Thursday, July 24, 2008

Let's Add More Debt To the National Total

Let's Add More Debt To the National Total

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From a story talking about the new housing bill:

From the WSJ:

The package could also come at a significant cost to the U.S. government, which would be authorized to invest billions of dollars in troubled mortgage giants Fannie Mae and Freddie Mac, as well as insure up to $300 billion in refinanced mortgages. As a result of the bill, Congress will raise the national debt ceiling to $10.6 trillion from $9.8 trillion. It will also give Fannie Mae and Freddie Mac a new, tougher regulator.

Let's just add more debt to the total, shall we? After all, we don't have enough debt. And we certainly wouldn't want to do anything that remotely resembles fiscal responsibility. That might send the wrong message to the markets about the US government's intentions.

Let's review. First, here is the yearly total of total US government debt outstanding at the end of each federal fiscal year.

09/30/2007 $9,007,653,372,262.48
09/30/2006 $8,506,973,899,215.23
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86

Why are these figures important? Because they indicate there is a systemic problem with the US government's budgeting system. Since the end of fiscal year 2002, the federal government has added at least $500 billion dollars of net new debt per year every year. That indicates the budget has never even come close to being balanced over the last 7 years -- despite rampant claims to the contrary. "But Bonddad -- the national press says the budget deficit is small!" Right -- that's why we're borrowing all that money -- because we're balancing the books of the federal government. Anyone who is reporting the federal government's books are balanced should resign from the financial press right now because they have no idea what they are talking about.

But there are three deeper and far more important reasons why this continual raising of the debt ceiling is so incredibly dangerous.

The first is psychological. At the national level the federal government has continued to abdicate fiscal responsibility. The US went to war and didn't raise taxes to pay for it. The US increased domestic spending and didn't increase taxes to pay for it. Instead, we acted as though the debt didn't matter and that tax cuts pay for themselves. As a result we are left with an ever-increasing mountain of debt which we continue to kick down to road. By not making tough choices now we make it easier to not make tough choices tomorrow.

The second reason is far more practical. As the debt load of the US has increased, the value of the dollar has dropped. Although the US economy was in an expansion from November 2001, the value of the dollar continually dropped. Why? An expanding economy should attract investment which in turn bids up its currency. Yet the dollar dropped. Some of the reason for this is interest rate policy which is an important determinant in currency valuation. However, the US -- which is the world's largest economy -- was seeing the value of its currency continue to decline. This has lead to inflationary pressures because commodities are priced in dollars. A drop in the value of the currency a good is priced in amounts to a de facto price increase in the good. In other words, one of the primary reasons for the spike in oil prices is the dollar's long-term drop in value. And we can thank fiscal irresponsibility as a primary reason for that.

The third reason why this development is important is it continues to push the national economic foundation closer to the edge. At some point all of this debt may cause very serious problems. Suppose that US creditors (bondholders) looked at the US' books and said, "I don't think you're going to be able to repay this loan I'm making to you. I need a higher interest rate as compensation for the risk I'm taking by lending you money." At that point, US interest rates increase. Imagine if that happened right now when the economy is at the beginning of a recession. In other words, we're creating a situation that is rife with possible future problems. And some of these problems are serious -- as in they could lead to the financial system freezing from a random world event.

"But Bonddad. We've been doing business like this for almost 30 years and nothing bad has happened! It must be OK to do things things this way." Fine. Try smoking a pack a day for 30 years. You may not get cancer. But your chances of contracting it are a whole lot higher. That's why doctors will always advise you to quit.

Bush Bans State Department Officials From Obama Rally

Bush Bans State Department Officials From Obama Rally

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In a flagrant political act, the State Department has barred its employees from attending Sen. Barack Obama's speech in Berlin tonight. Under the pretense that he is maintaining political neutrality, the Washington Post reported today, State Department Undersecretary for Management Patrick F. Kennedy has interpreted the Foreign Affairs Manual in the most restrictive way, claiming that he is ensuring that foreign service officials will remain untainted by a "partisan political act." (Spouse and family members, however, have generously been excluded from this ruling.) The U.S. embassy, which is headed by ambassador Robert Timken, a businessman and crony of George W. Bush's from Ohio, who is widely reviled in Germany for his ignorance of foreign affairs, has instructed officials not to attend the rally. The American Foreign Service Association has complained about the edict but there's not enough time to dispute it. Funny that.

The truth is that there would probably be few better opportunities for embassy officials to get a feel for the views of the Germans by mixing with them during the rally. Of course, the sentiments expressed by Germans, who worship Obama as much as they loathe George W. Bush, might not be ones that the administration is eager to hear.

Indeed, the administration has a long and tawdry record of trying to browbeat government agencies into submission, whether it's the CIA or the Centers for Disease Control. The State Department is perhaps highest on the list of conservatives and neocons who see it as the center of disloyalty and treachery. But this latest action represents a new low. If it's going to these lengths, the Bush administration must be really worried about Sen. John McCain's prospects.

Sales of Existing Homes Drop to Lowest Level in More Than Decade

Sales of Existing Homes Decline to 10-Year Low

By Bob Willis

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Sales of previously owned U.S. homes fell in June to the lowest level in a decade as tumbling real- estate prices and consumer confidence signal no end in sight to a housing recession now in its third year.

Resales dropped 2.6 percent to a lower-than-forecast 4.86 million annual rate from a 4.99 million pace the prior month, the National Association of Realtors said today in Washington. The median IND' ))">home price dropped 6.1 percent from June of last year.

The housing slump may deepen further after mortgage rates climbed to the highest in a year this month and turmoil engulfed Fannie Mae and Freddie Mac, which account for more than two- thirds of new home-loan financing. A record 18.6 million homes IND' ))">stood empty in the last three months as the industry's recession reverberated through communities, separate figures showed today.

The NAR report ‘‘is, unfortunately, not telling us about an end'' to the slide, said David Resler, chief economist at Nomura Securities International Inc. in New York. ‘‘Housing is going to be a non-contributor, if not a drag, on the overall economy.''

The Standard & Poor's Supercomposite Homebuilding Index dropped 4.9 percent to 480.61 at 10:33 a.m. in New York. By comparison, the Standard & Poor's 500 Stock Index lost 0.6 percent, to 1,274.06.

Economists forecast home resales would fall to a 4.94 million pace, according to the median of 77 projections in a Bloomberg News survey. Estimates ranged from a 4.79 million pace to 5.1 million rate.

Jobless Claims

The Labor Department earlier today reported that first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market. Applications increased by 34,000 to 406,000 in the week ended July 19.

Compared with a year earlier, existing home sales were down 16 percent in June. Purchases are down by about a third from a record of 7.25 million reached in September 2005.

The number of previously owned unsold homes on the market at the end of June rose to 4.49 million from 4.482 million in May. The total represented 11.1 IND' ))">months' supply at the current sales pace. The agents' group has said that a five-to-six month's supply reflects a balanced market.

‘‘The biggest problem is that we've not yet seen inventories come down,'' Paul Puryear, managing director of Raymond James & Associates Inc. in St. Petersburg, Florida, said in an interview with Bloomberg Radio yesterday. The housing market isn't likely to recover until at least 2009 or 2010, he said.

Property Types

Sales of existing single-family homes declined 3.2 percent to an annual rate of 4.27 million. Purchases of IND' ))">condos and co-ops increased 1.7 percent to a 590,000 pace.

The median sales price fell to $215,100 from $229,000 in June 2007. The median cost of a single-family home decreased 6.7 percent to $213,800, while that of condominiums and co-ops fell 2.2 percent to $224,200.

Purchases decreased in three of four regions, led by a 6.6 percent decline in the Northeast. Sales rose 1 percent in the West, which also showed a 17 percent drop in the median price, the biggest of any region.

The glut of homes may be even greater because not all foreclosed properties are counted by the Realtors group. The group only includes foreclosures that have been listed on the multiple listings service.

Most of the Market

Existing home sales account for about 85 percent of the U.S. housing market, while new home sales make up the rest. Monthly figures for resales are compiled from contract closings and may reflect sales agreed upon weeks or months earlier.

More Americans are walking away from their homes as property values slump and borrowing costs on adjustable-rate mortgages reset higher. Bank seizures increased a record 171 percent in June from a year ago and foreclosure filings rose 53 percent, RealtyTrac Inc., a seller of default data, reported this month.

Home prices nationwide have fallen 18 percent on average from their July 2006 peak, according to the S&P/Case-Shiller index of 20 metropolitan areas. The drop in values may be giving those buyers still able to get financing reason to hesitate.

Consumer sentiment dropped in June to the lowest level in 28 years, according to the Reuters/University of Michigan survey, and the economy lost jobs for a sixth straight month, adding to reasons home buyers are sidelined.

Fannie, Freddie

Concern over the ability of Fannie Mae and Freddie Mac, the largest U.S. purchasers of mortgages, to survive the meltdown in subprime lending has heightened the credit crisis and may further curtail access to loans.

There is ‘‘no sign of a recovery in housing'' this year, Caterpillar Inc., the world's largest maker of earthmoving equipment, said in a statement this week. The company said second-quarter profit climbed 34 percent, exceeding analysts' estimates, on demand for backhoes and mining tools in China and the Middle East.

Caterpillar's Chief Executive Officer Jim Owens said he expects the U.S. economy, including the housing market, to begin recovering next year.

‘‘We will get this problem behind us,'' Owens said in a July 22 interview with Bloomberg Television. ‘‘It will probably take another six months to a year, but it will come back.''

Two troubled U.S. banks each post billions in losses

Two troubled U.S. banks each post billions in losses

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Moving quickly to put an end to the constant spill of red ink, Wachovia, the banking giant, booked an $8.9 billion loss and slashed its dividend in its first quarter under new leadership.

Wachovia said it would also eliminate about 10,750 jobs, including about 6,350 positions, largely in its mortgage business, and another 4,400 contractors and other positions across the bank.

Also Tuesday, another bank, Washington Mutual, reported a second-quarter loss of $3.33 billion or $6.58 a share, compared with a profit of $830 million, or 92 cents, in the period a year earlier.

Washington Mutual said it had increased its reserve for loan losses by $3.74 billion to $8.46 billion in the quarter, betting on more problems with mortgages. In a statement, the bank said that it would not need to raise additional capital, sending its shares higher in after-hours trading.

"We remain confident that we have sufficient capital to successfully manage our way through this challenging period," the chief executive of Washington Mutual, Kerry Killinger, said in the statement.

The bank said it had set aside $5.91 billion for loan losses and had write-downs of $2.17 billion. The bank also said that several executives, including Killinger, would not receive incentive bonuses this year.

At Wachovia, investors had been bracing for large losses since the bank named Robert Steel, a former Treasury under secretary, as chief executive, to help steer it through the housing crisis. At the time, the bank said that it anticipated a loss of $2.6 billion to $2.8 billion on top of an unspecified merger-accounting charge.

But Steel had every incentive to kick off his tenure with a "kitchen sink" quarter as he tries to clean up the bank's problems.

Wachovia reported a second-quarter loss of $8.9 billion, including a $6.1 billion write-off that is tied to overpaying for several deals. The bank set aside another $5.6 billion to cover current and future losses. It also cut its quarterly dividend by 87 percent, to 5 cents a share, in order to conserve about $2.8 billion a year.

"These bottom-line results are disappointing and unacceptable," said Lanty Smith, Wachovia's chairman, who orchestrated the ouster of the bank's former chief executive, G. Kennedy Thompson, in early June. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia also accept responsibility."

Wachovia has faced staggering losses from its ill-timed acquisition of Golden West Financial, a large California lender that specialized in so-called pay-option mortgages. Loans made to builders and commercial real estate developers have started to sour. With the credit markets frozen, it has been forced to take steep markdowns on billions of dollars of unsold buyout loans and complex mortgage investments it holds on its books.

The bank's results were much worse than Wall Street anticipated, a stark contrast to its big bank rivals that handily bested the low targets analysts set. After falling sharply in premarket trading, Wachovia shares ended up $3.61, or 27.39 percent, to $16.79.

Wachovia's revenue fell 14 percent, to $7.5 billion. The bank reported a $4.20 a share loss in the second quarter, compared with a profit of $2.34 billion, or $1.22 a share, in the period a year ago. That figure, excluding the big accounting charge, was in line with the bank's July 9 guidance, but analysts previously had been expecting better results.

Thomson Financial says analysts had predicted a loss of 78 cents a share on revenue of almost $8.4 billion.

Last week, Wells Fargo & Company, JPMorgan Chase and Citigroup reported better-than-expected earnings, causing financial stocks to rally. On Monday, Bank of America also posted stronger-than-expected results. But investors had a gloomier mindset on Tuesday morning, as they digested Wachovia's dismal performance as well as poor results from American Express. The credit card company, which caters to wealthier customers, reported a surge in losses and a slowdown in consumer spending.

Wachovia's numbers, however, were much worse. The bank's revenue was essentially wiped out a laundry list of charges. The bank set aside an additional $5.6 billion to raise reserves and cover losses, including about $3.3 billion, stemming from its portfolio of Golden West pay-option loans. It booked a $936 million loss tied to markdowns on complex mortgage-related investments and the bailout of certain Evergreen money funds. It also booked a $391 million loss in anticipation of unloading certain investments at steep discounts and recorded a $975 million non-cash charge related to potential tax liabilities of certain leasing transactions. The bank added $590 million to bolster its legal reserves from shareholder lawsuits.

At Wachovia, Steel succeeded Thompson, who was ousted June 2. Steel has vowed to keep the bank independent and put it back on track.

"In the short term, the entire organization is focused on protecting, preserving, and generating capital," Steel said in a statement. He said that it was "clearly prudent and necessary" to further reduce it bank's dividend and said the bank was looking to trim expenses, sell assets and reduce its credit-only commercial borrowers to reduce risk.

Super Losses, Super Layoffs, Super Bailouts

Super Losses, Super Layoffs, Super Bailouts

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Financial sector statements dont add up, FDIC reserves pounded hard from IndyMac debacle, bailouts will soon come at the expense of the consumer, bond market watch, realities of a debtor nation, financial institutions given protection from shorting

So far this week we saw Wachovia get socked for an $8.86 billion loss with a layoff announcement of 10,750 employees, while Washington Mutual got hammered for a $3.3 billion loss and increased its beleaguered loan-loss reserves by $3.74 billion to $8.46 billion as it announced expense cuts and asset sales. This is nothing. This is just the beginning. This is just window dressing to protect incumbents. Together with the science fiction and fantasy we got last week from the banking sector, these latest financial statements from the banking sector should receive a Nebula Award from the Science Fiction and Fantasy Writers of America. Gene Roddenberry could not have dreamt up financial statements that were more phantasmagoric.

All these bank losses, as terrible as they are even in their understated amounts, are pathological accounting lies aimed at keeping the sheople from going ballistic on the incumbent scum-bags in Congress so that these corrupt reprobates and sociopaths can continue in office and maintain their rape, pillage and slaughter of the sheople of the US unabated on behalf of their evil, malevolent and rapacious Illuminist masters.

The stock markets, the bond markets, the derivative markets and the entire financial system would collapse if people knew the real truth about the balance sheets, income statements and debt-to-equity ratios of virtually all the major commercial and investment banking fraudsters of Wall Street. So the devastating truth will be withheld most likely until the final quarter which ends in December, because a good portion of the earnings results for the third quarter are going to be announced prior to the US general elections which would normally be held in early November, barring some false-flag attack. Until then, the huge whitewash reservoir behind the "creative accounting" dam will be sucked dry. We're not sure if there is enough whitewash left on the planet to cover up the losses for Q3, however.

Wait until the Pick-and-Pay loans all run their course. Ugly does not even begin to describe what is going to happen to many large banks when this jumbo variety of toxic waste comes home to roost on their financial statements. We doubt that the FDIC has enough funds to cover even the first ten to twenty banks that fail out the many hundreds that are expected, especially if a large bank like Wachovia goes under in the early going. Already, IndyMac has wiped out 10% of the FDIC's reserves. Depending on how the IndyMac liquidation goes, that percentage could go higher. And remember, IndyMac was not even on the FDIC's watch list. If that doesn't scare you, nothing will.

What will happen if the FDIC runs out of money? Will they get a big government bailout like the rest of the fraudsters? Of course not. That would benefit the banks' customers instead of the banks themselves. We certainly could not have that now, could we? Will the FDIC bailout money come from the source it is supposed to come from, meaning from the fraudsters themselves, most of which are now insolvent and bankrupt? It's a stupid question, of course, but we had to ask it for rhetorical purposes.

What is the real reason behind all these gargantuan bailouts for the fraudster banks and GSE's? We'll tell you what this about. This is about saving the dollar from sudden collapse, stopping the many trillions of dollars held by foreigners from returning to our shores and creating hyperinflation reminiscent of the Weimar Republic, and simultaneously violating all sense of moral hazard by saving the fraudsters at our expense while keeping their cost of funds low in light of the fact that the fractional reserve banking multiplier has collapsed due to the rampant fraud, lack of regulation and lack of transparency that has frozen credit markets. That is what this is really all about. The ultimate goal is to consolidate more power into the hands of a few by moving the US inexorably closer to a corporatist, fascist state, but the devastation they intended to wreak on everyone else is now coming back on them and they are trying to save the system, and themselves in the process, so that there is something left to consolidate when the dust settles. We believe that the Illuminati have destroyed themselves, and their "Chaos" henchmen, in the process of destroying us, and that their bid for a corporatist, fascist state will ultimately fail. Only their gold and silver failsafe hoards will rescue the head Illuminists from financial ruin and even bankruptcy. They really blew it this time. Their diabolical plans have been pushed back by half a century.

The Fed, the cartel and their Illuminist masters are trying to have their cake and eat it too. Of course, this is pure foolishness and it will not work, but they are going to try it anyway. They want to keep interest rates low for the fraudsters so they can make money on spreads from investments with higher yields in a futile attempt to save their balance sheets, but low rates are what drive inflation, speculation, improper allocations of capital and over-leveraged investments while simultaneously pushing money out of dollar-denominated bonds and treasuries into real assets such as commodities and real estate due to artificially low, even negative, rates of return in light of increasing risk and inflation. So they are saving the banks and destroying the economy, and the destruction of the economy will ultimately in turn destroy the banks anyway, and in more spectacular fashion to boot. The delay game they are playing only delays the inevitable, which is their complete and utter destruction.

The elitists want the bailouts to come at our expense because there is no other source remaining except from the big Illuminist players themselves, such as the Rockefellers, the Rothschilds and the Black Nobility of Europe, from their individually-owned and/or controlled assets, especially considering that their henchmen have mostly gone bust. Even the Fed looks like it may go under because the economy will collapse before they can create and monetize enough treasuries to absorb all the toxic waste collateral by exchanging it for treasury and agency paper. The only remaining alternative is the saving of the dollar as the world's reserve currency, the elitists' collective, comprehensive, corporate failure and the purging of the system. Of course, since the elitists and their transnational conglomerates are the ones who stand to get purged, that is not an acceptable alternative to them. However, for us peons, it is the only sensible, though painful, alternative. We doubt that the dollar can still be saved as the world's reserve currency, but it's still worth a try since success could make recovery much faster and easier. We either take the path to purge the system, or we ourselves will be purged by the Illuminati, albeit not to the extent that they had hoped due to their inept bungling of just about everything. NO MORE BAILOUTS USING TAXPAYER FUNDS!!!

We told you the key to analysis is the bond market, and the government bailouts are all aimed at saving all segments of the bond market, which includes treasuries, because it is the source of elitist power. Only the suppression of gold and silver has an equal priority at this point, but that priority will eventually be abandoned in favor of delaying the destruction of the bond markets when it is no longer feasible to save the bond market while simultaneously suppressing precious metals.

The elitists want to save the bond market because that is where all the excess dollars are parked overseas, and the return of these parked dollars to our shores could put us in the Mugabe Million Percent Club when it comes to hyperstagflation. They want you to bail out Fannie and Freddie GSE bonds worth many hundreds of billions of dollars that have been acquired by Japan, China, Russia, the Middle East (through British banks as proxies), the European Union nations and India with the same money these greedy nations have stolen or extorted from you using manipulated, artificially low domestic currencies to boost exports, uncompetitive, artificially high cartel oil prices to make ludicrous profits, as well as monies ransacked from us through use of globalization, free trade, off-shoring, outsourcing and both legal and illegal immigration, which incidentally have been used by the elitists to gut our economy, especially our manufacturing sector, in order to weaken us into accepting a one world government. These nations have therefore acted as willing henchman for the Illuminati to bring America to its knees.

And the same holds true for the Fed's forced, taxpayer-sponsored, $500 billion per month provision of money and credit through various facilities to bail out banks and their holdings of other non-GSE real estate bonds and derivatives, as well as other types of asset-backed bonds and derivatives and municipal bonds, which foreigners also own in the hundreds of billions. These bonds and derivatives were acquired by these same foreign nations using the same funds obtained by the same nefarious methods of beggaring the US public as were used to acquire the GSE bonds, all so that the elitists could control us, and so that the Black Nobility of Europe could turn us into their feudal serfs once again. If the fraudsters fail, that means liquidation, and liquidation means forced sales, which would lead to abysmal prices for these bonds and derivatives.

And then there is the counter-party risk and liability on credit default swaps and interest rate swaps, which will soon become a quadrillion dollar market, that would be in jeopardy if the Fed did not bail out the Wall Street bankster fraudsters, who are counter-parties on these swaps. The other end of these swaps, to the tune of trillions of dollars in notional principal, are also owned by these same foreign nations who collectively turned the US into the greatest debtor nation of all time when only a few decades ago it was the greatest creditor nation of all time.

The crux of the matter is that the Illuminists know that if they cannot convince the US public to bail out these various bonds and derivatives and their various owners and counter-parties, the system will collapse and all those trillions in treasuries hanging around in the forex reserves of these nations will come back to roost with a vengeance as foreigners stampede to unload their treasuries and their remaining toxic waste in exchange for commodities and other tangible assets before they become worthless and/or to force the Illuminists to lobby for a public bailout of the tanking asset-backed bonds and derivatives under threat of a treasury boycott or hyperinflation-inducing treasury flood back to the US. That is their greatest fear, because such an event would destroy them and their precious system, especially the bond market, which is the main source of their power, a fact which we cannot overemphasize. They are trying to manage the dollar down gradually by use of a beggar-thy-neighbor policy, and the failure to win these public bailouts would collapse the system and take them all down with it before they have a chance to bail out of stocks, bonds and other paper assets through the dark pools of liquidity known as Project Turquoise and Baikal and into commodities and other tangible assets.

You must not allow them to dupe you into bailouts at taxpayer expense. Let them bail themselves out, if that is what they want to do, since the need for a bailout was caused by them exclusively, through their own deceit and fraud. They made their beds, and now they can lay in them! Let the system fail and they will be destroyed with it. Then we will be rid of them once and for all as we remove all the corrupt, incumbent, scum-bags from Congress, except for Ron Paul!!! IT'S TIME TO START OVER AGAIN!!! It is a painful, but absolutely necessary, process. We won't have to push them out with rifles and swords this time. Their own evil and greed have destroyed them. LET'S TAKE BACK THE SYSTEM AND RESTORE THE CONSTITUTION!!! Otherwise, what will our children and grandchildren be left with? The Fourth Reich?!

The SEC will now enforce their rules against naked-short selling, but only against naked short-selling of the stocks of 19 named Illuminist fraudster financial institutions. The rest of you can kiss off with your naked- short-selling complaints. We'll add you to our handy dandy list of companies we know are being naked-shorted just to tick you off. So what if the criminal elitist scum can sell stock that does not even exist and ruin your company at will, and hammer the value of your stock while they laugh in your face. Stop whining and complaining, America. It's just a "mental recession" after all. And now it's just a figment of your imagination that many of your resources stocks are being illegally naked-shorted with impunity. Tits on a bull have more utility than the SEC which is more corrupt than the fiendish crooks they ignore while picking on small brokers and trumping up charges against newsletter writers. We want to puke every time we hear the SEC's commentary on the radio. Their blatant hypocrisy is deafening. The CFTC is no better. Former Senator Phil Gramm should head up both. He's the perfect sociopath for the job. Mr. Gramm's wife, Wendy, can advise him, as she was the Chairwoman of the CFTC when Enron was allowed to run amok with special exceptions. She later served on Enron's board of directors to complete her rampage of corruption. We now need a new federal agency to investigate the SEC investigators, who levy puny fines against wildly corrupt Illuminist criminals, allowing them to profit from their crimes without serving any time in jail. Only in America.

Schwarzenegger to State Workers’ Pay to Minimum Wage?

Governor plans to slash state workers' pay

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Gov. Arnold Schwarzenegger plans next week to slash the pay of more than 200,000 state workers to the federal minimum of $6.55 per hour to help ease the state's budget crisis, according to a draft executive order obtained by The Chronicle on Wednesday.

The governor also will order an end to overtime pay for all but critical services, a freeze on state hiring and the immediate layoff of nearly 22,000 temporary, seasonal and student workers.

"As a result of the late state budget, there is a real and substantial risk that the state will have insufficient cash to pay for state expenditures," the executive order states.

Schwarzenegger's staff would neither confirm nor deny that the governor plans to issue the executive order, but sources said he could take action as early as Monday. The state, facing a projected $17.2 billion budget deficit for the fiscal year that began July 1, has not approved a budget.

"The governor is looking at a number of different options to ensure that the state does not run out of cash," said Aaron McLear, a spokesman for the governor.

But administration officials, who asked to remain anonymous, said that about 200,000 of the state's 245,000 workers, both hourly and salaried, will see their pay trimmed back to the federal minimum wage of $6.55 an hour, saving the state up to $1.2 billion a month. Dropping the temporary and short-time workers will save an additional $28.5 million each month.

While the layoffs could be made immediately, the pay cuts might not be completed until mid- or late August.

The proposed pay cut for hourly employees would take their wages well below the state minimum wage of $8 an hour. But a 2003 California Supreme Court decision allows the state to chop workers' pay to the federal minimum when a state budget has not been enacted.

"While we've had late budgets in the past, the critical difference this year is cash," an administration official said. "We have not had a situation in recent years that's the same as the cash-starved situation that we may face in September if we don't have a budget in place."

While California needs to have about $2.5 billion in cash on hand at any given moment to cover the state's ongoing expenses, the Golden State is projected to have just $1.8 billion at the end of September, the official said.

But the governor's plan could face an immediate challenge from Democratic state Controller John Chiang, who will continue to pay state workers their full salaries, even in the face of Schwarzenegger's executive order, said Hallye Jordan, a spokeswoman for the controller. The governor will have to take Chiang to court if he wants to stop him, she said.

"The controller hasn't seen any executive order, but he would urge the governor to rethink his proposal," she said. "This hasn't been addressed by the courts and if it's ruled illegal, it could cost the state a tremendous amount in damages."

Chiang said the state has enough cash to make all payments, including the regular payroll, through September.

"Cutting workers' salaries will do nothing meaningful to improve our cash position," he said in a statement. The executive order is "nothing more than a poorly devised strategy to put pressure on the Legislature to enact a budget."

The state has been without a budget for nearly a month.

Although Republicans and Democrats in the Legislature remain at odds over how to close the state's anticipated budget deficit, Senate President Pro Tem Don Perata, D-Oakland, has called for a vote Tuesday on the Democrats' budget proposal.

"The senator is committed to moving a budget to the governor's desk so that it can be signed by Aug. 1, the date when the state will face more fiscal problems," said Lynda Gledhill, a spokeswoman for Perata. "Unfortunately, the time frame is dictated by the state's fiscal condition."

While Perata had no comment on Schwarzenegger's anticipated action, Republican leaders pledged to work to avoid any wage cuts.

"Republicans understand the urgency of getting the budget done as soon as possible, which is our main focus right now," according to a joint statement issued by Assembly Minority Leader Mike Villines, R-Clovis (Fresno County) and Senate Minority Leader Dave Cogdill, R-Modesto. "We are working very hard to avoid drastic measures like the one that is being proposed."

That is not likely to include reaching any agreement in time for Tuesday's planned budget vote, however.

"The budget right now is not a result of any negotiations," said Jennifer McDaniel, a spokeswoman for Villines. "The vote is just a drill."

But Schwarzenegger's planned pay cut for state employees is guaranteed to anger the workers and put even more pressure on Democrats and Republicans in the Legislature to quickly agree to a plan for closing the budget gap.

Some of the state's lowest-paid workers will have to pay the price for the deadlock in the Legislature, labor officials said.

"We are the victims of the incompetence of the Legislature and Gov. Schwarzenegger," said Jim Zamora, a spokesman for SEIU Local 1000, which represents 95,000 state workers. "Because they can't sit down and pass a balanced budget, state workers must live in fear of having their wages slashed as much as 90 percent. We are not chess pieces, we are real people."

Emily Clayton, policy coordinator for the California Labor Federation, added: "Holding state workers hostage is not a fair way to get to a budget agreement."

What they make

Database: Find out how much state workers are getting paid at

State budget update

The problem: Today is Day 24 of the state budget impasse over California's $17.2 billion budget shortfall. Gov. Arnold Schwarzenegger wants to help close the gap by borrowing against future state lottery sales, while Democrats and Republicans in the Legislature say the plan won't fix this year's budget woes.

Dispute: Democrats, who hold the majority in the Legislature, two weeks ago announced a $10 billion tax package, while Republicans said they will not support raising taxes.

What's next: Senate President Pro Tem Don Perata, D-Oakland, has called a floor session for the Senate on Tuesday to vote on the budget even though a compromise is not within sight.

The Economic Show Trials Begin

The Economic Show Trials Begin

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Could it be that our ruling elite has effectively transcended hypocrisy? As the aphorism informs us, hypocrisy is the tribute that vice pays to virtue; it is the product of a person's capacity for decent shame, the fig-leaf garment concealing one's naked corruption.

Shame being a vital precursor to hypocrisy, those who rule us – not only the politicians, but the banksters and image-molders as well – can't be accused of hypocrisy. This would be a bit like criticizing the fashion sense of somebody who's color-blind. This doesn't mean, however, that they should be allowed an indulgence for the evil that they do.

Last week, during a brief digression in the ongoing efforts to socialize the losses suffered by the super-rich kleptocrats at Fannie Mae and Freddie Mac, Congress conducted an authentic Orwellian hate-fest directed at "super-rich" people who had earned their money through legitimate enterprise.

The Fannie/Freddie nomenklatura built huge profits through the government-subsidized generation and "securitization" of bad mortgages and criminally corrupt bookkeeping. Last week's hearings by the Senate Subcommittee on Investigations focused on people who had made large sums of money through honest, productive commercial activity – and then tried to preserve their honest earnings for their posterity by protecting it in bank accounts in Liechtenstein.

Congress and the ruling elite it serves are eagerly stealing everything in sight, through taxes, subsidies, and inflation. But as last week's Senate hearings-cum-show trial illustrate, they are tuning up the machinery of mass hatred in anticipation of scapegoating authentic capitalists for the ongoing economic collapse.

The fault, we will be told, lies not with our corrupt and incurably profligate government, or the incorrigible official counterfeiters at the Federal Reserve, or the government-subsidized corporatist interests who are their clients – but rather those who greedily insist on keeping what they earn instead of paying their "fair share" in the name of the "common good."

The calculation here is that a hate campaign of that sort can keep the public from noticing how the phrase "common good" always seems to refer to policies that confer benefits on one particular elite. And it's quite likely that members of that elite have their own numbered accounts in places like Switzerland and Liechtenstein. Which is probably another reason they're so eager to go after well-heeled people who aren't part of their club.

As I have noted before, Liechtenstein, unlike the United States, is a relatively free country. It is presided over with a gentle hand by Prince Hans-Adam II, rather than being ruled by a degenerate fascist oligarchy like the one entrenched in Washington. Hans-Adam II is on record saying that a top tax rate higher than 6% is "tyrannical." This puts him well ahead of any other political leader I can think of in pursuing the truth, which is that taxation is always and everywhere nothing but officially sanctioned theft.

As would be the case in any civilized country, Liechtenstein's banking secrecy laws were designed to protect the assets of depositors from the scrutiny of predators serving the ruling class. Many foreign depositors have, in accordance with the sound and commendable laws of that estimable alpine country, set up foundations to protect their earnings from rapacious tax-gatherers in their own afflicted nations.

Unfortunately, a squalid little creature named Heinrich Kieber who had been a clerk at Liechtenstein's LGT Group, pilfered several CDs worth of data regarding foreign depositors from the United States and Europe. Driven by a variant of the invidious impulses that sixty years ago would have led him to rat out those who protected Jews from the Gestapo, Kieber – as viscous as he is vicious – oozed into the offices of Germany's BND intelligence service and sold his stolen information for $7.3 million stolen at gunpoint from German taxpayers.

Kieber conducted similar transactions with ruling criminals in London, Paris, Rome, and Washington. His information led to last week's hearings, chaired by the loathsome Senator Carl Levin (D-Michigan), who – in the interests of "bipartisanship" – gave a prominent co-starring role to the even more repulsive Senator Norm Coleman (R-Minnesota). Kieber himself, who has been taken into the "witness protection program," testified by way of a videotaped statement from a secret location.

The target of Comrade Levin's show trial was the reported $1.5 trillion cached by wealthy Americans in offshore accounts, including those in Liechtenstein, Switzerland's UBS, and elsewhere. Those banks, Levin complained, had employed "tricks" that made it "impossible for the Internal Revenue Service to follow the money, bring tax cheats to justice, and bring back into the US treasury the tens of billions of dollars owed to Uncle Sam."

Well, sure: The banks that sought to protect the assets of Jews during WWII employed the same methods to protect the assets of honorable people from the contemporary tax gestapo, who are the true moral heirs of the Nazi officials who sought to seize the assets of persecuted Jews. Impeding the efforts of criminals to steal wealth is not a "crime," and it's interesting that Levin didn't use that word to describe the "tricks" he protested.

And, if I can be permitted a brief digression, Levin's statement that the money should be brought "back to the US treasury" in order to pay "the tens of billions of dollars owed to Uncle Sam" is a Marxist lie sandwiched between two crusty slices of chutzpah.

For the purposes of this discussion, we'll refer to the fraudulent fiat currency issued by the Fed as "money."

Any quantity of "money" honestly earned does not belong to the Treasury; it belongs to the individual or enterprise that earned it, until he or they decide to spend it for some purpose. Accordingly, that money cannot go "back" to the Treasury, although it can be diverted there to be wasted on corrupt government undertakings of various kinds.

Furthermore, taxes are not "owed" to the federal government; they are seized by the federal government. One "owes" money to another party from whom he has received goods or services pursuant to a legitimate contract. "Contracts" imposed through duress (such as extortion pay-offs) are illegitimate. Those of us who pay taxes do so not because a legitimate contract exists between us and the Regime that extracts our wealth; we do so because of a desire to stay out of prison, or to avoid violent death at the hands of the State's hired killers.

Levin is a nearly ideal representative of the parasite class. His mind, or what passes for it, is entirely hostage to collectivist assumptions. Just as a dog cannot discern colors, Levin can't see anything amiss in extending official protection to a foreign criminal (Kieber was convicted of fraud in Liechtenstein) so he can testify against those who have done no injury to persons or property, or in treating foreign bank officers as if they were under Washington's jurisdiction by demanding that they testify before his committee.

All of this is being done, Levin insists, to bring "tax cheats to justice." Leaving aside, for the nonce, the fact that the word "justice" when uttered by the likes of Levin is like the word "love" in the mouth of a whore, the cruel fact is that tax avoidance is impossible for anyone who conducts business using the Federal Reserve's fraudulent scrip.

This brings us to one history-making admission offered last week by Fed Commissar Ben Bernanke beneath the avuncular but relentless cross-examination of Rep. Ron Paul (R-Texas) during Bernanke's recent congressional testimony.

"Inflation is a tax," Rep. Paul observed during his colloquy with Bernanke. "And if the Federal Reserve, and you as chairman, have this authority to increase the money supply arbitrarily, you’re probably the biggest taxer in the country."

"I couldn't agree with you more that inflation is a tax," admitted Bernanke, quickly seeking to evade responsibility by saying that "inflation currently is too high." The criminal syndicate over which Bernanke presides imposes taxation without representation or accountability.

Furthermore, it exports that inflation world-wide, thanks to the fact that the instrument of debt the Fed calls the "dollar" is the world's reserve currency. This means that nearly everyone who uses the dollar to conduct business is paying the tax called inflation. This is a unique form of withholding, in that the Fed steals an increment of value from each dollar before it ends up in the hands or accounts of private actors in the economy.

Where a government exercises the power to tax through inflation, no other taxes are "necessary," including the income tax. Furthermore, where governments tax through inflation, no tax evasion is possible, as long as people conduct business in that adulterated currency.

The redoubtable G. Edward Griffin points out that former Fed Chairman Beardsley Ruml admitted that, because of the Fed's ability to tax via inflation, "Taxes for Revenue are Obsolete" – the title of an essay Ruml published in the January 1946 issue of American Affairs. As Ruml wrote, "given control of a central banking system and an incontrovertible currency [that is, a fiat currency not backed by gold], a sovereign national government is finally free of money worries and need no longer levy taxes for the purpose of providing itself with revenue. All taxation, therefore, should be regarded from the point of view of social and economic consequences."(Emphasis added.)

Thus, where Washington is concerned, taxation exists purely for the purpose of social manipulation through vulgar redistribution of wealth, not to pay the operating costs of government. And as carried out by the IRS, taxation is an instrument of intimidation and terror used to compel social conformity.

By keeping their money in dollars, or any currency "pegged" to the dollar, so-called "tax cheats" aren't evading taxes. They, like the rest of us, are being taxed through the Fed's relentless inflation. Their only hope to evade being taxed by the Fed would be to take the advice offered by Jim Rogers last fall: Get out of dollar-denominated assets entirely.

There are only two ways to acquire wealth: It can be earned through mutually beneficial voluntary action, or it can be stolen through force and fraud. Any effort to acquire wealth that involves any degree of force or fraud is theft.

Senator Levin and his comrades, who are preparing to bail out the politically favored thieves running Fannie and Freddie, spent many taxpayer-funded hours last week dilating upon the supposed iniquity of those "super-rich" Americans who seek to protect what they earn from people whose professional lives are nothing but one prolonged exercise in theft.

It would avail nothing to point out such hypocrisy to Levin and his ilk; they can no more feel honest shame than a chimpanzee can compose a cantata.

Ford posts $8.7 billion loss on asset write-downs

Ford posts $8.7 billion loss on asset write-downs


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Ford Motor Co. posted the worst quarterly performance in its history Thursday, losing $8.67 billion in the second quarter.

The company also said it will retool two more North American truck and sport utility vehicle plants to build small, fuel-efficient vehicles, and it announced plans to bring six new small vehicles to North America from Europe by the end of 2012.

The net loss includes $8.03 billion worth of write-offs because of a decline in value of North American assets and Ford Motor Credit Co.'s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share.

Including the write-downs, Ford lost $3.88 per share in the April-June quarter, compared with net profit of $750 million, or 31 cents per share, in the same quarter a year ago.

The second-quarter loss surpassed Ford's previous record quarterly loss, $6.7 billion in the first quarter of 1992.

Second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

Ford has been successful selling cars in Europe, and the company is banking on the new European models to boost sales and revenue as it deals with a market shift from trucks to cars brought on by high gasoline prices. The company said it has sufficient liquidity to weather the latest downturn in the U.S. auto market without additional borrowing.

Wall Street wasn't impressed, at least initially. Ford shares dropped 38 cents, or 6.3 percent, to $5.65 in morning trading.

The company said it will retool the Michigan Truck plant in suburban Detroit, shifting its products from large SUVs to make global vehicles off the European Focus platform by 2010.

The SUVs made at Michigan Truck — the Lincoln Navigator and Ford Expedition — will be shifted to the Kentucky Truck plant in Louisville, which makes Ford Super Duty pickups.

The company also will retool the Louisville Assembly Plant, which now builds the Ford Explorer midsize SUV, to produce vehicles on the European Focus frame, starting in 2011.

The company had previously announced it would retool its pickup truck factory in Cuautitlan, Mexico, to build the Fiesta subcompact for North America starting in 2010.

Ford also said its Twin Cities Assembly Plant in St. Paul, Minn., will continue producing the Ranger small pickup through 2011. The plant was scheduled to close next year, but Ranger sales are down just 4 percent in the first half of this year, versus 18 percent for the U.S. light truck market as a whole.

The company said its write-offs included $5.3 billion in North America and $2.1 billion for Ford Credit's truck-heavy lease portfolio. Chief Financial Officer Don Leclair said most of the write-down was triggered by the drop in value of the company's truck and SUV inventory and lease residuals.

Ford reported a pretax loss of $1.3 billion in North America because of the deteriorating U.S. market and the shift away from trucks. U.S. sales overall were down 10 percent in the first half of the year, with Ford's sales down 14 percent.

The company, though, continued to be profitable overseas, posting a $582 million profit in Europe and $388 million in South America. The company also made $50 million at its Asia-Pacific-Africa division.

"The second half will continue to be challenging, but we have absolutely the right plan to respond to the changing business environment and begin to grow again for the long term," President and CEO Alan Mulally said in a statement.

Ford said it does not expect a U.S. economic recovery to start until early 2010.

The company identified only three of the European small vehicles it will bring to North America: the Transit Connect small van, the European Focus and the subcompact Fiesta. Most will be built in North America, and Leclair said some might be exported. Ford already has announced that the Transit Connect will be imported from Turkey.

Ford said the other three vehicles would be identified later, including one that is unique within its segment.

Other possible vehicles are the Kuga small crossover, the C-Max small van and the Mondeo midsize car.

Ford also announced that the next-generation Ford Explorer midsize SUV will come out in 2010 and be built on car underpinnings, making it more fuel efficient than the current truck-based model. And it announced it will build a seven-passenger car-based crossover vehicle for Lincoln in mid-2009.


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Blackwater is here to stay

Blackwater is here to stay

Despite reports that the company is leaving the mercenary business, Blackwater's future is secure

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t seems that executives from Blackwater Worldwide, the Bush administration's favourite hired guns in Iraq and Afghanistan, are threatening to pack up their M4 assault rifles, CS gas and Little Bird helicopters and go back to the great dismal swamp of North Carolina whence they came. Or at least that's how it is being portrayed in the media.

This story broke on Monday, when the Associated Press ran an article based on lengthy interviews with Blackwater's top guns. Since then, the story has picked up considerable steam and generated a tremendous amount of buzz online and in the press. After all, Blackwater has long been a key part of the US occupation and has been at the centre of several high-profile scandals and deadly incidents. Add to that its owner's ties to the White House and the radical religious right in the US and it is clear why this is news. On top of that, Barack Obama - a critic of Blackwater - just completed a tour of Iraq, where he was touting his withdrawal plan.

Among the headlines of the past 24 hours: "Blackwater plans exit from guard work", "Blackwater getting out of security business", "Blackwater sounds retreat from private security business", and "Blackwater to leave security business". One blogger slapped this headline on his post: "Blackwater, worst organisation since SS, to end mercenary work."

Frankly, this is a whole lot of hype.

Anyone who thinks Blackwater is in serious trouble is dead wrong. Even if - and this is a big if - the company pulled out of Iraq tomorrow, here is the cold, hard fact: business has never been better for Blackwater, and its future looks bright. More on this in a moment.

Back to the matter at hand. Complaining that negative media attention and congressional and criminal investigations are hurting business and that the Blackwater name had become a catch-all target for anti-war protesters, the company's brass told the AP that Blackwater was shifting its focus to its other areas of government contracting, like law enforcement and military training, as well as logistics.

''The experience we've had would certainly be a disincentive to any other companies that want to step in and put their entire business at risk,'' said Erik Prince, Blackwater's reclusive, 39 year-old founder and owner. Company president Gary Jackson said Blackwater has become like the "Coca-Cola" of war contractors, a brand representing all private companies servicing the Iraq occupation. Jackson charged the company had been falsely portrayed in the media, saying, ''If [the media] could get it right, we might stay in the business.''

All of this sounds a bit like whining on a children's playground.

Shame on journalists for not recognising the noble work of the gallant heroes and patriots (who happen to be paid much more than US troops and have not been subjected to any system of law and who can leave the war zone any moment they choose) and forcing Blackwater to consider abandoning its (very profitable, billion-dollar) charitable humanitarian campaign in Iraq. Remember, according to Blackwater, it is not a mercenary organisation. It is a "peace and stability" operation employing "global stabilisation professionals".

While they were at it, Jackson and Prince should have blamed those wretched 17 Iraqi civilians who had the audacity to step in front of the bullets flying out of Blackwater's weapons in Baghdad's Nisour Squaretold the US Congress that the only innocent people his men may have killed or injured in Iraq died as a result of "ricochets" and "traffic accidents". If that is true, Nisour Square might have been the most lethal jaywalking incident in world history. last September. After all, following those killings, Erik Prince

As for the current hype, the day after the AP story broke, Blackwater's long-time spokesperson Anne Tyrrell was quick to clarify the matter. Blackwater, she said, has no immediate plans to exit the security business. "As long as we're asked, we'll do it," she said. Meanwhile, the US state department, which renewed Blackwater's contract for another year in April, says it has received no communication from the company indicating it is not going to continue on in Iraq. "They have not indicated to us that they are attempting to get out of our current contract," said undersecretary of state Patrick Kennedy.

As of 2005-2006, according to the company, about half of Blackwater's business was made up of its security work in places like Iraq, Afghanistan and post-Katrina New Orleans. Today, Jackson says it is about 30%. ''If I could get it down to 2% or 1%, I would go there," he said in the interview.

Blackwater, like all companies operating in US war zones, is following political developments very closely. The company may be bracing for a possible shift in policy should Obama win in November. Blackwater could be contemplating resignation before termination. On the other hand, Obama has sent mixed messages on the future of war contractors under his Iraq policy. While he has been very critical of the war industry in general - and Blackwater specifically - he has also indicated he will not "rule out" using private armed contractors at least for a time in Iraq.

Perhaps Blackwater has already gotten what it needed from Iraq: over a billion dollars in contracts and a bad-ass reputation, which has served it well. In May, Blackwater boasted of "two successive quarters of unprecedented growth." Among its current initiatives:

• Erik Prince's private spy agency, Total Intelligence Solutions, is now open for business, placing capabilities once the sovereign realm of governments on the open market. Run by three veteran CIA operatives, the company offers "CIA-type services" to Fortune 1000 companies and governments.

• Blackwater was asked by the Pentagon to bid for a share of a whopping $15bn contract to "fight terrorists with drug-trade ties" in a US programme that targets countries like Colombia, Bolivia, Afghanistan and Uzbekistan. The New York Times said it could be the company's "biggest job" ever.

• Blackwater is wrapping up work on its own armoured vehicle, the Grizzly, as well as its Polar Airship 400, a surveillance blimp Blackwater wants to market to the Department of Homeland security for use in monitoring the US-Mexico border.

On top of this, Blackwater affiliate Greystone Ltd, registered offshore in Barbados, is an old-fashioned mercenary operation offering "personnel from the best militaries throughout the world" for hire by governments and private organisations. It also boasts of a "multi-national peacekeeping programme," with forces "specialising in crowd control and less than lethal techniques and military personnel for the less stable areas of operation." Greystone's name has been conspicuously absent in this current news cycle.

At the end of the day, maybe this is just a story, a whole lot of a hype and a dash of misdirection from a pretty savvy company. Safe money would dictate that Blackwater plans on continuing to be, well, Blackwater.

Consider this. The other day Blackwater president Gary Jackson told the AP: "Security was not part of the master plan, ever."

Interesting claim. It was in fact Jackson himself who, back at the beginning of the Iraq occupation, described his goal for Blackwater as such: "I would like to have the largest, most professional private army in the world."

Big Pharma Pushes Drugs That Cause Conditions They Are Supposed to Prevent

Big Pharma Pushes Drugs That Cause Conditions They Are Supposed to Prevent

By Martha Rosenberg
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Like gastroesophageal reflux and bipolar disease, osteopenia began to inflict millions when a drug to treat it was patented.

"Osteopenia, or the risk of developing osteoporosis, was concocted as a disease at a World Health Organization osteoporosis conference in Rome in 1992 that was sponsored by two drug companies and a drug company foundation," writes Susan Kelleher in the Seattle Times.

Using the bone density measurements or "T scores" of a 30-year-old woman as a standard, the new condition, osteopenia, had "boundaries so broad they include more than half of all women over 50," writes Kelleher. And it didn't hurt that 10,000 bone density measuring machines appeared in doctors' offices to detect the new disease -- only 750 existed in 1995 -- many owned and financed by Merck, whose anti-bone-thinning drug Fosamax came online in 1995.

No wonder doctor visits for thinning bones increased by 5 million from 1994 to 2003, according to the Associated Press.

Of course, selling "prevention" to at-risk patients is a pharma gold mine.

It keeps patients on meds for decades through fear, alarmist marketing and after-this-because-of-this reasoning -- since a patient doesn't know if she would have gotten the disease anyway.

So even when reports of Fosamax-related jaw problems called osteonecrosis surfaced -- 1,000 cases have been documented -- and even when a study in the Archives of Internal Medicine this year found that Fosamax doubled women's risk of irregular heartbeat, which can cause clots and strokes, few doubted its primary action of protecting women's bones.

But now, like hormone replacement therapy, which also exploited women's fear of aging and social marginalization, Fosamax appears to cause the conditions it's supposed to prevent.

Since 2006, articles in the New England Journal of Medicine, Journal of Orthopedic Trauma, Journal of Bone and Joint Surgery, Journal of Clinical Endocrinology & Metabolism and Aging Clinical and Experimental Research have suggested the anti-bone turnover action of bisphosphonate drugs like Fosamax can in some cases cause fractures.


While preventing bone loss that is caused by the process of bone turnover or remodeling, bisphosphonate drugs can fossilize and petrify a bone so it breaks spontaneously and with minimal trauma -- like chalk. It will not heal properly.

Thighbones of patients on bisphosphonates have "simply snapped while they were walking or standing," following "weeks or months of unexplained aching," reports the New York Times.

Like other fast-tracked-to-Wall-Street drugs that are effectively "tested" on the first users, adverse reports about bisphosphonates came from patients and practitioners long before they came from the FDA or manufacturers.

Bisphosphonate patients have documented excruciating pain from Fosamax since 2001 and GlaxoSmithKline's Boniva since 2006 on, many calling the drugs "poison" and saying they were forced into wheelchairs.

But only in March did the FDA alert health care professionals to the "severe, sometimes incapacitating, musculoskeletal pain" that bisphosphonate drugs could cause in their patients and caution them to consider whether musculoskeletal pain "might be caused by the drug" rather than the bone condition.

Not only is the pain that bisphosphonate patients report "not in their heads" -- imagine 1,257 men on saying their doc dismissed their constant pain and symptomology -- it is emblematic of what is really going on.

"There is actually bone death occurring," Dr. Phuli Cohan told Mallika Marshall, M.D., a medical reporter for Boston's WBZ-TV News in May. "People don't want to believe that this is happening, but it is a side effect of the medicine," she said.

Dr. David Hunter of New England Baptist Hospital concurs that bisphosphonates can cause "dead bone syndrome" and that patients should have a "drug holiday to allow bone cells to rejuvenate," reports Marshall.

Even drug reps on the industry chat room cafepharma are skeptical about bisphosphonates.

"They over-suppress the bone and 'may' cause subtrochanter fractures. ... It's the next hot button," wrote one anonymous poster on a thread titled "Is Boniva dead?" sparked by a rumor that Boniva pitchwoman Sally Fields had fallen and broken a bone.

Nor do bisphosphonates exit the body quickly when patients quit taking them, according to a 2006 study in the Journal of the American Medical Association -- rather, they remain for years.

(Patients "need not take costly bone-building drugs such as Fosamax for life to reap the medicine's protective benefits," was the News & Observer's upbeat interpretation of the drug's tenacity.)

Will bisphosphonates be the next hormone replacement therapy? Another example of women getting the diseases they were supposed to avoid, thanks to misogynistic marketing?

Is there a market for 10,000 used bone density measuring machines?

Anti-War Movement Successfully Pushes Back Against Military Confrontation With Iran

Anti-War Movement Successfully Pushes Back Against Military Confrontation With Iran

By Mark Weisbrot
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Who says there's no anti-war movement in the United States? In the past two months, the anti-war movement has taken on one of the most powerful lobbying groups in the United States in an important fight. And so far, the anti-war movement is winning.

Here's the story: On May 22, a bill was introduced into Congress that effectively called for a blockade of Iran, H. Con. Res. 362. Among other expressions of hostility, the bill calls for: "prohibiting the export to Iran of all refined petroleum products; imposing stringent inspection requirements on all persons, vehicles, ships, planes, trains, and cargo entering or departing Iran ... " This sounded an awful lot like it was calling for a blockade, which is an act of war. A dangerous proposition, especially given all the efforts that the Bush-Cheney administration has taken to move us closer to a military confrontation with Iran, the bluster and the threats, and the refusal to engage in direct talks with the Iranian government. The last thing we need is for the war party to get encouragement from Congress to initiate more illegal and extremely dangerous hostilities in the Persian Gulf. If the bill were to pass, the Bush Administration could take it as a green light for a blockade. It's hard to imagine the Iranians passively watching their economy strangled for lack of gasoline (which they import), without at least firing a few missiles at the blockaders.

Whereupon all hell could break loose.

By June 20 this bill was zipping through Congress, with 169 co-sponsors, soon to accumulate more than 200 Representatives. Amazingly, it was projected to appear quickly on the House Suspension Calendar. This is a special procedure that allows the House of Representatives to pass non-controversial legislation by a super-majority. It allows the bill to avoid amendments and other procedural votes, as well as normal debate. An aide to the Democratic leadership said the resolution would pass Congress like a "hot knife through butter."

Groups opposed to military confrontation with Iran sprang into action, including Peace Action, United for Peace and Justice, the National Iranian-American Council, the Friends Committee on National Legislation, Code Pink, and Just Foreign Policy. They generated tens of thousands of emails, letters, phone calls, and other contacts with members of Congress and their staff. The first co-sponsor to change his position on the bill was Representative Barney Frank (D-MA), an influential member of Congress who chairs the powerful House Financial Services Committee. He apologized for "not having read [the bill] more carefully," and pledged that he would not support the bill with the blockade language.

Then Robert Wexler, (D-FL), peeled off, also stating that he would not continue to support the bill if the blockade language were not changed.

Most of the major media ignored the controversy, but two newspapers noticed it. The first was Seattle's Post-Intelligencer, whose editorial board denounced the resolution on June 24 and asked, "are supporters of Res. 362 asleep at the wheel, or are they just anxious to drag us into another illegal war?"

Then on June 27 the editorial board of Newsday published an editorial calling for a full debate on the bill. Newsday has a large circulation, and perhaps more importantly, it publishes in the New York district of Congressman Gary Ackerman -- the lead author of the H. Con. Res. 362.

Then, earlier this month, Congressman Mike Thompson (D-CA) wrote: "[Howard] Berman [Chair of the House Committee on Foreign Affairs] has indicated that he has no intention of moving the bill through his committee unless the language is first altered to ensure that there is no possible way it could be construed as authorizing any type of military action against Iran ... I will withdraw my support for the bill if this change is not made."

The result, so far: no Congressional endorsement of a blockade against Iran. A dangerous piece of legislation, primed to pass through the House without debate, stopped in its tracks by an anti-war movement. And some Members of Congress are going to be a bit more careful about doing things that could move the country down the road to another war.

The anti-war movement's victory was all the more impressive given that the main lobby group promoting H. Con. Res. 362 was AIPAC, the American Israel Public Affairs Committee. Although AIPAC does not represent the opinion of the majority of American Jews, it is one of the most powerful lobbies in Washington. To get a flavor of how much influence it has, AIPAC's annual policy meeting in Washington in June was attended by half of the U.S. Senate and House of Representatives, according to the Washington Post. It's tough to think of another Washington lobby group that could pull off something like that -- certainly no other organization concerned with foreign policy comes to mind.

Of course, this is just one skirmish in the long battle to end this current, senseless war in Iraq -- a war that has needlessly claimed the lives of more than 4000 Americans and, according to the best scientific estimates, more than a million Iraqis; and to prevent our leaders from launching another criminally insane war. But it shows that, even in the rather limited form of democracy as exists in 21st century America, there is an organized anti-war movement and it has real power. It doesn't look like the anti-war movement of the last century, with street demonstrations, nationally known leaders, and regular expressions of public outrage. (It's not clear that the major media would give much more attention to the movement or its views -- that is, the views of the majority of the country -- even if it did pull huge crowds into the streets.)

But it is there, it is organized, it is intelligent and strategic. It will continue to grow, no matter what happens in November.

Mark Weisbrot is Co-Director and co-founder of the Center for Economic and Policy Research. He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy.

Better Ballots

Better Ballots

By Lawrence Norden, David Kimball, Whitney Quesenbery, and Margaret Chen

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The notorious butterfly ballot that Palm Beach County, Florida election officials used in the 2000 election is probably the most infamous of all election design snafus. It was one of many political, legal, and election administration missteps that plunged a presidential election into turmoil and set off a series of events that led to, among other things, a vast overhaul of the country’s election administration, including the greatest change in voting technology in United States history.

Yet, ironically, eight years after the 2000 election, and billions of dollars spent on new voting technology, the problems caused by poor ballot design have not been fully and effectively addressed on a national level. Year in and year out, we see the same mistakes in ballot design, with the same results: tens, and sometimes hundreds, of thousands of voters disenfranchised by confusing ballot design and instructions, sometimes raising serious questions about whether the intended choice of the voters was certified as the winner.

Problems with voting technology have, rightly, attracted much public attention. Scores of independent reports—including a major study published by the Brennan Center—have documented the vulnerabilities of electronic voting machines. More importantly, voting system failures lead to long lines on Election Day, voters being turned away at the polls, and lost votes. These are serious problems, and we must do what we can to ensure that poor technology and procedures do not continue to disenfranchise voters.

At the same time, when it comes to ensuring that votes are accurately recorded and tallied, there is a respectable argument that poor ballot design and confusing instructions have resulted in far more lost votes than software glitches, programming errors, or machine breakdowns. As this report demonstrates, poor ballot design and instructions have caused the loss of tens and sometimes hundreds of thousands of votes in nearly every election year.

While all groups of voters are affected by poorly designed ballots and badly drafted instructions, these problems disproportionately affect low-income voters, new voters, and elderly voters. All too often, the loss of votes and rate of errors resulting from these mistakes are greater than the margin of victory between the two leading candidates. As the examples in this report show, problems caused by poor ballot design and instructions recur in American elections, regardless of the type of voting technology a jurisdiction has used.

Some have dismissed the degree to which poor ballot design undermines democracy by arguing that voters only have themselves to blame if they fail to properly navigate design flaws. This is unfair. Candidates should win or lose elections based upon whether or not they are preferred by a majority of voters, not on whether they have the largest number of supporters who—as a result of education and experience—have greater facility navigating unnecessarily complicated interfaces or complex instructions, or because fewer of their supporters are elderly or have reading disabilities. Nor should candidates win elections because ballot designs happened to make it more difficult for voters supporting their opponents to accurately cast their votes.

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If you are an election administrator, representing a state, county or other jurisdiction and would like guidance for best design practices for November's ballot from our Task Force, you may email us for assistance at Please attach recent ballot designs or drafts for November.

Ballot Library – Past Ballot Design Problems

"Residual" or "lost" votes are typically calculated as the difference between the number of people voting and the number of valid votes cast for a particular office. In reviewing recent elections with unexpectedly high lost vote rates, we invariably found flawed ballot designs or instructions. Four examples are included here, three paper and one touch screen (Sarasota County).

Select one of the following counties to see actual ballots with flawed designs or sets of instructions. Click a ballot for a larger view or, in most instances, scroll over a ballot to see the flaw. Corrected ballots further illustrate how steps to correct these ballots need not be complicated or expensive.