Eeyore's News and View

Survivalist business booms as economy flails By NICHOLAS K. GERANIOS , 12.01.08, 12:13 PM "Too many things are occurring at the same time. It's upsetting people," said the Survivalist, whose real name is Kurt Wilson.
So this Martha Stewart for the camo-and-compound crowd provides valuable information on nonperishable foods, portable water purifiers and defensive weapons. His catalog business, Survival Enterprises, sells what you need for the coming hard times.
Northern Idaho has long been a magnet for anti-government types and Wilson moved his business here from California in 1998.
He operates out of a modest strip mall that is, ironically, on Government Way in Coeur d'Alene. Much of the work is packing and shipping orders for survival supplies such as canned bacon with a camouflage label and cases of military MREs.
Wilson started "The Armchair Survivalist" radio show about a year ago because so many people were asking him for advice on what he considered simple problems. The Saturday show can be heard over his Web site, on shortwave radio, or a few broadcast stations.

The survivalist movement was considered somewhat on the decline since it peaked around 1996, according to the Southern Poverty Law Center, which studies fringe movements around the country. But the SPLC warned last week of a rise in "hyper-survivalist paramilitary groups" as a result of the Obama election.
"Some conspiracy theorists and fringe "Patriot" radio hosts are seeking to reverse that course by calling on their friends and countrymen to arm themselves, organize and head for the hills in preparation for a fast-approaching second Civil War," the SPLC said on its web site.
Jim Rawles, editor of survivalblog.com said unique visits to his site are climbing. They've doubled to about 107,000 a week, he said. But he doesn't think Obama's election is the main reason.
"The main driver right now is the economic situation," he said. "A lot of people are deeply concerned we are on the cusp of another economic depression."
While the term "survivalist" often carries negative connotations of reactionary politics, advocates of the lifestyle say it has a long, proud place in history - see Lewis and Clark - and in fiction such as "The Swiss Family Robinson."
Barton Biggs, former chief global strategist for Morgan Stanley (nyse: MS - news - people ), recently wrote a book in which he warned that people should anticipate the breakdown of civilized society. He suggested creating a "safe haven" and stocking it with canned food, liquids, medicine, seed, fertilizer and other tools for survival.
In the same vein, Wilson devotes most of his program to topics like vacuum packing of food, generator silencing, and fire starting
But his politics are also clear. During a recent program he referred to "low-life interesting creatures that crawl over the border to get on Social Security." He said Barack Obama was a communist whose election was largely due to his race.
Yet business is booming at levels Wilson has not seen since the Y2K scare.
He attributes that to Americans' sense of vulnerability because of economic woes and a series of high profile disasters, most notably Hurricane Katrina. People feel they have to fend for themselves, he said.
Wilson spent part of his childhood living in a log cabin in the woods, where he picked up many of the skills once common among rural Americans but now largely forgotten.
During the Depression, for example, many Americans survived by planting gardens, he said.
Wilson said his show is intended for a mainstream audience, but it's not exactly "Paul Harvey."
On a recent program, he ripped the Wall Street bailout package, Democrats, rising taxes, disappearing pensions and the possible expansion of welfare. He warned that the worldwide credit crunch may leave cargo ships stranded in ports, making food imports to the U.S. impossible.
During breaks, there were advertisements for a product that can obscure license plates from red light cameras ("when cameras flash, you'll save some cash"), a cure for intestinal parasites, and a device for converting humidity into drinking water.
He doesn't worry so much about people who live in the country, figuring they can fend for themselves.
"The guy in an apartment has no chance in hell," he said. "I help people to become more self-sufficient."
One customer lives in a small Manhattan apartment, where he keeps stacks of canned food covered by tablecloths in his living room so they look like end tables, Wilson said.
Wilson recommends spending whatever it takes to have a year's worth of food on hand because grocery stores will be immediately stripped bare when disaster strikes.
Survival food and equipment can be expensive, but there are tricks to cutting the costs, such as buying cases of canned food on sale.
"I like yard sales," he said. "All true survivalists like yard sales."
http://www.forbes.com/feeds/ap/2008/12/01/ap5760797.html

Expect the Worst Recession Since WWII
This week we look at a short but excellent summary of the state of the current economic crisis. I always enjoy reading David Rosenberg, the North American economist of Merrill Lynch. He has a no-nonsense style that is refreshing from most mainstream economists. The reality is that things continue to deteriorate. Today's stock market action shows that we are not of the bear market woods just yet. Rosenberg gives us a few reasons why
The Six Lessons from Last Week's ActionBy David Rosenberg, North American Economist, Merrill Lynch
1) Expect the worst recession in the post-WWII eraFirst, this is going to be the worst recession in the post-World War II era, in our view. The ECRI leading indicator hit a record low for the fifth week in a row – down to - 29.2 as of the November 21st week versus -28.2 the week before. This index, which leads real GDP by two quarters with a 70% historical correlation, is getting further and further away from the prior all-time low of -19.8 that defined the worst recession of the post-WWII era and saw a six-quarter consumer recession coincide with a 45% peak-to-trough decline in the stock market. Perhaps the fact that this bear market is proving to be even more severe is symptomatic of an economic downturn that will also prove to be deeper and more prolonged. After the flurry of data released just before Thanksgiving, we are now tracking close to a 4.5% QoQ annualized fall in real GDP in 4Q. This would be the largest pullback since the 1982 recession, and we see a similar contraction in the first quarter of 2009.
2) Capex is in a steep declineSecond, capex is in a very steep decline right now. Durable goods orders dropped 6.2% in October, the third decline in a row. Over that time frame, orders have plunged at a 39% annual rate, which is unprecedented. The retrenchment has spread to the tech sector, where order books were expanding at a 7% annualized rate over the three months to June. Currently, that same three-month trend has swung to a negative 13% annualized rate.
3) Consumer spending down sharply; savings rate is soaringThird, consumer spending fell 1% in October, which was a near-record decline. This, in fact, was the fourth straight monthly decline, which is unprecedented. The savings rate is soaring; it leapt to 2.4% from 1.0% in September, in a sign of heightened risk aversion and cash preservation, and is a shift that we believe should be seen as secular, not merely cyclical.
This was a conclusion that came through loud and clear in the Conference Board's Consumer Confidence Index, principally in the spending intention components of the survey. Auto buying plans dropped for the third month in a row to a record low in October while home-buying plans fell to their lowest level since the 1982 recession. Consumer plans to buy a major appliance fell to a 14-year low as well – down for three months in a row. During this four-month period of unprecedented consumer retrenchment from July to October, spending on discretionary items collapsed at an average annual rate of 18%. Even spending on groceries has declined 6%, toiletries are off by 6% and utilities are down 3%. So, even some of the classic staples are being curtailed.
The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.
4) Obama planning a $700 billion fiscal packageFourth, we learned this week that President-elect Obama's economics team is planning a fiscal package as big as $700 billion over the next two years. We are going to wait for the details to see how this is going to impact our base case macro forecast. Suffice it to say that the cornerstone of the stimulus this time around will likely be infrastructure, not tax rebates. The key for investors is where these outlays will be concentrated, which, in turn, means identifying the areas of the capital stock that have been the most underinvested in recent years. After sifting through the data, we believe that the prime candidates will be hospitals, waste management services and passenger transit.
5) Housing market is not close to bottoming outFifth, we learned that the housing market is nowhere close to bottoming out. New home sales dropped 5.3% in November to a 433k annualized rate – the worst since the 1982 recession. Even though sales are now down 69% from the July 2005 bubble peak of 1.39 million units, we believe builders have not been aggressive enough in curbing production because the most critical variable of all, the unsold inventory backlog, rose to 11.1 months' supply from 10.9 in September.
Need to see inventory backlog drop to 8 months' supply
The reality is that even though single-family starts have dropped to 26-year lows of 531,000, they are still running 23% above the prevailing level of new home sales. The worst the inventory-sales ratio ever got in the early 1990s real estate meltdown was 9.4 months' supply. We are currently 18% above that level and almost 40% higher than the 8 months' supply we would need to see before calling an end to the housing deflation phase.
Another 15-20% decline in home prices likely from here
As we saw last week, the Case-Shiller index fell 1.85% MoM or at a 20% annual rate. All 20 cities were down both sequentially and YoY. Home prices are now down a remarkable 22% from the 2007 peaks. With the unsold inventory sitting at the third highest level of the past three decades and mortgage approvals for new home purchases falling to their lowest level in nine years, we believe the laws of supply and demand point to a further 15-20% decline from here. So, of all the things that happened last week in the market, retailing stocks up 17%, the bank stocks up 26%, tech up 9%, the one development that probably has the greatest chance of being reversed is the 60% surge we saw in the homebuilding group.
6) Fed has switched December meeting to a two-day affairSixth, we learned that the Fed is going to make the December FOMC meeting a two-day affair instead of one (December 15-16). The market is already sniffing out a 50 basis point rate cut. However, now that the Fed has de facto embarked on the process of quantitative easing, perhaps the need for a two day meeting is to iron out a more aggressive plan to revive the credit markets and the economy. The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.
As Chairman Bernanke suggested in several speeches he gave back in 2002 and 2003, one of the deflation-fighting strategies would likely involve Fed action to nurture lower rates at the longer end of the yield curve. Perhaps this prospect is behind the rally in the 10-year note yield and long bond to cycle lows. This would fit in very well with our ongoing strategy of focusing on equity sectors that have income-generating characteristics like utilities, health care and telecom services; these sectors also screen very well in a negative nominal GDP growth environment.
http://www.marketoracle.co.uk/Article7573.html

Jobless claims fall last week; benefits at 26-year high
WASHINGTON (AP) — The number of new claims for unemployment benefits fell unexpectedly last week, but the number of people continuing to claim benefits reached a 26-year high.
The Labor Department says initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised 530,000 the previous week.
That's significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters.
But the number of people continuing to claim unemployment benefits reached 4.09 million, the most since December 1982, when the economy was in a steep recession.
http://www.usatoday.com/money/economy/2008-12-04-jobless-claims_N.htm?loc=interstitialskip

AT&T, DuPont, United will cut thousands of jobs
AT&T, United Airlines and DuPont joined the layoff parade Thursday, as the number of people drawing unemployment benefits hit a 26-year high.
AT&T (T) announced plans to cut 12,000 jobs, about 4% of its work force.
DuPont (DD)says it will cut 2,500 jobs, mostly in its businesses that serve the U.S. and European auto and construction markets, plus 4,000 contractors.
United Airlines plans to furlough 1,088 workers at bases around the country, according to layoff notices and the unions that represent the workers.
Those announcements came as the Labor Department said the number of new claims for unemployment benefits fell unexpectedly last week to a seasonally adjusted 509,000, from an upwardly revised 530,000 the previous week.
But the number of people continuing to claim benefits reached a 26-year high 4.09 million, the most since December 1982, when the economy was in a steep recession.
The U.S. workforce is roughly 50% larger than it was in the early 1980s. As a result, the Labor Department said the proportion of workers continuing to receive jobless benefits matches a level reached 16 years ago, in September 1992, when the economy was recovering from recession.
Weekly claims last month reached a 16-year high 543,000. A year ago, initial claims stood at 340,000.
WHAT AT&T SAYS: Read the press release
WHAT DUPONT SAYS: Read the press release
AT&T, the nation's largest telecommunications company, said its job cuts will take place in December and throughout 2009.
It was not immediately clear what departments and cities would see cuts. But, like most telecom companies, AT&T has been seeing customers defect from landline phones to wireless services, and the company noted that it would still be hiring in 2009 in parts of the business that offer cellphone service and broadband Internet access.
The company also said it plans to reduce capital spending next year.
AT&T said it will take a charge of about $600 million in the fourth quarter to pay severance costs.
The company noted that many non-management employees have guaranteed jobs because of union contracts. All affected workers will receive severance "in accordance with management policies or union agreements," the company said.
Chemicals maker DuPont says it will cut the 4,000 contractors by the end of this year, with additional contractor reductions expected in 2009.
DuPont is forecasting a 2008 fourth-quarter loss of 20 cents to 30 cents a share, excluding restructuring charges of about 40 cents per share. The company expects 2009 earnings between $2.25 and $2.75 per share, anticipating the current global recession will continue well into 2009.
Analysts surveyed by Thomson Reuters were predicting quarterly profit of 23 cents per share and fiscal 2009 earnings of $2.80, on average.
United, the nation's third-largest airline also plans to close maintenance facilities at the Newark, New York-LaGuardia and Philadelphia airports on Jan. 11.
Chicago-based United has been working for several months toward reducing its headcount by 7,000 positions as it trims the amount of flying it does. It's been using a combination of leaves, buyouts, and furloughs to eliminate those jobs. The latest furlough plans are part of that 7,000 total, which also includes plans to lay off roughly 1,500 office and management workers.
United told workers in October that it plans to close maintenance facilities at Newark, LaGuardia, and Philadelphia, and said much of that work would shift to John F. Kennedy International Airport in New York.
United also told workers it would close hangars in Boston and JFK, although some maintenance would still be done in those locations. It said growing international departures would mean some growth in activity at Washington Dulles airport.
The 1,088 job cuts would include some 490 ramp and customer service workers represented by the International Association of Machinists and Aerospace Workers, spokesman Joseph Tiberi said on Wednesday. That includes 253 at Chicago O'Hare and 153 in San Francisco around Jan. 25, and 84 at Los Angeles International Airport on Feb. 3.
United also notified the state of California that it plans to furlough 598 San Francisco mechanics around Jan. 11. That was a revision from a previously-disclosed plan to furlough 414 this month.
"These previously-announced layoffs are difficult but necessary actions that we must take company-wide that will enable United to compete in the challenging economic environment," spokeswoman Megan McCarthy said.
United mechanics are represented by the Teamsters. The head of the union's airline division, David Bourne, is scheduled to meet with United executives on Dec. 11 and 12 to see if the number of job cuts can be reduced.
United's flight attendants avoided involuntary furloughs because enough of them took leaves, early retirement, or other voluntary measures.
United and other airlines have been reducing the flying they do. On Wednesday United reported that it cut November capacity by 14.2%, but its traffic fell faster, by 17%.
Shares of United parent UAL Corp. rose 28 cents, or 2.9%, to close at $9.92 on Wednesday.
http://www.usatoday.com/money/economy/2008-12-04-job-cuts_N.htm

Majority of CEOs say they plan job cuts in next six months
WASHINGTON — Businesses often cut workers at year's end to get salaries off their books. But this year is looking far bleaker than normal.
More than 4 million people were collecting unemployment benefits in the week that ended Nov. 22, the highest in 26 years, when the economy was climbing out of one of the worst recessions in postwar history, the Labor Department said Thursday.
And a survey showed the majority of CEOs plan to cut workers in the next six months, while a number of major companies, including AT&T and DuPont, announced layoffs of thousands of workers in coming weeks.
"This is so quick and so sharp," says Richard Yamarone, director of research at Argus Research. "We had some job loss the first seven or eight months of the year, but it was nothing like this." He says declining stock values are leading firms to cut more than usual in December.
The jobs news helped lead to another sell-off on Wall Street. The Dow Jones industrial average fell 215 points to 8376. A government report out today is expected to show another plunge in jobs in November and a further increase in the unemployment rate. The jobless rate in October was 6.5%, the highest since 1994.
The Business Roundtable survey found that 60% of CEOs planned to cut workers in the next six months. That was up from 32% in the third quarter.
The survey of 101 CEOs showed a rapid deterioration in the outlook from the nation's top executives as expectations for sales and investment dimmed. The group said its CEO economic outlook index plunged to 16.5 in the fourth quarter, down from 78.8 in the prior quarter and the lowest since the private group began doing the survey six years ago.
An index below 50 points to a contraction in the economy.
The survey was conducted Nov. 3-17. CEOs in the round table represent many of the nation's largest companies, with a combined workforce of 10 million employees.
Job cuts announced Thursday:
•AT&T said it's cutting 12,000 jobs, or about 4% of the company's workforce.
•DuPont is cutting 6,500 workers. The cuts include 4,000 contractors and 2,500 employees, or more than 4% of its permanent workforce. Those cuts are mainly in the motor vehicle and construction markets in the U.S. and Western Europe.
•United Airlines said that in January it will lay off nearly 1,100 workers.
http://www.usatoday.com/money/economy/2008-12-04-job-cuts_N.htm

Blackwater joins fight against sea piracy
Pirates beware -- Blackwater Worldwide may be looking for you, and soon. That prospect certainly would shiver Bartholomew Roberts, better known as "Black Bart," down to his timbers if the infamous pirate hadn't been dead for the past 285 years.
The North Carolina-based security firm, which came under fire from Congress over a shooting incident in Baghdad last year that left 17 Iraqi civilians dead, announced in October that its 183-foot ship, the McArthur, stands ready to assist the shipping industry as it struggles with the increasing problem of piracy in the Gulf of Aden and elsewhere.
"Billions of dollars of goods move through the Gulf of Aden each year," said Bill Mathews, Blackwater's executive vice president. "We have been contacted by ship owners who say they need our help in making sure those goods get to their destination safely. The McArthur can help us accomplish that."
The International Maritime Bureau estimated that more than 100 ships have been attacked off Somalia alone since January. A total of 14 ships and 250 crew members are still being held for ransom.
Among them, the Saudi oil tanker Sirius Star and its cargo worth more than $100 million are still being held. The ship and its 25-member crew were seized on Nov. 14.
Just this week, pirates fired on a U.S. cruise ship carrying hundreds of passengers as it steamed across the Gulf of Aden on a 32-day cruise from Rome to Singapore.
Blackwater spokeswoman Anne Tyrrell said more than 70 companies, including shipping and insurance firms, have contacted the security specialists for information on the McArthur, although she did not elaborate. She said meetings are taking place this week in London to explain to those interested what the company can provide.
"More than 70 different companies have reached out to find out our capabilities," she said.
As a company with a 50,000-person database of former military and law enforcement professionals, Blackwater says it is uniquely positioned to assist the shipping industry in the Gulf of Aden and elsewhere.
Formerly known as Blackwater USA and founded in 1997 by former U.S. Navy SEAL members Erik Prince and Al Clark, the company recently focused on expanding operations and services, and acquired the McArthur for use in combating terrorists and for special missions.
The refurbished ship has what the company has described as state-of-the-art navigation systems, full Global Maritime Distress and Safety System communications, SEATEL broadband satellite communications, dedicated command and control battlefield air support, helicopter decks, a hospital, multiple support vessel capabilities, and a crew of 45 highly trained personnel.
Formerly a National Oceanic and Atmospheric Administration research vessel, the McArthur was put in service in 1966 and decommissioned in 2003. Reconfigured and modified in 2006, the ship is now considered a Blackwater Worldwide maritime security support craft. Blackwater´s aviation affiliate can provide the helicopters, pilots and maintenance required to support escort missions in the Gulf of Aden.
Company spokesmen said the dramatic increase of pirate attacks on merchant vessels in the Gulf of Aden had led to parallel cost increases for the shipping industry, resulting in 10-fold insurance increases this year alone. They said that with the added danger pay offered to crews willing to make the journey, pirate ransom demands that reach into the millions, and lengthy negotiations for hijacked ships, if left unaddressed the cost of the piracy boom to the shipping industry -- and consumers buying their goods -- will only increase.
"Some shippers have taken the step of arming their crews, or hiring private security to ride on board cargo ships," the company said. "Rather than having armed guards on a cargo vessel, the McArthur´s ability to accompany a ship and deploy helicopters to patrol the area provides a safer option for the shipping industry.
The McArthur is a multipurpose maritime vessel designed to support military and law enforcement training, peacekeeping, and stability operations worldwide.

Motor Vessel McArthur
Blackwater Worldwide is the largest of the State Department's three private security contractors. Of the 987 contractors Blackwater provides, 744 are U.S. citizens. At least 90 percent of its revenue comes from government contracts, two-thirds of which are no-bid contracts. The company is currently contracted by the U.S. government to provide security services in the Iraq war.
Twenty-seven Blackwater employees have been killed during various security missions in Iraq. In March 2004, four Blackwater employees were ambushed and killed in Fallujah, and their bodies were hanged on bridges.
In September 2007, Blackwater employees in Baghdad fatally shot 17 Iraqis, at least 14 of whom were killed "without cause" according to the FBI. Witnesses told investigators the attack was unprovoked, although Blackwater maintained that its guards were under attack and responded accordingly.
The Iraqi government initially said it expected to refer criminal charges to its courts in connection with the incident, but in October 2007 immunity from prosecution was granted by the State Department. While the Justice Department said any immunity deals offered to Blackwater employees were invalid, legal experts have said the U.S. government is unlikely to allow a trial in the Iraqi courts, because there is little confidence that trials would be fair.
http://www.washingtontimes.com/news/2008/dec/04/blackwater-joins-fight-against-sea-piracy/

Record number of Americans using food stamps: report
By Roberta Rampton
WASHINGTON (Reuters) - Food stamps, the main U.S. antihunger program which helps the needy buy food, set a record in September as more than 31.5 million Americans used the program -- up 17 percent from a year ago, according to government data.
The number of people using food stamps in September surpassed the previous peak of 29.85 million seen in November 2005 when victims of hurricanes Katrina, Rita and Wilma received emergency benefits, said Jean Daniel of the USDA's Food and Nutrition Service.
September's tally -- the latest month available -- was also boosted by hurricane and flood aid, Daniel said on Wednesday.
But anti-hunger groups said the economic downturn is the main reason behind the higher figures.
"It's a disturbing trend," said Ellen Vollinger, legal director with the Food Research and Action Center. She said she expects more people will turn to food stamps as unemployment figures rise and the economy remains weak.
One in 10 Americans were participating in the food stamp program as of September, said Dottie Rosenbaum, analyst with Center on Budget and Policy Priorities, a think tank.
That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said.
States that have seen a drop in job numbers and increase in home foreclosures such as Florida and Nevada also have seen a marked increase in food stamp use, Rosenbaum said.
Food banks are struggling to meet increased requests for food, said Maura Daly of Feeding America, a network of food banks.
"The tough economic time that our nation is facing is having a tremendous impact on the level of food assistance needed across the country," Daly said.
On average, people who used food stamps received $100 per month in benefits in September. That increased slightly in October to account for higher food prices, but hunger groups said the benefits still don't go far enough at a time of high food prices and home heating costs.
Last month, the USDA said 36.2 million Americans or 11 percent of households struggle to get enough food to eat, and one-third of them had to sometimes skip or cut back on meals.
Hunger groups want Congress and the new administration to increase food stamp benefits as part of an economic stimulus package they hope will come in early 2009.
The benefits go directly to people who spend it at local grocery stores, supporting businesses and jobs, said Vollinger of the Food Research and Action Center.
"They (the benefits) don't sit in a pocket," she said, pointing to USDA estimates that $5 in food stamp spending generates $9 in economic activity.
http://www.reuters.com/article/domesticNews/idUSTRE4B28CB20081203

Eeyore's News and View

Water is one of things that you have to have to live, and it is a percious commodity, and people will do what ever they have to do to get it. That could happen here. You need to think about alternate ways to secure drinking, bathing, cleaning and cooking water if the electricity went out for a few days or longer. You might want to review the Water Prep Talk i did several weeks ago.
Mob runs riot as Zimbabwe runs out of water
Water supplies to residents in Harare were cut by the authorities yesterday as Zimbabwe’s cholera epidemic tightened its grip and the city witnessed its worst unrest for a decade.
The Zimbabwe National Water Authority turned off the pumps in the capital after it ran out of purifying chemicals. With cholera cases soaring above 11,000 across the country, and an anthrax outbreak ravaging the the countryside, David Parirenyatwa, the Health Minister, urged Zimbabweans to stop shaking hands to avoid spreading disease.
Companies and government offices, especially those in high-rise buildings, were sending workers home by midday as lavatories became blocked. “My office stinks and the toilet is a disgusting site,” said Mary Sakupwene, a secretary. “I won’t go back until the water’s on again.”
The four-star Jameson Hotel stopped taking guests and other less exclusive ones closed. Restaurants provided buckets of water for hand-washing and flushing. There was a sharp increase in people turning up at the Harare Sports Club – served by boreholes – for their ablutions after their home taps ran dry. It notified members that from today they would be charged $US2 (£1.34) for a shower.

In Harare’s townships, some of which have been without water for two years, 20 litres of water from one of the thousands of backyard hand-dug wells can cost $1. All wells hold the danger of cholera. “What I am afraid of is now that the rainy season has come, the faeces lying in the bushes will be washed into shallow wells and contaminate the water,” said Mr Parirenyatwa.
The opposition Movement for Democratic Change (MDC) urged President Mugabe to accept international humanitarian help. “The country is reaching a catastrophic level, in terms of food, health delivery, education,” said Morgan Tsvangirai, the MDC leader. “Everything seems to be collapsing around us.”
The seething anger felt by ordinary Zimbabweans exploded yesterday as hundreds of off-duty soldiers went on the rampage in the centre of Harare. Witnesses said that the violence erupted at a bus depot on the edge of the city centre where soldiers, frustrated at not being able to draw cash from banks, confronted illegal moneychang-ers. The dealers scattered and the soldiers turned on the city, followed by civilians spurring them on.
The mobs stoned cars and looted shops. In the panic, home-bound workers fled and traffic jammed as motorists tried to turn back from the scene.
It was the first serious public unrest since the riots over food price increases ten years ago. The disturbance brought a swift and brutal response from the authorities who swamped the area with heavily armed para-military police and troops. At least one man was shot.
http://www.timesonline.co.uk/tol/news/world/africa/article5269909.ece

Delinquent Mortgages Set to Nearly Double in 2009
The number of consumers with delinquent mortgages is poised to almost double by the end of next year, hitting its highest level in at least 16 years, according to a leading credit bureau.
TransUnion LLC, which analyzed about 27 million consumer records in its database, predicted that the proportion of consumers with mortgages that are 60 days or more past-due will hit 7.17% in the fourth quarter of 2009.
That would be the highest level reached since the Chicago credit bureau -- which is releasing the data on Tuesday -- first started tracking ... (Get the rest here)
http://online.wsj.com/article/SB122818894948271631.html

Starting Now: America’s Second Great Depression
by Martin D. Weiss, Ph.D. 12-01-08
On this first weekday after Thanksgiving, it’s time to take a moment, look at the changes swirling all around us and think about the tasks we must achieve together in the weeks ahead.
After more than six decades of growth, America is sinking into its Second Great Depression of modern times. The place is every home, business, and community.
The time is now.
America’s Second Great Depression is not a typical 20th century recession that happens to strike a bit harder or linger somewhat longer. Nor is it merely a fictional scenario conjured up by economists with a murky crystal ball.
America’s Second Great Depression is the probable consequence of a great housing bust, a massive mortgage meltdown and the biggest financial crisis in history.
It promises to bring the worst wave of bankruptcies, job losses and wealth destruction any citizen under 90 has ever experienced.
It challenges the smartest minds in Washington, defies the deepest pockets on Wall Street and threatens to rip through our life with the force of a Cat-5 hurricane. And yet, among all those making the decisions that could forever change our future, no one has personal experience with a similar episode.
I don’t either. I was born in 1946, just as we were leaving the final vestiges of America’s First Great Depression behind. I’ve studied that historic period with books, charts and numbers, but that’s not the same thing. I’ve lived in Brazil and Japan during tough times, but that, too, was different.
What brings me closer to a visceral understanding of this crisis is the half century I shared with my father, J. Irving Weiss, one of the few economists who not only advised investors during the First Great Depression, but actually predicted it.
Dad was so proud of that unusual feat, he began telling me stories about it when I was just five years old. Vicariously, I lived through the Roaring Twenties, the Crash of ‘29, the massive bank failures of the 1930s, and the many years of human suffering that ensued. Through Dad’s teachings, I felt as though I was there with him when investors lost fortunes, when we hit rock bottom in 1933, when we eventually recovered and brand new fortunes were made. Dad was not only a loving father, but also my mentor, partner and best friend.
I wish he could be here today to write to you directly and help you get through these tough times personally. But as soon as I was old enough, I helped him write his investment reports; and in 1971, soon after I founded Weiss Research, he helped me write mine. Although he’s gone, I can feel his vibrant energy and calming spirit beside me; and from time to time, I will let him speak to you posthumously here in Money and Markets.
Think of this message you get from me each Monday as co-authored by the two of us. He will tell you about his experiences and analysis during America’s First Great Depression; I will tell you what it means for America’s Second Great Depression and what you can do about it. A lot has changed since then. What hasn’t changed is my family’s passionate desire to help you through it.
This entire effort is the culmination of eighty-four years of research, beginning when Dad first went to Wall Street in 1924 to learn everything he could about money.
Five years later, when the great crash struck, he did not own any stocks. His parents were recent immigrants from Eastern Europe with barely enough to keep food on the table. He had to save everything he earned, bring it home and give it to his mother. He knew how real estate had collapsed in Florida, and he saw how America’s farms were in disarray. He didn’t want to gamble his hard-earned savings on another bubble.
After the crash, the stock market rallied for almost six months, and nearly everyone on Wall Street thought the crisis was over. But Dad persuaded his clients and friends to sell everything, get the heck out of the market, and pile up as much cash as they could. He was so convinced the market would fall again, he even borrowed $500 from his mother to sell short — to take a crack at profiting from the market’s decline.
Sure enough, the Crash of ‘29 was just the opening act of the great bear market. All told, from its peak in 1929, the Dow Jones Industrials Average fell 89%. Compared to the Dow’s peak in 2007, that would be tantamount to a plunge of more than 12,600 points — to a low of approximately 1500. Dad explains it this way:
“In the 1930s, at each step down the slippery slope of the market’s decline, Washington would periodically announce some new initiative to turn things around. President Hoover would give a new pep talk promising ‘prosperity around the corner.’ And often, the Dow staged dramatic rallies — up 30% on the first round, 48% on the second, 23% on the third, and more. Each time, I sought to use the rallies as selling opportunities. I persuaded more of my clients to get rid of their stocks and pile up cash. I even told them to take their money out of shaky banks.
“On the surface, it might have appeared that just sitting out the crisis got you nowhere. Actually, though, it was a great strategy for building wealth. Prices were falling — on homes, on automobiles, on almost everything. So the more prices fell, the more your money was worth. Just by saving money, stashing the cash, keeping your job and going about your daily life, you were building wealth. You didn’t have to know about investing. All you needed to figure out was how to protect yourself from the bad times. Then, when we hit rock bottom — that was the time to start buying real estate, stocks or bonds.
“The end of the entire decline came with two events: The inauguration of our new president, Franklin D. Roosevelt, and the national banking holiday he declared on his third day in office. But after three years of panics and crashes, most people greeted those events with dread. They thought it would be the beginning of another, even steeper slide. Some people even said it was the final chapter of capitalism itself. As it turned out, that was precisely the right time to pick up some of the greatest bargains of the century and make a lot of money.”
Helping people make money was Dad’s profession, but his passion in life went far beyond money; he was a man of deep empathy and feeling for his fellow man. When others suffered, he suffered along side them. He gave them jobs, bought them meals and offered an abundance of free advice
Most of all, he did not want to see America go through another depression ever again. His vision for accomplishing that goal, however, was different from that of most economists in the post-Depression era. Their strategy was to yank the economy out of nearly every slump and slumber, forever seeking to keep the economy growing, always bailing out major institutions that failed. His philosophy was moderation in both directions. “The only way to avoid the pain of a great bust,” he wrote, “is to refrain from the excesses of a great boom.”
I agree, and in the coming weeks, I’ll explain why. Plus, I’ll show you how you can use a similarly moderate approach to secure your own future.
A better future was also something Dad sought to secure for the country as a whole, in his own personal way. In 1955, for example, a Florida junk dealer sought to take over one of America’s largest cash-rich companies to force it to borrow money and grow more quickly. In response, Dad mobilized like-minded executives from all over the country and, in one of the greatest corporate battles of that era, successfully blocked the takeover. Similarly, in 1959, when the U.S. federal deficit seemed to be growing out of control, he formed the Sound Dollar Committee, organized a grassroots movement of an estimated 11 million citizens, and helped President Eisenhower give America its last truly balanced budget.
Today, I am Chairman of the Sound Dollar Committee; and separately, I am the cofounder of the Financial Publishers Association, representing over 14 million investors. My primary goal, like Dad’s, is to do my small part to help head off the avoidable consequences of another depression.
Right now, our country’s finances have deteriorated too far to balance the federal budget anytime soon. But it’s not too late to avoid some major financial blunders that could seriously weaken our country for the rest of the century. Even in the worst-case scenario, it is certainly not too late for you to protect your savings, boost your income and grow your wealth.
How long could the depression last? How much further can home prices fall? How far down will the stock market go? Will it be as bad as the 1930s? At this juncture, you can count on your fingers the number of serious analysts who believe that’s even a remote possibility. And yet, stranger things have already happened, including the largest bank and insurance company collapses of all time. Before he passed away, Dad expressed it this way:
“Most Americans — especially the youngsters who manage billions of dollars on Wall Street — have no concept of the power and speed of a great stock market crash. They’ve never lived through one. So it’s hard for them to visualize it. In 1929, people were jumping out of windows and one-time wealthy people were selling apples on street corners. The shock waves reached into almost every office and every home in the country and in the world. Next time, it could be just as bad, or even worse.”
Trouble is, there are no historical precedents for what’s happening in this era. Any forecasts I make today, no matter how well researched, are not nearly as valuable as the awareness you will have of current events as they unfold in real time. So rather than pick a number for the bottom in the Dow or guess the low price of an average home, my primary purpose is to help give you the understanding you need to make some major decisions right now and then adjust them as the crisis unfolds.
Your immediate task, which may seem hard, is actually very simple — get your money to safety.
Your second task, which may seem easy, could actually be more difficult — wait patiently.
But it’s the last step that will be the most rewarding — when real estate, stocks and bonds are near a true bottom, reinvest in America and greatly improve your life for years to come.
Over the next few weeks, I will show you how. I will give you the warning signs to watch out for while things are still falling; I will describe the kinds of conditions that are likely to prevail when we’re near a bottom; and I will provide step-by-step instructions on precisely what to do.
Surviving the crisis on Wall Street and Main Street is not rocket science. You don’t have to forecast the future. You don’t even need investing experience. All you need is the courage to get out of its way and the patience to stay out of its way for the duration.
The simple secret is to throw out your prejudices, start with a clean slate and then follow your own common sense. Right now, that means taking a cold, hard look at the events swirling around you and recognizing that your money could be in grave danger.
It means accepting the reality that the value of your home, your 401k, and even some of your supposedly “safe” investments CAN fall a lot further. And most important, it requires the realization that you have the power to stop the bloodletting.
There’s no law, rule or ethic that requires you to sit quietly and accept financial punishment passively. You have every right — and every mechanism — to get your money to safety without remorse.
I have warned about this crisis repeatedly. I have nagged, cajoled and shouted this message from the rooftops. But it gives me no pleasure to see my dire warnings come true. I have dreaded this day as often as I have predicted it. I prayed it would not come to pass. But now that it’s here, I have a new prayer:
That you are, or soon will be, out of danger and ready for the worst …
That the worst will strike swiftly and end swiftly …
That, once we hit bottom, no matter how ugly the future may appear, you, me and many others will have the fortitude to reinvest, help get our country back on its feet, and move on to better times.
Just promise me one thing: No matter how dark this tunnel may seem, never forget it is not the end of the world. Our country has been through worse before, and we survived. We will survive this crisis too.
You hold your future in your hands. At this landmark turning point in our history, it’s the choices you make today that will determine your fate — and the destiny of everyone that depends on you — for decades to come. Your decisions now could make the difference between a successful career or a lifetime of struggle … retiring in dignity or becoming a ward of the state … enjoying wealth and health or risking poverty-stricken illness.
Whatever your choices may be, do not procrastinate. And whenever you take action, don’t do so in haste. Your response to the current crisis — or any new crisis that may ensue — should be both prompt and planned; both bold and prudent. I write to you each week to help you make that possible.
Here are your tasks in a nutshell:
Your first and most urgent priority is to survive the depression, while building the biggest pile of CASH you can. Whether it’s a molehill of pennies that you pinch from daily sacrifices or a mountain of dollars you squeeze out of asset sales, the more cash you can accumulate now, the better.
Your second priority is to make sure your cash is in the safest place possible. That may not be the nearest bank or the biggest insurance company. Short-term Treasury securities, despite their low yield, must be the primary vehicle.
Third, for the duration of this crisis, plus any new ones that may strike, your best friend and companion will be patience.
Don’t yield to the temptation of so-called “bargains” and “big discounts” from peak prices. Many of those peak prices were a fiction from a bygone era that may never be seen again in my lifetime or yours.
Don’t jump in too soon. You can afford to wait. Indeed, just by waiting patiently, you can build wealth tremendously.
Fourth, I recognize that not everyone is able to follow all my instructions to the letter.
You may have real estate you cannot sell or a pension fund beyond you cannot control.
You may have bonds that have no market or a business that continues to provide income.
All could be assets that you must keep; and yet, at the same time, all are assets that could be vulnerable to big losses in a continuing decline.
To untie that knotty dilemma, you may need a hedge — a protective shield that can help offset your losses. Alternatively, if you are a risk-taker, those same hedges can be turned into pure profit opportunities during a market decline. I hope you have already read and acted on the guide to hedging I sent you a while ago. If not, the latest rally in the market gives you a great time to start. (Click here to download the pdf file.)
Last, the big pay-off will come when we hit rock bottom and it’s time to buy the greatest bargains of the century. So recognizing the bottom can unlock the opportunity to boost your income, allowing you to buy some of the best assets in the world for a pittance and stake out the high ground for yourself, your children and generations to come. I will do my utmost to alert you when the time comes.
Just remember that nothing is predetermined. Right now, the tsunami of crisis seems unstoppable. But in the foreseeable future, there will also come a singular moment in time when the worst of the storm has passed and the tides of history have ebbed, opening a window for you, me and our leaders to choose our own destiny. Before then, let’s have a serious discussion about what the best — and worst — choices may be.
Good luck and God bless!
Martin
http://www.moneyandmarkets.com/starting-now-americas-second-great-depression-3-28428

Fractional Reserve Banking a.k.a. Counterfeiting
Wednesday, November 26, 2008 - Vol. 10, No. 282
Today's comment comes from A-Letter Editor Matthew Collins and is the latest in a series of ‘Lies' reports, supplements to Sovereign Society Chairman John Pugsley's special "Lies" report.
Your bank is a counterfeiter, as facilitated by the Federal Reserve System and permitted by the government that allegedly represents you.
The lie of fractional reserve banking is at the heart of our ‘banking' system. And its acceptance as fact or necessity by the world's populace is the basis on which most other economic lies and myths gain so much credibility.
To understand why we're in so much trouble right now, and why the privately owned Federal Reserve Banks are to blame, one must understand fractional reserve banking, and why it amounts to little more than counterfeiting.
King Edward II, Goldsmiths and "Legal" Counterfeiting
For all of history through the 1800s, goldsmiths were the world's primary bankers. It made sense in those hard money days to keep your gold with the fellow who molded it into coins and acted as the community's central cash register.
So here we have the goldsmiths...guardians of bullion and protectors of everyone's wealth. I've personally always seen this as the primary function of a bank.
But just guarding money and issuing certificates for it...I suppose it just didn't pay as well as it could. That and you always end up with a huge pile of cash (gold) that's just sitting around and not really doing anything other than backing promissory notes. So the goldsmiths got crafty, and at this point they became the bankers we know today.
They started issuing more certificates than they could back in gold, allowing them to collect interest on the physical gold collecting dust in their shop...gold that already belonged to someone else. But weren't there already certificates attached to that gold? Of course. But the bankers believed those certificates wouldn't all be cashed in at the exact same time, so they could get by and no one would ever be the wiser.
This is the critical point in our story, and at few points in history has the difference between right and wrong been so very clear.
The value of goldsmith's notes was in the gold behind them. So when they issue a new note backed by...well backed by nothing other than the supposition that they'd have enough inventory to pay it off if it fell through...they were engaging in wishful thinking, at best. Ladies and gentlemen, I give you irrational exuberance. At the very core of our banking system.
But how could the goldsmiths get away with such blatant counterfeiting? Didn't anyone realize that they were pulling wealth from thin air, that they were trading worthless notes for valuable goods? Well, the governments knew. Why didn't they do anything to stop the goldsmiths?
Put clearly; it wasn't in the interest of the world's ruling monarchs to stop them. King Charles II of England had his own con game going with the bankers...one where they traded him physical gold for sticks of wood (I'm not kidding at all...we'll be covering government debt next week.)
So by complying with the government's con games and ponzi schemes, the goldsmiths earned themselves a back-scratching from the world's monarchs, received in the form of Fractional Reserve Banking.
The Whole World Falling for the Same Tricks...500 years later
And so we arrive at the modern-day. The Dollar is the world's reserve currency, making us in some sense the world's goldsmith. And we have a Federal Reserve System - composed of privately owned member banks - that represents how cloudy and convoluted the relationship between governments and banks has become in the last half-millennium.
But somehow, the world economy keeps falling for the same scam.
You see, the Federal Reserve controls not only the interest rate at which banks are allowed to lend, but the fractional reserve ratios they're required to keep (as a percentage of their reserves).
Let's backpedal for a second here...make it even simpler. An institution composed of banks and their representatives is in control of not only our money supply, but the amount of new money (in the form of loans issued) that banks are allowed to ‘counterfeit' and the interest they're required to charge on those conjured-from-nowhere dollars.
Interest rates - when the decision is left to the borrower and the lender - represent the time preferences and assumed risk of borrower and lender. Like the price of any other good, the interest rate of a loan ideally represents a compromise for both parties in terms of time and risk.
But when the government intervenes with a mandated interest rate (like Greenspan's sub-zero "liquidity experiment") those decisions to lend and borrow are often made with little or no consideration to time and risk. Since the money is cheap, free, or the government might even be paying you to take it, incentives are changed across the board.
And then fractional reserve banking comes in. Since the banks only have to keep a percentage of their reserves - a ratio set by an institution they own...making them essentially self-governing - these ridiculously low interest rates spur the banks into a lending frenzy.
Lending to and from each other, commercial interests and private parties, the banks go hog-wild. Without the restraint of reasonable lending costs, they lend as much credit against your money as humanly possible, flooding the economy with fresh dollars that never existed before.
Euphoria takes over. Of course housing prices will continue to go up when the pool of dollars chasing those houses is growing so rapidly...that's just common sense. But many of us bought into it, in some way or another. And that's what makes the coming correction so painful.
The M3 Chart: Ever wonder why the government dropped it a few years ago?
Because of the one-two punch of mandated interest rates and fractional reserve banking, an epic amount of bad business decisions are inevitably made. That's a simple truth of economics...no matter who tries to ignore it.
But what can I do?
Well, it's pretty easy actually. Just don't believe all the hype, take everything with a grain of salt, and make your own decisions. I'm not telling you to protest at your local federal reserve bank, I'm just saying you should use reason and that you shouldn't take most things at face value.
Like when the keepers of our national pocketbook - and thereby our national sovereignty - are run by the very banks they're supposed to govern, and those banks (whose original purpose was to guard the money of the people) have a balance sheet that looks like this:

You should be asking questions.
When our government gives a US$25 Billion bailout to Citigroup, and then the company's market capitalization is listed at around US$20 Billion shortly before the company is taken over...you should certainly be asking questions.
When Detroit's CEOs fly to Washington in separate luxury jets, and they beg for US$75 Billion in bailout money for companies with a combined market capitalization of less than US$10 Billion...you should be asking questions.
There's a heist going on out there...and plans are afoot. Through the careful control of information sources, those in power can control the actions of the masses. But you don't have to be a part of the masses.
To make the difference and speak out on the part of personal sovereignty, The Sovereign Society's Chairman John Pugsley has assembled this comprehensive report to tell you about a few of their most dangerous and pervasive of lies. I urge you to have a look.
Regardless of whether you voted for the current President. Regardless of whether or not you like or even trust our country's political and economic systems. You need to give this special information enough of your time to understand the grim situation you could be facing. Not just for your sake, but for the sake of the Sons & Daughters of America, now being laden with years and years of debt.
MATT COLLINS, A-Letter Editor

UN economists warn that dollar is in for a hard landing next year
By Harvey Morris at the United Nations
Published: December 1 2008 02:00 Last updated: December 1 2008 02:00
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published today, the economists say the dollar's sharp rebound this autumn has been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
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http://www.ft.com/cms/s/33f5d15a-c010-11dd-9222-0000779fd18c,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F33f5d15a-c010-11dd-9222-0000779fd18c.html%3Fnclick_check%3D1&_i_referer=http%3A%2F%2Fwww.survivalblog.com%2F&nclick_check=1

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

Eeyore's News and View

Asian markets fall on outlook for China, U.S.
SEOUL (AP) — Most Asian stock markets fell Monday on signs that the U.S. holiday shopping season got off to a tepid start over the key Thanksgiving weekend. Major European markets opened lower.
Investors seemed to want a breather to reassess after rallies in global markets last week, including the first five-day advance for Wall Street since July 2007. Some traders wanted to hold back ahead of the Institute for Supply Management's November manufacturing survey due later Monday for further clues about the strength of the U.S. economy, a vital export market.
Investors are bracing for more bad news about the U.S. economy, said Tsuyoshi Nomaguchi, a strategist for Daiwa Securities in Tokyo.
"They aren't sure what they're supposed to do at this point," he said.
India's benchmark Sensex index reversed early gains, falling 2.9% to 8,829.76 in the wake of the terrorist attacks in Mumbai that left 172 people dead.
In Tokyo, the benchmark Nikkei 225 stock average lost 115.05 points, or 1.4%, to close at 8,397.22 after advancing 7.6% last week. Investors sold exporters as the yen strengthened, which erodes their overseas earnings.
Markets in South Korea, Australia and Singapore also fell.
Bucking the trend were Hong Kong and mainland China, where key indices rose on expectations of further measures by the Chinese government to boost the economy after last month's big interest rate cut and anouncement of a multibillion dollar stimulus package.
Hong Kong's Hang Seng index closed up 220.60 points, or 1.6%, to 14,108.84, continuing its rally from last week, when it rose nearly 10%. China's Shanghai Composite index gained 1.3% to 1,894.61.
"These are the appetizers of a full meal," said Winson Fong, managing director at SG Asset Management in Hong Kong, which overseas about $3 billion in equities in Asia, referring to those earlier measures. "It's not the end."
Early reports from the U.S. showed modest gains in retail sales on Black Friday — the traditional start of the American holiday shopping season — but business appeared to fall off during the rest of the weekend, at least according to some accounts, and analysts said crowds were thinner than last year. Also, sales gains seemed to come at the expense of profits as companies slashed prices to lure shoppers.
Investors around the world are paying close attention to the weekend sales figures for clues on the strength of the American economy, a vital export market.
According to preliminary figures released Saturday by ShopperTrak RCT, a research firm that tracks total retail sales at more than 50,000 outlets, sales rose 3% to $10.6 billion on Friday from the same day a year ago. A more complete sales picture of how the Thanksgiving shopping weekend fared won't be known until Thursday when the nation's retailers report November same-store sales, or sales at stores opened at least a year.
"We don't know if it's driven by sales or if U.S. consumers are getting their confidence back," said SG Asset Management's Fong.
As trading opened in Europe, the FTSE 100 index of leading British shares fell 1.5% at 4,225.49. Germany's DAX was 1.8% lower at 4,584.37 and France's CAC-40 slipped 1.4% to 3,216.44.
Stocks in Thailand reversed early gains as investors weighed prospects that the country's political crisis will be resolved soon. Anti-government protesters have occupied Bangkok's two main airports for nearly a week, cutting off air freight, stranding tourists and crippling the economy. The benchmark SET index was down 1.7% at 394.80.
U.S. stock futures were down, suggesting Wall Street would open lower Monday. Dow futures were down 142 points, or 1.6%, to 8,678, and S&P futures were down 17.7 points, or 2%, to 878.1.
Oil prices fell to below $52 a barrel after OPEC declined to cut production at an informal meeting in Cairo on Saturday. Light, sweet crude for January delivery was down $2.54 to $51.89 a barrel in electronic trading on the New York Mercantile Exchange in mid-afternoon in Singapore.
In currencies, the dollar declined to 94.21 yen from 95.48 in New York late Friday. The euro fell to $1.2645.
http://www.usatoday.com/money/markets/2008-12-01-global-markets-monday_N.htm

Britain thinking of joining euro: Barroso
Britain is considering joining the eurozone as a direct consequence of global financial turmoil, European Commission President Jose Manuel Barroso said Sunday.
"We are now closer than ever before. I'm not going to break the confidentiality of certain conversations, but some British politicians have already told me: 'If we had the euro, we would have been better off'," Barroso told a weekly French news programme, referring to the fall in the pound's value since markets and liquidity meltdown earlier this year.
"The British have an enormous quality, one of many, that is they are pragmatic," he said on the panel of a joint RTL-LCI radio and television broadcast. "This crisis has emphasised the importance of the euro, and also of Britain," he added.
"I don't mean this will happen tomorrow, I know that the majority (of British people) are still opposed, but there is a period of consideration underway and the people which matter in Britain are currently thinking about it," the former Portuguese prime minister said.
Barroso pointed to the case of Denmark, another EU state which has so far refused to accept the euro but is now planning another referendum on the single currency. The Danish voted against joining in 2000.
http://www.breitbart.com/article.php?id=081130204959.yq2a770m&show_article=1

Iran proposes nuclear plants with Arab countries

TEHRAN, Iran (AP) — Iran's official news agency says Tehran has proposed building joint light-water nuclear power plants with neighboring Arab countries.
Sunday's IRNA report quotes the head of the Atomic Energy Organization of Iran, Gholam Reza Aghazadeh. He says Iran is ready to offer a proposal to Arab countries if they are interested.
Iran's Arab neighbors have been suspicious of the Persian country's controversal nuclear program, and several Arab countries have announced plans to develop their own nuclear programs.
The U.S. and some of its allies claim Iran is secretly seeking to develop nuclear weapons — a charge Tehran denies.
Iran is building its first nuclear power plant with Russia's help. It is slated to open in 2009.
http://www.google.com/hostednews/ap/article/ALeqM5jG7bnyWWJfgaYD-JwcqmImlpRujwD94P5OBG0

Choice for U.N. Backs Strong Action Against Mass Killings
CHICAGO — President-elect Barack Obama has chosen his foreign policy adviser, Susan E. Rice, to be ambassador to the United Nations, picking an advocate of “dramatic action” against genocide as he rounds out his national security team, Democrats close to the transition said Sunday.
Mr. Obama intends to announce Ms. Rice’s selection at a news conference here Monday along with his previously reported decisions to nominate Senator Hillary Rodham Clinton for secretary of state, keep Robert M. Gates as defense secretary and appoint Gen. James L. Jones, a retired Marine commandant, his national security adviser, the Democrats said.
The choice of Ms. Rice to represent the United States before the United Nations will make her one of the most visible faces of the Obama administration to the outside world aside from Mrs. Clinton. It will also send to the world organization a prominent and forceful advocate of stronger action, including military force if necessary, to stop mass killings like those in the Darfur region of Sudan in recent years.
To reinforce his intention to work more closely with the United Nations after the tensions of President Bush’s tenure, Mr. Obama plans to restore the ambassador’s post to cabinet rank, as it was under President Bill Clinton, according to Democrats close to the transition.
While the cabinet consists of 15 department heads, a president can give other positions the same rank for the duration of his administration.
“She’s obviously one of Obama’s closest advisers, so it underscores how much of a priority he’s making the position,” said Nancy Soderberg, a senior United States diplomat at the United Nations under Mr. Clinton. “If you look at the last eight years, we obviously need to be more engaged at the U.N. and realistic about what the U.N. can do.”
At Monday’s announcement, the president-elect will also formally unveil his nominations of Eric H. Holder Jr. to be attorney general and Gov. Janet Napolitano of Arizona to be secretary of homeland security, the Democrats said. He will not announce any of the top intelligence appointments on Monday, but the Democrats said they expected him soon to name Adm. Dennis C. Blair, a retired Pacific Fleet commander, as director of national intelligence.
If confirmed, Ms. Rice at 44 would be the second-youngest ambassador to the United Nations. A Rhodes scholar who earned a doctorate in international relations at Oxford University, she joined Mr. Clinton’s National Security Council staff in 1993 before rising to assistant secretary of state for African affairs at age 32. When Mr. Obama decided to run for president, she signed up as one of his top advisers, much to the consternation of the Clinton camp, which resented what it saw as a defection.
As the ambassador at the United Nations, Ms. Rice will have to coordinate with Mrs. Clinton, but will not be in the White House or at State Department headquarters on a daily basis as major policies are formulated. One person close to Mrs. Clinton said the senator did not object to Ms. Rice serving at the United Nations.
Some colleagues from her Clinton and Obama days said Ms. Rice can be blunt and unafraid to “mix it up,” as one put it, on behalf of issues she cares about. Ms. Rice herself acknowledges a certain impatience at times.
Admirers said she is a good listener and able to stand up to strong personalities, including foreign autocrats and militants in volatile regions of the world.
“Susan certainly is tough, and she’s tough in exactly the right way,” said Strobe Talbott, a former deputy secretary of state and now president of the Brookings Institution, where Ms. Rice has worked in recent years. “She’s intellectually tough, she’s tough in her approach to how the policymaking process should work and she will be very effective as a diplomat.”
John R. Bolton, who was one of Mr. Bush’s ambassadors at the United Nations, would not discuss Ms. Rice’s selection, but said it was unwise to elevate the position to the cabinet again.
“One, it overstates the role and importance the U.N. should have in U.S. foreign policy,” Mr. Bolton said. “Second, you shouldn’t have two secretaries in the same department.”
During her first run at the State Department, Ms. Rice was a point person in responding to Al Qaeda’s 1998 bombing of United States Embassies in Kenya and Tanzania. But her most searing experience was visiting Rwanda after the 1994 genocide when she was still on the N.S.C. staff.
As she later described the scene, the hundreds, if not thousands, of decomposing, hacked up bodies that she saw haunted her and fueled a desire to never let it happen again.
“I swore to myself that if I ever faced such a crisis again, I would come down on the side of dramatic action, going down in flames if that was required,” she told The Atlantic Monthly in 2001. She eventually became a sharp critic of the Bush administration’s handling of the Darfur killings and last year testified before Congress on behalf of an American-led bombing campaign or naval blockade to force a recalcitrant Sudanese government to stop the slaughter.
Jerry Fowler, president of the Save Darfur Coalition, praised the pending Rice nomination on Sunday, calling it a powerful sign of the new president’s interest in the issue. The coalition is urging Mr. Obama to begin a “peace surge” of sustained diplomacy to address the continuing problems in Sudan.
“It sends a very strong signal about his approach to the issue of Sudan and Africa in general,” Mr. Fowler said. Ms. Rice will be joining a high-powered team on stage with Mr. Obama on Monday, most notably Mrs. Clinton.
The two rivals from the polarizing battle for the Democratic presidential nomination will seal their reconciliation with Mrs. Clinton’s nomination to head the State Department.
At a time when the country remains engaged in two wars and still faces the threat of international terrorism, Mrs. Clinton will anchor a national security team with more of a centrist character than some of Mr. Obama’s liberal supporters once hoped to see.
Some critics have pointed out that the team represents experience rather than the change Mr. Obama promised. But it also drew praise from across the aisle.
“The triumvirate of Gates, Clinton and Jones to lead Obama’s national security team instills great confidence at home and abroad and further strengthens the growing respect for the president-elect’s courage and ability to exercise sound judgment in selecting the best and the brightest to implement our nation’s security policies,” said Senator John W. Warner of Virginia, a former chairman of the Armed Services Committee.
http://www.nytimes.com/2008/12/01/us/politics/01rice.html?ref=us

The Donald in trouble? The following two articles give an indication that he might be
Trump Sued Over Chicago Tower Top lender accuses developer of missing loan deadline
Ring the bell. Looks like Donald Trump and his lenders will go another round in their financing fight at the Chicago high-rise.
The lead lender on the Trump International Hotel & Tower is suing Donald Trump, seeking to collect on a $40-million personal guarantee the developer made on the 92-story structure, according to Crain's.
Citing chicagorealestatedaily.com, Crain's said Deutsche Bank Trust Co. Americas filed the suit Friday in Manhattan's New York state court, alleging Trump didn't pay off a remaining $334.2 million loan due on Nov. 7 to Deutsche Bank and its syndicate of lenders.
Earlier this month, Trump filed his own suit against Deutsche Bank and its syndicate, accusing them on not allowing an extention of a Nov. 7 deadline of the $640-million loan for the project.
http://www.nbcchicago.com/around_town/real_estate/Trump-Sued-Over-Chicago-Tower.html
Trump Entertainment to miss interest payment
CHICAGO (MarketWatch) -- Facing tough competition and sliding revenue amid the economic meltdown, Trump Entertainment Resorts will have to skip a $53.1 million interest payment scheduled for Monday on its 8.5% senior secured notes due 2015 in order to maintain sufficient liquidity.
The Atlantic City, N.J., casino operator, with about $1.25 billion worth of the notes outstanding, said late Friday that it has a 30-day grace period to pay up and will meanwhile seek talks with its lenders to revamp its capital structure and improve its liquidity.
A panel of independent directors will oversee the talks, the company said.
If it doesn't make the payment in the 30-day grace period, Trump Entertainment said, holders of a quarter of the notes and lenders under a $490 million senior secured loan to a company subsidiary will be able to accelerate the maturities of those obligations.
Donald Trump, the television personality and New York real estate investor, is non-executive chairman and the largest shareholder of Trump Entertainment (TRMP:
trump entmt resorts inc com
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TRMP 0.31, +0.02, +6.9%) , which operates three Atlantic City casinos: The Trump Taj Mahal and the Trump Plaza on the Boardwalk and the Trump Marina in the Marina district. The last is being sold to Coastal Development for $270 million in a deal that has seen the price lowered and the closing deadline delayed.
Trump Entertainment "is separate and distinct from Mr. Trump's privately held real estate and other holdings, which the company understands encompasses substantially all of his net worth," the company said.
After his casinos twice ran into bankruptcy, Trump was removed from having any operating role in them as part of the deal that brought the company out of Chapter 11 the last time around.
And it could happen again: Earlier this month, Fitch Ratings warned that after the company drew a remaining $25 million available on its credit facility this quarter to help fund an expansion, "it will have little to no access to committed external funds."
The ratings agency also said that "given Trump's heavy debt load and the expected operating pressure in Atlantic City over the next 12 months, it is crucial for Trump to close the Trump Marina sale in order to avoid a restructuring, in the absence of another transaction."
On Nov. 7, Trump Entertainment reported that it swung to a third-quarter loss of $139.1 million, or $4.39 a share, from a profit of $6.6 million, or 21 cents, in the year-earlier period. Continuing operations produced a loss of $3.49 a share against profit of 7 cents. Revenue fell 8.4% to $198.3 million.
The company cited slower consumer spending, competition from Pennsylvania, and a smoking ban as the primary factors in the latest results. The number of customers was relatively stable, but spending per person declined, the company said.
The company said then that it was controlling its costs and that its 21 top-paid executives had agreed to a 5% salary cut.
Shares of Trump closed at 31 cents Friday, giving the company a market capitalization of approximately $10 million. The stock price scraped as low as 25 cents earlier this month after trading near $6 this time last year.
http://www.marketwatch.com/news/story/story.aspx?guid=%7B7C187DC9%2DF04B%2D4225%2DA202%2D648889E4413E%7D&siteid=rss (also more on his Chicago deal)

Pentagon hires British scientist to help build robot soldiers that 'won't commit war crimes'
The American military is planning to build robot soldiers that will not be able to commit war crimes like their human comrades in arms.

The US Army and Navy have both hired experts in the ethics of building machines to prevent the creation of an amoral Terminator-style killing machine that murders indiscriminately.

By 2010 the US will have invested $4 billion in a research programme into "autonomous systems", the military jargon for robots, on the basis that they would not succumb to fear or the desire for vengeance that afflicts frontline soldiers.

A British robotics expert has been recruited by the US Navy to advise them on building robots that do not violate the Geneva Conventions.

Colin Allen, a scientific philosopher at Indiana University's has just published a book summarising his views entitled Moral Machines: Teaching Robots Right From Wrong.

He told The Daily Telegraph: "The question they want answered is whether we can build automated weapons that would conform to the laws of war. Can we use ethical theory to help design these machines?"

Pentagon chiefs are concerned by studies of combat stress in Iraq that show high proportions of frontline troops supporting torture and retribution against enemy combatants.

Ronald Arkin, a computer scientist at Georgia Tech university, who is working on software for the US Army has written a report which concludes robots, while not "perfectly ethical in the battlefield" can "perform more ethically than human soldiers."

He says that robots "do not need to protect themselves" and "they can be designed without emotions that cloud their judgment or result in anger and frustration with ongoing battlefield events".

Airborne drones are already used in Iraq and Afghanistan to launch air strikes against militant targets and robotic vehicles are used to disable roadside bombs and other improvised explosive devices.

Last month the US Army took delivery of a new robot built by an American subsidiary of the British defence company QinetiQ, which can fire everything from bean bags and pepper spray to high-explosive grenades and a 7.62mm machine gun.

But this generation of robots are all remotely operated by humans. Researchers are now working on "soldier bots" which would be able to identify targets, weapons and distinguish between enemy forces like tanks or armed men and soft targets like ambulances or civilians.

Their software would be embedded with rules of engagement conforming with the Geneva Conventions to tell the robot when to open fire.

Dr Allen applauded the decision to tackle the ethical dilemmas at an early stage. "It's time we started thinking about the issues of how to take ethical theory and build it into the software that will ensure robots act correctly rather than wait until it's too late," he said.

"We already have computers out there that are making decisions that affect people's lives but they do it in an ethically blind way. Computers decide on credit card approvals without any human involvement and we're seeing it in some situations regarding medical care for the elderly," a reference to hospitals in the US that use computer programmes to help decide which patients should not be resuscitated if they fall unconscious.

Dr Allen said the US military wants fully autonomous robots because they currently use highly trained manpower to operate them. "The really expensive robots are under the most human control because they can't afford to lose them," he said.

"It takes six people to operate a Predator drone round the clock. I know the Air Force has developed software, which they claim is to train Predator operators. But if the computer can train the human it could also ultimately fly the drone itself."

Some are concerned that it will be impossible to devise robots that avoid mistakes, conjuring up visions of machines killing indiscriminately when they malfunction, like the robot in the film Robocop.

Noel Sharkey, a computer scientist at Sheffield University, best known for his involvement with the cult television show Robot Wars, is the leading critic of the US plans.

He says: "It sends a cold shiver down my spine. I have worked in artificial intelligence for decades, and the idea of a robot making decisions about human termination is terrifying."

http://www.telegraph.co.uk/news/worldne ... rimes.html