SOS - Save the Arctic

By Padmini Arhant

Mother Nature has never been more vulnerable than now with the human power in industries and government targeting every available land on planet earth for profits. With the active space exploration for possible inhabitation on Mars and the Moon, earth’s natural resources depleted to the ultimate under the guise of ‘Clean Energy Act,’ by the yet another indomitable force in the corporate world, the ‘Energy Cartel.’

Should they trail behind in the Herculean contest of crushing democracy and the people it represents?

‘Profit’ revered more than the “Prophet” spares none in its sinister cannibalism revealed in the legislative matters concerning health, housing, finance, wars and even the planet they exist. It is no longer the Darwinian ‘survival of the fittest’ with a subtle hope for efforts to survive if not thrive in the sharks-infested waters.

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Thank you.

Padmini Arhant

Iranian Uprising - 21st Century

Apocalyptic New Era

By Padmini Arhant

The Presidential election results were out in the Islamic Republic of Iran and predictably, the theocratic rule through flawed electoral process declared the incumbent President Mahmoud Ahmadinejad the winner, with a landslide victory against the reformist leader Mir Hossein Mousavi of the Islamic Iran Participation Front, recognized as...

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Thank you.

Padmini Arhant

Obama Administration – Performance Assessment

By Padmini Arhant

Courtesy: www.padminiarhant.com

It is one hundred days since the new administration under President Obama took office on January 20, 2009.

Precisely, around that time the nation was in a precarious situation specifically with the economy in severe recession heading towards a possible depression. It required urgent policy decisions to avert the serous economic crisis contributing to the crumbling housing market, potential bankruptcies of the auto industry, tremendous job losses, failing financial institutions and volatile stock market.

Even though, the crises are far from over, the administration demonstrated diligence with the legislation of the $787 billion stimulus bill through American Recovery and Reinvestment Act accompanied by various strategies to reform and revive the financial institutions and housing market.

The financial bailouts were justifiably controversial and awaiting the stress test results due on May 4, 2009. Meanwhile, the alternative of inaction would have proven equally detrimental and exacerbated the liquidity crisis in the financial market.

In addition to the measures in stimulating the economy, the administration’s effort to sustain the existing jobs in different sectors particularly the auto industry is noteworthy. Further planning and policy decisions to create new jobs phrased, as ‘green jobs’ through vigorous environmental and energy programs is the right course of action to efficiently deal with the challenging issues of global warming and energy independence.

Other achievements in promoting science and technology such as the stem cell research within the realm of ethical code, proposal to digitalize medical records as one of many innovative solutions in the health care policy, coordinating with the environmental agencies in the protection of threatened and endangered species are impressive. However, the request from the environmental groups to rescind the rule that limits the protection of polar bears from the melting Arctic ice caused by climate change is pending approval.

In social programs, the signing of two major pieces of legislation into law – the Lilly Ledbetter Fair Pay Act, ensuring equal pay for men and women and the State Children’s Health Insurance Program (SCHIP) that guarantees 11 million low-income children affordable health care are significant actions.

World health crisis in the wake of the ‘pandemic swine flu’ appropriately handled by the Obama administration thus far.

Despite the fragile economic conditions, the Obama administration’s response and reaction to most issues has been right on target. The anticipated legislation of the budget focused on education, energy and health care should accelerate the economic growth for rapid recovery from the existing crises.

The administration must strive hard to isolate investment from wasteful spending i.e. earmarks or pork barrel that often finds its way through major budgets and stimulus packages. Likewise, preventing the special interests and lobbyists’ continuous dominance should be part of the administration’s agenda.

With respect to transparency and accountability, the recent scandals involving legislators raises credibility issue for the majority party. It is important to maintain bipartisanship in legislative matters for national interest since future holds no guarantee with the majority rule. Moreover, divisive politics contributes to polarization jeopardizing national unity and ultimately election results.

In foreign policy matter, the recent participation in international summits appears promising with the exception of the boycotting of the Geneva conference on ‘racism.’ Please refer to the article on ‘Racism – The Durban II Geneva Conference’ @ www.padminiarhant.com.

Obviously, the rising tensions in the international arena from Afghanistan, Pakistan, Iran and North Korea are few of the many challenges ahead. Resolving the Israeli-Palestinian conflict in the form of two states solutions is paramount to attain permanent peace in the region. It would create a pathway for others sharing similar aspirations.

Combat troops withdrawal from Iraq and simultaneous deployment in Afghanistan deserve individual criteria and attention. Military operation always yields immense casualties and often precious lives are lost in the process.

President Obama’s initiative with Russia in the reduction of conventional weapons and other arsenal is praiseworthy. Nevertheless, it remains subject to the real statistics and the actual defense spending contraction by the geopolitical powers. The bold and audacious declaration of nuclear disarmament was music to ears, although the reality of it relies on the willingness and commitment by the other nuclear nations.

At the G-20 summit, the United States’ reluctance to support France’s proposal to force international financial institutions unveil the corporations using tax havens for tax evasions was disappointing. The unpopular yet meaningful recommendation contributed to a major disagreement between France and China leading to the mediation by the U.S. President Barack Obama. The international sources attributed China’s objection to the potential ramifications on the corporate investments in that nation.

In conclusion, the result oriented performance reflects President Obama’s admirable leadership skills and the administration’s ambitious goals in education, energy and health care is a step in the right direction.

I wish President Obama and the administration success in all endeavors.

Thank you.

Padmini Arhant

Racism – The Durban II, Geneva Conference

By Padmini Arhant

www.padminiarhant.com

The past week - April 20 -24, 2009, Geneva, Switzerland hosted ‘The Durban II conference’ on racism. The preceding event in 2001 held in Durban, South Africa marred by racial overtones and negative attacks against the state of Israel evidently led the United States and Western allies to boycott the recent U.N meeting.

It was a United Nations gathering to address the persisting contemporary discriminatory practices often transforming into persecution, oppression and even genocide in some parts of the world. According to the White House and media reports, the reason behind United States and allies’ absence at the symposium was the blue print content notably against Israel by the Islamic Republic of Iran. However, the United Nations’ assurance to eliminate any anti-Israeli inflammatory remarks from the Iranian President’s speech failed in convincing the United States, Israel and others to attend the world forum.

Meanwhile, predictably the Iranian President Mahmoud Ahmadinijad’s rhetorical speech caused spectacle prompting other European diplomats to briefly abandon the summit. To the United Nations’ credit, the subsequent address by the Iranian President modified to reflect reality on the tragic holocaust previously denied by the political figure.

Whenever a consortium organized to deal with sensitive humanitarian issue of great magnitude, the stage is set for fireworks and doesn’t require more than a spark to ignite the flame into blazing fire. All those refuting the one nation’s contentious repetitive conduct, regrettably ignored the wide spectrum of humanitarian crises around the world. The objection against a particular nation’s demeanor effectively dismissed the urgency for unanimous solutions to global problems affecting humanity. Further, such action conspicuously displayed hierarchy prevalent in the humanitarian priorities.

Every continent has nations with dark legacy and embarrassing episodes of human rights violation. In the new millennium, the global community challenged to empathize with those currently enduring incessant suffering due to lack of freedom, inequality, injustice including intolerance.

The Geneva conference was a great platform for the nations that boycotted the meeting exclusively the United States and Israel to express serious commitment in resolving the age-old Middle East conflict between Israel and Palestine. Any glimpse of hope in the two states solutions approved by vast majority of population on both sides with a free Palestine comprising West Bank, Gaza and East Jerusalem alongside the democratic Israel unequivocally accepted as a sovereign state in the entire region would have instantaneously gained credibility in the large presence of the United Nations.

Needlessly, as holocaust victims Israel was better qualified to condemn any crime against humanity and set an example by leading the world in the establishment of peace and democracy with its neighbor Palestine. Israel had a unique opportunity in Geneva to demonstrate solemn pledge and action to aid those, relevantly the Palestinians deserving similar liberty granted to Israel predominantly with the support and solidarity among the nations around the world. Israel’s unprecedented humanitarian gesture would have made it incumbent on the Arab nations at the conference to forge alliance in promoting regional unity and peace.

If the world would not have heeded to the humanitarian call for an Independent Israel, it could have resulted in the devastating annihilation of a specific human race. Likewise, South Africa proudly declaring results from a democratic election today would have succumbed to oppressive apartheid without the international community’s involvement in the freedom of that nation.

There is immense misery and extreme hardships in various parts of the world. People in these regions generally exposed to despair, depression and death at infancy consider themselves fortunate if they live beyond the short life expectancy because of poverty, disease, war and deprivation of basic human rights.

Geneva conference reached a broad based consensus against racial and gender discrimination, anti-Semitism, Islamophobia other than human rights abuses across the globe. An international assembly by governments from most parts of the world had the moment and venue to review pertinent matter concerning different nations and people. Unfortunately, the U.N committee presumably under intense pressure from nations prioritizing political agenda in their allegiance to a single ally, did not layout the importance of relieving humanity from the perpetual violence through war, invasion and occupation reminiscent of the twentieth century’s imperialism and colonialism .

Is there deficiency in related topics involving the remaining population on the planet seeking entitlement to the international representation, rescue and relief from burgeoning crimes against innocent civilians?

Only if rationality and utilitarianism prevailed over popular political dogma of individualism, the desirable goals for fairness and justice are attainable in human affairs.

Is the struggle for peace and independence by the population in Palestine, Burma, Tibet, and North Korea any less significant than the international feud between Israel and Iran?

What about the status quo of civil wars contributing to genocides in Rwanda, Darfur, Congo and other parts of Africa?

Should the world ignore the escalating ethnic cleansing in Sri Lanka as an internal matter rather than an international moral issue?

Where was the denunciation of the pervasive Taliban abuse of women in Afghanistan now dangerously spreading to the Northwestern regions of Pakistan?

Why did the summit not extensively focus on the various abuses in Latin, Central and South America and China, notwithstanding the denial of equal status to women in the Middle East and other Islamic nations?

On the generic concept of racism, xenophobia - typically the fear of the unknown, homophobia - the overt hate crimes against gay and trans-gender community and other horrific incidents in human trafficking, child pornography and numerous offenses were excluded during the five-day long international meeting.

Apparently, the interpretation of ‘tolerance’ in the crimes against humanity is subject to the relationship among existing and emerging economic and political powers in the global society.

The protocol on protests, boycott and co-operation alike varies depending on the nations along with political and economic repercussions arising from such action.

For example, the Iranian President’s controversial stance against Israel held responsible for the Western nations’ boycott of the latest Geneva conference on racism while implying the other attendees’ motive questionable.

Nevertheless, the human rights activists’ plea to boycott the 2008 Beijing Olympics to draw attention towards the plight of the Tibetan population persecuted by the hour and suppression of the democracy movement in the People’s Republic of China rejected by the participating nations prominently those who recently boycotted the Geneva conference.

It is widespread knowledge that the emerging economic power China being the treasury and
Exchequer for the world economy, a nuclear nation possessing veto power routinely exercised against common benefit in the U.N. Security Council decisions, privileged with supreme diplomatic immunity in all things inhumane.

In the recent G-20 summit, call for globalization over protectionism dominated the theme for global economic revival. Synonymously, in the environmental matter and international security collective effort embraced as a successful strategy. Henceforth, collaborative action regarded imminent to resolve international crises.

Ironically, abstaining from leadership at the summit to formulate policies in the restoration of human rights, freedom and civil liberties, the fundamental requirements for peace, progress and prosperity, creates a vacuum rather than serving the real purpose.

History is testimony to the rise and fall of civilizations that fair well when guided by wisdom, compassion and courage for universal good.

Thank you.

Padmini Arhant

Stock Market Crisis

Courtesy: http://www.godlikeproductions.com - Thank you.

Whats Driving the Stock Market Chaos??

Denninger Speaks... – Thank you.

Quote

What The Media *Didn't* Cover

So yesterday the "news" was all about the long end of the Treasury curve rocketing higher (yield), which many people believe is about "risk acceptance" and The Fed (along with other central banks) cutting rates by 50 basis points.

Uh huh.

Let's talk about what's really going on.

First, our rates. The EFF (Effective Fed Funds) rate has been trading at 1.5% now for a couple of weeks. Two percent schmoo percent; a target rate only in name is no target at all. In reality the 50 bips cut, even though it resulted in an instantaneous 40 handle rocket shot in the /ES futures Wednesday morning, was entirely a CONfidence game (with the emphasis on "Con"!)

The RTS (Russian Market) is down 87% YTD, and is closed until further notice. The Nikkei is trading below the DOW - that's not good. Indonesia's stock market was shuttered Wednesday and remains closed after tripping "lock limits" within 90 minutes of the opening bell. As of Thursday morning the RTS was closed again after Putin allegedly strong-armed a whole bunch of Russian wealthy to "stick it in" (to the stock market); this sort of v-fib in a market does horrifyingly bad things to ordinary investors who find themselves out just before the market rockets higher without underlying economic cause.

Iceland has essentially melted down. Their currency went straight into the toilet and two of the three largest banks were nationalized - all in the space of 24 hours. The culprit? Bad loans. Where have we seen this movie before?

Mexico's peso has fallen some 40% in days against the dollar. Great if you're traveling there as an American. Sucks severely if you're a Mexican. That alleged fence on our southern border is going to need reinforcements.

Wednesday morning Britain and the EU zone all announced major bank rescue operations. Same deal - "throw money at it, paper it over."

Nowhere a mention of forcing balance sheet transparency and truth.

Except in one place - here in the US! Plans to standardize CDS contracts and force them onto an exchange are actually under way. This is a major positive move and fulfills one of the three prongs of my view of how to solve this problem, once implemented. We'll see how much pushback we get, and whether OTC derivatives are actually banned (as they should be), or whether the big trading houses and banks insist on being able to play "pick pocket" along side the "regulated" world.

The NY Fed announced plans to extend a further $39.6 billion credit line to AIG. The tab is now almost $120 billion dollars. Where did the other $80 billion go? Has it been vaporized trying to raise capital to pay down CDS contracts that have gone the wrong way on them?

Speaking of which, Thursday is D-Day - D standing for either "derivative" or, if things go sideways on people, "detonation."

See, this is the day that Lehman's CDS contracts are supposed to be resolved. Since Lehman's bonds are trading at ~20-30% recovery (horrible, on balance) the writers may have to fork up 60 to 70 cents on the dollar.

The $64,000 question is how many of those contracts net out. The real liability is what's left once everything is "balanced" (a long and short held by the same guy net to zero, assuming that both contracts are "money good", leaving the holder with no liability - and no asset)

This has the potential to be a big "nothingburger", a minor tremor, or a 250' high tsunami that washes over Lower Manhattan (and the City) tomorrow. There's no good way to know in advance which outcome will manifest, since nobody (at present) knows what the true netted-out open interest is. This is one of the problems with not having a public exchange; lack of knowledge.

The bright light of reality will shine tomorrow......

The architects of this, by the way, are the folks who took the cuffs off the banks, going back to the Gramm-Leach-Bailey law and the repeal, piece-by-piece prior but finished by GLBA, of Glass-Steagall. GLBA, by the way, was passed in 1999 - just as the Internet bubble was in full force. Coincidence? No. The root cause of this mess? Right there. Thank Congress, and make sure you include those members who have been around for the entire thing, including John McCain.

On the equity market side shorting is once again available, the order having expired. The lack of shorts was a definite factor in the stiff selloff that we've seen, and Chris Cox owes investors in America an apology - on the air. This was an objectively stupid decision, as shorts provide necessary liquidity during serious downturns. Without them you get "no bid" circumstances, and they sporadically appeared during the last few days in financials, which certainly exacerbated the selloff.

In the bond markets Treasury refunded some "off the run" bonds and got an ugly surprise - the market didn't want them. They had to pay a 40 bips "tail" to get them to go, which may be the start of a really troublesome trend. See, Treasury is now throwing over $100 billion a week into the market, and this only works on days when the market is crashing. THEN you can get people to suck up all you puke out, but the rest of the time you're going to have to pay up, and Treasury has had to do so - dearly.

This may be the start of the "bond market dislocation" that I have long feared. I hope and pray not, but if this trend continues Treasury is going to find that it cannot sell its debt into the market without slamming rates higher, especially on the long end of the curve, which means an instantaneous implosion of what's left in the housing market.

The ugly is that 3-month LIBOR widened today, as did the TED Spread. Both should have come in. They did not. LIBOR is essentially unsecured lending and the bad news is that a lot of corporate (and some personal) borrowing is indexed off it. If you are, you're screwed.

Why has LIBOR refused to come in despite these "coordinated" effort? Its simple: the underlying trust issue has not been addressed, and nobody is seriously proposing to do so.

Paulson and Bernanke now are truly caught in the box, as I have been talking about for more than a year. As they introduce and fund these silly programs like the "TARP" each new program produces more foreclosures by depressing home values and thus tightens the spiral.

See, as long rates go up house prices go down, since the value of a home for most people is Dependant on what they can finance, and that is directly related to interest rates. Get out your HP12C and run the principal value change for a fixed payment if interest rates change from 6% to 8% or 10% - that's the impact on the value of your house from these changes that are occurring in the Treasury marketplace.

This outcome is what I warned of in "Our Mortgage Mess" back in April of this year; a potential ramping of borrowing costs for government debt, which will not only make sustaining government spending (and perhaps government operation) impossible, but in addition destroy private credit by driving costs in the private sector skyward as well.

Simply put, the "TARP" or "EESA" must be repealed here and now.

It is unacceptable to risk Treasury Funding destruction in order to bail out some bankers. And make no mistake - there is and will be no benefit to taxpayers.

We are also now entering into earnings season, and Alcoa was a warning blast. They missed badly. That won't be the last.

This is the "value trap" problem that many investors fall into. You see the market down 30% and think its a great buying opportunity.

It is a great buying opportunity only if earnings going forward can be sustained. But in this case, they cannot. It is flatly impossible; with Treasury borrowing money like a madman, tacking on more than 20% to the national debt in the space of months, carrying costs will inevitably rise as will taxes. Both of these have a multiplier effect (in the wrong direction) on corporate profits, and in addition the "faux profits" from financial engineering have all disappeared at the same time.

The S&P 500's profit, in terms of gross dollars, are almost certainly going to come in by 50% from the highs, and that assumes we get a garden-variety recession and not something worse. This of course puts "Fair Value" on the SPX down around 750, or another 25% down from here.

The ugly stick potential is what I discussed yesterday, and that risk is very real. Treasury borrowing cost ramps can produce a 1930s-style dislocation in credit, and if it happens then you will see mass bankruptcies not only in corporate America but among individuals as well as borrowing costs ramp to the point of shutting down the marketplace for credit.

Treasury and Bernanke claimed that "credit markets seized"; this is only half-true. Credit markets always close to those who are lying, because there is no reason to loan someone money if you're not reasonably sure you will get paid back.

But there is a second form of seizure and this is the frying pan into which we've now jumped - that is a credit market that prices beyond what the market can bear at its imputed rate of return. In that market credit is available but it does not matter, as you can't make enough profit to generate a positive carry on the borrowed money, and consumers in that environment fall into a vortex of interest payments that spiral faster than they can borrow to stay ahead of them.

That rabbit hole is how we got the 1930s, and it is the danger we now face. Congress was in fact conned by Treasury, George W. Bush and the banking industry (including Ben Bernanke), who instead of forcing the malefactors into the open and exposing those who were bankrupt (or just plain corrupt - notice the common stem on both words?) threw them a line - unfortunately, the line is cleated to the entire economy of the United States, and they have enough negative buoyancy to drag us all under the waves.

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Analysis: This is one of many opinions floating around all over the cyberspace regarding the latest downward spiral in the stock market. The consensus is clear; a few operatives with a major stake in the gamut of the financial world are driving the mania for their profiteering with utter disregard for the rest of the population around the world.

It is time for the people of the United States and around the world to rise to the occasion and intervene as the snowballing of losses in market shares is not a natural event. Clearly, this kind of manufactured, well-orchestrated and premeditated mechanism is the result of greed, corruption and cronyism that is rampant and has now come to surface.

Not surprisingly, there is no investigation or reports by the media as the Corporations, the de facto beneficiaries own them. The world must awaken now and deal with the reality to bring all of these entities to justice. It is time to make every one of them accountable for their actions and inaction as well as make them absorb all of the losses generated by their devious modus operandi.

The current situation is not an isolated occurrence. The cause and effect factor is evident in the existing stock market turmoil. As suggested earlier, the unethical practices resulting from the lack of accountability and oversight is contributing to the pandemonium in the market worldwide with the infusion of the "survival of the fittest" theory.

The world is shocked and in despair, seeing no end to the plundering of wealth that rightfully belongs to the righteous and not the self-righteous. However, it is presumptuous of those involved in this mass abduction of world treasury that they will not be exposed and brought to spotlight.

Perhaps, Armageddon is the only alternative now to restore morality and world order. The degradation of principles, ethics and democratic values by the ruling power will not escape the judicial verdict.

Therefore, it is in the best interest of all those involved in the conspiracy to come forward and demonstrate figment of integrity by stabilizing the stock market decline or be prepared to deal with the wrath of natural phenomenon.

Further, to those entities responsible for the current economic disaster, “the end justifies the means”.

Any attempt to ignore the warning will be an invitation to their peril.

If the authorities in power fail to exercise diligence, proper management, and immediate interventional policies to stabilize the market, they will share similar destiny as the recently convicted O.J. Simpson.

The judicial mantle seized by the power is in denial and defiance of the existence of force that will deliver justice.

The mortals brought nothing upon their birth hence; take nothing upon death.

Thank you.

Padmini Arhant

P.S. News articles and objective analysis - www.padminiarhant.com

Economic Security

The legislators are currently addressing the financial crisis confronting our nation and it appears that a consensus has been reached to bailout the Corporations from the burden of bad debts. According to the lawmakers, the “bill” is structured to largely benefit the taxpayers and assist with the stabilization of the financial market.

It is important to recognize the fact that the twenty first century economy is a global economy and the investments are tied to one another directly or indirectly and traded in the global markets. Therefore, it is vital for the U.S. economy to remain stable and provide necessary market assurance to both domestic and foreign investors with stakes in U.S. investments.

The other important factor for the unprecedented government intervention in a “free market” environment is to eliminate loopholes to avert such catastrophe in the future. When the actual agreement proposal is presented to the taxpayers, it should reflect the absolute protection of the taxpayer’s funds and profitable return on any investments.

At the same time, politics should not take precedence over “American taxpayers” interest in terms of “Appropriation of funds” for a certain political faction like “ACORN” or for that matter a “private sector” from the “Wall Street” with any misrepresentation to provide insurance on the “mortgage backed” securities with no prospective buyer in sight.

The “bill” must include provisions for full disclosure of the deals regardless of the nature and size of the bailout amount.

Further, it is essential for the “impending bill” to fund the bailout in “installments” rather than a lump sum settlement as it would indicate the initial results on the venture carried out on a “trial and error” basis. This would also allow public opinion to analyze the “pros and cons” of such investment and facilitate the required liquidity in the financial market with a “majority” approval.

The task ahead of our nation is to restore economic security with the revival of the “housing” and “job” market. As stated earlier, the “housing market” crisis is directly related to the “credit crunch” and “subprime mortgage” failure leading to “foreclosures” and that could be resolved by overhauling the lending practices and assisting the “homeowners” with affordable revised mortgage package. The foreclosed homes should be made available for sale to potential investors with verifiable income and credit history.

Commercial lending should resume freely yet carefully to promote and revitalize the small businesses and Corporations relying on credit for the growth and development in the job market. The flow of goods and services without any disruption will contribute to the anticipated growth and help the nation in reducing the multi-trillion dollar debt due to trade and budget deficit which otherwise will be the inevitable burden on the next and future generation.

It is time to focus on this crisis as “national” rather than “individual” and collectively deal with the issue for a better future of all.

Thank you.

Padmini Arhant

P.S. Source - www.padminiarhant.com for more views and thoughts on "economy", "energy", "environment" and more.