Stock Market Crash Expected In 2008 To Be Worse Than 1929

[Shammu]

French Trader's Hacking Triggered Econ Crash
Jan 27, 2008

PARIS (AP) ― Societe Generale detailed Sunday how a young trader evaded all its controls to bet some $73 billion - more than the French bank's market worth - on European markets, saying he hacked computers and used other "fraudulent methods" to cover his tracks, causing billions in losses.

The bank says the trader, Jerome Kerviel, did not appear to have profited personally from the transactions and seemingly worked alone - a version of events reiterated Sunday by Jean-Pierre Mustier, chief executive of the bank's corporate and investment banking arm. But, in a conference call with reporters, Mustier added: "I cannot guarantee to you 100 percent that there was no complicity."

French judicial officials, speaking on condition of anonymity because the investigation is continuing, said Kerviel can be held until Monday afternoon. The trader was taken into custody on Saturday and under French law, he must either be released or handed preliminary charges after 48 hours in custody.

Societe Generale said Kerviel misappropriated other people's computer access codes, falsified documents and employed other methods to cover his tracks - helped by his previous experience working in offices that monitor traders.

In a five-page document, Societe Generale also sought to counter the notion that it had disrupted markets by unwinding the massive positions built up by the 31-year-old trader. The bank took three days last week to sell off the contracts on the Eurostoxx, DAX and FTSE indices, but said that it had done so in a "controlled" way.

Societe Generale said Kerviel misappropriated other people's computer access codes, falsified documents and employed other methods to cover his tracks - helped by his previous experience working in offices that monitor traders.

"He had a very good understanding of all of Societe Generale's processing and control procedures," the statement said.

The bank said Kerviel had built up a position worth some $73.5 billion - which was eventually closed or hedged by last Wednesday with a loss of $7.21 billion.

"The position was unwound over three days in a controlled fashion," it said.

Jean-Michel Aldebert, of the Paris prosecutors' office, told reporters Saturday that Kerviel gave himself up of his own free will. The trader had not been seen in public since the bank announced his unauthorized trades in a statement on Thursday.

His motives remained a mystery, and the bank said it appeared that he did not gain personally from the trades. Acquaintances described Kerviel as reserved and considerate, a young man who once taught children judo and held the door for elderly neighbors.

Kerviel had been investing the bank's money by hedging on European equity market indices, meaning he bet on how the markets would perform at a future date.

Germany's Der Spiegel newsmagazine cited unnamed traders as saying Kerviel made a huge gamble on Germany's DAX stock exchange, buying some 140,000 DAX futures. When the exchange dropped, Kerviel racked up losses that amounted by mid-January to around $3 billion, said the report, posted on Der Spiegel's web site.

Societe Generale said it discovered the fraud last weekend and unwound the trader's losing bets starting Monday, when world markets tumbled.

Some experts have suggested Societe Generale may have exacerbated the fall and indirectly led to the U.S. Federal Reserve's subsequent decision to cut rates.

In an interview published Saturday, Societe Generale's chief executive, Daniel Bouton, dismissed as "absurd" the notion that the bank's actions helped fuel the turmoil on world markets.

Bouton said Kerviel had been betting throughout 2007 that markets would fall - a winning position. But the trader had overstepped his authority and was wagering much more money than he should have, Bouton said.

So at the beginning of January, Bouton said, the trader voluntarily created losing positions, to neutralize his earlier gains and cover his tracks.

But this month's quickly dropping markets turned "this sad affair ... into a Greek tragedy: His virtual losing position became huge," Bouton was quoted by Le Figaro as saying.

Despite the bank's losses, which Bouton called "enormous and abnormal," he insisted Societe Generale's viability was not at risk.

Experts and others, including France's prime minister, have questioned whether a single futures trader could have managed such large sums. Some have suggested Societe Generale might have used Kerviel as a scapegoat for other losses, like those related to the subprime crisis.

The bank says the scale of the damage was so great only because of the bad timing of the discovery - right before the worst day in world markets since Sept. 11, 2001. It also fired Kerviel's supervisors.

French Trader's Hacking Triggered Econ Crash

[Soldier4Christ]

Dow down despite dramatic rate cut 
Analyst says Fed 'architect of the coming deep recession'

Following last week's emergency .75 percentage-point interest rate cut, the Federal Reserve's Open Market Committee today slashed rates another .50 percent in a move designed to ease the mortgage crisis and stimulate the economy.

The Fed hopes the nearly unprecedented 1.25 percent cut in the funds rate in just eight days – lowering it to 3 percent – will ease pressure on upcoming hikes in adjustable rate mortgages.

Within a half hour of the announcement, the Dow Jones Industrial Average rallied to a more than 160-point gain, reflecting the market's enthusiasm for the rate cut. But not all market observers were impressed, and by the end of the day, the Dow finished down 37 points.

While the cut provided an immediate boost to the stock market, it also drove gold higher and the dollar lower.

In the first hour after the announcement, gold soared to $938 an ounce and the dollar sank to $1.49 against the euro, close to the all-time low.

"The Fed is making it appear they are compassionate when really they are the architect of the coming deep recession," contended Michael Bolser, the author of an investment analysis newsletter published daily in conjunction with his website InterventionalAnalysis.com .

Bolser argued that former Federal Reserve chairman Alan Greenspan and high-ranking Treasury officials engineered the mortgage credit bubble by keeping rates artificially low from 1996 onward during the so-called "strong dollar" regime.

"The Fed caused excessive and irresponsible lending in what became the sub-prime mortgage lending crisis," Bolser told WND. "Regardless what anybody says today, the Fed knew violations were happening, and they encouraged risky and even fraudulent lending, with the result that now we have a bursting credit bubble of almost unimaginable size."

Bolser said his hypothesis was that the Fed engineered the bursting of the credit bubble as Greenspan and current Federal Reserve Chairman Ben Bernanke began to raise rates, starting in June 2004 through a series of 16 rate increases, to a high of 5 percent in May 2006.

"I'm ready to conclude the Fed wanted the U.S. economy to fall into a recession, so as to control inflation," Bolser said, "but all along the Fed craved anonymity in the process."

The day on Wall Street began with an announcement by the Commerce Department that U.S. gross domestic product, or GDP, increased in the fourth quarter last year at the remarkably sluggish rate of 0.6 percent, down sharply from 4.9 percent in the prior three months.

Yesterday, the International Monetary Fund issued a major report dramatically downgrading world growth projections.

Buffeted by recent financial market turbulence and a weakening U.S. performance, the International Monetary Fund quarterly update for the world economy projected world growth would slow to 4.1 percent this year, down from an estimated 4.9 percent last year.

Last weekend, according to a report in the Financial Times, Dominique Strauss-Kahn, the managing director of the IMF, warned the World Economic Forum in Davos, Switzerland, that rate cuts alone would not be enough to stave off a severe recession that most likely would spill over into the global economy.

In a dramatic policy turnaround for the IMF, Strauss-Kahn told the Davos audience, "I don't think we would get rid of the crisis with just monetary tools," adding "a new fiscal policy is probably an accurate way to answer the question."

In a Davos panel archived in a video on the IMF website, former U.S. Secretary of the Treasury Lawrence Summers, who served at the end of the Clinton administration, surprised the audience by agreeing with Strauss-Kahn that the proposed Bush administration stimulus package was needed to jump-start the U.S. economy.

Summers, who is considered the academic architect of the strong dollar-weak gold policy implemented by the Clinton administration, has achieved notoriety because of the tough way in which the IMF has tried to discipline countries implementing lax fiscal policies.

Strauss-Kahn and Summers are now arguing for fiscal stimulus in what can be seen as a criticism of the Greenspan-Bernanke policy of weak dollar/strong gold that has placed the world economy at the brink of a possible downturn.

"Ironically, the one-time tax refund the Bush administration is proposing as a fiscal stimulus amounts to offering a pittance to the U.S. public," Bolser said, calling it a "move that is nothing more than media cover to make it appear the Bush administration is compassionate, when really it is not."

Bolser argued that any stimulus to the Dow from today's rate cut would be short-lived in a market being propelled downward by a worldwide asset crisis, not a liquidity crisis.

[Soldier4Christ]

Arab nations eye control of U.S. companies
Ready to move with $1.7 trillion in windfall profits from oil-price spike

Sovereign Wealth Funds in six Persian Gulf countries – including Kuwait, the United Arab Emirates and Qatar – have now amassed $1.7 trillion, positioning them for attempts to control major banks and securities firms in the U.S.

The funds are ready to invest petrodollar earnings worldwide as their managers examine equity plays on businesses around the globe, Business Week reports.

Sovereign Wealth Funds in the Persian Gulf are comprised of government-controlled investment portfolios amassed largely as a result of the windfall profits from oil climbing to record highs.

Increasingly, U.S. investment bankers are traveling to the Middle East to meet what Business Week calls the "New Kings of Wall Street." The fund managers include:

    * Shiek Khalifi Bin Zayed Al Nahyan, chairman and managing director of the $875 billion asset Abu Dhabi Investment Authority that in late November invested $7.5 billion for a 4.9 percent equity stake in Citigroup.

    * Bader M. Al Sa'ad is the managing director of the $213 billion asset Kuwait Investment Authority, a fund which has become the cornerstone investor in the Industrial and Commercial Bank of China, China's largest commercial bank.

    * Sheikh Hamad bin Jassim bin Jabir Al-Thani is Qatar's prime minister and head of the Qatar Investment Authority, a $50 billion investment fund that in September bought 20 percent of the London Stock Exchange.

    * Soud Ba'alawy, the executive chairman of Dubai Group, a financial conglomerate which includes the Dubai Investment Group that through Borse Dubai owns a 19.9 percent stake in Nasdaq, the second largest securities exchange in the U.S.

Among U.S. companies, including many of the largest banks and financial institutions, there are many candidates that now or soon may be more than willing to receive capital infusions from foreign sources, including Middle East Sovereign Wealth Funds.

The Wall Street Journal at the end of December published a list of U.S. companies with earning problems resulting from the sub-prime meltdown, the housing slowdown and the credit crunch experienced as the U.S. economy slowed down in the fourth quarter last year.

The Wall Street Journal list included:

    * Ambac Financial Group expected a $5.4 billion pretax write-down in the fourth quarter 2007 and planned to cut its quarterly dividend by two-thirds;

    * American International Group, or AIG, saw a $2.54 billion after-tax drop in the value of investments in assets that are backed at least in part by sub-prime mortgages;

    * J.P. Morgan Chase reported fourth quarter 2007 net earnings fell 34 percent as it recorded $1.3 billion in markdowns on sub-prime positions and saw higher credit costs;

    * Washington Mutual expected to record a fourth quarter 2007 loss on a $1.6 billion goodwill write-down on the value of its home loans business;

    * Wells Fargo announced that fourth quarter net income fell 38 percent on a $1.4 billion reserve for credit losses.

    * On the list were several financial institutions that have already showed up in the market exploring foreign investment capital, including Bank of America, Bear Stearns, Citigroup, Merrill Lynch and Morgan Stanley.

Equity investments by Sovereign Wealth Funds differ from traditional private or public investment in that the equity purchased is not owned by a private investor or public holder of listed common stock but by a foreign government that owns the stock as a government entity.

Foreign investments in U.S. companies are subject to approval from the Committee on Foreign Investment in the United States, or CIFUS, organized within the U.S. Treasury.

As WND reported, a national outrage broke out in 2006 when a Dubai company, Dubai Ports World, proposed to take over operation of some 22 U.S. ports, as part of an acquisition involving the London-based Peninsular & Oriental Steam Navigation.

In the closing months of last year, foreign investments announced to help major U.S. banks and financial institutions received, by comparison, almost no public outcry. Many believe that's largely because the infusion of foreign capital was perceived by the public as necessary as troubled U.S. financial institutions scrambled to find capital required to continue operations under asset and reserve requirements.

[Soldier4Christ]

Weak dollar fuels China's buying spree of U.S. firms
Foreign cash ignites political concerns as Beijing money rescues American companies

From his posh office in a coastal city in eastern China, millionaire Zhou Jiaru oversees more than 100 workers at an auto parts refurbishing factory he purchased in a struggling manufacturing town on the other side of the world.

Zhou's new company is in Spartanburg, S.C.

The Chinese entrepreneur bought it from Richard Lovely, a 56-year-old industrial engineer and mechanic who says his business was in dire straits because of competition from abroad.

Zhou's 85 percent stake in the company now known as GSP North America is one example of how the weak dollar and weakening U.S. economy have made the United States a bargain for overseas companies shopping for investments.

In 2007, acquisitions in the United States by foreign ventures hit $407 billion, up 93 percent from the previous year, according to Thomson Financial. The top countries investing were Canada, Britain and Germany; the Middle East and Asia -- especially China -- are quickly catching up.

The biggest deals in recent months have involved Wall Street firms hit by losses from exposure to mortgage-related investment vehicles.

Saudi Prince Alwaleed bin Talal is once again coming to Citigroup's rescue. Canada's Toronto-Dominion Bank is buying an $8.5 billion share of Commerce Bancorp. Singapore's state-run Temasek Holdings purchased a stake in Merrill Lynch valued between $4.4 billion and $5 billion. And the sovereign wealth fund that invests the Chinese government's hard currency is injecting $5 billion into Morgan Stanley, while Citic Securities, a private Chinese firm, is investing $1 billion in Bear Stearns.

But the investment hasn't stopped there. Smaller companies in remote parts of the United States are also being bought out.

"The U.S. dollar is getting weaker and weaker, and many medium to small U.S. companies are in economic crisis. So they need investments from China. It is very good timing," said Yu Dan, a representative for the state of Pennsylvania in China.

Yu, who is one of about 30 people in China who represent American cities and states, said at least six Chinese companies are in the process of closing deals in Pennsylvania. One will make some purchases in the food industry. Another will invest in the wood industry, because as Yu put it, "Pennsylvania has very good hardwood resources, and the aboriginal people in the north Pennsylvania woods are good workers."

Aboriginal people? The Amish, Yu clarified.

As the dollar's value against other currencies fluctuates, the tricky part for foreign investors is buying at the right time. When the dollar is falling, there's a danger in overpaying. The $3 billion stake that China Investment Corp. bought in Blackstone last May, for instance, is now worth closer to $2 billion.

Much of the recent overseas investment in the United States has been driven by sovereign wealth funds backed by foreign states. While these funds comprise only about 1.5 percent of the $165 trillion of global traded securities, they are growing quickly.

The funds -- at least a dozen of which were created since 2000 -- now control about $2.5 trillion. Morgan Stanley's Stephen Jen estimates that their worth will jump to $12 trillion by 2015.

For much of their half-century history, sovereign wealth funds have been seen as ideal investors by many U.S. firms. They have deep pockets and a long-range investment horizon, and they have shown little interest in interfering in the operations of the firms they invest in.

"The vast majority of sovereign wealth funds are long-term investors that tend to take very small stakes in companies without seeking to control or influence companies," said David M. Marchick, head of global regulatory affairs for Carlyle Group, a private-equity firm in the District. "They are just along for the ride."

But as recently as a few years ago, when credit flowed more freely, some members of Congress expressed alarm about acquisitions of strategically important entities like oil companies and ports by outside funds backed by foreign states.

These days, the general weakness in the U.S. economy has touched off a fresh wave of concern.

"Foreign investment, in general, strengthens our economy and creates jobs. But as investments by sovereign wealth funds in American companies increase and the specter of control and undue influence by government entities looms, we have to be careful," said Sen. Charles E. Schumer (D-N.Y.).

Sen. James Webb (D-Va.) said in a statement that "governments are motivated by a broader range of factors than commercial investors."

"While foreign governments may invest money in a country to make a profit, they may also do so in order to further their foreign policy ambitions, to acquire national security assets, or to purchase a stake in strategic industries," Webb said.

The fact that little is known about the funds' assets, liabilities or investment strategies only exacerbates worries.

"Most of them are not transparent and don't seem to be accountable to anybody, including their own people," said Edwin M. Truman, a senior fellow at the Peterson Institute for International Economics, who has testified before Congress about the funds. He said that a large group of sovereign wealth funds is engaged in discussions with the International Monetary Fund to develop a set of best practices for such funds.

Much of the concern about foreign investment has been centered on China, where the line between private industry and state enterprise is often blurry. A 2005 attempt by the China National Offshore Oil Corp. to buy California-based Unocal fell apart because of political opposition.

While the money coming from China is still limited -- $9.6 billion in 2007, up from $66 million the previous year, according to Thomson Financial -- it is reminiscent of the Japanese and German buying sprees of U.S. firms in the 1970s and '80s.

One place where the trend is playing out is South Carolina, where nearly 21 percent of the manufacturing labor force works for foreign companies, the biggest proportion in any state except Hawaii.

It's also a place with high unemployment -- 6.6 percent statewide and 10 to 15 percent in some counties, according to December 2007 figures. South Carolina has also led the fight against outsourcing of jobs overseas. But in recent years the opposite has occurred: Chinese companies have invested in South Carolina -- albeit on limited terms.

Haier, a Chinese appliance maker, has a refrigerator factory in the state. There's also a Chinese-owned chemical factory, printing company and general construction company, among others, that in total employ thousands of South Carolinians, according to John X. Ling, the state's representative in China.

The low cost of land, cheaper than in China's major cities, and electricity -- which tends to be about a third or a fourth the cost in China -- are attractions. So is the idea of being closer to American consumers, their primary customers.

Zhou, 54, who purchased the auto refurbishing company in Spartanburg, said another factor has to do with politics.

"We look at the example of the Japanese company Honda. . . . The U.S. was against the dumping of Japanese cars at low prices, but Honda was not affected because it had operations in the United States," he said.

Zhou is the founder and chairman of Guanshen Auto Parts Manufacturing in Wenzhou, a city about 260 miles southwest of Shanghai that has an almost mythical reputation for capitalist wealth. When U.S. business delegations come to China seeking investments, Wenzhou is a popular stop.

Guanshen Auto is a leading supplier of constant-velocity axles, which transfer power from a vehicle's transmission to its wheels. Lovely's company, Powerline, refurbished old CV axles and sold them.

Zhou made his initial purchase of a stake in Powerline in 2005, a few months after the Chinese government did away with its currency's long-held peg to the dollar and its value began to rise. As the dollar continued to weaken in 2007, Zhou bought more of the company, renaming it GSP North America after the Chinese initials of the parent company. After having paid a total $1.3 million, Zhou now owns 85 percent of the South Carolina factory.

He said that the factory employees were apprehensive about working for a Chinese company. "People objected. When we went to visit the factory, American workers said, 'We work for Chinese now. We don't have face,' " Zhou recalled.

Lovely, who remains chief operating officer of the company and still owns 15 percent, himself was apprehensive. "People said, 'You're very gutsy to do that.' . . . It was hard for other people to understand. People think there's no law over there" in China, he said.

Dick Adams, 57, whom Zhou hired to be in charge of sales and marketing at GSP North America, said the company is proving to employees, the community and the state of South Carolina that they are "good Chinese."

When Zhou took over, he initially operated the factory Chinese-style, 24 hours a day -- with a day shift and a graveyard shift. But the workers complained about working in the middle of the night, so now the factory just keeps regular daytime hours.

"You have Chinese that come in here and just want to take, take, take and not give anything. They'll come in here just to get an order and run away. GSP hasn't done that. They have come and invested millions of dollars in buildings and people and distribution," Adams said.

[Soldier4Christ]

Next round of gas hikes won't be due to oil
Expensive additive alkylate, which replaced MTBE, in short supply

Get ready for another surge in gasoline prices.

Experts are predicting pump prices, which jumped by almost a dollar a gallon in each of the last two springs in many parts of the United States, will spike again this year as refiners and gas stations switch from winter- to summer-blended fuels.

The increases, starting as early as February in southern California, could push the average national price to a record $3.50 a gallon or more by June.
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That would be 17 percent higher than today's average of just under $3 a gallon, which already is about 80 cents a gallon higher than year-ago levels thanks to the surge of crude oil that took futures prices briefly to $100 a barrel. Prices in urban areas on each coast could approach $4 a gallon.

And the reason for the spring price shocks? Analysts say it's linked to a shortage of alkylate, a little-known and expensive gasoline additive that some in the industry are calling "liquid gold." It has become a must-have ingredient since refiners stopped using MTBE two years ago when the potentially cancer-causing additive was found to be seeping into ground water.

The alkylate shortage has become the most important driver of summer gas prices, said Doug Leggate, an analyst at Citigroup Global Markets. "Supply of (alkylate) will set the price of summer gasoline — not inventory levels," he said.

Oil companies deny they are purposely limiting production of alkylate, which like gasoline, jet fuel and asphalt is a byproduct of the oil refining process. But only recently have some started studying how they can boost output, and alkylate prices today are more than 15 percent higher than spot gasoline prices. That means overall costs will jump when it is added in larger quantities to summer-blend fuel.

Without additives, gasoline doesn't burn completely, increasing tailpipe air pollution. And untreated gas evaporates more quickly in hot weather, potentially causing vapor lock when it changes from a liquid to a gas and blocks fuel lines.

The federal government long ago required refiners to boost the oxygen content of summer-blend gasoline to make it burn more completely, a problem that was solved by adding MTBE and, more recently, ethanol.

But ethanol also has a high evaporation rate, so refiners increasingly have turned to alkylate, which Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., calls the "magic bullet" in making summer gasoline.

Alkylate and other gasoline additives don't raise the same safety issues as MTBE because they don't bond with water as effectively as MTBE did, analysts say.

Demand for alkylate changes with the seasons, falling in autumn and rising in the spring. On average, alkylate makes up about 10 percent of a gallon of gas, though that rises to as much as 15 percent in summer. But making more of it is not as simple as throwing a switch since the underlying chemical properties of oil limit how much of any one refined petroleum product can be produced.

On average, about 44 percent of each barrel of oil ends up as gasoline, 22 percent as diesel fuel and heating oil, 9 percent as jet fuel, and about 4 percent each as heavy fuel oil and liquefied petroleum gas, according to the Energy Department. The remainder is comprised of smaller products and additives.

The refining process is loud, hot and smelly. Boilers separate, or "crack," oil into new substances by subjecting it to high temperatures and pressure. As different products are boiled out, pipes carry them to other boilers or vessels where they're further refined, mixed with other substances or cleaned of pollutants and toxins.

Alkylate is made via a chemical reaction sparked when olefin fluids and isobutane — two of the smaller byproducts of the main gasoline producing unit — are mixed with acid.

"As opposed to the (gasoline unit) that cracks big components into small, this one takes two components and basically combines them," said Mark Fligner, director of planning and economics at Valero Energy Corp.'s refinery in Paulsboro, N.J., across the Delaware river and just south of Philadelphia.

Owners of about two-thirds of U.S. refineries have invested the $100 million or more it takes to add an alkylate unit. The rest have to buy alkylate on the spot market if they want to use it as additive in their gasoline supplies.

Refiners aren't gaming the system, purposely limiting alkylate production to boost gas prices, said John Auers, senior vice president at Turner Mason & Co., a Dallas consultancy. "They're not because they can't," he said. "You can't make more alkylate than you have feedstocks."

But there are tradeoffs that every refiner must weigh. For example, olefins and isobutane are in high demand for use in producing other lucrative products like plastics. Refiners can tweak their main gasoline producing unit to make more olefins and isobutane, but that would cut the gasoline output.
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Alkylate prices have jumped from 77 cents a gallon in the summer of 2001 — when MTBE was still in use — to nearly $3 a gallon at points over the past two summers. Wednesday's price on the spot market was $2.72 a gallon, 40 cents more than the spot price of gasoline, according to Platts. Retail prices for gas are higher because things like state and federal taxes are added. In recent summers, that spot market differential has jumped as high as 60 cents.

Refiners place the blame for spring gas price increases on crude costs, environmental regulations that have increased the overall cost of refining, and their inability to expand or build new refineries fast enough to keep up with gasoline demand.

John Pickering, vice president and general manager at the Paulsboro refinery, said Valero makes enough alkylate to meet its needs, but concedes that there is a national shortage of the additive in the spring and summer.

Other refiners contacted by The Associated Press said they are reluctant for competitive reasons to talk about how they blend gasoline, or whether they face alkylate shortages.

What is known, however, is that refiners are hiring companies such as UOP LLC of Des Plaines, Ill., to determine whether they can increase the capacity of their existing alkylation units. "In the last year or so, there has been a significant uptick (in business)," said Ashis Banerji, director for refining at UOP, which licenses alkylation technology to refiners.

And the 36 percent of domestic refineries that don't have alkylation units are looking at adding them.

"Our impression is that refineries are moving as fast as they possibly can to add alkylation capacity," said Jim Pawloski, business director at UOP competitor DuPont Clean Technologies, a unit of DuPont Co. He said his unit's business has jumped five-fold over the past five years and will likely double again this year.

The steep jump in summer alkylate prices has also caught the attention of at least two companies that used to produce MTBE. Enterprise Products Partners LP and Texas Petrochemicals Inc., both of Houston, say they're closely studying whether to convert idled MTBE plants into alkylate factories.

That also highlights the conundrum that is alkylate: If too many refiners decide to spend big bucks to crank up production, the premium prices now enjoyed by alkylate makers could disappear.

Refiners have to weigh the cost of such an investment against the incremental cost of simply buying the extra alkylate they need. "I'm not sure that it would be economical," said Jeff Hazle, technical director at the National Petrochemical and Refiners Association.

But if production doesn't rise, American motorists will be faced with big jumps in spring gas prices for years to come.

[Soldier4Christ]

The truth comes out.

Bill Clinton urges slowing economy to fight 'warming' 
On campaign trail says 'we have to save the planet for our grandchildren'

Bill: "We Just Have to Slow Down Our Economy" to Fight Global Warming

January 31, 2008 9:26 AM

Former President Bill Clinton was in Denver, Colorado, stumping for his wife yesterday.

In a long, and interesting speech, he characterized what the U.S. and other industrialized nations need to do to combat global warming this way: "We just have to slow down our economy and cut back our greenhouse gas emissions 'cause we have to save the planet for our grandchildren."

At a time that the nation is worried about a recession is that really the characterization his wife would want him making? "Slow down our economy"?

I don't really think there's much debate that, at least initially, a full commitment to reduce greenhouse gases would slow down the economy….So was this a moment of candor?

He went on to say that his the U.S. -- and those countries that have committed to reducing greenhouse gases -- could ultimately increase jobs and raise wages with a good energy plan..

So there was something of a contradiction there.

Or perhaps he mis-spoke.

Or perhaps this characterization was a description of what would happen if there isn't a worldwide effort…I'm not quite certain.

You can watch that one clip HERE or you can watch the whole speech at the website of ABC News' great Denver affiliate KMGH by clicking HERE.

It's worth watching -- he also pushed back against a 9/11 conspiracy theorist heckling him.

"Everybody knows that global warming is real," Mr. Clinton said, giving a shout-out to Al Gore's Nobel Peace Prize, "but we cannot solve it alone."

"And maybe America, and Europe, and Japan, and Canada -- the rich counties -- would say, 'OK, we just have to slow down our economy and cut back our greenhouse gas emissions 'cause we have to save the planet for our grandchildren.' We could do that.

"But if we did that, you know as well as I do, China and India and Indonesia and Vietnam and Mexico and Brazil and the Ukraine, and all the other countries will never agree to stay poor to save the planet for our grandchildren. The only way we can do this is if we get back in the world's fight against global warming and prove it is good economics that we will create more jobs to build a sustainable economy that saves the planet for our children and grandchildren. It is the only way it will work.

"And guess what? The only places in the world today in rich countries where you have rising wages and declining inequality are places that have generated more jobs than rich countries because they made a commitment we didn't. They got serious about a clean, efficient, green, independent energy future… If you want that in America, if you want the millions of jobs that will come from it, if you would like to see a new energy trust fund to finance solar energy and wind energy and biomass and responsible bio-fuels and electric hybrid plug-in vehicles that will soon get 100 miles a gallon, if you want every facility in this country to be made maximally energy efficient that will create millions and millions and millions of jobs, vote for her. She'll give it to you. She's got the right energy plan."

In other Bubba News, Sen. Hillary Clinton, D-NY, told the spectacular Kate Snow yesterday that this is her campaign, not Bill's, and told Nightline anchor Cynthia McFadden last night that she can control him.

(Which begs the question -- does she want to slow down the economy?)

UPDATE: Not so difficult to predict -- the RNC just issued a statement in response to the former President's comment.

“Senator Clinton’s campaign now says we must ‘slow down the economy’ to stop global warming," said Alex Conant, RNC Spokesman. "Clinton needs to come back to Earth. Her ‘tax-it, spend-it, regulate-it’ attitude would really bring the economy crashing down. No amount of special effects will hide Clinton’s liberal record.”

Sen. Clinton's campaign, meanwhile, has a new TV ad that calls her "the person you can depend on to fix the economy and protect our future."

[Barbara]

So, let me get this straight.

We need to stop "Global Warming" so our economy must change

There 'just happens' to be a shortage of an expensive gas additive so gas prices are going thru the roof

There also 'just happens' to be a shortage, or non-production, in the silver and gold industries

The price of groceries 'just happens' to be increasing exponentially

There are record foreclosures in this country

and so on, and so on.

It sounds like - Amero, here we come   

[Soldier4Christ]

It sounds like - Amero, here we come   

Right along with Socialism, government owning and controlling everything.

[Def]

Right along with Socialism, government owning and controlling everything.

I was listening to BBC WORLD Saturday  on Doha report and that is exactly what came out of it.

[Soldier4Christ]

Payrolls decline for 1st time since 2003 
Nervous employers cut 17,000 jobs in January

Nervous employers cut 17,000 jobs in January—the first such reduction in more than four years and a fresh trouble sign that the economy is in danger of stalling.

The Labor Department's report, released Friday, also showed that the unemployment rate dipped slightly to 4.9 percent, from 5 percent, as the civilian labor force shrank slightly.

Job losses were widespread. Manufacturers, construction firms and a variety of professional and business services eliminated jobs in January—reflecting the toll of the housing and credit debacles. The government cut jobs, too. All those cuts swamped job gains in education, health care, retailing and elsewhere.

Wage growth also slowed, another indication that employers are tightening their belts amid the economic slowdown.

Although the unemployment rate declined a notch, from 5 percent in December to 4.9 percent in January, the jobless rate—calculated from a different statistical survey than the payroll figures—dipped as people left the labor force for any number of reasons.

Taken together, the figures suggested that employers have grown cautious as they try to cope with fallout from housing and credit problems and rising worry about the ailing economy.

Economists were predicting employers would boost payrolls by around 70,000, and that the unemployment rate would stay at 5 percent.

Fears of a recession have grown.

The White House and Congress are working to enact a package to stimulate the economy. And, the Federal Reserve has gotten much more aggressive—ordering two big interest rate reductions in just over a week.

A severely depressed housing market, hard-to-get credit, turbulence on Wall Street and "some softening in labor markets" were cited by the Fed, when it lowered rates by a bold half point on Wednesday.

The unemployment rate had shot up in December to 5 percent, from 4.7 percent in November. The magnitude of that increase—something not seen since right after the September 2001 terror attacks—sent off alarm bells. In the past, such a big increase in the jobless rate signaled the economy was starting a recession or already in one.

The health of the nation's job market is a critical factor shaping how the overall economy fares. Until now, job and wage growth have helped cushion people from the negative forces coming from the housing bust and credit crunch. If companies continue to cut back on hiring and put a lid on wages, though, that will spell more trouble for the economy.

[Soldier4Christ]

Dollar approaches record low against euro after rate cuts
'U.S. economy will be slowing at a faster pace than other global economies'

The dollar fell for a second straight week against the euro after the Federal Reserve lowered its benchmark lending rate by a half-percentage point to 3 percent and indicated further cuts in borrowing costs may be needed.

The dollar pared its weekly loss yesterday as an expansion in manufacturing offset the first U.S. decline in jobs in four years and traders balked at bidding the euro above the all-time high. The European Central Bank is forecast to hold its main refinancing rate at a six-year high of 4 percent next week, maintaining the advantage over the Fed's target.

``It looks like the U.S. economy will be slowing at a faster pace than other global economies, clearly dollar- negative,'' said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York.

The dollar dropped 0.8 percent to $1.4802 per euro this week, from $1.4681 on Jan. 25. The U.S. currency came yesterday within a half-cent of the November low of $1.4967 per euro, the weakest level since Europe's currency debuted in 1999. Against the yen, the dollar fell 0.2 percent to 106.49, from 106.72. The euro increased 0.6 percent to 157.67 yen, from 156.68.

The U.S. Dollar Index traded on ICE Futures in New York, which tracks the dollar against six major currencies, fell 0.69 percent this week to 75.45. On Nov. 23, the day the dollar reached the record low versus the euro, the index dropped to 74.48, the weakest level since the gauge started in 1973.

BOJ's Rate

Japan's currency fell 3.2 percent against the New Zealand dollar and 2.6 percent versus the Australian dollar this week as a rally in U.S. stocks prompted investors to borrow in Japan and sell the yen to buy high-yielding assets.

The Bank of Japan's 0.5 percent target lending rate is the lowest among industrialized countries. New Zealand's benchmark is 8.25 percent, while Australia is forecast by economists to increase its target to 7 percent from 6.75 percent next week. In the carry trade, investors get funds in a country with low borrowing costs and buy assets where interest rates are higher. The risk is that fluctuating exchange rates can erase profits.

The Standard & Poor's 500 Index climbed 4.9 percent this week, trimming its yearly loss to 5 percent. The Dow Jones Industrial Average gained 4.4 percent this week.

Payrolls Report

Futures traders increased their bets to the highest level since 2004 that the yen will gain against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the yen compared with those on a drop, known as net longs, was 52,928 on Jan. 29, compared with net longs of 41,842 a week earlier.

The dollar dropped yesterday as low as $1.4949 against the euro after the Labor Department reported U.S. payrolls fell by 17,000 last month after an 82,000 gain in December that was larger than initially reported. After erasing its losses, the dollar rose against the euro on an Institute for Supply Management report showing manufacturing expanded in January.

The Fed on Jan. 30 lowered benchmark interest rates by a half-percentage point, eight days after a three-quarter-point emergency reduction, capping the fastest easing of monetary policy since 1990.

Fed Rate Outlook

The U.S. currency has declined 14 percent during the past 12 months as lower interest rates made dollar-denominated assets less attractive to international investors.

``The uptrend in the euro against the dollar is over because you have already priced in a lot of Fed easing,'' said Larry Kantor, head of research in New York at Barclays Capital Inc. and a former Fed economist.

Interest rate futures contracts on the Chicago Board of Trade show a 70 percent chance the central bank will cut the benchmark rate a half-percentage point by its March 18 meeting and 26 percent odds of a quarter-point reduction.

The ECB will keep its main refinancing rate at 4 percent at a policy meeting on Feb. 7, all 55 economists predicted in a Bloomberg News survey.

While interest-rate futures showed traders expected the ECB to lower its target rate in the second half, ECB council member Nicholas Garganas said on Jan. 31 that the central bank won't consider a rate cut because inflation remains ``a major concern.''

The implied yield on the three-month Euribor contracts expiring in July was 3.925 percent yesterday. That rate averaged 18 basis points more than the ECB's benchmark from 1999 until August, when the collapse of the U.S. subprime-mortgage market sparked a squeeze on credit.

The euro will trade at $1.48 by the end of the first quarter, and drop to $1.40 by year-end, according to the median forecast of 44 economists surveyed by Bloomberg News.

[Barbara]

This from Hal Lindsay:

"Venezuelan President, Hugo Chavez, recently issued a call to neighboring countries to join an anti-American military alliance. Chavez says the alliance is needed to guard against a possible US attack or invasion. He said that the US military support for Columbia's fight against guerillas and drug trafficers is a smokescreen to cover their real goal of destroying Latin American unity. On his weekly television program called "Hello President", Chavez warned, '...interfering with Bolivia, Nicaragua or Cuba is also interfering with Venezuela...This is about re-establishing the concept of unity."

Chavez is also actively working to accelerate the decline of the US dollar on the international oil market. Writing for the Associated Press, Ian James said, "Venezuelan President Hugo Chavez urged his Latin American allies on Saturday to begin withdrawing billions of dollars in international reserves from US banks, warning of a looming US economic crisis. Chavez made the suggestion, as he hosted a summit aimed at boosting Latin American integration and countering US influence." In the same article, James wrote that Chavez spoke of a new "...development bank established by he and other leaders."

2 years ago I (Hal Lindsay) was alerted by a well connected intelligence source in that area to watch for this particular development. He warned that preparations were being made by Chavez to attack the US dollar. He said that Chavez, using both his own money and money of the Saudis and other OPEC opperatives was buying up banks all over the Carribbean to establish and control another currency against the dollar. He recently sold off some 15% of Venezuela's oil dollar reserve. This pushed the US dollar even closer to the precipice.

Venezuea is just one of the major oil producing countries that is dumping the dollar in favor of the Euro or sometimes the yen. The Saudis recently refused to cut their interest rates along with the American Federal Reserve Board, a sure sign that the Saudis are preparing to upeg and cut their currency loose from the dollar. This is a move that President Bush has literally bent over backwards to prevent. If the Saudis dump the dollar as the official currency for all trading, it will be an economic coup de gras for America. It will start a stampede of Middle Eastern countries following suit. The OPEC countries of the Middle East hold about 3 1/2 trillion dollars in US currency reserves. China will no doubt follow the herd. China has already threatened to divest its vast dollar holdings in favor of the yen and the Euro.

Financial analysts call this the 'nuclear option' because of the catastrophic effect it will have on the already imperiled US economy.

Iran is already refusing to accept US dollar payments for oil shipments. Russia, the Sudan and South Korea have expressed interest in reducing their investments in the greenback. This whole economic fiasco has been further exacerbated by greedy loan institutions that made unsound and deceptive housing loans, and people who did not really heed the fine print. First time homebuyers, often with insufficient incomes and poor credit, took out interest only loans without accessing the boomerang effect involving the high interest that would come due after a few years. The easy availability of low interest, flexible loans fueled a booming real estate market that pushed the cost of housing beyond all other cost of living indexes. When the interest only period expired, and the principal came due with higher interest rates, tens of thousands of homeowners defaulted. Adding insult to injury, unscrupulous lending institutions bundled these risky and dubious loans and sold them to foreign investment firms. These are just a few of the reasons why, as one financial expert put it, we're experiencing an economic meltdown. And the Feds can't bail us out of this one by printing more fiat money, and lowering interest rates.

This only continues to drive the value of the dollar down in relation to other currencies."

[Soldier4Christ]

Economist: Expect Fed
to lower Dow to 8,000 
Critic claims agreements involving
billions used to shift stock market

Consumers should expect a deep recession, triggered by the "stealth methodology" of the Federal Reserve to "depress" the market even while lowering interest rates in an ostensible effort to stimulate economic growth, an economic analyst is charging.

"The Federal Reserve is directly involved in manipulating the stock market," said economic analyst Mike Bolser in a telephone interview with WND yesterday.

The New York Stock Exchange finished the day down 108.03 points, closing at 12,635.16, much as Bolser predicted, despite recent emergency Fed rate cuts of 1.25 percentage points aimed at stimulating the economy.

"Fed wants the Dow Jones Industrial Average and other financial indicators to descend in a managed way," Bolser said. "The Fed wants to drive the DJIA toward the 8,000 level, or below, in order to help create a deep recession which will have the effect of slowing consumption across the board, and dampening the otherwise harmful effects of inflation.

"A falling DOW is only one element of the recession effects of the excessive Fed-created housing and credit creation, whose bubbles are now bursting," he added.

"Without this recession, we would be on quick trip to hyper-inflation," Bolser, the author of an internationally followed newsletter published in conjunction with his InterventionalAnalysis.com website, said, "and the Fed wants to prevent this."

In his twice-daily subscription newsletter, Bolser has devised a quantitative methodology for utilizing Federal Reserve repurchase agreements to predict upward and downward movements of the DJIA, measured on a 30-day moving average.

Yesterday, Bolser noted the Fed added $18 billion to repurchase agreements, edging the pool up to a total of $153.158 billion in unexpired temporary repurchase agreements.

Repurchase agreements involve a sophisticated use of government securities issued every day by the Fed, but little understood or followed, even by sophisticated investors.

A repurchase agreement, as defined by the Fed, is a government security offered by the federal government to a small list of specified primary government securities dealers, for a limited period of time, usually 28 days or less, with overnight return being the most common.

The government securities are "rented" by the primary dealers and they can be added to the primary dealer's portfolio or collateralized and then used in the open market to implement the Fed's open market policy.

At the end of the repurchase agreement, the Fed obligates itself to take back the government securities from the primary dealers, effectively canceling the contract.

Meanwhile, while holding the government securities let out by the Fed in the repo agreement, primary dealers are free to utilize the liquidity provided by the repurchase agreement to manipulate the economy in accordance with the Fed's true monetary policy, whether publicly declared or not.

Primary dealers use the funds provided by the government securities they hold under the repurchase agreements to buy dollar exchange futures contracts, stock market futures, or to buy commodities contracts, including gold mining shares, all in accord with implementing Federal Reserve monetary policy to manipulate currency, commodity and stock markets up or down, depending what goals the Fed wants to accomplish at any particular time, the economist alleges.

Over the past several months, however, the Fed has implemented a policy to issue smaller amounts of daily repurchase agreements, with the goal of reducing the total pool of repurchase agreements available to the Fed's short list of 20 banks that are qualified by the Fed to serve as primary government securities dealers participating in the Fed's Open Market Operations.

Only the 20 banks specified in the Federal Reserve Bank of New York's list of primary government securities dealers are allowed to participate in Fed repurchase agreements.

"The primary government security dealer banks are like a private club," Bolser told WND. "You get to stay in the club as long as you take the repurchase agreements and enter the markets to implement Fed monetary policy the way the Fed wants it implemented. Violate the unspoken rules, and you risk being thrown out of the club."

Yesterday's $18 billion addition to the repurchase agreement pool caused the total amount of the outstanding repurchase agreement pool to remain below the DJIA 30-day moving average in a clear trend.

Bolser used this data to predict the Fed was manipulating the stock market lower, a controversial prediction when most economists see the Fed's emergency actions to reduce the target Fed Funds rate 1.25 percentage points lower over an eight-day period that ended with last Wednesday's meeting of the Federal Open Market Committee.

"Ultimately, the government is in the business of inflating the dollar," Bolser said, "so the Fed is trying to engineer a recession, in order to cushion the pernicious effects of its own inflation."

"In my view, the government intentionally desires a deep recession not unlike that of the 1930s," he continued. "The Fed, however, dissembles, attempting to display the opposite impression with its rate cuts."

"Cutting rates will not boost the economy in an environment where the credit bubble has burst and banks are afraid to lend," he explained. "But decreasing the repurchase pool will push the economy down, especially when the primary banks execute monetary policy in accordance with the wishes of the Fed to short the market with future contracts that push the indices down."

Bolser argued the Fed's ability to manipulate the market by increasing or decreasing the pool of available repurchase agreements amounts to a "stealth methodology" where the Fed can now depress the market, while implementing a policy of lowering interest rates, which most economists would see as trying to stimulate economic growth and the stock market.

"You have to remember the primary goal of the Fed is to support the bond market, which the Fed has done for quarter century," Bolser stressed. "The Fed needs a strong bond market so the Treasury can sell the enormous amount of Treasury securities, especially to China, that we need to sell to finance what this year may be as large as a $400 billion dollar budget deficit calculated on a cash basis."

"As a result, the friend of the Fed is the bond speculator," he added.

Among the U.S. banks and securities firms currently on the list are Bank of America Securities, Cantor Fitzgerald, Countrywide Securities, Bear Stearns, Daiwa Securities America, Goldman Sachs, Greenwich Capital Markets, HSBC Securities (USA), J.P. Morgan Securities, Lehman Brothers, Merrill Lynch Government Securities, and Morgan Stanley.

Also on the list are France's BNP Paribas Securities, Great Britain's Barclays Capital, Switzerland's Credit Suisse Securities, Japan's Mizuho Securities, and Germany's Dresden Kleinwort Wasserstein Securities.

"These dealers are the foot soldiers of the Fed, as it implements monetary policy," Bolser said.

Studying Bolser’s "Repos/DOW" chart from Dec. 7, 2007, through yesterday, a broad correlation between the downward movement in the Fed repurchase agreements pool totals and the DJIA as seen by tracking the 30-day moving average is clear.

"With this strategy, the Fed hopes we won't experience the extreme 'stag-flation' we had in the late-1970s," he argues. "The Fed hopes to induce a recession to manage downward stock prices and commodity prices, including oil, gold, copper, and lumber, as well as the overall consumer demand for retail goods."

"Stag-flation" is an unusual economic situation combined when economic stagnation is combined with inflation, much as the economy is currently experiencing, such that economists fear we are entering a recession while food and energy prices continue to rise sharply.

[Barbara]

Woe! This is scary! Have you ever read about the 'Federal Reserve?' Did you know that they are not 'Federal' at all. You won't find them in the phone book under government offices. You'll find them listed after Federal Express. During the Wilson presidency, the US government sanctioned the creation of the Federal Reserve, a group of World Banking organizations in Europe. Their buisness is to print money from nothing (no gold or silver backing in reserve), lend it to the US government, and charge interest on these loans.

Wilson's last known statement on his death bed was 'I have unknowingly ruined my country', referring to the power given the Federal Reserve.

We've got a video of a documentary called, 'Monopoly Men' from 1999 that speaks about this very situation. There's another by Vaughn Shatzer called 'World Dominion' from around the same time period that's just as frightening. Sounds like it's all going according to plan, the New World Order seems to be coming into play.

[Rhys]

Of course the government wants to devalue the dollar.

The only way we can pay off the debt the government has run up is to devalue the dollar until we are paying back our creditors with worthless paper.