Monday, November 26, 2007

The Bible is very clear: Genesis 12:3, “And I will bless them that bless you, and curse him that curses you.”

The Two Real Sides Of Annapolis Physical and Spiritual
- Bill Wilson

By Bill Wilson, KIN Senior Analyst

WASH—Nov 26—KIN-- The Middle East Peace Summit in Annapolis, Maryland has two sides to it—a physical side where leaders from around the world gather to make the public believe they are interested in peace; and a spiritual side that most involved have no idea the pending destruction that has been created by meetings such as these. Some 49 countries have been invited to attend the summit, most of them hostile to Israel. President George W. Bush, like most every American president since Jimmy Carter (except for Ronald Reagan), is attempting to broker peace in the Middle East by having a well-publicized summit.

Ahead of the summit, oil prices have been climbing toward that magic number of $100 per barrel. The dollar has been declining to record lows against many major currencies. Political disruption has increased in Pakistan, seemingly in the process of shifting the war on terror’s front from Iraq. Iran continues its quest to become a member of the nuclear club. Russia has made public that its nuclear arsenal is armed and ready. China is aggressively pursuing cyber warfare and space warfare development, while it is selling off its reserve of American dollars. There have been droughts, floods, fires, and other disasters throughout the United States. And the collective impact of all these events is taking a toll on American citizens.

Spiritually, President Bush and his administration are at cross-purposes to prophetic passages in the Bible that pertain to Israel. Bush is insistent on Israel giving up its traditional Biblical lands for a peace agreement with so-called Palestinians, despite a miserable failure of Palestinians electing terrorists to represent them and Israel, in good faith, giving up Gaza. This has resulted in Gaza becoming a lawless base of terror against Israel rather than a model of a Palestinian state co-existing side by side in peace with Israel, as Bush had hoped. What the President has done is move a spiritual stronghold from the Middle East to the Naval Academy in Annapolis, Maryland.

Now the spiritual battle may well rage over one of the world’s foremost military academies. All the hostile nations of the world gathered in one place against Israel in Annapolis, Md., are armed with the spirit of division—dividing Israel and the holy city of Jerusalem. In this, the Bible is very clear: Genesis 12:3, “And I will bless them that bless you, and curse him that curses you.” Zechariah 12:3, “And in that day will I make Jerusalem a burdensome stone for all people: all that burden themselves with it shall be cut in pieces, though all the people of the earth be gathered together against it.” And this is the case for Annapolis, because all the nations are trying to divide Jerusalem, even the friends of Israel.

Pakistans Missing Nukes

The Voice of the White House

Washington, D.C., November 23, 2007: “Now we learn, from clandestine filchings from the PDB, that some evil person in Pakistan, probably some of their generals, have made off with cores for atomic weapons from their repositories. What does this mean? The probability of some kind of nuclear accident based on the militancy in the Muslim world. No one, not the useless CIA, the Pentagon or any other U.S. intelligence agency has the slightest idea what happened to the deadly nuclear cores. We know they were stolen and very recently and an attempt made to conceal this. We know that it would be impossible to steal these from the custody of the Pakistani military without top level assistance. What are we going abut it? Nothing but pray a lot. The political situation in Pakistan is at the critical mass point and our response is to pretend everything is wonderful, just like we’re pretending everything is just peachy in Baghdad and that no more bombs are going off in crowded mosques or markets. If you put your head in the sand once too often, you can get a vicious kick in the ass.”

Harry Brunser Report

Editor’s note: Mr. Brunser is an excellent source of official top-level, inside foreign intelligence information.

The current situation in Pakistan as of November 21, 2007, is roughly this: Desperate to hang on to power at any cost mainly because of his access to unlimited and uncontrolled U.S. cash gifts, General Pervez Musharraf is refusing to stand down on his draconian declaration of martial law in Pakistan. Threats and pleadings from Washington result in vague assurances of “coming elections” but there has been no action on Musharraf’s part to defuse what is a very serious problem. The Islamic fundamentalists on his borders with Afghanistan are growing stronger and as the Pakistani army is being used to control internal dissents, are moving into territory once considered securely in the hands of that organization. Growing public outrage at the crackdown pales into insignificance in comparison with the hyper-critical situation with Pakistan’s nuclear arsenal. True, the domestic crisis is masking the really critical issue. : Nobody in the American security community seems to have considered the possibility that someone with access to the nuclear cores could abscond with two or three cores quite successfully, by replacing them with spheres of the same size machined from depleted uranium, of which latter material the USA has used literally hundreds of tons as 50-caliber ammunition and anti-tank rounds in Iraq and Kosovo. Depleted uranium ammunition is considered "harmless" by the USA and is extremely loosely controlled. Anyone with military connections could probably easily obtain several hundred pounds of this material in the form of DU ammunition, and re-machine it into metal spheres perfectly mimicking, in size, appearance, and weight, the real atomic cores. All that remains is to substitute the DU spheres for the HEU spheres during an inspection and tallying process. We do not know Pakistan's monitoring procedures, which are surely highly secret, but certainly such inspections must be performed quite regularly, most probably by two, or less likely three people, and would present an easy opportunity for substitution when a colleague is distracted or has his back turned. If the inspections consisted merely of a numerical count, and did not include testing with a Geiger counter (which is unlikely, except very occasionally to ensure the core had not deteriorated) the substitution could go unnoticed for years.

This scenario should cause an immense furor, when you publicly claim that such a thing has actually happened. Not only might this conceivably have happened in Pakistan, but anywhere that nuclear cores are stored. Every nuclear power as a result will be soiling themselves and scrambling to test their thousands of stored cores. However, since Pakistan is swarming with Islamic crazies, even among its top scientists, it is most terrifying to contemplate this having happened there.

All of this having been said, we have it on very reliable information that at least six nuclear cores have been taken and had substitutes installed in their place. This has happened within the past two and a half months. Although we are aware of this, we do not know who took them (though it had to be done with high-level military cooperation) and we do not know what the thieves are going to do with them. Our sources indicate that on a scale of ten, nine indicates an attack on India, probably the huge marketplace in Delhi. Naturally, we cannot inform India of this because if we plan any military action in Pakistan, which is now being very seriously considered, we will need India for a forwarding base. For this reason, we have lied to India and assured them that we have taken custody of all the atomic weapons. What we did not tell them is that six of the cores have been taken and we have no idea where they are, who took them or what they plan to do with them. Given that very high level Pakistani military personnel had to have been involved, their coverup is intense and to date, we have been unable to penetrate their security. Outward friendliness is the watchword but secret plotting is the actuality.

A Generalized Meltdown of Financial Institutions: Take a Look at Professor Roubini's Crystal Ball
A Generalized Meltdown of Financial Institutions: Take a Look at Professor Roubini's Crystal Ball
Sun, 25 Nov 2007 13:00:00

By Mike Whitney
(Counter Punch) - Reality has finally caught up to the stock market. The American consumer is underwater, the banks are buried in dept, and the housing market is in terminal distress. The Dow is now below its 200-Day Moving Average -- the first big "sell" signal. Anything below 12,500 could trigger program-trading and crash the market. The increased volatility suggests that we are watching a "real time" meltdown.

International Business editor for the UK Telegraph, Ambrose Evans Pritchard, summed up yesterday's action in the Asian markets:

"The global credit crisis has hit Asia with a vengeance for the first time, triggering a massive flight to safety as investors across the region pull out of risky assets. Yields on three-month deposits in China and Korea have plummeted to near 1pc in a spectacular fall over recent days, caused by panic withdrawals from money market funds and credit derivatives.

"'This' is a severe warning sign,' said Hans Redeker, currency chief at BNP Paribas. 'Asia ignored the credit crunch in August but now we're seeing the poison beginning to paralyze the whole global economy.'" (Credit 'Heart attack' engulfs China and Korea" Ambrose Evans Pritchard,UK Telegraph,)

The credit storm that began in the United States with subprime mortgages has spread to markets across the globe. In fact, the train has already crashed. What we're seeing now is the boxcars piling up on top of each other.

On Tuesday Chinese government officials ordered a complete halt to bank lending to slow the speculative frenzy that has created an enormous equity bubble in the stock market. According to the Wall Street Journal:

"Chinese authorities are slamming the brakes on bank lending, in their latest attempt to curb the runaway investment threatening to overheat what is soon to be the world's third-largest economy. In recent weeks, regulators have quietly ordered China's commercial banks to freeze lending through the end of the year, according to bankers in several cities. The bankers say that to comply, they are canceling loans and credit lines with businesses and individuals." ("China freezes lending to Curb Investing Frenzy" Wall Street Journal)

The move illustrates how concerned the Chinese are that a slowdown in US consumer spending will trigger a crash on the Shanghai stock market. It also shows that the Chinese are having difficulty dealing with the inflation generated by the hundreds of billions of US dollars absorbed via the trade imbalance with the US. China is awash in USDs and that surplus is causing a steady rise in food and energy costs. This could be mitigated by allowing their currency to "float" freely. But a sudden, steep increase in the Chinese yuan's value could also send the world headlong into a global recession. For now, the lending freeze and price fixing appear to be the way out.

Another sign that the markets have reached a "tipping point" appeared in a Reuters article on Wednesday; "Interbank Covered Bond Trading Halted on Volatility":

"Renewed credit turmoil and volatility led the European Covered Bond Council (ECBC) on Wednesday to suspend inter-bank market-making in covered bonds until Monday, Nov. 26.

The move is a sign of the stress in the covered bond market, which is dominated by German institutions that have almost a trillion euros of covered bonds outstanding.

Covered bonds -- backed by pools of assets that remain on the borrower's balance sheet -- are usually highly liquid and typically rated triple-A by ratings agencies. The ECBC's recommendation is aimed at relieving the pressure on market makers who are forced to quote prices at a fixed bid-offer spread.

"In light of the current market situation and in order to avoid undue over-acceleration in the widening of spreads, the 8-to-8 Market-Makers & Issuers Committee recommends that inter-bank market-making be suspended," the ECBC said in a release."

Note: This isn't mortgage-backed junk that's being sold, but highly liquid bonds that are usually easy to cash in. The ECBC's action is a sign of pure desperation and indicates that credit paralysis has infected the entire euro banking system.

Reuters: "Due to general market conditions and the specific mechanics of the inter-dealer market making it even seems possible that inter-dealer market making will not be resumed this year."

That's bad. The mechanism for converting covered bonds into cash has broken down.

The dollar took another pasting on Wednesday, sliding to $1.49 on the euro; another new record. Gold shot up to $814 per ounce. Oil continues to flirt with the $100 per barrel mark, and the yen rose to 107 per dollar forcing a sell-off of hedge fund assets levered through the carry trade.

Jon Basile, economist at Credit Suisse, summed it up like this: "There's a heck of a lot of bad news out there." Indeed.

In California Governor Arnold Schwarzenegger has joined with four mortgage lenders to freeze adjustable interest rates (ARMs) for some of the state's highest-risk borrowers; another unprecedented move. The Governor hopes to avoid a collapse of the California real estate market which has gone into a tailspin. Home sales have plummeted more than 40 per cent for the last two months. Prices have dropped sharply---roughly 12 per cent statewide. New construction has slowed to a crawl. Layoffs are steadily rising. Jumbo loans (mortgages over $417,000) have been put on the "Endangered Species" list. Even qualified borrowers can't get mortgages. Nothing is selling. California housing is "off the cliff".

Schwarzenegger's plan to keep over-extended subprime mortgage-holders in their homes faces an uncertain future. What incentive is there for homeowners to continue paying exorbitant monthly rates when their payments are not applied to the principle? The homeowners would be better off bailing out, accepting foreclosure, and starting over with a clean slate.

It's unrealistic to thinks that Schwarzenegger can stop the tidal wave of foreclosures that are sweeping across the state. An estimated 3 million homeowners will lose their homes nationwide.

If you want to blame someone; blame Alan Greenspan. He's the one who created this mess. According to the economist Mike Shedlock:

"The Fed caused the credit crunch by slashing interest rates to 1 per cent to bail out its banking buddies in the wake of a dotcom bubble collapse. All the Fed did was create a bigger bubble. This bubble is so big in fact that it cannot even be bailed out. It's the end of the line for a serially bubble blowing Fed.

"So not only was this the biggest credit bubble in history, this was also the biggest transfer of wealth from the poor and middle class to the already enormously wealthy. That is the real travesty of justice regardless of whether or not the price tag is $1 trillion, $2 trillion, or $10 trillion." (Mike Shedlock, "Mish's Global Economic Trend Analysis")

The problem has gotten so serious that even Secretary of the Treasury, Henry Paulson, is putting up red flags. Last week, Paulson ignited a sell-off on Wall Street when he made this statement:

"The nature of the problem will be significantly bigger next year because 2006 [mortgages] had lower underwriting standards, no amortization, and no down payments....We're never going to be able to process the number of workouts and modifications (to mortgages) that are going to be necessary doing it just sort of one-off. I've talked to enough people now to know that there's no way that's going to work."

The desperation is palpable. Like Schwarzenegger, Paulson is trying to get mortgage-lenders to provide a safety net for struggling borrowers who are defaulting on their loans.

Paulson is calling for emergency legislation that will allow the Federal Housing Administration to play a greater role in the relief effort. The FHA has already expanded its traditional role by taking on hundreds of billions in extra debt just to keep a few "private" mortgage lenders and banks from going bankrupt. Of course, when Paulson's plan goes kaput and the debts pile up; it'll be the taxpayer that foots the bill.

"Paulson also called the Senate's failure to pass legislation overhauling mortgage giants Fannie Mae and Freddie Mac frustrating," saying that the two government-sponsored entities need to be playing a bigger role in the housing market.

"If we ever need them it's during times like today, and they're most valuable when there is distress in the mortgage market," he said. "I'd like to see them playing an even bigger role."(Wall Street Journal)

Fannie and Freddie, have already posted enormous quarterly losses and don't have the capital reserves to put millions of subprime mortgage-holders under their "government-sponsored" umbrella. Paulson is just grabbing at straws.

Similar troubles are brewing in the broader market where late-payments and defaults have spread to credit card debt and new car loans. Every area of "securitized" debt has suddenly veered off the road and into the ditch. Last week the Fed injected more credit into the teetering banking system than anytime since 9-11.

No one has predicted the downward-spiral in the market more accurately than Nouriel Roubini. Roubini is a Professor at the Stern School of Business at New York University. His analysis appears regularly on his blogsite, Global EconoMonitor. Last week's prediction was particularly dire and is worth reprinting here:

"It is increasingly clear by now that a severe U.S. recession is inevitable in next few months...I now see the risk of a severe and worsening liquidity and credit crunch leading to a generalized meltdown of the financial system of a severity and magnitude like we have never observed before. In this extreme scenario whose likelihood is increasing we could see a generalized run on some banks; and runs on a couple of weaker (non-bank) broker dealers that may go bankrupt with severe and systemic ripple effects on a mass of highly leveraged derivative instruments that will lead to a seizure of the derivatives markets... massive losses on money market funds with a run on both those sponsored by banks and those not sponsored by banks; ..ever growing defaults and losses ($500 billion plus) in subprime, near prime and prime mortgages with severe knock-on effect on the RMBS and CDOs market; massive losses in consumer credit (auto loans, credit cards); severe problems and losses in commercial real estate...; the drying up of liquidity and credit in a variety of asset backed securities putting the entire model of securitization at risk; runs on hedge funds and other financial institutions that do not have access to the Fed's lender of last resort support; a sharp increase in corporate defaults and credit spreads; and a massive process of re-intermediation into the banking system of activities that were until now altogether securitized." (Nouriel Roubini's Global EconoMonitor)

"A generalized meltdown of the financial system".

Looks like Chicken Little might have gotten it right this time; "The sky IS falling."

Mike Whitney lives in Washington state. He can be reached at: