Eeyore's News and View

Fed predicts economy will get worse
In the minutes from its last meeting, the central bank said it expects GDP to decline in 2009 and unemployment to rise into 2010.
By Chris Isidore, CNNMoney.com senior writer
Last Updated: January 6, 2009: 7:12 PM ET
NEW YORK (CNNMoney.com) -- The U.S. economy is likely to deteriorate further this year and unemployment will rise into 2010, according to the latest forecasts from the staff of the Federal Reserve.
This bleak forecast was presented to Fed policymakers when they met last month and lowered interest rates to near zero. Low interest rates are one key tool the central bank uses to try to spur economic activity.
According to the minutes from that meeting, the central bank is now predicting that gross domestic product, the broadest measure of economic activity, will fall in 2009.
"I think that the Fed is really very scared right now -- like everybody else -- and they want to pull out all the stops," said David Wyss, chief economist for Standard & Poor's.
The Fed indicated that most members at its meeting expected a slow recovery to begin in the second half of the year, but that unemployment would still rise "significantly" into 2010.
Employers cut 1.9 million jobs over the first 11 months of 2008, which took the unemployment rate up to 6.7%. The December report will be released by the Labor Department Friday and economists surveyed by Briefing.com expect a loss of 475,000 jobs and that the unemployment rate will rise to 7%, which would mark a 15-year high.
The Fed cited a multitude of problems dragging down the economy besides rising unemployment, including stock market declines, low consumer confidence, weakened household balance sheets and tight credit conditions. It said business spending is also likely to fall due to weak retail sales and the credit crunch.
In addition, some members of the Fed expressed concerns that the economy could worsen even more than currently expected.
"Meeting participants generally agreed that the uncertainty surrounding the outlook was considerable and that downside risks to even this weak trajectory for economic activity were a serious concern," the Fed said in the minutes.
If the current recession, which began in December 2007, lasts throughout 2009, that would make it the longest U.S. economic downturn since the Great Depression.
Wyss said he thinks there is now little debate among policymakers about the problems in the economy and the need to take unprecedented action.
"They're already jumping, they're just asking how high," said Wyss.
The minutes also showed that some Fed members are now more worried about the threat posed by deflation, or falling prices, than they are about inflation. Deflation can slow economic activity dramatically since it could lead to businesses to cut their production plans in the wake of lower prices.
The Fed also revealed more details about other moves it plans to make to boost the economy now that it has lowered rates as far as it can.
According to the minutes, the Fed anticipates completing previously announced purchases of $600 billion in debt and mortgage backed securities from firms such as Fannie Mae and Freddie Mac by the end of June 2009. The plan to buy back these securities has already helped to lower mortgage rates in recent weeks.
First Published: January 6, 2009: 2:24 PM ET
http://money.cnn.com/2009/01/06/news/ec ... /index.htm

Was this economic crisis planned?
Posted: January 07, 2009
1:00 am Eastern
Barack Obama's White House chief of staff, Rahm Emanuel, told business leaders assembled by the Wall Street Journal in November that the economic crisis facing the country is "an opportunity to do things you could not do before."
That has to be one of the most chilling statements I have ever heard uttered by an American political official in my lifetime.
It ranks right up there with the transparent arrogance of Clinton administration hotshot Paul Begala's July 1998 explanation of the use of executive orders by the president to go over the heads of Congress: "Stroke of the pen. Law of the land. Kinda cool."
But there was even more to this quote from Emanuel. He followed up that scary and yet candid statement with this: "You never want a serious crisis to go to waste."
Every so often, an insider among the power brokers in our establishment elite let's slip an extremely telling remark. I suspect Emanuel meant exactly what he said – though he probably wishes he could take it back.
Why is it that Emanuel and other members of the Obama administration seem downright giddy about the collapse of our economy? Could it be more than the fact that it led them to power? Do they believe they can use this crisis to push through unconstitutional, immoral and draconian anti-freedom measures that will help them maintain control and power under the cover of crisis?
And, if so, is it possible this dire economic calamity was at least partly engineered by insiders from the beginning – for the purpose of enriching the elite and turning the rest of us into serfs?
I'm beginning to open my mind to just such a possibility.
It is certainly not without precedent. Way back in 1928, Edward Bernays wrote in his work, "Propaganda," the following: "The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government, which is the true ruling power in our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of."
Is there any doubt in your mind there is at least some truth to that statement? Is there any doubt in your mind that we can see at least some truth in that statement in American society today?
Could we have been manipulated into this financial crisis for economic gain and political power for the few? Just do some serious reading about the Great Depression if you have any doubts.
Treasury Secretary Henry Paulson, who works so well with Republicans and Democrats alike, worked with Goldman Sachs for more than two decades before ascending to his government position – and taking a huge pay cut in the process. If anyone was in a position to be one of the architects of this disaster, it was he.
He earned some $800 million during his years with Goldman Sachs. Why does someone give up that kind of wealth to become a federal government bureaucrat? Is he, in fact, still doing the bidding of his former cronies at the expense of U.S. taxpayers today?
By the end of last month, Paulson and Fed Chairman Ben Bernanke had engineered loans, pledges and guarantees of more than $7.4 trillion to the financial elite that was responsible for creating the economic crisis in which we find ourselves today:
March 11: $200 billion in loans to financial institutions
March 16: $29 billion in loans to J.P. Morgan Chase
July 30: $300 billion housing bill
Sept. 7: $200 billion for the U.S. Treasury to assume Fannie Mae and Freddie Mac's debt
Sept. 16: $85 billion to AIG and $70 billion injected into the financial system
Sept. 19: $50 billion pledged to support Money Market funds
Sept. 29: $150 billion made available to U.S. banks and $330 billion made available to foreign banks
Oct. 3: $700 billion in Paulson's bailout package
Oct. 7: $1.3 trillion in purchase debt from companies
Oct. 8: $38 billion in additional loans to AIG
Oct. 14: $1.4 trillion in FDIC guarantees of interbank loans
Nov. 24: $20 billion loaned to Citigroup with the Treasury Department assuming responsibility for 90 percent of Citigroup's $306 billion in debt
Nov. 25: $600 billion in loans for mortgage-backed assets and $200 billion in loans for consumer-backed assets
There's likely a lot more of this on the way.
Is any of it working? Is the economy better off today than it was before this spending spree? If you want an answer, just try getting a loan.
I don't like conspiracy theories, but we sure have a lot of people in positions of power who see crises as opportunities.
They don't mean opportunities for you.
They mean opportunities for them.
http://worldnetdaily.com/index.php?fa=P ... geId=85438

Powerful Solar Storm Could Shut Down U.S. for Months
Damage to power grids and other communications systems could be catastrophic, the scientists conclude, with effects leading to a potential loss of governmental control of the situation.
The prediction is based in part on a major solar storm in 1859 that caused telegraph wires to short out in the United States and Europe, igniting widespread fires.
It was perhaps the worst in the past 200 years, according to the new study, and with the advent of modern power grids and satellites, much more is at risk.
"A contemporary repetition of the [1859] event would cause significantly more extensive (and possibly catastrophic) social and economic disruptions," the researchers conclude.
When the sun is in the active phase of its 11-year cycle, it can unleash powerful magnetic storms that disable satellites, threaten astronaut safety, and even disrupt communication systems on Earth.
The worst storms can knock out power grids by inducing currents that melt transformers.
Modern power grids are so interconnected that a big space storm — the type expected to occur about once a century — could cause a cascade of failures that would sweep across the United States, cutting power to 130 million people or more in this country alone, the new report concludes.
Such widespread power outages, though expected to be a rare possibility, would affect other vital systems.
"Impacts would be felt on interdependent infrastructures with, for example, potable water distribution affected within several hours; perishable foods and medications lost in 12-24 hours; immediate or eventual loss of heating/air conditioning, sewage disposal, phone service, transportation, fuel resupply and so on," the report states.
Outages could take months to fix, the researchers say. Banks might close, and trade with other countries might halt.
"Emergency services would be strained, and command and control might be lost," write the researchers, led by Daniel Baker, director of the Laboratory for Atmospheric and Space Physics at the University of Colorado in Boulder.
"Whether it is terrestrial catastrophes or extreme space weather incidents, the results can be devastating to modern societies that depend in a myriad of ways on advanced technological systems," Baker said in a statement released with the report.
Stormy past
Solar storms have had significant effects in modern time:
— In 1989, the sun unleashed a tempest that knocked out power to all of Quebec, Canada.
— A remarkable 2003 rampage included 10 major solar flares over a two-week period, knocking out two Earth-orbiting satellites and crippling an instrument aboard a Mars orbiter.
"Obviously, the sun is Earth's life blood," said Richard Fisher, director of the Heliophysics division at NASA. "To mitigate possible public safety issues, it is vital that we better understand extreme space weather events caused by the sun's activity."
"Space weather can produce solar storm electromagnetic fields that induce extreme currents in wires, disrupting power lines, causing wide-spread blackouts and affecting communication cables that support the Internet," the report states. "Severe space weather also produces solar energetic particles and the dislocation of the Earth's radiation belts, which can damage satellites used for commercial communications, global positioning and weather forecasting."
Rush to prepare
The race is on for better forecasting abilities, as the next peak in solar activity is expected to come around 2012.
While the sun is in a lull now, activity can flare up at any moment, and severe space weather — how severe, nobody knows — will ramp up a year or two before the peak.
Some scientists expect the next peak to bring more severe events than other recent peaks.
"A catastrophic failure of commercial and government infrastructure in space and on the ground can be mitigated through raising public awareness, improving vulnerable infrastructure and developing advanced forecasting capabilities," the report states. "Without preventive actions or plans, the trend of increased dependency on modern space-weather sensitive assets could make society more vulnerable in the future."
The report was commissioned and funded by NASA. Experts from around the world in industry, government and academia participated. It was released this week.
http://www.foxnews.com/story/0,2933,478024,00.html

That cheap gasoline? Don’t get used to it
Analysts see scene being set for another set of oil price shocks next year
updated 8:32 a.m. ET, Wed., Jan. 7, 2009
HOUSTON - All that money you're saving these days at the gas pump? You might want to put it in the bank.
The same cheap oil that's providing relief to drivers and businesses in an awful economy is setting the stage for another price spike, perhaps as soon as next year, that will bring back painful memories of last summer's $4-a-gallon gas.
The oil industry is scaling back on exploration and production because some projects don't make economic sense when energy prices are low. And crude is already harder to find because more nations that own oil companies are blocking outside access to their oil fields.
When the world emerges from the recession and starts to burn more fuel again, and higher demand meets lower supply, prices will almost certainly shoot higher.
Some analysts say oil could eventually eclipse $150 a barrel, maybe even on its way to $200. In such a scenario, gasoline would easily cost more than the record high of $4.11 a gallon set last summer. Oil trades at about $50 today.
No one knows for sure, but some analysts say the spike could happen as soon as next year, perhaps in 2011 or 2012.
"I think those supply limits will come back to bite with a vengeance," said Sean Brodrick, a natural resources analyst at Weiss Research Inc.
High prices at the pump last summer — more than $4 per gallon for gas on average — helped slash demand for oil. From November 2007 to October 2008, Americans drove 100 billion fewer miles than the year before, according to government figures. The nation's biggest automakers lurched toward bankruptcy as sales of sport utility vehicles and trucks plummeted.
"We wouldn't be bailing out the automobile industry today ... had we not had this crazy situation with oil prices," said Daniel Yergin, chairman of Cambridge Energy Research Associates, a consulting firm, and author of "The Prize," the Pulitzer Prize-winning history of the oil industry.
Oil giants like Exxon Mobil, Chevron and ConocoPhillips have yet to announce their 2009 capital spending plans, but analysts say even the cash-rich companies are likely to shelve some projects.
Already, Royal Dutch Shell has postponed a near-doubling of production in Canada's oil sands — an operation that analysts say only makes economic sense when oil is about $20 a barrel more expensive than it is now. Marathon Oil says it expects to cut capital spending by 15 percent in 2009.
Brodrick said canceled or postponed oil and gas projects could contribute to a drop of 7 percent or more in global oil production this year.
Smaller oil producers could cut spending by 30 percent, said Oppenheimer & Co. analyst Fadel Gheit. The majority of U.S. crude and natural gas is supplied by smaller, independent companies, not the Exxons and Chevrons, and smaller producers have been forced to pull back because of frozen credit markets.
All this comes as the Organization of Petroleum Exporting Countries, which controls about 40 percent of world crude supplies, embarks on its biggest single production cut ever.
It adds up to another round of price shocks for consumers that's probably inevitable, said Bruce Vincent, president of Houston-based Swift Energy Co., an independent producer.
"Demand will start growing, supply will start coming down, and you'll have that intersect again where prices will take off dramatically," Vincent said. "(But) it's not healthy for the economy. It's not healthy for the industry."
Already, the futures markets are pricing in more expensive oil. While a barrel of light, sweet crude for February delivery costs about $50, the market for September oil is already over $60.
Big Western oil companies like Exxon and ConocoPhillips have also been cut off from crude reserves under the control of nationalized oil companies from Saudi Arabia to Venezuela.
Late last year, the International Energy Agency said it will take more than a trillion dollars in annual investments to find new fossil fuels over the next two decades in order to avoid shortages that could choke the global economy.
When the world economy recovers from the current malaise, "Are we going to get another one of these violent cycles where prices overshoot and you get back in the same spiral?" asked Yergin. "Some volatility is inevitable in global commodity markets, but this kind of extreme volatility is bad for everyone. It creates deep wounds."
Another part of the problem, said Judy Dugan, research director for the nonprofit Consumer Watchdog, is that oil companies didn't invest enough in new exploration over the past several years, as they raked in billions in profits.
"They're screaming, 'Drill, baby, drill,' but they didn't invest anywhere near where they should have been investing when prices were high," she said. "Now that prices have crashed, they say prices are too low, knowing full well prices are going to go back up."
http://www.msnbc.msn.com/id/28527108/

Waiter arrested for playing Arabic recording at Jewish wedding
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A waiter was charged with felony harassment after he played a recording of people chanting in Arabic at a Jewish wedding on Long Island, Newsday reports.
Stephen "Buttafuoco has said he didn't know that his cell-phone recording of a pro-Palestinian rally, which he was playing for a friend, was also being broadcast over the reception hall's sound system for hundreds of guests at the Woodbury Jewish Center on early on the morning of Jan. 4," the paper says. "Police say those who heard it became alarmed that a terrorist attack was imminent."
Buttafuoco, 23, pleaded not guilty to the hate-crime charge.
"The actions that I took were not very well thought through, but they were definitely not intended to be malicious in any way, shape or form," he tells the Daily News. "I feel horrible."
http://blogs.usatoday.com/ondeadline/2009/01/waiter-arrested.html

City Folk Flock To Raise Small Livestock At Home
All Things Considered, January 10, 2009 · If you picked up a carton of eggs at the store this week, they probably set you back about $1 or $1.50. The organic, cage-free kind costs more like $3. But some urban and suburbanites are skipping the store entirely when it comes to things like eggs and honey and turning instead to their own backyards.
Whether from tighter food budgets or local-eating ideals, more and more people are petitioning their cities to allow small animal husbandry.
City dwellers are accustomed to being awakened at night by the occasional siren or the roar of a low-flying jet. But the nocturnal disturbances in a Denver neighborhood have a slightly more agrarian feel.
Cutting-Edge 'Locavores'
A rooster belts out a cry from one of the yards, where the homeowners also keep a pair of geese in a converted sun porch. What they don't have, however, are any permits for their minor menagerie. Denver does allow chickens for an annual fee. Roosters, though, are entirely outlawed.
So it's understandable that the homeowner, Brad, doesn't want his last name used.
Many of the folks pushing for urban livestock ordinances do so because of trendy modern ideas about sustainability and local food. They're known as "locavores."
Brad says he simply loves chickens.
He says he had them as a boy in the countryside and just kept on raising them even after moving to Los Angeles as a teenager.
"So I was walking around L.A. streets with a Rhode Island Red and people would say, 'Whoa, my god that's a beautiful bird! What is it?' 'Oh, it's a chicken.' 'A chicken?!' You know, city folks, never seen 'em before," Brad says.
That seems to be changing. Forget growing your own vegetables — cutting-edge locavores are now pushing backyard honey, eggs and milk. Researchers with the American Planning Association say that in the past six months they've fielded more questions about livestock ordinances than almost any other topic.
Chickens As Rock Stars
Colorado zoning consultant Christopher Duerksen is trying to simplify some of the answers. He's putting together a model sustainability code for cities trying to green up their rules.
Asked how city planners tend to react when they hear the word "chicken," Duerksen quips: "They tend to squawk. I think most planners, like most people, don't think of urban areas as food producing areas, but that's changing with the cost of food and questions about the health of food. And so we're seeing a real change in mindset among urban planners."
This means residents can now keep bees in Denver or raise a mini-goat in Seattle. But the real rock stars of this movement are chickens.
Urban livestock researcher Jennifer Blecha says that in recent years a dozen or more cities annually have joined the pro-chicken flock. And she says chicken advocates are starting to get more organized.
"When I over the last year or two have done presentations at various conferences on urban agriculture," Blecha says,"a swarm of people comes afterward and says, 'I'm from Cleveland and we need to get our regulations changed, can you please help?' 'Oh, we're from here and we're trying to get our regulations changed, could you give me some advice?'"
Some municipalities have bucked the agrarian trend. Just north of Denver, the planning board for the city of Longmont, Colo., recently gave the thumbs-down to a chicken ordinance. According to Jon Van Bentham, the board chairman, concerns ranged from unsightly chicken-coop construction to noise and smell, to slightly more dire topics.
"Avian flu came up," Van Bentham says. "Again, that's maybe kind of a nightmare scenario, but that's one of the places where folks are concerned that it comes from."
But backyard farmers seem to have one ace in the hole for answering any local objections: bribery. Plenty of Brad's eggs, for example, end up on his neighbors' breakfast plates.
"I ask them every now and then if it's bothering them and they say, 'Oh no, it doesn't bother us at all and besides, you wouldn't mess with the one that feeds ya," Brad says.
For the record, no eggs — goose, chicken or otherwise — changed hands in the reporting of this story.
http://www.npr.org/templates/story/stor ... =YahooNews