Sunday, February 8, 2009

Gold Disconnects from USDollar

Gold Disconnects from USDollar

By Jim Willie

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The gold price has finally disconnected from its nemesis, the USDollar. This news should be read as the coming of spring after months of wintry torment, or as the sighting of land after 30 days adrift at sea in a derelict vessel. From 2002 to very early 2008, the gold price had risen from the massive speculative fervor that swept the United States and Europe, whose economies had been supplied largely by Asian factories. The mines from Latin America to South Africa to Australia greatly aided the process. The very paradoxical event of the USDollar rising this past autumn amidst truly horrendous news, one disaster after another, one major bank failure after another, one nationalization of a large financial institution after another, makes the disconnect all the sweeter for gold investors. That set the stage for a powerful gold price move. Imagine a notable rise in the buck, based upon broad negative news in August and October!

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The gold price withstood the counter-trend US$ rally. While the buck has undergone a retest, gold has risen and not looked back, as though the US$ has become an irrelevance. IT HAS! This is great news! We are at the doorstep of a powerful gold rally, one that will see a silver rally accompany. New highs are soon to come! We are the doorstep of a powerful gold rally on a global scale, where gold rises in ALL currencies. The gold move in US$ terms is last, but guaranteed! The fundamentals of the US$ are fifteen steps beyond miserable. The technicals in the chart are looking tremendous. The psychology is aligned for a powerful move on a global scale, undeniable even to the most ignorant commentators in the financial press.

GOLD BREAKOUT IN FOREIGN CURRENCIES

This is the biggest story in England not told, the gold breakout. True to form, the gold price has seen a powerful breakout in the nation whose financial foundation has been destroyed more rapidly than any other nation on the planet, except the Untied States of America. After a serious hesitation in December, when the gold price in London experienced a spastic episode, unsure of its direction, probably endofyear squaring, gold has launched into a powerful breakout. The most vivid and strongest breakout for gold in foreign currencies has been in terms of the British. The pound sterling has suffered a severe pounding, precisely as forecasted in the Hat Trick Letter for over a year, when at over 200 in late 2007, my forecast was for a step by step painful decline below 150. The sterling currency has no advantage of lift from liquidations or payment of Credit Default Swaps, nor a hunkering down into the global reserve bond, like the USDollar does. One should begin to ask the question whether England, the Untied States, and Mexico will be the next failed states behind Iceland!!! The gold in pound sterling chart provides a vivid preview of the gold price in US$ terms, soon enough.

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A similar graphic can be seen for gold in terms of other major currencies. Gold in euros, gold in Swiss francs, gold in Aussie Dollars, they are all in breakout. The laggard is the gold price in US$ terms, since the global financial breakdown has led to bizarre counter-intuitive demand for USDollars. Gold will next benefit enormously from the movement out of USTreasury Bonds, which have topped. No such thing exists as Flight to Quality or Flight to Safe Haven. The only flight of money is out of bonds not guaranteed by the USGovt, the German Govt, or the Japanese Govt. THE DEATH OF YOUR NEIGHBOR DOES NOT JUSTIFY A CLAIM OF YOUR OWN IMPROVED HEALTH. We are witnessing precisely the effects of competing currency wars, the competitive devaluations, the beggar thy neighbor. The financial press has yet to learn this concept. But then again, they are paid not to do so!

MASSIVE MONETIZATION DEAD AHEAD

The funding requirements for the USGovt are fifteen steps beyond colossal. A nasty surprise has already come for those who issue USTreasury Bonds and conduct auctions, A VERY BIG NASTY SURPRISE SO BIG THAT THE MEDIA NETWORKS REFUSE TO MENTION IT!!! The details are in the February Hat Trick Letter, and relate to angry, defrauded, and themselves defensive creditors. Foreign economies must tend to their own lands first and foremost. They also react to fraud on a scale perpetrated against them never witnessed before in human history. Find a time in all annals of history when national savings have been solicited and defrauded on this scale by another nation. There is none! This is the legacy of the Untied States, or better yet Wall Street, which has taken control of its host the USGovt like a cancer. The combination of unfettered usage of federal printing presses to create (and thus debauch) its money, together with abusive bilateral hostile actions directed at creditor nations (like China), together with bailouts & rescues soon to reach $10 trillion, together with continued Wall Street control of the USDept Treasury (see Goldman Sachs), together with a steady stream of major monster fraud cases (see Bernie Madoff), WILL SEND GOLD & SILVER NORTH IN PRICE. Lastly, the rising USTreasury Yield Curve also heralds a rising gold price, as the vile specter of monetization has begun to harm the 10-year and 30-year USTreasury Bond integrity.

Just a quick note on the Madoff victims. A closer look of supposed victims reveals his co-conspirators. They are framed as victims by a subservient press that has no desire at all to publicize where the stolen money is stored. It is in the banks of an allied nation that is beyond reproach, bordering the Mediterranean.

CANNOT MAINTAIN US$ & USTBOND BOTH

After the USDollar enjoyed a perverse lift in the early autumn months from a fundamental disaster and detailed wreckage, it suffered a swoon in December of serious magnitude. The fall from 88 to 78 in the space of four weeks qualifies as the floor suddenly disappearing. The event carried with it a billboard message of extreme volatility and growing instability to come, much like a highway with signs of dangerous curves before a cliff. Step back to see that in the autumn months, the USDollar rose from the critical support in the low 70’s into the upper 80’s, on a senseless rise. At the same time the USTreasury Bond complex also rose in principal value as bond yields marched toward 0% on the short end and toward 2% to 3% on the long end. The Zero Interest Policy was much decried of Japan. Now the US boasts the same.

Many astute analysts have declared that the Corrupt Powerz that control the vast manipulated machinery cannot conceivably keep both the US$ and USTBond levitated for long. One had to fall. My conclusion was simple. Any strong selloff of the USTreasurys, pushing bond yields higher, would trigger a credit derivative sequence of events that would result in overnight bank failures and collapse of entire financial markets, starting with a JPMorgan meltdown. It would occur much like a financial nuclear bomb. So the victim will be the USDollar, clearly, by default. As the US$ falls to unthinkably low levels, many banking and governmental leaders will proclaim the wondrous advantages of increased competitive position for exports. That would indeed be beneficial if any American industry were left standing. Also, the other side of such a position is a sudden thrust down the global staircase for the USEconomy into the Third World. The consequences of a severe US$ decline carry with it all the attendant disruptions, the interrupted supply chains, the vast unemployment, and the highly likely isolation. Foreign creditors are soon to vanish, as the Untied States would become a widely acknowledged pariah. America had better make preparations for the Third World, where credit strangulation carries a bitter cost. This will occur only after new global currencies are introduced in January 2010. Forget export advantage. Prepare for non-existent credit, or very expensive credit, the hallmark for Third World nation finances.

ENTIRE TRIANGLE TO SHATTER (US$-USTBOND-GOLD)
For two decades or more, the triangle is the name given by me to the vast financial complex that has supported a mindnumbing corrupt system of fiat currencies led by the USDollar. In fact, it is more like two important triangles exist: the US$-USTBond-Gold triangle, and the US$-USTBond-Oil triangle. The defacto Petro-Dollar enters the equation, or commands its own equation. A suppressed gold price has been the norm for a long time, engineered by selling forward two years worth of global production in the futures contract market, aided by sleepy regulators at the Commodity Trading Futures Commission. The CFTC regulators are even more corrupt than their counterparts at the Securities & Exchange Commission, if that is possible. Enter the vast machinery again by JPMorgan, to keep the USTreasury Bond levitated. Their principal device is the futures contract, which offers nice leverage. The crude oil triangle is maintained by conversion of OPEC oil revenues into USTreasury Bonds. It too is under great strain with a lower crude oil price, down over 60% since last summer.

The secret weapon of mass destruction in the last decade has been the Interest Rate Swap. Notice how the dreaded ‘Bond Vigilantes’ are all dead, run out of town, or converted to blacksmiths. The IRSwap device enabled JPMorgan to use lower Fed Funds rates and immediately associated short-term USTreasury Bill yields in order to leverage down the long-term USTBond yields. The IRSwap extended the reach of JPMorgan and the US Federal Reserve to control long-term rates. Fires are burning hot in the JPM basements, complete with visible smoke, since 0% yields put nearly infinite pressure on the leverage devices. This is pure physics. USTBills have approached a near infinite value, thus exerting unsustainable pressures on the IRSwap leverage. The end result is a shattered triangle that reined supreme for two decades. The powerful machinery is broken. Like horses no longer held back by weighty stagecoaches loaded with burdensome ballast and overweight men in stolen suits, the gold price will be released. The crude oil triangle will be broken also, but later.

INTERPRETATION: SHOCK WAVES COMING

The rise in the gold price during a US$ counter-trend rally foretells of a strong message. THE GOLD PRICE IS HEADING TOWARD NEW HIGHS. ALSO, THE USDOLLAR IS SOON TO EXPERIENCE SHOCK WAVES. Patience for gold & silver investors will be greatly rewarded. Numerous stories support this claim. Heavy reliance upon the printing press, as in monetization of USTreasury Bonds, is the biggest immediate threat to paper money, and the biggest immediate positive prospect for gold. The USFed has already announced this new policy, as they will purchase USTreasurys from expanded money supply. Any reluctance by foreign creditors to participate in auctions (see the Hat Trick Letter proprietary reports) will exacerbate the movement. Then there is the planned launch of the new Persian Gulf gold-backed currency in early 2010, which should act as a nuclear bomb against the USDollar in less than one year. That is the hidden motive for unprecedented attack of hedge fund crude oil positions by the sponsored Wall Street gangster bankers, aka banksters. That label is well deserved. Their crimes and protection given by USGovt authorities has been clear for the entire world to see. It has been revealed in plain view. Anyone who denies the criminal element in Wall Street, tied with ropes five feet thick to the USGovt ministries, is hopelessly blind at best, and compromisingly moronic at worst.

State can run out of money, but can't file for bankruptcy

State can run out of money, but can't file for bankruptcy

By Dan Carden

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Facing an ever-growing pile of bills, crushing debt and less tax money flowing into the state treasury, Illinois is broke. But could the state climb out of its nearly $9 billion budget hole by declaring bankruptcy?

No, say tax and budget experts.

Federal law permits individuals, businesses and local governments to file for bankruptcy reorganization and sometimes debt forgiveness. States are not covered by the law. No U.S. state has ever declared bankruptcy.

"A state is not going to just shut down," said Elizabeth McNichol, a state budget specialist at the Center on Budget and Policy Priorities, a nonpartisan Washington, D.C., think tank.

"As bad as things are, no state is going to have zero revenue coming in," McNichol said. "It's really just a matter of choices."

So, rather than having a court restructure its finances as in a bankruptcy filing, a state would have to reorganize its spending and debt on its own. That's the current challenge for Gov. Pat Quinn and lawmakers.

Illinois has long balanced the stack of bills on the comptroller's desk very carefully. Certain payments must be made on certain days, so other bills sometimes get pushed back a few days - or longer - to make sure there is enough cash on hand, said a spokeswoman for Comptroller Dan Hynes.

But should state finances became especially dire, Illinois could keep going by not paying back money it has borrowed. Such a move is unlikely and the consequences of default would make the state's financial situation worse.

That's because it would greatly hinder the state's ability to borrow in the future. Plus, the people Illinois owes money to could go to court to force the state to pay.

"It's not something you want to do because when you want to borrow in the future you'll have to pay a lot more interest because you're a higher risk," explained Beverly Bunch, an associate professor of public administration at the University of Illinois at Springfield.

But if the state manages to muddle through, the future could get pretty bleak. California's current $41 billion budget crisis is a preview of what Illinois might have to do to stay solvent.

California has been borrowing to pay its everyday bills. But facing a $346 million shortfall just for February, California Controller John Chaing this week stopped writing checks for nearly everything other than education and debt payments.

That means spending on state agencies, including public safety, payments for state purchases and tax refunds will be delayed until at least March.

The Illinois Constitution says state pensions cannot be "diminished or impaired." But money for schools, public safety, and payments to cities and counties are offered no such protection and could all be delayed.

The trickle-down effect of stopped payments in the Golden State is busting the budgets of cities and counties across California. Riverside County, located between Los Angeles and San Diego, is going to court for permission to stop providing state mandated services if the county does not receive state funding.

Starting today, California's 238,000 state workers begin "Furlough Fridays" - unpaid days off on the first and third Friday of every month through June 2010. The furloughs will save the state $1.3 billion over the next 17 months, but will also end up costing the state revenue as those workers pay less tax on smaller incomes.

84% of cities in money trouble

84% of cities in money trouble

Some 84% of cities say they are facing financial difficulty, according to new survey. Things won't improve this year

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More than eight in ten cities are in financial trouble, up from 64% six months ago, according to a survey released Wednesday.

The recession is straining cities' ability to meet their financial needs, according to the National League of Cities. Some 84% of cities reported facing fiscal difficulties, the highest percentage since the group starting doing surveys in 1985.

The nation's cities are counting on billions of dollars from the economic stimulus package now being debated in the Senate. Mayors gathered in Washington, D.C., to meet with White House advisers and House Speaker Nancy Pelosi, D-Calif., on Wednesday to urge Congress to pass the recovery bill.

The mayors are eager to get funding for transportation and infrastructure projects that will put their residents to work. While most of those meeting Wednesday have budget deficits, they are not looking for federal money to close those gaps.

"If we're going to invest to stimulate our economy, we need to invest in our cities," said Miami Mayor Manny Diaz. "Cities are ready to go. This money comes in and goes right back out to create jobs."

The mayors have put together a "Ready to Go" report that details 18,750 local infrastructure projects in 779 cities that can be started as soon as funding is received. The projects, which represent an investment of $150 billion, would create 1.6 million jobs in 2009 and 2010 and range from creating bridge guardrails in Bessemer, Ala., to renovating elementary schools in Norfolk, Va.

The economic stimulus package sets aside billions of dollars for highway construction, transit improvements, school modernization and community development block grants.

2009 not looking better

Things will remain tough in 2009. Some 92% of the cities surveyed expected to have trouble meeting their city needs during this year. To cope, they are implementing hiring freezes and layoffs, delaying capital expenditures and instituting service cuts.

Some 69% have instituted hiring freezes or layoffs, while 42% are delaying or canceling infrastructure projects. Another 22% have instituted across the board cuts.

Cities are seeing their tax revenues decline as property values drop, shopping slows and unemployment rises. On top of that, nearly one in two city finance officers report difficulties in access to credit and/or bond financing.

To bring in more revenue, they are adding to raising fees. Nearly half are increasing charges for services, while 28% are increasing the number of fees. Fewer are raising taxes. Some 14% have increased property taxes, while 6% have hiked sales taxes.

"Cities are responding as best they can," said Donald Borut, the league's executive director. "Their citizens have increasing needs for services just at the same time that revenues are declining."

City finances tend to lag the overall economy by 12 to 24 months, the league said. The weakening economic conditions will be felt by cities through 2009 and likely through most of 2010, the league said.

Tax the Speculators! By Ralph Nader

Tax the Speculators!

By RALPH NADER

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Let's start with a fairness point. Why should you pay a 5 to 6 percent sales tax for buying the necessities of life, when tomorrow, some speculator on Wall Street can buy $100 million worth of Exxon derivatives and not pay one penny in sales tax?

Let's further add a point of common sense. The basic premise of taxation should be to first tax what society likes the least or dislikes the most, before it taxes honest labor or human needs.

In that way, revenues can be raised at the same time as the taxes discourage those activities which are least valued, such as the most speculative stock market trades, pollution (a carbon tax), gambling, and the addictive industries that sicken or destroy health and amass large costs.

So, your member of Congress, who is grappling these days with gigantic deficits on the backs of your children at the same time as that deep recession and tax cuts reduce revenues and increase torrents of red ink, should be championing such transaction taxes.

Yet apart from a small number of legislators, most notably Congressman Peter Welch (Dem. VT) and Peter DeFazio (Dem. OR), the biggest revenue producer of all--a tax on stock derivative transactions--essentially bets on bets--and other mystifying gambles by casino capitalism--is at best corridor talk on Capitol Hill.

There are differing estimates of how much such Wall Street transaction taxes can raise each year. A transaction tax would, however, certainly raise enough to make the Wall Street crooks and gamblers pay for their own Washington bailout. Lets scan some figures economists put forth.

The most discussed and popular one is a simple sales tax on currency trades across borders. Called the Tobin Tax after its originator, the late James Tobin, a Nobel laureate economist at Yale University, 10 to 25 cents per hundred dollars of the huge amounts of dollars traded each day across bordered would produce from $100 to $300 billion per year.

There are scores of civic, labor, environmental, development, poverty and law groups all over the world pressing for such laws in their countries. (see tobintaxcall.free.fr).

According the University of Massachusetts economist, Robert Pollin, various kinds of securities-trading taxes are on the books in about forty countries, including Japan, the UK and Brazil.

Pollin writes in the current issue of the estimable Boston Review: "A small tax on all financial-market transactions, comparable to a sales tax, would raise the costs on short-term speculative trading while having negligible effect on people who trade infrequently. It would thus discourage speculation and channel funds toward productive investment."

He adds that after the 1987 stock market crash, securities-trading taxes "or similar measures" were endorsed by then Senate Minority Leader Bob Dole and even the first President Bush. Professor Pollin estimates that a one-half of one percent tax would raise about $350 billion a year. That seems conservative. The Wall Street Journal once mentioned about $500 trillion in derivatives trades alone in 2008--the most speculative of transactions. A one tenth of one percent tax would raise $500 billion dollars a year, assuming that level of trading.

Economist Dean Baker says a "modest financial transactions tax would be enough to finance a 10% across-the-board reduction in the income tax on labor."

The stock transaction tax goes back a long way. A version helped fund the Civil War and the imperial Spanish-American War. The famous British economist, John Maynard Keynes, extolled in 1936 a securities transaction tax as having the effect of "mitigating the predominance of speculation over enterprise." The U.S. had some kind of transaction tax from 1914 to 1966.

The corporate history scholar (read his excellent book, Unequal Protection ) Thom Hartmann, turned three-hour-a-day talk-show-host on Air America (airamerica.com/thomvision), had discussed the long evolution of what he calls a "securities turnover excise tax" to "tamp down toxic speculation, while encouraging healthy investment."

So, why don't we have such a mega-revenue generator and lighten the income tax load on today and tomorrow's American worker? (It was one of the most popular ideas I campaigned on last year. People got it.) Because American workers need to learn about this proposed tax policy and ram it through Congress. Tell your Senators and Representatives--no ifs, ands or buts. Otherwise, Wall Street will keep rampaging over people's pensions and mutual fund savings, destabilize their jobs and hand them the bailout bill, as is occurring now.

A few minutes spent lobbying members of Congress by millions of Americans (call, write or e-mail, visit or picket) will produce one big Change for the better. Contact your member of Congress. The current financial mess makes this the right time for action.

Revolt brews in California counties

Revolt brews in counties

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Counties in California say they've had enough – and they aren't going to take it anymore.

In what amounts to a Boston Tea Party-style revolt against the state Capitol, they're threatening to withhold money.

Los Angeles is considering such an option. And Colusa County supervisors said they authorized payment delays for February.

"We didn't vote on it, because I don't think anybody wants to go to jail," Colusa County Supervisor Kim Vann said.

Closer to home, Sacramento County is planning to file a lawsuit this week against the state and Controller John Chiang for withholding millions of dollars – much of it for social service programs.

"The Legislature authorized those expenditures, and (the controller) has decided to withhold it," said Susan Peters, chairwoman of the Sacramento County Board of Supervisors. "I believe it's possible other counties will be joining in the action."

Riverside County is looking at a similar lawsuit but plans to go one step further. It authorized going to court to relieve it from having to provide state-mandated services without state funding.

Hallye Jordan, a controller spokeswoman, said Chiang "shares the frustration of counties" but was forced to act because of the failure of the Legislature and governor to address the budget deficit.

"It's an awful situation," she said. "We understand that many counties are suffering."

Regardless, a coalition of six Southern California counties is headed to Sacramento for a Feb. 12 meeting to call attention to the counties' plight, Riverside County spokeswoman Lys Mendez said.

By the time leaders from Riverside, Los Angeles, Orange, San Diego, Imperial and San Bernardino counties come together, the revolt could be at full steam.

"I think it just reflects the severity of the problem, and folks are just trying to find a way to keep (programs) going," said Jim Wiltshire, deputy director of the California State Association of Counties.

Frustration has been spreading since last week, when the state controller vowed to delay payments to counties for health and social services.

"When we hear things like, 'We're out of cash and you're going to have to borrow the money,' it doesn't make us very happy," Yolo County Supervisors' Chairman Mike McGowan said.

McGowan said the county would look for a way to fund vital services such as mental health programs, CalWORKS, food stamps and child protective services.

That would mean borrowing about $5 million to cover mandated program expenses, McGowan said.

"We've heard rumors that the (state's) deferral approach will be longer than one month," he said.

In that case, McGowan added, there are smaller counties that will "simply go out of business. They'll not be able to borrow the money."

One budget proposal calls for the state to delay $3.5 billion in payments to counties over seven months, Wiltshire said.

"Counties just don't have the cash position to operate those programs and wait for a check to come in September," he said.

The rumor that the state could extend the delayed payments to counties sent a chill through Colusa County, which qualifies as small with only 22,000 people.

If the state delays payments for a longer period, "we can stay open for three months – period," Colusa County's Vann said.

If all counties withheld funds, money denied the state would total $675 million over a year, said Wiltshire.

That amount represents court receipts that counties remit to the state, he said.

In addition to filing suit, Sacramento County officials are considering withholding money. While counties do collect property taxes for the state, county officials doubted that money would come into play.

"We need to know the ramifications before we do something rash that has consequences," Supervisor Roberta MacGlashan said.

While deferring property tax revenue money to the state might seem like a good idea, that money goes in part to fund education. The county doesn't want to hurt schools while taking a stand against the controller's actions, she added.

There also could be a cost to withholding money from the state.

Terri Sexton, associate director of the Center for State and Local Taxation at the University of California, Davis, said she's never seen anything like this grass-roots revolt.

"But, of course, the state has never been in this fiscal position," Sexton said. "At some level, it doesn't make any difference whether the counties are suing the state or whatever.

"You can't squeeze blood out of a turnip. The money doesn't exist. What does it ultimately mean? Will there be cutbacks in those services? I think that's where we're headed."

Los Angeles County started the movement Tuesday when its Board of Supervisors considered holding back money from the state in a move that screamed: Give us our money or you won't get yours.

"The deal is the county has got bills to pay," said Gerry Hertzberg, policy director for Supervisor Gloria Molina. "If the state doesn't act, how do you plan how to budget?"

Los Angeles County is expecting to miss out on as much as $105 million a month as a result of the deferred state payments.

Other counties are in similar positions, so it came as no surprise to Hertzberg that others might join the revolution.

"It's not at all surprising," Hertzberg said. "We've got obligations."

Sacramento County's MacGlashan said despite the counties' threats to withhold, she wasn't certain all would follow through.

"It's really more of a stunt," she said. "But sometimes it takes a stunt to get people's attention."

Toyota warns of big annual loss

Toyota warns of big annual loss

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Toyota Motor, the world's biggest automaker, warned Friday it expects an annual operating loss of 4.9 billion dollars, its first ever, as the economic crisis sends car sales plunging.

But Toyota said it currently had no plans to close plants and it hoped to avoid further job cuts, in contrast to many other major Japanese companies.

The grim results from once-invincible Toyota underscore the depth of the turmoil in the auto industry, which has been battered by the global economic crisis.

Toyota expects an operating loss of 450 billion yen in the financial year to March, three times bigger than it had predicted in December, in a dramatic turnaround from the previous year's record profit of 2.27 trillion yen.

The company forecast a net loss of 350 billion yen, against a previous projection of a 50 billion yen profit.

For the fiscal third quarter to December, the company reported an operating loss of 360.6 billion yen (4.0 billion dollars), against a year-earlier profit of 601.6 billion yen.

"It was really a tough period," said Toyota executive vice president Mitsuo Kinoshita.

"The financial problems have spread directly to the real economy," he told reporters. "We cannot tell what will happen for the next fiscal year, but we hope we are now hitting the bottom."

Toyota posted a net loss of 164.6 billion yen for the third quarter, against a profit of 458.7 billion yen a year earlier. Revenue slumped 28.4 percent to 4.8 trillion yen.

The Japanese giant sold 1.84 million vehicles in the quarter, about 443,000 fewer than the same period of the previous year. It lowered its global sales target for the year to March by 220,000 vehicles to 7.32 million.

Toyota overtook General Motors in 2008 to become the world's top selling automaker, but only because the Detroit giant's sales fell faster than its own.

The Japanese company has moved to lower production, cut jobs and appoint a new president from its founding family in response to its biggest ever crisis.

Toyota aims to cut its fixed costs by 10 percent, but Kinoshita said there were no plans to shut factories and management hoped to limit layoffs.

The company is already shedding about 3,000 temporary workers in Japan as it reduces production.

Toyota has ramped up its production aggressively in recent years to meet brisk demand, particularly for its fuel-efficient cars.

Although it is in much better shape than its US rivals, analysts say that the Japanese giant's rapid expansion left it vulnerable to the current slump in sales.

"Tough times lie ahead for all Japanese automakers as they are unlikely to get through the slump for a few years at least," said Yasuaki Iwamoto, an auto analyst at Okasan Securities.

"They have to put more and more emphasis on their efforts to develop clean and small vehicles, which will be the main pillar of the industry from now on. Their survival depends on how quickly and effectively they can carry out cost-cutting measures," Iwamoto said.

Earlier Friday Moody's Investors Service cut Toyota's long-term debt rating from the highest possible "Aaa" to the second-highest "Aa1." It said the outlook was negative, meaning further downgrades are possible.

With global auto sales slumping, the yen soaring and raw material prices unstable, Toyota "is unlikely to meaningfully improve its operating performance" in the financial year ending in March 2010, Moody's said.

Truckmaker Isuzu, which is part-owned by Toyota, said Friday it expected to post a net loss of 15 billion yen (165 million dollars) for the year to March, against a year-earlier profit of more than 76 billion yen.

Pentagon clashes with media over control of information

Pentagon clashes with media over control of information

By CHRIS TOMLINSON

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The black-and-white video starts with a mini-van locked in the crosshairs and the sound of a missile launching. A ball of fire suddenly consumes the van and a palm grove somewhere in Iraq.

"Good shot," says a voice squawking over what sounds like a military radio. Before the one-minute video clip is over, two more SUVs are destroyed by Apache helicopters.

The video is one of dozens brought to viewers around the world by Maj. Alayne Conway, the top public affairs officer for the 3rd Infantry Division. When her unit was in Iraq, her office sent out four to six videos a day to media outlets around the world, as well as posting them on YouTube.

"You want to make sure you edit it in the right way," Conway said. "You have to go through the steps. ... Is this something that is going to make Joe Six-Pack look up from his TV dinner or his fast-food meal and look up at the TV and say, 'Wow, the American troops are kicking butt in Iraq?'"

Critics say the purpose of such violent material is not to inform the public about what the military is doing, but to promote it. Public affairs officers argue that they are in a battle with insurgents to shape the public perception of the wars they are fighting, and they will use every means available to push the military's version of events.

The Pentagon now spends more than $550 million a year — at least double the amount since 2003 — on public affairs, and that doesn't including personnel costs. Public affairs officers are, in the words of the military's training manual, a "perception management tool." Their job is to provide facts but not spin to American audiences and the American media.

Over the past two years, the number of public affairs officers trained by the Defense Information School has grown by 24 percent to almost 3,500. The military is also expanding its Internet presence from 300 to 1,000 sites and increasing its free cable programming on the Pentagon Channel by 33 percent to 2,080 programs.

Along with putting out its own messages, the public affairs arm tries to regulate what other media put out.

In recent years, as reporting out of Iraq turned more negative, the public affairs department has increased its ground rules for media who embed with troops from one to four pages.

In mid-2008, Associated Press reporter Bradley Brooks was stepping off a cargo plane in Mosul en route to an embed when he saw pallbearers carry the flag-draped coffins of dead soldiers from Humvee ambulances onto a plane. Brooks talked to soldiers, who mentioned their anger with political leaders, and wrote a story.

Within 24 hours the military had expelled him from northern Iraq. He was told he had broken a new rule that embedded reporters could not write while in transit.

In 2008, eight journalists were detained for more than 48 hours, according to cases tracked by the AP, more than in any other year since the war began. Since 2003, the AP alone has had 11 journalists detained in Iraq for more than 24 hours. And a Reuters journalist has been detained by U.S. forces as "a security threat" since Sept. 2.

"All of these journalists, with the exception of the one being held now, have been released without charge. That troubles us because it suggests that they are not able to successfully charge these journalists with anything," said Joel Simon, executive director of the Committee to Protect Journalists.

Pentagon officials say commanders have the right to detain anyone they consider a threat to security, and that the U.S. Constitution does not apply to foreign battlefields.

"The U.S. military is going to control the battle space in which they operate," Pentagon spokesman Bryan Whitman told a gathering of journalists in April 2007. "The First Amendment provides no right of access to the battlefield — zero, none." Whitman's assertion has never been tested in court, and legal opinions vary.

The public affairs department has even arranged to fly friendly bloggers to Iraq and Afghanistan, according to documents made available through the Freedom of Information Act. The public affairs office decided who could take part in special "Blogger Roundtables" with Pentagon officials in 2005, and transcripts show that those chosen were overwhelmingly pro-military and repeated the information they heard on their own Web sites without always revealing its source.

AP CEO Urges Better Press Access to Military Ops

AP CEO urges better press access to military ops

By JOHN HANNA

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The Bush administration turned the U.S. military into a global propaganda machine while imposing tough restrictions on journalists seeking to give the public truthful reports about the wars in Iraq and Afghanistan, Associated Press chief executive Tom Curley said Friday.

Curley, speaking to journalists at the University of Kansas, said the news industry must immediately negotiate a new set of rules for covering war because "we are the only force out there to keep the government in check and to hold it accountable."

Much like in Vietnam, "civilian policymakers and soldiers alike have cracked down on independent reporting from the battlefield" when the news has been unflattering, Curley said. "Top commanders have told me that if I stood and the AP stood by its journalistic principles, the AP and I would be ruined."

Curley said in a brief interview that he didn't take the commanders' words as a threat but as "an expression of anger." Late in 2007, Curley wrote an editorial about the detention of AP photographer Bilal Hussein, held by the military for more than two years.

Eleven of AP's journalists have been detained in Iraq for more than 24 hours since 2003. Last year, according to cases AP is tracking, news organizations had eight employees detained for more than 48 hours.

AP, the world's largest newsgathering operation, is a not-for-profit cooperative that began in 1846 to communicate news from the Mexican War. Curley has been the company's president and CEO since 2003.

Before his speech, Curley met for about a half-hour with Lt. Gen. William Caldwell IV, a former spokesman for the U.S. military in Iraq. Caldwell is commander at Fort Leavenworth, Kan., where military doctrines are drafted and a staff college trains both American and foreign officers.

"It's important for us to be very transparent," Caldwell said during an interview after Curley's speech. "If we do those things, ultimately, we're both trying to do the same thing."

Curley came to the University of Kansas to receive this year's national citation for journalistic excellence from the William Allen White Foundation. Curley also won national awards in 2007 and 2008 for his work on First Amendment and open records issues.

Answering questions from his audience of about 160 people, Curley said AP remains concerned about journalists' detentions. He said most appear to occur when someone else, often a competitor, "trashes" the journalist.

"There is a procedure that takes place which sounds an awful lot like torture to us," Curley said. "If people agree to trash other people, they are freed. If they don't immediately agree to trash other people, they are kept for some period of time — two or three weeks — and they are put through additional questioning."

His remarks came a day after an AP investigation disclosed that the Pentagon is spending at least $4.7 billion this year on "influence operations" and has more than 27,000 employees devoted to such activities. At the same time, Curley said, the military has grown more aggressive in withholding information and hindering reporters.

Curley said a military program to embed reporters with battlefield units in Iraq was successful in 2003, the war's first year. But afterward, the military expanded its rules from one to four pages, and Curley said they're now so vague, a journalist can be expelled on a whim if a commander doesn't like what's being reported.

"Americans understand hardships and setbacks," he said. "They expect honest answers about what's happening to their sons and daughters."

Caldwell now requires officers who attend Fort Leavenworth's staff college to blog and "engage" the media. "Not only when it's good stuff, but when it's challenging," Caldwell said.

Curley acknowledged that upon taking office, President Barack Obama rolled back many of the policies instituted by George W. Bush. But he said when the Pentagon faces difficulties again — perhaps in Afghanistan, with the new administration's focus on it — experience has shown, "the military gets tough on the journalists."

"So now is the time to re-negotiate the rules of engagement between the military and the media," he said. "Now is the time to insist that the First Amendment does apply to the battlefield."

He added: "Now is the time to resist the propaganda the Pentagon produces and live up to our obligation to question authority and thereby help protect our democracy."

Curley said examining the Defense Department's spending on its public relations efforts and psychological operations is difficult because many of the budgets are classified.

He said the Pentagon has kept secret some information that used to be available to the public, and its public affairs officers at the Pentagon gather intelligence on reporters' work rather than serve as sources.

Curley traced the propaganda efforts to former Defense Secretary Donald H. Rumsfeld. He cited a 2003 operations "road map" signed by Rumsfeld, declaring that psychological operations had been neglected for too long. Curley also noted that the current secretary, Robert Gates, has defended such efforts, including in a speech at Kansas State University in 2007.

"But does America need to resort to al-Qaida tactics?" Curley said. "Should the U.S. government be running Web sites that appear to be independent news organizations?" Should the military be planting stories in foreign newspapers? Should the United States be trying to influence public opinion through subterfuge, both here and abroad?"

He also said the Bush administration had stripped hundreds of people, including reporters, of their human rights. He noted that when an Iraqi judicial panel reviewed the evidence gathered by the military against Hussein, the AP photographer, it ordered his release. He declined in an interview to say who said AP could be "ruined" for sticking to its principles, but "I knew that they were angry."

"This is how you improve the standing of America around the world, by taking the universal human rights we enjoy as Americans and ensuring them for everyone," Curley said in his speech.

Both the award Curley received at the University of Kansas and its journalism school are named for White, who was publisher of the Emporia Gazette until 1944. A Pulitzer Prize winning editorial writer, White's commentary and friendships with prominent Americans made him a national figure.

"There's no doubt that White would have been angered by the last eight years," Curley said. "The right to access information and the ability to know the source of that information were diminished."

Associated Press Writer John Milburn also contributed to this report.

Economic Disaster - Are You Next?

Economic Disaster - Are You Next?

by Michael Collins

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The human costs of the U. S. financial crisis are coming into clear focus. Family members lose their jobs, then their homes, and the cascade of ruin begins in earnest. Health problems are ignored, anxiety and depression increase, and domestic violence is more common. Many are on the edge, anticipating their worst fears: losing their home or apartment then struggling to find the next meal. The biggest issues right now are about basic needs -- food and shelter.

There's a rational, reasonably immediate solution to a good part of the economic disaster. The banks won't like it but you will. But first the sad facts.

There were 2.3 million default notices to homeowners in 2008, up 80% over 2007. It will be worse in 2009 with Option ARMs coming due (those favorites of Alan Greenspan).

Typically the nation's economic leader, California, saw foreclosures increase by 160% in 2008. As a result three percent of California homes, 240,000 in all, became bank properties. These are the same banks that slithered up to the bar and demanded a double shot of the new elixir for failed financial institutions, federal bailouts. Put it on the tab.

To understand the full extent of the economic collapse, consider this. The current official unemployment rate is 7.2%. This includes those out of a job who have actively sought employment in the past four weeks. But this figure understates the level of economic distress. There are 1.9 million unemployed "marginally attached" workers not counted and 8.0 million underemployed workers seeking full time employment.

The total unemployed and under employed figure is 21 million U.S. workers.

Michigan, Florida, Ohio, and South Carolina are facing hard times similar to those in California. Your state is next. It's a nationwide

Despite hundreds of billions in give aways to the banks, there are no reports of a single U.S. citizen or family receiving a bailout from Washington to help them stay in their home.

What happens when you're thrown out of your home or apartment and you have no job?

To begin with, you're poor.

You can live on the street, move in with relatives, or seek to rent a home or an apartment. After a foreclosure, your credit rating will probably disqualify you from most opportunities at the outset. If you're in a warmer climate, you can live in a tent city which began springing up across the country last September.
phenomenon.



You can and will enter an entirely new world where you're exposed to a variety of risks that will make it very difficult to put your life back together again. Crime, infectious diseases, underpayment for work, and increasing social isolation are routine.

You can become a crime victim. In your new world, that of the poor, you will find that you're among the group with the majority of violent crime victims.

You can seek and receive occasional "subprime" medical care in hospital emergency rooms. But the days of serious attention to an ongoing condition, arthritis for example, are over for you.

You can watch your life melt away and your family suffer, all without the prospect of any real assistance. Homeless shelters are full in most places. Public health programs have been overflowing for years. The "welfare state" simply doesn't exist. You're screwed.

Wall Street welfare was supposed to save us from all of this according to the Bush-Cheney scam artists. Those two and their henchmen doubled the national debt in just a few short years of concentrated looting. Somehow, the most recent Wall Street donations were supposed to secure failed financial institutions and generate a stimulus for the economy. No deal.

To add insult to that injury, a $140 billion tax cut for banks was written "into law" by a Treasury Department bureaucrat, a move that everyone consulted said was clearly illegal. Nothing was done about it. In fact, a key congressional staffer explained it this way: "We're all nervous about saying that this was illegal because of our fears about the marketplace," Nov. 10, 2008

Crime pays. Deception pays.

But the money to pay working people isn't there thanks to the financial manipulations that made the very wealthy even wealthier and left the rest with little to nothing in return. There is no room at this inn for people who need a helping hand.

When do the People Collect?

California passed a law that cut into foreclosures by requiring that the banks actually give a reasonable notice of default prior to tossing families onto the street. This program had an impact for a few months but foreclosures bounced back and kept growing. .

Representative Marcy Kaptur, (D-OH), responded to the economic collapse of Toledo, Ohio (11% unemployment) with a sensible idea. Foreclosures and evictions are a commonplace event. Kaptur tells citizens to stay put, don't leave your home if a foreclosure notice is issued. "Produce the Paper" is the theme. Due to the complexity of many bad loans, it can be very difficult to figure out which bank actually holds the mortgage or to even find a true loan document. Without that information, there are legal challenges that can force banks to delay or forgo eviction.

Time for a Nationwide "Cramdown"

The easiest solution, the most immediate, is a cramdown. What's that?

In bankruptcy court, a judge can take the total amount of a mortgage and divide it into two parts. The appraised home value becomes the "secured claim" and "the amount over the current appraised home value" becomes the "unsecured claim." The unsecured amount is discarded. The secured amount, i.e., current appraised value, becomes the homeowner's only debt. This debt can be amortized over the life of the loan. Thus monthly payments go down, people have a much better chance of staying in their homes, and they have some disposable income for essentials. Link

Congressional Democrats and President Obama are arguing over legislation that would give bankruptcy judges greater options for "cramdowns." Both sides of the argument are out of touch with the accelerating harsh realities of the U.S. economy as experienced directly by the citizens.

There's no court that needs to hear this case. The nationwide cramdown should be negotiated directly by the Obama administration, in behalf of all citizens and the remaining banks. Obama's two financial system insiders, Treasury Secretary Timothy Geithner and chief economic advisor Larry Summers, would all of sudden become the good cop - bad cop negotiators shoving the banks in a corner and forcing them so submit to the plan.

Cramdowns were mentioned in the campaign as one of several options to address the needs of homeowners. Obama can resist the idea and those in Congress can ignore the scope of action needed. But the people will bring them back to reality very soon, just as they did on the specific issue of having someone in the cabinet so rich and aloof that he forgets to pay $126,000 in income taxes.

Meeting the urgent need for people to have a home means less social and economic disruption. There would be an immediate stimulus with more money available to spend in the real economy. This stimulus program would put money back in the economy in months not years.

Now is the time.

US unemployment expected to rocket

US unemployment expected to rocket

The US economy lost more than half a million jobs in January, official figures due out later on Friday are expected to confirm, underlining the need for President Obama’s $900bn (£615bn) plan to revive growth.

By James Quinn

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The monthly non-farm payroll figures – which combine public and private sector employment – are likely to show that 540,000 jobs were lost last month, according to economists. It will mean that US employers have made more than 1.5m people redundant in the last three months alone.

January saw deep cuts across the world's biggest economy, with more than 60,000 redundancies announced on January 26 alone, at companies ranging from industrial machinery manufacturer Caterpillar to DIY retailer Home Depot. Others to cut included Microsoft, dispensing with 5,000 positions in its first company-wide redundancy scheme in its 35-year-history.

February has so far been no different, with department store retailer Macy’s announcing plans to reduce its headcount by 7,000 positions.

The US Bureau of Labour Statistics release the numbers at 8.30am in Washington, or 1.30pm London time and revisions are also likely to November and December’s figures.

The BLS will also release the unemployment rate – which is calculated using slightly separate data and is expected to rise to 7.5pc – a 16-year high - from 7.2pc at the end of December

Initial jobless claims on Thursday showed a 35,000 leap in the number of people claiming unemployment benefit for the first time in the week to January 31, taking the total to 626,000, a 26-year high.

Six hundred thousand January layoffs in US

US sheds 600,000 jobs in January

By Tom Eley

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In a clear indication the economic crisis is rapidly heading into a severe global depression, US employers purged 598,000 jobs in January, the most job losses in a single month since 1974. January's firings raised the unemployment rate to 7.6 percent, the highest level since 1992.

Job cuts accelerated even more rapidly in Canada, where 129,000 jobs were eliminated, the highest monthly toll ever, with the unemployment rate spiking to 7.2 percent from 6.6 percent. Given a Canadian population of about one tenth that of the United States, the job losses are equivalent to about 1.3 million US cuts. Canadian economists, who had anticipated a figure of 40,000, were left dumbfounded by the data from Statistics Canada.

The new US Labor Department figures, released Friday, also far surpassed the expectations of economists, who had anticipated 524,000 lost jobs. The figure for December (577,000) was also revised upwards. In the coming period, job losses are expected to soar well above 600,000 a month.

Economists used the following terms to describe the Labor Department figures: "horror show," "alarming," "terrible toll," "endless spiral," "no end in sight," "slow motion train wreck," "horrific," "massive hemorrhage," and "stunning."

In the 12 months since January 2008, the American economy has hemorrhaged 3.5 million jobs, the most in one year since 1939, during the Great Depression. About half of those job cuts came in the past three months alone.

According to the Labor Department, there are now 11.6 million unemployed workers in the US. In addition, there are 7.8 million more who are underemployed, workers who seek full-time employment but are unable to find the hours they need.

If underemployed and marginally attached workers are counted, the US unemployment rate stands at 13.9 percent, according to the Wall Street Journal.

The industrial sector suffered the most, with 207,000 jobs lost, after losing 162,000 in December. This represented the steepest decline since 1982, when US industrial production was intentionally decimated by the high interest rate "shock therapy" of former Federal Reserve Chief Paul Volker, who is now a key economic advisor to President Barack Obama. There are now only 12.6 million US factory workers, the lowest number since 1946.

In Canada, meanwhile, nearly 80 percent of January's job losses were among factory workers, with Ontario particularly hard-hit. This is an indication that the collapse of the US economy is ravaging Canada's export-oriented industries and their suppliers.

In the US, the job losses extended across economic sectors. White collar and managerial workers were eliminated in large numbers, 121,000 in all. Construction companies cut 111,000 jobs; 76,000 temporary worker were fired; 45,000 retail workers lost their jobs; and 28,000 more workers are now unemployed in the "leisure and hospitality" industry.

The unemployed face increasingly long periods between jobs, if new jobs are to be found, Labor Department statistics reveal. The average job hunt for unemployed workers has increased to 19.8 weeks, up from 17.5 weeks one year ago.

The wave of job cuts is being undertaken in tandem with a broad assault on the conditions of those workers fortunate enough to keep their jobs. In keeping with the spirit of the Obama administration, employed workers are being asked to make new "sacrifices."

Over the previous months, US employers have launched an unprecedented wave of pay and benefit cuts, hours reductions, and other takeaways. The sacrifices of the employed are also registered in an increase in productivity, which the Labor Department recently revealed has shot up by 3.2 percent in the last quarter of 2008.

The flood of job losses in the US is such that the system of unemployment benefits has been overwhelmed, both financially and physically. After decades of free-market orthodoxy, the social safety system in the US is woefully ill equipped to confront an economic crisis.

The National Conference of State Legislatures recently released a report revealing that seven states have depleted their unemployment insurance funds, and eleven others will likely do so within a year. On Thursday, the Washington Post published an article noting that rising unemployment "is overwhelming claims offices" that are short on staff, facilities, and equipment to meet the needs of desperate workers ("Deluge Is Holding Up Benefits to Unemployed").

The prospects for the coming year are grim. Analysts anticipate that 3 million more jobs will be lost, although even these dire estimates are contingent upon passage of Obama's stimulus package and the administration's assertions on job creation.

"We see job losses accelerating for at least the next several months to the point where that 600,000 mark will soon be a dot in the distance behind us," said economist Guy LeBas of Janney Montgomery Scott LLC. Robert MacIntosh, chief economist with Eaton Vance Management in Boston, said, "it is just another confirmation that we're in a deep and long recession, and the bottom is not even in sight."

The flood of job losses in North America is an expression of a world process. In December, Japan experienced the sharpest increase in unemployment in 41 years. More layoffs are to come, as industrial production declines precipitously. The Japan Manufacturing Outsourcing Association has stated that 400,000 temporary workers will be laid off by March. Many of these live in company dormitories, and will be made homeless in the process.

Earlier this month, China announced a massive growth in unemployment. Some 20 million of the country's 130 million migrant workers are unemployed. Manufacturing jobs for export production have been particularly hard-hit.

In Europe, economists anticipate that the overall unemployment rate will climb to 8.7 percent for the 27 EU countries. French employers purged 217,000 jobs last year, and the unemployment rate is expected to rise to 10.6 percent by the end of next year. In Spain, Europe's fifth-largest economy, the unemployment rate is at 14.4 percent and rising. Industrial output in Spain fell by nearly 20 percent in December.

The International Labor Organization recently released a report that forecast global job losses with a range of 18 to 51 million. In the latter scenario, global unemployment would climb past 7.1 percent.

Regulators close failed banks in Ga., Calif.

Regulators close failed banks in Ga., Calif.

Regulators close 2 failed banks in Calif., 1 in Georgia; 9 US bank failures this year

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Regulators on Friday closed FirstBank Financial Services in Georgia and two California banks, Alliance Bank and County Bank, marking nine failures this year of federally insured institutions.

The Federal Deposit Insurance Corp. was appointed receiver of the three banks. FirstBank Financial, based in McDonough, Ga., had $337 million in assets and $279 million in deposits as of Dec. 31. Alliance Bank, based in Culver City, Calif., had about $1.14 billion in assets and $951 million in deposits as of year's end. Merced, Calif.-based County Bank had around $1.7 billion in assets and $1.3 billion in deposits as of Feb. 2.

Twenty-five U.S. banks failed last year, far more than in the previous five years combined. The six failures announced in the last two weeks are double the total for all of 2007.

It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions.

The FDIC said FirstBank Financial's deposits will be assumed by Regions Bank in Birmingham, Ala. Its four branches will reopen Monday as offices of Regions Bank. Regions Bank also agreed to buy around $17 million of FirstBank's assets; the FDIC will retain the rest for eventual sale.

The parent company, Regions Financial Corp., is a large regional bank company that received $3.5 billion from the Treasury Department under the government's financial rescue program. In August, Regions Bank took over deposits and some assets of another failed institution, Integrity Bank of Alpharetta, Ga.

Alliance Bank's deposits will be assumed by San Diego-based California Bank & Trust, which also agreed to buy about $1.12 billion in assets. The FDIC will keep the rest for eventual sale. In addition, California Bank & Trust agreed to share losses on the assets with the FDIC. Alliance Bank's five branches will reopen Monday as offices of California Bank & Trust.

Westamerica Bank, based in San Rafael, Calif., agreed to purchase all the deposits and assets of County Bank. Westamerica also is sharing losses with the FDIC. County Bank's 39 branches will reopen as branches of Westamerica, some on Saturday and others on Monday.

A number of banks have failed and been shuttered in recent months in California, an area that's been especially battered by the mortgage and housing crises.

The FDIC estimated that the resolution of FirstBank Financial will cost the federal deposit insurance fund $111 million while that of Alliance Bank will cost $206 million and County Bank, $135 million.

Regular deposit accounts are insured up to $250,000.

Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.

But with banks clamoring for the second $350 billion installment to be doled out, Treasury Secretary Timothy Geithner and other top officials are readying a plan to overhaul the rescue program. Those efforts are expected to be announced Monday.

Seattle-based thrift Washington Mutual Inc. failed in late September, the biggest bank collapse in U.S. history. It had $307 billion in assets. Wall Street powerhouse JPMorgan Chase & Co. bought Washington Mutual's deposits, branches and loan portfolio from the FDIC for $1.9 billion.

The FDIC estimates that through 2013, there will be more than $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion, below the minimum target level set by Congress and the lowest level since 2003.

An FDIC official asked Congress this week to more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion, as a way to reassure the public that the government stands firmly behind insured bank deposits.

The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. Under the program, which is meant to thaw the freeze in bank-to-bank lending, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 -- a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

New Orleans: Elite U.S. Troops, Bombs In Urban Warfare Exercise

Bombs, choppers during military exercises startle residents

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Residents in and around New Orleans have been hearing the sounds of low-flying helicopters and what sounds like bomb blasts over the past few nights, but the sounds are part of a training exercise for some of America's elite military troops.

At one Lakefront home, Gigi Burk normally hears her son, 6-year-old Beau, practicing the piano, but last night she heard something much different at around 10 p.m.

“I said, oh my God! They're bombs. That's what I thought it was, somebody dropping bombs,” Burk said.

Burk said she panicked, not knowing why she was hearing what sounded like explosions and low-flying helicopters.

“We're a little skittish around here with things that have happened,” Burk said.

But according to military officials, it’s a training exercise that brought about 150 U.S. troops from the U.S. Special Operations Command to train in New Orleans for urban warfare.

“They are regularly engaged in combat operations,” said U.S. Special Operations Command staffer Kimberly Tiscione. “They are the best of the best we have to offer across all the branches of the military.”

Black Hawk and "Little Bird" helicopters are transporting troops to several locations around New Orleans, according to Tiscione.

“They're going to be flying near buildings, doing approaches on them,” Tiscione said. “You might see them landing on the roof tops or landing on the ground near them as well.”

“I heard a bunch of explosions starting at about 10 p.m. They were about ten seconds apart, and then they'd stop, and we thought it was over, but then they started again,” said Burk.

Tiscione said that the ground troops were performing “breeches at several different locations.

“So, they're moving through doorways or walls or that sort of thing. They're also doing weapons proficiency,” Tiscione said.

The forces are using simulated ammunitions, almost like paintball pellets, to conduct the training. And even though the noise may affect your neighborhood, the night-time training is only supposed to last from sundown to 11 p.m., according to Tiscione.

“They are the best of the best because they get these kind of training events,” she said.

Burk said she wishes the training had been better publicized before-hand to avoid a scare Tuesday night.

"People were talking about it everywhere today," Burk said.

The NOPD did put a press release out about the training, and WWL-TV aired a story about it; however, that was a week ago.

Since U.S. Special Operations Command hasn't done a similar training here since 2000, it has caught many people by surprise.

The training will go on every night through the end of this week.

Keep Your Job, Lose Your Health Insurance

Keep Your Job, Lose Your Health Insurance

By Monica Sanchez

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These days you don't have to lose your job to lose your health care benefits, see them cut or have to pay more for them. Employers are trimming costs by decreasing their share of the cost of employee health insurance coverage or dropping coverage altogether. While this has been a growing trend over the past decade, the weak economy has forced an increase in those cuts.

According to The Washington Post, ten years ago, employers paid about 90 percent of their workers' health costs. That is down to 73 percent.

And the cost to employees will increase this year. The Washington Post outlines the bad news:

"A growing number of workers in 2009 will pay more for health benefits -- and in some cases receive less coverage -- as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.

"The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008." [Emphasis added]

Employees of small businesses are even more heavily affected. According to MSNBC's "Your Biz":

"It's getting ugly out there for small business owners that have been struggling to keep on paying high health insurance premiums for themselves and their workers. So ugly, in fact, that more and more are just dropping coverage. Because of ever-escalating premiums and falling sales, Craig Sumsky, director of Philadelphia-based DJ company Cutting Edge Entertainment, had to put the kibosh on health insurance for his office manager this year.

"In response, Sumsky's office manager handed in her two-week notice. She needed a job that could get her benefits, he said. Sumsky is not alone. One recent poll put out by credit card company Discover uncovered a disturbing trend: "Eighty-five percent of small business owners say they do not offer health insurance to their employees, up significantly from 77 percent a year ago and 74 percent in January 2007. Among small business owners who do offer health insurance, 36 percent say they have considered discontinuing coverage because of high costs." [Emphasis added.]

Employers cutting how much they contribute toward their health insurance is not the only reason employees' health care costs are rising. According to a new report by the U.S. Public Interest Research Group, if the health care system in this country is not reformed, premiums for Americans with employer-sponsored insurance will nearly double by 2016.

U.S. PIRG Health Care Advocate Larry McNeely says, "The health care reforms in President Obama's economic recovery plan are indispensable first steps to addressing this crisis." He adds his support for the president's economic recovery plan's investment in the health care infrastructure:

"This legislation funding of health information technology, evidence-based prevention, and comparative effectiveness research will set the stage for the broader reforms needed to address the high cost of health care."

Another important aspect of President Obama's health care reform plan is the addition of a public health insurance plan option to drive more value in our health care system by competing side-by-side with private insurance and using its bargaining power to rein in costs.

In his analysis of how a hybrid public/private plan choice would improve the U.S. health care system, "The Case For Public Plan Choice In National Health Reform", Jacob Hacker concludes that a national public health insurance plan option would allow for a much larger and broader risk pool and would be in a better position to contain overall health care costs by using its large membership in negotiating for discounts. It can also test and, where appropriate, implement evidence-based protocols, which private plans may choose to shun because of cost concerns, for treatments and payment systems, rewarding value.

And Americans want that choice. A new poll conducted by Lake Research Partners on behalf of Health Care for America Now (HCAN) found there is "intense and widespread voter support" for the choice of a public health insurance plan as part of comprehensive, national health care reform even when voters hear the sharpest insurance industry attacks on a public plan. In paired statements supporting and attacking a public health insurance plan, a majority of voters choose the statement backing a public health insurance option every time. For example:

  • 62% of voters believe a public health insurance plan will spend less on profits and administration and force private insurers to compete.
    • Only 28% of voters believe the attack that a public health insurance plan would be a "big, government bureaucracy."
  • 60% believe that if private insurers are really more efficient than government, then they won't have any trouble competing with a public health insurance plan.
    • Only 23% believe a public health insurance plan would have an unfair advantage over private plans.

While recent polling has shown consistent broad support for comprehensive health care reform, this poll specifically addressed whether people want a choice of a public health insurance plan. The answer is an overwhelming yes:

  • 73% of voters want a choice of a private or public health insurance plan, including Democrats (77%), Independents (79%), and Republicans (63%).

"Voters strongly value having a choice of private or public health insurance plans and support having the guaranteed, affordable coverage that a public health insurance plan provides. They also believe that a public health insurance plan will help contain costs in ways that private insurers have failed to do," said Celinda Lake, President of Lake Research Partners.

Let's make sure our representatives in Congress are listening.