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Archive for February, 2008

Here we have occasionally noted the latest iteration in the evolution of state control over the people: incremental violence, under “nonviolent,” “nonlethal” auspices, most publicly on display in Tbilisi, Georgia (yet another of George Soros’s Open Societies gone wrong) when Soros Mikhail Saakashvili needed to secure re-election in the face of a very disillusioned Georgian population.

In addition to probable ballot-box stuffing, Mikhail Saakashvili used expensive sound cannons to disorient and disperse protesters. But, hey, it was nonviolent. So it’s okay, right?

Anyway, all you dirty hippies out there better watch out, ’cause who else but the San Jose Police Department is a-gonna to fry your eardrums and knock you to the ground the next time you whine about something? (TOH the civil-liberties vigilantes at Infowars)

New tool for police is a blast of sound
DEVICE WILL HELP SAN JOSE CONTROL LOUD CROWDS

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Think louder than a jet engine. Think the front row of a Metallica concert. Think of the piercing scream of a smoke alarm – inches from your ear.

Now, imagine a bad guy, holed up with hostages, refusing to budge, surrounded by sharp-shooters and anxious neighbors.

Instead of bullets, San Jose police can blast him with the latest in high-tech cop gadgetry: a dish-shaped, sonic weapon.

This ear-splitting, mind-blowing device is growing in popularity around the globe, used by soldiers flushing terrorists out of caves in Afghanistan to cruise ships scaring off pirates in the sea off Somalia.

So why did San Jose plunk down $27,000 in state grant money for its own Long Range Acoustic Device?

Police say it will be used mostly as a high-grade sound system to clearly amplify a police officer’s order at great distances. But it can also be used as another of the department’s “less-lethal” weapons, along with Tasers and 40mm projectile guns.

Sgt. Dave Newman, a veteran SWAT officer, said the LRAD’s sound blast could be used on a barricaded and armed suspect who refuses to surrender.

“This is just a tool in a tool box,” Newman said. “We try to come up with tools that will provide a safe solution to the problem. That’s why we have the Tasers. That’s why we have” pepper spray.

The LRAD, Newman said, is a way for police tactics to evolve so they don’t “become a dinosaur and head for the La Brea tar pits.”

... Cops said that talking to a crowd was the whole point of the LRAD. [LOL–ed] Sometimes suspects, arrested during rowdy crowded events, complain that they don’t hear the order to leave.The LRAD, police said, will solve that.

The LRAD’s legend grew in 2005 when the captain of the Seabourn Spirit luxury cruise ship used one to help repel pirates who attacked the vessel with rocket-launched grenades off the coast of Somalia.

While most of the 1,000 or so LRADs that have been sold have gone to the U.S. military, about a dozen public safety agencies, including Sacramento and Santa Ana police, have also purchased them. The New York Police Department used the megaphone feature for crowd control during the 2004 Republican Convention.

The Santa Ana SWAT team used the LRAD to get 10 gang members holed up in a house to surrender.

“I know they have those crowds during Mardi Gras in San Jose,” said John Gabelman, commander of the Santa Ana SWAT team. “That will be an excellent tool for them.”

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SAN FRANCISCO (MarketWatch) — In an effort to calm grousing consumers as prices rise to 11-year highs, China is raising minimum wages across the country, a move analysts fear could further stoke inflation.
Guangdong, China’s richest province, said it plans to raise minimum wages by as much as 18% in some cities starting April 1. The decision followed similar actions in other areas, notably the major cities of Shanghai and Beijing. Tibet, an autonomous region administered by China’s central government, raised minimum wages by nearly 50% at the beginning of this year.
The wage increases, aimed at relieving food and other price pressures, could instead fuel inflation, analysts said. Higher wages are also likely to raise prices of U.S. imports from China, and possibly reduce China’s attraction as the world’s manufacturing center.

China is wrestling with consumer inflation that accelerated to 7.1% in January, up from a 6.5% rise in December, the National Bureau of Statistics reported last week. …

China’s dilemma
Since last year, Chinese residents have seen prices of food and other staples increase more than their pay checks, a factor analysts said could potentially unleash social unrest. In light of that, some fear the minimum wage increase came too late.
“It’s a dilemma for China,” said David Riedel, president of overseas-stock specialist Riedel Research Group. “The reality of higher food and fuel prices has to be offset with higher wages. This is more wages catching up to where the market is today.”
The wage increases could feed inflation, he said, explaining that companies absorbing higher wages have to pass those costs onto their customers.
Guangdong will increase the province’s minimum wages by an average 13% on April 1, the province’s labor bureau said in a news release last week. The southern China province produces about 13% of China’s economic output, the most among the country’s 32 provinces.
Minimum wages in the capital city Guangzhou will rise to 860 yuan ($120) per month from 780 yuan, an increase of 10%. Wages of other cities in the province will also get a boost, with those in some inland cities up nearly 18%.
China’s other provinces took similar actions earlier this year. Starting Jan. 1, four provinces hiked their average minimum wages by more than 20%, with the increase in Tibet topping the list, according to data collected by Citigroup. Five other provinces increased average wage caps by more than 10%.
Beijing and Shanghai, China’s two biggest cities, last year raised their minimum wages to 730 yuan and 840 yuan respectively, in the face of rising consumer prices.
Average minimum wages in China have risen 15% in 2007, Citigroup said in a report, and 21% in 2008 based on available data.
Higher inflation
The wage hike came as some analysts were already reconsidering their estimates for Chinese inflation.
“The current consensus view is that this year’s inflation should peak in the first quarter,” said Lan Xue, an analyst at Citigroup, in a separate research note. However, Xue said “we are getting nervous that not only may we not see a moderation in the second quarter,” but that inflation could even continue rising into second half or even 2009.
Recent inflation has even spread to home appliances, one of the most oversupplied goods in China.
Haier, China’s biggest appliance producers and an exporter of mini refrigerators and other appliances, said last week it will raise domestic prices of refrigerators and washing machines by 7% to 10% in response to higher producing costs.
The prices rises are notable because winter is usually the slowest season for selling appliances, according to Citi’s Xue, who added that it is “probably the first time in the past 15 years that we have seen price increases” in that sector.

Guangdong province, whose minimum wages will be the country’s highest as of April, is China’s largest manufacturing center for home appliances. That could put even more upward pressure on appliance prices.

Vindication for those of us who have never trusted Chinese statistics. “7.1%” Chinese CPI is a total fabrication. When the China myth has collapsed, common sense and a smidgen of on-the-ground experience will have trumped Wall Street’s credulous, all-too-fashionable quants and permabull prophets yet again.

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Nigerian states support discontinuing payment in dollars

Section: By Kunle Aderinokun
This Day, Lagos, Nigeria
via AllAfrica.com
Wednesday, February 20, 2008

http://allafrica.com/stories/200802200406.html

ABUJA, Nigeria — A few days after President Umaru Musa Yar’Adua stopped the payment of their share of monthly allocations and excess crude proceeds in US dollars as earlier proposed by the Central Bank of Nigeria, the 36 states of the federation yesterday said they supported the decision because the dollar is not the nation’s legal tender.

Also yesterday, the Federal Government directed the Office of the Auditor General of the Federation to carry out a comprehensive audit of all revenue inflows into the Federation Account from the Nigeria Customs Service, Nigerian National petroleum Corporation, Federal Inland Revenue Service, and Department of Petroleum Resources, as well as review the petroleum subsidy account.

Fielding questions from finance correspondents after the monthly meeting of the Federation Account Allocation Committee yesterday at the Ladi Kwali Hall of Sheraton Hotel and Towers, the Ondo State commissioner for finance and economic planning and chairman of the Forum of Finance Commissioners, Chief Tayo Alasoadura, said the states’ support for the stoppage of the dollar payment was predicated more on the need to keep the country’s pride and independence than pecuniary reasons.

Chief Alasoadura said, “We are happy with the decision. We don’t want dollar payment because the dollar is not our legal tender. Why should the highest revenue body of the country be paying money in dollars?

“We are degrading our own currency for other currencies. Let us have our money in naira. Anyone who wants to convert to dollars can go to the market to buy dollars. The legal tender of Nigeria is naira and we should be paid in naira. We are all in agreement with the president on this matter.

“Our rejection of dollar payment is not because of depreciation of the dollar. Our decision is based on the country’s pride and our independence. We should be paid in our own legal tender. We don’t want dollar payment.”

Earlier, while declaring open the Federation Account Allocation Committee meeting, the minister of state for finance, Mr. Remi Babalola, said that the issue of payment of statutory allocations to all tiers of government in foreign currency had been laid to rest following the presidential directive.

“As some of you may already be aware, the president and commander-in-chief of the armed forces has directed that any plan to disburse federation account funds to federal, state, and local governments in foreign currency should be stopped forthwith. With this development, I believe that this matter should be laid to rest,” he said. …

Nigeria discarded the dollar. You know, that country that spams you with scams all the time? They’re tired of watching Bernanke aggravate their own inflation problems.

Oh, and guess what else happened today? Greenspan urged the Gulf nations to dump their dollar pegs.

Alan Greenspan, the former chairman of the US central bank, or Fed, has said that inflation rates in Gulf states, which are reaching near record levels, would fall “significantly” if oil producers dropped their US dollar pegs.

Speaking at an investment conference on Monday in Jedda, Saudi Arabia, he said the pegs restrict the region’s ability to control inflation by forcing them to duplicate US monetary policy at a time when the Fed is cutting rates to ward off an economic downturn.

Debate is rife in the Gulf on how to tackle inflation.

Levels have hit seven per cent in Saudi Arabia, the highest in 27 years and a 19-year peak of 9.3 per cent in the United Arab Emirates in 2006.

Free float?

“In the short term free floating … will not fully dissipate inflationary pressure, although it would significantly do so,” Greenspan said.

Saudi and UAE central bank chiefs are in favour of retaining dollar pegs, but Sheikh Hamad bin Jassim bin Jabr al-Thani, the prime minister of Qatar, is pushing for regional currency reform to avert possible unilateral revaluations designed to curb inflation.

According to Hamad Saud al-Sayyari, governor of the Saudi central bank, floating the Saudi riyal would not be appropriate for an economy that relies on oil exports.

“Floating is beneficial when the economy and exports are diverse … as for the kingdom it remains reliant on the export of a single commodity,” he said.

Investor attraction

The dollar peg was also defended by Sultan Nasser al-Suweidi, the UAE central bank governor, at a conference in Abu Dhabi on Monday.

He said the policy was helping Gulf states attract foreign investments.

“They did very well for our economies because it has led to more capital flows,” al-Suweidi said.

Qatar, has the region’s highest inflation, and is considering the revaluing of the Qatari riyal to combat inflation currently at 13.74 per cent.

The exchange rate contributes to about 40 per cent of inflation in Qatar, where the riyal is believed to be 30 per cent undervalued.

Qatar’s stand

“We prefer always to act with all the GCC countries,” Sheikh Hamad said.

Qatar currently chairs the six-nation Gulf Cooperation Council.

“It’s now time for the Gulf to have its own currency,” he said.

Sheikh Hamad said such a currency should be “like the Japanese yen or other currencies”.

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NY GOP, RIP

The New York Republican Party has enjoyed one lifeline over the past century: its control of the state Senate. The NY GOP has always driven hard bargains on redistricting, pork, and other gimmickry to bolster not only their own fortunes, but also the district makeups of NY House Republicans.

As of last night, that’s over.

Dems shocking New York state senate victory

Tue Feb 26, 2008 at 08:01:12 PM PST

Democrats picked up a state senate special election in New York today, SD-48. Yeay for us! Except that this victory is particularly incredible.

First of all, this isn’t the kind of seat Democrats win. In fact, it had been over a century since that had happened — since 1880, to be exact, or 128 frackin’ years. Second of all, this was about as solid a district as you can get.

No Democrat has held the North Country seat for at least a century and enrollment appeared to favor [the Republican] Barclay – 78,454 Republicans to 46,824 Democrats, but there were also 35,000 independent voters.

That’s 49R, 29D, and 22I. Yet despite that 30,000 edge in voter registration, Democrat Darrel Aubertine won the race 52-48.

Incredible. If a district this Republican has given up on the GOP, then that party is truly dead in New York. Democrats are well poised to pick up the additional seats necessary to take full control of the state’s legislature this November, and the state will have its first Democratic trifecta in half a century. As a bonus, assuming Democrats hold those gains and the state governorship, redistricting will be in our hands. A 100 percent Democratic U.S. House delegation is well within reach, if not by the ballot box, then by the redrawing of the new districts.

It’s almost certain that some Republican will be bought out now, if they don’t bolt outright out of sheer self-preservation. Once the state Senate tips to the Democrats, the Democratic trifecta will axe a lot of quirks that the state GOP hardwired into the system (such as counting the prison population towards totals in Republican districts, even though they are ineligible and unable to vote — sort of a modern incarnation of the English “rotten boroughs”). They will redistrict everything more favorably, and will win a landslide next time around.

The point is that 4-6 of New York’s 6 House Republicans are now endangered, at a time when the Republicans can’t afford it.

In not very related politics news, Alaska — Alaska! — has joined the list of Senate seats favored to tip Democratic this year.

Such are the wages of hubris and betrayal ..

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What the debt market believes, and what the ‘Save the Sheeple’ monolines/ banks/ realtors caucus believes, are clearly two very different things.

Feb. 27 (Bloomberg) — Moody’s Investors Service and Standard & Poor’s say MBIA Inc. has enough capital to withstand losses and justify its AAA rating. MBIA’s debt investors aren’t so convinced.

Credit-default swaps indicating the risk that Armonk, New York-based MBIA’s bond insurance unit won’t be able to meet its obligations are trading at similar levels to companies such as homebuilder Pulte Homes Inc., which is rated 10 steps lower.

The discrepancy illustrates the skepticism debt investors have about the safety of MBIA’s rating after the company posted $3.4 billion of losses on subprime mortgages last quarter. Moody’s and S&P both said that while at least $4 billion of writedowns lie ahead, MBIA’s management has made enough changes to warrant the top rating.

Pardon me if I find this a little hard to believe,” said Richard Larkin, director of research at municipal-bond brokerage Herbert J. Sims & Co. in Iselin, New Jersey. “This is basically the same management that put MBIA into this hole in the first place.’

Moody’s yesterday ended a five-week review of MBIA, the world’s largest bond insurer, removing the threat of an imminent downgrade. S&P did the same a day earlier and also affirmed the top rating of New York-based Ambac Financial Group Inc., the second-biggest. Ambac is still under review from both S&P and Moody’s.

Credit-Default Swaps

Credit-default swaps tied to MBIA’s insurance unit rose 3 basis points today to 363 basis points, according to London-based CMA Datavision. The contracts, which rise as investors see increased risk and fall when confidence improves, have dropped 24 basis points the past three days. That’s still up from less than 100 as recently as October. The contracts rose above 720 last month as banks, securities firms and investors used them to hedge against the risk that the firm wouldn’t be able to make good on its insurance obligations.

Contracts on Bloomfield Hills, Michigan-based Pulte are trading at about 370 basis points, CMA price show. The BB+ rated homebuilder has reported five straight quarterly losses. The company is considered junk, or below investment grade.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.

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CURRENCIES

  VALUE CHANGE % CHANGE
EUR-USD 1.5105 0.0130 0.87
USD-JPY 106.4700 -0.8100 -0.76
GBP-USD 1.9903 0.0032 0.16

COMMODITY FUTURES

  VALUE CHANGE % CHANGE
Oil 100.68 -0.20 -0.20
Gold 958.40 9.50 1.00

Fannie Mae, Freddie Portfolio Limits to Be Lifted, Ofheo Says
By Jody Shenn

Feb. 27 (Bloomberg) — Fannie Mae and Freddie Mac, the two largest providers of money for U.S. home loans, will have restrictions on the sizes of their portfolios removed.

The limits, imposed after accounting errors at the government-chartered companies, will be lifted on March 1, according to a statement sent by e-mail today from the Office of Federal Housing Enterprise Oversight.

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Fed Vice Chairman Don Kohn:

“I do not expect the recent elevated inflation rates to persist. In my view, the adverse dynamics of the financial markets and the economy have presented the greater threat…

“I expect the run-up in headline inflation to be reversed and core inflation to edge lower over the next few years. This projection assumes that energy and other commodity prices will level out, as suggested by the futures markets…”

Yes, Don. Core inflation. Exactly.

Out. To. Lunch.

Buy more gold mining stock, even if you have already accumulated disproportionate gold-miner holdings. The devaluation train has a long way to go.

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