The Great Cyber-Wars Have Escalated.

I think we have all been aware of cyber activity.  We have generally been lead to believe that these so called cyber attacks have originated in China or Russia.  The usual story line goes that these hackers are independents that are allegedly encouraged by their governments.  In June however, I began following stories related to the cyber worm, called Stuxnet.  Stuxnet has been the object of intense study since its detection in June. As more has become known about it, alarm about its capabilities and purpose have grown. Some top cyber security experts now say Stuxnet’s arrival heralds something blindingly new: a cyber weapon created to cross from the digital realm to the physical world – to destroy something.  At least one expert who has extensively studied the malicious software, or malware, suggests Stuxnet may have already attacked its target – and that it may have been Iran’s Bushehr nuclear power plant, which much of the world condemns as a nuclear weapons threat.

The appearance of Stuxnet created a ripple of amazement among computer security experts. Too large, too encrypted, too complex to be immediately understood, it employed amazing new tricks, like taking control of a computer system without the user taking any action or clicking any button other than inserting an infected memory stick. Experts say it took a massive expenditure of time, money, and software engineering talent to identify and exploit such vulnerabilities in industrial control software systems.

Unlike most malware, Stuxnet is not intended to help someone make money or steal proprietary data. Industrial control systems experts now have concluded, after nearly four months spent reverse engineering Stuxnet, that the world faces a new breed of malware that could become a template for attackers wishing to launch digital strikes at physical targets worldwide. Internet link not required. It is a realization that has emerged only gradually.

Stuxnet surfaced in June and, by July, was identified as a hypersophisticated piece of malware probably created by a team working for a nation state, say cyber security experts. Its name is derived from some of the filenames in the malware. It is the first malware known to target and infiltrate industrial supervisory control and data acquisition (SCADA) software used to run chemical plants and factories as well as electric power plants and transmission systems worldwide. That much the experts discovered right away. But what was the motive of the people who created it? Was Stuxnet intended to steal industrial secrets – pressure, temperature, valve, or other settings –and communicate that proprietary data over the Internet to cyber thieves?

By August, researchers had found something more disturbing: Stuxnet appeared to be able to take control of the automated factory control systems it had infected – and do whatever it was programmed to do with them. That was mischievous and dangerous. This gives you an idea of how much infrastructure could be affected.

But it gets worse. Since reverse engineering chunks of Stuxnet’s massive code, senior US cyber security experts confirm what Mr. Langner, the German researcher, had concluded: Stuxnet is essentially a precision, military-grade cyber missile deployed early last year to seek out and destroy one real-world target of high importance – a target still unknown.  “Stuxnet is a 100-percent-directed cyber attack aimed at destroying an industrial process in the physical world,” says Langner, who last week became the first to publicly detail Stuxnet’s destructive purpose and its authors’ malicious intent. “This is not about espionage, as some have said. This is a 100 percent sabotage attack.”

Then came this from Tehran today.

TEHRAN: Iran’s nuclear agency is trying to combat a complex computer worm that has affected industrial sites throughout the country and is capable of taking over power plants, Iranian media reports said. Experts from the Atomic Energy Organization of Iran met this week to discuss how to remove the malicious computer code, or worm, the semi-official ISNA news agency reported Friday. The computer worm, dubbed Stuxnet, can take over systems that control the inner workings of industrial plants. Experts in Germany discovered the worm in July, and it has since shown up in a number of attacks – primarily in Iran, Indonesia, India and the US.

The ISNA report said the malware had spread throughout Iran, but did not name specific sites affected. Foreign media reports have speculated the worm was aimed at disrupting Iran’s first nuclear power plant, which is to go online in October in the southern port city of Bushehr. Iranian newspapers have reported on the computer worm hitting industries around the country in recent weeks, without giving details. Friday’s report also did not mention Bushehr.

The Russian-built plant will be internationally supervised, but world powers remain concerned that Iran wants to use its civil nuclear power program as a cover for making weapons. Iran denies such an aim and says its nuclear work is solely for peaceful purposes. While there have been no reports of damage or disruption at any Iranian nuclear facilities, Tuesday’s meeting signaled a high level of concern about the worm among Iran’s nuclear officials.

The destructive Stuxnet worm has surprised experts because it is the first one specifically created to take over industrial control systems, rather than just steal or manipulate data. The United States is also tracking the worm, and the Department of Homeland Security is building specialized teams that can respond quickly to cyber emergencies at industrial facilities across the country.

But the US does not know who is behind it or its purpose, a top US cybersecurity official said Friday. “One of our hardest jobs is attribution and intent,” Sean McGurk, director of the National Cybersecurity and Communications Integration Center (NCCIC), told reporters. “We’ve conducted analysis on the software itself,” McGurk said during a tour of the Department of Homeland Security facility outside Washington which is responsible for coordinating government cybersecurity operations.

It’s very difficult to say ‘This is what it was targeted to do,'” he said of Stuxnet. The worm has been found lurking on Siemens systems in India, Indonesia, Pakistan and elsewhere, but the heaviest infiltration appears to be in Iran, according to software security researchers. McGurk said Stuxnet had been found not only in power facilities but water purification or chemical plants which use the particular Siemens system it targets. “We haven’t seen any impacts or effects of what it does,” he said. “We know that it’s not doing anything specifically malicious right now.

McGurk said he could not say who is behind the worm. “It would be premature to speculate at this time,” he said. “We’re not looking for where it came from but trying to prevent the spread,” he said, adding that Siemens is “reaching out to their customer base” to deal with the infection. Stuxnet is able to recognize a specific facility’s control network and then destroy it, according to German computer security researcher Ralph Langner, who has been analyzing Stuxnet since it was discovered in June.

Stuxnet was tailored for Siemens supervisory control and data acquisition (SCADA) systems commonly used to manage water supplies, oil rigs, power plants and other industrial facilities. Langner suspected Stuxnet’s target was the Bushehr nuclear facility in Iran. Unspecified problems have been blamed for a delay in getting the facility fully operational.

Whether the Stuxnet computer worm was really a state cyber strike on Iran’s nuclear facilities or not, but hard-to-trace computer attacks look set to be a feature of 21st-century warfare. Western experts say the worm’s sophistication – and the fact that some 60 percent of computers infected looked to be in Iran – pointed to a government-backed attack. Some speculated Bushehr may have been targeted, perhaps by Israel.

But proving that is another thing altogether. Analysts say most major states – particularly China, Russia and the United States – have invested considerably in cyber warfare and defence in recent years, but details are inherently sketchy. “Attribution is extremely difficult in cyber attacks,” said Derek Reveron, a cyber warfare expert at the US Naval War College in Rhode Island. “Given how data moves around the world, determining the point of origin is difficult. Then there is the difficulty of determining if it was state-sponsored or not.

That, of course, is a key part of their appeal. Russia was widely blamed for cyber attacks on Estonia in 2007 after a dispute over a statue of a World War Two Russian soldier as well as Georgia during its 2008 war. But nothing was ever proven, and some pointed to “patriotic hackers” operating independently rather than government agencies themselves. What most experts do agree is that the increased reliance on computer systems for essential national infrastructure means such attacks are increasingly damaging. Lights could be turned off, streets turned to gridlock by targeting traffic light control systems, satellites blinded and warships left dead in the water.

Partly as a result, cyber warfare is seen as a particularly appealing option for countries that remain far outmatched by the conventional military might of the US. North Korea is seen as having particular advantages in any cyber confrontation – its own national computer infrastructure is so outdated that there would be little if anything for South Korea or US cyber warfare experts to counter-attack against. China’s “great firewall”, usually associated with censorship, is also believed to offer some defence against cyber attacks.

In his 2010 book “Cyber War”, former White House cybersecurity expert Richard Clarke sketches out a nightmare scenario in which online attacks bring the US to a standstill – and the experts can’t even tell which country attacked them. He says he believes the United States, China and others are already hacking into each other’s critical national systems, burying “logic bombs” and other attack software in the event they are needed – something he compares to the arms race and mechanisation that preceded World War One.

Invisibly, military units from over a score of nations are moving into a new battle space,” he writes. “Because the units are unseen, parliaments and publics have not noticed the movement of these forces… With attention divided elsewhere, we may be laying the groundwork for cyber war.” Even if such a doomsday scenario never unfolds, most experts believe hacking is already taking its place alongside air strikes and special forces as tools for limited military activity.


It may prove to be a useful tool in Syria in the long term, assuming Damascus pushes ahead with its suspected nuclear program and Hezbollah is so well armed – it already owns more rockets than most states – that Israel would think twice before launching air strikes … as it did in 2007,” said Maplecroft political risk analyst Anthony Skinner. However, there is no guarantee that a state subject to a cyber attack – even if was never able to categorically prove the source – might not retaliate in either a covert or open military way against those it is believed were responsible.

It’s not just about attacks. Experts say the main use of cyber capabilities by most countries is for hacking and spying, either for counterterrorism or commercial reasons. Authoritarian emerging states such as China and Russia are both frequently accused of using state spies to help government-linked businesses – and many analysts suspect Western countries have been guilty of the same as well. Few see that changing. “States will continue to develop more sophisticated asymmetric – and deniable – cyber and information attacks,” said Jonathan Wood, global issues analyst at Control Risks. “Some of these may be used for strategic and military aims, others for commercial or diplomatic espionage.

But so far, experts say cyber attacks have been limited to data theft or deletion. They have yet to come close to the physical damage of simply blowing something up the old-fashioned way. “To my knowledge, there is no case of a cyber attack leading to physical destruction,” said cyber warfare expert Reveron. “It is certainly possible and drives much thinking about cyber defence. But so far, there aren’t any cyber “super weapons”.” Unless Stuxnet is, of course, and we may never know.

So far, Stuxnet has infected at least 45,000 industrial control systems around the world, without blowing them up – although some victims in North America have experienced some serious computer problems, Eric Byres, a Canadian expert, told the Monitor. Most of the victim computers, however, are in Iran, Pakistan, India, and Indonesia. Some systems have been hit in Germany, Canada, and the US, too. Once a system is infected, Stuxnet simply sits and waits – checking every five seconds to see if its exact parameters are met on the system. When they are, Stuxnet is programmed to activate a sequence that will cause the industrial process to self-destruct, Langner says.

Langner’s analysis also shows, step by step, what happens after Stuxnet finds its target. Once Stuxnet identifies the critical function running on a programmable logic controller, or PLC, made by Siemens, the giant industrial controls company, the malware takes control. One of the last codes Stuxnet sends is an enigmatic “DEADF007.” Then the fireworks begin, although the precise function being overridden is not known, Langner says. It may be that the maximum safety setting for RPMs on a turbine is overridden, or that lubrication is shut off, or some other vital function shut down. Whatever it is, Stuxnet overrides it, Langner’s analysis shows.

A geographical distribution of computers hit by Stuxnet, which Microsoft produced in July, found Iran to be the apparent epicenter of the Stuxnet infections. That suggests that any enemy of Iran with advanced cyber war capability might be involved, Langner says. The US is acknowledged to have that ability, and Israel is also reported to have a formidable offensive cyber-war-fighting capability.

Could Stuxnet’s target be Iran’s Bushehr nuclear power plant, a facility much of the world condemns as a nuclear weapons threat?

Langner is quick to note that his views on Stuxnet’s target is speculation based on suggestive threads he has seen in the media. Still, he suspects that the Bushehr plant may already have been wrecked by Stuxnet. Bushehr’s expected startup in late August has been delayed, he notes, for unknown reasons. (One Iranian official blamed the delay on hot weather.)

But if Stuxnet is so targeted, why did it spread to all those countries? Stuxnet might have been spread by the USB memory sticks used by a Russian contractor while building the Bushehr nuclear plant, Langner offers. The same contractor has jobs in several countries where the attackware has been uncovered.

“This will all eventually come out and Stuxnet’s target will be known,” Langner says. “If Bushehr wasn’t the target and it starts up in a few months, well, I was wrong. But somewhere out there, Stuxnet has found its target. We can be fairly certain of that.”

To me, this is a real life fact that gives us a hint on how wars will be fought in the future.  Whoever devised or deployed Stuxnet has redefined warfare by a single act.  For the cost of writing some pretty kick butt code, a memory stick, and the cost of the logistics to get it loaded onto a Russian engineer’s computer may shut down Bushehr and avoid a military action with all of it’s costs, both in real terms and in global political capital.  This is a story worth following.

Our Sun, Our Time, and Now Our Curve Ball?

We all have heard that we are entering a period of increased solar activities.  Some have even suggested that this time in this normal 11 year cycle we are going to have a more rigorous solar period.  Indeed, it seems real enough that the country’s major power companies have looked at contingency plans for massive Coronal Mass Ejections(CMEs or solar flares) causing massive power outages in the upcoming three year period.

What has some astro-physicists worried is that this active cycle we are now entering was preceded by one of the quietest periods in activity since monitoring began.  Some say that does not bode well because that may mean an increase in energetic releases when they do start and they have begun.

Now, something new has surfaced and that is it looks like these CMEs can make turns in space!  I kid you not.  Solar storms don’t always travel in a straight line. But once they start heading in our direction, they can accelerate rapidly, gathering steam for a harder hit on Earth’s magnetic field.

So say researchers who have been using data from NASA’s twin STEREO spacecraft to unravel the 3D structure of solar storms. Their findings are presented in Nature Communications.

A coronal mass ejection (CME) observed by STEREO on Dec. 12, 2008.

“This really surprised us,” says co-author Peter Gallagher of Trinity College in Dublin, Ireland. “Solar coronal mass ejections (CMEs) can start out going one way—and then turn in a different direction.”

The result was so strange, at first they thought they’d done something wrong. After double- and triple-checking their work on dozens of eruptions, however, the team knew they were onto something.

“Our 3D visualizations clearly show that solar storms can be deflected from high solar latitudes and end up hitting planets they might otherwise have missed,” says lead author Jason Byrne, a graduate student at the Trinity Center for High Performance Computing.  A 3D model of an actual CME based on multiscale processing of STEREO data can be found here. [9MB movie]

The key to their analysis was an innovative computing technique called “multiscale image processing.” Gallagher explains:

“‘Multiscale processing’ means taking an image and sorting the things in it according to size. Suppose you’re interested in race cars. If you have a photo that contains a bowl of fruit, a person, and a dragster, you could use multiscale processing to single out the race car and study its characteristics.”

In medical research, multiscale processing has been used to identify individual nuclei in crowded pictures of cells. In astronomy, it comes in handy for picking galaxies out of a busy star field. Gallagher and colleagues are the first to refine and use it in the realm of solar physics.

“We applied the multiscale technique to coronagraph data from NASA’s twin STEREO spacecraft,” Gallagher continues. “Our computer was able to look at starry images cluttered with streamers and bright knots of solar wind and zero in on the CMEs.”

STEREO-A and STEREO–B are widely separated and can see CMEs from different points of view. This allowed the team to create fully-stereoscopic models of the storm clouds and track them as they billowed away from the sun.

One of the first things they noticed was how CMEs trying to go “up”—out of the plane of the solar system and away from the planets—are turned back down again. Gallagher confesses that they had to “crack the books” and spend some time at the white board to fully understand the phenomenon. In the end, the explanation was simple:

The magnetic field of a bar magnet.

The sun’s global magnetic field, which is shaped like a bar magnet, guides the wayward CMEs back toward the sun’s equator. When the clouds reach low latitudes, they get caught up in the solar wind and head out toward the planets—”like a cork bobbing along a river,” says Gallagher.

Once a CME is embedded in the solar wind, it can experience significant acceleration. “This is a result of aerodynamic drag,” says Byrne. “If the wind is blowing fast enough, it drags the CME along with it—something we actually observed in the STEREO data.”

Past studies from other missions had revealed tantalizing hints of this CME-redirection and acceleration process, but STEREO is the first to see it unfold from nearly beginning to end.

“The ability to reconstruct the path of a solar storm through space could be of great benefit to forecasters of space weather at Earth,” notes Alex Young, STEREO Senior Scientist at the Goddard Space Flight Center. “Knowing when a CME will arrive is crucial for predicting the onset of geomagnetic storms.”

“Furthermore,” he says, “the image processing techniques developed by the Trinity team in collaboration with NASA Goddard can be used in applications ranging from surveillance to medical diagnostics.”

To learn more about zig-zagging CMEs and the advanced computing techniques used to track them, read “Propagation of an Earth-directed coronal mass ejection in three dimensions” by Byrne et al in the Sept. 21, 2010, issue of Nature Communications.

So folks, we got Iraq, Afghanistan, Iran, the economy, the election and now the sun pitching curve balls that can accelerate on their way here.  OMG, I need more coffee and where is that roll of aluminum foil?

Happy Talk and Real Facts

As I continue report the facts on what is really going on in relationship to the economy, the happy talk continues.  We have reached the point of recovery and the recession is over according to some.  Really? The facts do not seem to support that conclusion, at least at the street level.

We have watched the markets expand consistently over the last month with bad metrics being reported from almost every important element of the economy.  At the same time gold and silver is reaching record highs.  This is just counter-intuitive to decades of financial history.

A number of economists would argue that the stimulus was simply not enough to accomplish the twin mission of preventing global financial systems from collapsing and kick starting the economy at the same time.  How much of a boost to the U.S. recovery could another trillion dollars or two buy?

To battle the financial crisis, the Fed bought $1.7 trillion of longer-term Treasury and mortgage-related bonds, supplementing its pledge to keep interest rates near zero for a long time. All told, it helped stabilize a collapsing financial system and to avert what could have been a second Great Depression.

At the Fed’s August meeting it decided to reinvest maturing mortgage-debt in Treasuries to keep its balance sheet steady, a move many analysts saw as a precursor to more easing. Proponents of a re-launch of large-scale bond-buying say it will help prevent inflation expectations from falling and spur growth by further reducing borrowing costs for consumers and businesses.

According to Michael Feroli, Chief U.S. Economist, JPMorgan,” Skeptics say the economic recovery has just hit a weak patch. They argue that more easing could be ineffective in helping the economy, potentially damaging Fed credibility. An incremental drop in long-term yields may not be enough to force banks to stop hoarding safe-haven Treasuries and make loans to businesses instead, some analysts warn. Some policy-makers worry that more easing could fuel market imbalances or sow the seeds of sky-high inflation ahead.”

“My own view is that any radical balance sheet program would be seen by many as an act of desperation which would dampen business sentiment and depress non-financial borrowing even more,” said Wrightson ICAP Chief Economist Lou Crandall.

Fed bond purchases can have two effects. They can increase liquidity in strained markets and, by lowering yields, force investors to look for returns in riskier asset classes, helping to boost the supply of credit in the economy. In addition, some officials believe bond buying helps solidify trust among investors that the Fed will keep policy easy for longer, further helping to lower borrowing costs.

“If you show up and purchase assets when markets are stressed, you are not pushing back against much conviction so you can move prices more easily,” said Reinhart, the former Fed staffer.  To get a significant effect in the Treasury market—where any new round of purchases would likely be centered—could be harder, says Mark Gertler, a professor at New York University.

“Evidence suggests it would take a huge purchase of long-term government bonds, maybe the whole market, to really have any effect, and the effect would be quite uncertain.”  Rather than announcing such an eye-popping amount upfront, the Fed could decide to buy Treasuries in smaller steps, calibrated to the economic outlook at each meeting.

Forecasting firm Macroeconomic Advisors estimates each $100 billion in asset buys could lower the yield on the 10-year Treasury note by 0.03 percentage point. That is a marginal move that could go unnoticed, though if Fed buying helped nudge up the inflation rate it could get a bit more of a bang for its buck on real rates. Even a small amount of easing is not to be sneezed at, says Michael Feroli, chief U.S. economist at JPMorgan Chase.

What all of these experts seem to have failed to see is that they have gone too far.  They have stalled the economic engine and all the maneuvering in the world they do in the bond markets will not do anything to jump start the economy.  They are talking about tightening non-financial credit.  We have nearly zero lending to small business now, how tight can get it get beyond zero.

The FACTS are that consumer credit card debt continues to shrink and consider this from Reuters.

WASHINGTON | Fri Sep 17, 2010 1:45pm EDT, – U.S. household wealth fell by $1.5 trillion in the second quarter, according to Federal Reserve data on Friday that showed the strain a slow-paced recovery and high unemployment are putting on Americans.

Household net worth fell to $53.5 trillion, well below the $64.2 trillion it had reached at the end of 2007 when the recession officially began, according to the central bank’s quarterly flow of funds report. Declines in the value of financial assets — especially in stocks and mutual funds — accounted for much of the decline in second-quarter net worth. Stocks alone were down $1.9 trillion to $14.9 trillion, more than offsetting small gains in other areas like state and local government retirement funds.

Consumers pared debt at a seasonally adjusted annual rate of 2.3 percent, the ninth consecutive quarter in which they did so. Home mortgage debt fell at an annual rate of 2-1/4 percent after a 4-1/4 percent drop in the first three months this year. During the financial crisis that wracked the country from 2007 to 2009, trillions of dollars in housing and financial market wealth was wiped out and heavy household and financial sector indebtedness was exposed.

The government has stepped in with increased spending and stimulus programs to try to spur recovery but the unemployment rate in August edged up to 9.6 percent and housing markets are still in distress.

Federal government debt expanded during the second quarter at a hefty 24.4 percent annual rate after a 20.5 percent increase in the first quarter. By contrast, state and local government debt shrank 1.3 percent during the second quarter.  THE actual figure of the US’ national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited on Sunday by the New York Post.

“The Government is lying about the amount of debt. It is engaging in Enron accounting,” said Laurence Kotlikoff, an economist at Boston University and co-author of The Coming Generational Storm: What You Need to Know about America’s Economic Future.

“The problem is we’re seeing an explosion in spending,” added Andrew Moylan, director of government affairs for the National Taxpayers Union.  In 1980, the debt – the accumulated red ink incurred by the Federal Government – was $US909 billion. This represented some 33 per cent of gross domestic product, according to the Congressional Budget Office (CBO).

Thirty years later, based on this year’s second-quarter numbers, the CBO said the debt was $US13.4 trillion, or 92 per cent of GDP.  The CBO estimates the debt will be at $US16.5 trillion in two years, or 100.6 per cent of GDP. But these numbers are incomplete.

They do not count off-budget obligations such as required spending for Social Security and Medicare, whose programs represent a balloon payment for the Government as more Americans retire and collect benefits. In the case of Social Security, beginning in 2016, the US Government will be paying out more than it is collecting in taxes.

Mr Kotlikoff and Mr Moylan agree US national debt is much more than the official $US13.4 trillion number, but they disagree over how to add up the exact number.  Mr Kotlikoff says the debt is actually $US200 trillion.  Mr Moylan says the number is likely about $US60 trillion. That is close to the figure quoted by David Walker, the US Comptroller General from 1998 to 2008.

Business debt excluding financial companies was up a slim 0.1 percent following a 0.5 percent rise in the first quarter.  Data issued on Thursday by the U.S. Census Bureau similarly underlined the extent to which the financial crisis and ensuing recession has hurt household incomes.

But to me the most worrisome “Bad Number” is related to the impact of “hollow pension plans” on the growing population of baby boomers hitting retirement age.  Consider this from MARY WILLIAMS WALSH, published: September 17, 2010.

Earlier this year, Illinois said it had found a way to save billions of dollars. It would slash the pensions of workers it had not yet hired. The real-world savings would not materialize for decades, of course, but thanks to an actuarial trick, the state could start counting the savings this year and use it to help balance its budget.

Gov. Pat Quinn of Illinois approved a plan in April that seemed to help balance the budget, but it may imperil the pension fund.  Actuaries, including some who serve on the profession’s governing boards, got wind of what Illinois was doing and began to look more closely. Many thought Illinois was using an unorthodox maneuver to starve its pension fund of billions of dollars, while papering over a widening gap between what it owed and how much it had. Alarmed, they began looking for a way to discourage Illinois’s method before other states could adopt it.

They are too late. The maneuver, and techniques that have similar effects, are already in use in Rhode Island, Texas, Ohio, Arkansas and a number of other places, allowing those states to harvest savings today by imposing cuts on workers in the future.

Texas saved millions of dollars this year after raising its retirement age for future hires and barring them from counting unused sick leave in their pensions. More savings will appear in coming years. Rhode Island also raised its retirement age for future retirees last year, after being told it could save $90 million in the first year alone.

Actuaries have been using the method for years, it turns out, but nobody noticed, in part because official documents usually describe it in language few can understand.  The technique is fairly innocuous in normal times, allowing governments to smooth out their labor costs over many years. But it becomes much riskier when pension funds have big shortfalls, when they need several decades to pay down their losses and when they are cutting benefits for future workers — precisely the conditions that exist today.

Dubious pension numbers in Illinois are not easily shrugged off after a warning shot fired by the Securities and Exchange Commission in August. The S.E.C. accused New Jersey of securities fraud, saying the state had manipulated its pension numbers to look like a better credit risk, while selling some $26 billion worth of bonds. The S.E.C. had never before taken action against a state. Now the commission is flexing its muscles, unleashing a team of specialized enforcement officials to look for more misleading public pension numbers.  The same type of conditions exist in large corporate pension funds as well.

It is the compilation of these facts that has me continuing to be concerned that we really haven’t seen the worst of this depression.  It’s election time and we are hearing all kinds of outrageous promises and assessments of where we are in relation to the economy.  However, to me, the facts I have just laid here say it all.  The contraction continues at the street level, unemployment rose in August, and we haven’t even discussed the potential global impacts such as the potential collapse of sovereign funds such as Greece, Spain or Portugal that could occur at any moment.

To me, staying the course, tightening business credit and mortgages at this point, along with no further stimulus is exactly the wrong thing to do.  But alas, it is the course so I would suggest you get ready to hunker down…. oh say about NOW.

Livable Communities Act of 2009 (SB1619) Diabolic Social Engineering or Not?

Here is a summary of the bill – Establishes in the Department of Housing and Urban Development (HUD) an Office of Sustainable Housing and Communities (OSHC). Establishes in the executive branch an independent Interagency Council on Sustainable Communities. Requires the OSHC Director to establish a program to make comprehensive planning grants and sustainability challenge grants to eligible entities (partnerships between a consortium of units of general local government and an eligible partner, which may be a metropolitan planning organization, a rural planning organization, a regional council, or a state). Requires the use of a comprehensive planning grant to carry out a project to: (1) coordinate land use, housing, transportation, and infrastructure planning processes across jurisdictions and agencies; (2) identify potential regional partnerships for developing and implementing a comprehensive regional plan; (3) conduct or update housing, infrastructure, transportation, energy, and environmental assessments to determine regional needs and promote sustainable development; (4) develop or update a comprehensive regional plan or goals and strategies to implement an existing comprehensive regional plan; and (5) implement local zoning and other code changes necessary to implement a comprehensive regional plan and promote sustainable development.

Requires the use of a sustainability challenge grant to: (1) promote integrated transportation, housing, energy, and economic development activities carried out across policy and governmental jurisdictions; (2) promote sustainable and location-efficient development; and (3) implement projects identified in a comprehensive regional plan. Directs the OSHC Director to study and report to specified congressional committees on incentives for encouraging lenders to make, and homebuyers and homeowners to participate in, energy-efficient mortgages and location-efficient mortgages.

A copy of the full text can be found here:  http://www.govtrack.us/embed/sample-billtext.xpd?bill=s111-1619&version=is&nid=t0%3Ais%3A92

There are a number of organizations and PACS that are very concerned about the intent of this bill.  They contend it is a social engineering bill to restrict residence in the suburbs and rural areas and force Americans into city centers. They are very concerned that the bill has passed the United States Senate Banking Committee and is on the fast track to passage in the Senate.

The bill is called the Livable Communities Act (SB 1619) and it was introduced by outgoing Senator Christopher Dodd (D-Conn.). According to its opponents the bill seeks to fulfill the United Nation’s plan Agenda 21, adopted at the Earth Summit in Rio de Janeiro in 1992 and signed onto by “New World Order” President George H.W. Bush.

Senator Dodd

Ron Paul released this statement on  September 16th:  “This bill, better called the Dodd Homeowner Control Act, was snuck through committee on August 3rd, and a final Senate vote could come as early as next week!  Nancy Pelosi has the votes to pass it in the House, and Barack Obama is sure to sign it.

I don’t know about you, but I have no interest in participating with Chris Dodd, Barack Obama, and their radical environmentalist friends in their version of Extreme Home Makeover.  The Dodd Bill, in the spirit of the U.N.’s “Agenda 21,” focuses on “sustainable development” and “comprehensive regional plans.”

These are code words for government determining not only how you live in your own home, but deciding what your neighborhood looks like by using your tax dollars to bribe state and local governments into forcing your community to fit federal guidelines.

There is not a minute to lose. A Senate filibuster is the only chance to stop this U.N. power grab.

Under the guise of “sustainability” the Dodd Homeowner Control Act will create a massive new Office of Sustainable Housing and Communities, likely to be under the control of a “Development Czar.”  Such a Czar would be tasked with imposing federal standards on energy, zoning, and housing that line up with the U.N.’s radical environmental agenda. State and local laws and zoning would be wiped out.

It’s vital that sign the petition to your Senators demanding they oppose the Dodd Homeowner Control Act (aka Dodd’s Livable Communities Act, S. 1619)…..

Indeed Section 13 of the proposed bill does seem to give a broad jurisdiction to regional planning boards and contains the code words for such things as high density housing, etc.  Given the state of the economy and the performance of local planning agencies, I get a little queasy on this one.  In general, I don’t have any problems with looking at local situations and deciding what is best for the community and the environment.  The problem seems to be that extreme activists seem to populate the local boards and things get a bit absurd and in a lot cases infringes significantly on individual property rights and more specifically, the owner’s right to appreciate his property in the way that seems reasonable to the owner.

To extend the powers of local planning commissions to a regional level is at the least worrisome to me.  If you are a property owner or a local developer, I think you should really take a look at this bill and weigh in on this one.  After it passes, it may just be too late to do anything that would be pre-emptive in nature.

What If? What If We Could End the Economic Crisis Tomorrow?

What if we could eliminate our economic crisis tomorrow and we could instantly raise the world’s standard of living by 100 fold.  I know, you think I have finally gone over the cliff.  Well if I have, then I am in the company of a growing number of scientists and engineers.

What if we had free unlimited availability of energy.  No transmission lines, no meters, just you tapping as much energy as you want and delivered in any wattage, voltage, and amperage you desired.  Sounds really fantastic doesn’t it? Well, what if I said there is evidence that just such a source of energy has been understood and available since 1902!

I started researching this topic about six months ago and quite frankly thought I would run into the usual Tesla myths and a lot of theoretical material, but nothing of any substance.  Six months later and I must tell you there is a helluva of lot of smoke!

Just so we are clear here, I am NOT talking about new and improved solar power, or hydrogen power, or wind technology.  The following summaries of technologies that I AM talking about in this article.

1. Transitional technologies. These are devices or processes that enable existing energy sources to be much more efficient, reduce pollution or clean up existing environmental hazards. For example, add-on devices to retrofit cars and trucks with a technology that significantly increases fuel economy.

2. Electromagnetic energy devices that are overunity. These include generators, solid-state devices and magnetic plasma devices that perturb the zero point energy field (or quantum vacuum flux field) to tap electromagnetic energy and create usable power, without a net external fuel source or pollution.

3. Advanced propulsion systems that use electromagnetic fields to alter the mass and space around an object to allow for lift and drive. These “electrogravitic” systems will enable travel to be pollution free, rapid and without the use of fossil fuels of any type or use of surface roads.

17 years of research by Dr. Greer, Dr. Loder and other members of The Orion Project, who have been studying energy generation and propulsion technologies have identified a number of new energy technologies that within 6 months to several years, given proper funding, may be ready for marketing. A number of these technologies were presented at a briefing for the US Senate EPW in 2001 at the request of the Chair of the EPW, Senator Bob Smith (R-NH) (Loder, 2001).

In Ocotober of 2009, the Orion Project wrote a briefing that was submitted to President Obama.  The full text of that report can be found here, theorionproject.org.

If there are working technologies out there, why haven’t they been brought forward.  The answer to that question can be traced all the way back to Tesla for sure.  As the story goes, Tesla sought financial support for just such a device from John D. Rockefeller.  After Rockefeller saw Tesla demonstration, he said, “where do I put the meter?.”

According to the Orion Project, there are a number of ways these technologies are being suppressed. For example:

Acquisition of the technology by ‘front’ companies whose intent has been to ‘shelve’ the invention and prevent the device from coming to market.

Denial of patents and intellectual property protection by systematic action by the US and other patent offices.

Seizure or suppression of the technology by the illegal application of section 181 of the US Patent law or other illegal applications of national security provisions that result in the technology being classified or deemed “of significance to the national security”. Note that these applications are illegal actions taken by rogue, unsupervised individuals and entities who are working in collusion with interests to suppress these technologies.

Abuses by other regulatory or licensing entities, including but not limited to rogue elements within the Department of Defense, CIA, NSA, Federal Trade Commission, Department of Energy and others.

Targeting the inventor or company with financial scams, illegal financial arrangements that lead to the demise of the company, and similar traps.

Systematic interception of funds and essential financial support needed to develop and commercialize such fundamental new energy sources.

A pattern of harassment, bomb threats, theft and other shadowy actions that frighten, intimidate and demoralize those inventing, holding or developing such technologies; significant bodily harm and murder have also apparently occurred.

Inducements through significant financial buyouts, offers of positions of power and prestige and other benefits to the owner of such technologies to secure their cooperation in suppressing such technologies.

Scientific establishment prejudice and rejection of the technology in light of unconventional electromagnetic effects thought to be not possible by current scientific conventional wisdom.

Corruption of scientific entities and leaders through clandestine liaisons with rogue classified or shadowy private projects that intend to suppress such devices.

Corruption of major media entities and key figures through clandestine liaisons with rogue classified or private shadowy projects that intend to suppress such devices.

My research seemed to confirm that there were a lot of “mysterious events” including freak accidents and loss of life involving scientists and engineers working on the basic science and technologies related to the types of energy we have been discussing.  Nearly 125 such incidents have occurred in the last five years.  I also found evidence that these technologies are discussed openly and as a given in places like NASA and DOE.

I think we can understand how suppression of such technologies may happen, given big oil and the fact that the entire world’s economy is based on fossil fuels.  However, given global warming, tension in the Middle East, collapsing world economies, and expanding world poverty, hunger, and disease we can no longer afford such “privilege”.

What Dr. Greer and his colleagues are asking of the President seems very reasonable to me.  Basically they asked the President to take the following actions:

In addition to the science and engineering aspects of developing these technologies, there will need to be active development of commensurate policies and strategies in the following areas:

• Application of these technologies in the developing world and the granting of such technologies to abate widespread poverty and environmental decay in those regions;

• Understanding the financial, economic and industrial implications of these technologies and determining how to best transition from a carbon-based industrial society to a clean, so called ‘free energy’ society, with minimal disruption;

• Determination of the national security and international security implications of these technologies and how to best empower existing governmental and international institutions to ensure a smooth transition to a new economy and geopolitical order;

• Development of higher order applications of these technologies such as combining new energy generators with advanced desalination processes for fresh water production;

• Determination of the long-term social, cultural, and geopolitical implications of these technologies as they help eliminate poverty, empower economies at the local/village level, and alter the zero-sum game of limited resources such as fossil fuels;

• Determination of medical, telecommunications and space travel applications of these technologies;

• Determination of methods to avoid and if necessary, contain the weaponization of such energy and propulsion technologies;

• Determination of the implications of these technologies for social justice, peace and the creation of a long-term sustainable civilization on Earth, among others.

It seems also apparent to me that even if there was only a slim hope that these technologies can deliver what is claimed and in some cases, well documented and demonstrated, then we absolutely must direct our collective resources to develop the applicable technologies.  I present this information for you to consider, and if you come to the same conclusions I did, we need to inform our representatives to act on this hopeful potential.  Given the state of the world it is simply immoral to do otherwise.  What if?

The Sad Decline of America or is it?

As I have written several times in this blog, the current economic “recession” is no such thing.  This is a great depression, as bad as the first, and in many ways it may be worse.  As long as we continue to believe the “happy talk” we will not demand the focus on the real issues that are at the center of the current problems.

We have seen the largest transfer of wealth to the top 1% than in any other time in our history.  The middle class has lost $10 Trillion in wealth in just 24 months!  The top 1% now control 43% of the personal wealth in this country.  Financial reforms have been a joke, not attacking the instruments of this war, credit derivatives, Repos, and High Frequency Trading (HFT’s).  Clearly, the banksters and big oil, healthcare and pharmas don’t seem to see any need to change their modus operandi in a compassionate response to the fact they just fleeced the middle class to death.

Mostly by accident, the tea party express has at least shown us that we DO HAVE the ultimate power and that is our vote.  While big business can easily buy votes on the hill doesn’t mean they can buy the votes on the street and it is the vote on the street that trumps the vote on the hill.  What it illustrates to us all is that even whacky activism can “shake things up” a bit.

We do need to wake and begin to shake up our leaders.  In fact, we should rough them up a little as well.  Before anyone starts calling me a radical, let me clearly what I mean by “rough them up”.  I mean we should all be calling or writing our representatives.  We should all turn out to their “town hall” meetings and local offices to let them know we are watching and we are informed and we are not whackos, but the very middle class of this country.  We are the ones who built this nation with our sweat and we are the very same grunts who bought all the big companies’ stuff and invested in their little scams and we ARE THE ONES IN CHARGE HERE.

If you need to get fired up a bit consider this:

15 Shocking Facts About Poverty In America

1.  45 million Americans were living in poverty in 2009

2.  2009 saw the largest single year increase in the U.S. poverty rate since the U.S. government began calculating poverty figures back in 1959.

3.  The U.S. poverty rate is now the third worst among the developed nations tracked by the OECD.

4.  Household participation in the food stamp program has increased 20.28% since last year.

5.  The number of Americans on food stamps surpassed 41 million for the first time ever in June

6.  As of June, the number of Americans on food stamps had set a new all-time record for 19 consecutive months.

7.  One out of every six Americans is now being served by at least one government anti-poverty program.

8.  More than 50 million Americans are now on Medicaid, the U.S. government health care program designed principally to help the poor.

9.  One out of every seven mortgages in the United States was either delinquent or in foreclosure during the first quarter of 2010.

10.  Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as in 2007.

11.  The number of Americans receiving long-term unemployment benefits has risen over 60 percent in just the past year.

12.  28% of all U.S. households have at least one member that is looking for a full-time job.

13.  Nationwide bankruptcy filings rose 20 percent in the 12 month period ending June 30th.

14.  More than 25 percent of all Americans now have a credit score below 599.

15.  One out of every five children in the United States is now living in poverty.

What we need really now is a tea party type movement, but with sanity and reality at its core.  The PTB are counting on that not happening.  While the Republicans are worried in the short term because of their association with the psycho-babblers, they feel in the long run, they will regain control of the far right within the party.  The Democrats are thankful for the tea party because in the mid-term elections, they will help Democrats minimize the damage.

The reality though is that only 8% of ALL voters actually support or believe the tea party agenda!  So it seems to me to be a no-brainer to form an active bloc of the “Silent and Sane Majority”.  We don’t talk much, but when we do everyone will listen.  It is time to put the kids and fools in their place. Look around, who else is going to do it.

Are Small Farmers and Co-Ops Under Attack?

I am getting concerned as to what is happening in relation to food and water.  What I mean specifically is three things.  First, it seems our government, especially the FDA, but also Homeland Security, is busting organic farmers and dairies all over the country.  Collecting rainwater is now illegal in many states. Secondly, it seems that our seed markets are being controlled by a few big ag producers and they are being very aggressive to insure you and I don’t own the seeds we develop from our growing.  And finally, there is pending legislation that seems to extend this control even further.

Stories like the following example are cropping up all over the country.  Swat teams, cars of police ascending with guns drawn on co-op farmers and independent small grower’s farms, taking everything like computers and farm equipment as “evidence’.  Raiding organic food stores. A sign of new times?

Collecting rainwater is illegal in many states, especially western states, such as Utah where it is illegal to collect rainwater without a “water right” permit!

And now S 510, the Food Safety Modernization Act of 2010, which may be the most dangerous bill in the history of the US.  It is to our food what the bailout was to our economy, only we can live without money.

“If accepted [S 510] would preclude the public’s right to grow, own, trade, transport, share, feed and eat each and every food that nature makes.  It will become the most offensive authority against the cultivation, trade and consumption of food and agricultural products of one’s choice. It will be unconstitutional and contrary to natural law or, if you like, the will of God,” according to Dr. Shiv Chopra, Canada Health whistleblower.  It is similar to what India faced with imposition of the salt tax during British rule, only S 510 extends control over all food in the US, violating the fundamental human right to food.

Monsanto says it has no interest in the bill and would not benefit from it, but Monsanto’s Michael Taylor who gave us rBGH and unregulated genetically modified (GM) organisms, appears to have designed it and is waiting as an appointed Food Czar to the FDA (a position unapproved by Congress) to administer the agency it would create — without judicial review — if it passes.  S 510 would give Monsanto unlimited power over all US seed, food supplements, food and farming.

History

In the 1990s, Bill Clinton introduced HACCP (Hazardous Analysis Critical Control Points) purportedly to deal with contamination in the meat industry.  Clinton’s HACCP delighted the offending corporate meat packers since it allowed them to inspect themselves, eliminated thousands of local food processors (with no history of contamination), and centralized meat into their control.  Monsanto promoted HACCP.

In 2008, Hillary Clinton, urged a powerful centralized food safety agency as part of her campaign for president.  Her advisor was Mark Penn, CEO of Burson Marsteller*, a giant PR firm representing Monsanto.  Clinton lost, but Clinton friends such as Rosa DeLauro, whose husband’s firm lists Monsanto as a progressive client and globalization as an area of expertise, introduced early versions of S 510.

S 510 fails on moral, social, economic, political, constitutional, and human survival grounds.

1.  It puts all US food and all US farms under Homeland Security and the Department of Defense, in the event of contamination or an ill-defined emergency.  It resembles the Kissinger Plan.

2.  It would end US sovereignty over its own food supply by insisting on compliance with the WTO, thus threatening national security.  It would end the Uruguay Round Agreement Act of 1994, which put US sovereignty and US law under perfect protection.  Instead, S 510 says:

COMPLIANCE WITH INTERNATIONAL AGREEMENTS.

Nothing in this Act (or an amendment made by this Act) shall be construed in a manner inconsistent with the agreement establishing the World Trade Organization or any other treaty or international agreement to which the United States is a party.

3.  It would allow the government, under Maritime Law, to define the introduction of any food into commerce (even direct sales between individuals) as smuggling into “the United States.” Since under that law, the US is a corporate entity and not a location, “entry of food into the US” covers food produced anywhere within the land mass of this country and “entering into” it by virtue of being produced.

4.  It imposes Codex Alimentarius on the US, a global system of control over food. It allows the United Nations (UN), World Health Organization (WHO), UN Food and Agriculture Organization (FAO), and the WTO to take control of every food on earth and remove access to natural food supplements.  Its bizarre history and its expected impact in limiting access to adequate nutrition (while mandating GM food, GM animals, pesticides, hormones, irradiation of food, etc.) threatens all safe and organic food and health itself, since the world knows now it needs vitamins to survive, not just to treat illnesses.

5.  It would remove the right to clean, store and thus own seed in the US, putting control of seeds in the hands of Monsanto and other multinationals, threatening US security. See Seeds – How to criminalize them, for more details.

6.  It includes NAIS, an animal traceability program that threatens all small farmers and ranchers raising animals. The UN is participating through the WHO, FAO, WTO, and World Organisation for Animal Health (OIE) in allowing mass slaughter of even heritage breeds of animals and without proof of disease.  Biodiversity in farm animals is being wiped out to substitute genetically engineered animals on which corporations hold patents.  Animal diseases can be falsely declared.  S 510 includes the Centers for Disease Control (CDC), despite its corrupt involvement in the H1N1 scandal, which is now said to have been concocted by the corporations.

7.  It extends a failed and destructive HACCP to all food, thus threatening to do to all local food production and farming what HACCP did to meat production – put it in corporate hands and worsen food safety.

8.  It deconstructs what is left of the American economy. It takes agriculture and food, which are the cornerstone of all economies, out of the hands of the citizenry, and puts them under the total control of multinational corporations influencing the UN, WHO, FAO and WTO, with HHS, and CDC, acting as agents, with Homeland Security as the enforcer.  The chance to rebuild the economy based on farming, ranching, gardens, food production, natural health, and all the jobs, tools and connected occupations would be eliminated.

9.  It would allow the government to mandate antibiotics, hormones, slaughterhouse waste, pesticides and GMOs. This would industrialize every farm in the US, eliminate local organic farming, greatly increase global warming from increased use of oil-based products and long-distance delivery of foods, and make food even more unsafe.  The five items listed — the Five Pillars of Food Safety — are precisely the items in the food supply which are the primary source of its danger.

10. It uses food crimes as the entry into police state power and control. The bill postpones defining all the regulations to be imposed; postpones defining crimes to be punished, postpones defining penalties to be applied.  It removes fundamental constitutional protections from all citizens in the country, making them subject to a corporate tribunal with unlimited power and penalties, and without judicial review. It is (similar to C-6 in Canada) the end of Rule of Law in the US. In addition to this act, keep in mind the designed “Anti-Hoarding Act” making it illegal to store more than 30 days food supply.

Even without S510, it seems that the big ag companies already believe they are in control of our food supply.  Consider this by Jack Kaskey:

June 25 (Bloomberg) — Monsanto Co., the world’s biggest seed company, is being investigated by West Virginia over possibly misleading growers who were promised improved yields from its new Roundup Ready 2 Yield soybean seeds.

“My office is concerned that West Virginia farmers are paying much higher prices for soybeans with the Roundup Ready 2 trait when the yields do not live up to the claims and do not justify the increased prices,” West Virginia Attorney General Darrell V. McGraw wrote in a letter dated June 24 and posted on his website.

Monsanto last year began shifting growers to the new seeds by promising a 7 percent to 11 percent bigger harvest compared with the original Roundup Ready soybean seeds, which loses patent protection in 2014. Iowa State University, Pennsylvania State University, a farmer group and investment researcher OTR Global found the latest seeds failed to boost yields as promised, McGraw said in the letter.

The St. Louis-based company may have engaged in unfair or deceptive acts under West Virginia law and be subject to penalties, McGraw wrote. He invited the company to meet before the state possibly begins litigation. Monsanto has data demonstrating the improved performance, it said in an e-mailed statement. Roundup Ready 2 soybeans increase yields on average by 3.6 bushels, more than 7 percent, according to 40,000 comparisons the company conducted between 2007 and 2009, it said.

Purchase Decisions

The attorney general’s letter “is based on a misunderstanding of our national marketing materials,” Monsanto said. “Growers measure the performance of these products on their farm and make their purchase decisions based on what’s right for them.”

Roundup Ready 2 soybeans were planted on 1.5 million acres last year and cost growers $74 an acre, 42 percent more than the older product. West Virginia growers bought enough of the new seeds to plant fewer than 50 acres in 2009, Monsanto spokesman Lee Quarles said. Sales this year aren’t yet available, he said.  West Virginia grew about 18,000 acres of the nation’s 77.5 million acres of soybeans last year, making it the smallest soybean-growing state tracked by the U.S. Department of Agriculture.

On the regulatory side we are hearing more and more stories like below:

Earlier in June, agents of the Minnesota Department of Agriculture, escorted by police and also bearing search warrants, raided and shut down Traditional Foods Warehouse, a popular food club in Minneapolis specializing in locally-produced foods. They also raided two farms suspected of illegally selling raw milk. And in a national first among such raids, agents searched a private home and made off with computers; the family’s offense appears to have been that it allowed one of the raw dairy farmers to park in its driveway to distribute raw milk to area residents who had ordered it.  The Minnesota Department of Agriculture has declined comment on such raids, saying they are part of an ongoing investigation into raw milk distribution in the state in lieu of eight illnesses in May linked to raw milk.

Meanwhile, the Wisconsin Department of Agriculture, Trade, and Consumer Protection has launched three raids over the last three months on the dairy farm and farm store of Vernon Hershberger, near Madison. The day after DATCP agents placed seals on his fridges storing raw dairy products in July, Hershberger cut the seals, and announced he was going to challenge the agency’s contention he needs a dairy and retail license to sell his products. Obtaining such licenses would be problematic, though, since Wisconsin prohibits sale of raw milk, except “incidental” sales, and defining “incidental” has been a bone of contention for many years. In any event, Hershberger contends he sells only to consumers who contract privately for his food.

What’s behind all these raids? They seem to stem from increasing concern at both the state and federal level about the spread of private food groups that have sprung up around the country in recent years — food clubs and buying groups to provide specialized local products that are generally unavailable in groceries, like grass-fed meats, pastured eggs, fermented foods, and, in some cases, raw dairy products. Because they are private and limited to consumers who sign up for membership, these groups generally avoid obtaining retail and public health licenses required of retailers that sell to the general public. (For more on what’s behind the raids, see this new post.)

In late 2008 and early 2009, the representatives of state agriculture agencies in Wisconsin, Indiana, Michigan, and Illinois met via phone conferences with representatives of the FDA to map a plan for targeting raw-milk buying clubs in the Midwest. The meetings came to light after Max Kane, the owner of a Wisconsin buying club who was subpoenaed by Wisconsin authorities for the names of his customers and suppliers, obtained email accounts of the sessions via a Freedom of Information request to Wisconsin’s Agriculture, Trade, and Consumer Protection department. (Kane has since been prosecuted by Wisconsin authorities for contempt of court for failing to give up the names; his case is under appeal after he was found guilty last December.)

Now, the Midwest program seems to have gone national, and the recent spate of raids suggests a quickening pace and broadened scope. While most raids before the Midwest government meetings had been related to raw-milk distribution, some, like a December 2008 armed raid of Manna Storehouse, an Ohio food club near Cleveland, have been about licensing issues. In that raid, armed law enforcement officers held a mother and eight young children being home-schooled at gunpoint for several hours while they searched the home and food storage areas. A legal challenge to the raid by the family is still tied up in court.

The current uptick has Pete Kennedy of the Farm-to-Consumer Legal Defense Fund concerned, not only about the spreading of the raids, but about the seemingly easy willingness of judges to hand out search warrants. While the U.S. Constitution’s fourth amendment suggests judges should exercise tight controls over search warrants (“no Warrants shall issue, but upon probable cause…”), Kennedy observes, “I haven’t seen an agency turned down yet” over the last four years in requests for search warrants connected with raw milk and other food production and distribution.

Is this some government conspiracy to take over the food supply?  No , I don’t think so.  What it is however, is large private corporations using their influence to insure their domination in the market place.  I have very strong fundamental problems with that modus operandi when it comes to food and a private individual’s right to grow food and to share food.  It is simply over the line by any standard.  If we can’t agree on geo-politics or the economy, surely we can be united when it comes to our food, can’t we? Oh God I hope so.

The Psychology of the Economy

It is interesting how much technical data is available to both big and little investors and yet when you look at when disaster strikes, it is rarely for pure technical reasons.  Most sharp downturns in the economy are triggered by market perceptions.  It always starts with a few big players getting the jitters and start dumping and then the lemming effect kicks in and all run off the cliff and a few actually take the real dive out of their Fifth Avenue apartments.

So I thought I would research a bit into what is the current perceptions by both the big boys and the  man on the street.  What I found was that a second big dip appears to be a reality.  It is not a matter of if it will happen, but only a question of when.  I personally have felt for some time a second dip, to say the Dow at 6500 by spring, could be a strong possibility.  However, now I think it might be the only reality.

You be the judge.  First how do we collectively feel about the future of the economy.  Consider the following from USNewswire.

NEW YORK, Sept. 9 /PRNewswire-USNewswire/ — Almost two in three Americans (65%) say a double-dip recession — defined as a recession followed by a short-lived recovery, followed by another recession — is now likely to happen.  Among those who expect a double-dip recession, nearly half (44%) fear it will be worse than the first one, with 21% worried it will be “much more severe.” Just 24% think the second recession will be less severe. These findings come from a recently conducted survey of 1,043 Americans by the polling firm StrategyOne, a Daniel J. Edelman company.

As they are bracing for a second downturn, Americans are certainly not holding their breath for a full recovery coming anytime soon. Just 5% think there will be a full economic recovery by the end of this year, and only another 21% see recovery taking place by the end of 2011.  Half of all Americans polled (50%) see a recovery not coming until sometime after the end of 2011, and about a quarter (23%) doubt our economy will ever fully recover.

But beyond feelings about where the economy is today and where it is heading next, fundamental doubts and concerns are being raised about America. The country is split on whether America’s best days lie ahead of us or behind. A slim majority, 52%, say they are ahead of us, while 48% say they are behind us.  There is however consensus around another point –  71% agree that America is fundamentally broken and not working.

OK, so the collective consciousness of the common man seems to have already concluded that a second dip is coming and probably will be worse than the first dip.  But, the common man doesn’t control the markets and certainly the PTB and the billionaires see it differently, right?  Well, consider this article that recently appeared over at CNBC

Source: CNBC

For 25 years, legendary Wall Street strategist Byron Wien, now with The Blackstone Group, has held summer meetings with high net worth individuals to get their outlook on the global economy and investing. This year’s group, totaling fifty individuals and including more than 10 billionaires, was decidedly pessimistic on the U.S. economy, investment opportunities and the Obama administration.

“They saw the United States in a long-term slow growth environment with the near-term risk of recession quite real,” said Wien, in a commentary to Blackstone clients. “The Obama administration was viewed as hostile to business and that discouraged both hiring and investment. Companies and entrepreneurs were reluctant to add workers because they didn’t know what their healthcare costs or taxes were going to be.”

The strategist, (whose “Ten Surprises” predictions for the New Year became required reading on Wall Street when he was at Morgan Stanley), declined to name the participants in this year two so-called benchmark lunches. However, the gatherings, which typically takes place out on the eastern end of Long Island, have included in the past such investing legends as George Soros, Julian Roberson, and James Chanos, according to an account of one such lunch in 2007 by The Financial Times.

Stocks are off their August lows this month and many traders, including Jim Iuorio, attribute some of those gains to this changing political tide. Still, President Obama re-emphasized in a press conference today that extending the Bush-era tax cuts for the wealthy was not in his stimulus plans.

“A massive reduction in the consumer debt load, a workforce without the right skills for the jobs of tomorrow, and too high labor costs relative to other countries “are not problems that are likely to be solved any time soon,” wrote Wien of the attitude of the people at the lunches, which took place in two groups on successive Fridays last month. “Only a few investors thought the Standard & Poor’s could reach 1200 next year.”

So what are the billionaires buying if this environment continues? Wien said “vacant office building,” “farmland” and “Africa” were some of the ideas thrown out. Not too many things for the regular investor.

“Billionaires have little in common with the retail investor in terms of investment options,” said Stephen Weiss of Short Hills Capital. “They don’t rely on mutual funds or stock/bond picking for return unless it is very concentrated. Their investments are generally more strategic and negotiated in businesses or other assets such as commercial real estate.”

To be sure, the folks at Wien’s lunches certainly have the most money at stake, but that hasn’t meant they were always correct. As The Financial Times chronicled in August 2007, only George Soros and one other big investor believed the economy was headed into a recession or a bear market. Now, we know those two men, not the consensus, were correct.

The scary part this time is that it seems from reading Wien’s commentary that there were not many dissenters.  “The lunches were over about three-fifteen,” wrote Wien to end the piece. “I didn’t get the feeling anyone there was rushing out to place an order before the close based on what was said.”

Based on the current psychology of the economy, it looks as if a second dip is all but a done deal and has the potential to be more severe than the first dip down.  Not good news for sure.  My suggestions remain the same.  Reduce your personal debt as much as possible. Reduce your expenses as much as possible. Try to develop a second or even third source of income, don’t rely on the fact you have a job right now. Finally, there are others out there who see this release(second dip) occurring in the late October or early November timeframe.  Looks like it is “Hunker Down” time.

An Update on the Continuing Bank Failures

On October 4th,2009 I wrote that the FDIC had laid out over $55 Billion in insurance funds to cover bank loses, and that I felt the FDIC would go red in January or February of 2010, just based on the math and the rate of bank failures, coupled with the number of banks that were still in trouble.  My concern was the bigger banks still in trouble like Citi.  In December 2009, one of the major shareholders of Citi, Kuwait Investment Fund sold their stake in Citi.  There is also a lot of money moving in the EU after the announcement that Greece is essentially bankrupt.  In my October article, I personally thought that the FDIC might go red sooner than January or February, “much sooner” is what I said exactly.

While many readers commented that I may be too pessimistic about the situation, it actually turned out to be worse than even I thought.  Bank failures for 2009 set a record and FDIC went red in December 2009.  As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund, and its deficit stood at $20.7 billion as of March 31.

282 banks have failed since the beginning of 2008. 400 of the remaining 800 “troubled” banks may be in trouble. George G. Kaufman is the John F. Smith Professor of Finance and Economics at Loyola University Chicago and a consultant at the Federal Reserve Bank of Chicago has this to say about it. “ Bank (depository institutions) failures are widely perceived to have greater adverse effects on the economy and thus are considered more important than the failure of other types of business firms. In part, bank failures are viewed to be more damaging than other failures because of a fear that they may spread in domino fashion throughout the banking system, felling solvent as well as insolvent banks.  Thus, the failure of an individual bank introduces the possibility of system wide failures or systemic risk. This perception is widespread.  It appears to exist in almost every country at almost every point in time regardless of the existing economic or political structure. As a result, bank failures have been and continue to be a major public policy concern in all countries and a major reason that banks are regulated more rigorously than other firms.  Unfortunately, whether bank failures are or are not in fact more important than other failures, and I will argue in this paper that they are not, the prudential regulations imposed to prevent or mitigate the impact of such failures are frequently inefficient and counterproductive.

A little background: Most failed banks are essentially sold to other banks and some go into receivership. The common maneuver here is to transfer the assets and liabilities to another bank with some level of guarantee from the FDIC to help support those liabilities. This is typically done on a Friday evening and causes the bank to be closed perhaps the next day (Saturday) and then the bank opens, business as usual, on Monday. So far, there has been little panic or problems with this modus operandi.

Now however, the FDIC is finding it more and more difficult to find banks that want to help out. That is, the banks that formerly had wanted to purchase other banks have done so and are not interested in buying any more banks. To put it bluntly, the FDIC is running out of buyers.  Often times they are literally coming down to the wire to get all the transactions and contracts, etc. pertaining to the purchase completed in time to seamlessly make the transition, as it is taking longer and longer to secure a buyer.  A recent example is Ideal Federal Savings Bank of Baltimore Maryland with $6.3 M in assets, but will cost the FDIC $2.1M because the FDIC could not find a buyer.

The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force, and only three succumbed in 2007.

The number of banks on the FDIC’s confidential “problem” list has jumped to 775 in the first quarter of 2010 from 702 three months earlier, even as the industry as a whole had its best quarter in two years. A majority of institutions posted profit gains in the January-March quarter. But many small and midsized banks are likely to continue to suffer distress in the coming months and years, especially from soured loans for office buildings and development projects.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.  The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.  While depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government, the concern is competition and more importantly the loss of local community banks that invest locally.

James Wesley Rawles at survivalblog.com suggests we should be forewarned: 1.) The pace of bank failures in the U.S. is likely to increase. 2.) The number of banks that will have to be directly bailed out (rather than conglomerated with little fuss) will increase. 3.) The risk of bank runs will also increase. The point at which bank runs occur is difficult to predict, since it is based upon subtle psychological tipping points.

What is really disconcerting about these facts is that there are several other facts that just don’t jive with the reality of what is going on. Fact One- The FED is sitting on the largest excess cash reserves in its history (over $1 trillion). Fact Two- collectively corporate America is sitting on their largest cash reserves. Fact Three- banks are recalling record numbers of credit lines from small businesses that ARE NOT in default and have no adverse issues.  So while overall the economy is the main cause of the failures, there also seems to be some hidden agendas working as well.  It will be very interesting to read the independent examiner’s report concerning the WAMU closure last year.  Maybe we can find a “smoking gun” from this report that would indicate if there is some hidden agenda in the FDIC’s aggressive actions.  All I know is that there will be little hope of recovery if the “Big Five” are the only ones standing when the “Fat Lady” sings.

Global Warming is Real, But Cap and Trade Schemes Right Now Could Be a Disaster!

I rarely weigh in on issues of religion, politics, or the environment.  However, our country along with several others, are really concerned of the financial impacts of the most popular cap and trade schemes to cap the total amount of CO2 going into the atmosphere.  I share that concern.  My concerns are based on several factors.

First and foremost, while we cannot doubt that CO2 building up in our atmosphere is a cause of heat trapping from the sun.  There is also no doubt that other greenhouse gases such as sulfur dioxide (NOx) and chlorofluorocarbons (CFCs) can contribute in ways that have very long term consequences.  However, there still isn’t anyone who can honestly and scientifically say that these man-made impacts are the CAUSE of global warming.  A contributing factor, yes, but the singular cause, no. There are two big problems with that theory.  First, natural activities such as volcanic eruptions and large forest fires can, in single events, emit more greenhouse gases in one event than man does in a year.  Secondly, while NASA has not made it public, global warming is occurring with our neighbors as well.  Mars, especially, seems to be impacted as much as we have here on earth.  While it would be easy and politically simple to say the sun is to blame, that does not seem to be supported by the sun’s activity of late.  However, it does seem we are seeing some cooling globally that can be related to the lack of sun activity the last few years.

Secondly, any cap and trade schemes are hugely unfair to developing countries.  Countries in Africa and South America would be at disadvantage and development would be delayed in those countries because their baselines would be established at very low levels and the developed countries would no doubt exploit the credits that could come from those countries.

CO2 credit auctions are already in place in the EU and the US.  So, how’s that working out?  Are my fears unfounded?  Well it doesn’t seem so.  This from WatchDog.org

New Jersey Watchdog’s battle over the “secret” records of the Regional Greenhouse Gas Initiative’s cap-and-trade auctions will be waged in a Trenton courtroom.  Investigative reporter Mark Lagerkvist filed suit against the New Jersey Department of Environmental Protection in Mercer County Superior Court for “wrongfully and knowingly” denying access.  Under the state Open Public Records Act (OPRA), Lagerkvist is asking the court to order NJDEP to release documents showing who bought what at RGGI’s auctions of carbon dioxide emission allowances.

In its first eight auctions, RGGI sold $662 million in CO-2 allowances, including $72 million in New Jersey permits.  Those costs are eventually passed along to consumers in higher electric rates.  At the auctions, utilities competed with speculators and financial heavyweights like Goldman Sachs, Morgan Stanley, Merrill Lunch and JPMorgan Chase, as reported by New Jersey Watchdog last month in an investigative report – “The Secrets Ten States & Wall Street Don’t Want You to Know.” Authorities have refused to identify auction winners and how many permits each purchased.

New Jersey Watchdog initially sought the records from RGGI, but the New York-based regional non-profit cooperative contends it is not a public agency subject to OPRA.  The next request went to NJDEP, the agency that supervises New Jersey’s participation in RGGI.  NJDEP claims it does not have the requested recordsdespite regulations mandating the agency to approve auction results, issue permits to winning bidders and oversee the allowance tracking system.

Banks like JPMorgan Chase, Morgan Stanley, and Goldman Sachs already have active carbon trading desks that deal in instruments connected to Europe’s cap-and-trade system and voluntary markets here. But business will explode if a cap-and-trade system becomes law. So it’s no surprise that the financial industry has taken an intense interest in the fine print of the Waxman-Markey bill. According to data compiled by the Center for Public Integrity, the financial services industry has 130 lobbyists working on climate issues, compared to almost none in 2003. They represent companies like Goldman Sachs, JPMorgan Chase, and AIG (before it was shamed into temporarily halting its lobbying activities last fall).

“BP supports an economy-wide price for carbon based on fair and equitable application across all sectors and believes that market based solutions, like a cap and trade or linked-fee, are the best solutions to manage GHG emissions.” (Committee on Energy and Commerce, Subcommittee on Energy and Environment, U.S. House Of Representatives, Hearing, 6/15/10).

At this time when the world’s economy is in such a fragile state, and you got players like Goldman Sach and BP suddenly becoming “Green” we have to be concerned.  This is a politically loaded issue, but it should be only an environmental issue.  Given all that has come to light in recent months about fudged data, over estimates of ice melts, and now all of a sudden, cap and trade auctions that are cloaked in secrecy, I think we all, environmentalists included, should pause and really consider the full financial impacts that would be created by these cap and trade schemes which seem on the surface to be logical, but on closer examination may be just another scheme by the PTB and banksters to capture and control the global wealth.  Just a thought, but it is one we should look at very closely.  If we don’t it might just be the proverbial last straw that kills the global economy permanently.  Well at least for 99% of world’s people.