As Irene Fades Northeast Fears Severe Flooding

As Tropical Storm Irene chugged north into Canada, residents along the battered U.S. East Coast began surveying damage and fretted over the next danger: treacherous flooding.

The storm, downgraded from a hurricane as it lumbered up the coast Sunday, battered the Northeast with driving rain, inundating homes and cutting power to millions. At least 21 deaths were blamed on Irene.

Though it was nothing like the nightmare some had feared and New York City escaped the worst, the danger was far from over for many.

Rivers and creeks turned into raging torrents tumbling with tree limbs and parts of buildings in northern New England and upstate New York.

Authorities warned of possibly disastrous flooding in the days ahead, with Vermont's governor saying his state was facing "a full-blown flooding catastrophe."

Read the rest here.

Lockerbie Planner Reported Near Death

TRIPOLI, Libya — An official with the rebel government on Sunday ruled out extraditing the former Libyan intelligence officer convicted as the mastermind of the 1988 bombing of Pan Am Flight 103 and released from a Scottish prison two years ago on the ground that he was near death.

The hero’s welcome back in Libya for the bombing planner, Abdel Basset Ali al-Megrahi, and his failure to die infuriated the United States and other Western governments, and calls for his return had been mounting as the Libyan revolution unfolded.

The rebels’ resolve to protect the former officer may prove only briefly relevant, however. Just hours after the official spoke, CNN reported that Mr. Megrahi was near death at his villa in the capital here, broadcasting images of a frail man lying comatose in an oxygen mask.

Mr. Megrahi’s death would end the possibility of eliciting his full account of the Libyan government’s role in the bombing over Lockerbie, Scotland, which killed 270 people, 189 of them Americans. But it would also remove a potentially serious point of friction between the rebels’ Transitional National Council and its Western backers.

Read the rest here.

Eternal Memory

Archbishop Dmitri (Royster) has reposed at 87.

The Great East Coast Hurricanes of 1933, '36 and '38

War in one photograph

US Navy SEAL Jon Tumilson's dog Hawkeye at his master's funeral.  He lay under the casket throughout the service.  Tumilson was killed in Afghanistan.  Memory eternal.

From here.
HT: T-19

Swiss Kickstart Talks With U.S. to Settle Tax Probe

ZURICH (Reuters) - Switzerland has made a proposal to try to kickstart talks to settle its impasse with U.S. authorities over Swiss banks suspected of helping wealthy Americans dodge taxes, its finance minister said.

"We have presented a discussion framework (to the U.S.)," Minister Eveline Widmer-Schlumpf told reporters on the sidelines of a conference on Friday. "We will try to solve it so that we do not get any more difficulties."

Widmer-Schlumpf said the proposal was an attempt to settle the dispute under the auspices of a new bilateral taxation agreement which the Swiss parliament approved in September 2009 and the U.S. Senate has yet to ratify.

She declined to give any timetable for the negotiations, which a spokesman would only say were proceeding.

Strict bank secrecy has helped Switzerland build up a $2 trillion offshore financial industry, but the country has agreed in recent years to do more to help hunt tax cheats amid a global crackdown on tax havens.

The United States is pushing for Switzerland to hand over thousands more bank client names as it did last year when it allowed UBS to bend bank secrecy and reveal the details of around 4,450 clients to avoid criminal charges.

Read the rest here.

A tax cut Republicans don't like (Hint: It's not for the rich)

WASHINGTON — It is hard to find a tax cut that Congressional Republicans dislike. Unless it is a tax cut pushed by President Obama.

In a turning of the tax policy tables, Democrats are increasingly hammering on Republicans who oppose the president’s proposal to extend for a year a payroll tax cut passed last year with bipartisan support.

That tax cut — which reduces workers’ contributions to Social Security this year to 4.2 percent of wages, from 6.2 percent — expires in December. The White House would like to extend it for another year. But Republicans in Congress are balking, arguing that such a cut adds needlessly to the nation’s budget deficit, and should be replaced with an overhaul of tax policy instead.

“All tax relief is not created equal,” said Brad Dayspring, a spokesman for Representative Eric Cantor of Virginia, the House majority leader. “If the goal is job creation, Leader Cantor has long believed that there are better ways to grow the economy and create jobs than temporary payroll tax relief.”

Read the rest here.

C.I.A. Demands Cuts in Book About 9/11 and Terror Fight

WASHINGTON — In what amounts to a fight over who gets to write the history of the Sept. 11 attacks and their aftermath, the Central Intelligence Agency is demanding extensive cuts from the memoir of a former F.B.I. agent who spent years near the center of the battle against Al Qaeda.

The agent, Ali H. Soufan, argues in the book that the C.I.A. missed a chance to derail the 2001 plot by withholding from the F.B.I. information about two future 9/11 hijackers living in San Diego, according to several people who have read the manuscript. And he gives a detailed, firsthand account of the C.I.A.’s move toward brutal treatment in its interrogations, saying the harsh methods used on the agency’s first important captive, Abu Zubaydah, were unnecessary and counterproductive.

Neither critique of the C.I.A. is new. In fact, some of the information that the agency argues is classified, according to two people who have seen the correspondence between the F.B.I. and C.I.A., has previously been disclosed in open Congressional hearings, the report of the national commission on 9/11 and even the 2007 memoir of George J. Tenet, the former C.I.A. director.

Mr. Soufan, an Arabic-speaking counterterrorism agent who played a central role in most major terrorism investigations between 1997 and 2005, has told colleagues he believes the cuts are intended not to protect national security but to prevent him from recounting episodes that in his view reflect badly on the C.I.A.

Some of the scores of cuts demanded by the C.I.A. from Mr. Soufan’s book, “The Black Banners: The Inside Story of 9/11 and the War Against Al Qaeda,” seem hard to explain on security grounds.

Among them, according to the people who have seen the correspondence, is a phrase from Mr. Soufan’s 2009 testimony at a Senate hearing, freely available both as video and transcript on the Web. Also chopped are references to the word “station” to describe the C.I.A.’s overseas offices, common parlance for decades.

The agency removed the pronouns “I” and “me” from a chapter in which Mr. Soufan describes his widely reported role in the interrogation of Abu Zubaydah, an important terrorist facilitator and training camp boss. And agency officials took out references to the fact that a passport photo of one of the 9/11 hijackers who later lived in San Diego, Khalid al-Midhar, had been sent to the C.I.A. in January 2000 — an episode described both in the 9/11 commission report and Mr. Tenet’s book.

In a letter sent Aug. 19 to the F.B.I.’s general counsel, Valerie E. Caproni, a lawyer for Mr. Soufan, David N. Kelley, wrote that “credible sources have told Mr. Soufan that the agency has made a decision that this book should not be published because it will prove embarrassing to the agency.”

Read the rest here.

Bernanke gives no hint at additional stimulus

JACKSON, Wyo. -- The recent swings in world financial markets pose risks to growth, Federal Reserve Chairman Ben S. Bernanke said Friday, and the Fed must be “responsive to changes in the economy.” But he offered no hints that any specific action by the central bank is on the way.

Indeed Bernanke did not spell out what any new steps by the Fed to bolster the economy might look like, saying only that the central bank will “employ its tools as appropriate” and adding that the next Fed policy meeting, in September, has been extended from one day to two to allow a fuller discussion of options.

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Hurricane Irene takes aim at the East Coast

Rains generated by Hurricane Irene began falling on the Carolinas on Friday, as the Washington region braced for a storm that could wreak havoc up the Eastern Seaboard into New York City and New England.

With the core of the tropical cyclone expected to approach the coast of North Carolina Friday night and a hurricane warning in effect for much of the East Coast , President Obama scheduled an address from his vacation getaway on Martha’s Vineyard, Mass., which lies on Irene’s projected path and for which a hurricane watch is in effect. Obama is scheduled to return to Washington on Saturday, when the East Coast is expected to take the brunt of the storm.

Read the rest here.

Yes, I'm still alive

I have been away for a few days and forgot the computer.  Sigh.  I haven't looked at my email box yet.  I am debating if I should leave it til tomorrow.  My guess is its full.  Yes, I am in New York and no, I did not feel the ground shake at all.  I was so preoccupied that I had no idea anything had happened until I turned on the 11 o'clock news.  Hopefully I will get things back up and running shortly.

Scenes from Vespers and Liturgy for the Feast of the Transfiguration

How bad is it really?

• Banks are now sending out pre-declined credit card notices
• When I hit the drive thru the other day the kid in the window asked me "can you afford fries with this?"
• The latest big business deals are now being made on the 18th hole at Bert's mini-golf.
• If your bank returns your check marked "Insufficient Funds" you have to call them to clarify whether they meant you or the bank.
• Stock prices are higher for Hot Wheels and Matchbox than GM.
• Parents in Beverly Hills and Hollywood are firing their nannies and learning their kids' names.
• A truckload of Americans were caught trying to sneak into Mexico.
• Dick Cheney took his broker hunting.
• Motel Six is no longer leaving the light on for you.
• The Mob is laying off judges.
• Congress is investigating Bernie Madoff.  Yes, that's right.  The man who made $50 billion disappear is being investigated by the men who made $15 trillion disappear.
• A buddy was so depressed about the state of the country and the economy that he called the suicide prevention line.  He was connected to a call center in Pakistan.  When he told them he was having suicidal thoughts they got very excited and asked if he could drive a truck.

Huzzah!

The Canadian armed forces are "Royal" again.

Happy Birthday

The late Julia Child, born this day in 1912.

A few years ago I learned that Julia Child had served in the OSS during World War II and I almost fell out of my chair.  That has so warped my image of her that ever since I have had this picture in my mind of Julia Child standing next to an open door on a darkened plane over Nazi occupied France, wearing a parachute over a Sam Spade trench-coat with a slouched fedora hat... and a spatula in one hand with a rolling pin in the other.  The rolling pin is of course, a cleverly disguised gun and the spatula has a straight razor edge on it.

Gold Standard: Forty Years Gone — And Good Riddance

A good read for those looking for the anti-gold perspective. It's so full of links and quotes I am not going to excerpt it. But do read it (even if you favor the gold standard) here.

Feast of the Dormition of the Most Holy Theotokos the Mother of God

The Telegraph: Abandoning the gold standard was a fatal error we're now all paying for

...Let's start with first principles: for as long as anyone can remember, politicians have sought to spend more than they can afford. Since the invention of money they have discovered ever more ingenious ways to do so.

The initial method involved debasing the currency. Henry VIII earned his nickname "Old Coppernose" because he added so much copper to what were supposed to be silver coins that eventually it would show through on the nose of his portrait.

These bouts of debasement typically end in disaster, as faith is lost in the currency, inflation shoots through the roof and the economy collapses, after which politicians introduce a new, more credible system.

After trust evaporated in gold and silver coinage, we had the gold standard and then the Bretton Woods system and now, today, fiat money – but the routine is painfully familiar. The main difference with fiat money is that whereas under the gold standard it was all too obvious when politicians were spending beyond their means (they would simply run out of gold reserves), these days it is slightly more difficult to tell quite how close the system is to breakage.

Read the rest here.

The Guardian: We've been warned: the system is ready to blow

...To understand the mess we are in, it's important to know how we got here. Today marks the 40th anniversary of Richard Nixon's announcement that America was suspending the convertibility of the dollar into gold at $35 an ounce. Speculative attacks on the dollar had begun in the late 1960s as concerns mounted over America's rising trade deficit and the cost of the Vietnam war. Other countries were increasingly reluctant to take dollars in payment and demanded gold instead. Nixon called time on the Bretton Woods system of fixed but adjustable exchange rates, under which countries could use capital controls in order to stimulate their economies without fear of a run on their currency. It was also an era in which protectionist measures were used quite liberally: Nixon announced on 15 August 1971 that he was imposing a 10% tax on all imports into the US.

Four decades on, it is hard not to feel nostalgia for the Bretton Woods system. Imperfect though it was, it acted as an anchor for the global economy for more than a quarter of a century, and allowed individual countries to pursue full employment policies. It was a period devoid of systemic financial crises.

Utter mess

There have been big structural changes in the way the global economy has been managed since 1971, none of them especially beneficial. The fixed exchange rate system has been replaced by a hybrid system in which some currencies are pegged and others float. The currencies in the eurozone, for example, are fixed against each other, but the euro floats against the dollar, the pound and the Swiss franc. The Hong Kong dollar is tied to the US dollar, while Beijing has operated a system under which the yuan is allowed to appreciate against the greenback but at a rate much slower than economic fundamentals would suggest.

The system is an utter mess, particularly since almost every country in the world is now seeking to manipulate its currency downwards in order to make exports cheaper and imports dearer. This is clearly not possible. Sir Mervyn King noted last week that the solution to the crisis involved China and Germany reflating their economies so that debtor nations like the US and Britain could export more. Progress on that front has been painfully slow, and will remain so while the global currency system remains so dysfunctional. The solution is either a fully floating system under which countries stop manipulating their currencies or an attempt to recreate a new fixed exchange rate system using a basket of world currencies as its anchor.

The break-up of the Bretton Woods system paved the way for the liberalisation of financial markets. This began in the 1970s and picked up speed in the 1980s. Exchange controls were lifted and formal restrictions on credit abandoned. Policymakers were left with only one blunt instrument to control the availability of credit: interest rates.

For a while in the late 1980s, the easy availability of money provided the illusion of wealth but there was a shift from a debt-averse world where financial crises were virtually unknown to a debt-sodden world constantly teetering on the brink of banking armageddon.

Currency markets lost their anchor in 1971 when the US suspended dollar convertibility. Over the years, financial markets have lost their moral anchor, engaging not just in reckless but fraudulent behaviour. According to the US economist James Galbraith, increased complexity was the cover for blatant and widespread wrongdoing.

Looking back at the sub-prime mortgage scandal, in which millions of Americans were mis-sold home loans, Galbraith says there has been a complete breakdown in trust that is impairing the hopes of economic recovery.

"There was a private vocabulary, well-known in the industry, covering these loans and related financial products: liars' loans, Ninja loans (the borrowers had no income, no job or assets), neutron loans (loans that would explode, destroying the people but leaving the buildings intact), toxic waste (the residue of the securitisation process). I suggest that this tells you that those who sold these products knew or suspected that their line of work was not 100% honest. Think of the restaurant where the staff refers to the food as scum, sludge and sewage."

Read the rest here.

WSJ: The Nixon Shock Heard 'Round the World

By severing the dollar's convertibility to gold in 1971, the president ushered in a decade of inflation and economic stagnation.

On the afternoon of Friday, Aug. 13, 1971, high-ranking White House and Treasury Department officials gathered secretly in President Richard Nixon's lodge at Camp David. Treasury Secretary John Connally, on the job for just seven months, was seated to Nixon's right. During that momentous afternoon, however, newcomer Connally was front and center, put there by a solicitous president. Nixon, gossiped his staff, was smitten by the big, self-confident Texan whom the president had charged with bringing order into his administration's bumbling economic policies.

In the past, Nixon had expressed economic views that tended toward "conservative" platitudes about free enterprise and free markets. But the president loved histrionic gestures that grabbed the public's attention. He and Connally were determined to present a comprehensive package of dramatic measures to deal with the nation's huge balance of payments deficit, its anemic economic growth, and inflation.

Dramatic indeed: They decided to break up the postwar Bretton Woods monetary system, to devalue the dollar, to raise tariffs, and to impose the first peacetime wage and price controls in American history. And they were going to do it on the weekend—heralding this astonishing news with a Nixon speech before the markets opened on Monday.

Read the rest here.