If I have seen further it is by standing on the shoulders of giants.

Wednesday, July 27, 2011

Iowa Polling to Test Paul’s Move to Mainstream

CEDAR RAPIDS, Iowa — Representative Ron Paul has a message for the ardent followers who read his books with a highlighter and donate to his fund-raising “money bombs” on the Internet: Winning the Iowa Straw Poll next month would “rock the establishment.”

Mr. Paul’s libertarian views have moved from the fringe toward the mainstream of conservative thinking in the past several years, with his warnings about fiscal meltdown gaining new resonance and the 2008 financial crisis allowing him to press his longstanding critiques of the Federal Reserve.

Now, as he again seeks the Republican presidential nomination, he is hoping to show that he can translate the new attention into votes. And his first test is the straw poll next month, where he is hoping he can organize his band of followers into a political machine capable of beating some or all of his brand-name rivals.

Phil Luetchford, 24, an engineer who left Mr. Paul’s appearance here at a Marriott hotel carrying a half-dozen Ron Paul lawn signs, plans to drive with co-workers and church members to Ames. “I’m really upset about the bailouts,” Mr. Luetchford said. “I don’t understand how the elite can choose who stays in business.”

Another volunteer, who asked not to be named because he has taken a 30-day leave from the military to campaign, which is discouraged, said: “Ron Paul tells his supporters, come and support him in the straw poll, and we come because we will walk through fire to vote for Ron Paul. He speaks to us.”

When asked how Mr. Paul, a 75-year-old former obstetrician who still has the manner of a folksy country doctor, speaks to a much younger generation, many cite his decades as a Cassandra warning about ruinous federal debt.

“I’m the one who has to pay the bills,” said Ben Kmack, 30, a professional diver, who heard Mr. Paul speak in Ames.

Mr. Paul dismissed the debt ceiling crisis embroiling Washington as a nonissue. The government is already bankrupt, in his view, and disguises it by printing money. “There’s no way the checks aren’t going out to Social Security,” he told the crowd. “The real question is what is the money going to buy when you get it.”

Many audience questions were technical, posed by people who knew his views well: As president, could he issue an executive order to make the Federal Reserve exchange gold for dollars? How quickly could he abolish the Fed altogether?

If the specifics of his monetary views are still unconventional, if not outright dismissed by most economists, his broad critique of a bloated government that needs to shrink to avoid catastrophe has become widely accepted in the Republican Party. His argument that many of the activities taken on by the federal government are illegal under the Constitution is a tenet of the Tea Party.

“In 2007 people laughed at him,” said A. J. Spiker, a vice chairman of the Paul campaign in Iowa. “John McCain and others laughed at these ideas. A lot of candidates are now echoing what Ron Paul says.”

I think Ron Paul is a man whose time has come,” Ms. Coppess said.

Continue reading - NY Times - Iowa Polling to Test Paul’s Move to Mainstream

Congressman Ron Paul Speech in Cedar Rapids, Iowa - July 25, 2011

Impact of Monetary Policy on the Economy: A Regional Fed Perspective on Inflation, Unemployment, and QE3

The hearing will examine the regional Federal Reserve Bank perspective on the role of the Federal Reserve in the economy, especially with regard to its mandate of price stability and full employment. The Subcommittee will consider the extensive liquidity operations undertaken by the Federal Reserve over the past few years; actions by the Federal Reserve going forward, including the potential, as indicated by Federal Reserve Chairman Ben Bernanke, of an additional program of quantitative easing; and the outlook for inflation, unemployment, and GDP growth.

Subcommittee Chairman Paul said, “I am very pleased to hold this important hearing on the role of the Federal Reserve in the economy. President Hoenig has been a much-needed independent voice on the Federal Open Market Committee and an outspoken critic of quantitative easing. He has a keen understanding of the dangers facing our economy and the inability of the Fed's present monetary policy to maintain stable prices or ensure full employment. I very much look forward to hearing his testimony on the Fed's role in the economy, potential exit strategies, and the likelihood of QE3.”

The Subcommittee’s hearing is entitled, “Impact of Monetary Policy on the Economy: A Regional Fed Perspective on Inflation, Unemployment, and QE3.”

Ron Paul Talks About the Fed & Debt

"What is a Dollar?" RonPaul at Dr Thomas Hoenig

Full Hearing July 26 2011

Monday, July 25, 2011

ISRAEL REVOLT - Protesters block streets in Tel Aviv after landmark rally

For the past week, hundreds of people have been gathering on the uppermost edge of the Rothschild Boulevard in Tel Aviv, close to the recently renovated national theatre plaza. Starting with a tiny group of friends who pitched their tents there in protest of Tel Aviv’s exorbitant rent prices, the movement has grown exponentially, both on the original protest site – every day, several more tents spring up as more and more people move in – and throughout the country. Camps have been struck not only in the big cities – Jerusalem, Haifa and Be’er Sheva – but in the forever-struggling border town of Kiryat Shmona, the tiny community of Tel Hai, and elsewhere.

The protest has struck a chord with hundreds, if not thousands, of Israelis. My generation (people in their late 20’s) constitute the first, second or third generation of complete indebtedness. Most of our parents bought the homes we grew up in with mortgages, taken out before we were born and still unreturned. Those of us planning to buy homes and raise families are likely to become similarly enslaved to the banking system, because very few of us are likely to make enough money by the time we are, say, 30, to actually buy a home ourselves – even in the most remote and punishing suburb.

Moreover, Israel’s extremely lax credit rules and remorseless credit card spending culture means most Israeli households are regularly overdrawn on their bank accounts; I know that most of my friends – educated young professionals, many working for top media organisations, academia, the arts, or even high-tech – usually hold their head above the zero line in their bank accounts for the first week or two of every month. Many of those who can boast a positive balance in their running accounts are thousands, if not tens of thousands of shekels in debt – whenever you go above, say, NIS 10k in your running account or get about NIS 5k overdrawn, despite earning well enough, you get a call from an extremely nice banker who offers you a 20 or 30k loan, spread out over several lifetimes with an intimidating interest rate. Accumulating the hundreds of thousands of shekels requested to buy a modest young family flat in said suburbia is therefore out of the question for most of us, and most of us, indeed, gave up on the idea long ago.

But what’s pushing people now onto the street is nothing as fanciful as one’s own property; it’s the rent and overall living costs. Mercer ranked Tel Aviv as the most expensive city in the Middle East already three years ago, and since then rent prices have been soaring. According to Ynet, since 2008, rent in Tel Aviv has risen by at between 17 and 20 percent; in Be’er Sheva, by 40 percent. Jerusalem, with its expansionist construction and the municipality’s subsidies scheme, was affected far less, but the cost of living anywhere within easy access to university campuses or middle-class working places is still preposterously high. I myself hardly know anyone in my peer group, in either of the big cities, who spends less than 40 to 50 percent of their mean income on rent if they live alone, and about 30 percent if they share with flatmates.

Continue reading - Tent city protest: It’s politics, but not as usual

It’s hard to write clearly and concisely about the struggle waged in Israel’s streets and squares for the past few days. It’s hard to write about it reservedly, and maybe it’s for the best. So many years have past since we dared to hope for something better. A decade and a half of weary shrugs, of “that’s the way it is,” of a trance-like state covering up over hopelessness. Because that’s the way it is.

And suddenly everything is aflame. People are sleeping in boulevards, on the squares, on the lawns. Processions go marching through the city, and people are shouting with hoarse throats – give us back our dignity. Did we ever have dignity? I can’t remember.

1. At the entrance to the tent-packed boulevard I opened up my purse, folded up the cynicism I carry around for survival purposes, and shoved it deep inside. Today, I told myself, I’ll only watch and look. With an open heart.

2. For two years now, Prime Minister Benjamin Netanyahu has been telling us about Israel’s blooming economy. Quietly, to myself, I was thinking that it does seem like everything is flourishing. It’s only me that manages to buy less and less, and I probably didn’t work enough this month. Freelancers are quickly punished for their sins, and it may even be right, from time. But then came the cottage cheese protest – which succeeded, and then failed; and then the tents, and on Thursday the harsh, marvelous news of the brave medical residents, who are loathe to violate either the law of the Hippocratic Oath, but they can’t go on anymore. They hospitalize themselves in their own hospitals, to pressure the system without violating the court orders not to leave work. They go on hunger strikes. They are escalating the struggle. The lie has survived for two years, but no longer.

3. I went to the boulevard just to have a look. It seemed to me a little like a festival. Strange. I walked, I looked, I listened. I heard friends of mine speak at the tent and I was filled with pride – did I know I had such impressive friends? I did not. I’m sure some of them didn’t know they were like that, either. Eventually I also spoke there, and I will speak again. I sat down for long conversations with the veterans of the Bread Square protest, and with a social worker who came to express solidarity and sleep at the tent camp, and meanwhile found herself helping four homeless people who also found their way here. We were sitting on a couch near the main tent at 11pm. A man walked up to us, a reasonably nice man, with a light French accent. What’s going on here, he asked. We looked at him as if he fell from the moon. I hesitated as I replied – maybe he’s mocking me, maybe he’s just a tourist. “I’ve been living rough on the street for four months now,” he said. “I didn’t know it was happening here, all this mess. A friend came by here and he told me something was on.” So we told him what was on, told him this place, here, was for him, and sent him to eat something at the communal kitchen. The stunned look on his face reminded me I couldn’t believe it a week ago either. I still can’t, from time to time. Did we really take to the streets? Really?

4. There’s no place I’d rather be now. There, in the squares, small flowerbeds are springing – of hopes, of shy, confused smiles. And I hear the words repeat themselves:

So beautiful.

I can’t believe it.

Is this real?

How did this happen?

Tell me it won’t go away.

Continue reading - Tent protest: Why we march tonight

See also: It’s all about real-estate: Understanding the tent protests

Tens of Thousands in Israel Protest Rising Prices

Revolu Zion - A Revolution in Tel Aviv 2011- A Fim by Assi Rose

לא עוצרים באדום - העם רוצה צדק חברתי!!!

Ron Paul: A Most Unusual Politician

This is the preface to Ron Paul’s Gold, Peace, and Prosperity: The Birth of a New Currency.

Ron Paul is a most unusual politician – in many ways. In the first place, he really knows what he’s talking about. He is not only for the gold standard. He knows why he is for it, and he is familiar with the most advanced and complex economic insights on the true nature of inflation, on how inflation works, and how inflationary credit expansions brings about booms and busts. And yet Ron has the remarkable ability to take these complex and vital insights and to present them in clear, lucid, hard-hitting terms to the non-economist reader. His economics is as sound as a bell.

But, even more important, Ron Paul is an unusual politician because he doesn’t simply pay lip service to moral principles. He believes in moral principles in his mind and heart, and he fights for them passionately and effectively. High on his set of moral principles is the vital importance of individual freedom, of the individual’s natural right to be free of assault and aggression, and of his right to keep the property that he has earned on the free market, and not have it stolen from him by confiscatory taxes and government regulations.

Ron Paul, in short, is that rare American, and still rarer politician, who deeply understands and battles for the principles of liberty that were fought for and established by the Founding Fathers of this country. He understands that sound economics, moral principles, and individual freedom all go together, like a seamless web. They cannot be separated, and they stand or fall together.

Ron Paul understands that all three parts of this system of liberty have been under grave attack for decades, and that the main problem is the federal government itself. The government has systematically eroded and invaded property rights, has piled on ever higher taxes, ever more onerous regulations, and, most sinister because most hidden, has eroded the value of the dollar and of all our savings through inflation. Ron Paul is an unusual politician because he is not content to shrug his shoulders, to "go with the flow," as Californians say, or to go along in order to get along. He is a man of honor as well as a man of principle, and so he has, ever since he got into politics, been doing something about it. He has fought, sometimes single-handedly, for our liberties and for our savings.

Inflation, as Ron Paul points out, is caused by the government’s continual creation of new money, by what amounts to its system of legalized counterfeiting. But, if that is so, why not simply urge the government to stop the creation of money? Why not point out to our rulers the bad consequences of their actions? But Ron Paul realizes that this kind of education, or even pressure, is not going to work by itself. For we are dealing not simply with ignorant or misled people; we are dealing with a pernicious system.

Let us put it this way: give any man or group power, and it will tend to use that power. If the power is inherently abusive, then that power will be abused. Our present system gives to the federal government and its Federal Reserve the unlimited power to counterfeit. The problem is that if the Fed has the power to counterfeit, it will inevitably use that power. Why? Because the power to counterfeit is too tempting. The power to create money means that it is far more tempting to print it than to work for it. It means that the counterfeiter can pay his debts, spend more money, give more money to his friends and associates. In the case of government, the power to counterfeit means that government’s debts can be paid without levying taxes, that government spending can increase, and that political allies can be purchased and maintained.

The power to counterfeit is the power to abuse. It is not enough to urge the government to use it more moderately. The power must be taken away. Counterfeiting is fraud, and no one should have the right to counterfeit, least of all the government, whose record of counterfeiting throughout history is black indeed. Money and banking must be separated from the State, just as Church and State are separated in the American tradition, just as the economy and the State should be separated.

Vital to this necessary reform is the return to a money which is a useful product produced by the free market itself. In every society, people on the market voluntarily arrive at one or two commodities which are the most useful to use as money. For thousands of years, gold has been selected by countless societies as that money. The only alternative to a market commodity-money is what we unfortunately have now: paper tickets issued by the government and called "money." Since the paper tickets – dollars, francs, pounds sterling, or what have you – are issued by the government, the government can issue any amount it arbitrarily chooses. Counterfeiting is built into the system, and hence so is inflation and eventual destruction of the currency.

The only genuine solution to the evil of inflation, then, is to separate money from the State, to make money once again a market commodity instead of a fiat ticket issued by the central government. The dollar must once again be what it was originally until it was, in effect, nationalized. The dollar must once again be simply a name for a unit of weight of gold coin. Only this kind of fundamental reform will cure the ravages of inflation. Because Ron Paul is one of the few men in public life who truly understands the problem and is willing to fight to cure it, it is truly a pleasure for me to write the preface to this booklet.

via Murray Rothbard - Ron Paul: A Most Unusual Politician

Ron Paul's internet presence condensed into 1 page | Peer2Paul

Saturday, July 23, 2011

Ron Paul: Default Now, or Suffer a More Expensive Crisis Later

Debate over the debt ceiling has reached a fever pitch in recent weeks, with each side trying to outdo the other in a game of political chicken. If you believe some of the things that are being written, the world will come to an end if the U.S. defaults on even the tiniest portion of its debt.

In strict terms, the default being discussed will occur if the U.S. fails to meet its debt obligations, through failure to pay either interest or principal due a bondholder. Proponents of raising the debt ceiling claim that a default on Aug. 2 is unprecedented and will result in calamity (never mind that this is simply an arbitrary date, easily changed, marking a congressional recess). My expectations of such a scenario are more sanguine.

The U.S. government defaulted at least three times on its obligations during the 20th century.

-- In 1934, the government banned ownership of gold and eliminated the right to exchange gold certificates for gold coins. It then immediately revalued gold from $20.67 per troy ounce to $35, thus devaluing the dollar holdings of all Americans by 40 percent.

-- From 1934 to 1968, the federal government continued to issue and redeem silver certificates, notes that circulated as legal tender that could be redeemed for silver coins or silver bars. In 1968, Congress unilaterally reneged on this obligation, too.

-- From 1934 to 1971, foreign governments were permitted by the U.S. government to exchange their dollars for gold through the gold window. In 1971, President Richard Nixon severed this final link between the dollar and gold by closing the gold window, thus in effect defaulting once again on a debt obligation of the U.S. government.

Unlimited Spending

No longer constrained by any sort of commodity backing, the federal government was now free to engage in almost unlimited fiscal profligacy, the only check on its spending being the market’s appetite for Treasury debt. Despite the defaults in 1934, 1968 and 1971, world markets have been only too willing to purchase Treasury debt and thereby fund the government’s deficit spending. If these major defaults didn’t result in decreased investor appetite for U.S. obligations, I see no reason why defaulting on a small amount of debt this August would cause any major changes.

The national debt now stands at just over $14 trillion, while net total liabilities are estimated at over $200 trillion. The government is insolvent, as there is no way that this massive sum of liabilities can ever be paid off. Successive Congresses and administrations have shown absolutely no restraint when it comes to the budget process, and the idea that either of the two parties is serious about getting our fiscal house in order is laughable.

Boom and Bust

The Austrian School’s theory of the business cycle describes how loose central bank monetary policy causes booms and busts: It drives down interest rates below the market rate, lowering the cost of borrowing; encourages malinvestment; and causes economic miscalculation as resources are diverted from the highest value use as reflected in true consumer preferences. Loose monetary policy caused the dot-com bubble and the housing bubble, and now is causing the government debt bubble.

For far too long, the Federal Reserve’s monetary policy and quantitative easing have kept interest rates artificially low, enabling the government to drastically increase its spending by funding its profligacy through new debt whose service costs were lower than they otherwise would have been.

Neither Republicans nor Democrats sought to end this gravy train, with one party prioritizing war spending and the other prioritizing welfare spending, and with both supporting both types of spending. But now, with the end of the second round of quantitative easing, the federal funds rate at the zero bound, and the debt limit maxed out, Congress finds itself in a real quandary.

Hard Decisions

It isn’t too late to return to fiscal sanity. We could start by canceling out the debt held by the Federal Reserve, which would clear $1.6 trillion under the debt ceiling. Or we could cut trillions of dollars in spending by bringing our troops home from overseas, making gradual reforms to Social Security and Medicare, and bringing the federal government back within the limits envisioned by the Constitution. Yet no one is willing to step up to the plate and make the hard decisions that are necessary. Everyone wants to kick the can down the road and believe that deficit spending can continue unabated.

Unless major changes are made today, the U.S. will default on its debt sooner or later, and it is certainly preferable that it be sooner rather than later.

If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing.

Raising the Ceiling

The alternative to defaulting now is to keep increasing the debt ceiling, keep spending like a drunken sailor, and hope that the default comes after we die. A future default won’t take the form of a missed payment, but rather will come through hyperinflation. The already incestuous relationship between the Federal Reserve and the Treasury will grow even closer as the Fed begins to purchase debt directly from the Treasury and monetizes debt on a scale that makes QE2 look like a drop in the bucket. Imagine the societal breakdown of Weimar Germany, but in a country five times as large. That is what we face if we do not come to terms with our debt problem immediately.

Default will be painful, but it is all but inevitable for a country as heavily indebted as the U.S. Just as pumping money into the system to combat a recession only ensures an unsustainable economic boom and a future recession worse than the first, so too does continuously raising the debt ceiling only forestall the day of reckoning and ensure that, when it comes, it will be cataclysmic.

We have a choice: default now and take our medicine, or put it off as long as possible, when the effects will be much worse.

Continue reading - Bloomberg - Default Now, or Suffer a More Expensive Crisis Later: Ron Paul

Friday, July 22, 2011

Audit: Fed gave $16 trillion in emergency loans

The U.S. Federal Reserve gave out $16.1 trillion in emergency loans to U.S. and foreign financial institutions between Dec. 1, 2007 and July 21, 2010, according to figures produced by the government's first-ever audit of the central bank.

Last year, the gross domestic product of the entire U.S. economy was $14.5 trillion.

Of the $16.1 trillion loaned out, $3.08 trillion went to financial institutions in the U.K., Germany, Switzerland, France and Belgium, the Government Accountability Office's (GAO) analysis shows.

Additionally, asset swap arrangements were opened with banks in the U.K., Canada, Brazil, Japan, South Korea, Norway, Mexico, Singapore and Switzerland. Twelve of those arrangements are still ongoing, having been extended through August 2012.

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.

The Fed agreed to "strongly consider" the recommendations, but as it is not a government-run institution it cannot be forced to do so by lawmakers. The seven-member board of governors and the Fed chairman are, however, appointed by the President of the United States and confirmed by the Senate.

The audit was conducted on a one-time basis, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed last year. Fed officials had strongly discouraged lawmakers from ordering the audit, claiming it may serve to undermine confidence in the monetary system.

The full GAO audit results follow, below.
GAO Fed Investigation

Europe Launches a Massive Greek Bailout

BRUSSELS—Euro-zone leaders agreed Thursday on a new €100 billion ($144 billion) bailout for Greece and new steps to prevent its debt crisis from metastasizing across the Continent—in a plan expected to trigger the first debt default by a nation using the common currency.

The meeting also produced a stark and open-ended declaration: The wider euro zone is committed to financing countries that take bailouts—thus far, Greece, Ireland and Portugal—for as along as it takes them to regain access to private lenders.

The move is a bold bid by Europe's leaders to corral an 18-month-old debt crisis that is veering dangerously out of control. Markets stopped lending to Greece, then Ireland, then Portugal. Fearful that policy makers have no concrete strategy for shoring up the larger economies of Spain and Italy, investors have lately soured on them as well. After months of dithering, European leaders resolved that they had to stop the bleeding.

Still, it remains to be seen whether the tourniquet will hold. Even after the new plan, Greece will have a staggering load of debt.

Thursday's agreement was the fruit of several concessions. European Central Bank Jean-Claude Trichet lost a fight to prevent default. German Chancellor Angela Merkel pried open her reluctant nation's pocketbook to write another check and be on the hook for still more.

French President Nicolas Sarkozy, though he lost a bid to tax banks to pay for the bailout, may have come out the best by urging Ms. Merkel to a more proactive approach to the debt crisis.

In a declaration crafted here after hours of haggling, and a whirlwind trip Wednesday to Berlin by the French president, the leaders put forward billions more in new loans to Greece. But they extracted a price: Greece's private-sector creditors will accept a bond exchange that gives them less than originally promised.

The euro zone had long insisted that none of its 17 members could contemplate not repaying their debt, and the European Central Bank vigorously fought a default to the very end. Mr. Trichet joined Ms. Merkel and Mr. Sarkozy at their meeting in Berlin on Wednesday to press his case once more. But Greece was reeling under its huge burden, and its woes were threatening to engulf other countries.

To push back against that contagion, the euro zone also agreed Thursday to a wide expansion of its €440 billion bailout fund. That vehicle, once restricted to lending to countries near the brink of collapse, will now be able to buy euro-zone bonds on secondary markets to move prices and lend directly to countries even before they lose access to private funding. That could even include lending money to finance bank recapitalizations.

Continue reading - WSJ - Europe Launches a Massive Greek Bailout

The Fed, Wall Street plan for default

With less than two weeks before the United States cannot borrow more money, the Federal Reserve and Wall Street are making plans to prepare for the country’s possible default on its $14.3 trillion debt.

In the most revealing comments to date, Charles Plosser, the president of the Philadelphia Federal Reserve, told Reuters the nation has for months been in “contingency planning mode” to deal with the fallout when the federal government runs out of money.

“We are developing processes and procedures by which the Treasury communicates to us what we are going to do,” Plosser said. “How the Fed is going to go about clearing government checks. Which ones are going to be good? Which ones are not going to be good? There are a lot of people working on what we would do and how we would do it.”

The Treasury Department has repeatedly denied making plans for default, saying raising the debt ceiling is the lone acceptable option. A spokesman did not comment to Reuters.

Wall Street officials are in the same boat, devising what the New York Times called “doomsday plans in case the clock runs out.”

Meanwhile, the Wall Street firms, the Times wrote, are seeking to reduce their risk related to Treasury bonds while hedge funds are hoarding cash to purchase U.S. debt if the price plummets in the event of a post-default sell-off.

The paper wrote that a full-scale financial panic has not set in but is close.

“The metaphor is a pile of sand,” Mark Zandi, the chief economist at Moody’s Analytics, told the Times. “You keep putting one piece of sand on the pile, nothing happens, and then, all of the sudden it just caves.”

Plosser also told Reuters that, despite the shaky economy, the Fed may raise interest rates before the year is out. He said he expects the unemployment rate, now at 9.2 percent, to fall to 8.5 percent.

I don’t see the fundamentals of the economy as changed that much,” he said. “Yeah, there’s been some shocks and disruptions, but the underlying forces that are going to cause us to continue a slow, moderate recovery are still in place.

Continue reading - Politico - The Fed, Wall Street plan for default

Inflation Tough to Digest for Asia as Food Costs Soar From Pork to Onions

Asian cuisine may be too much of a good thing for some of the region’s central banks as policy makers grapple with the challenge of responding to spikes in the cost of staples from rice and pork to onions and chilies.

Pork prices jumped 57 percent in June in China, leading Premier Wen Jiabao to vow to curb inflation even as growth slows. India had to buy onions from arch-rival Pakistan this year for curries and Indonesia told spice lovers to grow their own chili as shortages stoked prices. A wider variety of diet and greater purchasing power for non-food items leave wealthier nations less vulnerable to food-cost spikes.

Food makes up more than 30 percent of inflation indexes on average in Asia, compared with about 15 percent in Europe and less than 10 percent in the U.S., according to Rabobank Groep NV. The sensitivity of their economies to swings in meat and vegetable costs means emerging-market policy makers need to raise interest rates more to stem inflation when global agriculture prices soar.

“People can’t change their diets overnight,” said Song Seng Wun, an economist at CIMB Research Pte in Singapore who has analyzed Asian economies for more than two decades. “All monetary policy can do is to try to contain what is perhaps a supply disruption issue from broadening to the wider economy.

Rice, the staple food for about half of the global population, has surged 70 percent in the past year according to futures traded on the Chicago Board of Trade. The export price of rice from Thailand, the world’s biggest exporter of the grain, has jumped 23 percent.

World food prices held near a record in June as the cost of sugar, meat and dairy increased. An index of 55 food commodities rose to 233.8 points from 231.4 points in May, the United Nations’ Food and Agriculture Organization said July 7. The gauge climbed to an all-time high of 237.7 in February.

A fivefold jump in Indonesian chili prices last year made the spice costlier than beef, the Jakarta Globe reported in January. Indonesian’s Agriculture Minister Suswono said at the beginning of 2011 that the government will distribute chili seeds to 100,000 households, the paper said. Bank Indonesia, while trailing counterparts from Thailand to Malaysia this year, raised rates in February.

In India, where the price of onions has at times become an election issue, the central bank has raised rates 10 times since the start of 2010. The world’s second-biggest onion grower said in December it would buy the vegetable from abroad and banned exports after excess rainfall damaged crops and stoked prices.

Continue reading - Bloomberg - Inflation Tough to Digest for Asia as Food Costs Soar From Pork to Onions

Thursday, July 21, 2011

Ron Paul: 'Freedom Is a Young Idea and We're Throwing It Away'

Judy Woodruff sat down with Texas Rep. Ron Paul Wednesday to discuss his campaign for the GOP presidential nomination and the ongoing debt-ceiling negotiations. The interview is the first in a series of conversations with GOP contenders seeking to take on President Obama in the 2012 election.

Ron Paul: 'Freedom Is a Young Idea and We're Throwing It Away'

Floor Speech on Debt Ceiling July 19 2011

MALAWI REVOLT - Malawi riots erupt in Lilongwe and Mzuzu

Riots have broken out in cities in Malawi as opposition groups protest against President Bingu wa Mutharika's government.

At least one person has died in the northern city of Mzuzu and protesters are burning barricades and looting property in the capital.

The authorities have banned live broadcasts of the riots.

The trouble started after a court ruled on Tuesday the protests, called against the high cost of living, were illegal.

"We have more than 10 people in the hospital right now, some are in a serious condition," she said, speaking on condition of anonymity.

The BBC's Joel Nkoma in Lilongwe says the situation is also tense there, where angry crowds have been shouting, "Let him [Mr Mutharika] go".

The demonstrations were called to protest against rising fuel prices, a shortage of foreign exchange reserves, alleged bad governance and poor international relations.

Last week, the UK cut direct aid to Malawi after a diplomatic spat with Mr Mutharika's government.

The UK accused Malawi of mishandling the economy and failing to uphold human rights.

The government recently passed an austerity budget, raising taxes to reduce dependence on aid.

Malawi is one of the poorest countries in the world, with an estimated 75% of the population living on less than $1 (60p) a day.

Continue reading - BBC - Malawi riots erupt in Lilongwe and Mzuzu

Friday, July 15, 2011

For Liberty Re-cut - Ron Paul 2012 HD

Writes Chris Rye, director of the For Liberty Documentary:

Just got the final version uploaded in HD to Youtube today! The new ending of this is awesome:

For Liberty Re-cut - Ron Paul 2012 Handout DVD HD

Conviction, Not Compromise! (Ron Paul's First 2012 TV Ad)

Thursday, July 14, 2011

MUST WATCH! Bernanke Fights Ron Paul In Congress: Gold Isn’t Money

Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday. The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold. When asked whether gold is money, Bernanke flatly responded “No.”

While most of Bernanke’s reports to Congress serve politicians to pursue their own agendas by gearing the Chairman towards their issues, with Republican Rep. Bacchus talking of the unsustainability of Medicaid and Rep. Frank (D, Mass.) asking about the need to raise the debt limit without cutting spending, it was a stand-off between Bernanke and Ron Paul that took all the attention.

Rep. Ron Paul, Republican for Texas, asked Bernanke why a capital injection of more than $5 trillion “hasn’t done much” to help the consumer, who makes up about two-thirds of GDP in the U.S., and prop up the economy, while it helped boost corporate profits. “You could’ve given $17,000 to each citizen,” Ron Paul claimed.

Bernanke, clearly on the defensive, told Rep. Ron Paul that his institution hadn’t spent a single dollar, rather, the Fed has been a “profit center” according to the Chairman, returning profits to the federal government. As Bernanke began to sermon Rep. Paul on the history of the Fed (“we are here to provide liquidity [in abnormal situations],” the Chairman said), he was interrupted.

“When you wake up in the morning, do you think about the price of gold,” Rep. Paul asked. After pausing for a second, Bernanke responded, clearly uncomfortable. that he paid much attention to the price of gold, only to be interrupted once again.

“Gold’s at about $1,580 [an ounce] this morning, what do you think of the price of gold?” asked Rep. Paul. A stern-faced Bernanke responded people bought it for protection and was once again cut-off, with Ron Paul once again on the offensive.

“Is gold money?” he asked. Clearly bothered, Bernanke told the representative, “No. It’s a precious metal.”

After Paul interrupted him to note the long history of gold being used as money, Bernanke continued,”It’s an asset. Would you say Treasury bills are money? I don’t think they’re money either but they’re a financial asset.”

Paul asked Bernanke why central banks didn’t hold diamonds, clearly hinting at his fiat money criticism of the U.S. monetary system. The Fed Chairman told Rep. Paul it was nothing more than tradition, and, as he was attempting to develop his argument, Rep. Ron Paul quickly asked the acting authority of the House of Representative’s Committee on Financial Services, Rep. Bacchus, to excuse him for exceeding his time, as he returned the floor to the Committee.

The interesting exchange served as one of the few times Bernanke has been publicly pushed off his comfort zone by an elected official. Rep. Ron Paul brought up the issues that he’s famous for, namely, a sort of allegiance between the Fed and the nation’s most powerful institutions, the illusion of fiat money, and the gold standard. Bernanke, angered and bothered, had no option but to respond.

Continue reading - Forbes - Bernanke Fights Ron Paul In Congress: Gold Isn’t Money

Ron Paul asks Ben Bernanke - Is Gold Money? July 13, 2011

Financial Services Hearing July 13 2011

Bernanke: Fed ready to act if economy worsens

Federal Reserve Chairman Ben Bernanke told lawmakers Wednesday the Fed is ready to act if the economy gets weaker. He warned them that allowing the nation to default on its debt would send "shock waves through the entire financial system."

Underscoring how fragile the economy remains two years after the Great Recession, Bernanke laid out three new steps the Fed could take, including a fresh round of government bond purchases designed to stimulate economic growth.

"We have to keep all the options on the table. We don't know where the economy is going to go," Bernanke told the House Financial Services Committee.

The Fed chairman stopped short of promising anything, but Wall Street appeared comforted that the central bank was poised to act. The Dow Jones industrial average was up more than 150 points during his testimony to Congress, and closed up 45.

But some of the early stock gains were lost after Richard Fisher, president of the Federal Reserve Bank of Dallas, said in a speech that the Fed had already "pressed the limits of monetary policy."

"If we went so far as to default on the debt, it would be a major crisis because the Treasury security is viewed as the safest and most liquid security in the world," he said.

"It's the foundation for most of our financial -- for much of our financial system," he added. "And the notion that it would become suddenly unreliable and illiquid would throw shock waves through the entire global financial system."

The Fed bought $600 billion in government bonds late last year and early this year, a program designed to keep interest rates low and support the prices of assets such as stocks.

It was the second time the Fed had taken that step since the recession started. It was known on Wall Street as "QE2," or a second round of "quantitative easing." Besides a third round, Bernanke laid out two additional options if the economy gets weaker:

-- The Fed could offer financial markets more clarity about how long it tends to leave interest rates at record lows, where they have stood since December 2008. For now, the Fed says only that rates will remain "exceptionally low" for an "extended period."

-- It could start paying banks less interest on the excess money they park with the Fed. It doesn't pay much now -- 0.25 percent. But paying even less would encourage the banks to loan the money out rather than sending it to the central bank.

Bernanke said the measures would be necessary only if deflation, a cycle of falling prices that damages the economy, became a threat. For now, prices are still rising. Some inflation is healthy, economists say.

Critics of the Fed's two previous rounds of "quantitative easing" have said the real threat is the opposite -- that the central bank will create runaway inflation by flooding the economy with money.

Bernanke said the Fed was ready to raise interest rates if inflation becomes a serious threat.

Continue reading - Bernanke: Fed ready to act if economy worsens

China worried about US economy

China is watching whether the Federal Reserve launches a new stimulus that might hurt China by pushing up commodity prices, a Cabinet researcher said Thursday.

The U.S. economy "has been doing worse than expected" and Beijing needs to "seriously assess" possible risks to its vast holdings of American debt, said Yu Bin, an economist in the Cabinet's Development Research Center.

"The prospects of the U.S. economy are worrying," Yu said at a government-organized briefing. Beijing uses such briefings to explain official views, though the researchers do not act as government spokespeople.

Yu expressed concern about a possible third round of Fed purchases of government bonds, known as "quantitative easing" or QE. He said that might hurt China by depressing the value of the dollar and driving up prices of commodities needed by its industries. Most commodities are traded in dollars.

The Fed bought $600 billion in bonds late last year and early this year to keep interest rates low and support prices of assets such as stocks. On Wednesday, Chairman Ben Bernanke said the Fed was ready to take action if the U.S. economy weakens and said a third round of purchases was a possible option.

"We are following closely whether the United States will introduce QE3, because we believe it will have a major impact on China's economy," said Yu, director-general of the Development Research Center's Department of Macroeconomic Research.

"The drastic rise in commodity prices caused by the devaluation of the U.S. dollar will have a major impact on inflation, on economic growth and on Chinese people's daily lives."

Yu warned that such a move also would affect the "long-term trajectory of the U.S. economy."

Continue reading - China worried about US economy

Sunday, July 10, 2011

MALAYSIA REVOLT - Bersih 2.0 | Malaysia cracks down on protesters

Police in Malaysia have fired tear gas and arrested hundreds of protesters in the biggest opposition-backed rally in years.

More than 20,000 demonstrators massed across Malaysia's capital Kuala Lumpur on Saturday, demanding electoral reforms, activists said.

The federal police force arrested 1,400 people in a clampdown called Operation Erase Bersih, referring to the Bersih coalition, the group that organised the rally.

Those arrested included several senior opposition officials.

Ambiga Sreenavasan, head of the Bersih coalition, said that the suppression of the protests had "stirred a sense of outrage against the exhibition of raw power by our government".

"What is the necessity for a show of might against right? No matter what, right will always prevail," she said.

Prime Minister Najib Razak's government had declared the demonstration illegal, and police had sealed off parts of the capital in advance, warning those who took part in demonstrations that they would face "stern action".

Witnesses said riot police armed with batons charged at some protesters and dragged them into trucks.

Strict security measures

Authorities took extraordinary security measures to deter the rally by closing train stations and deploying lorries mounted with water cannons near the Independence Stadium in a suburb of Kuala Lumpur, where activists sought to gather.

Nevertheless, thousands tried to reach the stadium from various parts of the capital, chanting "Long live the people" and carrying yellow balloons and flowers as they marched.

Police fired numerous rounds of tear gas and chemical-laced water in repeated attempts to disperse the crowds, causing demonstrators to scatter into nearby buildings.

Helicopters flew overhead as a brief downpour failed to deter the protesters.

Anwar Ibrahim, the opposition leader, said he had sustained a "minor injury" when his group was hit by tear gas.

"We were attacked from both corners but what was horrifying is that the police shot directly at the protesters, some of them clearly aimed at me personally, so my security assistants had to cover me and one was badly injured because the canister was shot direct, he is badly injured," Anwar told the Associated Press news agency.

"This is a simple portrayal of the extent of desperation of brutal action approved by the Prime Minister Najib."

Government officials accuse Anwar's three-party alliance of endorsing the rally to cause chaos on the streets and undermine the National Front, the federal ruling coalition.

Electoral reforms

The rally organisers called for reforms following accusations that the Malaysian election commission is biased towards the ruling coalition, which has been in power since independence from Britain in 1957. The commission denies the charge.

The government insists the current electoral policies are evenhanded.

Over the past two weeks, more than 200 other activists have been arrested nationwide for trying to promote the rally.

Earlier, speaking to Al Jazeera over phone from Kuala Lumpur on Saturday, Edmund Bon, a human-rights lawyer, said: "It's an extraordinary clampdown on the whole [city] and we are not allowed to go anywhere.

"People are getting arrested on the streets and about 250 to 300 people have been arrested so far in connection with the rally.”

The activists' demands include an overhaul of voter registration lists, tougher measures to curb fraud and fairer opportunities for opposition politicians to campaign in government-linked media.

A general election is not due until 2013 but Najib has not ruled out early polls, after economic growth accelerated to a 10-year high in 2010.

Major street demonstrations are rare in this Southeast Asian country, but the rise of alternative media channels and a growing opposition voice are gradually creating a more vocal Malaysian public.

Continue reading - Malaysia cracks down on protesters

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Friday, July 8, 2011

Peter Russell's Words of Wisdom

Letting go is a recurrent theme of many spiritual traditions. In this clip from his Burning Man interview, Peter Russell reframes letting go as "letting in" and "letting be".

Letting Go

Samsara means "to wander on endlessly". Peter Russell discusses how we wandering on through life seeking one transient satisfaction after another, not realizing that that which we seek is our true nature. Nirvana means "to extinguish" as in blowing out a flame. Knowing our true nature blows out the flame of desire that drives the endless wandering on.

Samsara and Nirvana

Entheogen means "generating god within". Ayahuasca may well produce profound spiritual openings and personal transformation, but does it really generate a connection with the Divine? From a talk by Peter Russell at Institute of Noetic Sciences

Ayahuasca: Is It Really an Entheogen

Running Scared in Malaysia

The Malaysian government has pulled out all the stops to prevent an opposition rally this weekend. This week, army units conducted crowd control exercises with banners that said, "Disperse or we will shoot!" The police set up roadblocks and arrested Malaysians simply for wearing yellow T-shirts, the signature color of Bersih, a coalition of 62 nongovernmental organizations that demands changes in Malaysia's electoral system. To date, the police have arrested over 250 supporters of Bersih, claiming that they are "waging war against the king."

Then something unprecedented happened. Malaysia's King Tuanku Mizan Zainal Abidin, allegedly the target of Bersih's campaign, intervened. He called on both Prime Minister Najib Razak and Bersih to resolve their differences in a spirit of harmony and cooperation, for the good of the nation.

There was a collective sigh of relief in Malaysia. The leader of Bersih, Ambiga Sreenevasan, an attorney and former president of the Malaysian Bar Council, met with the king and announced that the "Walk for Democracy," as it was called, was cancelled. She said that she was ready to meet with the government to discuss Bersih's concerns about electoral fairness. Prime Minister Najib then offered an olive branch, saying, "We are willing to provide a stadium for them to rally in … from morning until night," an offer that Ms. Ambiga and Bersih immediately accepted.

Then Mr. Najib backed off. His government says that because Bersih is still illegal, it cannot apply for a permit. It also has banned Bersih's leadership from entering Kuala Lumpur on the day of the rally. On Thursday, he joined a gathering of martial artists who said that their 50,000 members will "wage war" against Bersih. Donning their militant uniform, Mr. Najib said, "If there are evil enemies who want to attack the country from within, you, my brothers, will rise to fight them."

Mr. Najib has undermined the authority of the king, who gave Bersih and its concerns credence by meeting with its leadership and calling for a negotiated solution. The political situation in Malaysia is a fast-moving target, and each day brings new developments. Ms. Ambiga and Bersih now say that because of Mr. Najib's actions, they will go ahead with their assembly, no matter what.

Nobody knows what will happen tomorrow. Bersih's main issue is not freedom of assembly but the fairness of Malaysia's democratic process. Bersih's backers ask how anyone can be opposed to free and fair elections.

It's an easy question to answer. The United Malays National Organization, of which Mr. Najib is president, is the longest continuing ruling party in the world, and it is running scared.

Continue reading - WSJ - Running Scared in Malaysia

Malaysian Opposition Digs In

Election reform advocates said Thursday they would proceed with a rally in a stadium here on Saturday, despite warnings from the authorities that such a gathering would be illegal.

Tensions have risen in this Southeast Asia nation in recent weeks, with the police arresting more than 200 people in connection with the planned rally, which is being organized by the Coalition for Clean and Fair Elections, also known as Bersih, or “clean” in Malay. The coalition is made up of 62 nongovernmental organizations.

Opposition leaders, who strongly support the campaign for electoral changes, have predicted that the rally could attract about 300,000 people.

A street rally calling for similar changes in 2007, in which the police used tear gas and water cannons to disperse protesters, was credited with helping the opposition make historic gains in the 2008 elections. The next election must be held by mid-2013, but there is speculation it could be held as early as this year.

Last Saturday, the government declared Bersih illegal, because it had not registered as an organization and was causing unrest among the public. Bersih countered that it was not a new organization, but rather an alliance of existing groups. Prime Minister Najib Razak then said the coalition could hold the rally, if it agreed to meet in a stadium, rather than on the streets as first planned.

After a rare mediation meeting Tuesday with the Malaysian king, Tuanku Mizan Zainal Abidin, Bersih organizers agreed to these terms. Now, however, the authorities have said that Bersih cannot proceed without a police permit, which normally would not be granted to a group that has been declared illegal.

Bersih leaders responded by accusing the prime minister of having “reneged” on his offer to provide a stadium for their rally and said they would assemble at Merdeka Stadium in Kuala Lumpur on Saturday afternoon “whatever happens between now and then.”

“We are coming, we will be peaceful and together, we will build a better Malaysia,” the coalition said in a statement.

Continue reading - NY Times - Malaysian Opposition Digs In

Monday, July 4, 2011

Once Greece goes…

The economic crisis in Greece is the most consequential thing to have happened in Europe since the Balkan wars. That isn’t because Greece is economically central to the European order: at barely 3 per cent of Eurozone GDP, the Greek economy could vanish without trace and scarcely be missed by anyone else. The dangers posed by the imminent Greek default are all to do with how it happens.

I speak of the Greek default as a sure thing because it is: the markets are pricing Greek government debt as if it has already defaulted. This in itself is a huge deal, because the euro was built on the assumption that no country in it would ever default, and as a result there is no precedent and, more important still, no mechanism for what is about to happen. The prospective default could come in any one of several different flavours. From everybody’s perspective, the best of them would be what is known as a ‘voluntary rollover’. In that scenario, the institutions that are owed money by the Greek government will swallow heavily and, when their loan is due to be repaid, will permit their borrowings to be rolled over into another long loan. There is a gun-to-the-side-of-the-head aspect to this ‘voluntary’ deal, since the relevant institutions are under enormous governmental pressure to comply and are also faced with the fact that if they say no, they will have triggered a proper default, which means their loans will plummet in value and they’ll end up worse off. The deal on offer is: lend us more money, or lose most of the money you’ve already lent.

This is, at the moment, the best-case scenario and the current plan A. It reflects the failure of the original plan A, which involved lending the government of George Papandreou €110 billion in May last year in return for a promise to cut government spending and increase tax revenue, both by unprecedented amounts. The joint European Central Bank-EU-IMF loan was necessary because, in the aftermath of the financial crisis of 2008, Greece was exposed as having an economy based on phoney data and cheap credit. The cheap credit had now dried up, and Greece was faced by the simplest and worst economic predicament of any government: it couldn’t pay its debts.

There is a good moment in one of the otherwise terrible Star Trek movies, in which Spock quotes an ancient Vulcan proverb: ‘Only Nixon could go to China.’ Similarly, it is probably true that only George Papandreou could confront the fundamental economic structure of the modern Greek state, since his father Andreas did more than anyone else to build it. Andreas Papandreou took Greece into the EEC in 1981, and subsequently the Greek government created a client state in which direct subsidies and transfers from the EEC were supplemented by easy loans from Western European banks. Money poured into Greece, and was used to fund a huge boom in public-sector jobs, most of them linked to political patronage. Various forms of corruption permeated the system, where cash gifts in fakelaki or ‘little envelopes’ were a fact of life, and where, crucially, the rich regarded paying tax as something that only the poor and stupid would ever choose to do. This latter fact meant that Greece was in certain vital respects a country without a functioning version of the social contract. To outside observers, all this was largely familiar, but the younger Papandreou, on becoming prime minister in 2009, was the first prominent Greek politician to admit it and promise to challenge it head-on. ‘Corruption, cronyism, clientelistic politics; a lot of money was wasted basically through these types of practices.’ Papandreou’s admission was jaw-dropping: everyone knew it was true, but since when do prominent politicians say very unpopular things which everyone knows to be true? The EU lent Greece the money to fund Papandreou through his programme of cuts and crossed its fingers that this would buy enough time for the deficit to narrow – the deficit being the gap between what Greece was spending and what it was raising in tax.

That was the old plan A, and it didn’t work. Papandreou made deep cuts across public-sector spending, but two things went wrong. One, the Greek economy kept crashing. Economists have varying theories about the practical effects of ‘austerity’, meaning sharp cuts in public spending. To an outsider, it’s a little alarming how they differ about something so big and basic as the effect of large public spending cuts. But if you ignore the economics and look at the history, it seems to be the case that you can’t simply cut your way to growth. (There are a couple of contentious counter-examples, but this is the broad rule.) Holding public spending flat while other parts of the economy grow is historically a more valid model – and, by the way, holding public spending flat is in itself a huge struggle, being roughly what Mrs Thatcher did in the UK. So the first problem was that the Greek cuts led to a worsening of the Greek predicament: the economy kept contracting, and unemployment hit a record high of 16.2 per cent. The second problem was that those richer Greeks who had never fancied paying their taxes showed no increased desire to do so, and, much worse, the state showed no new ability or desire to make them. Without the ability to raise more tax, the old plan A was invalid.

So this is the new plan A: the Greeks borrow another €120 billion, the bondholders allow their debt to be rolled over, Papandreou’s government introduces further austerity measures and privatisations, rich Greeks start paying their taxes, the Greek economy recovers, and by the time the next huge chunks of debt repayment are due – from mid-2012 – Greece can afford to pay back its lenders and the crisis is over.

Continue reading - John Lanchester - Once Greece goes…

The Zeitgeist Movement LA, CA | Townhall Talks

The Zeitgeist Movement's Townhall Meeting is a community forum for the public to engage the Movement's coordinators about root-cause understandings to social problems, and the solutions we advocate culminating in what can be termed a "global, resource-based economic model."

The Zeitgeist Movement, Regional LA, CA Townhall, 6/21 [Part 1 of 2 ]

The Zeitgeist Movement, Regional LA, CA Townhall, 6/21 [Q&A - PART 2/2]

The Zeitgeist Movement | LA, CA Townhall [ Talks ] 7/19

Friday, July 1, 2011

Goldman’s Central Bank Connections Deepen

The revolving door between Goldman Sachs Group Inc. (GS) and central banks is spinning again.

The fifth-biggest U.S. bank by assets said yesterday it hired Bank of England economist Andrew Benito after recruiting Huw Pill from the European Central Bank in May and Naohiko Baba from the Bank of Japan in January. Moving in the other direction, Ben Broadbent, Goldman Sachs’s ex-chief U.K. economist, started at the Bank of England last month. Former vice chairman Mario Draghi will take up the presidency of the ECB in November.

The targeting of central banks reflects the value banks such as New York-based Goldman Sachs place on the skills economists gather working in policy-making at a time when growth in advanced economies is struggling to gain momentum. Meantime, governments seeking top officials are again turning to Goldman Sachs for top decision-makers 12 months after it settled U.S. fraud claims and almost four years since the start of the worst financial crisis since the Great Depression.

“The people they’re hiring from central banks tend to have valuable understandings of monetary policies, currencies, what’s going on with regulation and have access to all sorts of important people,” said Roy Smith, a finance professor at New York University and former Goldman Sachs partner. “Goldman Sachs has taken a bashing in the crisis. It’s bound to be near the bottom or recovering now, as there’s nothing of substance to follow the charges. Governments recognize that to be the case.”

‘Talented People’

Benito, who most recently served as a senior economist at the Bank of England’s structural economic analysis division, arrived at Goldman Sachs this week as senior European economist based in London, according to an internal memo obtained by Bloomberg News. Fiona Laffan, a Goldman Sachs spokeswoman, confirmed the memo’s contents. She declined to comment further.

Pill, the ECB’s deputy director general of research, will start at the firm as chief European economist in August, succeeding Erik Nielsen, who will become global chief economist at UniCredit SpA (UCG), Italy’s biggest bank. Baba joined in January as chief economist for Japan after leading financial systems analysis at the country’s central bank.

“Investment banks seek out talented people and those who have skills, insight and access to how policy decisions are made are very attractive,” said Peter Hahn, a former Citigroup Inc. banker who lectures on finance at London’s Cass Business School.

Mario Draghi

The Securities and Exchange Commission sued Goldman Sachs last year for misleading investors in a mortgage-linked investment that was sold in 2007. Then British Prime Minister Gordon Brown said the firm’s employees showed “moral bankruptcy” amid calls to ban the company from government work. Goldman Sachs paid $550 million in July to settle the SEC’s civil claims.

Bank of Italy Governor Draghi’s three years as a vice chairman of Goldman Sachs’s international division from 2002 to 2005 became an obstacle to his candidacy to run the ECB before his German rival Axel Weber dropped out. Goldman Sachs arranged currency swaps that helped Greece hide the extent of its budget deficit. Draghi said on June 14 he “had nothing to do with this deal whatsoever” and that it had started before his arrival.

Goldman Sachs isn’t alone in recruiting central bankers. UBS AG, Switzerland’s biggest bank, said today it plans to appoint former Bundesbank President Weber to its board and then make him chairman in 2013. Barclays Plc said in May it hired Brian Madigan, the Federal Reserve’s former top staff adviser on interest-rate policy, to provide counsel on economic research and regulation.

‘Government Sachs’

Goldman Sachs has been a breeding ground for central bankers. Broadbent is the third Goldman Sachs alumnus to sit on the Bank of England’s Monetary Policy Committee since its creation in 1997. In his first vote on policy in June, he sided with the majority choosing to leave the U.K.’s benchmark rate unchanged. Former MPC members David Walton and Sushil Wadhwani also had Goldman Sachs on their resumes before joining the central bank.

Bank of Canada Governor Mark Carney and Fed Bank of New York President William Dudley both previously worked for Goldman Sachs. Former U.S. Treasury secretaries Robert Rubin and Henry Paulson ran the bank before entering government, helping to earn the company the nickname “Government Sachs.”

“Goldman Sachs partners are extremely fortunate that due to the success of their firm they can afford to go into public service sooner than their competitors,” said Philip Keevil, a partner at New York-based advisory firm Compass Advisers LLP.

Continue reading - Bloomberg - Goldman’s Central Bank Connections Deepen

HK REVOLT - Marchers vent anger on Hong Kong prices, policies

HONG KONG - Tens of thousands of people vented anger over Hong Kong's skyrocketing property prices and government policies Friday at an annual march marking the former British colony's return to Chinese rule.

People blew whistles, beat drums and banged metal cups to express their unhappiness. Many waved flags caling for universal suffrage while others chanted "Down down with property tycoons" and called for Chief Executive Donald Tsang to step down.

Since the territory was handed back to China on July 1, 1997, Hong Kong has largely retained its Western-style civil liberties, including press freedom and the right to hold public protests. But its people still cannot directly elect the city's chief executive or all legislative members.

One of the big themes of the march marking the 14th anniversary is the growing rich-poor divide in Hong Kong, where skyrocketing property prices have left many residences unaffordable and forced out small shopkeepers. March organizers say they want to protest the "hegemony" of Hong Kong's big property developers over the market.

Some protesters carried large signs depicting Tsang and billionaire Li Ka-shing, Hong Kong's richest man whose business empire includes a major property developer, with devil horns and vampire fangs. They chanted slogans accusing the government and developers of colluding to establish a monopoly.

Prices for apartments in Hong Kong have been driven up by ultra-low interest rates and excess liquidity, and the government has twice introduced measures since November to cool the market.

"But also on social issues, there is a lot of unhappiness. That's why the people are coming."

As many as 100,000 people were expected to take to the streets, according to an estimate by the nonpartisan Hong Kong Transition Project reported by the South China Morning Post newspaper. Hong Kong police said they would not have a crowd estimate until the rally ends.

Continue reading - Tens of thousands vent anger at Hong Kong rally over wealth gap, gov't policies



Thousands march on Hong Kong handover anniversary