When Germany goes, you can forget about the EU, everything will return to the Wild, Wild West

Sunday, May 13, 2012

BERLIN – Angela Merkel’s conservatives face defeat in a vote in Germany’s most populous state on Sunday that could give the left momentum before next year’s federal election and fuel criticism of the chancellor’s European austerity drive.
North Rhine-Westphalia (NRW), an industrial state in western Germany with an economy and population roughly the size of the Netherlands, has a history of influencing national politics.
First exit polls are due at 1600 GMT (12 pm Singapore time) and are expected to show Hannelore Kraft of the centre-left Social Democrats (SPD) trouncing her Christian Democrat (CDU) rival Norbert Roettgen, Merkel’s environment minister.
The vote is likely to bolster the SPD’s fortunes nationwide and make Merkel, Germany’s most popular politician, look politically vulnerable for the first time in a long while. Kraft, who has run a fragile minority government with the Greens for the past two years, has won over voters by promising a go-slowly approach to cutting NRW’s 180-billion-euro debt, dodging accusations of fiscal mismanagement by the CDU.
A decisive victory for the SPD would be seen by many as a double defeat for the chancellor – NRW would be rejecting her party and the fiscal discipline she has forced on heavily indebted euro zone countries like Greece.
The vote in NRW follows elections in Greece, France and Italy that pointed to a growing backlash against austerity.
Roettgen has declared the vote a referendum on Merkel’s European debt policies. “The election on Sunday also serves to finally give our chancellor full support from Duesseldorf … for her national and European policies,” he told a crowd of 2,000 at a campaign rally on Friday.
Other conservative leaders have distanced themselves from Roettgen and pollsters say a strong majority of Germans still support Merkel’s insistence on fiscal discipline in Europe, even if they do not want as much austerity at home.
NRW, home to one in six German voters, is a microcosm of Germany and changes in coalitions there have been harbingers of change for national governments. In 2005, the CDU led a centre-right coalition there to power four months before Merkel was elected with the same constellation in Berlin.
The latest poll released on Friday put the SPD on 38 percent and the Greens on 11 percent, just short of a majority but well ahead of the CDU and their preferred FDP coalition allies.
The CDU is polling 33 percent, which would be the party’s worst result in NRW, and the pro-business Free Democrats (FDP) look set to get just 5 percent of the vote. In the NRW election in 2010, the SPD were just behind the CDU.
“Hannelore Kraft set to win in NRW”, “SPD-Greens on home stretch”, read headlines at the weekend.
Leaders of the FDP, junior partners in Merkel’s centre-right coalition in Berlin, have sent signals that they might be open to a coalition with the SPD and the Greens.
“With the FDP and SPD, a performance-oriented party and a party focused mostly on social justice would rule together – surely it would be ideal if these two fundamental views came together,” Wolfgang Kubicki, leader of the FDP in the northern state of Schlweswig Holstein, was quoted as saying by “Welt am Sonntag”.
Were a similar coalition to come together at the national level in 2013, it could doom Merkel’s hopes of a third term. 
Am I detecting the early days of a big shift in the political landscape of the EU? Greece wants out, France next, and if Germany goes the same way, will it be the end of the EU? Looks like everyone wants to join the UN umbrella instead, is it true?
– Contributed by Oogle.

It is a ritual killing to challenge the Government

By Ioan Grillo

MEXICO CITY | Sun May 20, 2012 4:17pm EDT

(Reuters) – Mexican soldiers have arrested an alleged perpetrator of the massacre of 49 people whose corpses were decapitated, dismembered and dumped on a highway last week.
Daniel Elizondo, alias “The Madman,” a leader of the Zetas drug cartel, was detained in the northern state of Nuevo Leon, a spokesman for the army said Sunday.

By Luis Ochoa CADEREYTA JIMENEZ, Mexico | Mon May 14, 2012 12:01am EDT

(Reuters) – Suspected drug cartel killers in Mexico dumped 49 headless bodies on a highway near the northern city of Monterrey, a sickening atrocity that prompted the government to condemn the “inhuman” violence plaguing the country.
The corpses of 43 men and six women, whose hands and feet had also been cut off, were found in a pile on a highway in the municipality of Cadereyta Jimenez early on Sunday, officials from the state of Nuevo Leon said.
The Nuevo Leon government said the notorious Zetas drug gang had claimed responsibility for the bloodbath, one of the worst to hit Mexico during its struggle against the powerful cartels.
The massacre follows several other mass slayings in Mexico. Many have occurred in the north, where the Zetas have waged a war against rival groups for control of smuggling routes into the United States, the biggest market for illicit drugs.
The Mexican government said in a statement the evidence suggested turf wars between the Zetas and the Sinaloa cartel of Joaquin “Shorty” Guzman were behind the surge in bloodshed.
Condemning the “inhuman episodes of irrational violence” the warring gangs had caused, the government pledged to uphold justice in Mexico with “all of its force and might.”
The Zetas gang was founded by deserters from the Mexican army who became enforcers for the Gulf cartel, which once dominated the drug trade in northeastern Mexico. Leaders of the Zetas later split from their employers and the two gangs have since fought for control of trafficking routes.
The Zetas have also been at war with the Sinaloa cartel headed by Guzman, the country’s most wanted man.
President Felipe Calderon has staked his reputation on bringing Mexico’s drug gangs to heel, sending in the army to fight them shortly after taking power in December 2006.
But the violence has spiraled since, and more than 50,000 people have fallen victim to the conflict, eroding support for Calderon’s conservative National Action Party (PAN), which looks likely to lose power in presidential elections on July 1.
A poll published on Sunday showed PAN presidential candidate Josefina Vazquez Mota trailing front-runner Enrique Pena Nieto of the opposition Institutional Revolutionary Party (PRI) by 19 points with just seven weeks to go.
The commercial hub of Monterrey was long a bastion of the PAN, and the local business community has been “livid” about the violence engulfing the city, said George W. Grayson, a Mexico expert at the College of William and Mary in Virginia.
“This puts the final nail in the coffin of the PAN in the presidential contest,” he said after the latest atrocity.
Surveys show voters think that the PRI, which ruled Mexico for 71 years until 2000, is more likely to quell the violence. Its long rule was tainted by corruption and critics have accused the PRI of making deals with cartels to maintain order.
Vazquez Mota took a swipe at the PRI after the headless bodies were discovered, suggesting regions governed by the centrist party – which include Nuevo Leon and nearly two-thirds of Mexico’s states – had allowed crime to flourish.
“What happened in Cadereyta must be investigated, but what I think it shows, in a terrible and painful way, is the kind of permissiveness seen in these states towards organized crime,” she told Reuters in the eastern port of Veracruz on Sunday.
The headless victims have not been identified.
The bodies showed signs of decay, indicating they may have been dead for days, Nuevo Leon Attorney General Adrian de la Garza said. He noted there had been no mass disappearances reported in the state, so the victims could have died elsewhere.
De la Garza said many of the bodies were tattooed, which could offer a clue to their identities. The dead may have been migrants passing through Mexico to the United States, he added. Migrants have been targeted by criminal gangs in the past.
Violent street gangs in Central America like the Maras have distinctive tattoos, though Nuevo Leon public security spokesman Jorge Domene said the victims did not show these markings.
Domene said some had tattoos of Santa Muerte, or “Holy Death” a female skeletal grim reaper venerated by both gangs and some broader, non-criminal sections of Mexican society.
The corpses were taken to Monterrey and authorities said they would perform DNA tests. Thousands of Mexico’s drug war victims have never been identified.
The bloody killings in Nuevo Leon were the worst there since 52 people died in an arson attack on a casino in Monterrey in August. That attack was also blamed on the Zetas.
Monterrey is Mexico’s most affluent city and was long seen as a model of economic development in Latin America. But it has been ravaged by the drug war over the last three years.
The horrifying conflict has been marked by an escalation of mass slaughter in recent weeks.
Last Wednesday, 18 people were found decapitated and dismembered near Mexico’s second-largest city, Guadalajara.
A week earlier, the bodies of nine people were found hanging from a bridge and 14 others found dismembered in the city of Nuevo Laredo, just across the U.S. border from Laredo in Texas.
Security analyst Alberto Islas said much of the recent spike in violence was the result of fighting over cocaine supplies from South America between the Zetas and the Sinaloa cartel.
Increased pressure on Guzman’s operations in Colombia this year had prompted the Sinaloa cartel to buy up a bigger share of cocaine from Peru and Ecuador, squeezing the Zetas’ supply and sparking tit-for-tat attacks among the gangs, Islas added.
The fact that state and federal authorities had repeatedly failed to capture and prosecute those responsible for the brutality meant the attacks were only getting worse, he said.
“They’re fighting across the whole country with complete impunity,” he said. “The government has to send out a very clear signal they will stop the violence and find those responsible.”
Late last year, several mass killings took place in the eastern state of Veracruz, which has been ravaged by the Zetas.
(Reporting by Michael O’Boyle, Dave Graham, Ioan Grillo, Anahi Rama, Mica Rosenberg and Ana Isabel Martinez; Editing by Kieran Murray and Stacey Joyce)

Their hands, feets and head were cut off to prevent identification of the victims, who are most likely being traffic to Mexico by Cartel gangs, it is a ritual killing which the gangs want to show their powers to instill fear amongst the people, to challenge the Governments. But there is a God above, and Justice will be served. You cannot solve Hunger and Poverty without fighting Crime. By fighting Crime, only then there is Peace and Prosperity. You need an appropriate response to deal with drugs cartel, that is having even higher firepower and the methods to deal with counter-terrorism. They carry a gun, your men carry sub-machine guns, and if they carry sub-machine guns, your men carry bazooka and rpgs. If your police force cannot handle, the setup a task force. If there is an army, then bring in apache helicopters and anti-personnel crafts. If they resists with brute force, then take no survivors. That is what I call “an appropriate response”.
– Contributed by Oogle. 

EU needs to kick start their worst economies by recapitalising banks

EU needs to kick start their worst economies by recapitalising banks

Austerity measures bites but there is no shortcut to solve EU’s problems. Timing is the issue, after the economy is on the road to recovery, there is a need to recapitalise banks to provide much needed funds for SMEs to create jobs via micro-finance. The funds provided can be recovered by diluting the shares of state banks to private investors, and EU/IMF must continue to monitor and make sure there is an orderly exit to provide confidence to the markets. Once the ball is rolling, the creation of wealth will ensure there is ROI to make sure private investors stay vested. Every single one of those economies need a different solution, and the greatest headache is Greece, which is more difficult to fix once it gets out of the Euro, but politicians do not intend to solve the problems, they want an easy way out, which is dangerous when voters get light headed and do not think of the consequences, they just want money to drop down from heaven. An orderly exit might reduce Greece’s chances of repaying it’s debts, it might also cause a longer period of hardship as everything gets devalued in Greece, but it does not mean that Greece will not be able to pay it’s debts in future once the global economy recovers. So political will is needed, or you will see chaos once more than half the population of Greece lose their jobs and will have to depend on welfare, where there is none. It is the choice of the people, who has already casted their votes, but who in the right mind will chose such hardship?
That is the reason why the independence of the UN is very important to solve the global crisis as and when it surfaces, thru my innovations and technologies, UN can be internally funded by the World Bank and IMF, the contributions from members is important, but it will really give UN the resources to fight any crisis it needs, without complications from its own members, UN could therefore technically ‘print it’s own money’ far greater than the FEDs, without a worry of inflation or a drop in value in it’s money, or rely on it’s member states to supply it denominated currencies like US$, Euro$ or RMB$. But it doesn’t mean every member states will be given a blank check to do as it pleases, prudent financial management needs to give transparency and accountability to all.
– Contributed by Oogle. 
Sunday, May 13, 2012

BRUSSELS – The European Commission on Sunday welcomed a Spanish move that forces strapped banks to establish a new 30 billion euro (S$60 billion) loan cushion and rid their accounts of risky property assets.
“I welcome the measures announced on Friday by the Spanish authorities to further reform the banking sector,” said EU economy commissioner Olli Rehn.
“A prompt and profound reform of the banking sector is a cornerstone of Spain’s crisis response and its overall reform strategy.”
Rehn said the banking reform measure was a crucial addition to Madrid’s efforts at consolidating its budget and implementing structural reforms aimed at laying a foundation for sustainable growth and job creation.
Rehn also voiced hope that the move would help Spanish banks regain the confidence of financial markets and institutional investors.
Prime Minister Mariano Rajoy’s government took the dramatic step Friday, two days after it nationalised the fourth-biggest Spanish bank, Bankia, to salvage a balance sheet drenched in red ink.
Madrid will charge two independent auditing firms with valuing banks’ exposure to the collapsed property sector, which is still reeling from a housing bubble that popped in 2008, ministers said.
Banks have already been told to set aside 53.8 billion euros as a buffer against expected losses from real-estate loans on which borrowers are likely to default.
While the banks have been tasked with finding the money, a Spanish public aid fund might lend them some of it in exchange for stakes in institutions that have to ask for help, Spanish authorities have indicated.
That prospect drove Spanish stock market prices lower on Friday because investors expect Madrid to have to intervene again in favour of the banks. The Bankia operation was the eighth such move since 2008.
Bank of Spain figures show that commercial banks held problematic real estate assets, including loans and seized property, worth 184 billion euros, equal to 60 percent of their property portfolio at the end of 2011.
Spain’s greatest headache is the collapse of it’s real estate, making banks very vulnerable to exposure of risks but now that reforms has been in place, Spain will follow the recovery like in the US of Freddie Mae where investors will return back to buy real estate, as that is a very good hedge against inflation, once the global economic recovery is stable, Spain will be the first to get out of the red out of the worst four from EU. EU can afford to bail out it’s worst with some help from World Bank and IMF, but if the governments cannot afford reforms and austerity measures, who will take the risks when everything falters again?
– Contributed by Oogle. 

Our Missing Billions ; There is no accountability in our CPF, every Singaporean already knows

In our last post, I gave a short and a long answer to questions about the importance of who owns the debt. The short answer is that it doesn’t matter who the government of Singapore owes money to, it still owes money to them.  Some readers and posters said that if the Central Provident Fund (Singaporean social security) owns the debt issued by the Singaporean government, then it doesn’t really matter.  Let’s examine that question in greater detail.
The CPF collects mandatory contributions from Singaporean citizens and pays a statutory rate of return to its account holders currently ranging from 2.5% to 4% depending on the type of account.  The contributions are intended to be used for old age income support and health care among other basic services.  The CPF holds $185 billion SGD of investment assets under management but also $185 billion SGD in liabilities in the form of member accounts with a net surplus $1.9 billion.  In other words, there is only a small amount of net assets under management at the CPF.
According to CPF financial statements, 95% of CPF investment assets are “special issues of Singapore Government securities”.  In other words, the CPF is the primary purchaser of the debt issued by the government of Singapore.
The CPF is then part of a large circle that takes money from the citizens pays them interest and lends it to the government Singapore matching the interests rates between the two rather closely.  This leads to three important and inescapable conclusions:
1.  The CPF has minimal net assets under management and cannot really add to our search for missing assets.  In other words, the CPF cannot add to our understanding of where we might find large amounts of net public assets.
2.  Singaporean citizens have provided enormous free cash flow to the Singaporean government in the form of structural budget surpluses and large amounts of lending. As I said in the last post, from 1991 to 2010 alone the sum of budget surpluses and net lending totaled $512 billion SGD.
3.  All roads still lead to the Singaporean government. The enormous volume of free cash flow in the form of budget surpluses and increased borrowing flowed through Singaporean government finances and was under their management.
Returning to the question I posed in the previous post, if the Singaporean government enjoyed free cash flow from budget surpluses and borrowing totaling $512 billion SGD between 1991 and 2002, where did the money go?
To be clear there is no public record of expenditures by the Singaporean government to account for the $512 billion SGD in free cash flow since 1991. Nor is there as public record of assets held by Temasek, GIC,  or other public body in large enough amount to account for such a large discrepancy. Remember if this $512 billion earned the 7% GIC claims to have earned there should be more than $1 trillion in assets.
The reason the CPF matters and should concern Singaporeans is simple.  The government of Singapore is borrowing money from its citizens through the CPF payed 2.5-4% and investing that money in other assets through GIC and Temasek hoping to earn a higher return. Publicly, GIC and Temasek claimed to have earned 7% and 17% since inception meaning they are earning a comfortable spread above the 2.5-4% they must pay for those funds. If Temasek and GIC earn less than the 2.5-4% they pay to the CPF, the government must essentially subsidize the losses to keep the CPF whole.
According to the data published by Temasek and the best estimates of GIC, they hold around $500 billion SGD essentially matching the $512 billion SGD in budget surpluses and increased borrowing or a total return of about 0%. This leads to two frightening conclusions:
1.  While estimated GIC and Temasek assets essentially produce a 0% nominal return, when factoring in inflation, this produces real investment losses of about 35%!!
2.  The government of Singapore has essentially been subsidizing GIC and Temasek losses by paying their implied obligations to the CPF even though the they have not earned a rate of return sufficient to cover the cost of debt capital. In other words, the government of Singapore is subsidizing GIC and Temasek losses to the amount of the rate of return earned by GIC or Temasek minus the 4% it pays to CPF account holders. Financial losses attributable to GIC and Temasek but covered by the government of Singapore, significantly increase the risk of CPF deposits.
There are two final points worth mentioning. First, we continue to search for enormous amounts of missing assets. For instance, it has been suggested that GIC and Temasek have not produced accurate accounts that would reconcile the difference.  Given that there is a minimum of $500 billion SGD in missing assets, I am very skeptical that this is simply due to sloppy accounting.  However, the fundamental point is to focus on locating in public records the missing assets.  There needs to be a bare minimum of $500 billion SGD in unreported assets to begin to bridge the gap between what exists and what should exist.
Second, due to the length of this post, I only covered the CPF today and could not cover the Monetary Authority of Singapore and its foreign reserves.  In the next post on Monday, I will analyze the MAS.  Needless to say, it doesn’t in anyway change the analysis.
Christopher Balding
*The writer is a professor of business and economics at the HSBC Business School at the Peking University Graduate School.  An expert in sovereign wealth funds, he has published in such leading journals as the Review of International Economics, the Journal of Public Economic Theory, and the International Finance Review on such diverse topics as CDS pricing, the WTO, and the economics of adoption and abortion.  His work as been cited by a variety of media outlets including the Wall Street Journal and the Financial Times
Come 2016, when PAP loses the elections, when our CPF board is unable to repay it’s obligations to it’s CPF members, everything will be exposed, but I have already prepared for such a possibility, everything has been hidden from the public for so long, it will be an attempt to blackmail every Singaporean to vote PAP again, or there will no longer be a retirement fund.
Don’t be too happy if you can squeeze goodies from the government, you may end up paying the price from your retirement funds in future, if I am not wrong, the damage over the years could total as high as S$300 Billions, and there is no way the government can recover this money.
When I get to the UN and change the concept of Swiss Bank accounts no longer private, the UN and other governments will have all access to once secret accounts, we will definitely see the whole picture.
– Contributed by Oogle.

The First Magnetic Car, later a Flying Saucer?

The People’s Car Project debuted in China last year. The Hover Car is a two-seater zero emissions vehicle that hovers above the ground using electromagnetic road networks. It has distance sensors that keep the craft from colliding with other vehicles on the road. The car will be controlled by a nice-looking joystick that, based on the video below, is quite easy to use. While Volkswagen’s Hover Car is very cool, it’s important to note that it is still a concept and that it is still a far cry from the actual “car of the future” that we want to drive, paving the entire roads of china using magnetic road networks is too costly and may not be feasible.

HTRE-3? In 1955, this program produced the successful X-39 engine, two modified General Electric J47s with heat supplied by the Heat Transfer Reactor Experiment-1 (HTRE-1).[5] The first full power test of the HTRE-1 system on nuclear power only took place in January 1956. A total of 5004 megawatt-hours of operation was completed during the test program.[6] The HTRE-1 was replaced by the HTRE-2 and eventually the HTRE-3 unit powering the two J47s. The HTRE-3 used “a flight-type shield system” and would probably have gone on to power the X-6 had that program been pursued.


“When mankind combines magnetic energy to control gravity, using H2O water to cool and power the next generation engine(Nuclear Fusion or Fission? We do not have the technology to even build a proper nuclear fusion device in a space craft to generate energy, how to kick start the ITER project? You want to control the sun’s energy, you must first build a gravity device so strong like a black hole to contain the sun’s energy and make sure it does not leak in a containment unit), we will not only have a “car of the future” but a machine to travel thru time and space. – Contributed by Oogle.”

The ITER project confronts numerous technically challenging issues. French Nobel laureate in physics, Pierre-Gilles de Gennes said of nuclear fusion, “We say that we will put the sun into a box. The idea is pretty. The problem is, we don’t know how to make the box.”[31]
A technical concern is that the 14 MeV neutrons produced by the fusion reactions will damage the materials from which the reactor is built.[32] Research is in progress to determine how and/or if reactor walls can be designed to last long enough to make a commercial power plant economically viable in the presence of the intense neutron bombardment. The damage is primarily caused by high energy neutrons knocking atoms out of their normal position in the crystal lattice. A related problem for a future commercial fusion power plant is that the neutron bombardment will induce radioactivity in the reactor itself.[33] Maintaining and decommissioning a commercial reactor may thus be difficult and expensive. Another problem is that superconducting magnets are damaged by neutron fluxes. A new special research facility is planned for this activity, IFMIF.
The ITER tokamak will use three interconnected cooling systems. Most of the heat will be removed by a primary water cooling loop, itself cooled by water through a heat exchanger within the tokamak building’s secondary confinement. The secondary cooling loop will be cooled by a larger complex, comprising a cooling tower, a 5 km pipeline supplying water from Canal de Provence, and basins that allow cooling water to be cooled and tested for chemical contamination and tritium before being released into the Durance River. This system will need to dissipate an average power of 450 MW during the tokamak’s operation. A liquid nitrogen system will provide a further 1300 kW of cooling to 80 Kelvin, and a liquid helium system will provide 65 kW of cooling to 4.5 Kelvin.