The U.S. Economy, 75% Based on Consumption, Is 100% Broken by Bankers Who, after a Bailout of $12 TRILLION, Are Still Stealing from Consumers!

Blogger’s Note: Below I reprint recent blogs by Robert Reich and Jim Hightower, which combine to tell a tale of unbounded greed by the few, leading to a dismal future for the many. N.B. Reich is correct that the U.S. GDP is 70% consumption, if real estate is excluded. However, home sales have normally accounted for another 5%. “But the traditional housing market, the one that involves willing buyers and sellers, is still dead, with transactions lower than they have been for decades.”

When Will The Recovery Begin? Never.

by Robert Reich, posted July 09, 2009

The so-called "green shoots" of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.

Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.

That's where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.

Personally, I don't buy into either camp. In a recession this deep, recovery doesn't depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. They can't borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water -- owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can't are hunkering down, as they must.

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.

My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Robert Reich’s Latest book, "Supercapitalism," is now out in paperback. For copies of articles, books, and public radio commentaries, go to www.robertreich.org. This blog is available as an RSS feed.

Big Bankers Mounting Sneak Attack on Consumers

by Jim Hightower, AlterNet. posted July 10, 2009.

Have you received your thank-you note? I'm still waiting for mine.

More than a year into the Wall Street bailout, I've yet to get any sort of "thank you" from even a single one of the big banks that you and I propped up with $12 trillion in direct giveaways, indirect giveaways, government guarantees and sweetheart loans. You'd think their mommas would've taught them better. But I've begun to think that waiting on a simple gesture of banker gratitude is like waiting on Donald Trump to have a good hair day -- ain't gonna happen.

Far from showing appreciation, the largest banking chains are now going out of their way to stiff us. Instead of nice notes, they are quietly slipping new gotchas into our monthly credit card bills and bank statements. In June, for example, Bank of America abruptly raised its fee for a basic checking account by 50 percent. Citibank jacked up the interest rate on some of its cards to 29.99 percent. And JPMorgan Chase more than doubled the required minimum payment on its cards.

Across the board, fees have skyrocketed to their highest levels on record, including assessments for such common occurrences as overdrafts (as high as $39), stop-payment actions ($39 -- double what it was 10 years ago), balance transfers (up more than 50 percent in the past year) and ATM use (nearly doubled in 10 years).

To add insult to injury, the banks blame us for their rate increases. Because the economy is such a wreck (massive job losses, falling incomes, millions of home foreclosures and other unpleasantness), industry spokesmen say there is a greater risk that customers will bounce checks or fall behind on their credit-card payments. Thus, claim purse-lipped bankers, they must protect themselves from us by ratcheting up rates and fees. "There is an increased riskiness around repayment because of the recession," spaketh one lobbyist for the financial giants.

Glade doesn't make enough "Spring Lilac" to cover up the stench of this argument. Come on -- it was the greed and incompetence of Mr. Jolly Banker that wrecked our economy, caused the recession and forced the odious bailout on us. They want us to pay for that?

The truth is, they are socking it to their customers for two reasons: 1) they can, and 2) fee hikes are a shifty way to snatch enormous levels of new income for themselves without doing anything to earn it.

These are the geniuses who made an ugly mess of the core business of banking -- which is to make good loans. To make up for their huge losses in that business, bankers have essentially been reduced to flim-flam fee-scammers. Last year, assessment of consumer fees became the main business of banks, totaling 53 percent of the industry's income!

That was before the current outbreak of fee frenzy. In the first three months of this year, for example, Bank of America's fee income rose 50 percent above the same period of 2008 -- an extra $4 billion in revenue for the bank.

"Fees 'R' Us" is what big banks have become. This is why they are panicked by reforms presently coming out of Washington. Already, President Obama has signed a bill to restrict credit-card gouging, and Bank of America, Citigroup and JPMorgan (which control about 58 percent of the nation's credit-card market) are scrambling to jack up their rates and fees before the new law takes effect next February.

Now, the bankers are lobbying frantically to kill Obama's plan to create a Consumer Financial Protection Agency, which would have regulatory power to prohibit a wide range of finance-industry abuses. For the first time, we consumers would have our own seat at the regulatory table -- an agency with the independence and clout to counter the Federal Reserve and other agencies that primarily serve big banks.

From the bailout to the explosion in fees, we've seen that Wall Street's financial titans won't control their greed. For the sake of the economy, the well-being of America's majority and the advancement of our nation's democratic values, we must do it for them. For more information, contact Americans for Financial Reform: www.ourfinancialsecurity.org.

To find out more about Jim Hightower, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2009 CREATORS SYNDICATE INC.

2008 U.S. Presidential Candidate Aboard Ship Hijacked by Israeli Navy ...and the U.S. Media Is Either Silent or Blames the Victim

Then-Congresswoman Cynthia McKinney (D-Georgia) speaks at National Election Reform Conference, Nashville, TN, April 9, 2005. (Photo: D.L. Griscom)

Cynthia McKinney was the Green Party candidate for President of the United States last year, and I almost voted for her.

Two weeks ago, McKinney, together with Nobel Laureate Mairead Corrigan Maguire and other activists, was aboard a ship in international waters waiting for permission to deliver humanitarian aid to the people of Gaza, when the Israeli Navy surrounded and illegally threatened them, then boarded and hijacked the ship, and took them to Israel where they were imprisoned.

And they may not be released soon, since according to the Green Party website:

“Ms. McKinney and other Free Gaza 21 members have refused to sign a self-incriminating ‘deportation form’ stating that the Spirit of Humanity was violating the Israeli blockade and trespassing Israeli territorial waters by attempting to deliver supplies to Gaza. In fact, the Spirit of Humanity was in international waters when it was illegally seized by the Israeli navy in an act of piracy.”

The response by the U.S. media has mostly been silence, except for Fox News and the Washington Post, both of which mocked McKinney and tacitly blamed her for causing the problem. A balanced article on this dismal affair was published yesterday in the Foreign Policy Journal by Jerremy R. Hammond. Here is an edgier report on Alex Jones' tv show.

And only today we have Joe Biden saying, presumably with the permission of President Obama, that Israel has the right to bomb Iran.

So the Obama administration tacitly accepts Israel's kidnapping of any American who is not a high ranking member of the Democratic or Republican parties (a policy that is outright applauded our so-called mainstream media) and explicitly gives Israel carte blanch to start wars that Americans wouldn't approve of but would inevitably become involved with.

Although it wouldn't have made any difference, I'd sure be a lot happier with myself if I'd cast my vote for Cynthia McKinney last November...

Obama plan to create 3 ½ million jobs by late 2010; but we’re now 8 ½ million jobs in the hole, and the states are firing TEACHERS!

New York Times column

July 3, 2009

Op-Ed Columnist

That ’30s Show

By PAUL KRUGMAN

O.K., Thursday’s jobs report settles it. We’re going to need a bigger stimulus. But does the president know that?

Let’s do the math.

Since the recession began, the U.S. economy has lost 6 ½ million jobs — and as that grim employment report confirmed, it’s continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we’re about 8 ½ million jobs in the hole.

And the deeper the hole gets, the harder it will be to dig ourselves out. The job figures weren’t the only bad news in Thursday’s report, which also showed wages stalling and possibly on the verge of outright decline. That’s a recipe for a descent into Japanese-style deflation, which is very difficult to reverse. Lost decade, anyone?

Wait — there’s more bad news: the fiscal crisis of the states. Unlike the federal government, states are required to run balanced budgets. And faced with a sharp drop in revenue, most states are preparing savage budget cuts, many of them at the expense of the most vulnerable. Aside from directly creating a great deal of misery, these cuts will depress the economy even further.

So what do we have to counter this scary prospect? We have the Obama stimulus plan, which aims to create 3 ½ million jobs by late next year. That’s much better than nothing, but it’s not remotely enough. And there doesn’t seem to be much else going on. Do you remember the administration’s plan to sharply reduce the rate of foreclosures, or its plan to get the banks lending again by taking toxic assets off their balance sheets? Neither do I.

All of this is depressingly familiar to anyone who has studied economic policy in the 1930s. Once again a Democratic president has pushed through job-creation policies that will mitigate the slump but aren’t aggressive enough to produce a full recovery. Once again much of the stimulus at the federal level is being undone by budget retrenchment at the state and local level.

So have we failed to learn from history, and are we, therefore, doomed to repeat it? Not necessarily — but it’s up to the president and his economic team to ensure that things are different this time. President Obama and his officials need to ramp up their efforts, starting with a plan to make the stimulus bigger.

Just to be clear, I’m well aware of how difficult it will be to get such a plan enacted.

There won’t be any cooperation from Republican leaders, who have settled on a strategy of total opposition, unconstrained by facts or logic. Indeed, these leaders responded to the latest job numbers by proclaiming the failure of the Obama economic plan. That’s ludicrous, of course. The administration warned from the beginning that it would be several quarters before the plan had any major positive effects. But that didn’t stop the chairman of the Republican Study Committee from issuing a statement demanding: “Where are the jobs?”

It’s also not clear whether the administration will get much help from Senate “centrists,” who partially eviscerated the original stimulus plan by demanding cuts in aid to state and local governments — aid that, as we’re now seeing, was desperately needed. I’d like to think that some of these centrists are feeling remorse, but if they are, I haven’t seen any evidence to that effect.

And as an economist, I’d add that many members of my profession are playing a distinctly unhelpful role.

It has been a rude shock to see so many economists with good reputations recycling old fallacies — like the claim that any rise in government spending automatically displaces an equal amount of private spending, even when there is mass unemployment — and lending their names to grossly exaggerated claims about the evils of short-run budget deficits. (Right now the risks associated with additional debt are much less than the risks associated with failing to give the economy adequate support.)

Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms.

So getting another round of stimulus will be difficult. But it’s essential.

Obama administration economists understand the stakes. Indeed, just a few weeks ago, Christina Romer, the chairwoman of the Council of Economic Advisers, published an article on the “lessons of 1937” — the year that F.D.R. gave in to the deficit and inflation hawks, with disastrous consequences both for the economy and for his political agenda.

What I don’t know is whether the administration has faced up to the inadequacy of what it has done so far.

So here’s my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you don’t, you’ll soon be facing your own personal 1937.

What Do YOU Do when You Know Your Democracy Is Being Stolen?

OOPS! We rigged the Iran/Florida-Ohio vote count AGAIN!!
by Bob Fitrakis & Harvey Wasserman
June 23, 2009

Iran's Ayatollahs have just admitted that in some 50 cities there were as many as 3 million more votes cast than there were voters in the recent presidential election.

But, they say, that's not enough to change the outcome. So, like Florida in 2000 and Ohio 2004, there will be no total recount and no new election. Election theft should be opposed, whether it's sanctioned by a supreme Ayatollah or the U.S. Supreme Court.

It's as if the Iranian government is being advised by Ohio's former Imam J. Kenneth Blackwell, who, as Ohio's 2004 Secretary of State, purged hundreds of thousands of voters, and stole, switched and disappeared enough votes to put George W. Bush in the White House for a second term. The dubious Iranian tallies look very similar to the inflated Bush outcomes in 12 Republican southwest Ohio counties, most notably Warren, Clermont and Butler. They are reminiscent of the vote counts in two precincts in Perry County that reported turnouts of 121% and 118% of registered voters.

The chief difference between Iran 2009 and Ohio 2004---and Florida 2000----is in the opposition. Iran's Mir Hussein Moussavi has vowed martyrdom.

John Kerry, trailing in Ohio by just 130,000 votes with more than 250,000 yet to be counted, walked away less than 12 hours after exit polls showed him a clear victor.

Gore fought a little, but instead of embracing martyrdom, opted for boredom, and for making sure there was no challenge in the US Senate to the votes stolen.

Nationwide, Bush's alleged 3 million-vote nationwide margin in 2004, and 600 votes in Florida 2000, were as fictional as those ballots the Ayatollahs now admit should not exist.

Moussavi believes he has a date with destiny. But Kerry apparently had one on the golf course. Gore's failure to effectively respond in Florida 2000 remains an inconvenient truth.

Blackwell, Florida's Jeb Bush and Iran's Revolutionary Guard used registration tampering, disinformation, intimidation and fraud to disenfranchise millions of eligible voters before the balloting.

Blackwell and Bush then used a lethal mix of black box machines, faulty scantrons and hijacked ballots to finish the job. Blackwell worked with Diebold, ES&S, Triad, and other electronic magicians that let him disappear or switch all the votes he needed with a few keystrokes at around 2am election night. His high-tech IT henchman, Michael Connell, has since died in a mysterious plane crash.

The Times seems to finally understand the problem. In their June 22 editorial, "How to Trust Electronic Voting," they argued the following: "In paperless electronic voting, voters mark their choices, and when the votes have all been cast, the machine spits out the results. There is no way to be sure that a glitch or intentional vote theft – by malicious software or computer hacking – did not change the outcome. If there is a close election, there's also no way of conducting a meaningful recount."

Saddled with paper ballots that may or may not still exist, the Iranian authorities have simply trashed the whole election. "I don't think they actually counted the votes," one observer told the New York Times.

Because the American people did not take to the streets in the Iranian model, our democracy was subverted.

Thanks to Kerry and Gore, the public follow-up in Ohio and Florida was ineffective. As in Iran, the primary reporting has been largely limited to the Internet. The results---8 years of George W. Bush---speak for themselves.

But in the US, a nationwide election protection movement has arisen that protected the results in 2008, and that could make all the difference for the future of American democracy.

The Iranian people are speaking for themselves, and for the finest principles of democracy. For confirmation and inspiration, they need only look at America 2000-8 to see the consequences of unelected executives.

--

Bob Fitrakis & Harvey Wasserman have co-authored four books on election protection. Bob's FITRAKIS FILES are at FreePress.org, where this article first appeared. HARVEY WASSERMAN'S HISTORY OF THE U.S. is atwww.harveywasserman.com.

The Binary Fallacy and the End of Both Political Parties

The Binary Fallacy and the End of Both Political Parties

By Michael Collins

One party created the current disaster. The other has embraced the broadest parameters of the policies that created the disasters that voters want fixed -- wealth transfers to the ultra rich while the vast majority gets just about nothing plus mindless, counter productive fantasies of empire through war.

The two parties and the elitists who look down their noses on the overwhelming majority of citizens assume that the people will simply tolerate the creation of a catastrophe by one party and the perpetuation of that grave injustice to citizens by the other.

When you're broke, you know it.

When you're out of work, you know it.

When there are no jobs, you know it.

And when the country continues to fight overseas but does nothing to protect economic security at home, you know it.

Automotive Technology, Fuel Efficiency, and America’s Future

A recent column by economist Dean Baker begins with this paragraph:

“The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.”

Technology and top management from abroad?

Well, we are nearing the end of a month’s travel in France, driving around in a small but adequate-for-our-purposes Renault Clio, a model that has been manufactured in France since 1990 with incremental technological improvements even though its outward appearance changes little. Ours was brand new from the factory, reserved over the internet directly from the Renault company under their “purchase/repurchase” plan for anyone with a foreign address (Peugeot also has such a plan). This plan commits the vehicle to be exported, with French tax advantages which the company shares with the foreign-based purchaser – who is not really committed to keep the car. So when we turn it in at their compound near the airport, there will be no further cost to us than what we paid up front, about $1,300 – which included unlimited driving miles and all necessary insurance (so it wouldn’t cost us any more even if we total the car). If the car has no damage more than a few repairable dents it will be exported as a used car.

Clios are sold with wide variety of engines, although the purchase/repurchase plan gave fewer options. Since we are inclined to tradeoff a bit of fuel economy for horse power, our first choice was the 1.6 L, 110 hp (0 to 62 mi/h: 10.2 s) gasoline engine, but being as this model was then sold out at the time, we selected the 1.5 L, 85 hp (0 to 62 mi/h: 12.7 s) diesel over the 1.5 L, 67 hp diesel. We found this diesel’s high torque at low rpm to give excellent acceleration, which together with the 5-speed manual transmission made it quite competitive with higher-hp gasoline powered cars at lower speeds. We drove our Clio hard for a total of 1860 miles up to and sometimes exceeding the speed limit of 130 km/hr (81 mi/hr) on the Autoroutes and as slow as the average 12 mi/h in 40 miles of Paris rush-hour driving I did yesterday, for an average “gas” mileage of 44.8 mpg (which surely would have been in the range of closer to 55 mpg with the 67-hp model).

Diesel fuel costs only slightly less than gasoline in France, coming in at about $5/gal. The United States is one of the few countries in the world to sell gasoline as cheaply as they do. This surreal era of cheap gas for Americans will end when the dollar finally crashes and the price of crude oil (in Euros) begins to rise again. They will be able to face this situation better if the U.S. imports automotive “technology and top management” from abroad.

PS On Thursday morning, May 21st, we drove the car pictured above from our friend's home in the Paris suburbs out to Aeroport de Paris - Roissy Charles De Gaulle. Upon pulling up at the Renault/Peugeot export agency lot, it took all of 5 minutes to sign the nessessary papers and see our bags transfered to a small van by the driver who would deposit us in front our departure hall only minutes later.

The Real Reason Our Troops Are in Afghanistan: To Fight Terrorists? Nope. Women’s Rights? Guess Again…

Blogger’s Note: To save space, I’m only posting Tomgram's intro to this important article and its first paragraph. Follow the link to the whole article. BTW If you’d like to know better who Pepe Escobar is, watch this equally important video.

Posted May 12, 2009 3:37 pm

Tomgram: Pepe Escobar, Pipelineistan Goes Af-Pak

Back in March, Pepe Escobar, that itchy, edgy global reporter for one of my favorite on-line publications, Asia Times, began laying out the great, ongoing energy struggle across Eurasia, or what he likes to call Pipelinestan for its web of oil and natural gas pipelines. In his first report, he dealt with the embattled energy corridor (and a key pipeline) that runs from the Caspian Sea to Europe through Georgia and Turkey -- and the Great Game of business, diplomacy, and proxy war between Russia and the U.S. that has gone with it.

Now, in the second of what will be periodic "postcards" from the energy heartlands of the planet, he plunges eastward into tumultuous Central and South Asia and the great devolving battleground that, in Washington, now goes by the neologism of Af-Pak (for the Afghanistan-Pakistan theater of operations). There, the skies are filled with planes and unmanned aerial drones, and civilians as well as combatants die every day in increasing numbers as ever more frequent attacks and expanding conflicts make daily headlines, while, in Afghanistan, Washington continues to build new military bases and ready itself to send in reinforcements.

Those are, of course, the front-page stories. Energy, especially in the form of oil and natural gas, fuels everything from civilization to its various discontents and means of destruction, and yet it remains largely on the business pages of our papers. Even in a time of relatively depressed oil and gas prices, energy runs like an undercurrent just beneath global headlines. Under the carnage of war, that is, courses what Escobar likes to call the Liquid War, and just how the energy flows and through which territories controlled by whom does turn out to make -- quite literally -- a world of difference, even if that isn't what captures our attention most of the time.

Today, let Escobar, whose latest book is Obama Does Globalistan, take you deep into the "New Great Game" that will determine the shape of our future planet. Tom

Here below is the title and first paragraph of Pepe's article.
For the rest, go here.

Blue Gold, Turkmen Bashes, and Asian Grids

Pipelineistan in Conflict
By Pepe Escobar

As Barack Obama heads into his second hundred days in office, let's head for the big picture ourselves, the ultimate global plot line, the tumultuous rush towards a new, polycentric world order. In its first hundred days, the Obama presidency introduced us to a brand new acronym, OCO for Overseas Contingency Operations, formerly known as GWOT (as in Global War on Terror). Use either name, or anything else you want, and what you're really talking about is what's happening on the immense energy battlefield that extends from Iran to the Pacific Ocean. It's there that the Liquid War for the control of Eurasia takes place.

...

Why isn't Obama turning to the Credit Unions?

Blogger's Note: I have been banking with the NRL Federal Credit Union for over 40 years with scarcely a glitch. One of my office mates, a technician, once served as an elected director of the NRLFCU. I believe that Mike served without pay and that the salaried officers are paid no more than standard Federal wages. Given the trillions of dollars recently lost by the largest banks, I am led to conclude that the competence (or honesty) of bank CEOs and managers decreases exponentially with the increasing magnitude their salaries, bonuses, stock options, and perks. So why is the government not restructuring the banks for which the taxpayers are now the majority stockholders (by virture of their being billed for the multi-trillion-dollar bailouts) along the lines of the nation's credit unions?

Why isn't Obama turning to the Credit Unions?
by Bob Fitrakis & Harvey Wasserman
May 12, 2009

As hundreds of our hard-earned billions are being poured into corrupt, greed-driven, lethally inefficient banks, the Administration, Congress and corporate media have studiously avoided the one sector of the banking industry that actually works---the credit unions.

Throughout the United States there are hundreds of these people-powered banks that have succeeded and prospered while all around them the traditional banking has collapsed into ruin, taking our general economy with them.

Why?

Because unlike those private banks, the America's 10,000 not-for-profit credit unions are controlled by the people who deposit their money there. Loans are made only to members. The deposits are federally insured, and investments are monitored by the depositors and, allegedly, by federal regulators.

For the most part, their decisions are made democratically. Their boards of directors are elected. Increasingly those decisions have been oriented funneling resources into new green industries whose future is bright, and that actually serve that public rather than raping it.

To be sure, there are those credit unions that are plagued with problems. Like all institutions, they all have their flaws. As creatures of the democratic process, they are capable of making wrong decisions while driving those involved stark raving mad.

But by basic mandate, credit unions are ACCOUNTABLE, a concept almost completely lacking from those mega-banks "too big to let fail."

In fact, Obama's fiscal 2010 budget contains $234.6 billion in Community Development Financial Institution funds. Some $113 billions is earmarked for "financial issues in underserved communities," according to the Treasury Department, along with another $80 million for the new Capital Magnet Fund aimed at "enhancing investments in affordable housing opportunities for the very poorest Americans." This money, says a May 7 Treasury Department release, "should be a boon to Credit Unions."

The numbers are a great improvement over the Bush era. But they pale alongside the torrent of cash slushing into failed private banks.

Since the founding of the first true credit unions in Germany beginning in 1852, the institutions have spread throughout Europe, India and North America. The first came to the US in New Hampshire in 1909.

Edward A. Filene, the Boston merchant whose famous basement offered bargain clothing to working people, Basic principles include the idea that only members can borrow money from a credit union, and that the loans must be "prudent and productive." Because loans involve the money of a close-knit group, and must be approved by members whose money is at risk, the credit unions are a model of how the banking system might be remade.

On average about 10 of the nation's 10,000 credit unions fail each year. Because depositors' money is federally guaranteed, they may lose their bank, but not their deposits.

--
Originally published by The Free Press (http://freepress.org).

AZ Attorney General Recounts Pima County RTA Ballots in Secret, Foiling Citizen Efforts to Determine Whether or Not this $2 Bn Initiative Was Stolen

Bill Risner is interviewed by Tucson newscaster Bud Foster on this subject.

Tucson Citizen
April 27, 2009

Election integrity: Ensured or still in question?
Bill Risner: Full Transparency is the answer in achieving solid results - and public trust

The Pima County Democratic Party is in unanimous agreement that the accurate counting of our votes is fundamental, critical and non-negotiable. Some 1,500 of our volunteers work at each election to ensure the honesty of those elections. The recent RTA ballot count by the Attorney General’s office was a by-product of that effort but, by no means, a central focus. The central problem is that we use a computer system that makes cheating easy and detection difficult.

The RTA was endorsed by the Democratic Party. Our concerns had nothing to do with the plan. It had everything to do with the sworn affidavit in which the computer operator confessed to rigging the election on the instruction of his county bosses. That reported confession combined with our analysis of the database that revealed multiple anomalies consistent with such rigging required an investigation, in our view, to settle a supremely important question.

Local newspapers and the Republican and Libertarian parties joined in our request for a serious investigation. Since the ballots had been in the custody of Pima County officials for the past two and a half years, the issue of whether those ballots were the original ballots was a necessary issue to resolve. Pima County owns a ballot printing machine and the “GEMS” election software still contains all the printing instructions for that election. The original ballots were printed on an offset press by the Runbeck Company and Pima County’s ballot printing machine uses a laser printer. We asked the Attorney General to conduct a forensic examination itself, or to allow us to look at the ballots with a microscope to confirm that they were all offset-printed. The Attorney General refused both requests.

We noted that the simple non-destructive examination of sample ballots would serve our mutual goal of public confidence. Despite the presence of the microscope during the one-and-a-half weeks that the ballots were being counted, the Attorney General never permitted the examination of any ballots. We regret that he chose not to resolve that obvious issue since it was both important and easy to resolve.

However, our primary concern, by far, concerns future elections. The value of examining past election practices is to ensure that corrections and safeguards are in place for future elections. The entire election process is dependant on doing it right in the first place.

The common problem shared by all citizens in Pima County is that it is easy to cheat using our computer system and very difficult to do anything about it. The “easy-to-cheat” issue is agreed upon by all knowledgeable observers. Interestingly, those who know the most about computers are the least comfortable with them counting our votes using secret software instructions. Some sample quotes explain the problem.

“Because it can be easily manipulated, the bottom line in this whole thing is we’re only going to catch the stupid people, all right, because one could also alter the audit logs. One could do anything.” – Pima County Attorney’s Office Chief Civil Deputy, Chris Straub.

-iBeta report to the Arizona Attorney General: “During testing it was discovered that the GEMS software exhibits fundamental security flaws that make definitive validation of data impossible due to the ease of data and log manipulation.”

-David Jefferson, Ph.D.: “The security mechanisms that are there are ‘in general hopelessly inadequate to prevent manipulation of ballot records or vote totals by anyone with even a very short period of access to the system.”

-Arizona Election Director Joseph Kanefield: “…this is no secret. These issues have been known by not only our office but election offices all over the country.”

The “easy-to-cheat” problem must be combined with the impossibility to challenge any election. State law requires that an election challenge be filed within five days of the approval of the canvass with specific details as to why the outcome would have been different. The paper ballots cannot be examined. The electronic database cannot be examined within that narrow time frame and can be easily altered in any event. Finally, the courts have no jurisdiction after the five-day period. Therefore, it is impossible to challenge any crooked election. We know it is impossible and so do the election computer operators.

The answer is to use a graphic commercial scanner to scan all the ballots after they are counted and to make the totality of the ballots publicly available on the internet or other electronic means. Those ballots can then be counted by any person, candidate or political party using open-source free software.

-Bill Risner is a personal injury specialist trial attorney who has represented the Pima County Democratic Party in election matters.

PS If this should be the reader's first exposure to this issue and you would like to know more, please see this blog and play the video.

THE CHINA SYNDROME: How the Melt Down Will Likely Go

Blogger’s Note: The following is an abridged version of an article in the Business Section of today’s New York Times ...with my comments interspersed.

April 13, 2009

China Slows Purchases of U.S. and Other Bonds

By KEITH BRADSHER

HONG KONG — Reversing its role as the world’s fastest-growing buyer of United States Treasuries and other foreign bonds, the Chinese government actually sold bonds heavily in January and February before resuming purchases in March, according to data released during the weekend by China’s central bank.

China’s foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion, compared with a record increase of $153.9 billion in the same quarter last year.

China has lent vast sums to the United States — roughly two-thirds of the central bank’s $1.95 trillion in foreign reserves are believed to be in American securities. But the Chinese government now finances a dwindling percentage of new American mortgages and government borrowing.

This means China’s central bank currently owns about $1.3 trillion in American securities, which is a large investment to them but only about 17% of the current U.S. national debt (see below).

In the last two months, Premier Wen Jiabao and other Chinese officials have expressed growing nervousness about their country’s huge exposure to America’s financial well-being.

The main effect of slower bond purchases may be a weakening of Beijing’s influence in Washington as the Treasury becomes less reliant on purchases by the Chinese central bank.

Uhh... Less reliant? With the national debt practically doubling in the Bush years from $5.7 trillion to $10.0 trillion – and as of 7 April is standing at $11.2 trillion – one has to ask: Just who is going to step in and buy our ever mounting debt if the Chinese stop buying ...or worse, if they start selling? Answer: No one but suckers.

Asked about the balance of financial power between China and the United States, one of the Chinese government’s top monetary economists, Yu Yongding, replied that “I think it’s mainly in favor of the United States.”

He cited a saying attributed to John Maynard Keynes: “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.”

But if you are known to have squandered that million pounds and then gambled away couple million more on top of that, your bank manager realizes he is no longer at your mercy. In fact he is left with no choice but to write off his loan to you ...and turn his thoughts to the most merciless punishment he can legally lay on you!

Private investors from around the world, including the United States, have been buying more American bonds in search of a refuge from global financial troubles. This has made the Chinese government’s cash less necessary and kept interest rates low in the United States over the winter despite the Chinese pullback.

Uhh... How many savvy investors truly believe American bonds are “a refuge from global financial troubles”? The only way I can think of that the Chinese government’s cash has been made “less necessary” would be if the Fed is buying this stupendous debt with taxpayer money.

There have also been some signs that Americans may consume less and save more money in response to hard economic times. This would further decrease the American dependence on Chinese savings.

Just “some signs”? The U.S. unemployment rate has been rising exponentially for two full years. Of course, Americans must consume less now and try to save more. But the more Americans who lose their jobs, the fewer there will be who have anything to save. And the bloated ranks of job seekers will depress the wages of those still working. So it is totally dopy to think that Americans’ savings can even slightly compensate for the Chinese government pulling out of their “T-bill” investments.

Mr. Wen voiced concern on March 13 about China’s dependence on the United States: “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”

The main worry of Chinese officials has been that American efforts to fight the current economic downturn will result in inflation and erode the value of American bonds, Chinese economists said in interviews in Beijing on Thursday and Friday.

“They are quite nervous about the purchasing power of fixed-income assets,” said Yu Qiao, an economics professor at Tsinghua University.

The Chinese Premier and other officials are talking about what the mainstream media repeatedly refer to as “ultra safe” U.S. Treasury bonds. Why are we being told they are “ultra safe” when the Chinese Premier is “definitely a little worried” about them? Answer: if a single country (e.g., Korea or Brazil) should ever start seriously selling, then so must China and Japan and everyone else. It would be a panic that would swiftly drive down the dollar values of all classes T-bills, pushing the interest rates the other way, that is, skyward. And in that instant most of those invested in U.S. T-bills and/or any other interest-paying U.S. bonds will loose their shirts.

The abrupt slowdown in China’s accumulation of foreign reserves ... seems to suggest that investors were sending large sums of money out of mainland China early this year in response to worries about the country’s economic future and possibly its social stability in the face of rising unemployment.

My thought: When Americans finally understand that their unemployment rate has reached about 20% when calculated by more realistic methods, possibly there will be social instability in the U.S. too.

Evidence of such capital flight included a flood of cash into the Hong Kong dollar. Mainland tourists were even buying gold and diamonds during Chinese new year holidays here in late January.

Well, the gold and diamonds are excellent hedges against currency devaluations...

China’s reserves have soared in recent years as the People’s Bank bought dollars on a huge scale to prevent China’s currency from appreciating as money poured into the country from trade surpluses and heavy foreign investment. But China’s trade surpluses have narrowed slightly as exports have fallen, while foreign investment has slowed as multinationals have conserved their cash.

Heavy purchases of Hong Kong dollars by mainland Chinese residents early this year also have the indirect effect of helping the United States borrow money. The Hong Kong government pegs its currency to the American dollar, and stepped up its purchases of Treasury bonds this winter in response to strong demand for Hong Kong dollars.

Well, I don’t know to what extent Hong Kong has really been buying Treasury bonds. But I do have a hutch as to why mainland Chinese have been converting their greenbacks to Hong Kong dollars: When the American dollar ultimately crashes, you can count on Hong Kong to UNpeg their dollar from the freefalling greenback...