In Parts I & II we looked back on days past, via Steinbeck and the Great Depression, and wondered if that is a vision of our economic future? Economic issues aren’t the only thing we should be concerned about in the future…, and those issues seem particularly relevant on Independence Day. Thomas Pynchon took a look back at the 60’s and 70’s and gave us his vision of what the Ronald Reagan Road of the 1980’s looked like, behind the media veil, in his book, “Vineland“. I wonder what Pynchon is saying today…, with a new cabinet level government law enforcement agency called Homeland Security…, and Border Patrol agents manning checkpoints, stopping all law abiding citizens and boarding buses? Are they really looking for “terrorists” and illegal aliens? Or are they just testing us…, again…, to see what magnitude of fascist oppression we will stand still for?

Lord Turner of Ecchinswell

VIRTUAL KINGDOM OF GOD & HIS CHRIST UK chapter

After reading Krugman today I'm ready to go hide under a rock. I figured it was bad, but sheesh. There's bad and then there is bad.

Painful acceleration in job losses this month. Economist's expected losses of 365,000, instead they got 467,000.

Here's the killer quote, however:

Consumers are saving 6.9 percent of their disposable income, and spending remains sluggish.

Consumers are still retrenching. 6.9% for American consumers? That's a huge number. An implicit argument in the Times article comes from this quote:

“We have to wait to see where things go,” said Mark Zandi, chief economist at Moody’s Economy.com. “If we didn’t have the stimulus, the economy would’ve contracted twice as fast in the second quarter and the job losses we’re suffering now would be very similar to the ones we were suffering at the beginning of the year.”

I read this to mean the bounce from the stimulus is, to a certain degree, over. Is it? I can't say. We'll have to wait an see what the July numbers are like.

Still, are you still retrenching? Are you saving more than you spend? How are your neighbors doing? Still unemployed? Or recently laid-off? I know far too many people here in Austin who are unemployed. Another indicator is the sheer amount of homeless people I see on the streets, begging at stop lights and the like. This isn't over.

Sue Lannin | July 2

abc.net.au - A leaked report from the World Trade Organisation (WTO) says that nations are throwing up trade barriers in response to the global recession.{snip} WTO director-general Pascal Lamy says the global economy is fragile and that wealthy nations will see exports drop by 14 per cent this year, and that is not going to help the world recover from the worst downturn since the Great Depression.

Charles Lewis | June 27

National Post - Pope Benedict, whose official pronouncments mostly cover matters or religious faith and sexual behaviour, is about to weigh in on the ills of the economy.

In Charity in Truth, which should be released next week, he is expected to point out the failings of capitalism and lament the world's roiling markets, exploited workers and the harsh disparity between rich and the poor.

"Many conservatives will be shocked and disappointed by the encyclical, which will reflect Benedict's skepticism toward unbridled capitalism based on greed," wrote Father Thomas Reese, an American Jesuit scholar and an expert on the Vatican.

Richard Daughty has a fun look at the loss of GM and CitiGroup and the insertion of Cisco Systems and Travelers in the DJI index, necessitating a divisor change.

Now on Sunday amongst friends, you too can opine on the divisor change to 0.132319125 from 0.125552709.

Want to know more, read Richard posting as the Mogambo Guru here. The article has a popularity of 1% at the moment, lets give it a push!

Grant McCool | NEW YORK | June 27

Reuters - Ruth Madoff forfeits asset claims, left with $2.5 million
Sat Jun 27, 2009 8:13am EDT

By Grant McCool

NEW YORK (Reuters) - Ruth Madoff, the wife of epic swindler Bernard Madoff who reaped billions and a lavish family lifestyle, will be left with $2.5 million and have to look for a new home as she forfeits claim to some $80 million in assets.

Documents filed in Manhattan federal court on Friday night showed that Ruth Madoff, 68, who has said nothing in public about her jailed husband's crimes in the six months since his arrest, had come to an agreement with U.S. prosecutors.

“We very much want to work with others to make sure that we have … as pro-American a tax system for corporations as we possibly can …” Lawrence Summers

The Administration is struggling to fund its spending spree in ways that would nominally be consistent with the President’s campaign promises. The Obama budget proposed to inflict two substantial tax increases on U.S. corporations with global operations. One would make it more expensive to bring cash from those operations into the U.S. The other would make it expensive (on average 30% more expensive) to pay Americans, rather than citizens of any other country, to perform headquarters administrative jobs such as accounting, IT, or HR. These proposals were supposedly aimed at fulfilling the promise to “end tax breaks for shipping jobs overseas”. While they hurt companies with global operations, it is hard to see how they would do anything other than reduce U.S. jobs.

June 26

Bloomberg - China’s central bank renewed its call for a new global currency and said the International Monetary Fund should manage more of members’ foreign-exchange reserves, triggering a decline in the U.S. dollar.

“To avoid the inherent deficiencies of using sovereign currencies for reserves, there’s a need to create an international reserve currency that’s delinked from sovereign nations,” the People’s Bank of China said in its 2008 review released today. The IMF should expand the functions of its unit of account, Special Drawing Rights, the report said.

The restatement of Governor Zhou Xiaochuan’s proposal in March added to speculation that China will diversify its currency reserves, the world’s largest at more than $1.95 trillion. Chinese investors, the biggest foreign owners of U.S. Treasuries, reduced holdings by $4.4 billion in April to $763.5 billion after Premier Wen Jiabao expressed concern about the value of dollar assets. That reduction came a month after China boosted its holdings by $23.7 billion to a record.

“Zhou Xiaochuan sees the current international financial system is flawed, putting too much emphasis on the dollar as a reserve currency,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong.

Thalif Deen | United Nations | June 24

IPS -

An international conference on the global financial crisis - hosted by the United Nations - is being marginalised by Western countries which have refused to send any of their political leaders to the meeting.

Of the 126 countries participating in the three-day conference, scheduled to take place Jun. 24-26, there will be two heads of state, four vice presidents, 10 heads of government, three deputy prime ministers and 32 ministers.

But an overwhelming majority of the top level attendees are from the developing world, including Ecuador, Venezuela, Philippines, Brazil, Iran, Gambia, Laos, India, Bangladesh, Honduras, Zimbabwe, China, Russia, Barbados, Malaysia, Grenada, and Trinidad and Tobago.

The only relatively high level Western representation is a deputy prime minister from Luxembourg and six ministers from Finland, Belgium, Germany, Ireland, Netherlands and Britain.

Asked whether this is an attempt undermine the conference and marginalise the United Nations, the President of the General Assembly Fr. Miguel D'Escoto Brockmann said: "There are countries and institutions that are against this global conversation for obvious reasons."

June 24

The Independent -

A group of pensioners has been accused of kidnapping and torturing a financial adviser who lost over €2m of their savings.

The pensioners, nicknamed the "Geritol Gang" by police after an arthritis drug, face up to 15 years in jail if found guilty of subjecting German-American James Amburn to the alleged four-day ordeal.

Two of them are said to have hit him with a Zimmer frame(pic) outside his home in Speyer, western Germany, before he was driven 300 miles to a home on the shores of a lake in Bavaria.

Mr Amburn (56) says he was burned with cigarettes, beaten, had ribs broken, was hit with a chair leg and chained up "like an animal".

The incident began on Tuesday last week after Mr Amburn, the head of an investment firm called Digitalglobalnet, was allegedly attacked by two men aged 74 and 60.

Another couple, retired doctors aged 63 and 66, later arrived to join in the alleged torture.

Stephen Labaton | Washington | June 23

NYT - During the debate over financial regulation, the Federal Reserve chairman, Ben S. Bernanke, has been surprisingly quiet. But behind the scenes, he has been a forceful proponent of giving the Fed more power, both defending his management of the economic crisis and arguing that more authority would help the agency act more decisively to reduce the chances of a recurrence, according to interviews with lawmakers and officials from the Fed, the Treasury and the White House.

Despite criticism by some lawmakers that the Fed failed to anticipate the problems that led to the crisis, Mr. Bernanke has told associates that such critics fail to recognize the extraordinary actions taken by the central bank over the last year.

Mr. Bernanke believes the Fed’s actions have played a major role in averting a possible second Great Depression, according to government officials who know his thinking. Those steps, the Fed chairman has told these people, demonstrate that the agency is up to the larger task assigned to it by the Obama administration.

Phillip inman | New York | June 21

The Observer - Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms.

A lack of competition and a surge in revenues from trading foreign currency, bonds and fixed-income products has sent profits at Goldman Sachs soaring, according to insiders at the firm.

Shobhana Chandra | June 19

Bloomberg - More than one-quarter of American states now have unemployment rates higher than 10 percent, and all but two saw a further job-market deterioration in May.

Tennessee and Indiana joined the rank of states, now 13, that have jobless rates exceeding 10 percent, and eight states - - including California, Florida and Georgia -- reached their highest level of joblessness in May since records began in 1976, the Labor Department reported today in Washington.

The figures make it likely President Barack Obama, whose home state of Illinois also passed 10 percent for the first time since 1983, was correct this week in forecasting the national unemployment rate will reach that level this year. With no region escaping the rout, consumers across the country will probably curtail their spending, preventing any boom out of the deepest recession in half a century, analysts said.

Kevin G. Hall | Washington | June 18

McClatchy -

Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump.

The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.

Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages. However, interest rates dropped to historic lows, and that delayed the detonation of what many housing analysts still see as a ticking time bomb.

"They're probably going to default at a rate that makes subprime look like a walk in the park," warned Rick Sharga, senior vice president for RealtyTrac, a foreclosure research firm in Irvine, Calif.

Option ARMs have triggers that reset to a new interest rate based on either a set timeframe or when debt exceeds some cap above the loan's value. The spring drop in interest rates allowed many borrowers to escape a day of reckoning because the lower rates prevented a triggering of that cap.

That just postponed the problem, however, because most option ARMs have five-year automatic trigger dates. These loans were most prevalent in states such as California, Florida and Nevada, where home prices have sunk so far that many homeowners are underwater: They owe more than their homes are worth.

June 17

Raw Story - President Barack Obama will announce Wednesday the White House’s proposal for reforming the U.S. financial system. The plan will call for the closure of the U.S. Office of Thrift Supervision (OTS), the creation of a new consumer credit protection agency and greater powers for the Federal Reserve to supervise major financial firms.

Reuters characterized the plan as cutting the number of U.S. bank regulators.

The administration would merge the OTS with the Office of the Comptroller of the Currency, an administration official said Tuesday. The proposal also calls for creating the Consumer Federal Protection Agency (CFPA) to police credit, savings and other payment markets, the official added.

It will be guided by five principles, the official said on condition of anonymity, including “transparency, simplicity, fairness, accountability, and access.”

yay banksters regulating banksters!, sample comments after the jump

Robert Green | St Petersburg | June 17

Reuters - A Florida tent city for hundreds of homeless people lies at the end of a dead-end street, but residents say they have not given up hope of a better life despite the U.S. economic downturn.

The Pinellas Hope camp, 250 single-person tents in neat rows on land owned by the Catholic Diocese of St. Petersburg in a wooded area north of the city, has room for about 270 and has been filled to capacity since it opened two years ago.

"I could open the gates and have over 500 people," said Sheila Lopez, the chief operating officer for Catholic Charities at the St. Petersburg diocese.

June 16

The Guardian -
No recovery until next year in world's biggest economy, while ECB says European banks face $283bn more in write-downs

The massive stimulus thrown at the US economy will produce a solid recovery by the middle of 2010, the International Monetary Fund said today but it warned that the worst of the crisis may still lie ahead.

In its annual consultation with the world's number-one economy, the Washington-based group said policymakers were correct to keep the stimulus flowing for now, but would need to turn their attention to the threat of yawning deficits once the crisis had passed.

Published on Monday, June 15, 2009 by TruthDig.com
The American Empire Is Bankrupt
by Chris Hedges

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Shirong Chen | June 15

BBC -
Chinese President Hu Jintao and other leaders are gathering in Russia for the ninth Shanghai Co-operation Organisation summit.

Some will also attend the first summit of the four emerging economies - Brazil, Russia, India and China.

The main agenda item at the meetings in Yekaterinburg will be how to deal with the global economic crisis.

Putting the two top-level meetings next to each other highlights the dominance of the economic crisis for both groups.

The two meetings are further signs of a global power shift.

The Shanghai Co-operation Organisation, or SCO, was formed in 2001 by China, Russia and the four Central Asian nations of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan to curb extremism in the region and enhance border security.

India, Pakistan, Iran and Mongolia later joined as observer members.

It was China's answer to a multi-polar world and increasingly it has played a role in promoting regional security, for example by contributing to reconstruction in Afghanistan.

06/08/2009 15:18

http://www.asianews.it - Bonds worth US$ 134.5 billion are seized. This is the largest financial smuggling case in history. But are they real? Concern over ‘funny money’ or counterfeit securities is spreading in Asia. The international press is silent.

Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each.

Censorship working at full gear. Some rumors here: AsiaNews.it

More about these financial nukes: Market Ticker.

Because the two Japanese have not been arrested, the bonds are real. The problem of the USA is that the bonds shouldn't exist. Bloomberg of course claims that they are counterfeit.

Joyce Smith | June 13

The Kansas City Star -

Calorie counters, beware.

Restaurants across the land, feeding a trend begun several years ago with the introduction of Hardee’s Thickburger, are offering ever-larger burgers, sandwiches and rich dishes.

In this economy, restaurateurs say, they want to give more value for the money. And stressed consumers seem to have a taste for such comfort food. For some diners, words like low fat, diet, organic or healthy are just not on the menu.

“I hate to say it, but if you are down on your luck, you tend to eat more, you lean toward food,” said Kevin Lyman, president of the Kansas City Originals, an organization of area independent restaurants.

The latest burst of big food is not going down well with nutrition experts. To counter the trend, they’re backing federal legislation introduced this week that would require restaurants to list calories on the menu or on menu boards.

Papa Bob’s Bar-B-Que of Bonner Springs calls its entry into the giant sandwich explosion of 2009 the Ultimate Destroyer.(pictured, engorged here)

Take a half-pound of pulled pork and a half-pound of hickory-smoked sliced pork on a 12-inch hoagie bun. Top that with sauce, two slices of bread and then a half-pound of hickory-smoked turkey breast.

Follow that with a half-pound of ham, sauce and two more slices of bread, then three half-pound hickory smoked hamburgers with more sauce and more bread, brisket, sausage, sauce and bun.

In case you’ve lost track, that’s 4½ pounds of meat.

Joseph Stiglitz | The Guardian Comment Is Free

The US has a huge corporate safety net, allowing the banks to gamble with impunity, but offers little to struggling individuals

With all the talk of "green shoots" of economic recovery, America's banks are pushing back on efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details – and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.

The old system worked well for the bankers (if not for their shareholders), so why should they embrace change? Indeed, the efforts to rescue them devoted so little thought to the kind of post-crisis financial system we want that we will end up with a banking system that is less competitive, with the large banks that were too big too fail even larger.

It has long been recognised that those America's banks that are too big to fail are also too big to be managed. That is one reason that the performance of several of them has been so dismal. Because government provides deposit insurance, it plays a large role in restructuring (unlike other sectors). Normally, when a bank fails, the government engineers a financial restructuring; if it has to put in money, it, of course, gains a stake in the future. Officials know that if they wait too long, zombie or near zombie banks – with little or no net worth, but treated as if they were viable institutions – are likely to "gamble on resurrection". If they take big bets and win, they walk away with the proceeds; if they fail, the government picks up the tab.