In New Zealand, There's Nothing to Hide

The Great Recesssion has dealt a real body blow to airlines worldwide. But those madcap Kiwis down under sure do have a way to catch your attention during their version of the usual, humdrum pre-flight safety video. Watch carefully now. (Hint: check out the uniforms):

Still stumped? The airline staff (apparently volunteers for the video) are wearing only body paint. If you still don't believe me, watch the fadeaway at the very end of the video.

Who says New Zealanders don't have more fun?

MSM Dumbs Down Some More

Luther and I have railed here again and again at the obtuseness and cluelessness of the media in all fields. Either it's wilful politicization (as in carrying water for Obama 24/7). Or it's simple stupidity in pursuit of a good scare headline.

The following quip is excerpted, via TheStreet.com, from its pay-only site, Real Money:

Bloomberg: "White Sugar Drops in London on U.S. Consumer Confidence Slump."

So much nonsense compressed into such a small space! What, is someone sitting in a London bakery going to forgo a biscuit because of a backward-looking survey in the U.S.? Are Belgian beet-growers going to squeeze more sugar out of their crop because of boo-hooing in Baltimore?

This is typical of the kind of scare headline we see in financials these days, breathless negativity with no backup, a stupid story-line based on nothing whatsoever of substance but meant to sustain a negative mood of fear and loathing.

I miss the old days when raw sugar futures traded in the pits of New York. No stop was safe; put it in, and they were going to get it. But at least they manipulated the market the old-fashioned way, good and honest, and didn't enlist the support of wire-service reporters.

As for the writer's conclusion? We could not have done better:

Hey, there's a non-government organization we can start: Instead of Doctors Without Borders, we could start "Reporters Without Clues." Nominations are being accepted.

Russian Solution to Somalian Pirates: Would Ayn Rand Approve?

A Russian luxury yacht company is offering pirate-hunting cruises off the coast of Somalia...passengers can try their hand at repelling raiders with the help of a squad of former troops...(Not available online, NY Post, Weird but True, 6/25/2009)

This, you have to admit, is an unusual approach to the piracy problem. With state actors evidently unable to stop pirates, except in highly publicized executions and raids, a big Russian yacht with some ex-Red Army guys to train passengers in how to use AK-47s, might be watched closely by shipping companies. shipping company owners might then seriously consider arming crews of their ships instead of expecting the much-reduced Navies of the world to pick up the tab.

Luther

Honduras's Deposed President: A White House Favorite?

Hugo Chávez's coalition-building efforts suffered a setback yesterday when the Honduran military sent its president packing for abusing the nation's constitution...It seems that President Mel Zelaya miscalculated when he tried to emulate the success of his good friend Hugo in reshaping the Honduran Constitution to his liking...But Honduras is not out of the Venezuelan woods yet. Yesterday the Central American country was being pressured to restore the authoritarian Mr. Zelaya by the likes of Fidel Castro, Daniel Ortega, Hillary Clinton and, of course, Hugo himself. The Organization of American States, having ignored Mr. Zelaya's abuses, also wants him back in power. It will be a miracle if Honduran patriots can hold their ground...The Supreme Court ruled his referendum unconstitutional, and it instructed the military not to carry out the logistics of the vote as it normally would do....Honduras Defends Its Democracy, Mary Anastasia O'Grady, The Wall Street Journal, 6/29/2009

Read this article instead of paying serious attention to the cries from the White House, Secretary of State Clinton, Fidel Castro and Hugo Chavez about democracy betrayed. President Zelaya refused to heed a Constitutional restriction on changing Honduras's supreme law, which allows only a constituent assembly to carry out this task. Instead, like a familiar in Washington, he simply decreed that his own way of doing it was correct. The military, under instructions of Honduras's Supreme Court, removed him from office, as they were supposed to do to protect constitutional government.

Lies about a coup d'etat, whether from the State Department or Fidel Castro, really shouldn't be listened to. Nor should lies about any president's right to overturn established law on his own be listened to.

Don't be fooled.

Luther

New Haven Firefighters: What's the Real Lesson of the Court's Decision?

In a major reverse-discrimination case, the Supreme Court on Monday ruled that white New Haven, Conn., firefighters were discriminated against when the city threw out a promotion test because not enough minorities did well on it...The 5-4 ruling overturns an appeals court decision by Judge Sonia Sotomayor, President Obama's nominee to replace retiring Supreme Court Justice David H. Souter.... High Court Rules For Connecticut White Firefighters, Stephen Dinan, Washington Times, 6/29/09

As a decision on a specific case where the Court of Appeals decision had blared a terrible message -- your ethnic background matters more than your competence, the ruling by the Supreme Court was a good reversal of a specific wrong, but did not, as Justice Scalia noted in his supporting vote, address the fundamental, Constitutional issue of equal protection under the law.

But an unspoken question was a lot louder to the writer. Why, in a developed country, and in a city where almost two thirds of the citizens are African-American or other minorities, did the public school system in New Haven fail to deliver graduates capable of studying for and passing the test administered to prospective firefighters?

The writer knows a few educators. On the issue of why minorities fail, or do poorly, in public schools these instructors fall into two categories: those who blame the students and their families; and those who criticize the schools. Those who blame students and families are invariably on the political left. Parents, they say, suffering under economic privation, are unable to provide the benefits of middle class living to their children and, thus, the children don't have the background required. The argument is utterly fatuous, and it's suggestive to note that the same rate of failure, especially for boys, occurs in some school districts in Westchester County. A peculiar similarity emerges. Both the poor district schools and the rich district schools operate under a pedagogy that is alien to most children and to boys in particular.

It would be worth studying the pedagogy used as basis to educate the minority applicants to the New Haven fire department. When you teach students that their life's objectives are to get along and feel good, you're not producing graduates, but smiley-faced workers for Mickey D's.

Luther

Money Pot: Latest Update

Now we're all caught up. So what has the Wonk been doing since his last blog hiatus?

Overview: The economy is, in fact, still not quite recovering, but it has flattened and will stop declining shortly. Housing, which in the end is not really national but local, has, surprise, already begun to rebound in the states that led the housing crash: California, Nevada, Arizona, and a little tiny bit in Florida. The rotation will eventually take in all areas, including New York City (which was actually about the last to decline and which is still declining) but maybe never parts of the Rust Belt, a territory whose economy has nearly been obliterated courtesy of the lazy auto industry and public employees' unions who demand wage increases from unemployed taxpayers.

Since the market is a leading indicator, we enjoyed a nice move up, circa mid-March until about 2 weeks ago when the rally stalled. My guess is for sideways motion to somewhat down, particularly when bad second quarter numbers start showing up in July. But then we'll have some fun again this fall as the market plays a lengthy game of catch up.

Using no particular genius except common sense, I gritted my teeth and stayed about 75% invested in stocks during the horrendous days of late February and early March when I realized that the media--wrong as always--was consistently telling us we were all going to die. The media hysteria rose to such a pitch and to such great unanimity that I decided my favorite leading indicator had bottomed. The press had completely freaked out--which is always a buy signal. So I loaded up the rest of my nearly flatlined portfolio and got a hell of a ride for about the next 10 weeks.

My portfolio has now regained about 70% of its considerable losses during that brief period of time, and I've diversified somewhat into bonds, paring back several positions.

Short answer--I'm somewhat out of the woods now, but need to get that 30% back as soon as I can before I stop hawkeyeing my computer.

More later including a few observations on where the bargains might be today.

The Great Recession of 2007-2010

As promised in the previous post, here's a brief synopsis of our Recessionary adventures thus far.

To recap--many individuals lost their shirts last fall and again this spring when they first failed to pay attention to their investments (mostly in mutual funds via 401(k)s) and then refused to look at the carnage afterwards, as if it were going to go away.

My fiscal disaster was a bit different. Having been laid off by my employer last summer (oddly enough, by mutual agreement more or less), I first got my various retirement funds transferred into my own accounts so I could move the funds around into high-yielding investments whose interest and/or dividends promised to give me enough income to undertake a completely freelance writing career while improving my rental home portfolio.

Well, that plan went in the tank when pretty much everything that I or anyone else owned in the way of stocks and bonds went the way of the dodo in two phases. This is nothing I haven't been through before as a former stockbroker myself in the late 1970s and early 1980s. In fact, I distinctly remember the great Hunt Brothers silver crash which took silver from roughly $55 an ounce down to about $10 or less in what seemed like the twinkling of an eye. Paul Volcker's Fed jawboned Federal authorities who simply raised the margin requirements on silver from 10% to 50%. And the brothers who--similar to speculator Curtis Jadwyn in Frank Norris' excellent and mostly forgotten novel "The Pit" had almost cornered the market on silver--were forced to liquidate on margin call but found no buyers at $55. More like $10. Wipe out. (BTW, it mystifies me why some flavor of this wasn't put into force when speculators drove oil up to an unsustainable $147 a barrel last spring.)

Anyhow, back in March 1980, people went nuts, came in off the street to look at our tape (the old Dean Witter Reynolds, no PCs back then) and babble in terror. I myself stared blankly at my console (a green CRT) watching the plunging numbers as the market squealed in terror. I figured I'd be out on the street corner the next day selling apples. I remember breaking into a cold sweat. You had to be there.

Well, it was mainly the Hunt Brothers who got wiped out, actually. The market not only stabilized. It quietly and almost imperceptively began to morph into what eventually became the great Reagan Bull Market as interest rates peaked in the stratosphere and began to decline. Meanwhile, as Reagan's tax cuts took hold business got juiced as well.

Our current financial megadisaster, however, is different from the silver crash, different even from the brief, terrifying 1987 crash, and different from the short, savage "dot bomb" that first hit in the spring of 1999 (during Clinton, not Bush whom revisionist economists prefer to blame for it). The current meltdown--which I first regarded as "Great Depression II" but have now decided to call "The Great Recession of 2007-2010"--is turning out to be far more systemic than 1999 because it actually involved savaging most Americans who worked for a living. It hit their phantom nest eggs (their homes, which plummeted disastrously in value) as well as their own retirement portfolios. Many will never recover because they don't understand what happened or how to fix their portfolios, courtesy largely of a public education system that teaches people about multiculturalism but ignores the simple mechanics of wealth building.

The reason for the current debacle, the massive housing bubble, was in fact a house of cards that actually began to be built in the early 1970s by Democrats in Congress who slowly turned Fannie Mae and Freddie Mac into a free money pot for unqualified homebuyers who eventually sought the American dream on no money down, no documented income, and interest-only payments. The more unqualified people who were given mortgages they couldn't afford, the more pressure built on house prices. And the higher the prices, the more individuals and lenders panicked either to buy housing at any price or to loan money for them without even the most rudimentary kind of financial vetting.

This was, in short, a Ponzi scheme that only accelerated in the Clinton era. Unfortunately, it blew up on Bush's watch, even though he tried to get some sensible legislation through Congress to throttle this runaway train during his second term. It went down to defeat. The American people were next.

The Great Recession was and is the result, in the end, of the greatest credit binge in history, led by a left-leaning Congress that never really had a clue as to what was in store. And to their discredit, even the Repubs who led Congress from roughly 1994 through 2006 climbed on the train rather than putting the brakes on gently before it was too late.

That's where we are now. Lending standards have now tightened to where it's tough to get credit anymore unless you have a pristine record AND a job--a rare combo these days. And, ominously, Congress is scheming to impose ruinously inflationary and business busting nonsense like nationalized healthcare and cap-and-trade (read Luther in this blog). But I'll rant about some of this later. Our next installment is a brief update on how I personally began to climb out of the current economic mess. You can do it, too.

Wonker's Great Recession Update

Since I've been on one of my customary lengthy hiatuses lately (correct plural of that?), I haven't had a chance to give our millions of readers an update on my slow crawl out of last fall's financial disaster--a disaster I have shared, alas, with an awful lot of my fellow citizens. Particularly aging Boomers who've found their 401(k)s rather handily eviscerated by speculators and so-called market pros.

I'm happy to report better news today and will relay it in the next two posts. First a recap of The Great Recession at this point in time. Next, an update on my improving portfolio. Later today or this week, a little unsolicited advice to our investing fans who must keep in mind that while I was once an actual stockbroker, I'm no longer licensed. So take everything I say with a grain of salt. Or how did Mark Twain say it in "Huckleberry Finn?" Anyone finding a moral in this book will be shot. Or something like that.

Cap and Trade: Dollars and Nonsense

Although PETA's poster girl (below) is more pleasant to look at, let's turn to a graphic that gets back to cap-and-trade, the impending socialist disaster that Luther's been writing eloquently about. Via today's Power Line, we've obtained a map which shows you just how much cap-and-trade will cost taxpayers in each state. Red colors the losers, while green, appropriately, indicates the winners which are, not surprisingly, the states that can never tax you enough.

In typical fashion, we see the true meaning here behind cap-and-trade. The right and left coast state politicians have already taxed their own citizens into oblivion. They now want to extract lots of income from flyover country since they can never have enough money to spend on "our" behalf.

Fellow citizens, you wanted "change." Well, you've got it, and "change" is about all you'll have left in your pockets when your agents of "change" are done. How about waking up and defeating this travesty income redistribution plan in the Senate?

Meanwhile, to critics, yeah, this map is put out by an organization with an axe to grind. Just like everything you put out. In this case, our guys are providing a welcome antidote to your baseless propaganda. Their companies will go out of business and along with them will go tens of thousands of jobs, most of 'em in flyover country. The "jobs" you allege that green technologies will create are largely conjectural. We thought those voters whose jobs will be lost in the meantime would like to know about this "inconvenient truth."

(BTW, click on the image for a larger map.)

The PETA Party Resumes

Back again after a long hiatus, and a huge hat tip to Luther for keeping the truth in the forefront on the key issues of our day.

Taking a break from the developing cap-and-trade disaster for the moment, let's briefly focus, lest we forget, on the malign idiotarians over at PETA, who've now found a new poster girl in Che Guevara's granddaughter.

Check out the clever placement of the carrots in this photo. I wonder if they cried out in terror as they were rudely rooted out of their sleeping places below ground. Shall we call for prosecution against vegetable terrorism here?

Meanwhile, I can preach about the Marxism of front organizations like PETA until the cows come home, so to speak. But leave it to the PETA freaks themselves to prove my point with their new poster girl. Gotta love it.

Cap & Trade: What Democrats Expect From You

From The American Thinker, 6/26/09


Call your representative! Email your representative! See below.

The House vote on this bill, HR2454, is tonight. Stop it!

Looting and plundering is against any law. Apparently the Democrats and the White House think differently. Show them that you care about their robbery of your, and your children's, future!

Luther

The Cap-And-And-Tax Scam Vote is Today: Email Your Congresspeople Now

HR 2454, the "climate change" bill, which will cost each family thousands in increased gas, oil, and electric prices, steal millions of jobs, and hobble the United States economy, is up for a vote today. The Democrats are going to try to jam this down our throats, against our will. In personal conduct, this is called rape. Don't lie back; you won't enjoy it. Email your Congressman. List below:

Link to Congressional email list.

Fight back. The looters are in charge and the wallet they want, and the future they want, belongs to you.

Luther

Medical Care: How about a Real Debate?

Some form of restraint in our choice of medical procedures is going to be necessary. The debate we should be having is over whether restraint in our use of medical services should be initiated by government officials or left to consumers. The Democrats want to avoid that debate. Instead, they make it sound as if they can make excess health-care spending disappear by magic. But even if we were to stipulate for the sake of argument that all of the supposed savings from preventive care, electronic medical records, and eliminating the waste and greed supposedly inflicted by insurance companies and doctors will actually materialize, the excessive use of medical procedures would still be the main problem with our health-care system...Both government rationing and consumer cost-sharing seem unpleasant. The debate between the two approaches would not be one-sided. But until Democrats are willing to stand up toe-to-toe and have that debate, we will not see any move toward cost-effective health-care reform....The Non-Debate over Non-Reform, Arnold Kling, National Review, 6/24/2009

With ABC's White House infomercial tonight, their news division's most craven programming choice in a long time, it' s useful to look at what serious critics of socialized medicine are saying.

Arnold Kling used to write for Tech Central Station, a remarkable site founded by James Glass. Glass departed for other pastures. Tech Central Station is struggling. And, Arnold Kling is appearing on National Review. What he has to offer in this article is the proverbial elephant in the living room.

Yes, it's all about demand. We want to be cured of all that ails us. That's fine. That's what medicine aims at. Unfortunately, we also want to be cured of all that upsets us – being overweight; aging; body parts too big or too small. A lot of private insurance covers that and it is fabulously expensive. We also, however, want to challenge mortality. And, that is not the job of medicine. What does that mean?

Challenging mortality does not mean living forever. It means putting it off until the maximum possible number of years, months, weeks, and yes, even hours, have passed. In practical, accounting terms, it means that we'll spend almost ninety percent of health care money on the last year or two of our lives.

William F. Buckley, Jr.'s son Christopher, with whom he had many and profound disagreements, is a gifted satirist. A few years back he wrote a book called Boomsday. In it, a young radical's cause was not socialized medicine, but a dramatic reform of how entitlements are given to the old and paid for by the young. In the course of working with a public relations firm, she convinces a Senator to introduce legislation with a truly startling objective: those 65 and older, if they agree to commit suicide, will be able to pass on their estates without taxes. The bill is introduced, not with the hopes that it will actually pass, but to start a serious national discussion about the pending disaster in Social Security and Medicare. Naturally, this being a Chris Buckley story, the bill becomes the principal issue in a Presidential campaign. In the course of increasingly frantic efforts in Congress to pass some form of the bill, lobbyists pour down on Capitol Hill. By the time the bill approaches actual passage, with the sitting President an eager supporter, the age of Boomer suicide has been moved upwards to 85, making the bill not so much contemptuous of human life and Western values as utterly meaningless. That's politics. By its very nature, it can't address this issue. Why?

None of us wants to die. In a post-religious society – like it or not, that describes an emerging majority – the here and now is all there is. Nobody wants to give the bright now up for a black, insensate eternity; nobody wants to take it away from anyone else. And, so we routinely expect insurance and Medicare to pick up the million dollar cost of extending an old woman's life for six months. And we do this a million times. Not in France.

The writer is not advocating here, only discussing, something you are unlikely to hear on the ABC infomercial tonight.

In France, they have a remarkably successful single payer system, with a high quality of care delivered at costs somewhat less than in the United States. Doctors are not government employees. However, no procedure can be done for a fee greater than that set by the single insurance company (the French government). Efficiency and greater income come about by doctors performing more procedures at a fixed cost, not by charging more money based on their reputation or on their public relations. Sounds great, so why not here?

The French system depends to a remarkable degree on a form of cost control that Americans won't even discuss. Here's how it works.

If you need coronary bypass surgery (or major cancer therapy) or any of a number of other major operations or treatments, and you're over 65, you can't get them in France. The working assumption, as cold as dry ice, is that if you're retired and no longer producing goods and services, you have to depend on luck, genetics, and medical tourism, mostly to the United States, if you want to get past a major illness. Do they enforce it?

With a cruelty that is horrifying – remember 2005? In that year of Muslim youth setting fire to thousands of cars across France, the summer was an especially hot one. At its height, in July 2005, reports began to trickle out about a ghastly tragedy. Tens of thousands of aged French citizens in nursing homes were dying of effects from the heat. Why? The state-owned nursing homes did not have air conditioning. By the end of the heat wave, between fifty and one hundred thousand old folks in France had died. During this time, despite appeals from the press, the children of these old people, many of whom had fought in the Resistance, did not leave their vacation spas on the Mediterranean, neither to rescue their parents and grandparents nor to even claim the bodies of the dead. As an indication of a society that has decided that if you're old, you're useless and expendable, these abandoned old people, left to die, were a sickening paradigm. But far more die in France lacking procedures we consider routine for the old in the United States.

In the United States, the almost vertical growth rate of Medicare and Medicaid expenses, which will bankrupt the next generation or three, and have already bankrupted New York State and California, are a clear indication that we don't accept the French notion of what it means to be old and retired. There's nothing wrong with that moral assessment. After all, it still means something to us that the person we'd be abandoning with such a radical accounting practice would be our own mothers, fathers, and grandparents and, ultimately, ourselves as we reach that age. We don't accept that because it is fundamentally, and brutally, callous. However, the discussion is not complete, because we can't afford to continue this way.

Why wasn't this such a common problem in the past? It's very simple. In the past, as people aged, most were prepared by the practices and beliefs of faith, and by common sense and ordinary observation, to acknowledge that as one aged, nature's way and God's way of telling us it was time for the next generation was for us to become feeble, grow sick, and die. We were going to a better place, according to our faith. Even if we didn't believe, we knew that that unvarying process would break us down, and that our best hopes lay in the generation coming up. In both terms of faith, and those of materialism, that was a profoundly healthy understanding of aging, illness and death. After all, even with today's remarkable technologies, in chemistry, prosthetics, machines, and surgery, the end will come. The old folks were right after all. But we don't believe that. We act as if the expenditure of yet another hundred thousand, or another million, will put off that day.

That's the way people who refuse both faith and evidence act. But there's a difference between hope and hallucination. Ask any drug user. If Grandma is 89 and suffering from the dozens of systemic breakdowns that happen to anyone that age, a million dollars that might have kept a dozen children from an early death, or from stunted, abbreviated lives might provide Grandma with sixty days of semi-conscious life. But, we won't decide.

That's why the choice falls on two forms of rationing: price; and government edict. With the latter, everyone has to stand in line and money doesn't matter. As in France, the government can issue a decree that certain, expensive procedures or medications won't be given to certain classes of people. With the former, the major effect is that the inheritance of one generation is given to only one segment of the economy. Both are inherently material means of rationing. Both avoid the most serious ethical choices. Both are a product of our hallucinations about immortality, or at least outliving everybody else.

Is it better to preserve a dozen young lives, or to give a few extra months to the old?

Is it best to preserve individual choices on what is worth doing and what is not, or to let government set every standard?

Are we so foolish as to assume we can attain a practical immortality, or are we willing to accept a judgment of both nature and God that we have only a limited time before we must let the next generation come into its time and place?

If Americans won't make those choices, insurance companies and the United States government will make them for us.

Luther

IG Gerald Walpin Firing, Further

The inspector-general system in the federal government is vastly overrated and has an undeserved reputation for nonpartisan, objective investigations. In fact, many current and former government employees have been abused by...ideological witch hunts, conducted by glory-hunting IGs trying to make a name for themselves in the Washington political and media world...But two years ago, then-Senator Obama co-sponsored the Inspector General Reform Act...enacted last year as the Improving Government Accountability Act. Part of the purpose of that law...was to make sure that IGs operate with “sufficient independence to do their jobs well,” without fear of political repercussions. Thus, the law requires the president to communicate “in writing the reasons for any” removal or transfer of an IG. The Senate report says this provision is intended to “ensure that Inspectors General are not removed for political reasons.”...At first there was no explanation for Walpin’s firing; Obama simply said he “no longer” had “the fullest confidence” in Walpin. After the initial uproar, the White House started claiming the IG had been “disoriented” and “confused” at a May 20 meeting, something an eyewitness directly refutes....What is Obama Trying to Cover Up?, Hans A. von Spakovsky & Todd Gaziano, National Review, 6/22/2009

As those who remember more than the past year should recall, cover-ups take on a life of their own. An executive shuts one person up with dismissal; then another person gets transferred out because he or she saw something; then a quick, vague report is transmitted to the press to explain both actions; then the press asks some questions and an increasingly elaborate fiction is developed to rationalize the first report of the firings. Before long, a web of deceit has been built.

It takes a lot of energy to do that. Even the executive's friends and allies may begin to wonder about their colleague's integrity, about his real commitment to goals and objectives, about his judgment. The executive may begin to work them over as well until one of two things happen.

The best choice is for the executive to come clean, accept responsibility, and bear the consequences.

The usual choice is for the lies to continue until no one listens anymore and the executive's authority lies in tatters. That was the answer for Lyndon Johnson and Richard Nixon. Both of their Presidencies ended in disaster.

Luther

IG Gerald Walpin Firing: A different kind of counterfeiting

President Obama's excuses for firing AmeriCorps Inspector General Gerald Walpin look weaker every day. The FBI has opened an investigation into a Sacramento program formerly run by a close ally of President Obama's, giving credence to the IG's work...The president fired Mr. Walpin June 11 after Mr. Walpin filed two reports critical of Obama friends. The highest-profile of the two reports focused on misuse of funds at Sacramento's St. Hope Academy, then run by former NBA star Kevin Johnson before Mr. Johnson was elected Sacramento's mayor in November. Mr. Johnson was a frequent stump speaker for Mr. Obama during last year's campaign and has claimed in TV interviews to be particularly good friends with first lady Michelle Obama....Editorial, Washington Times, 6/22/2009

The “transparent” administration may be learning the various meanings and usages of irony. It's all about heritage. In Chicago ward politics, the standard for a century has been a favor given, a favor returned. This is fine, one supposes, for an alderman. What can it hurt? However, when the White House intervenes in another federal officer's investigation of a personal friend of the President's, we've stepped a long way back in time, from transparency to obstruction of justice. And it's getting worse.

On the very same day that the president fired Mr. Walpin, St. Hope's executive director, Rick Maya, left his job at St. Hope. He did not go quietly. His resignation letter charged Mr. Johnson and several St. Hope board members with numerous ethical violations. Most explosively, he charged that a board member improperly deleted e-mails of Mr. Johnson's that already were under a federal subpoena...Suddenly, the problems at St. Hope begin to look as severe as Mr. Walpin had charged rather than being minor infractions...(Editorial....cont'd)

The last thing the country needs is an administration so small-minded that it will flout its constitutional oaths and magisterial obligations on behalf of political supporters.

Luther

Who Owns American Federal Debt Overseas?

In $billions 

China_Mainland              763.5
Japan                       685.9
Carib_Bnkng_Ctrs            204.7
Oil_Exporters               189.5
United_Kingdom              152.8
Russia                      137.0
Brazil                      126.0
Luxembourg                   97.5
Hong_Kong                    80.9
Taiwan                       78.3
Switzerland                  64.2
Germany                      54.6
Ireland                      49.7
Singapore                    39.7
India                        38.5
Korea                        35.4
Mexico                       35.4
France                       30.6
Thailand                     28.5
Norway                       27.5
Turkey                       27.2
Israel                       19.1
Egypt                        18.5
Netherlands                  16.5
Italy                        16.2
Belgium                      15.8
Chile                        15.1
Canada                       13.1
Sweden                       12.7
Philippines                  12.0
Malaysia                     11.6
Colombia                     11.4
All_Other                   153.5

Grand_Total                3262.6

Department of the Treasury/Federal Reserve Board
June 15, 2009

Whoa! Long list. And lots of money -- about 20% of GDP in fact. There's been approximately a 20% increase in foreign-held dollar debt in the past thirteen months, about $650 billion according to the Treasury. And, despite all of the rhetoric from China, Beijing authorities have purchased almost 40% of that additional dollar-denominated debt. Some countries have changed their minds, however.

The English share of this debt has declined by almost 50% in the last year. So has Canada's. Japanese purchases over that time lagged behind the average increase, and last month their purchases declined 80%.

This is why the talk of another currency, or super currency, is very loud in Asia. If anyone in Washington is listening, they must not be in office.

Luther

$134.5 Billion Bond Smuggling: Malicious Hoax or Comedy of Errors?

Probably it's both. According to a number of sources, including the Guardia Finanza in Italy, the issue date of the 500 billion dollar bearer bonds was 1934. And on the Kennedy bonds (1 billion) there was an engraving of the space shuttle.

There were no such bonds issued in 1934.

The last Kennedy bearer bond was issued in 1969, 14 years before the shuttle flew.

They were, however, very high quality forgeries, as the investigating officers attested to in a number of reports. That's a pretty expensive hoax, prohibitively expensive for most counterfeiters in fact. The denominations are a clue as to what type of organization would attempt such a hoax. Such large bonds would have to pass muster with the issuing authorities. No bank would take that responsibility. Not even a porto banco would have passed on these. It must have been a nation that was responsible. A good guess would be North Korea or Iran.

Both nations have done large-scale counterfeiting before, and quite well. It's not surprising that superlative work would be done on the counterfeiting if it were done in either place, but that might also explain the errors in detail. It is unlikely that even the North Korean or Iranian governments know the issuing dates of such bonds; the engraving artist probably added the shuttle because of the association of JFK with NASA. And that's the other way to catch counterfeiting.

If the counterfeiters use the right paper, marks, deliberate impurities, inserted threads of a specific color, but miss a small, but critical, detail, then you have a comedy of errors made from a malicious hoax. All the experts had to do in Washington was to look up the issuing dates and the artwork.

However, until the writer sees very good photographs of these pieces of paper, he'll withhold judgment. In the interim, laughter is the best response. If they'd gotten the date and the artwork right, however, this might have been the most explosive financial story in a decade. And, there's trouble still. Someone has plates of a quality nearly high enough to fool police authorities whose expertise is chasing down precisely this kind of counterfeiting. Now, they know what their mistakes were. Was that why the two couriers were so obvious, so they'd be caught to test the fakes?

Luther

$134.5 Billion Italy: Stranger Still, Financial Times' Misleading Headline

Mafia blamed for $134bn fake Treasury bills
By FT reporters
Published: June 18 2009 19:52 | Last updated: June 18 2009 19:52
One summer afternoon, two “Japanese” men in their 50s on a slow train from Italy to Switzerland said they had nothing to declare at the frontier point of Chiasso.
But in a false bottom of one of their suitcases, Italian customs officers and ministry of finance police discovered a staggering $134bn (€97bn, £82bn) in US Treasury bills....Mafia blamed for $134bn fake Treasury bills, FT Reporters, 6/18/2009

Okay, same story, with an interpretation of the alleged crime expressed in the headline. The Mafia did it! But wait...

Italian prosecutors revealed last month that they had cracked a $1bn bond scam run by the Sicilian Mafia, with the alleged aid of corrupt officials in Venezuela’s central bank. Twenty people were arrested in four countries...The fake bonds were to have been used as collateral to open credit lines with banks, Reuters news agency reported. The Venezuelan central bank denied the accusations...(Mafia Blamed..., FT, 6/18/2009, cont'd)

It's a totally different story! A totally different crime! Was the Financial Times, one of the better sources on the Web, simply stumbling, or were they trying to communicate something else? As Wonker would say, yowser!

Please return to your regularly scheduled pablum from CNN.

Luther

SIGTARP Neil Barofsky Muzzling: The Missing Link in Ponte Chiasso Story ($134.5 billion)?

The Obama administration’s disputes with government watchdogs do not end with fired Inspector General Gerald Walpin. Behind the scenes, the Treasury Department is embroiled in a disagreement with Neil Barofsky, the watchdog for the $700 billion government bailout Troubled Asset Relief Program, or TARP...The dispute was revealed in a letter that Sen. Chuck Grassley, R-Iowa, sent on Wednesday to Treasury Secretary Tim Geithner, first reported by the Los Angeles Times’ Tom Hamburger and Peter Wallsten...As part of his duties performing audits and keeping tracking TARP dollars, Barofsky asked the Treasury Department for some documents about a financial institution receiving tens of billions in taxpayer bailout dollars. The Treasury Department refused to hand them over, “on a specious claim of attorney-client privilege,” Grassley wrote. “It is my further understanding that this disagreement then escalated into broader questions about whether SIGTARP is subject to your direct supervision and direction, which may have been referred outside Treasury for an independent legal opinion.”...Treasury Department Challenges Independence of TARP Inspector General, Jake Taper, Matt Jaffe, ABC News, 6/18/2009

A rule of thumb in Chicago's old gangland “society” was that the whistle-blower got taken to a garage and given a "valentine." But, just to be fair, at first they told him to shut up. Maybe next they crippled him by blowing off a kneecap. The valentine was saved for last.

Sorry, the writer fell into an old bent for conspiracy. Disregard this post. Pretend it never happened. Watch CNN for a while. All will be better.

Luther

Japanese Dumping $134.5 Billion in Bearer Bonds Using Smugglers in Italy? What?

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear...Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?...The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale....Suitcase with $134 Billion Puts Dollar on Edge, William Pesek, Bloomberg News, 6/17/2009

Readers are excused for not having heard of this astonishing story. The American MSM are not covering it. In the East, questions from the Asia Times netted a reassuring remark about trust in American bonds, and the simultaneous, if not related, resignation of the Prime Minister's brother as Internior Minister.

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano, 70, said in an interview in Tokyo on June 10 before attending a Group of Eight meeting of finance ministers starting today in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.” ...The Saga of the Bearer Bonds, Market Ticker (denniger.net), 6/18/2009

Der Spiegel published a straighforward account of the arrest in Ponte Chiasso in northern Italy.

It is the largest smuggling scandal in history - or a brilliant forgery: Italian officials have listed on the Swiss border arrested two men who bonds with a nominal value of 134 billion U.S. dollars were having. The authenticity is verified, Italy hopes to have a huge cash injection.
Chiasso - On the border from Italy to Switzerland, the customs officials feel always on smugglers - but such a finding is the Italian financial police have not arrived at in a suitcase, presumably from the two Japan-born men carried with them, the official U.S. government bond papers with a nominal value of 134 billion U.S. dollars were discovered. This is from a press release issued by the Italian Guardia di Finanza out. The sum corresponds to almost 100 billion euros.
The two men were already on 3 June Italy by train to Switzerland on the road. A check at the border at Chiasso financial police discovered the papers under a false bottom in the suitcase. Both over 50-year-old men had the documents are not specified in the customs. According to the Financial Police will be at the 249 papers to U.S. government bonds with a nominal value of 500 million U.S. dollars each and ten so-called Kennedy-bonds to a billion dollars per act.
However, there is the case for many puzzling: The Japanese Embassy in Rome confirmed the arrest while the two men. The Bloomberg news agency reports, however, that has not yet clarified whether they are Japanese citizens. A spokesman of the Japanese Foreign Ministry in Tokyo said the agency, the Consulate in Milan is currently examining the currently available Berichte.Sind the debt problems of the Italian State solved?
There is also, what a coup the Italian customs officials succeeded: Either they cover the largest smuggling scandal in the history - or an exceptionally large fake. The Italian customs checks, according to their own information yet as to whether the documents are authentic.
This is so far, that the papers appear to be the first authentic and had a normal bank documentation was it. The online service, International Business News reports, however, that at least some of the documents were probably forged. Kennedy Bonds with a nominal value of one billion dollars it had in that form never existed, it says. Imagine the papers - or at least a part of it - as genuine out the men threaten penalties. In Europe it is forbidden to amounts in excess of 10,000 euros from a country run without the customs indicated. Should the two men will be punished, this would Italy an unexpected windfall involved. The state could be 40 percent of the total seized forfeited - a large part of the Italian debt problems would be solved. However, it is entirely unclear whether the government is actually in Rome on an unexpected financial injection can be happy. Nevertheless circulate in newspaper reports on how the money was. This could reduce the government deficit or reconstruction in the earthquake zone in the Abruzzi to be financed. (Translated from Der Spiegel, June 12, 2009. Article is not available in English online.)

Asia News ran some very serious stories on this on three occasions.

The story of US$ 134.5 billion in US government bonds seized by Italy’s financial police at Ponte Chiasso on the Italian-Swiss border...initially made it to the front page of many Italian papers, but not of the international press. Since yesterday though, some reports have published by English-language news agencies. And some commentators are starting to link the story to reports in US press dating back to 30 March...On that date the US Treasury Department announced that it had about US$ 134.5 billion left in...the Troubled Asset Relief Program (TARP)...At the same time, Japan’s Kyodo news agency has reported that the resignation of Japan’s Interior Minister Kunio Hatoyama might also be related to the Ponte Chiasso affair...There are many reasons to connect the Ponte Chiasso incident to the minister’s resignation...the men carrying the bonds had a Japanese passport....they were not arrested. Under Italian law anyone in possession of counterfeit cash or bonds worth more than a few tens of thousands of euros must be arrested...the value of the seized counterfeit bonds is equal to 1 per cent of the US Gross Domestic Product (GDP). Thirdly...two well-dressed Japanese men carrying a briefcase travelling in a local train usually used by Italian manual labourers who commute to Switzerland for work had as much chance to go unobserved as two European businessmen travelling in the Congo....Seizure of US Government Bonds, Asia News, 6/12/2009

Hunt for “$134.5 billion Italy” on the Web and you'll get hundreds of sites that have looked at this story. A key point about this story is that, despite the assurances of the US government about the bonds being faked, they are “bearer bonds,” non-registered, negotiable instruments of a size (500 million US, and 1 billion US) that are only exchanged nation-to-nation. They were also last issued in the early 1970s. The seizure included bank documents describing in detail the acquisition and verifying these bonds. The Italian police who seized them had some doubts about the largest denomination (Kennedy $1 billion) but couldn't tell the difference between known genuine $500 billion bearer bonds and the ones they seized in Ponte Chiasso.

There are two major competing interpretations of what to this writer is one of the strangest financial stories of the last decade.

1)The Japanese, or someone else in the Far East, are unloading American debt. The amount represents 25% of Japan's current holdings of U.S. debt.

2)And not to be outdone, the conspiracy types, which are legion on Left and Right wing blogs, note the corresponding values: $134.5 billion in bonds; $134.5 billion in remaining TARP funds. Was the U.S. administration, or officials in Treasury or the Fed, parking a big pile of money overseas as a contingency in case things went to hell in the U.S.?

The writer for Asia News discounts the latter. This is not surprising. Such a transfer by anybody, or by any organization with attachments to the White House, the Fed or the Treasury Department would bring down a national government – our national government. He notes with more seriousness the terrifying danger of destabilizing world dollar-based credit markets by either vast amounts of counterfeit bearer bonds or by the Japanese (or a client) dumping a pile of U.S. debt.

It is not clear how statements by US Treasury spokesman Meyerhardt and Italian financial police can be reconciled. For the former the bonds “are clearly fakes”; for the latter, speaking at the start of this whole affair, some bonds were indistinguishable from the real ones when it comes to quality and detail...Italy’s Guardia di Finanza has a reputation for being a highly specialised and expert financial police agency. How could it be so easily duped! And if the bonds are “clearly fakes” why did it take US authorities two weeks to find out...Another discrepancy is the fact that, along with the securities, original and recent bank documents were seized as proof of their authenticity...If what Meyerhardt says is true, some major financial institutions have been deceived by the securities carried by the two Asian men. This would be a bombshell and raise serious questions as to how many bank assets are actually made up of securities that for Meyerhardt are “clearly fakes.”...If counterfeit securities of such high quality are in circulation the world’s monetary system, let alone that of the United States, is in danger. International trade and exchanges could come to a halt...Whether it is counterfeit money or money laundering, what happened is potentially more dangerous for the stability of the international system than the results of Iran’s elections...If the bonds are real it means someone with a lot of cash no longer trusts the US dollar as a reserve currency...the international press and main TV networks, with some exceptions, have ignored the whole affair. These days this is actually the real news.Mystery Surrounding $134.5 “fake” Billion Seized in Ponte Chiasso Remains, Asia News, 6/18/2009

The refusal to cover, or total ignorance of, this story by America's MSM is not really surprising. Iran's rioting is easier, and a lot cheaper to carry. And there's always Secretary of State Clinton's elbow.

But the Wall Street Journal hasn't looked at it, nor has Investor's Business Daily, two pretty sober sources. What the hell is going on?

Luther