Don’t Worry, Funny Money Will Go On

I see a lot of chit chat about a so-called “fiscal cliff”. Oh come on…even someone with a lukewarm IQ can figure this out. At the last minute, some silly deal will be ironed out and everyone will praise and bow down to our fearless leader and whatever some republican of the week. The media will inevitably fawn over the incredible bipartisan leadership exhibited by our slavemasters. I tend to ignore journalism memes; when I hear fiscal cliff, I want to throw up. We are way past the cliff and in the quicksand by now. The federal reserve and their puppet politicians control everything now. Not that I am conceding, mind you. I will fight until death. Things seem rather dire right now, but I refuse to live on my knees.

They are able to effectively control via fear. Too bad I have too much of that pesky Viking blood in me, eh?

The police state is ratcheting up. Alas, this is what the American populace seems to want, so who am I to argue? Drones, wiretapping, intimidation, fear, senseless wars and “operations”, high fructose corn syrup, aspartame, economic warfare, public schools…this will be your demise, although you might not realize it. I think most of you know subconsciously that it is occuring; I see it etched on people’s faces. For whatever reason, people have chosen to ignore it. Tomorrow’s history books will be written with an asterisk.

On the subject, I have been informed that my blog is verboten for the armed forces. This blog is blocked by the military. I don’t know why, but perhaps it is an honor. It is a bit disconcerting, but as I said it has been willed.

Personally, I am choosing to better myself and invest in family and preparations. This Christmas/Yule will be different. Gifts will be knowledge…science, books, and the like.

I’m too old to be arguing silly ideologies with the naysayers. I don’t see the point. I’ve been doing this information dissemination for 12 years now, I’m getting too tired. Argumentation on Twitter, Facebook, forums, etc. is not doing myself any favors; I have been using this time to further my knowledge on a wide array of subjects. I have no patience for ad hominem attacks, threats, parrot repeating, those that refuse to give a damn, the materialistic crowd, etc.
Seek love and knowledge. Let go of fears. Plant a garden. Educate family/friends. Prepare, prepare, prepare.

God luck and good speed.

It Is Getting Crazy Out There

Economy must be tanking, I keep getting bombarded by pre-Black Friday sales. I wonder if the minions are going to fall for it? I like to think of it as the mindless zombification American ritual. Not that Black Friday truly means anything, mind you. The stores will be open on Thursday! You can get in on the violence for a 3 dollar toaster game. Hell, why bother with Thanksgiving anyway? The family that stands in line for Chinese crap is the family that stays together, right? Yay!!!!!!

It is so skewed I don’t understand how people fall for it. Alas, it is a different world now. I am merely a relic from another time. Might as well go off into the dark night. You reap what you sow…at least the TSA will let ya take a turkey leg onto the planes.

*Gets into bunker to watch it in HD*

Fortress Demands US$90 Million From Canadian Government

If the Canadian government wants this month’s Winter Olympics to go off without a hitch, it may have to pay up big.

Fortress Investment Group, which owns the British Columbia ski resort where the games’ alpine events are scheduled to take place, is demanding about US$90 million from the Canadian government, the New York Postreports. If it does not get paid, the alternative investments giant is threatening to begin legal proceedings which threaten to disrupt the Olympics, which are to begin on Feb. 12 in Vancouver.

Fortress says Ottawa promised to make it whole before the Olympics, according to the Post. The Whistler Blackcomb resort is owned by Intrawest, which Fortress bought in a leveraged buyout four years ago. Intrawest is in default on more than US$500 million in debt.

That fact also casts a shadow over the games, with Intrawest’s creditors threatening to begin auctioning off the company’s assets, including Whistler Blackcomb, on Feb. 19, smack dab in the middle of the Olympics. But Fortress is reportedly offering a cash payment to Intrawest’s lenders—though less than the US$524 million it owes—and higher interest rates in exchange for two years to solve Intrawest’s problems.

Even though the lenders are likely to make more by selling off Intrawest’s assets, which include Stratton Mountain Resort in Vermont and the Village at Squaw Valley in California, the Post reports that a deal is likely to be struck allowing Fortress to retain control of Intrawest.

http://money.cnn.com/news/newsfeeds/articles/marketwire/0581861.htm

Struggling cities cancel Fourth of July fireworks

Mayor Bill Cervenik has spent a lifetime celebrating the Fourth of July curled up on a blanket in this city’s Memorial Park beneath bursts of fireworks across a darkened Ohio sky.

People have long considered the fireworks a treasure of this Cleveland suburb, where flags fly year-round in neighborhoods of bungalows and stores post signs for passersby to “support our troops.”

But the fireworks and singing along to “The Star-Spangled Banner” on a warm summer night — and the police and firefighters needed to manage the 30,000 people who turn out — don’t come cheap.

So this year, Euclid will have no fireworks. “I’m 55 years old and I can’t remember not going to one of these,” Cervenik said.

As the economic crisis has dragged on, city leaders around the country say fireworks are a luxury they can no longer afford. Big and small, urban and rural, the skies will remain dark over at least four dozen communities nationwide come July 4.

“It came down to this: Did we want to spend $150,000 on something that would be over in a few hours?” Cervenik said. “Or did we want to use that money to keep city workers employed?”

The news has sparked outrage and protests among residents who long to preserve an American tradition that dates to 1777. They say that fireworks displays are more than a nod to nostalgia: They allow communities to come together, set aside their woes and build up town pride — even if only for a few hours.

“Good times, bad times, there’s always been fireworks,” said Robert Baker, who heads the Fourth of July festival committee in Abington, Mass.

Baker, a shipping foreman with a shoe manufacturer, has been out of work for a year. The festival was quashed this month amid city budget fights.

“This is one more blow in a year of blow after blow,” Baker said.

In San Jose, slumping tourism and dwindling sales tax receipts shut down the city’s America Festival and its evening display over a half-mile stretch of Highway 87.

“We’re faced with balancing an $84-million budget shortfall,” said mayoral spokeswoman Michelle McGurk. “We don’t have the money to support a lot of things we’d like to.”

Some cities would rather feed their residents than entertain them. In the Los Angeles suburb of Montebello, where unemployment hovers at 12%, the City Council unanimously voted to use its $39,000 fireworks budget on donations to local food banks.

“The last food bank line I saw had more than 1,000 people in it,” said Mayor Rosemarie Vasquez. “We figured that, instead of burning the money in the air, why not give it to people who need it.”

In Lowell, Mass., Mayor Edward Caulfield canceled the city’s annual show to help save one city job. He had already cut 48.

Big cities, such as Chicago and New York, have been able to keep their shows thanks to corporate sponsors, according to the American Pyrotechnics Assn.

But Julie Heckman, executive director of the association, said that smaller communities tended to rely on a combination of city funds and local donations to pay for their displays of patriotism.

When budgets grow tight, she said, towns are forced to be creative with less.

That was the case for Punta Gorda, Fla., a community of 17,000 on the Gulf Coast. The city, devastated in 2004 by Hurricane Charley, is still rebuilding itself. The recession hasn’t helped.

When the city pulled its backing for the show over Charlotte Harbor last year, the town’s Main Street association took over.

Struggling cities cancel Fourth of July fireworks

June 29 2009

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Fundraising has been slow. The group has raised only two-thirds of what it needs. The pyrotechnic company stepped in to help: It offered a discount, a shorter show and fewer explosions.

So a much smaller show will go on, but the city came up with extra activities to make up for the abbreviated fireworks: three-legged races, water balloon tosses, hula-hooping and key lime pie-making contests.

“What do those cost?” asked Linda Dobson, executive director of Main Street Punta Gorda. “Nothing.”

In a few places, such as New Providence, N.J., a last-minute benefactor has stepped in to save the show.

After local newspapers wrote about how the town of 12,000 was canceling its holiday fireworks because of economic troubles, the local Investors Savings Bank stepped in and offered to cover the $15,000 bill.

Elsewhere, towns have just given up.

This will be the second year Carrollton, Texas, has canceled its $20,000 fireworks order and won’t have street vendors hawking plates of barbecue and buttery corn on a stick.

Residents were furious last year, said Mayor Ronald Branson. City leaders promised to try to bring the fireworks back in 2009.

But as the economy grew worse in the north Texas town of 121,000, those hopes fizzled.

Faced with a $2.3-million budget shortfall, the city is weighing whether to close City Hall and its libraries one day a week and make City Council members — who get paid $200 a month — take a pay cut.

Voters are still calling, but not to complain.

Branson said they were pleading with him to use the fireworks money to put people to work fixing city sprinklers or planting trees.

Branson, though, is still hoping next year will be different.

“We all would like to get the fireworks going again,” he said, “because it would mean the economy had turned around.”

http://www.latimes.com/news/nationworld/nation/la-na-fireworks29-2009jun29,0,2351470.story?page=1

Retailers Head for Exits in Detroit

DETROIT — They call this the Motor City, but you have to leave town to buy a Chrysler or a Jeep.

Borders Inc. was founded 40 miles away, but the only one of the chain’s bookstores here closed this month. And Starbucks Corp., famous for saturating U.S. cities with its storefronts, has only four left in this city of 900,000 after closures last summer.

Fabrizio Costantini for the Wall Street JournalLochmoor Chrysler Jeep on Detroit’s East Side has stopped selling Chrysler products, one of the 789 franchises Chrysler is dropping from its retail network.

There was a time early in the decade when downtown Detroit was sprouting new cafes and shops, and residents began to nurture hopes of a rebound. But lately, they are finding it increasingly tough to buy groceries or get a cup of fresh-roast coffee as the 11th largest U.S. city struggles with the recession and the auto-industry crisis.

No national grocery chain operates a store here. A lack of outlets that sell fresh produce and meat has led the United Food and Commercial Workers union and a community group to think about building a grocery store of its own.

One of the few remaining bookstores is the massive used-book outlet John K. King has operated out of an abandoned glove factory since 1983. But Mr. King is considering moving his operations to the suburbs.

Last week, Lochmoor Chrysler Jeep on Detroit’s East Side stopped selling Chrysler products, one of the 789 franchises Chrysler Group LLC is dropping from its retail network. It was Detroit’s last Chrysler Jeep store.

“The lack of retail is one of the biggest challenges the city faces,” said James Bieri, president of Bieri Co., a Detroit-based real-estate brokerage. “Trying to understand how to get it to come back will be one of the most important keys to its resurgence — if it ever has one.”

Detroit’s woes are largely rooted in the collapse of the auto industry. General Motors Corp., one of downtown’s largest employers and the last of the Big Three auto makers with its headquarters here, has drastically cut white-collar workers and been offered incentives to move to the suburbs. Other local businesses that serviced the auto maker, from ad agencies and accounting firms to newsstands and shoe-shine outlets, also have been hurt.

The city’s 22.8% unemployment rate is among the highest in the U.S.; 30% of residents are on food stamps.

“As the city loses so much, the tax base shrinks and the city has to cut back services,” said Margaret Dewar, a professor of urban planning at the University of Michigan. That causes such hassles for retailers as longer police-response times, as well as less-frequent snow plowing and trash pickup.

While all of southeast Michigan is hurting because of the auto-industry’s troubles, Detroit’s problems are compounded by decades of flight to the suburbs.

Hundreds of buildings were left vacant by the nearly one million residents who have left. Thousands of businesses have closed since the city’s population peaked six decades ago.

Navigating zoning rules and other red tape to develop land for big-box stores that might cater to a low-income clientele is daunting.

The lack of grocery stores is especially problematic. The last two mainstream chain groceries closed in 2007, when The Great Atlantic & Pacific Tea Co. sold most of the southeast Michigan stores in its Farmer Jack chain to Kroger Corp., which declined to purchase the chain’s two Detroit locations, causing them to close.

A 2007 study found that more than half of Detroit residents had to travel twice as far to reach a grocery store than a fast-food outlet or convenience store.

Michelle Robinson, 42 years old, does most of her shopping at big-box stores in the suburbs. When visitors staying at the hotel near her downtown office ask where to shop, she sends them to a mall in Dearborn, 12 miles away.

A few retailers are thriving. Family Dollar Stores Inc. has opened 25 outlets since 2003. A handful of independent coffee shops and a newly opened Tim Horton’s franchise cater to workers downtown.

Discount grocer Aldi Inc. opened stores in the city in 2001 and 2005. A spokeswoman said the chain is “very bullish” on Detroit. Farmer’s markets draw crowds looking for fresh produce.

Olga Stella, an official at the Detroit Economic Growth Corporation, works to persuade businesses to move to the city. She says companies have underestimated Detroit’s economic potential and that Aldi and Family Dollar are proof there’s money to be made here.

Meanwhile, the former Lochmoor Chrysler Jeep is now Lochmoor Automotive Group, a used-car dealership and repair shop. Gina Russo, daughter of the dealer’s longtime owner, is being groomed to take over the family business. She has agreed to start selling small pickup trucks made by India’s Mahindra & Mahindra Ltd.

http://online.wsj.com/article/SB124510185111216455.html#printMode

Obama seeks to ‘give government new powers to seize key companies’

Obama to propose strict new regulation of financial industry

President Obama is expected to unveil a plan that would give the government new powers to seize key companies whose failure jeopardizes the financial system.

The plan would give the government new powers to seize key companies whose failure jeopardizes the financial system, as well as creation of a watchdog agency to look out for consumers’ interests.

Reporting from Washington — The Obama administration this week will propose the most significant new regulation of the financial industry since the Great Depression, including a new watchdog agency to look out for consumers’ interests.

Under the plan, expected to be released Wednesday, the government would have new powers to seize key companies — such as insurance giant American International Group Inc. — whose failure jeopardizes the financial system. Currently, the government’s authority to seize companies is mostly limited to banks.

But critics say the easing of the financial crisis that gripped the country last year appears to have reduced the momentum for some of the most far-reaching proposals, such as merging several banking regulatory agencies.

They’re also concerned that the proposed agency whose mission would be to protect consumers against financial misconduct wouldn’t have the authority to do so for a wide-enough range of products.

“This is too little, too late,” said Rep. Brad Sherman (D-Sherman Oaks), based on his understanding of the plan. “It’s going to be way less than it should be.”

On Monday, Obama administration officials sketched the outlines of the plan the president is to unveil Wednesday. They said it would seek to reduce gaps in regulatory oversight, rein in the use of mortgage-backed securities and other complex derivatives, reduce incentives for companies to take excessive risk and give the government new power to quickly intervene during any future crises.

“We had a system that proved too unstable, too fragile. . . . Those are things we have to change,” Treasury Secretary Timothy F. Geithner said Monday at an economic forum in New York.

The administration also is expected to propose creation of a regulatory body for financial products marketed to consumers, such as credit cards, whose oversight is now spread over several agencies.

In addition, the administration wants to impose regulation over the market for derivatives — the murky financial contracts used to hedge risky investments — including new reporting and disclosure requirements. Institutions that originate loans would be required to retain 5% of the credit risk when the loans are turned into securities.

All the proposals would have to be approved by Congress in a process the administration hopes to complete by the end of the year.

In the heat of the financial crisis last year, there were widespread calls for the government to merge several banking regulatory agencies into one to reduce gaps in oversight and stop what might be called “regulator shopping.”

For example, AIG was able to choose the Office of Thrift Supervision for its non-insurance financial business when it bought a small savings and loan in the late 1990s. That office has been viewed as a weaker regulator, and was strongly criticized in a government report this year for ignoring repeated warning signs about Pasadena-based IndyMac Bancorp before the thrift’s failure last summer.

“I’m concerned that people think we’ve stepped back from the brink of disaster and so they’re not as committed to seeing real meaningful reforms adopted,” said Barbara Roper, director of investor protection for the Consumer Federation of America.

For their part, business groups have worried that the Obama administration might go too far in responding to the financial crisis with new regulations, stifling the market and hurting financial firms at a time when the economy is still weak.

They have been pushing back against some of the proposals floated by the administration, lawmakers and consumer advocates, such as a consumer protection agency for financial products.

But Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large financial institutions, said there was still a strong impetus in Washington for regulatory reform and dismissed the suggestion that the Obama administration had missed its chance to implement it.

“This has moved at lightning speed,” he said. “You’re talking about a historic piece of reform.”

Administration officials also have dismissed suggestions that they had moved too slowly, saying they had pushed ahead despite calls from some quarters for them to wait until the end of the crisis before acting.

“There are people who believe that the wrong time to reorganize the fire department is while the fire may still be burning,” Lawrence H. Summers, chairman of the White House’s National Economic Council and Obama’s chief economic advisor, said in a speech Friday. “The president has concluded very strongly that that view is wrong. . . . Experience teaches that once the crisis has passed, the will to reform will pass as well.”

Douglas J. Elliott, an economics fellow at the Brookings Institution and a former investment banker, said there was still enough political momentum to pass major reforms. But as the financial crisis has eased, there is less ability to tackle the difficult turf battles involved in merging regulatory agencies.

For that reason, Elliott said, the Obama administration appeared more focused on setting new rules and principles than on the blowing up the government’s regulatory structure.

“There are entrenched interests that benefit and are allied with each of these agencies. . . . That just makes it hard,” he said.

“As far as I can tell, the administration doesn’t think it’s as important to get that structure right as to get the rules right and make sure people are focused on acting the right way.”

http://www.latimes.com/business/la-fi-financial-regs16-2009jun16,0,4262249.story

Obama denies bailout funds for automakers

The White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever. In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.

Obama was set to make the announcement at 11 a.m. (1500 GMT) Monday in the White House’s foyer.

In an interview with CBS’ “Face the Nation” broadcast Sunday, Obama said the companies must do more to receive additional financial aid from the government.

“We think we can have a successful U.S. auto industry. But it’s got to be one that’s realistically designed to weather this storm and to emerge — at the other end — much more lean, mean and competitive than it currently is,” Obama said.

Frustrated administration officials said Chrysler cannot function as an independent company under its current plan. They have given Chrysler a 30-day window to complete a proposed partnership with Italian automaker Fiat SpA, and will offer up to $6 billion to the companies if they can negotiate a deal before time runs out.

If a Chrysler-Fiat union cannot be completed, Washington plans to walk away, leave Chrysler destined for a complete sell-off. No other money is available.

For GM, the administration offered 60 days of operating money to restructure. A frantic top-to-bottom effort began Sunday after CEO Rick Wagoner resigned under pressure from the White House.

Fritz Henderson, GM’s president and chief operating officer, became the new CEO, a Treasury Department source said. Board member Kent Kresa, the former chairman and CEO of defense contractor Northrop Grumman Corp., will be interim chairman of the GM board.

One official said a majority of the GM board was expected to step down.

Obama advisers saw public outrage come to an ugly head in recent weeks, as populist anger escalated over bonuses paid to American International Group executives. They realized Americans are frustrated with the economy and its business leaders; they also said they would not invest one dollar more than was necessary to keep the companies alive and would walk away if it looked impossible.

Officials said GM had not made good on promises made in exchange for $13.4 billion in government loans, although there are no plans to call in those loans.

Administration officials still believe GM’s chances are good, given its global brand and its research potential. Officials say they are confident GM can put together a plan that will keep production lines moving in the coming years. They planned to send a team to Detroit to help with that restructuring.

Chrysler, meanwhile, has survived on $4 billion in federal aid during this economic downturn and the worst decline in auto sales in 27 years.

In progress reports filed with the government in February, GM asked for $16.6 billion more and Chrysler wanted $5 billion more. The White House balked and instead started a countdown clock.

Administration officials acknowledged the short turnaround time was harsh; one described it as a nanosecond in a business cycle.

Two people familiar with the plan said officials will demand further sacrifices from the automakers and bankruptcy would still be possible if the automakers failed to restructure. Those officials spoke on condition of anonymity because they were not authorized to make details public.

Administration officials said they hoped large-scale bankruptcy could be avoided, especially if it might be stretched over many years. Any efforts to use the bankruptcy courts would have to be targeted and aggressive and must not prolong a restructuring process, they said.

GM and Chrysler, which employ about 140,000 workers in the U.S., face a Tuesday deadline to submit completed restructuring plans, but neither company is expected to finish its work.

GM owes roughly $28 billion to bondholders. Chrysler owes about $7 billion in first- and second-term debt, mainly to banks. GM owes about $20 billion to its retiree health care trust, while Chrysler owes $10.6 billion.

An exasperated administration official noted that the companies had not done enough to reduce debt; in some cases, it actually increased during this restructuring and review process.

In February, GM said it intended to cut 47,000 jobs around the globe, or almost 20 percent of its work force, close hundreds of dealerships and focus on four core brands — Chevrolet, Cadillac, GMC and Buick.

In an effort to bolster consumer confidence, Obama planned to announce government backing of warranties for GM and Chrysler vehicles. An administration official said there is no price tag yet associated with that promise.

Aides note that Obama inherited the auto mess from his predecessor, President George W. Bush.

Under the terms of a loan agreement reached during the last administration, GM and Chrysler are pushing the United Auto Workers to accept shares of stock in exchange for half of the payments into a union-run trust fund for retiree health care. They also want labor costs from the union to be competitive with Japanese automakers with U.S. operations.

Little progress has been made between the companies and the union.

http://finance.yahoo.com/news/Obama-denies-bailout-funds-apf-14777848.html

Caterpillar to lay off 2,454 workers in 3 states

*Hmmm…that worked well.*

PITTSBURGH (AP) — Caterpillar Inc. on Tuesday announced plans to lay off more than 2,400 employees at five plants in Illinois, Indiana and Georgia as the heavy equipment maker continues to cut costs amid the global economic downturn.

Caterpillar, the world’s largest maker of mining and construction equipment, has seen its sales wither as the sluggish world economy and the credit crisis weaken demand for its products, used to build everything from houses to highways. The company had expanded dramatically in recent years, helped by a building boom in developing countries.

In response to the worsening conditions, Caterpillar in January announced job cuts that will ultimately eliminate 20,000 positions. It also said it would slash executive compensation by up to 50 percent and offer buyouts to about 25,000 U.S.-based employees. Caterpillar, which employs about 112,000 people worldwide, said it had imposed a global hiring freeze.

In the latest cuts, the Peoria, Ill.-based company said 2,365 support and management workers had been notified of layoffs expected to last at least six months – including 245 announced previously – and 89 workers will be let go permanently.

Among the affected workers are 1,726 people at plants in Illinois. They include 911 workers at a plant in East Peoria that makes track-type tractors and pipelayers and 815 at a factory in Aurora that produces hydraulic excavators and wheel loaders. Caterpillar notified the employees Tuesday of the layoffs expected to last at least six months starting in June.

In Indiana, Caterpillar said it notified 439 employees at its large engine factory in Lafayette of layoffs effective May 29, also expected to last at least six months. The plant makes diesel engines for boats, locomotives and other applications.

Caterpillar notified 89 employees at its Jefferson, Ga., fuel systems plant that they would be laid off permanently when the company closes the facility, expected by the end of June. Work currently done at the plant will be shifted to factories in Thomasville, Ga., and Pontiac, Ill.

Also in Georgia, Caterpillar said it had notified 200 employees at a plant in Griffin, where the company makes generators, engines and oil service units, of layoffs scheduled to begin in May.

Meanwhile, the company has implemented so-called rolling layoffs, which vary in duration, at plants across the country and around the world, according to Jim Dugan, a Caterpillar spokesman.

Caterpillar – perhaps best known for its yellow-and-black painted backhoes, tractors and paving machines – said more layoffs may be needed as the year continues, depending on business conditions.

In January, Caterpillar said its earnings plunged 32 percent in the last three months of 2008, and that it had lowered its 2009 profit expectations. Demand plummeted at the end of the year, pulled down by slumping commodity prices, tight credit markets and a decline in home building. It said a first-quarter loss is possible as costs may outstrip falling orders.

In February, Caterpillar said it planned to offer early retirement packages to about 2,000 production workers.

President Barack Obama, during a visit to a Caterpillar factory last month, said the company’s chief executive, Jim Owens, had promised to rehire some workers if Congress approved the president’s economic stimulus plan. But Owens later said more cuts were likely before the company could start hiring again, and that a stimulus plan was unlikely to have an effect on the economy until late 2009 or early 2010.

The White House tried Tuesday to sound a positive note despite the news of more layoffs at Caterpillar.

Press Secretary Robert Gibbs said the White House was confident the stimulus bill will create opportunities for Caterpillar and other companies to grow their businesses because of the many construction projects states will be breaking ground on.

“The president believes as the money begins to get let out as a result of the Recovery and Reinvestment plan, that businesses will make different economic decisions,” Gibbs told reporters.

Shares of Caterpillar rose 41 cents to close at $26.83 on Tuesday.

http://hosted.ap.org/dynamic/stories/C/CATERPILLAR_LAYOFFS?SITE=AP

Russian Scholar Says U.S. Will Collapse Next Year

*YA THINK????*

MOSCOW —  If you’re inclined to believe Igor Panarin, and the Kremlin wouldn’t mind if you did, then President Barack Obama will order martial law this year, the U.S. will split into six rump-states before 2011, and Russia and China will become the backbones of a new world order.

Panarin might be easy to ignore but for the fact that he is a dean at the Foreign Ministry’s school for future diplomats and a regular on Russia’s state-guided TV channels. And his predictions fit into the anti-American story line of the Kremlin leadership.

“There is a high probability that the collapse of the United States will occur by 2010,” Panarin told dozens of students, professors and diplomats Tuesday at the Diplomatic Academy — a lecture the ministry pointedly invited The Associated Press and other foreign media to attend.

The prediction from Panarin, a former spokesman for Russia’s Federal Space Agency and reportedly an ex-KGB analyst, meshes with the negative view of the U.S. that has been flowing from the Kremlin in recent years, in particular from Vladimir Putin.

Putin, the former president who is now prime minister, has likened the United States to Nazi Germany’s Third Reich and blames Washington for the global financial crisis that has pounded the Russian economy.

Panarin didn’t give many specifics on what underlies his analysis, mostly citing newspapers, magazines and other open sources.

He also noted he had been predicting the demise of the world’s wealthiest country for more than a decade now.

But he said the recent economic turmoil in the U.S. and other “social and cultural phenomena” led him to nail down a specific timeframe for “The End” — when the United States will break up into six autonomous regions and Alaska will revert to Russian control.

Panarin argued that Americans are in moral decline, saying their great psychological stress is evident from school shootings, the size of the prison population and the number of gay men.

Turning to economic woes, he cited the slide in major stock indexes, the decline in U.S. gross domestic product and Washington’s bailout of banking giant Citigroup as evidence that American dominance of global markets has collapsed.

“I was there recently and things are far from good,” he said. “What’s happened is the collapse of the American dream.”

Panarin insisted he didn’t wish for a U.S. collapse, but he predicted Russia and China would emerge from the economic turmoil stronger and said the two nations should work together, even to create a new currency to replace the U.S. dollar.

Asked for comment on how the Foreign Ministry views Panarin’s theories, a spokesman said all questions had to be submitted in writing and no answers were likely before Wednesday.

It wasn’t clear how persuasive the 20-minute lecture was. One instructor asked Panarin whether his predictions more accurately describe Russia, which is undergoing its worst economic crisis in a decade as well as a demographic collapse that has led some scholars to predict the country’s demise.

Panarin dismissed that idea: “The collapse of Russia will not occur.”

But Alexei Malashenko, a scholar-in-residence at the Carnegie Moscow Center who did not attend the lecture, sided with the skeptical instructor, saying Russia is the country that is on the verge of disintegration.

“I can’t imagine at all how the United States could ever fall apart,” Malashenko told the AP.

http://www.foxnews.com/story/0,2933,504384,00.html

Bernanke Says U.S. May Need to Expand Bank Rescue

*It will NEVER end. Welcome to the new world.*

March 3 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said policy makers may need to expand aid to the banking system beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits.

“Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today in testimony prepared for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.”

Bernanke’s comments suggest he sees a role for bigger federal outlays as the Obama administration seeks congressional approval for a budget of $3.55 trillion for the fiscal year beginning in October. President Barack Obama has already signed into a law a $787 billion economic stimulus package of tax cuts and government spending.

Obama’s first budget seeks standby authority for as much as $750 billion in new aid to the financial industry. Whether those funds will be needed “depends on the results of the current supervisory assessment of banks” and the evolution of the economy, Bernanke said.

Bernanke said policy makers would have “preferred to avoid” what is likely to be the largest ratio of federal debt compared with gross domestic product since the end of World War II, and he urged lawmakers not to lose sight of fiscal discipline.

Cost to Budget

“But our economy and financial markets face extraordinary challenges,” and doing less now would eventually prove to be more costly, he said. “We are better off moving aggressively today to solve our economic problems; the alternative could be a prolonged episode of stagnation” that would cause budget deficits to swell further, increase unemployment and undermine incomes “for an extended period.”

The Fed has more than doubled its assets to $1.9 trillion during the past year by expanding loans to banks, launching programs to revive commercial paper and other markets and backing the merger of Bear Stearns Cos. with JPMorgan Chase & Co.

The 55-year-old Fed chairman told the Senate Banking Committee last week there’s a “reasonable prospect” the recession will end in 2009 “if the actions taken by the administration, the Congress and the Federal Reserve are successful in restoring some measures of financial stability.”

Stock Slump

Fed policy makers face headwinds from equity markets, with the Standard and Poor’s 500 Index falling this year by 22.5 percent and the S&P Financials Index tumbling 44.2 percent.

The government is still trying to stabilize large financial institutions such as Citigroup Inc. and insurer American International Group Inc. Shares of Citigroup traded at $1.33 this morning at 9:33 a.m., and the government expanded its aid to AIG yesterday after the company reported a fourth-quarter loss of $61.7 billion, the worst loss by any U.S. corporation.

The spending blueprint delivered to Congress last month forecasts government spending this year of $3.94 trillion, up 32 percent from a year ago. That would yield a record deficit of $1.75 trillion in the year ending Sept. 30, equal to about 12 percent of the nation’s gross domestic product, the highest since World War II. Government spending of $3.55 trillion next year will include about $350 billion approved as part of the stimulus package.

Stimulus Impact

“By supporting public and private spending, the fiscal package should provide a boost to demand and production over the next two years as well as mitigate the overall loss of employment and income that would otherwise occur,” Bernanke said.

Still, the size of the impact on the economy from government spending is “subject to considerable uncertainty,” Bernanke said. Consumers may decide to pay down debt or save their cash rather than spend it, he noted.

January forecasts by Fed officials suggest “a full recovery of the economy from the current recession is likely to take more than two or three years,” Bernanke told lawmakers last week.

The U.S. unemployment rate rose to 7.6 percent in January, the highest level since 1992. Job losses spanned almost all industries from trucking and construction to retailing and finance.

Fed officials expect unemployment in the fourth quarter to average 8.5 percent to 8.8 percent, which would be the highest since 1983, according to their January forecasts. Gross domestic product will contract 1.3 percent to 0.5 percent, and inflation will run at just 0.3 percent to 1 percent this year, their projections indicate.

Fed Forecasts

Fed officials don’t see labor markets improving until 2011, when growth forecast at 3.8 percent to 5 percent reduces the unemployment rate to a range of 6.7 percent to 7.5 percent.

Economic models used by Macroeconomic Advisers LLC show the Obama stimulus package could keep the jobless rate at about 8.8 percent instead of the 9.5 percent rate that would result without the package.

The Fed is stepping up efforts to stem the worst credit crisis in seven decades by expanding a program aimed at supporting consumer and business loans to $1 trillion from $200 billion and adding commercial real estate. It is also buying $600 billion of debt sold by government-backed housing finance companies and mortgage-backed securities they guarantee.

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