This Day In History…..World War I And How It Started!
Posted By thestatedtruth.com on June 28, 2010
From Art Cashin on the floor of the New York Stock Exchange……….. Â
On this day in 1914, a wrong turn changed the course of history. Of course, things were different then, at that time, there was nationalism afoot in Eastern Europe. The big flashpoint of nationalism was in what we used to call Yugoslavia.
Part of Serbia had been annexed by Bosnia (if you slept through sixth grade that was part of the Austro-Hungarian Empire – but save those old geography books it looks like it’s all coming back).
Anyway, the crown prince Franz Ferdinand thought it would be good to have a member of the Royal Family show up in the region. So with his wife, Sophie, he drove with his staff to a place called Sarejevo, the local gotham.
The townsfolk turned out in force. There was bunting, bands, beer and assassins (a total of six of them). The party pulled onto Appel Quay, a wide road along the river, heading for the celebration in the main square.
Suddenly, one of the assassins hurled a short-fuse bomb into the open touring car. The Archduke (as he was known to his friends) mumbled something like, “this is stupid.” Then he picked up the bomb and flung it over his shoulder.
It exploded in the street and injured several bystanders. Four other assassins took this as a bad omen, ditched their guns and headed for the Brauhaus. The Archduke halted, checked on the victims and proceeded to the ceremony. (For you trivia buffs, the touring car was a “Graf und Sift”….which became jinxed and went out of production.)
During the speeches, he got antsy but the Mayor reassured him, “It is over! Surely, we have only one murderer in Sarajevo.” Nevertheless, the police decided to change the plan and send them back the way they came instead of parading down Franz Josef Strasse (the main drag).
However, the security guys forgot to tell the guy in the lead car. He turned onto Franz Josef Strasse and the Archduke’s car followed him. Irate police halted the parade and ordered the Archduke’s car to back up into the intersection.
More amazed than the police was a nineteen year-old guy named Gavrilo Princip (the sixth assassin) who had been standing in the sun on F.J. Strasse just in case the first five guys missed.
As the cops tried to unravel the gridlock, they let Princip through. He promptly shot the Archduke and Sophie. Within 48 hours, World War I was on the way.
An Update On Middle East Military Movements…..Gene Inger’s Daily Briefing For Tuesday June 29, 2010
Posted By thestatedtruth.com on June 28, 2010
       Gene Inger’s Daily Briefing . . . for Tuesday June 29, 2010
 At presstime:     We just learned that the USS Nassau (I have personally been on that ship just as a curiosity to note, with an officer friend of mine who flew a helicopter off LHA-4 at the time) Amphibious Assault Ship carrying 4000 Marines has joined one of the battle groups in the area; supporting Fifth Fleet operations. It may be where waters of the Gulf of Aden flow into the Red Sea, but might not be there in the morning. One can only wonder if the location was/is to intercept any Iranian ship bound for Gaza if they still attempted that, since boarding would be authorized under UN sanctions.
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Good evening;
     Policy splits . . .were the expectation in these parts ahead of the G20 meeting; so it is no surprise that Europe’s refuting the US diatribe against fiscal responsibility ‘now’, became the rallying cry of the majority of nations (some of whom have no choice and must constrain spending, while others will do so out of common sense realizing that it makes no sense to push for more stimulus when the earlier packages were so poorly implemented that the US was barely coming out of its fun before these globally testy gatherings). Perhaps Germany put it best by saying that if you want consumers ready to spend; you should keep a nation’s fiscal house ‘in order’ to inspire real confidence.
As inane as believing more spending (borrowed from nowhere as what China really is showing by its willingness to revalue, is not an effort to help ‘American retirees’, as an actual reporter argued ineptly; but a realization that the Greenback might deteriorate, so as usual China is looking out for herself, not for our wellbeing or anything else at all); one could also consider something else increasingly troubling. That’s with Iran.
Despite the message trying to be conveyed to Tehran by deploying multiple battle groups to the Arabian Sea and Indian Ocean (not just the Persian Gulf), there is a big hole in this strategy that Iran is all too aware of (and their prior attacks on a US Navy warship during their earlier effort to block the Straits of Hormuz years ago proved): there is concern about no carrier defense against missiles. That isn’t an entirely valid perspective, because one has to define between cruise missiles and ballistic missiles although it is true that 4 instances of Western warships caught by such sea-skimming weapons all ended poorly for the ships. Nevertheless, even if this Navy is excessively accustomed to using large ships as forward artillery or launching platforms; there is a scenario shaping-up in which old techniques for ‘battle surface’ best be dusted-off as well. That means view twin challenges: new missile technology and surface warfare.
It is incorrect for writers (as have some) to say that Navy brass is arrogantly unaware of this issue, like the British when they sent Prince of Wales to battle the Japanese in the initial assault on Singapore (and it was rapidly sunk by Japanese carrier aircraft), without air cover (even then that was unfathomable). Actually the Royal Navy and the US Navy are well aware of ‘force protection’ needs, and know that the miniaturization of sophisticated guidance systems makes all our fleets of carriers big targets that are inadequately defended. And the next generation of defenses (lasers) isn’t ready yet.
These risks are precisely the message it is clear, that is apparently understood by the barbarians running Iran; as implied by the ‘speedboats’ of the Iranian Navy harassing our ships in the Persian Gulf. (Such a strategy only works in littoral or calm waters as such small boats can operate, which they cannot in blue waters of the open oceans.)
But multiple missiles in a salvo cannot easily be defended against. That is (sadly) not the worst case: for over 30 years the US Navy has in its inventory one of the world’s earliest and reliable cruise missiles called ‘Harpoon’. It is sea-skimming and it pops-up before engaging a target, which confuses enemy target acquisition radars. It was demonstrated about 25 years ago in the sinking of a Libyan ‘corvette’ during that brief encounter. A similar assault by Iraq against the USS Stark using ‘Exocet missiles did essentially the same thing; as did the Hezbollah terrorists against the Israeli ship near Lebanon more recently. It is that latter case I’m more concerned about. The terrorists were using a Chinese designed variation of the Silkworm, and Iran has newer types.
The Naval Surface Warfare guys were trying to develop a laser weapon for several of the recent years, but (unless it succeeded in a classified manner and we don’t know) it has not yet been refined into an operational format to engage salvos of targets all in a simultaneous assault. One concern is that by the time short-range Phalanx systems were able to engage an inbound weapon there would not be time to intercept many in time to prevent some getting through (either under radar or fired in salvos or both). In a sense this is back to warfare generally unseen and untested by modern navies; it’s a threat to the ‘fast but under-armored’ aluminum hull construction of our frigates too. It’s not that these vessels were just intended to ‘show the flag’ and deter conflict, but it is the reality that they were not built to sustain ‘heavy hits’ in actual surface combat. (The older cruisers and battleships were; and they had trouble with mines and such.)
The US Navy has discussed this at war college levels recently. I know they broached this subject repeatedly if reluctantly in anything remotely public. In fact the hope (and eventual plan) is to equip the newest of the ‘littoral’ warships with laser weapons; but the weapons just aren’t ready yet. At the same time the nuclear weapons capability of Iran is about ready, and that means we may not have the luxury of convenience here.
For one thing, we can’t depend on Israel alone to knock-out all of those facilities, as if they can’t, there is still no option but for the US to finish that job, as there is not going to be a nuclear-capable Iran permitted as the President says, by waiting for very long.
One reason I’ll conjecture that Turkey became so chummy with Iran (wishful thinking it may be; but hard to tell) is as a ‘cover’ for Turkey to deal with the Moslem ‘street’ as it becomes clearer that conflict is developing. An irony is that in sophisticated Turkey, a large segment of the population is ticked-off with Ankara’s distancing from NATO and the West, again assuming that’s actually happened (we suspect it has not and as US Forces leave Iraq, you’ll see it if they fly through Turkey, and not only via Kuwait; especially if heavy weapons transit that direction for shipment back to the States).
At the same time there is a ‘bright side’. The battle groups may be arrayed to provide cover for the massive operation to find Bin Laden underway right now (CIA led we’re able to note), which would be very uplifting if they get the mass-murderer while he’s still alive, if he is. Also they might be arrayed to cover our withdrawal if that becomes necessary. It is even conceivable they are arrayed to support (the least probable but maybe most interesting option of) an overland ground assault from both Iraq and also Afghanistan on Iran, to topple the regime and replace it with reasonable Iranians of whom there are many who risked their lives for freedom, just a year ago. Plus having learned from the idiocy of how Iraq was handled, presumably we’d do better this time, by not firing the police or regular army and putting them on the payroll (aka: Germany or Japan at the end of World War II, when politicians opposed this but it worked well).
Nobody talks about it; but we have a ‘pincer’ set-up with the magic numbers needed for our own ‘force protection’ in-event this President (yes, this one) were to order the assault. Plus both the USAF and the IAF (Israeli AF) have units in Azerbaijan and in Georgia right now, which puts fighter-bombers within relatively easy striking-range of most of Iran’s nuclear facilities, and Teheran itself (near the Caspian Sea) if we are to at least target their government buildings. Such an assault may be more practicable in contrast to a ‘cruise missile’ assault (at least alone) due to proximity and distance.
Are we suggesting that we’re on the eve of warfare? Well that’s hard to say but more of the forces needed are in-place or rotating in that direction as we noted previously. It may be said that we cannot politically or financially afford this while engaged in two other conflicts. Two ways to look at that contrarily: one; that we can’t afford not to if it is evident that Iran is counting on those factors to dissuade our resolve while they go ahead and blunder into attacking anyone, and two; that we will likely never again be so well-equipped with forces on both sides of their border to support such campaigns.
The cost structure is comparatively low as it would be turning the force around, as it’s pointing towards Iran rather than towards Baghdad or Pakistan. If not a ground attack at least the US Army could deter an Iranian counter-offensive against their neighbors. This would be the exact opposite of worrying about our forces being targeted in their neighborhood; how about their forces being targeted if they don’t comply with the UN resolutions forthwith. The timing of the sanctions and implantation support this thesis.
As for our carriers, if you see them positioned well out beyond a 1500 mile perimeter of Iran, you’ll know the fear is a missile attack; but also that from that distance (the range of a Silkworm or Sunburst or new Dong) conventional defense is feasible. It’s also maximum range without refueling of our F-18’s but they can be refueled in air or by landing at bases in the Gulf region. Or they could overfly even into Georgia by the way; and then be refueled and rearmed for a return mission; eventually landing back on their home carriers. The Israeli Air Force has limited capabilities to do this with the same bases abroad; but lacks the capacity of multiple sorties once the conflict starts. If the world is serious about stopping Iran; it is unfair (almost legitimizes Iran’s insane rants, which of course instilled genuine fear in Israel and in neighboring Arab nations as well) to ask Israel to shoulder the burden for the comfort of others also threatened.
In any event; we are not being alarmist; just realists. You don’t send one of our top Flag officers to command the new battle group just for recreation; and you shouldn’t assume that the USN hasn’t learned the lesson of carrier vulnerability that some are claiming exists (how could they not know; we developed the cruise design; as I noted again… ‘Harpoon’… the original). We simply have to adjust operating tactics. By the way remember this: the anti-ship cruise missiles are not ballistic missiles. Those that are (to the extent they exist) are limited in numbers. Also; a CAP (combat air patrol) or especially an advanced Aegis cruiser or destroyer can shoot down ballistic missile attacks during the reentry phase, using the latest Standard III antiaircraft missiles. If anything you would presume continuous airborne CAP’s in such a ‘theater of war’.
As a final thought on tactics, one might presume that unlike Lebanon or Egypt (there was a sinking by Russian cruise missiles of an Israeli/British destroyer years ago), in the event Iran were to launch such a weapon against a US carrier group; we would in no uncertain terms go to ‘tactical nuke’ warfare almost immediately; and that’s Iran’s finish. Plus the USS Truman currently is cruising opposite Chah Bahar in the Arabian Sea, which is the primary Iranian Revolutionary Guards naval base. That alone says enough about the likely purpose (no press statement needed) of current deployment.
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….So it’s more likely the Iranians would harass but not directly attack our carriers. At the same time we cannot assume that; so proper advance defenses will need to be taken as it might be something like the Cole, where unmarked vessels assail our Fleet, and Iran tries to pretend they had nothing to do with it (might even try blaming al Qaeda).
As to whether a truly hotter war is coming. First of all we are not denigrating the effort of our valiant troops in Afghanistan; but it’s an inhospitable situation. Second, it’s not at all near the sea; thus Naval air and artillery support is essentially impossible. So it is highly unlikely that Naval air is being intended to support that and more than likely it is there related to Iran. Incidentally, the real target of the Iranians has never been in our thinking Israel; that’s a ploy to elicit support from Arab masses who normally are a good bit suspicious of the non-Arab-but-Islamic Iran. Until ‘imadingbat’ nobody ever really picked on Israel in Iran; then he did it to cover his nuclear program. In fact Iran was a primary supplier of oil to Israel (yes Iran) for years even with the mullahs there.
The likely real target is the oil-rich small sheikdoms of the Gulf, and probably Iraq; not to mention Iranian support for Islamist forces (read Revolutionary Guard’s equipped infiltrators) in Yemen, who really are after the Saudi Arabian oil fields, as already has been acknowledged by 2 penetrations that were eventually repulsed into Saudi itself.
All this ties-into why Washington is so upset with the terrible mess BP made of what would have provided US energy independence during a war in which oil supplies will be constrained as and if Iran manages to close the Straits of Hormuz (and they well might be able to make transit hazardous to say the least). And perhaps we’ll be very lucky, and one ‘relief’ well will allow plugging the upper ‘gushing’ structure of the wild well, while the second ‘relief’ well bridges underneath and proceeds to produce it as we need the oil. There is then no more risk producing it then already exists by drilling the relief wells. Only fools would suggest that the project be plugged and abandoned.
In any case, with conflict, there goes the last chance of keeping Oil under 120 or so, in-event a conflict actually starts; although because there will be a fairly rapid victory (has to be, if we intend installing a friendly regime in Teheran, that has the support of educated and civilized Persians in that advanced society), the explosive run higher of Oil will be relatively temporary (no more than 6 months duration one would think; but that assumes all goes as planned); and the risk of homegrown or 5Â Â column terrorists because this Government has not properly secured our borders (near military bases).
Why so much discussion about this? It’s obvious. While higher Oil would somewhat it seems offset selling pressures elsewhere, it wouldn’t be sufficient and an already soft domestic economy would temporarily be even more suppressed. Likewise the market would dive; to levels that are hard to predict; but possibly 15-25% from current levels, and then become relatively attractive (again depending how things go; if poorly and/if at the same time we get ‘state defaults’, one could imagine a market cut in half or so).
Only today we hear major firm analysts talking about this as a ‘contained Depression’ (gee, where did I hear that one for the last two-three years); but one major analyst we all know, said it’s discounted (by what decline?). She is wrong in my opinion; and that view (a higher target) is exactly the same now as when they talked of solid growth for the year’s 2 half. Does that mean Wall Street is bullish if there is growth or if there’s no growth (or little)? Apparently. That means they are spinning fundamental reality to fit their earlier view; or that they are so loaded with positions (or their clients) that they have no alternative (the latter is the more likely answer). We’d say be very defensive.
Can you play this? Sure; but timing it is not meant to be easy. Such a war may not at all take place first of all (and our bearishness exists ‘sans’ any conflict, so add that as well and you have an ‘even more bearish’ prospect). Plus if so; the timing is intended to be a military secret. But as we look forward (and tend to think this would be much too soon) the next ‘new moon’ is July 12; just so you know (a favorite among military for launching strikes if need be). But again unless Iran provokes us (you’ll note they have backed-off wisely on their terrorist-laden ‘humanitarian’ ship; as has Turkey and even the Syrians have piped-down), that is probably too-early a date for real conflict.
Let’s just say that we need to ratchet-up the ‘military alert’ side a tad, and be aware of threats the Iranians have made about having co-conspirators already in the U.S. Oh it of interest that few have reported Interpol’s arrest of at last one Hezbollah terrorist in Paraguay just a few days ago. This is being severely underplayed. Let’s ponder why.
 At presstime:     We just learned that the USS Nassau (I have personally been on that ship just as a curiosity to note, with an officer friend of mine who flew a helicopter off LHA-4 at the time) Amphibious Assault Ship carrying 4000 Marines has joined one of the battle groups in the area; supporting Fifth Fleet operations. It may be where waters of the Gulf of Aden flow into the Red Sea, but might not be there in the morning. One can only wonder if the location was/is to intercept any Iranian ship bound for Gaza if they still attempted that, since boarding would be authorized under UN sanctions.
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..FYI: between USS Nassau; USS Mesa Verde and USS Ashland (sailing together); it is apparently the entire Amphibious Ready Group 24 Marine Expeditionary Unit, that has arrived in the region. USS Nassau also carries six AV-HB Harrier attack planes in event close-in defense (or ground support of Marines) is called for as a contingency. I think this third group (USS Eisenhower being the first) affirms the growing tension. Let us see if the Eisenhower ‘rotates out’ as scheduled or stays there. May be revealing.
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Domestically; keep an eye on Arizona. The current Sec’y. of Homeland Security has attempted to tie border defense to immigration reform, and says the border is too big to defend (hello; then what are we doing in Iraq). Nothing against her; but I believe it is her duty to protect where infiltration occurs. At the moment that is Arizona primarily not the whole Southwest border. Furthermore, not to sound any alarm; but there is a traditionally poor mostly black farming town in Florida, west of Palm Beach, that has now become almost overrun with Moslems. What do they want and why are they in a town like Belle Glade (near Lake Okeechobee, which provides drinking water for the majority of South Florida). This is not prejudicial, because there is no history of Islam in Florida being in either citrus or sugar businesses (mostly black or Latino workers); hence a reasonable question as to ‘why’ are they gathering in such a sleepy town? I was alerted to this latter condition by a member here, and am curious what it’s about.
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Finally as to Paul Krugman’s ‘revelation’ about a potential third Depression (he means of course the 1930’s and the 1880’s before that); well, that’s what I said in 2007-2008 of course; calling it a likely ‘controlled Depression’. In my opinion we’ve been in it so I do not know what he’s forecasting. More likely he’s making a pitch for more stimulus; an assumption by politicians that what didn’t do much before would miraculously now work better (not). At least not unless channeled differently; and frankly times up for all this. The failure of policy accord at G20 should result in not divisive, but individual so thus a bit decentralized decisions in the EU and the Americas too. Anyone believing that there is even room for no belt-tightening and increased spending, doesn’t get it. I think we’re past that point politically and financially; and that’s why the Fed’s in panic. It’s also why you don’t hear much in the media about it; they’re fearful of confronting.
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By the way with all respect to Prof. Krugman, his comparison with the aborted upturn of 1933 (though the market’s low had occurred) misses a big point we’ve contended all along: the US had the borrowing capacity after the roaring ‘20’s; it didn’t begin the revival from a position of ‘guns and butter’ in two wars, or heavily indebted already. It is this reason that caused my emphasis on the whole thrust not really as Keynes said at the time; hence the overreliance on Keynesian policies, or interpretations of it. But as I’ve quipped; ‘Keynes is still dead’; and that was because he said you could not do it if you were a debtor nation to start with, and that was why my call for fiscal restraint three years ago, along with keeping the banks going (not more) and helping business (you’ll note that the vast majority of promises to homeowners and others were little more than deceiving, and often caused normal citizens to delay getting out of debts).
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I also note that for three years I’ve argued ‘cash is not trash’ (it still is not) and that all the contrary arguments were intended to get you to take unjustified risks or to spend beyond your means; precisely what got this Nation into the problem in the first place. Government needs inflation and a debasing of the currency. They did not get that so now they’re in a quandary about what to do next. The President’s call for more newer spending is ‘old time religion’ and won’t work; just as the pleading for some states to defer cutting budgets because ‘we can’t handle too much at once’ is an old argument as it’s past that point, and there are about 40 states that can’t meet their obligations.
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Many easier answers were addressable 2 years ago but they didn’t address them at the time. So now you do come down to fiscal restraint and doing it the old fashioned or proven way; earn it; don’t borrow it. This is very hard for politicians, or labor unions for their pensioners in particular, to accept. Because it means sharing the challenge. In most cases it’s not the salaries of poor teachers, or firemen being laid-off; it’s just the pensions for the three generations of those who came before, who the rest simply can’t carry on their backs in these circumstances. Double-dipping should be outlawed and it won’t be popular. Maybe these are the ‘tough decisions’ the President means..
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A Closer Look At The Second Leg Down In Housing
Posted By thestatedtruth.com on June 28, 2010
By Barry Ritholtz
By using traditional metrics: Whether we are looking at U.S. housing stock as a percentage of GDP or Median income versus home prices or even ownership versus renting costs, prices remain elevated. Indeed, we see prices remain above historic means.
Consider price relative to income. From 1977 to 2010, the median U.S. home price was 4.1 times median household income. But as the chart below shows, Home prices are still above that mean. Oh, and that mean is artificially elevated due to the 2002-07 boom. It’s the same with home prices relative to rentals, or housing value as percentage of GDP.
Further, we should not assume that prices merely mean revert back to historic levels. What usually happens when markets get wildly overvalued and a ~3 standard deviation price move sure qualifies — is they get resolved not by reverting to the mean, but by careening far beyond it.
We can look at numerous other factors. Employment, inventory, REOs, credit, another wave of foreclosures. etc. But the bottom line remains that prices must revert to a sustainable level, and we simply aren’t there – yet.
Yes, government policies temporarily stopped prices from finding their natural levels. Now that the tax credit has ended, and most mortgage modifications are failing, the prior downtrend in price is likely to now resume.
Neither the Bush nor the Obama White House understood this. The assumption has been that if we can modify mortgages or voluntarily refrain from foreclosures, the residential RE market will stabilize. Through a combination of mortgage mods and buyers tax credits, the government has managed to create artificial demand and keep more supply off of the markets for a short time. But as we have seen, that fix was at best temporary.
34 States Saw Tax Collections Decline In The First Quarter Of 2010 And That’s After A Record Amount Of Government Stimulous! 46 States Face Budget Shortfalls!
Posted By thestatedtruth.com on June 27, 2010
34 states saw tax collections decline in the first quarter of 2010. State budget deficits projected well into 2010 – Plunging tax revenues reflect a weaker economy dragged down by pervasive unemployment and underemployment. $112 billion in state budget gaps for fiscal 2011.
Posted: Sun, 27 Jun 2010
Big states with dismal budget short falls like California and New York have been making the news for the last couple of years. Yet the problems with state budget deficits go beyond the big and mighty. The banking system has been stabilized at a very high cost to average Americans but state budget deficits reflect a deeper underlying problem. States generate revenue through a variety of taxes; these show up through payroll taxes, sales taxes, property taxes, and other fees. As a metric for the economy, these are a good way of measuring the health of economic activity. Looking at current massive budget deficits states are mired in expenses with revenues falling. For the next fiscal year of 2011 states will face a combined $112 billion in budget short falls. California’s current budget deficit is $19 billion (current plus next fiscal year). But things can and may get worse.
A recent survey compares this recession with the previous recession:
Source:Â CBPP
As of this year we are facing a deeply painful year for states. This will be the worst on record if 2011 doesn’t come in close contention. How is it that the rhetoric has shifted to recovery while states are facing deep and pervasive gaps in their funding? A large part of the so-called recovery has been directed to the banking sector. That is clear. Unemployment and underemployment is pervasively high and when we look at the top job sectors, 9 out of 10 are in low paying service sector jobs. Last month we added over 400,000 jobs but the vast majority were temporary Census positions. This is not a true recovery and state budgets reflect this.
Why is the above gap occurring? Take for example the collapse in housing prices. States adjusted revenue projections to assume higher assessments and thus believed that bubble level prices were the new norm. Take for example in California where property taxes can range from 1 to 1.5 percent of the assessed value of a home. We’ll use a $500,000 home as an example. Initially, this home would bring the state $5,000 per year at the low end in revenue. The bubble pops and that home now sells for $250,000. Only $2,500 comes into state coffers yet the state was expecting that funding to come in at a much higher level. That is one facet of the problem. Then you throw in pervasive unemployment that is taxing the system and you can see why state budget gaps are so wide and profound.
The state budget gaps are largely a reflection of a struggling working and middle class. Sales taxes have fallen in many states as people have cut back and started applying a level of austerity to their lives. Less spending obviously means less money coming in. To show how widespread this problem is, all but four states with small populations have budget gaps:
Now I know some will only see the gaps and talk about closing them at any cost. Yet some forget what this will mean to the overall economy and the so-called recovery. At this point, take for example the mortgage market, 95+ percent of all mortgages originated are government backed. The last month of employment gains were largely all (90+ percent) from government hiring. The current economy is largely supported by massive government spending. The problem is how we allocated the money. We have funneled too much money to the banking sector with little tangible results outside of Wall Street. As states cut deeper into their budgets, federal support is lagging and focusing more on helping out Wall Street. What this will mean is larger cuts and a drag on the overall economy going forward.
Going forward we know that there are only two ways to balance the gaps. More cuts or higher taxes and both hurt the economy. The issue so far is that states have gone after low hanging fruit. There are hundreds of state workers making high six-figures with fantastic pension plans and lifelong employment with little economic yield and these are not the people losing their jobs. They are going after janitors, repair workers, young teachers, and other easy targets that do little to balance the bigger line items. Penny wise but absolutely pound foolish. Below is from the CBPP:
“Expenditure cuts are problematic policies during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. In all of these circumstances, the companies and organizations that would have received government payments have less money to spend on salaries and supplies, and individuals who would have received salaries or benefits have less money for consumption. This directly removes demand from the economy.
Tax increases also remove demand from the economy by reducing the amount of money people have to spend — though to the extent these increases are on upper-income residents, that effect is minimized because much of the money comes from savings and so does not diminish economic activity. At the state level, a balanced approach to closing deficits — raising taxes along with enacting budget cuts — is needed to close state budget gaps in order to maintain important services while minimizing harmful effects on the economy.â€
Even after the Recovery Act, large budget deficits will remain:
So combining budget gaps for 2011 and 2012 will result in budget shortfalls of $260 billion combined. This is an incredible amount of money. Even a modest recovery will have a hard time making that up and we have yet to see a recovery for working and middle class Americans. The recovery to many is largely lost in the trillions of dollars funneled to a banking sector that is merely concerned about shoring up their balance sheets.
If we look at a map of state tax collections, 34 states saw declines in the first quarter of 2010:
Source:Â Rockefeller Institute of Government
What this means is there are two recoveries going on. A real one for Wall Street and the investment banks and a phantom one for working and middle class Americans. I wouldn’t even call it a recovery for the investment banks since they are simply stealing taxpayer money and calling it turning a profit. State budget gaps are merely a reflection of what we already know and that is the economy has yet to actually recover.
As Many As 1.3 Million Americans Are About To Lose Their Jobless Benefits This Week, The Unemployment Rate Will Likely Surge To 10.5%
Posted By thestatedtruth.com on June 27, 2010
A critical bill to extend unemployment benefits that was unable to pass congress last week will likely have lingering effects going forward. This will be a big hit to Americans spending as 1.3 million unemployed Americans will have lost their assistance by the end of this week. Beginning in July, there will be $2.4 billion less spent each month by America’s jobless.
As we reported on Friday, a critical bill that was unable to pass this past week was the extension of unemployment benefits to millions of Americans currently collecting an average $1,200 monthly stipend from the US government. Some are just sitting on their couch and not paying their mortgage. As a result of this huge hit, the WSJ reports that “a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week.” Furthermore, the cumulative number of people whose extended benefits are set to run out absent this extension, will reach 2 million in two weeks, and continue rising: as a reminder the DOL reported over 5.2 million Americans currently on Extended Benefits and EUC (Tier 1-4). The net result is yet another hit to the US ledger, as soon 2 million Americans will no longer recycle $1,200 per month into the economy. In other words, beginning in July, there will be $2.4 billion less spent each month by America’s jobless.
More at: www.zerohedge.com
USS Carrier Harry Truman Now Officially Just Off Iran, As Israel Allegedly Plotting An Imminent Tehran Raid
Posted By thestatedtruth.com on June 27, 2010
The Pentagon has now confirmed that a fleet of 12 warships has passed the Suez Canal, and is now likely awaiting orders to support the escalation in the Persian Gulf.   We can’t be sure if the following is all true, so we would caution readers to view this news cautiously. We should point out that according to Gene Inger of www.ingerletter.com, “Israel’s ‘Dolphin’ subs are diesel electric, not nuclear”!
 Tyler Durden            ZeroHedge.com       06/27/2010
As first reported last week, in an article that was met with much original skepticism, the Pentagon has now confirmed that a fleet of 12 warships has passed the Suez Canal, and is now likely awaiting orders to support the escalation in the Persian Gulf. The attached image from Stratfor shows the latest positioning of US aircraft carrier groups as of June 23: the USS Harry Truman (CVN-75) is now right next to USS Eisenhower (CVN 69), both of which are waiting patiently just off Iran.
From The Gulf Daily News:
As for the catalyst the two carriers may be anticipating, here is the following update from the Gulf Daily News where we read that Israel may be on the verge of an attack of Iran, with an incursion originating from military bases in Azerbaijan and Georgia.Â
Israel is massing warplanes in the Caucasus for an attack on Iran, it was revealed yesterday.
Preparations are underway to launch the military attack from Azerbaijan and Georgia, reports our sister paper Akhbar Al Khaleej, quoting military sources.
Israel was, in fact, training pilots in Turkey to launch the strike and was smuggling planes into Georgia using Turkish airspace, they said.
However, Turkey was unaware of Israel’s intention of transferring the planes to Georgia, the sources said.
The unexpected crisis between Israel and Turkey following an Israeli commando raid on an aid flotilla bound for Gaza Strip hit Israeli calculations.
Azerbaijan-based intelligence units, working under the cover of technicians, trainers and consultants, have helped with the preparations, the sources said.
Military equipment, mostly supplied by the US, was transported to a Georgian port via the Black Sea.
Georgian coastguard and Israeli controllers are co-operating to hide the operations from Russian vessels, said the sources.
They point out that according to Israel, it will not be in a position to launch a strike on Iran without using bases in Georgia and Azerbaijan due to the limited capabilities of its nuclear submarines stationed near the Iranian coast.
Meanwhile, Iran’s Press TV reported that a very large contingent of US ground forces had massed in Azerbaijan, near the Iranian border. The independent Azerbaijani news website Trend confirmed the report.
Those reports came just days after the Pentagon confirmed that an unusually large fleet of US warships had indeed passed through Egypt’s Suez Canal en route to the Gulf. At least one Israeli warship reportedly joined the American armada.
Press TV also quoted Iranian Revolultionary Guard Brigadier General Mehdi Moini as saying that the country’s forces are mobilised and ready to face Israelli and American “misadventures” near its borders.
* Iran last night said it has cancelled plans to send an aid ship to the Gaza Strip as Israel “had sent a letter to the UN saying that the presence of Iranian and Lebanese ships in the Gaza area will be considered a declaration of war on that regime and it will confront it,” Irna said.
Caribbean Storm Strengthens, May Miss Oil Spill
Posted By thestatedtruth.com on June 26, 2010
This may be the first sign of good luck in a while for the massive oil problem in the Gulf of Mexico!
By Dan Hart and Brian K. Sullivan          Jun 26, 2010
Tropical Storm Alex bore down on the coast of Belize and the Yucatan Peninsula today, and may spare BP Plc‘s efforts to contain and clean up the largest oil spill in U.S. history.
This should have a very minimal effect on the cleanup, said Jill Hasling, executive director of the Weather Research Center in Houston, which provides weather forecasts to the oil industry worldwide. She said the closest approach to the leaking well might be 400 miles (643 kilometers) away, based on the storm’s current track.
Alex is about 30 miles (48 kilometers) east of Belize City and is moving to the west at about 12 mph, according to a 5 p.m. advisory from the U.S. National Hurricane Center in Miami. The storm has maximum sustained winds of about 65 mph, more than the 39 mph threshold needed to be classified a tropical storm.
Admiral Thad Allen said the U.S. Coast Guard is monitoring the Atlantic season’s first tropical storm, which is on a path to pass through the southern end of the Gulf of Mexico. The cleanup is located in the northern and eastern ends of the Gulf.
States Of Crisis For 46 Governments Facing Greek-Style Deficits
Posted By thestatedtruth.com on June 26, 2010
By Edward Robinson     June 25,2010
Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.
Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.
Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.
Even as the U.S. appears to be on the mend — gross domestic product has climbed three straight quarters — finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.
“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,†says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.â€
New Song In Congress
Posted By thestatedtruth.com on June 25, 2010
The New Song In Congress, Bye Bye Bonus For Wall Street And Banks!
Gene Inger’s Comments On The Gulf Oil Well
Posted By thestatedtruth.com on June 24, 2010
Gene Inger……of the ingerletter.com
Remember my comment about BP wanting to drill in 500 ft. not 5000 feet Gulf depth? Turns out that everyone (even the Pentagon and Secretary of Energy and the Pres. as well) signed-off on deep drilling. Their logic was self-sufficiency in-event war came with Iran and we needed nearly 8-10 months of oil without worry about any closure as might occur of the Straits of Hormuz. Perhaps the timing of the fast-paced drilling had an undisclosed urgency to it after all (we really don’t know that part). But we do know that Washington green-lighted the Macondo drilling operation from the start, and that began in Keathley Canyon Block 102 Southeast of Houston (the Tiber Prospect). The Government authorized drilling up to 35,000 feet total, and this well run awry may as it turns out have been intended to make us self-sufficient (the opposite of catastrophe and indeed the politics would have been inverted). Given that the discovery well was ‘even bigger’ than anticipated (world’s largest) one has to wonder whether the ‘relief’ wells are desperately intended not only to ‘relieve’ but to produce petroleum (we sure hope so), but also to fulfill the undisclosed National Security imperative we hear of. It is one thing to talk about the SPR (strategic reserve) but another to be self-sufficient.
‘The Whole Casing System Is Deteriorating’…..Shell Oil Ex-CEO
Posted By thestatedtruth.com on June 24, 2010
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Sounds like the same thing Matt Simmons said a week ago!
 Â
Quotes – Former Shell CEO John Hoffmesiter
 June 23, 2010…
If you really want to stop a blowout the fastest way the most efficient way is you blow it in, you use explosives. Â
1:00 Hoffmesiter:
Now the problem with that, that is risky A geologist would tell you that the fragility, the hardness of that salt dome, that sits on top of these reservoirs – if you put lots of infantesimal number of cracks in that salt dome, you’d be creating a large seep, which you’d never stop, because nature finds a way to push oil and gas up through the seep.
3:00 Hoffmesiter:
“It looks like we are facing an endless destruction of our, of our area here in North America – this is going to keep going and going and going it looks like.”  Â
5:00 Hoffmesiter:
The more oil we some coming out, the more it tells you that the whole casing system is deteriorating. The fact that more oil would be coming out rather than less oil, would suggest that the construction within the pipe is offering no resistance whatsoever, and we’re just getting a gusher. Â
5:40 Hoffmesiter:
Get the oil off the surface but the problem with that is, they’re still using so much dispersant that all you get is a little sheen on the ocean, but then you get these big globules rolling up from underneath that hit the beaches.
http://www.floridaoilspilllaw.com
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Gulf Oil Danger Of Tsunamis From Methane? This May Be A Low Probability Event But Let’s Review It Anyway
Posted By thestatedtruth.com on June 24, 2010
London, UK
A new and less well known asymmetric threat has surfaced in the Gulf of Mexico oil gusher. Methane or CH4 gas is being released in vast quantities in the Gulf waters. Seismic data shows huge pools of methane gas at the location immediately below and around the damaged “Macondo” oil well. Methane is a colourless, odourless and highly flammable substance which forms a major component in natural gas. This is the same gas that blew the top off Deepwater Horizon and killed 11 people. The “flow team” of the US Geological Survey estimates that 2,900 cubic feet of natural gas, which primarily contains methane, is being released into the Gulf waters with every barrel of oil. The constant flow of over 50,000 barrels of crude oil places the total daily amount of natural gas at over 145 million cubic feet. So far, over 8 billion cubic feet may have been released, making it one of the most vigorous methane eruptions in modern human history. If the estimates of 100,000 barrels a day — that have emerged from a BP internal document — are true, then the estimates for methane gas release might have to be doubled.
Tsunami: Low Probability High Impact EventÂ
Warnings
Older documents indicate that the subterranean geological formation below the “Macondo” well in the Gulf of Mexico may contain the presence of a huge methane deposit. It has been a well known fact that the methane in that oil deposit was problematic. As a result, there was a much higher risk of a blow out. Macondo shares its name with the cursed town in the novel “One Hundred Years of Solitude” by the Nobel-prize winning writer Gabriel Garcia Marquez.
By some geologists’ estimates, the methane could be a massive bubble trapped for thousands of years under the Gulf of Mexico sea floor. More than a year ago, geologists expressed alarm in regard to BP and Transocean putting their exploratory rig directly over this massive underground reservoir of methane. Warnings were raised before the Deepwater Horizon catastrophe that the area of seabed chosen might be unstable and inherently dangerous.
Methane and Poison Gas Bubble
The US Environmental Protection Agency (EPA) has found high concentrations of gases in the Gulf of Mexico area. The escape of other poisonous gases associated with an underground methane bubble — such as hydrogen sulfide, benzene and methylene chloride — have also been found. Recently, the EPA measured hydrogen sulfide at more than 1,000 parts per billion (ppb) — well above the normal 5 to 10 ppb. Some benzene levels were measured near the Gulf of Mexico in the range of 3,000 to 4,000 ppb — up from the normal 0 to 4 ppb. Benzene gas is water soluble and is a carcinogen at levels of 1,000 ppb according to the EPA. Upon using a GPS and depth finder system, experts have discovered a large gas bubble, 15 to 20 miles wide and tens of feet high, under the ocean floor. These bubbles are common. Some even believe that the rapid release of similar bubbles may have caused the sinking of ships and planes in the Bermuda Triangle.
50,000 to 100,000 PSI
The intractable problem is that this methane, located deep in the bowels of the earth, is under tremendous pressure. Experts agree that the pressure that blows the oil into the Gulf waters is estimated to be between 30,000 and 70,000 pounds per square inch (psi). Some speculate that the pressure of the methane at the base of the well head, deep under the ocean floor, may be as high as 100,000 psi — far too much for current technology to contain. The shutoff valves and safety measures were only built for thousands of psi at best. There is no known device to cap a well with such an ultra high pressure.
Oxygen Depletion
The crude oil from the “Macondo” well, which is damaging the Gulf of Mexico, contains around 40 percent methane, compared with about 5 percent found in typical oil deposits. Scientists warn that gases such as methane, hydrogen sulfide and benzene, along with oil, are now depleting the oxygen in the water and are beginning to suffocate marine life creating vast “dead zones”. As small microbes living in the sea feed on oil and natural gas, they consume large amounts of oxygen which they require in order to digest food, ie, convert it into energy. There is an environmental ripple effect: when oxygen levels decrease, the breakdown of oil can’t advance any further.
Fissures or Cracks
According to geologists, the first signs that the methane may burst its way through the bottom of the ocean would be manifest via fissures or cracks appearing on the ocean floor near the path of least resistance, ie, the damaged well head. Evidence of fissures opening up on the seabed have been captured by the robotic midget submarines working to repair and contain the ruptured well. Smaller, independent plumes have also appeared outside the nearby radius of the bore hole. When reviewing video tapes of the live BP feeds, one can see in the tapes of mid-June that there is oil spewing up from visible fissions. Geologists are pointing to new fissures and cracks that are appearing on the ocean floor.
Fault Areas
The stretching and compression of the earth’s crust causes minor cracking, called faults, and the bottom of the Gulf of Mexico has many such fault areas. Fault areas run along the Gulf of Mexico and well inland in Mexico, South and East Texas, Louisiana, Mississippi, Alabama and the extreme western Florida Panhandle. The close coupling of new fissures and cracks with natural fault areas could prove to be lethal.
Bubble Eruption
A methane bubble this large — if able to escape from under the ocean floor through fissures, cracks and fault areas — is likely to cause a gas explosion. With the emerging evidence of fissures, the tacit fear now is this: the methane bubble may rupture the seabed and may then erupt with an explosion within the Gulf of Mexico waters. The bubble is likely to explode upwards propelled by more than 50,000 psi of pressure, bursting through the cracks and fissures of the sea floor, fracturing and rupturing miles of ocean bottom with a single extreme explosion.
Cascading Catastrophe Scenarios
1. Loss of Buoyancy
Huge methane gas bubbles under a ship can cause a sudden buoyancy loss. This causes a ship to tilt adversely or worse. Every ship, drilling rig and structure within a ten mile radius of the escaping methane bubble would have to deal with a rapid change in buoyancy, causing many oil structures in its vicinity to become unstable and ships to sink. The lives of all the workers, engineers, coast guard personnel and marine biologists — measuring and mitigating the oil plumes’ advance and assisting with the clean up — could be in some danger. Therefore, advanced safety measures should be put in place.
2. First Tsunami with Toxic Cloud
If the toxic gas bubble explodes, it might simultaneously set off a tsunami travelling at a high speed of hundreds of miles per hour. Florida might be most exposed to the fury of a tsunami wave. The entire Gulf coastline would be vulnerable, if the tsunami is manifest. Texas, Louisiana, Mississippi, Alabama and southern region of Georgia might experience the effects of the tsunami according to some sources.
3. Second Tsunami via Vaporisation
After several billion barrels of oil and billions of cubic feet of gas have been released, the massive cavity beneath the ocean floor will begin to normalise, allowing freezing water to be forced naturally into the huge cavity where the oil and gas once were. The temperature in that cavity can be extremely hot at around 150 degrees celsius or more. The incoming water will be vaporised and turned into steam, creating an enormous force, which could actually lift the Gulf floor. According to computer models, a second massive tsunami wave might occur.
Conclusion
The danger of loss of buoyancy and cascading tsunamis in the Gulf of Mexico — caused by the release of the massive methane and poisonous gas bubble — has been a much lower probability in the early period of the crisis, which began on April 20th. However, as time goes by and the risk increases, this low probability high impact scenario ought not to be ignored, given that the safety and security of the personnel involved remains paramount. Could this be how nature eventually seals the hole created by the Gulf of Mexico oil gusher?
[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]
 http://www.mi2g.com/cgi/mi2g/frameset.php?pageid=http%3A//www.mi2g.com/cgi/mi2g/press/210610.php
Rick Ackerman…..Negative Growth Dead Ahead!
Posted By thestatedtruth.com on June 24, 2010
In Summary…….There will not be inflation, particularly if quantitative easing, debt monetization and stimulus are being abandoned. It is Contraction with a capital “C†and nothing less. Negative growth is coming…..We are witnessing a sea-change of events unfolding that to my way of thinking spell a certainty of a global recession if not worse. Yes, that dirty “D†word is on the tip of my tongue: Depression……We are getting signals weekly out of Europe that change is in the wind – signals that would be perilous to ignore. Europe is about to enter a period that will be marked by a major economic contraction. It will affect every country on earth. None will be immune to the ominous political undertakings there.
Rick’s PicksÂ
Thursday, June 24, 2010
“Phenomenally accurate forecastsâ€Â
A young friend asked me yesterday, “What on earth does negative growth mean?†and I had to laugh because it really is a ridiculous term dreamed up by political economists to put a positive spin on really bad news. I had actually never given the term any serious thought until then. “It means,†I said, “economic contraction and recession.†It really is no wonder the kids cannot figure out what is going on with all the nonsense terminology flapping about.
With France, Italy, Britain, Spain and of course Greece all now seemingly embracing austerity measures to bring their economies into line with EU terms specifying deficits be no larger than 3% of GDP, they are all about to experience “negative growthâ€. A double dip recession is now hurtling our way and it will affect Canada and our housing markets in a very big way. Britain itself is targeting a debt reduction policy that it hopes will see that country’s massive debt fall to 40% or 50% of GDP by the year 2030. Prime Minister David Cameron has suggested that this will fundamentally change the lives of his countrymen for years to come. He is right.
Some economists and politicians are already spinning this development as a positive change and suggesting that inflation targets and growth objectives can be met while the engine of the economy is put into idle (if not reverse). That is nonsense, of course. And it is a hazard to your financial well being to believe it. We cannot have it both ways. We are headed for a deep correction and should just start telling it like it is. There will not be inflation, particularly if quantitative easing, debt monetization and stimulus are being abandoned. It is Contraction with a capital “C†and nothing less. Negative growth is coming.
Choosing Recession…or Worse
In other words, it spells recession. It is one thing for a single member of the European Union to choose a policy of restraint in order to bring its fiscal house back in order, but quite another when all of the heavy hitters of the EU do so at the same time. We are witnessing a sea-change of events unfolding that to my way of thinking spell a certainty of a global recession if not worse. Yes, that dirty “D†word is on the tip of my tongue: Depression.
The stars are lining up and they all have the same intention. Deficit-slaying to achieve balance, maintain bond ratings, and by so doing cap the costs of interest payments on the debts in which sovereign states are drowning. It may be a good thing, but you know what they say about too much of a good thing: It kills. And in this case, it kills growth. I will not even quibble over the outcome.
This is an important cumulative set of changes, and it has not been commented on enough by the wider media. It is happening with lighting speed, too. All of the countries I mentioned are now turning their backs on stimulus and Keynesian nostrums as solutions to their economic woes. Instead they are embracing pension reform, reductions in public-service spending, tax increases, program cuts, increasing the age of retirement, cuts to social service payments, and looking at national assets that might be sold to raise cash.
Media Missing the Big Picture
There are many business writers out there, and individually they have commented in detail on the policies of one country or another; at other times discussing single announcements such as retail figures, employment, CPI and related indicators of our economic health. They are missing the big picture, though. I think it may be a case of not seeing the forest for the trees. The significance of what is occurring in Europe cannot be overstated because it spells deflation with a certainty when you consider the events in conjunction with credit being restricted around the globe.
I have said before that I do expect a significant stock market correction to take place during June and leading up to the G8 summit — possibly even occurring as an outcome of announcements that flow from those meetings. I may be wrong, but I do suggest to any who are reading this that you take special care of your investments at this time. Being in cash is prudent right now. Backstopping is essential if you insist on staying in the wider speculative markets. Caution should be the order of the day.
The Speed of Events
We are getting signals weekly out of Europe that change is in the wind – signals that would be perilous to ignore. Europe is about to enter a period that will be marked by a major economic contraction. It will affect every country on earth. None will be immune to the ominous political undertakings there.
As I said, it is a surprise to me, the speed with which these events are unfolding, and it appears to be occurring in the absence of a media spotlight. Perhaps we have become immune or complacent when it comes to bad news? Connecting the dots is all the more difficult with distractions like the spill in the Gulf of Mexico and the Israeli raid on ships headed for Gaza clouding our media horizon and consuming most of the airtime.
We need to stay focused, though. Major events are shaping up in the background that cannot be ignored.
And they are about to bite us from behind.
***
Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts.  Rick’s Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick’s Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com
Methane In Gulf “Astonishingly High”: U.S. Scientist
Posted By thestatedtruth.com on June 24, 2010
Methane in Gulf “astonishingly high”: U.S. scientist
(Reuters) – As much as 1 million times the normal level of methane gas has been found in some regions near the Gulf of Mexico oil spill, enough to potentially deplete oxygen and create a dead zone, U.S. scientists said on Tuesday.
Texas A&M University oceanography professor John Kessler, just back from a 10-day research expedition near the BP Plc oil spill in the gulf, says methane gas levels in some areas are “astonishingly high.”
Kessler’s crew took measurements of both surface and deep water within a 5-mile (8 kilometer) radius of BP’s broken wellhead.
“There is an incredible amount of methane in there,” Kessler told reporters in a telephone briefing.
In some areas, the crew of 12 scientists found concentrations that were 100,000 times higher than normal.
“We saw them approach a million times above background concentrations” in some areas, Kessler said.
Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels
Posted By thestatedtruth.com on June 24, 2010
Vincent Fernando, CFAÂ Â Â Â Â Jun. 24, 2010
Deutsche Bank has a new and improved index of U.S. financial conditions, and this index just slumped back towards the lows of our recent crisis.
Deutsche Bank’s Peter Hooper:
Financial conditions appear to have worsened substantially in recent quarters based on our update of the broad index of US financial variables presented earlier this year at the US Monetary Policy Forum. In the wake of recent developments in Europe, increased stress in financial markets has pushed that index halfway back to its immediate post- Lehman crisis lows.
The index is built from an array of financial indicators such as U.S. treasury yields, the volatility index (VIX), the stock market, Broker-Dealer leverage, among others. It’s a bit of a black box, but it’s calculation is giving a similar reading to what we saw during the worst of the financial crisis.
Soros….Europe Needs To Grow Its Way Out Of Trouble
Posted By thestatedtruth.com on June 23, 2010
Jun 23, 2010
Billionaire investor George Soros believes the euro is a flawed construct.
According to Mr. Soros, the euro was an incomplete currency from the start as the EU’s 1992 Maastricht Treaty, which led to the creation of the euro currency, established a monetary union without a political union.
In a speech for delivery at Berlin’s Humboldt University, Soros said “the euro is a patently flawed construct.†The legendary investor who raked in $1 billion in 1992 by betting against the British pound also criticized Germany’s budget savings policy and its attitude toward the EU.
Reuters: “By insisting on pro-cyclical policies, Germany is endangering the European Union. I realize that this is a grave accusation but I am afraid it is justified,†he said.
“By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro, Germany is actually making it more difficult for the other countries to regain competitiveness,†he added.
Soros called for Europe to grow its way out of trouble and to then revise and strengthen the structure of the euro. He emphasized however, that “This cannot be done without German leadership.â€
More at: http://wallstreetpit.com/32700-the-euro-is-a-patently-flawed-construct-soros
“In God We Trust” Has Been On American Coins Since 1866………Why Does The Government Want To Remove It Now? Take The CNBC Poll On This Important Subject
Posted By thestatedtruth.com on June 23, 2010
NBC is presently taking a poll on “In God We Trust” to stay on our American currency.
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Please send this to every person you know so they can vote on this important subject.
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Please do it right away, before NBC takes this off their web page. Poll is still open so you can vote:
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http://www.msnbc.msn.com/id/10103521/Â <http://www.msnbc.msn.com/id/10103521/>Â
Fed Leaves Rates Unchanged, Citing Overseas Threats to U.S. Growth
Posted By thestatedtruth.com on June 23, 2010
So now they tell us…….hasn’t this been ongoing for some time?
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By CHRISTINE HAUSER
Published: June 23, 2010
The Federal Reserve’s policy-making arm said on Wednesday that it had decided to keep short-term interest rates near zero for “an extended period†in light of continuing threats to economic growth, including “developments abroad.â€
The announcement by the Federal Open Market Committee was released at the end of its two-day meeting.
The Fed’s decision to stick with its low-interest-rate policy was in line with what analysts had expected, taking into account the pressures on consumer spending, an unemployment rate of 9.7 percent and other conditions that factor into the pace of the economic recovery.
There are also concerns, especially in equity and credit markets, that the European debt crisis could worsen, affecting the health of the global economy. This was reflected in the Fed’s statement, which said: “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.â€
The Fed said it continued to anticipate that economic conditions, “including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.â€
U.S. Strikes Back: Interior Secretary To Issue New Moratorium On Offshore Drilling In More Than 500 Feet…….
Posted By thestatedtruth.com on June 23, 2010
From Reuters:
Interior Secretary Ken Salazar will offer testimony later on Wednesday on why the government will appeal that ruling and seek to renew the ban.
The ban was imposed after a well operated by British oil company BP exploded on April 20 and began spewing crude into the sea.
“We see clear evidence every day, as oil spills from BP’s well, of the need for a pause on deepwater drilling,” Salazar said in a statement.
Salazar will testify to a Senate subcommittee at 11:00 a.m. EDT on Wednesday, along with Michael Bromwich, the new head of the Bureau of Ocean Energy, which under its previous name the Minerals and Management Service was blamed for failing to police the energy industry adequately.
But President Barack Obama, also dealing with his top general in Afghanistan over inflammatory comments in a magazine article, postponed Wednesday’s energy policy meeting with senators which would have covered the process for passing energy and climate laws this year.
Interior Secretary Ken Salazar will offer testimony later on Wednesday on why the government will appeal that ruling and seek to renew the ban.
The ban was imposed after a well operated by British oil company BP exploded on April 20 and began spewing crude into the sea.
“We see clear evidence every day, as oil spills from BP’s well, of the need for a pause on deepwater drilling,” Salazar said in a statement.
Salazar will testify to a Senate subcommittee at 11:00 a.m. EDT on Wednesday, along with Michael Bromwich, the new head of the Bureau of Ocean Energy, which under its previous name the Minerals and Management Service was blamed for failing to police the energy industry adequately.
But President Barack Obama, also dealing with his top general in Afghanistan over inflammatory comments in a magazine article, postponed Wednesday’s energy policy meeting with senators which would have covered the process for passing energy and climate laws this year.
More at: www.zerohedge.com   Â
New Brainstorm At Fannie Mae
Posted By thestatedtruth.com on June 23, 2010
Fannie Mae To Deny New Mortgages To Deadbeats
06/23/2010Â
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According to Dow Jones, bankrupt GSE Fannie Mae, announced “it won’t back new mortgage loans for seven years for homeowners who walk away from their mortgages although they were able to pay or did not seek a workout in good faith with their lender.” “”We’re taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers and bad for communities.”
Agreed
Magnitude 5.0 Hits ONTARIO-QUEBEC Border Region Of Canada
Posted By thestatedtruth.com on June 23, 2010
Magnitude 5.0 – ONTARIO-QUEBEC
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BORDER REGION, CANADA
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2010 June 23 17:41:42 UTC
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Earthquake Details
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| Magnitude | 5.0 |
|---|---|
| Date-Time |
|
| Location | 45.862°N, 75.457°W |
| Depth | 18 km (11.2 miles) set by location program |
| Region | ONTARIO-QUEBEC BORDER REGION, CANADA |
| Distances |
|
| Location Uncertainty | horizontal +/- 2.3 km (1.4 miles); depth fixed by location program |
| Parameters | NST=283, Nph=283, Dmin=148.6 km, Rmss=0.91 sec, Gp= 25°, M-type=teleseismic moment magnitude (Mw), Version=8 |
| Source |
|
| Event ID | us2010xwa7 |
- This event has been reviewed by a seismologist.
Tectonic Summary
The June 23, 2010 Ontario-Quebec border region earthquake occurred at 1:42 pm local (eastern) time about 60 km (38 miles) north of Ottawa, Ontario, Canada’s capital city. The preliminary estimate of magnitude (M) is 5.0, at a depth of roughly 19 km (12 miles). These estimates may change as more data becomes available.
This earthquake occurred near the southern edge of the Western Quebec Seismic Zone. Earthquakes within this zone are mostly small. They tend to cluster in a wide area that is slightly elongated northwest-southeast. Historically, earthquakes in the Western Quebec Seismic Zone have caused damage roughly once a decade. Three or four smaller events each year are felt in the region but are generally too small to cause damage. The largest earthquakes known in this part of Canada occurred in 1935 (M6.1), about 250 km (150 miles) to the northwest of todays event, and in 1732 (M6.2), about 150 km (100 miles) to the east. The 1732 earthquake caused significant damage in Montreal.
Earthquakes of the size of todays event are uncommon east of the Rockies, but many have occurred since the arrival of European settlers three centuries ago. In eastern North America and geologically similar regions worldwide, M5.0 to M5.5 earthquakes typically cause light to moderate damage out to a few tens of kilometers (miles) from the epicenter, depending on the number of people and type of buildings near the epicenter. Typically these earthquakes are felt hundreds of kilometers (miles) away. Earthquakes of this size and depth are unlikely to rupture the Earth’s surface, although exceptions are known.
The main faults near this earthquake zone trend northwest. These faults form the Ottawa graben and were most active several hundred million years ago. Some of the faults of the graben have been reactivated one or more times since then. The initial focal mechanism of todays earthquake suggests reverse faulting on a fault trending southeast-northwest. However, the size and depth of this earthquake make it uncertain whether the causative fault can be identified.
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EARTHQUAKES IN THE WESTERN QUEBEC SEISMIC ZONE
People in the large Western Quebec seismic zone have felt small earthquakes and suffered damage from larger ones for three centuries. The two largest damaging earthquakes occurred in 1935 (magnitude 6.1) at the northwestern end of the seismic zone, and in 1732 (magnitude 6.2) 450 km (280 mi) away at the southeastern end of the zone where it caused significant damage in Montreal. Earthquakes cause damage in the zone about once a decade. Smaller earthquakes are felt three or four times a year.
Earthquakes east of the Rocky Mountains, although less frequent than in the west, are typically felt over a much broader region. East of the Rockies, an earthquake can be felt over an area as much as ten times larger than a similar magnitude earthquake on the west coast. A magnitude 4.0 eastern earthquake typically can be felt at many places as far as 100 km (60 mi) from where it occurred, and it infrequently causes damage near its source. A magnitude 5.5 eastern earthquake usually can be felt as far as 500 km (300 mi) from where it occurred, and sometimes causes damage as far away as 40 km (25 mi).
FAULTS
Earthquakes everywhere occur on faults within bedrock, usually miles deep. Most of the bedrock in the Western Quebec seismic zone was formed as several generations of mountains rose and were eroded down again over the last billion or so years.
At well-studied plate boundaries like the San Andreas fault system in California, often scientists can determine the name of the specific fault that is responsible for an earthquake. In contrast, east of the Rocky Mountains this is rarely the case. The Western Quebec seismic zone is far from the nearest plate boundaries, which are in the center of the Atlantic Ocean and in the Caribbean Sea. The seismic zone is laced with known faults but numerous smaller or deeply buried faults remain undetected. Even the known faults are poorly located at earthquake depths. Accordingly, few, if any, earthquakes in the seismic zone can be linked to named faults. It is difficult to determine if a known fault is still active and could slip and cause an earthquake. As in most other areas east of the Rockies, the best guide to earthquake hazards in the Western Quebec seismic zone is the earthquakes themselves.
- Preliminary Earthquake Report
- U.S. Geological Survey, National Earthquake Information Center:
World Data Center for Seismology, Denver
http://earthquake.usgs.gov/earthquakes/recenteqsww/Quakes/us2010xwa7.php
Coast Guard Reports Problems Occurred In The Containment Effort
Posted By thestatedtruth.com on June 23, 2010
Something Broke: Containment Cap Removed From BP Oil Leak After Problems Encountered;Â Large Increase In Spill Rate……
By Tyler Durden on 06/23/2010
The U.S. Coast Guard said there may be 2 deaths, but the oil flow is not completely unrestrcited, and some oil was being burned off on the surface.
More at: www.zerohedge.com
Click on image for live view:
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George Soros Speaks About Europe…..
Posted By thestatedtruth.com on June 23, 2010
As a general rule, what’s bad for Europe is usually bad for the U.S. eventually!
Billionaire investor George Soros said continental European banks haven’t been “properly cleansed†after the credit crisis because they haven’t marked the value of their holdings to market prices.
“The current crisis is more a banking crisis than a fiscal one,†Soros, 79, said in remarks prepared for a speech in Berlin today. “Bad assets haven’t been marked to market, but are being held to maturity. When markets started to doubt the creditworthiness of sovereign debt it was really the solvency of the banking system that was brought into question because the banks were loaded with the bonds of the weaker countries and these are now selling below par.â€
Banks are struggling to get short-term funding because the interbank lending and commercial paper markets have dried up, he said. Firms have instead turned to the European Central Bank for short-term financing and to deposit their excess cash, Soros said.
European policy makers have pledged to publish the results of stress tests on their banks in a bid to reassure investors. Only the region’s 25 biggest banks will be examined, according to Andrew Lim, an analyst at Matrix Corporate Capital LLP. Bank executives including Deutsche Bank AG Chief Executive Officer Josef Ackermann have said publishing the tests could undermine confidence in the banks unless governments promise aid.
“We cannot judge how serious the situation is until the results are published,†Soros said today. “Indeed we shall not be able to judge even then because the report will deal only with the 25 largest banks and the biggest problems are in the smaller banks, notably the Cajas in Spain and the Landesbanken in Germany.â€
CalPERS Unlucky Again
Posted By thestatedtruth.com on June 22, 2010
I guess we could say CalPERS (California Public Employees’ Retirement System) is just plain unlucky….either that or they’re plain stupid. Maybe a little of both. After dropping a quarter of the value (and that’s being generous, it may be greater) of its $200-billion portfolio during the recession of 2008 and 2009, the country’s largest public pension fund is posting more big paper losses because of the massive 2-month-old BP oil spill in the Gulf of Mexico.  Since the real estate isn’t marked on losses, well….you get the point! The more important question is what does CalPERS really have left and how do they pay all those pensions.
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June 22, 2010Â
After dropping a quarter of the value of its $200-billion portfolio during the recession of 2008 and 2009, the country’s largest public pension fund is posting more big paper losses because of the massive 2-month-old BP oil spill in the Gulf of Mexico.
Since April 20, the 58 million BP shares owned by the California Public Employees’ Retirement System have plunged in value by $285 million, dropping from $586 million to $301 million, according to an analysis by Bloomberg News.
BP-related losses for all U.S. pension funds have totaled $1.4 billion as the value of BP stock tumbled 47%, Bloomberg data show.
— Marc Lifsher
More at: http://latimesblogs.latimes.com/money_co/2010/06/calpers-loses-big-on-bp-stocks.html
Bad News Blues For British Consumers….Osborne Increases U.K. Value-Added Tax Rate to 20%
Posted By thestatedtruth.com on June 22, 2010
June 22, 2010
 By Andrew Atkinson
June 22 (Bloomberg) — British Chancellor of the Exchequer George Osborne increased the value-added tax rate to 20 percent from 17.5 percent in the first permanent change to the levy on sales of goods and services in almost two decades.
“The years of debt and spending make this unavoidable,†Osborne told Parliament in London in his emergency budget today as he announced a package of spending cuts and tax increases to cut the U.K.’s record deficit.
The rate will increase from January and produce more than 13 billion pounds ($19 billion) a year of extra revenue by the end of this Parliament in 2015, Osborne said. “That is 13 billion pounds we don’t have to find from extra spending cuts or income-tax rises,†he said.
The VAT increase dwarfed other revenue-raising measures in a budget that sought to all but eliminate a deficit that reached 11 percent of gross domestic product last fiscal year.
The tax generates about 15 percent of total government revenue and retailers say the rise may dampen consumer spending as the economy emerges from its worst slump since World War II.
“We understand that the budget deficit needs to be tackled but we think the focus needs to be cutting public spending over tax rises,†Krishan Rama, a spokesman for the industry lobby group, the British Retail Consortium, said in a telephone interview yesterday. “What we’re concerned about is that the recovery at the moment is very fragile and consumer confidence is also fragile, so we don’t want something to fracture that.â€
Wall Street Buyers Beware…. Lunar Eclipse This Weekend.
Posted By thestatedtruth.com on June 22, 2010
This mention from Art Cashin, Cashin’s Comments from the floor of The New York Stock Exchange……….
That Looming Weekend Cycle – We mentioned last week that there was a bit of a buzz around the floor about a cycle of some kind that was to kick in this coming weekend. We nosed around trying to get a handle on the cycle but got some confusing results.
We think the reason the results were confusing is that there appear to be two very similar but actually different cycles. They are both based somewhat on the upcoming Lunar Eclipse this weekend.
Arch Crawford, the technical/astrologer talks about the eclipse cycle he follows in one of his recent letters. He says the last time he had a lunar eclipse with this aspect Chernobyl exploded. (Sure to get your attention.)
The other mention of an eclipse cycle was made by Steve Puetz in The Unified Cycle Theory Newsletter. Steve list 15 very severe crashes going back centuries. He said that 13 of the 15 occurred around an eclipse and a proximate full moon. His concern window is somewhat wider than Arch’s giving the eclipse effect several weeks to kick in.
We bring the cycles up because of the buzz they’ve drawn on the floor and trading desks. If folks think they may have any validity, they might just “press the bet†on any down move.
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Obama Administration Knew About Deepwater Horizon 35,000 Feet Well Bore, Green-Lighted And Fast-Tracked Project
Posted By thestatedtruth.com on June 22, 2010
Submitted by Tyler Durden on 06/22/2010
- President Obama and Secretary of Interior Ken Salazar, Secretary of Energy Steven Chu, and Defense Secretary Robert Gates were informed that BP would drill an unprecedented 35,000 feet well bore at the Macondo site off the coast of Louisiana. In September 2009, the Deepwater Horizon successfully sunk a well bore at a depth of 35,055 below sea level at the Tiber Prospect in the Keathley Canyon block 102 in the Gulf of Mexico, southeast of Houston… According to the Wayne Madsen Report (WMR) sources within the U.S. Army Corps of Engineers and the Federal Emergency Management Agency (FEMA), the Pentagon and Interior and Energy Departments told the Obama Administration that the newly-discovered estimated 3-4 billion barrels of oil in the Gulf of Mexico would cover America’s oil needs for up to eight months if there was a military attack on Iran that resulted in the bottling up of the Strait of Hormuz to oil tanker traffic, resulting in a cut-off of oil to the United States from the Persian Gulf. Obama, Salazar, Chu, and Gates green-lighted the risky Macondo drilling operation from the outset, according to WMR’s government sources.
Source: www.zerohedge.com
Statfor…….Germany and Russia Move Closer
Posted By thestatedtruth.com on June 22, 2010
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Germany and Russia Move Closer  By George Friedman | June 22, 2010 German Foreign Minister Guido Westerwelle will brief French and Polish officials on a joint proposal for Russian-European “cooperation on security,†according to a statement from Westerwelle’s spokesman on Monday. The proposal emerged out of talks between German Chancellor Angela Merkel and Russian President Dmitri Medvedev earlier in June and is based on a draft Russia drew up in 2008. Russian Foreign Minister Sergei Lavrov will be present at the meeting. Peschke said, “We want to further elaborate and discuss it within the triangle [i.e., France, Germany and Poland] in the presence of the Russian foreign minister.†On the surface, the proposal developed by Merkel and Medvedev appears primarily structural. It raises security discussions about specific trouble spots to the ministerial level rather than the ambassadorial level, with a committee being formed consisting of EU foreign policy chief Catherine Ashton and Russia’s foreign minister. |
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1.2 Million Partnerships Own Over $1 Trillion In Commercial Real Estate. Too Big To Fail Dumping CRE Debt.
Posted By thestatedtruth.com on June 21, 2010
The problems for commercial real estate are deep and significant and have the potential of stifling any sort of recovery. Rather than looking at commercial real estate (CRE) as a reason for more stimulus or bailouts the question should examine why so many CRE locations are defaulting. Can this be a sign that demand for goods, strip malls, condos, and other large projects are simply not in demand from a middle class that is confronting a new austerity? The problems in commercial real estate have the potential of causing the same amount of market volatility as residential loans for a handful of reasons. Unlike residential loans, there is little sympathy for CRE owners. It is expected that those who buy into million and billion dollar projects understand what they are doing (even if this assumption is wrong as we are finding out). So the potential for massive support here is limited from the public but we have seen the U.S. Treasury and Federal Reserve bail out virtually anything with a connection to the banking industry.
The CRE market is enormous:
Source:Â McClatchy
$3.5 trillion in commercial real estate loans are out in the market. The problems will be magnified for smaller regional banks that went into this market hand over fist. There are little mechanisms to bailout this industry. Yet why should there be a bailout function for real estate developers and investors that purchased land at overvalued prices and now expect to be made whole by the American public? The middle and working class are largely opening their eyes to the massive wealth transfer that is taking place. On the one hand you hear representatives telling the public to tighten their belts and be cautious with their money while trillions of dollars are transferred to the banking industry with no strings attached. After 29 months of crisis, it looks like there is movement against the real estate industry as we heard last week that the Feds charged 1,200 people with mortgage fraud. This is a step in the right direction.
Yet there is a growing examination of how commercial real estate loans are structured and who is making money from this. As we all know, our government is spending large amounts of money it does not have. Put aside the problems this will cause for the U.S. dollar down the line. In order to come back into balance, two things can happen. Either spending is cut to run on a leaner machine. This is very unlikely given that last month without the government there would be no job growth. The other option is to find other additional revenues meaning raising taxes. Commercial real estate has caught the attention of many as a potential source of new found income:
“(Zanesville) Despite this, Congress might pass the American Jobs and Closing Tax Loopholes Act. This bill raises taxes on investment partnerships in real estate and other ventures by more than 150 percent and will stifle economic activity. Rep. Zack Space joined his Democrat colleagues in voting “yes,†and the U.S. Senate might vote on the legislation soon.
This bill increases taxes on carried interest, taxing it higher than the current capital gains rate. It will stifle profits on commercial real estate transactions and will harm the real estate industry, whose health is vital to economic recovery. The still-fragile real estate industry cannot handle this tax increase, too.
More than 1.2 million partnerships own more than $1 trillion in commercial real estate nationwide and rely on the current system to build and revitalize our neighborhoods. Business partnerships are the primary model for development of commercial investments. The Ohio Senate passed a resolution I sponsored urging Congress to maintain the current carried interest tax rates.â€
Aside from the reporting trying to protect the CRE market, for too many years CRE owners have used tax loopholes that were designed to protect a grandparent from being booted out of their home because of taxes to their advantage. There is little reason to offer special protection to this industry and as the U.S. government is hungry for money, it is highly likely that at some point the way CRE is valued and taxed will come under additional scrutiny.
The CRE market is merely one way governments from top to bottom are going after more sources of money. After all, they’ve already picked the pockets clean of the middle class to bolster and support the banking industry. Now that the too big to fail are protected at all costs, why not put the act of toughness on and go after smaller banks with too much CRE debt? Once they fall over the too big to fail banks can have some CRE locations for a massive discount. After all, who else is in the market to purchase CRE in today’s market? Think this isn’t the case?
“(Housing Wire) JP Morgan sold $716.3m of commercial mortgage-backed securities (CMBS) bonds this week, marking the second deal this year.
The JPM deal marks the second CMBS issued in 2010 and one of the first since the freeze of the securitization market. The Royal Bank of Scotland issued the first in April 2010.â€
The commercial real estate structure aside from being massive with $3.5 trillion in loans, also has an adjustment structure that doesn’t bode well for longer term stability:
Source:Â Zero Hedge
If you look at the above charts, from 2009 to 2010 the amount of maturing CMBS has doubled. It will double again from 2010 to 2011. Then there is a significant spike from 2011 to 2012. Even with the amount we are dealing with right now we are seeing major problems in large CRE projects including large Las Vegas condo projects. There has been little to combat the above trend and what really can be done? The banking industry was hoping to buy time to have some miraculous price recovery so they would be able to off load the properties to some other unsuspecting investor. Unlike the stock market or banking profits, commercial real estate values are still near their trough:
Source:Â MIT
Market prices remain depressed as you would expect given current economic conditions. And that is why the amount of CRE loans going into default is large and growing. If we look at the CMBS portfolio chart we realize that billions of loans in this market are largely toxic and inching closer to insolvency. We are reminded every Friday of one or two banks being closed by the FDIC that had their hands too deep in the real estate market including CRE loans.
The fact that the government is exploring taxing CRE is interesting because it shows the tone of where we are heading. There is this odd balance of banking power. As long as you are part of the giant banks and Wall Street power brokers, you can fail on a continuous basis and you will be protected. Fall out of that realm, and you are in a “free market†with no support. Not a hybrid system that is conducive to a healthy economy. And we can see that the amount of defaults with CRE loans are booming:
Source:Â MBA
Not exactly a chart that bodes well for a growing commercial real estate market.
More at: http://www.mybudget360.com/
Budget Crisis Leaves Los Angeles’ $74 Million Jail Empty
Posted By thestatedtruth.com on June 21, 2010
Gross overcrowding in one jail and no money to staff the other one
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By JOHN ADAMS
The brand new, state-of-the-art Metropolitan Detention Center remains empty because the cash-strapped Los Angeles Police Department lacks the funds to staff it.
The $70 million, 172,000-square-foot, five-floor structure jail is one of the largest of its kind, but because of the city’s budget problems, the LAPD can’t hire enough jailers to operate it, according to the Los Angeles Times.
British Petroleum…….. Gulf Oil Well Update……..Concerns About The Potential For Blowout In The Underground Portion Of The Well
Posted By thestatedtruth.com on June 20, 2010
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By oilflorida,        June 20th, 2010
Bill Gale, an engineer specializing in fires and explosions on oil rigs who is part of Bea’s Deepwater Horizon Study Group, said the 16-inch wide casing contains disks that are designed to relieve pressure if necessary. If any of those disks popped, it could create undesirable new avenues for the oil to flow.
Bea said there are also concerns about the casing at the seabed right under the blowout preventer. …
In an answer to a question, Bea said, “Yes,†there is reason to think that hydrocarbons are leaking from places in the well other than the containment cap.
“The likelihood of failure is extremely high,†Bea said. “We could have multiple losses of containment, and that’s going to provide much more difficult time of trying to capture this (oil).†…
Bea said BP isn’t sharing enough information for others to know. If there is oil and gas escaping from the sides of the well, it could erode the sediments around the well and eat away at the support for all the heavy equipment that sits above. Bea said reports that BP is using an inclinometer [to monitor the blowout preventer’s tilt] is significant news. “It tells me that they are also concerned,†he said.
Pension Payback Time…In Budget Crisis, States Take Aim at Pension Costs
Posted By thestatedtruth.com on June 20, 2010
By MARY WILLIAMS WALSH
Posted June 20,2010
Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.
Gov. Pat Quinn said an overhaul would save Illinois’s pension system $300 million in its first year. But the fund is weakened.
Payback Time    Untouchable Benefits
Articles in this series are examining the consequences of, and efforts to deal with, growing public and private debts.
Illinois raised its retirement age to 67, the highest of any state, and capped public pensions at $106,800 a year. Arizona, New York, Missouri and Mississippi will make people work more years to earn pensions. Virginia is requiring employees to pay into the state pension fund for the first time. New Jersey will not give anyone pension credit unless they work at least 32 hours a week.
“We can’t afford to deny reality or delay action any longer,†said Gov. Pat Quinn of Illinois, adding that his state’s pension cuts, enacted in March, will save some $300 million in the first year alone.
To read the entire article, go to:,http://www.nytimes.com/2010/06/20/business/20pension.html
12 American Warships, Including One Aircraft Carrier, And One Israeli Corvette, Cross Suez Canal On Way To Red Sea And Beyond
Posted By thestatedtruth.com on June 20, 2010
Submitted by Tyler Durden on 06/19/2010Â Â Zerohedge.com
Update: It appears the Aircraft Carrier crossing the Suez is the USS Harry Truman, under the control of Herman “Herm” Shelanski, who is quoted by aish.com as saying “I understood that the strength of the United States is directly proportional to the safety of Israel.”
Arabic newspaper Al-Quds al-Arabi reports that 12 American warships, among which one aircraft carrier, as well as one Israeli corvette, and possibly a submarine, have crossed the Suez Canal on their way to the Red Sea. Concurrently, thousands of Egyptian soldiers were deployed along the canal to protect the ships. The passage disrupted traffic into the manmade canal for the “longest time in years.” The immediate destination of the fleet is unknown. According to Global Security, two other carriers are already deployed in the region, with the CVN-73 Washington in the western Pacific as of May 26, and the CVN-69 Eisenhower supporting operation Enduring Freedom as of May 22. It is unclear at first read what the third carrier group may be, but if this news, which was also confirmed by the Jerusalem Post and Haaretz, is correct, then the Debka report about a surge in aircraft activity in the Persian Gulf is well on its way to being confirmed. There has been no update on the three Israeli nuclear-armed subs that are believed to be operating off the coast of Iran currently.
BP Internal Document To Congress….Internal BP Document Confirms Matt Simmons’ Worst Case Prediction Of Spill Rate Of 100,000+ Barrels Per Day
Posted By thestatedtruth.com on June 20, 2010
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BP document…. “If BOP and wellhead are removed and if we have incorrectly modeled the restrictions the rate could be as high as 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases).” ….. “This number is in sharp contrast to BP’s initial claim that the leak was just 1,000 barrels a day. At the time this document was made available to Congress, BP claimed the leak was 5,000 barrels a day, and told Members of the House Energy and Commerce Committee that the worst case scenario was be 60,000 barrels a day………….IF the seabed collapses, that even Simmons’ estimate will prove to be conservative.
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 Tyler Durden on 06/20/2010    From Zerohedge.com
An internal BP document released by the chairman of the Energy and Environment Subcommittee in the House Energy and Commerce Committee, Ed Markey, discloses what the vast majority already know – that a “worst case” gusher scenario could be as high as 100,000 barrels of oil per day. According to an exhibit discussing flow rate probabilities, BP says that “If BOP and wellhead are removed and if we have incorrectly modeled the restrictions the rate could be as high as ~ 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases).” This is getting very close to the estimate presented previously by Matt Simmons that the flow rate could be as high as 120,000 bpd. As Markey notes, “This number is in sharp contrast to BP’s initial claim that the leak was just 1,000 barrels a day. At the time this document was made available to Congress, BP claimed the leak was 5,000 barrels a day, and told Members of the House Energy and Commerce Committee that the worst case scenario was be 60,000 barrels a day. This document tells a different story.” It is stunning to discover that a major multi-national corporation could be so daring as to lie to shareholders, Congress and taxpayers. The next question that Congress may want to look into is why the Obama administration swallowed BP’s lies hook line and collapsing GoM floor bed, without using an independent 3rd party verification, and what the liability to the firm would be if the official flow rate is revised to be twice higher than the current worse case scenario. We are confident that as more of the structural integrity of the seabed collapses, that even Simmons’ estimate will prove to be conservative.
Cumberland Advisors – Oil Slickonomics Part 8
Posted By thestatedtruth.com on June 20, 2010
 Everyone should read this!
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Cumberland Advisors
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Oil Slickonomics
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Part 8 – Chemotherapy in the Gulf of Mexico
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June 20, 2010
“Plaquemines Parish President Billy Nungesser was out on Terrebone Bay at the break of dawn with his new industrial strength, compressed air-powered vac. Within 15 minutes, he said his crews had collected 55 gallons of oil and Nungesser — vocally frustrated by the response from BP and the federal government — was thinking about whipping out his credit card to pay for more pumps from an online site.â€Â
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Meanwhile, the BP president, “After being lambasted in Congress on Thursday … was spending the weekend with his family in Britain’s Isle of Wight. “On Saturday — Day 61 of the oil disaster – Tony Hayward was watching his yacht, a Farr 52 named Bob, compete at the J.P. Morgan Assessment Management Round the Island Race.â€Â Source: CNN, June 19, 2010
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Let’s be blunt. Only one of three presidents “gets it.â€Â That one is Billy.Â
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President Tony continues to demonstrate that he doesn’t get it. His congressional testimony proved it. We wonder how much prep help he got from his fellow BP board member and former US Senator Tom Daschle. Reminder: Daschle was a prospective President Obama appointee, whose name was withdrawn after financial revelations killed his nomination. Daschle is the former US Senate leader of his, and Obama’s, political party.
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The third president is now in deep trouble. Our national leader faces huge and growing disapproval and repudiation by his core constituency.  “Whose ass to kick†was supposed to be a demonstration of toughness. It backfired. Harvard lawyer and Chicago politician Obama is a skilled orator and chooses every word carefully. This phrase was selected by him to convey some type of forceful political nuance. It failed because it showed Obama out-of-character and therefore suggested that he is a politician first and leader second.
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The timeline of events starting with April 20 shows that the White House and the Obama administration had conflicting contingency plans and were disorganized. On April 22, the day the rig sank, President Obama, Homeland Security Secretary Napolitano, Interior Secretary Salazar and others did not know there was a leak. They were in an emergency meeting together in the Oval Office and were operating without good information. That is understandable. What is not comprehensible is why it took them so long to realize the seriousness of their ignorance.
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It took Coast Guard Admiral Allen to wake them up. On April 24, Obama’s staff was told there was a meaningful spill. On April 28, the White House finally accepted that it was big.
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The president made his first trip to the Gulf a week later and two weeks after the rig explosion. And he did not immediately activate sufficient federal resources to the level we now know was needed even when briefed by Admiral Allen and Governor Jindal. That is why Obama is being compared to George Bush and Katrina when the public evaluates the response to crisis.
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Sorry, Mr. President. You failed us at the beginning. You were ill prepared. You announced expansion of offshore drilling because of politics and, we now know that, you hadn’t considered increased research funding for NOAA and for the preventive measures we now know are necessary. You formed no commission of experts to study it. You failed to heed warnings. And we now know that your administration’s Mineral Management Service was a mess.
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And we also know that your present moratorium structure is improperly conceived, politically driven and lacks petroleum engineering professional skills. We also know that your present moratorium plan was discussed in Washington last week with Gulf folks who traveled to our nation’s capitol. They returned home convinced that Washington is likely to do huge damage to the US by the way you are shutting down existing and non-BP activity. Your moratorium doesn’t make us safer. It will make the US dependent on foreign sources for oil to the tune of another 2 million barrels a day as it shuts down the Gulf and if it causes the Alaska pipeline to cease operations for insufficient throughput.
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The list of bungling is extensive, Mr. President. When looking for asses to kick, you might want to start with the mirror. But first help me explain the use of this language to my four year old granddaughter after she sees her president demean himself and his office on national television.
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Let’s get to some very real economic reality.Â
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Five states are now suffering because of the BP spill. Florida, Alabama, Louisiana, and Mississippi are hit by oil slicks that are devastating their fisheries and tourism. Texas is a casualty along with the others because the drilling moratorium that was poorly designed by Obama’s team was created out of a political response.Â
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The moratorium payback will be the loss of thousands of jobs.Â
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We now add the Alaska pipeline as a possible casualty, because of insufficient throughput due to the shutdown of existing drilling thousands of miles from the Gulf. The pipeline is built for 2 million barrels a day capacity. It currently carries about 700,000 which is near the minimum necessary to operate. It is supplied by oil drilled offshore. If it doesn’t maintain sufficient volume of warm oil the oil will cool and congeal. Five existing offshore wells that would keep the volume sufficient are now affected by the Obama moratorium.Â
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We estimate that an extended moratorium, which we now expect to continue because of Obama political calculus, will cost up to 200,000 higher-paying jobs in the oil drilling and oil service business and that the employment multiplier of 4.7 will put the total job loss at nearly 1 million permanent employment shrinkage occurring over the next few years. Five states have a regional recession/depression development underway. Alaska could become the sixth state on the damaged list.Â
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Readers may note that for the Gulf region, they can watch the Beige Books of the Atlanta and Dallas Federal Reserve Banks for economic details over the next several months.Â
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And we must not be deceived by the $20 billion fund. It is not nearly enough to cover the liabilities that may develop for BP and its partners, who are already in dispute with each other over who is going to pay for what and when and how much. Remember at $4300 fine for each leaked barrel of oil, the $20 billion is likely to just cover the fine. We expect that the total cleanup and payment of the liabilities to all injured parties in all five states may approach 5 times that amount. Â
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Let’s get to dispersants.Â
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The United States has approved and is supervising the administration of chemotherapy to the Gulf of Mexico. I have personally watched chemo too many times. It attempts to restrain the fast-growing cells by doing more damage to them than it does to the healthy cells, in a desperate attempt to keep the patient alive. There are many warnings in chemotherapy about longer-term damage and about unknowns. They are accepted because chemo for a cancer victim is viewed as a life or death option.
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Dispersants in the GOM are similarly problematic. Think of them as chemotherapy to a 2000 mile coastline and to hundreds of square miles of sea.Â
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Use them sparingly and on the surface and we have a pretty good idea what will happen – they seem to accelerate evaporation and natural processes that get rid of the oil. Â
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Use them below the surface, however, and we have little experience and simply do not know what the longer-term effects will be. Oil on the sea floor is a naturally occurring phenomenon. There are natural processes that Mother Earth has to deal with it. Microbes eat it. And when it rises to the surface it is then broken down and evaporates. Yes, it’s toxic, and, yes, it does do damage.Â
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Dispersants are manmade; no Mother Nature involved in this one. They are toxic chemicals that can do damage themselves.Â
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When they are used in very cold water and a mile below the surface, we simply do not know what the outcome will be. And we do not know if the small droplets they create become an emulsion that travels for hundreds or thousands of miles. There is initial, but inconclusive, evidence that this is happening in the GOM. We will soon find out. I fear it will be the hard way.Â
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The rest of this commentary consists of quotes from the Obama Administration’s Environmental Protection Agency and other sources. They were extracted from public documents.Â
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During the GIC meetings in Europe last week there were several discussions on the impacts of the GOM events. We owe great thanks to Jim Lucier for sharing his insight. His database on this subject is enormous.Â
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The quotes follow. They are sequenced and lead to the issue of the use of Corexit. Remember, about 5 million liters of dispersants, mostly Corexit, have been used in the GOM in the last two months. About one-third of that has been at the wellhead, 5000 feet below the surface, in very cold, very high-pressure water. There are numerous reports of deeper-water oil plumes that are sufficiently subsurface to avoid easy measurement and detection. We will leave the rest of this to each reader to consider for her/himself.
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As you read these extracts, please note that the UK has now banned Corexit. British oil comes from the cold and deep water off its coast.
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Copyright 2010, Cumberland Advisors. All rights reserved.
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More:Â http://www.cumber.com
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