NightBlogger

Who’s being rescued? Are bailout funds being used as intended?
Dennis Kucinich: “Essentially what Secretary Paulson did the other day was to say we’re going to give the money to banks and maybe the banks will help millions of homeowners…Now you got money for bank consolidation, money for parties, money for bonuses….This is a dangerous moment for our country.”

Reuters — Families are flooding homeless shelters across the United States in numbers not seen for years, camping out in motels or staying with friends and relatives, homeless advocates say. “There are lots of families hemorrhaging into homelessness and we need to figure out how to put a tourniquet on the hemorrhaging,” Philip Mangano, the homelessness czar appointed by President George W. Bush in 2002, told Reuters. San Francisco’s four shelters are “beyond full,” according to Paul Boden of the Western Regional Advocacy Project, whose organization has identified 450 families with 800 children living in single-room hotels in the city. In Virginia’s Fairfax County, one of the richest counties in the United States, there are about 100 families on a waiting list to enter shelters, local officials say.

Maria Stephens, 38, a mother of three young boys, lived in one of the Fairfax shelters for seven months after two landlords were foreclosed on and she lost her job as a mortgage underwriter earning $80,000 a year. “It was a hell of an experience for me. I went from having my own bathroom to having to share a bathroom with five families,” said Stephens, who now works in a restaurant making $9 an hour and was helped by a local group, Reston Interfaith, to move into temporary accommodation in July.

The public perception is that newly homeless families borrowed money they were unable to repay or were the victims of greedy banks that sold them mortgages they could not afford. But homeless advocates say most are actually renters whose landlords were foreclosed on, or who lost their jobs, and were then unable to find the first and last month’s rent and security deposit to secure new accommodation. Local and state homeless groups have seen a 61 percent rise in homelessness since the foreclosure crisis began in 2007. More

Chinese Premier Wen Jiabao knows the US is no longer a credible risk, and that US consumers are broke. He made it clear China will find other buyers for their products in emerging economies. The US is now one gigantic step closer to Default and Hyperinflation.

BBC
Will China bail out the West?
Yi Gang, vice-governor of the People’s Bank of China, made this point at a meeting of world financial leaders in Washington last week. “The World Bank should urge the developed countries to shoulder their due responsibilities in stabilising the global economy,” he said. Chinese Premier Wen Jiabao has added his comments to the debate. He said his country would do its bit to help stabilise world financial markets. But in a telephone conversation with Britain’s Prime Minister Gordon Brown, he also made it clear where China’s priority lay.

“The most important thing for China now is to handle its own affairs well,” China’s state-run Xinhua news agency reported him as saying. And for all its foreign exchange reserves, China is still a developing country with its own problems that will require lots of money to fix. Just a few days ago, the Chinese leadership promised to double incomes in rural areas - where most of its people live - over the next 12 years. The government will have to try to meet these promises despite what independent Chinese economist Andy Xie believes will be an economic slowdown in China. He said the country had largely escaped financial problems affecting others, but would have to look to other areas of the world to generate future growth. “China needs to play a bigger role in circulating money among emerging economies,” he said. More

Ilargi
The Automatic Earth
“There ain’t no cure”
I know that whatever hope a new administration may evoke in the hearts and minds of Americans and people across the globe, one thing still stands. There is an untold number of trillions of dollars that needs to be sucked and wiped out of the global economic systems. These are toxic trillions. Toxic, as in: the longer they are permitted to remain within the body ‘financic’ and the body ‘politic’, the more damage they will cause.

Millions upon millions of jobs will be lost in the US alone within the next 12 months. Obama’s task will not, because it can not, be to lead his nation back into prosperous times. Certainly not before 2012, but in all likelihood not even within our lifetimes. If he wishes to prove himself to be a true leader, his mission will be to soothe the pain, to stem the bleeding, to minimize the suffering of the herd, and most of all to stop the lying and cheating that has come to define the nation, at the latest ever since Greenspan took over the Fed in 1987.

That is a role which is 1000 times harder than leading a people into prosperity. But there are no alternatives available: no-one can turn this economy around, not before it’s run its course, not until all the losses have been absorbed and many souls have perished as a result.

There will be enormous pressure on the new president to follow the path set by the IMF and the World Bank, whose solution has always been to live off the misery of people in far away corners of the planet. We can but hope that Obama has the guts to shut off access to that path. But I’m not sure of that by any means: it has been the American modus operandi for far too many years.

I see a bank merger in England, between Lloyd’s and HBOS, in which $27 billion needs to be raised in order to cut 20.000 jobs. Is that crazy or what? Moreover, the numbers pertaining to the US deficits are starting to boggle even my feeble brain. I saw yesterday how the Bush administration is being complimented on its preparations for the transition to a new government come January. And I’m thinking how I can totally imagine why they would want to transfer responsibility for all that’s in the pipeline before January 20, as soon as they can.

As soon as there’s a new president, they’ll wash their hands. However, not before they’ve run the deficit into the stratosphere. I doubt that many people still have the stomach, in the face of all the losses so far recorded, to think about what it means for the US government to borrow $2-$3 trillion in one single year, 2009. Until now, there’s never been a deficit larger than $1 trillion, not even close actually.

The new president will be left with a legacy of last-minute, legally binding, Bush, DIck and Colon commitments that will not only cause immeasurable grief on the streets of America, it will simultaneously hammer, pound and pulverize the status and value of US Treasury bonds, making it exponentially increasingly hard to finance what is needed just to keep day-to-day operations running. Treasuries are the last game left, and they too are a game that is over.

The markets will be up for a bit, hard to say for how long, but after that they will plunge in a way not seen since the 1720 South Sea Bubble. And Obama won’t be able to do anything, provided he would want to, except hold the hands of those who are drawing their last breath. He won’t be able to heal his people, or cure what is ailing the nation’s economy.

There ain’t no cure. More

Mike “Mish” Shedlock
Global Economic Analysis.blogspot.com
The ticking time bomb of over-promised, underfunded public pension plans has finally exploded. Here are a few headlines to consider:

Pension Fund of San Diego/Pension’s loss may add to San Diego’s money woes
Economic crisis hits IMRF, tax increases might be needed
Pension Crisis Looming In Canada
NY state pension fund down 20 pct since April
US public pension funds face big losses

The above is just a random sampling of hundreds of articles about pension plan woes. 40% of pension plans are underfunded and that assumes future returns of 8% annually. Good luck with that. Now think how bad things will be if the S&P drops to 600. Go one step further and think about what might happen if the US heads into an economic slump similar to Japan. More

Source: MSNBC
WASHINGTON - The government says new claims for jobless benefits increased by more than expected last week as companies cut jobs due to the slow economy. The Labor Department reported Thursday that new applications for unemployment benefits rose 15,000 to a seasonally adjusted 478,000, slightly above analysts’ estimates of 470,000. The four-week average, which smooths out fluctuations, dropped slightly to 480,250, down from a seven-year high in the previous week. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 333,000, the department said.

USA Today
More families with children are becoming homeless as they face mounting economic pressures, including mortgage foreclosures, according to a USA TODAY survey of a dozen of the largest cities in the nation. Local authorities say the number of families seeking help has risen in Atlanta, Boston, Denver, Minneapolis, New York, Phoenix, Portland, Seattle and Washington. “Everywhere I go, I hear there is an increase” in the need for housing aid, especially for families, says Philip Mangano, executive director of the U.S. Interagency Council on Homelessness, which coordinates federal programs. He says the main causes are job losses and foreclosures. Other factors have been higher food and fuel prices hitting families with “no cushion,” says Nan Roman of the National Alliance to End Homelessness. More

OpEdNews
Big Finance it seems is still living high on the hog, spending freely on parties and bonuses while the world’s poor go deeper into poverty and Americans worry about their jobs, retirement, health care and making ends meet. The first post-bailout outrage was the massive insurance giant AIG. After receiving an $84 billion tax payer bailout they had a party for their executives – the cost $440,000. There was outrage on Capitol Hill including threats to ‘get the money back.’ “They were getting their manicures, their pedicures, massages, their facials while the American people were paying their bills,” thundered Rep. Elijah E. Cummings (D-MD). But, instead the Federal Reserve gave them $38 billion more after their party. More

Financial Times

“Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries but nowhere has this trend been so stark as in the United States,” said the OECD.

The gap between rich and poor has widened in most developed countries over the past two decades as economic growth has benefited the wealthy more than the impoverished, according to the Organisation for Economic Co-operation and Development. The greatest inequality in incomes in the mid 2000s was found in Mexico and Turkey followed by Portugal and the US. Denmark and Sweden were the most equal societies in terms of income disparity in the 30-nation study.

The UK was seventh in terms of inequality – some 8 per cent above the OECD average – using the Gini scale, which measures disposable household income adjusted for household size. Mexico on the same basis was 52 per cent above average and Turkey 38 per cent. The US had the highest inequality level and poverty rate with the exception of these two countries, the OECD said in a report. Only a few countries has bucked the trend with France, Greece and Spain reducing income inequality over the past 20 years.

“Rich households in America have been leaving both middle and poorer income groups behind. This has happened in many countries but nowhere has this trend been so stark as in the United States,” said the OECD. The average annual income of the richest 10 per cent in the US – $93,000, using common purchasing parity – was the highest in the OECD. The poorest 10 per cent earned $5,800, “about 20 per cent lower than the average for OECD countries,” it said.

Angel Gurría, OECD general secretary said: “Growing inequality is divisive. It polarises societies, it divides regions within countries, and it carves up the world between rich and poor. Greater income inequality stifles upward mobility between generations, making it harder for talented and hard-working people to get the rewards they deserve. Ignoring increasing inequality is not an option.”

The biggest reason for the increase in inequality was changes in the labour market, with low-skilled workers experiencing “ever-greater problems in finding jobs”. This was despite the fact that there were more people in work across the OECD as a whole, said Mr Gurría. More people living alone or in single-parent households had also contributed to growing inequality. More

Source: Katherine Griffiths
The Telegraph
THE crisis consuming global markets is part of a fundamental shift of power from the US to emerging economies in China and the Middle East, according to Stephen Green, chairman of HSBC. Speaking at a financial conference in Dubai, the banker also condemned the financial model that has led to the crisis as “bankrupt”. The crisis, probably the worst since the 1929 Wall Street crash, will offer several lessons, Mr Green said, but added that the underlying trend of movement from West to East would “not be derailed”. “The rebalancing of the global economy towards Asia, home to over half the world’s population, and its implications for the Middle East, is the shift that will affect financial markets most profoundly,” he said. He pointed to the implosion in sub-prime mortgage lending in the US as the flashpoint but added it was “far from the only villain in town”. “The complexity and opacity of certain financial instruments reached a point where even senior and experienced banks had trouble understanding them, let alone investors,” he said.

Sub-prime lending exploded because bankers found ways to package up the debts and sell them on. Driving the process was Western consumption, fuelled by cash pumped into the US and elsewhere from developing countries, where savings surpluses have built up, Mr Green said. The HSBC chairman also criticised the bonus culture at banks, “which has so often encouraged too much opacity and excessive risk-taking”. He added that the “high-leverage model of finance is bankrupt” and said securitisation of loans would survive. “You cannot bring the whole of the world’s capital markets back on to banks’ balance sheets.” HSBC, one of the world’s best capitalised major banks, has refocused on Asia and developing markets after a disastrous foray into US sub-prime lending. However, problems at its US sub-prime division, Household International, emerged much earlier than at other lenders and the bank is seen as having weathered the storm well. HSBC yesterday struck a £351m deal to buy almost 90pc of an Indonesian lender, Bank Ekonomi.
Also See: New world currency coming soon

Leap 2020
In this 28th edition of the GEAB, LEAP/E2020 has decided to launch a new global systemic crisis alert. Indeed our researchers anticipate that, before next summer 2009, the US government will default and be prevented to pay back its creditors (holders of US Treasury Bonds, of Fanny May and Freddy Mac shares, etc.). Of course such a bankruptcy will provoke some very negative outcome for all USD-denominated asset holders. According to our team, the period that will then begin should be conducive to the setting up of a « new Dollar » to remedy the problem of default and of induced massive capital drain from the US. The process will result from the following five factors studied in detail further in this GEAB:

• The recent upward trend of the US Dollar is a direct and temporary consequence of the collapse of stock markets

• Thanks to its recent « political baptism », the Euro becomes a credible « safe haven » value and therefore provides a « crisis » alternative to the US dollar

• The US public debt is now swelling uncontrollably

• The ongoing collapse of US real economy prevents from finding an alternative solution to the country’s defaulting

• « Strong inflation or hyper-inflation in the US in 2009? », that is the only question.

Studying the case of Iceland can give an idea of the upcoming stages of the crisis. That is what our team has been doing ever since the beginning of 2006. This country indeed provides a good illustration of what the US and the UK should be expecting. It can be considered – and that is what most Icelandic people do today – that the collapse of Iceland’s financial system came from the fact that it was disproportionate to the size of the country’s economy.

Financially speaking, Iceland thought of itself as UK (1), in the same way as, financially speaking, UK thought of itself as the US and the US thought of themselves as the entire world. It is therefore quite useful to study the case of Iceland (2) in order to understand the course of events that London and Washington will follow in the next 12 months (3).

What we see today is a double historical phenomenon:

. on the one hand, since September 2008 (as anticipated in the February 2008 edition of the GEAB - N°22), the whole planet has become aware that a global systemic crisis is unfolding, characterised by the collapse of the US financial system and its contagion to the rest of the world.

. on the other hand, a growing number of global players are beginning to act on their own, in reaction to the ineffectiveness of the measures advocated or implemented by the US though they are the centre of this global financial system. What happened with this first Euroland (or Eurozone summit which took place on Sunday, October 12, 2008, and whose decisions, by their scope (close to 1,700-billion EUR) and their nature (4), resulted in a regain of confidence on financial markets from all over the world, is typical of the « post-September 2008 world ».

Indeed there is such a thing as a « post-September 2008 world ». According to our team, it is now clear that this past month will remain in the history books of the whole planet as the month when the global systemic crisis started; even if what is really at play is its decanting phase, the last of a series of four phases of the crisis described by LEAP/E2020 as early as June 2006 (5). As always when it comes to large human groups, the perception of change among the general public only occurs when change is already far on its way.

As a matter of fact, September 2008 is the month when the « financial detonator » of the global systemic crisis exploded. According to LEAP/E2020 indeed, this second semester 2008 is the time when « the world dives into the heart of the impact phase of the global systemic crisis » (6); which means for our researchers that, at the end of this semester, the world enters the « decanting phase » of the crisis, i.e. a phase when the outcome of the shock settles down. This phase is the longest (from 3 to 10 years, according to the country) and the one affecting the largest number of people and countries. It is also the phase when the components of new global equilibriums will start to appear, two of them being already described by LEAP/E2020 in this 28th edition of the GEAB in the graphic illustrations below (7).

Therefore, as we repeated it on and on since 2006, this crisis is far more important, in terms of impact and outcome, than the 1929 crisis. Historically, we are the very first players, witnesses and/or victims of a crisis affecting the whole planet, in a situation of unprecedented interdependence of countries (resulting from twenty years of globalisation) and people (the level of urbanization - and related dependence for all the basic needs – water, food, energy… - is also unprecedented). However, the 1929 experience and all its dreadful outcome, is still vivid enough in our collective memories to hope, if citizens are vigilant and leaders clear-sighted, that we will be spared from a « remake » leading to major conflagration(s).

Europe, Russia, China, Japan,… are certainly the collective players who can make sure that the unfolding implosion of today’s world power, i.e. the United States, does not drive the planet into a disaster. Indeed, except for Gorbachev’s USSR, empires have a tendency to strive in vain to reverse the course of History when they realize their might is escaping them. It then belongs to partner-powers to channel the process peacefully, as well as it belongs to the citizens and rulers of the concerned country to be clear-sighted and face the difficult times they are about to cross.

The « emergency repair » of international financial channels, achieved by the countries of the Eurozone at the beginning of this month of October 2008 (8), should not hide three fundamental facts:

• The “repair” was necessary to curb the panic that threatened to squander the entire global financial system in just a few weeks, but what it heals temporarily is merely a symptom. It has just bought a bit of time, two to three months maximum, as the global recession and the collapse of the US economy (the table above shows the staggering increase of US banks’ borrowings from the Fed) will speed up and create new tensions in the economic, social and political fields, that must be anticipated and coped with as soon as next month (as soon as the “financial packages” have been implemented)

• The huge financial means allocated worldwide for « emergency rescues » of the global financial system, though they were necessary to put back in order the system of credit, are lost for the real economy when it is on the verge of facing a global recession

• The « emergency repair » results in further marginalization, and therefore weakening, for the United States, because it sets up processes that are contrary to those advocated by Washington for the allocation of the Hank Paulson’s and Ben Bernanke’s 700-billion USD TARP: bank recapitalisation by governments (a decision Hank Paulson has now come to follow) and interbank loan guarantees (in fact Euroland governments substitute to credit insurers, a mostly American industry at the centre of global finance since decades). These trends turn more and more decision-making relays and financial flows away from the United-States when because of the explosion of their public (9) and private debt they need them more than ever; not to mention pensions going up in smoke (10).

The last aspect shows how, in the coming months, solutions to the crisis and to its various sequences (financial, economic, social and political) will increasingly diverge: what is good for the rest of the world will not be good for the United States (11), and now, Euroland in the first place, the rest of the world seems determined to make its own choices.

The sudden shock that will result from the US defaulting in summer 2009 is partly due to this decoupling of decision-making processes of the world’s largest economies with regard to the US. It is predictable and can be dampened if global players start to anticipate it. As a matter of fact, it is one of the topics developed in this 28th edition of the GEAB: LEAP/E2020 hopes that the September shock has “educated” the world’s political, economic and financial policy-makers and made them understand that it is easier to act by anticipation than in a panic. It would be a pity if Euroland, Asia and oil-producing countries, as well as US citizens of course, discover one morning of summer 2009 that, after a long-week-end or bank-holiday in the US, their US T-Bonds and Dollars are only worth 10 percent of their value because a « new Dollar » has just been imposed (12). More

Bloomberg) — Housing starts in the U.S. fell more than forecast in September as construction of single-family homes plunged to the lowest level in 26 years, indicating the three-year real-estate slump is intensifying. Builders will find it difficult to lure buyers into the market after stock prices plunged this month and banks made it harder to qualify for a mortgage. Declines in construction are likely to continue to hurt economic growth well into 2009, extending the housing slump into a fourth year. More

In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations. The Federal Reserve has activated a back channel that puts the central bank in direct contact with chief executives at Canada’s largest banks and insurers, according to a person familiar with the dialogue. They are approaching “banks with major assets in the U.S. like [Toronto-Dominion Bank] and Royal [Bank of Canada], because when they have a bailout situation they want everyone who is a potential buyer to look at it,” the source said.

The ongoing conversations between the U.S. central bank and Canadian executives reflects the challenge facing Washington as it seeks to address both short-term liquidity and permanent capital needs of financial institutions crippled by more than $500-billion in losses and limited access to financing. The communications have included phone calls from Fed officials pitching potential sales of assets of U.S. financial companies and at least one intensive discussion of a major rescue operation, according to people familiar with the contacts. More

John Robb
Global Guerrillas
The global financial and economic system is in broad failure. Hoarding, at least among the wealthy and the corporate, is rampant. Trust has evaporated. Worse, western nation-states (from the US to Ireland to Russia) are following historical patterns of response — massive bail-outs of the financial sector. Unfortunately, this crisis is ahistorical (a black swan). Why? The global financial system is much LARGER, FASTER, and COMPLEX than the nation-states that are trying to bail them out. As a result, nation-state intervention won’t return things to the status quo. What it will do, however, is tightly couple western nation-states to the now inevitable failure in the financial system (this is akin to lashing a dingy to the Titanic to prevent it from sinking). The rampant proliferation of bankrupt and hollow states is now likely inevitable.

nakedcapitalism.com
Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much bigger than the one envisaged by the Treasury plan, and the damage may come to $5 trillion:

Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government’s rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested….

“The $700 billion is really nothing,” Faber said in a television interview. “The treasury is just giving out this figure when the end figure may be $5 trillion.”…

“The decline in home prices of 20 percent is a relatively minor decline so far and it has created so many problems,” Faber added. “The US is in much worse shape” than Japan was when its stock market crash ushered in a decade-long slump in 1990.

More

(Bloomberg) — U.S. foreclosure filings rose to a record in August as falling home prices made it harder to sell or refinance homes to pay off the mortgage, RealtyTrac Inc. said. The worst housing slump since the 1930s shows little sign of abating. Home prices in 20 U.S. metropolitan areas declined 15.9 percent in June from a year earlier, according to the S&P/Case- Shiller index. Prices may fall another 10 percent through the end of 2009, according to analysts at Lehman Brothers Holdings Inc. More

MOSCOW (Reuters)
A military solution to the standoff over Iran’s nuclear ambitions is unacceptable and there is no need at the moment for new sanctions, Russian President Dmitry Medvedev said on Friday. But Medvedev said Russia continued to support a diplomatic drive led by European Union foreign policy chief Javier Solana to offer Tehran a package of incentives in return for it reining in some of its nuclear activities. Western states are anxious that a rift between Moscow and the West over Russia’s intervention in Georgia may shatter the fragile international coalition that has been applying pressure on Iran over its nuclear program. “We should not take any unilateral steps. It is not acceptable to opt for a military scenario. It would be dangerous,” Medvedev told the Valdai Club, a panel of journalists and academics who specialize in Russia. More

Source: Cnbc.com
“We already have $3 trillion of debt, as far as the U.S. government is concerned. These debt figures across the U.S. economy are rising very sharply.” When the government can no longer pass the United States’ “immense debt” on to taxpayers, it will turn to the holders of U.S. dollars, leading to the eventual downfall of the currency, Hennecke said. “Definitely, it (the dollar) is not a safe place to be invested in, as real inflation is closer to 10 or 11 percent than the actual inflation numbers given by the U.S. government,” Hennecke said on “Worldwide Exchange”.

Investors should avoid exposure to debt and stay away from leveraging on any investment or asset, including property, Hennecke advised, adding that “banks have been too highly leveraged in the past, private households, everybody.” Hennecke’s stock allocations are mainly Asian-based, especially in the Chinese market as the country’s government has a large amount of cash and the macroeconomics are fundamentally strong. He also suggested investing in gold, despite the recent fall in price.

*****

Gold price suppression discussed on CNBC
Submitted by cpowell at http://gata.org/node/6580

The gold price suppression scheme made it on to worldwide television today thanks to CNBC and Martin Hennecke, senior manager of private clients at Tyche Group in Hong Kong. At about the seven-minute mark of an 8 1/2-minute interview, Hennecke began to talk about precious metals, remarking that their recent decline resulted in part from the general deleveraging of commodity and dollar-short positions and in part from central bank efforts to suppress the gold price. Hennecke specifically cited the report published a year ago this month by Citigroup market analysts John H. Hill and Graham Wark, who wrote that central banks were “clearly” capping the gold price.

The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday. “We expect a depression in the United States. We expect a depression, very possibly, also in Europe,” Hennecke said on “Worldwide Exchange.” The estimated $300 billion cost of the Fannie/Freddie bailout will probably be considered as a loss that the government will have to take, therefore passing it on to taxpayers, he explained.

Watch Video

Source: Press TV
Iran is upgrading its naval fleet with a new generation of domestically-built submarines in an attempt to defend its territorial waters. Iran’s Chief Navy Commander, Rear Admiral Habibollah Sayyari, said Saturday that the semi-heavy Qaa’em submarine is equipped with torpedoes and naval mines. According to Rear Adm. Sayyari, the smart long-range Qaa’em submarine is also capable of carrying out both ‘defensive and offensive operations’.

The announcement of the new addition to the Iranian naval fleet comes shortly after reports that a large armada of US and European warships has been deployed to the Persian Gulf in an unprecedented build-up. Shortly after the release of the report in August, Iran warned that its naval forces are monitoring all movements in the Persian Gulf. The Iranian commander said Saturday that Iran is the only regional country capable of developing such sophisticated technology, adding that the Islamic Republic is fully prepared to defend its territorial waters with its self-sufficient military.

Washington and its allies demand Tehran halt its uranium enrichment program despite the country being entitlement to the peaceful application of nuclear technology under the Non-Proliferation Treaty (NPT). Israel, an ally of the US, has long threatened to launch military strikes on Iranian nuclear facilities should the country continue its enrichment activities. Tehran, however, says it is determined to assert its nuclear rights. It has declared that it will not give in to Western pressures and that diplomacy is the only means acceptable in resolving the nuclear dispute.

Source: MOSCOW (AFP) — Russian President Dmitry Medvedev on Saturday accused the United States of rearming Georgia under the guise of humanitarian aid, following the arrival of a US Navy flagship in the Georgian port of Poti. “The rearming of the Georgian regime is continuing, including under the guise of humanitarian assistance. They’ve sent a whole fleet to provide humanitarian assistance,” Medvedev told top officials at a Kremlin meeting. “I wonder how they would like it if we sent humanitarian assistance using our navy to countries of the Caribbean that have suffered from the recent hurricanes,” Medvedev said in toughly-worded comments.

The war of words between Russia and the United States has intensified with Moscow questioning why Washington chose one of its most sophisticated warships, the USS Mount Whitney, to transport aid to Poti. Since bombing the Black Sea port last month during the war with Georgia, Russia has deployed troops at checkpoints near the strategically important port, who patrol in the town from time to time. “Russia is a state that has to be reckoned with from now on,” said Medvedev. “We have lived a moment of truth…. The world changed after August 8 this year,” he said, referring to the date Russian troops entered Georgia at the start of a conflict over the Georgian separatist province of South Ossetia.

The US State Department on Friday rejected earlier Russian criticism of the US aid deliveries, saying the Mount Whitney was carrying only humanitarian assistance including blankets, juice, nappies and hygiene products. “There’s absolutely no foundation to this Russian charge,” said deputy spokesman Robert Wood. Russia has said US ships in the Black Sea are in breach of an international pact limiting naval deployments in the area. Medvedev’s speech came after a visit to Georgia this week by US Vice President Dick Cheney, who promised one billion dollars (690 million euros) in aid and accused Russia of an “invasion” aimed at redrawing the map of Georgia.

“After your nation won its freedom in the Rose Revolution, America came to the aid of this courageous young democracy,” Cheney told Georgian President Mikheil Saakashvili on Thursday, referring to a 2003 popular uprising. “We are doing so again as you work to overcome an invasion of your sovereign territory and an illegitimate, unilateral attempt to change your country’s borders by force that has been universally condemned by the free world.”

The stand-off between Russia and the West over the Georgia crisis has been sharpened by the arrival of several foreign military vessels in the Black Sea, a deployment that Russia sees as a form of intimidation. Medvedev on Saturday described the aid deliveries to Georgia as “political pressure” being exerted on Russia by the West. RIA Novosti news agency quoted an unnamed Russian intelligence officer saying there were currently a total of seven military ships belonging to Germany, Poland, Spain and United States in the Black Sea. “The fleet of NATO ships has basically been deployed in all the key points of the Black Sea. They are only missing in areas where Russia’s Black Sea fleet is operating,” the intelligence officer was quoted as saying.

Russian troops poured into Georgia last month to repel an attack by the Georgian army aimed at retaking South Ossetia from Moscow-backed separatists. Moscow says it was protecting Russian citizens from the Georgian assault. Western countries have called on Russia to withdraw its remaining troops from Georgia immediately and have condemned Moscow’s decision to recognise the independence of South Ossetia and Abkhazia, another rebel province of Georgia.

FRANKFURT (Reuters) - Porsche sales in North America nearly halved to 1,516 vehicles last month as demand for its core 911 sports coupe plummeted ahead of the model’s upcoming facelift, the company said on Thursday. More

Stephen Lendman
Prior to entering WW II, US strategists had a clear aim in mind at its conclusion - to hold unchallengeable power in a new post-war global system: military, economic and political in a “Grand Area” encompassing the West and Far East. Essentially most parts outside the communist bloc and exploiting it under disarming rhetoric like being “selfless advocates of freedom for colonial peoples (and an) enemy of imperialism.” Championing “world peace (also) through multinational control.”

Today, the facade is gone, and no pretense remains about much “grander” plans - over an “Area” comprising planet earth with “full spectrum dominance” over all land, surface and sub-surface sea, air, space, electromagnetic spectrum and information systems with enough overwhelming power to fight and win global wars against any potential challengers with all weapons in our arsenal, including nuclear and others of mass destruction.

One nation above others is an obstacle - Russia. It’s powerful and can’t be intimidated like most others. It’s also dominant where Washington wants control - the Eurasian vastness with its huge oil, gas and other resources. For years, American sought dominance over it. Saw an opening when the Soviet Union dissolved. And one way or other seeks to get it. Russia has other plans, so therein lies the root of the current conflict using Georgia as a US proxy to instigate it. More

U.S. economic troubles have spread to world credit and stock markets, slowing growth amid rising inflation and dashing hopes of the financial “decoupling” some thought would protect emerging economies from U.S. contagion, Federal Reserve Board Governor Randall Kroszner said Monday. For better or worse, trade and investment continues to tie the U.S. economy to others abroad, spreading economic shocks as it ensures the “efficient operation of global markets,” Kroszner told a forum in Buenos Aires, Argentina. The spreading U.S. sub-prime mortgage crisis dried up credit, slowed growth and weighed on stock markets in both advanced and emerging economies - proving their connection to the U.S., Kroszner said in his prepared text. More

John Markoff
The era of the American Internet is ending. Invented by American computer scientists during the 1970s, the Internet has been embraced around the globe. During the network’s first three decades, most Internet traffic flowed through the United States. In many cases, data sent between two locations within a given country also passed through the United States. Engineers who help run the Internet said that it would have been impossible for the United States to maintain its hegemony over the long run because of the very nature of the Internet; it has no central point of control.

And now, the balance of power is shifting. Data is increasingly flowing around the United States, which may have intelligence–and conceivably military–consequences. American intelligence officials have warned about this shift. “Because of the nature of global telecommunications, we are playing with a tremendous home-field advantage, and we need to exploit that edge,” Michael V. Hayden, the director of the Central Intelligence Agency, testified before the Senate Judiciary Committee in 2006. “We also need to protect that edge, and we need to protect those who provide it to us.”

Indeed, Internet industry executives and government officials have acknowledged that Internet traffic passing through the switching equipment of companies based in the United States has proved a distinct advantage for American intelligence agencies. In December 2005, The New York Times reported that the National Security Agency had established a program with the cooperation of American telecommunications firms that included the interception of foreign Internet communications. More

Banks transferred funds out of the United States and into Europe in the first three months of 2008 as they turned to safer assets amid the global credit crunch, the Bank for International Settlements said. “In the first quarter of 2008, reporting banks continued their net transfer of funds out of the United States, a trend evident since the onset of the financial turmoil in mid-2007,” the Swiss-based BIS said in its quarterly review of financial markets and banking activity, published on Monday. More

The Bush administration can prohibit meat packers from testing their animals for mad cow disease, a federal appeals court said Friday. The dispute pits the Agriculture Department, which tests about 1 percent of cows for the potentially deadly disease, against a Kansas meat packer that wants to test all its animals. Larger meat packers opposed such testing. If Creekstone Farms Premium Beef began advertising that its cows have all been tested, other companies fear they too will have to conduct the expensive tests. The Bush administration says the low level of testing reflects the rareness of the disease. Mad cow disease has been linked to more than 150 human deaths worldwide, mostly in Great Britain. Only three cases have been reported in the U.S., all involving cows, not humans. More

Source: Press TV
Russia’s ambassador to NATO has warned that any military interference in the Caucasus conflict will be considered as declaration of war. In an interview with the Russian newspaper Vremya Novostei, Dmitry Rogozin, warned that any NATO attack on the Moscow-backed regions would “mean a declaration of war on Russia.” This is while the Russian President Dmitry Medvedev held talks with the Chinese President Hu Jintao in Tajikistan ahead of the summit of the Shanghai Cooperation Organization (SCO) which is taking place on Thursday.

Medvedev, “informed his Chinese colleague about the situation in South Ossetia and Abkhazia,” AFP reported. The two men also discussed regional and international issues. The SCO is an intergovernmental organization which was founded in 2001 by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Iran holds an observer status in the SCO. This year’s summit will also be attended by the presidents of the above mentioned nations on August 28.

Russian Prime Minister Vladimir Putin has accused the United States of orchestrating the conflict in Georgia to benefit one of its presidential election candidates. In an exclusive interview with CNN’s Matthew Chance in the Black Sea city of Sochi Thursday, Putin said the U.S. had encouraged Georgia to attack the autonomous region of South Ossetia. Putin told CNN his defense officials had told him it was done to benefit a presidential candidate — Republican John McCain and Democrat Barack Obama are competing to succeed George W. Bush — although he presented no evidence to back it up. “U.S. citizens were indeed in the area in conflict,” Putin said. “They were acting in implementing those orders doing as they were ordered, and the only one who can give such orders is their leader.” More
Also See: Using Georgia To Target Russia

Guardian.co.uk
Syria’s President Bashar Assad has publicly stepped up his outreach to old ally Russia in recent days, seeking aid to build up Syrian military forces and offering Moscow help in return - in an apparent effort to exploit a new Russian-American rift. U.S. officials have noticed: Secretary of State Condoleezza Rice warned Mideast leaders this week that they should worry about Syria’s efforts to gain more sophisticated weapons. Syria’s long-term aim, however, remains unclear, in part because Assad also continues to pursue peace efforts with Israel - a key U.S. and European goal - even as he makes overtures to Russia that are sure to antagonize the West. Syria has a long history of apparently contradictory diplomatic moves as it maneuvers to find options and balance its interests. More

Shaun Walker in Tblisi
Russia’s relations with the West have plunged to a new low after President Dmitry Medvedev signed a decree officially recognising two breakaway territories in Georgia as independent states. “We are not afraid of anything, including the prospect of a new Cold War,” said Mr Medvedev, after signing the decree in defiance of the US and Europe. The decision, marking a U-turn for Russian policy, was swiftly condemned by Western leaders who urged Russia to reverse the “highly provocative” decree which violates international law.

The foreign secretary, David Miliband, who is flying to Kiev today (wed) to demonstrate the West’s solidarity with Ukraine – which like Georgia has been invited to become an eventual Nato member – said he was consulting partners to ensure “the widest possible coalition against Russian aggression on Georgia.” Although aides would not speculate on possible sanctions against Moscow, Mr Miliband is expected to argue in a speech today that Russia will be judged by its actions and “there will be consequences,” said one.

The US secretary of state, Condoleezza Rice, described the decision as “regrettable” and warned that it would be “dead on arrival” at the UN. The decree accused Georgia of “genocide” in South Ossetia and said that Georgian President Mikheil Saakashvili’s actions had left Russia with no other option but to recognise the independence of both South Ossetia and Abkhazia. “This is a difficult choice, but it is the only chance to save peoples’ lives,” it read. Both houses of the Russian parliament on Monday voted unanimously in favour of recognising independence for Georgia’s two breakaway states, but Mr Medvedev was urged by the West to refrain from officially recognising them. More

PETER S. GOODMAN
Economic trouble has spread far beyond the United States to major countries in Europe and Asia, threatening American businesses with the loss of foreign sales and investment that have become increasingly vital to their sustenance. Only a few months ago, some economists still offered hope that robust expansion could continue in much of the world even as the United States slowed. Foreign investment was expected to keep replenishing American banks still bleeding from their disastrous bets on real estate and to provide money for companies looking to expand. Overseas demand for American goods and services was supposed to continue compensating for waning demand in the States.

Now, high energy prices, financial systems crippled by fear, and the decline of trading partners have combined to choke growth in many major economies. The International Monetary Fund expects global growth to slow significantly through the end of this year, dipping to 4.1 percent from 5 percent in 2007. “The global economy is in a tough spot, caught between sharply slowing demand in many advanced economies and rising inflation everywhere,” the I.M.F. declared last month in its official World Economic Outlook. All this means that economic troubles in the United States could intensify into the presidential election season and beyond. It could also make it harder for financial companies like Lehman Brothers — which has been seeking fresh investment in South Korea — and the government-backed mortgage giants Fannie Mae and Freddie Mac to attract much-needed capital from abroad. More