Eeyore's News and View

A 'Copper Standard' for the world's currency system?
Hard money enthusiasts have long watched for signs that China is switching its foreign reserves from US Treasury bonds into gold bullion. They may have been eyeing the wrong metal.
China's State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.
Nobu Su, head of Taiwan's TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.
China's jobless migrant workers hits 23m"China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years."
"The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources," he said.
The SRB has also been accumulating aluminium, zinc, nickel, and rarer metals such as titanium, indium (thin-film technology), rhodium (catalytic converters) and praseodymium (glass).
While it makes sense for China to take advantage of last year's commodity crash to restock cheaply, there is clearly more behind the move. "They are definitely buying metals to diversify out of US Treasuries and dollar holdings," said Jim Lennon, head of commodities at Macquarie Bank.
John Reade, metals chief at UBS, said Beijing may have a made strategic decision to stockpile metal as an alternative to foreign bonds. "We're very surprised by Chinese demand. They are buying much more copper than they will need this year. If this is strategic, there may be no effective limit on the purchases as China's pockets are deep."
Zhou Xiaochuan, the central bank governor, piqued the interest of metal buffs last month by calling for a world currency modelled on the "Bancor", floated by John Maynard Keynes at Bretton Woods in 1944.
The Bancor was to be anchored on 30 commodities - a broader base than the Gold Standard, which had caused so much grief in the 1930s. Mr Zhou said such a currency would prevent the sort of "credit-based" excess that has brought the global finance to its knees.
If his thoughts reflect Communist Party thinking, it would explain the bizarre moves in commodity markets over recent weeks. Copper prices have surged 49pc this year to $4,925 a tonne despite estimates by the CRU copper group that world demand will fall 15pc to 20pc this year as construction wilts.
Analysts say "short covering" by funds betting on price falls has played a role. But the jump is largely due to Chinese imports, which reached a record 329,000 tonnes in February, and a further 375,000 tonnes in March. Chinese industrial demand cannot explain this. China has been badly hit by global recession. Its exports - almost half GDP - fell 17pc in March.
While Beijing's fiscal stimulus package and credit expansion has helped lift demand, China faces a property downturn of its own. One government adviser warned this week that house prices could fall 50pc.
One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America's debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. "We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets," he said.
This is slightly disingenuous. China has the world's largest reserves - $1.95 trillion, mostly in dollars - because it has been holding down the yuan to boost exports. This mercantilist strategy has reached its limits.
The beauty of recycling China's surplus into metals instead of US bonds is that it kills so many birds with one stone: it stops the yuan rising, without provoking complaints of currency manipulation by Washington; metals are easily stored in warehouses, unlike oil; the holdings are likely to rise in value over time since the earth's crust is gradually depleting its accessible ores. Above all, such a policy safeguards China's industrial revolution, while the West may one day face a supply crisis.
Beijing may yet buy gold as well, although it has not done so yet. The gold share of reserves has fallen to 1pc, far below the historic norm in Asia. But if a metal-based currency ever emerges to end the reign of fiat paper, it is just as likely to be a "Copper Standard" as a "Gold Standard".
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

Officials Say U.S. Wiretaps Exceeded Law
Published: April 15, 2009
WASHINGTON — The National Security Agency intercepted private e-mail messages and phone calls of Americans in recent months on a scale that went beyond the broad legal limits established by Congress last year, government officials said in recent interviews.
Several intelligence officials, as well as lawyers briefed about the matter, said the N.S.A. had been engaged in “overcollection” of domestic communications of Americans. They described the practice as significant and systemic, although one official said it was believed to have been unintentional.
The legal and operational problems surrounding the N.S.A.’s surveillance activities have come under scrutiny from the Obama administration, Congressional intelligence committees and a secret national security court, said the intelligence officials, who spoke only on the condition of anonymity because N.S.A. activities are classified. Classified government briefings have been held in recent weeks in response to a brewing controversy that some officials worry could damage the credibility of legitimate intelligence-gathering efforts.
The Justice Department, in response to inquiries from The New York Times, acknowledged Wednesday night that there had been problems with the N.S.A. surveillance operation, but said they had been resolved.
As part of a periodic review of the agency’s activities, the department “detected issues that raised concerns,” it said. Justice Department officials then “took comprehensive steps to correct the situation and bring the program into compliance” with the law and court orders, the statement said. It added that Attorney General Eric H. Holder Jr. went to the national security court to seek a renewal of the surveillance program only after new safeguards were put in place.
In a statement on Wednesday night, the N.S.A. said that its “intelligence operations, including programs for collection and analysis, are in strict accordance with U.S. laws and regulations.” The Office of the Director of National Intelligence, which oversees the intelligence community, did not address specific aspects of the surveillance problems but said in a statement that “when inadvertent mistakes are made, we take it very seriously and work immediately to correct them.”
The questions may not be settled yet. Intelligence officials say they are still examining the scope of the N.S.A. practices, and Congressional investigators say they hope to determine if any violations of Americans’ privacy occurred. It is not clear to what extent the agency may have actively listened in on conversations or read e-mail messages of Americans without proper court authority, rather than simply obtained access to them.
The intelligence officials said the problems had grown out of changes enacted by Congress last July in the law that regulates the government’s wiretapping powers, and the challenges posed by enacting a new framework for collecting intelligence on terrorism and spying suspects.
While the N.S.A.’s operations in recent months have come under examination, new details are also emerging about earlier domestic-surveillance activities, including the agency’s attempt to wiretap a member of Congress, without court approval, on an overseas trip, current and former intelligence officials said.
After a contentious three-year debate that was set off by the disclosure in 2005 of the program of wiretapping without warrants that President George W. Bush approved after the Sept. 11 attacks, Congress gave the N.S.A. broad new authority to collect, without court-approved warrants, vast streams of international phone and e-mail traffic as it passed through American telecommunications gateways. The targets of the eavesdropping had to be “reasonably believed” to be outside the United States. Under the new legislation, however, the N.S.A. still needed court approval to monitor the purely domestic communications of Americans who came under suspicion.
In recent weeks, the eavesdropping agency notified members of the Congressional intelligence committees that it had encountered operational and legal problems in complying with the new wiretapping law, Congressional officials said.
Officials would not discuss details of the overcollection problem because it involves classified intelligence-gathering techniques. But the issue appears focused in part on technical problems in the N.S.A.’s ability at times to distinguish between communications inside the United States and those overseas as it uses its access to American telecommunications companies’ fiber-optic lines and its own spy satellites to intercept millions of calls and e-mail messages.
One official said that led the agency to inadvertently “target” groups of Americans and collect their domestic communications without proper court authority. Officials are still trying to determine how many violations may have occurred.
The overcollection problems appear to have been uncovered as part of a twice-annual certification that the Justice Department and the director of national intelligence are required to give to the Foreign Intelligence Surveillance Court on the protocols that the N.S.A. is using in wiretapping. That review, officials said, began in the waning days of the Bush administration and was continued by the Obama administration. It led intelligence officials to realize that the N.S.A. was improperly capturing information involving significant amounts of American traffic.
Notified of the problems by the N.S.A., officials with both the House and Senate intelligence committees said they had concerns that the agency had ignored civil liberties safeguards built into last year’s wiretapping law. “We have received notice of a serious issue involving the N.S.A., and we’ve begun inquiries into it,” a Congressional staff member said.
Separate from the new inquiries, the Justice Department has for more than two years been investigating aspects of the N.S.A.’s wiretapping program.
As part of that investigation, a senior F.B.I. agent recently came forward with what the inspector general’s office described as accusations of “significant misconduct” in the surveillance program, people with knowledge of the investigation said. Those accusations are said to involve whether the N.S.A. made Americans targets in eavesdropping operations based on insufficient evidence tying them to terrorism.
And in one previously undisclosed episode, the N.S.A. tried to wiretap a member of Congress without a warrant, an intelligence official with direct knowledge of the matter said.
The agency believed that the congressman, whose identity could not be determined, was in contact — as part of a Congressional delegation to the Middle East in 2005 or 2006 — with an extremist who had possible terrorist ties and was already under surveillance, the official said. The agency then sought to eavesdrop on the congressman’s conversations, the official said.
The official said the plan was ultimately blocked because of concerns from some intelligence officials about using the N.S.A., without court oversight, to spy on a member of Congress.
http://www.nytimes.com/2009/04/16/us/16nsa.html?_r=1

Our view on public safety: Security smokescreen hinders chemical plant inquiry
Should Coast Guard control what you know about industrial risks?
Last August, an explosion at a pesticide plant in West Virginia killed two workers. That was bad enough. But since then, the accident has become a troubling example of what can happen when national security concerns collide with the public's right to know about safety threats.
In this case, the public has a major interest in finding out as much as possible. The blast occurred in a part of Bayer CropScience's plant in Institute, W.Va., that's just 80 feet from an above-ground tank containing one of the deadliest industrial chemicals on earth — methyl isocyanate, or MIC.
That's the chemical that leaked from a sister facility in Bhopal, India, in 1984, killing thousands of people. Had this explosion punctured the MIC tank, the results could have been catastrophic. Some 300,000 people live within 25 miles of the plant, located about 7 miles northwest of Charleston.
Those people, and others who live near similar facilities, deserve to understand the risks they face and what plant owners are doing to mitigate them. Yet when the Chemical Safety and Hazard Investigation Board launched an investigation of the Institute blast, and scheduled a public hearing to disclose its preliminary findings, obstacles were thrown in its way.
Bayer declared that some of what the safety board planned to disclose was "sensitive security information" under a post-9/11 law meant to safeguard the docks at chemical plants. Though the accident occurred atanother part of the 400-acre site, the Coast Guard agreed with Bayer that it had security jurisdiction over the entire plant. Anything the safety board planned to divulge to the public would have to be cleared first by the Coast Guard.
The safety board canceled its first hearing while it worked out what it could say. Eventually, the agency agreed to withhold just one fact: what time of day chemicals are transferred at the plant, which could conceivably give terrorists information about when to strike. The public hearing has been rescheduled for next Thursday, two days after a congressional hearing into the accident.
Though the safety board and the Coast Guard have come to terms for now, the episode is a worrisome demonstration of how easy it is for a company to overwhelm a small agency — the chemical safety board has 36 employees — by burying it with paperwork and making broad national security claims.
Like the National Transportation Safety Board, the chemical safety board has no regulatory authority, and public pressure is often the only tool it has to force companies to change dangerous practices. That makes it crucial for the safety board to be able to make its investigations and recommendations public.
To be sure, national security is a legitimate concern, and chemical plants are an inviting target. But reflexively invoking secrecy, in the name of thwarting al-Qaeda, risks going too far and could allow companies to get away with shoddy safety procedures. The blunt truth is that neighbors are more likely to die in industrial accidents than terrorist attacks. Policy should be set accordingly.
http://blogs.usatoday.com/oped/2009/04/security-smokescreen-hinders-chemical-plant-inquiry.html

The country stood up yesterday on tax day, and said enough is enough. I hope it does not end here, though.
CNBC Asks Santelli to React to Tea Parties: 'I'm Pretty Proud of This'
Chicago Mercantile Exchange floor reporter and taxpayer tea party revolt inspiration calls movement 'about as American as it gets.'
By Jeff Poor
Business & Media Institute
4/15/2009 9:25:04 AM
While Fox News has celebrated the Taxpayer Tea Party rallies and MSNBC has denigrated them, the impetus of the movement – CNBC and specifically Rick Santelli, its inspiration – had been conspicuously quiet about it.
But on CNBC’s “Squawk Box” April 15, co-host Joe Kernen asked Santelli what he thought of being a “cultural phenomenon.” That was the same show Santelli famously called out President Barack Obama for the unfairness of his housing bailout proposal on Feb. 19.
“A lot of articles about these tea parties,” Kernen said. “They all have your name in them, like you caused it. Are you actually attending any or are you just sort of got the idea going initially? What do you think? I mean, you’re like a cultural phenomenon at this point.”
Santelli didn’t shy away. He called the rallies American and said he was proud of what he inspired.
“I don’t know about cultural phenomenon, but I’ll tell you what,” Santelli said. “I think that this tea party phenomenon is steeped in American culture and steeped in American notion to get involved with what’s going on with our government. I haven’t organized. I’m going to have to work to pay my taxes, so I’m not going to be able to get away today. But, I have to tell you – I’m pretty proud of this.
He also said despite the claims from others in the media, including people at CNBC’s sister network MSNBC, calling the movement “Astroturf,” Santelli declared it a grassroots movement.
“I think from a grassroots standpoint, I’m sure some of the media out there is not going to peg it that way, but isn’t it about as American as it gets – for people to roll their strollers and make their signs and go voice their opinion about the direction of the country?” Santelli said. “Good, bad or indifferent – that’s a great thing. There’s not a lot of countries, of course, that afford their people that, that type of right. It’s a great thing.”
Kernen warned some may try to capitalize off the phenomenon he inspired.
“Just be careful, you may have some self-righteous type go off on a populist rant about your populist rant,” Kernen added.
However, Santelli told Kernen inciting mobs and pitchforks wasn’t part of his playbook.
“Well, you know, populist rant – mobs, pitchforks, that’s the vocabulary I’m certainly not using,” Santelli responded. “But, I’m sure it’ll be out there nonetheless.”
http://www.businessandmedia.org/articles/2009/20090415092104.aspx

Somali pirates vow to hunt down, kill Americans
MOMBASA, Kenya (AP) - Somali pirates vowed to hunt down American ships and kill their sailors and French forces detained 11 other brigands in a high-seas raid as tensions ratcheted up Wednesday off Africa's volatile eastern coast.
Pirates fired grenades and automatic weapons at an American freighter loaded with food aid but the ship escaped and was heading to Kenya under U.S. Navy guard.
The Liberty Sun's American crew successfully blockaded themselves inside the engine room—the same tactic that the Maersk Alabama crew used to thwart last week's attack on their ship. They were not injured in the attack Tuesday night but the vessel sustained some damage, owner Liberty Maritime Corp. said.
One of the pirates whose gang attacked the Liberty Sun said Wednesday his group was specifically targeting American ships and sailors.
"We will seek out the Americans and if we capture them we will slaughter them," said a 25-year-old pirate based in the Somali port of Harardhere who gave only his first name, Ismail.
"We will target their ships because we know their flags. Last night, an American-flagged ship escaped us by a whisker. We have showered them with rocket-propelled grenades," boasted Ismail, who did not take part in the attack.
The French forces launched an early morning attack on a pirate "mother ship" after spotting the boat Tuesday with a surveillance helicopter and observing the pirates overnight.
A "mother ship" is usually a seized foreign vessel that pirates use to transport speedboats far out to sea and resupply them as they plot their attacks. The ship was intercepted 550 miles (900 kilometers) east of the Kenyan city of Mombasa.
The French Defense Ministry said the raid thwarted the sea bandits' planned attack on the Liberian cargo ship Safmarine Asia. The detained pirates were being held on the Nivose, a French frigate among the international fleet trying to protect shipping in the Gulf of Aden.
The attack on the Liberty Sun foiled the reunion between the American sea captain rescued by Navy snipers and the 19-man crew of the Maersk Alabama who he saved with his heroism.
Capt. Richard Phillips had planned to meet his crew in Mombasa and fly home with them Wednesday, but he was stuck on the USS Bainbridge when it was diverted to help the Liberty Sun. The crew left without him, flying to Andrews Air Force base in Maryland in a chartered plane.
Despite President Barack Obama's vow to take action against the rise in banditry and the deaths of five pirates in French and U.S. hostage rescues, brigands seized four vessels and more than 75 hostages since Sunday's dramatic rescue of Phillips.
That brought the total number of sailors being held by Somali pirates to over 300 on 16 different ships—a distinct surge in the number of captives over the last few days.
Pirates can extort $1 million or more for each ship and crew seized off the Horn of Africa—and Kenya estimates they raked in $150 million last year.
http://www.breitbart.com/article.php?id=D97J00JG1&show_article=1

Another man-bites-python story
A Kenyan man who was dragged up a tree by a python fought back for more than an hour by biting the serpent before he could summon help with his cell phone, The Daily Nation reports.
The Kenyan national newspaper says Ben Nyaumbe, a farm manager, was at work when the python, apparently hunting for goats, struck.
"I stepped on a spongy thing on the ground and suddenly my leg was entangled with the body of a huge python," he told The Nation.
As it coiled around his body, Nyaumbe took desperate measures: “I had to bite it."
The python then dragged him up a tree, but Nayaumbe says that after about an hour, the snake relaxed long enough for him to reach his mobile phone and call for help. After police arrived, Nyaumbe smothered the snake's head with his shirt while rescuers tied a rope around its body and pulled.
"We both came down, landing with a thud," said Nyaumbe, who suffered torn and bruised lips.
But not everyone jumped right in, he tells The Nation. "The snake was hissing so much they all got so scared," Nyaumbe says. "One officer remained in the car, scared out of his skin.”
The python? It was stuffed into three sacks and taken to a nearby sanctuary, but by the next day had slithered away.
http://blogs.usatoday.com/ondeadline/2009/04/another-man-bites-python-story.html