By THE CANADIAN PRESS
ST. CATHARINES -- Niagara police are investigating a deadly home invasion on the weekend that left an intruder dead and a resident of the home charged with manslaughter.
The motive for the attack is still under investigation.
Police said four young men entered a home in St. Catharines around 2 p.m. on Saturday.
The four allegedly held another four people in the small home captive for a short time before 19-year-old Pedro Bello was shot and killed.
Bello's body was discovered in the basement of the home when police arrived after receiving a 911 call.
A 22-year-old man, who suffered minor injuries, has been charged with manslaughter.
Three other men, ranging in age from 19 to 23, were caught in a vehicle after fleeing the scene.
The three suspects, all from St. Catharines, face charges that include forcible confinement, robbery with a firearm, and breaking and entering.
Police said all four men in the case have been remanded into custody.
Monday, August 25, 2008
Thursday, August 21, 2008
Family birthday came first: Miller
Family birthday came first: Miller
By BRIAN GRAY, SUN MEDIA
Spending time with his family takes priority over attending a firefighter's funeral, Mayor David Miller said yesterday.
Miller has been criticized for his absence during much of the aftermath of last week's propane explosion in Downsview, including the funeral for District Chief Bob Leek, who died during the fight to control the blaze.
"I'm also a father and one of the things my family was doing in B.C. was celebrating my daughter's 13th birthday with my relatives," Miller explained.
"I think that everybody understands that as a father you have to be with your daughter when she turns 13."
Miller returned briefly after the Aug. 10 explosion but left town again prior to the Aug. 15 ceremony for Leek.
"I spoke both to the family and to the firefighters as soon as I knew the date and said I wouldn't be able to stay," Miller said.
The mayor visited the blast site yesterday morning and said he was pleased with the progress of the asbestos cleanup in the area, which he estimated would cost between $1 million and $2 million.
The city is going after Sunrise Propane and possibly the land owner to recover the cost but there are no guarantees taxpayers won't get the bill.
Cleanup crews should be finished by tomorrow but they will return again on Saturday to ensure all the asbestos has been removed, Miller said.
The city is looking at plans to change zoning bylaws, he said.
By BRIAN GRAY, SUN MEDIA
Spending time with his family takes priority over attending a firefighter's funeral, Mayor David Miller said yesterday.
Miller has been criticized for his absence during much of the aftermath of last week's propane explosion in Downsview, including the funeral for District Chief Bob Leek, who died during the fight to control the blaze.
"I'm also a father and one of the things my family was doing in B.C. was celebrating my daughter's 13th birthday with my relatives," Miller explained.
"I think that everybody understands that as a father you have to be with your daughter when she turns 13."
Miller returned briefly after the Aug. 10 explosion but left town again prior to the Aug. 15 ceremony for Leek.
"I spoke both to the family and to the firefighters as soon as I knew the date and said I wouldn't be able to stay," Miller said.
The mayor visited the blast site yesterday morning and said he was pleased with the progress of the asbestos cleanup in the area, which he estimated would cost between $1 million and $2 million.
The city is going after Sunrise Propane and possibly the land owner to recover the cost but there are no guarantees taxpayers won't get the bill.
Cleanup crews should be finished by tomorrow but they will return again on Saturday to ensure all the asbestos has been removed, Miller said.
The city is looking at plans to change zoning bylaws, he said.
Wednesday, August 20, 2008
Poem attributed to Pastor Martin Niemöller (1892–1984)
Poem attributed to Pastor Martin Niemöller (1892–1984) about the inactivity of German intellectuals following the Nazi rise to power and the purging of their chosen targets, group after group.
When the Nazis came for the communists,
I remained silent;
I was not a communist.
When they locked up the social democrats,
I remained silent;
I was not a social democrat.
When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.
When they came for the Jews,
I remained silent;
I wasn’t a Jew.
When they came for me,
there was no one left to speak out.
When the Nazis came for the communists,
I remained silent;
I was not a communist.
When they locked up the social democrats,
I remained silent;
I was not a social democrat.
When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.
When they came for the Jews,
I remained silent;
I wasn’t a Jew.
When they came for me,
there was no one left to speak out.
Russia’s financial crisis of 1998 plotted by IMF
19.08.2008 Source: Pravda.Ru URL: http://english.pravda.ru/russia/history/106148-financial_crisis-0
As it turns out, the default, which hit Russia ten years ago, was not merely a consequence of the ungifted economic policy of the Russian government during the second half of the 1990s. The devaluation of the Russian ruble occurred because of the efforts taken by the International Monetary Fund, which triggered the massive economic crisis in Russia nationwide and impoverished the majority of Russians in an instant.
“The weak position of the federal budget became the main reason of the black August in 1998. In the summer of 1998 the Finance Ministry could fund only a half of its spending with the help of taxes. The other half was funded at the expense of borrowings. When markets stopped lending money to the ministry, the federal budget was unable to function properly,” Sergei Aleksashenko, who took the position of the first deputy chairman of the Bank of Russia in 1998, said.
The government should have taken serious measures in the economic policy of the nation in 1996. Mr. Aleksashenko stated that he was surprised to hear incumbent Finance Minister of Russia , Aleksei Kudrin, saying that the crisis of 1998 was mainly caused because of IMF’s actions.
“I was very surprised to hear yesterday’s statement from Finance Minister Kudrin, who did not say a word about the budgetary policy and the weakness of Russia 's budget during the period of the crisis. Moreover, I was surprised to hear Mr. Kudrin laying the blame for the crisis on the IMF. If the minister said what he really thouhgt then it means that our government had not learned any lesson from the events that happened ten years ago,” Sergei Aleksashenko said.
Kudrin laid the blame for the crisis on the Russian government too. The minister said that the crisis had been predetermined with low gold and forex reserves. However, the minister said that the International Monetary Fund was also guilty of the financial crisis in Russia in 1998, RIA Novosti reports.
If the IMF had increased the Russian reserves by ten or 20 billion dollars within the framework of its coordinated aid program, the financial collapse would not have happened. As a result, the Russian government declared default on August 17, 1998 being unable to abide by its obligations.
The current economic situation in Russia has something in common with that of 1998. It is worthy of note that oil prices have dropped down to $112.5 per barrel from over $150. Russia ’s debt has undergone a significant change, though. Russia as a state appeared to be the major debtor in 1998. The corporate debt was negligibly small. Nowadays, Russia ’s foreign debt makes up $40 billion, whereas Russian companies owe some $400 billion in total.
The former chairman of the Moscow department of the International Monetary Fund, Martin Gilman, stated that every member of the Russian government, who was involved in the decision-making process ten years ago, played a big role in the crisis.
The economic crisis of 1998 became a result of certain decisions, the official believes, although bad luck was also involved. Mr. Gilman said that even world’s biggest men of genius would have faced difficulties if they had attempted to solve Russia ’s problems in the 1990s.
The official described the default of 1998 as the price which Russia had to pay to evolve from its old system to the new globalized economy.
“It was the price which Russia paid for moving forward,” the former chairman of the IMF in Moscow said.
As it turns out, the default, which hit Russia ten years ago, was not merely a consequence of the ungifted economic policy of the Russian government during the second half of the 1990s. The devaluation of the Russian ruble occurred because of the efforts taken by the International Monetary Fund, which triggered the massive economic crisis in Russia nationwide and impoverished the majority of Russians in an instant.
“The weak position of the federal budget became the main reason of the black August in 1998. In the summer of 1998 the Finance Ministry could fund only a half of its spending with the help of taxes. The other half was funded at the expense of borrowings. When markets stopped lending money to the ministry, the federal budget was unable to function properly,” Sergei Aleksashenko, who took the position of the first deputy chairman of the Bank of Russia in 1998, said.
The government should have taken serious measures in the economic policy of the nation in 1996. Mr. Aleksashenko stated that he was surprised to hear incumbent Finance Minister of Russia , Aleksei Kudrin, saying that the crisis of 1998 was mainly caused because of IMF’s actions.
“I was very surprised to hear yesterday’s statement from Finance Minister Kudrin, who did not say a word about the budgetary policy and the weakness of Russia 's budget during the period of the crisis. Moreover, I was surprised to hear Mr. Kudrin laying the blame for the crisis on the IMF. If the minister said what he really thouhgt then it means that our government had not learned any lesson from the events that happened ten years ago,” Sergei Aleksashenko said.
Kudrin laid the blame for the crisis on the Russian government too. The minister said that the crisis had been predetermined with low gold and forex reserves. However, the minister said that the International Monetary Fund was also guilty of the financial crisis in Russia in 1998, RIA Novosti reports.
If the IMF had increased the Russian reserves by ten or 20 billion dollars within the framework of its coordinated aid program, the financial collapse would not have happened. As a result, the Russian government declared default on August 17, 1998 being unable to abide by its obligations.
The current economic situation in Russia has something in common with that of 1998. It is worthy of note that oil prices have dropped down to $112.5 per barrel from over $150. Russia ’s debt has undergone a significant change, though. Russia as a state appeared to be the major debtor in 1998. The corporate debt was negligibly small. Nowadays, Russia ’s foreign debt makes up $40 billion, whereas Russian companies owe some $400 billion in total.
The former chairman of the Moscow department of the International Monetary Fund, Martin Gilman, stated that every member of the Russian government, who was involved in the decision-making process ten years ago, played a big role in the crisis.
The economic crisis of 1998 became a result of certain decisions, the official believes, although bad luck was also involved. Mr. Gilman said that even world’s biggest men of genius would have faced difficulties if they had attempted to solve Russia ’s problems in the 1990s.
The official described the default of 1998 as the price which Russia had to pay to evolve from its old system to the new globalized economy.
“It was the price which Russia paid for moving forward,” the former chairman of the IMF in Moscow said.
Citizens' U.S. Border Crossings Tracked Data From Checkpoints To Be Kept for 15 Years
By Ellen Nakashima
Washington Post Staff Writer
Wednesday, August 20, 2008; A01
The federal government has been using its system of border checkpoints to greatly expand a database on travelers entering the country by collecting information on all U.S. citizens crossing by land, compiling data that will be stored for 15 years and may be used in criminal and intelligence investigations.
Officials say the Border Crossing Information system, disclosed last month by the Department of Homeland Security in a Federal Register notice, is part of a broader effort to guard against terrorist threats. It also reflects the growing number of government systems containing personal information on Americans that can be shared for a broad range of law enforcement and intelligence purposes, some of which are exempt from some Privacy Act protections.
While international air passenger data has long been captured this way, Customs and Border Protection agents only this year began to log the arrivals of all U.S. citizens across land borders, through which about three-quarters of border entries occur.
The volume of people entering the country by land prevented compiling such a database until recently. But the advent of machine-readable identification documents, which the government mandates eventually for everyone crossing the border, has made gathering the information more feasible. By June, all travelers crossing land borders will need to present a machine-readable document, such as a passport or a driver's license with a radio frequency identification chip.
In January, border agents began manually entering into the database the personal information of travelers who did not have such documents.
The disclosure of the database is among a series of notices, officials say, to make DHS's data gathering more transparent. Critics say the moves exemplify efforts by the Bush administration in its final months to cement an unprecedented expansion of data gathering for national security and intelligence purposes.
The data could be used beyond determining whether a person may enter the United States. For instance, information may be shared with foreign agencies when relevant to their hiring or contracting decisions.
Public comments are being taken until Monday, when the "new system of records will be effective," the notice states.
"People expect to be checked when they enter the country and for the government to determine if they're admissible or not," said Greg Nojeim, senior counsel at the Center for Democracy & Technology. "What they don't expect is for the government to keep a record for 15 years of their comings into the country."
But DHS spokesman Russ Knocke said the retention period is justified.
"History has shown, whether you are talking about criminal or terrorist activity, that plotting, planning or even relationships among conspirators can go on for years," he said. "Basic travel records can, quite literally, help frontline officers to connect the dots."
The government states in its notice that the system was authorized by post-Sept. 11 laws, including the Enhanced Border Security and Visa Reform Act of 2002, the Aviation and Transportation Security Act of 2001, and the Intelligence Reform and Terrorism Prevention Act of 2004.
Nojeim said that though the statutes authorize the government to issue travel documents and check immigration status, he does not believe they explicitly authorize creation of the database.
"This database is, in a sense, worse than a watch list," he said. "At least in the watch-list scenario, there's some reason why the name got on the list. Here, the only thing a person does to come to the attention of DHS is to lawfully cross the border. The theory of this data collection is: Track everyone -- just in case."
Under the system, officials record name, birth date, gender, date and time of crossing, and a photo, where available, for U.S. travelers returning to the country by land, sea or air. The same information is gathered about foreign travelers, but it is held for 75 years.
DHS and other agencies are amassing more and more data that they subject to sophisticated analysis. A customs document issued last month stated that the agency does not perform data mining on border crossings to glean relationships and patterns that could signify a terrorist or law enforcement threat. But the Federal Register notice states that information may be shared with federal, state and local governments to test "new technology and systems designed to enhance border security or identify other violations of law." And the Homeland Security Act establishing the department calls for the development of data-mining tools to further the department's objectives.
That raises concerns, privacy advocates say, that analyses can be undertaken that could implicate innocent people if appropriate safeguards are not used.
The border information system will link to a new database, the Non-Federal Entity Data System, which is being set up to hold personal information about all drivers in a state's database. States that do not agree to allow customs to have such large amounts of information may allow the agency to query their databases in real time for information on a traveler.
Because of privacy concerns, Washington state earlier this year opted for the queries-only approach. The Canadian government made the same decision. "There was absolutely no way they should have the entire database," said Ann Cavoukian, Ontario's privacy commissioner, who learned about the Canadian government's decision in April.
"Once you have data in a database you don't need, it lends itself to unauthorized use," she said. "You have no idea of the data creep."
Vermont opted to allow access to its driver's licenses because the state could not guarantee the "nanoseconds" response time DHS required, said Bonnie L. Rutledge, the state's commissioner of motor vehicles. She said drivers are informed up front of the data sharing.
"A person opts to go over the border, their information is going to be collected and held anyway," she said. "If you don't want to go over the border, you don't have to."
The notice states that the government may share border records with federal, state, local, tribal or foreign government agencies in cases where customs believes the information would assist enforcement of civil or criminal laws or regulations, or if the information is relevant to a hiring decision.
They may be shared with a court or attorney in civil litigation, which could include divorce cases; with federal contractors or consultants "to accomplish an agency function related to this system of records"; with federal and foreign intelligence or counterterrorism agencies if there is a threat to national or international security or to assist in anti-terrorism efforts; or with the news media and the public "when there exists a legitimate public interest in the disclosure of the information."
Homeland Security is proposing to exempt the database from some provisions of the 1974 Privacy Act, including the right of a citizen to know whether a law enforcement or intelligence agency has requested his or her records and the right to sue for access and correction in those disclosures.
A traveler may, however, request access to records based on documents he or she presented at the border.
The notice is posted at the Government Printing Office's Web site.
Washington Post Staff Writer
Wednesday, August 20, 2008; A01
The federal government has been using its system of border checkpoints to greatly expand a database on travelers entering the country by collecting information on all U.S. citizens crossing by land, compiling data that will be stored for 15 years and may be used in criminal and intelligence investigations.
Officials say the Border Crossing Information system, disclosed last month by the Department of Homeland Security in a Federal Register notice, is part of a broader effort to guard against terrorist threats. It also reflects the growing number of government systems containing personal information on Americans that can be shared for a broad range of law enforcement and intelligence purposes, some of which are exempt from some Privacy Act protections.
While international air passenger data has long been captured this way, Customs and Border Protection agents only this year began to log the arrivals of all U.S. citizens across land borders, through which about three-quarters of border entries occur.
The volume of people entering the country by land prevented compiling such a database until recently. But the advent of machine-readable identification documents, which the government mandates eventually for everyone crossing the border, has made gathering the information more feasible. By June, all travelers crossing land borders will need to present a machine-readable document, such as a passport or a driver's license with a radio frequency identification chip.
In January, border agents began manually entering into the database the personal information of travelers who did not have such documents.
The disclosure of the database is among a series of notices, officials say, to make DHS's data gathering more transparent. Critics say the moves exemplify efforts by the Bush administration in its final months to cement an unprecedented expansion of data gathering for national security and intelligence purposes.
The data could be used beyond determining whether a person may enter the United States. For instance, information may be shared with foreign agencies when relevant to their hiring or contracting decisions.
Public comments are being taken until Monday, when the "new system of records will be effective," the notice states.
"People expect to be checked when they enter the country and for the government to determine if they're admissible or not," said Greg Nojeim, senior counsel at the Center for Democracy & Technology. "What they don't expect is for the government to keep a record for 15 years of their comings into the country."
But DHS spokesman Russ Knocke said the retention period is justified.
"History has shown, whether you are talking about criminal or terrorist activity, that plotting, planning or even relationships among conspirators can go on for years," he said. "Basic travel records can, quite literally, help frontline officers to connect the dots."
The government states in its notice that the system was authorized by post-Sept. 11 laws, including the Enhanced Border Security and Visa Reform Act of 2002, the Aviation and Transportation Security Act of 2001, and the Intelligence Reform and Terrorism Prevention Act of 2004.
Nojeim said that though the statutes authorize the government to issue travel documents and check immigration status, he does not believe they explicitly authorize creation of the database.
"This database is, in a sense, worse than a watch list," he said. "At least in the watch-list scenario, there's some reason why the name got on the list. Here, the only thing a person does to come to the attention of DHS is to lawfully cross the border. The theory of this data collection is: Track everyone -- just in case."
Under the system, officials record name, birth date, gender, date and time of crossing, and a photo, where available, for U.S. travelers returning to the country by land, sea or air. The same information is gathered about foreign travelers, but it is held for 75 years.
DHS and other agencies are amassing more and more data that they subject to sophisticated analysis. A customs document issued last month stated that the agency does not perform data mining on border crossings to glean relationships and patterns that could signify a terrorist or law enforcement threat. But the Federal Register notice states that information may be shared with federal, state and local governments to test "new technology and systems designed to enhance border security or identify other violations of law." And the Homeland Security Act establishing the department calls for the development of data-mining tools to further the department's objectives.
That raises concerns, privacy advocates say, that analyses can be undertaken that could implicate innocent people if appropriate safeguards are not used.
The border information system will link to a new database, the Non-Federal Entity Data System, which is being set up to hold personal information about all drivers in a state's database. States that do not agree to allow customs to have such large amounts of information may allow the agency to query their databases in real time for information on a traveler.
Because of privacy concerns, Washington state earlier this year opted for the queries-only approach. The Canadian government made the same decision. "There was absolutely no way they should have the entire database," said Ann Cavoukian, Ontario's privacy commissioner, who learned about the Canadian government's decision in April.
"Once you have data in a database you don't need, it lends itself to unauthorized use," she said. "You have no idea of the data creep."
Vermont opted to allow access to its driver's licenses because the state could not guarantee the "nanoseconds" response time DHS required, said Bonnie L. Rutledge, the state's commissioner of motor vehicles. She said drivers are informed up front of the data sharing.
"A person opts to go over the border, their information is going to be collected and held anyway," she said. "If you don't want to go over the border, you don't have to."
The notice states that the government may share border records with federal, state, local, tribal or foreign government agencies in cases where customs believes the information would assist enforcement of civil or criminal laws or regulations, or if the information is relevant to a hiring decision.
They may be shared with a court or attorney in civil litigation, which could include divorce cases; with federal contractors or consultants "to accomplish an agency function related to this system of records"; with federal and foreign intelligence or counterterrorism agencies if there is a threat to national or international security or to assist in anti-terrorism efforts; or with the news media and the public "when there exists a legitimate public interest in the disclosure of the information."
Homeland Security is proposing to exempt the database from some provisions of the 1974 Privacy Act, including the right of a citizen to know whether a law enforcement or intelligence agency has requested his or her records and the right to sue for access and correction in those disclosures.
A traveler may, however, request access to records based on documents he or she presented at the border.
The notice is posted at the Government Printing Office's Web site.
Tuesday, August 19, 2008
TEACHERS GET THEIR GUNS
By: Devvy
August 18, 2008
© 2008 - NewsWithViews.com
"The laws that forbid the carrying of arms are laws of such a nature. They disarm only those who are neither inclined nor determined to commit crimes....Such laws make things worse for the assaulted and better for the assailants; they serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man. Thomas Jefferson's "Commonplace Book," 1774-1776, quoting 18th century criminologist Cesare Beccaria in Chapter 40 of "On Crimes and Punishment", 1764.
On August 15, 2008, a Texas school district voted to allow teachers to bring guns to class this fall. The plan, adopted by the Harrold Independent School District was approved by parents who understand the right to own and bear arms to protect and defend. This is a small, rural district 150 miles northwest of Fort Worth. This school district is also 30 long miles from the Sheriff's office. Leaving the teachers without a way to protect and defend themselves and their students is simply condoning any evil that befalls them. As Superintendent, David Thweatt, so astutely pointed out: "When the federal government started making schools gun-free zones, that's when all of these shootings started. Why would you put it out there that a group of people can't defend themselves? That's like saying 'sic 'em' to a dog."
Immediately, ignorant ninnies in the controlled, corporate media went ballistic with their usual inane comments. FAUX News Network's weekend bimbo, Alisyn Camerota, twittered on August 16, 2008, how alarming this was because "there are children in that school as young as kindergarten age!" Oh, dear. Here's a clue for Alisyn: This is rural Texas. Many of those kids learn to handle a gun at very early ages and no doubt, many of the teens probably shoot better than the teachers. Here in Texas, guns are part of life. Texans take gun ownership seriously and with great responsibility. Alisyn Camerota gets paid a lot of money. Too bad it's for her blonde hair and not any brain power.
I know the gun grabbers would love nothing better than to file a lawsuit today to stop this sensible and long over due decision, but thankfully, back in 1995, the U.S. Supreme Court actually made a constitutional ruling:
U.S. v. Lopez, 115 S.Ct. 1624 (1995) Chief Justice Rehnquist delivered the opinion of the Court.
"In the Gun Free School Zones Act of 1990, Congress made it a federal offense "for any individual knowingly to possess a firearm at a place that the individual knows, or has reasonable cause to believe, is a school zone." 18 U.S.C. § 922(q)(1)(A) (1988 ed., Supp. V). The Act neither regulates a commercial activity nor contains a requirement that the possession be connected in any way to interstate commerce. We hold that the Act exceeds the authority of Congress "[to] regulate Commerce . . . among the several States . . . ." U. S. Const., Art. I, §8, cl. 3."
Let me quote from a book titled, Time Bomb:
"In 1928 the communists initiated their drive toward world domination when they adopted the "Program of the Communist International" to impose the Soviet way of life on Americans and the rest of the world. These master mind-subverters have always proceeded from the premise that the eradication of Christian moral principles, the inculcation of Communist morality, and the formation of the New Communist Man are the most crucial tasks of Communist construction. Their chief aim then has been the reconstruction of humanity - the reshaping of men's thoughts and beliefs on a mass scale - and their universal instruments of reeducation have been the mixture of utopian Communist community buildings, community values (Communist morality), Communist mass terror."
The reshaping of the American people, how they think and believe, according to The Program, has been in full forward mode for decades. Prior to the all out assault on our right to own and bear arms, young boys in this country up to the late 1960s, used to openly carry their rifles to school, check them with the principle and then pick them up after school for shooting competitions. Of course, back then there was a stay at home mother and a father who came home after work. Families ate dinner together and faced life together. Parents who taught their sons and daughters all about guns from an early age so they would learn to respect them and use them only in self-defense or for hunting.
It was as natural as sunshine - that is until the push began to severely restrict our right to own and bear arms by sissies who serve in Congress and the state legislatures. This well thought out propaganda program ("reeducation") was to emasculate men (make them more "sensitive") while brainwashing them into believing that guns are the root of all evil instead of the teeth of liberty. These panty waste politicians are urged on by new world order soldiers like Carolyn McCarthy, Diane Feinstein and Hillary Clinton, who promote the same old worn out lies about guns and gun violence. Besides politicians, print publications that cater to women are also in on the "reeducation" programs. In an April 5, 2004 column, Paige McKenzie wrote:
"Throughout the 1990s, women's magazine became focused less on fashion and more on features about violence against women and children, even though crime statistics were plummeting across the country....Research studies of women's magazines such as Cosmo, Family Circle, Good Housekeeping, Glamour, Marie Claire, Redbook, Vogue, Woman’s Day and Ladies Home Journal show that during that decade stories and cover lines that touched on social issues and victimization skyrocketed.
“In almost all of the stories, the message was the same: We have a big problem. It's scary and could affect any woman or her children. … we need government action, and we need it now! And then, of course, there's the “mother network of all victim television”: Lifetime Television Network for Women, a forerunner of "Sex and the City," whose programs tell women that “all men are unfaithful rats, abusive monsters, dishonest scumbags, or all of the above.” Women, however, are “ubervictims.”
These would be Marxist Hillary Clinton's base support: Leeching, whining, dependent females who want mother government to provide for their every need in life ("women's issues") and who care nothing for the supreme law of the land, the U.S. Constitution. The shift went from women being the center and strength of the family, not afraid to defend her own, to victim hood where the shrill cry for mother government to protect them - especially from law abiding gun owners - has risen ad nauseum.
Women, guns, history
Sue Munday, alias, Lieutenant Flowers, wore the Confederate uniform, operating principally in Kentucky during the Civil War. Bridget Divers served throughout the same war with the 1st Michigan Cavalry.[1] When the settlers came West, women wore guns to protect themselves and they weren't afraid of using one against a man who would take their body or threaten their children. Throughout the history of this Republic, our citizenry has always been an armed society and for good reason:
"To preserve liberty, it is essential that the whole body of the people always possess arms, and be taught alike, especially when young, how to use them." Richard Henry Lee, Virginia delegate to the Continental Congress, Initiator of the Declaration of Independence, and member of the first Senate, which passed the Bill of Rights.
The police don't have to protect you
Gun control makes victims of women. For those women who think that just because they call 9-11 when a couple of big bruisers break into their home - if they even have the time or opportunity to get to the phone - that the police are obligated to run right over and save their bacon are wrong. Dead wrong. The courts have repeatedly ruled that law enforcement do not have a duty to protect you or your property. Those three to five minutes it takes a squad car (if that quick) to get to your home or apartment can very well mean the difference between life and death. If the two legged predators out there got the message that women have guns in their homes and will use them, guess whose home they're going to skip on rape night out with the boys?
Not to mention the fact that ownership of a gun is REQUIRED under the Second Amendment. This is a fact the gun grabbers and sissy men in this country continue to deliberately ignore. Many times I have written about the absolute necessity of reconstituting the organized militia under the states, citing the brilliant work of Dr. Edwin Vieira. Those teachers here in Texas have taken an important first step, but every supporter of the Second Amendment must understand that our very survival depends on getting the first state to implement Edwin's carefully crafted plan of action. When there is societal breakdown, i.e., result of a massive financial collapse, local law enforcement will not be able to handle the situation - just like they couldn't during Katrina.
If you think I'm just blowing smoke, you're wrong. The powers that be don't want you to know these facts, they want the masses to buckle under to martial law on the whim of a sitting president "for their own good." This is the reason for conditioning the American people beginning back in 1997, Sacramento Bee: "Our Civilian-Military Face-Off : Bill of Rights No Obstacle for the [Marine] Corps." This piece exposed the mindset way back then that at some point due to: "...the rising potential for civil disobedience within the inner cities it is 'inevitable' the U.S. military will be employed more often within American borders."
The elites who rule this country know the American people have caught onto their plans for destroying this constitutional republic. There is no way to stop this financial disintegration no matter how many oceans of money are thrown onto the fire, and as I've said before, hungry bellies make for angry mobs. As well as recent armed stand off incidents when the Sheriff came to remove owners from their foreclosed home. All of these factors are why we have seen the paramilitiarization of local law enforcement over the past dozen years and military exercises being conducted in urban areas. This melt down has been underway a long time and is now out of control. The beast is devouring itself (see link 4 below).
What we're seeing right now is the lull before the tsunami as the ruling elite try to hold things together before the pretend elections in November. But, you just wait until the first quarter of next year. If Americans think the No Change duo of McCain and Obama can "fix" things, they will be the next wave of beggars. The destroyers have brought horrible pain to millions of people with the banking crisis (which Edwin Vieira has warned about for over thirty years and which has now come to pass) with the worst yet to come. Gold is being beaten down and the market manipulated. It's a crime underway in full view of the American people who simply have no understanding of what's happening to them.
As I have urged for years, diversify some of your assets into gold and don't wait until it's too late because too late is fast approaching. I've warned over the years (September 28, 2004, October 10, 2005, July 10, 2006, August 13, 2007, October 4, 2007, January 31, 2008, June 19, 2008) CON-gress would do nothing to stop the meltdown, just as both parties have allowed the energy crisis to build to where we are today. We all like to deal with people we trust, so I do recommend two individuals from El Dorado Gold: Harvey (Phoenix area) 602.228.8203 and Eric in the Florida area, 623.643.8785. Right now is the time to acquire some to protect what you have left.
We have to get one state to make the first move in reconstituting the organized militia of the states, but it won't happen unless YOU go after your state legislators now and stay in their face. If they are voted out in November, go after the new ones the day the new sessions open in January, 2009. Read Dr. Vieira's scholarly columns on the banking crisis and why the organized militias of the States MUST be reconstituted; see here. I've also put some of Edwin's material on audio. You can listen on the Internet, download to your IPod or a CD and listen while you drive at no cost. Just go to my web site (www.devvy.com) and click on the audio section.
I also can't highly recommend enough that you get Edwin's book, Constitutional Homeland Security: A Call for Americans to Revitalize the Militia of the Several States, Volume I, The Nation in Arms. Read it and act together with your gun group. Put the pressure on - especially in states like Montana, Idaho, Nevada and Virginia. Give a copy of Edwin's book to Second Amendment leaders in your state. Tell them this is critical to the survival of this country and a free people. It cannot be ignored because it's not politically correct.
Freedom is for the brave hearts.
August 18, 2008
© 2008 - NewsWithViews.com
"The laws that forbid the carrying of arms are laws of such a nature. They disarm only those who are neither inclined nor determined to commit crimes....Such laws make things worse for the assaulted and better for the assailants; they serve rather to encourage than to prevent homicides, for an unarmed man may be attacked with greater confidence than an armed man. Thomas Jefferson's "Commonplace Book," 1774-1776, quoting 18th century criminologist Cesare Beccaria in Chapter 40 of "On Crimes and Punishment", 1764.
On August 15, 2008, a Texas school district voted to allow teachers to bring guns to class this fall. The plan, adopted by the Harrold Independent School District was approved by parents who understand the right to own and bear arms to protect and defend. This is a small, rural district 150 miles northwest of Fort Worth. This school district is also 30 long miles from the Sheriff's office. Leaving the teachers without a way to protect and defend themselves and their students is simply condoning any evil that befalls them. As Superintendent, David Thweatt, so astutely pointed out: "When the federal government started making schools gun-free zones, that's when all of these shootings started. Why would you put it out there that a group of people can't defend themselves? That's like saying 'sic 'em' to a dog."
Immediately, ignorant ninnies in the controlled, corporate media went ballistic with their usual inane comments. FAUX News Network's weekend bimbo, Alisyn Camerota, twittered on August 16, 2008, how alarming this was because "there are children in that school as young as kindergarten age!" Oh, dear. Here's a clue for Alisyn: This is rural Texas. Many of those kids learn to handle a gun at very early ages and no doubt, many of the teens probably shoot better than the teachers. Here in Texas, guns are part of life. Texans take gun ownership seriously and with great responsibility. Alisyn Camerota gets paid a lot of money. Too bad it's for her blonde hair and not any brain power.
I know the gun grabbers would love nothing better than to file a lawsuit today to stop this sensible and long over due decision, but thankfully, back in 1995, the U.S. Supreme Court actually made a constitutional ruling:
U.S. v. Lopez, 115 S.Ct. 1624 (1995) Chief Justice Rehnquist delivered the opinion of the Court.
"In the Gun Free School Zones Act of 1990, Congress made it a federal offense "for any individual knowingly to possess a firearm at a place that the individual knows, or has reasonable cause to believe, is a school zone." 18 U.S.C. § 922(q)(1)(A) (1988 ed., Supp. V). The Act neither regulates a commercial activity nor contains a requirement that the possession be connected in any way to interstate commerce. We hold that the Act exceeds the authority of Congress "[to] regulate Commerce . . . among the several States . . . ." U. S. Const., Art. I, §8, cl. 3."
Let me quote from a book titled, Time Bomb:
"In 1928 the communists initiated their drive toward world domination when they adopted the "Program of the Communist International" to impose the Soviet way of life on Americans and the rest of the world. These master mind-subverters have always proceeded from the premise that the eradication of Christian moral principles, the inculcation of Communist morality, and the formation of the New Communist Man are the most crucial tasks of Communist construction. Their chief aim then has been the reconstruction of humanity - the reshaping of men's thoughts and beliefs on a mass scale - and their universal instruments of reeducation have been the mixture of utopian Communist community buildings, community values (Communist morality), Communist mass terror."
The reshaping of the American people, how they think and believe, according to The Program, has been in full forward mode for decades. Prior to the all out assault on our right to own and bear arms, young boys in this country up to the late 1960s, used to openly carry their rifles to school, check them with the principle and then pick them up after school for shooting competitions. Of course, back then there was a stay at home mother and a father who came home after work. Families ate dinner together and faced life together. Parents who taught their sons and daughters all about guns from an early age so they would learn to respect them and use them only in self-defense or for hunting.
It was as natural as sunshine - that is until the push began to severely restrict our right to own and bear arms by sissies who serve in Congress and the state legislatures. This well thought out propaganda program ("reeducation") was to emasculate men (make them more "sensitive") while brainwashing them into believing that guns are the root of all evil instead of the teeth of liberty. These panty waste politicians are urged on by new world order soldiers like Carolyn McCarthy, Diane Feinstein and Hillary Clinton, who promote the same old worn out lies about guns and gun violence. Besides politicians, print publications that cater to women are also in on the "reeducation" programs. In an April 5, 2004 column, Paige McKenzie wrote:
"Throughout the 1990s, women's magazine became focused less on fashion and more on features about violence against women and children, even though crime statistics were plummeting across the country....Research studies of women's magazines such as Cosmo, Family Circle, Good Housekeeping, Glamour, Marie Claire, Redbook, Vogue, Woman’s Day and Ladies Home Journal show that during that decade stories and cover lines that touched on social issues and victimization skyrocketed.
“In almost all of the stories, the message was the same: We have a big problem. It's scary and could affect any woman or her children. … we need government action, and we need it now! And then, of course, there's the “mother network of all victim television”: Lifetime Television Network for Women, a forerunner of "Sex and the City," whose programs tell women that “all men are unfaithful rats, abusive monsters, dishonest scumbags, or all of the above.” Women, however, are “ubervictims.”
These would be Marxist Hillary Clinton's base support: Leeching, whining, dependent females who want mother government to provide for their every need in life ("women's issues") and who care nothing for the supreme law of the land, the U.S. Constitution. The shift went from women being the center and strength of the family, not afraid to defend her own, to victim hood where the shrill cry for mother government to protect them - especially from law abiding gun owners - has risen ad nauseum.
Women, guns, history
Sue Munday, alias, Lieutenant Flowers, wore the Confederate uniform, operating principally in Kentucky during the Civil War. Bridget Divers served throughout the same war with the 1st Michigan Cavalry.[1] When the settlers came West, women wore guns to protect themselves and they weren't afraid of using one against a man who would take their body or threaten their children. Throughout the history of this Republic, our citizenry has always been an armed society and for good reason:
"To preserve liberty, it is essential that the whole body of the people always possess arms, and be taught alike, especially when young, how to use them." Richard Henry Lee, Virginia delegate to the Continental Congress, Initiator of the Declaration of Independence, and member of the first Senate, which passed the Bill of Rights.
The police don't have to protect you
Gun control makes victims of women. For those women who think that just because they call 9-11 when a couple of big bruisers break into their home - if they even have the time or opportunity to get to the phone - that the police are obligated to run right over and save their bacon are wrong. Dead wrong. The courts have repeatedly ruled that law enforcement do not have a duty to protect you or your property. Those three to five minutes it takes a squad car (if that quick) to get to your home or apartment can very well mean the difference between life and death. If the two legged predators out there got the message that women have guns in their homes and will use them, guess whose home they're going to skip on rape night out with the boys?
Not to mention the fact that ownership of a gun is REQUIRED under the Second Amendment. This is a fact the gun grabbers and sissy men in this country continue to deliberately ignore. Many times I have written about the absolute necessity of reconstituting the organized militia under the states, citing the brilliant work of Dr. Edwin Vieira. Those teachers here in Texas have taken an important first step, but every supporter of the Second Amendment must understand that our very survival depends on getting the first state to implement Edwin's carefully crafted plan of action. When there is societal breakdown, i.e., result of a massive financial collapse, local law enforcement will not be able to handle the situation - just like they couldn't during Katrina.
If you think I'm just blowing smoke, you're wrong. The powers that be don't want you to know these facts, they want the masses to buckle under to martial law on the whim of a sitting president "for their own good." This is the reason for conditioning the American people beginning back in 1997, Sacramento Bee: "Our Civilian-Military Face-Off : Bill of Rights No Obstacle for the [Marine] Corps." This piece exposed the mindset way back then that at some point due to: "...the rising potential for civil disobedience within the inner cities it is 'inevitable' the U.S. military will be employed more often within American borders."
The elites who rule this country know the American people have caught onto their plans for destroying this constitutional republic. There is no way to stop this financial disintegration no matter how many oceans of money are thrown onto the fire, and as I've said before, hungry bellies make for angry mobs. As well as recent armed stand off incidents when the Sheriff came to remove owners from their foreclosed home. All of these factors are why we have seen the paramilitiarization of local law enforcement over the past dozen years and military exercises being conducted in urban areas. This melt down has been underway a long time and is now out of control. The beast is devouring itself (see link 4 below).
What we're seeing right now is the lull before the tsunami as the ruling elite try to hold things together before the pretend elections in November. But, you just wait until the first quarter of next year. If Americans think the No Change duo of McCain and Obama can "fix" things, they will be the next wave of beggars. The destroyers have brought horrible pain to millions of people with the banking crisis (which Edwin Vieira has warned about for over thirty years and which has now come to pass) with the worst yet to come. Gold is being beaten down and the market manipulated. It's a crime underway in full view of the American people who simply have no understanding of what's happening to them.
As I have urged for years, diversify some of your assets into gold and don't wait until it's too late because too late is fast approaching. I've warned over the years (September 28, 2004, October 10, 2005, July 10, 2006, August 13, 2007, October 4, 2007, January 31, 2008, June 19, 2008) CON-gress would do nothing to stop the meltdown, just as both parties have allowed the energy crisis to build to where we are today. We all like to deal with people we trust, so I do recommend two individuals from El Dorado Gold: Harvey (Phoenix area) 602.228.8203 and Eric in the Florida area, 623.643.8785. Right now is the time to acquire some to protect what you have left.
We have to get one state to make the first move in reconstituting the organized militia of the states, but it won't happen unless YOU go after your state legislators now and stay in their face. If they are voted out in November, go after the new ones the day the new sessions open in January, 2009. Read Dr. Vieira's scholarly columns on the banking crisis and why the organized militias of the States MUST be reconstituted; see here. I've also put some of Edwin's material on audio. You can listen on the Internet, download to your IPod or a CD and listen while you drive at no cost. Just go to my web site (www.devvy.com) and click on the audio section.
I also can't highly recommend enough that you get Edwin's book, Constitutional Homeland Security: A Call for Americans to Revitalize the Militia of the Several States, Volume I, The Nation in Arms. Read it and act together with your gun group. Put the pressure on - especially in states like Montana, Idaho, Nevada and Virginia. Give a copy of Edwin's book to Second Amendment leaders in your state. Tell them this is critical to the survival of this country and a free people. It cannot be ignored because it's not politically correct.
Freedom is for the brave hearts.
The Elusive Bottom
We aren't past the halfway point of this recession
My sense is that we probably aren't even past the halfway point yet of this recession, the credit losses or the house price deflation. Looking at whether equities may have bottomed or not on an intermediate basis, maybe the recent action to the negative side was an important inflection. In terms of what I do, which is trying to tie the macro into the markets, I have a very tough time believing that we have reached anything close to a fundamental low, either in the S&P 500 or in the long-bond yield, for that matter.
300-point rallies in the Dow happen in bear markets
We're in a very confusing atmosphere. People didn't really know what to make of a 300-point rally in the Dow the other day, but my main message was that 300point rallies from the Dow don't happen in bull markets. In fact, they never happened in the bull market from October '02 to October '07, but it has happened 6 times in this bear market and happened 12 times in the last bear market. You don't get moves like that in bull markets. As Rich Bernstein has said time and again, "This is the hallmark of a recession and a hallmark of a bear market."
How can there be recession with GDP still positive?
We are at a crossroad in the economy. The 2Q GDP numbers recently came in at plus 1.9%. The details of the number left a little to be desired, but it was still a positive number. Turn on CNBC, and everybody says, "How can there possibly be a recession with GDP positive?"
Employment has been down seven months in a row
The very next day we got nonfarm payrolls. It prints down 51,000 and frankly, it doesn't matter whether it was below or above Wall Street expectations. The bottom line is that employment is down seven months in a row. In 60 years of sifting through the data here, that's never happened before without the economy being in a classic recession.
GDP is useful but it has its limitations
I think the point that has to be made as an economist talking to a group of portfolio managers or FAs or investors, it is important to convey to clients that there is a lot of noise out there. GDP is useful, but it has its limitations. First, GDP is going to get revised. We thought we had a plus 0.6 in the fourth quarter; all of a sudden, it's minus 0.2. Twenty percent of GDP is government. So, you really can't fully concentrate on GDP when a fifth of it is state, local and federal government, unless you're trading defense stocks.
You'll miss a lot of action waiting for GDP to go negative
More to the point, if you're waiting as an investor for GDP to actually turn negative, you're going to miss a lot of action along the way. I think the best example is to just go back to Japan. They had a real estate bubble that turned bust and they had their own credit contraction back in the early 1990s. Guess what; Japan didn't post its first back-to-back contraction of real GDP until the second half of 1993. By the time the back-to-back negative that people seem to be waiting for happened, the Nikkei had already plunged 50%, the 10-year JGB yield rallied 300 basis points, and the Bank of Japan had cut the overnight rate 500 basis points, which said a thing or two about the efficacy of using the traditional monetary policy response of cutting interest rates into a credit contraction (as we're now finding out here in the US).
The point is we can't make the assumption that we've avoided a recessionary condition in the economy, just because we have so far managed to avoid back-toback quarters of negative GDP. I'm just telling you as the economist that it is basically irrelevant. The only body that officially makes the call on the broad contours - when the recession started, when it ends, when the expansion starts, when it ends - is the National Bureau of Economic Research, the NBER. It's a very scientific process. It's not a gut check or a judgment call.
We should actually be welcoming the recession call
When they make the determination - it's very interesting, by the way - when they make the announcement that the recession began, when they actually date it for us, traditionally we're a month away from the recession actually ending. The announcement, in fact, is going to be a rather cathartic event, something we should actually welcome happening, but so far they are still taking their sweet time in making the proclamation.
Four factors used to determine recession
1) Employment
The NBER relies on four different variables. The first is employment. Now I've told you before; employment is down seven months in a row. Does employment go in the GDP? The answer is no. Is it correlated? Yes. Does it help grow the business cycle? Of course.
2) Industrial production
The next variable is industrial production. Does that go into GDP? The answer is no. Does it help grow the business cycle? The answer is yes. This is a number that comes from the Fed. The GDP comes from the Commerce Department. It's a very important variable.
3) Real personal income net government transfers
The next variable, the third one, is real personal income excluding government transfers. This metric is now down four months in a row. Does personal income go into GDP? The answer is no; of course, it doesn't. GDP is all about spending. Personal income goes into gross domestic income, which is another chart of the national accounts.
4) Real sales activity
The fourth variable and the only variable that actually feeds into GDP is real sales activity in manufacturing, retail and wholesale sectors.
Recession probably started in January
When I take a look at these four key indicators that define the broad contours of the business cycle, they all peaked and began to roll over sometime between October of last year and February of this year. I am convinced that when the NBER does make the final proclamation, it will tell us a that recession officially began in January. Of course, to any market person, this would make perfect sense, because of when the S&P 500 peaked. It did a double top into October, right when it usually does, before a recession begins.
This recession won't end before mid-2009, in our view
There is a good chance we test the 2002 lows
With that being respectful to the fact, I believe we're in a secular bear market. I don't even think that's an opinion anymore. I think it's a stylized fact. If you saw it, Rich Bernstein put out his performance asset mix table. Out of all the asset classes, stocks, cash, bonds, commodities, the only one to have a negative inflation-adjusted return over the past 10 years is the S&P 500. So I think we have to be honest about this. If it's something like a 1929 and 1955 or 1966, 1982 type of secular bear market, I think this one actually started in 2000, it doesn't mean that you don't get cyclical bull markets along the way. We actually had a cyclical bull market in the context of a secular bear market that actually took the S&P to a new high. Of course, as I said before, half of that was unprecedented leverage, the stone process of unwinding.
I think that it is important now to recognize for our clients that we have a cyclical bear market being overlaid into a secular bear market. I think the message that we're trying to send is that there is a different investing style and strategy for every part of the business cycle. One part of the business cycle is all about adding ... data and risk to maximize your turns. Then there are times when it is all about preserving your capital and focusing on income, earnings, stability and dividend growth. I think that's where we have been, and I firmly believe that's where we will continue to be, at least over the course of the next 12 months.
Chapter 1 was the end of the res construction bubble
When I look at where we are in this book, and we continue to write chapters in this book and it is a book; this is an epic period. We are living through history. People will be writing about this in the future, no different than they wrote about the 1920s and the 1930s. Chapter one of the book was the end of the residential construction bubble, which I would tag as the first quarter of 2006, when housing started to peak and began to roll over at 2.3 million units. I continue to look back at that, 2.3 million units.
The natural level of demographic demand for housing in this country is annual demand of 1.45 million units. From 2003 until 2007, builders added on average nearly 2 million residential units per year, or 30% more, than the natural demand could absorb, because, of course, we were in a new paradigm. So the builders were building homes and condos as if we had the same demographics as the 1970s when the Boomers were buying their first refrigerator. This is a case of Global Crossing meeting D.R. Horton, and we are paying the price for that, even today.
Chapter two was the end of the home price bubble
Chapter two of the book was the end of the home-price bubble, and I would date that to the first quarter of 2007 when the Case-Shiller Index began to deflate year over year. Now, I want to make this point, and I want to make this point emphatically. Home prices in this country on average rose 20% per year for six years. That has never happened before. When you take a look at home prices in real terms, they're still more than 30% higher today than they were when this mania morphed into a bubble back in 2001. So to those people who are thinking that we're only 5% away from the low, I'd say I don't think so. Make no mistake that there is going to be more deflation in home prices ahead - I think significant deflation - just as Freddie Mac put us on notice yesterday.
Chapter three was the end of the credit cycle
The third chapter was the end of the credit cycle, which, again, I would tag at exactly a year ago. I think the way we have to look at this, and we're talking about how this affects our ability to navigate the portfolio and manage the macro forecast. This cycle saw the end of a 20-year secular credit expansion that went absolutely parabolic in the last 6 years and accounted for half the growth in just about every segment that's forecast.
Chapter four was the end of the employment cycle
This is very big stuff and it's taking on different forms. We have the end of the credit cycle as chapter three. Chapter four was the end of the employment cycle, which I discussed earlier, which started in December of 2007.
Chapter 5 is the first consumer recession since 1990-91
We're heading into chapter five, and chapter five is the onset of the first consumer recession since 1990-91. I would argue this could end up being very similar to that six-quarter consumer recession that we endured from 1973-75. There are differences, but there are similarities. A lot of people like to compare this to 199091, because of the real estate flavor and the credit crunch, but there is actually a lot more going on that compares it to 1975.
I was around in the 1980s, and I remember that it played out very similarly. What people called resilience and people called contained and people called decoupling were all very pleasant euphemisms for lags. That's what they are; they're lags. There are built-in lags. Housing peaked in 1988, rolled over, the credit crunch intensified in 1989 when RTC got into real action. Then 1990 ... two years after housing peaked, we had this very surprising consumer recession that caught even the Fed off guard.
The Four Horsemen
I wrote a report late last year titled The Four Horsemen. It was a regretful choice of words, because I kept on fielding questions as to whether or not I was, in fact, calling for the end of the world. I got to a point where my answer was "Just wait; it's going to get worse than that." In any event, who are the four horsemen? The four horsemen are credit contraction, deflation of both housing and equities, and that happened in the mid-1970s. Usually you'll get one or the other. To have both housing and equities deflate on the household balance sheet, we're talking about $30 trillion of assets. Half the assets on the household balance sheet are compressing dramatically right now. That last happened in the mid-1970s. We got credit contraction. We got deflation on the asset side of the household balance sheet that's forcing the savings rate higher. We have employment, which I mentioned before.
Of course, food and energy - and, again, not just energy, but energy and food - and food is a bigger deal. Food is 15% of the household budget; energy is 10%. That's a quarter of the household budget constrained by food and energy. Food is going to come down at a slower rate than energy will, but it's already too late.
Oil prices are going down because demand is going down
People are saying to me all the time, "Gee, aren't you going to turn more bullish with oil prices going down?" Well, oil prices are going down, because for the first time in this cycle it took $145 to break the back of the consumer. Quite amazing that it took that long, but it has happened. So we're seeing true demand destruction in energy at a rate we haven't seen in almost two decades.
It's something to get an oil price decline that's predicated on a new oil supply. I would keep that as a de facto exogenous tax cut; but when you're getting oil price declines because of recessionary pressures cutting into energy demand, it's no different than what happened in late 2000. That was the last time we had oil peel off as much as it is right now. I think it would have been a bit of a mistake for the economists at the end of 2000 to say, "Ah-ha, oil is coming down; I'm going to raise my 2001 GDP forecast." You have to take a look at the reason why oil is going down, and the reason is not because of supply. The reason is because consumer demand is starting to go down. Again, the last time you had food and energy deviating so much from the long-run norm was in the mid-1970s.
Cash flow drain to household sector is $800 billion
When I take a look at the four horsemen and I try to come up with a number, the number I'm trying to come up with is a cash flow number. What is the cash flow drain on the household sector from the four horsemen in the coming year? The answer is $800 billion. So Uncle Sam, give me six more of those tax stimulus plans. That is a huge number. It's equivalent to 12% of discretionary spending, which, by the way, is exactly the peak-to-trough decline in real consumer cyclical spending back in that 1973 to 1975 recession. The S&P 500 goes down peak to trough not by 20%, but more like 40%.
Three markers to turn us bullish
In terms of what are some of the markers that I'm weighing down to turn more bullish? I think this is very important. I look at not so much where am I going to be wrong, but looking at what are the things that will turn me more positive? There are three markers that I have laid down. The first marker is the personal savings rate. I have to see the personal savings rate go back to the pre-bubbles, normalized levels, which was 8%. I'm not talking about the Jurassic period here. I'm talking about where we were in the late 1980s and the early 1990s, before the last two bubbles. That's why I said plural.
We had a tech stock bubble followed very quickly by a housing bubble. This had tremendous implications for perceived net worth and perceived future asset growth of the household sector. It had monumental impact on how people spent their after-tax income. That's why we got to a point last year where briefly the savings rate got to negative for the first time since the 1920s. There was a belief system that we could retire on our assets, and now these assets are deflating and people's expectations of how they're going to retire is going to force that savings rate higher. That's going to be very disinflationary, by the way.
I think it's important to note that, in 2002, as the tech sector was deflating, Greenspan and Bernanke decided that it was a good idea to re-slate the housing stock as an antidote to the deflation in the tech capital stock. This is almost a piece of Mary Shelley's Frankenstein; we built the monster, now we have to tear it down. I don't know what else is left. We've had an equity bubble followed by a housing bubble, followed by a credit bubble. I don't think there are any more rabbits in the hat to create the next bubble, unless that bubble is going to be in Treasuries, and maybe that is, in fact, going to happen. It's pretty clear that the Fed is going to be concentrating a lot more in the future on non-traditional measures to ease monetary conditions, and not just cutting the Fed fund rate. Part of that may be reflating by expanding its balance sheet, which means that it's not just talk. The Fed is actually going to add to its balance sheet, and that's exactly what happened.
1) Need to see the savings rate go to eight percent
With the Bank of Japan and the operations they conducted back in the 1990s, this is just stuff to consider for the future. Let me just say that a savings rate of 8% would leave me feeling very good about the fact that we would have gone to a level of pent-up demand that would help us embark on the next bull market and economic expansion. That's going to take quite a bit of time. This is a process. This a process we're talking, even after the recession ends, that's going to be an elongated recovery, as there was in the early 1990s, after that asset cycle. Remember, the recession might have ended in November 2001, but that did not give you a "get out of jail free" card as an equity investor, and certainly the recovery was a good two years away, even if the recession technically ended at the end of 2001. I'm talking about the markers that will turn me bullish for the next cycle. An eight percent savings rate, to me, would be a very critical launching pad.
2) Months supply below eight months
What else? Well, I doubt that anything is really going to bottom, including the financials, until we're convinced that house prices have hit bottom. For that we have to look at the inventory to sales ratio, and there are different measures. There is the new inventory, which is a 10-month supply. There's the resale; that's 11-month supply. When I take a look at the Census Bureau data, which includes total vacant units for sale, single-family, condo, it's more like 17-month supply. We need to include everything, including foreclosed properties. I have to see that number sliced in half. I have to see it down below eight months supply before I'll be convinced home prices don't bottom, at least the second derivatives start to turn positive. I have to see that metric at the eight-month supply. I'm keeping a very close eye on it. That will make me feel a lot more comfortable with turning bullish for the next cycle.
3) Interest coverage ratio has to come down to 10.5%
The third and last marker comes down to the household balance sheet. What I'm referring to here is interest coverage in the household sector. We have a record debt-income ratio, but that's a stop-to-flow concept. I'm talking about interest coverage, how much are principal and interest payments from the record debt absorbing out of household income? It is 14.1%. It's at a near-record high. We have never been in a recession with this metric at this level. So, that means there are too many things that are levels we've never seen before. The whole thing about economic bottling is you run the rest of it based on the past, and there are so many things that we're entering into this thing that I've never seen before.
There is, I'd have to admit, a wide dispersion around the forecast I am providing. What I am really trying to do is put things into a certain perspective. What I know, being an economist, is that in some sense you're a glorified historian. So when I take a look at the chart of interest coverage in the household sector, what do I see? I see that after the recession of the early 1980s, this interest coverage ratio got down to 10.5% by 1982 and, voila, that was the touch-off point for a multi-year bull market and economic expansion.
Then we had the recession of the early 1990s, and what do you know? In 1992, interest coverage went down to 10.5% again. That was the launching pad for a multi-year bull market and economic expansion. We're 14.1% in this metric today. I know this historical record tells me that there is something about a 10.5% ratio that is a very cathartic event. The problem is that to get there from here would require the elimination of $2 trillion of household debt. So, maybe when NYU's Nouriel Roubini talks about that the total losses could be up to $2 trillion, maybe he's not talking through a paper bag.
Frugality is going to set in
As far as I know, there are only two ways to eliminate debt. You either walk away from it, which people obviously are doing, which is why we got these write-downs and these foreclosures, or you pay it down. I think people with a FICO score that they are concerned about are going to pay that down. That means that the savings rate is going to be forced higher. This, again, is going to be very, very disinflationary. It means that fashions are going to change. It means frugality is going to set in. We're going to be living in smaller houses, driving smaller cars and living more frugally. It's not going to be the end of the world; it's going to be a necessary process to truly embark on getting the balance sheets down to more comfortable levels so that we can actually embark on the next cycle.
Intense deleveraging in the banking sector
The whole thing about being an economist is that you're being requested to model behavior. What I found recently was three signs of significant changes in behavior. We obviously know of at least one investment bank that is taking aggressive action to sell assets and to deleverage. That's going to force a lot of action in other parts of the industry. What we're talking about here is intensified deleveraging in the banking sector.
Inventories cut by $62 billion despite tax stimulus
What else did we see? Well, those GDP numbers were just fascinating when you dig through them. Think about it for a second. How did businesses respond to the biggest tax stimulus of all time? They cut their inventory by $62 billion. Can you fathom that? Instead of boosting production as a result of the stimulus, they just allowed the stimulus to absorb past production. We already know that the inventory component went down another five points based on the July ISM number, so this inventory liquidation process is continuing.
Savings rate boosted despite stimulus too
Alan Greenspan cut his teeth on inventory investment cycles. So banks are deleveraging, and companies are liquidating inventories. How did households respond to the biggest tax stimulus of all time? They boosted their savings rate from 0.3% in the first quarter to 2.6% in the second quarter, which is only the third steepest increase in the savings rate in any given quarter in the past 55 years. Now you probably didn't read that in the front page of The Wall Street Journal, but I find that to be a very relevant statistic.
So we have financial sector deleveraging. We have business sector inventory liquidation overlaid with the households boosting their savings rate. These are new themes, and the theme is about getting small. That's going to play very well into Rich Bernstein's decision two months ago to allocate an extra 15 percentage points to his fixed income portfolio. Now we're talking about fixed income. We're talking about bonds that are high quality and have non-callable protection.
Nominal GDP growth has highest correlation with yields
I'll tell you that the really key forecast next year coming from the economics department here is the nominal GDP, nominal, price times quantity, because we're calling for nominal GDP growth next year to average 1.5%. That is going to be very bullish for sectors that have proven earnings stability and reliable dividend growth, and it's going to be very bullish for bonds. I say that, because I know that the critical driving factor for bonds is not fiscal deficits. It's not the dollar and, guess what, it's not commodities. Nominal GDP growth has the highest correlation. People look and they say, "Four percent 10-year note; who'd want to touch it?" The reality is that nominal GDP growth this year is averaging 4%. The fact that the 10-year note is averaging 4% is not really a big mystery, if you're looking at the macro underpinnings.
Now, if I'm right on 1.5% nominal GDP growth for next year, all I can tell you is that the last time we had a condition like that was in 1958. All I can tell you is that 1958, the funds rate averaged to 1.5% and the 10-year note averaged 3%. If you're going to ask me if we have a realistic chance of going back and retesting the June 2003 lows and the 10-year note or the March 2008 lows and the 10-year note, I firmly believe that's going to happen. I believe that's going to also provide you with very handsome total returns.
Your glad to see oil dropping in price analyst,
John Mauldin
My sense is that we probably aren't even past the halfway point yet of this recession, the credit losses or the house price deflation. Looking at whether equities may have bottomed or not on an intermediate basis, maybe the recent action to the negative side was an important inflection. In terms of what I do, which is trying to tie the macro into the markets, I have a very tough time believing that we have reached anything close to a fundamental low, either in the S&P 500 or in the long-bond yield, for that matter.
300-point rallies in the Dow happen in bear markets
We're in a very confusing atmosphere. People didn't really know what to make of a 300-point rally in the Dow the other day, but my main message was that 300point rallies from the Dow don't happen in bull markets. In fact, they never happened in the bull market from October '02 to October '07, but it has happened 6 times in this bear market and happened 12 times in the last bear market. You don't get moves like that in bull markets. As Rich Bernstein has said time and again, "This is the hallmark of a recession and a hallmark of a bear market."
How can there be recession with GDP still positive?
We are at a crossroad in the economy. The 2Q GDP numbers recently came in at plus 1.9%. The details of the number left a little to be desired, but it was still a positive number. Turn on CNBC, and everybody says, "How can there possibly be a recession with GDP positive?"
Employment has been down seven months in a row
The very next day we got nonfarm payrolls. It prints down 51,000 and frankly, it doesn't matter whether it was below or above Wall Street expectations. The bottom line is that employment is down seven months in a row. In 60 years of sifting through the data here, that's never happened before without the economy being in a classic recession.
GDP is useful but it has its limitations
I think the point that has to be made as an economist talking to a group of portfolio managers or FAs or investors, it is important to convey to clients that there is a lot of noise out there. GDP is useful, but it has its limitations. First, GDP is going to get revised. We thought we had a plus 0.6 in the fourth quarter; all of a sudden, it's minus 0.2. Twenty percent of GDP is government. So, you really can't fully concentrate on GDP when a fifth of it is state, local and federal government, unless you're trading defense stocks.
You'll miss a lot of action waiting for GDP to go negative
More to the point, if you're waiting as an investor for GDP to actually turn negative, you're going to miss a lot of action along the way. I think the best example is to just go back to Japan. They had a real estate bubble that turned bust and they had their own credit contraction back in the early 1990s. Guess what; Japan didn't post its first back-to-back contraction of real GDP until the second half of 1993. By the time the back-to-back negative that people seem to be waiting for happened, the Nikkei had already plunged 50%, the 10-year JGB yield rallied 300 basis points, and the Bank of Japan had cut the overnight rate 500 basis points, which said a thing or two about the efficacy of using the traditional monetary policy response of cutting interest rates into a credit contraction (as we're now finding out here in the US).
The point is we can't make the assumption that we've avoided a recessionary condition in the economy, just because we have so far managed to avoid back-toback quarters of negative GDP. I'm just telling you as the economist that it is basically irrelevant. The only body that officially makes the call on the broad contours - when the recession started, when it ends, when the expansion starts, when it ends - is the National Bureau of Economic Research, the NBER. It's a very scientific process. It's not a gut check or a judgment call.
We should actually be welcoming the recession call
When they make the determination - it's very interesting, by the way - when they make the announcement that the recession began, when they actually date it for us, traditionally we're a month away from the recession actually ending. The announcement, in fact, is going to be a rather cathartic event, something we should actually welcome happening, but so far they are still taking their sweet time in making the proclamation.
Four factors used to determine recession
1) Employment
The NBER relies on four different variables. The first is employment. Now I've told you before; employment is down seven months in a row. Does employment go in the GDP? The answer is no. Is it correlated? Yes. Does it help grow the business cycle? Of course.
2) Industrial production
The next variable is industrial production. Does that go into GDP? The answer is no. Does it help grow the business cycle? The answer is yes. This is a number that comes from the Fed. The GDP comes from the Commerce Department. It's a very important variable.
3) Real personal income net government transfers
The next variable, the third one, is real personal income excluding government transfers. This metric is now down four months in a row. Does personal income go into GDP? The answer is no; of course, it doesn't. GDP is all about spending. Personal income goes into gross domestic income, which is another chart of the national accounts.
4) Real sales activity
The fourth variable and the only variable that actually feeds into GDP is real sales activity in manufacturing, retail and wholesale sectors.
Recession probably started in January
When I take a look at these four key indicators that define the broad contours of the business cycle, they all peaked and began to roll over sometime between October of last year and February of this year. I am convinced that when the NBER does make the final proclamation, it will tell us a that recession officially began in January. Of course, to any market person, this would make perfect sense, because of when the S&P 500 peaked. It did a double top into October, right when it usually does, before a recession begins.
This recession won't end before mid-2009, in our view
There is a good chance we test the 2002 lows
With that being respectful to the fact, I believe we're in a secular bear market. I don't even think that's an opinion anymore. I think it's a stylized fact. If you saw it, Rich Bernstein put out his performance asset mix table. Out of all the asset classes, stocks, cash, bonds, commodities, the only one to have a negative inflation-adjusted return over the past 10 years is the S&P 500. So I think we have to be honest about this. If it's something like a 1929 and 1955 or 1966, 1982 type of secular bear market, I think this one actually started in 2000, it doesn't mean that you don't get cyclical bull markets along the way. We actually had a cyclical bull market in the context of a secular bear market that actually took the S&P to a new high. Of course, as I said before, half of that was unprecedented leverage, the stone process of unwinding.
I think that it is important now to recognize for our clients that we have a cyclical bear market being overlaid into a secular bear market. I think the message that we're trying to send is that there is a different investing style and strategy for every part of the business cycle. One part of the business cycle is all about adding ... data and risk to maximize your turns. Then there are times when it is all about preserving your capital and focusing on income, earnings, stability and dividend growth. I think that's where we have been, and I firmly believe that's where we will continue to be, at least over the course of the next 12 months.
Chapter 1 was the end of the res construction bubble
When I look at where we are in this book, and we continue to write chapters in this book and it is a book; this is an epic period. We are living through history. People will be writing about this in the future, no different than they wrote about the 1920s and the 1930s. Chapter one of the book was the end of the residential construction bubble, which I would tag as the first quarter of 2006, when housing started to peak and began to roll over at 2.3 million units. I continue to look back at that, 2.3 million units.
The natural level of demographic demand for housing in this country is annual demand of 1.45 million units. From 2003 until 2007, builders added on average nearly 2 million residential units per year, or 30% more, than the natural demand could absorb, because, of course, we were in a new paradigm. So the builders were building homes and condos as if we had the same demographics as the 1970s when the Boomers were buying their first refrigerator. This is a case of Global Crossing meeting D.R. Horton, and we are paying the price for that, even today.
Chapter two was the end of the home price bubble
Chapter two of the book was the end of the home-price bubble, and I would date that to the first quarter of 2007 when the Case-Shiller Index began to deflate year over year. Now, I want to make this point, and I want to make this point emphatically. Home prices in this country on average rose 20% per year for six years. That has never happened before. When you take a look at home prices in real terms, they're still more than 30% higher today than they were when this mania morphed into a bubble back in 2001. So to those people who are thinking that we're only 5% away from the low, I'd say I don't think so. Make no mistake that there is going to be more deflation in home prices ahead - I think significant deflation - just as Freddie Mac put us on notice yesterday.
Chapter three was the end of the credit cycle
The third chapter was the end of the credit cycle, which, again, I would tag at exactly a year ago. I think the way we have to look at this, and we're talking about how this affects our ability to navigate the portfolio and manage the macro forecast. This cycle saw the end of a 20-year secular credit expansion that went absolutely parabolic in the last 6 years and accounted for half the growth in just about every segment that's forecast.
Chapter four was the end of the employment cycle
This is very big stuff and it's taking on different forms. We have the end of the credit cycle as chapter three. Chapter four was the end of the employment cycle, which I discussed earlier, which started in December of 2007.
Chapter 5 is the first consumer recession since 1990-91
We're heading into chapter five, and chapter five is the onset of the first consumer recession since 1990-91. I would argue this could end up being very similar to that six-quarter consumer recession that we endured from 1973-75. There are differences, but there are similarities. A lot of people like to compare this to 199091, because of the real estate flavor and the credit crunch, but there is actually a lot more going on that compares it to 1975.
I was around in the 1980s, and I remember that it played out very similarly. What people called resilience and people called contained and people called decoupling were all very pleasant euphemisms for lags. That's what they are; they're lags. There are built-in lags. Housing peaked in 1988, rolled over, the credit crunch intensified in 1989 when RTC got into real action. Then 1990 ... two years after housing peaked, we had this very surprising consumer recession that caught even the Fed off guard.
The Four Horsemen
I wrote a report late last year titled The Four Horsemen. It was a regretful choice of words, because I kept on fielding questions as to whether or not I was, in fact, calling for the end of the world. I got to a point where my answer was "Just wait; it's going to get worse than that." In any event, who are the four horsemen? The four horsemen are credit contraction, deflation of both housing and equities, and that happened in the mid-1970s. Usually you'll get one or the other. To have both housing and equities deflate on the household balance sheet, we're talking about $30 trillion of assets. Half the assets on the household balance sheet are compressing dramatically right now. That last happened in the mid-1970s. We got credit contraction. We got deflation on the asset side of the household balance sheet that's forcing the savings rate higher. We have employment, which I mentioned before.
Of course, food and energy - and, again, not just energy, but energy and food - and food is a bigger deal. Food is 15% of the household budget; energy is 10%. That's a quarter of the household budget constrained by food and energy. Food is going to come down at a slower rate than energy will, but it's already too late.
Oil prices are going down because demand is going down
People are saying to me all the time, "Gee, aren't you going to turn more bullish with oil prices going down?" Well, oil prices are going down, because for the first time in this cycle it took $145 to break the back of the consumer. Quite amazing that it took that long, but it has happened. So we're seeing true demand destruction in energy at a rate we haven't seen in almost two decades.
It's something to get an oil price decline that's predicated on a new oil supply. I would keep that as a de facto exogenous tax cut; but when you're getting oil price declines because of recessionary pressures cutting into energy demand, it's no different than what happened in late 2000. That was the last time we had oil peel off as much as it is right now. I think it would have been a bit of a mistake for the economists at the end of 2000 to say, "Ah-ha, oil is coming down; I'm going to raise my 2001 GDP forecast." You have to take a look at the reason why oil is going down, and the reason is not because of supply. The reason is because consumer demand is starting to go down. Again, the last time you had food and energy deviating so much from the long-run norm was in the mid-1970s.
Cash flow drain to household sector is $800 billion
When I take a look at the four horsemen and I try to come up with a number, the number I'm trying to come up with is a cash flow number. What is the cash flow drain on the household sector from the four horsemen in the coming year? The answer is $800 billion. So Uncle Sam, give me six more of those tax stimulus plans. That is a huge number. It's equivalent to 12% of discretionary spending, which, by the way, is exactly the peak-to-trough decline in real consumer cyclical spending back in that 1973 to 1975 recession. The S&P 500 goes down peak to trough not by 20%, but more like 40%.
Three markers to turn us bullish
In terms of what are some of the markers that I'm weighing down to turn more bullish? I think this is very important. I look at not so much where am I going to be wrong, but looking at what are the things that will turn me more positive? There are three markers that I have laid down. The first marker is the personal savings rate. I have to see the personal savings rate go back to the pre-bubbles, normalized levels, which was 8%. I'm not talking about the Jurassic period here. I'm talking about where we were in the late 1980s and the early 1990s, before the last two bubbles. That's why I said plural.
We had a tech stock bubble followed very quickly by a housing bubble. This had tremendous implications for perceived net worth and perceived future asset growth of the household sector. It had monumental impact on how people spent their after-tax income. That's why we got to a point last year where briefly the savings rate got to negative for the first time since the 1920s. There was a belief system that we could retire on our assets, and now these assets are deflating and people's expectations of how they're going to retire is going to force that savings rate higher. That's going to be very disinflationary, by the way.
I think it's important to note that, in 2002, as the tech sector was deflating, Greenspan and Bernanke decided that it was a good idea to re-slate the housing stock as an antidote to the deflation in the tech capital stock. This is almost a piece of Mary Shelley's Frankenstein; we built the monster, now we have to tear it down. I don't know what else is left. We've had an equity bubble followed by a housing bubble, followed by a credit bubble. I don't think there are any more rabbits in the hat to create the next bubble, unless that bubble is going to be in Treasuries, and maybe that is, in fact, going to happen. It's pretty clear that the Fed is going to be concentrating a lot more in the future on non-traditional measures to ease monetary conditions, and not just cutting the Fed fund rate. Part of that may be reflating by expanding its balance sheet, which means that it's not just talk. The Fed is actually going to add to its balance sheet, and that's exactly what happened.
1) Need to see the savings rate go to eight percent
With the Bank of Japan and the operations they conducted back in the 1990s, this is just stuff to consider for the future. Let me just say that a savings rate of 8% would leave me feeling very good about the fact that we would have gone to a level of pent-up demand that would help us embark on the next bull market and economic expansion. That's going to take quite a bit of time. This is a process. This a process we're talking, even after the recession ends, that's going to be an elongated recovery, as there was in the early 1990s, after that asset cycle. Remember, the recession might have ended in November 2001, but that did not give you a "get out of jail free" card as an equity investor, and certainly the recovery was a good two years away, even if the recession technically ended at the end of 2001. I'm talking about the markers that will turn me bullish for the next cycle. An eight percent savings rate, to me, would be a very critical launching pad.
2) Months supply below eight months
What else? Well, I doubt that anything is really going to bottom, including the financials, until we're convinced that house prices have hit bottom. For that we have to look at the inventory to sales ratio, and there are different measures. There is the new inventory, which is a 10-month supply. There's the resale; that's 11-month supply. When I take a look at the Census Bureau data, which includes total vacant units for sale, single-family, condo, it's more like 17-month supply. We need to include everything, including foreclosed properties. I have to see that number sliced in half. I have to see it down below eight months supply before I'll be convinced home prices don't bottom, at least the second derivatives start to turn positive. I have to see that metric at the eight-month supply. I'm keeping a very close eye on it. That will make me feel a lot more comfortable with turning bullish for the next cycle.
3) Interest coverage ratio has to come down to 10.5%
The third and last marker comes down to the household balance sheet. What I'm referring to here is interest coverage in the household sector. We have a record debt-income ratio, but that's a stop-to-flow concept. I'm talking about interest coverage, how much are principal and interest payments from the record debt absorbing out of household income? It is 14.1%. It's at a near-record high. We have never been in a recession with this metric at this level. So, that means there are too many things that are levels we've never seen before. The whole thing about economic bottling is you run the rest of it based on the past, and there are so many things that we're entering into this thing that I've never seen before.
There is, I'd have to admit, a wide dispersion around the forecast I am providing. What I am really trying to do is put things into a certain perspective. What I know, being an economist, is that in some sense you're a glorified historian. So when I take a look at the chart of interest coverage in the household sector, what do I see? I see that after the recession of the early 1980s, this interest coverage ratio got down to 10.5% by 1982 and, voila, that was the touch-off point for a multi-year bull market and economic expansion.
Then we had the recession of the early 1990s, and what do you know? In 1992, interest coverage went down to 10.5% again. That was the launching pad for a multi-year bull market and economic expansion. We're 14.1% in this metric today. I know this historical record tells me that there is something about a 10.5% ratio that is a very cathartic event. The problem is that to get there from here would require the elimination of $2 trillion of household debt. So, maybe when NYU's Nouriel Roubini talks about that the total losses could be up to $2 trillion, maybe he's not talking through a paper bag.
Frugality is going to set in
As far as I know, there are only two ways to eliminate debt. You either walk away from it, which people obviously are doing, which is why we got these write-downs and these foreclosures, or you pay it down. I think people with a FICO score that they are concerned about are going to pay that down. That means that the savings rate is going to be forced higher. This, again, is going to be very, very disinflationary. It means that fashions are going to change. It means frugality is going to set in. We're going to be living in smaller houses, driving smaller cars and living more frugally. It's not going to be the end of the world; it's going to be a necessary process to truly embark on getting the balance sheets down to more comfortable levels so that we can actually embark on the next cycle.
Intense deleveraging in the banking sector
The whole thing about being an economist is that you're being requested to model behavior. What I found recently was three signs of significant changes in behavior. We obviously know of at least one investment bank that is taking aggressive action to sell assets and to deleverage. That's going to force a lot of action in other parts of the industry. What we're talking about here is intensified deleveraging in the banking sector.
Inventories cut by $62 billion despite tax stimulus
What else did we see? Well, those GDP numbers were just fascinating when you dig through them. Think about it for a second. How did businesses respond to the biggest tax stimulus of all time? They cut their inventory by $62 billion. Can you fathom that? Instead of boosting production as a result of the stimulus, they just allowed the stimulus to absorb past production. We already know that the inventory component went down another five points based on the July ISM number, so this inventory liquidation process is continuing.
Savings rate boosted despite stimulus too
Alan Greenspan cut his teeth on inventory investment cycles. So banks are deleveraging, and companies are liquidating inventories. How did households respond to the biggest tax stimulus of all time? They boosted their savings rate from 0.3% in the first quarter to 2.6% in the second quarter, which is only the third steepest increase in the savings rate in any given quarter in the past 55 years. Now you probably didn't read that in the front page of The Wall Street Journal, but I find that to be a very relevant statistic.
So we have financial sector deleveraging. We have business sector inventory liquidation overlaid with the households boosting their savings rate. These are new themes, and the theme is about getting small. That's going to play very well into Rich Bernstein's decision two months ago to allocate an extra 15 percentage points to his fixed income portfolio. Now we're talking about fixed income. We're talking about bonds that are high quality and have non-callable protection.
Nominal GDP growth has highest correlation with yields
I'll tell you that the really key forecast next year coming from the economics department here is the nominal GDP, nominal, price times quantity, because we're calling for nominal GDP growth next year to average 1.5%. That is going to be very bullish for sectors that have proven earnings stability and reliable dividend growth, and it's going to be very bullish for bonds. I say that, because I know that the critical driving factor for bonds is not fiscal deficits. It's not the dollar and, guess what, it's not commodities. Nominal GDP growth has the highest correlation. People look and they say, "Four percent 10-year note; who'd want to touch it?" The reality is that nominal GDP growth this year is averaging 4%. The fact that the 10-year note is averaging 4% is not really a big mystery, if you're looking at the macro underpinnings.
Now, if I'm right on 1.5% nominal GDP growth for next year, all I can tell you is that the last time we had a condition like that was in 1958. All I can tell you is that 1958, the funds rate averaged to 1.5% and the 10-year note averaged 3%. If you're going to ask me if we have a realistic chance of going back and retesting the June 2003 lows and the 10-year note or the March 2008 lows and the 10-year note, I firmly believe that's going to happen. I believe that's going to also provide you with very handsome total returns.
Your glad to see oil dropping in price analyst,
John Mauldin
Monday, August 18, 2008
Suburban Legend
The American suburb was the greatest misallocation of resources in the history of the world… Why? Because it has no future, because we’re not going to be able to run it…. We don’t have the resource base to run it.
A lot of the delusions that are now rampant in the country all focus on the alternative energy scene. I want to be very clear about this, I am in favor of alternative energy. I think we’re going to do everything we possibly can. But the key to understanding alternative energy is this: First of all, we are going to be disappointed by what it can do for us, and second, it is not going to change the fact that we have to make other arrangements for all the important activities of daily life…
We’re having an incoherent conversation about that in our society right now because of the psychology of previous investment. We’ve invested so much of our wealth and even our identity in the [existing American] way of life that we can’t imagine letting go of it… But the “project of suburbia” is over as a period in our history and the homebuilders are going down and they will not be coming back.
We’re in the process now of losing somewhere between $1.5 and $3 trillion worth of capital. That capital is going to be lost. It went into a black hole and things don’t come out of black holes. We’re not going to have money to lend to people, least of all for mortgages. In fact, the whole idea of mortgage in America may be similar to what happened back in France after the Mississippi bubble. They didn’t even use the word “bank” for 150 years, it was such a toxic word.
And we are facing a huge problem with food. All of the systems of our daily life are going to have to be reformed, whether we like it or not…really. We’re going to have to grow more of our food closer to home. The age of the 3,000-mile Caesar salad is over! We don’t know how much food close to home we are going to have to grow, but at least more than we do now…probably a lot more… This is going to change completely our idea of how we value our rural, so-called undeveloped, land. Right now, we’re still in the frame of mind where undeveloped means undeveloped for suburban crap. But that’s going to be over. From now on it’s going to be land that has needs to be used for agriculture…
But let me step back for a moment, just to give you an idea of the differences between suburban development and urbanism. In suburbia, everything is rigorously and relentlessly segregated from everything else.
You’re not allowed to live near the shopping mall; the school cannot be anywhere near the business. Everything is separated and everybody has to get in the car and go out to the “collector boulevard” then go into the pod, whether it’s the education pod, the business pod, the housing pod and we can’t do that anymore. We can’t afford it, especially from 38 miles outside of Dallas and Minneapolis.
By contrast, traditional urbanism networks of interconnected streets mix use with people living close to the schools, the shopping and the business and it will become self-evident that very soon that that is superior way to live…
We don’t know what the city of the future is going to be like, but I believe our large cities are going to contract substantially, even while they “densify” at their centers… And one of the things we’re going to learn again, as the automobile begins to diminish its presence in our life is how wonderful the composition of the urban block can be, because the center of it is not going to be for parking… We are going to re-learn the design and assembly of human habitat and that too will be a self-organizing process, as we’re compelled to respond to the circumstances of the global energy emergency…
We need a self-image that informs us that we’re confident and that we are competent and that we are capable people. And that’s why one of the first things we have to do is rebuild the railroad systems in America, because it’s the one thing we can do right away that will have the greatest impact on our oil use. It will put thousands and thousands of people to work in all layers and skills. The infrastructure for running it is lying out there rusting in the rain and it’s the one project that we can do right away that will allow us to demonstrate that we can actually do something. We can do a collective project as a nation, as a society, as a people that can actually accomplish something important at this time.
You know…the kids in the college lectures are always asking me if I can give them hope. And the one thing that the college students don’t understand is that they have to become the generators of the hope. They have to generate it themselves within themselves by demonstrating that they are capable people who understand the signals reality is sending to them about the kind of world they are going to be living in the next 20–30 years…
We’ve got to build a different world here in North America now and we don’t have any time to waste. We don’t have time to be crybabies about it. We don’t have time to point fingers. We have too many things to do right away. We’ve got to reform the way we produce our food; we’ve got to change the way we do commerce and trade; we’ve got to change the way we get from point “A” to point “B,” and we have to inhabit the landscape differently and, as far as investors are concerned, we’ve got to find a way to do finance that’s not based on getting something for nothing, because that is what has gotten us into this situation we’re in now.
Regards,
James Howard Kunstler
A lot of the delusions that are now rampant in the country all focus on the alternative energy scene. I want to be very clear about this, I am in favor of alternative energy. I think we’re going to do everything we possibly can. But the key to understanding alternative energy is this: First of all, we are going to be disappointed by what it can do for us, and second, it is not going to change the fact that we have to make other arrangements for all the important activities of daily life…
We’re having an incoherent conversation about that in our society right now because of the psychology of previous investment. We’ve invested so much of our wealth and even our identity in the [existing American] way of life that we can’t imagine letting go of it… But the “project of suburbia” is over as a period in our history and the homebuilders are going down and they will not be coming back.
We’re in the process now of losing somewhere between $1.5 and $3 trillion worth of capital. That capital is going to be lost. It went into a black hole and things don’t come out of black holes. We’re not going to have money to lend to people, least of all for mortgages. In fact, the whole idea of mortgage in America may be similar to what happened back in France after the Mississippi bubble. They didn’t even use the word “bank” for 150 years, it was such a toxic word.
And we are facing a huge problem with food. All of the systems of our daily life are going to have to be reformed, whether we like it or not…really. We’re going to have to grow more of our food closer to home. The age of the 3,000-mile Caesar salad is over! We don’t know how much food close to home we are going to have to grow, but at least more than we do now…probably a lot more… This is going to change completely our idea of how we value our rural, so-called undeveloped, land. Right now, we’re still in the frame of mind where undeveloped means undeveloped for suburban crap. But that’s going to be over. From now on it’s going to be land that has needs to be used for agriculture…
But let me step back for a moment, just to give you an idea of the differences between suburban development and urbanism. In suburbia, everything is rigorously and relentlessly segregated from everything else.
You’re not allowed to live near the shopping mall; the school cannot be anywhere near the business. Everything is separated and everybody has to get in the car and go out to the “collector boulevard” then go into the pod, whether it’s the education pod, the business pod, the housing pod and we can’t do that anymore. We can’t afford it, especially from 38 miles outside of Dallas and Minneapolis.
By contrast, traditional urbanism networks of interconnected streets mix use with people living close to the schools, the shopping and the business and it will become self-evident that very soon that that is superior way to live…
We don’t know what the city of the future is going to be like, but I believe our large cities are going to contract substantially, even while they “densify” at their centers… And one of the things we’re going to learn again, as the automobile begins to diminish its presence in our life is how wonderful the composition of the urban block can be, because the center of it is not going to be for parking… We are going to re-learn the design and assembly of human habitat and that too will be a self-organizing process, as we’re compelled to respond to the circumstances of the global energy emergency…
We need a self-image that informs us that we’re confident and that we are competent and that we are capable people. And that’s why one of the first things we have to do is rebuild the railroad systems in America, because it’s the one thing we can do right away that will have the greatest impact on our oil use. It will put thousands and thousands of people to work in all layers and skills. The infrastructure for running it is lying out there rusting in the rain and it’s the one project that we can do right away that will allow us to demonstrate that we can actually do something. We can do a collective project as a nation, as a society, as a people that can actually accomplish something important at this time.
You know…the kids in the college lectures are always asking me if I can give them hope. And the one thing that the college students don’t understand is that they have to become the generators of the hope. They have to generate it themselves within themselves by demonstrating that they are capable people who understand the signals reality is sending to them about the kind of world they are going to be living in the next 20–30 years…
We’ve got to build a different world here in North America now and we don’t have any time to waste. We don’t have time to be crybabies about it. We don’t have time to point fingers. We have too many things to do right away. We’ve got to reform the way we produce our food; we’ve got to change the way we do commerce and trade; we’ve got to change the way we get from point “A” to point “B,” and we have to inhabit the landscape differently and, as far as investors are concerned, we’ve got to find a way to do finance that’s not based on getting something for nothing, because that is what has gotten us into this situation we’re in now.
Regards,
James Howard Kunstler
Britons with no criminal record but now registered on Labour’s DNA database
573,639: The disturbing number of Britons with no criminal record but now registered on Labour’s DNA database
By Jason Lewis
Last updated at 11:21 PM on 16th August 2008
Nearly 600,000 people never convicted of any crime now have their details stored on Labour’s DNA database, shock figures reveal.
More than 400,000 of those were added in the past two years, further fuelling the belief that the Government is building a genetic record of the entire population by stealth.
The figure of 573,639 people on the database who have not been convicted, cautioned, formally warned or reprimanded has pushed the overall total to 4.2million.
dna
Civil rights campaigners and MPs want the police to destroy the DNA records of anyone without a criminal record
In the past two years alone, a total of about one million new people have had their DNA added. Nearly half of them – 434,176 – have not been convicted of any crime.
Police can take DNA fingerprints from anybody arrested on suspicion of a recordable offence.
But DNA taken from victims and witnesses to separate it from suspects’ samples at crime scenes can also be added to the database.
The information can be stored indefinitely and potentially matched with samples at crime scenes, even if the suspect is innocent.
Home Office Minister Meg Hillier: Innocent children are included in the database
Home Office Minister Meg Hillier: Innocent children are included in the database
Civil rights campaigners and MPs have been calling on the Government to change the law to force the police to destroy the DNA records of anyone without a criminal record.
Last month, a Government-funded inquiry called for new laws to limit who can access the database, including restricting police use to ‘seeking matches from a crime scene’.
It also called on Ministers to curtail police powers that allow them to take DNA by force from people picked up for minor offences such as a breach of the peace.
The revelations of the number of ‘non-criminals’ being added to the system are contained in internal research statistics obtained by The Mail on Sunday from the National Policing Improvement Agency, which oversees the DNA database.
The research, carried out at the end of March, compared individuals on the DNA database and records on the Police National Computer.
It is the first official figure on the number of ‘innocents’ on the database since November 2005, when there were just 139,463 people on the system who had not been charged or cautioned.
Last week, the Government also revealed its database contained the profiles of almost 40,000 innocent children.
Home Office Minister Meg Hillier said the profiles of an estimated 39,095 ten to 17-year-olds who ‘had not been convicted, cautioned, received a final warning/reprimand and had no charge pending against them’ were on the database.
The UK’s database is the largest in the world, holding the genetic fingerprints of more than 5 per cent of the population, compared with the equivalent database in the United States, which holds 0.5 per cent of the population.
Before 2001, the police could take DNA samples during investigations but had to destroy these and the records derived from them if the people concerned were acquitted or charges were not proceeded with.
The law was changed in 2001 to remove this requirement and changed again in 2004 so that DNA samples could be taken from anyone arrested for a recordable offence and detained in a police station.
Neither the Home Office nor the National Policing Improvement Agency would explain the reason for the apparent huge increase in the number of people not convicted of any offence being added to the system.
Last night a spokesman for the National Policing Improvement Agency said the new figures were incomplete and had been produced only for research purposes.
He said: ‘It is not possible to give a precise figure for the number of people on the National DNA Database who have committed no offence as some relevant conviction and caution records have been weeded from the Police National Computer.’
He added that he was unable to discuss the apparent increase because it was not ‘a like-for-like comparison’.
And a Home Office spokeswoman said: ‘The National DNA Database is a key intelligence tool which has revolutionised the way the police can protect the public through identifying offenders and securing more convictions.
‘It provides critical investigative leads for police investigations, providing on average about 45,000 matches per year.’
The spokeswoman pointed to the case of Abdul Azad, who was arrested for violent disorder in his Birmingham home in February 2005.
He had a DNA sample taken and was released without charge.
Later that year a rape happened in Stafford, 25 miles away. There were no clues until skin from beneath the victim’s fingernails was profiled and found to match the DNA taken from Azad. He was jailed for six years.
By Jason Lewis
Last updated at 11:21 PM on 16th August 2008
Nearly 600,000 people never convicted of any crime now have their details stored on Labour’s DNA database, shock figures reveal.
More than 400,000 of those were added in the past two years, further fuelling the belief that the Government is building a genetic record of the entire population by stealth.
The figure of 573,639 people on the database who have not been convicted, cautioned, formally warned or reprimanded has pushed the overall total to 4.2million.
dna
Civil rights campaigners and MPs want the police to destroy the DNA records of anyone without a criminal record
In the past two years alone, a total of about one million new people have had their DNA added. Nearly half of them – 434,176 – have not been convicted of any crime.
Police can take DNA fingerprints from anybody arrested on suspicion of a recordable offence.
But DNA taken from victims and witnesses to separate it from suspects’ samples at crime scenes can also be added to the database.
The information can be stored indefinitely and potentially matched with samples at crime scenes, even if the suspect is innocent.
Home Office Minister Meg Hillier: Innocent children are included in the database
Home Office Minister Meg Hillier: Innocent children are included in the database
Civil rights campaigners and MPs have been calling on the Government to change the law to force the police to destroy the DNA records of anyone without a criminal record.
Last month, a Government-funded inquiry called for new laws to limit who can access the database, including restricting police use to ‘seeking matches from a crime scene’.
It also called on Ministers to curtail police powers that allow them to take DNA by force from people picked up for minor offences such as a breach of the peace.
The revelations of the number of ‘non-criminals’ being added to the system are contained in internal research statistics obtained by The Mail on Sunday from the National Policing Improvement Agency, which oversees the DNA database.
The research, carried out at the end of March, compared individuals on the DNA database and records on the Police National Computer.
It is the first official figure on the number of ‘innocents’ on the database since November 2005, when there were just 139,463 people on the system who had not been charged or cautioned.
Last week, the Government also revealed its database contained the profiles of almost 40,000 innocent children.
Home Office Minister Meg Hillier said the profiles of an estimated 39,095 ten to 17-year-olds who ‘had not been convicted, cautioned, received a final warning/reprimand and had no charge pending against them’ were on the database.
The UK’s database is the largest in the world, holding the genetic fingerprints of more than 5 per cent of the population, compared with the equivalent database in the United States, which holds 0.5 per cent of the population.
Before 2001, the police could take DNA samples during investigations but had to destroy these and the records derived from them if the people concerned were acquitted or charges were not proceeded with.
The law was changed in 2001 to remove this requirement and changed again in 2004 so that DNA samples could be taken from anyone arrested for a recordable offence and detained in a police station.
Neither the Home Office nor the National Policing Improvement Agency would explain the reason for the apparent huge increase in the number of people not convicted of any offence being added to the system.
Last night a spokesman for the National Policing Improvement Agency said the new figures were incomplete and had been produced only for research purposes.
He said: ‘It is not possible to give a precise figure for the number of people on the National DNA Database who have committed no offence as some relevant conviction and caution records have been weeded from the Police National Computer.’
He added that he was unable to discuss the apparent increase because it was not ‘a like-for-like comparison’.
And a Home Office spokeswoman said: ‘The National DNA Database is a key intelligence tool which has revolutionised the way the police can protect the public through identifying offenders and securing more convictions.
‘It provides critical investigative leads for police investigations, providing on average about 45,000 matches per year.’
The spokeswoman pointed to the case of Abdul Azad, who was arrested for violent disorder in his Birmingham home in February 2005.
He had a DNA sample taken and was released without charge.
Later that year a rape happened in Stafford, 25 miles away. There were no clues until skin from beneath the victim’s fingernails was profiled and found to match the DNA taken from Azad. He was jailed for six years.
Saturday, August 16, 2008
Toronto homeless sell hate propaganda
Joseph Brean, National Post Published: Friday, August 15, 2008
Simon Hayter for National Post
A grey-haired man, known on the streets as the General, stood in front of a liquor store with a stack of newspapers and a crumpled Tim Horton's cup, watching the passing customers through an artsy pair of glasses.
Most passed without eye contact. Some looked sheepish, even scared, or they shrugged to say they had no spare change. A few read the headline: "Beachers' White Racist Hate Attacks Expanding!!" And like every day at countless streetcorners across Toronto, the General sold three issues in a midafternoon hour, making six dollars, nearly minimum wage, and sparing himself the indignity of begging.
Since the passage ten years ago of the Safe Streets Act with its strict controls on panhandling, the Toronto Street News has become a popular alternative, selling 4,000 copies every two weeks across the city. Homeless people pay a nominal fee at various collection points, then sell it for $2 an issue.
But under this guise of charity, it has become the city's most prominent vehicle for hate propaganda, outrageous conspiracy theories, blatant plagiarism and libellous personal attacks, though virtually nothing about the homeless, all published at the whim of a man who lives a two-hour drive away in Ontario's farm-belt.
In the past year, the paper has claimed that Liberal MP Bob Rae's name was changed from Levine to hide his Jewishness and that Prime Minister Stephen Harper's secret true birthday is the same as Adolf Hitler's, which "looks good on a resume" for "New World Order types." It has claimed that a police officer covered up racist attacks on a shopkeeper, and even the editor admits one article was an illegal incitement to genocide against Jews. Ads are rare to non-existent, and often unpaid.
"It's a little left wing," the General said. "Real out there."
Barbara Hall, chief commissioner of the Ontario Human Rights Commission, calls it an "unpleasant rant," full of anti-Semitism and senseless paranoia that is contrary to the spirit, if not the letter, of human rights law.
"I don't like it. It's offensive," she said. "I suspect that a large number of people who open it would very quickly do what I did, which is say, ‘This is scurrilous stuff' and throw it away... This is just using a group of vulnerable people to put out an offensive message, which is making them even more vulnerable."
"It strikes me that it's better than begging," said Mel Sufrin, executive secretary of the Ontario Press Council. At the same time, he said it fails almost every conceivable test for membership in his council.
The Canadian Jewish Congress has a longstanding file on the Street News, and in the last year has brought a hate speech complaint to the police, since settled without charges, and a human rights complaint against a columnist, now referred to a tribunal.
But even though the editor and publisher of the Street News apologized for a story that urged the killing of all "jew bankers," he remains unrepentant.
"For a homeless paper, I can get away with it, and have done that for ten years," said Victor Fletcher, 63, who calls himself a "one-man charity," though not a registered one, and a "hands-on reporter."
"I have the rare luxury of sounding off any way I want. I'm just amazed that people go out there and buy it. If they didn't want to buy the paper, they can give the homeless guy two bucks. But they don't, they want the paper, so there is an audience out there. It's amazing to me."
That audience, he said, is "upscale communities and a lot of women."
The story of the Toronto Street News is one of great compassion poorly focused. It involves a family feud, a massive fraud, a price war, a terminal illness, and a decade's worth of paranoid delusions.
But at its heart, it is the story of Mr. Fletcher, a watchmaker's apprentice who came to work in high-tech weapons assembly, and had a crisis of conscience when he realized that the world is controlled by a cabal of Masons and Zionists. As penance, he turned to the radical underground press, and eventually, thanks to the charity of Toronto's pedestrians and the salesmanship of its homeless, plus a lot of his own money, became the city's most prolific and persistent propagandist.
And now it is coming to an end. Mr. Fletcher expects that neither he nor the paper will be around to celebrate the 10th anniversary of the Street News next summer. He says they will die for different reasons, but the one cannot live without the other. He calls the Street News an "act of frustration."
"I've been trying to stop it for years. It's something I feel I have to do, for some stupid reason," he said. "I keep being told a lot of people depend on it."
************
Richie van den Kerkhof sat on a stool, barefoot under his baggy pants, with an ashtray balanced on his knee. He produced a rolled up Ziploc baggie, the kind that bulk Indian cigarettes come in. He took the last one that was fully intact and squeezed a bit of tobacco back into the bag among the half dozen busted ones, then twisted the tip into a point. He held the smoke in his hand rather than his lips to light it, rotating the sealed end in the flame of a miniature Bic.
He said he grew in homes arranged by children's aid, and by the time he was a teenager around the millennium, he was in a world of trouble, vulnerable to drugs, prostitution and violence.
"A lot of other people went that way," he said.
But he met Angel Femia-Richmond, one of the Street News' main writers and distributors. She saved him.
A bohemian woman with colourful braids in her hair, Angel runs an outreach program called LoveCry from a cozy house behind a Jamaican restaurant, kitty corner to a strip club. She has written poetry and essays for all three of Toronto's street papers: the original Outrider, the upstart Outreach Connection, and now the Street News. She says it serves as both a creative outlet and as a stabilizing force in their lives.
"Artwork heals, period. Writing heals. I give them journals the minute they walk in the door," she said. Selling the paper "takes them out of sympathy. They become addicts because of sympathy. You want them out of sympathy... The input of positive energy is really good for these people. Panhandling just gives them negative energy."
Richie seems to think Victor has some exquisite sense for how far he can push things, that he takes his writing right up to the line, but not over. He says the proof is that he has never been sued.
"Some of the articles are very controversial, but it's the truth. He pushes back," Richie said. "He pushes whatever he can push, whatever people aren't paying attention to. He gets real upset sometimes."
******
Charity papers in Toronto were not always in the sorry state they are today.
Rod Goodman, 81, a long-time newspaperman who worked at the Globe and Mail and Toronto Star before becoming editor of the Outrider, said the goal was to create something good to read on the streetcar ride to work.
There was a sports column written pseudonymously by a Queen's Park bureau chief, sections on politics, culture and food, interviews with stars like Mike Myers, even two of the biggest bylines in Canadian letters, Robertson Davies and Margaret Atwood.
"We figured if we put enough different stuff in here, with something for everybody, it enables the seller to say, ‘Look, here's something you can't get in other papers," he said. "We got a lot of professional respect."
That respect, ironically, was the beginning of the end for Toronto's homeless papers.
When it launched in 1993, mainstream media praised the new Outrider, comparing it to similar projects in New York and London. That coverage caught the attention of David Mackin, who recognized the publisher as his estranged father, Jim Mackin.
Briefly reunited, father and son soon fell into a dispute over money. David would later tell a reporter that he started the the Outreach Connection "out of total anger as well as helping the poor. I just wanted to go after him and stab him in the guts."
A price war followed, creating an environment in which Patrick Harold White - who introduced himself to David as a Prairie farm boy, but was really a fraudster and child rapist wanted by police from Regina to Halifax to Mississippi - was able to grab the financial reins of the Outreach Connection. By the spring of 1994, when David and his staff clued in that their new business manager was a crook, White had left with the money and the office furniture. The Outreach Connection continues to exist, but its presence is greatly diminished. Efforts to contact David Mackin were unsuccessful.
Mr. Fletcher said he started the Street News because, "I don't like people being ripped off, especially at the bottom end of society."
But Mr. Goodman, a former ombudsman of the Toronto Star, does not buy it, literally or figuratively.
"There's got to be a better product than this. I'd say, ‘Here's a dollar. Keep the paper,'" he said. "That's not news. That's not street news. That's a message."
******
The current message at the Street News is that the Beaches area of Toronto, near where the paper used to have offices, is awash in the blood of minorities, spilled by "roving gangs" of "white agents."
A recent issue reported on a variety store owner, Kishore Muthreja, who closed his shop after a series of robberies, which he and the police say were done by teenage thugs, but which the Street News described as a racist campaign, supported by "white power" locals.
"It's just propaganda," said Paul Francis, a landlord who last month bought the building.
As a "Grenadian by birth and a Canadian by choice," he said he was offended by the loose accusations of racism in the Street News, and feels bad for the police officer held up as the scapegoat. "They just threw that guy under the bus," he said.
Constable Rob McDonald - "is he protected by secret society?" sic - said the criticism comes with the territory.
"If it was a legitimate news outlet, I would have great concern, and would be very quick to defend our actions, or what the truth really is, but then I don't think a responsible journalist would portray anything like that," he said. "I just wish they'd spell my name right."
******
Like the fraudster Patrick White, Victor Fletcher describes himself as a "Canadian farm boy," whose homestead is a beef cattle farm in Fergus, Ontario, a bucolic village near the university town of Guelph.
He learned watchmaking in the 1960s and worked in antique shops before being hired to make tiny weights for gyroscopes at Litton Systems, a U.S. defence contractor whose Toronto-area offices were famously bombed years later, in 1982. With his clearance, he also got work at Canadian Arsenals making weapons components.
"I just felt I was killing people," he said in an interview. He went to work for the Guerilla, an anti-war paper in the early 70s, and eventually set up a typesetting business, doing pamphlets and annual reports. He is divorced with no children.
"I take shots at everybody," he said. "Telling the truth is radical, you might say, these days, and that's what I feel I do... I project what I see and the conclusions I've come to."
So, who are the Zionists that control the media?
"Zionists are people who victimize Jews."
Are they in cooperation with the Masons who control Bay Street?
"At times, yeah. I can't walk down the street without the Masonic thing all over me, you know? They control 680 News."
How does he know Stephen Harper actually has Hitler's birthday?
"I'm satisfied I didn't make it up, okay," he said. "The New World Order types, they love to have somebody who would emulate that birthday and be chosen."
Why did he plagiarize an article about AIDS from the British Guardian newspaper, put his byline on it, and the false headline: Man-Made AIDS Virus Targets Blacks?
"I consider them a supporter of the paper."
Does he feel he is doing good for Toronto's homeless?
"The homeless come and go like flies. They either die, right? And I'm the last person who sees them sometimes, the last commercial relationship they had to the world is me. Or they finally get a room, get on welfare, and if the drugs don't kill them, they survive."
******
About a year ago, Mr. Fletcher's journalism finally got him into serious trouble.
He had printed, without permission, a piece from Hal Turner, a prominent American racist and anti-Semite, about a North American common currency. It read, in part: "Are you starting to grasp why so many things are going wrong lately? Does a lot of it start to make sense when put in the context of wiping out currencies in the name of globalization? It's the jew bankers, folks.
"Another jew banking scam designed to enrich the few at the utter devastation of the rest!...This is EVIL treachery on such a massive scale that the only proper response may be to simply KILL everyone involved."
"You can always tell you're dealing with a real intellectual by the number of capital letters they use," said Len Rudner, Ontario director of the Canadian Jewish Congress.
Faced with the CJC's police complaint, even Mr. Fletcher agreed this was hate speech, apologized in print, and promised to stop running columns by another anti-Zionist conspiracy theorist, Henry Makow, although he has recently started again.
Mr. Rudner said the CJC made a human rights complaint against Mr. Makow for describing Jews as a cancer, and it has been referred for a tribunal hearing.
"To ignore them is a form of encouragement," Mr. Rudner said.
He quoted Stephen Bronner, a philosopher at Rutgers University, as saying that the Protocols of the Elders of Zion, like other grand conspiracy theories, is "an idiot's answer to a very important question"
"The important question is why do things happen in the world... The idiot's answer is there is a conspiracy out there and they are controlling everything that happens in this world, and the net result is not only do you then have an answer that says, ‘Aha, it's happening because of them.' But also, you are released from any responsibility or obligation for your own predicament."
******
Victor Fletcher is dying of cancer. He has only a matter of months to live.
"I'm just going to let it develop. I'm just tired of living. I'm so depressed," he said. "I wish I didn't know what I know... I'm disgusted with the world, you know? I don't want to go through operations and stuff. I've done my thing in this life. That's it. Goodbye. Goodbye, Charlie."
He said he has read about cancer of the bowel on the Internet, and his symptoms seem to match it. He has not been to a doctor for a diagnosis. He does not trust them.
"When I'm gone, it's gone," he said of the Toronto Street News. "It shouldn't exist. It's an anomaly. There'll never be another one like it."
Simon Hayter for National Post
A grey-haired man, known on the streets as the General, stood in front of a liquor store with a stack of newspapers and a crumpled Tim Horton's cup, watching the passing customers through an artsy pair of glasses.
Most passed without eye contact. Some looked sheepish, even scared, or they shrugged to say they had no spare change. A few read the headline: "Beachers' White Racist Hate Attacks Expanding!!" And like every day at countless streetcorners across Toronto, the General sold three issues in a midafternoon hour, making six dollars, nearly minimum wage, and sparing himself the indignity of begging.
Since the passage ten years ago of the Safe Streets Act with its strict controls on panhandling, the Toronto Street News has become a popular alternative, selling 4,000 copies every two weeks across the city. Homeless people pay a nominal fee at various collection points, then sell it for $2 an issue.
But under this guise of charity, it has become the city's most prominent vehicle for hate propaganda, outrageous conspiracy theories, blatant plagiarism and libellous personal attacks, though virtually nothing about the homeless, all published at the whim of a man who lives a two-hour drive away in Ontario's farm-belt.
In the past year, the paper has claimed that Liberal MP Bob Rae's name was changed from Levine to hide his Jewishness and that Prime Minister Stephen Harper's secret true birthday is the same as Adolf Hitler's, which "looks good on a resume" for "New World Order types." It has claimed that a police officer covered up racist attacks on a shopkeeper, and even the editor admits one article was an illegal incitement to genocide against Jews. Ads are rare to non-existent, and often unpaid.
"It's a little left wing," the General said. "Real out there."
Barbara Hall, chief commissioner of the Ontario Human Rights Commission, calls it an "unpleasant rant," full of anti-Semitism and senseless paranoia that is contrary to the spirit, if not the letter, of human rights law.
"I don't like it. It's offensive," she said. "I suspect that a large number of people who open it would very quickly do what I did, which is say, ‘This is scurrilous stuff' and throw it away... This is just using a group of vulnerable people to put out an offensive message, which is making them even more vulnerable."
"It strikes me that it's better than begging," said Mel Sufrin, executive secretary of the Ontario Press Council. At the same time, he said it fails almost every conceivable test for membership in his council.
The Canadian Jewish Congress has a longstanding file on the Street News, and in the last year has brought a hate speech complaint to the police, since settled without charges, and a human rights complaint against a columnist, now referred to a tribunal.
But even though the editor and publisher of the Street News apologized for a story that urged the killing of all "jew bankers," he remains unrepentant.
"For a homeless paper, I can get away with it, and have done that for ten years," said Victor Fletcher, 63, who calls himself a "one-man charity," though not a registered one, and a "hands-on reporter."
"I have the rare luxury of sounding off any way I want. I'm just amazed that people go out there and buy it. If they didn't want to buy the paper, they can give the homeless guy two bucks. But they don't, they want the paper, so there is an audience out there. It's amazing to me."
That audience, he said, is "upscale communities and a lot of women."
The story of the Toronto Street News is one of great compassion poorly focused. It involves a family feud, a massive fraud, a price war, a terminal illness, and a decade's worth of paranoid delusions.
But at its heart, it is the story of Mr. Fletcher, a watchmaker's apprentice who came to work in high-tech weapons assembly, and had a crisis of conscience when he realized that the world is controlled by a cabal of Masons and Zionists. As penance, he turned to the radical underground press, and eventually, thanks to the charity of Toronto's pedestrians and the salesmanship of its homeless, plus a lot of his own money, became the city's most prolific and persistent propagandist.
And now it is coming to an end. Mr. Fletcher expects that neither he nor the paper will be around to celebrate the 10th anniversary of the Street News next summer. He says they will die for different reasons, but the one cannot live without the other. He calls the Street News an "act of frustration."
"I've been trying to stop it for years. It's something I feel I have to do, for some stupid reason," he said. "I keep being told a lot of people depend on it."
************
Richie van den Kerkhof sat on a stool, barefoot under his baggy pants, with an ashtray balanced on his knee. He produced a rolled up Ziploc baggie, the kind that bulk Indian cigarettes come in. He took the last one that was fully intact and squeezed a bit of tobacco back into the bag among the half dozen busted ones, then twisted the tip into a point. He held the smoke in his hand rather than his lips to light it, rotating the sealed end in the flame of a miniature Bic.
He said he grew in homes arranged by children's aid, and by the time he was a teenager around the millennium, he was in a world of trouble, vulnerable to drugs, prostitution and violence.
"A lot of other people went that way," he said.
But he met Angel Femia-Richmond, one of the Street News' main writers and distributors. She saved him.
A bohemian woman with colourful braids in her hair, Angel runs an outreach program called LoveCry from a cozy house behind a Jamaican restaurant, kitty corner to a strip club. She has written poetry and essays for all three of Toronto's street papers: the original Outrider, the upstart Outreach Connection, and now the Street News. She says it serves as both a creative outlet and as a stabilizing force in their lives.
"Artwork heals, period. Writing heals. I give them journals the minute they walk in the door," she said. Selling the paper "takes them out of sympathy. They become addicts because of sympathy. You want them out of sympathy... The input of positive energy is really good for these people. Panhandling just gives them negative energy."
Richie seems to think Victor has some exquisite sense for how far he can push things, that he takes his writing right up to the line, but not over. He says the proof is that he has never been sued.
"Some of the articles are very controversial, but it's the truth. He pushes back," Richie said. "He pushes whatever he can push, whatever people aren't paying attention to. He gets real upset sometimes."
******
Charity papers in Toronto were not always in the sorry state they are today.
Rod Goodman, 81, a long-time newspaperman who worked at the Globe and Mail and Toronto Star before becoming editor of the Outrider, said the goal was to create something good to read on the streetcar ride to work.
There was a sports column written pseudonymously by a Queen's Park bureau chief, sections on politics, culture and food, interviews with stars like Mike Myers, even two of the biggest bylines in Canadian letters, Robertson Davies and Margaret Atwood.
"We figured if we put enough different stuff in here, with something for everybody, it enables the seller to say, ‘Look, here's something you can't get in other papers," he said. "We got a lot of professional respect."
That respect, ironically, was the beginning of the end for Toronto's homeless papers.
When it launched in 1993, mainstream media praised the new Outrider, comparing it to similar projects in New York and London. That coverage caught the attention of David Mackin, who recognized the publisher as his estranged father, Jim Mackin.
Briefly reunited, father and son soon fell into a dispute over money. David would later tell a reporter that he started the the Outreach Connection "out of total anger as well as helping the poor. I just wanted to go after him and stab him in the guts."
A price war followed, creating an environment in which Patrick Harold White - who introduced himself to David as a Prairie farm boy, but was really a fraudster and child rapist wanted by police from Regina to Halifax to Mississippi - was able to grab the financial reins of the Outreach Connection. By the spring of 1994, when David and his staff clued in that their new business manager was a crook, White had left with the money and the office furniture. The Outreach Connection continues to exist, but its presence is greatly diminished. Efforts to contact David Mackin were unsuccessful.
Mr. Fletcher said he started the Street News because, "I don't like people being ripped off, especially at the bottom end of society."
But Mr. Goodman, a former ombudsman of the Toronto Star, does not buy it, literally or figuratively.
"There's got to be a better product than this. I'd say, ‘Here's a dollar. Keep the paper,'" he said. "That's not news. That's not street news. That's a message."
******
The current message at the Street News is that the Beaches area of Toronto, near where the paper used to have offices, is awash in the blood of minorities, spilled by "roving gangs" of "white agents."
A recent issue reported on a variety store owner, Kishore Muthreja, who closed his shop after a series of robberies, which he and the police say were done by teenage thugs, but which the Street News described as a racist campaign, supported by "white power" locals.
"It's just propaganda," said Paul Francis, a landlord who last month bought the building.
As a "Grenadian by birth and a Canadian by choice," he said he was offended by the loose accusations of racism in the Street News, and feels bad for the police officer held up as the scapegoat. "They just threw that guy under the bus," he said.
Constable Rob McDonald - "is he protected by secret society?" sic - said the criticism comes with the territory.
"If it was a legitimate news outlet, I would have great concern, and would be very quick to defend our actions, or what the truth really is, but then I don't think a responsible journalist would portray anything like that," he said. "I just wish they'd spell my name right."
******
Like the fraudster Patrick White, Victor Fletcher describes himself as a "Canadian farm boy," whose homestead is a beef cattle farm in Fergus, Ontario, a bucolic village near the university town of Guelph.
He learned watchmaking in the 1960s and worked in antique shops before being hired to make tiny weights for gyroscopes at Litton Systems, a U.S. defence contractor whose Toronto-area offices were famously bombed years later, in 1982. With his clearance, he also got work at Canadian Arsenals making weapons components.
"I just felt I was killing people," he said in an interview. He went to work for the Guerilla, an anti-war paper in the early 70s, and eventually set up a typesetting business, doing pamphlets and annual reports. He is divorced with no children.
"I take shots at everybody," he said. "Telling the truth is radical, you might say, these days, and that's what I feel I do... I project what I see and the conclusions I've come to."
So, who are the Zionists that control the media?
"Zionists are people who victimize Jews."
Are they in cooperation with the Masons who control Bay Street?
"At times, yeah. I can't walk down the street without the Masonic thing all over me, you know? They control 680 News."
How does he know Stephen Harper actually has Hitler's birthday?
"I'm satisfied I didn't make it up, okay," he said. "The New World Order types, they love to have somebody who would emulate that birthday and be chosen."
Why did he plagiarize an article about AIDS from the British Guardian newspaper, put his byline on it, and the false headline: Man-Made AIDS Virus Targets Blacks?
"I consider them a supporter of the paper."
Does he feel he is doing good for Toronto's homeless?
"The homeless come and go like flies. They either die, right? And I'm the last person who sees them sometimes, the last commercial relationship they had to the world is me. Or they finally get a room, get on welfare, and if the drugs don't kill them, they survive."
******
About a year ago, Mr. Fletcher's journalism finally got him into serious trouble.
He had printed, without permission, a piece from Hal Turner, a prominent American racist and anti-Semite, about a North American common currency. It read, in part: "Are you starting to grasp why so many things are going wrong lately? Does a lot of it start to make sense when put in the context of wiping out currencies in the name of globalization? It's the jew bankers, folks.
"Another jew banking scam designed to enrich the few at the utter devastation of the rest!...This is EVIL treachery on such a massive scale that the only proper response may be to simply KILL everyone involved."
"You can always tell you're dealing with a real intellectual by the number of capital letters they use," said Len Rudner, Ontario director of the Canadian Jewish Congress.
Faced with the CJC's police complaint, even Mr. Fletcher agreed this was hate speech, apologized in print, and promised to stop running columns by another anti-Zionist conspiracy theorist, Henry Makow, although he has recently started again.
Mr. Rudner said the CJC made a human rights complaint against Mr. Makow for describing Jews as a cancer, and it has been referred for a tribunal hearing.
"To ignore them is a form of encouragement," Mr. Rudner said.
He quoted Stephen Bronner, a philosopher at Rutgers University, as saying that the Protocols of the Elders of Zion, like other grand conspiracy theories, is "an idiot's answer to a very important question"
"The important question is why do things happen in the world... The idiot's answer is there is a conspiracy out there and they are controlling everything that happens in this world, and the net result is not only do you then have an answer that says, ‘Aha, it's happening because of them.' But also, you are released from any responsibility or obligation for your own predicament."
******
Victor Fletcher is dying of cancer. He has only a matter of months to live.
"I'm just going to let it develop. I'm just tired of living. I'm so depressed," he said. "I wish I didn't know what I know... I'm disgusted with the world, you know? I don't want to go through operations and stuff. I've done my thing in this life. That's it. Goodbye. Goodbye, Charlie."
He said he has read about cancer of the bowel on the Internet, and his symptoms seem to match it. He has not been to a doctor for a diagnosis. He does not trust them.
"When I'm gone, it's gone," he said of the Toronto Street News. "It shouldn't exist. It's an anomaly. There'll never be another one like it."
Wednesday, August 13, 2008
FCC Commissioner: Fairness Doctrine Could Lead To Government Regulation Of Web
McDowell says reinstated powers could be tagged on to net neutrality debate by leading Democrats
Paul Joseph Watson
[1] Prison Planet
Wednesday, August 13, 2008
FCC Commissioner Robert McDowell says that the potential re-introduction of the Fairness Doctrine under a Democratic administration could lead to “government dictating content policy” on the Internet.
The Fairness Doctrine was an FCC regulation mandating broadcasters afford time to opposing viewpoints. It was abolished in 1987 by the Supreme Court after it was found to be harmful to journalistic freedom and anathema to the First Amendment.
[2] Speaking to the Business and Media Institute, McDowell stated that the Fairness Doctrine could return under a different name and be tagged on to the net neutrality debate, opening the door for the government to regulate content on the Web.
McDowell said the net neutrality effort could win the support of “a few isolated conservatives” who may not fully realize the long-term effects of government regulation.
“I think the fear is that somehow large corporations will censor their content, their points of view, right,” McDowell said. “I think the bigger concern for them should be if you have government dictating content policy, which by the way would have a big First Amendment problem,” said McDowell.
“Then, whoever is in charge of government is going to determine what is fair, under a so-called ‘Fairness Doctrine,’ which won’t be called that – it’ll be called something else,” McDowell said. “So, will Web sites, will bloggers have to give equal time or equal space on their Web site to opposing views rather than letting the marketplace of ideas determine that?” he added.
The reinstitution of the Fairness Doctrine has strong support amongst top Democratic powerbrokers and an effort to push it through under a different name is expected should Barack Obama secure the presidency.
In June, [3] House Speaker Nancy Pelosi told reporters that the Democratic caucus was interested in bringing back the Fairness Doctrine. Senators Richard Durbin and John Kerry have also publicly supported its return.
Neo-Con radio talk show hosts like Rush Limbaugh have long railed against the Fairness Doctrine, but its impact would be felt by all alternative news outlets, who would be forced to devote some of their time to parroting government talking points while enduring constant harassment and threat of closure.
The Great Gold Robbery of 1933
Daily Article by Thomas E. Woods, Jr. | Posted on 8/13/2008
An Ironic Tribute: Franklin D. Roosevelt Commemorative Gold Coin
It's been 75 years since the federal government, on the spurious grounds of fighting the Great Depression, ordered the confiscation of all monetary gold from Americans, permitting trivial amounts for ornamental or industrial use. This happens to be one of the episodes Kevin Gutzman and I describe in detail in our new book, Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush. From the point of view of the typical American classroom, on the other hand, the incident may as well not have occurred.
A key piece of legislation in this story is the Emergency Banking Act of 1933, which Congress passed on March 9 without having read it and after only the most trivial debate. House Minority Leader Bertrand H. Snell (R-NY) generously conceded that it was "entirely out of the ordinary" to pass legislation that "is not even in print at the time it is offered." He urged his colleagues to pass it all the same: "The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation."
Among other things, the act retroactively approved the president's closing of private banks throughout the country for several days the previous week, an act for which he had not bothered to provide a legal justification. It gave the secretary of the Treasury the power to require all individuals and corporations to hand over all their gold coin, gold bullion, or gold certificates if in his judgment "such action is necessary to protect the currency system of the United States."
The Emergency Banking Act reached back in time to amend the Trading with the Enemy Act of 1917, which had originally been intended to criminalize economic intercourse between American citizens and declared enemies of the United States. One provision of the act granted the president the power to regulate and even prohibit "under such rules and regulations as he may prescribe … any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency … by any person within the United States." In 1918, the act was amended to extend its provisions two years beyond the conclusion of hostilities, and to allow the president to "investigate, regulate, or prohibit" even the "hoarding" of gold by an American.
After those two years elapsed, people generally assumed that the Trading with the Enemy Act had passed into desuetude. But the Supreme Court later explained that the act's provisions were not limited merely to World War I and the two years that followed — it "stood ready to meet additional wars and additional enemies" and could be called into service once again under those circumstances. (Little did anyone suspect in 1917 that these "additional enemies" would turn out to be the American people themselves.) As amended by the Emergency Banking Act of 1933, the Trading with the Enemy Act no longer said that simply "during time of war" could the president prohibit the export of gold or take action against "hoarding" (i.e., holding on to one's money). Now these actions could be taken during time of war or "during any other period of national emergency declared by the President."
A month later, claiming authority from the Emergency Banking Act and its amendment to the Trading with the Enemy Act, the president ordered all individuals and corporations in America to hand over their gold holdings to the federal government in exchange for an equivalent amount of paper currency. The paper currency they were receiving in exchange for the gold had always been redeemable in gold in the past, so few saw anything amiss in this coerced transaction, and most trusted the government's assurances that this was somehow necessary in order to combat the Depression. Only later would they discover that they weren't getting that gold back, and that the paper dollars they were being given in exchange would be devalued. Soon only foreign governments and central banks would be able to convert dollars into gold — and even that link to gold would be severed in 1971.
On June 5, 1933, at the behest of the president, Congress took the next step, passing a joint resolution making it illegal to "require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby." Any provision in a private or public contract promising payment in gold was thereby nullified. Payment could be made in whatever the government declared to be legal tender, and gold could not be used even as a yardstick for determining how much paper money would be owed.
For the next six months President Roosevelt pursued an erratic monetary course. Every day a new gold price was declared, on a basis no one could figure out. Private lending in effect came to a halt, with the value of the dollar in constant flux amid the prospect of ongoing devaluation. As Senator Carter Glass (D-VA) put it, "No man outside of a lunatic asylum will loan his money today on a farm mortgage." And thus the government could triumphantly announce that since the private sector was cruelly depriving Americans of credit, it would have to step in and provide relief.
Meanwhile, Senator William Borah was assuring his countrymen that when it came to the nation's monetary system, "there is no limitation upon the power of Congress. It is not circumscribed in any respect whatever. It is given full and plenary power to deal with that subject; and therefore it is the same as if there were no Constitution whatever." Borah also tried to argue that "when an individual takes an obligation payable in gold" he does so "with the full understanding that the Government may change its monetary policy at any time and that he must accept whatever the Congress says at a particular time shall constitute money."
The general rule (to which there are occasional exceptions) that no senator should ever be listened to on anything holds here: the power of Congress over money is in fact very limited. It has the power to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
Coining money simply refers to the process of taking a precious metal, converting it into coins, and stamping those coins with an indication of their metal content. The power to regulate the value of money does not involve a power to dilute the value of money by inflation, an absurd and self-serving rendering. Regulation of the value of money is a power of declaration and comparison, whereby some monetary standard is compared to other coins in circulation and an exchange rate for these various kinds of currency established according to the amounts of precious metals (with due allowance for the distinct values of different precious metals) in each. In other words, if Congress were to declare by statute what the prevailing market exchange rate between gold and silver was, and thus to "regulate" gold and silver coins vis-à-vis one another — or, more precisely, vis-à-vis the Spanish silver dollar that constituted the American monetary standard — then it would be properly exercising its constitutional power, which consists of nothing more than this.
That is why this power appears in the same clause with the power to "fix the Standard of Weights and Measures," which involves the measurement of fixed standards in order to assure uniformity throughout the nation. That power does not give Congress the power to declare that one-tenth of a pound shall now be declared a pound, but to take an already-existing standard and codify it. Every single monetary statute enacted from the ratification of the Constitution until the 1930s understood the congressional power to regulate the "value" of money not in the sense of declaring money to possess some arbitrary value that suits the whims of politicians or central bankers, but in the sense of establishing the relative values of gold and silver coins in terms of the ever-shifting relative values of those metals on the free market. (Needless to say, the market is perfectly capable of doing this on its own.)
Moreover, the "dollar" was not an arbitrary term at the time the Constitution was drafted. In the late 18th century, everyone knew what the "dollar" referred to: the silver Spanish milled dollar, which was in widespread use in the United States. The Constitution twice refers to the dollar — in Article I, Section 9, Clause 1 (a clause that everyone understood to involve a tax on the import of slaves), and in the Seventh Amendment (which protected the right to a jury trial in civil cases involving at least twenty dollars). If the dollar had been something that Congress could manipulate at will, or if "dollar" had been merely a generic term to refer to whatever Congress should arbitrarily choose to recognize as currency, the South would never have accepted that clause — or the Constitution itself. Congress might have manipulated the dollar so as to make the tax on slave imports prohibitively expensive. It could also have effectively abolished trial by jury in civil cases by making twenty "dollars" an astronomically high amount of money.
The Court never pronounced upon the constitutionality of the gold seizure (for reasons we speculate on in our book), the legality of which it simply took for granted. The cases it chose to hear involved the cancellation of gold clauses in public and private contracts. Known as the Gold Clause Cases, Norman v. Baltimore & Ohio Railroad Co., Nortz v. United States, and Perry v. United States were argued in January 1935 and decided the following month. In each case Chief Justice Charles Evans Hughes wrote the opinion for the Court; Justice McReynolds composed a single dissent that he applied to all three.
The Court declared in the first two cases that the federal government had been entitled to cancel all private contracts in gold. The perpetuation of gold clauses would have amounted to the "attempted frustration" of "the constitutional power of the Congress over the monetary system of the country…. [T]hese clauses interfere with the exertion of the power granted to the Congress." Not a stitch of evidence existed for any aspect of this argument.
Perry, the third case, involved a man who had purchased in gold a US bond that was payable in gold, and was seeking payment either in gold or in the equivalent in paper currency. Since the government intended to pay in depreciated dollars, he believed he was receiving far less than he was entitled to under the terms of the bond. The bond's face value was $10,000 in gold. In the inflated dollars of post-gold-standard America, it would have taken nearly $17,000 in paper currency in order to satisfy what the government had contracted to pay him.
The Court declared that the plaintiff was indeed entitled to his gold, since the government had an obligation to live up to its promises. But in not paying him his gold, the government wasn't really wronging him, since gold was now illegal to hold. In other words, if the government paid him in gold, it would then have to confiscate that gold from him anyway since holding gold was against the law.
Speaking for the minority, Justice McReynolds declared:
Just men regard repudiation and spoliation of citizens by their sovereign with abhorrence; but we are asked to affirm that the Constitution has granted power to accomplish both. No definite delegation of such a power exists; and we cannot believe that the farseeing framers, who labored with hope of establishing justice and securing the blessings of liberty, intended that the expected government should have authority to annihilate its own obligations and destroy the very rights which they were endeavoring to protect. Not only is there no permission for such actions; they are inhibited. And no plenitude of words can conform them to our charter.
To the argument that the bondholder had suffered no damage in being denied payment in gold since it was now illegal for people to own gold, the dissent replied: "Obligations cannot be legally avoided by prohibiting the creditor from receiving the thing promised…. There would be no serious difficulty in estimating the value of 25.8 grains of gold in the currency now in circulation." The contract to pay in gold having been broken, the holder was at least morally entitled to receive in currency not just the nominal amount of the bond but an amount in paper dollars equivalent to what he would have earned if the payment could have been made in gold. "For the government to say, we have violated our contract but have escaped the consequences through our own statute, would be monstrous. In matters of contractual obligation the government cannot legislate so as to excuse itself." Suppose a private individual tried to do the same thing, "secreting or manipulating his assets with the intent to place them beyond the reach of creditors." Any such attempt "would be denounced as fraudulent, wholly ineffective."
"Loss of reputation for honorable dealing," the dissent concluded, "will bring us unending humiliation; the impending legal and moral chaos is appalling."
By the 1970s the federal government had once again permitted Americans to hold gold coins. But when it came time to actually mint them again, it made sure that gold coins could never circulate and displace the constantly depreciating paper currency printed by the US government: the law required that such coins could circulate with a face value only a tiny fraction of their market value.
The full story of the gold confiscation is actually much worse than this, and we tell it in Who Killed the Constitution? What this episode teaches us is not so much that we need to "return to the Constitution," though that would be an improvement over what we have now, but rather that pieces of paper that governments themselves interpret cannot be expected to prevent governments from doing what they think they can get away with.
Lysander Spooner once said that he believed "that by false interpretations, and naked usurpations, the government has been made in practice a very widely, and almost wholly, different thing from what the Constitution itself purports to authorize." At the same time, he could not exonerate the Constitution, for it "has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist." It is hard to argue with that.
An Ironic Tribute: Franklin D. Roosevelt Commemorative Gold Coin
It's been 75 years since the federal government, on the spurious grounds of fighting the Great Depression, ordered the confiscation of all monetary gold from Americans, permitting trivial amounts for ornamental or industrial use. This happens to be one of the episodes Kevin Gutzman and I describe in detail in our new book, Who Killed the Constitution? The Fate of American Liberty from World War I to George W. Bush. From the point of view of the typical American classroom, on the other hand, the incident may as well not have occurred.
A key piece of legislation in this story is the Emergency Banking Act of 1933, which Congress passed on March 9 without having read it and after only the most trivial debate. House Minority Leader Bertrand H. Snell (R-NY) generously conceded that it was "entirely out of the ordinary" to pass legislation that "is not even in print at the time it is offered." He urged his colleagues to pass it all the same: "The house is burning down, and the President of the United States says this is the way to put out the fire. [Applause.] And to me at this time there is only one answer to this question, and that is to give the President what he demands and says is necessary to meet the situation."
Among other things, the act retroactively approved the president's closing of private banks throughout the country for several days the previous week, an act for which he had not bothered to provide a legal justification. It gave the secretary of the Treasury the power to require all individuals and corporations to hand over all their gold coin, gold bullion, or gold certificates if in his judgment "such action is necessary to protect the currency system of the United States."
The Emergency Banking Act reached back in time to amend the Trading with the Enemy Act of 1917, which had originally been intended to criminalize economic intercourse between American citizens and declared enemies of the United States. One provision of the act granted the president the power to regulate and even prohibit "under such rules and regulations as he may prescribe … any transactions in foreign exchange, export or earmarkings of gold or silver coin or bullion or currency … by any person within the United States." In 1918, the act was amended to extend its provisions two years beyond the conclusion of hostilities, and to allow the president to "investigate, regulate, or prohibit" even the "hoarding" of gold by an American.
After those two years elapsed, people generally assumed that the Trading with the Enemy Act had passed into desuetude. But the Supreme Court later explained that the act's provisions were not limited merely to World War I and the two years that followed — it "stood ready to meet additional wars and additional enemies" and could be called into service once again under those circumstances. (Little did anyone suspect in 1917 that these "additional enemies" would turn out to be the American people themselves.) As amended by the Emergency Banking Act of 1933, the Trading with the Enemy Act no longer said that simply "during time of war" could the president prohibit the export of gold or take action against "hoarding" (i.e., holding on to one's money). Now these actions could be taken during time of war or "during any other period of national emergency declared by the President."
A month later, claiming authority from the Emergency Banking Act and its amendment to the Trading with the Enemy Act, the president ordered all individuals and corporations in America to hand over their gold holdings to the federal government in exchange for an equivalent amount of paper currency. The paper currency they were receiving in exchange for the gold had always been redeemable in gold in the past, so few saw anything amiss in this coerced transaction, and most trusted the government's assurances that this was somehow necessary in order to combat the Depression. Only later would they discover that they weren't getting that gold back, and that the paper dollars they were being given in exchange would be devalued. Soon only foreign governments and central banks would be able to convert dollars into gold — and even that link to gold would be severed in 1971.
On June 5, 1933, at the behest of the president, Congress took the next step, passing a joint resolution making it illegal to "require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby." Any provision in a private or public contract promising payment in gold was thereby nullified. Payment could be made in whatever the government declared to be legal tender, and gold could not be used even as a yardstick for determining how much paper money would be owed.
For the next six months President Roosevelt pursued an erratic monetary course. Every day a new gold price was declared, on a basis no one could figure out. Private lending in effect came to a halt, with the value of the dollar in constant flux amid the prospect of ongoing devaluation. As Senator Carter Glass (D-VA) put it, "No man outside of a lunatic asylum will loan his money today on a farm mortgage." And thus the government could triumphantly announce that since the private sector was cruelly depriving Americans of credit, it would have to step in and provide relief.
Meanwhile, Senator William Borah was assuring his countrymen that when it came to the nation's monetary system, "there is no limitation upon the power of Congress. It is not circumscribed in any respect whatever. It is given full and plenary power to deal with that subject; and therefore it is the same as if there were no Constitution whatever." Borah also tried to argue that "when an individual takes an obligation payable in gold" he does so "with the full understanding that the Government may change its monetary policy at any time and that he must accept whatever the Congress says at a particular time shall constitute money."
The general rule (to which there are occasional exceptions) that no senator should ever be listened to on anything holds here: the power of Congress over money is in fact very limited. It has the power to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
Coining money simply refers to the process of taking a precious metal, converting it into coins, and stamping those coins with an indication of their metal content. The power to regulate the value of money does not involve a power to dilute the value of money by inflation, an absurd and self-serving rendering. Regulation of the value of money is a power of declaration and comparison, whereby some monetary standard is compared to other coins in circulation and an exchange rate for these various kinds of currency established according to the amounts of precious metals (with due allowance for the distinct values of different precious metals) in each. In other words, if Congress were to declare by statute what the prevailing market exchange rate between gold and silver was, and thus to "regulate" gold and silver coins vis-à-vis one another — or, more precisely, vis-à-vis the Spanish silver dollar that constituted the American monetary standard — then it would be properly exercising its constitutional power, which consists of nothing more than this.
That is why this power appears in the same clause with the power to "fix the Standard of Weights and Measures," which involves the measurement of fixed standards in order to assure uniformity throughout the nation. That power does not give Congress the power to declare that one-tenth of a pound shall now be declared a pound, but to take an already-existing standard and codify it. Every single monetary statute enacted from the ratification of the Constitution until the 1930s understood the congressional power to regulate the "value" of money not in the sense of declaring money to possess some arbitrary value that suits the whims of politicians or central bankers, but in the sense of establishing the relative values of gold and silver coins in terms of the ever-shifting relative values of those metals on the free market. (Needless to say, the market is perfectly capable of doing this on its own.)
Moreover, the "dollar" was not an arbitrary term at the time the Constitution was drafted. In the late 18th century, everyone knew what the "dollar" referred to: the silver Spanish milled dollar, which was in widespread use in the United States. The Constitution twice refers to the dollar — in Article I, Section 9, Clause 1 (a clause that everyone understood to involve a tax on the import of slaves), and in the Seventh Amendment (which protected the right to a jury trial in civil cases involving at least twenty dollars). If the dollar had been something that Congress could manipulate at will, or if "dollar" had been merely a generic term to refer to whatever Congress should arbitrarily choose to recognize as currency, the South would never have accepted that clause — or the Constitution itself. Congress might have manipulated the dollar so as to make the tax on slave imports prohibitively expensive. It could also have effectively abolished trial by jury in civil cases by making twenty "dollars" an astronomically high amount of money.
The Court never pronounced upon the constitutionality of the gold seizure (for reasons we speculate on in our book), the legality of which it simply took for granted. The cases it chose to hear involved the cancellation of gold clauses in public and private contracts. Known as the Gold Clause Cases, Norman v. Baltimore & Ohio Railroad Co., Nortz v. United States, and Perry v. United States were argued in January 1935 and decided the following month. In each case Chief Justice Charles Evans Hughes wrote the opinion for the Court; Justice McReynolds composed a single dissent that he applied to all three.
The Court declared in the first two cases that the federal government had been entitled to cancel all private contracts in gold. The perpetuation of gold clauses would have amounted to the "attempted frustration" of "the constitutional power of the Congress over the monetary system of the country…. [T]hese clauses interfere with the exertion of the power granted to the Congress." Not a stitch of evidence existed for any aspect of this argument.
Perry, the third case, involved a man who had purchased in gold a US bond that was payable in gold, and was seeking payment either in gold or in the equivalent in paper currency. Since the government intended to pay in depreciated dollars, he believed he was receiving far less than he was entitled to under the terms of the bond. The bond's face value was $10,000 in gold. In the inflated dollars of post-gold-standard America, it would have taken nearly $17,000 in paper currency in order to satisfy what the government had contracted to pay him.
The Court declared that the plaintiff was indeed entitled to his gold, since the government had an obligation to live up to its promises. But in not paying him his gold, the government wasn't really wronging him, since gold was now illegal to hold. In other words, if the government paid him in gold, it would then have to confiscate that gold from him anyway since holding gold was against the law.
Speaking for the minority, Justice McReynolds declared:
Just men regard repudiation and spoliation of citizens by their sovereign with abhorrence; but we are asked to affirm that the Constitution has granted power to accomplish both. No definite delegation of such a power exists; and we cannot believe that the farseeing framers, who labored with hope of establishing justice and securing the blessings of liberty, intended that the expected government should have authority to annihilate its own obligations and destroy the very rights which they were endeavoring to protect. Not only is there no permission for such actions; they are inhibited. And no plenitude of words can conform them to our charter.
To the argument that the bondholder had suffered no damage in being denied payment in gold since it was now illegal for people to own gold, the dissent replied: "Obligations cannot be legally avoided by prohibiting the creditor from receiving the thing promised…. There would be no serious difficulty in estimating the value of 25.8 grains of gold in the currency now in circulation." The contract to pay in gold having been broken, the holder was at least morally entitled to receive in currency not just the nominal amount of the bond but an amount in paper dollars equivalent to what he would have earned if the payment could have been made in gold. "For the government to say, we have violated our contract but have escaped the consequences through our own statute, would be monstrous. In matters of contractual obligation the government cannot legislate so as to excuse itself." Suppose a private individual tried to do the same thing, "secreting or manipulating his assets with the intent to place them beyond the reach of creditors." Any such attempt "would be denounced as fraudulent, wholly ineffective."
"Loss of reputation for honorable dealing," the dissent concluded, "will bring us unending humiliation; the impending legal and moral chaos is appalling."
By the 1970s the federal government had once again permitted Americans to hold gold coins. But when it came time to actually mint them again, it made sure that gold coins could never circulate and displace the constantly depreciating paper currency printed by the US government: the law required that such coins could circulate with a face value only a tiny fraction of their market value.
The full story of the gold confiscation is actually much worse than this, and we tell it in Who Killed the Constitution? What this episode teaches us is not so much that we need to "return to the Constitution," though that would be an improvement over what we have now, but rather that pieces of paper that governments themselves interpret cannot be expected to prevent governments from doing what they think they can get away with.
Lysander Spooner once said that he believed "that by false interpretations, and naked usurpations, the government has been made in practice a very widely, and almost wholly, different thing from what the Constitution itself purports to authorize." At the same time, he could not exonerate the Constitution, for it "has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist." It is hard to argue with that.
Israeli assassins likely to pose as Canadians: expert
OTTAWA (CBC) - Israel is reported to have reactivated a unit known to send agents posing as Canadian tourists to foreign countries to carry out assassinations.
The Kidon Unit—named for the Hebrew word for bayonet—is part of Israel's overseas intelligence service, the Mossad.
Canadian travel documents have been a favourite of the Mossad for decades, and some in Canada say that practice is likely to resume, no matter what Israel promises.
At a time of heightened tension in the Middle East, Mossad agents posing as Canadians may expose real Canadians to attacks by groups who fear they're on Mossad's hit list, says a former CSIS agent, Michel Juneau-Katsuya.
It might also mean more scrutiny for Canadians travelling abroad.
"These people [the Mossad] have very active covert operations all around the world, so more scrutiny, more suspicions, maybe more surveillance against Canadians, will make travel more difficult," says Juneau-Katsuya, who's now a security consultant with the Northgate Group.
The last time Mossad agents were caught using Canadian passports was in 1997. Two hit men had tried and failed to inject a lethal poison into the neck of the director of the Hamas press office in Amman, Jordan.
Canada recalled its ambassador in protest. It was the third time Mossad agents had been caught posing as Canadians, and the third time Israel promised to stop.
Foreign Affairs spokesperson Reynald Doiron says it was important for Canada to tell the world that its passports were being used without its permission.
"There was no cooperation whatever between the Canadian and Israeli governments, in that Canada did not supply the passports," says Doiron.
He adds that the passports found in 1997 were determined by the RCMP to be counterfeit.
The resumption of the Kidon Unit means the use of Canadian passports is likely to resume, no matter what Israel has said in the past, says Juneau-Katsuya.
In defence of the Kidon Unit, Israel says "pre-emptive" assassinations are necessary to protect it from attacks.
The Kidon Unit—named for the Hebrew word for bayonet—is part of Israel's overseas intelligence service, the Mossad.
Canadian travel documents have been a favourite of the Mossad for decades, and some in Canada say that practice is likely to resume, no matter what Israel promises.
At a time of heightened tension in the Middle East, Mossad agents posing as Canadians may expose real Canadians to attacks by groups who fear they're on Mossad's hit list, says a former CSIS agent, Michel Juneau-Katsuya.
It might also mean more scrutiny for Canadians travelling abroad.
"These people [the Mossad] have very active covert operations all around the world, so more scrutiny, more suspicions, maybe more surveillance against Canadians, will make travel more difficult," says Juneau-Katsuya, who's now a security consultant with the Northgate Group.
The last time Mossad agents were caught using Canadian passports was in 1997. Two hit men had tried and failed to inject a lethal poison into the neck of the director of the Hamas press office in Amman, Jordan.
Canada recalled its ambassador in protest. It was the third time Mossad agents had been caught posing as Canadians, and the third time Israel promised to stop.
Foreign Affairs spokesperson Reynald Doiron says it was important for Canada to tell the world that its passports were being used without its permission.
"There was no cooperation whatever between the Canadian and Israeli governments, in that Canada did not supply the passports," says Doiron.
He adds that the passports found in 1997 were determined by the RCMP to be counterfeit.
The resumption of the Kidon Unit means the use of Canadian passports is likely to resume, no matter what Israel has said in the past, says Juneau-Katsuya.
In defence of the Kidon Unit, Israel says "pre-emptive" assassinations are necessary to protect it from attacks.
Subscribe to:
Posts (Atom)