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Alarm Clock

Why QE2 Failed: The Money All Went Offshore

bankers money bags
© Unknown
On June 30, QE2 ended with a whimper. The Fed's second round of "quantitative easing" involved $600 billion created with a computer keystroke for the purchase of long-term government bonds. But the government never actually got the money, which went straight into the reserve accounts of banks, where it still sits today. Worse, it went into the reserve accounts of FOREIGN banks, on which the Federal Reserve is now paying 0.25% interest.

Before QE2 there was QE1, in which the Fed bought $1.25 trillion in mortgage-backed securities from the banks. This money too remains in bank reserve accounts collecting interest and dust. The Fed reports that the accumulated excess reserves of depository institutions now total nearly $1.6 trillion.

Interestingly, $1.6 trillion is also the size of the federal deficit - a deficit so large that some members of Congress are threatening to force a default on the national debt if it isn't corrected soon.

So here we have the anomalous situation of a $1.6 trillion hole in the federal budget, and $1.6 trillion created by the Fed that is now sitting idle in bank reserve accounts. If the intent of "quantitative easing" was to stimulate the economy, it might have worked better if the money earmarked for the purchase of Treasuries had been delivered directly to the Treasury. That was actually how it was done before 1935, when the law was changed to require private bond dealers to be cut into the deal.

The one thing QE2 did for the taxpayers was to reduce the interest tab on the federal debt. The long-term bonds the Fed bought on the open market are now effectively interest-free to the government, since the Fed rebates its profits to the Treasury after deducting its costs.

But QE2 has not helped the anemic local credit market, on which smaller businesses rely; and it is these businesses that are largely responsible for creating new jobs. In a June 30 article in the Wall Street Journal titled "Smaller Businesses Seeking Loans Still Come Up Empty," Emily Maltby reported that business owners rank access to capital as the most important issue facing them today; and only 17% of smaller businesses said they were able to land needed bank financing.

Bad Guys

Aiding Insecurity: Four Years of Mexico's Drug War

Mexican federal police
© Adriana Zehbrauskas / The New York Times

A Mexican federal police officer patrols the streets of Acapulco, Mexico, January 28, 2011.

*Region is less secure after nearly four years of regional security cooperation.

* Claims that US national security threatened by drug trafficking remain unsubstantiated.

*Obama administration's professions of "shared responsibility" don't acknowledge the US government's fundamental responsibility.

Mexico's drug-trafficking organizations constitute a threat to regional security and to US national security, says the US government. Yet the region is becoming less secure and less safe as the result of the security emphasis of US counternarcotics initiatives.

The Merida Initiative, signed by President George W. Bush and Felipe Calderon in October 2007, officially launched new US efforts to improve "regional security" through counternarcotics aid programs in Mexico, and, to a lesser degree, in Central America and the Caribbean. [1]

Heart - Black

Murdoch's dirty tricks against Palestinians

Hacking the mobile phones of British families who had lost loved ones to sexually depraved violent criminals, al-Qaeda inspired "terrorists" and Taliban insurgents proved the tipping point that led to the closure of Britain's most popular Sunday newspaper The News of the World, first published in London in 1843 and printed for the very last time on Sunday July 9, 2011.

Rupert Murdoch Scandal
© Gallo/Getty
Murdoch's News International phone hacking scandal will be subject to forensic examination and extensive analysis
To adopt a current media idiom, hacking these telephones at times of deep family grief became toxic for Rupert Murdoch's News International media empire because public support for precisely these victims sits at the heart of all Murdoch's political strategies. As a result, Murdoch has been forced to mount a damage limitation exercise on an unprecedented scale in an effort to protect his global media empire from the fallout.

Hugh Grant, a famous British actor turned investigative journalist, himself a victim of News International phone hacking was the first to acknowledge the extent to which the invasion of celebrities and politicians' privacy paled into insignificance compared to the unpardonable intrusion into the lives of the newly bereaved. Grant is absolutely right, but it is the fact that Sunday's News of the World - like its daily sister The Sun - sets itself up as the champion of these victims that hoisted it by its own petard.

In fact, the "Sarah's Law" campaign that named and shamed convicted paedophiles following the murder of eight-year-old Sarah Payne was spearheaded personally by Murdoch's now beleaguered lieutenant Rebekah Brooks. When confronted with criticism that the campaign encouraged vigilantism and threatened the rule of law she responded that she did not "regret the campaign for one minute". The same well attuned ear for the popular mood led The News of the World and The Sun to launch and promote the popular charity Help the Heroes that supports British troops.


Why the US won't leave Afghanistan

Among multiple layers of deception and newspeak, the official Washington spin on the strategic quagmire in Afghanistan simply does not hold.

Afghanistan troop surge
© Gallo/Getty
The Pentagon wants the White House to "hold off on ending the Afghanistan troop surge until the fall of 2012"
No more than "50-75 'al-Qaeda types' in Afghanistan", according to the CIA, have been responsible for draining the US government by no less than US $10 billion a month, or $120 billion a year.

At the same time, outgoing US Defense Secretary Robert Gates has been adamant that withdrawing troops from Afghanistan is "premature". The Pentagon wants the White House to "hold off on ending the Afghanistan troop surge until the fall of 2012."

That of course shadows the fact that even if there were a full draw down, the final result would be the same number of US troops before the Obama administration-ordered AfPak surge.

And even if there is some sort of draw down, it will mostly impact troops in supporting roles - which can be easily replaced by "private contractors" (euphemism for mercenaries). There are already over 100,000 "private contractors" in Afghanistan.


China "Kidnaps" Bishops to Stage Catholic Ordination

© Reuters
There are thought to be millions of "underground" Catholics in China who remain loyal to Rome.
China has ordained another bishop without the Pope's approval and allegedly kidnapped four bishops to witness the ceremony, in its fiercest act of defiance against the Vatican yet.

In a three hour-long morning ceremony, China's government-run Catholic church ordained the Reverend Joseph Huang Bingzhang as the new bishop of the southern city of Shantou.

It is the third time in eight months that the Communist party - which insists that it, rather than the Pope, controls China's church - has appointed a bishop without a Papal mandate.

Thursday's ceremony was particularly controversial after four bishops loyal to the Vatican were taken away by Chinese police and allegedly forced to participate.

The Rt Revs Liang Jiansen, Liao Hongqing, Paul Su Yongda disappeared from their dioceses in Guangdong province on Sunday, while the Bishop of Guangzhou, the Rt Rev Joseph Junqi, has been missing for even longer.


US: Appeals Court Upholds TSA's Use of Full-Body Scanners

© Cynthia Boll/Associated Press
A U.S. appeals court Friday upheld the use of full-body scanners to screen air travelers, but said the Transportation Security Administration should have sought public comment before deploying them.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that the machines, known as Advanced Imaging Technology (AIT), were not an unconstitutional search and declined to halt their use despite TSA's failure to follow proper procedure.

Privacy advocates, who have strongly opposed the use of the machines, had argued their use constituted an illegal search under the U.S. Constitution's Fourth Amendment. They also said TSA failed to provide public notice that it was deploying them and to seek public comment.

"Any passenger may opt-out of AIT screening in favor of a pat-down, which allows him to decide which of the two options for detecting a concealed, nonmetallic weapon or explosive is least invasive," the three-judge panel ruled.

Evil Rays

Belly-Bomb Baloney: the TSA Lies Yet Again

© Unknown
Ah, belly-bombs -- the Transportation Security Administration's (TSA) newest scare-story for frightening us into its porno-scanners and sexual assaults at airports.

Belly-bombs play right into the TSA's hands even if passengers won't. They kill, which makes them petrifying. And they're invisible but pervasive: since terrorists "surgically implant" them inside the body, almost any passenger could conceal one. Worse, "regular scanning equipment, including full-body scanners, is not designed to penetrate the skin, so it would not be able to detect implanted devices."

Ergo, the possibility that we could explode from causes other than rage at the TSA justifies "additional security measures at U.S. airports and overseas airports serving U.S. destinations, the [TSA] said in a statement. The new measures could include increased use of behavior-detection techniques such as agents studying passengers for nervous behavior and conducting airport interviews, pat-down searches, and efforts to detect traces of explosive materials by swabbing skin and clothing and using explosives-sniffing dogs and machines, the TSA said."

It's all a tad too convenient, isn't it? As the TSA abuses dying grandmothers and molests children, as legislation at both the local and national levels threatens to trim its power, as calls for its abolition reverberate, along comes a diabolical threat right out of Marvel Comics. The lesson from the TSA and its collaborators in the corporate press who ballyhoo belly-bombs is clear: not only do we "need" the agency with its groping and ogling, we must cede it authority for "additional security measures at U.S. airports" - - and everywhere else.


Palestinian-Israeli leader granted bail in UK

Sheikh Raed Salah, who heads the Islamic Movement in Israel, was detained two weeks ago during a speaking tour.
Salah was detained by UK authorities on June 28 during a speaking tour of the country

Sheikh Raed Salah, the detained leader of the Islamic Movement in Israel, has been granted bail by a court in London.

He was detained on June 28 in the UK during a speaking tour, allegedly for entering the country illegally.

Ismail Patel, chair of the activist organisation Friends of Al-Aqsa, who was at Friday's bail hearing, said: "It is a tremendous relief that Sheikh Raed's bail application was successful."

Earlier, as the hearing got under way at the Royal Courts of Justice, a group of 50 people protested peacefully outside, calling on the British authorities to grant bail.

A previous demand last week had been refused.

"We are shocked and horrified that a Palestinian leader can be held like this," Sarah Colborne, director of the Palestine Solidarity Campaign, told Al Jazeera.


Europe steps back from the abyss, for a day

The European Union has reached "crunch time" in the words of George Papandreou, Greece's despondent premier. Its leaders can longer allow themselves the luxury of "indecisiveness, errors and tactical politics" as the debt crisis engulfs 40pc of the eurozone's economy and almost half its population.

© unknown
George Papandreou claims the European Union has reached "crunch time".
"Let us be clear: if there is no relief we are going straight into the abyss," said Romano Prodi, Italy's ex-premier and former head of the European Commission.

Relief came just in the nick of time at 9.15 on Tuesday morning when somebody - most likely the European Central Bank (ECB) - intervened in the Spanish and Italian debt markets. Systemic contagion has been halted. A global crash has been averted. At least for a day.

Cell Phone

US: Millions hit by $2billion in mystery phone charges hidden on their cell bills

© Tomas Rodriguez/Corbis
Unaware: Millions of customers are not informed they are being hit by extra charges
Millions of people have been hit with a total of more than $2billion in hidden costs on their cell phone bills, a government investigation has found.

The practice, known as 'cramming', allows third party companies to attach costs onto people's phone bills, often without authorisation, meaning customers are automatically charged for services they have never requested unless they actively opt out.

The charges are often hidden in the final few pages of customers' bills, meaning they often go unnoticed by millions of people who are far too busy, and perhaps too trusting, to inspect their bills with a fine tooth comb.

The investigation, by the Senate Commerce Committee, began in May last year after 'consumers had complained for years that they were finding mysterious charges on their telephone bills for services they had not purchased," the report stated.

The investigation found there is a loophole in the law which allows for third party billing on cell phone bills from companies which provide services such as voicemail and paid for 800 numbers.

Often customers do not know these services have been set up for them and mobile providers are reluctant to clarify the process because they make money from the extra charges, the report found.

The practice of cramming began in the 1990s when phone companies started allowing accounts to be used as credit cards.