Weekday NEWS to Comfort the Disturbed and Disturb the Comfortable.

Monday 07.26.2010

US bank failures in 2010 surpass 100
By MARCY GORDON - AP -WashingtonPost
WASHINGTON -- U.S. bank failures this year have surpassed a bleak milestone of 100 as regulators shut down banks in Georgia, Florida, South Carolina, Kansas, Nevada, Minnesota and Oregon.
The seven bank seizures announced Friday bring to 103 the failures so far in 2010. The pace of bank closures this year is well ahead of that of 2009, which saw a total of 140 banks shuttered amid the recession and mounting loan defaults. That was the highest annual tally since 1992, at the height of the savings and loan crisis.

William Black: "Unlimited Taxpayer Bailout" of FDIC Coming; FDIC Shell Game Hides the Bailout
Mike Shedlock
Last Friday seven more banks failed bringing the total bank failures to 103. More Failures Coming
The FDIC is now deep in the red and the situation is getting worse every week. The situation would be even worse were it not for widespread "extend and pretend" tactics that keep woefully insolvent banks in business.
FDIC Shell Game To Hide Bad Assets
To address the situation, the FDIC is going to start selling U.S.-guaranteed FDIC senior certificates. However, it has no Congressional authority to do so according to former thrift regulator William Black.
Unlimited Taxpayer Bailout
Black claims an "unlimited taxpayer bailout" of the FDIC is on the way.

The Death of Paper Money
By Ambrose Evans-Pritchard - Telegraph.co.uk
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974
Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699 (shipping free.. thanks a lot).
The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation -- whether the early 1920s in Germany, or the Korean and Vietnam wars in the US -- starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.

Seven EU banks fail stress tests
BBC News
Seven of the 91 European banks that underwent stress tests have failed the healthchecks, the Committee of European Banking Supervisors (CEBS) has said.
They include five Spanish banks - Diada, Espiga, Banca Civica, Unnim and Cajasur. The other two were Germany's Hypo Real Estate and Greece's ATEbank.
The tests assessed banks' ability to survive future economic shocks.
The seven banks would need a total of 3.5bn euros (£3bn) of new capital to meet the standards required, CEBS said.
"[The failed banks] will have to agree with their respective supervisors a plan over a given time period which will explain how this weakness will be resolved," CEBS chairman Giovanni Carosio said.

U.S. Need Not Fear Sovereign Debt Crisis, Unlike Greece, It Actually Is Sovereign
By: Ellen Brown - MarketOracle.co.uk
Last week, a Chinese rating agency downgraded U.S. debt from triple A and number one globally, to "double A with a negative outlook" and only thirteenth worldwide. The downgrade renewed fears that the sovereign debt crisis that began in Greece will soon reach America. That is the concern, but the U.S. is distinguished from Greece in that its debt is denominated in its own currency, over which it has sovereign control. The government can simply print the money it needs, or borrow it from a central bank that prints it. We should not let deficit hawks and short sellers dissuade the government from pursuing that obvious expedient.

Making Sense of the Economic Puzzle
By: Clif Droke - MarketOracle.co.uk
You can tell a lot about the state of the economy by simply looking at the covers of national news magazines. Or perhaps a better way of saying it is that you can get a good sense of how most Americans perceive the state of the economy by perusing the mainstream magazines.
With much fanfare Newsweek magazine proclaimed back in April, "America's Back! (The Remarkable Tale of Our Economic Turnaround)" as it trumpeted what was widely perceived by Keynesians as a legitimate economic recovery based on the latest government data. No sooner had this sentiment been proclaimed than the stock market did an about face and the "flash crash" of May sent equity prices tumbling and had many economists wondering if the market was pricing in a "double dip" recession.

Chinese Central Bank Outlines Plan To Ditch The Dollar As The Yuan's Peg
Vincent Fernando, CFA - BusinessInsider.com
Hu Xiaolian, deputy governor at the Chinese central bank, has released a paper which suggests it's soon time for China to peg the yuan to a basket of foreign currencies, rather than the U.S. dollar alone.
This especially makes sense for China given that, going forward, the U.S. might not the voracious consumer it once was. Thus tying itself at the hip to the dollar might not be as useful as it was before.
Hu Xiaolian: Compared with pegging to a single currency, the exchange rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner. It has two-way movements of exchange rate. The RMB exchange rate has been basically stable at an adaptive and balanced level though it may fluctuate in both ways against any particular single currency.

Chinese Banks See Risks in 23% of $1.1 Trillion Loans
By Bloomberg News
July 24 (Bloomberg) -- Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they've lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation's regulator.
About half of all loans need to be serviced by secondary sources including guarantors because the ventures can't generate sufficient revenue, the person said, declining to be identified because the information is confidential. The China Banking Regulatory Commission has told banks to write off non-performing project loans by the end of this year, the person said.

U.S. Economy Never Came Out of Recession, Pray and Hold onto Gold
By: The Gold Report - MarketOracle.co.uk
Newsletter Writer Ron Struthers is an old-school straight talker who doesn't mince words. Ron believes the U.S. economy never came out of the 2008 recession and predicts America is about to face a whole new set of debt problems at the state level. "Any one of the U.S. states is bigger than Greece and 40 or more of them are in the same bad shape," he warns. Ron recommends investors fortify their portfolios with 15%-20% physical gold and another 40% in cash, ready to jump on any opportunities the moody markets present. In this short but sweet interview with The Gold Report, Ron also offers some of his favorite gold and silver plays, many of which are in Mexico. ¡Ole!

Deflation 'crisis' doesn't exist
By Bill Fleckenstein - MSN Money
The growing fear of falling prices is exactly why we need to protect ourselves from rising ones -- and the money printing that produces them.
"Helicopter" Ben Bernanke appeared before Congress for his semiannual visit July 21. Given the near hysteria sweeping the financial world about possible deflation, I expected to see the Federal Reserve chief's feet put to the fire more than they were regarding when the next round of quantitative easing might begin.
Because he is on record as promising that deflation will not occur on his watch, he has dug himself a bit of a hole in terms of how -- and how quickly -- he must respond to the fear of deflation, let alone the reality, which some believe is already here.

Here Comes Deflation
John Mauldin - BusinessInsider.com
The debate over whether we are in for inflation or deflation was alive and well at the Agora Symposium in Vancouver this this week. It seems that not everyone is ready to join the deflation-first, then-inflation camp I am currently resident in. So in this week's letter we look at some of the causes of deflation, the elements of deflation, if you will, and see if they are in ascendancy. For equity investors, this is an important question because, historically, periods of deflation have not been kind to stock markets. Let's come at this week's letter from the side, and see if we can sneak up on some answers.

Next Big Battle in Washington: Bush's Tax Cuts
By DAVID M. HERSZENHORN - NYTimes.com
WASHINGTON - An epic fight is brewing over what Congress and President Obama should do about the expiring Bush tax cuts, with such substantial economic and political consequences that it could shape the fall elections and fiscal policy for years to come.
Democratic leaders, including Mr. Obama, say they are intent on letting the tax cuts for the wealthy expire as scheduled at the end of this year. But they have pledged to continue the lower tax rates for individuals earning less than $200,000 and families earning less than $250,000 - what Democrats call the middle class.

Obama signs a bill that lets banks have US over a barrel once more
By Liam Halligan - Telegraph.co.uk
Last week, President Obama signed into law the Dodd-Frank Wall Street Reform bill - hailed as the most sweeping overhaul of US financial regulation since the 1930s.
"Because of this law, the American people will never again be asked to foot the bill for Wall Street's mistakes," Obama boomed at the schmaltzy signing ceremony, amid bursts of applause.
"These reforms will put a stop to a lot of the bad loans that fuelled this debt-based bubble," the President gushed to America and the rest of the world. "This bill also empowers consumerse_SLpsdelivering the strongest consumer financial protections in history."
It would be reassuring if we could agree with Obama, concluding that Dodd-Frank will help to prevent the next systemic crisis and associated bail-out of "too-big-to-fail" banks. Reassuring, but wrong.

Ron Paul on Lew Rockwell Show 6/21/10:
Gold, Oil, and the Dollar

White House predicts record $1.47 trillion deficit
By Andrew Taylor AP - WashingtonTimes.com
WASHINGTON (AP) - New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.
That's actually a little better than the administration predicted in February.
The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.

Shadow Banking Makes A Comeback
By: Mike Whitney - MarketOracle.co.uk
Credit conditions are improving for speculators and bubblemakers, but they continue to worsen for households, consumers and small businesses. An article in the Wall Street Journal confirms that the Fed's efforts to revive the so-called shadow banking system is showing signs of progress. Financial intermediaries have been taking advantage of low rates and easy terms to fund corporate bonds, stocks and mortgage-backed securities. Thus, the reflating of high-risk financial assets has resumed, thanks to the Fed's crisis-engendering monetary policy and extraordinary rescue operations. Here's an excerpt from the Wall Street Journal:
"A new quarterly survey of lending by the Federal Reserve found that hedge funds and private-equity funds are getting better terms from lenders and that big banks have loosened lending standards generally in recent months. The survey, called the Senior Credit Officer Opinion Survey, focuses on wholesale credit markets, which the Fed said functioned better over the past quarter."

The Health Care Bill Change in 1099 Reporting Requirements Does NOT Target Gold and Silver
JESSE'S CAFÉ AMÉRICAIN
I had originally included this in my weekly gold and silver market wrap up. But I have received so many emails from alarmed readers about the topic that I thought it would be useful to give it a separate blog entry that is linkable, so it would be easier to answer those who express concern.
Those who originally raised this issue of a change in the law stated it rightly, but since then it has been fanned into a falsehood and a bogeyman, far beyond the proportions of its original scope and intent.
It is true that transactions in gold and silver and more particularly rare coins were exempt from 1099 reporting under the previous 1099 MISC rules. But they were always reportable and taxable on one's tax returns. Goods were exempts, but services were not exempt from 1099 MISC reporting and the thresh hold for them was $600. This law primarily applied to the self-employed and small businesses.

Bullion buyers bank on gold coins
By Claudia Assis, MarketWatch
Precious metal glitters for investors seeking to hedge financial chaos
SAN FRANCISCO (MarketWatch) -- Apart from a New York City phone book listing, gold dealer Manfra, Tordella & Brookes, Inc. does no advertising. Lights are on all day because the shop sits in a basement.
Yet MTB, as the firm is known, has never been busier. Every day, people find their way to the Manhattan store with one thing in mind: getting their hands on gold bullion coins, as soon as possible and as much as possible, before the financial Armageddon they fear renders the dollars in their pockets worthless.

Gold to shine for years to come
LONDON (Commodity Online): If anybody thought the recent slide in gold prices is an indication of the yellow metal's losing power to sustain above $1,200 per ounce level, think again.
According to analysts, gold prices are set to rise and rise in the coming months and years. They said gold prices are set to mark an eleventh year of gains in 2011 as investors seek refuge from an uncertain global economic outlook.
A poll of 55 analysts and traders showed expectations for gold prices in 2011 have risen nearly 7% to a median $1,228 an ounce, from a forecast of $1,150 in a similar survey conducted in January, said a report in India's Economic Times.

Gold, Silver in bull market, not in a bubble
By John Browne - Commodity Online
In the first few days of July, the prices of gold and silver appeared to break a five-month upward trend by drawing back about five per cent from the record June peaks. Despite many similar corrections that have occurred frequently during the long bull market in precious metals, pundits nevertheless looked to draw bold and significant conclusions from the drop. But just as investors were getting comfortable with the leading explanation - that a looming double dip recession will prevent inflation and thereby dampen demand for precious metals - the markets for both metals stabilized.

Gold Market Spooked by Deflationary Double-Dip Recession Fears
By: David Galland - MarketOracle.co.uk
Last week, the price of gold again broke below its new base at $1,200, and the U.S. stock market was again under strong pressure, due to a confluence of fears, most of which point to a deflationary double-dip. The fears were fanned by disappointment in the just-released early quarterly results, by the latest CPI reports that show inflation continuing to moderate, and by yet another poll revealing faltering consumer confidence.

Elements of Deflation and the Super-Trend Puzzle
By: John Mauldin - MarketOracle.co.uk
The debate over whether we are in for inflation or deflation was alive and well at the Agora Symposium in Vancouver this this week. It seems that not everyone is ready to join the deflation-first, then-inflation camp I am currently resident in. So in this week's letter we look at some of the causes of deflation, the elements of deflation, if you will, and see if they are in ascendancy. For equity investors, this is an important question because, historically, periods of deflation have not been kind to stock markets. Let's come at this week's letter from the side, and see if we can sneak up on some answers.

(Part 1/2) Peter Schiff on CNBC Fast Money 6/21/10:
Spotlight on the Yuan

(Part 2/2) Peter Schiff on CNBC Fast Money 6/21/10:
Spotlight on the Yuan

Goldman reveals where bailout cash went
By Karen Mracek and Thomas Beaumont,
Des Moines Register - USAToday.com
Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.
Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.
Asked the significance of the list, Grassley said, "I hope it's as simple as taxpayers deserve to know what happened to their money."
He added, "We thought originally we were bailing out AIG. Then later on ... we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world."

Private sector must drive economy: Geithner
By Alistair Barr and Robert Schroeder, MarketWatch
Treasury secretary plans big changes for Fannie and Freddie
WASHINGTON (MarketWatch) -- The U.S. economy is gradually recovering, but the private sector now must drive growth rather than the government, Treasury Secretary Timothy Geithner said Sunday.
During an interview on NBC's "Meet the Press," Geithner also said the government has big plans for reforming Fannie Mae and Freddie Mac, the housing finance giants that now stand behind most of the mortgages in the U.S. after being bailed out by taxpayers during the 2008 financial crisis.

Fannie and Freddie Hold $30 Billion in Bad Loans
Jody Shenn, Bloomberg - MFI-Miama
Fannie Mae and Freddie Mac's regulator may identify as much as $30 billion of debt included in mortgage bonds that the companies can force sellers to repurchase, according to Joshua Rosner, an analyst who in 2007 predicted the collapse in the market for the securities.
The Federal Housing Finance Agency this month said it issued 64 subpoenas seeking loan files and other documents related to so-called non-agency mortgage securities bought by the two government-supported companies. The U.S. is trying to determine whether misrepresentations might require issuers to repurchase debt, producing funds from firms that may include Wall Street's largest banks to help repay taxpayer money.

When will unemployment checks be mailed? Not soon
By Tami Luhby
NEW YORK (CNNMoney.com) -- Kevin Landry had to give up his San Diego apartment because he couldn't afford the rent after his federal unemployment benefits were cut off in early June.
Since then, Landry and his cocker spaniel, Curley, have been sleeping in his 1991 Dodge Dakota in a church parking lot. He sold his possessions and applied for food stamps in order to survive.
And even though President Obama signed a measure Thursday that extends benefits through November, Landry knows he won't get his $475 weekly check anytime soon.

Jobless claims jump in latest week
By Blake Ellis
NEW YORK (CNNMoney.com) -- The number of Americans filing for initial unemployment insurance climbed last week, the government said Thursday.
There were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week, the Labor Department said.
The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.

U.S. Jobs Situation Worse Than Broadcast
By: Hans Wagner -
The unemployment numbers for June 2010 were worse than articulated. The headline number said 83,000 private sector jobs were created and the unemployment rate slipped to 9.5% from 9.7%. Sounds like things are looking up. But, as you might expect, the devil is in the details and the details tell a different story.
Birth/Death Rate
The Bureau of Labor Statistics uses a statistical model they call the Birth/Death Rate. Do not worry, the Birth/Death model has nothing to do with people being born or dying. Rather it attempts to estimate the number of new business that were born last month and the number of old business that gave up the ghost. They use these numbers to adjust the employment numbers they report each month. The model uses historical statistics and applies seasonality factors to derive their estimate of the number of the number of business that began operation and that closed their doors. This is normal application of statistical theory, as the BLS has to make some sort of estimate. The problem is the birth/death rate tends to skew the employment numbers more than most people realize.

New wave of credit card abuses
By Ben Rooney
NEW YORK (CNNMoney.com) -- A 2009 federal crackdown on abusive credit card practices has exposed a litany of other ways consumers are being hosed.
That's according to a report released Thursday examining the Credit Card Accountability Responsibility and Disclosure Act.
The study, from the Pew Health Group's Safe Credit Cards Project, found that most of the practices deemed "unfair" or "deceptive" by the Federal Reserve under the law have disappeared from new credit card offers since Congress passed the law.
"Most of the news is good, but we are seeing the rise of new harmful behavior," said Shelley Hearne, managing director of the Pew Health Group.

The Government's Role in the Housing Bubble
The Atlantic
I never would have guessed that years in, we'd still be debating the role of the government in the housing bubble. Conservatives are still pinning most of the blame on the Community Reinvestment Act, while liberals are saying that there's no evidence that government played any significant role--unless, perhaps, it was all the fault of Alan Greenspan.
As it happens, I think that the government did play a role. A big role. But I think it's rather subtler, and thus, rather more problematic, than most people on either side are discussing.

Bart Chilton on Financial Regulatory Reform Legislation, July 2010
Commodities and Futures Trading Commission Commisioner Bart Chilton explaining the significance of the recently passed Financial Regulatory Reform legislation package, including position limits to prevent market concentration.

Why Are Banks Withholding Highend Repossessions Over $300,000 From the Market? by Keith Jurow - RealEastateChannel.com
With the expiration of the first-time buyer tax credit on April 30, there are now two main props keeping the housing market afloat. One is the growing percentage of home sales financed by Federal Housing Administration (FHA) loan guarantees. The other is the refusal of banks to put on the market foreclosed homes over $300,000.
In this article, we will take a look at the second factor. A future report will examine the role of the FHA in keeping the market from collapsing.
Chicago and Cook County, IL
Let's begin with Chicago. Cook County is comprised of Chicago and its contiguous suburbs and has a population of roughly 5.3 million residents. It experienced a huge bubble during 2004-2006 and has suffered a substantial drop in both prices and home sales.

Geithner Says Companies 'Cautious' About Hiring
By Ian Katz
July 25 (Bloomberg) -- Treasury Secretary Timothy F. Geithner said U.S. companies scarred by the financial crisis remain "very cautious" and are trying to get more productivity from current employees before hiring new ones.
Job growth is "not as fast as we need," Geithner said in an interview broadcast today on NBC's "Meet the Press" program. Employers "are still cautious, still very cautious," he said. "So they've been trying to get as much productivity out of their employees as possible."
Geithner also said, in a separate interview on ABC's "This Week" program, that allowing tax cuts for the wealthiest Americans to lapse at the end of this year wouldn't hurt economic growth.

Protesters incensed by Bell officials' high salaries visit mayor's business, home LATimes.com
Residents irate over the high salaries hauled in by their public officials marched Sunday to the businesses and homes of the mayor and City Council members.
A boisterous crowd of more than 200 gathered at the corner of Gage and Corona avenues. Several were wearing T-shirts featuring a city seal and the words "My city is more corrupt than your city."
Their first stop: Oscar's Korner Market and Carniceria, owned by the mayor, Oscar Hernandez. They then moved on to the mayor's house, near Florence Avenue, then to a home on Otis Avenue owned by City Councilman George Mirabal.
At the stops, protesters maintained a moment of silence and then shouted "Fuera!" -- "Out!" Dozens of cars honked as they passed and offered thumbs-up, though one man stopped, defended the city officials and challenged a protester physically.

First Lady Now Requires 26 Servants
By Dr. Paul L. Williams Monday, August 17, 2009
"In my own life, in my own small way, I have tried to give back to this country that has given me so much," she said. "See, that's why I left a job at a big law firm for a career in public service," - Michelle Obama.
We were wrong.
Michelle Obama, as we reported on July 7, is not served by twenty-two attendants who stand by to cater to her every whim.
She is served by twenty-six attendants, including a hair dresser and make-up artist.
The annual cost to taxpayers for such unprecedented attention is approximately $1,750,000 without taking into account the expense of the lavish benefit packages afforded to every attendant.

Wal-Mart plan to use smart tags raises privacy concerns
By Anne D'Innocenzio, AP - USAToday.com
NEW YORK - Wal-Mart Stores is putting electronic identification tags on men's clothing like jeans starting Aug. 1 as the world's largest retailer tries to gain more control of its inventory. But the move is raising eyebrows among privacy experts.
The individual garments, which also includes underwear and socks, will have removable smart tags that can be read from a distance by Wal-Mart workers with scanners. In seconds, the worker will be able to know what sizes are missing and will also be able tell what it has on hand in the stock room. Such instant knowledge will allow store clerks to have the right sizes on hand when shoppers need them.

Freedom From Tyranny Is Our Goal
By Dr. Robert R. Owens Canada Free Press
The Land of the Free is held captive, locked in a two party system where both parties are merely two heads on the same bird of prey
When taxes become destructive they surpass the consent of the governed bending to the will of tyranny. When regulations strangle competition instead of securing it from evil combinations they become counterproductive and defeat the very purpose for which they were proposed. When foreign entanglements bleed the nation but do not secure the peace or defeat the enemy they become interventionist vehicles for vested interests.

JD Hayworth's Republican challenge to John McCain grows as anti-immigrant anger spills onto Arizona's streets
State's tough new rules capture mood of growing fury - and are starting to set a national trend
Paul Harris - The Observer - Guardian.co.uk
JD Hayworth, a barnstorming Arizona Republican who is campaigning for the Senate, has strong opinions about his state's new law on illegal immigration.
The law, known as SB1070 and due to come into effect this week, requires police to arrest suspected illegal immigrants and makes it a crime not to have valid immigration papers on your person. It has prompted Hispanics to fear racial profiling, immigrants to flee the state in droves, activists to organise consumer boycotts and the Obama administration to sue in federal court.

Chavez warns of US oil cutoff in Colombia dispute
IAN JAMES AFP
Associated Press Writer - CARACAS, Venezuela (AP) - President Hugo Chavez threatened on Sunday to cut off oil sales to the United States if Venezuela is attacked by its U.S.-allied neighbor Colombia in a dispute over allegations Venezuela gives haven to Colombian rebels.
Chavez made his warning in an outdoor speech to thousands of supporters, saying: "If there is any armed aggression against Venezuela from Colombian territory or anywhere else supported by the Yankee empire, we ... would suspend shipments of oil to the United States!"
"We wouldn't send another drop of oil to its refineries, not a single drop more!" Chavez shouted, adding that the United States is "the big one to blame for all the tension in this part of the world."

North Korea warns of nuclear 'sacred war'
BBC News
North Korea says it will use its "nuclear deterrent" in response to joint US-South Korean military exercises this weekend.
Pyongyang was ready to launch a "retaliatory sacred war" at any time, the state-run Korean Central News Agency (KCNA) said.
Washington and Seoul say the war games are to deter North Korean aggression.
Tensions between the two Koreas have been high since the sinking of a South Korean warship in March.
An international investigation said the ship was sunk by a North Korean torpedo, a claim strongly denied by Pyongyang.

North Korea says US military exercises pose 'grave danger' to peace in region Justin McCurry - guardian.co.uk,
After new sanctions aimed at North Korea's nuclear programme, US and South Korea prepare for manoeuvres in Sea of Japan
North Korea warned today that a joint military exercise by the US and South Korea this weekend poses a "grave danger" to regional security, a day after Washington announced new sanctions designed to cut off funding for the regime's nuclear weapons programme.
The north called for the cancellation of the drill, which will involve 8,000 troops, 100 aircraft and 20 ships, including the nuclear-powered aircraft carrier the USS George Washington.

S Korea-US military exercise begins in the Sea of Japan
BBC News
The US and South Korea have begun a major military exercise in the Sea of Japan, despite threats of retaliation from North Korea.
The navy and air force manoeuvres involve 20 ships, 200 planes and 8,000 US and South Korean personnel.
Washington and Seoul say they want to send a clear signal to the North following the sinking of a South Korean warship in March.
An international investigation said a North Korean torpedo sank the ship.
However, the claim has been angrily denied by Pyongyang.
On Saturday, North Korea threatened to use its nuclear deterrent in a retaliatory, "sacred war" in response to the exercise.

Accusations of Iraq war 'cover-up'
Press Association - Guardian.co.uk
The Government has been accused by a former diplomat of covering up key information from the Iraq Inquiry to hide mistakes.
Carne Ross, who quit the Foreign Office in 2004 after criticising Britain's involvement in the war, said he had been denied access to key material ahead of his recent appearance.
The UK's former Iraq expert at the United Nations also claimed he was subjected to "subtle intimidation" from Whitehall to drop references to a classified memo.
Giving evidence to Sir John Chilcot's panel earlier this month, Mr Ross complained about a "culture of unaccountability and, sometimes, dishonesty" in Government.

Two US soldiers 'captured by Taliban' in Afghanistan
By Philip Sherwell in New York - Telegraph.co.uk
The Taliban has captured two US soldiers in eastern Afghanistan, a spokesman for the Islamic insurgents said.
American officials separately confirmed that two US soldiers serving with Nato forces were missing, but did not comment on the Taliban claims.
In the eastern Afghanistan province of Logar, local radio broadcast offers of a $20,000 reward for information that led to the safe release of the pair.
"Early this morning two coalition personnel went missing," the announcement said. "They are believed to have been captured by insurgents somewhere in Logar province.

Taliban claim to capture U.S. sailor, kill another
By Deb Riechmann and Rahim Faiez AP
KABUL, Afghanistan - The Taliban claimed Sunday that they killed a U.S. sailor and kidnapped another as NATO forces ramped up a massive search for the servicemen, who went missing two days earlier in an area held by the militants.
The coalition force set up checkpoints and distributed fliers with the sailors' pictures and are offering thousands of dollars in rewards for their return. There were conflicting reports about whether the body of one of the two had been recovered.

Search Widens for U.S. Sailors in Afghanistan
By RICHARD A. OPPEL Jr. and ALISSA J. RUBIN - NYTimes.com
KABUL, Afghanistan - As a huge manhunt for two missing American sailors widened throughout a dangerous region of eastern Afghanistan on Sunday, a Taliban spokesman said that one of the Americans had been killed in an ambush and the other one had been captured.
Adm. Mike Mullen, the chairman of the joint chiefs of staff, said in Kabul on Sunday that the military would "do all we can" to return the sailors, and the United States military in Afghanistan was offering a $20,000 reward for information leading to their return.

* * * * * Important! * * * * *

Afghanistan war logs: Massive leak of secret files exposes truth of occupation Nick Davies and David Leigh - guardian.co.uk
A huge cache of secret US military files today provides a devastating portrait of the failing war in Afghanistan, revealing how coalition forces have killed hundreds of civilians in unreported incidents, Taliban attacks have soared and Nato commanders fear neighbouring Pakistan and Iran are fuelling the insurgency.
The disclosures come from more than 90,000 records of incidents and intelligence reports about the conflict obtained by the whistleblowers' website Wikileaks in one of the biggest leaks in US military history. The files, which were made available to the Guardian, the New York Times and the German weekly Der Spiegel, give a blow-by-blow account of the fighting over the last six years, which has so far cost the lives of more than 320 British and over 1,000 US troops.

Afghanistan War Logs

Pakistan Aids Insurgency in Afghanistan, Reports Assert
By MARK MAZZETTI, JANE PERLEZ, ERIC SCHMIT
and ANDREW W. LEHREN - NYTimes.com
Americans fighting the war in Afghanistan have long harbored strong suspicions that Pakistan's military spy service has guided the Afghan insurgency with a hidden hand, even as Pakistan receives more than $1 billion a year from Washington for its help combating the militants, according to a trove of secret military field reports made public Sunday.
The documents, made available by an organization called WikiLeaks, suggest that Pakistan, an ostensible ally of the United States, allows representatives of its spy service to meet directly with the Taliban in secret strategy sessions to organize networks of militant groups that fight against American soldiers in Afghanistan, and even hatch plots to assassinate Afghan leaders.

----- oil crisis -----

Censored Gulf news: People bleeding internally, millions poisoned says 'EPA whistleblower'
Human Rights ExaminerDeborah Dupre' - Examiner.com
"...we have dolphins that are hemorrhaging. People who work near it are hemorrhaging internally. And that's what dispersants are supposed to do... Congressman Markey and Nadler, as well as Senator Mikulski, have been heroes... Mark Kaufman, EPA whistleblower, Democracy Now!
Poisoning millions of people
In its report, EPA Whistleblower Accuses Agency of Covering Up Effects of Dispersant in BP Oil Spill Cleanup, Democracy Now! states that "many lawmakers and advocacy groups say the Obama administration is not being candid about the lethal effects of dispersants," so Amy Goodman interviewed Hugh Kaufman, a senior policy analyst at the EPA's Office of Solid Waste and Emergency Response and a leading critic of the decision to use Corexit" who disclosed how the officials are lying about many things related to the catastrophe poisoning "millions of people."
(Listen: MP3 Download)

Is BP preparing to use the nuclear option?
PPJGazette - Dr. Tom Termotto, National Coordinator
Gulf Oil Spill Remediation Conference (International Citizens' Initiative)
There has been much speculation lately about a nuclear device being planned for closing in the BP Macondo Well in the Gulf of Mexico. The consequences of exercising this option go well beyond killing the Gulf of Mexico; there would be far-reaching and profound ramifications for the oceans of the world. There are many risks associated with this option that must be considered. Let's review some of these before BP finishes the relief wells, which are allegedly being utilized for the strategic placement and detonation of a nuclear device.
DEEP OIL WELL DRILLING ALWAYS BRINGS INCREASED LEVEL OF RADIOACTIVITY
The radioactive levels of the hydrocarbon brew that has been flowing for over 90 days into the Gulf is already cause for alarm. The deeper the well, the greater the likelihood that the oil and gas effluent will have greater concentrations of radioactive components, particularly radium, thorium and uranium.

Tony Hayward to quit BP
Terry Macalister - guardian.co.u
Beleaguered oil firm chief executive to be replaced by Gulf of Mexico clean-up chief Bob Dudley
BP is planning to announce the departure of chief executive Tony Hayward alongside its half-year financial results on Tuesday.
The BP boss will be replaced by Bob Dudley, who is currently overseeing the oil spill operation in the Gulf of Mexico.
The exit of Hayward, who has been vilified by American politicians since the 20 April blowout on the Deepwater Horizon rig, is the second dramatic change of leadership at BP in less than four years. Lord Browne, Hayward's predecessor, left the oil group after a spat with the then chairman, Peter Sutherland, and a sinking of the share price after the Texas City refinery fire.

Dudley poised to replace Tony Hayward as BP chief
By Graham Ruddick - Telegraph.co.uk
Bob Dudley is set to be named as the new chief executive of BP within 24 hours as the company launches the fight to repair its reputation and finances.
The board of BP will meet this afternoon and is expected to ratify the resignation of existing chief executive Tony Hayward.
Mr Hayward is believed to have been in negotiations over the weekend about his compensation package. Under his contract he is entitled to at least £1.045m - his basic salary - although BP is thought to be keen to avoid any row with the US Government over the scale of the payout.

BP accused of 'buying academic silence'
By Robyn Bresnahan - BBC News
The head of the American Association of Professors has accused BP of trying to "buy" the best scientists and academics to help its defence against litigation after the Gulf of Mexico oil spill.
"This is really one huge corporation trying to buy faculty silence in a comprehensive way," said Cary Nelson.
BP faces more than 300 lawsuits so far.
In a statement, BP says it has hired more than a dozen national and local scientists "with expertise in the resources of the Gulf of Mexico".
The BBC has obtained a copy of a contract offered to scientists by BP. It says that scientists cannot publish the research they do for BP or speak about the data for at least three years, or until the government gives the final approval to the company's restoration plan for the whole of the Gulf.

BP, Deepwater Horizon and the Armageddon Scenario
Pravda.ru
What exactly is going on in the Gulf of Mexico? When there are reports of media blackouts, then the natural reaction is to start investigating, and in the current environmental catastrophe, the more stones one turns, the more horrific the potential scenario becomes. While scare mongering is as pointless as it is dangerous, the truth remains that the media have the duty to inform.
What exactly is going on in the Gulf of Mexico? US-based geologist Chris Landau and writer Terrence Aym are but two of a growing number of researchers who are trying to find out exactly what is happening, amid reports of a media blackout, amid reports of Federal agents blocking journalists from the centre of operations, amid reports of threats of 40,000-dollar fines and felony arrests. To hide what? Let us see.

BP acquits itself of sole blame for gulf spill after internal inquiry
Tim Webb - The Observer - Guardian.co.uk
Oil company determined to fight claims of gross negligence as speculation grows over Hayward's future
BP will this week reveal that it has cleared itself of gross negligence after an internal inquiry into the causes of the Deepwater Horizon explosion.
The company believes evidence will emerge of the role that other oil companies and contractors on the project had in causing the worst environmental disaster in US history. But this is unlikely to satisfy its critics. During congressional hearings in the US, politicians have laid the blame for the disaster squarely on BP, accusing it of ignoring standard oil industry safety practices to save money.

Deepwater Horizon alarms were switched off 'to help workers sleep'
Ed Pilkington in New York - guardian.co.uk
Alarms and safety mechanisms on gulf disaster oil rig were disabled, chief technician at Transocean reveals
Vital warning systems on the Deepwater Horizon oil rig were switched off at the time of the explosion in order to spare workers being woken by false alarms, a federal investigation has heard.
The revelation that alarm systems on the rig at the centre of the disaster were disabled - and that key safety mechanisms had also consciously been switched off - came in testimony by a chief technician working for Transocean, the drilling company that owned the rig.

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