The Next Banking Crisis on the Way

Jim Jubak
MSN Money
January 21, 2008

Is this the quarter when banks finally admit all of their problems?

On Jan. 15, Citigroup (C, news, msgs) announced it would take an $18.1 billion write-down on its portfolio of subprime mortgages and other risky debt, and the bank cut its dividend 41%.

With other banks following suit — Merrill Lynch (MER, news, msgs) reported $16 billion in write-downs and other charges two days later, and Wells Fargo (WFC, news, msgs) delivered similarly huge losses — will they throw everything, including the kitchen sink, into their losses? That kind of quarter always marks the bottom in a crisis like this.

Nah. The banks and other financials have more losses from the subprime-mortgage mess on their books that they haven’t yet confessed. Worse, the mortgage debacle has spread to other types of debt, with banks and other financial companies reporting mounting losses in their credit card and auto loan portfolios. And worst of all, the next big leg of the crisis — the one I think will mark the true bottom — has just started.

As the economy slows, the default rate is rising for corporate debt, especially for the high-risk, high-yield corporate debt called "junk" by many of us. That’s opening a Pandora’s box of potential write-downs that could dwarf the losses in the mortgage market.

If that’s true, it would push off the kitchen-sink bottom until the second or third quarter of 2008, depending on how bad the economy gets and how long it stays in the dumps. (See my Dec. 28 column, "Don’t count on a ‘normal’ recession.")

A brief history of bubbles

It’s not surprising that it will take so long to work through this mess, if you remember how it all began. The current crisis is yet another in a string of financial bubbles — the tech bubble that burst in 2000, the housing bubble that burst in 2007 and the debt-market bubble that’s bursting now. Behind each bubble stands a global flood of cheap money created by:

• Central banks running their printing presses to fend off economic slowdowns or financial-market crashes.

• A weak yen that let traders and speculators borrow for almost nothing in Japan in order to buy stocks and bonds in other markets.

• A huge surge of exports from countries such as China determined to hold down domestic consumption.

• Soaring oil prices that gave oil producers billions of dollars to invest somewhere.

All of those dollars chased a limited supply of real assets and traditional stocks and bonds, bringing down returns just as a falling dollar and signs of inflation lowered real returns more. Everyone wanted something as safe as U.S. Treasurys that paid more than Treasurys.

Everyone wants to believe in magic

Wall Street obliged by packaging and then slicing debt backed by mortgages, so that even the riskiest mortgages could earn a safe AA or AAA rating from Standard & Poor’s, Moody’s (MCO, news, msgs) or Fitch. It performed the same magic with credit card debt, with auto loans and finally with corporate debt — even the riskiest kind, called high-yield because it pays out a higher dividend to compensate for its higher risk. It’s known as junk because in hard economic times it can become worthless. (See my Aug. 10 column, "How Wall Street got into this mess.")

Everyone wanted to believe that Wall Street’s magic worked. Investors from Citigroup to the Hillsborough County Public Schools in Florida (exposure: $573 million) bought in. The more investors who bought in, the more of these new products Wall Street could sell and the more money it was willing to lend to home builders, home mortgage lenders and credit card companies; to the savings and loans and banks that created the raw materials (mortgages, credit card debt, auto loans) that Wall Street needed to manufacture its products; and to the hedge funds and structured investment vehicles that bought what Wall Street produced.

It worked out just fine until reality stuck a pin in the bubble. It turns out that you can’t lend more and more money to less- and less-qualified home buyers without driving up the number of borrowers who pay late or can’t pay at all.

On Jan. 9, Countrywide Financial (CFC, news, msgs) reported that the foreclosure rate on its 9 million mortgages had climbed to 1.44% in December, double the 0.7% rate of December 2006. The delinquency rate had climbed to 7.2% of unpaid balances, up from 4.6% in December 2006. The rates were the highest ever for Countrywide, which entered the mortgage business in 2002.

Within a week, as bankruptcy rumors swirled around Countrywide, Bank of America (BAC, news, msgs) agreed to acquire the company for $4 billion.

Damage goes beyond mortgages

But the cause of this mess stretched far beyond any problems specific to the mortgage sector, so the damage wasn’t limited to that part of the debt markets. On Jan. 10, for example, American Express (AXP, news, msgs) announced that credit card debt at least 30 days past due had climbed to 3.2% of its portfolio from 2.9% in the third quarter, and write-offs of bad debt had climbed to 4.3% from 3.7% in the same period. In 2008, American Express expects write-offs to average 5.1% to 5.3%.

Continued: The real concern

How about auto loans? On Jan. 15, Sovereign Banc (SOV, news, msgs) said it would take $1.6 billion in charges for the fourth quarter of 2007, including a $600 million write-down on consumer and auto loans. The company had aggressively expanded its auto loan business in Arizona, California, Florida, Georgia and Nevada in 2006 and 2007 — just in time to get hit by the cooling of the hot real-estate market in those states. The company has pulled out of the auto loan market in Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina and Utah because of rising default levels.

But it’s the emerging problems in the corporate-junk-bond market that really worry me. The sector and the problems are big enough to produce another big setback for financial companies and the economy as a whole.

The real concern: Credit-default swaps

Actually, I’m worried not so much about the junk-bond market itself as the huge market for a derivative called a credit-default swap, or CDS, built on top of that junk-bond market. Credit-default swaps are a kind of insurance against default, arranged between two parties. One party, the seller, agrees to pay the face value of the policy in case of a default by a specific company. The buyer pays a premium, a fee, to the seller for that protection.

• Talk back: Do you think we’ve seen the worst for financial stocks?

This has grown to be a huge market: The total value of all CDS contracts is something like $450 trillion. Because buyers and sellers of insurance usually create multiple "policies" as they attempt to control risk, that number includes a lot of duplication. Real exposure, says the Bank for International Settlements, may be only 20% of that, or $90 trillion. Some studies have put the real credit risk at just 6% of the total, or about $27 trillion. That puts the CDS market at somewhere between two and six times the size of the U.S. economy.

The CDS market has been a good place to make money in the past few years because default rates in the junk-bond market have been historically low. The default rate for all junk bonds declined to 1.7% in 2006. That’s the lowest rate since 1996. With defaults that low, sellers were paid insurance premiums but didn’t have to cough up much in return.

But that default rate started to rise in 2007, climbing to 2.6%. And Standard & Poor’s projects the rate will climb to 3.4% by October. At that rate, 56 bonds would go into default in 2008, compared with 14 in 2007.

That level of default isn’t likely to inflict too much damage on the CDS market. The historical rate for defaults by corporate junk bonds has averaged 5% a year since 1980. But the default rate has run as high as 12.7% in previous recessions.

Will investors walk or run for the exits?

The junk-bond market isn’t in a panic yet, but the fear is climbing. The spread between the yield on the safe U.S. Treasury bonds and comparably risky high-yield bonds climbed by 0.81 percentage point in the few trading days up to Jan. 9. That’s the biggest increase in the spread in the first days of January ever measured.

I’d say that junk-bond investors, taking a clue from the 30%-to-50% losses suffered in the subprime-mortgage market by investors who held on too long, are moving toward the exits with all due speed. They also know that in the CDS market it’s very hard to tell who is ultimately holding the long or short end of any deal. And it’s even harder to judge the financial strength of the ultimate holder of any individual insurance contract. If the mortgage crisis is a guide, some of that insurance may turn out to be worthless because it’s held by an investor without the ability to pay.

Whether that exit continues at a purposeful walk or turns into panicked flight largely depends on the speed with which the economy slows and on the duration of any slowdown. Wall Street continues to talk as if all we’re facing is a two-quarter downturn, although perhaps of some severity, but the early money is starting to behave as though things are likely to be worse than that.

On Wall Street, fears have a nasty tendency of becoming self-fulfilling prophecies.

All it takes is enough investors behaving as if the short-term, asset-backed commercial-paper market is risky for that market to freeze into immobility, which leaves companies with less-than-sterling credit ratings without a source of short-term working capital.

All it will take in the CDS market is enough buyers and sellers deciding they can’t rely on this insurance anymore for junk-bond prices to tumble and for companies to find it very expensive or impossible to raise money in this market.

And that would be enough to make any economic downturn both longer and deeper than stock prices yet reflect.

The CIA Eyes the Internet

Alex Constantine
Alex Constantine’s Blacklist
January 19, 2008

Chooms: This is a TRUE story, not an execrable satire, capricious exercise in political fulmination or similar waste of petroleum …

The next phase in the institution of fascist law enforcement involves cyber-security and the Internet. Media martinets have been making noise about cyber-terrorism lately - similar to the manner in which they raised a good scare over anthrax preceding the mailing of the spores - and the CIA is currently laying the justification for legislation that will permit spying on us via our computers with this story in the current PC World: “CIA Says Hackers Have Cut Power Grid”:

“Several cities outside the U.S. have sustained attacks on utility systems and extortion demands.”

No one but the CIA appears to know anything about the outages and attendant extortion demands, and now the Company - one that trains death squads and put Saddam Hussein in power - is graciously letting us in on it …

“Criminals have been able to hack into computer systems via the Internet and cut power to several cities…. Speaking at a conference of security professionals on Wednesday, CIA analyst Tom Donahue disclosed the recently declassified attacks while offering few specifics on what actually went wrong.

“Criminals have launched online attacks that disrupted power equipment in several regions outside of the U.S., he said, without identifying the countries affected. The goal of the attacks was extortion, he said.”

Again, vagaries, no specifics - as if he were making the whole thing up …

“‘We have information, from multiple regions outside the United States, of cyber intrusions into utilities, followed by extortion demands,’ he said in a statement posted to the Web on Friday by the conference’s organizers, the SANS Institute. ‘In at least one case, the disruption caused a power outage affecting multiple cities. We do not know who executed these attacks or why, but all involved intrusions through the Internet.’”

How did media around the world miss THAT ONE, especially in cities thrown into blackness and disarray by these vicious criminal “outages.” There must have been looting, chaos, casualties. But why is this secret information suddenly fit for lay consumption? …

‘According to Mr. Donahue, the CIA actively and thoroughly considered the benefits and risks of making this information public, and came down on the side of disclosure,’ SANS said in the statement.”

Risks? Anyone who thinks secrecy is necessary in this case may WORK for the CIA, which is holding all related information closely to its blood-stained vest:

“One conference attendee said the disclosure came as news to many of the government and industry security professionals in attendance.”

It may also come as a surprise to the cities around the world subject to these hideous “extortion plots.”

“It appeared that there were a lot of people who didn’t know this already,’ said the attendee, who asked not to be identified because he is not authorized to speak with the press.”

OF COURSE, the disclosure “came as news” - the CIA appears to have fabricated the whole problem, or perhaps hired provocateurs as they’ve often done in the past, to stir up tensions, fatten the counter-terror budget …

“He confirmed SANS’ report of the talk. ‘There were apparently a couple of incidents where extortionists cut off power to several cities using some sort of attack on the power grid, and it does not appear to be a physical attack,’ he said.”

We would all like an actual, concrete example of a power grid extortion plot, so the reporter gives us this:

“Hacking the power grid made front-page headlines in September when CNN aired a video showing an Idaho National Laboratory demonstration of a software attack on the computer system used to control a power generator. In the demonstration, the smoking generator was rendered inoperable.”

The scare mongering recalls Colin Powell’s tiny vial of death. Drastic steps that happen to violate civil liberties are necessary.

“The U.S. is taking steps to lock down the computers that manage its power systems, however. On Thursday, the Federal Energy Regulatory Commission (FERC) approved new mandatory standards designed to improve cybersecurity. CIA representatives could not be reached immediately for comment.”

The Agency will search frantically for other existing “solutions.” As it happens, in little Bavaria, Nordic Big Brother is already taking on the Beast, according to Trend News: “German state of Bavaria to go ahead with online surveillance.”

That’s IT!

“The southern German state of Bavaria is to go ahead with controversial plans to permit security officials to monitor personal computers online to check for terrorist internet traffic, the state interior minister said Saturday.
A spokesman for Bavarian Interior Minister Joachim Herrmann confirmed an earlier news report in the weekly Focus news magazine that Bavaria would not wait for planned federal legislation.”

No time for niceties like overhauling the Bavarian Constitution.

This is a likely peek at our own near future if the CIA succeeds in putting the fear into the proles. Legislators are enamored of the prospects:

“Herrmann said he would put forward draft legislation in February. Federal Interior Minister Wolfgang Schaeuble favours similar plans to deploy a so-called ‘government Trojan’ to spy on the PCs of terrorist suspects. The German Constitutional Court in Karlsruhe is currently considering a similar law put forward by the western state of North Rhine-Westphalia and is expected to rule in the spring. Schaeuble, a member of Chancellor Angela Merkel’s Christian Democrats (CDU), last year suggested constitutional changes to give increased powers to counter-terrorism operatives, including online searches of PCs.

“Members of the Social Democrats (SPD), the junior partner in Merkel’s grand coalition, have opposed the plans on civil liberties grounds. SPD Justice Minister Brigitte Zypries has said she is not ‘in principle’ opposed to the idea but concerned about the practicalities of implementing legislation.”

We can all be reassured that government in Bavaria and stateside will handle its new powers “responsibly.”

“The head of the Federal Criminal Police (BKA), Joerg Ziercke , has criticized the debate as ’scare-mongering,’ adding that at most only 10 such online searches would be carried out in any one year.”
http://news.trendaz.com/index.shtml?show=news&newsid=1115506〈=EN

But when the cyber-security apparat is in place, who’s to stop the CIA Homeland Security thugs from “overstepping their bounds,” as they did with forced detainments, secret files and torture, to cite a few well-known examples?

Spaniard becomes Jesuits' new "black pope" (Superior General)

VATICAN CITY (Reuters) - Spaniard Adolfo Nicolas was elected the Jesuits' "black pope"(Superior General), as the head of the largest and perhaps most influential, controversial and prestigious Catholic order is known, in a secret conclave on Saturday.

Nicolas, 71, has run Jesuit operations in east Asia and Oceania since 2004 and spent most of his career in the Far East after being ordained in Tokyo in 1967.

The order said in a statement that Nicolas had been elected to succeed Father Peter-Hans Kolvenbach, who received permission from Pope Benedict to retire as head of the order formally known as the Society of Jesus at the age of 79.

Jesuit superior generals are known as "black popes" because, like the pontiff, they wield worldwide influence and usually keep their position for life -- and because their simple cassock is black, in contrast to the pope who dresses in white.

The 468-year history of the Jesuit order has often included stormy relations with the Vatican. Benedict's predecessor, Pope John Paul, believed the order had become too independent, leftist and political, particularly in Latin America.

Soft-spoken, white-haired Dutchman Kolvenbach won widespread praise for mending relations with the Vatican during his years in the post, after conflicts between his charismatic Basque predecessor and Pope John Paul.

Kolvenbach also had to deal with declining vocations and the future of the order founded by St Ignatius Loyola in 1540.

In the 1960s, the all-male order peaked with some 36,000 members worldwide. It now has about 19,200 members involved in education, refugee help and other social services.

The general congregation that elected Nicolas gathered 217 electors from all over the world at Jesuit headquarters, a block from the Vatican.

They spent four days in prayer and what is known in Latin as "murmuratio", or murmurings, about who should be elected. It is strictly forbidden to lobby for the post and anyone actively seeking the job must be 'turned in' by the other delegates.

The election is by secret ballot and delegates are not allowed to leave the room until Pope Benedict is informed who has won, in keeping with a tradition that the "white pope" is first to know who is the new "black pope".

But unlike a conclave to elect the pontiff, a Jesuit general congregation can continue for weeks or even months after the election to discuss future challenges and priorities.

Recession fears weigh on markets

BBC
Tuesday January 22, 2008

Many of Asia's and Europe's top share indexes have fallen sharply on Tuesday amid fears of a recession in the US leading to a global economic slowdown.

London's FTSE 100 index has had a bumpy day, dropping more than 3% at the open. It has since recovered and was recently trading between 1% higher and 1% lower.

Earlier, Asian markets had tumbled with Japan's Nikkei index closing down 5.7%, taking its decline this year to 18%.

Many analysts are predicting indexes will remain volatile in coming weeks.

"I think we can safely say that the stomping, snorting optimistic beast of a market is fleeing the field, to be replaced by something scary and grizzly," said BBC Business Editor Robert Peston.

"But volatility is the order of the day. In London, there has been a stunning bounce, which could yet turn out to be ephemeral.

"Having worked at assorted times on trading floors, I can smell the adrenalin, testosterone and fear that is creating this mayhem," he said.

Full article here.

Global economic crisis 'serious': IMF Chief

Investors skeptical of U.S. stimulus package, says IMF's Strauss-Kahn; an American recession would spread globally, he warns.

PARIS (AP) -- The head of the International Monetary Fund called the global economic situation "serious" and said markets worldwide had responded skeptically to a U.S. stimulus plan.

Dominique Strauss-Kahn stressed that a U.S. recession would affect economies across the globe.

"The situation is ... serious," said Strauss-Kahn following a meeting in Paris with French President Nicolas Sarkozy. "All the countries in the world are suffering from a slowdown in growth in the United States."

He said investors were skeptical that an economic stimulus plan presented last Friday by U.S. President George W. Bush would shore up the economy, which has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

"It appears that the markets did not appreciate the packet proposed by President Bush," he said, adding that the negative reactions were "perhaps to be expected."

Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan. U.S. markets were closed Monday, but the downbeat mood from last week's market declines in New York circled through Europe, Asia and Canada. In Hong Kong, the blue-chip Hang Seng suffered its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Strauss-Kahn, a Frenchman who took the reins at the IMF late last year, said he and Sarkozy discussed possible French responses to the situation in the United States.

"When [Sarkozy] says 'there are risks to doing something but there are even more risks in not doing anything,' I think he's right," Strauss-Kahn said. He did not elaborate on what measures the French might take.

IMF warns of serious meltdown

PARIS: All developed countries are suffering from the slowdown in the US putting the world economy in a serious situation, IMF Managing Director Dominique Strauss-Kahn said yesterday.

His comments came after world stock markets fell sharply and demand for safe-haven bonds.

"The situation is serious," he said.

He warned that emerging market growth could also be dragged down by the outlook in the US.

Meanwhile, top European finance officials stressed that their economies remained solid as global stock markets plunged on concerns about a risk of recession in the US.

"The excess of volatility of the markets is not good news," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said.

"I hope they will become more quiet because at least in Europe the fundamentals of our economies are sound," Almunia added.

Seeking to allay fears about the impact of US weakness on Europe, Dutch Finance Minister Wouter Bos said a US slowdown "will have an impact on the European economy but it will be moderate."

"We are all concerned. We are following the events on a daily basis, we hope things will not be as bad as they may look," said Slovenian Finance Minister Andrej Bajuk, whose country holds the rotating EU presidency.

Spanish Finance Minister Pedro Solbes acknowledged: "We are worried in the sense that we have to follow what's happening every hour and to try to understand what's happening."

Ron Paul blames Federal Reserve for weakening economy

01/21/2008

By CAIN BURDEAU / Associated Press

Ron Paul, a long-shot Republican presidential contender and Texas congressman, said Monday that the Federal Reserve is to blame for the country's weakening economy.

Paul highlighted his economic remedies — abolishing the federal income tax and returning to the gold standard, among them — on a three-city tour of Louisiana.

The libertarian-minded Paul was the only candidate to visit Louisiana on the eve of the state's Republican caucuses Tuesday. The caucuses are an intermediary step in picking a favorite candidate. A presidential primary will take place on Feb. 9 and a state convention will convene on Feb. 16.

Paul blamed the Federal Reserve for the current economic conditions; stock markets worldwide fell Monday after Wall Street declined last week. On his Web site, he said the Fed has taken the United States "into a terrible crisis."

Paul told an overflow crowd at a suburban New Orleans hotel Monday that the Fed has allowed the dollar to weaken, which in turn, he said, has hurt the middle class and led to inflation.

"I would enjoy being the next president to get rid of our central bank," he told supporters. The crowd gave him a raucous welcome, chanting at one point, "Who dat? Who dat say they're gonna beat Ron Paul?" — a riff on a popular football chant for the New Orleans Saints.

Paul, on his Web site Monday, said the economic policies of his opponents are based on ill-advised "print-and-spend" theories. He added that he would cure the economic crisis by ending the "hyper-expensive, hyper-dangerous empire all around the globe."

Paul is a 10-term congressman from southeast Texas whose campaign differs on many points from most of his Republican rivals. He opposes the Iraq war and the death penalty, for instance, and votes against military appropriations.

He would also like to abolish the Education Department, Energy Department and Internal Revenue Service. He is against abortion and gun control.

In Nevada, Paul was a distant second to former Massachusetts Gov. Mitt Romney. Still, Paul called Nevada "a shot in the arm" and pledged to keep campaigning "all the way through a brokered convention."

As of late, Paul has been raising hefty sums, pulling in about $20 million in the last quarter of 2007, according to his campaign.

He's been running an Internet-driven campaign, trying to appeal to and excite younger and libertarian-minded voters. Monday marked another so-called "Money Bomb," in which his campaign aims to raise as much money online as possible in one day.

Planned Parenthood to Push Candidacies

By BRODY MULLINS
January 22, 2008; Page A6A
Wall Street Journal

WASHINGTON -- For the first time, abortion-rights advocate Planned Parenthood Federation of America Inc. is launching a major effort to elect pro-abortion-rights candidates to Congress and the White House in November.

The nation's largest reproductive-health-care provider plans to spend $10 million in hopes of persuading one million people to vote for abortion-rights candidates in the 2008 election. Planned Parenthood will roll out its election plans today to mark the 35th anniversary of the Supreme Court decision in Roe v. Wade that made abortion legal.

With its "One Million Strong" campaign, Planned Parenthood becomes the latest Washington interest group to launch an independent effort to elect candidates who back its priorities. Since Congress enacted a campaign-finance-reform law banning large financial contributions to the Republican and Democratic parties, a growing number of individuals, labor unions, corporations and other interest groups have started or boosted their own campaigns to elect like-minded candidates.

In the presidential primaries, the fiscally conservative Club for Growth has aired television advertisements against Republican candidates who have backed tax increases in the past. Labor unions have spent heavily to support Democratic candidates they endorse. And Emily's List, a group that supports pro-abortion-rights female Democrats, has funded a campaign to get women to go to the polls for New York Sen. Hillary Clinton in the primaries.

In all, Emily's List hopes to exceed the $46 million it raised for the 2006 election. Another abortion-rights organization, Naral Pro-Choice America, plans to spend $10 million on the general election.

Together, the efforts by the three abortion-rights groups are the most aggressive attempt by abortion-rights advocates to elect like-minded candidates -- most of whom are likely to be Democrats.

The campaign spending by Planned Parenthood and the other groups will compete against conservative organizations who are spending money to elect antiabortion Republicans, so it isn't clear how much impact the efforts will have on turnout and voters' choices.

The efforts come at a time when many abortion-rights advocates feel they are under attack. Since President Bush took office, he has nominated federal judges who have chipped away at abortion rights and installed two antiabortion justices to the Supreme Court. Two of the oldest justices on the current Supreme Court are liberal. If a Republican wins the 2008 presidential election, two more conservative judges could be added to the court.

Until recently, Planned Parenthood hadn't played a role in elections. In 2004, the organization endorsed Massachusetts Democratic Sen. John Kerry for president, marking the first time it had endorsed a presidential candidate in its 90-year history. In 2006, Planned Parenthood lent its backing to a handful of Democratic candidates for governor.

Officials at Planned Parenthood say they decided to move into the campaign arena because they say reproductive rights are under assault by Republicans. The political effort will be led by Cecile Richards, the organization's president, who has a long history of working in Democratic politics. "To keep our doors open," Ms. Richards said, "it's clear that we need to step into the electoral arena."

A former aide to Democratic Rep. Nancy Pelosi of California, Ms. Richards took over Planned Parenthood last year. She is the daughter of Ann Richards, the former Democratic governor of Texas.

Ms. Richards said she believes Planned Parenthood can rally an important demographic that has proved to be elusive to the traditional political parties and candidates: young, unmarried independent and Democratic women.

"Women voters and young adults already trust Planned Parenthood's health information -- and this year they'll be able to rely on the Planned Parenthood Action Fund for election information," Ms. Richards said.

This year's presidential primaries underscore the importance of women and younger voters. In New Hampshire, women made up 57% of the Democratic vote and helped to deliver a surprising win to Mrs. Clinton. In Iowa, younger voters are credited with propelling Sen. Barack Obama of Illinois to victory.

Planned Parenthood has a potent political tool to reach its target voters: a database of nearly four million people. About five million women visit Planned Parenthood clinics across the country each year and 10 million people browse Planned Parenthood's Web site, the organization says.

Planned Parenthood will fund political advertisements for candidates and organize paid staffers and volunteers to go door-to-door seeking votes.

Poster Comment: planned parenthood is a eugenics operations. Doubt it? Read this and go do some research on your own. Its the truth.

Fed Slices Interest Rate by 0.75%, Possible Sign of Panic

Ken Sweet

FOXBusiness

New York -- The Federal Reserve’s emergency decision to slash a key interest rate three-quarters of a percentage point -- the most in recent memory -- is seen by some as a panic-stricken attempt to add spark to an economy slipping into recession.

“The Fed is responding to a panic,” said Quincy Krosby, chief market strategist at The Hartford. “They are reacting to a market sell off that is based on out-and-out fear and lack of confidence in the markets. We should have had this cut weeks ago.”

The move came a week ahead of the bank’s regularly scheduled meeting and in response to a global market sell off and a 9% drop in the U.S. stock market year-to-date – the worst start ever for U.S. equities.

“The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth,” the Fed said in a statement. “Broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.”

Many on Wall Street believe the Federal Reserve has been behind the curve as the economy has been careening toward recession.

Fed Chairman Ben Bernanke told Congress last week that the U.S. will not slip into a recession but instead will head into a period of slow economic growth for the first half of 2008. However, economists at firms such as Goldman Sachs and Merrill Lynch say we are already in one or heading toward one.

"Investors have been talking about this damage to the economy for weeks, and now the Fed is catching up," Krosby said.

The Fed holds their regular Open Market Committee Meeting on Jan. 29-30, and many believe additional cuts are needed and likely.

"This move is not an instant fix," Ian Shepherdson, chief U.S. economist at High Frequency Economics told the Associated Press. "The economy is still staring recession in the face, but at least the Fed now gets it."

Tuesday's Fed's action was approved 8-1 with William Poole, president of the Fed's regional bank, dissenting. The statement said that Poole objected because he did not believe current conditions justified a rate move before the Fed's meeting next week.

Russia bombers to test-fire missiles in Atlantic

Guy Faulconbridge
Reuters
Tuesday January 22, 2008

Russia on Tuesday sent two long-range bombers to the Bay of Biscay, off the French and Spanish Atlantic coasts, to test-fire missiles in what it billed as its biggest navy exercise in the area since Soviet times.

British and Norwegian Tornado and F-16 jets were escorting the Russian 'Blackjack' bombers, Interfax reported, quoting the Russian Air Force.

However, the French Defence Ministry spokesman said his country had been informed about the Russian exercises.

Firing missiles off the coastline of two members of the NATO military alliance is the latest in a series of Kremlin moves flexing Moscow's military muscle on the world stage.

The Russian bombers joined aircraft carriers, battleships and submarine hunters from the Northern and Black Sea fleets for the Atlantic exercises, which come as the country enters an election campaign to choose a successor to President Vladimir Putin.

"The air force is taking a very active part in the exercises of the navy's strike force in the Atlantic," Russia's air force said in a statement.

"Today, two strategic Tu-160 bombers departed for exercises in the Bay of Biscay, which ... will carry out a number of missions and will conduct tactical missile launches," it said.

Putin, widely popular as his second four-year term draws to a close, has sought to use such moves to revive domestic and international respect for Russia's armed forces which were shattered by the chaos of the 1990s.

Full article here.

More immigrants are heading to Britain after EU extended border-free zone eastwards, German police warn

UK Daily Mail
Tuesday January 22, 2008

German police fear thousands of illegal immigrants together with victims of people-trafficking gangs have swept into Western Europe since the end of border controls with eastern states last month.

They said that since passport controls were ended on December 21, 620 illegal immigrants have been caught by police patrols in the area of Germany's border with Poland and the Czech Republic, as the border-free Schengen Zone was extended to East European countries.

But they say the figures is almost certainly a mere fraction of the number who have made it across the frontier successfully.

By comparison, in the whole of the first six months of last year, only 480 illegal migrants were caught.

Lars Wendland of the GdP German police trade union in Frankfurt-an-der-Oder on the border with Poland said: "Whatever number we have caught, you can be sure that ten times that number have successfully crossed the border in this period."

German police had earlier warned of chaos and a flood of illegal immigrants when the Schengen Zone was expanded to include former communist states in Eastern Europe last month.

The Schengen Zone now allows for borderless travel between 24 countries in Europe and in December took in Poland, the Czech Republic, Hungary, Estonia, Latvia, Lithuania, Slovakia, Slovenia and Malta. But the UK and Ireland are not part of the zone.

German police had called for the Schengen expansion to be delayed and had even marched in protest in eastern parts of Germany, warning of rising crime in the country as a by-product of the abolition of border controls.

Locals in towns on the border began buying up expensive alarm equipment and some even weapons to defend themselves against an expected crimewave.

Konrad Freiberg, chairman of the GdP union, said: "Our fears have come true."

Full article here.

Kissing couple sue over surveillance video posting

AFP
Tuesday January 22, 2008

A couple filmed in a lingering embrace on a Shanghai station platform are suing the metro rail authority after the video of them kissing was posted on the Internet.

The couple, said to be in their 20s, claimed the video posted on popular video websites Youtube.com and Ku6.com had embarrassed them and violated their privacy rights, according to the China Daily.

"We think employees of the metro station taped us illegally and made negative comments (while filming)," it quoted the unnamed man in the video as saying.

"This has to do with the protection of the legal rights of all passengers travelling on metro trains in Shanghai, and not simply our own interests and (the) damage it has done to us."

The video shows the couple in a prolonged embrace and kiss as three voices speaking in the local Shanghai dialect can be heard in the background laughing and making lewd sexual comments.

The title of the video is "Shanghai metro line staff secretly tape lovers kissing goodbye."

The Shanghai Metro Company said it was investigating the matter.

"If it is proved the video was shot by metro company employees, they and the company should take responsibility for the invasion of the commuters' privacy," said Gao Puping, a professor of law at East China University.

In communist China privacy was virtually non-existent in the past, when the state interfered in all aspects of people's lives.

But a sense of privacy has emerged with economic reform and the retreat of the state apparatus from society.

Yes, They're Watching Every Move

Rick Green
Courant.com
Tuesday January 22, 2008

I'm spooked by all these video cameras constantly watching us.

Forget the mall, the ATM, the casinos or the changing room at Marshall's, where we all know the cameras are rolling, digitally recording and storing your every move.

Call me neurotic, but have you seen those devices that look like spy cameras, installed above all the traffic lights at intersections in West Hartford Center?

Perhaps you've been down Park Street in Hartford recently and looked up at the surveillance cameras at every intersection, funded with a $400,000 grant from state taxpayers.

"I think it violates my civil rights," Jorge Figueroa told me when I stopped to talk with him at a hot dog cart near the corner of Park and Lawrence, not far from a camera's watchful eye. "I feel like somebody is watching."

You've got that right, Jorge. Increasingly — and notably since the 9/11 terrorist attacks and the federal Department of Homeland Security opened the funding spigot — the government is filming and recording us.

It's all to make you feel more secure, but there's not much research that suggests cameras reduce crime.

The latest issue of Popular Mechanics confirmed my fears.

"There are an estimated 30 million surveillance cameras now deployed in the United States shooting 4 billion hours of footage a week," James Vlahos writes in a feature story. "Americans are being watched, all of us, almost everywhere."

Just think how much fun all this makes going out on the town, knowing that some rent-a-cop — or Homeland Security snoop — is tracking you.

Bill Brown, co-founder and director of the Surveillance Camera Players, which monitors the growth of government video snooping, said all this should worry us.

"Right underneath our noses, our cities are changing," Brown said. "People know there are cameras, but they don't know how many there are."

A new feature film, "Look," tracks this obsessive videotaping trend, entirely from the perspective of a video surveillance camera.

"We're being captured on camera nearly 200 times a day, and those images are being digitized and archived forever," director Adam Rifkin told Newsweek. "Nobody's stopping to ask questions about its propriety."

A 2006 report by the New York Civil Liberties Union noted the installation of thousands of police cameras in New York since 9/11, creating "a massive video surveillance infrastructure ... with virtually no oversight."

In Stamford, where crime-fighting video cameras were approved last year, officials have promised careful supervision of citizen snooping. Downtown Hartford and New Haven are full of private and government cameras. In Newton, Mass., a liberal bastion, suspicious administrators installed cameras in the hallways of a high school. They were exposed by the school's student newspaper.

But in East Hartford, residents questioned a surveillance proposal and the town council tabled — for now — a $300,000 video camera initiative.

"It comes down to money and effectiveness. Put another officer or two on the beat instead," said Paul Roczynski, the local Republican Party chair who opposed the expanded surveillance. "Plus, it's a violation of people's privacy rights."

When I reached West Hartford Police Chief James Strillacci, he told me to relax and assured me that Big Brother is not yet tuning in to Blue Back Square. The devices above the traffic lights, although they look like it, aren't cameras.

"It's a controller for the lights," monitoring traffic to prevent long backups, Strillacci said. "But it's not to say we couldn't retrofit it or something."

Does all this make you feel safer? It just makes me paranoid.