Government Wastes Billions Of Dollars With Duplicative Programs

Posted By on February 28, 2011

Yep…we’re not surprised!

From The Wall Street Journal:

A government study found duplicative programs that cost taxpayers billions of dollars each year, including 15 different agencies overseeing food-safety laws, 20 programs to help the homeless and 80 for economic development.

Impossible Assumed Rates Of Return…The Pension Fund Debacle In A Nutshell

Posted By on February 27, 2011

Ridiculous 7.5%-9.0% assumed rates of return are not “little white lies” — they are Everest-sized whoppers. They are far from reality and nearly impossible to ever realistically have happen over the medium term and even more impossible over the long term in mature economies. 

If the three big California Public Retirement Funds used a realistic 4.5%-5% rate of return instead of the make believe 7.5%-8% in which they now use, these funds would be $500 billion under-funded — 10 times the $50 billion shortfall they admit to.  Public employee funds as a whole are probably $3 or $4 trillion underwater. The massive shortfalls we now face exist despite prior “Bull Markets” and the current huge stock market rally.

There are many reasons for the pension fund debacle, but one of the biggest is the greed of Wall Street and its corporate allies. It’s a result of their dismantling of our nation’s regulatory safeguards and Wall Street’s capture and abuse of America’s public pension funds — charging them huge management fees, while losing trillions of dollars of pension fund assets in risky investments.

Inappropriate investments that caused these massive pension fund losses were not an accident. The pension fund field caught the Wall Street contagion — financial corruption. It’s called “Pay to Play.” The SEC saw it years ago but, controlled by anti-regulation political appointees, it did nothing. So a nationwide system of political contributions to elected officials who sit on fund boards and payoffs and kickbacks to politically well-connected “Placement Agents” to steer fund money to Wall Street became widespread. Not surprisingly, the investments obtained by “pay-to-play” kickbacks and contributions have generated horrific losses.

An investment officer of the California Public Employee Pension Fund was forced to resign — he got an all-expense-paid trip to NYC from an investment group that got $600 million from the fund. The middle men on that deal — two former top CalPERs officials — got some $20 million to arrange this placement. Two other former CalPERS officials have been sued by the Attorney General for taking $50 million in placement fees to steer pension investments.CalPERs lost hundreds of millions on such investments. Alan Hevesi — the former head of the New York State Fund — pleaded guilty to doling out billions in that Fund’s assets to favored managers in return for benefits. The SEC has finally outlawed this system of bribes and kickbacks. But too late — the damage has already been done to the pension funds. Nationwide, public pension funds lost billions on these types of corrupt investments with Wall Street types.

The horrible deficit numbers funds admit to actually hide a far more terrible reality. To determine how well a fund is “funded” it uses an assumed rate of return. It estimates how much the fund will earn on its investment portfolio in the future. For decades, public pension funds have assumed 7.5%-8%, even 9% annual growth, i.e., over 100% compounded over 10 years. Fat chance!

Today, pension funds are engaged in massive deceptions to conceal the true extent of their funding deficits. They are concealing the massive black holes that haunt public budgets. These ridiculous 7.5%-9.0% assumed rates of return are not “little white lies” — they are Everest-sized whoppers. If the three big California Public Funds used a 4.5%-5% rate of return instead of the 7.5%-8% they now use, these funds would be $500 billion under-funded — 10 times the $50 billion shortfall they admit to. Since this is a nationwide deception going on in virtually all public plans, try extrapolating that out. Public employee funds are probably $3 or $4 trillion underwater. The massive shortfalls we now face exist despite prior “Bull Markets” and the current rally. And the next round of excess of a still under-regulated Wall Street will produce another wealth destruction event that will erase recent gains.

www.zerohedge.com

Popularity Of Congress Is All Time Low Of 11%

Posted By on February 27, 2011

Anybody surprised?  Nope, didn’t think so……Why do so few Americans believe in our government today? That’s simple….it’s because Congress is self serving, and favors the giant corporations and the ultra-wealthy, not Main Street and the common American.

Influential Harvard and Stanford law professor Lawrence Lessig noted in a must-watch speech last week that polls show that only 11% of the American people have confidence in Congress.

Marc Faber Interviewed By The McAlvany Financial Group

Posted By on February 27, 2011

Everything the government is doing involves a rig job of one kind or another and it’s unmatched in history.  Real estate and equity markets are not standing on there own, they are all being supported by the government either directly or indirectly…..and there in lies the problem. 

Here are some key extracts from the Marc Faber interview by The McAlvany Financial Group:

I think what will happen is that we are in the midst of a kind of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, that there will be more money-printing, and then you have inflation, and a poor economy, an extreme form of stagflation, and, eventually, in that situation, countries go to war, and, as a whole, derivatives, the market, and everything will collapse, and like a computer when it crashes, you will have to reboot it.For the investor, the question is: How do I navigate through this complete disaster that is going to unfold?  And I think if you look at different asset classes  real estate, equities, bonds, cash, precious metals  I suppose that you have to be diversified.  I think real estate in the U.S. may go down another 15%.   Look at the history, for example, of Germany, for the last 100 years.  They had World War I.  They had the hyper-inflation in World War II.  The bond-holders got wiped out three times.  If you owned Siemens, and you still own Siemens today, it was not a fantastic investment, but at least you still have something.  You were not wiped out.  I think that in equities you will be better off because you have an ownership in a company, than by being the lenders to companies, and the lenders, especially, to governments.

Faber on the key distinction between nominal and real, which nobody on CNBC seems to grasp yet, why gold now is cheaper than it was in 1999, and on the Dow and gold reaching parity.

In a money-printing environment, it is very difficult to know what is actually cheap and what is expensive.  Is the price of wheat high, or is it low?  Inflation-adjusted, it is extremely low.  In nominal terms, it is relatively high.  I believe that, in March 2009 when the S&P was at 666, the market was actually much cheaper than is generally perceived, because of the money-printing, and I do not anticipate that we will see 666 on the S&P again, in nominal terms. In other words, the Dow could be perhaps at 10,000 or 12,000, and gold could be at the same level.  Can gold have a correction?  Yes, there has been a little bit too much euphoria about gold, and we may have a correction, but I do not think we are in a bubble in the price of gold.  In fact, I could make a case that gold, at this level of $1400 an ounce, is cheaper than in 1999, when I look at the unfunded liability growth of the U.S., at the credit growth of the U.S., and at the household growth, and at the money printing, and at all the wealth creation that happens in China and Russia.

In other words, they are going to print so much money that the S&P could be at, perhaps, 2000, but in real terms, it could be down below the lows of March 6, 2009.  Maybe in gold terms, we could one day reach a ratio of Dow Jones to gold of 1-to-1, as we were in 1980. 

Marc Faber: That is why I am advising people to accumulate gold.

OECD (Organization for Economic Cooperation and Development) Says Real Worldwide Demand Driving Commodity Prices

Posted By on February 27, 2011

From The Wall Street Journal….this is why commodity prices continue to go higher!

WASHINGTON—A report being prepared for the world’s Group of 20 leading economies indicates the main factor behind rising prices for wheat, sugar, cotton, metals, oil and other commodities isn’t speculators, as some have suggested, but that the global demand to consume these goods is growing faster than the supply.

Financial Weapons Of Mass Destruction

Posted By on February 26, 2011

Understanding Derivatives – Class Name and Description: Greedy Financial Morons 101, How To Destroy The Financial World……

Heidi is the proprietor of a BBQ Bar in Mt. Airy Maryland .

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers’ loans).

Word gets around about Heidi’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Heidi’s bar. Soon she has the largest sales volume for any bar in the Baltimore-Washington area .

By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Heidi’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINK BONDS.

These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AAA Secured Bonds” really are debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi’s bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.

Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Heidi’s 11 employees lose their jobs.

Overnight, DRINK BOND prices drop by 90%.

The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities.

They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, nondrinkers who have never been in Heidi’s bar.

Now does everybody understand? 

A $228 Million Dollar Mistake, Yes, You Heard That Right…$228 Million Dollar Mistake Made For The Orange County, California Pension System, And It Wasn’t Found For 8 Years

Posted By on February 26, 2011

So…Inquiring minds want to know what other computer systems are using this same software and why it takes 8 years to figure this out.  We think there’s more to this story!

SANTA ANA, Calif. (KABC) — A $228 million mistake has landed two employees for Orange County’s pension system on paid leave.

It’s all linked to a computer error dating back eight years ago, according to the Orange County Register.

In 2003, new software was installed which miscalculated some rates for payments to the pension fund.

The Orange County Register reported that pensions themselves shouldn’t be affected by the mistake, but it will result in some hefty catch-up bills for agencies countywide. The Orange County Fire Authority, for example, will have to pay $76 million to make up for eight years in which funds went uncollected for special pay stipends for paramedics and others with specialized jobs, the newspaper reported.

The retirement agency is allowing the firefighters to pay the bill over a 25-year period beginning in July.

Orange County Employees Retirement System Assistant CEO Steve Cadena and Finance Officer Michelle Williamson have been placed on paid leave since Feb. 18, as the agency conducts an audit.

The Associated Press contributed to this report.

Providence School Board Votes To Fire All Teachers, Has A $40 Million Dollar Deficit

Posted By on February 25, 2011

The Providence School Department (District) has a $40-million deficit.  So the big question is: Why was this deficit allowed to get so large in the first place.  Inquiring minds want to know! 

Yes we know, nobody learned math 101… so now we have 1,000’s of math morons running public departments supported by the government with large budget deficits around the country.  In the private sector, the companies would have long ago been bankrupt.

This is not an attack on teachers, but rather on a broken system. 

PROVIDENCE — After two hours of contentious discussion, the School Board voted 4 to 3 Thursday night to send out termination notices to each of the city’s 1,926 public school teachers.

More than 700 teachers jammed a high school gymnasium to tell school officials that their hearts were broken, their trust violated and their futures as teachers jeopardized.

Many of the teachers were caught off guard by Mayor Angel Taveras’ decision to terminate teachers instead of laying them off. Last night, speakers questioned the mayor’s rationale: a $40-million school budget deficit and a March 1 deadline by which the School Department must notify teachers if their jobs are in jeopardy.

Teachers begged the School Board to issue layoffs rather than fire them outright because, under the layoff provisions, teachers are recalled based on seniority. There is no guarantee that seniority would be used to bring back any of the fired teachers. School leaders have been vague about exactly how seniority will play out in the case of terminations.

Before the vote, several School Board members explained their reasons for supporting or rejecting the motion to dismiss:

Philip Gould said he believes that Providence Teachers Union President Steve Smith is committed to serious and meaningful school reform, adding that if “we do this, it will be detrimental to the children of this district.”

Nina Pande said the board is faced with an extremely difficult decision and that the board was given only three days to close a $40-million deficit.

Superintendent Brady has said that the majority of teachers will be rehired but could not give any details until the mayor’s special panel completes its report on the city’s financial status.

More: http://www.projo.com/news/content/PROVIDENCE_SCHOOL_MEETINGS_02-25-11_MCMMBSG_v26.1bd455c.html

More Fertilizer….It’s The Best Option For Food Shortages

Posted By on February 25, 2011

The clear trend in major regions is for less and less arable land per capita. Thus the only way to get more food is to get more yield from diminishing acres. And that means: more fertilizer!

The chart from Dundee Securities tells the story:


Read more: http://www.businessinsider.com/chart-of-the-day-arable-land-per-capita-2011-2#ixzz1F0kHzU4R

Surging Gasoline Prices And How It Will Effect You

Posted By on February 25, 2011

A quick look at this chart tells it all! Yes, gasoline prices do effect the economy.

Courtesy of John Lohman

Wisconsin Assembly Passes Bill On Union Rights

Posted By on February 25, 2011

Sounds like there was more then one way to play the game of hide and seek, but the Democrats weren’t paying attention while hiding!

MADISON, Wis. — Republicans in the Wisconsin Assembly took significant action on their plan to strip collective bargaining rights from most public workers, by passing the measure early Friday morning before sleep-deprived Democrats realized what was happening.

The vote ended three straight days of harsh debate in the Assembly. 

The Assembly’s vote sent the bill on to the Senate, but minority Democrats in that house have fled to Illinois to prevent a vote. No one knows when they will return from hiding. Republicans who control the chamber sent state troopers out looking for them at their homes on Thursday, but they turned up nothing.

With the Senate immobilized, Assembly Republicans decided to act and convened the chamber Tuesday morning. Democrats launched a filibuster, throwing out dozens of amendments and delivering rambling speeches. Each time Republicans tried to speed up the proceedings, Democrats rose from their seats and wailed that the GOP was stifling them. Debate had gone on for 60 hours and 15 Democrats were still waiting to speak when the vote started around 1 a.m. Friday.

Speaker Pro Tem Bill Kramer opened the roll and closed it within seconds. Democrats looked around, bewildered. Only 13 of the 38 Democratic members managed to vote in time. Republicans immediately marched out of the chamber in single file. The Democrats rushed at them, pumping their fists and shouting “Shame!” and “Cowards!” The Republicans walked past them without responding. Democrats left the chamber stunned.

The protesters greeted them with a thundering chant of “Thank you!” Some Democrats teared up. Others hugged. “What a terrible, terrible day for Wisconsin,” said Rep. Jon Richards. “I am incensed. I am shocked.”

GOP leaders in the Assembly refused to speak with reporters, but earlier Friday morning Majority Leader Scott Suder warned Democrats that they had been given 59 hours to be heard and Republicans were ready to vote.

The governor has said that if the bill does not pass by Friday, the state will miss a deadline to refinance $165 million of debt and will be forced to start issuing layoff notices next week.

STRATFOR On Bahrain, At The Center Of Middle East Oil Shipping Lanes

Posted By on February 25, 2011

Some good points about Bahrain….and why it’s important to oil!

Bahrain lies in the middle of an age-old contention between Iran and Saudi Arabia… and the balance between the two rivals could soon be tipped.

A strong Iraq was a nice buffer between Saudi Arabia and Iran, but a strong Iraq is no more. Now there’s unrest in Bahrain, whose Shiite majority lives under Sunni rule. If the protests in Bahrain lead to concessions for the Shia, it could energize Saudi Arabia’s Shiite minority. And in the Middle Eastern balance of power, a weaker Saudi Arabia means a potentially stronger Iran.

Why does this matter? 40% of the world’s seaborne oil passes through the very narrow Strait of Hormuz every day. Iran is on one side; what if it were on both… Imagine the disruption to the world economy if Iran mined the strait.

www.stratfor.com

Looking Toward The Future, It’s About Time For Natural Gas To Show Its Value….

Posted By on February 24, 2011

www.jsmineset.com

IRS Has New Rules For Tax-Debt Relief

Posted By on February 24, 2011

From The Wall Street Journal………The Internal Revenue Service announced new rules intended to help struggling taxpayers cope with tax debts.

Commissioner Doug Shulman called the steps an effort to “stand in taxpayers’ shoes” in order to minimize unnecessary burdens and said they wouldn’t compromise tax collections.

The changes affecting individuals concern tax liens and so-called Offers in Compromise, which are settlements with taxpayers who have no prospect of paying what they owe. There are also new rules for small businesses with tax debts.

The threshold for tax liens for individuals will now be $10,000, doubling the $5,000 previous amount that had been in place since the mid-1980s. This means that the IRS generally won’t file a lien unless unpaid taxes exceed $10,000. Tax liens give the IRS a legal claim to a taxpayer’s property for the amount of an unpaid debt.

The agency also said it will be easier for taxpayers to obtain “lien withdrawals”—a higher level of erasure than a “lien release”—after the full amount of the tax debt is paid. Formerly the IRS would release but not fully withdraw the lien. Full withdrawal is often better for taxpayers’ credit ratings.

In addition, liens may now qualify for withdrawal if the amount is less than $25,000 and the taxpayer has or enters into a Direct Debit Installment Agreement, which typically involves monthly withdrawal of payments from a taxpayer’s bank account.

The IRS also said it will make streamlined installment agreements on back taxes available to more small businesses, as long as the taxpayer agrees to make periodic direct payments. Small businesses with $25,000 of tax debt or less can participate, and those with more who pay down the balance to that amount may qualify as well. Formerly the tax debt had to be $10,000 or less.

The IRS is also expanding and easing terms for its streamlined Offer in Compromise program, which allows taxpayers who have no prospect of being able to pay tax debts to settle for a lesser amount. In most cases the agency will not accept an offer if it believes the debt can be paid in full either as a lump sum or through payments over time.

Taxpayers with incomes up to $100,000 may now be eligible for the compromise program if their total tax liability is $50,000 or less. The change doubles the limits of $50,000 in income and $25,000 of total tax due.

Libya’s Sovereign Fund Has $32 Billion Dollars With U.S. Banks And Over $70 Billion Dollars In Total Assets Spread Around The World

Posted By on February 24, 2011

Libya’s “secretive” sovereign fund (LIA) has assets of over $70 billion and has placed $32 billion with U.S. banks, reported Reuter,  based on Wikileaks provided information from a “confidential diplomatic cable.”

According to the report: ” The cable, obtained by WikiLeaks and revealing the details of a January meeting between the head of the Libyan Investment Authority (LIA) and the U.S. ambassador in Tripoli, comes as the United States and European governments explored the possibility of freezing assets belonging to the Libyan government.” Libya’s sovereign fund is estimated to hold some $70 billion in assets. The fund is a major stockholder in Italy’s Unicredit bank and U.K. publishing giant Pearson.

The report details a conversation that ranged over a wide range of topics, including where and how Libya did business and with whom. It also mentions a dispute between LIA and Lehman brothers over a “major investment” that was “mismanaged,” but that Libya’s fund manager denied having any connection to the Ponzi schemes run by Bernie Madoff or Alan Stanford.

B of A Expects Libya Oil Production To Shut Down Completely

Posted By on February 24, 2011

Oil production in Libya is expected to shut down completely and could be lost for a prolonged period of time, Bank of America Merrill Lynch said on Thursday.
U.S. officials said current oil stockpiles were adequate to meet any supply disruptions.  So, can we believe them is the big question!

Troubled Banks Rise To Highest Level In 18 Years

Posted By on February 24, 2011

Rock and Roll, and to think….the media says it’s all behind us and everything is getting better rapidly…..NOT!

Troubled Banks Rise To Highest Level In 18 Years
By Marcy Gordon
Posted: 02/23/2011

WASHINGTON — The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the final three months of 2010, the highest level in 18 years.

The Federal Deposit Insurance Corp. said Wednesday that the number of banks on its confidential “problem” list rose to 884 in the October-December quarter, up from 860 in the previous quarter. Those are banks rated by examiners as having very low capital cushions against risk.

Twenty-two banks have failed so far this year. And more banks are at risk, even as the FDIC reported the industry’s highest earnings as a group since the financial crisis hit three years ago.

Only a small fraction of the 7,657 federally insured banks — about 1.4 percent with assets of more than $10 billion — are driving the bulk of the earnings growth. They are the largest banks, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

The big banks accounted for about $20.6 billion of the industry earnings of $21.7 billion in the fourth quarter.

www.jsmineset.com

New Home Sales Down 13% To 19K Actual New Homes Sold, It Is The Lowest Monthly Sales Ever Since Records Started

Posted By on February 24, 2011

Does anyone really think there is a recovery going on!  ” Less than 500 homes  sold in the over $750,000 and only 19k total new homes were sold. The lowest monthly total ever. (and of the 19K, 53% were vacant lots or under construction).

“Sales of new single-family houses in January 2011 were at a seasonally adjusted annual rate of 284,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.6 percent (±11.2%) below the revised December rate of 325,000 and is 18.6 percent (±15.4%) below the January 2010 estimate of 349,000. The median sales price of new houses sold in January 2011 was $230,600; the  average sales price was $260,300. The seasonally adjusted estimate of new houses for sale at the end of January was 188,000. ” Less than 500 homes sold in the over $750,000 category and only 19k total non-annualized homes were sold. It is the lowest monthly total ever. (and of the 19K, 53% were vacant lots or under construction).

Gaddafi Packed And Ready To Head Out Of Dodge…Unless He Pulls A Hitler On Everyone!

Posted By on February 24, 2011

Here is the latest news from the ABC.net.au,:

 “Gaddafi’s private plane is loaded with gold bullion and hard currency, mainly dollars, and is preparing to fly to Zimbabwe.” Yet there is speculation that  Gaddafi may pull a Hitler: “Earlier, one of Mr Gaddafi’s former ministers predicted the Libyan leader will follow in Adolf Hitler’s footsteps and commit suicide rather than give up power. Mustapha Abdeljalil, justice minister until he quit over the bloody crackdown on protesters, says he expects Mr Gaddafi to make good on his pledge to die on Libyan soil rather than slink into exile. “Gaddafi’s time is up. He is going to go out like Hitler. He is going to commit suicide,” Mr Abdeljalil told Swedish media.” In either case, it is questionable how much of Libya’s oil infrastructure will survive the outcome.  As a reminder, Libya had 143.8 tonnes of gold (or fools gold Tungsten?) as of December 31, per the WGC (World Gold Council).

World Debt Chart – This Is Why The Years 2012-2014 Will Likely Be Very Tough Years

Posted By on February 23, 2011

Fed’s Hoenig Says United States Has “Deeply Undermined Free-Market Capitalism”

Posted By on February 23, 2011

Federal Reserve Bank of Kansas City President Hoenig is one guy that knows!

HOENIG:  U.S. HAS `DEEPLY’ UNDERMINED FREE-MARKET CAPITALISM

HOENIG: WARNS OF ESCALATING SERIES OF CRISES WITH RISING COSTS

HOENIG: LARGE FINANCIAL FIRMS CAN EXPECT BAILOUTS IN FUTURE

HOENIG: BIG FINANCIAL FIRMS MUST NOT HOLD ECONOMY`HOSTAGE’

HOENIG: BIG FIRMS `HAVE SIGNIFICANT INCENTIVES’ TO INCREASE RISK

HOENIG: TOO-BIG-TO-FAIL FIRMS POSE `GREATEST RISK’ TO ECONOMY

HOENIG: LARGE FIRMS WERE `GAMING’ CAPITAL STANDARDS PRE-CRISIS

HOENIG: BIG FINANCIAL FIRMS ENJOY `HUGE’ FUNDING ADVANTAGE

 www.zerohedge.com

Cumberland Advisors – Nowhere Near Over!

Posted By on February 23, 2011

Nowhere Near Over
February 23, 2011

This is nowhere near over.  

By “This”, we mean the regional contagion, spreading violence and rising geopolitical risk in the Middle East and North Africa.    Reports say that Libya has stopped producing oil and that pipeline delivery to Europe (Italy) is interrupted.  Libya seems headed for complete dismemberment and full-blown civil war.

Note that China is evacuating 15,000 workers.  China!  Imagine that we learn there are as many workers from China in Libya as there are workers from Egypt.  Anyone still think this is a local idiosyncratic event.

We are watching a “sea change” occur among one tenth of the world’s population and among the world’s low cost marginal producers of the world’s energy.  Scenarios with benign outcomes and peaceful transitions appear remote.

Note how the region’s worst of the bad actors seize their opportunities where they find them.  Every success emboldens them.  A case study is Iran’s two ships transiting the Suez.  Also, note how the most suppressive regimes like Syria, Iran, Saudi Arabia, Libya have learned how to suppress social networks, cut off cell phones, block internet traffic and reverse or alter the information flows. 

Consider that suppressive regimes are not an encouraging environment for business risk taking and capital investment.  This true around the world.  Despots maintain their power with only harsh methods whether in the Middle East or North Korea or Venezuela.  Simply put: a thug is a thug. Their actions eventually stymie and persecute thoughtful and creative internal forces.  Despots raise costs and lower production.  In addition, the energy dependent western democracies are now learning that despots are also not reliable longer-term partners. 

Also, consider that success by demonstrators and protesters leads to additional demonstrations and increasing demands for reforms.  We believe that the turmoil and regime change in the region has a long way to go.   We also believe that forecasting the outcomes is a highly problematic exercise.   Do we end up with open democracy or Islamized fundamentalist states or something else?   This is going to be determined on a case-by-case basis.  We do not know the outcomes.  History says that emerging democracies are rare in the Middle East.

A sea change can bring on a protracted period of higher oil and energy pricing.  The US economy is ill prepared for it.  Our policies border on madness.  We do not drill for oil off our coast.  In the Gulf, deep water drilling is encouraged in Cuban national waters but not in American waters.  On American land, we spend billions subsidizing an uneconomic program called ethanol.  We raid the federal treasury to put money in the pockets of the politically connected few.  In addition, we raise the price of corn and farmland and global Ag output to increase the starvation of millions of people.  Thank you Washington and specifically a few members of America’s congress.

Back to the Middle East.  Consider that a 1-penny increase in the price of a gallon of gasoline acts as a sales tax on consumers at the rate of 1.2 billion dollars a year (Naroff Economics estimate).  A one-dollar rise in the price of oil eventually leads to a 2.5-cent increase in gasoline on average (Moody’s estimate).  It is easy to get to a $4-$5 range for gasoline in the US.

Add that to the food price surge and we have a shock.  We have already consumed about half of the 2% payroll tax cut.  It appears higher gas prices will use up the other half and more by Memorial Day.  Gasoline at 4 to 5 dollars a gallon will be enough to turn the improving consumer sentiment numbers into deteriorating ones and will hurt the fragile economic recovery.  It will also set back any hope for stability in the housing sector.

If we flirt with a double dip recession, the Fed may be debating QE3 by late summer.   So far, QE2 seems to have little impact.  It may turn out to have been too small to do very much.  A few hundred billion in a mass of many trillions is not very much. 

Consider that there has been no significant increase in the amount of federal debt reaching the markets.  To get to that conclusion, add up all the new treasury issuance, subtract the shrinkage of Fannie and Freddie debt and subtract the Fed’s purchases.  The net result is that most of the federal deficit is being financed without increasing the publicly traded portion. 

So why have treasury bond interest rates risen since QE2, if they are not driven by the deficit.  They may be driven by inflation expectations or flight from the dollar or re-allocation of portfolios.  However, they do not seem to be higher due to direct federal borrowing from the markets.

So where is this going?

Any slowing of the US economy from this energy shock may act to lower interest rates and dampen inflation expectations.  Higher energy prices can mean that something else does not get purchased.  We may see substitution and not inflation.

At Cumberland, our US ETF accounts are in the highest cash position they have seen in over two years.  We think being full invested when there is a shooting war in a major oil producing country is folly.  There is one position that must be maintained.  We are high in energy overweight.   We are underweighted in consumer discretionary exposure. 

This is nowhere near over.

David R. Kotok, Chairman and Chief Investment Office

*********

Copyright 2011, Cumberland Advisors. All rights reserved.

The preceding was provided by Cumberland Advisors.  This report has been derived from information considered reliable, but it cannot be guaranteed as to accuracy or completeness.

It is not our intention to state or imply in any manner that past results and profitability are an indication of future performance. This does not constitute an offer to sell or the solicitation or recommendation of an offer to buy or sell any securities directly or indirectly herein.

Cumberland Advisors supervises about $1.5 billion in separate account assets for individuals, institutions, retirement plans, government entities, and cash-management portfolios. Cumberland manages portfolios for clients in 47 states, the District of Columbia and in countries outside the U.S. Cumberland Advisors is an SEC registered investment adviser. For further information about Cumberland Advisors, please visit our website at www.cumber.com.

Please feel free to forward this Commentary (with proper attribution) to others who may be interested.

http://www.cumber.com

A Broken System…Bottom 90% Of Americans Average $31,244 In Income!

Posted By on February 22, 2011

How Rich Are The Superrich

A huge share of the nation’s economic growth over the past 30 years has gone to the top one-hundredth of one percent, who now make an average of $27 million per household. The average income for the bottom 90 percent of us? $31,244.

PIMCO’s El-Erian Says We Can Not Assume The Dollar Will Retain Its Reserve Currency Status

Posted By on February 22, 2011

Mohamed El-Erian appeared on Bloomberg Surveillance with Tom Keene,  talking about the developments in the Middle East, “we have to appreciate that in the west, what is happening in Egypt and North Africa results in stagflation in the short term. So higher inflation and lower growth because of higher oil prices that take away purchasing power and transfer wealth somewhere else; because of higher geopolitical risk, which tends to diminish animal spirit and therefore impact investment; and let’s not forget that the Middle East is a market, particularly for European exports. So from an economic perspective, it is important for the west to understand that these are stagflationary winds that have been added to the global economy.” “It is a warning shot to America that we cannot simply assume flight to quality, flight to safety. That people are starting to worry about the fiscal situation in the U.S., worrying about the level of debt and what they’re hearing about states and municipalities. I would take this as a warning shot that we cannot assume that we will maintain the standing of the reserve currency as we have in the past.”

From Bloomberg TV:

On unrest in the Middle East:

“I think that a common factor that’s been driving all of that is a combination of youth unemployment, high food prices, and political repression. But as you say, Libya is different. The revolutions in Tunisia and Egypt were relatively peaceful. Libya is far from being relatively peaceful.  There is a tremendous amount of human suffering and casualties there, making this protest more unpredictable and more dangerous. In addition, Libya is a major oil exporter, so suddenly developments in North Africa and the Middle East have a systemic impact on the economy.”
 
On other oil producers in the region:

“Everyone in the Middle East and beyond understands that this is a movement that has to be taken seriously. That it is better to be ahead of the curve rather than behind the curve. The story of Egypt, Tunisia and Libya have been regimes that have been consistently behind the curve. The lesson that has gone out to not only other Middle Eastern countries but to the whole world, is take seriously these economic and political issues.”
 
On political and economic intelligence for Libya:

“On the economic side, the data that you can confirm on the other side, particularly trade data where there is a trading partner and therefore you get another number, tends to be pretty good. It tells you that Libya is an export of about 1.5 million barrels per day, which is not insignificant. This is one of the top 10 or 11 oil exporters. When it comes to internal data–GDP numbers, inflation numbers–then it becomes more difficult. On the political aspects, what we have learned is that western intelligence has been behind the curve in terms of understanding the dynamics in those.”
 
On what the western world can do over the next 48 hours regarding the unrest in Libya:

“Three elements. One is the reality that in countries like Libya, the rest of the world cannot do very much other than condemn and try to put pressure, but ultimately that’s not going to bear very much.  Second, In countries that have gone to the first phase of revolution–Tunisia and Egypt–the west is able and willing to step in to help the process towards democracy. It is encouraging that the British prime minister went to Egypt yesterday. Thirdly, we have to appreciate that in the west, what is happening in Egypt and North Africa results in stagflation in the short term. So higher inflation and lower growth because of higher oil prices that take away purchasing power and transfer wealth somewhere else; because of higher geopolitical risk, which tends to diminish animal spirit and therefore impact investment; and let’s not forget that the Middle East is a market, particularly for European exports. So for an economic perspective, it is important for the west to understand that these are stagflationary winds that have been added to the global economy.”
 
On persistent stagflation as the new normal:

“The new normal is just a recognition that the western world is not going to grow as rapidly as before. That unemployment will be a persistent issue. That social safety nets will be very stretched. And that government intervention will continue in the economy. What we’re getting on top of that now are headwinds from higher oil prices, higher geopolitical risk, and a concern that one of the reactions to higher commodity prices will be for consumers to stockpile. So I suspect that right now a lot of airlines are likely saying that with oil where it is now, should we be hedging now? What you get is an overshoot, just like we saw in 2008. That is a concern in terms of the stagflation headwinds.”
 
On Pimco’s strategy and how to react to unrest as an investor:

“Last week, Friday in particular, when the crisis started impacting countries like Bahrain, we recognize that things were morphing. That it would impact commodity prices and oil prices in particular. We identified a process of morphing that went on. When the crisis was focused on Egypt and Tunisia, when those countries were going to their peaceful revolution, they were not systemic in nature. The influence on the global economy was limited.  They were not large economies. They were not major exporters of commodities.  And they did not owe anyone lots of money. When the crisis and turmoil started to hit Libya and Bahrain, this whole phenomenon has morphed.  And it has morphed into something that in the short term means higher oil prices, greater risk aversion, and a somewhat flight to quality.  Although it’s interesting to see that the dollar has not benefitted that much.”
 
On higher oil prices:

“The global economies are going to have to live with these for a while. That is just a reality of the world we are living in today.”
 
On the events in Egypt over the past week:

“They have taken important steps. You’ve seen ministerial changes, you’ve seen a timeline announced.  And most importantly, you’ve seen the protest movement saying that we will be the check and balance. We’re going to make sure that this revolution that was started will end up with democracy and greater individual freedom. We’re seeing progress. It’s a bumpy road that does not happen overnight. But every day we are seeing progress.”
 
On what the weak dollar is signaling:

“It is a warning shot to America that we cannot simply assume flight to quality, flight to safety. That people are starting to worry about the fiscal situation in the U.S., worrying about the level of debt and what they’re hearing about states and municipalities. I would take this as a warning shot that we cannot assume that we will maintain the standing of the reserve currency as we have in the past.”

www.zerohedge.com

The Math Comes Up Short For Most Retirement Plans

Posted By on February 21, 2011

The average person doesn’t realize the shortage they will likely be faced with in retirement! 

New Zealand Hit With Magnitude 6.3 Earthquake

Posted By on February 21, 2011

WELLINGTON, New Zealand (AP) — A strong 6.3-magnitude earthquake rocked the southern New Zealand city of Christchurch on Tuesday, and there were reports of damage to some buildings.

Radio New Zealand reported that a church near the city center collapsed. The station also said staffers in its Christchurch newsroom had to cling to their desks during the shaking, with large filing cabinets toppling over.

“What I can see from where I am in the central city is that there are significant amounts of additional damage,” Christchurch Mayor Bob Parker said.

The U.S. Geological Survey said the temblor was centered 3 miles (5 kilometers) from the city at a depth of 2.5 miles (4 kilometers).

Warning: Get Ready For A ‘Global Katrina’…. Biggest Ever Solar Storm Could Cause Power Cuts Which Last For MONTHS

Posted By on February 21, 2011

Earth is overdue a massive solar storm as the sun enters its most active period…..We’ve been talking about this for a while.  

Heads up everybody…..Have cash on hand and 30-60 days of food, water, toilet goods etc, and lots of flash lights and batteries and keep your car gas tank at least half full at all times………what’s so hard about being prepared for something when you’ve been warned! If it doesn’t happen, so what you were prepared. Are banks going to be open if the power grid goes down, NO.  Will grocery stores be open, No. Will gas stations be open, NO.  Get the point!

Chaos will be flowing if this massive solar storm hits the power and communications equipment.  We are more relent on wireless and electricity then ever before in the history of mankind!

Professor Sir John Beddington, the government’s chief scientific adviser, said: ‘The issue of space weather has got to be taken seriously. We’ve had a relatively quiet period of space weather – but we can’t expect that quiet period to continue.   ‘Many things that we take for granted today are so much more prone to the process of space weather than was the case in the last solar maximum.’

‘At the same time over that period the potential vulnerability of our systems has increased dramatically, whether it is the smart grid in our electricity systems or the ubiquitous use of GPS in just about everything we use these days.  

The world is overdue a ferocious ‘space storm’ that could knock out communications satellites, ground aircraft and trigger blackouts – causing hundreds of billions of pounds of damage, scientists say.

Astronomers today warned that mankind is now more vulnerable to a major solar storm than at any time in history – and that the planet should prepare for a global Katrina-style disaster.

A massive eruption of the sun would save waves of radiation and charged particles to Earth, damaging the satellite systems used for synchronising computers, airline navigation and phone networks.  If the storm is powerful enough it could even crash stock markets and cause power cuts that last weeks or months, experts told the American Association for the Advancement of Science.

 
Read more: http://www.dailymail.co.uk/sciencetech/article-1359136/Global-Katrina-Biggest-solar-storm-cause-power-cuts-MONTHS.html#ixzz1EdIqcVQq

Volcano Bulusan Eruptes In The Philippines

Posted By on February 21, 2011

Thousands of people in the Philippines fled their homes as a volcano erupted on Monday, sending a spectacular column of ash high into the sky, residents said.

The eruption of Bulusan, a 1,559-metre (5,115-foot) volcano, turned mid-morning into night for about 20 minutes across largely farming areas around its slopes, regional army spokesman Major Harold Cabunoc told AFP.

“There was a major ashfall. There was zero visibility,” Cabunoc said.

State volcanologist Ramil Vaquilar told AFP that rumbling sounds accompanied the ash column that rose between two and 2.5 kilometres (1.2-1.6 miles) above the crater.

About 2,000 residents were evacuated from three farming villages in the area as the government banned people from within four kilometres of the crater, said Lieutenant-Colonel Santiago Enginco, the local army commander.

Philippine Institute of Volcanology and Seismology director Renato Solidum said on national television that planes should avoid the skies over Bulusan, as ash might clog jet engines.

Bulusan is among 23 active volcanoes in the Philippines, which is located in the so-called Ring of Fire of volcanic activity around the Pacific.

British Foreign Minister Reports Gaddafi On Way To Venezuela…Gaddafi Says No, He Is In Tripoli

Posted By on February 21, 2011

Inquiring minds want to know what happens to the Libyan Gold….Uh, one guess…It follows Gaddafi out of Libya.  Duh!

Libya had 143.8 tonnes of Gold and is (was) the ninth largest oil producer!

George Soros Says Obama `Has Lost Control Of The Agenda’

Posted By on February 20, 2011

George Soros….whether you like him or hate him, he has earned our respect with his success over the years.  He came to the U.S. as a poor boy, and has earned the wealth he has.

Soros says Iran’s ruling regime will topple within the year, though he warned the situation there could become “very ugly” before this happens. 

Soros also said the economic recovery is most likely short lived in the United States based on what he is seeing with states becoming the next area of major concern.  

Oh, and just in case anyone wonders…..George Soros is a die hard Democrat and contributed $27 million to Democrats during the 2004 elections, according to Congressional Quarterly’s Moneyline.

George Soros, said Democratic President Barack Obama “has lost control of the agenda” on the U.S. economy, leaving it “now in the hands of the Republican Party.”

Republicans “are going to pursue a very strong effort to cut services by refusing to have any tax increases,” Soros said in an interview with CNN’s “Fareed Zakaria GPS” program.

“This agenda will be successful,” though it will be “more directed at cutting services and achieving the ideological purposes of the Republicans rather than to get the economy going,” Soros, 80, said, according to a transcript of the interview released by CNN. “This will have a negative impact on the economy.”

The U.S. government is facing a situation in which it may not be able to tap the bond market for funds, according to the Hungarian-born billionaire financier.

“That’s more or less in the cards because we aren’t applying fiscal stimulus, because of the ideologies that the government can’t do anything right, so we can’t expect the government to help,” Soros said. “So you have idle resources, and the Federal Reserve is providing quantitative easing. Well, I think when it expires, they won’t give it any more.”

Interest rates ultimately will rise and “choke off the economic recovery,” Soros said.

Soros also predicted that Iran’s ruling regime also will topple within the year, though he warned the situation there could become “very ugly” before this happens.

“Opposition leaders could easily be killed through a false judicial process because the regime is fighting for its survival, because they know that they have committed such crimes that it’s either them or the people,” he said. “But I don’t think that they will be able to succeed.”

http://www.bloomberg.com/news/2011-02-18/soros-says-obama-has-lost-control-of-the-agenda-.html

Gadhafi’s Son Warns of Civil War in Libya

Posted By on February 20, 2011

Guess it doesn’t matter if they burn the oil wealth when it all goes to the ruler anyway!  Sounds like Gadhafi should ride out of Dodge while he can!

The son of Libyan leader Moammar Gadhafi says protesters have seized control of some military bases and tanks. Appearing on Libyan state television Sunday night, Seif al-Islam warned of civil war in the country that would burn its oil wealth.

Another Economic Tidal Wave Coming Towards California

Posted By on February 20, 2011

How Congressional Budget Cuts Will Effect California

 

Under the GOP House proposals, about $1.5 billion in federal funds for California would be trimmed, affecting such things as Pell grants, Head Start, K-12 education and rail projects.

Reporting from Washington— University of California students would take a nearly $55-million hit from reductions in Pell grants. A $20-million check promised for bringing a rail line closer to the L.A. airport would be taken back. Head Start cuts would eliminate about 14,000 slots for low-income children in California.

Those are among the possible effects on California in the budget-cutting bill approved Saturday by the House’s new Republican majority — legislation that would cut about $1.5 billion in federal money going to California, according to one estimate.

California would face reductions of at least $125 million for kindergarten through 12th-grade schools under an approximately 16% nationwide cut in education funding, according to watchdog groups.The National Education Assn. estimated that the cuts would eliminate 13,840 Head Start slots for low-income children and eliminate after-school programs for 26,139 students.

World Wide Turmoil

Posted By on February 20, 2011

Things are coming unglued in the Middle East as revolution is spreading like wildfires.  The U.S. isn’t immune from this as we are seeing large protests in Madison Wisconsin over budget cuts that effect unions, entitlements and retirements.  Just imagine what happens in California (if) the special election to extend temporary tax increases gets voted down in June! Massive budget cuts in California if that happens!

 

Protests Spread to Morocco

Thousands of protesters took to the streets in Morocco on Sunday to demand sweeping changes to the nation’s constitution, defying predictions that this thousand-year-old monarchy would prove an exception to the demands for greater democracy that are sweeping the region.

China rounds up 100 activists to rapidly quash pro-democracy ‘Jasmine Revolution’ …..Chinese authorities moved quickly and with force to quash a pro-democracy ‘Jasmine Revolution’, believed to have been inspired by the recent uprisings in the Middle East and North Africa.

And the word “Jasmine” has been banned from the Chinese Internet!

Libya… Death Toll Surges, Protesters Shot, 100’s Killed!

Iran …….For a second time in a week, Iran’s opposition drew tens of thousands of supporters to the streets across the nation on Sunday calling for the end to the Islamic Republic’s rule.

“This was the most violent protest we’ve had by far, and people were also really angry and fearless,” said one witness from Tehran, adding that the public seemed resolved to stay on the street.

Wisconsin….Budget Protests in Wisconsin for Fifth Day

Thousands of protesters gathered outside the Wisconsin Capitol Saturday for a fifth day of demonstrations against a budget bill that would strip public employees of most of their bargaining rights.

To combat a $3.6 billion deficit, the governor has proposed legislation that would require most public workers to pay for nearly 6% of their pension costs, up from none now, and around 12% of their health-care benefits, up from 6% today. He argues that the changes would merely put public employees in line with most private workers.

But the bill would also take away the unions’ right to bargain for anything other than pay. Wisconsin was the first state, in 1959, to pass a comprehensive collective-bargaining law. When protests erupted this week, the governor threatened to call out the National Guard, if needed, to man prisons and take over other services provided by unionized employees, a move that amplified anger among unions.

MacroMavens Stephanie Pomboy Talks Real Estate In This Weeks Barron’s

Posted By on February 19, 2011

Here is an interesting piece on Real Estate in this weeks Barron’s column Up and Down Wall Street… by ALAN ABELSON

For most people, their house, be it ever so humble, is their largest single investment. (And all these years we’ve been suffering under the delusion that a house was, pure and simple, to live in. It came to wear an “investment” label during the wild years of the last decade, when it was viewed as an ATM and an asset that could only appreciate in value.)

As Stephanie Pomboy in her always lively MacroMavens dispatch points out, the acrid aftermath of the big bust in housing has failed to dissipate and adamantly hangs on. The average homeowner with a mortgage, she notes, has a scant 2.6% equity in his house, and the already towering delinquency and foreclosure rates seem headed for a new thrust upward, with interest rates creeping up and jobs remaining anything but easy to come by.

Hardly surprising, then, that demand for mortgages has sagged to a 27-month low, an evil omen for something even vaguely resembling a decent recovery in housing.

What’s more, if CoreLogic is right, things are a heck of a lot worse than most of us dreamed. CoreLogic, in case you wondered, is a demon data collector of, among other things, property and mortgage info that it peddles to business and Uncle Sam. Last week, it released a report that expresses grave doubts as to the accuracy of the widely followed calculations of home sales and other critical items by the National Association of Realtors, claiming they are seriously flawed, tending to understate the bad news, while inflating not-so-bad by 15% to 20%.

By way of example, according to the Realtors’ reckoning, existing-home sales last year declined 5%, to 4.9 million. By CoreLogic’s count, however, existing-home sales totaled a meager 3.6 million, a drop of 12% from the ’09 total. The disparity between the two is also graphically evident in their respective gauges of the size of the inventory of unsold houses.The Realtors figure the overhang is around nine months worth of supply, but CoreLogic counts the visible inventory of homes with a “for sale” out in the front yard at 16 months. Normal is six or seven months.

CoreLogic suggests the wide spread between itself and the Realtors is possibly explained by the difference in how the two gather the data and by out-of-date benchmarks (which the Realtors say they aim to recalibrate). The Realtors canvass multiple listing services and large brokerages. CoreLogic compiles its data from publicly available records stored in courthouses. Historically, CoreLogic adds, its survey pretty much agreed with 85% to 90% of the Realtors’ count, but began to diverge in earnest about 2006, when the housing market was smoking.

Home prices, meanwhile, have been caught in another downward spiral, reflecting a lack of demand and a huge supply, the bitter fruit of the great bust that followed the wild and woolly boom and a prime victim of the jobless recovery in the economy at large. If current trends persist, those already sharply lower prices,CoreLogic predicts, by spring will be down more than 10% from last year’s comparable stretch.

A Little Perspective Is In Order Here!

Posted By on February 19, 2011

The President ordered the cabinet to cut $100 million from the $3.5 trillion federal budget!  So we thought a little perspective might be in order. 

In comparison, if I have about a $4,000 a month budget for groceries, medicine, bills, etc, and I cut my spending at exactly the same ratio – 1/35,000, here’s what I would be sacrificing…..after doing the math, it looks like I’m going cut twelve cents out of my budget!  Yep, twelve cents!  That leaves me with $3,999.88.  Honestly, do you think anybody is going to notice it?  The answer is NO. 

The problem we have here is that nobody in government can do basic math.  They think $100 million is a big number to cut, but what we really need is a big percentage cut.  The numbers lie, they look big but they aren’t, the percentages look small and they are. So TPTB  just don’t get it. As Ross Perot would have said, there in lies our problem.

 

Pelosi Aide Says U.S. Government Shutdown Likely….

Posted By on February 18, 2011

This could create a Black Swan set of events if it happens.  Looks like the Democrats are playing with Dominos…..and here’s the thing, they know it!
 
Speaking at a meeting of top aides to Congressional Democrats on Capitol Hill, an aide to former House Speaker Nancy Pelosi said that a government shutdown is likely and that Democrats need to start planning accordingly. 
 
Politico Reports:

That became the focal point of the meeting, sources said, with the other aides asking only questions about “the possibility of a government shutdown and the logistics” — i.e., what it would mean for their offices and government services — according to one chief of staff who spoke to POLITICO on the condition of anonymity.

The aide said the message of a likely shutdown did not appear geared toward ginning up the staffers for political purposes. 

“It was genuine,” the aide said. 

Read more: http://www.businessinsider.com/pelosi-aide-says-government-shutdown-likely-2011-2#ixzz1EMksZDAa

The Swine Flu Can Spread Four Times Faster Than Other Viruses

Posted By on February 18, 2011

Swine Flu Can Spread at ‘Unbelievable’ Rate: The WHO (World Health Organization) says the swine flu spreads four times faster than other viruses and 40 percent of the fatalities are young adults in good health,  this according to top health officials.

“This virus travels at an unbelievable, almost unheard of speed,” World Health Organization Director General Margaret Chan told France’s Le Monde daily in an interview.

“In six weeks it travels the same distance that other viruses take six months to cover,” Chan said.

“Sixty percent of the deaths cover those who have underlying health problems,” Chan said. “This means that 40 percent of the fatalities concern young adults — in good health — who can die of a viral fever in five to seven days.

While 90 percent of severe and fatal cases occur in people aged above 65 in seasonal flu, most of those who die from swine flu are under the age of 50.

A “very severe form of disease” affecting the lungs and causing severe respiratory failure among young and healthy people was being reported, WHO said Friday, adding that highly specialised care was required.

Time To Revisit: The Flu Fighters…….Making Sure Your Diet Has The Right Nutrients

Posted By on February 18, 2011

This hopefully should be a helpful guide to minimizing the flu when it hits you. 

The Flu Fighters—In Your Food

 

While many people are still waiting for swine-flu vaccine to become available in their area, there is a lot they can do in their own kitchens to help fight off disease and build a strong immune system.

Scientists in the growing field of nutritional immunology are unveiling new evidence of the complex role that nutrition plays in fighting off infectious diseases like influenza. A diet rich in nutrients such as vitamin A, found in colorful fruits and vegetables, and zinc, found in seafood, nuts and whole grains, can provide the critical fuel the body needs to fight off disease, heal injuries, and survive illness when it does strike, experts say.

Scientists are still studying all the complex ways in which nutrients interact with the immune system. There is still much that they don’t know about minerals such as zinc, for instance, including how they are absorbed and all the roles they play in the body. But scientists do know that certain vitamins and minerals can improve the body’s ability to fight off infection: Studies in healthy elderly adults, for example, have shown an improved immune response to vaccination and fewer infections after receiving extra doses of vitamin E.

To create immune cells to fight off a specific infection, the body has to rapidly draw nutrients from the bloodstream, says Anuraj Shankar, a researcher at the Harvard School of Public Health. “If you don’t have an adequate intake of vitamins and minerals, you won’t be able to produce the number of immune cells you need, and the immune cells you do produce may be compromised,” Dr. Shankar says. That makes it impossible to mount an effective response to infection, he says.

The benefits of good nutrition may have been recognized first by Hippocrates, the ancient Greek physician who declared “let food be thy medicine, and medicine be thy food.” An 18th century naval surgeon’s discovery that citrus fruits could cure scurvy in sailors was later recognized as a vitamin C deficiency, and after the 1930s, when dairies began to fortify milk with vitamin D, the disease known as rickets was virtually eliminated in the U.S.

Researchers warn that malnourished people may be a breeding ground for more dangerous infectious diseases. Animal studies at the University of North Carolina show that in a host with poor nutrition, viruses mutate in the face of a weak immune response to become more powerful. And once those mutations occur, even well-nourished hosts are susceptible to the newly virulent virus. “A lot of people may think malnutrition on the other side of the world isn’t their problem,” says Melinda A. Beck, a researcher at the University of North Carolina, Chapel Hill. But malnutrition “is a driving force in emerging infectious diseases that are spreading around the world,” she says.

The human body doesn’t have to be starving to suffer from malnutrition. Studies show that obesity, in addition to its other health risks, may also make people more susceptible to infections like the flu. A diet heavy on processed and fast foods may be low in the vitamins and minerals important for health. And diets that are high in saturated fat appear to actually depress the body’s immune response, increasing the risk of infections.

Dr. Beck says studies of mice show that only 4% of lean animals infected with the flu virus die. That compares with a death rate of between 40% and 60% in obese mice infected with the virus. And after a small study showed that obese people vaccinated for the flu didn’t mount a strong immune response, the University of North Carolina is expanding its trials to compare vaccination response rates in lean and obese people.

[INFORMEDjump]

When obese people fall ill, “their immune function may not be strong enough to mount an effective response,” says Donald Hensrud, a Mayo Clinic specialist in preventive and internal medicine and editor-in-chief of “The Mayo Clinic Diet,” a new book promoting weight loss through a healthy diet that allows unlimited quantities of fruits and vegetables.

Dr. Hensrud and other experts caution against loading up on supplements to add vitamins and minerals to the diet. While a multivitamin is a good addition to any balanced diet, individual supplements and vitamin pills may not be as well absorbed by the body as nutrients in foods. Some supplements also can have toxic effects in too-high quantities. An excess of zinc, for example, can interfere with absorption of other nutrients, including iron and copper. And too much of the mineral selenium can cause nerve damage and has been linked recently to an increased risk of diabetes.

There is no single test to measure if your body has enough vitamins and minerals, and assays for individual nutrients are generally expensive and unreliable. Blood tests used to screen for blood-cell abnormalities can pick up changes that are linked to possible vitamin or mineral deficiencies, but they can’t necessarily identify the cause.

Scientists have long known that some vitamins, minerals and other nutrients can play a key role in the immune system by acting as antioxidants. These protect and repair cells from oxidative stress, the damage caused by molecules known as free radicals.

But nutrients work in ways beyond acting as antioxidants, says Dr. Beck. For example, vitamin A can enhance the immune system “by stimulating specific proteins necessary for immune function by activating specific genes,” she says. So, if vitamin A is deficient, then the immune cells that require vitamin A to function properly won’t work as efficiently. Animal studies show that a deficiency of vitamin B-6, which helps maintain the health of organs that make white blood cells, can decrease antibody production and suppress the immune response. And selenium in small amounts can help stimulate immune cells and may prevent the growth of some tumors.

Nutritional experts generally agree that the best way to get the right balance of nutrients is a balanced diet that includes plenty of fresh fruits and vegetables, lean proteins and dietary fiber. The federal Centers for Disease Control and Prevention’s www.fruitsandveggiesmatter.gov Web site offers a calculator to determine how many servings are ideal based on calorie needs for age, sex and activity level. Harvard’s Nutrition Source Web site includes a healthy eating pyramid based on the most up-to-date knowledge of nutrition requirements. And the National Institutes of Health’s Office of Dietary Supplements Web site (dietary-supplements.info.nih.gov) offers detailed information on the risks and benefits of supplements, along with tables that list food sources for each vitamin and mineral.

A survey by the CDC in 2007 showed that the majority of adults consume less than the government’s recommended five servings of fruits and vegetables daily. But quantity matters: A 2004 Harvard study of 110,000 men and women showed that people who averaged eight or more servings of fruit and vegetables daily were 30% less likely to have had a heart attack or stroke than those who had only 1.5 servings daily.

Nutrition experts say to boost immunity it is also important to avoid processed foods, and to minimize trans fats and unhealthy saturated fats from animal products and vegetable oils like palm and coconut. Instead, they say, people should eat foods rich in unsaturated fats such as olive oil.

Some advice for a healthy diet can seem contradictory. For example, heart-healthy diets typically include unsaturated fats such as omega-3 fatty acids, which are found in fish such as salmon and trout and in flaxseed and walnuts. For people who don’t want those foods, nutritionists may recommend fish-oil supplements, which can be beneficial in suppressing chronic inflammation in the body, a condition that can lead to coronary artery disease and arthritis.

But those same anti-inflammatory properties of fish oil can also suppress the immune responses necessary to combat an acute viral infection. Studies at the University of North Carolina have shown that mice fed with fish oil have an impaired resistance to infections, including the flu. “If I suppress the immune response and get a viral infection, I’m worse off,” says Dr. Beck, who is studying the links between fish oil and resistance to influenza.

One nutrient hard to get in food is vitamin D. Even with the fortification of milk, orange juice and other food products, some experts have been sounding the alarm in recent years about wide deficiencies, especially in children. Tests are available for about $100 to determine vitamin D levels, but their accuracy is in question. And just how much vitamin D different people need is the subject of considerable debate. The federal government’s current recommendations range from 200 international units daily for children to 600 IUs for adults, with a safe upper limit of 2,000 IUs daily. The American Academy of Pediatrics recommends 400 IUs for children, and vitamin D experts at Oregon State University and elsewhere recommend 2,000 IUs daily for all adults. The Institute of Medicine, a government advisory group, is expected next year to update the recommendations.

Adrian Gombart, a researcher at Oregon State University’s Linus Pauling Institute, says vitamin D, in addition to building strong bones and fighting off a variety of diseases, appears to activate proteins that help the body fight off infection. “Vitamin D won’t prevent you from getting the flu, but it might allow you to mount an optimal immune response, suffer less of the effects, and resolve the infection more quickly,” says Dr. Gombart, who is researching the nutrient’s role in stimulating immune cells.

From www.wsj.com

The Swine Flu Is Back, Here’s How It Works…….

Posted By on February 18, 2011

Heads Up……We are hearing of  cases now of the Swine Flu, but nobody is talking about it.  It’s medical name is Influenza C and sub types of influenza A (H1N1 variations).

Wisconsin Senate Fails Vote…State In Chaos

Posted By on February 18, 2011

OK, let’s look at the options, the State of Wisconsin is broke,  and the Democrats and Republicans can’t agree on needed changes of things that were agreed to at a different time and under quite different circumstances 50 years ago.  A state isn’t like a federal government in that it can’t print its own money, therefore they either do one or more of the following: go borrow it, raise taxes, cut services or close down the state while trying to decide.  Right now it looks like they’re shut down.

Just wait until the June special election in California to extend the temporary tax increases from a few years back.  Most likely it gets voted down in our opinion. If so, California will be forced to make massive, absolutely massive cutbacks.   You haven’t seen anything yet.  Guaranteed!

The Wisconsin Senate failed to muster enough members to vote for a second day Friday, holding up legislation that would strip state workers of most collective-bargaining rights and prompting Republicans to criticize their absent Democratic colleagues.

“There are five and a half million people losing out,” he said. “They’ve shut down government.”

On Thursday, the 14 Senate Democrats fled the state to avoid a vote on Republican Gov. Scott Walker’s “budget repair” bill, which would force most unionized state workers to pay more for health and pension benefits while limiting their collective-bargaining rights to wages.

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