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Wednesday, November 23, 2011

The Heavens proclaim His Glory

Russian Air Force to get 90 aircraft in 2012

The Russian Air Force will take delivery of about 90 new or modernized fixed and rotary wing aircraft in 2012, a Defense Ministry spokesman said on Tuesday.

The Air Force will receive up to 10 Su-34 Fullback fighter-bombers, about 10 Su-25SM Frogfoot attack fighters, and an unspecified number of Su-35S Flanker-E multirole fighters, Col. Vladimir Drik said.

The Su-35S is Russia’s advanced “Generation 4++” fighter.

New acquisitions will also include over 20 attack helicopters, such as the Mi-28N Night Hunter and the Ka-52 Alligator, as well as “highly modernized” Mi-35 Hind helicopters.

The Air Force will also receive about 30 Mi-8transport and five Mi-26T heavy lift helicopters.

RIA Novosti

L.A. Airports Prepare for Biometric ID Security

November 18, 2011 By Brian Heaton

Three Los Angeles-area airports are replacing their identification card reader systems and prepping security infrastructure for an eventual upgrade to biometric-based identification.

Los Angeles International, LA/Ontario International and Van Nuys airports are moving from a magnetic swipe card system to a contactless “proximity reader.” As the work is done, infrastructure is being rolled out to use iris scan or other biometric identification technology beginning in 2012.

Dominic Nessi, deputy executive director and CIO of Los Angeles World Airports (LAWA), which oversees operations at the three airports, said replacement of the access control and alarm monitoring system’s magnetic card readers is done regularly as the equipment and swipe cards wear out.

But instead of doing the work piecemeal, LAWA elected to change out the entire system and get a head start on the infrastructure improvements. While the organization currently favors the future use of iris scan technology, LAWA is keeping its options open regarding biometric security in the coming year.

“What we are doing in this current project is putting the wiring in place so we can add biometric readers, irrespective of the technology,” Nessi said. “By December of next year, we’ll either reaffirm our decision to utilize iris scan technology or we’ll review other technologies that may have entered the market by that time.”

He added that while fingerprint scans are the old biometric standard, factors such as greasy hands and people carrying items are issues LAWA wants to avoid. That’s why iris scan technology is being considered, as it appears to be the least invasive option.

Currently employee access at the airports runs on a two-factor authentication system — the swipe cards and a personal identification number. Ultimately, however, the addition of a biometric identification system is something LAWA feels needs to be done to keep up with security best practices.

“Our goal is to secure physical access throughout the airport as much as possible, and we feel a major part of that is to add a third form of authentication, particularly on those doors that go out to the airfield and other sensitive areas,” Nessi explained.

LAWA is also moving its access control and alarm monitoring system to a newer and more reliable network. Nessi said the old network was built on standards from 15 years ago and was causing difficulty with various doors in the airports. If one microcontroller for a door failed, it would sometimes have a cascade effect, shutting down multiple access points. The new network and architecture should alleviate those problems, he said.

Unisys, the vendor that LAWA has used for the past three years as its maintenance and operations contractor for its access control and alarm monitoring system, was awarded a $10.3 million contract for the proximity reader project, which will span 870 access points in the airports. The company will also handle the network infrastructure upgrades.

Fukushima: “China Syndrome Is Inevitable” … “Huge Steam Explosions”, “Massive Hydrovolcanic Explosion” or a “Nuclear Bomb-Type Explosion” May Occur

I’ve repeatedly noted that we may experience a “China syndrome” type of accident at Fukushima.
For example, I pointed out in September:
Mainichi Dailly News notes:
As a radiation meteorology and nuclear safety expert at Kyoto University’s Research Reactor Institute, Hiroaki Koide [says]:
The nuclear disaster is ongoing.
At present, I believe that there is a possibility that massive amounts of radioactive materials will be released into the environment again.
At the No. 1 reactor, there’s a chance that melted fuel has burned through the bottom of the pressure vessel, the containment vessel and the floor of the reactor building, and has sunk into the ground. From there,radioactive materials may be seeping into the ocean andgroundwater.
The government and plant operator TEPCO are trumpeting the operation of the circulation cooling system, as if it marks a successful resolution to the disaster. However, radiation continues to leak from the reactors. The longer the circulation cooling system keeps running, the more radioactive waste it will accumulate. It isn’t really leading us in the direction we need to go.
It’s doubtful that there’s even a need to keep pouring water into the No.1 reactor, where nuclear fuel is suspected to have burned through the pressure vessel. Meanwhile, it is necessary to keep cooling the No. 2 and 3 reactors, which are believed to still contain some fuel, but the cooling system itself is unstable. If the fuel were to become overheated again and melt, coming into contact with water and trigger a steam explosion, more radioactive materials will be released.
We are now head to head with a situation that mankind has never faced before.
Mainichi also reports:
The Ground Self-Defense Force (GSDF) and residents of the zone between 20 and 30 kilometers from the stricken Fukushima No. 1 nuclear plant held an emergency evacuation drill on Sept. 12 … in preparation for any further large-scale emission of radioactive materials from the plant.
The scenario for the drill presupposed further meltdown of the Fukushima plant’s No. 3 reactor core, and a local accumulation of radioactive materials emitting 20 millisieverts of radiation within the next four days. …
And nuclear expert Paul Gunter says that we face a “China Syndrome”, where the fuel from the reactor cores at Fukushima have melted through the container vessels, into the ground, and are hitting groundwater and creating highly-radioactive steam:

G20 case reveals 'largest ever' police spy operation

Police organizations across the country co-operated to spy on community organizations and activists in what the RCMP called one of the largest domestic intelligence operations in Canadian history, documents reveal.

Information about the extensive police surveillance in advance of last year's G8 and G20 meetings in southern Ontario comes from evidence presented in the case of 17 people accused of orchestrating street turmoil during the summits.

The court case ended Tuesday before it went to trial. Six of the defendants pleaded guilty to counselling mischief and two of those to an additional count of counselling to obstruct police, while 11 people had their criminal charges dropped.

Testimony previously under a publication ban describes how two undercover police officers — one male, one female — spent 18 months infiltrating southern Ontario community groups ahead of the June 26-27, 2010, gathering of world leaders.

They were part of a much larger so-called joint intelligence group (JIG) operation that the RCMP, in its internal post-summit review, called "likely the largest JIG ever assembled in Canada."
Undercover operatives

The Crown built its case against the 17 around the work of the two officers, Ontario Provincial Police members Bindo Showan and Brenda Carey. It was a massive case: 59 criminal charges in all, more than 70,000 pages of Crown evidence disclosed to the defence, and months of scheduled testimony.

Earlier this fall, Showan told the court about how he attended a meeting prior to the Toronto summit. There, a protest-planning group that included several of the 17 main G20 defendants was discussing whether to lend their support to a First Nations rally.

Adam Lewis, one of the 17 accused conspirators in the G20 case, interjected, “Kill whitey!” The group chuckled. Lewis, like all but one of his co-accused, is white.

When a Crown lawyer asked the officer what he thought Lewis meant, Showan said in complete seriousness, to "kill white people."

"Deliberately or accidentally, the undercover officers misinterpreted hyperbolic jokes as literal statements of belief," said Kalin Stacey, a community organizer, friend and supporter of the defendants. "This undercover case highlights the incentive for undercovers to ensure that charges are laid."
Canada-wide surveillance

The two undercover officers at the core of the Crown's case were just a small part of a Canada-wide operation to spy on activist groups in the lead-up to the 2010 Winter Olympics in Vancouver, the G20 summit in Toronto and the G8 meeting in Huntsville, Ont.

RCMP records obtained under freedom of information legislation reveal that at least 12 undercover officers infiltrated groups. Organizations in Vancouver, the southern Ontario cities of Guelph and Kitchener-Waterloo, Toronto and Montreal were scrutinized.

In all, the RCMP-led joint intelligence group — a conglomeration of federal, provincial and municipal police tasked with G8/G20 reconnaissance — employed more than 500 people at its peak, the records show. The group ran undercover operations, recruited confidential informants and liaised with domestic and foreign governments, law enforcement agencies and even corporations.

The JIG's targets included activists protesting the Olympics, the migrant-justice group No One Is Illegal, Southern Ontario Anarchist Resistance and Greenpeace.

"The 2010 G8 summit in Huntsville ... will likely be subject to actions taken by criminal extremists motivated by a variety of radical ideologies," reads a JIG report from June 2009, before the G20 summit was scheduled, that sets out the intelligence group's mission. "These ideologies may include variants of anarchism, anarcho-syndicalism, nihilism, socialism and/or communism.
'We're always concerned about public safety. That's our number 1 concern.'—Sgt. Pierre Chamberland, OPP spokesperson

"The important commonality is that these ideologies ... place these individuals and/or organizations at odds with the status quo and the current distribution of power in society."

The surveillance was widespread. Campers at Rattlesnake Provincial Park west of Toronto were monitored, while another document indicates that police had a process in place "to obtain information on registered campers" who stayed at Algonquin Provincial Park and Arrowhead Provinical Park, both of which are within driving distance of Hunstville.

And RCMP records suggest that the reconnaissance continues. Report logs indicate at least 29 incidents of police surveillance between the end of the G20 summit and April 2011 — more than nine months after world leaders departed Toronto.

The same document indicates that the RCMP-led intelligence team made a series of presentations to private-sector corporations, including one to "energy sector stakeholders" in November 2011.

Other corporations that received intelligence from police included Canada’s major banks, telecom firms, airlines, downtown property companies and other businesses seen to be vulnerable to the effects of summit protests.
Public safety

Spokesperson Sgt. Pierre Chamberland acknowledged the OPP had undercover officers involved in the G20 but declined to speak about specifics, saying the force can’t comment on operational matters.

But he said generally, undercover agents are constrained in what they can say and do by strict policies.

"So it's not a matter of like you would see on television where they can do or say whatever they want. They’re not authorized to break the law unless they have special permissions," he said.

Chamberland affirmed that the main motivation for using undercover officers is, like most police work, to protect the public.

"We're always concerned about public safety. That's our number 1 concern," he said.

Stacey sees it differently, arguing that undercover agents create a chill effect on activism.

"The practice of infiltration and undercover policing of political protest is legally about making a case for conviction, but politically about creating a culture of fear about dissent."

p. 5

p. 6


UK at greatest risk of financial crisis since Lehman Brothers collapse

A survey of 68 top City institutions by the Bank of England found that 54pc of respondents reckoned the probability of a short-term "high-impact event" to be "high or very high" – a level not witnessed since the survey began in July 2008, just two months before Lehmans' tipped the world into recession. Respondents said they feared a eurozone debt crisis and another economic downturn most.

The findings underline the scale of the crisis the UK faces if Europe's leaders can not strike a deal to calm bond markets. Last week, the Bank warned that the UK was on the brink of a second credit crunch as the eurozone crisis has caused funding markets to dry up.

According to the Bank's twice-yearly Systemic Risk Survey, funding risk is also at its highest level on record, with 57pc of respondents citing it as a major concern – a reading only surpassed by sovereign debt risk and a slide back into recession. Last week's Inflation Report revealed that banks' funding in the three months to September had also fallen to levels not seen since Lehmans collapsed.

Research by Fitch, the ratings agency, reinforced the concerns.

It found that US money market funds – a major source of bank finance – have cut their exposure to UK lenders by 25pc since the end of May. Britain's funding squeeze was not as bad as Europe's, which has had 42pc of US money withdrawn, but worse that the Nordic region, which has lost just 15pc.

Mike Amey, a managing director at bond house Pimco, warned separately on Tuesday that UK banks were not yet in a position to withstand a systemic European crisis involving multiple defaults. He added that any outcome to the eurozone crisis "that does not involve multiple defaults is starting to look like a good result."

Some 68pc of respondents to the Bank's survey raised concerns about European sovereign risk, including fears of a break-up of the euro, disorderly debt restructuring, or sovereign default. Another 13pc expressed concerns about a UK "rating downgrade, loss of confidence in fiscal solvency or the gilt market, a debt crisis, and government default".

The survey was conducted in the month to October 21.

The Telegraph

Supercommittee Failure Poses Risk to U.S. Economy Even as Rating Affirmed

The implosion of the congressional supercommittee is likely to delay any major deficit-reduction agreement until after the next presidential election and may pose an immediate threat to the struggling U.S. economy.

The committee’s failure to reach a deal means several tax programs, including a payroll tax holiday, risk expiring at the beginning of next year, weighing on the household spending that accounts for about 70 percent of the world’s largest economy.

The panel’s inability to agree on $1.2 trillion in budget cuts stoked doubts about U.S. lawmakers’ ability to overcome partisan gridlock and deal with the nation’s fiscal future.

“They could not agree even on the smaller challenge of $1.2 trillion,” said former White House budget director Alice Rivlin, among a coalition of officials who pushed the panel to “go big” and find $4 trillion in savings, in an e-mail. “I do not see a way to get to the big deal before the election, if then. It is really discouraging!”

Still, Standard & Poor’s reaffirmed that it would keep the U.S. credit rating at AA+ after stripping the government of its top AAA grade on Aug. 5. Moody’s Investors Service reaffirmed its AAA rating with a negative outlook. Fitch Ratings noted in a statement that it said in August that a supercommittee failure would probably result in a “negative rating action,” likely a revision of its outlook to negative, and that a review would be concluded by the end of this month.
Shrugging Off S&P

Investors largely shrugged off S&P’s August downgrade of U.S. debt. After the move, the government’s borrowing costs fell to record lows as Treasuries rallied.

S&P said yesterday its rating would stand because the committee’s failure triggers $1.2 trillion in automatic spending cuts, which were put in place in the event no compromise could be reached. Easing those automatic spending limits may cause “downward pressure on the ratings,” S&P said in a statement.

Even that so-called trigger may be in jeopardy, with both Democrats and Republicans leery of steep cutbacks at the Pentagon that Defense Secretary Leon Panetta has called “Draconian.” Congress has succeeded in the past in undoing debt-reduction enforcement mechanisms.

Republican Senators Lindsey Graham of South Carolina and John McCain of Arizona already are looking for other cuts to take the place of those the Pentagon faces. Representative Howard McKeon of California said he would introduce legislation to prevent the spending reductions to defense.
‘Be Careful’

“They have to really be careful not to mess with that,” said Robert Bixby, head of the nonpartisan Concord Coalition, which presses for debt reduction. “To dismantle it would be totally unacceptable.”

Other lawmakers say they still seek a more ambitious effort to curb record-high deficits, although their ideas already face opposition from top leaders in both parties.

Appearing this morning on Bloomberg Television, Senator Dick Durbinof Illinois, the chamber’s No. 2 Democrat, picked up on a Twitter suggestion from Illinois’s other senator, Republican Mark Kirk, that a bipartisan group of senators known as the Gang of Six take the lead in restarting deficit talks.

“I would like to see the leadership in the Senate say something that’s kind of radical: Let’s take this to the Senate floor,” said Durbin, who was part of the group. He said some lawmakers would speak by phone today with the goal of seeking a debate, amendments and a vote.
Reid Noncommittal

Still, just 45 of 100 senators have broadly backed the goal of a comprehensive debt-reduction plan, and it takes 60 votes to bring legislation to the floor. Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, wasn’t committal today when asked whether the party leader would advance a proposal he has opposed, saying only that Reid would need to see legislation from the group to decide.

The debate over the deficit hasn’t shaken investor confidence in U.S. government debt. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5, when S&P downgraded the U.S. credit rating, to below 1.72 percent on Sept. 22. The yield on the 10-year notetoday fell one basis point, or 0.01 percentage point, to 1.94 percent at 2:43 p.m. in New York, according to Bloomberg Bond Trader prices. The Standard & Poor’s 500 Index (SPX) declined 0.3 percent to 1,189.73 at 2:33 p.m., New York time.
Struggling Economy

Trouble may lie ahead for the economy. The supercommittee was considering rolling into its final product expiring tax provisions that must now be addressed before January.

Representative Dave Camp of Michigan, chairman of the tax- writing House Ways and Means Committee, has expressed concern about the cost of extending the payroll tax cut. Other Republicans on that panel, including Representative Kevin Brady of Texas, have said they would oppose an extension.

The Senate will take up a payroll tax extension as soon as next week, according to Reid spokesman Jentleson.

Bill Hoagland, a former Republican staff director of the Senate Budget Committee, said this position puts Republicans in a bind. During the debt negotiations, they objected to ending the tax cuts for upper-income earners enacted under President George W. Bush. If Congress fails to extend the payroll tax cut, which affects many more Americans, “that’s going to play into somebody’s hand,” Hoagland said, meaning Democrats.

An end to the reduction in payroll taxes would subtract 0.5 percent from gross domestic product in 2012, while failing to extendunemployment benefits would cause a separate 0.3 percent decline, according to JPMorgan Chase & Co. chief U.S. economist Michael Feroli.
Adding to Debt

At the same time, any extension of the tax holiday will add to the nation’s debt now that there’s no broader deficit- trimming agreement.

“It’s certainly going to look awkward to do a number of these things that expand the deficit over the next year,” said Bixby.

Earlier this year, the Congressional Budget Office estimated that U.S. debt will reach 187 percent of gross domestic product by 2035. Even after the trigger takes effect, the debt will grow to between 134 percent and 164 percent of GDP in 2035, according to the New York-based Peter G. Peterson Foundation, which works to focus public attention on the U.S.’s fiscal deficit.

“History suggests that a debt-to-GDP ratio of more than 60-90 percent can impair economic growth and produce crises,” Peterson said in a statement.

After addressing these more immediate agenda items, congressional lawmakers are likely to turn to altering the trigger’s equal blend of domestic and defense cuts.

Defense Cuts

If Republican efforts to reverse the automatic defense cuts fail, the Defense Department’s budget would face reductions of about $1 trillion over a decade, the most of any department.

The Pentagon already is cutting about $450 billion from its budget over the next decade as a result of the Budget Control Act that PresidentBarack Obama signed into law Aug. 2, the same measure that created the supercommittee. The panel’s failure to reach an agreement increases the defense cuts by about $500 billion, excluding interest savings, starting in January 2013.

On the domestic side, the CBO estimates that 71 percent of the cuts would come from programs such as education, the environment, transportation, housing assistance and veterans’ health care.
Veto Threat

An administration official who briefed reporters said the president will oppose any effort to alter the automatic cuts and will veto any attempt to undo the legislation. The White House is still hoping the enforcement mechanism, which doesn’t take effect for 14 months, will force Congress into a deal, said the official, who spoke on condition of anonymity.

The supercommittee’s failure to reach an agreement takes the Medicaid health-insurance program for the poor off the table for potential cuts. Cuts to Medicare, the federal insurance program for the elderly and disabled, are limited to a maximum of 2 percent for payments to hospitals, doctors and other health providers and to private health plans participating in the Medicare Advantage program.

The supercommittee was largely derailed by a standoff between Democrats and Republicans over the expiration of the tax cuts enacted under Bush.

Republicans wanted to extend them all, and Democrats pushed to allow the tax breaks for top earners to lapse. If Congress does nothing, the cuts will expire in January 2013, and taxpayers will face higher rates on wages, capital gains and dividends.

“Republicans did overreach by taking the position they had to extend all of the expiring tax provisions,” said Hoagland. “Democrats were just completely unwilling to make any kind of fundamental structural changes to Medicare.”

Jim Rogers onRT 22 nov 2011

As Layoffs Rise, Stock Buybacks Consume Cash

When Pfizer cut its research budget this year and laid off 1,100 employees, it was not because the company needed to save money.

In fact, the drug maker had so much cash left over, it decided to buy back an additional $5 billion worth of stock on top of the $4 billion already earmarked for repurchases in 2011 and beyond.

The moves, announced on the same day, might seem at odds with each other, but they represent an increasingly common pattern among American corporations, which are sitting on record amounts of cash but insist that growth opportunities are hard to find.

The result is that at a time when the nation is looking for ways to battle unemployment, big companies are creating fewer jobs, and critics say they are neglecting to lay the foundation for future growth by expanding into new businesses or building new plants.

What is more, share buybacks have not fulfilled their stated purpose of rewarding investors over the last decade, experts say. “It’s a symptom of a deeper problem, which is a lack of investment in the long term,” said William W. George, a Harvard Business School professor and former chief executive of Medtronic, a medical technology company. “If we’re not investing in research, innovation and entrepreneurship, we’re going to be a slow-growth country for a decade.”

Liberal critics insist the trend is another example of top corporate executives raking in an inordinate share of the nation’s wealth, even as their employees suffer.

“It’s an extraordinarily unimaginative way to use money,” said Robert Reich, a former secretary of labor under President Clinton who now teaches public policy at the University of California, Berkeley. After diving in the wake of the financial crisis, buybacks have made a remarkable comeback in recent years, with $445 billion authorized this year, the most since 2007, when repurchases peaked at $914 billion.

But spending on capital investments like new plants and infrastructure has stagnated more broadly in corporate America, confounding efforts by the Obama administration to spur economic growth. Capital expenditures by companies on the Standard & Poor’s 500-stock index are expected to total $546 billion in 2011, down from $560 billion in 2008, according to data compiled by Thomson Reuters Eikon.

The principle behind buybacks is simple. With fewer shares in circulation, earnings per share can rise smartly even if the company’s underlying growth is lackluster. In many cases, like that of the medical device maker Zimmer Holdings, executives are able to meet goals for profit growth and earn bigger bonuses despite poor stock performance.

“It’s clear there’s a conflict of interest,” said Charles M. Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Unless earnings per share are adjusted to reflect the buyback, then to base a bonus on raw earnings per share is problematic. It doesn’t purely reflect performance.”

In addition, executives, who are often large shareholders, stand to benefit from even a small, short-term jump in stock prices.

Earlier this month, Pfizer increased its estimate for stock repurchases this year to between $7 billion and $9 billion — essentially spending in one year nearly all of the money it set aside in February for multiyear buybacks. There has been a steady drumbeat of other companies laying off workers even as they have disclosed plans to buy back more stock. On June 23, Campbell Soup said it would buy back $1 billion in stock; five days later it announced plans to eliminate 770 jobs. Hewlett-Packard announced a $10 billion stock repurchase in July, and jettisoned 500 jobs in September after it discontinued its TouchPad and smartphone product lines.

Last month, the first layoffs began at Zimmer’s plant in Statesville, N.C., which is due to shut early next year. The company made splints and tourniquets there for more than three decades. For the sewing machine operators and the rest of the 124 workers at the plant, it is bad news, but it is a different story for Zimmer’s top executives.

Powered by huge stock buybacks — the company bought $500 million worth of its own shares last year, more than twice what it spent on research and development — Zimmer posted earnings growth of 10 percent a share, even though operating income and revenue grew by less than 5 percent in 2010.

That helped its senior management, including the chief executive, David C. Dvorak, collect millions in cash and stock incentive payments by meeting earnings-per-share goals. For example, 50 percent of Mr. Dvorak’s $1.03 million cash bonus was tied to achieving per-share earnings of $4.28 in 2010. The company earned $4.33, but without the share repurchases the company would have made $4 to $4.10 a share.

Investors have not rewarded the strategy, however: Zimmer’s shares have dropped 32 percent in the last five years, while Pfizer’s are down 30 percent in the same period.

Over the last decade, in fact, companies that spent the most on repurchases had a total shareholder return of 37 percent versus 127 percent for companies that spent the least, according to research by Gregory V. Milano, chief executive of Fortuna Advisors, which consults with companies on how to raise their share price over the long term.

In the cases of Pfizer and Zimmer, analysts say the rush to buy back shares crimped development of new products, a prime reason that both companies are experiencing slow revenue growth.

Despite the looming expiration of the patent for its best-selling drug, Lipitor, Pfizer spent more than $20 billion repurchasing shares from 2005 to 2010.

“In that era, it wasn’t the best use of cash,” said Catherine Arnold, an analyst with Credit Suisse. “They should have been doing more to fix the company.”

Matthew Dodds, an analyst with Citigroup, said, “Zimmer has shown little appetite for acquisitions or diversification, yet they don’t sport a pipeline that can drive investor interest."

Nevertheless, Zimmer is on track to repurchase $1 billion worth of its shares this year, double last year’s pace, and it actually borrowed money last quarter to achieve its goal.

In a statement, Zimmer said its bonus programs were “designed to pay for performance,” and that overall compensation strategy was “designed to align the interests of its employees and stockholders.” Zimmer is committed to research and development and the introduction of new products, the company said, adding that the factory closure in North Carolina, while difficult, “is in the best interest of the company’s stockholders.”

Pfizer declined to make an executive available to discuss its policy. But in a statement, the company said it “remains committed to returning capital to shareholders through share buybacks and dividend payments.”

As for the cut in research spending in February, Pfizer said it has “accelerated our research strategy and made important changes to concentrate our efforts to deliver the greatest medical and commercial impact.”

In a conference call with analysts this month, Pfizer’s chief executive, Ian C. Read, said his company would “continually look” for acquisitions that would increase revenue growth. But in deciding how to use the proceeds from recent asset sales, he said “the case to beat is share repurchase.”

Financial institutions, which bought back huge amounts of stock over the last decade at share prices far higher than they are today, do not seem to have learned their lesson either. JPMorgan Chase, for example, spent $4.4 billion repurchasing shares in the third quarter even as its stock fell more than 25 percent.
New York Times

Top U.S. banks told to stress test against severe recession

The Federal Reserve told the largest U.S. banks on Tuesday to test their loan portfolios and trading books against a severe recession and a European market shock.

The most severe point of the test will assume a 13 percent unemployment rate and an 8 percent decline in U.S. gross domestic product.

Some 31 bank-holding companies are being asked as part of their 2012 capital plan review to project revenues, losses and capital positions through the end of 2013 using four different scenarios, two provided by the Fed and two defined by the bank.

All start in the fourth quarter of this year and go through the last quarter of 2014, taking into account loan-loss reserves at the end of 2013. Each Fed scenario for the U.S. variables includes five measures of economic activity and prices, four aggregate measures of asset prices or financial conditions and four measures of interest rates. The six largest banks will also have their trading portfolios tested against a “global market shock,” the Fed said.

The Comprehensive Capital Analysis and Review has become a centerpiece of the U.S. central bank’s heightened oversight of the largest banks. It is also an exam of decision making by bank management and boards. The Fed is assessing how well they understand their risks and demands on earnings and capital from new standards coming from both international accords and the Dodd-Frank act in the U.S.

“The aim of the annual capital plans, which build on the CCAR conducted earlier this year, is to ensure that institutions have robust, forward-looking capital planning processes that account for their unique risks, and to help ensure that institutions have sufficient capital to continue operations throughout times of economic and financial stress,” the Fed said in a statement.

The decision to make the scenario public before the tests began marks a step toward greater transparency in supervision by the Fed. The central bank didn’t disclose the scenarios when it started its 2011 stress tests in November last year. The Fed completed those tests in March.

The Fed will also publish the results of the tests for the 19 largest bank holding companies. Six institutions with large trading operations will have to estimate potential losses from a hypothetical “global market shock,” the Fed said. That shock will be based on market price movements seen during the second quarter of 2008, the Fed said, and include a scenario involving “sharp market price movements in European sovereign and financial sectors.”

The Fed said it would publish the results of the market shock scenario of the six institutions.


Corzine´s mafia ties to Obama

Asian stocks down after US cuts 3Q growth estimate

BANGKOK (AP) -- Asian stocks fell Wednesday after the U.S. lowered its economic growth estimate for the third quarter and climbing yields on Spanish bonds magnified worries over Europe's debt load.

Hong Kong's Hang Seng fell 2 percent to 17,882.10. South Korea's Kospi lost 2 percent to 1,789.83 and Australia's S&P/ASX 200 shed 1.6 percent to 4,066.80. Japanese stock markets were closed for a public holiday.

Wall Street slipped Tuesday after a government report showed the U.S. economy grew at a 2 percent annual rate from July through September, down from an initial estimate of 2.5 percent. Economists had expected the figure to remain the same.

The Dow Jones industrial average lost 0.5 percent to close at 11,493.72. The Standard & Poor's 500 fell 0.4 percent to 1,188.04. The Nasdaq composite fell 0.1 percent to 2,521.28.

Higher borrowing costs for Spain, meanwhile, renewed worries about Europe's debt crisis. The higher rates suggest that investors are still skeptical that the country will get its budget under control despite a new government coming to power this week.

Investors have been worried that Spain could become the next country to need financial support from its European neighbors if its borrowing rates climb to unsustainable levels.

Greece was forced to seek relief from its lenders after its long-term borrowing rates rose above 7 percent. The rate on Spain's own benchmark 10-year bond is dangerously close to that level, 6.58 percent.

Underscoring jitters was the lack of market reaction to an announcement by the International Monetary Fund that it will provide quick cash on flexible terms to countries facing sudden financial stress.

"Failure of this news to result in significant gains across markets shows just how cautious investors are," Stan Shamu of IG Markets in Melbourne said in a report.

Concerns remain that Europe's debt crisis is pushing the region toward recession, which would slow industrial activity in countries around the world that export to Europe.

Australian resource shares took a big hit after the country's House of Representatives approved a proposal to impose a windfall profits tax on big mining companies. The Senate is expected to endorse the measure in early 2012.

BHP Billiton, the world's largest mining company, fell 2.6 percent. Rival Rio Tinto lost 1.6 percent and Energy Resources of Australia slid 4.2 percent.

Benchmark oil for January delivery was down 65 cents to $97.36 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.09 to finish at $98.01 per barrel on the Nymex on Tuesday.

In currencies, the euro fell to $1.3466 from $1.3509 late Tuesday in New York. The dollar rose slightly to 76.99 yen from 76.97 yen.

France’s AAA Status in Tatters as Yields Surge: Euro Credit

(Bloomberg) -- Investors aren’t waiting for Standard & Poor’s or Moody’s Investors Service to strip France, Europe’s second-biggest economy, of its top credit rating.

The extra yield demanded to lend to AAA rated France for 10 years was 158 basis points more than the German rate at 11:51 a.m. today. The gap was 200 basis points on Nov. 17, the widest spread since 1990, up from 28 in April. The French 10-year yield was at 3.5 percent, about midway between top-rated Holland and Belgium, which is graded one level lower at Aa1 by Moody’s. French borrowing costs are more than a percentage point above the AAA rated U.K.

“France isn’t trading like a AAA,” said Bill Blain, a strategist at Newedge Group in London, who recommends buying U.K. government debt. “The market has made its judgment already.”

The debt crisis that began more than two years ago in Greece and snared Ireland, Portugal, Italy and Spain is close to reaching France. Moody’s said in a report published yesterday that any persistent increase in borrowing costs would amplify the French government’s challenges as economic growth slows.

President Nicolas Sarkozy has unveiled two sets of budget cuts since August to preserve the credit rating and try to calm jittery markets. Two-year yields on French debt have climbed 55 basis points since Aug. 31 to 1.67 percent, while the rate on German notes of similar maturity fell 30 points to 0.42 percent.

“The market is concerned about the dissolution of the euro itself, hence only bunds are acting as a safe haven,” said Richard McGuire, a fixed-income strategist at Rabo Bank International in London. Germany is the region’s largest nation.

Credit Suisse

French 10-year bond yields may climb above 5 percent, analysts at Credit Suisse Group AG said in a note to investors yesterday. Euro leaders must reach “a momentous deal” for fiscal and political union by mid-January to save the 17-nation bloc, Credit Suisse said in the report.

Yield spreads have widened for the other AAA rated euro- zone countries -- Austria, Finland, the Netherlands and Luxembourg -- bringing the crisis from the periphery to the so- called core.

France has the biggest debt burden of the top-rated euro nations, at 85 percent of gross domestic product. Its financial institutions also have the largest debt holdings in the five crisis-hit countries, at 681 billion euros ($921 billion) as of June, according to data from the Bank for International Settlements in Basel.

“France is not a AAA at all,” said Nicola Marinelli, who oversees $150 million at Glendevon King Asset Management in London. “French banks are very exposed to euro-zone periphery. If they were to mark to market these loans at current levels, there would be huge losses.”

Weak Metrics

Moody’s and S&P currently have a stable outlook on French credit, though both have signaled the nation’s rating is at risk. Moody’s said Oct. 17 that France’s debt metrics “are now among the weakest” in the AAA club. France might be downgraded in a stressed economic scenario, S&P said four days later.

The prospect of France taking on additional liabilities to support countries such as Greece and Italy is among the main threats to its rating, according to New York-based Moody’s.

S&P roiled global markets on Nov. 10 when it sent and then corrected an erroneous message to subscribers suggesting France had been downgraded.

France says to resolve the region’s crisis the European Central Bank needs to be the lender of last resort, supporting Europe’s rescue fund. The French proposal, which would allow the ECB to fund purchases of troubled sovereign debt, has the support of leaders such as U.K. Prime Minister David Cameron.

German Opposition

Germany and the ECB oppose the plan.

“We don’t have any new bazooka to pull out of the bag,” Michael Meister, a senior lawmaker in German Chancellor Angela Merkel’s coalition, said in a telephone interview in Berlin today, reiterating opposition to the ECB plan.

The stalemate has added to market perception that France, the second-biggest backer of the European Financial Stability Facility after Germany, may get dragged further into a crisis that this month led to the ouster of Italian Prime Minister Silvio Berlusconi and Greece’s George Papandreou.

“Where are the guardians of the euro?” asked Eric Chaney, chief economist at Axa SA in Paris. “The EFSF, the ECB? The markets are going to continue to test them. Markets are increasingly betting on a breakup of the euro zone.”

European leaders agreed last month to boost the EFSF to 1 trillion euros to help contain the crisis. The fund owes its AAA rating to guarantees from the euro region’s six top-rated nations. The EFSF’s lending capacity would fall by 35 percent if France is downgraded, Mizuho Corporate Bank Ltd. analysts said.

French Vote

Sarkozy, 56, who faces a presidential election in April or May, and his government have vowed to do everything to defend France’s creditworthiness. They point to a reserve in the country’s 2012 budget to compensate for any economic slump, and this month unveiled 18.6 billion euros in tax increases and spending cuts to defend the rating. They’ve pledged to do more if necessary to reduce the deficit to 4.5 percent of GDP next year and 3 percent in 2013, from 5.7 percent this year.

“France has shown its seriousness on the budget, we’ve adapted,” Finance Minister Francois Baroin said today on France 2 radio. “We’re borrowing at the best rates in the past decade and we’re watching the situation closely.”

The current 3.5 percent yield on 10-year bonds compares with an average 3.9 percent during the past decade. The French treasury completed its funding requirement for 2011 when it sold 7 billion euros of medium-term debt and 1.1 billion euros of indexed bonds on Nov. 17.

‘Self Fulfilling’

France’s medium and long-term funding costs had an average yield of 2.8 percent in 2011, the second lowest since the euro was created, according to Agence France Tresor, the country’s debt-management body. It was 2.5 percent in 2010.

The market has “taken on its own dynamic, with its own forecasts that are partly self fulfilling and very far from the any fundamental analysis,” Philippe Mills, the head of AFT, told journalists last week in Frankfurt.

With the election coming up, “it is by no means certain that the government will be able to implement the proposed fiscal tightening,” said Jennifer McKeown, an economist at Capital Economics in London. “The clear downside of France’s exposure to the euro zone’s south is that a failure to address the problems of Italy and the peripheral economies will have disastrous consequences.”

Europe Will Implode if ECB Doesn’t Act Soon: Bob Doll

Like any investor, Bob Doll is growing tired of the prolonged uncertainty and contagion risk that continues to flow out of Europe. While the U.S. economy's ability to avoid getting sucked into a recession is heartening, the frustrating part for him is that the European crisis is solvable.

"It's not a matter of economics and how many Euros it will take to solve the problem, it's 'Is there the political will to do it?'" says Bob Doll, the chief equity strategist at BlackRock. He believes the longer leaders in Germany and the European Central Bank wait, the harder and more costly the ultimate fix will be. Along those lines, he thinks the ECB, and its new chief, need to do a lot of things and do them now.

"It's a bunch of things that need to be tried," Doll says in the attached video clip. "Back in late 2008, early 2009, Congress threw a bunch of things at the wall to see what would stick. I think that's what we are going to go through here."

Ultimately he'd like to see the ECB increase purchases of sovereign bonds, expand its balance sheet and lower interest rates further. And the pain of recession and market forces will force Europe's hand. Doll believes if markets and rates don't begin to normalize, a re-visitation of the hard fought 50% reduction in Greek debt (known as the 'haircut') might happen.

Interestingly, Doll was unmoved by recent headlines about China's warning on a global slowdown, saying it "wasn't anything we don't already know, they just verbalized it."

In the meantime, this strategist with over a trillion dollars under his purview, 60% of which is in domestic stocks, is in no mood to take a lot of risk. " You're better off in safe havens," says Doll.

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