Monday, February 28, 2011

Constitution Version 2.0: "Of the Banks, By the Banks and For the Banks"


We the People Giant Corporations of the United States, in Order to form a more perfect Union Pig Trough, establish Justice Perpetual Bailouts, insure domestic Tranquility Passivity, provide for the common defence Bewilderment, promote the general Welfare Sense of Cynicism and Helplessness, and secure the Blessings of Liberty Socialism for the Rich to ourselves and our Posterity Key Executives, do ordain and establish this Constitution Version 2.0 for the United States of America ...

Of the banks, by the banks and for the banks.

On a related note, a reader sent me the following:

If the Declaration were written today, how would Jefferson phrase it? A reader speculates . . .

TO THE GOVERNMENT OF THE UNITED STATES:

A DECLARATION

CONCERNING THE RIGHTS OF THE PEOPLE OF THE

UNITED STATES OF AMERICA

When in the Course of human events, it becomes necessary for the people to renounce the political bands which have connected them with their government, and to reclaim among the powers of the earth, the equal station to which the Laws of Nature and of Nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to that renunciation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.
Such has been the patient sufferance of the American people; and such is now the necessity which constrains them to renounce the conduct of their Government. The history of the present Government of the United States is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over its People. To prove this, let Facts be submitted to a candid world.

CONCERNING THE CONGRESS OF THE UNITED STATES:
You have abused the electoral system to guarantee returns for incumbents, and allowed our elections to become advertising campaigns controlled by Monied Interests.
You have ceased to write our Nation’s Laws, allowing them to be written instead by those same Monied Interests that finance your election campaigns.
You have ceased to publicly debate or even read, before enacting, the Laws that Monied Interests write for you.

You have abdicated your responsibility to declare War and secure Peace.

You have saddled the People with the Gambling Debts of the Wall Street Bankers, and in so doing thrown our Nation into Bankruptcy.

IN SUMMATION:

Ninety-eight per cent of Congressional seats are now held by incumbents; a percentage matched only by fraudulent democracies and de facto tyrannies like the former Soviet Union. Those seats are controlled by Special Monied Interests that run our political system, write our laws in their own interests, exchange the Rights of our People for the Privileges of the Oligarchy, and saddle us with Perpetual War.

CONCERNING THE EXECUTIVE BRANCH OF THE UNITED STATES:

You have violated the Fourth Amendment guarantee against unreasonable Search and Seizure, and issued Warrants without Probable Cause.

You have violated the Fifth Amendment guarantee of due process of law, targeting your own citizens for extra-legal assassination.

You have violated the Sixth Amendment guarantee of a public Trial by Jury.

You have violated the Eighth Amendment guarantee prohibiting Cruel and Unusual Punishment with a reign of Torture.

You have saddled the People with the Expense of maintaining in Peacetime a Standing Army of

Two Million Professional and Mercenary Soldiers.

You have built a Thousand Military Bases in 110 Countries Worldwide, and subverted the United States from a Republic to a Military Empire.

You have asserted fraudulent Casus Belli to bend the People’s Will to the Hostile Designs of War.

You have made war on countries--Iraq, Afghanistan, Pakistan--that pose no threat to the American people and desire no conflict with us.

You have abused the Citizens with Propaganda Campaigns to promote these Wars.

You have allowed the Secret Police Forces of the CIA, the NSA, the FBI, and the Military Police to spy upon, arrest, imprison without charges, and torture his own citizens.

IN SUMMATION:

You have lied about Iraqi Weaponry, the Perpetrators of the Anthrax Attack, and the Perpetrators of 9/11 [*Note: see statements below from the chairman of the Senate Intelligence Committee, and chair of the Joint Inquiry of the House and Senate Intelligence Committees into 9/11, and the 9/11 Commissioners themselves, in this regard]; and used those lies to justify the Desecration of our Rights, and the Fearmongering and Warmongering Campaigns that preceded your Armed Invasion of the Middle East. You have allowed the Military Forces and the Secret Police of this country to wrest control from their Civil Authority, and embark on a campaign of world domination that requires as a corollary the usurpation of the fundamental rights of the Citizens of the United States.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Government whose character is thus marked by every act which may define a Tyranny, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our brethren in Government. We have warned you from time to time of your attempts to extend an unwarrantable jurisdiction over us. We have reminded you that our rights under the Constitution and the Bill of Rights are Inalienable. We have appealed to your native justice and magnanimity, and we have conjured you by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. You have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold you, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Citizens of the United States of America, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of this Country, solemnly publish and declare, That these Citizens of the United States are, and of Right ought to be Free and Vested in Liberty; that they are Absolved from all Allegiance to the Government of the United States, and that all political connection between them and the Government, is and ought to be totally dissolved until that Government restores the Rights and Liberties it has unlawfully taken from us; and that as Free and Independent Citizens, we have full Power to create a New Government, and to do all other Acts and Things which Free Citizens may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

* Note: In 2002, Senator Bob Graham - former chairman of the Senate Intelligence Committee, and chair of the Joint Inquiry of the House and Senate Intelligence Committees into 9/11 - told PBS:
I think there is very compelling evidence that at least some of the terrorists were assisted not just in financing -- although that was part of it -- by a sovereign foreign government and that we have been derelict in our duty to track that down, make the further case, or find the evidence that would indicate that that is not true and we can look for other reasons why the terrorists were able to function so effectively in the United States

Indeed, many 9/11 Commissioners, Congressmen and high-level government officials claim that the 9/11 Commission did not get to the bottom of that heinous terrorist act.

6 comments

"The Financial Industry Has Become So Politically Powerful That It Is Able To Inhibit the Normal Process of Justice And Law Enforcement"


In his acceptance speech for winner for best documentary at the Oscars, director Charles Ferguson said:

Three years after our horrific financial crisis caused by financial fraud, not a single financial executive has gone to jail, and that’s wrong.

But none of the mainstream, corporate networks covered it. Not CBS, ABC, NBC or MSNBC.

Ferguson told Reuters:

“The biggest surprise to me personally and biggest disappointment was that nobody in the Obama administration would speak with me even off the record — including people that I’ve known for many, many years,” Ferguson said backstage.

He believes Americans, who lost homes and jobs in the millions because of shady mortgage lending and bank collapses, are disappointed that “nothing has been done.”

“Unfortunately, I think that the reason is predominantly that the financial industry has become so politically powerful that it is able to inhibit the normal process of justice and law enforcement,” said Ferguson.

For background on the subversion of justice to the powers that be, see this.

Indeed, as I have repeatedly pointed out, fraud is one of the main causes of the financial crisis. See this and this.

Even Bernie Madoff tells New York Magazine:

“I realized from a very early stage that the market is a whole rigged job. There’s no chance that investors have in this market.”

***

“The SEC,” he says, “looks terrible in this thing.” And he doesn’t see himself as the only guilty party on Wall Street. “It’s unbelievable, Goldman … no one has any criminal convictions. The whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”

The economy cannot stabilize unless fraud is prosecuted. But the folks in D.C. seem determined to turn a blind eye to Wall Street shenanigans, and is now moving to defund the enforcement agencies like the SEC and CFTC.

And yet the large corporate media never covers this issue. An October 2009 Pew Research Center study on the coverage of the financial crisis found that the media has largely parroted what the White House and Wall Street were saying. (The mainstream media is also pro-war.)

In fact, the financial industry has become so politically powerful that it is able to inhibit the normal process of justice and law enforcement, and the American press.

4 comments

Sunday, February 27, 2011

"Out of Every Dollar that Funds Wisconsin' s Pension and Health Insurance Plans for State Workers, 100 Cents Comes from the State Workers"


Pulitzer prize winning journalist David Cay Johnston - who has written several books on taxes - reports at Tax.com:

Accepting Gov. Walker' s assertions as fact, and failing to check, created the impression that somehow the workers are getting something extra, a gift from taxpayers. They are not.

Out of every dollar that funds Wisconsin' s pension and health insurance plans for state workers, 100 cents comes from the state workers.

How can that be? Because the "contributions" consist of money that employees chose to take as deferred wages – as pensions when they retire – rather than take immediately in cash. The same is true with the health care plan. If this were not so a serious crime would be taking place, the gift of public funds rather than payment for services.

Thus, state workers are not being asked to simply "contribute more" to Wisconsin' s retirement system (or as the argument goes, "pay their fair share" of retirement costs as do employees in Wisconsin' s private sector who still have pensions and health insurance). They are being asked to accept a cut in their salaries so that the state of Wisconsin can use the money to fill the hole left by tax cuts and reduced audits of corporations in Wisconsin.

The labor agreements show that the pension plan money is part of the total negotiated compensation. The key phrase, in those agreements I read (emphasis added), is: "The Employer shall contribute on behalf of the employee." This shows that this is just divvying up the total compensation package, so much for cash wages, so much for paid vacations, so much for retirement, etc.

The collective bargaining agreements for prosecutors, cops and scientists are all on-line.

Reporters should sit down, get a cup of coffee and read them. And then they could take what they learn, and what the state website says about fringe benefits, to Gov. Walker and challenge his assumptions.

And they should point out the very first words the state has posted at a web page on careers as a state employee (emphasis added):

The fringe benefits offered to State of Wisconsin employees are significant, and are a valuable part of an individual's compensation package.

***

But the mainstream press is not even getting basic labor economics right, a much simpler matter.

As Forbes' Rick Ungar notes, the taxpayers do not contribute to the pensions, but do guarantee payment of the pensions if the state makes bad investments:

Many commenters have made the point that, while it is true that it is state employees’ own money that funds the pension plan, when the pension plan comes up short it is up to the taxpayer to make up the difference.

There is some truth in this – but not as much as many seem to think. Because the pension plan is a defined benefit plan – requiring the state to pay the agreed benefit for however long the employee may live in retirement- if the employee lives longer than the actuarial plan anticipated, the taxpayer is on the hook for the pay-outs during the longer life.

But is this the fault of the state employees? The pension agreements are the result of collective bargaining. That means that the state has every opportunity to properly calculate the anticipated lifespan and then add on some margin for error. What’s more, the losses taken by the pension funds over the past few years can hardly be blamed on the employees.

Take a look at what Sue Urahn, an expert on the subject at the Pew Center on the States, has to say about this when describing the $1 trillion gap that existed between the $2.35 trillion states had set aside to pay for employees’ retirement benefits and the $3.35 trillion price tag of those promises.at the end of 2008-

To a significant degree, the $1 trillion reflects states’ own policy choices and lack of discipline:

  • • failing to make annual payments for pension systems at the levels recommended by their own actuaries;
  • • expanding benefits and offering cost-of-living increases without fully considering their long-term price tag or determining how to pay for them; and
  • • providing retiree health care without adequately funding it

Via Pew Center on the States

That is the point. While the governor of Wisconsin is busy trying to shift the blame to the workers in an effort to put an end to collective bargaining, the reality is that it was the state who punted on this – not the employees.

Further, by the state employee unions agreeing to the deal proposed by Walker on their benefits (as they have despite Walker’s refusal to accept it) they are taking on much - and possibly all – of the obligation out of their own pockets.

As a result, the taxpayers do not contribute to the public employee pension programs so much as serve as insurers. If their elected officials have been sloppy , the taxpayers must stand behind it. But if the market continues to perform as it has been performing this past year, don’t be surprised if the funding crisis begins to recede. If it does, what will you say then?

Of course, if you are bearish on the economy - as I am - then this last sentence may seem moot. But Ungar's points that this was bargained-for insurance, and that the state - and not the employees - was responsible for the shortfall, remains.

And as I've previously noted, the little guy shouldn't be asked to sacrifice unless the biggest banks, giant corporations, and top 1% of wealthiest Americans are simultaneously asked to sacrifice.
9 comments

A Higher Percentage of Americans Believed in King George During the Revolutionary War than Believe in Congress Today


Influential Harvard and Stanford law professor Lawrence Lessig noted in a must-watch speech last week that polls show that only 11% of the American people have confidence in Congress.

He notes that more people believed in King George at the time of the Revolutionary War than believe in congress today.

He's right.

Historians have estimated that between 15 and 20% of the white population of the colonies were Loyalists

Watch:


Why do so few Americans today believe in our government? Because the government is serving the giant corporations and the ultra-wealthy, and not Main Street and the common American. And see this.

4 comments

Corporate Profits Soaring Thanks to Record Unemployment


Guest Post by Mark Provost. Mark has more than ten years experience as an equity analyst, specializing in the semiconductor and wireless industry. Mark writes regularly about the US economy for Dollars & Sense, ZMag, Truthout, and Global Research. Mark also told me that several prominent economists have endorsed his essay.

In a January 2009 ABC interview with George Stephanopoulos, then President-elect Barack Obama said fixing the economy required shared sacrifice, "Everybody’s going to have to give. Everybody’s going to have to have some skin in the game." (1)

For the past two years, American workers submitted to the President’s appeal—taking steep pay cuts despite hectic productivity growth. By contrast, corporate executives have extracted record profits by sabotaging the recovery on every front—eliminating employees, repressing wages, withholding investment, and shirking federal taxes.

The global recession increased unemployment in every country, but the American experience is unparalleled. According to a July OECD report, the U.S. accounted for half of all job losses among the 31 richest countries from 2007 to mid-2010. (2) The rise of U.S. unemployment greatly exceeded the fall in economic output. Aside from Canada, U.S. GDP actually declined less than any other rich country, from mid-2008 to mid 2010. (3)

Washington’s embrace of labor market flexibility ensured companies encountered little resistance when they launched their brutal recovery plans. Leading into the recession, the US had the weakest worker protections against individual and collective dismissals in the world, according to a 2008 OECD study. (4) Blackrock’s Robert Doll explains, “When the markets faltered in 2008 and revenue growth stalled, U.S. companies moved decisively to cut costs—unlike their European and Japanese counterparts.” (5) The U.S. now has the highest unemployment rate among the ten major developed countries. (6).

The private sector has not only been the chief source of massive dislocation in the labor market, but it is also a beneficiary. Over the past two years, productivity has soared while unit labor costs have plummeted. By imposing layoffs and wage concessions, U.S. companies are supplying their own demand for a tractable labor market. Private sector union membership is the lowest on record. (7) Deutsche Bank Chief Economist Joseph LaVorgna notes that profits-per-employee are the highest on record, adding, “I think what investors are missing - and even the Federal Reserve - is the phenomenal health of the corporate sector.” (8)

Due to falling tax revenues, state and local government layoffs are accelerating. By contrast, U.S. companies increased their headcount in November at the fastest pace in three years, marking the tenth consecutive month of private sector job creation. The headline numbers conceal a dismal reality; after a lost decade of employment growth, the private sector cannot keep pace with new entrants into the workforce.

The few new jobs are unlikely to satisfy Americans who lost careers. In November, temporary labor represented an astonishing 80% of private sector job growth. Companies are transforming temporary labor into a permanent feature of the American workforce. UPI reports, “This year, 26.2 percent of new private sector jobs are temporary, compared to 10.9 percent in the recovery after the 1990s recession and 7.1 percent in previous recoveries.” (9) The remainder of 2010 private sector job growth has consisted mainly of low-wage, scant-benefit service sector jobs, especially bars and restaurants, which added 143,000 jobs, growing at four times the rate of the rest of the economy. (10)

Aside from job fairs, large corporations have been conspicuously absent from the tepid jobs recovery. But they are leading the profit recovery. Part of the reason is the expansion of overseas sales, but the profit recovery is primarily coming off the backs of American workers. After decades of globalization, U.S. multinationals still employ two-thirds of their global workforce from the U.S. (21.1 million out of 31.2 million). (11) Corporate executives are hammering American workers precisely because they are so dependent on them.

An annual study by USA Today found that private sector paychecks as a share of Americans’ total income fell to 41.9 percent earlier this year, a record low. (12) Conservative analysts seized on the report as proof of President Obama’s agenda to redistribute wealth from, in their words, those ‘pulling the cart’ to those ‘simply riding in it’. Their accusation withstands the evidence—only it’s corporate executives and wealthy investors enjoying the free ride. Corporate executives have found a simple formula: the less they contribute to the economy, the more they keep for themselves and shareholders. The Fed’s Flow of Funds reveals corporate profits represented a near record 11.2% of national income in the second quarter. (13)

Non-financial companies have amassed nearly two-trillion in cash, representing 11% of total assets, a sixty year high. Companies have not deployed the cash on hiring as weak demand and excess capacity plague most industries. Companies have found better use for the cash, as Robert Doll explains, “high cash levels are already generating dividend increases, share buybacks, capital investments and M&A activity—all extremely shareholder friendly.” (5)

Companies invested roughly $262 billion in equipment and software investment in the third quarter. (14) That compares with nearly $80 billion in share buybacks. (15) The paradox of substantial liquid assets accompanying a shortfall in investment validates Keynes’ idea that slumps are caused by excess savings. Three decades of lopsided expansions has hampered demand by clotting the circulation of national income in corporate balance sheets. An article in the July issue of The Economist observes: “business investment is as low as it has ever been as a share of GDP.” (16)

The decades-long shift in the tax burden from corporations to working Americans has accelerated under President Obama. For the past two years, executives have reported record profits to their shareholders partially because they are paying a pittance in federal taxes. Corporate taxes as a percentage of GDP in 2009 and 2010 are the lowest on record, just above 1%. (17)

Corporate executives complain that the U.S. has the highest corporate tax rate in the world, but there’s a considerable difference between the statutory 35% rate and what companies actually pay (the effective rate). Here again, large corporations lead the charge in tax arbitrage. U.S. tax law allows multinationals to indefinitely defer their tax obligations on foreign earned profits until they ‘repatriate’ (send back) the profits to the U.S. U.S. corporations have increased their overseas stash by 70% in four years, now over $1 trillion—largely by dodging U.S taxes through a practice known as “transfer pricing”. (18) Transfer pricing allows companies to allocate costs in countries with high tax rates and book profits in low-tax jurisdictions and tax havens—regardless of the origin of sale. U.S. companies are using transfer pricing to avoid U.S. tax obligations to the tune of $60 billion dollars annually, according to a study by Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon. (18)

The corporate cash glut has become a point of recurrent contention between the Obama administration and corporate executives. In mid December, a group of 20 corporate executives met with the Obama administration and pleaded for a tax holiday on the $1 trillion stashed overseas, claiming the money will spur jobs and investment. In 2004, corporate executives convinced President Bush and Congress to include a similar amnesty provision in the American Jobs Creation Act; 842 companies participated in the program, repatriating $312 billion back to the U.S. at 5.25% rather than 35%. (19) In 2009, the Congressional Research Service concluded that most of the money went to stock buybacks and dividends—in direct violation of the Act. (20)

The Obama administration and corporate executives saved American capitalism. The U.S. economy may never recover.

Sources:
1. ‘This Week’ ABC News with George Stephanopoulos, January 2009. http://abcnews.go.com/ThisWeek/Economy/story?id=6618199&page=2
2. OECD report, U.S. lost most jobs among rich countries. EMMA VANDORE AP Business Writer http://abcnews.go.com/Business/wireStory?id=11104432
3. Carnegie Endowment for International Peace. Policy Brief 89. November, 2010. Uri Dadush & Vera Eidelman. Five Surprises of the Great Recession. http://carnegieendowment.org/files/five_surprises.pdf
4. OECD Indicators of Employment Protection. http://www.oecd.org/document/11/0,3343,en_2649_37457_42695243_1_1_1_3745...
5. The Wall St. Journal. June 8, 2010. Robert Doll. Opinion. The Bullish Case for U.S. Equities. http://online.wsj.com/article/SB1000142405274870356160457528289379646147...
6. Bureau of Labor Statistics. International Labor Comparisons. Updated Dec. 2, 2010. http://www.bls.gov/ilc/intl_unemployment_rates_monthly.htm
7. Bloomberg Businessweek. January 22, 2010. Holly Rosenkrantz.Union membership in the private sector declines to record low: http://www.businessweek.com/news/2010-01-22/union-membership-in-the-priv...
8. Joseph Lavorgna quote: CNBC. When will profits translate into jobs? http://www.cnbc.com/id/40350345/When_Will_Record_Corporate_Profits_Trans...
9. UPI. Temp work becomes a fixture. Dec. 20th, 2010. http://www.upi.com/Business_News/2010/12/20/Temp-work-becomes-a-fixture/...
10. Restaurant industry’s hiring helping to revive economy. DAYTON, Nov 28, 2010 (Dayton Daily News - McClatchy-Tribune Information Services via COMTEX): http://www.techzone360.com//news/2010/11/28/5161348.htm
11. Tax Notes, Martin A. Sullivan. U.S. Multinationals Cut U.S. Jobs While Expanding Abroad. http://taxprof.typepad.com/files/128tn1102.pdf
12. USA Today. May 26, 2010. Private pay shrinks to historic lows as gov't payouts rise. http://www.usatoday.com/money/economy/income/2010-05-24-income-shifts-fr...
13. New York Times. Economix blog. Catherine Rampell. Nov. 23, 2010. Visualizing Booming Profits. http://economix.blogs.nytimes.com/2010/11/23/visualizing-booming-profits/
14. $262 billion in equipment and software investment, calculated from EconStats. http://www.econstats.com/nipa/nipa_5__3___5q.htm
15. ABC News. Dec. 20, 2010. Mark Jewell. S&P 500 Companies More Than Double Buybacks in 3Q. http://abcnews.go.com/Business/wireStory?id=12440445
16. The Economist. Companies’ cash piles: Show us the Money.http://www.economist.com/node/16485673
17. Corporate Income Tax as a share of GDP, 1946-2009. http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=263
18. Bloomberg. May 13, 2010. U.S. Companies Dodge $60 Billion in Taxes with Global Odyssey. http://www.bloomberg.com/news/2010-05-13/american-companies-dodge-60-bil...
19. Bloomberg. Jesse Drucker. Dec 29, 2010. Dodging Repatriation Tax Lets U.S. Companies Bring Home Cash http://www.bloomberg.com/news/2010-12-29/dodging-repatriation-tax-lets-u...
20. Center for Budget priorities. Robert Greenstein and Chye-Ching Huang. Feb. 2009. Proposed Tax Break For Multinationals Would Be Poor Stimulus
“Dividend Repatriation Tax Holiday” Failed in 2004, Unlikely to Work Now. http://www.cbpp.org/cms/index.cfm?fa=view&id=2270

0 comments

Friday, February 25, 2011

Politicians Slash Budget of Watchdog Agencies ... Guaranteeing that Financial Fraud Won't Be Investigated or Prosecuted


As I noted last year, you can tell how interested Congress and the White House are in uncovering the truth by looking at how much money is actually budgeted for investigation:

The government spent $175 million investigating the Challenger space shuttle disaster.

It spent $152 million on the the Columbia disaster investigation.

It spent $30 million investigating the Monica Lewinsky scandal.

The government only authorized $15 million for the 9/11 Commission.

And how much has the government authorized for the Financial Crisis Inquiry Commission? You know, the commission charged with getting to the bottom of what caused the financial crisis?

Just $8 million.

These figures don't account for inflation. For example, the Challenger investigation cost over $300 million in today's dollars.

You can tell alot about the questions which the government is truly interested in finding answers to by the amount of money it authorizes for the various investigations.

The lack of any real interest in uncovering - let alone prosecuting - financial fraud is again on display.

Specifically, as the Wall Street Journal reports today (via MarketWatch):

The Commodity Futures Trading Commission has halted development of a technology program used to flag suspicious trading because of an $11 million cut in its technology budget, increasing rancor within the small agency about how it should spend its money.

***

The tensions offer a taste of spending battles to come at the CFTC and Securities and Exchange Commission if, as seems increasingly likely, Congress refuses to increase the agencies' funding to deal with new mandates created by the Dodd-Frank financial-reform act.

These squabbles have a long history, and often involve budget-process bluffing and gamesmanship between Congress and regulators. The regulators say it's different this time because of the extensive new responsibilities they have been handed under last year's Dodd-Frank legislation. The two agencies say they need another 1,200 staff in total to implement and enforce the sweeping financial overhaul.

"If the requested budget increases are not granted, we will manage within our allocated resources but we'll face a lot of bad choices," Luis Aguilar, a Democrat SEC commissioner, said in an interview.

Such tough choices are already being faced by the CFTC, which has cut $11 million from this year's technology budget, some of which was supposed to help the agency expand an automated surveillance system to examine trades in the futures market.

The system is used to scan millions of trades, looking for patterns that suggest potentially illegal activity. It has only a "handful of alerts, when we need dozens of them," according to someone familiar with the situation.

"It's something we should already have had," Mr. O'Malia, the Republican, said in an interview. "Technology is important in every investigation. We need to look at massive amounts of data, millions of trades."

***

Enforcement work at the SEC is also suffering from an austerity drive, say SEC officials. A ban on nonessential travel has left a number of investigations "in limbo," according to a person familiar with the situation. The person said that foreign bribery cases are being hit particularly hard, because of the need for overseas travel to investigate the allegations.

Complex accounting-fraud cases are also being affected by curbs on the use of expert witnesses, the person said.

"We've had budget freezes before. But this level of clampdown, with every nickel being flyspecked before we can spend it, is unprecedented in my experience," the person said.

Mr. Aguilar warned that the current funding squeeze was "debilitating" for the SEC. "The adverse impact that it has cannot be overstated," he said.

Rep. Scott Garrett (R., N.J.) a top member of the House Financial Services Committee, last month argued that the big spending increases being sought by the agencies "would further the mindset that our nation's problems can be solved with more spending, not more efficiency."

***

Both the CFTC and SEC took on extra staff last year, in anticipation of budget increases pledged—but not guaranteed—by Congress to meet their new responsibilities under the Dodd-Frank law. Now they are being forced to cut other spending to meet their higher staffing costs.

The CFTC on Thursday discussed rules to curb "disruptive trading" required by the Dodd-Frank Act. But the agency says it will be unable to use new powers it has under the act to tackle fraud and manipulation unless it is given more funding.

"We've had this terrible track record [on prosecuting manipulation cases] because the law has not been strong enough," said Bart Chilton, a Democratic CFTC commissioner.

"We finally got the authority we needed and now we're not going to be able to use it," Mr. Chilton said.
It is very telling that we have enough money to extend the Bush tax cuts, to throw boatloads of cash at the big banks so that they can give lavish bonuses, and to continue fighting never-ending wars on multiple fronts giving no-bid contracts to favored contractors, but we can't scrape together a little spare change to fund the regulators and prosecutors.

The economy cannot stabilize unless fraud is prosecuted. But the folks in D.C. seem determined to turn a blind eye to Wall Street shenanigans.


6 comments

Thursday, February 24, 2011

It's Not an Arab Revolution ... It's a GLOBAL Revolution


While the revolution in Tunisia, Egypt, Libya and other North African countries may seem like an "Arab revolt", it's actually worldwide.

Protests involving thousands of protesters have recently been held in:

Predicted Years Ago

The worldwide riots are not mysterious or unforeseeable. They've been predicted for years, and are a direct result of the bad policy choices made by most nations worldwide.

The Bank for International Settlements - the world's most prestigious financial agency, nicknamed the "central banks' central bank" - warned in December 2008 that the bailouts and other bank rescue programs were transferring risks from private companies to nations.

As I noted at the time:

BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.
In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don't have, central banks have put their countries at risk ....
The Root Cause: Bad Economic Policy

Specifically, nations around the world decided to bail out their big banks instead of taking the necessary steps to stabilize their economies (see this, this and this). As such, they all transferred massive debts (from fraudulent and stupid gambling activities) from the balance sheets of the banks to the balance sheets of the country.

The nations have then run their printing presses nonstop in an effort to inflate their way out of their debt crises, even though that effort is doomed to failure from the get-go.

Quantitative easing by the Federal Reserve is obviously causing food prices to skyrocket worldwide (and see this, this and this).

But the fact is that every country in the world that can print money - i.e. which is not locked into a multi-country currency agreement like the Euro - has been printing massive quantities of money.

By way of example only, the Economic Collapse Blog provides the following charts:

The U.S. is printing lots of money.....

Source, The St. Louis Fed

The Bank of England is printing lots of money.....

Source: The BoE

The EU is printing lots of money....

Source: The ECB

Japan is printing lots of money.....

Source: The BoJ

China is printing lots of money.....

Source: The People’s Bank of China

India is printing lots of money.....

Source: Reserve Bank of India


Moreover, the austerity measures which governments worldwide are imposing to try to plug their gaping deficits (created by throwing trillions at their banks) are causing people world-wide to push back.

As I warned in February 2009 and again in December of that year:

Numerous high-level officials and experts warn that the economic crisis could lead to unrest world-wide - even in developed countries:

  • Today, Moody's warned that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world, that in the coming years, evidence of social unrest and public tension may become just as important signs of whether a country will be able to adapt as traditional economic metrics, that a fiscal crisis remains a possibility for a leading economy, and that 2010 would be a “tumultuous year for sovereign debt issuers”.
  • The U.S. Army War College warned in 2008 November warned in a monograph [click on Policypointers’ pdf link to see the report] titled “Known Unknowns: Unconventional ‘Strategic Shocks’ in Defense Strategy Development” of crash-induced unrest:
    The military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” “An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on. “Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read.
  • Director of National Intelligence Dennis C. Blair said:
    "The global economic crisis ... already looms as the most serious one in decades, if not in centuries ... Economic crises increase the risk of regime-threatening instability if they are prolonged for a one- or two-year period," said Blair. "And instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways into the international community."***

    "Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one-to-two-year period."***

    “The crisis has been ongoing for over a year, and economists are divided over whether and when we could hit bottom. Some even fear that the recession could further deepen and reach the level of the Great Depression. Of course, all of us recall the dramatic political consequences wrought by the economic turmoil of the 1920s and 1930s in Europe, the instability, and high levels of violent extremism.”

    Blair made it clear that - while unrest was currently only happening in Europe - he was worried this could happen within the United States.

    [See also this].
  • Former national security director Zbigniew Brzezinski warned "there’s going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots."
  • The chairman of the Joint Chiefs of Staff warned the the financial crisis is the highest national security concern for the U.S., and warned that the fallout from the crisis could lead to of "greater instability".
Others warning of crash-induced unrest include:
Unemployment is soaring globally - especially among youth.

And the sense of outrage at the injustice of the rich getting richer while the poor get poorer is also a growing global trend.

Countries worldwide told their people that bailout out the giant banks was necessary to save the economy. But they haven't delivered, and the "Main Streets" of the world have suffered.

As former American senator (and consummate insider) Chris Dodd said in 2008:
If it turns out that [the banks] are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay.
Of course, the big banks are hoarding, and refusing to lend to Main Street. In fact, they admitted back in 2008 that they would. And the same is playing out globally.

As I noted earlier this month:

Agence France-Press reports today:
The International Monetary Fund stands ready to help riot-torn Egypt rebuild its economy, the IMF chief said Tuesday as he warned governments to tackle unemployment and income inequality or risk war.

No wonder former U.S. National Security Adviser Zbigniew Brzezinski ... warned the Council on Foreign Relations that:

For the first time in human history almost all of humanity is politically activated, politically conscious and politically interactive. There are only a few pockets of humanity left in the remotest corners of the world that are not politically alert and engaged with the political turmoil and stirrings that are so widespread today around the world.

***

America needs to face squarely a centrally important new global reality: that the world's population is experiencing a political awakening unprecedented in scope and intensity, with the result that the politics of populism are transforming the politics of power. The need to respond to that massive phenomenon poses to the uniquely sovereign America an historic dilemma: What should be the central definition of America's global role?

[T]he central challenge of our time is posed not by global terrorism, but rather by the intensifying turbulence caused by the phenomenon of global political awakening. That awakening is socially massive and politically radicalizing.
It is no overstatement to assert that now in the 21st century the population of much of the developing world is politically stirring and in many places seething with unrest. It is a population acutely conscious of social injustice to an unprecedented degree, and often resentful of its perceived lack of political dignity. The nearly universal access to radio, television and increasingly the Internet is creating a community of shared perceptions and envy that can be galvanized and channeled by demagogic political or religious passions. These energies transcend sovereign borders and pose a challenge both to existing states as well as to the existing global hierarchy, on top of which America still perches.

***
That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness.

***

Politically awakened mankind craves political dignity, which democracy can enhance, but political dignity also encompasses ethnic or national self-determination, religious self-definition, and human and social rights, all in a world now acutely aware of economic, racial and ethnic inequities. The quest for political dignity, especially through national self-determination and social transformation, is part of the pulse of self-assertion by the world's underprivileged

***

We live in an age in which mankind writ large is becoming politically conscious and politically activated to an unprecedented degree, and it is this condition which is producing a great deal of international turmoil.

That turmoil is the product of the political awakening, the fact that today vast masses of the world are not politically neutered, as they have been throughout history. They have political consciousness.
Watch an excerpt:

5 comments

Wednesday, February 23, 2011

Government Infiltrates Terror Cells Time and Again ... But Fails to Stop Attacks


It's amazing how governments infiltrate terror cells time and again, but then fail to actually stop the attacks.

London

The Guardian noted on February 13th:

A remark from the sentencing judge that Babar "began co-operating even before his arrest", has raised the possibility, supported by other circumstantial evidence obtained by the Guardian, that he may have been an informant for the US government before his detention by the FBI in April 2004.

***

Having reviewed the court transcript himself, bereaved father Graham Foulkes said: "There's a hint from one or two of the sentences [in the transcript] that do strongly suggest [Babar's] co-operation was going well beyond his official arrest. And it looks as if the Americans may well have known in detail what Babar was up to in Pakistan [at the time] and that is a very, very serious matter."

When judge Marrero's office was asked to clarify the remarks, his office declined to comment. The US attorney's office declined to comment on whether Babar had been working with US agencies before his arrest.

The law enforcement officer involved in Babar's arrest and debriefing also refused to discuss the allegations.

Indeed, this short Fox news interview with terrorism expert and former prosecutor for the Justice Department shows that the bombing "mastermind" was a British intelligence agent (or read the transcript here). And see confirming story here.

An MSNBC translator confirms that claim of responsibility by Al-Qaeda was a fake. And see this regarding the unreliability of the translation.

This article from the Independent raises the question of whether attackers were "arrested and then released" while remaining under close observation by the government".

Times Online reports that the police were "bugging" the car of the mastermind of the bombings.

And apparently Israel was warned ahead of the blasts (confirmed here).

Madrid

BBC reported in 2004:

The Spanish interior ministry says it is investigating reports that two suspects in the 11 March Madrid train bombings were police informants.

The move came after Spain's El Mundo newspaper said Moroccan Rafa Zuher and Spaniard Jose Emilio Suarez had been in contact with police before the attacks.

The men are suspected of providing dynamite for the attacks, which killed 191 people and injured more than 2,000.

The paper said they passed on details about drug deals and other crimes.

New York: 1993

The FBI had penetrated the cell which carried out the 1993 world trade center bombing, but had -- at the last minute -- canceled the plan to have its FBI infiltrator substitute fake powder for real explosives, against the infiltrator's strong wishes (summary version is free; full version is pay-per-view)?

And see this TV news report:


New York: 2001

The government had also infiltrated the 9/11 terror cell:

  • According to the large French newspaper Le Monde, the intelligence services of America's close ally France and of other governments had infiltrated the highest levels of Al-Qaeda's camps, and actually listened to the hijackers' debates about which airlines' planes should be hijacked, and allied intelligence services also intercepted phone conversations between Al-Qaeda members regarding the attacks
  • The National Security Agency and the FBI were each independently listening in on the phone calls between the supposed mastermind of the attacks and the lead hijacker. Indeed, the FBI built its own antenna in Madagascar specifically to listen in on the mastermind's phone calls
  • According to various sources, on the day before 9/11, the mastermind told the lead hijacker "tomorrow is zero hour" and gave final approval for the attacks. The NSA intercepted the message that day and the FBI was likely also monitoring the mastermind's phone calls
  • According to the Sunday Herald, two days before 9/11, Bin Laden called his stepmother and told her "In two days, you're going to hear big news and you're not going to hear from me for a while.” U.S. officials later told CNN that “in recent years they've been able to monitor some of bin Laden's telephone communications with his [step]mother. Bin Laden at the time was using a satellite telephone, and the signals were intercepted and sometimes recorded." Indeed, before 9/11, to impress important visitors, NSA analysts would occasionally play audio tapes of bin Laden talking to his stepmother.
  • And according to CBS News, at 9:53 a.m on 9/11, just 15 minutes after the hijacked plane had hit the Pentagon, "the National Security Agency, which monitors communications worldwide, intercepted a phone call from one of Osama bin Laden's operatives in Afghanistan to a phone number in the former Soviet Republic of Georgia", and secretary of Defense Rumsfeld learned about the intercepted phone call in real-time (if the NSA monitored and transcribed phone calls in real-time on 9/11, that implies that it did so in the months leading up to 9/11 as well)
What About the Terror Arrests?

But what about the arrests which have been made of would-be terrorists? Doesn't that show that governments do sometimes catch the bad guys?

Maybe ... but:
  • Former counterterrorism czar Richard Clarke said:
A lot of the cases after 9/11 were manufactured or enormously exaggerated and were announced with great trumpets by the attorney general and the FBI director so that we felt that they were doing something when, in fact, what they were doing was not helpful, not relevant, not needed.
  • The Washington Post ran a story about one alleged threat entitled "Was it a terror sting or entrapment?", showing that the U.S. government lent material support to the wanna-be terrorists, and put violent ideas in their heads
  • There are numerous other instances of entrapment of peaceful or mentally incompetent people who are then arrested as "terrorists". For example, the "mastermind" of the terrorism plot was a self-confessed "pothead" , another was a crackhead, and that they were all semi-retarded. And see this, this and this
So while there are a lot of loud announcements about catching terrorists, most of the convictions are optics without substance.
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CIA Agent Caught Red-Handed Aiding Pakistani Terrorism?


CNN notes:

News that the American accused of killing two Pakistani men is a CIA contractor has intensified an already highly charged situation in Pakistan.

"Raymond Davis is a CIA Guy," read the headline in the Daily Times newspaper Tuesday.

***

Davis was jailed January 27 after fatally shooting two men who pulled up to him on a motorcycle in a bustling Lahore neighborhood.

***

The 36-year-old Davis is a former member of the U.S. Army special forces and had been employed by security firm XE Services, previously known as Blackwater.

Davis began working for the CIA nearly four years ago. He was assigned to Pakistan in late 2009. He was living with other security personnel at a safehouse in Lahore before the shooting incident.

On Monday, a U.S. government official also said that Davis was a CIA contractor providing security for CIA officers.

The U.S. at first falsely claimed that Davis was a diplomat with the State Department and should therefore be granted diplomatic immunity:

Despite the revelation of Davis' true line of work, U.S. officials on Monday renewed their argument that he has diplomatic immunity and must be released.

***

Before Monday, U.S. officials had described Davis only as an employee who was attached to the U.S. Embassy in Islamabad and who was working at the U.S. Consulate in Lahore at the time of the shootings.

But the deeper story is that Davis allegedly actively aided and abetted terrorism. As CNN notes:

Some newspapers cited unnamed sources to link Davis with "terrorist activity" and the Pakistani Taliban.

"CIA agent Davis had ties with local militants," read the headline in The Express Tribune.

The Tribune quoted an unnamed "senior police official" as saying Davis was suspected in masterminding terrorist activity.

"His close ties with the TTP (The Pakistani Taliban) were revealed during the investigations," the paper quoted the police official as saying. "Davis was instrumental in recruiting young people from Punjab for the Taliban to fuel the insurgency."

The Star explains:
In a story published Tuesday, the English-language Express Tribune quoted a Punjabi police official who said Davis was actually working with the Pakistani Taliban in a bid to stoke insecurity in Pakistan and support the argument that its cache of nuclear weapons isn’t safe.

Call records of Davis’s cellphone allegedly establish his link to 27 Taliban militants and a sectarian group known as Lashkar-e-Jhangvi, the police source said.

Reuters points out that two other CIA contractors were involved in a fatal car accident last month while trying to help Davis, and have now quickly departed from Pakistan, and notes:
Two U.S. officials confirmed media reports the two men involved in the fatal accident were working and living in the same building in Lahore as Davis. They said all three men were working on similar security assignments for the CIA.
Most dramatically, South Asian news agency ANI reports that - according to Russia's Foreign Intelligence Service - Davis was giving nuclear and biowarfare materials to Al-Qaeda:
Double murder-accused US official Raymond Davis has been found in possession of top-secret CIA documents, which point to him or the feared American Task Force 373 (TF373) operating in the region, providing Al-Qaeda terrorists with "nuclear fissile material" and "biological agents," according to a report.

Russia's Foreign Intelligence Service (SVR) is warning that the situation on the sub-continent has turned "grave" as it appears that open warfare is about to break out between Pakistan and the United States, The European Union Times reports.

The SVR warned in its report that the apprehension of 36-year-old Davis, who shot dead two Pakistani men in Lahore last month, had fuelled this crisis.

According to the report, the combat skills exhibited by Davis, along with documentation taken from him after his arrest, prove that he is a member of US' TF373 black operations unit currently operating in the Afghan War Theatre and Pakistan's tribal areas, the paper said.

While the US insists that Davis is one of their diplomats, and the two men he killed were robbers, Pakistan says that the duo were ISI agents sent to follow him after it was discovered that he had been making contact with al Qaeda, after his cell phone was tracked to the Waziristan tribal area bordering Afghanistan, the paper said.

The most ominous point in this SVR report is "Pakistan's ISI stating that top-secret CIA documents found in Davis's possession point to his, and/or TF373, providing to al Qaeda terrorists "nuclear fissile material" and "biological agents", which they claim are to be used against the United States itself in order to ignite an all-out war in order to re-establish the West's hegemony over a Global economy that is warned is just months away from collapse," the paper added.
However, ANI's allegations are uncorroborated at this time, and it is unknown whether Russia's Foreign Intelligence Service said anything of the sort.

See this, this, this, this and this for background.

6 comments

Monday, February 21, 2011

Libya: Government Bombs Civilians, Top Sunni Cleric Puts Out a Death Warrant on Gadhafi, Son Warns of Foreign Occupation, Native Tribes Revolt


The news out of Libya is dramatic.

Dictator Moammar Gadhafi is bombing his own people with military jets.


Two senior officers in the Libyan air force have defected to Malta:

A top Sunni cleric says the army should kill Gadhafi.

Gadhafi’s son is warning: “Stop the protest or face civil war & colonialism”. He states that the U.S. and Europe will occupy Libya if the protests are not reined in.


Libya's own diplomat accuses Gadhafi of 'crimes against humanity' and 'crimes of war'. Military officials are reportedly calling for Gadhafi's removal. And diplomats and the justice minister have resigned. See this.

And Al Jazaeera reports:

Unconfirmed reports suggest the Migraha tribe has now abandoned Gaddafi. This follows the Tuareg and Warfela tribes who came out in support of the protests yesterday.
These are true native peoples. For example, the Tuareg people are nomads of the Sahara:

Tuareg Nomads








4 comments

Sunday, February 20, 2011

Leading Indicators of Revolt in the Middle East and Northern Africa: Corruption, Unemployment and Percentage of Household Money Spent on Food


What determines which Middle Eastern or North African (MENA) countries will face revolt?

On February 3rd, the Economist came up with a list of "vulnerable" countries based upon the amount of democracy, corruption and press freedom:


Unemployment

But the Economist index doesn't take unemployment into account unemployment.

As Alternet notes:
Arab Labour Organisation (ALO) figures show that Arab countries have among the highest unemployment rates in the world -- an average of 14.5 percent in fiscal year 2007/08 compared with the international average of 5.7 percent. The rates may even be higher if one accepts unofficial estimates.
Global risk specialist Mi2g notes:
There are a lot of “orphans” and most are young – 65 percent of the population of the Arab League is under the age of 30. Youth unemployment rates are exorbitantly high – as high as 75 percent in some countries like Algeria. While the informal economy provides partial compensation, this does not provide security; the Jasmine Revolution was triggered by the self-immolation of a young man, Mohamed Bouazizi, unemployed after police confiscated his wheelbarrow, used to make ends meet by selling fruits and vegetables.
On February 2nd, Nomura published a report written by Steven Cook of the Council on Foreign Relations, arguing that youth unemployment and underemployment - along with a large proportion of youth - are primary factors driving revolt in the Middle East:
In both Tunisia and Egypt factors were at play which are also to be found in other economies in the region, notably:–An autocratic and corrupt regime [and] A significant―youth bulge and related unemployment and under-employment....
In other words, when there alot of young, unemployed (or under-employed) people, they might revolt.

Here are statistics from Nomura showing the percentage of youth under 15 years old and median age in years in the Middle East and Northern Africa:






























































CountryPopulation Aged <15>
Median Age (2010)
Algeria 27.0% 26.2%
Egypt 32.1% 23.9%
Iran 23.8% 26.8%
Iraq 40.7% 19.3%
Jordan 34.0% 22.8%
Libya 30.1%26.2 %
Morocco28.0%26.2%
Saudi Arabia32.0 %24.6%
Syria34.7%22.5%
Tunisia22.9%29.1%
Yemen43.4%17.8%


On February 9th, the Economist came up with a revised index, which they call the "shoe thrower's index" (throwing one's shoes at someone is the ultimate sign of disrespect in the Arab world).

The index gives a 35% weighting for the share of the population that is under 25; 15% for the number of years the government has been in power; 15% for both corruption and lack of democracy as measured by existing indices; 10% for GDP per person; 5% for an index of censorship and 5% for the absolute number of people younger than 25:

As a side note, youth unemployment is rising globally. As the New York Times reported last August:
Youth unemployment across the world has climbed to a new high and is likely to climb further this year, a United Nations agency said Thursday, while warning of a “lost generation” as more young people give up the search for work.

The agency, the International Labor Organization, said in a report that of some 620 million young people ages 15 to 24 in the work force, about 81 million were unemployed at the end of 2009 — the highest level in two decades of record-keeping by the organization, which is based in Geneva.

The youth unemployment rate increased to 13 percent in 2009 from 11.9 percent in the last assessment in 2007.

“There’s never been an increase of this magnitude — both in terms of the rate and the level — since we’ve been tracking the data,” said Steven Kapsos, an economist with the organization. The agency forecast that the global youth unemployment rate would continue to increase through 2010, to 13.1 percent, as the effects of the economic downturn continue. It should then decline to 12.7 percent in 2011.

***

In some especially strained European countries, including Spain and Britain, many young people have become discouraged and given up the job hunt, it said. The trend will have “significant consequences for young people,” as more and more join the ranks of the already unemployed, it said. That has the potential to create a “ ‘lost generation’ comprised of young people who have dropped out of the labor market, having lost all hope of being able to work for a decent living.

***

Data from Eurostat, the European Union’s statistical agency, show Spain had a jobless rate of 40.5 percent in May for people under 25.

Indeed, as I have previously pointed out, youth unemployment is also very high in the U.S. And when those who have given up looking for work and those who are underemployed are taken into account (i.e. using the U-6 measure of unemployment), it is clear that the youth of much of the world are suffering Depression-level unemployment.

Food

As many have noted, soaring food prices are also one of the main reasons for the revolts in Tunisia, Egypt, Bahrain, Yemen, Libya and elsewhere.

Nomura pointed out last September:

The World Bank (2009, p.11) estimates that nearly two-thirds of total income
is spent on food in the poor urban population of the developing world. High food prices reduce the ability to meet even basic needs and can lead to increased poverty and become a potential source of protests, riots and political tension ....

Alternet notes:

"Tunisians and Algerians are hungry. The Egyptians and Yemenis are right behind them," Emirati commentator Mishaal Al Gergawi wrote in the Dubai- based newspaper Gulf News. "Mohammad Bouazizi didn't set himself on fire because he couldn't blog or vote. People set themselves on fire because they can't stand seeing their family wither away slowly, not of sorrow, but of cold stark hunger."

While Americans spend less than 15 percent of household expenditures on food, Egyptians spend 50%.

As UPI reports:
Just as in Tunisia, the spark was skyrocketing food prices -- increasing at a brisk 17 percent annually in Egypt. That's unhealthy in any economy but particularly one in which, as estimated by the investment house Nomura, on average 50 percent of household expenditures goes toward food. (In the United States, by comparison, food costs represent 14 percent -- and falling -- of the Consumer Price Index.)

For that, Egyptians may in no small way thank the U.S. Federal Reserve and its policies of "quantitative easing" -- known by most as "printing money."

Nomura prepared the following chart showing household spending on food as a percentage of income and per capita GDP (I've bolded information on the MENA countries):









































































































































































































































































































































































































































































































































































































































































Rank Country Nomura’s Food Vulnerability Index (NFVI) GDP per
capita Current prices US$ 		Household
spending on
food % of total
consumption 		Net food
exports
(% of
GDP)
1 Bangladesh 101.5 497 53.8 -3.3
2Morocco 101.3 2,76963.0 -2.1
3Algeria 101.3 4,845 53.0 -2.8
4 Nigeria 101.2 1,370 73.0 -0.9
5 Lebanon 101.2 6,978 34.0 -3.9
6 Egypt 101.0 1,991 48.1 -2.1
7 Sri Lanka 101.0 2,013 39.6 -2.7
8 Sudan 100.9 1,353 52.9 -1.3
9 Hong Kong 100.9 30,863 25.8 -4.4
10 Azerbaijan 100.8 5,315 60.2 -0.6
11 Angola 100.8 4,714 46.1 -1.4
12 Romania 100.7 9,300 49.4 -1.1
13 Philippines 100.7 1,847 45.6 -1.0
14 Kenya 100.7 783 45.8 -0.8
15 Pakistan 100.6 991 47.6 -0.4
16 Libya 100.6 14,802 37.2 -1.7
17 Dominican Rep 100.6 4,576 38.3 -1.1
18 Tunisia 100.5 3,903 36.0 -1.1
19 Bulgaria 100.5 6,546 49.5 -0.1
20 Ukraine 100.5 3,899 61.0 0.9
21 India 100.4 1,017 49.5 0.3
22 China 100.4 3,267 39.8 -0.3
23 Latvia 100.4 14,908 34.3 -1.1
24 Vietnam 100.4 1,051 50.7 0.8
25 Venezuela 100.4 11,246 32.6 -1.0
26 Portugal 100.4 22,923 28.6 -1.8
27 Saudi Arabia 100.3 19,022 25.1 -1.8
28 Kazakhstan 100.3 8,513 44.7 0.1
29 Uzbekistan 100.3 1,023 34.7 -0.3
30 Russia 100.3 11,832 34.4 -0.7
31 Mexico 100.3 10,232 34.0 -0.5
32 Indonesia 100.2 2,246 47.9 1.0
33 Croatia 100.2 15,637 30.1 -0.9
34 Peru 100.2 4,477 31.8 -0.3
35 Greece 100.2 31,670 38.3 -0.7
36 Belarus 100.1 6,230 42.3 0.8
37 Slovenia 100.1 27,019 25.8 -1.3
38 Syria 100.1 2,682 47.9 1.5
39 Turkey 100.1 9,942 35.2 0.2
40 South Korea 100.1 19,115 23.1 -0.9
41 Colombia 100.1 5,416 28.0 0.0
42 South Africa 100.0 5,678 25.0 -0.1
43 Serbia 100.0 6,811 44.8 1.4
44 Czech Republic 100.0 20,673 27.4 -0.4
45 Lithuania 100.0 14,098 41.1 1.1
46 Guatemala 99.9 2,848 37.1 1.3
47 Slovakia 99.9 18,212 22.3 -0.4
48 Poland 99.9 13,845 32.1 0.7
49 Singapore 99.9 37,597 21.9 -1.0
50 Kuwait 99.9 54,260 30.0 -1.1
51 UK 99.8 43,541 22.5 -1.0
52 Israel 99.8 27,652 17.7 -0.5
53 Japan 99.7 38,455 19.8 -0.6
54 Italy 99.7 38,492 22.1 -0.3
55 Thailand 99.6 4,043 39.0 2.7
56 Hungary 99.6 15,408 29.4 1.6
57 Sweden 99.5 51,950 17.4 -0.7
58 Finland 99.5 51,323 20.5 -0.5
59 Germany 99.5 44,446 18.5 -0.3
60 Spain 99.5 35,215 21.8 0.4
61 Austria 99.5 49,599 19.5 -0.3
62 Ecuador 99.5 4,056 30.6 2.5
63 Switzerland 99.5 64,327 24.0 -0.5
64 Malaysia 99.5 8,209 37.1 2.9
65 France 99.5 44,508 22.0 0.2
66 Brazil 99.5 8,205 20.8 1.8
67 United States 99.3 46,350 13.7 0.2
68 Canada 99.3 45,070 18.0 0.6
69 Australia 99.2 47,370 19.7 1.1
70 Belgium 99.2 47,085 15.9 0.9
71 Chile 99.1 10,084 22.5 3.1
72 Ireland 99.1 60,460 25.8 1.5
73 Norway 99.0 94,759 16.9 -0.6
74 Luxembourg 99.0 109,903 19.1 -1.0
75 Costa Rica 98.9 6,564 30.6 4.7
76 Netherlands 98.9 52,963 13.3 1.6`
77 Denmark 98.8 62,118 16.8 1.8
78 Argentina 98.7 8,236 33.4 5.6
79 Uruguay 98.5 9,654 25.3 5.6
80 New Zealand 97.7 30,439 18.8 7.5

As should be noted, there are countries outside of MENA with extremely high percentages of spending on food.
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