US Banks Send in the Lobbyists to Blunt Reform

Thursday, June 17, 2010 by The Independent/UK
by Sean O'Grady

Wall Street's biggest banks are engaged in the legislative equivalent of house-to-house fighting as the final provisions of the US financial reform bill are decided in Congress.

With lawmakers working to tie up the most sweeping reform of banking since the Great Depression by the end of this month, billions of dollars are at stake in almost every line of the legislation, and lobbyists for the industry are still confident of securing the defeat of some of the harshest provisions under discussion.

In particular, they are focusing on getting Congress to drop a provision that would force banks to sell off their lucrative derivatives trading businesses - but the industry is resigned to accepting a quid pro quo, namely new curbs on their ability to conduct proprietary trading.

Analysts at Citigroup yesterday estimated that up to 11 per cent of Wall Street's profits are at risk from the reforms, which are designed to make the financial system safer and avoid a repeat of the credit crisis. Worst hit would be Goldman Sachs, which could lose 23 per cent of its earnings.

The US Senate passed its version of a financial reform bill on 21 May, five months after the lower House of Representatives passed its own bill, and the pair now have to be married together before legislation is presented for the presidential signature - by a tentative deadline of 4 July.

Between now and then, senior politicians from both Houses and from both parties are going line by line through the legislation. This conference process began last Thursday and Wall Street has already succeeded in winning some minor victories, but the biggest fight - over exactly which bits of their business banks will be forced to exit - will come towards the end of the discussion.

The two key names to watch out for are Paul Volcker, the former chairman of the Federal Reserve and now a White House adviser, and Arkansas senator Blanche Lincoln, chairman of the Senate agriculture committee, which oversees the derivatives markets.

The "Volcker rule" would require banks to stop "proprietary trading" - that is, trading for their own profit instead of simply making trades for clients. It is simply unfair, Mr Volcker says, that banks operating with access to Federal Reserve assistance should be using that advantage for themselves rather than for clients.

The Volcker rule certainly means in-house hedge funds and private equity funds will have to be spun off; the question is how to distinguish proprietary and client trading. What is the difference between a bank buying an investment because traders think it will go up in value and buying it because they think there will be demand from clients?

Senator Lincoln's proposal added a whole new threat to Wall Street profits, since it demands that all trading in credit default swaps be conducted outside of banks. It was these opaque derivative contracts that led the financial panic to spread through the banking system in 2008, because banks had entered into trillions of contracts with each other but no one could trace who was exposed to what liabilities. The Obama administration preferred to force swaps trading on to public exchanges, ending the opacity, and does not support the Lincoln proposal, but it passed the Senate nonetheless.

The question now is whether it will survive the conference process, and Wall Street lobbyists are fighting to ensure it does not. Allies in the White House already appear to have had some success in watering down the plan. In a "clarification", Senator Lincoln suggested that her rules would allow banks to house swaps trading in a separate subsidiary which could only raise capital from shareholders or the financial markets. Analysts, however, believe the proposal could still be defeated in conference.

These debates are still to come. In the early stages of the conference process, lawmakers focused on easier areas. On Tuesday, for example, they voted to raise the cap on deposit insurance to $250,000 (£169,000) from $100,000, a move they hope will allow banks to attract more cheap money from savers. Yesterday, they were debating allowing shareholders to sue a company's banks and accountants when company officers commit securities fraud.

Credit rating agencies also scored an early victory, securing the removal of a provision that would have created a government panel to assign business to 10 federally approved agencies as a way of ending the conflicts of interest that many blame for the credit crisis. The big agencies are paid to give ratings by the issuers of debt or the creators of mortgage derivatives, something that lawmakers believe led them to mischaracterise many toxic mortgage derivatives as safe investments. Instead of the government panel, there will be a longer study of the issue, looking for a better solution.

Once the laws are in place, the focus will switch down to the regulators that will be charged with interpreting the laws and coming up with the detailed rules that govern things such as capital requirements and the characterisation of individual trades. Much of this will dovetail with the international rules coming out of the Bank for International Settlements.

Whatever big changes are decided, banks will be given years to implement them. The impact on earnings will therefore be delayed, while the impact on stock prices could be immediate - and perhaps surprisingly positive. "We believe a final regulatory reform law could be a positive catalyst as it should remove some of the overhang on the stocks that we have seen throughout the unpredictable regulatory reform process," Citigroup's bank analyst, Keith Horowitz, said. "It appears investors have already factored in most of the impact. Uncertainty has created very attractive buying opportunities."

The Holes in the Finance Bill

How It Can be Improved
By KEVIN ZEESE

The financial reform bill in its final stages of legislative action did not break up the big banks, re-instate Glass-Steagall, reign in bonuses and executive salaries, stop the usury rates for pay day loans and credit cards, nor did it require re-making of mortgages in light of the housing collapse, but there are still some key issues worth fighting for – issues the big banks and, too often, the Obama administration, are trying to remove from the bill.

Right now the conference committee is holding behind closed door negotiations where bank lobbyists through big bank friendly lawmakers are trying to strip key reforms from the bill. There are three key issues we should be urging legislators to support:

1. Stop Taxpayer Subsidies for Risky Derivatives: Sec. 716 of the Senate bill contains a ban on federal government assistance to any swap entity involved in the risky derivatives market. The derivatives market worth hundreds of trillions of dollars is conducted with no transparency and was a root cause of the financial collapse. Sec. 716 will require the five largest banks/swaps dealers (Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup and Bank of America responsible for 90% of the swaps and derivatives markets) to spin off their swaps desks into a separately capitalized affiliate. It is critical to separate the casino derivatives market from old fashioned banking because it is risky and these banks are so big that if they fail the taxpayers will be forced, once again, to bail the out or suffer a collapse of the economy. Sec. 716 is designed toward preventing a situation in which taxpayers would once again be liable for the risky bad bets of big banks. Sec. 716 would ensure that private sector institutions alone are responsible for these risky trades.

2. Sufficient Capital for Bets – Rep. Susan Collins was able to get included an amendment that required banks to hold sufficient capital for their risky investments. Legislators should be urged to take the strongest measures from the House and Senate versions of the bill. Unfortunately, the Obama administration through officials in the Treasury Department, along with the Federal Reserve and Wall Street banksters are working to kill the Collins Amendment even though it was adopted unanimously. The amendment, supported by Sheila Bair co-chair of the FDIC, would force big U.S. banks with more than $250 billion in assets to meet higher capital requirements when they are engaging in risky activities like derivatives, financial guarantees and repurchase agreements, i.e. the types of activities that caused the economic collapse.

3. Independent Consumer Agency – Perhaps the most hopeful proposal from President Obama was the creation of an independent consumer agency. This would create a focused watchdog to stop obvious bank abuses by giving consumers somewhere to go to challenge subprime mortgages, abusive and arbitrary rate hikes on your credit card, payday loans and hidden bank fees.

Unfortunately, the agency has been put in the Federal Reserve which is primarily concerned about keeping the banking system stable. And, amendments have passed that weaken the agency further, e.g. Rep. Brad Miller (D-N.C.) sponsored an amendment exempting 8,000 of the nation's 8,200 banks from the CFPA's oversight. Another requires the director of the agency to take input from other regulators whose focus is protecting the banks not consumers. These amendments can be removed so consumers have an advocate who can protect us from banking abuses.

Prosperity Agenda is joining with other organizations like A New Way Forward and BanksterUSA to urge legislators to strengthen the final bill. The top targets of our attention are Senate Banking Chair, Chris Dodd (D-CT), House Financial Services Chair Barney Frank, Sen. Charles Schumer (D-N) and Sen. Judd Gregg (R-NH). For a full list of the members of the conference committee and where they stand and their phone numbers click here.

There is no question that the concentrated corporate power of Wall Street is working to weaken the already disappointing financial reform bill. There is only one antidote to their power and that is our power. To be effective conscious citizens must be organized, active and persistent. Please call today and let your legislators know you want real reform. Time is running out – call now.

The Gusher and the Sun

(In response to the article below, Why ONLY solar? It will take more than just 'green' solar energy to replace foreign oil. It will take natural gas, ethanol and other biofuels, wind, and whatever else we have cooking, not just solar. But this is a good article advocating solar's positive aspects.-jef)




The Time for Solar is Now
By HARVEY WASSERMAN

BP's apocalyptic Gulf gusher has put our ability to survive in serious doubt.

We have no reason to believe an end to the crisis is near---or even in sight. Nor can we begin to calculate the damage to our Mother Earth…to her oceans, to the core of her being…and to each of us as individual organisms.

Only one thing IS clear: we cannot ultimately survive without a rapid conversion to a Solartopian economy that is totally green-powered. That transformation will be forced by biological imperatives, not money or markets.

The powers that be studiously avoid the core reality that this disaster stems from the ability of large corporations to make all of us pay for their irresponsible greed.

The black poisons killing our global body gush from a system that grants corporations human rights but does not demand human responsibility.

It is suicidal to allow corporations to deploy technologies they cannot mange or insure and then make us pay for their greed.

From banking to industry to energy, the system privatizes profits and socializes disaster. It is the essence of what Mussolini called "corporate control of the state."

Liability at the Deepwater Horizon was set at a paltry $75 million. Had BP been forced to account beforehand for the scale of harm now being done, that well would never have been drilled.

The $20 billion Obama wants BP to ante up won't cover a fraction of the damages. In fact, BP does not have sufficient assets to pay for what it has done, any more than any owner of any nuclear power plant could cover the downwind horrors of a major meltdown.

The liability pool for an atomic reactor disaster stands at a scant $11 billion. These reactor pushers all claim such an accident is virtually impossible. Just like BP.

The Obama Administration supports these nuclear loan guarantees. But it could no more meet the monetary and logistic challenges of a melt down than it's done at Deepwater Horizon.

As always, society as a whole, not the corporate perps, would be forced to pay.

For us to survive, technologies that can't be insured must be replaced with ones that can. That means wind, solar, tidal, geothermal, ocean thermal, sustainable biofuels, wave energy, current energy and a massive push for increased efficiency and conservation, including a restoration of mass transit.

All the above bear risks of some sort. But all can get liability insurance. None threaten our survival.

Fossil/nukers say such technologies are years away from meeting our needs.

But the barriers are not primarily technological---they are defined by the corporate-run world of money, markets and bureaucratic corruption.

Remove socialized risk while taxing ecological impacts and Solartopian technologies would eventually force fossil/nuclear fuels to extinction.

But could the market make that happen before we terminally pollute our planet?

The BP gusher says: not likely.

After Pearl Harbor, Franklin Roosevelt set completely "undoable" goals for armaments production. All defied a market economy and sober assessments of what we could actually accomplish. And all were met.

In crisis, we've conjured military mobilizations, the New Deal, Manhattan Project, Marshall Plan, stimulus package, bank bailouts, public works projects and whatever else it took to survive.

Now energy consumption must plummet as efficiency and green production rise to supplant the fossil/nuclear technologies that are killing us. Our basic biology demands the twain meet before BP and its buddies kill us all.

The Solartopian scenario requires not just a shift in energy production and consumption. It means an end to war, which is not sustainable anywhere, for any alleged cause. Real peace in turn demands social justice, which can come only with true democracy---paper ballots and all. Our food needs to be raised organically. Our numbers can only be controlled by freely educated, empowered women in bio-conspiracy with our Mother Earth.

Above all, the corporate structure that rules our world must be replaced with a means of organization that serves people and the planet, not the reverse. BP's black death pouring through our oceans says we cannot afford the free market illusions of a corporate-sponsored apocalypse.

A system that is peaceful, just and totally green-powered is the only way we survive.

Five Questions for Tony Hayward

BP in the Dock
By ROBERT WEISSMAN

BP CEO Tony Hayward today faces what is sure to be a tough inquisition before the House Energy and Commerce Committee.

Here are five questions Hayward should be forced to answer under oath:

1. Do you agree that the Deepwater Horizon disaster could have been averted if BP had exercised a greater degree of concern for safety?

In advance of the hearing, Energy and Commerce Committee Chair Henry Waxman and Subcommittee on Oversight and Investigations Chair Bart Stupak sent Hayward a detailed letter elaborating five separate cost-cutting and corner-cutting decisions made by BP. Had BP made a different decision in any of these and other instances -- prioritizing safety over profit -- it is likely the Gulf catastrophe could have been averted. The Committee is sure to focus on these issues.

2. If you believe that the Gulf gusher is simply an unfortunate accident, rather than the result of BP's negligence and recklessness, do you therefore agree that deepwater drilling is too risky and dangerous?

3. Even if this disaster could have been prevented if BP had not been so reckless, doesn't the scale of the gusher and the fecklessness of BP's response mean that deepwater drilling should be abandoned?

It is evident that the gusher is having a devastating effect on the Gulf's ecology, but no one knows how serious it is or will be. This disaster has far outpaced scientific knowledge about the deep sea.

The disaster has also shown that, while oil giants do have the technology to drill a mile below sea level and miles into the earth's core, they do not have commensurate capacity to handle an oil geyser a mile below the ocean's surface. There is not even a serious capacity to control oil on the surface.

4. After the explosion, BP claimed 1,000 barrels a day were leaking into the ocean. The government now estimates 60,000 barrels are gushing a day. Some experts believe the amount may be more like 100,000. Some skeptics have understandably raised questions about whether BP's initial public statements on the size of the leak were made in good faith. Will you release all internal estimates and related documentation on the size of the oil gusher, and continue to release such information publicly as you generate it?

More generally, will you presumptively share publicly all materials you are now generating related to capping the well, capturing oil and cleaning up the ocean and shore?

Information about BP's operations in this regard can no longer be considered proprietary and nonpublic, if it ever should have been. BP is now performing essentially public functions in trying to address the gusher. BP remains in control of the remedial process only because the government does not have the technological capacity to take over.

5. You have agreed to pay $20 billion into an escrow fund to pay victims of the oil gusher. You have also agreed to suspend dividend payments for this year. But BP's liabilities may vastly exceed $20 billion. Do you pledge to make available the resources of the entire BP corporate structure to satisfy these liabilities?

Behind this question: There is good reason to be concerned about BP trying to isolate liability in one or more subsidiaries, and then either entering the subsidiary into bankruptcy, or manipulating the corporate form in an attempt to pay all of what it will owe.

For Tony Hayward and BP, the hard questions are just beginning.

Devising Solutions to Help the Gulf

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An Energy-Independent Future -- Daily Show

Lewis Black on Democrats & Republicans

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What's wrong with the sun?

14 June 2010 by Stuart Clark

SUNSPOTS come and go, but recently they have mostly gone. For centuries, astronomers have recorded when these dark blemishes on the solar surface emerge, only for them to fade away again after a few days, weeks or months. Thanks to their efforts, we know that sunspot numbers ebb and flow in cycles lasting about 11 years.

But for the past two years, the sunspots have mostly been missing. Their absence, the most prolonged for nearly a hundred years, has taken even seasoned sun watchers by surprise. "This is solar behaviour we haven't seen in living memory," says David Hathaway, a physicist at NASA's Marshall Space Flight Center in Huntsville, Alabama.

The sun is under scrutiny as never before thanks to an armada of space telescopes. The results they beam back are portraying our nearest star, and its influence on Earth, in a new light. Sunspots and other clues indicate that the sun's magnetic activity is diminishing, and that the sun may even be shrinking. Together the results hint that something profound is happening inside the sun. The big question is what?

The stakes have never been higher. Groups of sunspots forewarn of gigantic solar storms that can unleash a billion times more energy than an atomic bomb. Fears that these giant solar eruptions could create havoc on Earth, and disputes over the sun's role in climate change, are adding urgency to these studies. When NASA and the European Space Agency launched the Solar and Heliospheric Observatory almost 15 years ago, "understanding the solar cycle was not one of its scientific objectives", says Bernhard Fleck, the mission's project scientist. "Now it is one of the key questions."

Sun behaving badly
Sunspots are windows into the sun's magnetic soul. They form where giant loops of magnetism, generated deep inside the sun, well up and burst through the surface, leading to a localised drop in temperature which we see as a dark patch. Any changes in sunspot numbers reflect changes inside the sun. "During this transition, the sun is giving us a real glimpse into its interior," says Hathaway.

When sunspot numbers drop at the end of each 11-year cycle, solar storms die down and all becomes much calmer. This "solar minimum" doesn't last long. Within a year, the spots and storms begin to build towards a new crescendo, the next solar maximum.

What's special about this latest dip is that the sun is having trouble starting the next solar cycle. The sun began to calm down in late 2007, so no one expected many sunspots in 2008. But computer models predicted that when the spots did return, they would do so in force. Hathaway was reported as thinking the next solar cycle would be a "doozy": more sunspots, more solar storms and more energy blasted into space. Others predicted that it would be the most active solar cycle on record. The trouble was, no one told the sun.

"The latest solar cycle was supposed to be the most active on record. The trouble was, no one told the sun"

The first sign that the prediction was wrong came when 2008 turned out to be even calmer than expected. That year, the sun was spot-free 73 per cent of the time, an extreme dip even for a solar minimum. Only the minimum of 1913 was more pronounced, with 85 per cent of that year clear.

As 2009 arrived, solar physicists looked for some action. They didn't get it. The sun continued to languish until mid-December, when the largest group of sunspots to emerge for several years appeared. Finally, a return to normal? Not really.

Even with the solar cycle finally under way again, the number of sunspots has so far been well below expectations. Something appears to have changed inside the sun, something the models did not predict. But what?

The flood of observations from space and ground-based telescopes suggests that the answer lies in the behaviour of two vast conveyor belts of gas that endlessly cycle material and magnetism through the sun's interior and out across the surface. On average it takes 40 years for the conveyor belts to complete a circuit (see diagram).

When Hathaway's team looked over the observations to find out where their models had gone wrong, they noticed that the conveyor-belt flows of gas across the sun's surface have been speeding up since 2004.

The circulation deep within the sun tells a different story. Rachel Howe and Frank Hill of the National Solar Observatory in Tucson, Arizona, have used observations of surface disturbances, caused by the solar equivalent of seismic waves, to infer what conditions are like within the sun. Analysing data from 2009, they found that while the surface flows had sped up, the internal ones had slowed to a crawl.

These findings have thrown our best computer models of the sun into disarray. "It is certainly challenging our theories," says Hathaway, "but that's kinda nice."

It is not just our understanding of the sun that stands to benefit from this work. The extent to which changes in the sun's activity can affect our climate is of paramount concern. It is also highly controversial. There are those who seek to prove that the solar variability is the major cause of climate change, an idea that would let humans and their greenhouse gases off the hook. Others are equally evangelical in their assertions that the sun plays only a minuscule role in climate change.

If this dispute could be resolved by an experiment, the obvious strategy would be to see what happens when you switch off one potential cause of climate change and leave the other alone. The extended collapse in solar activity these past two years may be precisely the right sort of test, in that it has significantly changed the amount of solar radiation bombarding our planet. "As a natural experiment, this is the very best thing to happen," says Joanna Haigh, a climatologist at Imperial College London. "Now we have to see how the Earth responds."

The climate link
Mike Lockwood at the University of Reading, UK, may already have identified one response - the unusually frigid European winter of 2009/10. He has studied records covering data stretching back to 1650, and found that severe European winters are much more likely during periods of low solar activity (New Scientist, 17 April, p 6). This fits an emerging picture of solar activity giving rise to a small change in the global climate overall, yet large regional effects.

Another example is the Maunder minimum, the period from 1645 to 1715 during which sunspots virtually disappeared and solar activity plummeted. If a similar spell of solar inactivity were to begin now and continue until 2100, it would mitigate any temperature rise through global warming by 0.3 °C on average, according to calculations by Georg Feulner and Stefan Rahmstorf of the Potsdam Institute for Climate Impact Research in Germany. However, something amplified the impact of the Maunder minimum on northern Europe, ushering in a period known as the Little Ice Age, when colder than average winters became more prevalent and the average temperature in Europe appeared to drop by between 1 and 2 °C.

A corresponding boost appears to be associated with peaks in solar output. In 2008, Judith Lean of the Naval Research Laboratory in Washington DC published a study showing that high solar activity has a disproportionate warming influence on northern Europe (Geophysical Research Letters, vol 35, p L18701).

So why does solar activity have these effects? Modellers may already be onto the answer. Since 2003, spaceborne instruments have been measuring the intensity of the sun's output at various wavelengths and looking for correlations with solar activity. The results point to the sun's emissions of ultraviolet light. "The ultraviolet is varying much, much, much more than we expected," says Lockwood.

Ultraviolet light is strongly linked to solar activity: solar flares shine brightly in the ultraviolet, and it helps carry the explosive energy of the flares away into space. It could be particularly significant for the Earth's climate as ultraviolet light is absorbed by the ozone layer in the stratosphere, the region of atmosphere that sits directly above the weather-bearing troposphere.

More ultraviolet light reaching the stratosphere means more ozone is formed. And more ozone leads to the stratosphere absorbing more ultraviolet light. So in times of heightened solar activity, the stratosphere heats up and this influences the winds in that layer. "The heat input into the stratosphere is much more variable than we thought," says Lockwood.

Enhanced heating of the stratosphere could be behind the heightened effects felt by Europe of changes in solar activity. Back in 1996, Haigh showed that the temperature of the stratosphere influences the passage of the jet stream, the high-altitude river of air passing from west to east across Europe.

Lockwood's latest study shows that when solar activity is low, the jet stream becomes liable to break up into giant meanders that block warm westerly winds from reaching Europe, allowing Arctic winds from Siberia to dominate Europe's weather.

The lesson for climate research is clear. "There are so many weather stations in Europe that, if we are not careful, these solar effects could influence our global averages," says Lockwood. In other words, our understanding of global climate change could be skewed by not taking into account solar effects on European weather.

Just as one mystery begins to clear, another beckons. Since its launch 15 years ago, the SOHO spacecraft has watched two solar minimums, one complete solar cycle, and parts of two other cycles - the one that ended in 1996 and the one that is just stirring. For all that time its VIRGO instrument has been measuring the total solar irradiance (TSI), the energy emitted by the sun. Its measurements can be stitched together with results from earlier missions to provide a 30-year record of the sun's energy output. What this shows is that during the latest solar minimum, the sun's output was 0.015 per cent lower than during the previous lull. It might not sound like much, but it is a hugely significant result.

We used to think that the sun's output was unwavering. That view began to change following the launch in 1980 of NASA's Solar Maximum Mission. Its observations show that the amount of energy the sun puts out varies by around 0.1 per cent over a period of days or weeks over a solar cycle.

Shrinking star
Despite this variation, the TSI has dipped to the same level during the three previous solar minima. Not so during this recent elongated minimum. Although the observed drop is small, the fact that it has happened at all is unprecedented. "This is the first time we have measured a long-term trend in the total solar irradiance," says Claus Fröhlich of the World Radiation Centre in Davos, Switzerland, and lead investigator for the VIRGO instrument.

If the sun's energy output is changing, then its temperature must be fluctuating too. While solar flares can heat up the gas at the surface, changes in the sun's core would have a more important influence on temperature, though calculations show it can take hundreds of thousands of years for the effects to percolate out to the surface. Whatever the mechanism, the cooler the surface, the less energy there is to "puff up" the sun. The upshot of any dip in the sun's output is that the sun should also be shrinking.

Observations suggest that it is - though we needn't fear a catastrophe like that depicted in the movie Sunshine just yet. Back in the 17th century French astronomer Jean Picard made his mark by measuring the sun's diameter. His observations were carried out during the Maunder minimum, and he obtained a result larger than modern measurements. Was this simply because of an error on Picard's part, or could the sun genuinely have shrunk since then?

"Any dip in the sun's output means that the sun is shrinking. Observations suggest that it is, though they are controversial"

Observations with ground-based telescopes are not precise enough to resolve the question, due to the distorting effect of Earth's atmosphere. So the French space agency has designed a mission, aptly named Picard, to return precise measurements of the sun's diameter and look for changes.

Frustratingly the launch, on a Russian Dnepr rocket, is mired in a political disagreement between Russia and neighbouring Kazakhstan. Until the dispute is resolved, the spacecraft must wait. Every day of delay means valuable data being missed as the sun takes steps, however faltering, into the next cycle of activity. "We need to launch now," says Thuillier.

What the sun will do next is beyond our ability to predict. Most astronomers think that the solar cycle will proceed, but at significantly depressed levels of activity similar to those last seen in the 19th century. However, there is also evidence that the sun is inexorably losing its ability to produce sunspots (see "The sunspot forecast"). By 2015, they could be gone altogether, plunging us into a new Maunder minimum - and perhaps a new Little Ice Age.

Of course, solar activity is just one natural source of climate variability. Volcanic eruptions are another, spewing gas and dust into the atmosphere. Nevertheless, it remains crucial to understand the precise changeability of the sun, and the way it influences the various regional patterns of weather on Earth. Climate scientists will then be able to correct for these effects, not just in interpreting modern measurements but also when attempting to reconstruct the climate stretching back centuries. It is only by doing so that we can reach an unassailable consensus about the sun's true level of influence on the Earth and its climate.

"266 days without sunspots in 2008

18 billion tonnes of matter thrown into space by a coronal mass ejection"

The sunspot forecast
Although sunspots are making a belated comeback after the protracted solar minimum, the signs are that all is not well. For decades, William Livingston at the National Solar Observatory in Tucson, Arizona, has been measuring the strength of the magnetic fields which puncture the sun's surface and cause the spots to develop. Last year, he and colleague Matt Penn pointed out that the average strength of sunspot magnetic fields has been sliding dramatically since 1995.

If the trend continues, in just five years the field will have slipped below the threshold magnetic field needed for sunspots to form.

How likely is this to happen? Mike Lockwood at the University of Reading, UK, has scoured historical data to look for similar periods of solar inactivity, which show up as increases in the occurrence of certain isotopes in ice cores and tree rings. He found 24 such instances in the last few thousand years. On two of those occasions, sunspots all but disappeared for decades. Lockwood puts the chance of this happening now at just 8 per cent.

Only on one occasion did the sunspot number bounce back to record levels. In the majority of cases, the sun continued producing spots albeit at significantly depressed levels. It seems that the sunspot bonanza of last century is over.

Barney Frank Announces Proposed Fed Audit Will Be Materially Curbed

Frank Sides with the Fed Once Again
Published on 06-15-2010
Source: Zero Hedge

Barney Frank has released the House "offer" language on various issues to be discussed tomorrow during the House-Senate Conference Committee, which will convene at 11am in Rayburn Room 2128. While some of the items on the docket relating to Investor Protection and Executive Compensation, are largely irrelevant, Barney will also discuss such critical issues as the Fed Audit, the Fed's emergency lending power, and Foreign FX swaps. Ignoring that 80% of the S population demand an end to fed secrecy, the just released proposed language also appears to peddle exclusively to Bernanke and his Wall Street superiors, in that items under debate for the audit will not include monetary policy, and it will be America's sad fate to extinguish under a 0% interest rate, never knowing how such lunacy can have come to be, until such time as the banking system blows itself up once again. This way the American public will never know whether someone like Goldman Sachs (in addition to Jerome Kerviel) has had any influence in determining monetary policy.

Full language of the completely uncorrupt Congressman's proposal as it relates to the Fed audit:

Title 11 of base text: Fed audit and governance, and emergency liquidity provisions

The House proposes the following amendments to the Base text:

• Amend Senate provision regarding Federal Reserve 13(3) lending to insert requirement from House-passed bill that the Federal Reserve Board and Secretary of Treasury have reasonable cause to believe that the security or other collateral policies for any emergency lending program or facility provide 99% confidence that funds disbursed under the facility or program and interest will be repaid. (Senate bill §1101, Page 1724, lines 16-19).

• Amend Senate Provision regarding ongoing Federal Reserve audit requirements to add discount window and open market transactions to items to be reviewed by GAO. (Senate bill § 1102, Page 1730 line 7 – Page 1733, line 23).

• Amend Senate Provisions requiring public disclosure of emergency credit facilities information to also require public disclosure of Federal Reserve open market operations and discount window transactions three years after the transactions have been entered into. (Senate bill § 1103, Page 1735, after line 17).

• Strike Senate provisions regarding emergency liquidity guaranties and replace with House provisions on emergency liquidity guaranties. (Replace Senate bill §§ 1104-1106, Page 1735, line 18 – Page 1751, line 7, with House bill §§§ 1109-1111).

• Strike Senate Provision on appointment of Federal Reserve Bank of New York President and limiting eligibility to vote for or serve as a Federal Reserve Bank director, and replace with provision removing the authority of the member banks’ representatives on each regional board of directors (Class A directors) from appointing/voting for the President of the Reserve Bank (Senate bill § 1107, Page1751, line 20 – 1752, line 6).

• Add House Provision on no financial stability authority in the bill being delegated to Federal Reserve Bank Presidents to Senate Provision on no delegation of supervisory policymaking to reserve banks. (House bill § 1114, Page 132, line 3-14; Senate bill § 1108, Page 1754, line 17).

• Add House Provision adding new restrictions to the Federal Reserve’s foreign currency swap authority (House Bill, §1702, Page 517, line 1-15).

The Fed's Purchase of US Sovereign Debt

Published on 06-16-2010
By Bob Chapman - The International Forcaster

Were it not for the Federal Reserves purchase of Treasury and Agency bonds, the US would already be unable to raise funds to service debt and issue new debt, and it would already have descended into national bankruptcy. It is no wonder the Fed does not want to be audited. Through various artifices the Fed has been purchasing US treasury paper. No one knows how much, because when asked the Fed says it is a state secret. That is what all Americans love. A country run in secrecy. A privately owned corporation operating under the cover of secrecy, and protected by a Treasury Department, that is under the control of the Fed’s owners. How is that for an incestuous relationship?

Government is desperately searching for more revenue to cover its massive deficit spending and to service existing mandatory programs. Taxes are being increased; some 19 new taxes, in the recently passed medical reform legislation. Unfortunately this isn’t enough. Of course, there is never enough.

As a result, government has been eying retirement plans as a source of funding. The arm-twisting has been going on for some six months to make managers of retirement funds to purchase US Treasuries and Agency bonds. This is to provide a delaying action as the dollar begins to play second fiddle to gold as the only real currency. In addition, foreign central governments, which own well over $3 trillion of these debt instruments, hope that the US is serious about protecting the functioning of government. Accessing retirement plans will be an integral part of extending solvency to buy more time for Wall Street, banking and government. Of course there is nothing our purchased Congress won’t pass to stay in office.

Thus it has been decided behind the scenes to eventually confiscate the $15 trillion in private retirement funds. The only thing those who control government haven’t quite figured out yet is exactly how to confiscate what little wealth you have left. These plans were in construction in the early 1990s with funding from the Rockefellers. In 1991, plans were presented to create a mandatory pension system to be funded by a one-time 15% tax on retirement assets and a continuing tax of 15% on retirement income. Those plans had to be put on the shelf, because they were not politically acceptable at the time and passage was not possible. Today there are more aggressive plans in the works and if we do not unseat most of the incumbents in November’s election you will see passage of such legislation over the next two years.

Tax revenues are plunging due to high unemployment and the justification is there to present such legislation, as government spending reaches unbelievable levels. New methods, no matter how unpalatable have to be found to feed this devouring money monster.

In 2007 ideas were submitted to a congressional subcommittee by Thresa Ghilarducci who was director for the far, far, left at the New School for Social Research. Her idea, of course, was to make sure retirement would be available for millions who never bothered to save a cent and her solution was to confiscate the assets of those who did save. A program that would have made Marx and Lenin very happy. Her plan was to tax workers of 5% of their gross income. The eventual payout would be based on government’s bogus CPI, which has been screwing retirees under COLA for the past 30 years. As any intelligent person knows the government is already broke and can never pay off its debt, thus the funds would be used to pay down existing debt. That would go for any plan the government puts together. Since then we have seen other approaches, such as mandatory plans, voluntary plans, but they all end up stealing your retirement. As we said last week now is the time to start phasing out of these plans, such as IRAs. In order to overcome the tax and possible penalties you might phase out over 2 or 3 years. If you have any questions contact us and we will try to be of assistance.

There could be legislation to end further tax deductions in effect ending all plans for the future in order to being in immediate tax revenues, or a voluntary plan where a percentage of your plan could be traded for a government annuity, which would not be worth the paper it is written on. It is coming no matter what form it takes. The people who control government know this has to be done to keep the economy afloat. This is just another form of fascist nationalization. It may be sold to Americans’ as bonds lose their AAA status, or an attack on the Fed or the Treasury, or another war, or a complete economic collapse. It could be a false flag event, or World War III. Take your pick, but it is coming. The brainwashed public in worry and fear can be convenienced of anything. These events could spark a move to add taxes or penalties justified by such events. Those in plans they cannot exit are just plain screwed, unless they quit their jobs, take the funds and buy gold and silver related assets.

Discussions are in progress to relieve you of your wealth. They have already destroyed the real estate market. The stock market will be next to fall followed by bonds. You have to begin exiting now before the rules become more onerous. In fact, such events will force workers to jump at the chance for a worthless government program. Fortunately you will already be out and into gold and silver assets. If you do not begin your exit now you will be plundered by government. We might add that in the process of the stock and bond market falling there will be a consolidation and nationalization of banks, so immediately exit CDs. Those lower values in stocks and bonds will lower the value of cash value life insurance policies and annuities, which also should be terminated while you still have time to do so. Whether we like it or not, this is to be a total takedown. If you think moving assets offshore, forget it, unless you are willing to live in that new country and become a citizen. The US has agreements with many countries already to access the assets of US citizens. Why do you think the number of Americans renouncing citizenship is growing in leaps and bounds? There are some savvy people who are able to escape and are doing so. Now is the time to act. He who hesitates is lost.

The foregoing events lead us to other manifestations of trouble, real trouble. For the past four years all currencies have fallen versus gold and silver. The US dollar has been falling for 11 years versus gold and silver. What gold is telling you is that the US, UK and European financial systems are on the way to collapse. The cover-up cannot go on and all the players know that. They are all living in the theater of the absurd. What politicians in all these countries are doing is what they are being told to do. If they do not do what they are told they will never hold public office or be a bureaucrat again. If what they do is serious enough they will be liquidated. What is happening financially, fiscally and monetarily is unnatural. There is absolutely no way the system can be fixed. If these politicians and their handlers believe this they are doomed. They have pulled this hundreds of times and each time they have been unsuccessful. This time will be a disaster for the Illuminists due to the Internet and talk radio. This time they will escape nothing. We live in a decadent, immoral financial system that has to fall. In this sort of environment only gold and silver can protect your assets.

BP Admits That to Cap the Leak Might Blow the Whole Well

link to video

More Than 90 Banks Miss TARP Payments

Published: Wednesday, 16 Jun 2010  
By: Reuters

More than 90 U.S. banks and thrifts missed making a May 17 payment to the U.S. government under its main bank bailout program, signaling a rising number of lenders are struggling to meet their obligations.

The statistics, compiled by SNL Financial from U.S. Treasury data, showed 91 banks and thrifts skipped the May dividend payment under the Troubled Asset Relief Program, or TARP. It was the first missed payment for 23 of the banks; for the others, it was at least their second miss.

The number of banks missing their TARP payments rose for the third straight quarter. In February, 74 banks deferred their payments; 55 deferred last November.

SNL Financial's analysis found 20 banks have missed four or more payments since the program began in 2008, while eight banks have missed five payments.

Under the TARP program, the U.S. Treasury invested in preferred shares issued banks looking for funds. The banks were to make regular dividend payments to the Treasury, and have the right to repurchase the shares at some point in the future.

While many of the largest U.S. banks easily repaid billions in TARP aid, more than 600 smaller banks still hold $130 billion from the program, created at the height of the financial crisis.

In some cases, small banks are renegotiating the repayment terms. Midwest Banc Holdings, for example, agreed to swap $84.8 million in preferred shares issued under the TARP program in 2008 for $15.5 million in common shares. That would have meant an 80 percent loss for the government—and the U.S. taxpayer—on the initial investment. But the swap was contingent on the bank raising more private capital, which it failed to do. Regulators seized the bank in May.

The next quarterly TARP payments to the U.S. Treasury are due by August 16.

U.S. targets Iranian banks

(Trying to start yet another war...)

By LAURA ROZEN | 6/16/10

The Obama administration announced Wednesday the addition of almost two dozen more Iranian entities and individuals to the U.S. sanctions list, taking advantage of a new U.N. resolution in a bid to persuade Congress to give the White House more flexibility in the final version of Iran sanctions legislation.

Under Secretary of Treasury for Terrorism and Financial Intelligence Stuart Levey, said the list includes 17 more Iranian banks, Islamic Revolutionary Guards Corps-linked construction and energy firms and individuals, as well as 27 Iranian-government front companies.

“We know that officials in Iran have been anxious about this new round of sanctions,” Levey said. “If the Iranian government holds true to form, it will scramble to identify “work-arounds” – hiding behind front companies, doctoring wire transfers, falsifying shipping documents. We will continue to expose this deception thereby reinforcing the very reasons why the private sector is increasingly shunning Iran.”

The move came after European Union foreign ministers, meeting in Luxembourg, announced that the EU would be implementing their own track of strong sanctions divesting from Iranian energy, banking and transport sectors under Security Council Resolution 1929, approved earlier this month.

The additions won strong praise from Rep. Howard Berman (D-Calif.) who leads a conference committee working to reconcile House- and Senate-passed Iran sanctions legislation.

“These designations strengthen our anti-proliferation efforts in several sectors, as urged by that resolution, including the financial, transportation, and energy sectors and Iran’s Islamic Revolutionary Guard Corps. They also underscore the importance of the Obama administration’s remarkable diplomatic achievement in winning UN Security Council support for UNSCR 1929.”

Berman did not indicate in the statement whether he would agree to the administration’s request for more flexibility in the legislation, separate versions of which passed both houses by comfortable margins. The administration wants Congress to exempt from sanctions those countries and international organizations such as the EU that have worked to vigorously support the international effort to pressure Iran over its nuclear program.

Key European allies, including those who were most supportive of U.N. sanctions, have told Washington they oppose what they call “extraterritorial” U.S. unilateral sanctions that would aim to penalize third-country entities, including their own firms. Both bills contain provisions authorizing U.S. sanctions against foreign firms dealing with Iran.

Berman and Sen. Chris Dodd (D-Conn.) met with Secretary of State Hillary Clinton on the issue late last week. Clinton appointed her top nonproliferation adviser, Bob Einhorn, to be the U.S. coordinator for Iran and North Korea sanctions.



Read more:

BP agrees to 20-billion-dollar oil spill fund

By Agence France-Presse
Wednesday, June 16th, 2010

WASHINGTON (AFP) – BP on Wednesday agreed to pay 20 billion dollars into an independently run fund to meet the spiralling costs of the Gulf of Mexico oil disaster, bowing to tough demands from President Barack Obama.

The deal was revealed as top executives from the British energy giant met at the White House with Obama to discuss the crisis, which has triggered the nation's worst environmental disaster.

Both sides were armed with legal teams, after Obama vowed to make BP pay for its "recklessness" which triggered the massive spill.

A source with knowledge of the deal confirmed to AFP that BP had bowed to Obama's demands to set the money aside in the fund, adding it would be overseen by prominent lawyer Kenneth Feinberg.

Feinberg managed the compensation fund for victims of the September 11, 2001 terror attacks.

"We're going to use every device, legal device, at our disposal if necessary," senior White House advisor David Axelrod said earlier on CNN.

BP initially declined to confirm whether it would agree to set up an escrow fund to meet the thousands of compensation claims pouring in from the stricken southern states.

The New York Times reported BP would pay in the 20 billion over several years, after Obama warned Americans that the country was fighting an "epidemic" which could take years to control.

US experts now estimate between 35,000 and 60,000 barrels a day is spewing into the waters off the Louisiana coast, after an explosion in April sank an exploratory deepwater drilling rig operated by BP.

The massive slick is threatening the coastlines of four southern US states, and has crippled the fishing and tourist industries -- vital economic lifelines for the region.

Obama said in a national address Tuesday that he would tell BP chairman Carl-Henric Svanberg "to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company?s recklessness."

Svanberg attended Wednesday's talks with BP chief executive Tony Hayward, along with a battery of lawyers from both the British company and the US Justice Department and US administration.

Just hours before, British Prime Minister David Cameron said while BP was not "running away" from its responsibilities, it had to be assured it would not be landed with claims which were nothing to do with the spill.

"While it is important that they pay reasonable claims -- BP accept this themselves -- they do need a level of certainty," Cameron told BBC radio.

"This is BP's worry, the (need for a) level of certainty that there won't be claims entertained that are three, four times removed from the oil spill," he added.

He sought to offer reassurances that the crisis facing the United States would not damage ties between London and Washington.

"The important thing is this should not become an issue between the US and the UK. President Obama doesn't want that, I don't want that," he said.

BP is currently containing an average of 15,000 barrels a day of oil, which is being siphoned up to a processing ship on the surface via a mile-long pipe.

The company announced Wednesday that a second ship, the Q4000, had now been attached to the Deepwater Horizon's failed blow-out preventer valve, so oil and gas can be carried up to the surface where it will be burned off.

US officials hope the two containment systems will allow BP to capture between 20,000 to 28,000 barrels of oil a day. And Obama said he hoped by the end of the month some 90 percent of the spill would be contained.

But the leak is not expected to be permanently capped until August, when one of two relief wells being drilled is complete.

Obamas's speech, delivered from the Oval Office which is normally reserved for the most somber moments in national life such as the announcement of war, followed a three-state tour of the disaster zone.

Obama stressed the disaster highlighted the need for a new energy policy based on renewable sources of power.

"We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now."

The House of Representatives has already passed an energy reform bill, but the legislation faces stiff Senate opposition after a bipartisan effort to pilot it through the chamber before mid-term elections in November collapsed.

Jobless aid bill hits deficit wall in Senate

By ANDREW TAYLOR, Associated Press Writer – Wed Jun 16, 2010

WASHINGTON – President Barack Obama's plea for more stimulus spending as insurance against a double-dip recession hit a roadblock in the Senate on Wednesday, the victim of election-year anxiety over huge federal deficits.

A dozen Democrats joined Republicans on a key 52-45 test vote rejecting an Obama-endorsed, $140 billion package of unemployment benefits, aid to states, business and family tax breaks and Medicare payments for doctors because it would swell the federal debt by $80 billion.

The swing toward frugality runs counter to the advice of economists who support the bill's funding for additional jobless benefits and help to states to avoid layoffs of public service jobs. They fear that the economy could slip back into recession just as it's emerging from the biggest economic downturn since the Great Depression.

Federal Reserve Chairman Ben Bernanke warned last week that while lawmakers need to come up with a plan for tackling the nation's long-term deficit crisis, the U.S. recovery is still fragile. It's too early for large, immediate spending cuts, Bernanke said.

"We've got to do more to build on the existing jobs momentum and that's what these targeted measures are about," said White House economist Jared Bernstein.

The Senate earlier passed another version with even bigger deficits. But that was before tea party-backed candidates running on anti-deficit, anti-big government platforms began knocking off more established politicians in spring primaries.

Despite the loss, Democratic leaders predicted serenely that a scaled-back version of the measure — extending unemployment benefits for the long-term jobless and providing $24 billion in aid to the states — could pass, possibly as early as later this week, after relatively minor revisions.

"We need to change a few things," said Majority Leader Harry Reid, D-Nev.

Later Wednesday, Finance Committee Chairman Max Baucus, D-Mont., unveiled a new, slimmer version of the bill that he predicted would "provide a path forward."

But Republicans cautioned that the margin of Wednesday's vote was a bad sign for a bill that, even after revisions, would still likely add more than $50 billion to deficits over the next decade. Democrats would need 60 votes, 15 more than they got Wednesday, to prevent Republicans from blocking the bill.

"All I can tell you is that consensus about borrowing, debt, spending is growing stronger in our caucus and I think it is in the Democrats' as well," said Sen. John Thune, R-S.D.

Obama renewed his push for the measure last weekend, warning that "hundreds of thousands" of state and local government jobs could be lost without $24 billion in Medicaid money to help states balance their budgets and $23 billion more to prevent layoffs at local school districts around the country.

The new version released Wednesday afternoon would roll back last year's $25-a-week increase in unemployment checks and give doctors just a six-month reprieve from scheduled cuts in their Medicare payments instead of relief through 2011.

A new tax on investment fund managers — who presently pay taxes on much of their income at the 15 percent capital gains rate instead of the 35 percent top income tax rate — was pared back for venture capitalists. It would impose regular income taxes on only 50 percent of profits that are the result of sales of assets held for five or more years.

The lost receipts would be replaced with still more revenue from an increase in the per-barrel tax paid into the oil spill liability trust fund. Now limited to 8 cents a barrel, the tax would rise more than six-fold to 49 cents a barrel under the latest version of the bill — instead of 41 cents under the version killed on Wednesday.

But top Democrats were standing strongly behind $24 billion in help to state governments for the Medicaidhealth program for the poor and disabled. Some 30 states have incorporated the money into their budgets for the fiscal year starting July 1 and governors say that without it, they'll have to lay off thousand of workers.

"The effect on the economy of not doing this ... would be disastrous," Pennsylvania Democratic Gov. Ed Rendell said. "If we lose this (Medicaid) money, we will have to lay off 20,000 people."

"If states don't get this aid, they will be cutting payrolls very aggressively and it is a serious threat to the recovery," said Mark Zandi, chief economist at Moody's Analytics.

The renewed stimulus money is part of a catchall measure combining the jobless aid and help for states with the renewal of dozens of popular tax breaks for businesses and individuals, including a property tax deductionfor people who don't itemize, lucrative credits that help businesses finance research and develop new products, and a sales tax deduction that mainly helps people in states without income taxes.

The urgency to pass the measure is palpable since Medicare announced earlier this week that a 21 percent cut in reimbursements to physicians would take effect on Friday. And by the end of the week, more than 900,000 people out of work for more than six months will have been ineligible to apply for continued benefits, according to the latest Labor Department estimates.