HARPER - OBAMA TEXT PRESS CONFERENCE

CNBC IS ALL OVER NATIONALIZATION OF BANKS TODAY,ITS A HOT STORY AS IS GOLD GOING OVER $1005.00.

BANK NATIONALIZATION VIDEOS
http://www.ft.com/cms/8787ae00-2a26-11dc-9208-000b5df10621.html?_i_referralObject=1041529837&fromSearch=n
http://www.reuters.com/news/video?videoId=99001&newsChannel=ousiv
http://www.reuters.com/news/video?videoId=99075&videoChannel=5
http://www.msnbc.msn.com/id/21134540/vp/27085703#27085703
http://www.cnbc.com/id/15840232?video=1041665984
http://www.cnbc.com/id/15840232?video=1041569525
http://www.cnbc.com/id/15840232?video=1040246332
http://www.cnbc.com/id/15840232?video=1040944991

BOB PISANI-CNBC BANK NATIONALIZATION FEARS?
-White House downplays Bank NATIONALIZATION rumors.
-Treasury to provide details on Bank rescue plan next week.
BANKS WHATS THE WORTH? (market Capitalization)
Exxon mobile:$354 BILLION.
All other 24 Banks in Bank Index:$268 BILLION.
http://www.cnbc.com/id/15840232?video=1041076897

Dodd Backs Nationalizing Banks; White House Doesn't FEB 20,09

(Newser) – Chris Dodd says the US may have to nationalize the most troubled banks for a short time to save the financial system, Bloomberg reports. The chairman of the Senate Banking Committee joined Ben Bernanke and Alan Greenspan in calling for serious consideration of nationalizing flailing institutions such as Bank of America and Citigroup. Within hours, White House spokesman Robert Gibbs countered, This administration continues to strongly believe that a privately held banking system is the correct way to go.I don’t welcome that at all, but I could see how it’s possible it may happen, Dodd told Bloomberg. I’m concerned that we may end up having to do that, at least for a short time. The Obama administration does not support nationalization, holding out hope that its bailout efforts can foster recovery in the privately held banking system. I think I was very clear about the system this country has and will continue to have,Gibbs said. Sources: Bloomberg, CNNMoney

Bank Rumors Dominate The Day Posted By: Bob Pisani FEB 20,09

Bank nationalization scares dominated the day, we hit our lows as Senator Chris Dodd said nationalization of some banks may be necessary on a short term basis, then rallied midday as the White House downplayed bank nationalization rumors (White House Press Secretary Robert Gibbs said the U.S. will continue to have a private banking system), and we reported that the Department of the Treasury will provide details on the bank rescue plan next week. Regardless, stocks still drifted lower in the final hour, even though Congressman Barney Frank said in a Bloomberg interview that he doesn't see any likelihood now of bank nationalization.

The Dow finished with the worst week since October.

A brief recap: on Tuesday the S&P 500 closed below 800 for the first time since November, as the dollar rallied to a 3-month high. On Wednesday, January housing starts came out at the lowest levels since record keeping began in 1959, some homebuilders hit multi-decade lows. On Thursday, the Dow closed at its lowest level in over 6 years, triggering a Dow Theory sell signal,as both the Dow Industrials and the Dow Transports hit new lows. Banks: what are they worth? I'll make it simple: the market capitalization of ExxonMobil is $354 billion. The market capitalization of all 24 stocks in the Philly KBW Bank Index is $269 billion. This week: Dow down 6.2 percent, Dow Transports down 8.7 percent, S&P 500 down 6.8 percent, NASDAQ down 6.0 percent.

Citi And BofA Pay For Nationalization Fears Miriam Marcus, 02.20.09, 02:45 PM EST Banks' shares plummet on fears the U.S. Treasury will take them over.
Citigroup Inc.02/20/2009 3:59PM ET

As the U.S. government struggles to revitalize its economy, investors are speaking their minds by taking their money out of the banking sector, sending shares of two leading institutions to their lowest levels in decades. The slide has come despite protestations from the banks that they are in reasonably good health. Citigroup and Bank of America suffered substantial sell-offs on Friday afternoon on mounting fears that the Treasury Department is planning nationalization of the banks, which likely would wipe out common stockholders. Shares in Citigroup (nyse: C - news - people ) plummeted 28.7%, or 72 cents, to $1.79, while Bank of America (nyse: BAC - news - people )’s stock dropped 26.0%, or $1.02, to $2.91. The banks have lost 92.9% and 93.2% from year-earlier prices, respectively. Right now, people are looking at the worst-case scenario, which is either a complete nationalization or Bank of America and Citi having to raise so much common equity that they dilute shareholders. It seems to me either one is a possibility, said analyst Keith Davis of Washington-based Farr, Miller & Washington. There's just so much uncertainty about what's going to happen to these two companies ... No one wants to get involved with these banks, he added.The banks are suffering as a result of the financial dislocations that began in the U.S. housing sector's subprime mortgage crisis. Yet the pair claim they are sufficiently healthy not to need government bailouts.A Citigroup spokesman Jon Diat said his bank’s capital base is very strong, and its Tier-1-capital-to-assets ratio is among the highest in the industry, adding that we continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth. Citi is selling noncore assets, likely including its stake in a Brazilian credit-card business.At Bank of America, Chief Executive Ken Lewis commented, Our company continues to be profitable. We see no reason why a company that is profitable with strong levels of capital and liquidity and that continues to lend actively should be considered for nationalization. Speculation about nationalization is based on a lack of understanding of our bank’s financial position as well as a lack of appreciation for the adverse ramifications for our customers and the economy.

Investors expect details next week on the Treasury's future moves to stabilize the financial sector. It's going to take a bold move by the new U.S. administration to stop this resurgent hemorrhaging of world markets - and with bailouts being interpreted as signs of economic weakness there are no quick fixes, said Anthony Grech, market strategist at IG Index in London. The Associated Press and Thomson Reuters contributed to this article.

Markets tumble amid fears over banks By Aline van Duyn in New York and Ralph Atkins in Frankfurt February 20 2009 18:27

The growing realisation that there is no quick fix for the ailing global financial system – and that some of the world’s biggest banks might have to be taken over by the US government – this week pushed stock markets around the world to their lowest levels in years.The weak financial system threatens to deepen the credit crunch and plunge economies into even deeper recessions.

EDITOR’S CHOICE
Fears over state ownership rock Wall St - Feb-20Overview: Investors flee to gold and government bonds - Feb-20Eurozone lurches deeper into recession - Feb-20Gold price tops $1,000 - Feb-20Bank nationalisation fears fuel Wall Street slide - Feb-20In depth: US banks - Feb-20The eurozone recession, already the most severe in postwar history, has deepened further, according to unexpectedly bleak purchasing managers’ indices for the 16-country region released yesterday.

The survey provided a grim backdrop to this weekend’s meeting of European leaders in Berlin, part of efforts to co-ordinate the global response to the crisis, and encouraged expectations that the European Central Bank will make further significant cuts in its main policy interest rate.The S&P 500 was on course for a weekly loss of 6.5 per cent, leaving it less than 2 per cent away from an 11-year low. The market plunges come despite growing intervention by governments around the world to counteract the grim economic news and the strains in the financial system. This week, Barack Obama, US president, signed a $787bn (£547bn, €617bn) economic stimulus plan; Germany suggested it would support weaker European countries; and the Bank of England said it might adopt quantitative easing, monetary policy measures aimed at increasing the availability of credit. The market is in a deep funk, and any one event or policy measure is not going to get the market out of it, said Carl Mason, equity derivatives strategist at BNP Paribas in New York. The current phase of the market downturn can be traced back to the high expectations that preceded the unveiling of a plan to prop up the US financial system by Tim Geithner, the new US Treasury secretary, more than a week ago. The lack of details in parts of the plan that dealt with US banks and the trillions of dollars of toxic assets that threaten their solvency have left financial markets facing the prospect of a long period of uncertainty. A key index of US financial shares plunged to its lowest level since its inception in the early 1990s.The uncertainty about the depth of the economic downturn has forced investors into only the safest investments. This has pushed up the price of gold sharply – futures rose above $1,000 an ounce for the first time since July of last year. It has also sent yields on US government bonds lower and has boosted the dollar.Additional reporting by Alistair Gray and Nicole Bullock in New York.The Financial Times Limited 2009

Graham: Nationalizing Banks Should Be On The Table February 15, 2009 10:48 AM

In a gloomy segment about the financial sector on ABC'S This Week, two self-avowed fiscal conservatives said that the U.S. Government should at least consider nationalizing the country's banking system as a means of moving beyond the current lending crisis.This idea of nationalizing banks is not comfortable, said Sen. Lindsey Graham (R-SC). But I think we've got so many toxic assets spread throughout the banking and financial community, throughout the world, that we're going to have to do something that no one ever envisioned a year ago, no one likes. To me, banking and housing are the root cause of this problem. I'm very much afraid any program to salvage the banks is going to require the government... I would not take off the idea of nationalizing the banks.The remark prompted a bewildered smile of sorts from fellow panelist Maxine Waters (D-CA) who said, to no one in particular, We have come a long way.Indeed we have. While Graham was supported in his assessment by Waters and Rep. Peter King (R-NY), both of whom said nationalization should remain on the table, he found opposition from his Democratic counterpoint on the panel, Chuck Schumer. I would not be for nationalizing, said the New York Senator, whose constituency includes the epicenter of the U.S. banking industry. I don't think government is good at making these decisions.

Another voice in opposition to nationalization is President Barack Obama, who in a recent interview with ABC rejected the Swedish approach to revamping the banking system. We want to retain a strong sense of that private capital fulfilling the core -- core investment needs of this country, said the president. Sunday's discussion was prompted by a Washington Post op-ed that morning by economist Nouriel Roubini entitled: Nationalize the Banks! We're all Swedes Now.Nationalization is the only option that would permit us to solve the problem of toxic assets in an orderly fashion and finally allow lending to resume. Of course, the economy would still stink, but the death spiral we are in would end. [...] Nationalizing banks is not without precedent. In 1992, the Swedish government took over its insolvent banks, cleaned them up and reprivatized them. Obviously, the Swedish system was much smaller than the U.S. system. Moreover, some of the current U.S. financial institutions are significantly larger and more complex, making analysis difficult. And today's global capital markets make gaming the system easier than in 1992. But we believe that, if applied correctly, the Swedish solution will work here.

Bank nationalisation gains ground with Republicans By Edward Luce and Krishna Guha February 17 2009 19:44 February 18 2009 21:57

Long regarded in the US as a folly of Europeans, nationalisation is gaining rapid acceptance among Washington opinion-formers – and not just with Alan Greenspan, former Federal Reserve chairman. Perhaps stranger still, many of those talking about nationalising banks are Republicans. Lindsey Graham, the Republican senator for South Carolina, says that many of his colleagues, including John McCain, the defeated presidential candidate, agree with his view that nationalisation of some banks should be on the table.

EDITOR’S CHOICE
In depth: Obama’s first 100 days - Jan-28Obama acts to cut risk of foreclosures - Feb-18Lex: US housing - Feb-18US homebuilder confidence remains near low - Feb-17Californian dream turns into nightmare - Feb-17Mr Graham says that people across the US accept his argument that it is untenable to keep throwing good money after bad into institutions such as Citigroup and Bank of America, which now have a lower net value than the amount of public funds they have received.

You should not get caught up on a word [nationalisation], he told the Financial Times in an interview. I would argue that we cannot be ideologically a little bit pregnant. It doesn’t matter what you call it, but we can’t keep on funding these zombie banks [without gaining public control]. That’s what the Japanese did.Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has moved more towards what he calls the Swedish model – an approach backed strongly by Mr Graham. In the early 1990s Sweden nationalised its banking sector then auctioned banks having cleaned up balance sheets. In limited circumstances the Swedish model makes sense for the US, says Mr Graham.Mr Obama last weekend made clear he was leaning more towards the Swedish model than to the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.They [the Japanese] sort of papered things over, Mr Obama said. They never really bit the bullet . . . and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time.Administration officials acknowledge that the rescue plan unveiled by Tim Geithner, Treasury secretary, last week could result in the temporary nationalisation of some weak banks.The plan sets out a framework for revealing the extent of the likely credit losses facing banks. Most private sector analysts believe the exercise will reveal that some banks have large capital shortfalls.Policymakers acknowledge that if this is indeed the case, it will be difficult for those with the largest shortfalls to raise the required equity from the markets, in which case the government would probably have to take temporary control. Moreover, while nationalisation remains taboo in some political circles it is increasingly openly discussed among past and present economic policymakers of all leanings.In this country nationalisation of some banks – not the whole banking sector – should be a last resort, but it should definitely now be on the table, said David Walker, president of the Peterson Foundation and a former senior official in the George W. Bush administration.

The time for biting the bullet may also be fast approaching.

In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so.The first week in April – that’s when the children’s party is over, says Chris Whalen, co-founder of Institutional Risk Analytics.That is when the obvious will become apparent.The Obama administration remains opposed to federal control. Mr Geithner last week said: Governments are terrible managers of bad assets.Others say he may eventually face no choice.The danger we face is a Freddie Mac/Fannie Mae scenario where government gives the banking sector guarantees and then socialises the losses,says Adam Posen, an economist. That’s the worst thing we could do.The Financial Times Limited 2009

We already own the banks -- shouldn't we run them? Fear of nationalization is beside the point when it comes to rehabilitating our crippled financial institutions.Michael Hiltzik February 19, 2009

The worst thing about ideological sloganeering is that it obscures, rather than clarifies, the facts of a situation.Exhibit A: The question of whether we should nationalize our crippled banks. To the political right, the very word smacks of the world of banana republics. To the left, it's just what those idiots on Wall Street deserve, and long overdue.To the center -- let's call it the Obama administration -- it's an intriguing concept, but not really suitable for these United States.Yet if you peer beneath the terminology at the underlying reality, it's obvious that nationalization of the banks is a done deal. We bought them. We own them. The only problem is that we've failed to exercise our right to control them.As part of its $700-billion bank bailout, the U.S. government is injecting $45 billion of taxpayers' cash into each of the two most impaired institutions in the elephantine herd, Bank of America and Citigroup. The government has also pledged to cover $419 billion in losses at the two institutions.The cash injections alone are almost enough to buy up all of BofA's outstanding common stock twice over and Citi's stock three times over. Yet the government has failed to demand any specific performance in return. There have been no sackings of management and no mandate that the money be applied to support loans in credit-strapped sectors, like small and medium-size businesses.

Former Treasury Secretary Hank Paulson presented his hands-off policy as a plus, as though giving banks money but not instructions is the American Way. His successor, Timothy Geithner, hasn't shown that he feels much differently.So it's unsurprising that the banks still act as if Job One is to maximize shareholder value. BofA Chairman Ken Lewis told Congress last week that he was determined to balance the interests of customers, shareholders and taxpayers. That struck Campbell R. Harvey, a banking expert at Duke University, as the opposite of what it should be. BofA would be bust without the U.S. government. The taxpayer should be No. 1, not No. 3.

Indeed, we're still trying to coax the banks into doing the right thing, as though they should do us a favor. Didn't we do them a favor?The most recent example is the housing recovery plan President Obama announced Wednesday, which attempts to make home lending and foreclosure relief more palatable to banks by offering them more taxpayer-financed sweeteners.No wonder the taxpayers' capital seems to have been flushed down the sewer.Stuffing the banks with money just enables incumbent management to hang on and enables current holders of bank stocks to pretend they still have value, James K. Galbraith, an economic policy expert at the University of Texas, told me this week. Galbraith says the bailed-out banks should be declared insolvent and taken over by the FDIC to be restructured or split up, whichever is best. Calling this nationalization is misleading, the professor says, because what needs to happen isn't the political act implied by the term, but a regulatory act.

Step One should be dumping current management, he says. The banks' CEOs argue that their executive caste needs to stay put because they know best how to run the place. This is the sort of argument my mother used to characterize as, I like me, who do you like? Even if one agrees that a core of professional management should be left intact, what's the rationale for not firing the boards? Bank directors presided over a disaster in a collective stupor, yet unaccountably continue to hold on to their seats with what George Orwell called prehensile bottoms.At BofA, the board of directors includes several current or retired business executives, a college president and Gen. Tommy Franks, architect of the brilliantly executed Iraq war.My favorite director is Jackie M. Ward, a retired software executive who also serves on five other boards. These companies paid her total annual compensation of more than $1.5 million in cash and stock last year, according to their latest disclosure statements. The six corporations scheduled a total of 52 board meetings over that time, so she got $28,840 per meeting. Personally, I'd do it for half as much, especially if I could read the paper and catch up on my sleep during meetings, as the average director seems to have done.I don't mean to pick on Ms. Ward, who for all I know is still a business dynamo at the age of 70. Yet given that she chairs the BofA board's committee on asset quality, which is ground zero of the company's implosion, might the institution not have been better served if she had focused on this one thing? Certainly a government order to fire the board would begin to look like nationalization, but that's beside the point. One consequence of our obsession with the term is that it tempts people across the political spectrum to base their model on Sweden, which nationalized its banking sector during a financial crisis in 1992.

The Swedish program, which was focused on the seven banks that controlled 90% of its market, is almost universally misunderstood. Only one bank, the largest, was taken over and operated by the government. Other elements of the rescue plan were far more important. Sweden, which did not then have deposit insurance, shielded all bank creditors from losses. At the same time, as former Swedish Central Bank Gov. Urban Backstrom told a financial conference in 1997, the government engaged in tough negotiations" with the bankers to enforce the principle that losses were to be covered in the first place . . . by shareholders.The Swedes also insisted on absolute transparency. Any bank taking a government handout had to come clean about the expected losses and write-downs on its books. Bad assets were transferred to an independent government-capitalized agency -- a form of the bad bank workout contemplated, on and off, by U.S. Treasury officials. The nationalized bank was cleaned up, thoroughly reorganized, and partially privatized in 1995, after only three years in government hands.Plainly, the key pieces of Sweden's recovery were the frank admission of loan losses, the creation of the bad bank and the setting of a substantial price to be paid by shareholders and management in exchange for bailout capital. Meanwhile, the gravity of the crisis produced a politics-free consensus among bank executives and government leaders, including Parliament. Of these four elements, the number thus far implemented in the United States is zero.

There's almost no mystery about how to restore credibility to American banking. Call it nationalization or not, it amounts to transparency, recapitalization and an end to the entitlement culture of bank executives and shareholders. How much longer should we wait? Michael Hiltzik's column runs every Monday and Thursday. You can reach him at michael.hiltzik@latimes.com and read his previous columns at www.latimes.com/hiltzik.

LAND FOR PEACE (THE FUTURE 7 YEARS OF HELL ON EARTH)

JOEL 3:2
2 I will also gather all nations, and will bring them down into the valley of Jehoshaphat, and will plead with them there for my people and for my heritage Israel, whom they have scattered among the nations, and parted my land.

THE WEEK OF DANIEL 9:27 WE KNOW ITS 7 YRS

Heres the scripture 1 week = 7 yrs Genesis 29:27-29
27 Fulfil her week, and we will give thee this also for the service which thou shalt serve with me yet seven other years.
28 And Jacob did so, and fulfilled her week: and he gave him Rachel his daughter to wife also.
29 And Laban gave to Rachel his daughter Bilhah his handmaid to be her maid.

DANIEL 9:26-27
26 And after threescore and two weeks(62X7=434 YEARS+7X7=49 YEARS=TOTAL OF 69 WEEKS OR 483 YRS) shall Messiah be cut off, but not for himself: and the people of the prince that shall come shall destroy the city and the sanctuary;(ROMAN LEADERS DESTROYED THE 2ND TEMPLE) and the end thereof shall be with a flood, and unto the end of the war desolations are determined.(THERE HAS TO BE 70 WEEKS OR 490 YRS TO FUFILL THE VISION AND PROPHECY OF DAN 9:24).(THE NEXT VERSE IS THAT 7 YR WEEK OR (70TH FINAL WEEK).
27 And he( THE ROMAN,EU PRESIDENT) shall confirm the covenant with many for one week:(1X7=7 YEARS) and in the midst of the week he shall cause the sacrifice and the oblation to cease,(3 1/2 yrs in TEMPLE SACRIFICES STOPPED) and for the overspreading of abominations he shall make it desolate, even until the consummation, and that determined shall be poured upon the desolate.

ISAIAH 28:14-19 (THIS IS THE 7 YR TREATY COVENANT OF DANIEL 9:27)
14 Wherefore hear the word of the LORD, ye scornful men, that rule this people which is in Jerusalem.
15 Because ye have said, We have made a covenant with death, and with hell are we at agreement; when the overflowing scourge shall pass through, it shall not come unto us: for we have made lies our refuge, and under falsehood have we hid ourselves:
16 Therefore thus saith the Lord GOD, Behold, I lay in Zion for a foundation a stone, a tried stone, a precious corner stone, a sure foundation: he that believeth shall not make haste.
17 Judgment also will I lay to the line, and righteousness to the plummet: and the hail shall sweep away the refuge of lies, and the waters shall overflow the hiding place.
18 And your covenant with death shall be disannulled, and your agreement with hell shall not stand; when the overflowing scourge shall pass through, then ye shall be trodden down by it.
19 From the time that it goeth forth it shall take you: for morning by morning shall it pass over, by day and by night: and it shall be a vexation only to understand the report.

VIDEO BIBI
http://www.reuters.com/news/video?videoId=99019&newsChannel=newsOne

Bibi clears hurdle in bid to be Israel PM by Patrick Moser Patrick Moser – Thu Feb 19, 12:47 pm ET

JERUSALEM (AFP) – Hawkish Likud leader Benjamin Netanyahu on Thursday cleared a major hurdle in his bid to become Israel's prime minister as ultra-nationalist Avigdor Lieberman backed his bid to form a government.But the former premier promptly hit a new snag as Foreign Minister Tzipi Livni made it clear her centrist Kadima party had no interest in joining a Likud-led coalition that includes Lieberman's far-right Yisrael Beitenu.Netanyahu, popularly known as Bibi, can still count on the support of 65 of the 120 members of parliament, but would have to rely on parties to the right of his own despite his stated preference for a broad coalition, pundits said.President Shimon Peres has asked Livni and Netanyahu to meet him separately on Friday in a bid to resolve their differences.I intend to make another attempt to convince the parties to cooperate in a bid to form a broad and stable government, he said in a statement.Lieberman said earlier he favoured a Likud-led alliance with Kadima and his Yisrael Beitenu party.We recommend Bibi Netanyahu, but only as part of a wider government, Lieberman told Peres who was meeting parliamentary factions before deciding who he will ask to form a new government.To govern the country, we need a government with the three largest parties, said Lieberman, a Soviet immigrant whose party displaced Labour as the third largest parliamentary faction in the February 10 election.Those that want to join (the coalition) can do so later,Lieberman added.

But Livni dismissed the proposal.

Today, the bases of a far-right government led by Netanyahu have been set, she told Kadima members.We have not been elected to give legitimacy to this extreme right-wing government, and will head to the opposition.She insisted she had no interest in supporting a paralysed government.Kadima and I will continue on the track we have taken to push forward the peace process and fight against terrorism.Lieberman, on the other hand, said he did not consider the Middle East peace talks the most pressing issue for Israel.The Israeli-Palestinian conflict is not a priority, he said in a speech expected to raise further concerns over the future of the already hobbled process.Our biggest threat comes from Iran, with its nuclear programme and its proxies like Hamas and Hezbollah, Lieberman said at a conference of US Jewish organisations in Jerusalem.Peres met with Likud and Kadima representatives on Wednesday and held talks with the other 10 factions on Thursday. Kadima had suggested a power-sharing deal with Netanyahu similar to the one Israel had in 1984 after another close ballot, when the two leading parties each held the post of prime minister for two years.But Lieberman said that Livni must give up the idea of a rotation as such a solution would cause instability.

Netanyahu has also rejected a rotating premiership.

Kadima won 28 parliamentary seats in the election, just one more than Likud, but has far fewer potential coalition allies than its right-wing rival. Under Israeli law, the task of forming a government does not automatically go to the party that wins the most votes but to the one most likely to form a majority coalition. Right-wing parties made dramatic gains overall in the election, which was held in the wake of Israel's deadly 22-day offensive on the Hamas-ruled Gaza Strip and was dominated by security concerns.Peres will announce his decision on Sunday or Monday, his spokeswoman Ayelet Frish said.The Kadima delegation on Wednesday pressed the president, who is himself drawn from Livni's centrist faction, to give it first go at trying to forge a governing coalition, but Likud insisted that Netanyahu was better placed to lead a new government. The person tasked by Peres to form a government will have 28 days to put together a coalition. If necessary Peres can extend the deadline by 14 days.The election was called after Prime Minister Ehud Olmert handed in his resignation in September after being questioned by police over a series of graft allegations. He has stayed on as acting premier.

Egypt angry over Israel truce condition Thu Feb 19, 11:57 am ET

CAIRO (AFP) – Egypt expressed its indignation on Thursday over Israel's decision by Israel to link a Cairo-brokered truce in Gaza with Hamas to the release of a seized soldier.Cairo feels indignation after Wednesday's vote by Israel's security cabinet to make a truce conditional on the release of Gilad Shalit, a senior official told AFP.The young conscript was captured by Gaza militants in a deadly cross-border raid in June 2006.Israel has demolished its credibility and this attitude will complicate the situation, said the official, who did not wish to be identified.It was clear from the beginning that the issue of the soldier was not linked to the truce agreement, he added.Egypt will not change its position. The Shalit case cannot be linked to the truce, he said echoing similar remarks made earlier this week by Egyptian President Hosni Mubarak.Hamas insists that Shalit's release be negotiated separately as part of a prisoner exchange involving hundreds of Palestinians currently held in Israeli jails.

Hamas has said any truce must include the opening of Gaza's border crossings, which Israel has closed to all but humanitarian aid since the Islamist movement seized power in June 2007.Egypt has been acting as a go-between in efforts to consolidate the separate ceasefires that ended Israel's 22-day Gaza offensive on January 18. The war killed more than 1,300 Palestinians and 13 Israelis.The ceasefires have been rattled by Palestinian rocket fire and retaliatory Israeli military raids.

Lieberman endorses Netanyahu for Israeli premier By STEVEN GUTKIN, Associated Press Writer – Thu Feb 19, 5:28 pm ET

JERUSALEM – Benjamin Netanyahu won the endorsement Thursday of an anti-Arab politician who emerged from Israel's election as a kingmaker, virtually ensuring that the hawkish, U.S.-educated politician will once again become prime minister.

The big question is whether Netanyahu will be able to build the broad coalition he will likely need to stay in power and avoid clashing with the Obama administration and much of the world.With his top rival, centrist Foreign Minister Tzipi Livni, signaling that she would enter the opposition, Netanyahu's prospects for such a coalition do not look good. He will probably have little choice but to forge a coalition with nationalist and religious parties opposed to peacemaking with the Palestinians and Israel's other Arab neighbors.One major Orthodox Jewish party, Shas, also threw its support to Netanyahu, joining a group of similar movements that did the same.Today the foundations were laid for an extremist right-wing government under the leadership of Netanyahu, Livni said in a text message to 80,000 members of her Kadima Party. That is not our way and there is nothing for us in such a government... We must be an alternative of hope and go into opposition.If Livni stays out of Netanyahu's government, it would almost surely hurt Netanyahu's credibility with the United States and Europe. And his hold on power would be more tenuous in a narrow coalition of rightists, with hard-line allies threatening to bring down his government in the face of any concession for peace.Livni seeks a negotiated settlement with the Palestinians, a position supported by the Obama administration, while Netanyahu's partner on the right, Avigdor Lieberman, has drawn opprobrium with his call for Israel's 1 million Arabs to swear allegiance to the Jewish state or lose their citizenship.

Israel's ceremonial president, Shimon Peres, held talks with political parties before choosing a candidate to form a government. Peres is scheduled to meet separately Friday with Netanyahu and Livni, and is likely to make his choice over the weekend, the daily newspaper Haaretz reported. If he names Netanyahu, as seems likely, then Netanyahu will have six weeks to create a coalition.Israeli Army Radio reported Thursday night that if tasked by Peres, Netanyahu would immediately invite Livni and Labor leader Ehud Barak to join him in government.In light of the great challenges which Israel faces — Iran, terrorism, the economic crisis and job losses —a national unity government is the order of the hour, the station's Web site quoted him as saying.

Netanyahu aides could not be reached for comment.

Barak, himself a former premier, has already said he will take the center-left Labor Party into opposition.Livni has said she will not join Netanyahu unless she can be an equal partner, presumably through the sort of rotation agreement Israel has tried in the past in which an election's top two winners each get to be prime minister for two years.One reason that a rightist government could be unstable is that Lieberman's secular agenda puts him squarely at odds with religious parties, such as Shas, clouding prospects.Also Thursday, Sen. John Kerry, D-Mass., traveled to the Gaza Strip, the highest-level visit by a U.S. official since the Hamas militant group seized power in the territory nearly two years ago. He did not meet with anyone from Hamas, which the U.S. shuns as a terrorist group, and used the visit to urge the group to end its violence against Israel.Lieberman's Yisrael Beiteinu (Israel is Our Home) Party finished third in the Feb. 10 election, after Kadima and Netanyahu's Likud Party. That essentially allowed him to determine whether Netanyahu or Livni would be able to muster the backing of a majority in the 120-seat Knesset, or parliament.Lieberman's stance toward Arabs has exposed him to charges of racism, and many see him as a far-right extremist. However, he is opposed to the Orthodox Jewish establishment's control over key aspects of public life in Israel, one of several positions that has enabled him to find common ground with moderates.While announcing support for Netanyahu, Lieberman said he preferred a national unity government that included Livni over a narrow coalition of right wingers. We need a wide government with the three big parties, Likud, Kadima and Yisrael Beiteinu, Lieberman said. Netanyahu will lead the government but it will be a government of Netanyahu and Livni together.Putting together a broad, centrist government would be a tall order for Netanyahu. Livni has said she will not join Netanyahu unless she can be an equal partner, presumably through the sort of rotation agreement Israel has tried in the past in which an election's top two winners each get to be prime minister for two years.Both Netanyahu and Lieberman — buoyed by the clear majority for the hawkish parties — have ruled out a rotation. It's also unlikely the hard-liners would agree to Livni's key demand for pressing ahead with peace talks with the Palestinians and Syria. All this will pressure Netanyahu to rely on the sort of narrow coalition whose members could dictate or torpedo policy and force him from office on a whim — especially if he adopts any conciliatory policies toward the Palestinians that his ultranationalist partners oppose.

If Netanyahu wants cohesion and peace among the ranks of his coalition, that would mean isolation from the rest of the world, said political scientist Menachem Hofnung. If he wants to avoid international condemnation and isolation, then he will face cracks and dissent from within his coalition.Hofnung said he believes Netanyahu will ultimately give in to Livni's demands for joining the government. In Washington, former U.S. Ambassador Martin Indyk said Netanyahu would pursue economic peace with the Palestinians, removing roadblocks to the flow of people and goods, but wants to avoid territorial concessions on the West Bank. Netanyahu will attempt to deflect pressure from Obama and adviser George J. Mitchell by trying to make peace with Syria instead, offering to relinquish the Golan Heights, strategic land captured in the 1967 Mideast war, provided Israel was secure on that front, Indyk said at the Brookings Institution. Netanyahu showed a pragmatic side as prime minister from 1996-99, meeting with Palestinian leader Yasser Arafat and ceding part of the biblically significant West Bank city of Hebron to Palestinian control.

However, the Likud leader says he will allow existing Jewish settlements in the West Bank to expand. He recently told a security conference that any territory Israel relinquished to the Palestinians in a peace deal would be grabbed by extremists.He says peace efforts should focus on building the Palestinian economy rather than creating an independent state — a nonstarter for the Palestinians and one of several stances that could put him at odds with Obama. In forming a coalition, Netanyahu has said he would turn to religious and nationalist parties. But he has also expressed support for a government that reflects a broad national consensus. Kadima edged out Likud in the election, capturing 28 seats to Likud's 27. But Likud is in a better position to make a coalition because of gains by Lieberman and other hard-line parties.

MUSLIM NATIONS

EZEKIEL 38:1-12
1 And the word of the LORD came unto me, saying,
2 Son of man, set thy face against Gog,(RULER) the land of Magog,(RUSSIA) the chief prince of Meshech(MOSCOW)and Tubal,(TOBOLSK) and prophesy against him,
3 And say, Thus saith the Lord GOD; Behold, I am against thee, O Gog, the chief prince of Meshech(MOSCOW) and Tubal:
4 And I will turn thee back, and put hooks into thy jaws,(GOD FORCES THE RUSSIA-MUSLIMS TO MARCH) and I will bring thee forth, and all thine army, horses and horsemen, all of them clothed with all sorts of armour, even a great company with bucklers and shields, all of them handling swords:
5 Persia,(IRAN,IRAQ) Ethiopia, and Libya with them; all of them with shield and helmet:
6 Gomer,(GERMANY) and all his bands; the house of Togarmah (TURKEY)of the north quarters, and all his bands:(SUDAN,AFRICA) and many people with thee.
7 Be thou prepared, and prepare for thyself, thou, and all thy company that are assembled unto thee, and be thou a guard unto them.
8 After many days thou shalt be visited: in the latter years thou shalt come into the land that is brought back from the sword, and is gathered out of many people, against the mountains of Israel, which have been always waste: but it is brought forth out of the nations, and they shall dwell safely all of them.
9 Thou shalt ascend and come like a storm, thou shalt be like a cloud to cover the land, thou, and all thy bands, and many people with thee.(RUSSIA-EGYPT AND MUSLIMS)
10 Thus saith the Lord GOD; It shall also come to pass, that at the same time shall things come into thy mind, and thou shalt think an evil thought:
11 And thou shalt say, I will go up to the land of unwalled villages; I will go to them that are at rest, that dwell safely, all of them dwelling without walls, and having neither bars nor gates,
12 To take a spoil, and to take a prey; to turn thine hand upon the desolate places that are now inhabited, and upon the people that are gathered out of the nations, which have gotten cattle and goods, that dwell in the midst of the land.

ISAIAH 17:1
1 The burden of Damascus. Behold, Damascus is taken away from being a city, and it shall be a ruinous heap.

PSALMS 83:3-7
3 They (ARABS,MUSLIMS) have taken crafty counsel against thy people,(ISRAEL) and consulted against thy hidden ones.
4 They have said, Come, and let us cut them off from being a nation; that the name of Israel may be no more in remembrance.
5 For they (MUSLIMS) have consulted together with one consent: they are confederate against thee:(TREATIES)
6 The tabernacles of Edom,and the Ishmaelites;(ARABS) of Moab, and the Hagarenes;
7 Gebal, and Ammon,(JORDAN) and Amalek;(SYRIA) the Philistines (PALESTINIANS) with the inhabitants of Tyre;(LEBANON)

DANIEL 11:40-43
40 And at the time of the end shall the king of the south( EGYPT) push at him:(EU DICTATOR IN ISRAEL) and the king of the north (RUSSIA AND MUSLIM HORDES OF EZEK 38+39) shall come against him like a whirlwind, with chariots, and with horsemen, and with many ships; and he shall enter into the countries, and shall overflow and pass over.
41 He shall enter also into the glorious land, and many countries shall be overthrown: but these shall escape out of his hand, even Edom, and Moab, and the chief of the children of Ammon.(JORDAN)
42 He shall stretch forth his hand also upon the countries: and the land of Egypt shall not escape.
43 But he shall have power over the treasures of gold and of silver, and over all the precious things of Egypt: and the Libyans and the Ethiopians shall be at his steps.

EZEKIEL 39:1-8
1 Therefore, thou son of man, prophesy against Gog,(LEADER OF RUSSIA) and say, Thus saith the Lord GOD; Behold, I am against thee, O Gog, the chief prince of Meshech (MOSCOW) and Tubal: (TUBOLSK)
2 And I will turn thee back, and leave but the sixth part of thee, and will cause thee to come up from the north parts,(RUSSIA) and will bring thee upon the mountains of Israel:
3 And I will smite thy bow out of thy left hand, and will cause thine arrows to fall out of thy right hand.
4 Thou shalt fall upon the mountains of Israel, thou, and all thy bands,( ARABS) and the people that is with thee: I will give thee unto the ravenous birds of every sort, and to the beasts of the field to be devoured.
5 Thou shalt fall upon the open field: for I have spoken it, saith the Lord GOD.
6 And I will send a fire on Magog,(NUCLEAR BOMB) and among them that dwell carelessly in the isles: and they shall know that I am the LORD.
7 So will I make my holy name known in the midst of my people Israel; and I will not let them pollute my holy name any more: and the heathen shall know that I am the LORD, the Holy One in Israel.
8 Behold, it is come, and it is done, saith the Lord GOD; this is the day whereof I have spoken.

JOEL 2:3,20,30-31
3 A fire(NUCLEAR BOMB) devoureth before them;(RUSSIA-ARABS) and behind them a flame burneth: the land is as the garden of Eden before them, and behind them a desolate wilderness; yea, and nothing shall escape them.
20 But I will remove far off from you the northern army,(RUSSIA,MUSLIMS) and will drive him into a land barren and desolate, with his face toward the east sea, and his hinder part toward the utmost sea, and his stink shall come up, and his ill savour shall come up, because he hath done great things.(SIBERIAN DESERT)
30 And I will shew wonders in the heavens and in the earth, blood, and fire, and pillars of smoke.(NUCLEAR BOMB)
31 The sun shall be turned into darkness, and the moon into blood, before the great and the terrible day of the LORD come.

IAEA finds graphite, more uranium at Syria site By Mark Heinrich – Thu Feb 19, 1:11 pm ET

VIENNA (Reuters) – U.N. inspectors found graphite and more uranium traces in test samples taken from a Syrian site Washington says was a covert graphite nuclear reactor almost built before Israel bombed it, officials said on Thursday.The first word that graphite particles had turned up came with the release of the International Atomic Energy Agency's second report on Syria in three months. But U.N. officials familiar with it said the IAEA inquiry remained inconclusive.Still, one senior U.N. official said the discovery of additional uranium traces was significant. That, together with graphite traces that are undergoing more tests, raised pressure on Damascus to provide evidence for its denials of wrongdoing.The IAEA's November report said the site bore features that would resemble those of an undeclared nuclear reactor.Thursday's report said Damascus, in a letter to the IAEA this month, had repeated its position that the desert complex destroyed by Israel, known as al-Kibar or Dair Alzour, in September 2007 was a conventional military building only.But Syria, it said, was still failing to back up its stance with documentation or by granting further access for IAEA sleuths to the bombed location and three others cited in U.S. intelligence handed to the U.N. watchdog last year.

Some diplomats said Syria might be playing a waiting game until it sees what U.S. President Barack Obama has to offer as part of his stated intent to engage foes including Iran, an ally of Syria with a disputed uranium enrichment program.The United States says its information indicates the site was a reactor that was close to being built with North Korean assistance and designed to produce plutonium for atomic bombs.The U.N. official said further analysis of swipe samples since November turned up around 40 more instances of processed uranium particles, adding to 40 registered three months ago.He said some graphite traces had been found around the alleged reactor site and also by a water treatment plant 5 km away where equipment for the complex that was bombed to rubble by Israel had been stored temporarily.

SIGNIFICANT FINDING

We are sure it is man-made graphite but not yet sure if it has specifications of nuclear-grade graphite, he said.If you find 40 uranium particles and then 40 more, this constitutes for us a significant finding, because we are now sure this is not just a simple contamination from a person who went to the site for a visit.The IAEA report said the uranium contamination that turned up in soil samples was a chemically processed form of the mineral that was not the enriched variety used to run nuclear power plants or as fissile bomb material.It was extremely unlikely, the report said, that the traces came with munitions Israel had used to smash the complex, as Syria has asserted. Depleted uranium is sometimes used to boost the penetrating power of munitions.The report, to be debated by the IAEA's 35-nation governing board in early March, said the uranium element at issue was not in Syria's declared nuclear inventory. Syria's only official nuclear site is an old research reactor.The presence of the particles at Dair Alzour, imagery of the site available to the agency, and information about certain (nuclear-related) procurement activities need to be fully understood, the report said in its summary.Syria needs to be transparent by providing additional access to other locations alleged to be related to Dair Alzour. These measures, together with the sampling of destroyed and salvaged equipment and debris, are essential for the agency to complete its assessment,it added. IAEA Director-General Mohamed ElBaradei again called on Syria to take such transparency steps as soon as possible. He also urged Israel and other states to share information to help the IAEA probe, including satellite imagery, and agree to let inspectors share this information with Syria. The IAEA report said Syria was still ignoring IAEA requests to let inspectors take swipe samples from rubble, shrapnel and any equipment that satellite pictures showed were removed from al-Kibar after Israel's air strike to undetermined locations. Syria has also been asked to explain why it landscaped all four sites in question to alter their look after inspectors asked to examine them.(Editing by Janet Lawrence)

Iran says it has built unmanned aircraft By ALI AKBAR DAREINI, Associated Press Writer – Wed Feb 18, 8:55 am ET

TEHRAN, Iran – Iran has built an unmanned surveillance aircraft with a range of more than 600 miles — enough to reach Israel — a top defense official said in remarks published Wednesday.Deputy Defense Minister Ahmad Vahidi said he could not provide more details, only saying the development of the unmanned aircraft, or drone, was an important achievement. His remarks were published Wednesday in the government-owned newspaper, Iran, and by the semiofficial Fars news agency.Iran announced two years ago it had built an unmanned aircraft, but Vahidi's comments were the first by a top official revealing its range. His claims could not be independently confirmed.

Wednesday's reports follow this week's announcement that Iran has restructured its military in an effort to improve its air defense capabilities.The move was widely seen as part of a broader military build up by Tehran, which is concerned about the U.S. military's presence in neighboring Iraq and Afghanistan and Israeli threats to target its nuclear facilities.Iran has taken Israeli threats to strike its nuclear sites seriously and has said Israel would be subject to Iran's devastating retaliation if it attacks.The first word of the drone came in 2007, when the then-commander of the Revolutionary Guards, Gen. Yahya Rahim Safavi, said the unmanned device was designed to take photos of and gather information about enemy positions.

Iran also is seeking to develop a drone with attack capabilities.

In December, air force commander Gen. Hasan Shah Safi said Iranian experts had designed an unmanned aircraft with radar-evading devices that would be able to attack an enemy target and avoid detection. He said the military was working on building a prototype of the craft. He did not elaborate on what sort of weaponry the craft would be fitted with.Since 2005, Tehran has accused the United States of flying surveillance drones over Iran's airspace to spy on its nuclear and military facilities.Iran says it is fighting an intelligence battle with the United States and Israel, which accuse Tehran of seeking to build nuclear weapons. Iran has denied the charges, saying its nuclear program is solely geared toward generating electricity.Iran launched an arms development program during its ruinous 1980-88 war with neighboring Iraq to compensate for a U.S. arms embargo. Since 1992, Iran says it has produced its own jet fighters, torpedoes, radar-avoiding missiles, tanks and armored carriers.

Russia sets tough tone for arms talks with US By VLADIMIR ISACHENKOV, Associated Press Writer – Thu Feb 19, 3:51 pm ET

AP MOSCOW – Russia's foreign minister set a tough tone Thursday for nuclear arms control talks with the new U.S. administration, raising demands that long have been a stumbling block for Russian and U.S. negotiators.Sergey Lavrov was quoted by Russian news wires as saying Russia hopes President Barack Obama's administration will take realistic approaches that will meet the interests of strategic stability.

Lavrov said Russia expects the U.S. to form a team of negotiators to begin talks on a successor deal to the pivotal 1991 Strategic Arms Reduction Treaty, or START I, which expires in December.START I was signed by Soviet President Mikhail Gorbachev and President George H.W. Bush. It called for each country to cut its nuclear warheads by at least one-quarter, to about 6,000.A second deal — the so-called Treaty of Moscow — was signed in 2002 and called for cutting each country's nuclear arsenal further, to 1,700-2,200 warheads by 2012. The document was closely based on START I rules and verification procedures.Lavrov said Russia has yet to receive specific U.S. arms control proposals, but signaled the talks will be difficult.He said Moscow would urge Washington to count the entire arsenals of nuclear warheads. The 2002 pact only counted the so-called operationally deployed warheads, or those attached to missiles.Russia has criticized that provision, saying it could allow parties to quickly boost their arsenals by moving extra warheads from stockpiles. We do not want to leave a chance for carriers to be quickly fitted with warheads from warehouses, Lavrov said Thursday.Another Russian demand, Lavrov said, is to cut not only warheads, but also the missiles, bombers and submarines that carry them. The 2002 deal only applied to warheads, while the START I also contained limits for carriers.

We want to keep the agreement, which limits them, and to apply it to all carriers, Lavrov said. So far the U.S. is avoiding this.He said U.S. plans to fit some strategic missiles with non-nuclear warheads posed another challenge. Russia has strongly criticized the U.S. intentions, saying the launch of such missiles could provoke a mistaken nuclear strike in retaliation.These weapons raise serious questions because modern missile tracking systems cannot tell the difference between a carrier with a nuclear warhead and a non-nuclear carrier, Lavrov said Thursday. We do not see any progress here either.He reaffirmed that the U.S. plans to deploy a battery of missile interceptors in Poland and a related radar base in the Czech Republic would pose a key obstacle in arms control talks.Obama has not said how he intends to proceed with the missile defense plan, which was a favorite of George W. Bush's administration, but has stressed the system must be cost-effective and proven, and that it should not divert resources from other national security priorities.U.S. Defense Secretary Robert Gates said Thursday the administration hasn't decided yet what to do about the missile shield.Russia has threatened to deploy short-range missiles in its westernmost region, bordering Poland, if the U.S. deploys the missile defense sites.

DANIEL 7:23-24
23 Thus he said, The fourth beast(THE EU,REVIVED ROME) shall be the fourth kingdom upon earth,(7TH WORLD EMPIRE) which shall be diverse from all kingdoms, and shall devour the whole earth, and shall tread it down, and break it in pieces.(TR BLOCKS)
24 And the ten horns out of this kingdom are ten kings that shall arise:(10 NATIONS) and another shall rise after them;(#11 SPAIN) and he shall be diverse from the first, and he shall subdue three kings.(BE HEAD OF 3 KINGS OR NATIONS).

Czech president compares EU to Soviet Union By CONSTANT BRAND, Associated Press Writer – Thu Feb 19, 11:40 am ET

BRUSSELS – The Czech Republic's leader has long been one of the most strident critics of the European Union, blasting the bloc with withering attacks at every opportunity. Now he has inherited the ideal pulpit to air his views: The EU presidency itself.In a startling diatribe before EU legislators Thursday, Czech President Vaclav Klaus, whose country assumed the rotating EU helm in January from France, branded the club an undemocratic and elitist project comparable to Soviet-era dictatorships that forbade free thought.Despite the uproar, this is hardly uncharacteristic of a deeply Euroskeptic leader who has refused to fly the EU flag over his official seat in Prague during the Czech presidency, saying the country is not an EU province.Not so long ago, Klaus thundered, in our part of Europe we lived in a political system that permitted no alternatives and therefore also no parliamentary opposition. We learned the bitter lesson that with no opposition, there is no freedom.His speech provoked boos from many lawmakers, some of whom walked out, but applause from a minority of nationalists and other anti-EU legislators.While deeply unpopular in EU circles, Klaus strikes a deep chord in some member states where citizens fear European plans to share more powers come at the cost of national sovereignty — concerns reflected in the bloc's continuing inability to adopt a charter aimed at jumpstarting the European project.Even in some of the poor EU newcomer nations, which might be expected to overwhelmingly support membership in the rich bloc, there are growing grumblings about the meddlesome hand of Brussels.Thursday's attack against the EU from its head of state marked another rough day for the Czech Republic, which has been struggling to offer sound leadership of the EU club amid a deepening economic recession.

It hopes to get all 27 EU governments to agree on coordinating economic measures to get Europe out of its downturn in a slew of summit talks in the coming months. But the Czechs are EU minnows with little of the clout of heavyweights like France or Germany.Czech diplomats scrambled to play down Klaus' words. Even the president's decision to hold his press conference at the Czech Embassy rather than follow tradition and have it at the European Parliament caused offense.Czech Prime Minister Mirek Topolanek traded barbs with French President Nicolas Sarkozy over a car bailout plan that Topolanek branded protectionist. The EU presidency is meant to take the role of neutral arbiter.A Czech art installation launching the presidency at EU headquarters also caused a stir by depicting Bulgaria as a squat toilet, leading to official protests by the fellow EU member. The Czechs were forced to apologize and — in a diplomatic fig leaf — covered up the offending image.On Thursday, Klaus raised more eyebrows when he branded the 785-member parliament undemocratic and spoke out against the new EU treaty which would give the EU parliament more powers and oversight.Klaus said the 27-nation bloc should concentrate on offering prosperity to Europeans, rather than closer political union, and scrap a stalled EU reform treaty that Irish voters have already rejected.He said that questioning deeper integration has become an uncriticizable assumption that there is only one possible and correct future of the European integration.

The enforcement of these notions ... is unacceptable, Klaus said. Those who dare thinking about a different option are labeled as enemies.Lawmakers were aghast at Klaus' attempt to compare the EU to the Soviet bloc.Mr. Klaus outlined a completely twisted and manipulated view of European reality, said Green leader Daniel Cohn-Bendit. To seriously compare the decision-making process in the EU with that of the Soviet Union indicates that the man has lost all touch with reality.

Czech president compares EU parliament to one-party state The Czech president is not opposed to his country's membership of the EU (Photo: European Parliament)VALENTINA POP 19.02.2009 @ 17:41 CET

EUOBSERVER / BRUSSELS – Increasing the European Parliament's powers won't solve EU's democratic deficit, since the bloc's legislature does not represent any nation and allows for no political alternatives opposed to EU integration, Czech President Vaclav Klaus told MEPs on Thursday (19 February).Renowned for his critical stance towards Brussels and the Lisbon treaty, Czech President Vaclav Klaus has questioned the authority of the European Parliament visiting the EU capital, prompting a dozen Socialist MEPs to leave the room.Are you really convinced that every time you take a vote, you are deciding something that must be decided here in this hall and not closer to the citizens, that are inside the individual European states? Mr Klaus asked.He warned that the European Parliament currently lacked any political alternative opposed to European integration, something that resembled the one-party system of the Soviet Union.Moreover, since there was no genuine European demos, the democratic deficit of the EU could not be solved by strengthening the role of the European Parliament – a measure foreseen in the Lisbon treaty. This would, on the contrary, make the problem worse and lead to an even greater alienation of the citizens of European countries from the EU institutions, he said.The solution, he explained later in a press conference, was "to return many competences from the European Parliament to national parliaments and from Brussels to national governments.The Czech president stressed that he was not opposed to his country's membership of the EU, since he saw no alternative to it and didn't want to be "the bad guy, with all the good guys inside the EU.However, he argued that the methods and forms of European integration do, on the contrary, have quite a number of possible and legitimate variants.

There is no end of history, he said. Neither the present status quo, nor the assumption that the permanent deepening of the integration is a blessing is – or should be – a dogma for any European democrat. The enforcement of these notions ...is unacceptable.In his view, the European Union should go back to the principles it was based on – human freedom and economic prosperity through the market economy and deregulation.The current economic and financial crisis, was incorrectly depicted as being caused by free market and lack of regulation. In reality, it is just the contrary – caused by political manipulation of the market, he said.People in eastern Europe, including Czechs, who lived half of the 20th century without freedom and in a dysfunctional, centrally planned economy were particularly sensitive to the tendencies leading in other directions than towards freedom and prosperity,he argued.Asked about the remarks of President Nicolas Sarkozy, who has called on French car makers to stay in France instead of setting up shop in the Czech Republic, Mr Klaus said he would oppose any ideas from anyone suggesting the building of new barriers.Mr Klaus also opposed any accelerated accession of his country to the eurozone, being convinced that the Czech republic would have been worse off if it were in the monetary union.

Chess play with Lisbon

Asked whether he would sign the Lisbon treaty if the Czech parliament completed ratification of the document, the president compared himself to a chess player who never announces his next move.When questioned if the new Libertas party was one of the political alternatives he was calling for, Mr Klaus answered that Libertas is against the Lisbon treaty. This is an important message that I fully support.He reiterated the idea that the Irish voters should not be bullied into accepting the treaty, stressing that the idea of EU integration was initially based on freedom and on equal rights for every country – big or small. I hope we're not moving towards an Orwellian world where some are more equal than others,he concluded.

Parliament's establishement outraged

The president of the European Parliament, German MEP Hans-Gert Pottering, a strong supporter of the Lisbon treaty and EU integration, was visibly upset by Mr Klaus' remarks.Standing next to the Czech president after he delivered his speech, Mr Poettering said: It was your wish to speak in this house, adding: You would not have been able to deliver this speech in a parliament of the past.Your visit today is an expression of the diversity of opinions in the EU, Mr Poettering added.He did concede one point to the Czech president, saying that decisions should be indeed taken closer to the citizen, but that it was also the responsibility of national government to devolve powers to regional and local authorities.The co-president of the Greens, Daniel Cohn-Bendit, also a strong promoter of EU integration, went so far as to propose Mr Klaus for a special carnival award in recognition of his efforts as provocateur of the year.His speech to this house was a perfect source of festive amusement.

STORMS HURRICANES-TORNADOES

LUKE 21:25-26
25 And there shall be signs in the sun, and in the moon, and in the stars; and upon the earth distress of nations, with perplexity;(MASS CONFUSION) the sea and the waves roaring;(FIERCE WINDS)
26 Men’s hearts failing them for fear, and for looking after those things which are coming on the earth: for the powers of heaven shall be shaken.

1 dead, 16 injured as severe storms pelt Ga., Ala. By ED SHEARER, Associated Press Writer – Thu Feb 19, 4:28 pm ET

ATLANTA – One person was killed and at least 16 were injured when fierce thunderstorms swept Georgia and Alabama, bringing tornadoes, hail and lightning and downing trees and power lines, authorities said Thursday.At least three tornadoes touched down in central Georgia when the storms swept through overnight, according to National Weather Service teams who rolled out after daylight to determine if twisters had hit based on the damage. The storms gutted homes, and destroyed a nightclub and damaged schools.It looks like a B-52 bomber went over, Putnam County Sheriff Howard Sills said. The buildings are completely disintegrated.In the Hancock County town of Sparta, Johnny Frank Baker was killed when his home was destroyed by the storm, county coroner Alexander Ingram said.Most of the 143-year-old Hickory Grove Missionary Baptist Church, which is across the street from Baker's home, was leveled and nearby graves were uprooted by toppled trees.Kent McMullen, a meteorologist with the weather service in Peachtree City, said one confirmed tornado cut a 7-mile swath through rural Jasper County with winds of up to 100 mph. At least 10 people were injured and as many as 100 structures were damaged in Jasper County, emergency managers said.

Two other twisters touched down in Taylor County and at Robins Air Force Base in Warner Robins, south of Macon, McMullen said.In Alabama, an apparent tornado uprooted trees in Geneva near the Florida line. No injuries were reported.The storms also damaged at least two schools in Fayette County south of Atlanta.Across Georgia, roughly 13,400 homes and businesses lost power during the height of the storm. Much of it was restored by Thursday morning.The storms might just be a preview of the spring tornado season. A record outbreak of 21 tornadoes struck the state on March 1, 2007, wrecking a hospital in Americus and killing nine people. A tornado struck downtown Atlanta on March 14 last year, causing millions of dollars in damage, and some buildings still have broken windows.Associated Press writers Dorie Turner in Atlanta and Shedd Johnson in Montgomery, Ala., contributed to this report.

EARTH DESTROYED WITH THE EARTH

GENESIS 6:11-13
11 The earth also was corrupt before God, and the earth was filled with violence.(WORLD TERRORISM,MURDERS)
12 And God looked upon the earth, and, behold, it was corrupt; for all flesh had corrupted his way upon the earth.
13 And God said unto Noah, The end of all flesh is come before me; for the earth is filled with violence (TERRORISM) through them; and, behold, I will destroy them with the earth.

Chaiten volcano erupts again in southern Chile By EVA VERGARA, Associated Press Writer – Thu Feb 19, 5:17 pm ET

SANTIAGO, Chile – More than 150 people who had returned to a Chilean town destroyed by a volcanic eruption last year were evacuated again on Thursday as the volcano roared back to life, spewing ash high into the air.The explosion apparently rocked the dome of the Chaiten volcano and sent volcanic material down the mountain's slope, threatening to block a river and trigger flooding, said Paula Narvaez, a presidential delegate to the area in southern Chile.Experts who flew over the volcano reported large emanation of gas on Thursday and said the situation is risky for the nearby seaside town of Chaiten because rains could trigger avalanches.The experts were unanimous in considering that no one must remain in Chaiten, Chile's Emergency Bureau said in a communique.Narvaez said that as many as 160 people were evacuated from the vicinity of the 2,700-foot (960-meter) volcano.More than 4,000 people were initially evacuated after Chaiten erupted on May 2 for the first time in an estimated 9,000 years.On Thursday, increased seismic activity was reported and ash fell 100 miles (160 kilometers) away in Futaleufu.Some residents of Chaiten, six miles (10 kilometers) from the like-named volcano, have strongly resisted government efforts to relocate them to a new settlement following the devastating eruption last year.Residents opposed to the move in recent weeks staged protests in the town's ruins, amid houses buried under ash and volcanic mudflows.Narvaez said the situation on Thursday was exactly the kind of danger we were talking about when we decided to relocate Chaiten.The relocation site has yet to be determined.

OZONE DEPLETION

ISAIAH 30:26-27
26 Moreover the light of the moon shall be as the light of the sun, and the light of the sun shall be sevenfold, as the light of seven days, in the day that the LORD bindeth up the breach of his people, and healeth the stroke of their wound.
27 Behold, the name of the LORD cometh from far, burning with his anger, and the burden thereof is heavy: his lips are full of indignation, and his tongue as a devouring fire:

MATTHEW 24:21-22,29
21 For then shall be great tribulation, such as was not since the beginning of the world to this time, no, nor ever shall be.
22 And except those days should be shortened, there should no flesh be saved: but for the elect’s sake those days shall be shortened (Daylight hours shortened)
29 Immediately after the tribulation of those days shall the sun be darkened, and the moon shall not give her light, and the stars shall fall from heaven, and the powers of the heavens shall be shaken:

REVELATION 16:7-9
7 And I heard another out of the altar say, Even so, Lord God Almighty, true and righteous are thy judgments.
8 And the fourth angel poured out his vial upon the sun; and power was given unto him to scorch men with fire.
9 And men were scorched with great heat, and blasphemed the name of God, which hath power over these plagues: and they repented not to give him glory.

World Bank warns of climate change in Andes By ANDREW WHALEN, Associated Press Writer – Tue Feb 17, 10:21 pm ET

LIMA, Peru – Global climate change threatens the complete disappearance of the Andes' tropical glaciers within the next 20 years, putting precious water, energy and food sources at risk, according to a World Bank report presented here Tuesday.

The study says glacial retreat has already reduced by 12 percent the water supply to Peru's dry coastline, home to 60 percent of the country's population.In Peru, (the glaciers) are melting very quickly. More than 20 percent of the glacial ice caps have disappeared since the 1970s, World Bank climate change specialist Walter Vergara told reporters in the capital, Lima.The report says that in neighboring Bolivia, the Chacaltaya glacier has lost 82 percent of its surface area since 1982. Meanwhile the Ecuadorean capital of Quito could face increased water costs of up to $100 million annually in the next 10 years as rising temperatures deplete nearby glaciers, Vergara said.The World Bank study on climate change in Latin America warns of three other major threats besides glacier disappearance: the destruction of coral reefs by warming oceans, which could cause the Caribbean basin's ecosystem to collapse; wetlands devastation in the Gulf of Mexico due to deforestation, pollution and land development; and the risk of reduced rainfall drying large swaths of the Amazon jungle.Bank staffers said that if nothing is done to combat global climate change and reverse the trends, those threats could have profound social and economic effects.Glacier retreat could devastate the supply of drinking water and agriculture in the Andean nations, they said, while also hurting hydroelectric power generation that makes up 50 percent of energy production in Bolivia, Ecuador and Peru.Pablo Fajnzylber, the World Bank's senior economist for the Latin American region, warned that agricultural production in South America as a whole will drop 12 to 50 percent by 2100 if new technologies and more resistant seeds are not introduced.

Fajnzylber acknowledged that reversing climate change has taken a back seat to the global financial meltdown, but said the crisis actually presents an opportunity for nations to encourage investment in renewable and efficient energy.The Bank also announced Tuesday it has approved a $330 million loan to help Peru's newly created Environment Ministry regulate mining, fishing and transportation, and protect the country's forests and biodiversity.

SIGNS OF THE END OF THE AGE (NOT THE WORLD) THE WORLD GOES ON FOREVER.

GENESIS 1:5,14
5 And God called the light Day, and the darkness he called Night. And the evening and the morning were the first day.
14 And God said, Let there be lights in the firmament of the heaven to divide the day from the night; and let them be for signs, and for seasons, and for days, and years:(ISRAELS HOLY DAYS AND SABBATH STARTS AT 6PM) And for SIGNS (PROPHECY SIGNS TO HAPPEN IN THE FUTURE, OUR DAY)

SIGNS IN THE SUN, MOON AND STARS

LUKE 21:11
11 And great earthquakes shall be in divers places, and famines, and pestilences; and fearful sights and great signs shall there be from heaven.

What a mess! Experts ponder space junk problem By VERONIKA OLEKSYN, Associated Press Writer – Thu Feb 19, 3:53 pm ET

VIENNA – Think of it as a galactic garbage dump. With a recent satellite collision still fresh on minds, participants at a meeting in the Austrian capital this week are discussing ways to deal with space debris — junk that is clogging up the orbit around the Earth.Some suggest a cosmic cleanup is the way to go. Others say time, energy and funds are better spent on minimizing the likelihood of future crashes by improving information sharing.The informal discussions on the sidelines of a meeting of the United Nations Committee on the Peaceful Uses of Outer Space, which began Feb. 9 and ends Friday, arose from concern about the collision of a derelict Russian spacecraft and a working U.S. Iridium commercial satellite.The Feb. 10 incident, which is still under investigation, generated space junk that could circle the Earth and threaten other satellites for the next 10,000 years; it added to the already worrying amount of debris surrounding the planet.Nicholas L. Johnson, NASA's chief scientist for orbital debris, said about 19,000 objects are present in the low and high orbit around the Earth — including about 900 satellites, but much of it is just plain junk.He estimated that included in the 19,000 count are about a thousand objects larger than 10 centimeters (4 inches) that were created by last week's satellite collision, in addition to many smaller ones. He predicted that if more junk accumulates, the likelihood of similar collisions — currently very rare — will increase by 2050.To Johnson, the true solution in the long run is to go get the junk — or push it away to a higher altitude before it has time to crash into anything.Today's environment is all right but the environment is going to get worse, therefore I need to start thinking about the future and how can I clean up sometime in the future, he said.Johnson is the co-lead of an International Academy of Astronautics study that is exploring ways of extracting space debris from Earth orbit.

Some of the suggestions sound pretty spaced out.

One proposes attaching balloons to pieces of debris to increase their atmospheric drag and bring them back to Earth faster. Another, said Johnson, foresees attaching a 10-mile (16-kilometer) electrodynamic tether to debris that would generate a current, which then could be controlled from the ground enabling technicians to bring it down.

Many scientists are skeptical about the possibility of a cleanup.

Richard Crowther, the chief British delegate to the meeting, suggested extracting debris from space was costly and risked causing more collisions or explosions that, in turn, would generate more debris.Crowther, an expert on space debris and so-called Near Earth Objects, suggested it was important to improve information-sharing about the location of objects in orbit to minimize future crashes since each collision creates more debris, further congesting Earth orbit.The information to a large extent is out there, but the owners of the data tend to keep the information to themselves, Crowther said, acknowledging that the U.S. has been very good about making its data publicly available.To Brian Weeden, technical consultant at the nonprofit Secure World Foundation, the ideal scenario would involve the creation of a global network that would funnel data on the whereabouts of space debris into a clearing house for all.The vision we have is a network where a number of different countries — each of which has a sensor or radar — contributes data from that sensor or radar to a central location, Weeden said.The European Space Agency has begun a program that goes part way toward meeting that goal by monitoring space debris and setting up uniform standards to prevent future collisions far above the planet.

Launched in January, the 50 million euro ($64 million) program — dubbed Space Situational Awareness — aims to increase information for scientists on the ground about the estimated 13,000 satellites and other man-made bodies orbiting the planet.
But a worldwide system is unlikely to be created any time soon. While the U.S., France and others have expressed informal interest, no state has pledged official support, Weeden said. On the Net: United Nations Office for Outer Space Affairs: http://www.oosa.unvienna.org

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 FEB 20,2009

09:30 AM -5.98
10:00 AM -86.26
10:30 AM -71.05
11:00 AM -107.21
11:30 AM -141.22
12:00 PM -133.49
12:30 PM -126.56
01:00 PM -180.72
01:30 PM -194.58
02:00 PM -152.52
02:30 PM -60.22
03:00 PM -58.86
03:30 PM -133.73
04:00 PM -100.28 7365.67

S&P 500 770.05 -8.89

NASDAQ 1441.23 -1.59

GOLD 994.50 +18.00

OIL 38.94 -0.54

TSE 300 7949.99 -235.36

CDNX 892.90 -9.20

S&P/TSX/60 477.26 -13.31

MORNING,NEWS,STATS

YEAR TO DATE PERFORMANCE
Dow -14.93%
S&P -13.76%
Nasdaq -8.51%
TSX Advances 652,declines 861,unchanged 279,Volume 2,436,445,540.
TSX Venture Exchange Advances 336,Declines 408,Unchanged 377,Volume 227,899,303.

Dow -134 points at 4 minutes of trading today.
Dow -154 points at low today.
Dow -5 points at high today so far.
Dow crosses below NOVEMBER INTRADAY LOW of 7449.38 TODAY.
Dows last close below 7200 points was on OCT 27,1997.(7161.15)
Oil opens today at $37.47.Oil declines on Economic concerns.
Gold opens at $997.90 today.
Gold eyes $1003.20 record close on MARCH 18,2008.
Gold INTRADAY RECORD $1014.60 on MARCH 17,2008.
Gold tops $1004.00 at 1PM TODAY.

BOLTON,BECK ON MEXICO VIOLENCE
http://www.realclearpolitics.com/video/2009/02/bolton_beck_on_impact_of_mexican_violence.html
ERIC HOULDER - AMERICA COWARDS
http://www.youtube.com/watch?v=2Fy2DnMFwZw&eurl=http:
//www.realclearpolitics.com
/video/2009/02/eric_holder_race
_cowards.html&feature=player_embedded

AFTERNOON,NEWS,STATS
Dow -212 points at low today so far.
Dow -5 points at high today so far.
Boeing touches lowest level since OCTOBER 2003.
Alcoa touches lowest level since AUGUST 1988.
General Electric dips to lowest since 1995.
Kraft foods touches all time low since going public in 2001.
European Banks down 5-14% today.
Research in motion -26% this month.
Financials lead stocks lower today.
General Motors at $1.60 a 71 year low.
GM shares last closed below $1.70 in MAY 1938.
GM close to seeing market cap fall below$1 BILLION.

DAY TODAY PERFORMANCE - 12:30PM STATS
NYSE Advances 540,declines 3,248,unchanged 57,New Highs 11,New Lows 597.
Volume 4,005,920,125.
NASDAQ Advances 698,declines 1,969,unchanged 138,New highs 9,New Lows 360.
Volume 1,132,148,853.
TSX Advances 373,declines 1,031,unchanged 231,Volume 1,421,868,131.
TSX Venture Exchange Advances 227,Declines 368,Unchanged 302,Volume 144,386,952.

WRAPUP,NEWS,STATS
Dow -212 points at low today.
Dow +8 points at high today.
Dow -1.34% today Volume 584,899,403.
Dow ends day at fresh 6 year low.
Dow briefly turned possitive after bouncing from 2.9% drop.
Nasdaq -0.11% today Volume 2,147,483,648.
Nasdaq still above JAN closing low.
Nasdaq was up almost 1% after bouncing from 1.8% drop.
S&P 500 -1.14% today Volume N/A
S&P closes above NOV low.
S&P ends down 1.1% after bouncing from 3.1% drop.
Worst week for stocks since OCT.NOV 2008.
Stocks close near middle of days trading range.
STOCKS REBOUNDED AFTER WHITEHOUSE CALMED BANK NATIONALIZATION FEARS.
PRIVATE BANK SYSTEM WAY TO GO WHITEHOUSE CLAIMS.

SECTORS THIS WEEK
Dow -6.2% this week.
Nasdaq -6.1% this week.
S&P -6.9% this week.
Dow Transports -8.7% this week.
Russell 2000 -8.2% this week.
Gold +3.0% this week.
Financials -16.9% this week.
Housing -12.8% this week.
Semis -10.8% this week.
Oil -9.9% this week.
Consumer -4.9% this week.

END OF WEEK STATS-YEAR TO DATE
Dow -16.07%
Nasadaq -8.61%
S&P -14.75%
END OF WEEK CANADA STATS
TSX Advances 389,declines 1,193,unchanged 234,Volume 2,746,067,748.
TSX Venture Exchange Advances 339,Declines 480,Unchanged 377,Volume 253,759,708.

THE BANK DILEMMA
Zombie Bank Vs Nationalization.
The only alternatives.HOW TO VALUE ASSETS?
Provide money to Banks without Dilution.

Gold price tops $1,000 By Javier Blas and Chris Flood February 20 2009 18:15 | Last updated: February 20 2009 18:15

Gold prices rose above the $1,000 a troy ounce mark on Friday as investors shunned risky assets for the relative safety of bullion amid renewed fears about the health of the global financial system. Gold investors hear ‘trillions and trillions’ and bail-out after bail-out and look at gold as the only asset which remains good for capital preservation, said Tom Pawlicki of MF Global, the commodities broker in Chicago.In London, spot gold jumped to $1,005.40 an ounce, sharply higher from New York’s last quote on Thursday of $973.85, and the highest level since March 2008.

Gold is trading less than 3 per cent below its all-time high of $1,030.80 set last March.Bullion has reached new record highs when priced in a range of currencies, including sterling, the euro, the Australian and Canadian dollars and the Indian rupee.Alan Ruskin of the Royal Bank of Scotland said that unlike last year, the run-up in gold was much less a direct consequence of the US dollar weakness than a general flight from paper currencies. Suki Copper of Barclays Capital said: Last year, we saw a switch into physical gold from paper gold futures following the growing concerns over counterparty risk as investors wanted the safety of a hard asset. However, in this recent rally, we have not seen that same discrimination so along with strong demand for coins and bars, we’ve also seen renewed buying interest in gold futures as well as the huge inflows into ETFs.Holdings in the SPDR Gold Trust, the world’s largest gold-backed ETF, rose to 1,028.98 tonnes on Thursday, elevating it to the world’s seventh-largest holder, behind a handful of central banks. SPDR holdings have risen 248.75 tonnes so far this year, absorbing about 10.5 per cent of the world’s annual gold mine output.Ms Copper said: The speed of the inflows into ETFs really has been remarkable this month. Total ETF holdings have jumped by 201 tonnes in February alone which is a record inflow - almost double the inflows of the previous record.

Michael Jansen, metals analyst at JPMorgan, said that if the pace of buying from the ETF community and from physical bars and coins hoarders was sustained, then the illiquidity in the gold market would be the tinderbox that allows the parabolic move that some seek, or fear.A $1,200 to 1,300 an ounce target for gold is not unreasonable over the next three to six months, said Mr Jansen. Michael Lewis, commodity strategist at Deutsche Bank, said gold’s rally would continue to reflect the worsening economic outlook.The surge in investment flows into gold ETFs exposes gold [prices] to the ebb and flow of investor sentiment and consequently introduces an additional level of volatility risk into the market, said Mr Lewis. Retail investors and wealthy individuals are purchasing large quantities of gold coins, a move seen as the strongest signal of safe-haven buying by the industry. Sales of South Africa’s Krugerrand, the world’s most popular bullion coin, are running 10 times higher than this time last year, with investors buying about 20,000 ounces a week, according to Johan Botha, head of precious metals sales at the Rand Refinery in Germiston, on the outskirts of Johannesburg. As long as there is a lack of confidence in the banking system, investors would rather look at physical investment such as gold, Mr Botha told the Financial Times. The Rand Refinery doubled its maximum production capacity last month to 20,000 ounces from 10,000 ounces.

We are operating at maximum capacity, said Mr Botha who also that that if the refinery was able to produce more gold coins, demand was strong enough to absorb the increased output. The surge in gold investment contrasts with a lack of demand from the jewellery sector, traditionally the backbone of global consumption. India, the world’s largest consumer, has not imported gold so far this year as high prices have detered buyers and led to a surge in scrap supplies returning to the market.The weakness of the jewellery market has prompted fears of a pull-back in prices if the momentum in investment buying slows. Deutsche Bank also cautioned that the threat of deflation in the US was bearish for the gold price as it would imply a significant rise in real interest rates around the world, an environment that has historically proved problematic for gold returns.The World Gold Council reported a 4 per cent increase in global gold demand in 2008, driven by a 64 per cent jump in investment. In its latest Gold Demand Trends report released earlier this week, the industry sponsored body noted that jewellery demand fell 11 per cent while industrial consumption dropped 7 per cent last year.. Supply was 1 per cent lower in 2008 than the previous year, with a 3 per cent drop in mine production and a 42 per cent plunge in official sector sales, mostly from central banks. Supplies from scrap surged 17 per cent.Financial Times Limited 2009

US dollar mostly lower in European trading Thu Feb 19, 7:47 am ET

LONDON – The U.S. dollar was mostly lower against other major currencies in early European trading Thursday. Gold rose.The euro traded at US$1.2675, up from US$1.2555 late Wednesday in New York.Other dollar rates:93.51 Japanese yen, down from 93.76
1.1766 Swiss francs, up from 1.1762 1.2506 Canadian dollars, down from 1.2644 The British pound was quoted at US$1.4381, up from US$1.4224.Gold traded in London at $973.50 per troy ounce, up from $964.00 late Wednesday.(This version CORRECTS final graf to show gold up sted down)

Dow ends at lowest close in more than 6 years By TIM PARADIS, AP Business Writer FEB 19,09

NEW YORK – An important psychological barrier gave way on Wall Street Thursday as the Dow Jones industrials fell to their lowest level in more than six years.The Dow broke through a bottom reached in November, pulled down by a steep drop in key financial shares. It was the lowest close for the Dow since Oct. 9, 2002, when the last bear market bottomed out.The blue chips' latest slide dashed hopes that the doldrums of November would mark the ending point of a long slump in the market, which is now nearly halfway below the peak levels reached in October 2007.The market's inability to rally signals that investors see no immediate end for the recession, which is already 14 months old and one of the most severe in decades. Investors also haven't been impressed with two major economic initiatives from the Obama administration this week, an economic stimulus package and a mortgage relief plan.It is definitely, definitely a blow to psychology, said Quincy Krosby, chief investment strategist at The Hartford, referring to the Dow's finish. There is more pessimism in the market as to when the economy is going to pick up steam.The Dow had been teetering close to November bottom since Tuesday, when the index tumbled 300 points on worries about the economy and the stability of banks in Eastern Europe. Stocks had barely finished above the November low on Tuesday and Wednesday.On Thursday, worries about financial and technology stocks weighed on the market, with steep drop-offs in financial bellwethers like Citigroup and Bank of America leading the way downward. Both stocks tumbled 14 percent and closed below $4, less than the cost of a latte in some coffee shops.

The Dow represents, to the average investor, the American economy, Krosby said. While professional investors often look at indexes like the Standard & Poor's 500 index, the Dow's slide is an unwelcome milestone. It's a tenet of the market, selling begets selling. You're going to see the market on guard.The Dow lost 89.68, or 1.2 percent, to end at 7,465.95.The blue chips have fallen 9.8 percent in the last eight sessions.Broader indexes also fell. The Standard & Poor's 500 index ended down 9.48, or 1.2 percent, to 778.94. The index finished above its Nov. 20 close of 752.44, which was its worst finish since April 1997.The technology-heavy Nasdaq composite index suffered the biggest hit Thursday after Hewlett Packard Co. posted worrisome results after market close on Wednesday. The Nasdaq fell 25.15, or 1.7 percent, to 1,442.82.The Russell 2000 index of smaller companies fell 6.47, or 1.5 percent, to 416.71.Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 5.64 billion shares compared with 5.65 billion shares traded Wednesday.Dan Cook, senior market analyst at IG Markets, said the Dow's move lower is unnerving because it forces many investors to reassess their expectations of how far the market could slide.It's kind of like if we're walking across a frozen pond. If that ice starts to crack a bit we're going to be very wary, he said.The news of the day didn't offer much support. Hewlett-Packard gave up nearly 8 percent after the computer and printer company turned in disappointing fourth-quarter sales, hurt by tightening spending at many businesses.Even the bright spots weren't enough to lift the market. Sprint Nextel Corp., the nation's third-largest wireless carrier, rose 20 percent after its fourth-quarter results came in better than forecast. And Whole Foods Market Inc. jumped 37 percent Thursday after earnings from the natural and organic grocer topped expectations.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, rose to 2.86 percent from 2.75 percent late Wednesday. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.29 percent from 0.30 percent Wednesday. The dollar was mixed against other major currencies, while gold prices slipped. Light, sweet crude rose $2.77 to settle at $40.18 per barrel on the New York Mercantile Exchange. Economic news released Thursday offered investors little incentive to buy. The number of workers receiving unemployment benefits hit a record high of nearly 5 million, and new jobless claims are at levels not seen since the early 1980s. A reading on wholesale prices, the Producer Price Index, jumped more than expected in January, the first increase in six months. The Philadelphia Federal Reserve said conditions in the region's manufacturing sector weakened in February. There was some good news: An index of leading economic indicators logged a surprise increase in January, the second straight monthly gain. Technology and financial stocks weighed on the market. H-P fell $2.69, or 7.9 percent, to $31.39. Citigroup fell 40 cents to $2.51, while Bank of America fell 64 cents to $3.93. Some investors turned to consumer staples stocks after drugstore operator CVC Caremark Corp. posted a better-than-expected 17 percent increase in earnings for the final three months of 2008. CVS rose $1.72, or 6.4 percent, to $28.71.Sprint rose 54 cents, or 19.9 percent, to $3.25, while Whole Foods rose $3.46, or 37.2 percent, to $12.75.Overseas, Britain's FTSE 100 rose 0.3 percent, Germany's DAX index rose 0.2 percent, and France's CAC-40 fell 0.1 percent. Japan's Nikkei stock average rose 0.3 percent.

Feb. could be worst month yet for jobless claims By MARTIN CRUTSINGER, AP Economics Writer Thu Feb 19, 5:01 pm ET

WASHINGTON – February is shaping up to be another brutal month of job losses: The number of laid-off workers receiving unemployment benefits hit an all-time high of nearly 5 million, and new jobless claims are at levels not seen since the early 1980s.The Labor Department reported Thursday that the number of people receiving regular unemployment benefits rose by 170,000 to 4.99 million for the week ending Feb. 7, marking the fourth straight week continuing claims have hit a record.The surge in joblessness has pushed those claims far above the 2.77 million people getting benefits a year ago. The number totals 6.54 million with the inclusion of an additional 1.5 million people who are getting extended benefits under a program passed by Congress last summer.And those numbers are sure to climb higher, based on the flood of newly laid-off workers seeking benefits.The government reported Thursday that new jobless claims for last week totaled 627,000, the same level as the previous week but higher than economists expected. It also was near the recent high of 631,000 hit three weeks ago, which was the most new weekly claims since 1982 when the country was in another severe recession. The three straight weeks of seasonally adjusted claims above 600,000 also is the longest stretch in more than 26 years.The labor market is in disarray, said Mark Zandi, chief economist at Moody's Economy.com. We are seeing job losses across nearly every industry and every region of the country.Based on current trends, net job losses for February could well top 700,000, Zandi said. That would surpass the 598,000 jobs lost in January, which had been the biggest total since 1974.

Worries about the economy dragged the Dow Jones industrial average down nearly 90 points Thursday to close at 7,465.95, its lowest level in more than six years. The Standard & Poor's 500 index and the technology-heavy Nasdaq composite index also fell.Even with approval of a $787 billion economic stimulus package this week, economists are warning that any recovery may not take hold until late this year at the earliest, given that the housing market is still deteriorating, the financial market has yet to stabilize and job losses are mounting.Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday that the economy faces obstacles for the next several quarters that would work against a strong recovery.Those obstacles include credit markets not yet returned to healthy functioning, a housing market still weighed down by an excess supply of homes for sale and low business and household confidence, Lockhart said. None of these is likely to turn around quickly.In other economic news, wholesale inflation surged unexpectedly in January, according to the Labor Department. Wholesale prices jumped 0.8 percent last month, the biggest gain since July and well above the 0.2 percent increase that economists expected.The acceleration was led by a 3.7 percent surge in energy prices. Gasoline prices jumped 15 percent, the biggest gain in 14 months. Even outside the volatile food and energy sectors, wholesale prices showed a bigger-than-expected increase, rising 0.4 percent.Meanwhile, the New York-based Conference Board said its January index of leading economic indicators rose 0.4 percent, the second straight monthly gain.However, economists dismissed the gains in both wholesale prices and economic indicators as temporary blips that did not signal either a problem with inflation or a potential rebound in the economy.The Conference Board said the single biggest boost to the index was the real money supply. The government's effort to address the credit crisis has put more money in circulation, but banks still have not returned to normal loan operations.The inflation jump reflected a big rise in energy costs that analysts said was unlikely to last given slack demand from a spreading global recession.The recession at home continues to pummel workers searching for jobs. The four-week average for unemployment benefits applications rose to 619,000, up from 608,500 the previous week. The prior week's total had been the first time the figure topped 600,000 during the current economic downturn, which began in December 2007 and is the longest slump in a quarter-century. The cascade of layoff notices in recent weeks has shown that many employers are starting to trim payrolls drastically, abandoning hopes they could retain workers until a rebound took hold.Goodyear Tire & Rubber Co., said Wednesday it will cut nearly 5,000 jobs, or almost 7 percent of the biggest U.S. tire maker's work force, this year after it posted a fourth-quarter loss and revenue sank 21 percent. The cuts follow the elimination of about 4,000 jobs in the second half of last year.

General Motors Corp. and Chrysler on Tuesday filed plans with the government more than doubling their request for aid to a total of $39 billion and announced plans for thousands more job cuts. GM alone said it would cut 47,000 jobs globally by the end of the year — 19 percent of its work force, and Chrysler said it will cut 3,000 more jobs. For the week ending Feb. 7, the states with the largest increases in jobless applications were Kentucky and Arkansas, which blamed the jumps on rising layoffs in the mining, trade and manufacturing industries. The biggest decreases were recorded in California and Tennessee, which reported fewer layoffs in the construction, trade, service and manufacturing industries. AP Economics Writer Jeannine Aversa contributed to this report.

US, UBS in high stakes battle over banking secrecy by P. Parameswaran – Thu Feb 19, 4:57 pm ET

WASHINGTON (AFP) – Swiss bank UBS and US authorities Thursday were locked in a high-stakes legal tussle over banking secrecy despite a pact meant to settle a gigantic tax fraud case shaking the Swiss banking industry.The showdown came a day after UBS admitted to US tax fraud and agreed to pay 780 million dollars as part of a provisional deal to settle charges by the US government that it helped thousands of American clients use Swiss accounts to evade US taxes.Ratcheting up the pressure on Switzerland's biggest bank, the US government filed a lawsuit Thursday seeking a court order for UBS to disclose to the Internal Revenue Service (IRS) the identities of as many as 52,000 US customers who allegedly evaded taxes.According to a UBS document filed with the lawsuit, as of the mid-2000s, those secret accounts held about 14.8 billion dollars in assets and the American clients had failed to pay taxes on income earned in those accounts.At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes, said John DiCicco, a senior attorney with the Justice Department.It is time for those who are trying to hide from the IRS to rethink their actions, he said.But UBS, Switzerland's banking flagship, refused the US government's demand for information on the US clients, saying it had substantial defenses and intends to vigorously contest the enforcement of the summons in the civil proceeding.The bank said that the objections were based on US law as well as terms of its agreement with the IRS and provisions of Swiss financial privacy and other laws, as well as international obligations, respected by Washington.UBS, the world's largest manager of private wealth, stressed that information about undisclosed accounts maintained by Americans at the bank in Switzerland were protected from disclosure by Swiss financial privacy laws.US legislators have accused UBS and other banks of helping wealthy Americans hide about 1.5 trillion dollars in overseas tax havens.According to the US lawsuit, Swiss-based bankers actively marketed UBS?s services to wealthy American customers within the United States.

UBS documents filed with the lawsuit show that its bankers came to the United States to meet with clients nearly 4,000 times per year in violation of US law.The US government alleged that UBS trained its bankers to avoid detection by US authorities and engaged in cross-border securities transactions it knew violated US security laws, according to court documents.The lawsuit also alleged that UBS helped hundreds of US taxpayers set up dummy offshore companies, to make it easier for those taxpayers to avoid their reporting obligations under US tax laws.As part of a deferred prosecution agreement announced Wednesday, UBS agreed to immediately provide Washington with the identities of, and account information for, certain US customers of UBS's cross-border business.The Swiss Financial Markets Supervisory Authority (FINMA) ordered UBS to reveal to US authorities account details for about 250 to 300 customers, according to Swiss President and Finance Minister Hans-Rudolf Merz on Thursday.Banking secrecy remains intact, Merz told journalists, adding that it doesn't protect tax fraudsters.Lawyers in Zurich Thursday said they would sue FINMA for violation of the country's financial secrecy law, on behalf of four US clients of UBS whose identities were revealed to US authorities. The decision to hand over client details sparked a debate on the future of banking secrecy in Switzerland, also under pressure from its European neighbors, notably Germany, over claims that it encourages tax evasion. European Commission spokeswoman Maria Assimakopoulou said in Brussels that the European Union had already suggested that secrecy should be lifted in cross-border requests for assistance. The OECD group of mostly industrialized economies estimates that between five to seven trillion dollars are held in tax havens or banking secrecy jurisdictions globally.

World Bank calls for eastern Europe bail-out
ANDREW WILLIS 19.02.2009 @ 09:28 CET

The World Bank called for intervention in central and eastern Europe on Wednesday (18February) as the region struggles to deal with the financial crisis and economic downturn.World Bank president Robert Zoellick said the bank was attempting to help the region along with the International Monetary Fund but needed more backing from Brussels, he admitted in an interview with the Financial Times on Wednesday.It's got to have support from the European governments, he said. It's 20 years after Europe was united in 1989. What a tragedy if you allow Europe to split again.Mr Zoellick hopes to announce a €20 billion ($25bn) trade finance plan before the G20 summit in London on 2 April. Speaking at meeting on budget deficits on Wednesday, economy commissioner Joaquin Almunia appeared to pour cold water on a co-ordinated Brussels action for central and eastern Europe.Listing countries such as EU member Romania, candidate country Croatia, and Ukraine, Mr Almunia said their different relationships with the EU executive meant that a single initiative for the region was not feasible. We think a lot of authorities should be involved in the coordination of the situation ... but from our point of view, what we can not do is to use the same instruments to help these countries, he said.However Lithuanian Prime Minister Andrius Kubilius echoed recent Austrian calls for an EU support plan for the region, saying that the root cause of the region's troubles was the banking crisis in the west.

It would be good to see a more co-ordinated approach from the EU authorities, Mr Kubilius said, also speaking to the Financial Times. We are all suffering in a similar way from the credit crunch and the recession.He also warned of the possibility of a collapse in Ukraine's or Russia's economy and said such an event would have dire consequences for eastern Europe. European interconnectivity has been highlighted in recent weeks. While central and eastern economies have been harmed by the economic slowdown that resulted from the financial crisis in the west, several western European states now fear contagion in the other direction. Austria in particular has been calling for a support package for eastern countries, fearing an economic collapse in the region could devastate the Alpine country's banking sector. Vienna's financial institutions are particularly exposed to the region, being owed €220 billion - equivalent to around three quarters of the country's GDP.On Tuesday, Moody's, the credit rating agency, caused panic in global financial markets after it reported that some west European banks with east European subsidiaries risked ratings downgrades because of the growing vulnerability of eastern Europe's banking system.Following the news, the polish zloty approached all-time lows against the euro and the Hungarian forint set a new record low. Austria is not alone in its concern. On Wednesday, Hungarian Prime Minister Ference Gyurcsany called for a €100 billion rescue plan from the EU for troubled banks in central and eastern Europe and plans to raise the idea at an informal meeting of European leaders on 1 March.

Central and eastern European leaders are calling for a meeting beforehand with commission President Jose Manuel Barroso to discuss the region's troubles, according to the Brussels-based European Voice.

Billionaire's bank customers denied their deposits By BEN FOX, Associated Press Writer – Wed Feb 18, 8:29 pm ET

ST. JOHN'S, Antigua – Panicky depositors were turned away from Stanford International Bank and some of its Latin American affiliates Wednesday, unable to withdraw their money after U.S. regulators accused Texas financier R. Allen Stanford of perpetrating an $8 billion fraud against his companies' investors.Some customers arrived in Antigua by private jet and were driven up the lushly landscaped driveway of the bank's headquarters, only to be told that all assets have been frozen pending an investigation by Antiguan banking regulators.I don't know what to think. I have my life savings here, said Reinaldo Pinto Ramos, 48, a Venezuelan software firm owner who flew in by chartered plane from Caracas on Wednesday with five other investors to check on their accounts. We're waiting to see some light.Banking regulators and politicians around the region are scrambling to contain the damage after the U.S. Securities and Exchange Commission filed civil fraud charges against the billionaire on Tuesday. Regional Director Rose Romero of the SEC's Fort Worth office called it a fraud of shocking magnitude that has spread its tentacles throughout the world.Stanford, 58, is a larger-than-life figure in the Caribbean, using his personal fortune — estimated at $2.2 billion by Forbes magazine — to bankroll public works and sports teams. He also is a major player in U.S. politics, personally donating nearly a million dollars, mostly to Democrats. At 6-foot-4 and 240 pounds, he towered over House Speaker Nancy Pelosi while giving her a warm hug at the Democratic National Convention last year.He owns a home in the U.S. Virgin Islands, and operates businesses from Houston to Miami and Switzerland to Antigua, where the government knighted him in 2006 in recognition of his economic influence and charity work.U.S. regulators have accused Stanford, two other executives and three of their companies of luring investors with promises of improbable and unsubstantiated high returns on certificates of deposit and other investments.

Many details about the alleged fraud remain unclear, but the SEC alleges a pattern of secrecy, including a failure to disclose the bank's exposure to losses in money manager Bernard Madoff's alleged Ponzi scheme.The SEC said no one but Stanford and James M. Davis of Baldwyn, Miss., the Antigua-based bank's chief financial officer, know where most of depositors' cash is invested, and both men have failed to cooperate with investigators.Approximately 90 percent of SIB's claimed investment portfolio resides in a black box shielded from any independent oversight,the SEC said in its complaint.Stanford's companies also have been scrutinized in recent years over concerns that they were laundering drug money, according to a U.S. official familiar with the case. DEA, FBI and Homeland Security investigators often launch such inquiries when offshore banks move lots of money, and there is no indication that money laundering charges are being prepared, said the official, who spoke on condition of anonymity because he was not authorized to discuss the inquiry.

Stanford wasn't talking Wednesday and a company Web site directed inquiries to the SEC. But in an e-mail to his employees last week, the billionaire said his company was cooperating with the probe, and vowed to fight with every breath to continue to uphold our good name and continue the legacy we have built together.A federal judge appointed a receiver to identify and protect Stanford's assets worldwide, including about $8 billion managed by the bank, which has affiliates in Mexico, Panama, Colombia, Ecuador, Peru and Venezuela.Also frozen were assets of Houston-based Stanford Capital Management and Stanford Group Company, which has 29 brokerage offices around the U.S.The fallout threatens catastrophic and immediate consequences for the twin-island nation of Antigua and Barbuda, said Prime Minister Baldwin Spencer. It also could rattle the economies of smaller nations where Stanford's companies have had outsized influence.SEC spokesman John Nester said the agency does not know where Stanford is. James Sullivan, the U.S. marshal for the Virgin Islands, said agents are monitoring his extensive holdings in St. Croix, including a boat he sometimes docks there, but could not say whether he is in the territory. He does not currently face any charges requiring his presence in court.As of right now, all we are doing is an ongoing investigation to monitor his holdings, for lack of a better term, and we are not actively pursuing him,Sullivan told The Associated Press.

Some U.S. lawmakers quickly announced they would donate Stanford's campaign contributions to charity.The Stanford Financial Group, through its political action committee and employees, has contributed $2.4 million to political candidates, parties and committees in the U.S. since 1989, with nearly two-thirds going to Democrats, according to the Center for Responsive Politics, a group that tracks campaign spending. Most of that cash flowed during the 2002 election cycle, when Congress was debating a financial services antifraud bill that would have linked the databases of state and federal banking, securities and insurance regulators. The bill ultimately died in the Senate, where the biggest recipients have been Sen. Bill Nelson, D-Fla. ($45,900); Sen. John McCain, R-Ariz. ($28,150); Sen. Chris Dodd, D-Conn. ($27,500); and Sen. John Cornyn, R-Texas ($19,700). Rep. Pete Sessions, R-Texas, also received $41,375. Stanford and his wife, Susan, also donated $931,100 of their own money, with 78 percent going to Democrats, including $4,600 to President Barack Obama's presidential campaign last May 31. Records show $2,300 of that was returned on the same day.Governments across Latin America and the Caribbean took a variety of actions Wednesday to protect investors who'd deposited money with Stanford-linked institutions. Colombia and Ecuador suspended the activities of Stanford's local brokerages Wednesday, and Panamanian regulators occupied Stanford bank branches hit by a run on deposits, which they described as an isolated consequence of decisions adopted by foreign authorities. Assets at the bank's four Panama branches, which reportedly held $200 million in deposits at year's end, are held largely in liquid, fixed-income investments that can more easily be converted into cash to cover deposits if necessary, the bank said. In Venezuela, banking regulator Edgar Hernandez said the government was considering a request for help from Stanford Bank SA in Caracas after a $26.5 million run on deposits removed about 12 percent of its holdings. We suggested an open intervention by the government, including the possibility of the government or a state-run bank depositing funds to back deposits, Hugo Faria, one of the bank's directors, told The Associated Press.

In Mexico, where the Stanford Fondos unit manages about $50 million for some 3,400 clients, a note posted on a shuttered office door in the capital's wealthy Polanco neighborhood announced that all accounts are temporarily frozen.We don't have any other information at this time. You will be contacted in the future with more details,the note said. Karina Klinckwort, 38, had rushed to the office Wednesday: Everything I have is with them, everything that my husband, may he rest in peace, invested is with them.The Stanford-controlled Bank of Antigua was not named in the complaint, but many Antiguans lined up outside nevertheless to try to get their money. Some of these working-class depositors clutched portable radios to listen to financial news. People have to come to get their money, said electrician Rasta Kente.But panicking will only make things worse, regional regulators warned. If individuals persist in rushing to the bank in a panic they will precipitate the very situation that we are all trying to avoid, said K. Dwight Venner, governor of the Eastern Caribbean Central Bank. Associated Press writers Anika Kentish in St. John's, Antigua; Jim Abrams and Matt Apuzzo in Washington, D.C.; Jeff Kummer in Dallas; Frank Bajak in Bogota; Jeanneth Valdivieso in Buenos Aires, Argentina; Olga Rodriguez in Mexico City; and Fabiola Sanchez in Caracas, Venezuela, contributed to this report.

OBAMA AND HARPER WERE TALKIN ABOUT A CARBON TAX FOLKS,THAT EVERYTHING WILL BE TAXED AND CALL IT A CARBON TAX.THIS CARBON TAX IS JUST A NEW AGE SCAM TO GET A WORLD TAX FOR THE IMF,WORLD BANK AND WORLD GOVERNMENT ELITES.

BERNANKE AT NPC VIDEO
http://www.c-span.org/Watch/watch.aspx?ProgramId=HP-A-40711

OBAMA CULT IN CANADA VIDEO
http://www.c-span.org/Watch/watch.aspx?MediaId=HP-R-15597

OBAMA VISIT TheStar.com | Canada | Transcript: Obama-Harper press conference
Transcript: Obama-Harper press conference FEB 19,09 STEVE RUSSELL/TORONTO STAR

President Barack Obama and Prime Minister Stephen Harper take questions in the Reading Room at Parliament in Ottawa, Feb. 19, 2009.

English-language transcript of a news conference held Thursday, Feb. 19 by U.S. President Barack Obama and Prime Minister Stephen Harper, as released by the White House press secretary's office.PRESIDENT OBAMA: Hello, good afternoon.

PRIME MINISTER HARPER: Good afternoon, ladies and gentlemen. (In French.)

(In English.) Once again, it is a great pleasure to welcome President Obama to Canada. We are deeply honored that he has chosen Canada for his first foreign visit since taking office. His election to the presidency launches a new chapter in the rich history of Canada-U.S. relations. It is a relationship between allies, partners, neighbors, and the closest of friends; a relationship built on our shared values -- freedom, democracy, and equality of opportunity epitomized by the President himself.Our discussions today focused on three main priorities. First, President Obama and I agree that Canada and the United States must work closely to counter the global economic recession by implementing mutually beneficial stimulus measures, and by supporting efforts to strengthen the international financial system.

We concur on the need for immediate, concerted action to restore economic growth and to protect workers and families hit hardest by the recession through lowering taxes, ensuring access to credit, and unleashing spending that sustains and stimulates economic activity. Second, President Obama and I agreed to a new initiative that will further cross-border cooperation on environmental protection and energy security. We are establishing a U.S.-Canada clean energy dialogue which commits senior officials from both countries to collaborate on the development of clean energy science and technologies that will reduce greenhouse gases and combat climate change.Third, the President and I had a productive discussion about our shared priorities for international peace and security -- in particular, our commitment to stability and progress in Afghanistan.This has been a very constructive visit, revealing to both of us a strong consensus on important bilateral and international issues. President Obama, I look forward to working with you in the months ahead to make progress on these issues and build on the long and deep friendship between our two countries and our two peoples.

PRESIDENT OBAMA: Thank you. Well, it is a great pleasure to be here in Ottawa. And Prime Minister Harper and I just completed a productive and wide-ranging discussion on the many issues of common concern to the people of the United States and Canada.

I came to Canada on my first trip as President to underscore the closeness and importance of the relationship between our two nations, and to reaffirm the commitment of the United States to work with friends and partners to meet the common challenges of our time. As neighbors, we are so closely linked that sometimes we may have a tendency to take our relationship for granted, but the very success of our friendship throughout history demands that we renew and deepen our cooperation here in the 21st century. We're joined together by the world's largest trading relationship and countless daily interactions that keep our borders open and secure. We share core democratic values and a commitment to work on behalf of peace, prosperity, and human rights around the world. But we also know that our economy and our security are being tested in new ways. And the Prime Minister and I focused on several of those challenges today. As he already mentioned, first we shared a commitment to economic recovery. The people of North America are hurting, and that is why our governments are acting. This week I signed the most sweeping economic recovery plan in our nation's history. Today the Prime Minister and I discussed our respective plans to create jobs and lay a foundation for growth. The work that's being done by this government to stimulate the economy on this side of the border is welcomed, and we expect that we can take actions in concert to strengthen the auto industry, as well.We know that the financial crisis is global, and so our response must be global. The United States and Canada are working closely on a bilateral basis and within the G8 and G20 to restore confidence in our financial markets. I discussed this with Prime Minister Harper, and we look forward to carrying that collaboration to London this spring.Second, we are launching, as was mentioned, a new initiative to make progress on one of the most pressing challenges of our time: the development and use of clean energy. How we produce and use energy is fundamental to our economic recovery, but also our security and our planet. And we know that we can't afford to tackle these issues in isolation. And that's why we're updating our collaboration on energy to meet the needs of the 21st century.The clean energy dialogue that we've established today will strengthen our joint research and development. It will advance carbon reduction technologies and it will support the development of an electric grid that can help deliver the clean and renewable energy of the future to homes and businesses, both in Canada and the United States. And through this example, and through continued international negotiations, the United States and Canada are committed to confronting the threat posed by climate change.

In addition to climate change, Prime Minister Harper and I discussed the need for strong bilateral cooperation on a range of global challenges -- one of the most pressing being Afghanistan. The people of Canada have an enormous burden there that they have borne. As I mentioned in an interview prior to this visit, those of us in the United States are extraordinarily grateful for the sacrifices of the families here in Canada of troops that have been deployed and have carried on their missions with extraordinary valor. You've put at risk your most precious resource: your brave men and women in uniform. And so we are very grateful for that. There is an enduring military mission against al Qaeda and the Taliban in Afghanistan and along the border regions between Afghanistan and Pakistan, but we also have to enhance our diplomacy and our development efforts. And we discussed this in our private meetings. My administration is undertaking a review of our policy so that we forge a comprehensive strategy in pursuit of clear and achievable goals. And as we move forward, we intend to consult very closely with the government here in Canada to make certain that all our partners are working in the same direction.In April, we'll have a broader dialogue with our NATO allies on how to strengthen the alliance to meet the evolving security challenges around the world.And finally, we look forward to the Summit of the Americas. My administration is fully committed to active and sustained engagement to advance the common security and prosperity of our hemisphere. We will work closely with Canada in advancing these goals and look forward to a meaningful dialogue in Trinidad.As I've said, the United States is once again ready to lead. But strong leadership depends on strong alliances, and strong alliances depend on constant renewal. Even the closest of neighbors need to make that effort to listen to one another, to keep open the lines of communication, and to structure our cooperation at home and around the world. That's the work that we've begun here today. I'm extraordinarily grateful to Prime Minister Harper for his hospitality, his graciousness, and his leadership. And I'm looking forward to this being the start of a continued extraordinary relationship between our two countries.

Q Thank you, Mr. President, Mr. Prime Minister. I have Afghanistan questions for you both. Mr. President, General McKiernan requested 30,000 extra troops; your new order calls for 17,000. How likely is it that you will make up that difference after the review you've mentioned? And more importantly, how long can we expect all U.S. combat troops to be in Afghanistan?

And, Mr. Prime Minister, based on your discussions today, are you reconsidering the 2011 deadline for troop withdrawal, and are you also thinking about increasing economic aid to Afghanistan?

PRESIDENT OBAMA: Well, David, the precise reason that we're doing a review is because I think that over the last several years we took our eye off the ball, and there is a consensus of a deteriorating -- that there is a deteriorating situation in Afghanistan. I don't want to prejudge that review. I ordered the additional troops because I felt it was necessary to stabilize the situation there in advance of the elections that are coming up. But we have 60 days of work to do. They -- that review, which will be wide-ranging, will then result in a report that's presented to me. And from -- at that point, we will be able to, I think, provide you with some clearer direction in terms of how we -- how we intend to approach Afghanistan.In terms of length, how long we might be there, obviously that's going to be contingent on the strategy we develop out of this review. And I'm not prejudging that, as well.

I should mention, just to preempt, or to anticipate Prime Minister Harper's -- the question directed at him, that I certainly did not press the Prime Minister on any additional commitments beyond the ones that have already been made. All I did was to compliment Canada on not only the troops that are there, the 108 that have fallen as a consequence of engagement in Afghanistan, but also the fact that Canada's largest foreign aid recipient is Afghanistan. There has been extraordinary effort there, and we just wanted to make sure that we were saying thank you.

PRIME MINISTER HARPER: Just very quickly, as you probably know, it was just last year that we were able to get through Parliament a bipartisan resolution extending our military engagement in Afghanistan for an additional close to four years at that point. As we move forward, we anticipate an even greater engagement on economic development. That was part of the strategy that we adopted. I would just say this -- you know, obviously we're operating within a parliamentary resolution -- I would just say this in terms of the United States looking at its own future engagement. We are highly appreciative of the fact the United States is going to be a partner with us on the ground in Kandahar. The goal of our military engagement, its principal goal right now, beyond day-to-day security, is the training of the Afghan army so the Afghans themselves can become responsible for their day-to-day security in that country.I'm strongly of the view, having led -- you know, as a government leader, having been responsible now for a military mission in Kandahar province, that we are not, in the long term through our own efforts, going to establish peace and security in Afghanistan; that that job ultimately can be done only by the Afghans themselves. So I would hope that all strategies that come forward have the idea of an end date, of a transition to Afghan responsibility for security, and to greater Western partnership for economic development.

Q (As translated.) Good day. In French for you, Mr. Harper. With regard to the environment, going beyond green technology, how far are your two countries prepared to harmonize your strategy to reduce greenhouse gases? And how will you reconcile your approaches? They seem different when it comes to the tar sands, for instance.

For you, Mr. President, I can repeat in English. On the part of the -- of the environment, beyond research, technology and science, how far are your two countries willing to go to harmonize your strategies in terms of greenhouse gas reductions? And how can you reconcile your two approaches when they seem so different, especially considering the fact that Canada refuses to have hard caps, in part because of the oil sands?

PRIME MINISTER HARPER: (In French.)

(In English.) Briefly, first of all, really premature to talk about anything like that, anything like harmonization with the United States. The United States has not had a national dialogue and debate on its own detailed approach. Obviously that's something the President's administration will be doing.What we have agreed to today is a dialogue on clean energy, and particularly on the development of clean energy technology. Both of our governments are making large investments in things such as carbon capture and storage and other new technologies designed to fight climate change. We share our -- our document on this clean energy dialogue talks about things we can do together to improve the electricity grid in North America. There are all kinds of things we can do together, independent of any American regulatory approach, on climate change.We will be watching what the United States does very -- with a lot of -- with a lot of interest for the obvious reasons that, as we all know, Canada has had great difficulty developing an effective regulatory regime alone in the context of a integrated continental economy. It's very hard to have a tough regulatory system here when we are competed with -- competing with an unregulated economy south of the border. So we'll be watching what the United States does. We'll be looking ourselves, for our own sake, at opportunities for harmonization to make our policies as effective as they can. And I don't think the differences are near as stark as you would suggest. When I look at the President's platform, the kind of targets that his administration has laid out for the reduction of greenhouse gases are very similar to ours. You say we have intensity, they have absolute -- but the truth is these are just two different ways of measuring the same thing. You can convert one to the other, if that's what you want to do. So I'm -- I'm quite optimistic. I'll be watching -- I'll be watching what's done in the United States with great interest. But I'm quite optimistic that we now have a partner on the North American continent that -- that will provide leadership to the world on the climate change issue, and I think that's an important development.

PRESIDENT OBAMA: Well, this is not just a U.S. or a Canadian issue; this is a worldwide issue that we're going to have to confront. There are good, sound economic reasons for us to address this issue. You know, to the extent that, on both sides of the border, we can make our economies more energy efficient, that saves consumers money; that saves businesses money; it has the added advantage of enhancing our energy security. And we are very grateful for the relationship that we have with Canada, Canada being one of -- being our largest energy supplier.But I think increasingly we have to take into account that the issue of climate change and greenhouse gases is something that's going to have an impact on all of us. And as two relatively wealthy countries, it's important for us to show leadership in this area. I think the clean energy dialogue is an extraordinary beginning because right now there are no silver bullets to solve all of our energy problems. We're going to have to try a whole range of things, and that's why sharing technology, sharing ideas, sharing research and development is so important. Here in Canada you have the issue of the oil sands. In -- in the United States, we have issues around coal, for example, which is extraordinarily plentiful and runs a lot of our power plants. And if we can figure out how to capture the carbon, that would make an enormous difference in how we operate. Right now the technologies are at least not cost-effective.So my expectation is, is that this clean energy dialogue will move us in the right direction. We're not going to solve these problems overnight, as Prime Minister Harper indicated. We have to complete our domestic debate and discussion around these issues. My hope is, is that we can show leadership so that by the time the international conference takes place in Copenhagen that the United States has shown itself committed and ready to do its part.I think the more that we can coordinate in -- with Canada, as well as Mexico, a country that has already shown interest in leadership on this issue -- and when I spoke to President Calderón, he indicated this is an area of interest to him -- the more that, within this hemisphere, we can show leadership, I think the more likely it is that we can draw in countries like China and India, whose participation is absolutely critical for us to be able to solve this problem over the long term.

And, as Prime Minister Harper suggested, there are going to be a number of different ways to go after this problem. You know, we've suggested a cap and trade system. There are other countries who've discussed the possibilities of a carbon tax. I think there's no country on Earth that is not concerned about balancing dealing with this issue on the environmental side and making sure that, in the midst of a severe recession, that it's not having too much of an adverse impact on economic growth and employment.So we think that we can benefit by listening and sharing ideas, and my hope is, is that we emerge from this process firmly committed to dealing with an issue that, ultimately, the Prime Minister's children and my children are going to have to live with for many years.

Q Thank you, to both of you. I've got a question for both of you. Mr. President, on Tuesday you said that now is not the time to reopen NAFTA. But your aides said that you would be trying to convince our friends in Canada and in Mexico of the rightness of your position. So, first, did you convince our friends in Canada? And when is the right time to incorporate labor and environmental standards into the main body of NAFTA?

Second, for Prime Minister Harper. Mr. Prime Minister, is there a way for a Buy American provision to be compliant with the U.S. obligations under the World Trade Organization?

PRESIDENT OBAMA: Well, first of all, Jonathan, I'm not sure that was my exact quote. I always get a little nervous about responding to quotes without me actually seeing it. I think what I said was, is that now is a time where we've got to be very careful about any signals of protectionism, because, as the economy of the world contracts, I think there's going to be a strong impulse on the part of constituencies in all countries to see if we -- they can engage in beggar thy neighbor policies. And as obviously one of the largest economies in the world, it's important for us to make sure that we are showing leadership in the belief that trade ultimately is beneficial to all countries.Having said that, what I also indicated was that with a NAFTA agreement that has labor provisions and environmental provisions as side agreements, it strikes me if those side agreements mean anything then they might as well be incorporated into the main body of the agreement so that they can be effectively enforced. And I think it is important, whether we're talking about our relationships with Canada or our relationships with Mexico, that all countries concerned are thinking about how workers are being treated and all countries concerned are thinking about environmental issues of the sort that Emmanuelle just raised earlier.So, you know, I raised this issue with Prime Minister Harper. My hope is, is that as our advisors and staffs and economic teams work this through, that there's a way of doing this that is not disruptive to the extraordinarily important trade relationships that exist between the United States and Canada.Now you didn't ask me about the Buy American provisions, but since it relates to our recovery package, let me just reiterate -- and I said this very clearly before the bill was passed and before I signed it -- that I think it was very important to make sure that any provisions that were there were consonant with our obligations under WTO and NAFTA. And I think that is what we achieved. I recognize the concerns of Canada, given how significant trade with the United States is to the Canadian economy. I provided Prime Minister Harper an assurance that I want to grow trade and not contract it. And I don't think that there was anything in the recovery package that is adverse to that goal.

PRIME MINISTER HARPER: I'll answer both questions, as well. First of all, I just think it's important to reiterate that since NAFTA came into force, and more importantly since Canada signed its free trade agreement with the United States in 1988, trade agreements between our two countries have been nothing but beneficial for these two countries. There has been a massive explosion of trade. It was already the biggest trading relationship in the world; it's so much bigger now. And that trade supports, you know, countless millions of jobs. And I don't think we should also forget the leadership that was established in that. You know, this was about the end of the Cold War, and Canada and the U.S. signed the first modern generation trade agreement that really started -- started the proliferation of these types of agreements, which really gave us the growth of the global economy.Now, you know, I know some aspects of trade invariably cause political concerns, but nobody should think for a minute that trade between Canada and the United States is anything but a benefit between the two of us. And quite frankly, the trade challenges we face are common trade challenges. The trade challenges we face in North America are common trade challenges; they're not problems between our countries. So I just think it's always important to keep this in mind. The President and I did have a good discussion of his concerns. You know, our position is that we're -- we're perfectly willing to look at ways we can -- we can address some of these concerns, which I understand, without, you know, opening the whole NAFTA and unraveling what is a very complex agreement. But we had a good discussion on that and I think -- I'm hopeful we'll be able to make some progress.

On -- on the Buy American provisions -- and let's also be very clear, as well, that in both WTO and NAFTA, there are -- there are industries and there are ways in which and there are levels of government at which one can have domestic preferences and purchasing policies. These things are allowed, in some cases, but they are certainly not allowed without limit. We expect the United States to adhere to its -- to its international obligations. I have every expectation, based on what the President has told me and what he's said publicly many times in the past, that the United States will do just that. But I can't emphasize how important it is that we do that. We have agreed in Canada and, you know, all the major countries of the world through the G20, we agreed to pursue economic stimulus measures -- not just to stimulate our own economies, but to recognize that we have a synchronized global recession that requires policies that will not just benefit ourselves but benefit our trading partners at the same time. If we pursue stimulus packages, the goal of which is only to benefit ourselves or to benefit ourselves, worse, at the expense of others, we will deepen the world recession, not solve it. So I think it's critical that the United States has been a leader for a long time in the goals of an open global economy. I think it's critical that that -- that that leadership continue. And I'm --I'm quite confident that the United States will respect those obligations and continue to be a leader on the need for globalized trade.If I could just comment on our stimulus package, one of the things we did in our stimulus package was actually remove duties on some imported goods. Part of the reason we did that, it's in our own economic interest, but also, as well, it will help stimulate continental and global trade. And this is important for our recovery. We know as a small economy we can't recover without recovery in the United States and recovery around the world. But that's true for all of us these days.

Q I have a question for both of you. Mr. President, during your meetings today, did you discuss the possibility of Canada stepping up its stimulus plans? And secondly, for both of you, what do you think the Canada-U.S. relationship will look like in four years? What will the auto sector look like? Will the border be thicker or thinner? And will you have a carbon market?

PRESIDENT OBAMA: You stuffed about six questions in there. (Laughter.) Were you talking to Jonathan? Is that -- (laughter.) Q I have more.

PRESIDENT OBAMA: Yes, I'll bet. Well, first of all, I'll answer your last question first. I expect that, four years from now, the U.S.-Canadian relationship will be even stronger than it is today. I expect that you will see increased trade. I think we will see continued integration of efforts on -- on energy in various industries, and I think that's to be welcomed. I'm a little biased here because I've got a brother-in-law who's Canadian and I have two of my key staff people who hail from Canada. And I love this country and think that we could not have a better friend and ally. And so I'm going to do everything that I can to make sure that our relationship is strengthened.You mentioned a couple of specific issues -- the idea of thickening of borders. One of the things that I would like to see is -- and we -- Prime Minister Harper and I discussed this -- how we can use some of our stimulus and infrastructure spending that is already being planned around potentially easing some of these bottlenecks in our border. Now, we've got very real security concerns, as does Canada. But I think that it is possible for us to balance our security concerns with an open border that continues to encourage this extraordinary trade relationship in which we have $1.5 billion worth of trade going back and forth every single day.With respect to the auto industry, obviously we are concerned -- we're deeply concerned about the current state of the North American auto industry. It is an integrated industry. When we provided our initial federal help to the auto industry, Prime Minister Harper stepped up and provided assistance that was commensurate with the -- the stake that Canada has in the auto industry. We have just received the report back from GM and Chrysler in terms of how they intend to move forward. My economic team is in the process of evaluating it. One thing we know for certain is that there's going to have to be a significant restructuring of that industry. And as that restructuring takes place, one in which all parties involved -- shareholders, creditors, workers, management, suppliers, dealers -- as all of those parties come together to figure out what is a sustainable and vibrant auto -- North American auto industry, it's going to be very important for our government to coordinate closely with the Canadian government in whatever approach that we decide to take. And we are committed to doing that.And finally, with respect to stimulus, I think that, as Prime Minister Harper mentioned, Canada has put in place its own stimulus package. We obviously are very proud of the recovery act that I recently signed, not only because it provides a short-term boost to the economy and provides relief to families that really need help, but I think it also will lay the groundwork for long-term growth and prosperity.We were talking earlier about the issue of the electric grid. The potential that exists for creating ways of delivering energy from wind and solar across vast plains to get to urban areas and populated areas is enormously promising. That's why we are investing billions of dollars to help jumpstart that process.

And so we think we've taken the right approach to not only get the economy moving again and to fill domestic demand as well as global demand, but also I think Prime Minister Harper is taking the same approach. And to the extent that as we go to the G20 summit, that we are saying -- the most significant economies in the world all taking these steps in concert, then more -- the more likely we are that we're going to be able to slow the recessionary trends, reverse them, and start growing the economy again, which ultimately is the bottom line for both the Prime Minister and myself -- making sure that Americans, Canadians have good jobs that pay good wages, allow them to support a family and send their kids to college, and let their children aspire to new heights.So I think we're going to continue to coordinate as closely as possible to make sure that we are helping families on both sides of the border.

PRIME MINISTER HARPER: You did ask several questions. I'll try and touch on a few of them. On stimulus, first of all, it's important to understand that Canada's economic stimulus package is very large. It's certainly larger than the kind of numbers the IMF was talking about in the fall with the provincial action that we will bring in to our stimulus spending -- will be close to 2 percent of GDP for this year, a percent and a half for next year. This is not as large as the stimulus package in the United States. But the issues in the United States are different, and in fairness, they are bigger than in Canada.Let me just give you a concrete example of the difference -- I could talk about housing, or the banking sector. But the American stimulus package contains a significant money -- a significant pot of money being transferred to lower levels of government to deal with health care. Well, in Canada, as you know, we already have permanent health care transfer arrangements with our provinces before this economic crisis. So not all of these things are directly transferable to the Canadian experience. But by any measure, ours is a very large stimulus program.As the President mentioned, we talked about today how we can use our investments in infrastructure to focus specifically on border infrastructure that we share. We know well at Detroit/Windsor and elsewhere in Canada that the growth of our trade is straining our border infrastructure that's independent even of security demands. So there may be things we can do there jointly in the name of economic stimulus that are beneficial for the long term. The statement lays out today a whole bunch of initiatives we're undertaking, and I think President Obama mentioned them. Beyond border infrastructure, we have joint action going on on the auto sector. We were working closely with the outcoming administration. We will be continuing to work with President Obama's administration on what is an integrated industry needs an integrated solution. We are engaged in Afghanistan. We talked about that at length. We are launching a clean energy dialogue on one of the most important challenges of the next decade, and that is climate change. So, you know, I see a range of initiatives that will carry us forward for many years. I do want to address two specific things, though, you raised -- one is border thickening, and one is kind of four years from now. On -- on the thickening of the border, I just want to make this clear -- and I want to make this clear to our American friends -- not only have we since 9/11 made significant investments in security and security along our border, the view of this government is unequivocal: threats to the United States are threats to Canada.

There is no such thing as a threat to the national security of the United States which does not represent a direct threat to this country. We as Canadians have every incentive to be as cooperative and alarmed about the threats that exist to the North American continent in the modern age as do the governant people of the United States. That's the -- that's the approach with which we treat the border. Obviously we've been concerned about the thickening of the border. You know, in our judgment -- and we'll have some time to talk about this as -- as we move along in our respective governments -- we're looking at -- the key is to look at how we can deal with security in a way that does not inhibit commerce and social interaction. That is the real challenge. But let there be no -- and that's where thickening of the border concerns us -- but let there be no illusion about the fact that we take these security concerns as seriously as our American friends.In terms of big picture, you know, I think this would be the safest prediction in the world, that today Canada and the United States are closer economically, socially, culturally, in terms of our international partnerships than any two nations on the face of the Earth -- closer friends than any two nations on the face of the Earth. And I think we can safely predict that in four years' time we will be in exactly the same spot. What we can do with that in the meantime -- and what I'm sure President Obama will want to do with that -- is to take that close relationship that is so deeply integrated when it comes to things like trade and military -- military and defense considerations, things where we have not only established a close friendship, but where we have established models that others who want to pursue close friendships have used around the world -- that we can take those things and we can continue to lead in the future. We can continue to show how two countries can work together in ways that pursue global cooperation and integration to mutual benefit.And as we all know, one of President Obama's big missions is to continue world leadership by the United States of America, but in a way that is more collaborative. And I'm convinced that by working with our country, he will have no greater opportunity than to demonstrate exactly how that model can operate over the next four years.

PRESIDENT OBAMA: And let me just say that, to echo what the Prime Minister said, we have no doubt about Canada's commitment to security in the United States as well as Canada. Obviously we've got long-lasting relationships around NORAD, for example, and the same is true with respect to border security; there's been extraordinary cooperation and we expect that that will continue.And Prime Minister Harper is right. It's a safe bet that the United States and Canada will continue to enjoy an extraordinary friendship, and together I think we've got an opportunity to show the world that the values that we care about -- of democracy, of human rights, of economic growth and prosperity -- that these are values that the world can embrace, and that we can show leadership. And I'm very much looking forward to working with --with this government and -- and all Canadians in order to promote these -- these values.I want to also, by the way, thank some of the Canadians who came over the border to campaign for me during the -- during the election. (Laughter.) It was much appreciated. And I'm looking forward to coming back to Canada as soon as it warms up. (Laughter.)

PRIME MINISTER HARPER: This brings an end to the press conference. Thank you very much, everybody.END 3:31 P.M. (Local)

NATIONALIZE BANKS

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/

WHAT ARE THE IMF,WORLD BANK?
http://www.globalexchange.org/campaigns/wbimf/facts.html
http://www.essortment.com/all/worldbankinter_riaw.htm
http://www.imf.org/external/index.htm

ECONOMY VIDEOS CNBC
http://www.cnbc.com/id/15840232?video=1038666214
http://www.cnbc.com/id/15840232?video=1038548059
http://www.cnbc.com/id/15840232?video=1038579389
http://www.cnbc.com/id/15840232?video=1039487624
http://www.cnbc.com/id/15840232?video=871862447
IMF HEAD VIDEO-RESTRUCTURE BANKS
http://www.cnn.com/video/?/video/business/2009/02/18/qmb.econ.imf.strausskahn.cnn
NATIONALIZE BANKS


Fed says economy even worse than thought Gloomy assessment as governments consider bank nationalization February 18, 2009 5:42 pm Eastern 2009 WorldNetDaily

Ben Bernanke
The economic outlook for the next two years is worse than expected, say Federal Reserve policymakers, who warned today the economy is contracting at a disturbing pace.In a speech at the National Press Club, Federal Reserve Chairman Ben Bernanke pointed to dismal economic data while another top Fed official warned of the need for even more stimulus, even with interest rates set near zero. Evidence of further economic gloom, the officials say, can be seen in figures showing a curtailment of big industry production in January and record-low housing construction. Meanwhile, governments worldwide that already have poured billions of dollars into failing banks are considering seizing full control of financial institutions. Bernanke said in his speech today, according to USA Today, that the Fed is determined to do everything possible within the limits of its authority to repair the economy.

Bernanke defended the Fed's bailout of institutions such as insurance giant American International Group, but its interventions in select credit markets have boosted its liabilities in recent months from $800 billion to about $2 trillion. Fed officials, according to minutes released today from its meeting at the end of January, lowered estimates made in October for Gross Domestic Product and raised forecasts for the unemployment rate this year and next Given the strength of the forces currently weighing on the economy, participants generally expected that the recovery would be unusually gradual and prolonged,the minutes said. In a speech today at the Rockford Chamber of Commerce in Rockford, Ill., Chicago Fed President Charles Evans said the U.S. economy is still contracting at a disturbing pace. We likely are in for a protracted period of poor economic performance,Evans said, according to Reuters. He underlined the need for more stimulus even with interest rates already set near zero.For the Fed, this means that the (Federal Open Market) Committee will have to focus on other ways to impart monetary stimulus to the economy, said Evans, a voting member of the central bank's policy-setting Federal Open Market Committee in 2009.

Evans told the Rockford chamber that the pessimistic outlook has reduced everyone's confidence,dampening long-term investment and new spending, which further lowers the economic outlook. The Fed official, according to Reuters, said real GDP, the broadest measure of economic growth, will fall markedly in the first half of the year before potentially expanding later in the year and moving back to the neighborhood of its potential in 2010. However, I do not see growth as being strong enough to make much progress in closing resource gaps over this period. Indeed, the unemployment rate ... is likely to rise into 2010, he said. Evans said it's unclear at this point what impact the Obama administration's $787 billion economic stimulus would have on GDP. The new fiscal stimulus package will boost output ... Our forecast could need some recalibration as we gain knowledge of how the package is affecting the economy,he said. Economic data reported by the Fed today showed a drop in big industry production last month, partly due to auto shutdowns, the Associated Press reported. It was the third straight month in which production was cut back. Production at factories, mines and utilities fell 1.8 percent last month, while many economists expected a 1.5 percent drop. A dramatic rise in home foreclosures is adding to an already glutted market, forcing builders to reduce home construction, which fell to a record low last month. Construction of new homes and apartments sank 16.8 percent in January from the previous month. A gauge of future building activity, application for permits, dropped to a record low pace in January of 521,000units, 4.8 percent lower than December. Another horrible month; more pain ahead, predicted Patrick Newport, economist at IHS Global Insight, the AP reported. Meanwhile, in the wake of unsuccessful bank bailouts, governments increasingly are considering seizing control of the banks entirely, the Voice of America reports.

German Chancellor Angela Merkel's Cabinet is supporting a bill that would allow her government to forcibly nationalize banks that have received government aid. In the U.S., former Federal Reserve Chairman Alan Greenspan told the Financial Times bank nationalization may be the only way to restore confidence to a shaken financial system.During his Fed chairmanship, Greenspan's policy was to let financial institutions regulate themselves. But action may be necessary now, he says, as something you do once in a hundred years. Sen. Lindsey Graham, R-S.C., also told the Financial Times the U.S. should consider taking control of some banks, arguing we should be focusing on what works.

Nationalization: Code Word for Banker Takeover
Kurt Nimmo Infowars February 19, 2009

It is now a mantra in the corporate media — the only way to fix the banking system is to nationalize the banks. A touchy word has entered the public debate about the future of America’s economy. It’s a word that would shock the nation in normal times, but as even Republicans begin to whisper it, temporary nationalization of troubled banks is increasingly seen as our last best hope for fixing our financial system,declares Thomas Kelley, writing for Yahoo News. Republican Sen. Lindsey Graham of South Carolina.Republicans like Sen. Lindsey Graham of South Carolina defend and push bank nationalization because there is not a dime’s worth of difference between Republicans and Democrats — both are on the hook to the global elite and the bankers. Even supposed libertarians are lining up behind this scheme, including the Cato Institute. But then Cato’s directorship is rife with honchos from E-Trade Financial, FedEx, and other big corporations. Cato has hosted Greenspan and Bernanke at its functions.

Simply put: Nationalizing ailing banks means the government would tell bank execs to take a hike, and then oversee taxpayer dollars as they course through the banking sector’s veins,writes Kelley. When all is well, perhaps after selling assets and operations to new private investors, the government then steps back and lets a newly regulated bank sector float on its way.Does Mr. Kelley really think the government will step back after nationalizing the banks? He seems to think the government is of the people, by the people, for the people, as Lincoln put it, when it fact it is of the banks, by the banks, and for the banks. Bank nationalization is merely a code word for a banker scheme to socialize the insolvency of certain banks. In other words, the government — the bankers — are transferring this insolvency to the tax payers who are confused on the issue, thanks in part to the diligent work of Thomas Kelley, Michael Hirsh of Newsweek, Nicholas Kristof and Paul Krugman of the New York Times, and no shortage of economists from the IMF and the banker controlled Treasury. Even so, most Americans smell a scam in the works. The reason all these corporate scribes are chanting nationalization (banker takeover) in unison is quite simple — the American people are steadfastly against it. All sorts of big government solutions are being proposed to combat the country’s economic troubles, but Americans are clear on one thing: 75% say the federal government should not take over the U.S. banking system, notes Rasmussen Reports. Only nine percent (9%) think nationalization of America’s banks is a good idea, and 16% are undecided in a new Rasmussen Reports national telephone survey, published on February 10. Not that it matters. Congress is listening to former Fed mob boss Alan Greenspan, who may have given Republicans the political cover they need to consider nationalizing U.S. banks when the former Federal Reserve chairman joined a growing list of experts who suggest nationalization is inevitable, reports Reuters. Republicans typically stand for small government and deregulation, but ideology has a way of being put aside in a crisis. Greenspan has acknowledged he was wrong to oppose some forms of market regulation.

Republicans stand for small government? Is this why the size of government increased substantially under Republican president George Bush? He was the Mother of All Big Spenders, spending even more than Democrat Bill Clinton and rivaling Jimmy Carter. No president since FDR — who offered a New Deal to pull the nation out of the Great Depression and then fought World War II — has presided over as rapid a growth in government when measured as a percentage of the total economy,writes Jon Ward. In fact, both Republicans and Democrats stand for increasing the national debt to the point where the economy will implode — and soon. The debt-driven bubble economy was engineered by the bankers for a specific reason — to create a global economic blowout followed by consolidation. It is no mistake the Federal Reserve overleveraged the financial system, leading to a collapse in asset prices. It is not that the free market failed,writes Marc Faber for the Wall Street Journal. The mistake was constant interventions in the free market by the Fed and the U.S. Treasury that addressed symptoms and postponed problems instead of solving them. However, this was no mistake. The credit bubble is a deliberate and skillfully orchestrated scheme cooked up by the private bankers that own and run the Federal Reserve. Further interventions through ill-conceived bailouts and bulging fiscal deficits are bound to prolong the agony and lead to another slump — possibly an inflationary depression with dire social consequences,Mr. Faber continues. Indeed, and precisely as planned. So-called nationalization of the banks and financial institutions will not accomplish the miraculous feats advertised and supported by the likes of Lindsey Graham and the Democrats and Republicans. It will, however, allow offshore bankers to consolidate wealth and turn the world into a feudalist police state.

Once again, let us return to the CFR historian and author Carroll Quigley, who wrote: The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences.Now they need to sell it to the American people, but the American people are not in the mood to buy. And that’s what Northcom and newly encamped combat brigades in America are all about — if Americans resist the bankster plan for global domination, they will deliver it to them at gunpoint.

Bank Nationalization: No Longer A Dirty Word
Posted By: Bob Pisani FEB 18,09

Last night, with Jim Cramer and Melissa Lee, I was speaking about how odd it was that bank nationalization was suddenly a hot topic among traders. Odd because a month ago you would have been stoned on Wall Street for bringing up the topic, because—everyone knows—the government would do a terrible job managing private assets. But now, as the situation has become more dire, and as bank stocks again swoon as regulators are descending upon the banks to begin collecting data for Treasury's stress test, the word nationalization is being heard on the Street as a legitimate alternative to the plans that have been floated. It’s a sign of how worried—desperate—the Street has become. Today, the growing minority supporting this was given support by none other than Allan Greenspan, who told the FT that he supported nationalization of some banks (on a temporary basis, whatever that means).

Not only that, but Republican Senators like Lindsey Graham are also floating trial balloons, saying that nationalization should at least be considered in lieu of sending billions more down a black hole. In lieu of the word nationalization, some are using the less offensive term Swedish model, but don't be fooled by that. It would:

1) Nationalize the weakest banks, and

2) Auction off assets after cleaning up balance sheets.

Mr. Geithner will soon be presenting details of his public/private partnership to help banks. Once that plan is presented, expect nationalization to emerge as a credible alternative to parts of that plan.

German govt agrees bank nationalisation bill-sourceBy: AFX | 17 Feb 2009 | 02:35 PM
http://www.cnbc.com/id/15840232?video=1039093653 (VIDEO)(NATIONALIZE)
http://www.cnbc.com/id/15840232?video=1038695184

BERLIN, Feb 17 (Reuters) - The German government has agreed on a draft bill to step up aid for its struggling lenders which would enable the country to nationalise banks as a last resort, a government source told Reuters on Tuesday. The bill, due to be approved by the cabinet on Wednesday, could lead to the expropriation of shareholders of stricken German lender Hypo Real Estate, which has received billions of euros worth of state guarantees. However, the draft bill said such a move should only be carried out as a last resort and foresees restricting expropriations to Oct. 31. A cabinet decree on any expropriation would have to be passed by the end of June, the source said. (Reporting by Andreas Moeser, writing by Dave Graham) (dave.graham@reuters.com; Reuters Messaging: dave.graham.reuters.com@reuters.net; Thomson Reuters 2009.

Q+A - Germany drafts legislation to nationalise banksBy: AFX | 18 Feb 2009 | 05:43 AM ET

BERLIN, Feb 18 (Reuters) - German Chancellor Angela Merkel's cabinet has approved a draft law which would allow Berlin to nationalise stricken banks and, as a last resort, expropriate their shareholders to shore up the financial system. Below are some questions and answers about the proposed legislation, which must still be approved by the German parliament. WHAT IS THE GOAL OF THE NEW LEGISLATION? The draft legislation, an extension of Germany's existing bank rescue law, was formulated to allow the government to take control of Munich-based lender Hypo Real Estate, a high-profile casualty of the financial crisis. Hypo has received a total of 102 billion euros ($129 billion) in guarantees from the state and fellow banks but its financial condition remains uncertain. Because of its key role in the 800 billion euro Pfandbrief covered bond market, the government has said it cannot be allowed to fail. WHY DOES BERLIN NEED A LAW TO NATIONALISE A BANK? Germany's Basic Law, or constitution, forbids the expropriation of shareholders without the establishment of a new law. In the case of Hypo Real Estate, the government wants the option of expropriation because without it, it might have trouble taking full control of the bank. This is because U.S. private equity investor JC Flowers owns nearly a quarter of Hypo's shares. WILL BERLIN EXPROPRIATE JC FLOWERS SHARES? Berlin is keen to avoid this step, in part because expropriation, or Enteignung in German, is a step associated in the minds of many Germans to the Nazis seizure of Jewish assets in the 1930s and the assault of private business owners by the former communist government of East Germany. The government will continue to try to negotiate a settlement with JC Flowers and if that fails, it could seek to gain control by pushing through a capital increase at a Hypo shareholders meeting. The new legislation makes this possible by reducing the shareholding majority needed to inject fresh capital to 50 percent plus one share from a previous threshold of 75 percent plus one share. COULD OTHER BANKS BE NATIONALISED? The German government has made clear that it wants to avoid taking control of its banks and would only do so if it deemed the broader financial system to be at risk. The draft law imposes strict limits on any expropriation of shareholders, making clear that this would have to occur by Oct. 31, 2009 and that any cabinet decree ordering this would have to be submitted by the end of June. This aims to limit application of the expropriation option to Hypo Real Estate alone. Germany has said no other banks are in the same difficult position as Hypo Real Estate, but if the financial crisis worsens, other German financial institutions could come under pressure and force the government to intervene. Last month the government took a 25 percent stake in Commerzbank, which on Wednesday reported an operating loss of 822 million euros for the fourth quarter. (Writing by Noah Barkin; Editing by Louise Ireland) ($1=.7908 Euro)(noah.barkin@reuters.com; +49 30 2888 5091; Reuters Messaging: noah.barkin.reuters.com@reuters.net)Thomson Reuters 2009.

World Bank chief tells EU to do more for Central & East Europe ReutersPublished: February 19, 2009

LONDON: The European Union should do more to support economies in central and eastern Europe, leading a coordinated global effort to help the region, World Bank President Robert Zoellick was quoted as saying.It's got to have support from the European governments, he said in an interview published in Thursday's edition of the Financial Times.It's 20 years after Europe was united in 1989 - what a tragedy if you allow Europe to split again.The euro fell to its lowest level in three months on Wednesday and shares in Europe's banks have been hurt further in recent days, undermined by fears that contagion from a sharp economic slowdown in emerging Europe could spread westwards.British Prime Minister Gordon Brown on Wednesday called for international action to prevent too much damage to trade and jobs as hard-pressed western banks pull out of eastern Europe to focus on their core home markets.

Zoellick said the World Bank was trying to work with the International Monetary Fund and other multilateral institutions to help the region but needed more backing from Brussels, the FT reported.

Ex-leader of opposition concedes failure in Italy

There is a disconnect between some of the rhetoric of leaders calling for global this and global that and their own policies, he was quoted as saying.He also said that one shoe that hasn't dropped yet in terms of fresh blows to the global economy was a sudden currency crisis in an important country.Meanwhile IMF managing director Dominique Strauss-Kahn repeated a warning that a second wave of countries may come knocking on his door for support in the near future.I'm afraid that there is a possibility that in the coming weeks and months another couple, maybe more than that, countries will need some support, he told the BBC in an interview.Strauss-Kahn said emerging economies in particular were likely to need IMF help because capital flows are reversing as western banks and private investors repatriate funds.He said the fund had enough money to deal with countries currently needing its help but that more would be needed should there be a second wave of applicants.We need stronger multilateral institutions ... so that the early warning system we are trying to rebuild, and will be making more effective, will be listened to by governments, he said, adding he was confident the G20 would hand the IMF the funds and mandate it needs at a summit in London in April.I really think that the G20 will give the IMF the resources and also ask the IMF questions to deal with which will really broaden our scope, Strauss-Kahn said.Strauss-Kahn said he did not believe Gordon Brown wanted to succeed him as head of the IMF: I don't think he has this kind of ambition,he told the BBC's Newsnight programme.(Reporting by Paul Hoskins; Editing by Phil Berlowitz)

G-7 meeting IMF Gains New Funding, Puts Focus on Bank Clean Up
IMF Survey online February 14, 2009

IMF welcomes Japan loan, seeks to double Fund resources Says emerging markets may face big financing problems in 2009 Clean up of banks critical for recovery from crisis IMF head Dominique Strauss-Kahn, warning that the global economic crisis was set to bite emerging markets and low-income countries harder this year, said he aimed to double the Fund's lendable resources to $500 billion and thanked Japan for leading the way by contributing $100 billion.Speaking to reporters following a meeting on February 13-14 in Rome of the Group of Seven (G-7) major industrialized countries, Strauss-Kahn said that advanced economies were in a serious recession and the rest of the world was close to one.Along with implementing planned economic stimulus measures, the next critical step in combating the global financial crisis is to restructure damaged banks and clean up the financial sector, he said.In a communiqué, G-7 ministers said they were committed to acting jointly to support world growth and employment and strengthen the financial sector, while avoiding protectionism. The ministers met as the U.S. Senate voted in favor of a $787 billion economic stimulus plan—clearing the way for it to be signed into law by President Barack Obama.

Boosting IMF resources

The ministers backed a proposal to increase the resources available to the IMF to help support countries hurt by the crisis. We agree that a reformed IMF, endowed with additional resources, is crucial to respond effectively and flexibly to the current crisis,their statement said.Strauss-Kahn (left) exchanges the signed loan agreement with Shoichi Nakagawa, Japan's Minister of Finance, at the Rome ceremony (photo: IMF)Japan signed an agreement in Rome to lend an extra $100 billion to the IMF and Strauss-Kahn said he aimed to double total IMF lendable resources to $500 billion [see related story on the Japan loan].The biggest concrete result of this summit is the loan by the Japanese ... I want to thank the Japanese for having led the way... Now I will continue with the objective of doubling the (IMF) resources, he told reporters. It is the largest loan ever made in the history of humanity.

Why the IMF needs more money

The IMF has so far committed around $50 billion in lending to a number of economies affected by the crisis, including Belarus, Hungary, Iceland, Latvia, Pakistan, Serbia, and Ukraine. It announced a precautionary loan for El Salvador last month and an IMF team has also been in negotiations with Turkey.But with the global economy grinding to a virtual halt this year and both trade and capital flows plummeting, Strauss-Kahn foresaw mounting problems for developing countries in the year ahead. There's going to be a true, massive problem of financing for developing countries in 2009, Strauss-Kahn said. The IMF needed to be ready because of the fall off in private capital flows, he added. The balance of payments surpluses emerging markets still had in 2008 will melt like snow in the sun, he warned.

Concessional funds

The IMF Managing Director said low-income countries would face difficulties because of fallout from the global crisis.I do not want to talk about financing and forget the poorest countries, he said. I also want to double concessional resources.The IMF and the World Bank provide lending to low-income countries at concessional rates to help finance their development.

Cleaning up the banks

Before the meeting Strauss-Kahn welcomed economic stimulus measures announced by several major and emerging market economies and said it was now critical to start applying them.In Rome, Strauss-Kahn told reporters that the next critical step was to take action to clean up the banking sector. Today the problem is not really stimulus any more. It's really the problem of the banking sector and the restructuring of the banking sector.He said that credit markets were still not functioning well,...so the restructuring of the financial sector is absolutely essential.What we must do is to test viability bank by bank. The banks that are viable you must help them with public money. The ones that aren't you must help them to be taken over by another.

Politically difficult

He recognized that spending additional public money was politically difficult when people legitimately felt that the banking sector had created the crisis. But it was important to do so, otherwise the economy would not recover. The IMF had studied 122 banking crises around the world and the lesson was that banks' balance sheets must be cleaned up for real recovery to begin. The banking sector can start distributing credit only once it has shrunk and it's been cleaned up,he said.Comments on this article should be sent to imfsurvey@imf.org

TRADE IN THE OBAMA ERA VIDEO (BY EXXON LEADER)
http://www.c-span.org/Watch/watch.aspx?MediaId=HP-A-15633

PRESIDENCIAL WAR POWERS VIDEO
http://www.c-span.org/Watch/watch.aspx?ProgramId=Terr-A-40757

DEFENCE PRESS BRIEFING
http://www.c-span.org/Watch/watch.aspx?ProgramId=Terr-A-40727

STATE PRESS BRIEFING
http://www.c-span.org/Watch/watch.aspx?ProgramId=HP-A-40760

WORLD AFFAIR COUNCIL VIDEO
http://www.c-span.org/Watch/watch.aspx?ProgramId=HP-A-40751

BERNANKE CSPAN VIDEO OF SPEECH
http://www.c-span.org/Watch/watch.aspx?ProgramId=HP-A-40711

Chairman Ben S. Bernanke At the National Press Club Luncheon, National Press Club, Washington, D.C.February 18, 2009 Federal Reserve Policies to Ease Credit and Their Implications for the Fed's Balance Sheet

We live in extraordinarily challenging times for the global economy and for economic policymakers, not least for central banks such as the Federal Reserve. As you know, the recent economic statistics have been dismal, with many economies, including ours, having fallen into recession. And behind those statistics, we must never forget, are millions of people struggling with lost jobs, lost homes, and lost confidence in their economic future. In examples that resonate with me personally, the unemployment rate in the small town in South Carolina where I grew up has risen to 14 percent, and I learned the other day that what had once been my family home was recently put through foreclosure. Traditionally the most conservative of institutions, central banks around the world have responded to this unprecedented crisis with force and innovation. In the United States, the Federal Reserve has done, and will continue to do, everything possible within the limits of its authority to assist in restoring our nation to financial stability and economic prosperity as quickly as possible. Policy innovation has been necessary because conventional monetary policies, which focus on influencing short-term interest rates, have proven insufficient to overcome the effects of the financial crisis on credit conditions and the broader economy. To further ease financial conditions, beyond what can be attained by reducing short-term interest rates, the Federal Reserve has taken additional steps to improve the functioning of credit markets and to increase the supply of credit to households and businesses--a policy strategy that I have called credit easing. In the first portion of my remarks, I will briefly outline the three principal approaches to easing credit that we have undertaken, over and above cutting the short-term interest rate, and assess their effectiveness to date.

Each of these policy approaches involves the provision of credit or the purchase of debt securities by the Federal Reserve, which collectively have resulted in a substantial expansion in the size of the Federal Reserve's balance sheet. The second portion of my remarks addresses some issues raised by the changes in the size of the Fed's balance sheet. In particular, I will discuss how the size of the balance sheet affects the ability of the Federal Open Market Committee (FOMC), the body that sets monetary policy, to foster maximum sustainable employment and price stability, as well as the steps that are being taken to manage the balance sheet appropriately.

Finally, the expansion of the Federal Reserve's balance sheet has raised some concerns--and led to some misconceptions--about the credit risk being taken by the Fed. I will address the issue of credit risk today. And I would also like to talk about steps that the Fed is taking to improve the transparency of its programs to the public, consistent with our obligations in a democracy.

Federal Reserve Policy during the Crisis
The Federal Reserve has responded forcefully to the crisis since its emergence in the summer of 2007. The FOMC began to ease monetary policy in September 2007, reducing the target for the federal funds rate, its policy instrument, by 50 basis points, or 1/2 percentage point. As indications of economic weakness proliferated, the Committee continued to respond, bringing down its target for the federal funds rate by a cumulative 325 basis points by the spring of 2008. In historical comparison, this policy response stands out as exceptionally rapid and proactive.

Monetary easing helped support employment and incomes during the first year of the crisis. Unfortunately, the intensification of financial turbulence last fall led to further significant deterioration in the economic outlook. The Committee responded by cutting the target for the federal funds rate an additional 100 basis points in October, with half of that reduction coming as part of an unprecedented coordinated interest rate cut by six major central banks on October 8. In December, the Committee reduced its target further, setting a range of 0 to 25 basis points for the target federal funds rate.The Fed's monetary easing has been reflected in significant declines in a number of lending rates, especially shorter-term rates, thus offsetting to some degree the effects of the financial turmoil on the cost of credit. However, that offset has been incomplete, as widening credit spreads, more-restrictive lending standards, and credit market dysfunction have worked against the monetary easing and led to tighter financial conditions overall. Thus, in addition to easing monetary policy, the Federal Reserve has made use of a range of additional tools to ease credit conditions and support the broader economy.These additional components of the Fed's toolkit can be divided into three sets. The first set is closely tied to the central bank's traditional role of provider of short-term liquidity to sound financial institutions. Over the course of the crisis, the Fed has taken a number of extraordinary actions to ensure that financial institutions have adequate access to short-term credit. In fulfilling its traditional lending function, the Federal Reserve enhances the stability of our financial system, increases the willingness of financial institutions to extend credit, and helps to ease conditions in interbank lending markets, thereby reducing the overall cost of capital to banks. In addition, some interest rates, including the rates on some adjustable-rate mortgages, are tied contractually to key interbank rates, such as the London interbank offered rate (Libor). To the extent that the provision of ample liquidity to banks reduces Libor, other borrowers will also see their payments decline.

Because interbank markets are global in scope, the Federal Reserve has also approved temporary bilateral liquidity agreements with 14 foreign central banks. These so-called currency swap facilities have allowed these central banks to acquire dollars from the Federal Reserve that they may lend to financial institutions in their own jurisdictions. The purpose of these swaps is to ease conditions in dollar funding markets globally. Improvements in global interbank markets, in turn, promote greater stability in other markets, such as money markets and foreign exchange markets.

Although the provision of ample liquidity by the central bank to financial institutions is a time-tested approach to reducing financial strains, it is no panacea. Today, concerns about capital, asset quality, and credit risk continue to limit the willingness of many intermediaries to extend credit, notwithstanding the access of these firms to central bank liquidity. Moreover, lending to financial institutions does not directly address instability or declining liquidity in critical nonbank markets, such as the commercial paper market or the market for asset-backed securities, which under normal circumstances are major sources of credit for U.S. households and firms.To address these issues, the Federal Reserve has developed a second set of policy tools, which involve the provision of liquidity directly to borrowers and investors in key credit markets. Notably, we have introduced facilities to purchase highly rated commercial paper at a term of three months and to provide backup liquidity for money market mutual funds. The purpose of these facilities is to serve, once again in classic central bank fashion, as backstop liquidity provider, in these cases to institutions and markets that were destabilized by the rapid withdrawal of funds by short-term creditors and investors. In addition, the Federal Reserve and the Treasury have jointly announced a facility--expected to be operational shortly--that will lend against AAA-rated asset-backed securities collateralized by recently originated student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration. Last week, in conjunction with the Treasury, we announced that we were prepared to expand significantly this facility, known as the Term Asset-Backed Securities Loan Facility, or TALF, to encompass other types of newly issued AAA-rated asset-backed securities, such as commercial mortgage-backed securities and private-label mortgage-backed securities, as well. If this program works as planned, it should lead to lower rates and greater availability of consumer, business, and mortgage credit.The Federal Reserve's third set of tools for supporting the functioning of credit markets involves the purchase of longer-term securities for the Fed's portfolio. For example, we are purchasing up to $100 billion in the debt of government-sponsored enterprises (GSEs) and up to $500 billion in mortgage-backed securities guaranteed by federal agencies by midyear.

The Federal Reserve is engaged in continuous assessment of the effectiveness of its credit-related tools, and we have generally been encouraged by the market responses. Our lending to financial institutions has helped to relax the severe liquidity strains experienced by many firms and has been associated with improvements in interbank lending markets; for example, we believe that liquidity provision by the Fed and other central banks is a principal reason that liquidity pressures around the end of the year--often a period of heightened liquidity strains--were relatively modest. Libor has fallen sharply as well. Our commercial paper facility has helped to stabilize that market, lowering rates significantly and allowing high-quality firms access to financing at terms longer than a few days. Together with other government programs, our actions to stabilize the money market mutual fund industry have also shown some success, as the sharp withdrawals from funds seen in September have given way to modest inflows. And rates on 30-year conforming fixed-rate mortgages have fallen nearly 1 percentage point since we announced the program to purchase GSE-related securities. Thus, taken together, these policies appear to give the Federal Reserve some scope to affect credit conditions and economic performance, notwithstanding that the conventional tool of monetary policy, the federal funds rate, is nearly as low as it can go.

The Federal Reserve's Policies and its Balance Sheet
The various credit-related policies I have described have implications for the Federal Reserve's balance sheet. In the remainder of my remarks I will discuss those implications as well as some related issues.The three sets of policy tools I have focused on today--lending to financial institutions, providing liquidity directly to key credit markets, and buying longer-term securities--each represents a use of the asset side of the Fed's balance sheet. Specifically, loans that the Fed extends--either to financial institutions, through the discount window and related facilities, or to other borrowers in programs like our commercial paper facility--are recorded as assets on our balance sheet, as are securities acquired in the open market, such as the GSE securities we are purchasing. The Fed's assets also include about $500 billion of Treasury securities. About 5 percent of our balance sheet, or $100 billion, consists of assets we acquired in the government interventions to prevent the failures of Bear Stearns and American International Group (AIG). I won't say much about those interventions today, except to note that the failures of those companies would have posed enormous risks to the stability of our financial system and economy. Because the United States has no well-specified set of rules for dealing with the potential failure of systemically critical nondepository financial institutions, we believed that the best of the bad options available was to work with the Treasury to take the actions we did to avoid those collapses. The liability side of the Federal Reserve's balance sheet is relatively simple, consisting primarily of currency issuance (Federal Reserve notes) and reserves held by the banking system on deposit with the Federal Reserve.The various credit-related policies I have described today all act to increase the size of both the asset and liability sides of the Federal Reserve's balance sheet. For example, the purchase of $1 billion of GSE securities, paid for by crediting the deposit account of the seller's bank at the Federal Reserve, increases the Fed's balance sheet by $1 billion, with the acquired securities appearing as an asset, and the seller's bank's deposit at the Fed being the offsetting liability. The quantitative impact of our credit actions on the balance sheet has been large; its size has nearly doubled over the past year, to just under $2 trillion.Some observers have expressed the concern that, by expanding its balance sheet, the Federal Reserve will ultimately stoke inflation. The Fed's lending activities have indeed resulted in a large increase in the reserves held by banks and thus in the narrowest definition of the money supply, the monetary base.1 However, banks are choosing to leave the great bulk of their excess reserves idle, in most cases on deposit with the Fed. Consequently, the rates of growth of broader monetary aggregates, such as M1 and M2, have been much lower than that of the monetary base.2 At this point, with global economic activity weak and commodity prices at low levels, we see little risk of unacceptably high inflation in the near term; indeed, we expect inflation to be quite low for some time.

However, at some point, when credit markets and the economy have begun to recover, the Federal Reserve will have to moderate growth in the money supply and begin to raise the federal funds rate. To reduce policy accommodation, the Fed will have to unwind some of its credit-easing programs and allow its balance sheet to shrink. To some extent, this unwinding will happen automatically, as improvements in credit markets should reduce the need to use Fed facilities. Indeed, where possible, we have tried to set lending rates and other terms at levels that are likely to be increasingly unattractive to borrowers as financial conditions normalize. In addition, some programs--those authorized under the Federal Reserve's so-called 13(3) authority, which requires a finding that conditions in financial markets are unusual and exigent--will, by law, have to be phased out once credit market conditions substantially normalize. However, the principal factor determining the timing and pace of that process will be the Federal Reserve's assessment of the condition of credit markets and the prospects for the economy.A significant shrinking of the balance sheet can be accomplished relatively quickly, as a substantial portion of the assets that the Federal Reserve holds--including loans to financial institutions, temporary central bank liquidity swaps, and purchases of commercial paper--are short-term in nature and can simply be allowed to run off as the various programs and facilities are scaled back or shut down. As the size of the balance sheet and the quantity of excess reserves in the system decline, the Federal Reserve will be able to return to its traditional means of making monetary policy--namely, by setting a target for the federal funds rate.Importantly, the management of the Federal Reserve's balance sheet and the conduct of monetary policy in the future will be made easier by the recent congressional action to give the Fed the authority to pay interest on bank reserves. Because banks should be unwilling to lend reserves at a rate lower than they can receive from the Fed, the interest rate the Fed pays on bank reserves should help to set a floor on the overnight interest rate. Moreover, other tools are available or can be developed to improve control of the federal funds rate during the exit stage. For example, the Treasury could resume its recent practice of issuing supplementary financing bills and placing the funds with the Federal Reserve; the issuance of these bills effectively drains reserves from the banking system, thereby improving monetary control. As we consider new programs or the expansion of old ones, the Federal Reserve will carefully weigh the implications for the exit strategy. And we will take all necessary actions to ensure that the unwinding of our programs is accomplished smoothly and in a timely way, consistent with meeting our obligation to foster maximum employment and price stability.

Credit Risk and Transparency
Two other frequently asked questions about the Federal Reserve's balance sheet are: First, how much credit risk is the Fed taking in its lending activities? And, second, is the Fed informing the public adequately about these activities? To address the first question, for the great bulk of Fed lending, the credit risks are extremely low. The provision of short-term credit to financial institutions--our traditional function--exposes the Federal Reserve to minimal credit risk, as the loans we make to financial institutions are generally short-term, overcollateralized, and made with recourse to the borrowing firm. In the case of the liquidity swaps, the foreign central banks are responsible for repaying the Federal Reserve, not the financial institutions that ultimately receive the funds, and the Fed receives an equivalent amount of foreign currency in exchange for the dollars it provides foreign central banks. The Treasury stands behind the debt and other securities issued by the GSEs.Our special lending programs have also been set up to minimize our credit risk. The largest program, the commercial paper funding facility, accepts only the most highly rated paper. It also charges borrowers a premium, which is set aside against possible losses. And the TALF, the facility that will lend against securities backed by consumer and small business loans, is a joint Federal Reserve-Treasury program, as I mentioned, and capital provided by the Treasury will help insulate the Federal Reserve from credit losses.The transactions we undertook to prevent the systemically destabilizing failures of Bear Stearns and AIG, which, as I noted, make up about 5 percent of our balance sheet, carry more risk than our traditional activities. But we intend, over time, to sell the assets acquired in those transactions in a way that maximizes the return to taxpayers, and we expect to recover the credit we have extended. Moreover, in assessing the financial risks of those transactions, once again one must also consider the very grave risks our nation would have incurred had public policy makers not acted in those instances.

Finally, I should remind you that all the Federal Reserve's assets pay interest, and the expansion of our balance sheet thereby implies increased interest income, income that will accrue to the benefit of the federal budget. From the point of view of the federal government, the Federal Reserve's activities do not imply greater expenditure or indebtedness. To the contrary, the Federal Reserve's interest earnings have always been, and will continue to be, a significant source of income for the Treasury.On the second question, transparency, I firmly believe that central banks should provide as much information as possible, both for reasons of democratic accountability and because many of our policies are likely to be more effective if they are well understood by the markets and the public. During my time at the Federal Reserve, the FOMC has taken important steps to increase the transparency of monetary policy, such as moving up the publication of the minutes of policy meetings and adopting the practice of providing projections of the evolution of the economy at longer horizons and four times per year rather than twice.Later today, with the release of the minutes of the most recent FOMC meeting, we will be making an additional significant enhancement in Federal Reserve communications: To supplement the current economic projections by governors and Reserve Bank presidents for the next three years, we will also publish their projections of the longer-term values (at a horizon of, for example, five to six years) of output growth, unemployment, and inflation, under the assumptions of appropriate monetary policy and the absence of new shocks to the economy. These longer-term projections will inform the public of the Committee participants' estimates of the rate of growth of output and the unemployment rate that appear to be sustainable in the long run in the United States, taking into account important influences such as the trend growth rates of productivity and the labor force, improvements in worker education and skills, the efficiency of the labor market at matching workers and jobs, government policies affecting technological development or the labor market, and other factors. The longer-term projections of inflation may be interpreted, in turn, as the rate of inflation that FOMC participants see as most consistent with the dual mandate given to it by the Congress--that is, the rate of inflation that promotes maximum sustainable employment while also delivering reasonable price stability. This further extension of the quarterly projections should provide the public a clearer picture of FOMC participants' policy strategy for promoting maximum employment and price stability over time. Also, increased clarity about the FOMC's views regarding longer-term inflation should help to better stabilize the public's inflation expectations, thus contributing to keeping actual inflation from rising too high or falling too low.

Likewise, the Federal Reserve is committed to keeping the Congress and the public informed about its lending programs and balance sheet. For example, we continue to add to the information shown in the Fed's H.4.1 statistical release, which provides weekly detail on the balance sheet and the amounts outstanding for each of the Federal Reserve's lending facilities. Extensive additional information about each of the Federal Reserve's lending programs is available online.3 The Fed also provides bimonthly reports to the Congress on each of its programs that rely on the section 13(3) authorities. Generally, our disclosure policies are consistent with the current best practices of major central banks around the world. In addition, the Federal Reserve's internal controls and management practices are closely monitored by an independent inspector general, outside private-sector auditors, and internal management and operations divisions, and through periodic reviews by the Government Accountability Office. All that said, recent developments have understandably led to a substantial increase in the public's interest in the Fed's balance sheet and programs. For this reason, we at the Fed have begun a thorough review of our disclosure policies and the effectiveness of our communication. Today I would like to mention two initiatives.First, to improve public access to information concerning Fed policies and programs, in coming days we will unveil a new website that will bring together in a systematic and comprehensive way the full range of information that the Federal Reserve already makes available, supplemented by explanations, discussions, and analyses.Second, at my request, Board Vice Chairman Donald Kohn is leading a committee that will review our current publications and disclosure policies relating to the Fed's balance sheet and lending policies. The presumption of the committee will be that the public has a right to know, and that the nondisclosure of information must be affirmatively justified by clearly articulated criteria for confidentiality, based on factors such as reasonable claims to privacy, the confidentiality of supervisory information, and the need to ensure the effectiveness of policy.

Conclusion
Extraordinary times call for extraordinary measures. Responding to the very difficult economic and financial challenges we face, the Federal Reserve has gone beyond traditional monetary policy making to develop new policy tools to address the dysfunctions in the nation's credit markets. We have done so in a responsible way: The credit risk associated with our nontraditional policies is exceptionally low, and, by carefully monitoring our balance sheet and developing tools to drain bank reserves as needed, we will ensure that policy accommodation can be reversed at the appropriate time to avoid risks of future inflation.We provide a great deal of information about our lending programs and our balance sheet to the Congress and the public. But, as I have discussed today, we will do more on this front, both expanding the information we provide and improving how we communicate that information. Increased transparency is the best way to demonstrate that the Federal Reserve's nontraditional policies are well conceived, well managed, and produce substantial public benefit.

Footnotes

1. The monetary base is the sum of currency in circulation and bank reserves. Return to text

2. M1 consists of currency, traveler's checks, demand deposits, and other checkable deposits. M2 consists of M1 plus savings deposits, small-denomination time deposits, and balances in retail money market mutual funds. M2 has grown more rapidly than normal in recent months, at about a 15 percent annual rate on a quarterly average basis in the fourth quarter. We attribute this increase primarily to investors' demand for greater safety, which has led them to increase their holdings of government-guaranteed bank deposits. We expect growth in M2 to slow considerably in 2009, barring a similar shift in portfolio preferences. Return to text

3. For links and references, see Ben S. Bernanke (2009), Federal Reserve Programs to Strengthen Credit Markets and the Economy, testimony before the Committee on Financial Services, U.S. House of Representatives, February 10.