was asked at a Senate Banking Committee hearing *** whether or not he was concerned over China’s large ownership of U.S. debt. Paulson stated that the daily volume of trade in Treasury securities was larger than China’s total Treasury securities holdings and concluded: “given the size of our debt outstanding and the way it trades and the diversity and so on, that’s not at the top of the list.”

*** Congressional Transcripts, Congressional Hearings, Senate Banking, Housing and Urban
Affairs Committee, Hearing on U.S.-China Strategic Economic Dialogue, January 31, 2007.

PS : at market close US$ 1 = 1.5909 Euros

Emily Freeman runs superb 200metres for GB team place in Peking beats muscle mass and definition of Christine Ohuruogu

The National Championship meeting over the weekend which is supposed to be pivotal in selecting the GB team for Peking was remarkable in many ways. Considering this was the decisive moment after 4 years for team selection, the public support was negligible.

The BBC as ever provided excellent coverage of the events but with the inane jingoistic voice overs and coverage we have to accept as standard.

The most remarkable event was the women's 200 metres.

This featured, remarkably, Christine Ohuruogu, allegedly our 400m gold medal prospect who didn't run in the 400 metres which was won by 29 year old Scot, Lee McConnell in 52.31 seconds.

Just to recap, Christine Ohuruogu was the Commonwealth Gold medal winner at Melbourne in 2006 in 50.28 seconds and also in the Osaka World Championships last year winning her heat, semis and final.
This appearance was 24 days after a suspension resulting from having missed three out of competition drugs tests, one in October 2005 and two in June 2006. According to IAAF and British Olympic Association rules, she received a one-year ban for missing these tests. The British Olympic Association also banned her from competing at future Olympic Games for Great Britain. John Scott, UK Sport's director of drug-free sport, defended Ohuruogu's punishment at the time and said: "The sanction is in line with that set out within the IAAF's rules and reflects the seriousness of the offence. "

She appealed to the Court of Arbitration for Sport, but the original decision was upheld.

She appealed against her Olympic ban - having claimed apparently that if her claim failed she would run for Nigeria In the event, her ban was overturned on 27 August 2007, leaving her free to compete for Britain in future games, then in November her Olympics ban was overturned.

Her ban was completed on the original date of 5 August 2007.

In the 200 metres final yesterday , slim , shy 27 year old, Emily Freeman from Mirfield and a member of the Wakefield club produced a stunning, solid Olympic A standard time (23 secs B Standard is 23.20 secs) of 22.92 seconds , with Ohuruogu on her shoulder at 22.99.

Emily was close to her personal best and was fastest in heats, semis and the final. She is actually a civil engineer and decided last October to become a full time athlete - 23.01 on June 8 in Regensburg she pushed her personal best down to 23.01 seconds and then last week at Leiden clocked 22.72 - 5th fastest ever for a GB athlete - where she also did a season best in the 100metres at 11.39 seconds.

Nobody could fail to be impressed by the sheer body bulk , upper body muscle mass and well defined muscular structure of Christine Ohuruogu when she was interviewed post race by the BBC alongside Emily Freeman .

It is worth noting that the womens 200 metre world record still stands from Seoul 29/09/1988 when Florence Griffith-Joyner "Flo-Jo" ran 21.34 - her pre-1988 best at 200 meters was 21.96, a mark not even in the top 20 runs on the all-time list. In 1988 she improved that by 0.67 seconds, another time which has not been approached and long since ascribed to illegal drug use to which many attribute her early death. Another remarkable performance was in New Orleans, LA on 26th June 1992 when Marion Jones (now disgraced and self confessed illegal drug user) was a youth she ran 22.38 sec. Heike Drechlser is still recorded as holding the European title with 21.71 run both at Jena and Stittgrta in 1986 - she was then running for the GDR after having been trained in East Germany suing drugs and acting as a Stasi spy. (She is of course the FDR representative for the next Wordl Championships) see post Tuesday, May 06, 2008 Stasi spy Heike Drechsler represents Germany on IAAF - expect great results for Germany in IAAF World Championships in Berlin 2009

The IAAF show that the fastest runner this year has been Isabel Le Roux who ran 23.05 secs at Germiston in South Africa and won the 16th African Championships at Addis Abba in May with 22.69 seconds. She will join her colleague Thuso Mpuang in Peking.

PS : From the BBC website with GB team biogs Emly weighs in at 56 Kilos = 125 pounds = 8stoe 13 lb and Christine weighs in at 70 Kilos = 154 pounds= 11 stone which if Christine is 5ft 6" gives her a BMI of 25 = overweight.

Day 1 : Paulson's "trickle up" economics

Comment on the actions of the US administration in the UK press is limited as the announcement came too late. The BBC 4 Financial commentators in the early hours appear to think that this papering over another gaping hole in the global financial system is fine. No mention of the way the market will short Lehman Bros.

Probably the best knee - jerk public reactions come from the reader comments in the New York Times to Paulson's announcement.

The very best first - this from frd-Chicago

"Taxpayers are going to make a killing on this deal."

"This bloated quasi-govt monopoly openly supported and donated to the Republicans and Bush in the elections in order to keep their gilded fiefdom humming along while they abuse, manipulate, profit, and contort economic reality on the backs of the average American. "

"The seeds of this debacle were planted nearly 30 years ago when Ronald Reagen unleashed his reign of voodoo trickle-down economics."

"So a bankrupt government is going to save bankrupt lenders."

"It's taken 7 years and a lot of hard work but it looks like the Bush administration will successfully leave our country in international and domestic ruin by the time they slink from office in in January 2009."

"My question is, what if even the government's billions don't restore confidence?"

"According to Treasury Direct, the National Debt stands at $9.503 trillion today, slightly more than $300 billion below the debt ceiling, and up about $75 billion since June 30. If the government continues to accelerate its borrowing like this, how long will it take before we exhaust the "full faith and credit" of the country and become a nation dependent on the kindness of strangers?"

"If we're going to get into nationalizing huge chunks of private industry, why not nationalize something useful, like the healthcare industry?"

"That this nation, under God, shall have a new birth of freedom; and that government of the money lenders, by the money lenders, for the money lenders, shall not perish from the earth."

"The US economy has not been a truly capitalist system for a very long time. We have actually been a socialist state (managed capitalism in the current jargon) for a very long time. Strip out the military-industrial complex, social security and related programs, government salaries and construction, farm aid, etc. and what would our economy actually look like?"

.... and finally ...

"We have lost the trust of investors around the world and now placed the full faith and trust of our government, out of necessity, to back the mortgage loan market that remains. Our journalists concentrate so eagerly on the families facing foreclosure but ignore the families, around the world, that have lost trust in our mortgage bonds. "

On the Company website , Richard F Syron , Chairman and CEO of Freddie Mac says ...."This affirmation of the important role of the GSEs, and that we should continue to operate as shareholder-owned companies, should go a long way toward reassuring world markets that Freddie Mac and Fannie Mae will continue to support America's homebuyers and renters. I applaud Secretary Paulson and Chairman Bernanke for their leadership and encourage Congress to act quickly to pass the new legislative proposals."

Freddie Mac sells three-month and six-month reference bills every Monday, which will be the time when world opinion crystallises into buying into what is promised a new way of running the business. Bloomberg quotes Wrightson ICAP LLC, a research company that specializes in government finance, in Jersey City, New Jersey. .."``We were glad to read that Treasury officials had been calling around to ensure adequate participation in the auction,'' Wrightson wrote, without attributing the information .. and the BBC talked of arms being twisted up backs.

They also quote Mizuho Asset, with US $37.5 billion funds as part of Japan's second-largest bank, who have no plans to bid at Freddie Mac's auction today.

``We are concerned about the U.S. housing market, so we don't have any agency debt,'' said Hiromasa Nakamura, a senior fund manager at Mizuho. ``It will be a difficult auction.''

Japan's Fukoku Mutual Life Insurance Co. said there's a risk those losses ( above the declared US$400Bn (ish) losses already declared by those exposed to US residential mortgage securities)will spread and recommended investors put their money into government debt, pinpointing Germany or France.

What Lord Patel cannot fully grasp is that Fannie Mae and Freddie Mac between them hold US$5 Trillion load and mortgages and the US Government have now effectively told the bond holders that their bonds are 100% secured. So that effectively increasesUS Government indebtedness from the current US$ 9.5 Trillion (approx) to say US$14.5 Trillion whichever way you slice the deal.

White House Announcement due on making "Implicit Guarantee" for Fanny Mae and Freddie Mac real, with US Govt taking up shares , backing Fed loans

The Authorities haven't closed the market down but have let the New York Times know in the last few minutes that the Bush administration will ask Congress to approve a rescue package that would give the government the authority to buy billions of dollars in stock in Fannie Mae and Freddie Mac and also lend to the companies to meet their short-term funding needs.

In concert the Federal Reserve voted on Sunday to also open a lending facility for Fannie Mae and Freddie Mac, if they need emergency capital. The two companies would be able to post their own securities as collateral.

The plan apparently asks Congress to give the government the authority over the next 2 years to buy an unspecified amount of stock in the two companies.

Simultaneously it would permit the companies to have greater access to the Treasury, by expanding the credit line that each company has from the Treasury. Each company now has a $2.25 billion credit line, set nearly 40 years ago by Congress. At the time, Fannie had only about $15 billion in outstanding debt. It now has total debt of about $800 billion, while Freddie has about $740 billion.

The 2 companies also hold or guarantee mortgages valued at more than $5 trillion.

This will require an immediate lifting of the national debt limit which requires Congressional approval . It will ask Congress to give the Federal Reserve a role in setting the rules for how big a capital cushion each company must hold which they think will re-assure markets.

When President Bush took office five years ago, the national debt was at $5.6 trillion; it was increased for the 5th time in his Presidency on September 27th last year 850 billion U.S. dollars to 9.815 trillion dollars by a vote of 53-42 . Last week it stood at over US$9.39 trillion, or US$124,400 for a family of four. Interest payments on the debt are already 9.5 % of all government expenditures.

An official statement is expected some time later

The Bush administration wants a fast reolsution and want Congress to adopt the plan immediately.

Last Friday, the Senate approved a measure that will form ther basis of the Amdiminstartions plans .

This "surprise" announcement is intended to send a sharp signal to both stock markets and debt markets that the government was standing behind the mortgage companies.

The credit line provided by the Treasury to the companies has always been seen by the market place as evidence that the two companies would be rescued by the government if they ever encountered severe financial problems.

This is despite years of denial by leaders from the Federal Reserve and to officials from Republican and Democratic administrations has denied the existence of a so-called “implicit guarantee.” Those who denied the existence of the guarantee included Treasury secretaries Robert Rubin, Lawrence Summers and Henry M. Paulson Jr., and Federal Reserve Chairmen Alan Greenspan and Ben S. Bernanke.

The implicit guarantee was a useful device both for the companies and the federal government. It has enabled the companies to get money in the debt markets at rates far lower than other companies and close to the same as treasury securities. At the same time, the Federal government did not have to record on its budget any significant liabilities for the large subsidy it was, in effecting, providing to the companies. Yet it also raised concerns among critics, who said it was unfair to rival companies and that it promoted a management laxity since executives knew that the companies could always count on a hand from the government if they began to falter.

Motivating the change was the central role of the two institutions and the depth of ownership in the paper they have issued. Every major bank, and many mutual funds and pension funds and foreign governments, hold significant amounts of securities issued by Fannie and Freddie, which have been viewed over the years as being almost as safe as treasury securities. A default by either one of the companies could be catastrophic for the financial system.

No mention of Lehman Bros. Nor of closing the market for a day , which would seem sensible until this plan is actually enacted.

PS : Apparently the Commander in Chief ducked announcing this grand plan of showering money on Wall Street and left it to Mr Paulson (Ex CEO Sacks of Gold) to talk to his own, from the steps of the Bell Tower entrance of the White House.

For those seeking a straightforward brief account of the role of Fannie Mae and Freddie Mac there is an excellent piece in the New York Times today by Peter Goodman - Government as the Big Lender

Driving the Poor to starve - Redux

We posted " Driving the Poor to starve" on Saturday May 12th 2007 and now we read in the Sunday Telegraph today "The Great Biofuels Con" , By Christopher Booker and Richard North

So it is probably worth re-posting.... If you want to see the very many post on the subject simply search on "biofuels"

“How Biofuels Could Starve the Poor" C. Ford Runge and Benjamin Senauer ,Foreign Affairs May/June 2007

C. Ford Runge is Distinguished McKnight University Professor of Applied Economics and Law and Director of the Center for International Food and Agricultural Policy at the University of Minnesota. Benjamin Senauer is Professor of Applied Economics and Co-director of the Food Industry Center at the University of Minnesota. If you read nothing else about ethanol - read this.

The authors demonstrate how Washington's fixation on corn-based ethanol has distorted the national agenda and diverted its attention from developing a broad and balanced strategy to energy independence.

Because of current high oil prices and hefty production subsidies, corn-based ethanol is promoted as a major step in increasing national energy independence in the US. Reliance on high input corn crops drives up prices (corn peaked Feb US$4.37 a bushel, trading today US$3.90 dropped 4% in last 4 weeks) and pushes up grain prices worldwide - the price of grain fed protein sources, poultry, pigs and beef is shooting up as well as secondary markets such as milk and eggs. A bad, cold, wet spring has delayed planting and with 40 million acres of corn to plant in the weeks ahead reduced yields could push prices up further gain later in the year.

Filling the 25-gallon tank of an SUV in the US with pure ethanol would require over 450 pounds of corn -- which contains enough calories to feed one person for a year. It requires a US$13 Federal subsidy to the ethanol refiner, protected by a 51 cents a gallon tariff barrier - if the entire corn crop in the United States were used to make ethanol, that fuel would replace only 12 % of current U.S. gasoline use.

Direct subsidies to corn growers of the mid-west were $8.9 billion in 2005 - which will fall as producer prices soar.

2.1 billion bushels of corn grown 78 million acres produced ethanol at 106 plants nationwide this is expected to grow to 3.5 billion bushels ( U.S. Department of Agriculture showed 15 percent more corn planted than 2006, some 90.4 million acres) this year as corn output jumps to benefit from the US$4 a bushel price ( US$2 only 2 years ago). Farmland devoted to other crops is also being diverted. Cotton acreage this year in the US will drop 14 % on 2006, according to the National Cotton Council. Soybeans, wheat, barley, oats and alfalfa are also being displaced.

The biofuel industry has long been dominated not by market forces but by politics and the interests of a few large companies. In the United States, at least, corn and soybeans have been used as primary inputs for many years thanks in large part to the lobbying efforts of corn and soybean growers and Archer Daniels Midland Company (ADM), currently the biggest ethanol producer in the U.S. market.

ADM started making ethanol and other products resulting from the wet-milling of corn in the 1970's , such as high fructose corn syrup and grew to be a major player in the feed market and key force in driving ethanol use. By 1980, ADM's ethanol production had reached 175 million gallons per year, and resultant high fructose corn syrups had become a ubiquitous sweetening agent (and alternative to much criticised raw sugars) in processed foods. ByIn 2006, made just over 1 Bn gallons of ethanol and was the major US producer 4 times the size of , VeraSun Energy (as corn cost rose Vera Sun posted a loss after in Q1 2007). Last year they planned to increase investment in ethanol from $700 million to $1.2 billion in 2008 and increase production by 50%, or close to 500 million gallons, by 2009.

Legislators such as Vice President Hubert Humphrey the Minnesota senator promoted special subsidies , as did Bob Dole (R-Kans.) - critics have pointed out that nearly half of ADM's profits have come from products that the U.S. government has subsidized or protected.

Now protection has gone down the food chain and the 51 cents a gallon subsidy is augmented by a further 10 centsa gallon tax reduction on the first 15 million gallons produced. Many states (Indiana is notable) also provide all sorts of tax breaks on new built plants.

The poor are faced not only with higher energy costs but a resultant rise in food costs - none more dramatically recently than in Mexico earlier this year who import 80% of their corn from the US .Late 2006, the price of tortilla flour doubled . mexican tortillas are made of home grown white corn and the price rose as feed producers swapped supplies from US$4 a bushel corn to cheaper white corn - speculation and hoarding pushed prices even higher.

With about half of Mexico's 107 million people living in poverty and relying on tortillas as a main source of calories, the public outcry was fierce with food riots erupting. In January this year , Mexico's new president, Felipe Calderón, was forced to cap the prices of corn products.

Mark Rosegrant, a director of The International Food Policy Research Institute, in Washington, D.C., projects that given continued high oil prices, the rapid increase in global biofuel production will push global corn prices up by 20 percent by 2010 and 41 percent by 2020. The IFPR calculate that ...

The price of oilseeds, (soybeans, rapeseeds,sunflower )to rise 26% by 2010 and 76% by 2020
Wheat prices by 11 % by 2010 and 30 % by 2020 (which probably undersestimates Australian and Indian drougths this year and rising demand in Egypt)

In the poorest parts of sub-Saharan Africa, Asia, and Latin America, where cassava is a staple (and is being tested as an ethanol crop) , its price is expected to increase by 33 percent by 2010 and 135 percent by 2020.

The United Nations Millennium Development Goals of 2000 to halve the world's chronically underfed population from 16% in 1990 to 8% in 2015 will never be met as biofuels use supplant food use and world hunger grows. There is only one result when you spend 50-80% of household income on food and the staple crops double in price.

Of course the drive for food based fuels rests on a hidden but unwelcome truth - ethanol is neither fuel efficient nor environmentally friendly - Argonne National Laboratory and the National Renewable Energy Laboratory have calculated that the net energy ratio of gasoline is 0.81, a result that implies an input larger than the output. Corn-based ethanol has a ratio that ranges between 1.25 and 1.35, which is better than breaking even. Petroleum diesel has an energy ratio of 0.83, compared with that of biodiesel made from soybean oil, which ranges from 1.93 to 3.21. (Biodiesel produced from other fats and oils, such as restaurant grease, may be more energy efficient.)

Comaring biofuels gasoline such as greenhouse gas emissions shows that the complete cycle of the production and use of corn-based ethanol releases less greenhouse gases than does that of gasoline, but only by 12 to 26 %. The production and use of biodiesel emits 41 to 78 percent less such gases than do the production and use of petroleum-based diesel fuels.

Even worse is relative fuel efficiency. Using gasoline blends with 10 percent corn-based ethanol instead of pure gasoline lowers emissions by 2 percent. If the blend is 85 percent ethanol (which only flexible-fuel vehicles can run on), greenhouse gas emissions fall further: by 23 percent if the ethanol is corn-based and by 64 percent if it is cellulose-based. Likewise, diesel containing 2 percent biodiesel emits 1.6 percent less greenhouse gases than does petroleum diesel, whereas blends with 20 percent biodiesel emit 16 percent less, and pure biodiesel (also for use only in special vehicles) emits 78 percent less. On the other hand, biodiesel can increase emissions of nitrogen oxide, which contributes to air pollution. In short, the "green" virtues of ethanol and biodiesel are modest when these fuels are made from corn and soybeans, which are energy-intensive, highly polluting row crops.

Ethanol made entirely from cellulose fibre from wood by product, special grasses, field crop residues has an energy ratio between 5 and 6 and emits 82 to 85 percent less greenhouse gases than does gasoline. As corn grows scarcer and more expensive, enzyme technology is improving (To learn more search through this site for Novozymes) and novel closed cycle gasification technologies offfer a promising source of biofuel in the future but significant industrial scale production is at least a decade away. Key technologies are currently not owned by US companies.

Some of the problems are simply logistical one calculation shows that fueling an ethanol plant with switchgrass, a much-discussed alternative, would require delivering a semitrailer truckload of the grass every six minutes, 24 hours a day.... every day.

If you want to drive ... someone somewhere will starve.

Two billion people suffer from hunger daily. The struggle against hunger is made harder as agrifuels for the rich supplant food crops for the hungry. Hunger is a universal scourge - the rapid transformation of agriculture to feed the apparently insatiable and irrational demand for fuels will drive food prices, impact on water resource, adding even more pressures to the overpopulated and underfed.

There is a choice.