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Tuesday, September 11, 2012

The Destiny Of Babylon - Chuck Missler

Mahmoud Ahmadinejad accuses the West of destroying Iran's rain clouds

Mahmoud Ahmadinejad has accused the West of deliberately destroying rain clouds headed for Iran

The Iranian president made the assertions in a speech on Monday addressing the problems caused by low rainfall trends, which experts say is threatening Iran's agriculture.

"Today our country is moving towards drought, which is partly unintentional due to industry and partly intentional, as a result of the enemy destroying the clouds moving towards our country and this is a war that Iran is going to overcome," Mr Ahmadinejad said in a speech in the Caspian Sea city of Gonbad-e Kavus to mark its registration as a Unesco World Heritage site.

Although Iran is recognised as having one of the world's driest climates, the comments were the latest in a series of allegations by officials of a Western conspiracy to turn its water shortage into a major crisis.

In July, Hassan Mousavi, head of Iran's cultural heritage organisation and one of Mr Ahmadinejad's vice-presidents, urged meteorological experts to investigate the possibility that the west was engineering a draught in southern Iran, traditionally one of the country's most parched regions.

"I feel that the world arrogance and colonisation (Iranian official code language for the US and its allies) by using their technologies, are affecting the environmental situation in Iran," he said.

Specialists have recently warned that low rainfall has reached "undesirable levels", producing officially-designated draught conditions in more than three-quarters of the country.

Previously, Mr Ahmadinejad has accused European nations of deliberately emptying clouds to produce torrential storms in their own countries that would lead in turn to rain shortages in the Middle East. He said Iran would pursue the matter through international legal channels.

Earlier this year, the Iranian leader accused Western states of creating the HIV to weaken the developing world and create a market for pharmaceuticals.

The Telegraph

Here’s How Facebook Is Tracking Your Internet Activity

In testing out the new Abine DNT+ tool, we noticed that Facebook has more than 200 “trackers” watching our internet activity.

Abine defines trackers as “a request that a webpage tries to make your browser perform that will share information intended to record, profile, or share your online activity.” The trackers come in the shape of cookies, Javascript, 1-pixel beacons, and Iframes.
Cookies are tiny bits of software that web pages drop onto your device that identify you anonymously but nonetheless signal useful behavior about your background interests to advertisers who might want to target you.
Critics call this spying. Advertisers call it targeting.
In an email to Business Insider, Abine privacy analyst Sarah Downey explained why users should pay more attention to trackers, and block them:
In addition to invading your privacy, these tracking requests can consume large amounts of data. And transferring lots of data takes time. Generally, the more tracking requests on a website, the slower that website loads. That’s why DNT+ gets you surfing at 125% of the normal speed and with 90% of the bandwidth, compared to a browser without DNT+ running.
Equipped with this insight, an inquisitive Facebook user might be wondering why they wouldn’t block all trackers and cookies alike. With a slightly harsh tone, the Facebook page cautions:
Technologies like cookies, pixel tags (“pixels”), and local storage are used to deliver, secure, and understand products, services, and ads, on and off Facebook. Your browser or device may allow you to block these technologies, but you may not be able to use some features on Facebook if you block them.
There is certainly truth to this statement, not all cookies are used for tracking. Many are simply placed in order to keep store information for later use. But it is the broader scope of “requests” that present the larger issue. In simple terms, Downey explained that when you navigate to a website, your browser constructs that site by communicating back and forth with the server where the site information is stored. These communications are the “requests.”
But it isn’t just the website you are visiting that makes requests for information: online trackers from other companies hidden on the site do it, too. They act as third parties on your computer: you can’t see them without privacy software, you probably wouldn’t expect them to be present, and you probably don’t intend to share your information with them.
They request information like your geographic location, which other sites you’ve visited, what you click, and your Facebook username.
In terms of what the “requests” represent, Facebook noted that they could not comment because the requests do not mean a whole lot unless you can see exactly what they are and how they are used. Facebook’s entire site is run off of JavaScript and other such tags that have an array of purposes.
So, we set out to see just how much Facebook is watching our internet browsing activity. Using the Abine software, we tracked to what extent Facebook trackers increased for each new click. We started by cleaning out the browser cache and search history, and then went about using the browser like it was the start of a typical work day …

It started off as just a normal day…

The first thing I do when I sit down at my computer in the morning is open up Facebook. Just by logging in, I could see that Facebook had 228 trackers watching my web activity.

So when DNT+ says it’s blocked Facebook from tracking you 200 times, that means it’s blocked 200 requests from Facebook that attempt to use the information in the request to collect information about you. Those 200 requests could have been a mix of Javascript, iframes, images, and cookies, and they could have spawned even more requests.
Note: we ran the test on various browsers, and two different machines to ensure the results were consistent.

Opening up Business Insider on a new tab.

Opening up Business Insider on a new tab.
By opening Business Insider and posting a story on Facebook there was an increase in 8 trackers. So, now Facebook had 236 trackers on my browsing activity.

Downey explained why this happens: when you visit BusinessInsider, and there’s a Facebook button on the page, Facebook will send a request, that request comes back from Facebook with a button, which contains Javascript code that allows tracking. That piece of code then allows third parties (Facebook in this case) to run code on your machine. That code can write cookies and even make more tracking requests.

Then I opened up Bloomingdale’s.com

Then I opened up Bloomingdale's.com
Daniel Goodman / Business Insider
Admittedly one of my favorite sites, I am sure to check it daily — and, surprisingly there was no uptick in Facebook trackers.

Moving on, I clicked on a Huffington Post article in my Facebook feed.

Moving on, I clicked on a Huffington Post article in my Facebook feed.
By clicking through to the Huffington Post Facebook page, then to the article itself, and then spending a bit of time on the Huffington Post site, my Facebook trackers went up to 244

Business Insider

'Greece will capitulate to Troika demands'

Body Scanners Beyond Airports

Rajoy rejects bailout conditions

Spain's Prime Minister Mariano Rajoy has said he will not accept outside conditions over a possible bailout.

Mr Rajoy made the pledge in his first television interview since taking office. But he said no decision to request a bailout had been taken.

Last week, the president of the European Central Bank (ECB) unveiled plans to buy bonds from indebted countries - under bailout conditions.

Mario Draghi said the ECB would provide a "fully effective backstop".

The aim of the programme was to cut the borrowing costs of debt-burdened eurozone members by buying their bonds.

The Spanish government's implied borrowing costs fell sharply after the announcement.Pensioners reassured

"I am absolutely convinced that everyone will be reasonable but I insist that we haven't taken a decision," Mr Rajoy told Spanish state television.

"I will look at the conditions. I would not like, and I could not accept, being told which were the concrete policies where we had to cut," the prime minister added.

And he promised that pensioners would not be affected by any decisions.

ECB president Mario Draghi: "We will have a fully effective backstop to avoid destructive scenarios"

Under Mr Draghi's plan, the ECB would agree to buy a potentially unlimited amount of bonds of debt-stricken eurozone members on the condition that these countries made a formal request for bailout funds and stuck to the terms of any deal.

Mr Draghi said the ECB would engage inoutright monetary transactions, or OMTs, to address "severe distortions" in government bond markets based on "unfounded fears".

OMTs will be carried out only in conjunction with European Financial Stability Facility or European Stability Mechanism programmes, he said.

In other words, countries will still have to request a bailout before the OMTs are triggered.

The maturities of the bonds being purchased would be between one and three years and there would be no limits on the size of bond purchases, he added.

The ECB will ask the International Monetary Fund to help it monitor country compliance with its conditions.


Jerusalem Within New Iranian Missile’s Range

Iran is set to unveil a “domestically produced” cruise missile capable of reaching Israel and being launched “from land, sea, and air,” according to Iranian media reports.

Dubbed “Meshkat,” the existence of the long range Iranian missile was made public over the weekend by Iranian Deputy Defense Minister Mehdi Farahi, according to the Mehr News Agency.

With a range of 2,000 kilometers, or 1,242 miles, the missile could easily reach Israeli cities, including Jerusalem.

The report quotes Farahi as telling Iran’s Press TV that the weapon will serve as “the upper hand of the Armed Forces of the Islamic Republic of Iran. … [The] Meshkat cruise missile, which God willing will be unveiled soon, has a range of more than 2,000 kilometers.”

Meanwhile, Iran held high-level talks with Chinese officials Sunday, and released a statement praising Chinese support for embattled Syrian President Bashar al-Assad, Mehr reported.

The meetings were held between Chinese Deputy Foreign Minister Zhang Zhijun and Iranian deputy foreign minister Hossein Amir Abdollahian, according to the report.

Zhang praised Iran’s efforts to bolster Syria’s Assad regime, which has murdered hundreds of its own citizens since pro-democracy protests erupted in the Arab country. Iran has publicly and privately sought to prop up Assad’s regime in direct opposition to the U.S. and Western positions on the conflict.

Iranian official Abdollahian was quoted as praising China’s “political support” for Assad and Syria. He also maintained that, “Syria is going strong on the path to fight terrorists,” according to the report.

Washington free Beacon

Shadow economy in eastern Europe undermines growth, says World Bank

There is always someone to blame .... it was not for the government expenses, it was for your existence!!!!!

If that is the case then do not invite new members.

Doing business and working outside government regulation and tax systems in eastern Europe is so widespread that it risks undermining the region's long-term growth potential, says a World Bank report released on Monday (10 September).

"The governments of the new member states in Eastern Europe simply cannot afford a large shadow economy, neither in the short run due to fiscal concerns, nor in the long run due to the shrinking labour force," said World Bank senior adviser, Katarina Mathernova.

The report looked primarily at Bulgaria, the Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Slovenia and Slovakia.

It found that the shadow economy made up 33 percent of Bulgaria’s GDP in 2007.

The report notes that the ongoing financial crisis has created a "renewed sense of urgency" to end the practice of untaxed and unregulated work.

The World Bank recommends a series of policy initiatives to ensure these governments provide a more attractive working alternative to the existing informal economy. A friendlier tax system coupled with a viable social and employment protection schemes is among its proposals.

In particular, the report notes that the sector most often involves low-paying and casual part-time jobs. State officials need to design "smarter social benefits that reward formal work" for those engaged in the shadow economy.

The World Bank recommends the states cultivate better practices to encourage unregulated businesses to declare their income and employ declared workers. It also says social norms need to change.

"Building trust in government is a key factor in convincing citizens paying taxes is useful," says the report.

Tax officials, it notes, should approach citizens on the "presumption of good citizenship" in order to build better relations.

Meanwhile, the shadow economy creates problems on three different levels, says Truman Packard, World Bank lead economist and co-author of the study.

Truman says that at the household level workers and families are unable to properly manage their income risks because they have no formal access to social security.

Businesses that operate outside regulation also lack access to credit protection of property rights while formal companies "are overburdened due to tax revenue losses and unfair competition from informal firms."

"At the societal level, a large informal sector erodes the financing of public goods and services, thereby inhibiting the government’s capacity to provide proper education and health care services and a well-functioning infrastructure," said Packard.

European Commission statistics estimate Bulgaria's shadow economy as accounting for 32 percent of GDP in 2012.

This is followed by Romania (29%), Lithuania (28.5%) and Estonia (28.2%). Austria is at the other end of the scale, with 7.6 percent of GDP coming from the black market.


Euro Bailout Fund Faces New Court Challenge in Germany

If you ask Wolfgang Schäuble these days about his state of mind in the run-up to the Federal Constitutional Court's planned ruling on the permanent euro bailout fund this Wednesday, the German finance minister brushes it aside. Worries? Why should he have any?

In an interview with the Bild am Sonntag newspaper, he explained that people have taken great care to ensure that the euro bailout fund is constructed in a way that it does not violate the German constitution. "So far, the Constitutional Court has never ruled that the course of European integration is directed against the constitution," he told the paper.

Schäuble isn't alone in his demonstrative casualness. In the government coalition, comprised of the conservative Christian Democratic Union (CDU), its Bavarian sister party the Christian Social Union (CSU) and the business-friendly Free Democratic Party (FDP), there is a broad assumption that the justices in Karlsruhe will rule on Wednesday that the European Stability Mechanism (ESM), the permanent euro bailout program, as well as the fiscal pact, can go into effect. With the exception of the Left Party, most people in Berlin's political circles hold the same view. Most Berlin politicians -- but not all.

At least one prominent politician is still trying to derail the ESM: Thanks to his persistent opposition to the euro rescue policies of Chancellor Angela Merkel's government, Peter Gauweiler has earned his reputation as a euro rebel. He has alsochallenged Germany's bailout policies at the Constitutional Court before. Gauweiler, who is with Bavaria's CSU, is trying to prevent the court from issuing another of its "yes, but" rulings in which the court imposes additional conditions on the government but basically allows it to continue funding the euro bailout as it has in the past. This weekend, Gauweiler attempted to torpedo the decision at the last minute, creating uncertainty in Berlin and Brussels.

The CSU politician submitted a new petition over the weekend to the Karlsruhe court to delay its ruling on the ESM. Gauweiler has based the petition on the decision announced on Thursday by the European Central Bank (ECB) that it would purchase unlimited quantities of sovereign bonds from crisis-plagued euro-zone member states. Gauweiler argues in his petition that the ECB's step has "created an entirely new situation" and that "almost all of the discussion that has taken place so far is now invalid". Through the bond-buying program, he argues, the ECB itself will become an "unlimited ultra- and hyper- bailout fund" -- one that national parliaments will have no control over.

Now Gauweiler is demanding that the court reject the ratification of the ESM treaty until the ECB revises its decision. He is arguing that if the court is not able to decide on the emergency petition that it should delay the ruling on the ESM that has been scheduled for Wednesday.

On Monday, a court spokesperson said the judges would convene later in the day to consider Gauweiler's petition and that a decision would likely be made by Tuesday morning on how the court would proceed.

Delay in Decision Would Be 'Highly Problematic'

The fact of the matter is that the Constitutional Court is taking the current pending complaints about the euro bailout very seriously. The main case being heard is backed by 37,000 German people, making it the biggest constitutional complaint in German history. Even though the current decision is being conducted in expedited proceedings, the court's justices have still allowed themselves more time than they normally would. They also took other unusual steps for expedited proceedings, including hearing oral arguments.

The question for the court now is this: If it wants to stick to the position it has held until now, will the court not also have to take the appropriate amount of time to consider Gauweiler's complaint? Does it not need a few more days or weeks? Or has the court already taken into account in its ruling that the ECB might move ahead with a bond-buying program that would include a role for the ESM?

ECB President Mario Draghi said last week the ECB will link its market interventions to the ESM, which would apply strict austerity criteria to countries that sought aid.

The backers of the main complaint against the ESM have also offered support for Gauweiler's petition. "The current developments at the ECB confirm our worst fears," said Christoph Degenhart, a professor of law at the University of Leipzig who is representing the organization Mehr Demokratie ("More Democracy), which is a plaintiff in the main case being heard at the Constitutional Court. "Because it can print unlimited amounts of new money, the European Central Bank has the ability to thwart any ruling that the Constitutional Court makes," he said.

Alexander Dobrindt, the secretary general of Gauweiler's CSU, who has likewise been critical of euro rescue policies, said he had "major sympathy" for his colleague's move.

Meanwhile, the Research and Legislative Reference Services of the German Bundestag, the German counterpart to the Congressional Research Office that advises the federal parliament, warned in a report on Sept. 5 that the permanent euro rescue fund could impede on the role of Germany's parliament in budgetary decision-making. In the paper, obtained by the Neue Osnabrücker Zeitung newspaper, the research staff warned that the "possible direct and possibly unlimited liability" for the debts of other countries would violate the German parliament's right to determine the national budget. The advisory opinion, which had been solicited by the Left Party, also stated that it was unjustifiable that the "authority of the state and its ability to exercise it could be limited by tying the hands of the budget legislature as a result of liabilities through international agreements." It added that if one ESM member could no longer contribute to the bailout fund, "there would be higher payment obligations for other ESM members."

Still, Michael Stübgen, the CDU's point man in parliament on European policy issues, said he does not see a connection between possible ECB bond buys and the ESM. "I'm unconvinced by the emergency petition," he said. He also warned against a delay in the ruling on the main case. "This would be highly problematic," he added. Indeed, a further delay would threaten to cause new uncertainty and turbulence on the markets.

Concerns about ECB's Independence

Germany is the last country to ratify the €500 billion ($639 billion) bailout fund, and other Europeans are waiting with suspense for German approval so that the ESM can finally begin operations in October. Sources in Berlin and Brussels have all said there is no "Plan B" if the court rejects ESM ratification.

Even though most in Merkel's cabinet believe the court will approve the ESM, there are still widespread concerns even within the chancellor's coalition government about the ECB's possible bond-buying program. SPIEGEL reported in its latest issue that, in a scenario that has been circulated internally at the central bank, ECB officials have calculated that bond-buying costs for the rest of this year could run as high as €70 billion to €100 billion if interest rates for Spanish and Italian bonds begin to shoot up again as they did in recent months.

Within Merkel's CDU and her junior coalition partner, the FDP, many politicians believe the central bank has fundamentally exceeded its mandate and that the ECB's role is being abused in order to finance states. ECB chief Draghi has sought to counter such concerns, noting last week that the central bank would only purchase bonds on the secondary markets from crisis-hit countries if they applied for aid through the ESM and agreed to the reform conditions applied by the euro rescue fund. Spain is considered to be the first country that is likely to apply.

The link between bond-buying and the ESM would actually provide Germany's federal parliament, the Bundestag, with an indirect veto right because it already has the right to vote on whether a country should receive ESM aid. The German government has repeatedly stated that the ECB retains its full independence, but that's not entirely true if it is politicians who will determine whether the central bank can buy a country's bonds or not. "Given that the ECB action is contingent on programs that are decided politically, it does raise some questions about its independence," Volker Kauder, the CDU's floor leader, told the mass-circulation Bild newspaper. The ECB's official mandate is to ensure price stability, and it is prohibited from directly financing states. But it also has a mandate to remain independent of governments in its decision-making.

Indeed, the situation has become highly complex, and there will be no lack of issues to debate in the run-up to Wednesday's ruling -- if it still happens. The same day, the European Commission is slated to unveil its plans for a European banking authority. And in the neighboring Netherlands, an important ally of Germany in efforts to save the euro, a new government is to be elected. Yet again, these are proving to be decisive days for the future of Europe's common currency.

Spiegel Online

ALERT!! Netanyahu: Those that refuse to set red lines for Iran can't give Israel red light

Prime Minister Benjamin Netanyahu on Tuesday launched an unprecedented verbal attack on the U.S. government over its stance on the Iranian nuclear program.

"The world tells Israel 'wait, there's still time'. And I say, 'Wait for what? Wait until when?' Those in the international community who refuse to put red lines before Iran don't have a moral right to place a red light before Israel," Netanyahu told reporters on Tuesday.

"Now if Iran knows that there is no red line. If Iran knows that there is no deadline, what will it do? Exactly what it's doing. It's continuing, without any interference, towards obtaining nuclear weapons capability and from there, nuclear bombs," he said.

Meanwhile, diplomats told the Associated Press on Tuesday that The International Atomic Energy Agency has new intelligence that Iran has advanced its work on calculating the destructive power of a nuclear warhead, a step toward building such a weapon.

The new findings confirm Haaretz's report several weeks ago, which quotes an Israeli official as saying that Iran has made progress toward developing a nuclear warhead.

The official, who spoke on condition of anonymity, said new intelligence obtained by the United States, Israel and other Western countries shows that the Iranian activity around the "weapon group" - the final stage in the development of a nuclear weapon - is progressing far beyond the scope known to the International Atomic Energy Agency.

On Tuesday, the diplomats said that the information - from the U.S., Israel and at least one other country - alleges the research was done within the past three years.

Iran denies that it has worked on nuclear arms and says allegations to the contrary are based on fabricated intelligence.

But the UN atomic agency gives credence to the suspicions and says it cannot disprove them unless Iran starts cooperating with its probe of the allegations.

The information comes from six diplomats who spoke to The Associated Press on condition of anonymity because they were not authorized to discuss intelligence.

On Monday, speaking to reporters in Washington, State Department spokeswoman Victoria Nuland said, "It is not useful to be ... setting deadlines one way or another" or to outline "red lines" for how far the U.S. can allow Iran's nuclear program to advance.

She repeated that President Barack Obama has stated unequivocally that the United States will not allow Iran to obtain a nuclear weapon, and that U.S. support for Israel's security is unwavering.

But she said she would not speak about ongoing discussions between the U.S. and Israel, calling such talk "not helpful for the diplomacy."

U.S. Secretary of State Hillary Clinton also said the administration is not prepared to make such a public commitment.

"We're not setting deadlines," Clinton said in an interview with Bloomberg Radio.

On Sunday, Netanyahu said Jerusalem and Washington were talking about pressuring Iran further. He said setting clear red lines that if crossed will prompt a military strike against Iran's nuclear facilities is the only way war can be avoided.

Clinton demurred, saying negotiations were "by far the best approach" to prevent Iran from developing nuclear weapons.

"We're watching very carefully about what they do, because it's always been more about their actions than their words," she said on the sidelines of an Asia-Pacific forum in Vladivostok, Russia.

Clinton emphasized that while Israel and the United States share the goal of preventing Iran from developing a nuclear weapon, they disagree over the negotiations timetable with the Islamic Republic. Israel is "more anxious about a quick response because they feel that they're right in the bull's-eye, so to speak," Clinton said, adding, "But we're convinced that we have more time to focus on these sanctions, to do everything we can to bring Iran to a good-faith negotiation."

Israeli officials were dismayed by Clinton's comments rebuffing Netanyahu's demand for "red lines."

"Such remarks won't stop Iran's centrifuges, just the opposite," one senior official in Jerusalem said, adding, "Without a clear, firm red line Iran won't stop its race to a nuclear weapon. Statements like these not only do not deter Iran, they reassure it," he said.


9/11 anniversary: Taliban claim US face 'utter defeat' in Afghanistan

Eleven years ago on Tuesday, almost 3,000 people lost their lives in the worst terror strike on American soil that saw two passenger planes hijacked by al-Qaeda slam into New York's World Trade Center and another into the Pentagon. A fourth plane crashed in a Pennsylvania field.

What followed was a war in Afghanistan, launched over the Taliban's alliance with al-Qaeda.

"The anniversary of 9/11 is approaching America this year at a time when it is facing utter defeat in Afghanistan militarily, politically, economically and in all other facets and it has exhausted all other means through which to prolong its illegal war," said a statement from the Afghan Taliban, the US-based SITE Intelligence Group said on Monday.

The statement, which the Taliban wrote in English and posted on Sunday, goes on to say that the war in Afghanistan "under the pretext of retaliation for the September incident has no legal or ethical" basis, and that Afghans had "no hand" in what happened.

Even though the United States has spent "large amounts of military and economical assets" in the war, "no American is safe in any society today," the statement said.

The Taliban also claimed it was not a threat but vowed to defend its homeland and continue with its "sacred struggle" against "the invaders."

"The Islamic Emirate, on the eleventh anniversary of the September incident, once again calls upon the American officials, its coalition members and its people to halt shedding the blood of the oppressed Afghans under this pretext and to follow the path of sound reasoning instead of tyranny and stupidity."

The war in Afghanistan has steadily lost popular support in the United States.

A growing majority of Americans oppose the US military presence in Afghanistan and support NATO's plan to withdraw most combat forces by the end of 2014.

More than 2,000 US troops have been killed in Afghanistan. Some 77,000 are currently stationed in the country.

In a separate statement, also released Sunday according to SITE, the Taliban accused CIA Director David Petraeus of founding the "Arkabi" militia groups and alleged that he is therefore "directly involved" in killings attributed to them.

The Telegraph

Real US. Unemployment at 19%

Beneath the surface of Friday's jobs report lies the reality of just how disastrous the Obama economy truly is.

Consider the following 11 economic facts:

1. When you include the underutilized labor figure with the eight million Americans who have lost hope altogether and stopped looking for a job, real unemployment now stands at just under 19 percent.

2. If the labor force were the same as when President Obama took office in January 2009, the unemployment rate reported on Friday would be 11.2 percent.

3. A record 88,921,000 Americans are no longer in the labor force. To be included in that figure, an individual must be over 16 years of age, a civilian, not in a mental hospital or nursing home, and have stopped hunting for a job for at least four weeks.

4. The average American lost 40 percent of their wealth from 2007 to 2010.

5. Every fifth man in America is out of work.

6. One out of two Americans are now low-income or below the poverty line.

7. Over the past four years, 400,000 food stamp recipients a month have been added to the welfare dole.

8. In 2006-2007, 90 percent of college graduates landed jobs. Under Obama, just 56 percent find work after college.

9. A gallon of gasoline cost $1.84 when Obama entered office. Today, a gallon of gas costs$3.77.

10. Every fourth home mortgage in America is underwater.

11. Under Obama, healthcare costs have skyrocketed 18.9 percent.

The latest Gallup tracking poll shows Mr. Obama leading Republican challenger Mitt Romney 49 to 45 percent.


The FED'S Campaign

By Peter Schiff

This past Friday, as Fed Chairman Ben Bernanke delivered his annual address from Jackson Hole - the State of the Dollar, if you will - I couldn't help but hear it as an incumbent's campaign speech. While Wall Street was hoping for some concrete announcement, what we got was a mushy appraisal of the Fed's handling of the financial crisis so far and a suggestion that more 'help' is on the way.

It is important to remember that it's not just President Obama's job on the line in this election; in two years time, the next President will have the opportunity to either reappoint Bernanke or choose someone else. So we must understand what platform Bernanke is running on, as his office has an even greater effect on global markets than the President's.

Bernanke has been the perfect tag-team partner for George W. Bush and then Barack Obama as they have pursued an economic policy of deficits, bailouts, and stimulus. Without the Fed providing artificial support to housing and US debt, Washington would have already been shut out of foreign credit markets. In other words, they would have faced a debt ceiling that no amount of bipartisan support could raise. Fortunately for the politicians, Helicopter Ben was there to monetize the debts.

As far back as his time as an academic, Bernanke made clear that when the going got tough, he wouldn't hesitate to fire up the printing presses. He specialized in studying the Great Depression and, contrary to greater minds like Murray Rothbard, determined that the problem was too little money printing. He went on to propose several ways the central bank could create inflation even when interest rates had been dropped to zerothrough large-scale asset purchases (LSAPs). Sure enough, the credit crunch of 2008 gave the Fed Chairman an opportunity to test his theory.

All told, the Fed spent $2.35 trillion on LSAPs, including $1.25 trillion in mortgage-backed securities, $900 billion in Treasury debt, and $200 billion of other debt from federal agencies. That means the Fed printed the equivalent of 15% of US GDP in a couple of years. That's a lot of new dollars for the real economy to absorb, and a tremendous subsidy to the phony economy.

This has bought time for President Obama to enact an $800 billion stimulus program, an auto industry bailout, socialized medicine, and other economically damaging measures. In short, because of the Fed's interventions, Obama got the time and money needed to push the US further down the road to a centrally planned economy. It is also now much more unlikely that Washington will be able to manage a controlled descent to lower standards of living. Instead, we're going to head right off a fiscal cliff.

The Fed Chairman even admitted to this reality in his statement. Here are two choice quotes:

"As I noted, the Federal Reserve is limited by law mainly to the purchase of Treasury and agency securities. ... Conceivably, if the Federal Reserve became too dominant a buyer in certain segments of these markets, trading among private agents could dry up, degrading liquidity and price discovery." [emphasis added]

"...expansions of the balance sheet could reduce public confidence in the Fed's ability to exit smoothly from its accommodative policies at the appropriate time. ... such a reduction in confidence might increase the risk of a costly unanchoring of inflation expectations, leading in turn to financial and economic instability." [emphasis added]

So we all agree that the prospect of inflationary depression was made worse by the Fed's actions - but at least Ben Bernanke has pleased his boss. As a guaranteed monetary dove, Ben Bernanke appears to be a shoo-in if Obama is re-elected.

Meanwhile, Mitt Romney has pledged to fire Bernanke if elected. While I am not confident that Mr. Romney has the economic understanding to appoint a competent replacement - let alone pursue a policy of restoring the gold standard or legalizing competing currencies - he may well be seen as a threat not only to the Fed Chairman's self-interest, but also to his inflationary agenda.

Given this background, let's look at Bernanke's quotes that have been the focus of media speculation for the past week: the US economy is "far from satisfactory," unemployment is a "grave concern," and the Fed "will provide additional policy accommodation as needed." These comments seem designed to reassure markets (and Washington) that there will be no major shift toward austerity in the near future. The party can go on. But they also hint that Bernanke might be planning to double down again. I have long written that another round of quantitative easing is all but inevitable. It now seems to be imminent.

In reality, when the money drops may have more to do with politics than economics. The Fed may not want to appear to be directly interfering in the election by stimulating the economy this fall, but there are strong incentives for Bernanke to try to perk up the phony recovery before November and deliver the election to Obama. However, if Romney wins, Bernanke can at least fall back on his appeal as a team player as he lobbies for another term.

Peter Schiff