Deficits May Alter U.S. Politics and Global Power
February 3rd, 2010Via: New York Times:
In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.
The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.
But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.
For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.
China Threatens U.S. Sanctions Over Arms Sale
February 3rd, 2010Via: Sydney Morning Herald:
China will erect trade sanctions against Boeing and other large US companies unless the US Congress blocks the Obama administration’s planned $US6.4 billion ($7.2 billion) weapons sales program to Taiwan, a senior defence strategist said.
Rear Admiral Yang Yi told the Herald yesterday China was prepared to hurt itself in order to teach the administration a lesson.
”We’re waiting for the reaction from US Congress and if they don’t have a U-turn then the follow-up of sanctions will come soon,” said Admiral Yang, who previously co-wrote Chinese defence white papers while director of international strategic studies at the National Defence University.
”We are clear this action will harm ourselves but we don’t care,” he said. ”We are going to give a lesson to the US government that harming others will harm yourself. This will not only affect Boeing but all companies involved in this.”
The theme of teaching the US a lesson has emerged in China since it strengthened its economic and strategic standing after the global financial crisis. Last month China’s climate change ambassador, Yu Qingtai, told the Herald that ”the key lesson” developed countries should learn from his team’s aggressive diplomacy at Copenhagen was that China could not be pushed around.
Yesterday China opened up yet another challenge to President Barack Obama warning that he would ”threaten trust and co-operation” between the two countries if he met with the Dalai Lama.
On Friday the administration presented Congress with its first weapons sale package to Taiwan.
Chinese trade sanctions against companies involved in the sales could trigger counter-measures from the US under World Trade Organisation rules. Or it could cause US companies, perhaps including Boeing, to lobby the US Congress to dilute the Taiwan arms package – which would be a milestone in China’s rising economic and diplomatic power.
Boeing, which plans to sell Harpoon Block anti-ship missiles to Taiwan, accounts for 53 per cent of the planes in China’s current commercial fleet. The company estimates the Chinese market will be worth $US400 billion over the next two decades.
The Next Leg Of The Housing Crisis In Five Simple Charts
February 2nd, 2010Via: ZeroHedge:
Below are 5 simple charts the highlight just how precarious the housing situation in the U.S. is, and how likely the second, and probably much more fierce, leg down in the markets is going to be.
A bearish report by CIBC 1captures precisely the highly unstable system that U.S. housing has become, and deconstructs it along the five key axes of weakness which while individually may be controllable to a degree, combined represent a recipe for disaster. CIBC’s main sources of concern arise from:
1. Short-lived remedies; used by the administration to prevent further price deterioration (tax-credits);
2. Shadow Inventory; in reality when accounting for the surging shadow inventory which very few dare talk about, the total number of available unit sdouble to over 8 million, representing a record high 16 months of supply.
3. Strategic defaults; the amount of households with negative equity is roughly 10 million or about 20%, in 2009 25% of all foreclosures were strategic; as populist anger against banks accelerates look for strategic defaulits to keep rising
4. Quantitative Easing expiring; This needs no introduction: the sole reason why mortgage rates have been as los as they have, has been due to the Fed’s constant manpulation of the MBS market via the $1.4 trillion MBS/Agency QE purchase program. With this program set to expire in 2 months, rates are set to explode.
5. House Prices are already entering a double dip; Previously we discussed the Case Shiller NSA home price index number which indicated that a double dip in prices has already commenced. A positive feedback loop will only lead to further deterioration here
City of L.A. Wants Construction of New Buildings to Include Catchment Systems to Handle Toxic Runoff During Rain Storms
February 2nd, 2010What is happening to the millions of people who are breathing the air that’s carrying all the pollutants that are winding up in the toxic runoff?
This is the Los Angeles Times from 2002:
A report by a Washington, D.C., environmental group says that children in California are at greater risk of contracting cancer from inhaling toxic air pollutants than adults.
The study, which was to be released today and focused on five areas of the state, maintains that a 2-week-old baby in the Los Angeles region has already been exposed to more pollution than the federal government deems acceptable over a lifetime.
By age 18, the same child will have inhaled enough contaminants to exceed the acceptable exposure level hundreds of times over, according to the study.
…
California is the nation’s smoggiest state and researchers have long known that air pollution contains a mix of industrial and automotive chemicals. Solvents, metals and unburned fuel not only contribute to smog and haze, but can cause cancer, reproductive harm and neurological damage.
More, from 2009: L.A. Air Pollution May Endanger Babies, People in General:
It looks like L.A. air could be killing us in more ways than one.
Two studies released Wednesday have linked toxic air pollution in Southern California to cancer and complications with birth.
Exposure to local traffic-generated pollution increased the risk of major complications and preterm birth, concluded a report published online in Environmental Health Perspectives. Local scientists studied the relationship of traffic pollution, preterm birth and a complication called preeclampsia that can lead to maternal and perinatal morbidity.
By measuring pregnant women’s exposure to chemicals emitted by local traffic (nitrogen oxides and particulate matter), the researchers concluded that the risk for preeclampsia increased by as much as 42% at the highest exposures. The risk for “very preterm delivery” (meaning delivery when the fetus is less than 30 weeks old) increased by as much as 128% for women exposed to the highest levels.
The study was the first to look at the connection between preeclampsia and air toxics. It focused on births in Los Angeles and Orange counties.
Meanwhile, an Environmental Protection Agency study found that Los Angeles has some of the highest levels of cancer-related toxic air pollutants in the country. For residents of Cerritos, located at the heart of the L.A. basin, the EPA estimated the cancer risk due to air toxics at 1,200 in 1 million, the highest in the country and more than 33 times the national average. The statistic represents the expected number of additional deaths per million people, based on a lifetime exposure to the chemicals.
Via: Los Angeles Times:
A proposed law would require new homes, larger developments and some redevelopments in Los Angeles to capture and reuse runoff generated in rainstorms.
The ordinance approved in January by the Department of Public Works would require such projects to capture, reuse or infiltrate 100% of runoff generated in a 3/4 -inch rainstorm or to pay a storm water pollution mitigation fee that would help fund off-site, low-impact public developments.
The fairly new approach to managing storm water and urban runoff is designed to mitigate the negative effects of urbanization by controlling runoff at its source with small, cost-effective natural systems instead of treatment facilities. Reducing runoff improves water quality and recharges groundwater.
Board of Public Works Commissioner Paula Daniels, who drafted the ordinance last July, said the new requirements would prevent 104 million gallons of polluted urban runoff from ending up in the ocean.
Pentagon Black Budget Sees Year Over Year Record Funding; Tops $56 Billion
February 2nd, 2010More Change.
Via: Wired:
The Defense Department just released its king-sized, $708 billion budget for the next fiscal year. Much of the proposed spending is fairly detailed — noting exactly how many helicopters the Pentagon plans to buy and how many troops it plans on playing. But about $56 billion goes simply to “classified programs,” or to projects known only by their code names, like “Chalk Eagle” and “Link Plumeria.” That’s the Pentagon’s black budget.
Cobbling together this round figure for the military’s hush-hush projects is easier than it seems. The Pentagon’s separate ledgers for operations, research and procurement all contain line items for “classified programs.” Add those to the non-sensical, all-caps programs, and you’ve got yourself an estimate for the Pentagon’s secretive efforts.
Last year, that budget grew to more than $50 billion – ”the largest-ever sum,” according to Aviation Week’s Bill Sweetman, a longtime black-budget seer. A few more billion were added for wartime operations, for a total of $54 billion. This year’total would be $2 billion higher, a 3.7 percent increase.
Not all of the Pentagon’s secret projects got a budget boost, however. Funds for the Cobra Judy missile-watching radar system were cut nearly in half, from $61 million to $36.5 million. Similar, money for the Navy’s Link Evergreen project was cut to $41 million, from $123 million.
Related: Blank Spots on the Map: The Dark Geography of the Pentagon’s Secret World by Trevor Paglen
Obama Budget Seeks More Money for Nuclear Weapons
February 2nd, 2010Even I never thought Change we can believe in would include the biggest increase in nuclear weapons related activities since the, “Early years of Ronald Reagan.”
Via: Canadian Press:
President Barack Obama is seeking increased funding for nuclear weapons research and security next year, even as his administration has pledged to reduce the world’s stockpile of nuclear arms.
The administration on Monday asked Congress for more than $7 billion for activities related to nuclear weapons in the budget of the National Nuclear Security Administration, an increase of $624 million from the 2010 fiscal year.
NNSA Administrator Thomas D’Agostino said more money is needed because the U.S. needs the best nuclear weapons facilities, scientists and engineers, even as it moves toward eventual disarmament.
“This budget is implementing the president’s nuclear vision,” he said.
NNSA wants a 4.7 per cent overall increase for infrastructure to more than $2.3 billion, including money for major long-term projects to replace aging buildings at New Mexico’s Los Alamos National Laboratory and the Oak Ridge National Laboratory in Tennessee.
Greg Mello, director of the nuclear watchdog Los Alamos Study Group, said budgets have increased in recent years, but the nation “hasn’t seen any increase in weapons activities like this since the early years of Ronald Reagan.”
He called the budget “a complete surrender to Senate Republicans,” who have argued that stockpile reductions must be accompanied by a modernized nuclear weapons complex.
Los Alamos’ budget includes about $225 million for design work for a research building to replace a 58-year-old lab where scientists analyze samples of plutonium and other radioactive materials.
Watchdog groups contend the new building would position the U.S. to build more nuclear weapons, but Los Alamos lab officials have said the facility would replace existing capabilities.
NNSA’s budget request includes more than $2 billion for stockpile support activities, a 25 per cent increase, and $1.6 billion for science, technology and engineering, an increase of more than 10 per cent.
The Fed as Giant Counterfeiter
February 2nd, 2010Via: Ludwig von Mises Institute:
San Jose State economics professor Jeffrey Rogers Hummel tells all his students that the easiest way to understand the Federal Reserve is to think of it as a giant, legalized counterfeiter. I had always known that the Fed and other central banks were like counterfeiters, but I still thought that the actual mechanics of open-market operations and so forth actually provided some important distinctions.
In large part because of my frequent email exchanges with Hummel, I now realize that I was being naïve. Once you understand the details of modern central banking, you are able to step back and see that it truly is a way for the government to use the printing press to pay its bills. All of the complicated process of targeting interest rates through buying Treasuries simply hides this essential point — and perhaps deliberately so.
January Earnings
February 2nd, 2010In January, earnings from all sources came to a total of $873.88, a miss of $126.12 from the minimum earnings goal of $1000.
This is the first miss of the earnings goal in years, and many months have far exceeded the goal. Missing the goal in January isn’t the end of the world, but it won’t happen too many times with the site remaining open, or, at least, open to the public.
I don’t want to waste the time of the handful of people who make Cryptogon possible, but for those of you who appreciate the site, but do nothing at all to support it, this page describes the financial situation. It’s up to you. You vote on the site’s availability with your financial support. I wish that reality could work differently for me, but that’s the situation. (I’m having some small but encouraging successes with some interesting hacks that I’ve been working on for a very long time. So, maybe this situation can change.)
In the event that some kind of subscription model has to be used, all of your previous contributions would apply toward any subscription fees. (Some of you would have paid up subscriptions for many decades. HA) I would have to think about which affiliate activity could be counted, since most of that isn’t attributable to individuals… Hopefully, we won’t need to go there.
With that out of the way * phew *, thank you to all of you who contributed to Cryptogon in January, and conducted business via Cryptogon’s affiliate links.
CIA Officers Working for Private Corporations
February 2nd, 2010Related: They Made a Killing: The Use of Knowledge of Covert Operations in the Stock Market
Via: Politico:
In the midst of two wars and the fight against Al Qaeda, the CIA is offering operatives a chance to peddle their expertise to private companies on the side — a policy that gives financial firms and hedge funds access to the nation’s top-level intelligence talent, POLITICO has learned.
In one case, these active-duty officers moonlighted at a hedge-fund consulting firm that wanted to tap their expertise in “deception detection,” the highly specialized art of telling when executives may be lying based on clues in a conversation.
…
A government official familiar with the policy insists it doesn’t impede the CIA’s work on critical national security investigations. This official said CIA officers who want to participate in it must first submit a detailed explanation of the type of work involved and get permission from higher-ups within the agency.
“If any officer requests permission for outside employment, those requests are reviewed not just for legality, but for propriety,” CIA spokesman George Little told POLITICO.
There is much about the policy that is unclear, including how many officers have availed themselves of it, how long it has been in place and what types of outside employment have been allowed. The CIA declined to provide additional details.
…
But the close ties between active-duty and retired CIA officers at one consulting company show the degree to which CIA-style intelligence gathering techniques have been employed by hedge funds and financial institutions in the global economy.
The firm is called Business Intelligence Advisors, and it is based in Boston. BIA was founded and is staffed by a number of retired CIA officers, and it specializes in the arcane field of “deception detection.” BIA’s clients have included Goldman Sachs and the enormous hedge fund SAC Capital Advisors, according to spokesmen for both firms.
BIA has employed active-duty CIA officers in the past, although BIA president Cheryl Cook said that has “not been the case with BIA for some time.”
But the ties between BIA and the intelligence world run deep. The name itself was chosen as a play off CIA. And the presence of so many former CIA personnel on the payroll at BIA causes confusion as to whether the intelligence firm is actually an extension of the agency itself. As a result, BIA places a disclaimer in some of its corporate materials to clarify that it is not, in fact, controlled by Langley.
BIA’s clients can put the company on a retainer for as much as $400,000 to $800,000 a year. And in return, they receive access to a variety of services, from deception detection to other programs that feature the CIA intelligence techniques.
Britain: Significant Percentage of Teenagers Think Oats Grow on Trees, Bacon Comes from Sheep
February 2nd, 2010Via: Telegraph:
Teenage schoolchildren think oats grow on trees and bacon comes from sheep, a survey showed today.
Many children and young adults also believe eggs were a key ingredient in bread, the researchers said.
The survey showed 26% of children thought bacon came from sheep, 29% thought oats grow on trees, while 17% of both children and adults under the age of 30 believed eggs were a core ingredient in bread.
Research Credit: V
