Eeyores News and View

I personally think it will be less then 5 years. Terrorist are emboldened when they see weakness and i have a feeling that is what they will take our future President policies for, if things remain the same.
Panel: Bio attack likely in next 5 years December 2, 2008 - 7:37am
WASHINGTON (AP) - A bipartisan commission is asserting the country should expect a terrorist attack using nuclear or biological weapons sometime in the next five years.
The report, which is scheduled to be publicly released on Wednesday, suggests that the incoming administration of President-elect Barack Obama should improve the capability of the United States to counter such an attack and to prepare if necessary for germ warfare.
The report was written by the Commission on the Prevention of WMD Proliferation and Terrorism. Among other things, it concluded: "Our margin of safety is shrinking, not growing."
The commission also is encouraging the new White House to appoint a National Security Council official to exclusively coordinate U.S. intelligence and foreign policy on combating the spread of nuclear and biological weapons.
http://wtop.com/?nid=251&sid=1531938

Get ready for a rough ride from world recession, Chinese President tells party
The Chinese President has issued a rare warning to the ruling Communist Party, telling his officials that the global economic downturn is so severe that it could shake its 59-year grip on power.
President Hu Jintao's remarks, at a weekend meeting of the ruling 25-member Politburo, appeared on the front page of the party's official mouthpiece, the People's Daily. It was his bluntest message yet delivered on the crisis to China's 1.3 billion people and more than 70 million members of the party.
The subtext of his speech was the increasing risk of social unrest caused by China's rising unemployment, as a slump in exports leads to factory closures and a fall in property sales results in abandoned construction projects.
The President, who is also the head of the Communist Party, said: “In this coming period, we will starkly confront the effects of the sustained deepening of the international financial crisis and pressure as global economic growth clearly slows.” He said that the slowdown would “steadily weaken our country's traditional competitive advantages”.
The speech is the most authoritative warning yet of the blow dealt to the world's fourth-largest economy by the international financial crisis. Tens of thousands of migrant workers at failed factories are already heading back to their farms, and economists say that the real drop in export orders may not be felt until early next year.
Mr Hu said: “Whether we can turn this pressure into momentum, turn challenges into opportunities, and maintain steady and relatively fast economic development ... is a test of our Party's capacity to govern.”
It is unlikely that the President expects a challenge serious enough to force the party from power. But his warning is evidence of anxiety over a threat to social stability, and is almost certainly a reminder to regional authorities that they must maintain order by stepping in to resolve popular grievances. Protests over factory closures, particularly in the most developed southern coastal zone, have erupted in recent weeks.
Most have involved enraged workers, as their employers skip town and leave their wages unpaid. But the tens of thousands of others heading back to their rural homes for the Chinese new year in late January could add to the threat if they cannot find new jobs in the cities on their return. China's top economic planner, the chairman of the Cabinet's National Development and Reform Commission, gave warning last week that the impact of the global financial crisis was worsening and that rising job losses could fuel instability.
China's leadership has said on several occasions over the past decade that popular anger over official corruption poses the most serious threat to continued party rule. It is unusual for a government that has placed the economy above ideology for three decades and which has ensured sharply rising incomes to issue such a stark alert over living standards.
The message that people may not be able to expect greater prosperity with each passing year is a particularly unpalatable one for the party to deliver. Since the death of Chairman Mao and the end of the ultra-leftist chaotic Cultural Revolution in 1976, the party has effectively based its legitimacy on its ability to guarantee growth. The urban middle class has largely focused on Deng Xiaoping's exhortation that “to get rich is glorious”, setting aside any demands for more checks and balances on Communist Party rule.
The party had begun to shift its focus towards more equitable growth and greater environmental sustainability, but this shift may face pressure as officials scramble to shore up growth - and jobs. The Government has unveiled a 4 trillion yuan (£381billion) fiscal stimulus package to counter the global financial crisis. Some of those funds - pre-allocated under other programmes - are already flowing into the economy.
President Hu said that it was now more urgent than ever to transform China's export-driven, resourceirresponsible development, although growth was also more crucial than ever. “Under current conditions, we must keep an even tighter focus on economic development,” he said.
Knowing that China can no longer rely on exports, the Government is eager to boost the domestic consumer demand that was a major engine of growth in the 1990s. A nationwide rebate scheme to encourage rural residents to buy more refrigerators, washing machines, colour televisions and other domestic appliances will be expanded to 14 provinces from today and nationwide from February.
http://www.timesonline.co.uk/tol/news/world/asia/article5263907.ece

World stability hangs by a thread as economies continue to unravel
The political bubble is bursting. Spreads on geo-strategic risk are now widening as dramatically as the spreads on financial risk at the onset of the credit crunch.
Whether it is the Indian rupee, the Shanghai bourse, or Kremlin debt, the stars of the credit boom have fallen to earth. Investors are retreating into 3-month US Treasury bills – the ultimate safe-haven. The yield has fallen to 0.02pc, less than zero after costs. You pay Washington to guard your money.
The working assumption of the "Great Boom" is – or was – that we live in a benign era where most societies are converging towards some form of market liberalism; where trade and capital flows are unrestricted; where governments have enough legitimacy to keep order by light touch; where a major war is unthinkable.
This illusion is now being tested.
We should not to read too much into the Bombay carnage. It may or may not be significant that the Deccan Mujahideen – whoever they are – picked India's financial hub to launch their spectacular.
Even so, the love affair with Bombay's bourse was cooling anyway. The Sensex index is down almost 60pc from its peak.
The exodus of foreign capital may now quicken, laying bare the horrors of Indian public finance. The combined federal and state deficit is 8pc of GDP. Plainly, spending will have to be slashed.
If the atrocity now propels the Hindu nationalist leader Narendra Modi into office at the head of a revived Bharatiya Janata Party (BJP), south Asia will once again face a nuclear showdown between India and Pakistan.
Events are moving briskly in China too. Wudu was torched by rioters this month in a pitched battle with police. Violence has spread to the export hub of Guangdong as workers protest at the mass closure of toy, textile, and furniture factories.
"The global financial crisis has not bottomed yet. The impact is spreading globally and deepening," said Zhang Pin, head of the national development commission. "Excessive bankruptcies and business closures will cause massive unemployment and stir social unrest".
We are about to find out whether China has made the wrong bet with a development strategy of vast investment in manufacturing plant for mass export at thin margins to the US and Europe.
The shocking detail in the World Bank's latest report on China is that wages have fallen from 52pc to 40pc of GDP since 1999. This is evidence of an economic model that is disastrously out of kilter, and unlikely to retain popular support.
The Communist Party lost its ideological mission long ago. The regime depends on perpetual boom to stay in power. As the economy sours, there must be a high risk that it will resort to the nationalist card instead.
Tokyo certainly thinks so. When I visited Japan's Defence Ministry last year the deputy minister showed me charts detailing the intrusion of China's fast-growing fleet of attack submarines into Japanese waters. "We see its warships in the Sea of Japan all the time," he said.
Shoichi Nakagawa, the head of the ruling LDP party, was even more explicit. "What happens when China attacks Japan? Will the US retaliate on our behalf?" he said.
As for Europe, it is already fragile. Iceland, Hungary, Ukraine, Belarus, Latvia, and Serbia have turned to the IMF. Russia is a hostage to oil prices. If Urals oil stays below $50 a barrel for long, we are going to see an earthquake of one kind or another.
It is too early in this crisis to conclude whether Europe's monetary union is a source stability, or is itself a doomsday machine. The rift between North and South is growing. The spreads on Greek, Irish, Italian, Austrian, and Belgian debt remain stubbornly high. The lack of a unified EU treasury has become glaringly clear. Germany has refused to underpin the system with a fiscal blitz.
In the 1930s, it was not obvious to people living through debt deflation that their world was coming apart. The crisis came in pulses, each followed by months of apparent normality – like today.
The global system did not snap until September 1931. The trigger was a mutiny by Royal Navy ratings at Invergordon over pay cuts. Sailors on four battleships refused to put out to sea. They sang the Red Flag.
News that the British Empire could not uphold military discipline set off capital flight. Britain was forced off the gold standard within five days. A chunk of the world followed suit.
Nor was it obvious that Germany would go mad. Bruning persisted with deflation, blind to the danger. The result was the election of July 1932 when two parties committed to the destruction of Weimar – the KPD Communists and the Nazis – won over the half the seats in Reichstag.
We can hope that governments have acted fast enough this time – with rate cuts and a fiscal firewall – to head off such disasters. But then again, the debt excesses are much greater today. If in doubt, cleave to those countries with a deeply-rooted democracy, a strong sense of national solidarity, a tested rule of law – and aircraft carriers. The US and Britain do not look so bad after all.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3537362/World-stability-hangs-by-a-thread-as-economies-continue-to-unravel.html

The Hyperinflationary Depression
Walter “John” Williams thinks out of the box. He makes disquieting reading, but you won't find him in the mainstream. … Conditions today are hazardous. A major financial crisis precipitated them. Reckless policies caused it. It threatens the solvency of major banks and other financial institutions. It also hurts the greater economy. Solutions - massive liquidity injections, interest rate cuts and reckless deficit spending. Result - financial malpractice for a short-term fix. Consequences - “financial Armageddon” according to Williams. M3 (the broadest money supply measure) growth is so high that the Fed no longer reports it. Economists like Williams do because it's crucial to know, and the data he reveals are disturbing - record M3 growth at a near 18% annual pace. Hyperinflationary seeds are now sown. Dollar valuation is falling, and at some point may accelerate when investors flee it for safer havens. The Fed again will respond. More debt will be monetized. It will build over time. Things will get worse and then be exacerbated when the government is less able to meet its obligations. “Therein lies the ultimate basis for the pending hyperinflation,” in Williams' judgment. He believes it will morph into a hyperinflationary depression, then a “great depression.” And when it hits, it will be with “surprising speed.” Already disposable income is falling in a weakened economy in crisis. As things worsen, politicians get blamed, and Williams raises an interesting possibility. If conditions get bad enough, voters may respond with their feet, declare a pox on both major parties, and turn to a third alternative around 2010 or 2012. It happened before in our history. The Republican Party is Exhibit A. It was created in 1854 at a time Democrats and Whigs were the two dominant parties. Exit Whigs, and enter Republicans with Abraham Lincoln its first elected president in 1860. Williams shows US inflation data going back to 1665. It was fairly stable up to the Fed's 1913 creation. It then began rising and accelerated post-WW II. Government calculations mask it. Alternative ones are more revealing and accurate. Except for minor price declines in 1944 and 1955, the US hasn't had a deflationary period since the 1930s. Abandoning the gold standard is why. It imposed monetary discipline. Roosevelt went off it in 1933. He had to. The banking system collapsed, money supply imploded, and economic stimulus was needed. It released the Fed to create money freely. Therein lies the problem, and it shows up in the numbers. Current Fed Chairman Bernanke and Alan Greenspan are students of the Great Depression. “Helicopter Ben” especially vowed never again, and his actions prove it to a fault. He knows the risks and stated them in an earlier speech. He said: “Like gold, US dollars have value only to the extent that they are strictly limited in supply. But the US government has a technology called a printing press (now its electronic equivalent), that allows it to produce as many US dollars as it wishes.” By doing so, it “reduce(s) the value of a dollar in terms of goods and services” which raises their prices…. ”under a paper-money system, a determined government can always generate higher spending and hence positive inflation.” So it has, according to Williams, and it caused a “slow-motion destruction of the US dollar's purchasing power” since 1933. It shows up in GAAP-based 2007 federal deficit figures - $4 trillion for the fiscal year, not the official $163 fiction reported. Williams estimates total outstanding federal obligations at $62.6 trillion. At least one other economist puts it over $80 trillion. There's no way to honor this debt level, so the “government effectively is bankrupt.” At that point, it has three choices - default, declare a moratorium, or repudiate the entire amount. Sooner or later, markets will react. Holders of US debt already are balking, but so far modestly and quietly. Ahead, that may change if dollar valuations plunge. It will force the Fed's hand. Greater debt monetization will follow. Dollar valuations will sink further, and so forth in a progressive downward cycle to oblivion if Williams is right. If conditions get severe enough, the Fed can create huge amounts of currency in a few days or weeks - enough to match the dollar's lost purchasing power in the last 75 years. Combine it with fiscal irresponsibility and imagine the consequences. Official data alone today are reason for concern - soaring food and oil prices, the dollar near historic lows, money growth at an all-time high, and off-the-charts federal deficits and debt. The trend continues, and it shows up in gold prices - topping $1000, then retreating, but nearly certain to soar way above previous highs on its way to numbers not discussed in the mainstream - $2000 an ounce, $3000? Who knows. Williams sees it “setting new historic highs.” In 1980, its price hit $850 an ounce. In CPI inflation-adjusted terms, around $2300 an ounce would match it today. But if the government hadn't cooked the CPI calculation, the number would be about $6250 an ounce. By that standard, gold today is cheap. It's way below its real 1980 top, and if inflation accelerates as Williams predicts, expect much higher prices as dollars keep deflating. Under this scenario, the “US government cannot cover (its) existing obligations.” Annual federal deficits are “careening wildly out of control, averaging $4.6 trillion per year for the six years through 2007.” That's with all unfunded liabilities included like Social Security, Medicare, Medicaid, other social services, debt service and more. Williams says things are so out of control that “if the government (raised taxes) to seize 100% of all wages, salaries and corporate profits, it still would (show) an annual deficit using GAAP accounting” methods. At the same time, “given current revenues, if it stopped (all) spending (including defense and homeland security) other than Social Security and Medicare obligations, the government still would (show) an annual deficit.” The hole is so deep, it's impossible to dig out, according to Williams. But given political realities, officials spend whatever it takes to get elected and keep their jobs. That's besides foreign wars, limitless corporate subsidies and more. Things, however, won't improve. They'll worsen, and that for Williams spells hyperinflation ahead. It's happening “with the full knowledge of political Washington and the Federal Reserve.” It it weren't for the US's “special position,” our debt would likely be rated “below investment grade instead of triple-A.” Longer term bonds are especially risky. At some point, they'll lose their full value. They also risk default, and that's besides their loss in dollar terms. It's just a matter of time before foreign investors get worried enough to act - buying fewer Treasuries down to none, then followed by redemptions. The Fed will have to compensate. Print more currency, and the problem deepens. Its value declines and inflation accelerates. Trade policies worsen things. We're in a global race to the bottom. The once bedrock manufacturing base eroded. It's now 10% of the economy and falling. Services currently account for around 84% of it and rising. Jobs in all categories are being offshored to low-wage countries. Average inflation-adjusted wages keep declining. Real earnings are below their early 1970s peak. Living standards are falling. Consumer debt is rising to make up the shortfall. Savings are liquidated. Before the housing decline, mortgage refinancing helped when valuations rose. It meant taking on more debt. Fed policy encouraged it. Today's dilemma “is payback” for unsustainable bubble-creation policies. Recalling a relevant quote: “Things that can't go on forever won't.” Bad policy caused enormous structural change, and trade deficits are part of it. They've “risen to the highest level for any country in history.” They're one more problem for a seriously over-extended economy. It places “the federal government and Federal Reserve in untenable positions, where they cannot easily or rapidly address the underlying problems, even if standard economic stimuli were available.” Given the federal deficit and out-of-control spending, fiscal policy limits have been reached. The Fed's in the same bind. It can neither stimulate the economy or contain inflation. Rate cuts have done little. Saving the dollar may require raising them, but that won't “contain non-demand driven inflation.” It shows up in high food, energy, health care, and companies like Dow Chemical announcing on May 28 that it will raise prices across the board up to 20% to offset increased costs. More cause for worry, and Williams anticipates depression. Hyperinflation will follow, and it will sink “the economy into a great depression.” It will halt commercial activity. The greater disparity in income, the more negative its consequences. “Extremes in income variance usually are followed by financial panics and economic depressions. US income variance today is higher” than in 1929 and “nearly double that of any other ‘advanced' economy.” Federal bailouts have worsened things. Dollar creation exploded. Crisis has been pushed into the future. Its enormity will be far greater, and foreign investors will get stuck with a lot of it. When it arrives in strength, capital outflow will follow, and dollar valuation will plunge with it. Williams believes that “both central bank and major private investors know that the dollar is going to be a losing proposition. They either expect and/or hope that they can get of (it) in time to lock in their profits (or for central bankers) that they can forestall the ultimate global economic crisis” as long as possible. Dollars are very vulnerable in this environment. If Treasuries are dumped, the Fed will monetize debt to make up the difference. Inflation will then accelerate, multi-trillion dollar deficits will worsen things, and a “self-feeding cycle of currency debasement and hyperinflation” will follow. Cash as we know it will disappear. A barter system and black market will replace it or possible introduction of a new currency. Since most money today is electronic, not physical, chances of it adapting “are practically nil.” With hyperinflation, electronic commerce would completely shut down and economic collapse would follow. Gold and silver will be invaluable. Holders could exchange them for goods and services. Physical goods will also be precious for survival and as a medium of exchange. Anything with a long shelf life may be stocked in advance, and providers of essential services could barter them for goods and other services. Forewarned is forearmed. Safety and liquidity are crucial. Anything retaining value is essential. Real estate, other currencies for example. Foreign equities and debt to a small degree because US financial assets hammering will spill everywhere. With all that to deal with, consider another dilemma - the likelihood of painful political change, civil unrest, disruptive violence, and utter chaos. If Williams is right and hyperinflation arrives, Katie bar the door on what may follow. Revolutions are possible with three notable last century ones to consider - in Russia, Weimer Germany and Nationalist China. In each case, the old order ended, everything changed, but not for the good. How does Williams advise? Evaluate one's own circumstances, use common sense, and forewarned is forearmed. That will help, but hard times hurt everyone. Hopefully they won't arrive, at least not full-blown as Williams predicts. But make no mistake. Excess has a price. The more of it the greater. America has an ocean of it. Sooner or later comes payback. “Things that can't go on forever won't.”
My reaction: Like Walter "John" Williams, I believe hyperinflation is imminent for the US. The current deflationary phase is ending. Our enormous trade deficits and reckless money creation guarantee that the next phase will be hyperinflation, and the trigger will be rising gold prices. US Trade And Current Account Deficits To put the US's international deficits into context, Here is an extract from an article by Alan Tonelson where he writes that the U.S. Trade Deficit Endangers the American Economy .
Measuring the deficit as a share of the whole economy is critical because it indicates how sustainable America's foreign debts are. Last fall, the Federal Reserve published a study showing that most countries run into major financial trouble when their overall international deficits hit four percent of gross domestic product. In other words, these countries' foreign creditors begin fearing that their debts have become so high that full repayment is no longer possible. And the creditors become much less willing to continue lending. Sometimes they cut off the credit supply altogether, and even start selling the assets they hold in the debtor country, including their stockpiles of its currency. And other creditors tend to follow suit. If you're curious about how this rush for the doors can end, take a look at the economic devastation in Argentina.
After hitting a record 6.6 percent of GDP, U.S. trade and current account deficits now stands around 5 percent of GDP, but it is about to turn significantly higher. US GDP is enormously dependent on consumer spending which is disappear due to collapsing consumer credit. Meanwhile, the US imports aren't likely to drop much as they are goods Americans can least afford to give up: cheap non-durable goods, oil, etc. Finally, exports are likely to fall rapidly because what little manufacturing the US has left is concentrated in durable goods, the sector most sensitive to economic slowdowns (also sector hit hardest during the great depression). So while the US's GDP and exports are going to shrink enormously, our reliance on imports won't shrink much at all. In fact, when the dollar's collapse pushes oil back over a $100 a barrel, the US trade and current account deficits will easily surpass 10%. (For the rest of the article and charts you can go to the link)
http://www.marketoracle.co.uk/Article7539.html


Winter brings on onset of norovirusDecember 2, 2008 - 4:23am
Wash you hands frequently as a prevention measure. (AP)
Patricia Guadalupe , WTOP Radio
WASHINGTON - With the onset of cold weather, comes a most unwelcome visitor: a gastrointestinal illness that makes its victims very ill very quickly.
Norovirus, or "winter vomiting disease," is not usually life threatening, but it's very contagious. Symptoms include frequent vomiting and diarrhea, headaches and chills.
Health officials say more cases occur in the winter months when people spend a greater amount of time indoors.
There are a couple of real simple things you can do to avoid getting it.
"You need to wash your hands frequently, and use alcohol-based hand sanitizers between hand washings," says Maribeth Brewster, spokeswoman for the Virginia Department of Health.
Brewster recommends if you get the virus that you stay away from work or school for at least three days after symptoms subside, and avoid handling any food.
"You can still be contagious and you can still infect someone else, either through direct contact or through food preparation," she tells WTOP. "That's why we recommend the 72-hour window."
Other tips include promptly disinfecting contaminated surfaces with household cleaners that contain bleach and washing soiled articles of clothing as soon as possible.
http://www.wtop.com/?nid=106&sid=1532680