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Thursday, July 21, 2011

Real-life 'Noah's ark' takes shape on Dutch river

Noah’s ark has been made real by Dutch businessman Johan Huibers and a team of 50 employees. Stocked with thousands of plastic animals, the enormous vessel stands at an abandoned quay on the Merwede River, 40 miles south of Amsterdam
The 150 meter-long 'Noah’s ark' created by Johan Huibers stands at an old abandoned quay on the Merwede River in Dordrecht. AFP PHOTO / ANOEK DE GROOT

The 150 meter-long 'Noah’s ark' created by Johan Huibers stands at an old abandoned quay on the Merwede River in Dordrecht. AFP PHOTO / ANOEK DE GROOT
For three years, the quaint old city of Dordrecht has watched in amazement as a local businessman’s dream of building a real-life Noah’s ark, stocked with thousands of plastic animals, became a reality.
The enormous vessel stands at an abandoned quay on the Merwede River, about 40 miles south of Amsterdam. Here, Johan Huibers, 52, and a team of 50 dedicated employees put the final touches to what they believe is the only life-size wooden ark in existence.
“We want to tell people about God,” the deeply religious Dutchman told AFP when asked why he undertook the project. “We wanted to build something that can help explain the Bible in real terms.”
The plan is to open what Huibers, who is in construction, calls “a Bible museum” by the end of the year, but he will allow local residents in on a one-day sneak preview later this month. His undertaking is all
the more amazing as Huibers is building the replica according to ancient standards cited in the
Book of Genesis, which say the boat was 300 cubits long, 30 cubits high and 50 cubits wide.
1,600 animal species
With a cubit estimated roughly as the distance between the elbow and fingertips, or a half-meter, this makes the ark’s dimensions staggering, about 150 meters long, roughly four storeys high and 25 meters across. It weighs around 3,000 tons, Huibers said.
A massive roof protects sprawling decks where Huibers plans to place life-sized replicas of some 1,600 animal species to represent the Biblical tale of Noah, who was ordered by God to build the ark to save his family and animals of all species before the earth was swamped by a massive flood.
“The wood is Swedish pine, because that’s the closest we think to the ‘resin wood’ God ordered Noah to use in the Bible. The animals are plastic and come from the Philippines,” Huibers told AFP.
On board there will be sleeping quarters, including Noah’s bedroom, a theatre and stage, a fully equipped restaurant as well as conference facilities to seat 1,500 people. There is even a millstone to grind wheat to make “Biblical bread,” and artists are painting walls with the story of the ark and other Biblical tales.
‘I’ve always been a dreamer’
The idea for the project came in 1992, said Huibers, when in true Dutch fashion he had a nightmare about the low-lying Netherlands again being flooded by surging waters from the North Sea.
“The next day I bought a book about Noah’s ark. That night while sitting on the couch with my kids, I looked at it and said: ‘It’s what we’re going to do’.”
By 2004, he had buildt a smaller ark, 70 metres long, which he used to take passengers on joyrides along the Dutch canals. Huibers pushed these profits into his grand plan and by mid-2008, construction of the “big ark” had started.
The rest of the financing came from a three million-euro bank loan, 500 euros a year from his church and a “100-euro donation from my 93-year-old mother.”
Not all share his vision, including his wife Bianca, a police officer, who “berated” him with the Dutch saying “being normal is being crazy enough,” Huibers laughed.
“In the beginning my dad’s project was a bit strange,” agreed his son Ray, 23, who now works full time to help finish the ark. “But now I find it really great.”
Others like Dennis Langeveld, 30, who works on a construction project across the quay, are less convinced.
“He has to do what he has to do,” he said munching a sandwich during his lunch break as he watched activity at the ark. “Maybe he knows something we don’t.”
Next year, Huibers wants to tow the ark like a barge across the Channel and moor it somewhere in London during the 2012 Summer Olympics “to tell people about God.”
He has already done a trial run to Rotterdam, Europe’s largest port, and believes his vessel is completely seaworthy.
“I have always been a dreamer,” Huibers said smiling.

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Weiss downgrades U.S. debt! What to do …

Martin D. Weiss Ph.D. | Monday, July 18, 2011 at 7:30 am
Martin D. Weiss, Ph.D.
Weiss Ratings has just downgraded the debt of the United States government to a C-minus — approximately equivalent to a BBB- rating by S&P, or one notch above speculative grade (junk).
This is critical for you.
As I’ll explain today, regardless of the outcome of the debt debate now raging in Washington, few will escape the far-reaching consequences of America’s unfolding debt disaster.
No matter what assets you own, and no matter what country you live in, the impact on your finances could be huge.
You ask: How can this actually be happening in America? Isn’t the United States still the world’s largest economy, the dominant superpower, and the issuer of its primary reserve currency?
Yes, it is.
But it’s precisely because of America’s unique strengths that Washington and Wall Street have been able to spend, borrow, and assume financial risks that are actually greater than those taken by any other major nation on Earth.
I’ll name those risks for you in a moment. But first …
Here’s Why We Downgraded the U.S.
This saga begins over one year ago, when Weiss Ratings publicly challenged S&P, Moody’s, and Fitch to downgrade the debt of the United States government. (See Weiss Ratings press release of May 10, 2010.)
“By reaffirming the government’s triple-A rating,” we wrote, “the three leading rating agencies help entice savers and investors to pour trillions more into a potential debt trap or, at best, to be severely underpaid for the actual risks they are taking.
“The rating agencies give policymakers a green light to perpetuate their fiscal follies, further degrading our government’s ability to meet future obligations. And they help create a false sense of security overall.
“Recognizing and confronting our nation’s financial troubles with honesty is the necessary first step toward solving them.”
But in the months that ensued, despite continued rapid deterioration in the nation’s finances, S&P, Moody’s, and Fitch failed to budge.
We waited patiently. But after waiting nearly a year, we could wait no longer: On April 28, we launched our own Sovereign Debt Ratings, assigning the U.S. a C (fair) — a grade that we feel is the first to speak the truth about America’s financial mess. (See press release.)
The reaction from the media was swift and sharp. The Wall Street Journal and Barron’sreported that the Weiss Rating on Uncle Sam is a mere two notches above “junk” status.Fortune expressed shock that we ranked America below some smaller countries. Virtually everyone in the mainstream press — and in government — seemed to think that the Weiss Ratings was rash, radical, or both.
But now, as the debt debate rages on, some are finally beginning to wake up to the true magnitude of America’s financial disaster — the massive size of the federal deficit, the uncontrollable nature of entitlements, and the extreme political resistance to meaningful change.
S&P and Moody’s have finally put the U.S. on credit watch. The Fed Chairman has warned of financial Armageddon. And some in the media are now shouting from the rooftops the same warnings we were issuing over a year ago.
On the surface, the primary source of their fears is the immediate chaos that would be triggered if the U.S. defaults on August 2, just 15 days from now.
But behind the scenes, many have also begun to recognize that …
Even if the immediate debt ceiling crisis is resolved to everyone’s apparent satisfaction, it could be just a dress rehearsal for the true tragedy of a nation unable to end its own financial decline any more effectively than a Greece, Ireland, or Portugal. (For our paper outlining this view, see Introducing the Weiss Sovereign Debt Ratings.)
How is this possible? How can the mighty United States be on the same wayward path as countries that are so much smaller and less powerful?
Here are the hard facts:
Among the 49 sovereign nations Weiss Ratings covers, the U.S. has one of the heaviest debt burdens, the weakest international reserves, and the least stable economies.
It’s more dependent on foreigners for deficit financing than any other major country in the world.
Its consumers are among the most reliant on mortgages, credit cards, and other forms of debt to support its economy.
And perhaps most dangerous of all, America’s largest banks have the greatest exposure to high-risk derivatives — nearly 40% more today than during the debt crisis of 2008.
More Canaries in the Coal Mine
If there were no recent precedent for what happens to wayward nations in today’s high-stakes, fast-moving global markets, Washington and Wall Street apologists for the status quo might argue that the consequences of this entire mess are either unknown or unimportant.
But today there are so many canaries in the coal mine, the din is deafening.
Consider Greece, already caught in a death spiral — revenues sinking like the Titanic, insufficient funds to pay monstrous debts, and unavoidable austerity measures that sink revenues even deeper into the abyss.
Result: Just in the past few months, we’ve seen riots, the firebombing of banks, and blood in the streets.
Home values are plunging. Unemployment is soaring. The poverty rate is skyrocketing. One in four citizens, including an estimated 450,000 children, live in poverty. Crime is exploding.
And Greece is not alone.
Just a few years ago, Ireland was booming. Banks loaned people money hand over fist to finance homes and cars — all the joys of modern life.
Then, the bubble burst. Real estate values crashed. Mortgage defaults and bank foreclosures soared. Suddenly, Irish banks, drowning in red ink, were both insolvent and illiquid.
Thus, just as we saw in the United States, the Irish government stepped in and bailed them out … and soon, it was the government itself — not just the banks — that was in danger of going under.
In May 2010, with Dublin on the verge of defaulting on its debts, the European Union and International Monetary Fund rode to Ireland’s rescue with a 110 billion euro bailout. It still wasn’t enough. So again, in July 2011, Dublin agreed to accept another bailout worth tens of billions.
Now, the Irish people are living under crushing austerity measures. Countless jobs have been wiped out; the official unemployment rate is 15%.
Salaries have been cut to the bone. Pensions and health benefits have been slashed. The Irish tourism industry — once among the richest — is a shambles.
Similar stories are being told in Madrid, Barcelona, and 53 other cities across Spain, where tens of thousands of workers have taken to the streets to protest a problem they thought they’d never see in their lifetime — not just 9.2% official unemployment as in the U.S., but 21% official unemployment.
In picturesque plazas, beggars outnumber tourists and protesters outnumber beggars. In front of Parliament, riot police stand watch to protect lawmakers from angry mobs.
But of all euro-zone economies now threatened with this kind of chaos, Italy is, by far, the largest.
The combined GDP of all three countries that have gone bankrupt and needed a bailout so far — Greece, Ireland, and Portugal — is $739 billion. The GDP of Italy alone is over $2 trillion, or nearly three times more!
In other words, as the debt contagion strikes Italy, it will have TRIPLE the impact on global markets as the failure of a Greece, Ireland, and Portugal happening all at the same time.
Already, Italy’s government bonds are plunging, its borrowing costs surging, and the cost of insuring its debts against default exploding to all-time highs.
The obvious trigger: The demise of Italy’s UniCredit, one of the largest banks in Europe.
In the June 24th issue of his free e-letter (The S&A Digest), Porter Stansberry explains it this way:
“In March 2010, I wrote an entire issue of my newsletter, Stansberry’s Investment Advisory, about why I believed UniCredit would eventually collapse. I explained why the failure of this particular bank would be such a big problem for the global monetary system. UniCredit is the largest bank in Italy, and it owns other large banks in Germany, Austria, and Poland. The Italian government cannot afford to bail out UniCredit’s depositors, many of whom reside in other countries. The pan-European nature of the bank will politicize its failure, making it harder to manage.
“These same factors, ironically, led to the failure of big bank Credit-Anstalt in May 1931. The bank’s failure knocked Europe off the gold standard and directly led to the Great Depression. Credit-Anstalt is the predecessor of UniCredit.
“The past is prologue in this case. UniCredit’s failure will lead directly to the collapse of the euro currency as it finally dawns on the Europeans that their savings are not safe in the current system.”
These comments have turned out to be both prescient and accurate. But how are they relevant to U.S. investors? In three ways:
First, as I’ve explained here repeatedly, America’s largest banks — JPMorgan Chase, Bank of America, Citibank, and Goldman Sachs Bank — are grossly overexposed to the credit risk associated with their huge holdings in derivatives. Plus, many of these are linked to large European banks like UniCredit.
Second, like Italy, the United States is now confronting the Faustian choice of either letting its credit go to hell in a hand basket or forcing austerity down the throat of a weakened economy. And this is the same choice Washington also faces, whether Congress raises the debt ceiling in time or not.
Third, like the euro zone, the U.S. has been sacrificing its currency on the altar of expediency. Washington is debasing the dollar’s value to postpone its reckoning day. It’s forcing the public to pay for its financial sins in the form of higher prices for essentials like food and fuel. And it’s careening toward the same kind of disasters we now see in Europe.
As the U.S. follows Europe, you could see cutbacks in Social Security, Medicare, veterans’ benefits, support for states, homeland security, and more.
You could see stiffer limits on government guarantees for failing banks, commercial checking accounts, and consumer deposits.
In the event of new bank failures and turmoil in the nation’s credit markets, you won’t be able to count on Uncle Sam to be the lender, investor, and guarantor of last resort.
Nor can you expect reason to prevail at the Federal Reserve. As Fed Chairman Bernanke declared last week, he’s perfectly willing to devalue your money by running the money printing presses with still another round of quantitative easing.
Here’s what to do …
First and foremost, don’t trust research or ratings that are bought and paid for by the very same companies that are the subjects of the research and ratings.
Case in point: S&P, Moody’s, and Fitch. Despite abundant evidence that their conflicted ratings played a major role in causing the housing bust and debt crisis of 2007-2009, there has been no change in their conflated business model; they continue to collect large yearly fees for the ratings they assign to the thousands of debt issuers they cover.
Moreover, many of the banks and companies that pay them the biggest fees owe their very survival to government bailouts, government guarantees, and government contracts.
So connect the dots: If the credit rating agencies downgrade the U.S. government itself, they will come under intense pressure to also downgrade their biggest paying customers. That alone could trigger an investor exodus and a chain reaction of failures that threatens the credit rating agencies’ own revenues.
This is among the most egregious — and least understood — conflicts of interest in the history of financial analysis.
This conflict of interest helps explain why S&P, Moody’s, and Fitch have stubbornly refused to alter their AAA/Aaa ratings for Uncle Sam despite history-breaking declines in his finances.
It helps explains why, in defiance of all logic, the three credit rating agencies assign far inferior grades to countries with far superior finances.
It explains why the European Central Bank recently concluded that, by maintaining its AAA rating for U.S. government debt, S&P blatantly defies its own published guidelines for rating sovereign countries.
And it also explains why Moody’s and S&P have waited until the U.S. government was a mere three weeks away from a default deadline before even putting it on credit watch.
Second, continue to avoid the bonds issued by the U.S. Treasury and U.S. government agencies.
Although we are not predicting an outright default by the U.S. government, the debt crisis in Washington adds urgency to our earlier recommendations to avoid all medium- or long-term government securities. You can still hold some short-term T-bills for liquidity. But be sure to hedge against the growing dollar risks with gold or equivalent.
Third, don’t automatically expect the government to protect you if your bank, credit union, or insurance company sinks or fails. Make sure your financial institution has the resources to survive on its own even in the worst of times. If you haven’t done so already.
Good luck and God bless!


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Crisis Erases 75% Junk Bond Gains as Losses Spread: Euro Credit

Junk corporate bonds are turning into a losing bet in Europe as surging sovereign yields infect assets that just 18 months ago were handing investors returns of more than 75 percent.

Speculative-grade bonds have lost 1.1 percent on average this month, adding to the 1.6 percent investors forfeited in June, according to Bank of America Merrill Lynch data. They’re being beaten by German bunds, commodities and investment-grade company notes, while stocks are still proving a bigger casualty of the euro-region crisis.

“There’s so much uncertainty about the future of the euro project,” said Marchel Alexandrovich, a London-based economist at Jefferies International Ltd., a unit of the U.S. investment bank. “No one knows what tomorrow will bring.”

Investors are shunning all but the safest securities as European Union leaders prepare to meet tomorrow to address the sovereign crisis that has propelled Italian and Spanish bond yields to euro-era records. German Chancellor Angela Merkel said yesterday the situation can’t be fixed “in one step.” Confidence in high-yield notes is also withering as government budget cuts hamper economic growth in the region, hurting companies’ ability to pay debt.

Junk bonds returned a record 76.4 percent, including reinvested interest in 2009, and 14.7 percent last year, according to Bank of America Merrill Lynch’s Euro High-Yield Constrained index of 297 bonds issued by companies such as Fiat SpA (F) and Continental AG. The debt gained 4.1 percent in the first quarter of this year and just 0.7 percent in the second.
Relative Performance

Junk bonds, rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s, lost money this month as benchmark German government debt returned 2.7 percent, and investment-grade corporate securities earned 0.8 percent, Bank of America index data shows. Investors made more by holding commodities, with the Standard & Poor’s GSCI Spot Index increasing 2.8 percent in July. Stocks were a worse bet, with the Stoxx Europe 600 index losing 3.9 percent.

“Given that high yield is a riskier asset class, the debt crisis and associated economic concerns have a greater impact than on investment-grade bonds,” said Vasant Mehta, a credit strategist at Royal Bank of Scotland Group Plc in London.
Speculative-grade companies’ borrowing costs have surged this month. The extra yield investors demand to hold junk bonds rather than government debt widened 71 basis points, or 0.71 percentage point, to a seven-month high of 641 on July 18.



Strong earthquake hits Central Asia: USGS

(Reuters) - A strong earthquake hit Central Asia's densely populated Ferghana valley early on Wednesday, shaking buildings in the region and sending residents of at least one Uzbek city onto the streets, local residents said.

The U.S. Geological Survey said the 6.2 magnitude earthquake occurred 9.2 km (5.7 miles) underground, around 42 km (26 miles) southwest of Ferghana, a city in the east of Uzbekistan.

There was no immediate word on casualties and it was not clear if the epicenter of the quake was in a populated area.

A native of Ferghana, who lives in Kazakhstan, said that residents of her home city were woken by strong shaking and that many had evacuated their apartment blocks.

"Everybody is out on the street," she told Reuters by telephone after speaking to Ferghana residents. She did not want to be identified.

She said that local residents also reported damage to low-rise apartment blocks in the nearby town of Margilan, a silk production center. "It's an old town and some of the old houses have been destroyed," she said.

Ferghana valley -- split between Uzbekistan, Tajikistan and Kyrgyzstan in a confused patchwork of Soviet-era borders -- is Central Asia's most densely populated area.

Tremors were felt across the vast mountainous region. A resident of a Kyrgyz town near the Uzbek border, also reached by Reuters by telephone, said the quake lasted up to 15 seconds.

"It was very scary and long," said the Kyrgyz resident.

Earthquakes are frequent in Central Asia, a region of mountains and steppes set between Afghanistan, Iran, Russia and China.

In 2008, a powerful earthquake killed more than 70 people in Kyrgyzstan, a volatile country bordering Uzbekistan.

In 1966, the Uzbek capital Tashkent was flattened by a 7.5 earthquake when hundreds of thousands of people were left homeless. A 6 magnitude quake rocked Tashkent in 2008 but there was no damage.

Ferghana valley is a major center of cotton and silk production, and the hills above are covered by walnut forests. The valley also has some oil and gas.

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5 States Have Credit Ratings Put on Review by Moody’s for U.S. Dependence

Five of the 15 states with top bond ratings from Moody’s Investors Service may be downgraded because their dependence on federal revenue makes them vulnerable to a U.S. credit cut should talks to raise the debt limit fail.

Maryland, South Carolina, New Mexico, Tennessee and Virginia are under review, Moody’s said today. The action affects $24 billion of general-obligation and related debt, it said. The states are rated Aaa, Moody’s top municipal grade.

The credit evaluator said on July 13 it may cut the federal government’s Aaa rating as congressional Republicans and President Barack Obama’s administration failed to agree on raising the U.S. debt limit. Moody’s said the next day it would scrutinize top-rated states, municipalities, housing programs and other debt issuers.

“Should the U.S. government’s rating be downgraded to Aa1 or lower, these five states’ ratings would likely be downgraded as well,” New York-based Moody’s said today. Aa1 is Moody’s second-highest rank. Any change in the state ratings would be announced seven to 10 days after action on the U.S., it said.

Democrats and Republicans have yet to agree on raising the government’s debt limit with an Aug. 2 deadline looming. Without the ability to borrow, the Treasury would have to cut about $134 billion of spending during August, according to a report by the Washington-based Bipartisan Policy Center.
Imperiled Funds

Such cuts could imperil money states receive for programs such as Medicaid, which is the health-care program for the poor, public-works projects and education. An impasse could also rattle financial markets and push up interest rates for states, whose bonds track Treasury securities.

The deadline hasn’t upset financial markets, where Treasuries have gained as investors bought U.S. bonds on speculation Greece’s struggle with its debt will spread in Europe.

Municipal-bond yields have also declined as issuers cutting budgets curtailed borrowing. The Bond Buyer 20 Index, a measure of yields on general-obligation bonds due in 20 years, dropped to 4.51 percent last week, down from 4.65 a week earlier and as much as 5.4 percent in January.

A bond sold by one of the states, South Carolina, to fund infrastructure projects traded for a yield of 4.5 percent today, unchanged from before the Moody’s announcement, according to Municipal Securities Rulemaking Board data.
Long Shot

“Most participants are assuming there will not be a default and there will not be an event that would create a downgrade,” said Alan Schankel, head of fixed-income research for Janney Montgomery Scott LLC in Philadelphia. “It’s kind of a long shot.”

Today, President Obama backed a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would both increase taxes and cut spending while raising the government’s ability to borrow, spurring optimism that Congress will resolve the deadlock of the debt limit.

Moody’s said it chose the five states because they are more vulnerable to economic fluctuations and depend more than the others on the federal government for employment and revenue.

Maryland, Virginia and New Mexico have relatively high proportions of federal employees and contracts, the ratings company said. New Mexico, South Carolina and Tennessee rely more on Medicaid money than the national average, Moody’s said. Maryland, Tennessee and Virginia are more sensitive to national economic trends than most, according to the Moody’s report.
Well Positioned

A spokeswoman for Maryland Governor Martin O’Malley, Raquel Guillory, said the Moody’s announcement isn’t surprising, given the state’s economic ties to the federal government. She said the state has the ability to respond to financial problems emanating from Washington.

“We’re positioned very well right now,” she said.

The 10 top-rated states that Moody’s said are less vulnerable to downgrades are Alaska,Delaware, Georgia, Indiana, Iowa, Missouri, North Carolina, Texas, Utah and Vermont
. They would be cut only in the event that the federal rating is dropped by more than one level, Moody’s said.

Only Germany can save EMU as contagion turns systemic

German Chancellor Angela Merkel smiles while casting her vote for the European Elections 2009 in a polling station in Berlin, Germany

"We are heading towards fiscal union or break-up," said David Bloom, currency chief at HSBC. "Talk is no longer enough as the fire threatens to leap over the firebreak into Spain and Italy.

"What the market is worried about is Germany's long-term committment to the euro project. If we see unreserved and absolute backing from the political establishment of Germany, that will be a soothing balm."

Chancellor Angela Merkel seemed in little hurry on Tuesday to convey such a message. There will be no "spectacular step" at the Justus Lipsius building on Thursday; just a "controlled process of gradual steps and measures", she said with unflappable calm. Given the simmering wrath from top to bottom of German society, it may be impossible for her to do much more.

Jens Weidmann, the Bundesbank's president, has made her task that much harder by telling the eurosceptic Bild Zeitung that "nothing would destroy the incentives for a solid budget policy more quickly and more permanently than joint liability for national debts. European and especially German taxpayers would have to answer for the entire state debt of Greece. That would be a step toward a transfer union."

Days earlier he shot down proposals for issuance of eurobonds or use of Europe's rescue fund to buy Spanish and Italian bonds on the open market, crucial steps to prevent Italy and Spain being drawn into the maelstrom. "It has a high cost, limited use, and dangerous secondary effects," he said, departing radically from the script of the European Central Bank.

The Telegraph


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