Brazil's Real Weakens After Fed Rate Cut, Bear Stearns Collapse

By Adriana Brasileiro

March 17 (Bloomberg) -- Brazil's real fell as investors shunned higher-yielding securities after the Federal Reserve cut its discount interest rate in an emergency move and JPMorgan Chase & Co. agreed to purchase Bear Stearns Cos. for less than a tenth of its March 14 value.

``The crisis in the U.S. fell into a deeper, much scarier level over the weekend,'' said Francisco Carvalho, head of currency trading in Sao Paulo at Liquidez Corretora, the biggest currency derivatives brokerage in Brazil. ``Now we'll start to see more contagion in emerging markets.''

The real weakened 0.6 percent to 1.7226 per dollar at 3:55 p.m. New York time, after most trading in Brazil had ended. Global markets fell after the Fed made its first weekend change in borrowing costs since 1979 and Bear Stearns, the fifth largest securities firm in the U.S., was acquired for $2 a share. The real's losses today extend its decline over the past three days to 2.9 percent.

The real fell as much as 1.7 percent earlier today. Losses eased as traders stepped up bets the Fed will cut its target rate for overnight loans tomorrow to at least 2 percent from 3 percent. The move improves the yield advantage offered by local bonds and helps makes Brazil ``one of best risk-return options'' amid market turmoil, said Jose Guimaraes Monforte, chief executive at Pragma Gestao de Patrimonio, a Sao Paulo-based asset management firm.

``There's still ample liquidity in world markets and it needs to be invested somewhere,'' Monforte said. ``Brazil offers a strengthening currency, high interest rates, huge international reserves and assets that are still quite attractive.''

Brazil's economy hasn't been hurt by the deepening international credit squeeze, Finance Minister Guido Mantega said today.

``Brazil is a safe harbor,'' Mantega told reporters in Brasilia today. He expects the Fed to cut the benchmark interest rate by as much as 1 percentage point tomorrow to ``calm down'' markets.

Brazil-U.S. Spread

Brazil's 11.25 percent benchmark lending rate, while at a record low, is still 8.25 percentage points higher than the Fed's overnight target rate. The Fed this weekend cut its discount rate to banks by a quarter of a percentage point to 3.25 percent.

The real has gained 21.6 percent against the dollar over the past 12 months as rising commodity exports and purchases of local financial assets swelled dollar inflows. Exports rose to $3.5 billion in the week ended March 16 from $3.3 billion in the previous week, the government said today. The trade surplus in the week reached $527 million.

Economists in a weekly central bank survey revised up their year-end forecast for the real. The median forecast in the March 14 survey of about 100 economists was 1.75 per dollar at year- end, compared with a 1.78-per-dollar forecast the prior week.

Economists also raised their year-end inflation forecast to 4.44 percent from 4.42 percent, according to the survey.

The rising inflation forecast adds to speculation that the central bank will increase interest rates this year to rein in consumer demand, said Tony Volpon, chief economist at CM Capital Markets in Sao Paulo.

Rising Yields

The yield on the overnight interest-rate futures contract for January delivery held today 12.26 percent, more than 1 percentage point above the central bank's target rate. The yield has jumped 50 basis points, or 0.5 percentage point, this month.

Central bankers, in minutes of their March 4-5 policy meeting released on March 13, said rising food prices and the fastest economic expansion in more than three years boosted concern that inflation might overshoot their 4.5 percent target this year. The bank left the benchmark rate at 11.25 percent at the meeting for a fourth consecutive time.

The yield on Brazil's zero-coupon bond due in January 2009 rose 6 basis points, or 0.06 percentage point, today to 12.33 percent, according to Banco Votorantim SA.

Dollars tough to sell on streets of Amsterdam

AMSTERDAM (Reuters) - The U.S. dollar's value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.

"Our dollar is worth maybe zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in front of the Anne Frank house. "It's hard to find a place to exchange. We have to go downtown, to the central station or post office."

That's because the smaller currency exchanges -- despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency -- don't want to be caught holding dollars that could be worth less by the time they can sell them.

The dollar hovered near record lows on Monday, with one euro worth around $1.58 versus $1.47 a month ago.

Argentina, Brazil to drop U.S. dollar in bilateral commercial transactions

BUENOS AIRES, March 15 (Xinhua) -- Argentina and Brazil are to scrap bilateral commercial transactions in U.S. dollars and start using their own currencies from August, an official in charge of currency settlement at the Argentine Central Bank said here Saturday.

The new payment system is aimed at reducing costs in commercial transactions and would benefit small and medium-sized enterprises, the official said.

Under the new system, there will be a unified exchange rate between the real and peso, the so-called reference rate, which will be applied by Brazilian and Argentine central banks at the end of each day.

Brazilian President Luiz Inacio Lula da Silva reached an agreement to establish a new payment system with his Argentine counterpart Cristina Fernandez de Kirchner during his visit to Argentina in February.

Technical preparations are underway for the new system, which the two countries will adopt in several steps due to the large amount of bilateral trade.

Brazil is Argentina's largest trading partner, while Argentina is Brazil's second-biggest trading partner after the United States.

Bilateral trade stood at around 23.6 billion U.S. dollars last year.

Banks to Be Part of “New World Order” in Wake of Bear Stearns

By Walden Siew

NEW YORK (Reuters) - Financial firms face a "NEW WORLD ORDER" after a weekend fire sale of Bear Stearns and the Federal Reserve's first emergency weekend meeting since 1979, research firm CreditSights said in a report on Monday.

More industry consolidation and acquisitions may follow after JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) on Sunday said it was buying Bear Stearns (BSC.N: Quote, Profile, Research) for $236 million, or $2 a share, a deep discount from the $30 price on Friday and record share price of about $172 last year.

"Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the wounded broker for a token amount of $2 per share," CreditSights said. "The reality check is that there are many challenged major banks, brokers, thrifts, finance/mortgage companies, and only a handful of bona fide strong U.S. banks."

CreditSights said it lowered its broker, bank and finance company recommendations to "market weight" due to the credit crisis and stresses in the market.

In the event of future consolidation, potential acquirers identified by CreditSights include JPMorganChase, Wells Fargo, US Bancorp, Goldman Sachs and Bank of America (BAC.N: Quote, Profile, Research), once it works through its recent agreement to acquire Countrywide Financial Corp, (CFC.N: Quote, Profile, Research) the largest U.S. mortgage lender.

Possible foreign bank acquirers include HSBC, Barclays and Canadian firms, said CreditSights, which said the Bear Stearns deal should be good for bondholders.

"The debt side whether at the parent level or on the broker/dealer levels seems to be in rather good shape with the capital structure to be assumed by JPMorgan at deal close," which is expected in about 90 days, CreditSights said.

Financial stocks are likely to trade lower but the overall market may begin to stabilize, according to Morgan Stanley's chief U.S. credit analyst.

"I view the stabilization of Bear Stearns coupled with the liquidity action by the Fed as constructive for the proper functioning of the lending system," said Gregory Peters, chief U.S. credit analyst at Morgan Stanley. "Financial stocks will trade lower, but these are important steps in the path of trying to stabilize the credit markets."

Global stocks fell sharply on Monday, and U.S financial stocks tumbled in early trading, led by a 86 percent slump in Bear Stearns. Lehman Brothers (LEH.N: Quote, Profile, Research) shares sank more than 35 percent.

Financial share prices could fall further by as much as 50 percent, Oppenheimer & Co. analyst Meredith Whitney said.

"As we believe we will begin to see goodwill write downs during the first half of this year, we believe investors will focus more on tangible book value and stocks will quickly revalue to far lower levels," Whitney wrote in a note to clients.

National EXP
One Fine Week

Sutton Financial - It doesn’t matter what newspaper you picked up. It doesn’t matter what TV show you watched. Records fell like no time in recent history with perhaps the exception of Carl Lewis running loose at the Olympics in his heyday. I wonder how much his Gold medals are worth now?

$1.55 on the Euro, $100 on the Yen, $1000 Gold, $110 oil. The three pillars of what we have been writing about for almost 2 years in this column are falling into place exactly as we said they would. Gold and oil up, the Dollar down. This was no stroke of genius mind you, but rather a dead-wringer given the circumstances surrounding the financial system. Things are starting to get interesting, but AGAIN, rather than stand up and admit how bad this problem is, the powers that be continue to offer fairytale assertions of how things are fine and that the bottom is in. Crying bottom has already cost a number of forecasters their reputations and in some cases, their jobs.

Yesterday, Standard & Poor’s took their turn on the stump saying that the writedowns from subprime mortgages are basically over. A few weeks ago, CNBC trotted out T. Boone Pickens in an attempt to talk down the price of oil. The effort fell flat on its face and Mr. Pickens ended up looking rather badly. He also lost quite a bit of money if he was actually short oil, which I seriously doubt. This has been the way of things. Every time I watch one of these interviews, I feel the need to dig through cereal boxes looking for the special glasses they used to include to help you see the magic patterns on the back of the box. So the latest is that the subprime writedowns are over; blue skies are here again.

What? We are only about halfway through the mortgage reset process, and even though there has been a lot of talk about freezing rates, nothing is in stone yet. Unlike the easy ‘economic stimulus’ package, it is a harder sell when asking bankers to part with profits. Given the cloak and dagger nature with which this problem first emerged and has stealthily worked its way through the financial system, gobbling balance sheets along the way, I am surprised anyone would risk their reputation at this point. Maybe I shouldn’t be. The stock market rallied heavily after the comments, and after all, that is what is needed right now. Minus intervention, the markets are looking downright ugly and Wall Street needs your money. Pure and simple. It just isn’t fun shuffling around billions of dollars between big banks. Without your 401’s, they are done. I think that deep down there is an understanding of the difference between real capital (foregoing of consumption in favor of investment) and the stuff rolling off the printing presses. The Fed can print dollars, but it cannot print capital. Capital formation encourages real growth, whereas the additional fiat created while in crisis mode only destroys the value of the existing capital. Retirement plans are essentially the last bastion of genuine savings in our economy.

Speaking of 401’s, the problem is that people are cashing in 401’s in record numbers right now so they can avoid foreclosure. Just when the markets need buyers, the little guy is selling. This will be a short term Band-Aid at best. The penalties and taxes alone on an early withdrawals will take over 1/3 of the money. Most people with any kind of retirement plan from the bull market of the 1990’s got cleaned out in the tech wreck. Only in 2006 did they finally ‘break even’ again (see article here). They had a short window of about a year to get out of the market before the barber showed up and gave the major indices a 15% haircut. So in reality, how much money do these people have left? Not much. Robbing Peter to pay WaMu will last a little while, but the long-term effect of having no retirement funds coupled with failing Social Security will be much worse than a foreclosure.

Against this backdrop, the Bernanke Fed continues to make history before our very eyes. Day after day, move after move they place another nail in the coffin and further cement their role as the facilitator of the next US Depression. So perfectly wrong has Fed policy been over the past 18 months that it will likely become the test case for what not to do in the future. This should not be a surprise to anyone. This is all they know how to do. The irony here is that Ben Bernanke has always thought that the reason we had the Great Depression was because the Fed didn’t print enough money. So now he will take us back there again, this time by printing too much. The Planners are limited by their understanding of economics, and more importantly, their lack of desire to do anything politically unpopular. The fact that we are in an election year will only exacerbate the situation. There has been much talk, but precious little meaningful action and even that has been dead wrong.

At this point their best bet would be to stop their acronym-denoted inflation creating devices (TAF, TSLF) and let the bad apples rot to nothing, particularly Bear Stearns which is now officially on life support. This would cause economic pain. But once the system cleanses, normal economic growth could resume. By not allowing the system to cleanse, they are guaranteeing that the pain will be worse and last much longer than necessary. It appears that they are willing to accept that in exchange for a few more months of status quo. They have a serious problem in that inflation is running out of control, and at the same time, the economy is sinking. Stagflation is upon us. The more money the Fed prints to solve the liquidity and banking problems, the higher prices will climb at the consumer level. This is great if you’re an investor in anything tangible, but a downright disaster if you’re a consumer.

This week has been unlike any other week in recent memory. Things are moving quickly, and it is important to stay tuned and keep your eye on the ball. The protective measures discussed in My Two Cents over the past two years are still in play, granted at much higher costs now, but as the saying goes, the best time to plant an oak tree was fifty years ago; the second best time is right now. Make sure yours is planted while there is still some growing time left.

Fed acts Sunday to prevent global bank run Monday

By Rex Nutting & Greg Robb, MarketWatch

Last update: 10:38 p.m. EDT March 16, 2008

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before.

The extraordinary weekend moves came as J.P. Morgan Chase sealed a deal to buy Bear Stearns Cos. for just $2 a share backed by up to $30 billion borrowed from the Fed. The Fed board gave its approval to that unique funding arrangement, which guarantees JP Morgan against losses from buying Bear. See full story.

The Fed board also approved the creation of a special lending facility through the New York Fed that would be available to members of its primary dealers list, which includes both commercial banks and investment banks. Investment banks, such as Bear Stearns, have not been allowed to borrow directly from the Fed.

JP Morgan has access to the discount window through its Chase Bank subsidiary, but Bear Stearns does not have direct access.

Events have unfolded at warp speed over the past week. On Tuesday, the Fed announced a new lending program for primary dealers in the bond markets, but that program won't go into effect for two more weeks. On Friday, the Fed allowed Bear Stearns to borrow money via JP Morgan in a desperate bid to save the firm, which has been pummeled by losses on exotic securities backed by subprime mortgages.

The Federal Open Market Committee meets on Tuesday. Analysts expect the FOMC to cut the target for the federal funds rate by as much as a full percentage point to 2%. Another cut in the discount rate is also likely.

The new lending program would operate for at least six months, and would offer loans for as long as 90 days, rather than 30 days under the regular discount window. Loans from the new program would be backed by a "broad range of investment-grade debt securities," the Fed said. The interest rate would be the same as the discount rate.

"The Federal Reserve, in close consultation with the Treasury, is working to promote liquid, well-functioning financial markets, which are essential for economic growth," said Fed Chairman Ben Bernanke, in a statement. "These steps will provide financial institutions with greater assurance of access to funds."

Robert Brusca, chief economist at FAO Economics, said the new lending facility created a general way to help other dealers.

"The Fed has more information now that it has seen what Bear Stearns had on its books," Brusca said in an interview.

President Bush will meet with Bernanke, Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Chris Cox on Monday at 2 p.m. Eastenr.

Earlier on Sunday, Paulson went on television to project an image of confidence in the U.S. financial market. He said Washington would do what it takes to foster stability on Wall Street. See full story.

Dean Baker, the co-director of the Center for Economic and Policy Research, criticized the Fed's "real turn to secrecy" in the new auction facilities.

The Fed does not reveal the names of firms that borrow funds in the auctions. The purpose was to get around the "stigma" of banks that didn't want to borrow at the discount window because of the questions it would raise about its balance sheet.

But, in an interview, Baker said "now is not the time to shut the doors and keep everything in the dark."

Baker said he sensed a whiff of panic at the Fed and in the Treasury Department.

"The main thing is that they [Fed and Treasury] are really really scared. Telling us that everything is great is an insult to intelligence. They should own up to it and talk seriously to people," Baker said.

Peter Morici, a professor of economics at University of Maryland, criticized the Fed for not imposing meaningful conditions on the financial institutions that it is providing cash.

As a result, banks continue to impose onerous conditions on their innocent customers, he said.

"Today's moves by the Federal Reserve are the desperate acts of failing men," he said.

Below is a list of primary dealers who will be able to borrow directly from the Fed's new program announced Sunday:

BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Bear, Stearns & Co., Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Countrywide Securities Corporation
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Wasserstein Securities LLC.
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities Inc.
Lehman Brothers Inc.
Merrill Lynch Government Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
UBS Securities LLC.

Rex Nutting is Washington bureau chief of MarketWatch.
Greg Robb is a senior reporter for MarketWatch in Washington.

China blocks YouTube, Yahoo! over Tibet

Jonathan Richards
March 17, 2008

China has closed down access to several of the world's most popular websites in an apparent attempt to censor international coverage of the violence that is unfolding in Lhasa, the Tibetan capital.

YouTube, the video-sharing website which has become a home to amateur footage of news events, has been blocked to Chinese users since Saturday, and there are also reports that the news pages of Yahoo!, the internet portal, have been made inaccessible.

In addition, the entire Guardian website has been closed down as of today, and other sites - including Times Online - have had access to their coverage of recent events in Tibet severely restricted.

Popular sites which assimilate news from different sources - such as Google News - have been subject to what is known as 'keyword filtering', where a Chinese internet user attempting to load a page which contains words such as 'Tibet' or 'Dalai Lama' will see the site stall.

Times Online has also learned that the editors of some of the most popular 'forum' - or bulletin board - sites in China have been directly contacted by government officials and told not to publish any content relating to the recent protests.

Flickr, the photo-sharing website, Wikipedia, and the LA Times, the US newspaper, are among the other sites to which access has been cut off.

"There's definitely been a ramping up of keyword filtering in recent days, particularly for words like Tibet and protest," said Jeremy Goldkorn, the editor of danwei.org, a site which translates news from various Chinese sources into English. "The whole internet has also slowed down, which is almost certainly connected with authorities' attempts to censor content."

The websites of most British newspapers are for the most part accessible, but since Friday, for instance, all articles by the Times Beijing correspondent, Jane Macartney, have been blocked to readers in China.

One comment on danwei.org today read: "I'm in the south of China, and many news sites containing Tibet-related articles are blocked with connection reset errors. This includes the entire Guardian website, as well as all news links from Yahoo."

Another read: "It's about midnight of the 16/17th, and Yahoo's homepage is blocked. They have headlines on the protests/riots up, so I'm not surprised."

China now has more than 210 million internet users - more than in the US, according to the government-backed China Network Information Centre - and authorities are notoriously strict about the sites which they are able to access.

YouTube has been blocked in the past, and the so-called Great Firewall of China prevents discussion of and searches for many sensitive topics, such as the Tiananmen Square protests.

Censorship is made easier by the fact that the country has relatively few internet service providers (ISPs) - the gateways through which all Western content must pass before it is seen from within China - meaning that software which runs 'keyword' checks on sites can readily be installed.

"In many ways, the technical solution - filtering software etc - is enough for the authorities here," Mr Goldkorn said. "You have to remember that the Chinese education system paints a very different picture of Tibet to that which is understood in the West, and it's likely many Chinese are simply not curious enough to try to make the effort to search out an alternative view of events."

A spokesman for the Chinese Embassy in London was not available for comment.

http://technology.timesonline.co.uk/tol/news/tech_and_web/article3568040.ece

Dollar hammered on financial fears

By William L. Watts, MarketWatch

Last update: 4:47 a.m. EDT March 17, 2008

LONDON (MarketWatch) - The Bear Stearns fire sale and the Federal Reserve's emergency decision to cut its discount rate sent the dollar to plunging to historic lows against major counterparts on Monday.

In an extraordinary move, the Federal Reserve Sunday night announced it had cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to an unprecedented list of firms. See full story.

The dollar hit a new 12-year low against the Japanese yen at 95.75 yen overnight and remained 1.7% lower at 97.25 yen.

The euro soared to yet another all-time high of $1.5903, against the dollar and remains 0.7% higher on the day at $1.5776. The dollar tumbled below parity with the Swiss franc, changing hands at 0.9827 francs after hitting a low 0.9631.

The Fed acted as J.P. Morgan Chase wrapped up a deal to buy Bear Stearns Cos. for $2 a share, or around $236 million, with the Fed agreeing to provide as much as $30 billion in financing to back up illiquid Bear assets, including mortgage securities the company hasn't been able to offload. See full story.

The Fed's rate-setting Federal Open Market Committee is set to meet Tuesday, where it's widely expected to announce a cut in its key lending rate, the Fed funds rate, by as much as a full percentage point to 2%. Another cut in the discount rate is also seen as a possibility.

The scope and speed of the Fed action provided little support for the dollar, which ticked higher in the immediate aftermath of the decision before plunging to new lows.

European shares plunged on the open, with banks leading major indexes lower. Major benchmarks tumbled across Asia overnight, with the Nikkei 225 Average ending 3.7% lower at 11,787.51 to finish below the 12,000-point level for the first time since August 2005. See Asia Markets. See Europe markets.

Treasury prices surged and bond yields tumbled as investors fled other assets, pushing down the yield on the benchmark two-year Treasury note by around 18 basis points to 1.31%. Bond yields move inversely to prices.

"It is highly probable that the market is assuming that something is very wrong when the Fed feels that it is necessary to cut the discount rate just one day ahead of a scheduled FOMC meeting," wrote economists at Jyske Bank.

Analysts at Danske Bank said the measures are a "cause for concern as the probability of a full credit crunch with severe damage on the economy is rising rapidly, in our view."

The British pound, meanwhile, failed to match gains versus the dollar, instead losing 0.2% against the greenback to $2.0149. The euro was up 0.9% against sterling at 0.7834 pounds.

Analysts said renewed ideas the Bank of England will be forced to follow through with rate cuts have left the pound under pressure.

"Consensus here is pointing towards the fact that the Bank of England will also be obliged to cut its rates in the coming months to stimulate demand, so expect tomorrow's U.K, CPI data to be closely watched as well for any indication as to where the yield curve may lie for sterling in the months ahead," said James Hughes, foreign-exchange analyst at CMC Markets.

Jim Rogers: “Abolish the Fed”

Kurt Nimmo
Infowars
March 13, 2008

Somebody at CNBC, billed as “America’s business channel,” made a mistake. They allowed Jim Rogers, investor and buddy to George Soros, to get on and slam the Federal Reserve.

Not only slam the Fed, but call for it to be abolished.

Somebody at CNBC was asleep at the switch, or the kill button anyway. Because you never hear such talk over the corporate media, an entity owned by the same banking and financial interests that prop op the Fed and the funny money system.

“How much money does the Federal Reserve have?” Rogers asks. “I know they can run their printing presses forever, but that is not good for the world, inflation is not good for the world, a collapsing currency is not good for the world. It means worse recession in the end.”

Of course, recession — or, depending where you are situated in the funny money system, depression — will be a good deal for the bankers, as it will wipe the board clean and allow them to consolidate and at the same time destroy the once heralded middle class, a necessary task as our rulers move toward their plan to impose serfdom on the masses, or that is to say those who are not already serfs and peons, working for a dollar or two per day.

“I will ask you this,” one of CNBC’s talking heads asks Mr. Rogers, “what would be the first two things you would do if you were in Mr. Bernanke’s seat tomorrow morning?”

“I would abolish the Federal Reserve,” avers Rogers, “and I would resign,” a response that brings nervous laughter all around at the CNBC studios.

Rogers then declares Bernanke and the Fed are debasing the currency in an effort to “revive America… it has never worked in the long term or medium term.”

I am not an economist or a stock market investment guru like Rogers, but it seems Bernanke and the Federal Reserve, as in Federal Express, in that there is nothing “federal” about it, are not attempting to prevent a recession but are in effect adding nitro to the process of destroying the economy and thus the middle class. Call me paranoid, but if we are to believe Mr. Rogers, Bernanke is a blithering idiot that has no idea what he is doing. Of course he knows what he is doing, or rather what he was told to do.

“We are witnessing the unfolding of a crash exactly as predicted by Former World Bank Vice President, Chief Economist and Nobel Prize winner Joseph Stiglitz [in late 2006],” write Steve Watson and Alex Jones.

Stiglitz agreed that the process of hijacking and looting key infrastructure on the part of the IMF and World Bank, as an offshoot of predatory globalization, has now moved from the third world to Europe, the United States and Canada.

Stiglitz warned that the signs were there with plummeting real estate prices in the U.S., stating that a global economic depression could only be avoided if a correction was made.

But no correction will be made because the World Bank/IMF/Globalist doctrine betrays a focused agenda to deliberately foment economic turmoil, riots, and then enforced bondage to eternal debt. We have witnessed this time and time again, their own documents even confirm this as the chosen method of social control.

No doubt Mr. Rogers, as an insider, would disagree with this analysis and insist Helicopter Ben is simply a bungling fool. Even so, his solution is correct — in order to get out from under, the Federal Reserve must be dismantled. I’d add that Bernanke and crew should be arrested, same as a common criminal is arrested for holding up a liquor store, as they are facilitating the theft of trillions of dollars by the bankers.

As Daniel Estulin and Jim Tucker reported in 2005, the elite, in the guise of the Bilderbergers, want to usher in a “post-industrial revolution,” as Jose Barroso, president of the European Commission and a Bilderberg member described it. It seems they are on schedule, as we are looking at yet another “Great Depression,” a good chance worse than the last one. Bernanke is simply continuing the process initiated by his predecessor, Alan Greenspan, who was recently “lauded for doing the job of publicly destroying confidence in the dollar, publicly trying to destroy confidence in the banks, and publicly trying to destroy the economy, enabling a consolidation during a recession as set out exactly in globalist blueprints,” as Watson and Jones write.

Of course, we shouldn’t expect to hear a word about this on CNBC, “America’s business channel.” Instead, we will hear about how the “irrational exuberance” of the stock market is good for yuppies, never mind, with each passing day, their funny money is all the more worthless.

In the meantime, Jim Rogers may not be invited back to chat with CNBC’s talking heads.

JPMorgan Chase, Fed to aid Bear Stearns

Wall Street firm hit by liquidity crunch

The Associated Press

updated 10:55 a.m. ET March 14, 2008

NEW YORK - The Federal Reserve said Friday that it has voted to endorse an arrangement to bolster troubled Bear Stearns Cos. and stands ready to provide extra resources to combat a serious credit crisis.

The Fed announcement came in a brief two-sentence statement that was issued as stocks were plunging on Wall Street over worries that a plan to ease a liquidity crisis at Bear Stearns Cos. might not work.

“The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system,” the board said.

The statement said that the board had voted unanimously to approve the arrangment announced by JP Morgan Chase and Bear Stearns earlier on Friday.

The plan will provide secured funding to Bear Stearns for an initial period of 28 days, seeking to provide short-term relief for Bear Stearns.

Treasury Secretary Henry Paulson praised the Fed’s leadership and said that the country’s financial system would be able to weather the problems.

“As we have been saying for some time, there are challenges in our financial markets and we continue to address them,” Paulson said in a statement. “This is another challenge that market participants and regulators are addressing. We are working closely with the Federal Reserve” and the Securities and Exchange Commission, he said.

Paulson also said that he appreciated the leadership of the Fed “in enhancing the stability and orderliness of our markets.”

While it was not clear exactly how much money Chase would pump into Bear, a person familiar with the bailout, who spoke on condition of anonymity because the talks are private, said Chase may end up buying Bear Stearns outright.

Bear Stearns said in a statement it is working with JPMorgan Chase to find permanent strategic alternatives to alleviate the liquidity problems, but could not guarantee they would be successful.

JPMorgan Chase is providing secured funding to Bear for 28 days, backstopped by the Federal Reserve Bank of New York. Bear Stearns and the Federal Reserve approached JPMorgan Chase about the financing and a potential deal, according to the source.

Rumors have persisted throughout the week that Bear Stearns was facing major liquidity problems, but the investment bank’s chief executive initially denied those rumors.

“Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity,” Bear Stearns president and chief executive, Alan Schwartz, said in a statement. “Amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated.”

In a memo sent to employees, Schwartz said the temporary financing would allow the company to “get back to business as usual.”

The company has struggled since the middle of 2007 due to the fallout in the mortgage and credit markets. Last summer, two hedge funds worth billions of dollars managed by Bear Stearns collapsed because of bad bets on securities backed by subprime mortgages — loans given to customers with poor credit history.

JPMorgan Chase said the financing would not expose its company to any material risk.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/23630319/

NSA Rebuilds Total Information Awareness

Declan McCullagh
CNet News
March 13, 2008

The National Security Agency was once known for its skill in eavesdropping on the world's telephone calls through radio dishes in out-of-the-way places like England's Menwith Hill, Australia's Pine Gap, and Washington state's Yakima Training Center.

Today those massive installations, which listened in on phone conversations beamed over microwave links, are becoming something akin to relics of the Cold War. As more communications traffic travels through fiber links, and as e-mail and text messaging supplant phone calls, the spy agency that once intercepted telegrams is adapting yet again.

Recent evidence suggests that the NSA has been focusing on widespread monitoring of e-mail messages and text messages, recording of Web browsing, and other forms of electronic data-mining, all done without court supervision. Taken together, those activities raise unique privacy and oversight concerns greater than those posed by large-scale monitoring of voice communications.

Documents released last week by a security consultant (PDF) indicate that an unnamed major wireless provider has opened its network to the U.S. government, allowing customers' e-mail, text messaging, and Web use to be monitored. And Assistant Attorney General for National Security Kenneth Wainstein said last week that surveillance of e-mail was the real concern raised by the debate over amending the Foreign Intelligence Surveillance Act.

That led some high-ranking House Democrats, including Energy and Commerce Chairman John Dingell, to circulate a letter (PDF) advising their colleagues to look skeptically at a Republican proposal that would grant retroactive immunity to companies that illegally let the Feds plug into their networks. The Republicans' blanket of retroactive immunity would likely cover e-mail providers, search engines, Internet service providers, and instant-messaging services too.

On Monday, the Wall Street Journal published an article saying that the NSA can, "without a judicial warrant," obtain the Subject line and other header information from e-mail messages, plus information about Web sites visited and queries to search engines. Phone records, credit card usage information, and airline passenger data are also reportedly vacuumed up by the NSA.

"According to current and former intelligence officials, the spy agency now monitors huge volumes of records of domestic emails and Internet searches as well as bank transfers, credit-card transactions, travel and telephone records. The NSA receives this so-called 'transactional' data from other agencies or private companies, and its sophisticated software programs analyze the various transactions for suspicious patterns," the article said.

For its part, the NSA says that it abides by U.S. law. Last week, Donald Kerr, the principal deputy director of national intelligence, blamed critical reports on the NSA's culture of "stand-offishness" and said "we've lost something we never knew we needed until we didn't have it--the support of a grateful nation. The question we have to ask now, and this is something everyone here should help think about, is how do we get it back?"

If the reports are correct, what this transactional-data-dragnet amounts to is a rebuilding of the Defense Department's Total Information Awareness program, which promised to do extensive warrantless data-mining to identify "information signatures" that could identify criminals. After a public outcry, the department renamed it Terrorism Information Awareness; Congress zeroed funding for it in September 2003.

But that law referred only to "the program known either as Terrorism Information Awareness or Total Information Awareness, or any successor program"--leaving the door open, given sufficiently clever lawyering, to a similar program that wasn't quite close enough to be called a "successor" to TIA.

Elements of this data dragnet have been disclosed before. USA Today reported two years ago on how the NSA has been secretly collecting the phone call records of tens of millions of Americans, using data provided by AT&T, Verizon, and BellSouth; the latter two have narrowly denied it. Qwest reportedly was approached but rejected the request.

A survey CNET News.com published in February 2006 asked the major telecommunications and Internet companies this question: "Have you turned over information or opened up your networks to the NSA without being compelled by law?" AT&T, Adelphia, Google, Level 3, Verizon, and Yahoo would not answer the question; the rest said they had not.

A subsequent article by Seymour Hersh in the New Yorker said the NSA had returned to "intercepting large numbers of electronic communications made by Americans"--the same kind of legally dubious tactic that led to the Foreign Intelligence Surveillance Act being enacted in 1978.

FISA reinforced the notion that the NSA could conduct widespread surveillance of foreigners, but specified that a court order (or authorization from the attorney general) was needed to spy on American citizens. That means the world's largest intelligence agency is, legally speaking, on very shaky ground when operating its e-mail/text-messaging/Web-site-visiting/search-term dragnet.

The Electronic Frontier Foundation's Kurt Opsahl posted a stinging critique of the data-dragnet's legality. Here are some excerpts from what Opsahl wrote, referring to the Journal article:

The infobox incorrectly asserts that the subject lines of email are not "content," and can be obtained without a warrant... But this is contradicted by the Department of Justice's own 2002 Searching and Seizing Computers and Obtaining Electronic Evidence in Criminal Investigations manual, which states that "the subject headers of e-mails are also contents."

The infobox incorrectly asserts that the NSA can review "[s]ites visited and searches conducted" without a warrant. "According to current and former intelligence officials, the spy agency now monitors huge volumes of records of ... Internet searches." "The [NSA's] haul can include ... records of Internet browsing." To the contrary, courts have held that search terms are "content" within the meaning of the Electronic Communications Privacy Act.

The infobox asserts that the NSA can get cellphone location data without a warrant. "The information [obtained by the NSA] can give such transactional information as a cellphone's location..." The issue of obtaining cell phone location information has been contentious for some time, but the vast weight of judicial interpretation is that a probable cause warrant is required.

If you get the feeling that a lot of this depends on a set of legal definitions that the NSA would like to keep as fuzzy and ambiguous as possible, you're probably right.

One thing the recent disclosures are likely to do is put the Bush administration on the defensive, which will happen just as Congress is preparing to vote on extending retroactive immunity to telecommunications companies. It has looked likely to pass if the House Democratic leadership had held an up-or-down vote; the Senate already approved its version by a 68-29 margin.

Add in FBI Director Robert Mueller's acknowledgment last week of additional surveillance abuses, and his admission that retroactive immunity may not be all that necessary, and retroactive immunity looks a lot less compelling a prospect than it did a week ago. Then again, the NSA didn't need it to create an electronic dragnet in the first place.

Ron Paul warns of Worldwide Economic Collapse

Raw Story
Friday, March 14, 2008

Congressman Ron Paul (R-Texas) Warns of Worldwide Economic Collapse.

The following video is from C-SPAN’s Congress Coverage, broadcast on March 12, 2008

Clinton Admits He was a Bilderberg Tool

David Edwards and John Byrne
Raw Story
March 13, 2008

Campaigning for his wife in Erie, Pennsylvania, Bill Clinton returned fire at a heckler who began shouting about the former president’s attendance at a 1991 invitation- only conference of wealthy powerbrokers — "1991 Bilderberg" — implying that discussion there led to unfair trade policy such as the North American Free Trade Agreement (NAFTA).

As the audience booed, Clinton replied: “Wait, wait, wait, wait, wait… This is the deal folks. All these folks that are paranoid at the world folks, come and scream at me everywhere. You said you would go if I answered the question, right? You said you would go if I answered the question…"

"All right, here’s the answer. I happened to be in Europe then on my way to Russia I was invited to go to Bilderberg by Vernon Jordan, a friend of mine and a genuine hero of the civil rights movement. And to the best of my knowledge NAFTA was not discussed by anybody in my presence. I happened to be on my way to Europe where people do not give a rip about NAFTA.

"Number two, okay. Number two. I tried to get labor and environmental standards in the agreement but I couldn’t because it was all negotiated when I got there.

"Number three. When I was president, we enforced our trade laws five times as much as the Bush Administration did… Family incomes went up $7,500 a year when I was president, they’re down $1,000 now. So I was not… I had a very good time talking to those Europeans about European affairs and what was going to happen to Russia but I was not somehow polluted by it into sacrificing America’s economic interests. America did a lot better when I was president than they did in this decade. And that’s the truth. Now. Goodbye. Thank you."

This video is from ABCNews.com, broadcast March 12, 2008.

Despite the Federal Reserve's efforts Wall Street fears a big US bank is in trouble

From The Times
March 13, 2008

Siobhan Kennedy and Suzy Jagger

Global stock markets may have cheered the US Federal Reserve yesterday, but on Wall Street the Fed's unprecedented move to pump $280 billion (£140 billion) into global markets was seen as a sure sign that at least one financial institution was struggling to survive.

The name on most people's lips was Bear Stearns. Although the Fed billed the co-ordinated rescue as a way of improving liquidity across financial markets, economists and analysts said that the decision appeared to be driven by an urgent need to stave off the collapse of an American bank.

“The only reason the Fed would do this is if they knew one or more of their primary dealers actually wasn't flush with cash and needed funds in a hurry,” Simon Maughan, an analyst with MF Global in London, said.

Mr Maughan said that the most likely victim was Bear Stearns, the first bank to run into trouble in the sub-prime crisis and the one that, among all wholesale and investment banks, is most reliant upon the use of mortgage securities for raising funds in the money markets.

“The average financial institution was up 7.5 per cent yesterday after the Fed's actions, but Bear Stearns rose just 1 per cent on massive trading volume,” Mr Maughan said. “The market is telling you it's Bear Stearns.”

The Fed's intervention sparked fears of deeper underlying trouble because it came only days after it had made $200 billion (£99 billion) available in emergency funds. The nature of the financing was also unusual, bankers say, because it was the first time that the Fed had offered to lend Treasury securities in exchange for ordinary AAA-rated mortgage-backed securities as collateral.

Chris Whalen, of the financial consultancy Institutional Risk Analytics in New York, said: “The Fed move is confirmation that at least one of the banks is in trouble. A huge part of the banks' inventories are illiquid. If a broker-dealer is illiquid, it dies.”

Speculation has swirled for months about the collapse of an American bank as the credit crisis has escalated and spread from sub-prime to other mortgage-backed securities, treasuries and bonds. As well as Bear Stearns, attention has focused on UBS, the Swiss bank, which has been forced to make more than $18 billion in sub-prime writedowns, and Citigroup, the world's largest financial institution, which has turned to sovereign wealth funds to help to shore up its credit-stricken balance sheet.

Bankers say that mortgage lenders, such as Paragon, Alliance & Leicester and Bradford & Bingley, could also be teetering on the brink soon if they cannot raise enough money in the markets to continue to lend to customers. All the banks have denied that they are facing a cash crunch and each has said that its liquidity position is strong. Nonetheless, the speculation continues to mount. Alan Schwartz, the Bear Stearns chief executive, reiterated that stance yesterday after Punk Ziegel analysts gave warning that the bank could be forced to seek a merger partner.

“We don't see any pressure on our liquidity, let alone a liquidity crisis,” Mr Schwartz told CNBC yesterday. He said that Bear had finished fiscal 2007 with $17 billion of cash sitting as a“liquidity cushion”. He added: “That cushion has been virtually unchanged. We're in constant dialogue with all the major dealers, and I have not been made aware of anybody not taking our credit.”

Yet banking sources said yesterday that a collapse seemed inevitable. One senior banker in London said: “Someone will go under in this crisis, that's for sure. The question is whether they stay under or get rescued. Let's see whether this latest round of stabilisation helps, but if it doesn't, it's difficult to see what Plan B is. The Fed can't just keep on printing money.”

One problem with the credit crunch is that banks' solvency positions can change overnight. As banks force firesales of assets to recover their loans from hedge funds, the prices of those assets fall. But as the prices fall, the amount of capital that the banks need rises. Lena Komileva, a Tullett Prebon economist, said: “This is what is fuelling the vicious cycle. Things can deteriorate very rapidly and banks can reach insolvency almost overnight.”

Ms Komileva said it was clear that the Fed was reacting to address a “specific counterparty risk”, although she declined to comment on which bank might be in trouble. She said: “The speed and severity of their action appeared disproportionate to what had actually happened, so, consequently, it seems the Fed really reacted to prevent a Northern Rock-style problem in the US.”

She said that the Fed's moves amounted to window-dressing. “All the signs of stress that were there before are still here,” she said.

Study: Public unaware of Iraq toll

Only 28 percent know that nearly 4,000 U.S. troops have been killed

By Karen DeYoung

The Washington Post

updated 12:01 a.m. ET March 13, 2008

Twenty-eight percent of the public is aware that nearly 4,000 U.S. personnel have died in Iraq over the past five years, while nearly half thinks the death tally is 3,000 or fewer and 23 percent think it is higher, according to an opinion survey released yesterday.

The survey, by the Pew Research Center for the People and the Press, found that public awareness of developments in the Iraq war has dropped precipitously since last summer, as the news media have paid less attention to the conflict. In earlier surveys, about half of those asked about the death tally responded correctly.

Related Pew surveys have found that the number of news stories devoted to the war has sharply declined this year, along with professed public interest. "Coverage of the war has been virtually absent," said Pew survey research director Scott Keeter, totaling about 1 percent of the news hole between Feb. 17 and 23.

The Iraq-associated median for 2007, he said, was 15 percent of all news stories, with major spikes when President Bush announced a "surge" in forces in January of that year and when Gen. David H. Petraeus, the U.S. commander in Iraq, testified before Congress in September.

"We try not to make any causal statements about the relationship between the absence of news and what the public knows," Keeter said. "But there's certainly a correlation between the two. People are not seeing news about fatalities, and there isn't much in the news about the war, whether it be military action or even political discussion related to it."

Although Iraq topped the list of the public's most closely followed news stories in all but five weeks during the first half of 2007, according to Pew's research, interest fell rapidly in the fall, and Iraq has not held the top spot since October. That corresponded with a sharp drop in the rate of U.S. casualties in Iraq and increased news coverage of the U.S. presidential campaign.

More track Ledger than war
During the last week in January, 36 percent of those surveyed said they were most closely following campaign news, while 14 percent expressed the most interest in the stock market and 12 percent in the death of actor Heath Ledger. In contrast, 6 percent said they were most closely following coverage of Iraq.

Compared with those Americans surveyed who correctly identified U.S. casualties at around 4,000 (3,975 as of yesterday morning, according to the Pentagon), 84 percent identified Oprah Winfrey as the talk-show host supporting Sen. Barack Obama (Ill.) for the Democratic presidential nomination, and 50 percent knew that Hugo Chavez is president of Venezuela.

All education levels in the recent survey were similarly uninformed, Keeter said. The Pew "Political Knowledge Update" was based on nationwide telephone interviews of 1,003 adults conducted Feb. 28 through March 2. The margin of error was plus or minus 3.5 percentage points.

© 2008 The Washington Post Company

URL: http://www.msnbc.msn.com/id/23602987/

February retail sales worse than expected

Decline of 0.6 percent another worrisome sign for the economy

The Associated Press

updated 9:06 a.m. ET March 13, 2008

WASHINGTON - Consumers, battered by plunging home prices and a credit crunch, stayed away from the malls in February, pushing retail sales down by a larger-than-expected amount. It was another worrisome sign that the country could be falling into a recession.

The Commerce Department reported Thursday that retail sales fell by 0.6 percent last month, far worse than the small 0.2 percent increase that analysts had been expecting.

The weakness was widespread with sales of autos, furniture and appliances all down.

It marked the second time in the past three months that retail sales have taken a tumble. Sales had fallen by an even bigger 0.7 percent in December, the largest drop in six months, as the nation’s retailers suffered through a dismal holiday shopping season. Sales posted a modest 0.4 percent gain in January.

Consumer spending is closely watched because it accounts for two-thirds of total economic activity. Many economists believe that the country will suffer a mild recession in the first half of this year as the economy is unable to withstand the blows from a prolonged slump in housing, record-high energy prices and a severe credit crisis brought on by soaring mortgage defaults.

In another report, the Labor Department said that the number of laid-off workers filing applications for unemployment benefits was unchanged this past week at 353,000, the same number as last week. That was a slightly better showing than analysts had been expecting although the benefit applications remain at elevated levels indicating the labor market is under stress.

The government reported last week that employers slashed payrolls by 63,000 in February, the second straight monthly decline in employment and the most dramatic evidence to date that the country could be sliding into a recession.

A third report Thursday showed that U.S. import prices rose last month by 0.2 percent after jumping an even larger 1.6 percent in January. Compared to a year ago, import prices are up a sharp 13.6 percent, reflecting the fact that petroleum prices are up 60.9 percent over the past year.

The rising cost of imported goods reflects the bind the Federal Reserve faces at the current time as it must deal with the twin threats of a sluggish economy and higher inflation.

Analysts expect that the Fed will continue to emphasize its battle against recession and cut interest rates sharply when officials hold a regularly scheduled meeting next Tuesday.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/23609249/

Parents may be jailed over vaccinations

MARIA CHENG
Associated Press
Wednesday, March 12, 2008

LONDON - As doctors struggle to eradicate polio worldwide, one of their biggest problems is persuading parents to vaccinate their children. In Belgium, authorities are resorting to an extreme measure: prison sentences.

Two sets of parents in Belgium were recently handed five month prison terms for failing to vaccinate their children against polio. Each parent was also fined 4,100 euros ($8,000).

"It's a pretty extraordinary case," said Dr. Ross Upshur, director of the Joint Centre for Bioethics at the University of Toronto.

"The Belgians have a right to take some action against the parents, given the seriousness of polio, but the question is, is a prison sentence disproportionate?"

The parents can still avoid prison — their sentences were delayed to give them a chance to vaccinate their children. But if that deadline also passes without their children receiving the injections, the parents could be put behind bars.

Because of privacy laws, Belgian officials would not talk specifically about the case, such as why the parents refused the vaccine or how much longer they have to vaccinate their children.

The polio vaccine is the only one required by Belgian law. Exceptions are granted only if parents can prove their children might have a bad physical reaction to the vaccine.

"Polio is a very serious disease and has caused great suffering in the past," said Dr. Victor Lusayu, head of Belgium's international vaccine centre. "The discovery of the vaccine has eliminated polio from Europe and it is simply the law in Belgium that you have to be vaccinated. ... At the end of the day, the law must be respected."

Some ethicists back the hardline Belgian stance.

"Nobody has the right to unfettered liberty, and people do not have a right to endanger their kids," said John Harris, a professor of bioethics at the University of Manchester.

"The parents in this case do not have any rights they can appeal to. They have obligations they are not fulfilling."

Aside from Belgium, only France makes polio vaccinations mandatory by law. In the United States, children must be vaccinated against many diseases including polio, but most states allow children to opt out if their parents have religious or "philosophical" objections.

In the U.S. state of Maryland, prosecutors and school officials in one county threatened truancy charges against parents who failed to vaccinate their children. The measure sharply reduced the number of unvaccinated children although nobody has been charged.

FULL STORY: CLICK HERE

Video Shows Cop Tasering Already Restrained Disabled Man

Abuse of "last option before lethal force" continues
Steve Watson
Infowars.net
Wednesday, March 12, 2008

Recently uncovered video of a disabled British Columbia man being shocked with a taser by a Royal Canadian Mounted Police officer has sparked controversy and once again brought the use of such weapons into the limelight.

The video, which was shot in 2004 but only recently released to legal representitives, shows John Dempsey, who suffered from a debilitating muscle disorder similar to Parkinson's disease, being forced to the ground by two RCMP officers inside a Kamloops, B.C. RCMP detachment.

The video shows Dempsey being led into the booking room after being arrested for trying to intervene in the arrest of a friend whom he believed the police were being too heavy handed with.

Already handcuffed and subsequently shoved face down to the ground, an officer then fires a taser into Dempsey's back at point blank range.

"I wasn't resisting arrest, I calmly walked, he grabbed me, and said this will teach you not to [profanity] with us, that's what he said," Dempsey later commented.

Watch the video:

Dempsey had initiated a lawsuit accusing the RCMP of excessive force, but was sadly killed in a traffic accident recently.

Had he been able to see his case through, Dempsey may have been as successful as Jared Massey, who has accepted a $40,000 settlement in a lawsuit filed against the state and a Utah Highway Patrol trooper, after he was stopped and tased for refusing to sign a speeding citation.

The news comes on the back of internal reports by Vancouver police, which have revealed that the force regularly use Tasers to subdue people who are unarmed and non-violent.

The reports, released via a freedom of information request, state that in a number of cases police used the Taser as soon as someone displayed a "fighting stance" or simply to get a non-violent suspect to do what they were told.

Other cases we have highlighted also corroborate the fact that the weapon, which is designed to be a last resort before lethal force, is now being used as a compliance tool. Every week we post stories of incidents, which often feature old women, children and disabled people as the victims. The weapons are even being used in schools.

The police are now trained that "pain compliance," a euphemism for torture, is acceptable in apprehending anyone even if that person poses no physical danger. If you electrify any person, they suffer extreme pain and stand a high chance of being killed.

Many Civil Liberties Associations and police departments across North America have called for a moratorium on the weapons after hundreds of Taser-related deaths have garnered headlines from coast to coast. However, infinitely more police continue to use the weapons without question.

Despite claims by Taser proponents the weapons are safe, scientists and doctors have raised concerns about possible links between Tasers and potential heart and respiration problems, mental health and an individual’s state of exhaustion or agitation in confrontations with authorities.

Amnesty International has also cited hundreds deaths around the world after Taser use and has called for a full taser suspension while a thorough investigation into the impact of the weapon is conducted.

Recently, a UN Committee said the stun gun "causes acute pain, constituting a form of torture".

Carlyle Capital in default, on brink of collapse

AMSTERDAM (Reuters) - An affiliate of U.S.-based buyout firm Carlyle Group has defaulted on about $16.6 billion of debt and expects its lenders to seize remaining assets as the global credit crunch tightens around leveraged investors.

Carlyle Capital Corp (CARC.AS: Quote, Profile, Research), a fund listed in Amsterdam, said in New York on Wednesday that negotiations with lenders deteriorated late in the day after a drop in the value of its mortgage investments would result in margin calls of $97.5 million on top of the $400 million it was already facing.

A "successful refinancing is not possible," Carlyle Capital said, after trying for the past week to work out a deal with lenders to stave off bankruptcy.

Bund futures in Europe rose after the news back to levels they traded at before the U.S. Federal Reserve and other central banks coordinated on Tuesday to inject liquidity into credit markets. The dollar also fell.

The credit crunch, triggered last year when subprime mortgages made to risky U.S. borrowers went sour, has put increasing pressure on lenders to shore up capital and made it difficult to value collateralized debt, mortgage portfolios and other fixed-income securities -- the investments that Carlyle Capital was set up to invest in.

"The credit angst is back," said Tim Condon, head of Asia research with investment bank ING.

The default by the fund prompted spreads to widen on the iTRAXX Asia ex-Japan investment grade index, and European credit spreads also widened, returning close to record wide levels touched earlier in the week. The news also sent the dollar lower, where it touched 12 year-lows against the yen .

Carlyle Capital, based in Britain's offshore dependency of Guernsey, said in the only assets it has left are AAA-rated residential mortgage-backed securities, and that it expected lenders to foreclose on the this collateral.

"It has become apparent to the company that the basis on which lenders are willing to provide financing against the company's collateral has changed so substantially that a successful refinancing is not possible," Carlyle Capital said.

Its shares tumbled 73 percent to $0.76 at 1002 GMT, a fraction of their $20 debut price last July.

Dutch market regulator AFM said it was monitoring developments closely.

"Sentiment is broadly negative and news of missed margin calls at large highly leveraged funds only elevates fear of a vicious cycle of more forced selling at deep loss, collateral shortfalls, and more missed margin calls," said Brett Williams, credit analyst with BNP Paribas in Hong Kong.

Among the counterparties for Carlyle's repurchasing agreements, Deutsche Bank, Merrill Lynch & Co. and Bear Stearns Cos. have sold off assets, the Wall Street Journal reported.

FEARS

June Bund futures FGBLM8 were 33 ticks higher at 117.95, and by 0839 GMT, the Markit investment-grade iTraxx Europe index was at 156.5 basis points, according to data from Markit, 10.5 basis points wider and erasing Wednesday gains.

Fears that more private equity groups, hedge funds and mortgage lenders are struggling with their financing are putting heavy pressure on global equity markets, which have tumbled in recent months on fears of a U.S. recession and the widening fallout from a global credit crunch.

On Tuesday, the U.S. Federal Reserve expanded a securities lending program to prove short-term liquidity of $200 billion.

"The Fed will remain vigilant that it does not cause systemic problems, but I don't think we can rule out more instances of stress," Condon said.

U.S.-based buyout giant Carlyle Group CYL.UL participated actively in negotiations with lenders and last year extended a $150 million credit line to its affiliate.

Managers at Carlyle Group own about 15 percent of Carlyle Capital, which listed in July 2007, as the credit crunch began to take hold of the global financial system.

The Carlyle Group, based in Washington, DC, has more than $75 billion under management and has attracted a string of high-profile advisers including U.S. President George Bush in the early 1990s and former British Prime Minister John Major.

One of the world's largest private equity firms, The Carlyle Group owns a range of companies including TV ratings firm Nielsen, doughnut seller Dunkin' Brands and former General Motors unit Allison Transmission.

According to CCC's annual report, counterparties for its repurchasing agreements as of the end of 2007 were Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JP Morgan, Lehman Brothers, Merrill Lynch and UBS.

Dollar Falls to 12-Year Low of 100 Yen on Carlyle Fund Failure

March 13 (Bloomberg) -- The dollar fell below 100 yen earlier today for the first time since 1995 and to a record low against the euro after a Carlyle Group fund moved closer to collapse, triggering concern of more turmoil in financial markets.

The dollar approached parity with the Swiss franc and slumped against the British pound after Carlyle said lenders will take over the assets of its mortgage-bond fund and President George W. Bush acknowledged the U.S. currency's decline was not ``good tidings.'' The dollar's drop may prompt Middle East central banks to reduce dollar holdings, Greg Gibbs, a strategist at ABN Amro Holding NV in Sydney, said in a report.

``Sentiment for the dollar continues to deteriorate very, very rapidly and if we're not careful this will turn into a dollar crash,'' said Mitul Kotecha, head of foreign-exchange research in London at Calyon, the securities unit of Credit Agricole SA, France's second-biggest bank. ``The risk is that we see a fairly aggressive move sharply lower towards 95 yen, and that could really perk up the interest of the Bank of Japan.''

The dollar fell as low as 99.77 yen, the weakest since Nov. 9, 1995, before trading at 100.24 at 7:38 a.m. in New York, from 101.79 yesterday. The dollar dropped to $1.5624 per euro, the lowest since the common European currency's debut in 1999, and was at $1.5591 from $1.5551. It also slumped to a record 1.0045 Swiss francs. Japan's currency advanced to 156.27 per euro, from 158.30.

The U.S. currency fell against a basket of six major trading partners to the lowest since the index began in 1973. The Dollar Index traded on ICE Futures in New York declined to 71.94.

Yen Sales

Japan sold the yen on the four occasions since 1995 when the currency approached 100 to support exporters including Toyota, the world's second-biggest automaker. The Bank of Japan sold 14.8 trillion yen ($148 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003.

The yen's 24 percent gain against the dollar from a 4 1/2- year low on June 22 was ``unexpected'' and will damage earnings, Toyota Motor Corp. President Katsuaki Watanabe said today.

``We must continue cost cuts by all means, but the currency has reached the level where we have to think about other measures,'' Watanabe told reporters in Tokyo. A gain of 1 yen against the dollar cuts Toyota's annual operating profit by 35 billion yen, according to the automaker.

The yen may rise as high as 95 per dollar, according to forecasts this month by Citigroup Inc., the third-biggest currency trader, Lehman Brothers Holdings Inc., the fourth- biggest U.S. securities firm, and Mizuho Financial Group Inc., Japan's second-largest publicly traded bank. Deutsche Bank AG and UBS AG, the world's two biggest currency traders, had predicted the dollar would hold above 100.

Intervention Risk

``There's more than a 50 percent probability that the U.S. is in recession,'' Eisuke Sakakibara, dubbed ``Mr. Yen'' when he was Japan's top currency official from 1997 to 1999, said in an interview on March 6. ``The dollar-yen rate is dependent on the state of the U.S. economy.''

The Group of Seven, which next meets April 12-13 in Washington, may signal its intent to consider coordinated intervention, UBS strategists wrote in a March 3 report. Unilateral intervention ``seems unlikely'' after Japan's economy has grown every year since 2002, it said.

The yen is a favored funding currency for carry trades, in which investors borrow in a country with low interest rates and invest in one with higher yields, earning the spread between the two. The risk is that currency moves erase those profits.

The nation's benchmark rate of 0.5 percent, the lowest among major economies, compares with 3 percent in the U.S., 4 percent in Europe, 7.25 percent in Australia and 8.25 percent in New Zealand.

Carlyle Defaults

Carlyle Capital Corp., co-founded by David Rubenstein, said in a statement it defaulted on about $16.6 billion of debt as of yesterday. Lenders will ``promptly'' take over all of its remaining assets and any remaining debt is expected ``soon'' to go into default, it said.

The yen has rallied 13 percent against the dollar as the Fed cut rates amid the worst housing slump in a quarter of a century and $190 billion of U.S. subprime-mortgage-related losses and markdowns at the world's biggest financial institutions.

``Investors are starting to lose confidence in the dollar, given the increased uncertainty over credit-related losses,'' Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in a note to clients today. ``Carlyle is unlikely to be the last hedge fund in difficulty. That will only further depress investor sentiment.''

Recession Concern

The biggest job losses in five years and record fuel costs are eroding U.S. consumer confidence and spending, which accounts for more than two-thirds of the economy. Lehman and JPMorgan Chase & Co. last week said the U.S. is headed into a recession.

A report today is forecast by economists to show retail sales rose 0.2 percent in February after a 0.3 percent gain in the previous month, according to a Bloomberg survey. The Commerce Department will release the data at 8:30 a.m. in Washington.

``Dollar-yen is going lower,'' said Ray Farris, head of foreign-exchange strategy at Credit Suisse in London. ``It will definitely overshoot our 98 forecast in the very near term. Our forecast was for the dollar to reach 98 in three months. The big question now is whether there will be intervention.''

Japanese officials are unlikely to intervene now in the foreign-exchange market, because the yen is ``cheap'' compared to other currencies, Sakakibara said. The U.S. and Japan may intervene to weaken the yen should it break through 90 and head toward 80 per dollar, he said.

Trading Partners

The yen's real effective exchange rate, measured against 15 currencies of major trading partners including China, Europe and Canada, is 99.5, according to Bank of Japan figures. The rate averaged 121.9 in the first quarter of 2004, when the bank last intervened on behalf of the Ministry of Finance.

Central banks intervene in the foreign-exchange market when they buy or sell currencies to influence exchange rates.

``The yen hasn't played its part in terms of dollar depreciation,'' said Tom Fitzpatrick, global head of currency strategy at Citigroup in New York. As carry trades unwind, ``we could find ourselves moving down toward 95 very, very quickly in the next couple of weeks.''

The yen may strengthen further as global growth slows and other central banks will lower interest rates, prompting Japanese investors to send money back home, said Scott Ainsbury, who helps oversee about $12 billion in currency as a portfolio manager in New York at FX Concepts Inc.

IMF Forecast

Japan's economy, the world's second-largest, may expand 1.5 percent this year, matching the growth rate in the U.S., the International Monetary Fund said on Jan. 29. It would be the first time Japan doesn't lag behind the U.S. since 1991.

Japanese mutual funds have reduced purchases of overseas assets by 9 percent to 33.5 trillion yen in January, from 36.9 trillion yen in December, according to the Investment Trust Association data.

``Money is flowing back toward Japan, rather than going out to the rest of the world,'' said Ainsbury. ``Why put the money in the U.S. where stocks are sliding and the dollar is sliding? It's just a double whammy.''

The yen will reach 95 per dollar in three months, he predicted.