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The Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA's Terra satellite captured this true-color image on February 7, 2010, showing part of the region affected by heavy snowfall. Snow blankets the area hundreds of kilometers inland from the Atlantic coastline. Along the latitude of New York City, however, snow cover thins considerably. Credit: NASA

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Google Asks NSA to Help Secure Its Network

Google is teaming up with the National Security Agency to investigate the recent hack attack against its network in a bid to prevent another assault, according to The Washington Post.
The internet search giant is working on an agreement with the controversial agency to determine the attacker’s methods and what Google can do to shore up its network.
Sources assured the Post that the deal does not mean the NSA will have access to users’ searches or e-mail communications and accounts. Nor will Google share proprietary data with the agency.
But the move is raising concerns among privacy and civil rights advocates.
The Electronic Privacy Information Center filed a Freedom of Information Act request on Thursday, shortly after the agreement was made public, seeking more information about the arrangement (.pdf).
Executive Director Marc Rotenberg believes the agreement covers much more than the Google hack and that the search giant and intelligence agency were in talks prior to Google discovering that it had been hacked.
“What they’ve told you is that this is about an investigation of a hack involving China,” he told Threat Level in a phone interview. “I think and have good reason to believe that there’s a lot more going on.”
Google declined to comment.
“At the time [of the hack announcement], we said we are working with the relevant US authorities, but we don’t have any comment beyond that,” wrote spokesman Jay Nancarrow in an e-mail.
The FOIA request also seeks NSA communications with Google regarding Google’s failure to encrypt Gmail and cloud computing services. Rotenberg says EPIC wants to know what role the NSA has played in shaping privacy and security standards for Google’s services.
EPIC also filed a lawsuit against the NSA and the National Security Council, seeking a key document governing the government’s broader national cybersecurity policy, which has been shrouded in secrecy.( Read more... )

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824,000 Will Disappear On February 5; BLS Admits Flawed Model But Plans No Changes

On Friday, expect to see the BLS revise job creation estimates down by a whopping 824,000 jobs. The culprit, as I have been harping on for a couple years is a birth-death model far out of sync with reality.

Bloomberg has some nice interactive charts in an article Birth Death Model Insights.

click on any chart for sharper image

Originally the BLS said 4.8 million jobs were lost between April 2008 and March 2009.
This is what it looks like now.



Birth Death Model Falls Out Of Bed



The labor department says there are flaws in its model but defends the process and says "no changes to the current modeling technique are scheduled at this time." Please note that the birth death model has added 990,000 jobs since April. Those jobs are not reflected in the upcoming 824,000 revision.



Jobs Contract 24 Straight Months

Here is a snip from my post Jobs Contract 24th Straight Month; Unemployment Rate Stays At 10.0%

Birth Death Model Revisions 2008



click on chart for sharper image

Birth Death Model Revisions 2009



click on chart for sharper image

Birth/Death Model Revisions

At this point in the cycle Birth/Death Model numbers should have been massively contracting for months. The BLS is going to keep adding jobs through the entire recession.

Please note that one cannot subtract or add birth death revisions to the reported totals and get a meaningful answer. One set of numbers is seasonally adjusted the other is not. In the black box the BLS combines the two coming out with a total. The Birth Death numbers influence the overall totals but the math is not as simple as it appears and the effect is nowhere near as big as it might logically appear at first glance.

BLS Black Box

For those unfamiliar with the birth/death model, monthly jobs adjustments are made by the BLS based on economic assumptions about the birth and death of businesses (not individuals). Those assumptions are made according to estimates of where the BLS thinks we are in the economic cycle.

The BLS has admitted however, that their model will be wrong at economic turning points. And there is no doubt we are long past an economic turning point.

Here is the pertinent snip from the BLS on Birth/Death Methodology.

• The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations.
• Note that the net birth/death figures are not seasonally adjusted, and are applied to not seasonally adjusted monthly employment links to determine the final estimate.
• The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend.

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Energy Quiz: What renewable fuel delivers the most net energy?

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Obama's Budget Has One Small, Missing Piece.... For $6.3 Trillion Dollars

Let's remind our readers of what then-CBO director Peter Orszag said on September 8, 2008, at the press conference announcing the conservatorship of the bankrupt mortgage titans. Below we transcribe the relevant Q&A:

QUESTION:  (OFF-MIKE) completely incorporated into the federal budget?

ORSZAG:  What I— what I said was it is our view that at this point they should be incorporated into the federal budget, that we intend to do that in our January baseline and that with regard to the budget of the United States, which is put together by the administration’s Office of Management and Budget, that—the treatment therein will obviously be up to OMB, but it is our hope that working with the budget committees and OMB we can have a consistent treatment between our baseline and their budget.

QUESTION:  This may be a little repetitive, but can you give—and if—if you do what you just said you would do, incorporating the mortgage companies into the federal budget directly, can you estimate at all the impact on federal receipts and federal outlays?

ORSZAG:  I don’t—I could but I don’t want to. And the reason is that—is that again that can depend very sensitively—there is a lot of mortgage-backed security activity, and it can depend a lot on how this tension between whether if you buy a hundred-dollar’s worth of mortgage-backed securities that is scored as a hundred dollars in spending or whether that’s evaluated at its subsidy value, the numbers can be dramatically different. So I’m—until we reach judgment on, in particular, that issue but a few others, it’s premature for me to give you the raw (ph) numbers.

Christian (ph) and then (inaudible).

QUESTION:  Sure, but just in a conceptual sense, though, you are ruling that—that Fannie and Freddie are now part of the public sector. They’re now part of the government. They are in effect nationalized.

ORSZAG:  We are saying that the degree of control exercised by the federal government over these entities is so strong that the best treatment is to incorporate them into the federal budget.

Alas now-White House budget director is singing a radically different tune. According to a statement from the administration: "The administration continues to monitor the situation of the GSEs closely and will continue to provide updates on considerations for longer-term reform of Fannie Mae and Freddie Mac as appropriate." We hope this update will come at least a few days before America files for bankruptcy. Oh, and what is this difference in MBS scoring between "spending" and "subsidy value." Could we maybe please got some color on which of these two concepts applied to the nearly $100 billion in MBS sales initiatied by Bill Gross, with the US taxpayer as an unwitting buyer.

As there may have been some confusion as to the magnitude of the numbers we are discussing here, we are providing a break down of total GSE debt introduced just a few days ago by Neil Barofsky.

As readers can see, we are not talking about just any paltry amount: the most recent US total debt balance was $12.222 trillion. It would seem a little presumptuous that an amount representing more than half of the total US sovereign debt is conveniently swept under the rug.

And with the omission from the Federal Budget, America's population once again has absolutely no visibility into the real fiscal costs associated with the government's support for the Debtor Nation Sponsored Entities (aka DeNSEs). Not only that, but at some point we really should have a discussion over just what the delicate transition from the existing "conserved" [sic] status to a full nationalization and permanent US debt onboarding. Because otherwise the ignorant morts may think that the Federal Reserve was responsible for purchasing just $300 billion worth of US debt, when in reality, courtesy of what should have been a Budget liability, the Bernanke policy will have been responsible for purchasing essentially $1.7 trillion worth of US securities. And the whole MBS-UST rotation by China, PIMCO and everyone else who was clever enough to hold the worst possible security around, would just have been a little more formalized than assorted discussions in the fringe media.

Luckily for the administration, today's budget provided absolutely no color, and further confirmed that Orzsag is nothing but a pure-blood hypocrite who says whether is suitable for the occasion. Seeing how the Volcker plan is about to be retracted, we reserve judgment for the President until such time as he formally announces his prop trading ban was simply the result of an HFT algorithm gone amok in his telepromter. But we digress. As for the whole "GSE-reform" thing, the administration will do it soon. Not today... But soon. After all: what is 40% of GDP? Bernanke can print that in like 2 days.

What we do know, is that recently the Treasury formally gave itself unlimited bailout capacity as pertains to the GSEs, once again making the case that in the grand scheme of things Treasury and GSEs liabilities are essentially the same concept. Of course, the public's, media's, and assorted CDS traders' reactions, were they to suddenly uncover that the US debt-to-GDP is actually more like 130% than 90%, would be quite amusing. We also know that by this action the administration has avoided the recognition of about $100 billion in cash outlays compared to the prior CBO estimate. Oh yes, we almost forgot how self-congratulatory the Treasury was when it announced that its January-March and March-June quarter borrowing needs would be lower than expected.

What we definitely know is that we now live in a system where delusion is the norm: we have an administration that willfully and consistently deludes its population from representing just how bad our economic debacle really is, and we have a population, that willfully and consistently is happy to accept lies and delusions from every media and administrative outlet, and in turn deludes the administration that it will pays it taxes, or not walk away from yet another underwater mortgage. Rinse. Repeat.

What we are positive, is that this arrangement of mutual delusion will persist will spectacular success. Until it doesn't.

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DES MOINES, Iowa - Dreaming of biting into a garden-fresh cucumber sandwich this summer? Better order your seeds now.

A poor growing season last year and increased orders from Europe could make it difficult for home gardeners to get seeds for the most popular cucumber variety and some vegetables this spring. Farmers, who usually grow different varieties than home gardeners, aren't likely to be affected.

Seeds for what's known as open-pollinated cucumbers seem to be most scarce, but carrots, snap peas and onions also could be in short supply.

"I suspect there will be some seeds you just won't be able to buy if you wait too long on it," said Bill Hart, the wholesale manager in charge of seed purchasing at Chas. C. Hart Seed Company in Wethersfield, Conn. "The sugar snap peas we're not able to get at all, and other companies that have it will sell out pretty quickly."

The problem is primarily due to soggy weather last year that resulted in a disappointing seed crop. European seed growers also had a bad year, leading to a big increase in orders for American seeds.

Demand for seeds in the U.S. soared last year, as the poor economy and worries about chemical use and bacteria contamination prompted many people to establish gardens. Homegrown food seemed safer and more affordable. But some wonder if the wet weather that ruined gardens in many areas last summer will discourage first-time gardeners from planting again.

"A lot of people are getting into it, but it was a disastrous year for gardens last year because it was so cold and wet," said wholesale seed distributor Mel Brekke, who owns Brekke's Town and Country near Ames, Iowa.

Kathy Gocke of Bondurant, Iowa, said she orders seeds early for herself and her county's master gardener's program and advises others to do the same.

"If you do it before the first of January, they have a pretty good stock," Gocke said.

Burpee Seeds in Warminster, Pa., bills itself as the largest provider of home garden seeds, and Chief Executive Officer George Ball said the company's huge reserves mean it will have plenty of seeds. But Ball said he understands why others might have limited supplies after a big spike in demand in the past two years.

"It was unlike anything I've seen in the past 30 years," he said.

Barbara Melera, owner of D. Landreth Seeds of New Freedom, Pa., expects carrot seeds to be especially hard to find because of big orders from Europe, which had a poor crop last year. Also, fewer farmers are opting to grow seeds, she said. Many now have switched to growing corn for the biofuels industry.

"In this country, farmers who grow things for seed are becoming an endangered species," Melera said. "The farms producing things for seeds is reduced significantly, and in the past two to three years they can get more money for growing corn for ethanol plants than carrots for seeds."

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What Should We Make of Obama's "Spending Freeze" by Washington's Blog
Global Research, January 27, 2010
Washington's Blog - 2010-01-26
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The big news today is Obama's proposed "spending freeze". Fiscal liberals say this cuts spending at the exact time that we most need to increase it. See this and this. Fiscal conservatives say this doesn't go nearly far enough. See this, this and this. But I think there's a bigger issue that deserves some inquiry: is America being turned into a third world country? As I wrote last June: When the International Monetary Fund or World Bank offer to lend money to a struggling third-world country (or "emerging market"), they demand "austerity measures". As Wikipedia describes it: In economics, austerity is when a national government reduces its spending in order to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable. Development projects, welfare programs and other social spending are common areas of spending for cuts. In many countries, austerity measures have been associated with short-term standard of living declines until economic conditions improved once fiscal balance was achieved (such as in the United Kingdom under Margaret Thatcher, Canada under Jean Chrétien, and Spain under González). Private banks, or institutions like the International Monetary Fund (IMF), may require that a country pursues an 'austerity policy' if it wants to re-finance loans that are about to come due. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'. Wikipedia goes on to point out: Austerity programs are frequently controversial, as they impact the poorest segments of the population and often lead to a wider separation between the rich and poor. In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors. What Does This Have to Do With the First World? Since the IMF and World Bank lend to third world countries, you may reasonably assume that this has nothing to do with "first world" countries like the US and UK. But England's economy is in dire straight, and rumors have abounded that the UK might have to rely on a loan from the IMF. And as former U.S. Comptroller General David Walker said : People seem to think the [American] government has money. The government doesn't have any money. Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations. Al Martin - former contributor to the Presidential Council of Economic Advisors and retired naval intelligence officer - observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005. The International Monetary Fund considers a nation-state with a total debt-to-GDP ratio of 200 percent or more to be a "de-constructed Third World nation-state." Martin explained: What "de-constructed" actually means is that a political regime in that country, or series of political regimes, have, through a long period of fraud, abuse, graft, corruption and mismanagement, effectively collapsed the economy of that country. What Does It Mean? Some have asked questions like, "Is the goal to force the US into the same kinds of IMF austerity programs that have caused riots in so many other nations?" Some predicted years ago that the "international bankers" would bring down the American economy. I used to think, frankly, that such kinds of talk were crazy-talk. I'm not so sure anymore. Catherine Austin Fitts - former managing director of a Wall Street investment bank and Assistant Secretary of the Department of Housing and Urban Development (HUD) under President George Bush Sr. - calls what is happening to the economy "a criminal leveraged buyout of America," something she defines as "buying a country for cheap with its own money and then jacking up the rents and fees to steal the rest." She also calls it the "American Tapeworm" model, explaining: [T]he American Tapeworm model is to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic "discretionary" spending .... This will then place local municipalities and local leadership in a highly vulnerable position - one that will allow them to be persuaded with bogus but high-minded sounding arguments to further cut resources. Then, to "preserve bond ratings and the rights of creditors," our leaders can he persuaded to sell our water, natural resources and infrastructure assets at significant discounts of their true value to global investors .... This will be described as a plan to "save America" by recapitalizing it on a sound financial footing. In fact, this process will simply shift more capital continuously from America to other continents and from the lower and middle classes to elites. Writer Mike Whitney wrote in CounterPunch in April 2005: [T]he towering [U.S.] national debt coupled with the staggering trade deficits have put the nation on a precipice and a seismic shift in the fortunes of middle-class Americans is looking more likely all the time... The country has been intentionally plundered and will eventually wind up in the hands of its creditors This same Ponzi scheme has been carried out repeatedly by the IMF and World Bank throughout the world Bankruptcy is a fairly straightforward way of delivering valuable public assets and resources to collaborative industries, and of annihilating national sovereignty. After a nation is successfully driven to destitution, public policy decisions are made by creditors and not by representatives of the people .... The catastrophe that middle class Americans face is what these elites breezily refer to as "shock therapy"; a sudden jolt, followed by fundamental changes to the system. In the near future we can expect tax reform, fiscal discipline, deregulation, free capital flows, lowered tariffs, reduced public services, and privatization. And given that experts on third world banana republics from the IMF and the Federal Reserve have said the U.S. has become a third world banana republic (and see this and this), maybe the process of turning first world into the third world is already complete.
Washington's Blog is a frequent contributor to Global Research.  Global Research Articles by Washington's Blog

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The Supreme Court has decreed that corporations are persons and money is speech, so it was only a matter of time before a company decided to exercise its Constitutional right to run for Congress.

Following the recent Supreme Court ruling in Citizens United v. Federal Election Commission to allow unlimited corporate funding of federal campaigns, Murray Hill Inc. today announced it is filing to run for U.S. Congress. “Until now,” Murray Hill Inc. said in a statement, “corporate interests had to rely on campaign contributions and influence-peddling to achieve their goals in Washington. But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.” Murray Hill Inc. is believed to be the first “corporate person” to exercise its constitutional right to run for office.

“The strength of America,” Murray Hill Inc. said, “is in the boardrooms, country clubs and Lear jets of America’s great corporations. We’re saying to Wal-Mart, AIG and Pfizer, if not you, who? If not now, when?” Murray Hill Inc. added: “It’s our democracy. We bought it, we paid for it, and we’re going to keep it.” Murray Hill Inc., a diversifying corporation in the Washington, D.C. area, has long held an interest in politics and sees corporate candidacy as an “emerging new market.”

The announcement represents a landmark moment in American politics, as former President George W. Bush’s dream of an “ownership society” is finally realized. Still, important questions remain for the candidate. For instance:

• How will Murray Hill go about modernizing the nation’s antiquated system of “elections.” Surely there’s a more efficient way of generating broad consensus, and citizens shareholders will be looking to emerging politicorporate leaders to quickly craft best-of-breed solutions to maximize return and lower total cost of ownership going forward.
• Is it safe to assume that under-performing sectors of the country will be spun off or sold? (Specifically, it’s anticipated that Nebraska, New Jersey, South Carolina and Texas will come in for much-needed scrutiny.)
• What role will outsourcing play in bureaucratic reform? Certainly business units like Health & Human Services and Interior could be managed more cost-effectively in Bangalore.
• Opposition to corporate/government merger and acquisition activity remains and buy-in will be needed from significant segments of the marketplace. However, Murray Hill has so far presented no marketecture for how it will capture sufficient mindshare to ensure the campaign’s success.
• What strategies will be employed to insulate United States of America, Inc. against hostile takeovers by international competitors?
• What does the company see as its key differentiators with respect to competitors in the crowded “governance” space?

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