CARBON TAX SCAM

Ron Paul’s Bill To Audit The Federal Reserve Now Has 186 Co-Sponsors
By admin - June 5, 2009 AUDIT THE FED

Ron Paul’s bill to audit the Federal Reserve (HR 1207) now has 186 co-sponsors, and the numbers keep growing!This is history in the making, and victory is within reach. Imagine what will happen if HR 1207, The Federal Reserve Transparency Act, comes up for vote in Congress! With more than 40% of the House of Representatives already co-sponsoring this bill, it has real potential to pass — BUT only if we educate and rally the people to support it and get our Congresspeople to put it to vote and pass it.

Step 1: Your Representative
If your representative is not on the following list of HR 1207 co-sponsors, call their offices, write to them, email them, etc. Let them know they need to support HR 1207. If you live in their district, let them know. Go to their office.Capitol Switchboard: (202) 224-3121

THE OFF SHORE BANKERS LOVE THIS T.A.L.F GETTING GIFTS FROM GEITHNER (ROBBING AMERICANS BEFORE THEIR VERY EYES).AFTER BUYING UP G.M. THEY HAVE GONE TO FAR GERALD CELENTE SAYS THERES NO TURNING BACK ONLY A WAR CAN CHANGE THINGS NOW BY THESE WORLD ROBBERS NEW WORLD ORDER OCCULT WORSHIPPERS.THIS WAR WILL BE ISLAM ATTACKING AMERICA,POSSIBLY SETUP BY THE U.S GOVERNMENT (NOT MY VIEW ON THIS POINT)OR A WAR WITH PAKISTAN.THE RIOTS AND REBELLION WILL SOON BE STARTING,GET READY FOR HELL ON EARTH FOLKS.

GERALD CELENTE TRENDS RESEARCH
http://www.trendsresearch.com/gerald.html

William D. Cohan: TALF Is Geithner's Gift To Wall Street
Update on Tuesday, May 19, 2009 at 1:18AM by DailyBail

The TALF is really starting to p--- me off. TARP Inspector General Neil Barofsky was right, the potential for TALF abuse is limited only by the creativity of the crooks.

There are several problems infecting the securitization markets. Buyers are scarce because credit is scarce (enter the Treasury), and because there is much more risk in purchasing $2 billion in student loans and credit-card receivables versus a few years ago when employment was stronger and the economy was stuck in optimistic, self-denial. There are economic consequences to this paucity of bidders. Sellers of securitized slogs are stuck holding what they never expected to, and thus create few new loans. The economy is hurt by a lack of credit to attend college, buy a Tahoe, or finally get that Harley. Occasional distressed sellers unload to the only bidders around (at much lower prices than the assets are marked on the balance sheets everywhere) and so mark-to-market changes notwithstanding, all the financial institutions who hold similar securities must in theory adjust their sheets accordingly every quarter.From the government's perspective, creating a secondary bubble and stimulating buyers to come back to the market at higher prices accomplishes the duet of allowing for no more writedowns for those who hold the junk, as well as clearing the decks for the sellers who can then go out and offer credit for consumer purchases again. And this obviously benefits the economy as a whole in the short run. It's the long run that's not so pretty, especially when the underlying economy and consumers are already soaking in debt.The problem with this logic is, in aggregate, we already have enough Harleys and Tahoes and designer Gucci bags. (Student loans are a different story due to the long-term economic and productivity benefit from an educated workforce.) Then why all the fuss about re-inflating the bubble? Wouldn't it be beneficial to cut back for a few years and adjust some of our excesses? The answer unfortunately is POLITICS. Because of our 2-party system and the constant competitiveness it engenders, the party in power feels it can't allow a bad recession (what we absolutely need after 26 years of partying and soft landings and manipulation of interest rates to keep the mania alive) to HAPPEN ON THEIR WATCH.

Obviously borne of fear that the other party will seize the opportunity and supplant them in the next election cycle. It's disheartening that no politician has emerged (as did occur in New Zealand) to explain to voters that this recession is necessary and that at a minimum we shouldn't waste trillions on un-stimulative stimuli, zombie-bank propping, and securitization re-igniton attempts. We need desperately to take our medicine. At the local, state, federal, corporate, and personal level: we all need to cut back for awhile. But our power-hungry political parties and their ego-driven puppets with brains filled more by air than matter continue to drive us to ruin, while too many of the sheeple slog through their day and then smoke or drink their way into a nightly calm where none of it matters anyway. Cynical perhaps but unassailably true.

Outstanding piece by William Cohan after the jump.From Fortune:

Imagine if you were not really in the market for a house but the government came along and said that it would finance 94% of a home's purchase price with a mortgage rate of less than 3%. Still not interested? Wait, Uncle Sam has some additional sweeteners: if you do the deal and buy the house for only 6% down, you also get the equivalent of rental income every month to the tune of at least an annualized yield of 10% of the purchase price.But wait there's still more: if, say, after two years, you decide you don't want the house any longer, you can just walk away from it. No need to pay the balance of the mortgage (it won't affect your credit rating), and you can keep the rental income received to date.That's essentially the deal that Treasury Secretary Timothy Geithner has offered qualified professional investors who participate in the so-called TALF (Term Asset-Backed Securities Loan Facility). Two months into the program as the first TALF- backed deals hit the market, you can see why the likes of hedge fund Fortress Investment Group are drooling over it. I'm a big believer in the impact that TALF can and should have,Fortress CEO Wes Edens said on a May 6 investor call, adding that he expects that Fortress will be a big participant in the TALF program three to six months from now.

0:00 /24:35Geithner opens up

The first few TALF deals -- one for Ford Credit (the financing arm of the automaker), another for American Honda Receivables Corp., a third for the student loan company Sallie Mae and a fourth for motorcycle icon Harley Davidson -- shed some light on our tax dollars at work.I've had accounts that dropped everything they were doing to take a look at this TALF financing,one Wall Street trader explained.It was like nothing they had ever seen. It beats any financing that the private sector could ever come up with. I almost want to say it is irresponsible.For instance, Prudential Financial, Inc. (PRU, Fortune 500), the large insurer and investment manager, borrowed $786 million from the TALF as of March 31 and put up only $50 million to do so, some 6.4% of the deals.In case you're not totally conversant with the alphabet soup of financial remedies emanating from the Obama Administration, here's a brief refresher: Geithner and the Federal Reserve announced the launch of the TALF in March. The TALF is a $200 billion (on its way to $1 trillion) non-recourse lending program to private investors as a way to encourage them to buy newly underwritten securities backed by auto loans, credit-card receivables and student loans, among other asset classes. (The TALF program is set to extend, in June, to the issue of new commercial real-estate mortgage-backed securities.)These securitizations were once upon a time a key component of the so-called shadow financing system that helped raise trillions of dollars of capital worldwide. Of course, the securitization and sale of mortgage-backed securities was one of the leading causes of the current financial crisis as the people who took out the underlying mortgages started to default upon them in unexpected numbers. Still, Geithner has determined, correctly, that getting these securities circulating again is crucial to restoring the health of the credit markets. The Treasury designed the program, but it is the Federal Reserve that provides the government's share of the capital. The increase in the TALF is expected to help stimulate both new issuances and the removal of assets from bank balance sheets,Credit Suisse wrote to its shareholders on May 8.

Investors interested in borrowing from the TALF program have to be approved by the Treasury and then, once approved, have to set up an account with a broker-dealer that is subject to a variety of the usual terms and conditions. The investor then must indicate a desire to buy, say, at least $10 million of one of the dozen or so deals, worth an aggregate of around $25 billion, which have come to market since the TALF program was set up in March. An early test for TALF was a May 5, $1.5 billion car-receivables securitization for American Honda Receivables Corp. and underwritten by JPMorgan Securities (JPM, Fortune 500) and BNP Paribas Securities. Investor demand for the deals so far is said by one trader to be strong and the deals are selling well. The real market test, though, of TALF will come when the first deals involving CMBS (Commercial Mortgage Backed Securities) start coming to market in the next few months.The way the TALF works in practice is this: The amount of equity an investor has to put up, or the haircut as the TALF documents call it, depends upon the assets involved, the term of the loan or lease of the underlying asset (say, a car) and the credit quality of the underlying borrower. A loan to buy a three-year security backed by a group of credit-card receivables from high-quality borrowers would require an investor to put up 6% of the capital -- a 6% haircut -- and then can borrow the rest from the TALF through his brokerage account. To buy a two-year high-quality credit-card receivable security, a borrower would put up 5% of the face amount of the securities purchased. Auto receivables require as 12% equity investment for a three-year security. Small business loans require 5% down. Student loans require 10% down for a three-year deal.An investor interested in a $10 million slice of three-year credit card receivable would put up 6% of the money -- $600,000 -- and borrow the balance of $9.4 million from the TALF at a rate of three-year LIBOR plus 100 basis points (Attention K-Mart shoppers, that's 2.85% at this moment.) Depending on all sorts of assumptions, the yields on these investments are said to be in the 11% to 15% range, especially attractive since the TALF loans are non-recourse to the borrowers -- you can just walk away and lose only your underlying equity investment and the collateral but you are not held responsible for the unpaid portion of the TALF loan itself.In addition, the TALF loan is not marked-to-market so if the underlying collateral deteriorates in value, the investor is not required to put up more equity. What's more as the car payments or credit-card payments on the underlying security are made, the payments are distributed to the government and the investor on equal footing -- that means the investor starts getting paid back at the same time as the government even though the government is the senior secured creditor and even though an investor has put up only a small fraction of the original money. One private equity investor, who would not normally have looked at investing in such a deal but did, called this particular aspect of the TALF shockingly good.But who will the TALF deals be shockingly good for -- the players on the field or those of us in the bleachers? If what Geithner calls our lending facility with the Fed does its job and jumpstarts the credit markets then the extraordinary concessions the government has made to attract private capital may have been worth it.William Cohan is the author of House of Cards: A Tale of Hubris and Wretched Excess on Wall Street, published this month by Doubleday Books, a division of Random House, Inc.

The Surrender of American Sovereignty to the Global Oligarchy
PostBy Sean Osborne, Associate Director

31 MAY 2009: Good morning America and welcome to your dismal slavish future within the Global Oligarchy. The surrender of the financial sovereignty of the United States of America is now an established fact and occurred on 2 April 2009. That was the day President Barack Hussein Obama surrendered our financial sovereignty to the Globalist G-20 and the European Union.The unprecedented success of the American experiment in capitalist free enterprise was summarily surrendered to the new Global Oligarchy of world socialist elites, a newly emergent form of global government which is unquestionably led by the European Union. The worst part about it is that this surrender will be paid for by every living American taxpayer, their children and their children’s children for several generations to come - should the nation by some unforeseen miracle last that long. For this we have to thank our elected representatives who allowed it to happen, and ourselves for not keeping an eye on the career politicians who gave away our God-given birthrights.The traditional American profit motive of our free market economy had been utilized for well over twenty decades by American entrepreneurs to grow prosperous companies into corporations from small town Mom and Pop Shops was replaced in a single day by the Global Oligarchy’s consortium of elite bankers known as the Financial Stability Board (FSB) led by an Italian banker named Mario Draghi. The FSB is the vehicle by which the Global Oligarchy will fashion their global superstate. Whatever became of American Constitutional law I cannot say, but I suspect it was unceremoniously buried alive on foreign soil by an sitting American president who still cannot prove he has not usurped the office of chief executive.You don’t have to take my word for it, simply read any interview or recent book or article written by the Great One Mark R. Levin (Levin’s Liberty and Tyranny is an instant classic), FoxNews financial expert Stuart Varney or political advisor Dick Morris. In fact, I urge you to seek them out to learn why Lady Liberty is weeping so uncontrollably these days.

Irish Lisbon guarantees raise questions
HONOR MAHONY 04.06.2009 @ 17:32 CET

EUOBSERVER / BRUSSELS - Ireland is busy working on legal wording to make the Lisbon Treaty more palatable to Irish voters, but its EU partners have raised concerns about the scope of the texts and some impatience at the pace of the work. Last week, officials from Dublin met representatives from the 26 other member states to shed some light on what kind of wording Ireland is looking for in order to ensure the greatest chance that its citizens will vote Yes the second referendum on the treaty, scheduled for autumn.While other capitals have demonstrated goodwill and understanding towards Dublin's situation, they also want to make sure the Irish do not end up inadvertently opening other cans of worms, which red-faced governments would then have to defend in their own parliaments.The greatest concern, expressed by a number of diplomats spoken to by EUobserver, is to keep the texts as Irish specific as possible.This should not be too difficult for the declarations guaranteeing tax sovereignty, the country's neutrality and on family and ethical issues - areas seen as contributing to Irish No vote last June.But the reason for the wariness among other capitals is that these texts will take the form of legally-binding protocols, which will be attached to the first legal vehicle available to get them ratified. At the moment, the talk is of Croatia's accession treaty, which will have to pass through all 27 parliaments of the EU.We want to make sure it is very specific to Ireland, so we do not get asked why we haven't got guarantees on certain issues, said one diplomat.Another diplomat from another country said: What worries us is that our ratification will still stand.All countries, except Ireland, have ratified the treaty via their parliaments. But if the scope of Ireland's declaration is too wide, then it could result in calls for a re-ratification. This is said to be of particular concern for Britain, but also of several others.Meanwhile, a non-binding declaration on workers' rights is causing as much wariness among member states, some of whom are seeking to make sure it does not come down too much in favour of employee rights to the detriment of the internal market.We want to make sure it reflects the balance of the Treaty,said a diplomat from a large country.

In addition, there is also some bemusement among some diplomats that Ireland, seen as one of the most pro-market EU member states, should now be making an extra declaration concerning workers' rights.For its part, given the sensitivities of the topic and how much political capital Dublin is risking on the text, Ireland has not yet put pen to paper. Unfortunate wording, if leaked, is hard to remove from the public consciousness once out.But this has led to some frustration, with EU ambassadors expected to try and informally wrap up the text in just one week's time. We would very much appreciate to get some clarity. We have only been briefed orally, said a diplomat.The wording could raise real issues ... re-ratification is one of the problems we definitely don't want,he continued, with his country seen as one of the less pro-EU states.The texts will be discussed by foreign ministers on 15 June before going being tabled at an EU leaders' summit three days later. Ireland is hoping to get the texts signed off at the summit with as little ceremony as possible.Once the wording is cleared, Dublin is expected to announce the referendum date soon afterwards. It is hoping the texts, the guarantee that each member state is entitled to have an EU commissioner as well as the general unease that the economic crisis has caused among Irish citizens will swing the vote to a Yes this time round.But, admits an Irish official, a lot of work is still to be done.

Insurance company buys $400 million in gold Posted Jun 04 2009, 12:50 PM by Kim Peterson.

This isn't a good sign. Northwestern Mutual, the third-largest life insurer in the country, has bought gold for the first time in its history, Bloomberg reports. And it bought a lot.Gold just seems to make sense; it’s a store of value,chief executive Edward Zore told Bloomberg.In the Depression, gold did very, very well.Northwestern now has about $400 million in gold. The way Zore sees it, the investment just can't go bad.Some of the stocks in the company's portfolio fell 95% in the financial crisis. Gold isn't going to do that, Zore said. In fact, he thinks the price of gold could even increase five-fold if the economy continues to deteriorate.

Is gold the next bubble?
Posted Feb 27 2009, 01:18 PM by Kim Peterson

Gold rose above $1,000 an ounce a week ago, but has since dropped about 6%, unable to get past the technical barrier at the $1,000 mark.But gold looks poised to turn back up. How high can it get? According to the Economist, some gold enthusiasts are hoping it hits $2,300, which would match its January 1980 peak in real terms.Gold is viewed as a safe haven in this troubled economy, since it's likely to maintain value even in tough times. There's a limited supply and lots of potential buyers -- perfect conditions for a bubble, a Morgan Stanley analyst tells the Economist. One gold floor trader thinks gold could rise to as much as $1,300 by year's end, according to Reuters.

Warnings of a bio-attack & the art of public deception
PostBy Douglas J. Hagmann, Director

4 June 2009: The breaking exclusive published yesterday by The Washington Times warning of a possible bio-attack from the southern border is curious in terms of both timing and content. The basis of the news article is a video that aired on al Jazeera TV in February - over four months ago. All American media had access to this very video at the same time it was broadcast in February, yet disregarded any reference to it. Shortly after the release of this video was made public in February, the Northeast Intelligence Network received numerous e-mails about its existence. An evaluation of the video by investigators and analysts found nothing significant in terms of its intelligence value beyond the obvious, yet remained amazed by the interest generated by the video. Now, there is a renewed interest in this video, and even the most patriotic and well-meaning Americans are being duped in the name of national security. Since the early 1990’s, there’s been a concerted effort by the U.S. administrations, officials on both sides of the political spectrum and the media to connect the conservative right with neo-Nazi right-wing extremists. Myths created by political operatives at the highest levels within our intelligence agencies and the media charged with perpetuating such myths have been effectively and subtlety altering public perception for decades. The veneer of subtlety became insidiously overt during the investigation of the April 19, 1995 bombing of the Murrah Federal Building in Oklahoma City. That case itself could serve as Exhibit A as a leading example of globalists within the U.S. government, from those within the administration to the leaders of the intelligence agencies, creating the myth that right-wing extremists had suddenly joined forces with Islamic terrorists to the extreme peril of the government and the safety of American citizens.Despite voluminous evidence authenticated in multiple legal venues to the contrary, the myth of a neo-Nazi or any right-wing connection to the Oklahoma City bombing has been purposely promoted in order to advance public opinion against those fighting to protect our national sovereignty, constitutional protections and cultural identity. Whoever is tasked with conducting a historical post-mortem examination on the democratic and sovereign existence of the United States of America would likely identify the mythical association between neo-Nazi, right wing zealots and Islamic terrorists a significant factor that ultimately contributed to an incorrect diagnosis and wrong course of treatment. That intentional misdiagnosis led to a course of treatment that resulted in the abandonment and subsequent death of America’s traditional principals of liberty, justice, and concepts of government.

Most Americans were surprised and outraged by the recent revelation that the Department of Homeland Security under Janet Napolitano classified anyone concerned with the rule of law, the U.S. Constitution, gun rights, military veterans, and even those wanting answers to legitimate questions about Barack Hussein Obama’s eligibility to hold office as President of the United States as potential [security] threats.The legitimate assembly of millions of Americans who gathered last April 15 as protesters against taxation were placed under surveillance by federal law enforcement agencies - a measure that redirected intelligence assets away from enemies who are entrenched in our land - to true red-blooded, patriotic Americans who care about the American way of life as it was once known. For those paying attention to the events of the last two decades, this should have come as no surprise. The globalists have been setting this very stage for a long time, but those who tried to sound the alarm were frequently branded as conspiracy nuts by nearly everyone from political hacks to paid facilitators.The definition of terrorism has been convoluted to include anyone voicing concerns over our civil liberties. Meanwhile, those in charge of conducting our domestic fight against terrorists continue to leave our national borders wide open, threaten and harass potential whistle blowers or those who are concerned with genuine security issues, and manipulate public reports about potential bio-attacks at the hands of home-grown, right-wing extremists. While there will always be delusional and paranoid crackpots fitting the mold of a potential anti-government terrorist willing to assist any cause, the number is minimal and their activities are generally identifiable. Many are so off-the-wall that the rank and file kooks are quick to turn them in to authorities, lest they become erroneously associated with them in their criminal enterrprise.It is important to look beyond the headlines and question the purpose behind stories that suddenly become news after a four-month incubation period. Based on the rapidly moving agenda of this administration and those working in tandem, an agenda designed to erode our rights, liberties and national sovereignty, we must look at this story, ask questions and demand answers.Our future depends on it.

Birthers take eligibility battle to next level.White House can't hide from swarm of citizenship posts in open government dialogue
http://wnd.com/index.php?fa=PAGE.view&pageId=100161

Obama Seeks Common Ground, New Beginning Between West and Muslim World
Obama delivers speech he had promised during the presidential campaign, aimed at reaching out to the world's 1.2 billion Muslims.FOXNews.com Thursday, June 04, 2009

Highlighting his own Muslim roots and embracing Islamic culture, President Obama on Thursday defined himself as the linchpin in a new beginning between the West and Islamic world. The U.S. president delivered a sweeping, hour-long address in Cairo, Egypt, aimed at reaching out to the world's 1.2 billion Muslims, an address he promised during the presidential campaign. Obama's speech cycled through the most contentious of issues between and among Western and Islamic societies -- from Iraq to Afghanistan to democracy and religious freedom. I've come here to Cairo to seek a new beginning between the United States and Muslims around the world -- one based upon mutual interest and mutual respect, and one based upon the truth that America and Islam are not exclusive, and need not be in competition,Obama said. The president sought to highlight Muslim contributions to the modern world and stress common ground between his country and Muslim states, drawing heavy focus to his early life in Muslim Indonesia as well as his Muslim family members. He noted that while he is a Christian, his father came from a Kenyan family thatincludes generations of Muslims.

Obama quoted the Koran and greeted the Cairo University audience with the Arabic, assalaamu alaykum, or peace be upon you. He used his full name, Barack Hussein Obama. The audience applauded thunderously when the president cited lessons from the Koran and at one point someone shouted, We love you.Obama declared he has experienced Islam on three continents, which has shaped an attitude of tolerance toward its religion and culture. That experience guides my conviction that partnership between America and Islam must be based on what Islam is, not what it isn't. And I consider it part of my responsibility as president of the United States to fight against negative stereotypes of Islam wherever they appear,Obama said to applause. He said neither Muslims nor Americans, though, can fit the crude stereotype they are sometimes assigned.He closed his speech by citing passages endorsing peace from Christian, Jewish and Islamic scripture.There is one rule that lies at the heart of every religion -- that we do unto others as we would have them do unto us. This truth transcends nations and peoples,he said.Obama expressed regret for the U.S.-led war in Iraq -- a war he opposed when he was a state legislator -- and called it a reminder of the need to use diplomacy over force when possible. But he attempted to convince Muslims that the current conflict against extremists in Afghanistan and Pakistan is a worthy one, and their fight as well, though he said the U.S. does not seek a permanent presence in the region.In Ankara, I made clear that America is not -- and never will be -- at war with Islam,he said, referencing his speech to the Turkish parliament on his last overseas tour.We will, however, relentlessly confront violent extremists who pose a grave threat to our security. Because we reject the same thing that people of all faiths reject -- the killing of innocent men, women and children. And it is my first duty as president to protect the American people.He continued: Islam is not part of the problem in combating violent extremism -- it is an important part of promoting peace. As he addressed a series of sensitive topics, Obama handled one in a way sure to stir added controversy.The speech included a message to Hamas, which the U.S. Department of State labels a terrorist organization, calling on the network to join the mainstream Palestinian coalition. Hamas does have support among some Palestinians, but they also have to recognize they have responsibilities, to play a role in fulfilling Palestinian aspirations, to unify the Palestinian people, Hamas must put an end to violence, recognize past agreements, recognize Israel's right to exist, Obama said.

Obama also waded deeper into the debate over the Palestinian-Israeli conflict.

The president, while calling the United States' bond with Israel unbreakable and shaming those who deny the Holocaust, continued to step up pressure on Israel's leadership to follow U.S. terms for a roadmap to peace. He called on Israel to stop constructing settlements in Palestinian territory and declared that Palestinian statehood is the only resolution to the conflict in the region. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace,he said.It is time for these settlements to stop.In the days leading up to his address, the president's prior call for Israel to abandon all settlement construction drew criticism in the Jewish state, and had been rebuffed by Prime Minister Benjamin Netanyahu. Israelis note that natural growth like doctors' offices and schools will continue to occur in settlements. Obama also called on Palestinians to abandon violence, comparing their struggle to that of blacks in South Africa and slavery-era America and suggesting only peaceful resistance would be productive. And he condemned Holocaust denial as ignorant and hateful,as well as other anti-Semitic rhetoric.

Threatening Israel with destruction or repeating vile stereotypes about Jews is deeply wrong and only serves to evoke in the minds of the Israelis this most painful of memories while preventing the peace that the people of this region deserve,he said.Obama spoke at Cairo University after meeting with Egyptian President Hosni Mubarak. He first traveled Wednesday to Riyadh in Saudi Arabia, where he met with King Abdullah.

From Egypt, Obama will head to Germany and France.

To all those nations, a continuing hot topic is Iran, which is believed to be developing nuclear weapons. Obama did not call on the United Nations to sanction the Islamic Republic, instead suggesting that to stop proliferation all nations must get rid of their nuclear weapons.I understand those who protest that some countries have weapons that others do not. No single nation should pick and choose which nations hold nuclear weapons. That is why I strongly reaffirmed America's commitment to seek a world in which no nations hold nuclear weapons,he said. But he said,any nation, including Iran, should have the right to access peaceful nuclear power if it complies with its responsibilities under the Nuclear Non-Proliferation Treaty.

Israel hopes Obama speech will lead to peace By STEVEN GUTKIN, Associated Press Writer – Thu Jun 4, 1:05 pm ET

JERUSALEM – Israel said it hoped President Barack Obama's speech to the Muslim world Thursday would help usher in a new period of reconciliation in the Middle East, but the positive emphasis barely masked discomfort over key policy differences highlighted in the historic address.A government statement skirted any reference to Obama's calls for a settlement freeze in the West Bank and the creation of an independent Palestinian state — demands that Israel's hawkish prime minister, Benjamin Netanyahu, continues to reject.We share President Obama's hope that the American effort heralds the beginning of a new era that will bring about an end to the conflict and lead to Arab recognition of Israel as the homeland of the Jewish people, living in peace and security in the Middle East,the statement said, noting that Israeli's security must also be guaranteed in any future peace moves.Israelis had mixed reactions to Obama's speech, which was meant to heal rifts between the U.S. and the Muslim world.One government official said the speech could have been worse for Israel, while a settler spokeswoman called Obama naive and out of touch with reality. Israel's dovish president, Nobel peace laureate Shimon Peres, said it was full of vision.Obama devoted significant time in his speech to the Israeli-Palestinian conflict. He asked Muslims to accept Israel's right to exist as a nation that came about after centuries of persecution and the Nazi genocide of 6 million Jews. He urged his audience to speak out against Holocaust denial, a common occurrence in the Arab world.He also made an emotional plea for the right of Palestinians to live in dignity in an independent state of their own. He even used the term Palestine,in a break from standard references to a future Palestinian state.

Palestinian President Mahmoud Abbas welcomed Obama's words.It shows there is a new and different American policy toward the Palestinian issue,said his spokesman, Nabil Abu Rdeneh.Israel, the country most on edge about Obama's outreach to Muslims, tried to put a positive face on Thursday's events. Israel's hawkish government clearly did not want to exacerbate already palpable tensions with the liberal U.S. president.All in all, it's not bad. I don't think there's anything we disagree with here,said Danny Seaman, the director of Israel's Government Press Office.The state of Israel isn't against reconciliation,he added, but warned against any moves that could be used by the extremists to endanger Israel and endanger the peace process.Aliza Herbst, a 56-year-old resident of the West Bank settlement of Ofra, calmly watched Obama's speech on television and when he finished said his naivety can be dangerous.You can have your speechwriters find every good thing a Muslim has ever done. But more modern history is that the Muslim world is at war with the Western world,she said, referring to the speech's myriad references to historical contributions by Muslims.Michael Ben-Ari, an Israeli lawmaker from a far-right ultranationalist party, took the criticism of Obama a step further.His hatred for the people of Israel led him to deliver a most dangerous speech that exposed his pro-Islamic trends, designed to undermine the vision of the people of Israel returning to their homeland,he said.Many Israelis had been anxious about Obama's speech, fearing the U.S. leader would use the stage to step up his recent criticism of Israel.But Seaman, the Israeli official, said the speech had no major surprises and that the current disagreements between Israel and the U.S. are well-known.Netanyahu has refused to endorse a Palestinian state and said settlement construction will continue.Yuli Tamir, a dovish lawmaker from the centrist Labor Party, was filled with praise for Obama and his speech. It's one of the most important speeches ever delivered, a key speech for changing the climate in the Middle East. Israel will make a big mistake if it ignores it,she said. Associated Press writers Joseph Marks in Ofra, West Bank, and Amy Teibel and Ian Deitch in Jerusalem contributed to this report.

World Bank: Aid won't spark Palestinian growth By KARIN LAUB, Associated Press Writer – Thu Jun 4, 12:34 am ET

RAMALLAH, West Bank – Massive aid to the Palestinians can slow economic decline, but won't revive their private sector sufficiently to gradually ease their need for external support, the World Bank said Thursday, challenging assumptions that have long guided donor countries.The Palestinian economy has considerable potential for growth, the bank said in a report. However, development continues to be stymied by Israeli restrictions on Palestinian trade and movement in the West Bank and the growing isolation of the Hamas-run Gaza Strip, the bank said.As a result, Palestinians are becoming more, not less, dependent on foreign aid, the report said.

In this policy environment and pending a political resolution to the conflict, aid should be recognized for what it is — more of a stabilizing measure, slowing down socio-economic decline, than a catalyst for sustainable economic development,the report said.At a pledging conference in December 2007, the international community set out a far more ambitious agenda — pumping huge sums into the Palestinian territories in hopes of stimulating the private sector in the West Bank and gradually reducing Palestinian dependence on aid.At the time, donor countries pledged $7.7 billion over three years, a large chunk of it as direct support for the government of Western-backed Palestinian President Mahmoud Abbas. The large pledges coincided with a resumption of Israeli-Palestinian peace talks.However, the talks ended inconclusively a year later, and Israel's new prime minister, Benjamin Netanyahu, has not endorsed the principle of Palestinian statehood. He has proposed economic peace, an idea the Palestinians reject because it falls short of independence.Netanyahu has set up a ministerial committee that looks at ways to spur Palestinian growth, including by removing bureaucratic obstacles by Israel, said government spokesman Mark Regev.We want to work with the Palestinians and the international community,he said. Any good idea that can move the Palestinian economy forward, we want to hear it.
However, the World Bank noted that Israel has been slow in relaxing the sweeping restrictions on trade and movement — closures, a network of checkpoints, cumbersome cargo checks — first set up after the outbreak of the second Palestinian uprising in 2000.Israel has removed a few physical obstacles in recent months, but not on a scale that would boost the economy or investor confidence, the bank wrote. Israel took down a main checkpoint near the city of Nablus on Wednesday but insists it needs roadblocks to prevent attacks by Palestinian militants.The real gross domestic product grew about 2 percent in 2008 which, the bank said, translates to an almost 1 percent decline in real per capita terms.

What little growth there was took place in the West Bank, the report said.

Gaza, already buckling under two years of border closures since Hamas overran the territory, suffered another setback with Israel's war on the Islamic militants earlier this year. Israel launched the three-week offensive to halt Gaza rocket fire on border towns.At a March pledging conference, donor countries promised $5.2 billion to the Palestinians, some of it recycled pledges and some of it new funds, to rebuild what the war destroyed. However, with Gaza's borders still closed, reconstruction has not begun.Meanwhile, Abbas is also struggling to keep his Palestinian Authority afloat, despite the aid.Since November, his government has had to borrow $530 million from banks to help pay the salaries of some 150,000 civil servants, including tens of thousands of former government employees in Gaza who are still loyal to Abbas.

Analysts said the crunch is mainly due to Arab donors who have been withholding funds to pressure Abbas and his Hamas rivals to reach a power-sharing deal. Despite the scaled-back expectations of what aid can achieve, the World Bank urged donors to keep making good on their pledges. The Palestinian Authority needs to provide basic services, and it will be the key to unlock the potential of the Palestinian economy once conditions are right, the bank said.

Poland celebrates 20 years since historic vote By MONIKA SCISLOWSKA and RYAN LUCAS, Associated Press Writer – Thu Jun 4, 5:31 pm ET

GDANSK, Poland – European leaders on Thursday hailed Poland's first semi-free vote as an inspiration for movements that brought down regimes across the Soviet bloc, saying on the election's 20th anniversary that it helped pave the way for a reunited Europe.

At events in Gdansk, the birthplace of Solidarity, and Krakow, the historic seat of Polish kings, two men above others were hailed for their historic role in bringing down communism: Lech Walesa, the former Polish electrician, and Vaclav Havel, the Czech playwright.Both men were imprisoned by their countries' communist regimes but went on to topple their one-time jailers and rise to the presidency in their nations.

The leaders of Poland and Germany and high-ranking representatives from nine other countries once behind the Iron Curtain joined Walesa, now 65, and Havel, 72, to honor those who helped topple communism in Poland.Today ... leaders of European countries have come to pay tribute to the great ideas of freedom and solidarity and to the heroes — both the famous and unknown — who sacrificed their entire lives for freedom and solidarity,Polish Prime Minister Donald Tusk, himself a pro-democracy dissident, said at a ceremony in the arched courtyard at Krakow's historic Wawel Castle.The celebrations later moved to Gdansk, where Walesa and Havel were again the focus of events. George H.W. Bush, who was the U.S. president in that historic year of revolutions, congratulated Poles by video for their irrepressible spirit.He said that Solidarity and the June 4 elections set an undeniable precedent to the downfall of the communist regime in your country.Later, thousands attended an outdoor concert at the shipyard. Performers included the German band Scorpions, which closed its show with a hit ballad from 20 years ago, Wind of Change. Many in the audience — some clearly too young to remember communist repression themselves — sang along to the lyrics celebrating those massive political changes.A group of Solidarity dissidents, including Walesa, together knocked over 20 large red dominos representing the communist regimes that fell like dominoes after the Polish elections. A beaming Walesa waved to the crowd to cheers and applause and red and white confetti fluttered in the air.

Strikes born of frustration with worsening economic hardship pushed the communist authorities to sit down in 1989 for talks with Walesa's Solidarity.The negotiations resulted in the communist regime legalizing Solidarity and agreeing to hold elections for all 100 Senate seats to free voting and one-third of the seats in the more important lower house, the Sejm.The remaining two-thirds of the lower house was reserved for the communists and minor parties allied with the regime.With Soviet troops still stationed in their country, Poles delivered a sweeping victory to Solidarity and a crippling blow to Poland's communist regime. Solidarity won 99 of the 100 Senate seats and all the 161 seats that were contested in parliament's more important lower house.Havel, who led the dissident movement in what was then Czechoslovakia, said Solidarity and the June ballot spurred change in his homeland and helped tear down the Iron Curtain dividing Europe.This was a very strong impetus, a very strong link in the chain of events which were conducive later on to our liberation and to the end of the bipolar division of the world, said Havel, who is greatly respected in Poland for his commitment to democracy and his literary achievements.German Chancellor Angela Merkel, who grew up in communist East Germany, said the June 4 elections marked the decisive victory of democracy in Poland and finally in the whole of Eastern Europe.We Germans are deeply grateful for your courageous stands, especially the Germans from within the German Democratic Republic, she said.In the months to follow the ballot in Poland, Soviet-backed communist regimes would lose their grip on power in Hungary, Czechoslovakia, East Germany and Romania. Across Poland on Thursday, people marked the vote's anniversary and the momentous changes it unleashed with academic conferences, debates, rock concerts and art exhibitions.But for all the gains of the past two decades, some Poles also complain that much that was good, such as job security, free time and more equal pay, has been lost with the arrival of a Western-style consumer society. That frustration was visible in Gdansk, where one union leader, Janusz Sniadek complained about the pro-market policies of Poland today, saying the changes have not always helped the workers who fought for the changes.Sniadek also said that the bloodless transition to democracy left too many communist-era crimes unpunished.The shipyard's gate was adorned with the nation's red and white flag, flowers and a framed photograph of Pope John Paul II, the late Polish pontiff whose rise to the papacy inspired Poles to resist the regime.Scislowska reported from Gdansk, Lucas from Krakow.

Storm kills 22 people in central China JUNE 4,09

BEIJING – A storm with gale-force winds killed 22 people and seriously injured 117 in central China, state media said Friday.Heavy rain and winds of up to 67 miles (108 kilometers) per hour swept through Shangqiu and Kaifeng in Henan province Wednesday night, ripping up trees and sending them crashing into homes, the official Xinhua News Agency said.Several cities in neighboring Anhui were also affected but no deaths were reported there, it said.Most of the victims were hit by falling houses or trees, and two were hit by lightning, Xinhua said.The storm destroyed about 9,800 homes and cut water and electricity to more than 3 million people, it said.

Senator threatens filibuster of Pedophile Protection Act.DeMint signs on to fight against privileged status for homosexuals June 04, 2009 10:40 pm Eastern
By Bob Unruh 2009 WorldNetDaily

Sen. Jim DeMint

Sen. Jim DeMint, R-S.C., today confirmed that he will fight the hate crimes legislation now pending in the U.S. Senate and, if necessary, will launch a filibuster against the plan that critics have dubbed the Pedophile Protection Act.His Washington office confirmed to WND that position today, shortly after several Christian activists who have been rallying opposition to the proposal said they'd gotten word he would help. The proposal, called the Local Law Enforcement Hate Crimes Prevention Act of 2009, already has passed the House 249-175. But analysts have reported it would designate homosexuals and others with an alternative sexual lifestyle choice for special protections under federal law. At the same time, it would leave Christian ministers open to prosecution should their statements, especially Biblical condemnations of homosexuality, be linked to any subsequent offense, by anyone, against a homosexual person. The hate crimes plan in the Senate is the target of an organized letter-writing campaign that has already generated more than 560,000 individual letters sent by Fed Ex to all 100 U.S. senators. The effort, organized by WND columnist Janet Porter, who also heads the Faith2Action Christian ministry, permits activists to send individually addressed letters to all 100 senators over their own signature for only $10.95. It was designated the Pedophile Protection Act after Rep. Steve King, R-Iowa, proposed an amendment during the proposal's trek through the U.S. House. He suggested,The term sexual orientation as used in this act or any amendments to this act does not include pedophilia.

But majority Democrats to a vote refused to go along.

Rep. Louis Gohmert, R-Texas, a former judge, said that statement of intent would go a long way towards providing pedophiles with the protection they would want from the law for their sexual proclivity. Having reviewed cases as an appellate judge, I know that when the legislature has the chance to include a definition and refuses, then what we look at is the plain meaning of those words,explained Gohmert.The plain meaning of sexual orientation is anything to which someone is orientated. That could include exhibitionism, it could include necrophilia (sexual arousal/activity with a corpse) ... it could include urophilia (sexual arousal associated with urine), voyeurism. You see someone spying on you changing clothes and you hit them, they've committed a misdemeanor, you've committed a federal felony under this bill. It is so wrong.In fact, one supporter of the hate crimes,Rep. Alcee Hastings, D-Fla., confirmed that very worry, saying: This bill addresses our resolve to end violence based on prejudice and to guarantee that all Americans regardless of race, color, religion, national origin, gender, sexual orientation, gender identity, or disability or all of these philias and fetishes and ism's that were put forward need not live in fear because of who they are.Rick Scarborough of Vision America told WND that DeMint had assured him DeMint understood the issue and would use every delay tactic available to him as a senator. And if it gets to the floor, Scarborough said, If it's necessary, he would filibuster. He said he would do that as a last resort. He told me,Rick, I'm used to being beaten up by the Left, Scarborough said.

Scarborough also said James Dobson, founder of Focus on the Family, also has agreed to work against the hate crimes plan, with possibly a radio program on it soon. Scarborough said the campaign is going to be contacting pastors in coming days, asking them to preach about the possible loss of their right to preach on Biblical truths, and what that would mean. The endorsement by DeMint is a huge turnaround for the campaign against hate crimes,which before today had not seen a single senator stand up and announce a formal opposition to the plan. Everyone else that we talked to either said or implied that it is a lost cause,Scarborough said. But he noted the Old Testament story of King David, while still a youth, taking on the Philistines' champion Goliath. For every other warrior, the battle against the Philistines was unwinnable,he said.David dropped what he was doing and when he did the whole nation got its courage.Jim DeMint is going to give a lot of courage to other senators out there,Scarborough said. Just today, a court opinion from the 9th U.S. Circuit Court of Appeals said that it is all right for a government unit, like the city of San Francisco, to describe Christian beliefs as hate.In that case, authorities in San Francisco who called the beliefs of the Catholic Church hateful,callous, and an insult – and urged members to disobey them – were told by a panel of judges it's all right to express such hate because it serves a secular purpose. Barack Obama recently promised homosexual murder victim Matthew Shepard's mother fast action in the U.S. Senate to approve the bill. Judy Shepard visited the White House to lobby for Senate approval after it cleared the House with opposition from many Republicans.

The White House issued an official comment on the meeting:The President thanked Ms. Shepard for her work on the hate crimes bill and reiterated his commitment to ensuring that the Senate finalize the bill and act swiftly. It's not too late to take advantage of the opportunity to overnight letters of opposition to the hate crimes bill to all 100 U.S. senators for only $10.95. Sources working with senators opposing the legislation say the campaign has shaken up the dynamics of the debate. This bill was supposed to sail through the Senate, but it suddenly has become much more controversial as a result of all these letters,one source said. Gohmert and King said the only chance to defeat the legislation was for a massive outpouring of opposition from the American people. If you guys don't raise enough stink there's no chance of stopping it,Gohmert said on a radio program with Porter. It's entirely in the hands of your listeners and people across the country. If you guys put up a strong enough fight, that will give backbone enough to the 41 or 42 in the Senate to say we don't want to have our names on that.An analysis by Shawn D. Akers, policy analyst with Liberty Counsel said the proposal, formally known as H.R. 1913, the Local Law Enforcement Hate Crimes Prevention Act bill in the House and S. 909 in the Senate, would create new federal penalties against those whose victims were chosen based on an actual or perceived ... sexual orientation, gender identity.Gohmert warned Porter during the interview that even her introduction of him, and references to the different sexual orientations, could be restricted if the plan becomes law.

You can't talk like that once this becomes law,he said.

He said the foundational problem with the bill is that it is based on lies: It assumes there's an epidemic of crimes in the United States – especially actions that cross state lines – that is targeting those alternative sexual lifestyles. When you base a law on lies, you're going to have a bad law, he said.This Pedophilia Protection Act, a hate crimes bill, is based on the representation that there's a epidemic of crimes based on bias and prejudice. It turns out there are fewer crimes now than there were 10 years ago.He said he fought in committee and in the House to correct some of the failings, including his repeated requests for definitions in the bill for terms such as sexual orientation.Obama, supported strongly during his campaign by homosexual advocates, appears ready to respond to their desires. I urge members on both sides of the aisle to act on this important civil rights issue by passing this legislation to protect all of our citizens from violent acts of intolerance,he said.But Gohmert pointed out that if an exhibitionist flashes a woman, and she responds by slapping him with her purse, he has probably committed a misdemeanor while she has committed a federal felony hate crime. That's how ludicrous this situation is, Gohmert said.

DOCTOR DOCTORIAN FROM ANGEL OF GOD
then the angel said, Financial crisis will come to Asia. I will shake the world.

JAMES 5:1-3
1 Go to now, ye rich men, weep and howl for your miseries that shall come upon you.
2 Your riches are corrupted, and your garments are motheaten.
3 Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days.

REVELATION 18:10,17,19
10 Standing afar off for the fear of her torment, saying, Alas, alas that great city Babylon, that mighty city! for in one hour is thy judgment come.
17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,
19 And they cast dust on their heads, and cried, weeping and wailing, saying, Alas, alas that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.

EZEKIEL 7:19
19 They shall cast their silver in the streets, and their gold shall be removed: their silver and their gold shall not be able to deliver them in the day of the wrath of the LORD: they shall not satisfy their souls, neither fill their bowels: because it is the stumblingblock of their iniquity.

REVELATION 13:16-18
16 And he(FALSE POPE) causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:(CHIP IMPLANT)
17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
18 Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.(6-6-6) A NUMBER SYSTEM

WORLD MARKET RESULTS
http://money.cnn.com/data/world_markets/

HALF HOUR DOW RESULTS FRI JUNE 05,2009

09:30 AM +2.15
10:00 AM +13.81
10:30 AM +4.07
11:00 AM +39.77
11:30 AM +56.34
12:00 PM +43.88
12:30 PM +59.92
01:00 PM +64.15
01:30 PM +42.80
02:00 PM +35.95
02:30 PM +3.69
03:00 PM +22.25
03:30 PM +11.98
04:00 PM +12.89 8763.13

S&P 500 940.09 -2.37

NASDAQ 1849.42 -0.60

GOLD 955.00 -27.30

OIL 68.55 -0.26

TSE 300 10,569.29 +92.05

CDNX 1137.99 +4.83

S&P/TSX/60 644.76 +5.46

MORNING,NEWS,STATS

YEAR TO DATE PERFORMANCE
Dow -0.30%
S&P +4.34%
Nasdaq +17.31%
TSX Advances 1,050,declines 491,unchanged 249,Volume 2,121,436,549.
TSX Venture Exchange Advances 497,Declines 358,Unchanged 344,Volume 331,200,871.

Dow +81 points at 4 minutes of trading today.
Dow -51 points at low today.
Dow +88 points at high today so far.
GOLD opens at $960.20.OIL opens at $68.69 today.

AFTERNOON,NEWS,STATS
Dow -51 points at low today so far.
Dow +88 points at high today so far.

DAY TODAY PERFORMANCE - 12:30PM STATS
NYSE Advances 2,035,declines 1,507,unchanged 109,New Highs 35,New Lows 66.
Volume 3,391,032,955.
NASDAQ Advances 1,264,declines 1,336,unchanged 141,New highs 46,New Lows 9.
Volume 1,209,485,520.
TSX Advances 775,declines 551,unchanged 291,Volume 1,372,758,837.
TSX Venture Exchange Advances 317,Declines 313,Unchanged 266,Volume 152,810,811.

WRAPUP,NEWS,STATS
Dow -51 points at low today.
Dow +88 points at high today.
Dow +0.15% today Volume 254,968,265.
Nasdaq -0.03% today Volume 2,147,483,600.
S&P 500 -0.25% today Volume N/A

Consumer Credit -15.7 BILLION in APRIL,2ND largest drop ever.
Oil briefly tops $70 before closing down $0.37 to $68.44/Barrel.
Stocks gain for 3RD straight week.

THIS WEEK RESULTS
Dow +3.2%
Dow Transports +4.6%
S&P +2.3%
Nasdaq +4.2%
Russell 2000 +5.7%

3 WEEK RESULTS
Dow +6%
S&P +6%
Nasdaq +10%

RECORD LOWS DOW
-Sept 30,1996 5,882.17
-Oct 30,1996 5,993.23
-Nov 6,1996 6,177.71
-Dec 16,1996 6,268.35
-Apr 15,1997 6,587.16
-Apr 21,1997 6,660.21
-Apr 28,1997 6,783.02
-May 1,1997 6,976.48
-May 7,1997 7,085.65

RECORD LOWS S&P 500
-Sept 5,1996 649.44
-Sept 6,1996 655.68
-Sept 11,1996 667.28
-Sept 12,1996 671.13
-Oct 1,1996 689.08
-Oct 28,1996 697.26
-Nov 4,1996 706.73
-Nov 5,1996 714.14
-Dec 17,1996 726.04

YEAR TO DATE PERFORMANCE,WEEKENDER
Dow -0.15%
S&P +4.08%
Nasdaq +17.27%
CANADAS WEEK ENDING STATS
TSX Advances 921,Declines 618,Unchanged 255 Volume 2,283,104,300.
TSX Venture Advances 451,Declines 390,Unchanged 318 Volume 286,712,786.

HOW CARBON TAX WORKS
http://science.howstuffworks.com/carbon-tax.htm
http://www.answers.com/topic/carbon-tax

THIS CARBON TAX SCAM HAS BEEN GOING ON FOR YEARS THIS WAS 1998 THIS STORY.I'M PUTTING THIS ON MY SITE EARLY BECAUSE THEY WERE TRYING TO STOP ME FROM PUBLISHING IT.THERES SOMETHING IN THIS CARBON STORY THEY DON'T WANT PEOPLE TO KNOW ABOUT.

Carbon Taxes

One of the most talked about areas for potential environmental taxation is the so-called carbon tax. Advocates of a carbon tax argue that it would -- by raising the price of burning fossil fuels -- provide an incentive for producers or service providers who burn carbon fuel, to seek ways to become more fuel efficient, thereby emitting fewer pollutants. In addition, under normal conditions of supply and demand, it is argued that the tax would be passed on by the producer or service provider through the price system, making the product or service more expensive (to reflect its environmental cost), encouraging people to switch to products or services that are less harmful to the environment. However, there are a host of issues which first need to be understood.

A Global Problem
Because global warming is international in scope, it requires an international response. The effectiveness of a carbon tax introduced only in Canada would depend on actions taken in other countries. A recent study of foreign approaches to mitigating environmental impacts, conducted for Transport Canada, concludes that regardless of progress in curbing emissions in the OECD countries, global emissions of both traditional pollutants and greenhouse gases are expected to increase, primarily as a result of the industrialization and motorization of the Third World.

Competitiveness
Imposition of a carbon tax implies significant adjustment problems for a number of key Canadian manufacturing and other industries (such as trucking) which are tightly integrated into the mid-continent manufacturing sector. In markets where Canadian employers must compete with foreign suppliers, the imposition of carbon taxes here, but not in other industries (or at least trading regions), would place domestic companies at a significant competitive disadvantage. This means that domestic jobs would be lost.In order to ensure that Canadian competitive position was not impaired, and to ensure that a carbon tax was having its intended environmental effect, it would be essential that such a tax was revenue neutral (other taxes on an industry would need to be reduced, so that total tax bill would remain constant or be reduced). And, all funds collected would not go into general revenue, but would accrue back to the industry that paid them, to invest in research and technology aimed at improving that industry's environmental performance. Industry and consumers would not tolerate the further introduction of taxes that are perceived as a further tax grab. Of course, these features of the tax would likely increase the costs of compliance and administration for government.

Further Work Needed
Many of the above issues appear to have been recognize by some groups looking at the issue of carbon taxes. For example, even the Ontario Fair Tax Commission's Working Group on Environment and Taxation, in their December 1992 final report urged that further research needs to be done, focusing on macro-economic and distributional impacts. The group cautions against the introduction of such taxes to bolster general revenues, and identifies the problem of unilateral introduction by Ontario. The Working Group recommended that if, for whatever reason, Ontario acted unilaterally, carbon taxes should not be used as the sole mechanism for achievements in energy efficiency; reflect considerations for sectoral economic impacts through low tax rates, special provisions for the most energy/carbon intensive industries, and the use of revenues to offset other taxes; reflect considerations for the advancement of energy efficiency gains and reductions in emissions; reflect considerations for regional and income disparities. In its 1993 final report, the Ontario Fair Tax Commission reiterated many of these concerns and stated we are sensitive to the substantive competitiveness concerns raised by the introduction of carbon tax in Ontario. The Commission further suggested that a carbon tax be introduced at a moderate rate, coinciding with decreases in other business taxes. However, the Commission also stated that a moderate rate of tax, on its own, would not have much effect on emissions.

Shifting Freight
With respect to freight transportation services, when one talks about modifying behaviour, or purchasing decisions, through a carbon tax, often they are of the belief that introduction of such a tax will lead to a shift of traffic from one mode (trucks) to another mode which they may believe is more fuel efficient (rail). But, different measures provide different answers to the question of which mode is more environmentally friendly. And, what many people fail to understand is that, regardless of the measurements used, industry-wide comparisons on fuel efficiency between trucks and rail lack meaning because the service that each mode provides is vastly different. Trucks essentially serve the short distance, small shipment market, while the railways dominate the long distance, bulk commodity market.Trucks and rail really only compete on a very small percentage (less than 10 per cent) of total freight. For most shipments, rail is not an alternative, and price is only one factor. Where alternatives do not meet market needs, the environmental impact of a carbon tax is likely to be ineffective. A recent study (Nix 1992) finds that long distance trucking (defined as freight movements of more than 500 kilometres, which is generally where truck-rail competition begins) is a very minor contributor to the total production of emissions. So minor, in fact, that even if trucking were eliminated completely from this market, the impact on total emissions would be virtually unnoticeable. (The study estimates that long distance trucking accounts for .08% of emissions of CO, .12% of HC/VOC, 1.02% of N0x, .06% of PM and .24% of C02.) The taxpayer suggested that a carbon fuels tax may also not cause any shift from one mode to another. However, the negative impact on the provincial economy would be enormous.

A 1993 study of Intermodal Optimization of Intercity Transportation in the Quebec City-Windsor corridor for Transport Canada also found that diverting 20% of long distance truck traffic to rail would have a negligible impact on emissions of NOx and VOCs in Canada. In the end, all that would be accomplished would be an increase in the cost of transportation for Ontario shippers and manufacturers, which would impact again on their competitiveness.OTA does not support the imposition of a carbon tax by Ontario. The province's competitiveness would be impaired and little, if any, environmental enhancement would take place. Suggestions that a carbon tax be set at a moderate rate and be accompanied by reductions in other business taxes have merit, but are only a start. Such a tax would need to be revenue-neutral, with all funds accruing back to the industry that paid them -- in order to invest in research and environmental technology -- and not to general revenues. A tall order, likely rendering this type of tax administratively impractical.

1995 - 1998, Ontario Trucking Association 555 Dixon Road, Toronto, Ontario
M9W 1H8 Tel: (416) 249-7401 | Fax: (416) 245-6152 Email: info@ontruck.org

Juncker denies reports of leaving eurogroup presidency post
ELITSA VUCHEVA 04.06.2009 @ 11:59 CET

Speculation about whether the eurogroup will continue to be chaired by Luxembourg prime minister Jean-Claude Juncker has started up again following reports that he intends to step down as finance minister of the Grand Duchy, and therefore as head of the 16-nation group, after the general election on Sunday.Newspaper reports in Luxembourg suggested that if the governing CSV – Mr Juncker's centre-right party – wins the elections on Sunday and Mr Juncker secures another term as prime minister then he will recommend budget minister Luc Frieden to the finance minister post.

Confirming the information, CSV leader Paul Weimerskirch told Reuters news agency on Thursday (4 June): It's a surprise for us equally. We thought it was a rumour for a week, and he confirmed it last night.However, Mr Juncker himself later told the same news agency that the move would not necessarily imply that he leaves the presidency of the Eurogroup.It could be but it is not compulsory,he said.In April, German newspaper Handelsblatt newspaper, citing talk in Brussels diplomatic circles, reported for the first time that Mr Juncker may resign as a result of the series of run-ins he has had with EU heavy-weights France and Germany, most recently over tax havens.Luxembourg's 54-year-old prime minister has headed the eurogroup since 1 January 2005.

ECB defends independence after Merkel attack
ANDREW WILLIS 04.06.2009 @ 17:37 CET

EUOBSERVER / BRUSSELS – The European Central Bank defended its independence on Thursday (4 June) as doubts grow over how long current Eurogroup chairman Jean-Claude Juncker will remain in the post. Speaking after a two-day meeting of the ECB's governing board, the bank's president, Jean-Claude Trichet, revealed he had held a telephone conversation with German Chancellor Angela Merkel on Wednesday as a result of criticisms she made earlier in the week of current central bank policies. Mr Trichet said he defended the bank's fierce independence in the telephone call, saying current decisions were based on the extraordinary economic circumstances that have gripped the Eurozone since the start of the financial crisis. The ECB president reminded the German chancellor that decisions were made without bowing to pressure, but added that a clear exit strategy was also vitally important. What we do today should not hamper medium-term price stability which is in the interest of all our citizens,he said while refusing to be drawn on who had phoned whom. In a prepared speech on Tuesday, Ms Merkel lashed out at the US Federal Reserve and the Bank of England, saying she viewed their policies with great scepticism and that they would ultimately lead to more economic turmoil. The European Central Bank has also bowed somewhat to international pressure with the purchase of covered bonds,she added, highlighting her concerns that the extra liquidity will lead to future inflation. Mr Trichet confirmed on Thursday that the bank's purchases of covered bonds - the type of bonds used by banks in the funding of loans - of up to €60 billion will go ahead, starting in July of this year and likely to run until June of next year, with their distribution spread across the euro area. The aim of the purchases is to provide further capital to European banks in a bid to kick-start normal credit flows. The issuance of covered bonds enables financial institutions such as banks to finance the mortgages and public sector loans they give out. ECB board members decided to hold interest rates at their current historical low of one percent on Thursday, saying they were appropriate under the current circumstance but not necessarily at their lowest limit.Mr Trichet said he expects positive growth to return to the Eurozone mid 2010.

Juncker to end eurogroup chairmanship?

While the ECB was vigorously defending itself, fresh doubts emerged on Thursday over how long Eurogroup chief Jean-Claude Juncker – also the current prime minister and finance minister of Luxembourg - will remain in the post. Luxembourg holds parliamentary and European elections on Sunday, with Mr Juncker indicating he will stay on as prime minister but give up his position of finance minister if his CSV party wins another term. Precedent would suggest that Mr Juncker would then resign his Eurogroup chairmanship - the post is traditionally held by a finance minister – although he has been unclear on this subject.This does not necessarily imply that I will leave the presidency of the Eurogroup. It could be but it is not compulsory,he told Reuters on Thursday. As head of the Eurogroup since 2005, Mr Juncker has chaired monthly meetings of euro area finance ministers with some success, his term being extended last September until 2010.However, criticism this year from Germany and France over Luxembourg's banking secrecy rules has somewhat soured Mr Juncker's relationship with the two euro area heavyweights. Speculating on the Luxembourg premier's next move, Daniel Gros, director the Centre for European Policy Studies, a Brussels-based think-tank, told EUobserver he felt Mr Juncker would most likely hold the post for the remainder of this year. Maybe he will stay on for a little bit and then towards the end of the year when we have the Irish referendum cleared, a new commission and a permanent president for the European Council ... At that point it may be the time to look at his position,said Mr Gros.He added that under normal circumstances, the work of the Eurogroup did not require the seniority of a prime minister. Before falling out with Berlin and Paris, Mr Juncker had been mooted as a possible candidate to take up the new position of a permanent president of the European Council, a post that would be created if the Lisbon Treaty were to be ratified.

One-year-old lobby registry as useful as a phonebook without numbers
LEIGH PHILLIPS 04.06.2009 @ 17:40 CET

EUOBSERVER / BRUSSELS - A year after the birth of the European Commission's much-trumpeted register of Brussels lobbyists, a review of the process by transparency campaigner has found that less than a quarter of lobbyists in the EU capital have actually signed up.The commission launched the register last June. As of 25 May this year, 1488 organisations had signed up. The EU executive has repeatedly cheered the success of the registry, but a detailed analysis by the Alliance for Lobbying Transparency and Ethics Regulation (Alter-EU) reveals that just 593 actually had offices in the European capital.Of the 2,600 lobbying entities that operate in Brussels according to a 2003 European Parliament estimate, this equates to just 22.8 percent.The review used Brussels as a measure because any serious outfit determined to lobby on European legislation will have offices in the city. Additionally, some categories of lobbyists - notably law firms and think-tanks - are effectively boycotting the register entirely.This means that a large share of the Brussels lobbying is basically invisible, said Olivier Hoederman, of Alter-EU and Corporate Europe Observatory, an Amsterdam-based transparency NGO.Many of the major lobby firms, corporations and industry lobby groups are still missing from the register, Alter-EU says. Smaller outfits are signing up, but not the major-league players.The registry is a net that catches the little fish and lets the big fish go, Jorgo Riss of Alter-EU and Greenpeace, a key organisation within the coalition, told reporters in Brussels on Thursday (4 June).

Inflated sign-up figures

Compounding the situation, what data is provided in the registry is utterly unreliable, the group argues, without the names of any individual lobbyists, untrustworthy financial reporting, and register spam in which groups that have nothing to do with lobbying are erroneously registering and falsely inflating the sign-up figures.Without names, there is no way of identifying potential conflicts of interest when, in one example the report mentions, commission officials pass through the revolving door to lobbying jobs with companies with an interest in legislation or decisions with which they have just months before been involved. The identities of the clients of lobbying firms often remain a mystery, accuses the report, and the register gives no information on which issues are being lobbied on.It is as useful as a phonebook without any numbers,said Mr Riss.

The financial reporting requirements are particularly lax, according to the review.

In another example, the report notes that the US lobby registry, which is mandatory and has stricter reporting rules, reveals that British Petroleum spent $8 million on lobbying in Washington in 2008. Meanwhile, if the EU registry is to be believed, the same company spent only between €200,000 and €250,000 and yet BP maintains an office on the expensive Rond-Point Schuman - the roundabout at the foot of the headquarters of both the commission and the Council of Ministers.

Can this really be done for less than €250,000 a year? asks the report.

Using the data from the registry, the transparency groups compiled a ranking of the 100 biggest spenders. One would think that groups such as Business Europe [the trade association for some of Europe's biggest corporations] or Cefic [the European chemical industry association] would be up there in the top five or top ten at least,said Mr Hoedeman.In fact, Business Europe comes in at number 32 and Cefic makes lower than the 100th place,he added. Instead, representatives of small and medium-sized companies tend to top the ranking. Are small businesses really the biggest lobby spenders? the report demands.

Erotic German lobbying

The report highlighted the huge problem of lobby register spam or clutter of the document by outfits that engage in little or no lobbying at all. The document highlights as examples the German Erotic Trade Association, who apparently spent a grand total of ten euros on lobbying, and the European Surfrider Association, which spent €0 on lobbying.There are many tiny, local NGOs in the register, all with EU lobby budgets of zero or next to nothing,the report reads. These should be excluded from the registry, argues Alter-EU, since they artificially inflate the total number of lobby registrants.The group recommends that the registering be changed from a voluntary process to a mandatory one, similar to the lobby registry in the United States. While the commission does not have the power of legal sanction that the American Congress does, refusing to meet with lobbyists that have not registered would de facto deliver an identical obligation, Alter-EU recommends.

Fine-tuning

The commission is to undertake a review of the lobby registry after a year of operation. Administrative affairs spokeswoman, Valerie Rampi, said the commission would not comment on the Alter-EU report findings until this process is completed.

Sector stakeholders have until 15 June to submit comments on the registry to the commission, after which the EU executive will carry out a review of the registry. This is expected to be completed early to mid July.There will be no review before the review,she said.As to the size [of those registering], it depends what you consider to be large players. Of the 1500, I see quite a lot of big players.The commission has always said that it wishes to work on the basis of a voluntary approach, but if this proves to be unsatisfactory or insufficient, it would be quite prepared to bring in a compulsory system,she continued.No doubt after a year their will be a need for some fine-tuning.One commission official told EUobserver: I don't accept this Brussels-only categorisation - there are companies from outside Belgium engaged in EU lobbying,while conceding:although it is true that if you are a serious operator you'd have an office here.But the real question is: Are the big hitters on the registry, the Burson-Marstellers, the Hill and Knowltons? Yes they are,he said, referring to two lobbying firms.

German MEPs test legal limits in EU elections
EUOBSERVER STAFF 04.06.2009 @ 14:13 CET

EUOBSERVER / BRUSSELS – Two prominent German MEPs are testing the limits of free speech in their EU election campaign, while Polish politicians compete for attention on the 20th anniversary of the fall of Communism.Top German Liberal candidate, the attractive Silvana Koch-Mehrin, whose smiling face graces the party's numerous posters ahead of voting on 7 June, finds herself in Germany top newspapers over her attendance record in the European Parliament. In April, the Frankfurter Allgemeine Zeitung reported that her attendance in the EU assembly was just 38.9 percent. Ms Koch-Mehrin complained that her time off for maternity leave had not been factored in and had a temporary court injunction – since lifted - taken out against the paper preventing the unflattering attendance figure, taken from an unofficial website on MEPs' records, from being mentioned. Meanwhile, she testified that the real figure was 75 percent. Official European Parliament statistics in May cited 62 percent, however, prompting speculation about whether the MEP lied under oath as well as a wider debate on the pressure that politicians put on media if they do not like coverage.Website netzpolitik.org has had some fun with Ms Koch-Mehrin's slogan Für Deutschland in Europa saying it should be changed to Für Deutschland öfter mal nicht in Europa (meaning Not very often for Germany in Europe).Leading German Socialist MEP Martin Schulz has meanwhile laid into the leader of the far-right FPO party in Austria, Heinz-Christian Strahe, campaigning on an anti-immigrant and anti-Israel platform.Even if this risks getting me a lawsuit – to my mind, this man is a Nazi, Mr Schulz said, Financial Times Deutschland reports. Polls say the FPÖ will triple its share of the vote in Austria. The result, together with victories for the far-right BZÖ party and eurosceptic MEP Hans-Peter Martin, would mean that the majority of the Alpine republic's 17 MEPs would be anti-EU.The far-right is not proving too energised in France, however. Just 1,000 or so people turned up to a 3,000-man venue for a meeting with racist octogenerian Jean Marie Le Pen on Wednesday.In Poland, the nationalist Law and Justice party has laid aside scare stories about German World War II exiles coming to take Polish land, to focus on celebrating the 20th anniversary of the fall of Communism.

Law and Justice party leader Jaroslaw Kaczynski and his twin brother, Polish President Lech Kaczynski, have organised a rally in Gdansk, where they are expected to showcase the party's anti-Russian politics. The ruling Civic Platform party is set to steal the thunder at official celebrations in Krakow however, with anti-Communist heroes Lech Walesa and Vaclav Havel as well as German Chancellor Angela Merkel to appear side-by-side with the centre-right Polish faction.Surveys are showing that Civic Platform will send 26 MEPs to the EPP-ED group in the new EU parliament. Law and Justice is to double its number of EU deputies from seven to 15.With voters in the UK and Netherlands on Thursday (4 June) casting ballots on the first day of the EU elections, the British Conservative party is expected to storm to victory with 26 percent, while the ruling Labour party is to come in third place on 16 percent, behind the eurosceptic UKIP faction.The Dutch far-right Freedom Party is in second place in mainstream polls, but a shadow poll of high school students on Wednesday put the anti-immigrant and anti-Islamic faction back ahead of the ruling conservatives by a whisker.In France, the green Europe Ecologie party is set to come in third place on 13.5 percent, with the fourth-ranked centrist MoDem party complaining that polls are distorting the political scene.

Final outcome?

The final prediction of a poll-analysis project by UK and Irish academics Simon Hix and Michael Marsh says the EPP-ED will get 262 seats in the new parliament, the socialist PES will have 194, the Liberals will be on 85, a new EPP-ED splinter group will get 53, with around 50 far-right and eurosceptic MEPs also in the mix.Visitors to the project's predict09.eu webpage voted by 50 percent in favour of Danish socialist Poul Nyrup Rasmussen to be the next European Commission chief. Incumbent conservative Jose Manuel Barroso came in fourth place on 8 percent, after green and liberal names. Amid reports of Bulgarian police busting criminal vote-selling rackets in the towns of Lom and Montana on Wednesday, one British campaigner has launched a scheme to reward voters with online music. Tamil-origin musician M.I.A., best known for her work on hit film Slumdog Millionaire, has promised on her blog that she will give one free song to everybody who votes for Jan Jananayagam, an independent candidate campaigning for a tougher European stance against the Sri Lankan government.

Online apathy in Sweden

Not all internet campaigns have met with success in the elections.Nobody has watched the online video of Swedish centre right leader Maud Olofsson casting her vote, Swedish daily Dagens Nyheter writes. Just six people viewed Social Democrat Olle Ludvigsson's debate and 58 watched far-right politician Jan Bjorklund's town square rally. A video by the Pirate party showing its ballots being thrown away during early voting attracted 46,000 clicks, however.In Slovakia, ice hockey stars and an African-born pop singer are trying to drum up turnout to avoid the country again clocking in the lowest turnout in the EU-wide vote, after hitting a low of 17 percent in 2004.I don't think Slovak people are racist,the left-wing singer, Ibrahim Maiga, told the BBC. The biggest event in an otherwise humdrum campaign environment was related to Slovak tension over its Hungarian ethnic minority, however. A Hungarian politician, Robert Fico, attended a rally by the Slovak pro-Hungarian minority SMK party on Wednesday, sparking accusations of SMK irredentism by Bratislava's left-wing government.

IMF FINANCES,CURRENCIES
http://www.bcra.gov.ar/pdfs/contad/itemp1208.pdf

Managing risk: The role of the central bank in a financial crisis
Speech by José Manuel González-Páramo, Member of the Executive Board of the ECB
at Risk Europe 2009 Frankfurt am Main, 4 June 2009 1. Introduction
http://www.ecb.int/press/key/date/2009/html/sp090604.en.html

Ladies and gentlemen,

It is a great pleasure for me to be speaking here at Risk Europe 2009. Over the last few years this annual conference has succeeded in gathering together the brightest minds in both academia and financial practice in the area of risk management, offering interesting and topical discussions and providing valuable insights into future developments in this field. And I’m sure you will agree with me when I say that the challenges faced by risk managers in the financial world have rarely been more complex than they are at present. I would like to focus today on how a central bank can help the risk management community to address these challenges. I will also highlight the restrictions that I see in central banks’ operational leeway. However, I will not consider the macro-prudential role of a central bank, recognising that this is a topic large enough to merit a separate discussion. A few years ago, it would probably have been unusual for a central banker to be giving a speech at a conference on risk. Today, we know that central banking and risk management are very much interconnected. First, central banks have played a key role worldwide – through their operations in financial markets – in alleviating the implications of the dramatic intensification of banks’ liquidity risk since the summer of 2007. It is no exaggeration to say that central banks have become the best friends of banks’ liquidity risk managers. Second, central banks have learned that their own financial risk management is crucial if they are to deliver, in a prudent manner, the best possible liquidity support for strained markets and financial institutions. While central banks have certainly done a lot, there are no shortage of proposals for other things that central banks should do. Having the ability to create unlimited purchasing power at short notice without being constrained by internal liquidity considerations, central banks have often been regarded as having limitless power to resolve economic crises.

Such discussions concerning the limits on central banks’ ability to intervene – and the dangers if these limits are ignored – are not new. One of the most famous discussions on this topic is Milton Friedman’s presidential address to the American Economic Association in 1968, entitled The role of monetary policy [1]. The address consisted of three main sections: the first on What monetary policy cannot do; the second on What monetary policy can do; and finally a third on .How should monetary policy be conducted? While opinions on monetary policy have changed a lot since 1968, I would like to follow the structure of Friedman’s address – focusing, however, on central banks’ policies for the management of financial crises.

2: What central banks cannot do to help contain a financial crisis
Central banks have no comparative advantage in credit risk management. To cite just one example, a study published by the Bank for International Settlements in 2008 on the management of foreign exchange reserves [2] remarks that central banks have traditionally had a low level of tolerance as regards credit risk, and therefore have limited expertise in credit risk management. While this is partly explained by the need to hold highly liquid foreign exchange reserves for intervention purposes, it is also due to the reputational costs perceived as being associated with a credit event. Even when assessing the credit risk of financial institutions in their own jurisdiction, for instance their regular counterparties in open market operations, central banks do not have access to any privileged information available to banking supervisory authorities – or if they do, they are prevented from using it through the establishment of Chinese walls. Consequently, central banks should not take on credit risk unless there are good reasons for doing so in terms of providing necessary liquidity services or it is required in order to re-establish an effective transmission mechanism for monetary policy.Central banks have been made independent in order to fulfil a well-defined mandate. Hence, they must not take inappropriate decisions which could have a direct and significant impact on the allocation of public money – for instance taking excessive amounts of credit risk onto their own balance sheets. Market risks should also be contained, and this can be achieved through sound risk management. Very substantial risk taking, subsidies and recapitalisation must be reserved for elected governments. In theory, one could assess central banks’ ability to take financial risk onto their balance sheets by considering the adequacy of their capital and other financial buffers. However, in practice, one should also take into account the idiosyncratic features of central banks when compared with private financial institutions, such as the fact that their ability to issue legal tender also contributes to their resilience by guaranteeing a future stream of income. Furthermore, however a central bank’s risk budget is set, in specific institutional set-ups the range of measures adopted by a central bank in a financial crisis could – provided that the independence of the central bank is preserved – be further extended if a government guaranteed those operations that led to risks exceeding that budget. These two points mean that a line must be drawn in terms of the financial risk taken by a central bank. This line is not merely quantitative in nature. It is also determined by the goals to be achieved by the specific measures adopted by a central bank. While it could be argued that the government could take the necessary risks associated with the provision of support in terms of financial stability, the central bank remains responsible for the risks incurred by measures associated with monetary policy geared towards ensuring price stability. These two goals may sometimes converge – for example when the impairment of the transmission mechanism for monetary policy needs to be addressed using measures which will, at the same time, improve the resilience of the financial system.

When intervening to provide liquidity, a central bank must avoid favouring certain sectors over others in terms of liquidity support. It must avoid distorting competition or otherwise hindering the efficient allocation of resources. While the central bank should therefore be very careful in its market interventions, this is not an argument in favour of inactivity. On the contrary, when asymmetric information – owing, for example, to a lack of market transparency or the opacity of certain financial instruments – threatens the functioning of a particular market segment, there may be grounds for the central bank to intervene. In such cases, intervention may be what is needed to restore market efficiency.

Section 3: What central banks can do to help contain a financial crisis
It follows logically from the points I have just made that the central bank, as the only player that has no liquidity constraints, can and should help to overcome a liquidity crisis by injecting additional cash into the system. In doing so, it should use all available instruments, but should not take on excessive credit risk. Its objective of providing the financial system with adequate amounts of liquidity needs to be carefully weighed against the need to avoid central bank losses or the moral hazard of encouraging excessive risk taking by financial institutions.Lending against adequate collateral is one of the main ways in which major central banks can provide liquidity. If such lending is conducted on the basis of a carefully designed collateral management framework (with eligibility criteria and risk control measures being of particular importance), central banks can continue to inject considerable amounts of liquidity into the system without necessarily exposing themselves to additional risk. This is because, in entering into a repurchase agreement with a counterparty, the central bank is exposed to counterparty risk, but does not itself take on default risk. It can therefore unilaterally select the collateral it accepts, imposing haircuts on that collateral which its counterparties are expected to accept. Haircuts safeguard the value of the collateral pledged to the central bank by protecting against liquidation risk and market risk, as well as mark-to-market losses owing to an increase in the credit risk implied by the collateral. In addition to haircuts, the central bank’s capabilities in terms of valuation and credit assessment are of crucial importance in an environment in which, owing to the market not functioning properly, central banks act as a backstop for financial activities. In normal times, market participants establish standards for credit quality and prices to which both buyers and sellers have an incentive to adhere. In instances when markets break down and investors disappear, central banks should, to the extent possible, consider stepping in to temporarily replace the industry as a market-maker of last resort. While the central bank could always compensate for poor valuation and credit assessment capabilities by means of draconian risk control measures (e.g. by imposing very large haircuts), this would result in the poor performance of its policy function of helping to overcome the liquidity crisis.

The central bank’s flexibility in terms of its collateral management framework should be used wisely. In the presence of a liquidity crisis or a credit crunch, financial institutions find it difficult to fund their assets. Credit lines are reduced or eliminated as other participants, faced with uncertainty, refuse to take on counterparty risk. Indeed, central banks are the only market participants that can afford to be counter-cyclical in their behaviour. They continue to lend as before, being aware that both counterparty and collateral risks have increased. This inertia in central banks’ behaviour in the money market was described in W. Bagehot’s Lombard Street, in which he advised the central bank to continue lending on what in ordinary times is reckoned a good security [3]. In fact, the ECB has gone beyond inertia in the current crisis in order to mitigate the systemic liquidity risk faced by the financial system in the wake of Lehman Brothers’ failure. It has increased its lending, with financing now offered at extended maturities of up to one year [4], and has even temporarily expanded the list of collateral accepted in its credit operations [5].As I have said, in a crisis central banks face a trade-off that may prevent them from engaging in bolder measures, notably as regards the need to contain moral hazard. A constant concern for central bankers is the issue of how to prevent public resources being directed to institutions that have engaged in inappropriate risk taking. Were that to happen, not only would it appear that those institutions were being rewarded for their poor risk management performance, but other financial institutions would, indirectly, be encouraged to behave in a similar way in the future. This can be avoided if the central bank pays due attention to its own risk management practices, making sure that risk taking on its own balance sheet remains limited and is always well controlled. This approach allows an abstract idea (i.e. the need to prevent moral hazard) to be translated into a concrete policy constraint (i.e. the control of risk taking associated with liquidity-enhancing measures). In conclusion, central banks should aim to provide liquidity in whatever ways they can, without taking on excessive financial risk. The better the central bank’s risk management, the better the liquidity services the central bank can provide for a given risk budget; or, the other way round, the less risk it will have to take on for a given set of liquidity services.

Section 4: How central banks can help to overcome the financial crisis
On the basis of the previous considerations, a number of concrete measures can be regarded as natural responsibilities of central banks in general, and the ECB in particular.The primary objective of the ECB and the Eurosystem is the maintenance of price stability. Interest rate policies should remain geared towards that primary objective, with a clear distinction being made between the monetary policy stance and the management of the banking system’s need for liquidity.A central bank can provide liquidity to the banking system as a whole through its regular open market operations. These can be extended in terms of the maturity of the lending operations and relaxed in terms of their tender procedures, depending on the nature, depth and expected duration of a liquidity crisis. Furthermore, financial institutions have access to standing lending facilities, which are normally provided to banks at a penalty rate. Collateral policies should at the very least obey the principle of central bank inertia in a crisis – i.e. they should not be tightened. They can even be loosened, provided that an appropriate risk management framework guards against both financial risk for the central bank and moral hazard. Again, the precise measures implemented by a central bank will depend on the nature, depth and expected duration of a liquidity crisis.Extraordinary liquidity measures can be complemented by non‑standard monetary policy measures, such as the outright purchase of securities. One example of such a measure is the covered bond portfolio programme announced today. Such purchases have a longer-lasting impact on the balance sheet of the central bank, making it all the more important that a carefully designed risk control framework be put in place.Furthermore, the central bank can provide emergency liquidity assistance to individual banks in so far as these are illiquid but not insolvent. This must be done in close cooperation with supervisory authorities, in order to ensure that informed decisions are made and public resources are used wisely. Admittedly, the chain reactions that can be triggered by liquidity problems mean that it is sometimes difficult to determine whether a financial institution that requires liquidity assistance remains inherently solvent.On specific occasions some central banks have also played an important role as a catalyst for private rescue measures (as was the case, for example, in the role played by the Federal Reserve System in the bailing out of Long-Term Capital Management in 1998).

Section 5: Central banks’ impact on the functioning of the markets
Furthermore, central banks should make an active contribution to improved market transparency, first and foremost by supporting market initiatives in this regard and thereby helping to support the identification and analysis of systemic risks. For instance, securitisation could be made more transparent, leading to the availability of better, more accurate information on the value of underlying assets – particularly loans. Improving the infrastructure used by issuers and investors to exchange information on complex financial products would increase transparency and foster market innovation, while reducing systemic risk.Without such initiatives, important market segments could fail to recover from the severe decline in activity caused by the current crisis. Such markets are important in allowing financial institutions to secure asset‑based funding, expand lending and better distribute risk. They contribute to the efficiency of the economic system, and so a failure to revive them would entail considerable social costs.

Section 6: Conclusions
Let me conclude as I started – i.e. by following Milton Friedman in determining what a central bank both can and cannot do in a financial crisis. Central banks’ ability to contribute to the stability of the financial system is based on their unique capacity to create liquidity without constraints. Consequently, a central bank can make a substantial contribution to the resolution of a liquidity crisis through the provision of adequate amounts of liquidity.But there are also things that a central bank cannot and should not contribute to. Besides the general need for such measures to be fully compatible with monetary policy, a central bank’s ability and willingness to take on financial risk is the deciding factor when it comes to drawing a red line between what the central bank can and cannot do. This line is drawn both in terms of the goals that specific measures are designed to achieve (which should be compatible with the mandate of the central bank) and in terms of the level of risk taken (which should be compatible with the ability of the central bank to absorb risk without jeopardising its financial independence). The idiosyncrasies of certain institutional set-ups have allowed some central banks to consider extending their remit backed by the issuance of government guarantees. The need to preserve the independence of the central bank and a clear division of labour are the overarching considerations in this respect. In any case, the quality of the central bank’s financial risk management is crucial to the services it can deliver without crossing this red line.

Finally, a central bank can act as a catalyst in fostering market developments that improve transparency, improve risk management standards and encourage the revival of dysfunctional markets.With these remarks on the role of central banks in a financial crisis, I wanted to explain how I perceive the role of our institutions: their responsibilities, but also their limitations. Just as importantly, I wanted to emphasise the importance of risk management considerations – in line with the theme of this conference – in determining central bank policies in the area of crisis management. We can add this to the long list of reasons why advances in the field of risk management, pursued in conferences such as this, will be essential in preventing and – should it prove necessary – managing financial crises in the future. Thank you very much for your attention.

[1] Friedman, M. (1968),The role of monetary policy: Presidential address to the American Economic Association, American Economic Review 58(1), pp. 1-17.
[2] FX reserve management: trends and challenges, BIS Papers, No 40, May 2008.
[3] Bagehot, W. (1872),Lombard Street: A description of the money market.
[4] ECB press release of 7 May 2009 entitled Longer-term refinancing operations.
[5] ECB press release of 15 October 2008 entitled Measures to further expand the collateral framework and enhance the provision of liquidity.

Friedman, M. (1968),The role of monetary policy: Presidential address to the American Economic Association, American Economic Review 58(1), pp. 1-17.FX reserve management: trends and challenges, BIS Papers, No 40, May 2008.Bagehot, W. (1872), Lombard Street: A description of the money market.ECB press release of 7 May 2009 entitled Longer-term refinancing operations.ECB press release of 15 October 2008 entitled Measures to further expand the collateral framework and enhance the provision of liquidity.European Central Bank.

Directorate Communications Internet: http://www.ecb.europa.eu
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Speeches & Interviews By date 2009.

http://www.ecb.int/press/key/date/2009/html/sp090529.en.html
The financial crisis and the role of central banks: The experience of the ECB
Keynote address by Jean-Claude Trichet, President of the ECB at the international symposium marking the 50th anniversary of Bank Al-Maghrib.Marrakech, 29 May 2009

Dear Governor Jouahri,Dear Governors,Ladies and gentlemen,

It is an honour and a great pleasure for me to be a speaker at this celebration marking the 50th anniversary of the Bank Al-Maghrib. I would like to congratulate Governor Jouahri on this occasion, and wish him and the staff of the central bank all the best for the future.The Eurosystem has a well-established framework for dialogue with the Bank Al-Maghrib, the Euro-Mediterranean Seminar. This forum regularly brings together the governors of Eurosystem central banks with those of the Barcelona Process: Union for the Mediterranean. The Euro-Mediterranean Seminar has, since its first meeting in 2004 in Naples, strengthened our dialogue by addressing various topics relevant to central banks around the Mediterranean. The Bank Al-Maghrib and Governor Jouahri have contributed to this fruitful exchange of views and will no doubt do so at the next meeting in March 2010 in Cyprus. In addition, the Bank Al-Maghrib has close bilateral relations with some of the central banks in the Eurosystem and in particular with the Banque de France on various aspects of technical assistance. We are living in a very challenging time. Morocco, like all countries worldwide, has been hit by the global crisis. The business cycles of Morocco and the EU are largely synchronised and the existence of various economic transmission channels such as trade, tourism, and remittances, explain why both the European and Moroccan economies are going through a challenging period in the present global context.My speech today will focus on the global financial crisis and its roots, on the ECB’s response to the crisis and on the role of emerging market economies in the world economy.

The global financial crisis and its roots
Let me start by briefly highlighting the origins and evolution of the current crisis. Imagine a neutral observer who looked at the financial sector about a decade ago and then didn’t look at it again until the eve of the current financial crisis. He would have found a completely different financial industry, one which over the past decade has undergone a dramatic shift of focus. He would have discovered a financial system that had moved away from its traditional role of supporting trade and real investment. He would have found a financial system in which speculation and financial gambling had run rife. He would have encountered a system transformed – a system no longer managing genuine economic risks but one actually creating and assuming financial risks – risks resulting from arbitrage and intentional exposure to asset price changes.That same observer would have realised that financial liberalisation and innovation had made our economies more productive. The securitisation of assets, for example, had great potential to diversify economic risks and to manage them efficiently. But it also meant that financial institutions were able to sell loans or take them off the balance sheet, which weakened lenders’ incentives to conduct prudent screening and constant monitoring of credit risk. So underwriting standards and lending oversight declined, and contributed to the excessive credit growth in the second half of the 1990s. In sum, the observer would have concluded that the factors that fuelled the credit and asset price boom of the past decade also created the conditions for a bust.In mid-2007 we started to see the backlash. The start of the financial turmoil was sudden but not unexpected. The financial system as it worked over the past decade – with its flawed incentives and its overly complex products and with global imbalances as its macroeconomic backdrop – was no longer sustainable. The asset cycle turned, the weaknesses were exposed and investors suddenly lost confidence. After years of exceptional risk appetite and high profits, the pendulum swung in the opposite direction, as markets became extremely sensitive to financial risk.

In September last year, the crisis escalated sharply. In particular, a major financial player collapsed, which was directly involved in about 30 large payment and settlement systems worldwide and had a balance sheet of USD 600 billion. Its failure turned a large-scale crisis of confidence into a global financial panic. Financial intermediaries restored liquidity buffers, tried to economise on capital and to scale down their balance sheets. They sold assets and tightened lending conditions. Banks and other financial institutions drastically reduced their exposure to the risks that they had imprudently accumulated during the phase of financial euphoria. Financial intermediation and loans to companies were curtailed in the wake of a forceful process of deleveraging.This was the point when important spillovers of the financial crisis set in. We saw the almost immediate spillover from the financial sector to the real economy. The credit squeeze and loss of confidence started to take a toll on the real economy, and a negative feedback loop developed between the financial sector and the real economy, and has since become a major feature of economic and financial developments. Almost simultaneously, the crisis that originated in the advanced economies spilled over to the emerging market economies. Since the fourth quarter of 2008, virtually all economies – both those of the industrialised countries and the emerging markets – have faced synchronised business cycles. Since half a year, we are facing a highly synchronised global economic downturn.

The ECB’s response to the financial crisis
Turning to the ECB’s response to the crisis, let me first insist that none of my remarks should be interpreted in terms of the future course of monetary policy. I stick rigorously to what I have said during my last press conference. We are indeed in the one-week purdah period before the next meeting of the Governing Council. Since the start of the financial turmoil, central banks around the globe face unprecedented challenges. We at the ECB and other central banks have reacted swiftly, flexibly and decisively. The ECB took the lead with some exceptional decisions as early as 9 August 2007. We have, since then, modified our operational framework and used an exceptional set of non-standard policy tools. These tools, combined with the bold action taken by euro area governments over recent months, have played an essential role in preventing a collapse of the financial system and in bolstering confidence.I would like to emphasise that despite this upheaval and our exceptional measures, our objective remains unchanged: to preserve price stability over the medium term, and that’s what guides our policy. In so doing, we support the conditions for financial and economic stability. The crisis has not changed this objective.

Interest rates
As regards interest rates, the ECB’s Governing Council has reacted promptly and decisively to the intensification and broadening of the global financial turbulence. We have lowered our key interest rate by 325 basis points since October 2008. This is the largest cut ever decided over such a short period in Europe. These moves were fully in line with our strategy. The upside risks to price stability have indeed receded considerably over that period due to the sharp fall in oil and other commodity prices, and the abrupt slowdown in economic activity. As price stability is the needle in our compass, we took account of the easing of inflationary pressures and lowered interest rates.In this context, I would like to underline that since the introduction of the euro in 1999, the ECB’s quantitative definition of price stability – an inflation rate of below, but close to, 2% in the euro area, over the medium term – has proved to be an invaluable asset. It has guarded against undesirably high inflation and against deflation. Long-term inflation expectations in the euro area, whether based on surveys or extracted from financial indicators, have been and continue to be firmly anchored at levels consistent with our definition of price stability. Inflation expectations have been exceptionally resistant to sudden upward short-term price changes, and we have ensured that is also the case with sharply falling inflation.

Non-standard measures
In addition to reducing interest rates, we have taken exceptional policy actions in response to the crisis – non-standard measures related to liquidity management. At the very start of the money market stress in August 2007, the ECB reacted within a few hours and temporarily provided additional liquidity to banks with immediate liquidity needs. We were in fact the first central bank to take non-standard measures.

When in mid-September 2008 the crisis intensified and interbank trading came to a virtual halt, the ECB engaged in a new mode of liquidity provision. We started to provide refinancing well above the levels that banks had absorbed to fulfil their reserve requirements in normal times. Our approach comprises three main building blocks.We significantly adapted our regular refinancing operations. We now follow a fixed rate full allotment tender procedure and have significantly expanded the maturity of our operations. Banks have been granted access to essentially unlimited liquidity at our policy interest rate at maturities of, initially, up to six months. This is an exceptional mode of operation. In normal times we auction a given amount of central bank credit and let competition between the bidders determine the interest rate. This unusual mode of operation implies that we currently act as a surrogate for the market in terms of both liquidity allocation and price-setting.Our second building block is the long list of assets that we take as collateral. This list was already very long before the crisis, but we have extended it even further and now accept an even wider range of securities as collateral. The first two building blocks offer unlimited refinancing against a very wide range of collateral. But they can only reach the financial system if they are coupled with the third building block, namely the very large number of counterparties that have always been able to take part in our refinancing operations. Even before the financial crisis, this number was higher than for the other major central banks. Following the changes to our operational framework in October last year, this number rose further.All these non-standard measures have now been supplemented by further exceptional steps that the ECB’s Governing Council decided to take at its last meeting on 7 May. We will conduct liquidity-providing longer-term refinancing operations with a maturity of 12 months. This will further lengthen the maturity at which we provide banks with liquidity at fixed rates and full allotment. This move is consistent with the operations we have undertaken since October 2008 and it recognises the central role played by the banking system in the euro area economy.

The European Investment Bank (EIB) will become an eligible counterparty in the Eurosystem’s monetary policy operations. Access to the Eurosystem’s liquidity is a natural complement to the EIB’s financing initiatives and it will facilitate the accommodation by the EIB of additional demand for its lending programme. Furthermore, the Governing Council decided in principle that the Eurosystem will purchase euro-denominated covered bonds issued in the euro area. We expect to engage in a programme of around €60 billion that targets an important segment of the private securities market, which has been particularly affected by the financial market turbulence. Our primary concern when taking these decisions in recent months was to maintain the availability of credit for households and companies at accessible rates. I have described that as enhanced credit support. Furthermore, our very flexible liquidity management ensured that solvent banks did not get into difficulties because of liquidity constraints.Our response to the crisis has been carefully calibrated to the financial and economic structures of the euro area. In particular, we needed to bear in mind that the euro area’s financial system is predominantly bank-based. Take the structures of private credit outstanding as an example: recourse to banks makes up more than 70% of non-equity external finance in the euro area. By comparison, in the US the equivalent proportion is only around 30%. This reflects the fact that the US financial system is primarily market-based. In the euro area, guaranteeing steady access to credit for households and companies largely means preserving the viability of the banking system. Banks play such a dominant role in our economy that it was appropriate to focus our non-standard measures on the banking sector.This profound contrast in financial and economic structures explains the different responses by central banks to the crisis as exemplified by the approaches of the ECB and the Federal Reserve System of the US. We rely on different channels as regards the transmission of our policy action. But these variations do not reflect conflicting views on fundamental principles or objectives. On the contrary: given the different structures, the approaches need to be different to achieve the same objective. Thus, I would strongly argue that central banks around the world are united in purpose. As I indicated before, the remarks I just made on the ECB’s response to the crisis did not contain any message concerning future monetary policy, and should not be interpreted as containing any such message.

Emerging markets and Mediterranean economies in the global economy
Today we are celebrating the 50th anniversary of Bank Al-Maghrib. This is also an occasion to reflect on the role of the Mediterranean region, and on the role of emerging market economies in general in the global economy. The growing importance of these economies, including those in this area, has profound implications for the euro area and the rest of the world. I would like to share my thoughts with you on this phenomenon.

The growing role of emerging market economies
The global financial crisis is slowing the growth of the emerging market economies. Only a year ago, some observers were still saying that these economies were likely to decouple from the downturn stemming from the advanced economies. Today it is obvious that this has not happened. Most emerging markets are affected by the crisis through real or financial channels. Many sectors have been severely hit by the global turmoil, for instance, the automotive, textile, building and tourist industries. In addition, remittances which, for many emerging markets, are an important source of revenue, are vulnerable to the downturn in host countries, even though they tend to be a relatively stable source of income. It is too early to say when emerging market economies will bottom out of the global financial crisis, but some recent data, particularly for Asia, are somewhat encouraging. According to the latest IMF forecasts, world output will shrink by 1.3% and the advanced economies by no less than 3.8%. However, GDP in emerging markets, though lower than in previous years, will still grow by 1.6%.Despite the crisis, the long-run prospects for emerging market economies remain bright. Projections for long-term growth, based on demographic trends and models of capital accumulation and productivity, suggest that the emerging markets are likely to gain in global importance. A number of studies found startling results regarding the growth prospects for emerging markets. According to one study, Brazil, Russia, India and China (the so-called BRIC economies) could account for over half the size of today’s six largest industrialised economies from 2025 onwards. [1] We have to prepare for a very profound structural rebalancing of world output during the next years. The world economy is changing profoundly, as so should its governance. The creation and the recent reinforcement of the G20 and the enlargement to the G20 of the Financial Stability Board are milestones in this respect. The rise of the emerging economies will also be reflected in the reforms of the international financial institutions. What are the specific implications of the growing role of emerging markets for the euro area? The euro area has close links with emerging market economies. In trade terms, the euro area is actually more open than other major economies. Our exports and imports of goods and services account for more than 40% of GDP, significantly more than in the United States or in Japan. Emerging markets are important in trade: nine of 20 euro area’s main trading partners are emerging economies, with a share of more than 18% of exports and around 31% of imports in 2008. The BRICs alone accounted for more than 12%of extra-euro area exports and more than 22% of extra-euro area imports in 2008.

The growing role of Mediterranean economies
In the present context, which is very challenging, the Mediterranean region is one of the few in the world that will continue to grow this year. The countries in this area have an increasingly important place among the world’s emerging markets. Moreover, the Mediterranean economies, and particularly the Maghreb countries, have close links to the euro area. For example, more than 50% of Morocco’s imports and exports are with the euro area. Within the Mediterranean region, labour and product markets have become more flexible, the financial sector is now on a more solid footing and the economy has become more business-friendly. A continuation of these reforms will help to increase the long-run growth potential of the region. A continued implementation of such reforms would lay the foundation for an increase in the long-run growth potential in the region. Central banks and monetary policy frameworks are frontrunners in this reform process. In that respect, Morocco is an excellent example. Important progress has been made towards introducing an inflation targeting framework, which is the medium-term objective of Bank Al-Maghrib. The bank’s new statutes promulgated in February 2006 confirmed its independence in the conduct of monetary policy and enshrined price stability as its primary objective mandate. As you know, the Eurosystem attaches greatest importance to cooperating with central banks of emerging market economies, including those in the Mediterranean region. The ECB, as the central bank of the world’s second largest integrated economy, very closely monitors economic developments in regions nearby, notably the Mediterranean.

As I said earlier, we have been working more closely in recent years by holding regular Euro-Mediterranean Seminars for central banks. And further east, we have established a similar seminar with the governors of the Gulf Cooperation Council. The group’s first meeting was held in Germany last year.

Conclusion
To conclude, I would like to call your attention to the following points.To start with, we are, for the first time, putting to the test the soundness and resilience of the globalised economy, which has become increasingly integrated over the past fifteen years. We now have to draw, systematically and without complacency, the lessons of the global crisis that we are fighting against. Secondly, we have a duty. Our duty is to considerably reinforce the resilience of the global financial system and the soundness of the real global economy. We should not allow that, a few years from now, a new crisis would emerge that would be similar to the current one. That would be unforgivable.Thirdly, the international community has engaged in drawing all lessons from the crisis. We agree on the method, on the role of the G20, on the role of the Financial Stability Board, and on the role of international financial institutions, in particular the crucial role of the International Monetary Fund, and also of the Bank for International Settlements, which during the past years has shown remarkable lucidity in its analysis. As regards the global financial sector, we agree on the broad orientations to follow: to reduce procyclicality, to fight short-termism, and to impose transparency.

Fourthly, we are still today in a very difficult and very unpredictable environment. We permanently need to remain alert, and there is no place for complacency. I would have two main messages in that regard. As concerns direct government support to the financial sector, today’s priority is rapidity of execution. Decisions that have already been taken should be implemented swiftly. This holds true, in particular, for recapitalisation, as currently only 55% of funds earmarked for recapitalisation have been used in the euro area. In crisis times, rapid implementation is crucial. As concerns global governance, I insist on the absolute necessity to reinforce macroeconomic policy surveillance of systematically important countries and economies. The IMF has to play a fundamental role in such monitoring, coupled with responsible and active peer surveillance.Finally, central banks have a fundamental role in ensuring monetary and financial stability from a long-term perspective. Morocco knows that it can count on the crucial contribution of Bank Al-Maghrib, whose fiftieth anniversary we are celebrating today. The world economy can count on central banks to continue to act as anchors of stability, which are more needed than ever. The European Central Bank, for its part, will continue to be an anchor of stability and confidence. And I am pleased to note the recent proposals by the European Commission, in line with the recommendations of the la Rosière report, to establish a European Systemic Risk Council under the auspices of the ECB.Thank you for your attention.

[1] See Wilson, D. and R. Purushothaman Dreaming With BRICs: The Path to 2050, Global Economics Paper No. 99, Goldman Sachs, 1 October 2003.

See Wilson, D. and R. Purushothaman Dreaming With BRICs: The Path to 2050”, Global Economics Paper No. 99, Goldman Sachs, 1 October 2003.European Central Bank
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Speeches & Interviews By date 2009