NightBlogger

Source: Norwich Bulletin
TAUNTON, Mass. — A 53-year-old wife and mother fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead. Police in Taunon say Carlene Balderrama used her husband’s high-powered rifle to kill herself Tuesday afternoon, 90 minutes before her foreclosed home was to be sold at auction. The mortgage company notified authorities, who found her body an hour later. Police say she left a note to her family telling them to take the life insurance money to pay for the house.

Source: About.com
Got fear of flying? Better try to suppress it, at least until you’re on the airplane, because the Transportation Security Administration (TSA) has started conducting random additional at-gate screening of airline passenger who display “involuntary physical and physiological” actions indicating stress, fear or deception.

Passengers selected for the additional screening are separated from the line and may be subjected to enhanced security procedures including, checking and matching passenger identification and boarding passes, conducting physical searches of carry-on luggage and using handheld explosive detection units. The behavioral screening checks are unannounced and may be done at any gate, at any time.

While the TSA acknowledges that displaying stress or fear while waiting in line to get on an airplane does not automatically mark a person as a terrorist or criminal, they believe the enhanced behavioral screening can help their security officers determine if an individual poses a higher security risk. “Passenger safety continues to be our mission as we use flexible measures in our approach to random screening” assures the TSA in a press release. “Your safety is our priority.” So, whatever you do, relax.

July 21 (Bloomberg) — Investors worldwide are betting more than $1 trillion on a collapse in stock prices. Managers from William Ackman to Jim Rogers made a total of at least $1.4 billion in July with wagers against U.S. mortgage financiers Fannie Mae and Freddie Mac, data compiled by Bloomberg as of last week show. Harbinger Capital Partners staked $665 million that U.K. mortgage lender HBOS Plc would drop and Sao Paulo-based hedge-fund manager Francisco Meirelles de Andrade’s short selling of Cia. Vale do Rio Doce is also paying off. More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007, data compiled by Spitalfields Advisors, the London-based firm specializing in securities lending, show. Almost all of that is being used to speculate that shares will fall, according to James Angel, a finance professor at Georgetown University who studies short selling. The global economic slowdown, $453 billion in bank losses and an explosion of funds that can profit from stock declines spurred the increase in short selling, helping send 22 of 23 countries in the MSCI World Index into bear markets. More

Source: Seeking Alpha.com
We are a year into the financial pain and virtually no systemic problem has been solved. Markets have entered into a new unsustainable cycle. The new dance is a two-step. Home prices slide, delinquencies rise, defaults rise. This puts additional pressure on housing going forward. Financial firms announce greater write-offs. Retailers slump and contagion goes global. Selling grips the markets, the good and the bad are sold off indiscriminately. Commodities rise, fear escalates and reaches a crescendo as at least one major institution nears or reaches insolvency. Forecasts of impossible return to the good old days are debated and rebound timetables are pushed back. In the depths of the swoon, the Fed opens the discount window to some new and previously barred set of institutions. Bail-outs are readied, Treasury checks are cut and we rebound off the lows. Bad news becomes good, commodities sell-off and financials soar.

We are at least three episodes deep. Discount window borrowing is open to anyone not convicted of a federal crime. Interest rates are under half the official rate of inflation. House prices keep falling, delinquencies keep rising and losses keep mounting. Mountains of dubious debt have and will be parked on the Government’s books. Bad mortgages, mortgage bundles and sundry cycle on and off Fed books as the Treasury writes checks to the public, maybe JPMorgan Chase (JPM) and likely Fannie Mae (FNM) and Freddie Mac (FRE). The dollar rallies when folks ignore that the Greenback is ever more backed by home mortgages. Interest-rate jawboning replaces inflation management and traders adapt to buying policy driven rallies and shorting on rising fear and fading intervention. Fear returns, babies are tossed with bath-water, commodities rally and short attacks batter firms based on rumor and trend.

Each round sees lower lows and greater intervention. Early on, reassurances and rate cuts rallied the believers. When that failed, new regulation and credit action were added. When that failed, Treasury assisted liquidation, greater assurance and rebate checks were put into motion. As that failed, direct mortgage aid, tightened regulation and enforcement of short position mixed with explicit assurance of implicit guarantees. New housing assistance is now forthcoming and another round of rebate checks appears increasingly likely. Now that we know this cycle is not working to solve any systemic or structural problem, we will do more. How much bad debt can Uncle Sam paper over or eat? How much household and financial pain can be pushed onto government books? How much more will the Fed, Treasury, SEC and Congress have to do to reverse the next leg down? Are we flirting with disaster? With a loss of confidence in state intervention to slow or reverse the slide?

There are distinct patterns emerging. Slides are lasting longer and falling to new lows. More dramatic and extensive interventions are required to generate shorter rebounds. These factors do not augur well. Fed and Treasury actions stall downslide and nibble at the edges of larger problems. Nothing like an actual solution is in the offing. Time buying and slide soothing will have to continue long enough for an organic turn around to take effect.

Otherwise, we will ride this unsustainable wave into the rocks. Rates are below comfort levels. Consumer, producer and import price inflation are well above stated target levels and recent historic norms. Deficit spending is rising fast. There are few candidates left for discount window action that have not already been invited. Recent slides in oil and commodity prices are creating some rotation back into equities and financials in particular. There is no meaningful improvement in fundamentals - yet.

The weakness of US and EU demand has put downward pressure on oil futures prices. This is combining with housing policy, Fannie Mae and Freddy Mac assistance to breathe new life. Folks are buying on oil and commodity declines. There has been some dollar strength as US economic weakness pressures oil and commodity prices. Does that sound sustainable? The dollar has done some strengthening - further pressuring oil and commodities - as Congress and candidates get down to promising spending and tax cuts that can not possible be paid for out of tax revenues? Oil is down on declining demand from economic pain. Federal Deficit spending is spiking on bail-outs, bail-ins and rebate checks. This is good news for American equities and the macroeconomic outlook?

If this bounce is like those leading into it, I expect a real show as it reverses and greater drama is called for form the Fed, the Treasury and traders. Who will get creative temporary assistance next? Who will be attacked suddenly by a rabid short crowd on 3 month old news? What further guarantees are forthcoming? What will they say when the discount window gets a “billions served” sign a la the golden arches?

Ailing savings & loan Downey Financial Corp. (DSL: 1.96 -28.21%) said Thursday morning before market open that it lost $218.9 million during the quarter — that’s a loss of $7.86 per share — as the number of bad loans on its books continued to spiral higher. The quarterly loss represents a huge swing into the red for the Newport Beach, Calif.-based lender, which one year ago reported earnings of $32.7 million, or $1.17 per share. On the heels of yet another quarterly loss amid a housing slump that shows no signs of slowing down, the bank also said it had sacked key members of its board and executive team — including CEO Daniel Rosenthal, and current chairman and company founder Maurice McAlister (who the company said had decided to retire). More

This reporting season, there have been some major, major writedowns from the likes of WaMu, Citi, Merrill, and Wachovia. Most analysts see this quarter as the last quarter of major writedowns from the credit crisis. Haven’t we heard that every quarter? Wachovia’s share price even rallied after it reported an outsized $8.9 billion loss for the quarter. But, far from representing the last of a slew of writedowns, these writedowns represent the last sub-prime writedowns. Many more writedowns are to come in Alt-A, Option Arm and even Prime classes of mortgages. To date, there have been over $450 billion in credit writedowns by the world’s financial institutions. Bloomberg has done an amazing job in summing up the writedowns in the financial services sector as they are reported. Below is the chronological list of tallies as presented by Bloomberg starting right before New Year’s 2008.

The credit writedown tallies have unexpectedly increased dramatically every quarter since Q4 2007 (see entries in red). With the European banks still left to present Q2 2008 results, one can imagine the tally easily reaching $500 by September.

2007 12 27 Subprime Bank Losses Reach $97 Billion, Led by Citigroup: Table
2008 01 22 Subprime Bank Losses Reach $133 Billion, Led by Merrill: Table
2008 01 31 Subprime Bank Losses Reach $146 Billion as Europe Joins: Table
2008 02 22 Subprime Losses Reach $163 Billion With Asian Banks
2008 02 29 Subprime Losses Reach $181 Billion With European Banks: Table
2008 03 07 Subprime Losses Reach $188 Billion With Canada, Europe: Table
2008 03 14 Subprime Losses Reach $195 Billion; German Banks Get Hit: Table
2008 03 26 Subprime Losses Exceed $208 Billion With U.S. Writedowns: Table
2008 04 01 Subprime Losses Reach $232 Billion With UBS, Deutsche: Table
2008 04 10 Subprime Bank Losses Reach $245 Billion With WaMu, HSH: Table
2008 04 28 Subprime Bank Losses Reach $312 Billion With RBS, Nomura: Table
2008 05 09 Subprime Bank Losses Top $323 Billion With HBOS, Lloyds: Table
2008 05 19 Subprime Losses Top $379 Billion on Balance-Sheet Marks: Table
2008 06 18 Subprime Losses Top $396 Billion on Brokers’ Writedowns: Table
2008 07 02 Reference within article: Writedowns have topped $403 Billion
2008 07 15 Reference within article: Writedowns reach $415 Billion
2008 07 22 Reference within article: Writedowns reach $462 Billion
2008 07 23 Reference within article: Writedowns reach $467 Billion
More

The Trumpet
“Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation,” the U.S. Congress was told earlier this month. On July 9, Texas Rep. Ron Paul warned the House Financial Services Committee that “big events” were about to occur.

“… I have days, growing more frequent all the time, when I’m convinced the time is now upon us that some big events are about to occur,” he said. “These fast-approaching events … will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed” (emphasis ours throughout). Paul continued:

There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. …

The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical care costs; the collapse of the housing bubble; the bursting of the nasdaq bubble; stock markets plunging; unemployment rising; massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?

Until recently, Mr. Paul endured a near constant barrage of criticism for his pessimistic views on the American economy. But nowadays he’s not alone in his fear of impending economic disaster. The New York Times agreed this past weekend that “big events” are indeed on the horizon:

Meanwhile, as American debts swell and foreigners hold more of it, nervousness grows that, some day, this arrangement will end badly. The dollar has been declining in value against other currencies. Some foreigners have begun to hedge their bets by buying more euros. “Obviously, this is going to come to an end,” [president of Euro Pacific Capital Inc. Peter] Schiff said. “Foreigners are not charitable organizations, and they’re going to demand that we pay them back.”

No single country owning large amounts of dollar-based investments is inclined to dump them abruptly; nobody aims to start a panic. But fears have begun to grow that one day a country may get spooked that another is about to dump its dollars—and that could trigger preemptive panic selling.

More

Proposals would give Washington unprecedented control over kids
The U.S. House of Representatives is scheduled to debate two bills that could give the federal government unprecedented control over the way parents raise their children – even providing funds for state workers to come into homes and screen babies for emotional and developmental problems. The Pre-K Act (HR 3289) and the Education Begins at Home Act (HR 2343) are two bills geared toward military and families who fall below state poverty lines. The measures are said to be a way to prevent child abuse, close the achievement gap in education between poor and minority infants versus middle-class children and evaluate babies younger than 5 for medical conditions. More

Says trading firm attempted to ‘bang the close’ by amassing large positions just before markets closed, but overall effect on oil prices small.

NEW YORK (CNNMoney.com) — The government charged an oil trading firm Thursday with manipulating oil prices, the first complaint to be announced since the regulators began a new investigation into wrongdoings in the energy markets. The Commodity Futures Trading Commission accused Optiver Holding, two of its subsidiaries, and three employees, with manipulation and attempted manipulation of crude oil, heating oil and gasoline futures on the New York Mercantile Exchange. “Optiver traders amassed large trading positions, then conducted trades in such a way to bully and hammer the markets,” CFTC Acting Chairman Walt Lukken said at a press conference. “These charges go to the heart of the CFTC’s core mission of detecting and rooting out illegal manipulation of the markets.” More

Source: WorldNetDaily
A Wall Street Journal columnist has advised people to “start stockpiling food” and an ABC News Report says “there are worrying signs appearing in the United States where some … locals are beginning to hoard supplies.” Now there’s concern that the U.S. government may be competing with consumers for stocks of storable food. “We’re told that the feds bought the entire container of canned butter when it hit the California docks. (Something’s up!),” said officials at Best Prices Storable Foods in an advisory to customers. Spokesman Bruce Hopkins told WND he also has had trouble obtaining No. 10 cans of various products from one of the world’s larger suppliers of food stores, Oregon Freeze Dry.

He said a company official told him on the telephone when he discussed the status of his order that it was because the government had purchased massive quantities of products, leaving none for other customers. That, however, was denied by Oregon Freeze Dry. In a website statement, the company confirmed it cannot assure supplying some items to customers. “We regret to inform you Oregon Freeze Dry cannot satisfy all Mountain House #10 can orders and we have removed #10 cans from our website temporarily,” the company tells frustrated customers. “The reason for this is sales of #10 cans have continued to increase. OFD is allocating as much production capacity as possible to this market segment, but we must maintain capacity for our other market segments as well.”

The company statement continues, “We want to clarify inaccurate information we’ve seen on the Internet. This situation is not due to sales to the government domestically or in Iraq. We do sell products to this market, but we also sell other market segments … The reason for this decision is solely due to an unprecedented sales spike in #10 cans sales. “We expect this situation to be necessary for several months although this isn’t a guarantee. We will update this information as soon as we know more. We apologize for this inconvenience and appreciate your patience. We sincerely hope you will continue to be Mountain House customers in the future,” the company statement said. But Hopkins wasn’t backing away from his concerns. “The government just came in and said they’re buying it. They did pay for it,” he told WND about the summertime shipment of long-term storage butter. “They took it and no one else could have it.

“We don’t know why. The feds then went to freeze dried companies, and bought most of their canned stock,” he said. A spokeswoman for Oregon Freeze Dry, sales manager Melanie Cornutt, told WND that the increasing demand for food that can be stored has been on the rise since Hurricane Katrina devastated large sections of the Gulf Coast, cutting off ordinary supply routes. “We are currently out of stock on our cans. We are not selling any of our cans,” she confirmed. She then raised the issue of government purchases herself. “We do sell to the government [but] it is not the reason [for company sales limits],” she said. Officials with the Federal Emergency Management Agency told WND whatever government agency is buying in a surge it isn’t them. They reported a stockpile of about six million meals which has not changed significantly in an extended period. But Hopkins said it was his opinion the government is purchasing huge quantities of food for stockpiles, and Americans will have to surmise why.

“We don’t have shelters that [are being] stocked with food. We’re not doing this for the public. My only conclusion is that they’re stocking up for themselves,” he said of government officials. Blogger Holly Deyo issued an alert this week announcing, “Unprecedented demand cleans out major storable food supplier through 2009.” “It came to our attention today, that the world’s largest producer of storable foods, Mountain House, is currently out of stock of ALL #10 cans of freeze dried foods, not just the Turkey Tetrazzini. They will NOT have product now through 2009,” she said. “This information was learned by a Mountain House dealer who shared it with me this morning. In personally talking with the company immediately after, Mountain House verified the information is true. Customer service stated, ‘I’m surprised they don’t have this posted on the website yet.’ She said they have such a backlog of orders, Mountain House will not be taking any #10 can food requests through the remainder of this year and all of the next.

“Mountain House claims this situation is due to a backlog of orders, which may very well be true, but who is purchasing all of their food? This is a massive global corporation. “One idea: the military. Tensions are ramping up with Iran and news segments debate whether or not we will implement a preemptive strike in conjunction with Israel,” she wrote. Hopkins raised some of the same concerns, suggesting a military conflict could cause oil supplies to plummet, triggering a huge increase in the cost of food – when it would be available – because of the transportation issues. The ABC report from just a few weeks ago quoted Jim Rawles, a former U.S. intelligence officer who runs a survival blog, saying food shortages soon could become a matter of survival in the U.S. “I think that families should be prepared for times of crisis, whether it’s a man-made disaster or a natural disaster, and I think it’s wise and prudent to stock up on food,” he told ABC.

“If you get into a situation where fuel supplies are disrupted or even if the power grid were to go down for short periods of time, people can work around that,” he said. “But you can’t work around a lack of food – people starve, people panic and you end up with chaos in the streets.” At his California ranch, the location of which is kept secret, he said, “We have more than a three-year supply of food here.” In the Wall Street Journal, columnist Brett Arends warned, “Maybe it’s time for Americans to start stockpiling food. “No, this is not a drill,” he wrote. His concern was about various food shortages around the globe, and the fact that in a global market, prices in the U.S. reflect difficulties in other parts of the world quickly.

Professor Lawrence F. Roberge, a biologist who has worked with a number of universities and has taught online courses, told WND he’s been following the growing concern over food supplies. He also confirmed to WND reports of the government purchasing vast quantities of long-term storable foods. He said that naturally would be kept secret to avoid panicking the public, such as when word leaks out to customers that a bank may be insolvent, and depositors frantically try to retrieve their cash.
Also See: US, UK, France, prepare to attack Iran?

Rising food prices are putting millions of people in East Africa at risk of severe hunger and destitution, the UK-based charity Oxfam has warned. Droughts, war and poverty have put an estimated nine to 13 million people in the region in urgent need of humanitarian assistance, it says. The situation has been made worse by rising food prices, with wheat and rice particularly expensive. A BBC correspondent says some people have started to eat animal feed. Many people in the remote north-eastern Afar region raise animals for a living but many camels have died and the goats are starting to succumb to hunger too. More

This just came in off the tipline, it seems the husband of a U.S. citizen has gone missing somewhere on that magical highway between Naco and Cananea, Sonora. Lots and lots of things happen on that 35 mile stretch of road, many of them terrible, none of them clear. If it bears out, and so far it seems to, this isn’t good. Last week, the Mexican Army uncovered a grave with what they said were four bodies inside. Others, including a Cananea law enforcement source, tell me it was actually 11 bodies in that grave. That doesn’t include eight more people have been reported missing between June 19 and today. It says something of what’s been happening in Cananea lately that the families of the eight missing men all willingly went to police. What’s always stayed inside, between the families, is now on the outside. This smells of panic. More

The International Olympic Committee (IOC) has confirmed a ban on Iraq from competing in the Beijing Games in a major blow to seven Iraqi athletes who had hoped to travel to China this August, an IOC letter said. In the letter dated July 23 and addressed to the Iraqi Minister of Youth and Sports, Jassim Mohammed Jaffer, the IOC said it was moving ahead with a ban first imposed on Iraq’s athletes last month. More

Locally grown produce is in vogue as even the biggest grocers try to appeal to shoppers and save on fuel costs. Among the big names selling homegrown food are Whole Foods Market, Safeway, Tesco, and Wal-Mart. As gas prices remain high and the popularity of local food grows—the number of local farmers markets has more than doubled in the past decade, the Department of Agriculture says—grocers are reviving the old practice of buying from smaller regional farms. More

Ford Motor Co. posted the worst quarterly performance in its history Thursday, losing $8.67 billion in the second quarter. The net loss includes $8.03 billion worth of write-offs because of a decline in value of North American assets and Ford Motor Credit Co.’s lease portfolio. Even excluding those items, Ford lost 62 cents per share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected a 27 cent loss per share. More

Source: (Reuters) - The pace of existing home sales in the United States fell in June to a 4.86 million-unit annual rate, the National Association of Realtors said in a report on Thursday that saw the sales volume hit a 10-year low. Economists polled by Reuters were expecting home resales to fall to a 4.93 million-unit pace, from the 4.99 million rate initially reported for May. The June rate was the lowest since a 4.83 million rate in early 1998, the Realtors said. The inventory of homes for sale held steady at 4.49 million homes or an 11.1 months’ supply at the current sales pace. The median national home price declined 6.1 percent from a year ago to $215,100.

Moscow is angry about U.S. plans for missile-defense sites in eastern Europe and Izvestia cited a “highly placed” military aviation source as saying, “While they are deploying the anti-missile systems in Poland and the Czech Republic, our long-range strategic aircraft already will be landing in Cuba.” Izvestia said this apparently refers to long-range nuclear-capable bombers. Former Russian Air Force Commander-in-Chief Anatoly Kornukov told Russia’s Interfax news agency Thursday that the country’s “strategic bombers are entitled to use airfields in any country, including Cuba, as long as its leaders do not object.” More

The head of a prominent cancer research institute issued an unprecedented warning to his faculty and staff Wednesday: Limit cell phone use because of the possible risk of cancer. The warning from Dr. Ronald B. Herberman, director of the University of Pittsburgh Cancer Institute, is contrary to numerous studies that don’t find a link between cancer and cell phone use, and a public lack of worry by the U.S. Food and Drug Administration. Herberman is basing his alarm on early unpublished data. He says it takes too long to get answers from science, and he believes that people should take action now, especially when it comes to children. “Really at the heart of my concern is that we shouldn’t wait for a definitive study to come out but err on the side of being safe rather than sorry later,” Herberman said. No other major academic cancer research institutions have sounded such an alarm about cell phone use. But Herberman’s advice could raise concern among many cell phone users and especially parents. More

SAN DIEGO (Reuters)
San Diego’s city attorney said on Wednesday he filed a lawsuit against Bank of America Corp and its Countrywide unit to prevent the mortgage lenders from foreclosing on homes in the city, which he aims to make a “foreclosure sanctuary.” City Attorney Michael Aguirre plans to file similar lawsuits against Washington Mutual Inc, Wells Fargo & Co and Wachovia Corp in an effort to make the lenders negotiate with mortgage borrowers facing foreclosure. “We would like to see San Diego become a foreclosure sanctuary,” Aguirre said. Housing markets across Southern California, including the city of San Diego and the county of the same name, are seeing steep increases in foreclosure rates because so many homes bought there earlier this decade involved subprime mortgages and other types of risky loans. More

John Browne
It was camouflaged by means of securitization, in the form of Collateralized Debt Obligations (CDO’s), sometimes packaged within triple “A” bundles. This so-called “toxic waste” was passed on to unsuspecting financial institutions around the world. The hidden virus infected the entire vast international financial system. Soon, the credit markets tightened, threatening first their own financial crisis and then, with their reduced lending ability, an economic recession.

When the Treasury/Fed team moved to rescue Bear Stearns and, more recently, Fannie Mae and Freddy Mac, the $5 trillion-plus burden of risk was neatly transferred to the American citizen. This week, the Wall Street Journal commented on Nouriel Roubini, the New York University economist. He aptly observed that it was “the price of a system that privatizes profit and socializes losses.” People could be excused for protesting strongly against such political policies as outrageously un-American.

The rescue of Fannie Mae and Freddy Mac, in particular, generated a wave of buying amongst the so-called “bargain basement” financial stocks, off some 80 percent from their highs. This optimism was based largely on the belief that the taxpayer would be forced to rescue the banks. But the banks are not the only financial institutions in trouble. The home lending and credit boom provided a feast for all manner of other speculations. Credit cards lenders became very aggressive as did auto lenders and lenders to students. Even businesses borrowed in order to participate in the great consumer credit boom.

These categories of lending are vast, in sum, amounting to several trillion dollars. All financials are exposed, but the degree of infection is not yet fully understood. Soon, even the government must wonder how much more taxpayer “rescue” the $14 trillion U.S. economy can afford? As the recession takes hold, borrowers are heading for stringent times, especially those with large, high cost credit card debts. Likewise, their lenders, including many regional banks, are likely to experience massive loan defaults. Then, there are the insurance companies who have invested much of their own reserve funds in real estate.

In short, investors should become urgently aware that banks are not the only financial institutions that will be adversely affected by the severe economic conditions now looming ahead. Before being tempted back into buying financial stocks as “bargains”, investors should assess carefully whether or not the government will be able, either financially or even politically, to extend taxpayer obligations to underwrite the entire financial industry. Finally, investors should estimate what the long-term cost of government support will be in terms of higher taxes and the hyperinflation that will cause the further debasement of the U.S. dollar. More

TFEX 08-4 “Operation Brimstone” Flexes Allied Force Training

Navy NewsStand

Story Number: NNS080715-21
Release Date: 7/15/2008 5:17:00 PM

From Commander, U.S. 2nd Fleet Public Affairs

NORFOLK (NNS) — More than 15,000 service members from four countries will participate in Joint Task Force Exercise (JTFEX) 08-4 “Operation Brimstone”, July 21-31 in North Carolina and off the eastern U.S. coast from Virginia to Florida.

JTFEX 08-4 serves as a ready-for-deployment certification event for the Theodore Roosevelt Carrier Strike Group (TR CSG) and the Iwo Jima Expeditionary Strike Group (IWO ESG). The exercise will also serve as a Joint Task Force Capable Headquarters sustainment event. In addition, JTFEX 08-4 will offer preliminary accreditation for 2nd Fleet’s Maritime Headquarters with Maritime Operations Center (MHQ with MOC)). MHQ with MOC is a new approach to command and control for fleet commanders.

“This exercise is a tremendous opportunity to train; not only as the Navy and Marine Corps team, but with our joint and coalition partners as well,” said Commander, 2nd Fleet Vice Adm. Marty Chanik.

“JTFEX 08-4 will flex our warfighting capabilities from the operational level through expeditionary strike force and strike group operations with several of our coalition partners – France, Brazil and the United Kingdom.”

The exercise also marks the first time that forces from Navy Expeditionary Combat Command are participating in an East-Coast JTFEX. NECC forces operating in the littorals and riverine environment are supporting integrated operations.

“Navy Expeditionary Combat Command provides a self-contained adaptive force package with a command element tailored to support the full spectrum of operations from major combat operations to unconventional and irregular warfare,” said NECC commander Rear Adm. Mike Tillotson.

U.S. and coalition naval assets underway for the exercise include the U.S. aircraft carrier USS Theodore Roosevelt (CVN 71), the amphibious assault ship USS Iwo Jima (LHD 7) with associated units including the British aircraft carrier HMS Ark Royal (RO 7), the Brazilian Navy frigate Greenhalgh (F-46) and the French submarine FS Amethyste (S 605). BNS Greenhalgh is the first Brazilian Navy ship to operate integrated in a U.S. strike group.

French Rafale fighter aircraft assigned to the 12th Squadron, and Hawkeye early warning aircraft assigned to the 4th Squadron will conduct carrier qualifications and cyclic flight operations with U.S. Carrier Air Wing 8 during Theodore Roosevelt Carrier Strike Group’s Joint Task Force Exercise. This marks the first integrated U.S. and French carrier qualifications and cyclic flight operations aboard a U.S. aircraft carrier. More

In a new sign of increasing inequality in the U.S., the richest 1% of Americans in 2006 garnered the highest share of the nation’s adjusted gross income for two decades, and possibly the highest since 1929, according to Internal Revenue Service data. Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group’s share of the tax burden has risen, though not as quickly as its share of income. The figures are from the IRS’s income-statistics division and were posted on the agency’s Web site last week. The 2006 data are the most recent available. The figures about the relative income and tax rates of the wealthiest Americans come as the presumptive presidential candidates are in a debate about taxes. Congress and the next president will have to decide whether to extend several Bush-era tax cuts, including the 2003 reduction in tax rates on capital gains and dividends. Experts said those tax cuts in particular are playing a major role in falling tax rates for the very wealthy. More

The Federal Emergency Management Agency asked a federal judge Wednesday for immunity from lawsuits over potentially dangerous fumes in government-issued trailers that have housed tens of thousands of Gulf Coast hurricane victims. Lawyers for victims of hurricanes Katrina and Rita accuse FEMA of negligence for sheltering them in trailers with elevated levels of formaldehyde, a preservative used in construction materials that can cause health problems. But a government attorney told U.S. District Judge Kurt Engelhardt that the FEMA’s decisions in responding to a disaster, including its use of travel trailers after Katrina, are legally protected from “judicial second-guessing.” More
Also See: FEMA crimes: formaldehyde trailers sicken tens of thousands

As Bernanke points out, when a country has a government-controlled paper money system, then it can use the printing press to increase the relative supply of domestic currency. As the printing presses crank up, the price of money relative to goods and services falls. In other words, the domestic currency loses value as inflation takes hold. Bernanke’s last sentence is positively chilling; “under a paper money system, a determined government can always generate higher spending and hence positive inflation.” His words are extremely precise, and worth close examination. The qualification “paper money system” is crucial. There are plenty of monetary regimes where the government could not devalue the currency; for example; a gold standard, a silver standard; a fixed change rate; or a currency board. Unfortunately, a paper money system is exactly what we have here in the UK and in the US. More

MISH
Reuters is reporting WaMu has $3.33 bln loss, may be cut to “junk”. It is now time to explore the implications of the desperate deal that Washington Mutual made with TPG. Please consider Lack of Transparency = Shareholders Get Ratcheted. Following are a few highlights from the above lengthy, but well written article. I condensed this down as best as I can but inquiring minds will definitely want to read the entire article.

Even though hundreds of billions of dollars of capital have been raised by the financial sector over the past several months, which of the investors in a financial institution have made money since their initial investment? Answer: Zero.

We can’t think of one. They are all underwater. When Abu Dhabi first invested $7.5 billion in Citigroup last November, Citi’s stock was $35. Subsequently, when Citi did their $14.5 billion raise in January, the stock was trading at $30. Today Citigroup’s stock is under $20… and it keeps falling. Merrill Lynch did a combined raise of $12.8 billion in December and January at $48. Now the stock is under $35… and also falling. Warburg Pinkus made their now infamous $1 billion investment in MBIA at $31 per share. MBIA has fallen over 80% since and is now trading at under $5 per share.

Those who participated in Ambac’s $1.5 billion rights issue in March are down a similar amount, 80%, as the stock now hovers under $2. Bank of America made their initial investment in Countrywide Financial last August at $18 per share (rather surprising to us, given that Countrywide looked to be going bankrupt if BofA didn’t come to the rescue). Bank of America subsequently made a takeover offer in January. Today Countrywide shares can be got for under $5 per share.

TPG invested in Washington Mutual to the tune of $7 billion at $8.75 per share, a substantial discount at the time to WaMu’s stock price of $13. Today WaMu’s stock is $6. Last month AIG raised $20 billion when their stock was trading at $37 per share. Today AIG stock is just above $30 per share. Even those who participated in Lehman Brothers’ $6 billion equity offering last week at $28 per share are already underwater, with LEH currently trading below $24 (year-to-date Lehman’s stock is down over 60%).

Ironically, thanks to full ratchet provisions, this promises to lead to further dilution and even weaker stock performance going forward.

There were at least some smart investors who noted the downward trend and successfully negotiated for downside protection. We know of at least two cases (though there are doubtless others); namely, Merrill Lynch’s $12.8 billion investment from Temasek (the Singapore sovereign wealth fund) and Washington Mutual’s $7 billion raise from TPG (a private equity firm).

Quite unbeknownst to the general public at the time, downside protection was built into these equity raises to protect these investors. They are called “look back” provisions or “full ratchet” compensation.

We believe it is more accurate to call them “death spiral” securities. They work as follows. The investors in the equity raise would have their investment “protected” by a provision which states that should the bank afterwards raise money at a lower price than what they paid, these investors would be compensated retroactively by having their initial investment priced at this lower price, thereby being issued new shares for free. It doesn’t take a mathematician to see how these provisions can result in massive dilution should the bank subsequently raise even a paltry amount of capital. A new offering will trigger a lower price because of the dilution it would cause, which would trigger even more dilution because of the lower price, which would then trigger an even lower price because of the even higher dilution, etc. This is why we call such securities a death spiral.

However, unless the bank goes bankrupt, these investors can’t lose. And we already know to what lengths the Fed will go to prevent a banking bankruptcy. It’s heads I win, tails I win.

They can even short the stock in the expectation that it will go down and still not lose. At the next financing, which is sure to come, they will be made whole… even making money on the short!

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A couple has contacted the Secret Service claiming a Central Florida bank gave them 10 counterfeit bills during a transaction. Ulises Garcia said he was withdrawing cash from a Wachovia Bank and depositing it into a Bank of America so he could pay his bills online. However, the Bank of America teller noticed something funny about 10 of the 36 $100 bills Garcia said he received from Wachovia Bank — they were counterfeit, Local 6’s Tony Pipitone reported. More

Andrew Cuomo, the New York Attorney-General, is preparing to file civil securities fraud charges against embattled investment bank UBS, according to reports. Mr Cuomo may file the charges, which relate to the Swiss bank’s participation in the auction rate securities market, in the next few days, according to The Wall Street Journal. Auction rate securities are short-term financial instruments that investors hold as an alternative to cash. Mr Cuomo’s charges will relate to whether UBS gave investors sufficient warning that the securities, which are generally easy to sell, can become illiquid. The $330 billion market, in which charities, student loan companies and other institutions issue the securities via investment banks, collapsed in February leaving thousands of investors unable to sell their holdings. More

The Market Ticker
Henry Paulson is about to be given an $800 BILLION dollar blank check in the form of an increased Federal Debt Ceiling which he can spend on Fannie Mae and Freddie Mac IN ANY WAY HE CHOOSES, INCLUDING BUYING THE CRAPPIEST LOANS THEY HAVE AND STICKING A ONE HUNDRED PERCENT LOSS, $800 BILLION WORTH, ON YOUR TAX BILL. A huge percentage of the debt issued by Freddie and Fannie - about $1.5 trillion worth - is held by foreign central banks. Paulson is proposing to bail out the Chinese and Japanese governments with our tax money! Paulson SAYS he will “protect the taxpayer.”

THE BILL ALLOWS HIM TO SCREW YOU WITH ABSOLUTELY NO RECOURSE. More

Fannie and Freddie own or guarantee nearly half of the nation’s $12 trillion worth of home mortgages. If they collapse, so may the whole system of finance for American housing, threatening a most unfortunate string of events: First, an already plummeting real estate market might crater. Then the banks that have sunk capital into American homes would slip deeper into trouble. And the virus might spread globally. The central banks of China and Japan are on the hook for hundreds of billions of dollars worth of Fannie’s and Freddie’s bonds - debts they took on assuming that the two companies enjoyed the backing of the American government, argues Brad Setser, an economist at the Council on Foreign Relations. Commercial banks from South Korea to Sweden hold investments linked to American mortgages. Their losses would mount if American homeowners suddenly couldn’t borrow. The global financial system could find itself short of capital and paralyzed by fear, hobbling economic growth in many lands. More

(NaturalNews)
Children’s risk of cancer goes up substantially the closer they live to a nuclear power plant, according to a German government study. Researchers contracted by the Federal Office for Radiation Protection studied the occurrence of cancer in children under the age of five who were living within five kilometers (three miles) of one of 21 nuclear reactors in 41 districts of the country between the years of 1980 and 2003. A total of 4,735 children without cancer and 1,592 children with cancer were included in the study population. More

TOKYO - Japan’s weather agency says a strong earthquake with a preliminary magnitude of 6.8 struck off the northern Japanese coast. The Meteorological Agency says there was no danger of a tsunami, or seismic waves, from the 12:26 a.m. (11:26 a.m. EDT) quake, which occurred about 75 miles below the ocean’s surface off the coast of Iwate. More

NEW YORK (Reuters) - E*Trade Financial Corp reported a wider-than-expected second-quarter loss on Tuesday, and warned it could see more losses as the economy deteriorates and more loans sour. E*Trade posted a net loss of $94.6 million, or 19 cents a share, in the quarter ended June 30, compared with a profit of $159.1 million, or 37 cents per share, a year earlier. The quarterly loss was its third in a row. More

NEW YORK (Reuters) - Washington Mutual Inc, the largest U.S. savings and loan, posted a $3.33 billion second-quarter loss on Tuesday as souring mortgages forced it to set aside more money for loan losses. The thrift’s deteriorating health prompted Moody’s Investors Service to say it may downgrade Washington Mutual to “junk” status. Shares of Washington Mutual fell in after-hours electronic trading. Washington Mutual said its third straight quarterly loss was $3.34 per share, more than triple the $1.09 per share loss that analysts on average expected according to Reuters Estimates. Year-ago profit was $830 million, or 92 cents per share. More

The emails keep coming and many of you are finding unsolved or closed cases that fit the pattern. Individually, these accounts got a blurb in a newspaper or a mention on the evening news. Now that the NYPD Detectives theory about a connection with drownings is out there, you’re taking another look at these cases. In most cases, the young man was last seen with friends at a bar. After an exhaustive search, his body is found in a river and his identification and wallet are in his pocket. The Medical Examiner finds no signs of foul play and the case is either closed or goes cold.

Many of you have asked for a list of the 40 men that NYPD Detectives Kevin Gannon and Anthony Duarte claim are victims of the Smiley Faced Killers. At their New York news conference, a spokesperson for their company agreed to release a list. To my knowledge, this has not been made public. It’s unfortunate, because it leaves many families wondering if their child’s drowning was investigated. During my interviews with the Detectives, they discussed many names and cases. The majority of these have been included in my stories or have been intentionally excluded because the family does not want more publicity. From the emails that I’m receiving, there are many people out there doing their own investigations because they are frustrated that law enforcement appears to be uninterested. Here are a few men who’s cases I hadn’t heard about until they were emailed to KSTP this week. More