Monday, February 2, 2009

Global crisis threatens to break up the Eurozone

Global crisis threatens to break up the Eurozone

By Ulrich Rippert

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The international economic crisis is having an ever more devastating impact on Europe. A few weeks ago German Finance Minister Peer Steinbrück (Social Democratic Party—SPD) was still speaking of a financial crisis centred in America. Since then it has become clear that the crisis has developed into a worldwide recession with increasingly serious consequences for industry and jobs.

At the beginning of last week came warnings of the possible bankruptcy of several European states. Since then there have been mounting reports of a potential breakup of the sixteen-nation Eurozone and the collapse of the European currency, the euro.

The current issue of Der Spiegel magazine warns: “The possibility of the disintegration of the Eurozone has become a burning issue on financial markets.” On January 29, Die Zeit commented: “The crisis is widening the gap between the euro countries. Serious economists are wondering when the first state will go bankrupt. After that it’s only a short step to catastrophe—the collapse of the currency union.”

Such a breakdown of the European currency is entirely possible because the crisis has exposed a fundamental problem in the European currency union: The countries that share the euro lack any common economic policy.

The economic position of the individual Eurozone countries is extremely diverse. At the beginning of the 1990s, the so-called “stability pact“ was adopted on the insistence of Germany. The introduction of the euro seven years ago was tied to firm conditions concerning financial policy. Each accession country had to commit itself to strict budgetary discipline. The annual deficit of a country was to be limited to a maximum of 3 percent and its total debt to 60 percent of the country’s gross domestic product (GDP).

First and foremost, it was Germany that urged the adoption of these criteria as a means of maintaining the stability of the euro. The euro was to be strengthened not only to compete with the US dollar, but also to ensure the dominance in Europe of the German economy, which was certain to profit from a stable currency owing to its position as the leading exporter.

A few weeks ago the German finance minister was still trying to defend the stability pact. His opposition to costly economic stimulus programmes led to heated conflict with the French and British governments. Since then, the crisis has largely destroyed the stability pact. Every European government—including the German government—is doing its best to save its own industries and economy.

On January 27, the federal cabinet put forward a supplemental budget amounting to 18 billion euros. It is designed to counteract shortfalls in tax revenue and increased expenditures. It also includes special allocations for investment in a second economic stimulus package. These will come from credits of up to an additional 21 billion euros. Combined with net borrowings of 18.5 billion euros already planned in the budget, the new package will result in total additional indebtedness of well over 50 billion euros for 2009. Never before has a German government had to approach financial markets with such massive demands.

Debt is growing even faster in other countries. Financial experts in Brussel’s European Union (EU) Commission assume that the deficits of the sixteen Eurozone states will increase to 4 percent of GDP this year and 4.4 percent the following year–although such figures have to be corrected upwards almost every day. The stability pact’s 3 percent cap on debt is being exceeded in all the Eurozone countries.

Consequently, a competition for access to credit has begun. This is sharpening antagonisms within Europe and pushing the Eurozone to the breaking point. Despite the single currency, government bonds of different countries attain widely different values on the financial markets. Some countries—like Spain, Portugal and Greece—have to pay much higher interest rates because of growing doubts about their credit worthiness.

Italy’s national debt is the third largest in the world at 106 percent of its GDP. With the threat of national bankruptcy looming, it is more and more difficult for the government in Rome to find financial backers. Fixed-interest government bonds, issued in mid-January, attracted buyers only after the return interest rate was significantly increased.

Over the coming two years Greece will need 48 billion euros to redeem old debts. In addition, it also has to finance its recent budget deficits.

Rating agencies are reevaluating downwards the economic status of “problem countries” and, as a consequence, raising the interest rates on the debt they issue. Greek ten-year government bonds now yield 5.75 percent; those of Ireland, 5.25 percent; and Spain, 4.21 percent. A look at German ten-year bonds, yielding just over 3 percent, reveals how serious the situation has become. In contrast to Greek and Irish rates, the German government is obtaining loans for, respectively, 2.66 percent and 2.21 percent less. And this divergent tendency is increasing rapidly.

Up until now, countries with falling credit ratings have devalued their currencies and lowered key interest rates, thereby boosting their economies by creating more favourable conditions for exports. This is no longer possible for the Eurozone countries. “It looks like [some countries] might have to leave the club,” writes Der Spiegel.

Facing this situation, Luxembourg’s finance minister, Jean-Claude Juncker, who is also the prime minister, suggested that the sixteen Eurozone states should issue common debt securities, or “euro bonds.” This was greeted with approval by some of the smaller EU countries, but met with bitter resistence from the Berlin chancellery. Just as Austrian Finance Minister Josef Pröll referred to euro bonds as “a royal charter to get into debt at the expense of others,” his German colleague Steinbrück claimed each country will have to take its own steps to cope with problems arising from the rescue measures for the banks.

Mounting economic and political problems are creating conditions in which self-interest predominates and the project of European integration is rapidly unravelling.

A collapse of the EU would have convulsive consequences. Countries that became insolvent and opted out of the euro club would be confronted with enormous problems. Their credit standing would decline further and the cost of credit would become even higher. Old debts would have to be paid off in euros. In the case of devalued currencies, this would cause additional expense. The inevitable result would be drastic austerity measures and emergency decrees, as in the 1930s.

However, preservation of the EU and the single currency is not the solution. Bridge loans for the most crisis-ridden member states are already being made subject to draconian financial conditions and austerity measures. This has already led to riots and street-fighting in several eastern European capital cities. A few days ago, EU Economic Commissioner Joaquin Almunia demanded painful reforms in the labour markets and welfare systems of Greece, Spain, Portugal, Italy and France.

Notwithstanding the tensions among EU countries, all European governments are using the European Union to shift the burden of the economic crisis onto the general population. To achieve this, Brussels is laying the foundation for a police state.

The EU Commission has become a synonym for deregulation and the dismantling of workers’ rights. Instead of reconciling social and regional antagonisms, it exacerbates them. This bureaucratic colossus–with 40,000 generally high-paid officials, unhindered by democratic control and subject to the influence of an army of lobbyists—manifests itself more and more openly as a tool of the leading European powers and the most powerful corporate interests.

General Motors to Invest $1 Billion in Brazil Operations; Money to Come from U.S. Bailout

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

By Russ Dallen

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General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.

Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.

GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.

For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.

The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.

This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

World Bank Demolished Albania Village

World Bank Demolished Albania Village

By Besar Likmeta and Gjergj Erebara

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A World Bank project meant to safeguard Albania’s coastal zones was used to selectively demolish parts of a village in southern Albania and leave many families homeless, according to an internal report , which additionally notes allegations of corruption and efforts by World Bank officials to cover up the events .
An internal report of the International Development Association, IDA, obtained by Balkan Insight, shows that a World Bank project on coastal zones management in southern Albania aided the demolishment of informal settlements in the village of Jale, in disregard to the Bank's policies of forced displacement.

The investigation by an inspection panel found that World Bank management failed to comply with its policies with respect to the design, appraisal and implementation of the project, harming the local people affected by it. The probe also found that WB assisted the demolition by pressuring local construction police to take action and by supplying them with equipment and aerial photos.

In addition to the project's failure to comply with World Bank policies, the investigators noted allegations of corruption and complaints that the demolition of the Jale settlements was part of a bigger scheme to develop the area as a tourist resort. While the panel does not evaluate these allegations, it concludes that the selective demolition carried out by construction police supports the intention to clear the area.

The investigative panel also accused World Bank management of misrepresenting facts during the probe and hampering the investigation by withholding access to data, while it notes the unusual lack of recollection of facts and crucial events by staff. Investigators say that several WB staff members both in headquarters and on the field were “coached” to provide unusually consistent but factually incorrect or misleading information.

In a statement for Balkan Insight the World Bank conceded “that mistakes were made in the project, and that ways to address the alleged grievances of those affected are under active consideration.”

“The World Bank is concerned about the errors that were made by management and staff in the context of the project. In accordance with our internal processes, the Bank is reviewing actions of its staff, and, if warranted, will take appropriate action," the statement said.

Bulldozed Lives

The village of Jale is situated on the coast the Ionian Sea, on the road linking the port of Vlora with Saranda, and is considered by many as one the most beautiful hamlets on Albania’s Riviera. Two authors of children's books who come from the area have featured its deep blue waters and sandy beaches often in their books, giving it the image of paradise on earth.

The families residing in the village have a history dating back 300 years, owning small plots of land that were handed down from father to son.

The area was neglected by the Stalinist regime of the late Enver Hoxha, its landscape spared the mass industrialisation that blighted other parts of the country. When the regime imploded in 1991, the majority of the houses in the village were little more than shacks, and most of the residents left for Greece and Western Europe to seek a better life.

After a decade of tumultuous transition to democracy, the tourism industry started to slowly recover, remittances started flowing, and the village experienced a renaissance.

The old houses serving the growing numbers of tourists were suddenly not big enough. Residents applied for building permits but were refused because the area was outside planning zones. Driven by economic necessity and the reality of wildcat construction everywhere in the country, they pushed on, iainly adding rooms within their fences.

By 2006, when Albania adopted a law for the legalization of illegal construction, the houses in Jale were a fraction of the estimated 220,000 unauthorised buildings across the country.

The villagers applied to legalize their buildings under the new law but none of them obtained a conclusive answer. On April 3, 2007, they were notified that their houses were illegal and would be demolished.

They launched an appeal at the local court, but construction police did not wait for the case to come to trial, and on April 17, 2007 surrounded the area and demolished all newly built houses in the village.

“They [police] surrounded the village like we were in state of war”, recalls Vasilika Koka, who saw her parents house in ruins. “All that police forces, snipers in watching positions, for three days the road was blocked and no one could bring even food.”

As they proceeded over the pleas and curses of the villagers, the construction police would tell the residents that they should not worry.

“You are crying now, but don’t worry, you will be eating with silver spoons soon as this is part of big World Bank project and they will invest and take care of you,” a construction police officer said according to the locals.

Aiding and Abetting Destruction

The televised scenes of the demolition caused a furore. The head of the Union of Civil Liberties party, Vangjel Dule, who represents the area in parliament, slammed Prime Minister Sali Berisha, arguing that the demolition was being done for business interests close to him.

“In the [demolition] process are illegally hidden sinister interests linked to Berisha,” said Dule at the time in parliament.

Berisha denied any ulterior motive, and a spokesperson said he "has only one interest, the law and only the law, and any interpretation beyond the legal context is a speculation and untrue.”

One week after the demolitions, then Minister of Transportation Lulzim Basha told parliament that the demolition was a result of the World Bank project on Integrated Coastal Zones Management and Clean-Up.

“The demolition was a must because of the World Bank project in the area, the Bank asked for it,” Basha said.

The investigative panel found a direct connection between the project and the demolition of Jale, and described the project’s role as “paving the way” for the demolition.

According to the report, project records indicate an active relationship between the project and the construction police, because of the fact that aerial photography financed under the project identified the buildings to be demolished.

The probe also found that the project provided equipment to construction police to carry out the demolition, including digital cameras, GPS and computers.

In March 2007, some two weeks before the demolition order, the project coordinator, Jamarber Malltezi, the son-in-law of Berisha, sent a letter to the head of the construction police asking the demolition of the houses without a permit in Jale. Attached to the letter were two CDs with the aerial photography financed by the project, indicating the houses to be demolished.

Several articles published in the local media later linked the process to the project coordinator and indicated that that it was being carried out to make way for a tourist resort.

According to the investigative panel the World Bank at some point prepared a press release to address the allegations, but in the end did not issue it, choosing not to deny them publicly.

Contacted by Balkan Insight, Malltezi rejected the allegation that appeared in the local media in the aftermath of the demolition.

“The articles were conned and paid for [by someone],” he said, adding that he had denied any wrongdoing on his part at the time as well, but the local press had not published his reply.

Malltezi characterized the report of the inspection panel as biased and not factual, and said that in February the World Bank would compare the report with another report filed by management in response to the allegations, before its board of directors reaches a decision.

The Bank confirmed to Balkan Insight that its Board of Executive Directors will meet to discuss the report of the investigative panel as well the management's response. This Board Meeting is expected to be held in mid-February, after which time the reports prepared by the Inspection Panel and Management will be made public.

The investigative panel arrived to the conclusion that the Wold Bank failed to comply with its policies on involuntary settlement, and this failure can be traced as back as the time of the appraisal of the project in 2004.

It also concluded that World Bank’s management response “was particularly unhelpful and non-informative and at times in total conflict with factual information that had been long known to management.”

Although the panel does no mandate necessary compensation it points out that “some of the people affected seem poor and vulnerable and they claim the demolition took away their life savings and need assistance to rebuild their lives.”

Hiding the Truth

In a memo send on November 24, 2008, with the report attached , the investigative panel expressed its concern to the Bank's Executive Board of Directors on what it calls “misrepresentation of the of facts” by bank management and staff.

“We are disturbed to report that during its investigation the panel received certain documentation that misrepresented critical project facts,” reads the memo.

According to the memo in one instance a crucial statement in the project appraisal documents stated that an agreement had been reached with the Albanian government to halt demolitions in the project area until certain procedures and criteria were in place, however the panel discovered during the investigation that the statement was not true.

According to the panel, staff and bank management hampered its access to critical data and project documents which were later provided only at the panel’s insistence.

“During the investigation some staff gave the impression of being pre-interviewed,” notes the memo. “In one interview there was even a refusal to answer a straightforward factual question on the grounds that management was going to produce an official response.”

The investigative panel concludes that it encountered unusual difficulties in having access to accurate and complete information.

“It may be an exceptional case, but that
fact that it happened is of great concern,” the memo states.

Secret Spending: Fed Lends Two Trillion Without Oversight

Secret Spending: Fed Lends Two Trillion Without Oversight

By Danielle Ivory

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So, you know about the Treasury's $700 billion bailout plan. But you probably don't know that the Federal Reserve has lent out about $2 trillion since September. Few do. And that is what's irritating bulldog Congressman Alan Grayson. Will he be able to shed a light on the Fed's secret spending?

Richest Americans' Income Doubled, Tax Rate Slashed

Richest Americans’ Income Doubled as Tax Rate Slashed

By Ryan J. Donmoyer

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The average tax rate paid by the richest 400 Americans fell by a quarter to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million, new IRS data show.

The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.

The drop from 2001’s tax rate of 22.9 percent was due largely to ex-President George W. Bush’s push to cut tax rates on most capital gains to 15 percent in 2003.

Capital gains made up 63 percent of the richest 400 Americans’ adjusted gross income in 2006, or a combined $66.1 billion, according to the data. In all, the 400 wealthiest Americans reported a combined $105.3 billion of adjusted gross income in 2006, the most recent year for which the IRS has data.

“The big explosion in income for this group is clearly on the capital gains side, although there are also sharp increases in dividend and interest income,” said Dean Baker, co-director of the Center for Economic Policy and Research in Washington.

In addition, “they are realizing more of their gains due to the lower tax rate,” Baker said.

The data show that the population of the top 400 income- earners has fluctuated over the 15 years the agency has tracked it, according to an analysis by the Washington-based Tax Foundation, a research group. Some 3,305 different taxpayers have been included at least once on the list, the Tax Foundation said. Only 27 percent of those taxpayers have appeared more than once on the list, and only about 15 percent have been on it more than twice.

Ammunition for Democrats

The data may provide ammunition for Democrats such as House Speaker Nancy Pelosi who say they intend to increase the capital gains tax rate even as the credit crunch roils markets and is producing more investment losses than gains.

President Barack Obama pledged during the presidential campaign to increase the rate. He has said he wants to let the rate rise to 20 percent for families making more than $250,000 and eliminate it for small businesses.

“My guess is that Obama still will not rush to do anything on this” because of likely negative reactions from Republicans and the stock market, Baker said. “We’re talking late in the year or early next year.”

The richest 400 Americans collectively paid $18.1 billion in taxes in 2006, the highest in the 15-year period and 1.77 percent of all income taxes paid in the United States; on an inflation- adjusted basis, the dollar amount was the highest since 2000.

Calm Iraqi Election Marred as Thousands Were Denied Vote

Calm Iraqi election marred as thousands were denied vote

By Leila Fadel

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Iraqis cast ballots in 14 of the country's 18 provinces Saturday, selecting among 14,500 candidates for 440 seats on new provincial councils.

The day was free of election-related violence, but thousands of Iraqis were unable to vote because their names were inexplicably missing from voter lists. Some confused Iraqis even wandered neighborhoods looking for a polling place that would accept their vote.

The extent of the no-vote could not be determined, but thousands of Iraqis in some locales took to the streets to protest.

McClatchy reporters located across Iraq also noted that turnout was not as sizable as previous elections.

Nonetheless, election monitors deemed the election, which essentially selected local government officials, a success and even President Barack Obama congratulated the citizens of the war-torn nation on the balloting.

Preliminary results will not be known for some five days. Final results would take weeks.

By 7 p.m. Iraq time, all the polls were closed and the United Nations envoy to Iraq Staffan de Mistura along with the head of the Independent High Electoral Commission Faraj al Haidari congratulated themselves and Iraq on a successful election.

"This is your success and the success of all Iraqis," de Mistura said in a press conference. "This is probably one of the most observed elections in recent years."

In Washington, President Obama also praised the election.

"I congratulate the people of Iraq on holding significant provincial elections today," Obama said in a statement. "Millions of Iraqi citizens from every ethnic and religious group went peacefully to the polls across the country to choose new provincial councils. It is important that the councils get seated, select new governors, and begin work on behalf of the Iraqi people who elected them."

Saturday's balloting allows Iraqis to select provincial council members who in turn chose the governor of each Iraqi province. They are the equivalent of a state legislature.

Under Iraqi law, the power of provincial councils remains unclear. They have control over local security forces, public facilities and influence over the appointment of senior ministry officials in their province. But the Baghdad national parliament can remove governors and other provincial officials and the provincial budget will come from the federal government.

More than 500,000 local and party observers watched Saturday's election and hundreds of international observers came from outside of Iraq including from the European Union and the Arab League.

Vehicular traffic was banned for much of the day as a security precaution, and many voters walked as much as three hours to reach their assigned polling stations. Children took over the empty streets and turned them into makeshift soccer fields. The goals were made of shoes and bricks.

Many other Iraqis apparently chose not to vote at all, and in Baghdad the polling centers, which surrounded by concertina wire, saw only a trickle of voters. The commission said there would be no numbers on voter turnout for another day.

Iraqi Prime Minister Nouri al Maliki lifted the vehicle ban in the afternoon and urged people to get out to vote. Turnout was far less than previous elections, when Iraqis stood in line for hours across the country, except in the disputed areas in Nineveh province where Arab and Kurdish tensions are most visible. These areas were packed with voters.

The biggest complaint among potential voters was that their names were missing from the rosters at polling stations. Some walked from station to station searching for a polling place that had their names. Iraqis were to vote where their ration card was registered.

"I am looking for my name and I've been to five polling stations in the neighborhood and I still can't find my name," said Saleh Talib Kadhim, a resident of Jamiaa, a mostly Sunni Muslim neighborhood in the city's west. "I will not give up my right to vote. I will keep looking."

It would be Kadhim's first time to cast a ballot. The Sunni Arab boycotted the last election, which many perceived as a fraudulent because it was influenced by Iran and the United States.

In Haswa just west of Baghdad, thousands of the displaced demonstrated because they wouldn't find their names on the list. Record numbers of people turned out to vote in the Sunni area just west of Baghdad.

"We want our rights," they chanted. "This is a conspiracy."

It was unclear who would win in the elections with so many candidates and parties competing for the same votes. Familiar faces like Prime Minister Maliki seemed to be getting votes across the country. Secularist Ayad Allawi, an ex-CIA operative and former Prime Minister of Iraq, was popular among Sunni Arab voters.

Many Iraqis said that parties had offered them cash and gifts in exchange for a vote.

In Adhamiyah, Safiya Jassim, 40, voted and exited a polling station. After she passed the Iraqi and American tanks outside the school she proudly announced her family's association with Saddam Hussein's Baath party.

She voted for Allawi, who the U.S. installed as prime minister in 2004. Many Iraqis have grown disenchanted with the religious parties that came to power in the last election.

"I came here so our sons might be something, get jobs and stand by us," she said. "Every vote counts."

Even in the Shiite holy city of Najaf where religious sentiments are at an all time high in the midst of 40 days of mourning for Hussein, the grandson of the Muslim prophet Mohammed, slaughtered in nearby Karbala almost 1,400 years ago, voters showed disgust for religious parties.

"We were cheated by Islamic parties in the previous election," said Mohammed Hassan, 27. "They've been discovered. I will not make the same mistake so I voted for a secular party because this is the best. I voted for Ayad Allawi."

Tensions were greatest in Nineveh in the country's north as Kurdish and Arab parties vie for seats and control. The current provincial council is dominated by Kurds in the mostly Sunni Arab province.

Sheikh Abdullah al Yawar, a member of the Hadbaa slate in Rabiaa near the Syrian border, accused Kurdish parties of fraud in his area and the district of Sinjar a mixed area of Yazidis and Arabs.

He said members of the Kurdish Democratic Party and the Kurdish intelligence were forcing people to choose the Kurdish slate, the Fraternity of Nineveh, with threats and intimidation.

The electoral commission said it was investigating, but the province's deputy governor, Khasrow Goran, denied the accusations.

Kurdish parties in Nineveh and Diyala province, both areas of mixed Arab and Kurdish populations, said that nearly 30,000 Kurds were not on polling center lists and could not vote. The Electoral commission said those that couldn't vote had relocated their place of residence tracked by a ration card late last year making them ineligible

In Diyala province in the mostly Kurdish area of Khanaqeen, Kurds marched in front of the local office of the Independent High Electoral Commission because some 16,000 weren't allowed to vote.

"Khanaqeen will stay Kurdish despite not letting us vote," they shouted.

Yasir Baqir, 28, withheld his vote in his city of Mosul. Every promise politicians made to Iraqis were left unfulfilled.

"I didn't participate in this election because I don't trust any list," he said. "We read and see many promises but nothing real and we still have crisis, there is still no security."

Many Iraqis from Baghdad to the southern city of Najaf voted for one reason. They didn't want someone to steal their ballot and cast a vote for someone else. The elections in 2005 were rife with fraud. Iran was accused of wide interference including bussing in fake ballots from across the border. The biggest fear is that this could happen again.

In Ameriyah Mohammed Allawi, 25, laughed when asked why he came to vote.

"We are an occupied country," he said. "I am voting only so that my vote will not be stolen by the corrupt people who are willing to do anything to remain firm on their seats."

His name was not on the roster's list and he left dejected.

After polls closed, Maliki who'd cast his own ballot on Saturday morning called the elections a success.

"It remains ahead what we will know of winning and not winning," he said. "I hope this will be a reason to continue the competition...and to head as loving brothers and partners to build the provincial councils and the local governments so we can raise our country."

Florida, Maryland, Utah Banks Shut as Financial Crisis Deepens

Florida, Maryland, Utah Banks Shut as Financial Crisis Deepens

By Ari Levy

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Banks in Florida, Maryland and Utah were closed yesterday as regulators wrapped up the busiest month for failures since the housing slump began in 2006.

Ocala National Bank in Florida and Suburban Federal Savings Bank of Crofton, Maryland, were shut by federal regulators, according to statements sent by the Federal Deposit Insurance Corp. MagnetBank of Salt Lake City was seized by the Utah Department of Financial Institutions. The banks had total assets of $876.4 million and deposits of $790 million.

Six banks have failed this month as tumbling home prices and a 16-year high in unemployment boost foreclosures. The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the previous period amid the worst housing crisis since the Great Depression.

Regulators closed 25 U.S. banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. Ocala and Suburban Federal combined will cost the FDIC fund about $225.6 million, the regulator said. No estimate was provided for MagnetBank.

Suburban Federal’s seven offices were scheduled to open today as branches of The Bank of Essex of Tappahannock, Virginia, which acquired the deposits. The Office of Thrift Supervision said it seized the bank because of more than a year of losses stemming from soured residential, construction and land loans.

“The OTS determined that Suburban was critically undercapitalized and in unsound condition,” the regulator said in an e-mailed statement.

Deposits Insured

Ocala was closed by the Officer of the Comptroller of Currency. CenterState Bank of Florida in Winter Haven is assuming the deposits and four branches.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said in the Ocala statement.

The FDIC said it was unable to find a buyer for MagnetBank’s deposits, the first time that’s happened since 2004. Insured customers will be mailed checks for their funds next week.

The FDIC, the Treasury Department and Federal Reserve have stepped up efforts to aid U.S. institutions that reported more than $500 billion in writedowns and credit losses, and raised more than $400 billion in capital last year. The U.S. on Jan. 16 gave Bank of America Corp., the largest bank by assets, $20 billion cash and $118 billion in asset guarantees to help absorb losses after the acquisition of Merrill Lynch & Co. Citigroup Inc. got $20 billion and $301 billion in guarantees in November.

‘Bad Bank’

To unclog banks’ balance sheets, President Barack Obama’s administration may set up a so-called bad bank, managed by the FDIC, to buy up toxic assets, according to people familiar with the matter.

More than 2.3 million U.S. properties got a default or auction notice, or were seized by lenders last year, RealtyTrac Inc., the California-based seller of default data, said Jan. 15. That’s the highest total in the four years of RealtyTrac recordkeeping. Filings rose 41 percent in December from a year earlier.

The FDIC and the OCC have taken steps to prevent failures, including allowing private-equity firms and other bidders to buy assets and deposits of lenders running out of cash. IndyMac Bank, the fourth-largest U.S. lender to fail last year, on Jan. 2 became the first institution sold to a private-equity investor for $1.3 billion. The sale was led by Steven Mnuchin of Dune Capital Management LP.

The FDIC last month approved a budget for the coming year that almost doubles spending to $2.2 billion from 2008 to hire staff for handling bank closures. As much as $1 billion was allotted to manage failed banks.

The largest institution to fail in U.S. history, Washington Mutual Inc., was sold to JPMorgan Chase & Co. Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp. was near failure before being bought by Wells Fargo & Co. for $12.7 billion.

Nests In Hell

Nests In Hell

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“American leadership is good for America and for the world.”

So reads the introduction to the Project For The New American Century (PNAC), perhaps the most important document ever ignored by so many impacted millions—the neocon blueprint for American “full-spectrum domination” of the world. “Benign global hegemony” is their tender euphemism for it, and the hegemony business is not going as planned. American leadership for America hasn’t been so good, either.

Commonly accepted accounting principles show America bankrupt, our federal government’s net worth at negative $60 trillion, roughly.. American leadership has turned our government into a special-interest Hydra owned and ruled by financial gangsters, the industrial military complex, and the American Israeli Public Awareness Committee (AIPAC). Foreign creditors are about all that’s keeping American government from insolvency. But the global financial contagion effectively spawned by American leadership threatens that funding; alternatives promise hyperinflation, collapse of the dollar.... Americans are accelerating toward surpassing even the Great Depression in terms of sheer misery and decay and loss. Right now we seem to be running on fumes of hope.

Obama’s masterful engagement of hope in Americans, that’s the easier part. It’s change where inertia takes over—the tendency for a body in motion to remain in motion, a body at rest to remain at rest. Besides being the place where principles go to die, Washington is the world’s center of inertia.

Obama’s friendly and sincere face backed up by apparent compassion and intelligence, those moving speeches, and massive corporate funding power a beacon of hope after our dark eight-year BushCo nightmare. But the big corporate bucks cement elite ownership and control architecture, and inertial guidance, wrapping Obama in a sinister bind. Anything he does for the common good—any significant change, will compromise elite interests. For instance, one of the greatest improvements possible for the people would be whittling down the 737 military bases we’ve planted around the world, and withdrawing from wars of aggression. Iraq and Afghanistan alone have cost about $4 trillion so far. And of our thousands of domestic military bases, 120 of them are more than two miles underground...totally self-contained elite nests as it were, endgame oases, safe havens for when the people wise up.

Imagine even a fraction of our military spending, and black op insurance against the people wising up—imagine it applied to the common good. American military spending exceeds that of the rest of the world combined, and much of the rest of the world pays attention. When bringing freedom and democracy really means murder and plunder, no amount of PR can hide the blood and oil, except from Americans.

Spokescreature for the elite and legendary ghoul Henry Kissinger wrote recently, “The extraordinary impact of the President-elect on the imagination of humanity is an important element in shaping a new world order. But it defines an opportunity, not a policy. The ultimate challenge is to shape the common concern of most countries and all major ones regarding the economic crisis, together with a common fear of jihadist terrorism, into a strategy reinforced by the realization that the new issues like proliferation, energy and climate change permit no national or regional solution.”

Fear, terrorism, economic crisis, proliferation...fear and fear and more fear—don’t think when it’s so easy just to fear and obey authority. Henry, you’re hot. And how exquisitely that heat dovetails with statements of record from fellow inhumanist David Rockefeller, including:

"Some even believe we (the Rockefeller family) are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure---one world, if you will. If that's the charge, I stand guilty, and I am proud of it."

Also, "We are grateful to The Washington Post, The New York Times, Time magazine, and other great publications whose directors have attended our meetings and respected their promise of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world government. The super national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries." (emphasis added)

And, "We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."

David and Henry might as well admit that the “economic crisis” has been engineered for much the same reason as the Great Depression: massive transfer of wealth from the working class to the elite. The Federal Reserve confessed to engineering the Great Depression, apologized, said they’d never do it again. This time around there are more “engineers”, plus enhancement of the baleful dimension of getting the world to “...march toward a world government”.

So what might the New World Order show us? Simply, absolute control of land, sea, space, cyberspace, resources and people by the same elite now grappling with messiness of such as sovereign nations and human rights. They smell the goal line—those who profit from all dimensions of war and destruction; who profit from mangling the biosphere with fossil fuels; who profit from cashing out any hope of a non-reptilian future for humanity; who profit on extinction...those to whom profit, power and control are what life is about. Humanity slashed and burned down to under a billion slaves lorded over by a crust of reptilian supremacy....

Obama is shackled by the same power system that purchased his ascendance. No president dare work outside of the system, cannot effect significant improvement to that enemy of the elite, the common good. But Obama has a gift for inspiring hope. Could his resonance with the people go beyond simple hope, into actual change—in the people? When enough people finally realize that the change they have so hoped for can’t happen in this system regardless of who is president, will the collapse of hope create enough energy to leverage people into wising up? Will enough people finally be motivated into recognizing the lies and distractions, indirection and manipulation of the elite’s media for what they are? Can Americans learn to ignore what essentially the enemy tells them in favor of what they see, and learn to think for themselves?

That’s the sum of any legitimate hope we have of not being herded into oblivion. Can we still rally our minds? That should quickly lead to greater understanding of what is really going on—to what David Rockefeller smugly termed “the bright lights of publicity.” That in turn is bound to dish up some serious shock and awe—first, and then, renaissance of intelligence? If we didn’t genuinely have the power, why would the elite still be so obsessed with perception management this late in the end game? How much taxpayer money goes toward protecting the elite from the people—just how much of our sweat and blood is used against us, that should send the thoughts flying. All those nests in hell are hideously expensive, would sure buy a lot of health care, and....

Unfortunately, getting Americans to coordinate their collective intelligence into focused power presents a daunting challenge. There have been many factors in the atrophy of independent and penetrating thinking in America. At or near the top...that most successful of federal programs, the intentional dumbing down of Americans—quest for a nation of sheep. Sheer scope of the endeavor is mind numbing. Inanity and lies, indirection and omission and overt brainwashing of mainstream corporate media—that’s just the frosting. The cake is full of lead and mercury, two of the most dangerous neurotoxins around; thanks to coal-fired power plants and many decades of leaded gasoline, both neurotoxins are ALL around. Our foods are spiked with brain-damaging excitotoxins such as aspartame and especially monosodium glutamate (MSG)—which hides under many different names. It’s been revealed that high fructose corn syrup, that ubiquitous sweetener that has largely replaced sugar in the sweetening of America, contains mercury. Nine out of twenty commercial samples tested positive this week.

There’s also classified and unpublicized programs the U.S. military is using in its openly-stated goal to “Own the weather by 2025". You know, the “spray boys” and their chemtrails crisscrossing the sky...seeding the atmosphere with particles of metal oxides (aluminum, barium, strontium...). It’s just one more soldier in the undeclared War On Thinking, the elite versus everyone else. If there is any way Obama can directly or indirectly inspire Americans to think their way out of the New World Order trap, all the hope we’ve been seeing could be absolutely justified by Americans themselves being the change.

Bush's War Totals

Bush's War Totals

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The human cost of Bush's war on the Iraqis: 1 million dead. 4.5 million displaced. 1 million to 2 million widows. 5 million orphans. Now that Bush is gone, perhaps the US can honestly face the damage we have wrought and the responsibilities we must accept from it, says John Tirman.

We are now able to estimate the number of Iraqis who have died in the war instigated by the Bush administration. Looking at the empirical evidence of Bush's war legacy will put his claims of victory in perspective. Of course, even by his standards -- "stability" -- the jury is out. Most independent analysts would say it's too soon to judge the political outcome. Nearly six years after the invasion, the country remains riven by sectarian politics and major unresolved issues, like the status of Kirkuk.

We have a better grasp of the human costs of the war. For example, the United Nations estimates that there are about 4.5 million displaced Iraqis -- more than half of them refugees -- or about one in every six citizens. Only 5 percent have chosen to return to their homes over the past year, a period of reduced violence from the high levels of 2005-07. The availability of healthcare, clean water, functioning schools, jobs and so forth remains elusive. According to Unicef, many provinces report that less than 40 percent of households have access to clean water. More than 40 percent of children in Basra, and more than 70 percent in Baghdad, cannot attend school.

The mortality caused by the war is also high. Several household surveys were conducted between 2004 and 2007. While there are differences among them, the range suggests a congruence of estimates. But none have been conducted for eighteen months, and the two most reliable surveys were completed in mid-2006. The higher of those found 650,000 "excess deaths" (mortality attributable to war); the other yielded 400,000. The war remained ferocious for twelve to fifteen months after those surveys were finished and then began to subside. Iraq Body Count, a London NGO that uses English-language press reports from Iraq to count civilian deaths, provides a means to update the 2006 estimates. While it is known to be an undercount, because press reports are incomplete and Baghdad-centric, IBC nonetheless provides useful trends, which are striking. Its estimates are nearing 100,000, more than double its June 2006 figure of 45,000. (It does not count nonviolent excess deaths -- from health emergencies, for example -- or insurgent deaths.) If this is an acceptable marker, a plausible estimate of total deaths can be calculated by doubling the totals of the 2006 household surveys, which used a much more reliable and sophisticated method for estimates that draws on long experience in epidemiology. So we have, at present, between 800,000 and 1.3 million "excess deaths" as we approach the six-year anniversary of this war.

This gruesome figure makes sense when reading of claims by Iraqi officials that there are 1-2 million war widows and 5 million orphans. This constitutes direct empirical evidence of total excess mortality and indirect, though confirming, evidence of the displaced and the bereaved and of general insecurity. The overall figures are stunning: 4.5 million displaced, 1-2 million widows, 5 million orphans, about 1 million dead -- in one way or another, affecting nearly one in two Iraqis.

By any sensible measure, it would be difficult to describe this as a victory of any kind. It speaks volumes about the repair work we must do for Iraqis, and it should caution us against the savage wars we are prone to. Now that Bush is gone, perhaps the United States can honestly face the damage we have wrought and the responsibilities we must accept from it.

John Tirman, executive director and principal research scientist at the Massachusetts Institute of Technology Center for International Studies, is co-author and editor of The Maze of Fear: Security and Migration After 9/11 (New Press).

State Department to Blackwater: You're Fired, Leave Iraq by May

State Department To Blackwater: You're Fired, Leave Iraq by May

$1.2 Billion Contract Won't Be Renewed Following Iraqi Refusal to License U.S. Firm


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Blackwater has been fired by the State Department from its job protecting U.S. diplomats in Iraq.

Executives of the controversial U.S. security company were notified today by the State Department that its five-year, $1.2 billion contract for services in Iraq will not be renewed in May, U.S. officials tell ABC News. The contract provides yearly options for cancellations.

In a statement, company spokesperson Anne Tyrrell said, "The company has always said that the security services we provide in Iraq would be temporary."

The move by the State Department follows the refusal of Iraqi officials to license Blackwater to operate in the country. Officials cited "lingering outrage" over the Sept. 2007 shooting by Blackwater guards that left 17 civilians dead.

Five former Blackwater guards have pleaded not guilty to federal charges that include 14 counts of manslaughter and 20 counts of attempted manslaughter. No charges were brought against the corporation.

The new U.S.-Iraq security agreement gives Iraq the authority to regulate private security companies operating in the country.

Blackwater president Gary Jackson told the Associated Press the company could pull its 1,000 security contractors and two dozen aircraft out of the country within 72 hours, if ordered to leave.

"We are honored to have provided this service for five years and proud of our successwhile under out protection, no U.S. government official has been even seriously injured," Blackwater's spokesperson told

One of the company's constant critics, Rep. Jan Schakowsky (D-IL) said in a statement Friday: "We finally have a State Department that will no longer ignore the gross misconduct of contracting companies, like Blackwater. The State Department's decision not to renew Blackwater's contract in Iraq shows a dramatic departure from the previous administration. Instead of overriding the Iraqi government's decision to deny Blackwater a license to operate, the Obama Administration respected the sovereignty of the Iraqi government and did not renew Blackwater's contract."

Mediators called in as wildcat strikes spread across UK

Mediators called in as wildcat strikes spread across UK

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The government called in mediators from Acas last night in an urgent attempt to end the dispute over the exclusion of British workers from construction contracts which led to a wave of wildcat strikes across the country yesterday.

The attempt to halt the protest came as it emerged that hundreds more workers were ready to join the nationwide strike action. Bosses at Sellafield nuclear power plant confirmed that 900 contractors will vote on a walkout on Monday morning in solidarity with oil industry contractors in Lincolnshire which is at the heart of the dispute after around 300 new jobs were taken by Italian and Portuguese workers.

The conciliation service was called in after around 3,000 workers at oil and power plants across the UK staged unofficial strikes in support of workers at the Lindsey refinery at North Killingholme. The TUC claimed the refinery owner, Total, had made an "apparent attempt to undercut the wages, conditions and union representation of existing staff".

In angry scenes outside plants from Scotland to south Wales, union leaders spoke out against European workers taking construction jobs in the oil and energy industry ahead of British workers. Outside the Lindsey refinery, some protesters called on their colleagues to march on Downing Street.

Shop steward Kenny Ward told the crowd they had to stand together and take on the "greedy employer". He said: "I'm a victim, you are a victim, there are thousands in this country that are victims to this discrimination, this victimisation of the British worker."

Total had put a contract out to tender for a £200m construction project with five UK firms and two European contractors. The Italian company IREM won the contract and supplied its own permanent workforce. It is understood 100 Italian and Portuguese workers are already on site and 300 more are expected next month.

In apparently co-ordinated action, 700 workers at the Grangemouth oil refinery near Falkirk walked out, and 400 more downed tools at the Wilton chemical site in Cleveland. Early morning protests flared at at least eight other facilities in Scotland, Wales and Northern Ireland.

In Downing Street and Davos, where Gordon Brown had been speaking against protectionism at the World Economic Forum, the government came under pressure to respond to the crisis. There was criticism that the award of the contract at the Lindsey refinery appeared to cast into doubt the prime minister's pledge in 2007 to deliver "British jobs for British people". "I understand people's worries about their jobs," Brown said.

A Downing Street spokesman said the contract taken by the foreign workers had been agreed "some time ago when there was a shortage of skilled labour in the construction sector in the UK".

Pat McFadden, minister for employment relations, said he understood the strikers' concern about employment but could not condone their unofficial walkouts.

"What is important in a sensitive situation where tempers are running high is to take an independent and dispassionate look at what is going on," he said.

Union leaders were furious that with unemployment rates soaring, British workers had been overlooked. The TUC accused employers of attempting to undercut the wages, conditions and union representation of existing staff.

Bobby Buirds, a regional officer for the union Unite in Scotland, said: "The argument is not against foreign workers, it's against foreign companies discriminating against British labour. This is a fight for work. It is a fight for the right to work in our own country. It is not a racist argument at all."

Nevertheless, there were indications that far right politicians were eager to seize on the dispute. The British National party, which is hoping to make a breakthrough in this year's European parliament elections, said it had sent a team of supporters to join the 800 workers gathered outside the north Lincolnshire plant.

Brendan Barber, secretary general of the TUC, said workers were "rightly angry" at employers who have not given British based workers the opportunity to apply for new jobs but added: "The anger should be directed at employers, not the Italian workers."

Bailed out banks sought foreign workers for high-paying jobs

AP Investigation: Banks sought foreign workers

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An Associated Press review of visa applications shows banks collecting billions of dollars in federal bailout money asked for permission to bring thousands of foreign workers to the U.S. for high-paying jobs.

The dozen banks have received the biggest rescue packages, worth more than $150 billion. They tried to bring in almost 21,800 foreign workers over the past six years to fill openings that paid an average salary of nearly $91,000.

As the economic collapse worsened last year the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from about 3,300 in fiscal 2007 to nearly 4,200 in fiscal 2008.

It's unclear how many foreigners actually got hired, but it's likely only a fraction of the requests were approved.

Foreigners are attractive hires because companies have found ways to pay them less than American workers.

Proposed legislation in Congress would set up camps for US citizens

Proposed legislation in Congress would set up camps for U. S. citizens

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A bill proposed by Florida Democrat Alcee Hastings would set up a series of emergency centres on U. S. military installations. House Resolution 645 provides that no fewer than six such centres will be built and would give emergency aid, housing and relief services for citizens during a time of disaster or national emergency.

Even though the intend of the bill sounds humanitarian, the provision listed in Section Two, Paragraph B-4 raises the most questions. The wording reads…

    (4) to meet other appropriate needs, as determined by the Secretary of Homeland Security.

To read the text of the entire bill, click here:

The wording of the bill doesn’t define ‘appropriate needs’, nor does it specify why the Department of Homeland Security is responsible for administration of the bill’s various provisions.

Some commentators wonder about the bill’s true purpose in the same breath that they talk about recession-related riots in Lithuania, Greece and other western countries. There is concern that the move to return combat-ready military units to the U. S. is a step towards making these centres ‘concentration camps’ for American citizens.

Writing on this legislation, Representative Ron Paul says that the bill would supplement other ‘emergency powers’ granted to the federal government since 9/11 and be the mechanism for imposing martial law. Paul says some questions need to be asked…

‘With this in mind, it appears as if these so called national emergency centers will be used in a national emergency but only if the national emergency requires large groups of people to be rounded up and detained. If that isn’t the case, than why have these national emergency facilities built in military installations?’

In an internet search for information on the proposed bill, most sites merely provide the text of the legislation. Little commentary and explanation has been offered.

At this time, Representative Hastings’ own web site doesn’t list the legislation on the legislation page.

The bill has been assigned to the House Committee on Transportation and Infrastructure.

For the rest of Representative Paul’s comments on the bill, click here…

The World View Weekend web site lists the text and asks for comments…

The only site with actual commentary on the bill…