American Markets-Leading News

IMF Prepares to Rule Spain

NEW YORK (MarketWatch) — Treasury prices pared gains in afternoon trading Thursday, lifting yields up from record lows, after The Wall Street Journal reported that the International Monetary Fund has started contingency planning for a rescue loan for Spain if the country can’t find the funds needed to bailout lender Bankia SA ES:BKIA +0.19% . Yields on 10-year notes 10_YEAR -2.21% , which move inversely to prices, fell 3 basis points to 1.60%, up from their record low of 1.54%.

Alex Jones Cameo at Bilderberg


 Bilderberg: Breaking News

Bilderberg Meetings

Chantilly, Virginia, USA, 31 May-3 June 2012

Final List of Participants


FRA Castries, Henri de Chairman and CEO, AXA Group
DEU Ackermann, Josef Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG
GBR Agius, Marcus Chairman, Barclays plc
USA Ajami, Fouad Senior Fellow, The Hoover Institution, Stanford University
USA Alexander, Keith B. Commander, US Cyber Command; Director, National Security Agency
INT Almunia, Joaquín Vice-President – Commissioner for Competition, European Commission
USA Altman, Roger C. Chairman, Evercore Partners
PRT Amado, Luís Chairman, Banco Internacional do Funchal (BANIF)
NOR Andresen, Johan H. Owner and CEO, FERD
FIN Apunen, Matti Director, Finnish Business and Policy Forum EVA
TUR Babacan, Ali Deputy Prime Minister for Economic and Financial Affairs
PRT Balsemão, Francisco Pinto President and CEO, Impresa; Former Prime Minister
FRA Baverez, Nicolas Partner, Gibson, Dunn & Crutcher LLP
FRA Béchu, Christophe Senator, and Chairman, General Council of Maine-et-Loire
BEL Belgium, H.R.H. Prince Philippe of
TUR Berberoğlu, Enis Editor-in-Chief, Hürriyet Newspaper
ITA Bernabè, Franco Chairman and CEO, Telecom Italia
GBR Boles, Nick Member of Parliament
SWE Bonnier, Jonas President and CEO, Bonnier AB
NOR Brandtzæg, Svein Richard President and CEO, Norsk Hydro ASA
AUT Bronner, Oscar Publisher, Der Standard Medienwelt
SWE Carlsson, Gunilla Minister for International Development Cooperation
CAN Carney, Mark J. Governor, Bank of Canada
ESP Cebrián, Juan Luis CEO, PRISA; Chairman, El País
AUT Cernko, Willibald CEO, UniCredit Bank Austria AG
FRA Chalendar, Pierre André de Chairman and CEO, Saint-Gobain
DNK Christiansen, Jeppe CEO, Maj Invest
RUS Chubais, Anatoly B. CEO, OJSC RUSNANO
CAN Clark, W. Edmund Group President and CEO, TD Bank Group
GBR Clarke, Kenneth Member of Parliament, Lord Chancellor and Secretary of Justice
USA Collins, Timothy C. CEO and Senior Managing Director, Ripplewood Holdings, LLC
ITA Conti, Fulvio CEO and General Manager, Enel S.p.A.
USA Daniels, Jr., Mitchell E. Governor of Indiana
USA  DeMuth, Christopher Distinguished Fellow, Hudson Institute
USA Donilon, Thomas E. National Security Advis

or, The White House

GBR Dudley, Robert Group Chief Executive, BP plc
ITA Elkann, John Chairman, Fiat S.p.A.
DEU Enders, Thomas CEO, Airbus
USA Evans, J. Michael Vice Chairman, Global Head of Growth Markets, Goldman Sachs & Co.
AUT Faymann, Werner Federal Chancellor
DNK Federspiel, Ulrik Executive Vice President, Haldor Topsøe A/S
USA Ferguson, Niall Laurence A. Tisch Professor of History, Harvard University
GBR Flint, Douglas J. Group Chairman, HSBC Holdings plc
CHN Fu, Ying Vice Minister of Foreign Affairs
IRL Gallagher, Paul Former Attorney General; Senior Counsel
USA Gephardt, Richard A. President and CEO, Gephardt Group
GRC Giannitsis, Anastasios Former Minister of Interior; Professor of Development and International Economics, University of Athens
USA Goolsbee, Austan D. Professor of Economics, University of Chicago Booth School of Business
USA Graham, Donald E. Chairman and CEO, The Washington Post Company
ITA Gruber, Lilli Journalist – Anchorwoman, La 7 TV
INT Gucht, Karel de Commissioner for Trade, European Commission
NLD Halberstadt, Victor Professor of Economics, Leiden University; Former Honorary Secretary  General of Bilderberg Meetings
USA Harris, Britt CIO, Teacher Retirement System of Texas
USA Hoffman, Reid Co-founder and Executive Chairman, LinkedIn
CHN Huang, Yiping Professor of Economics, China Center for Economic Research, Peking University
USA Huntsman, Jr., Jon M. Chairman, Huntsman Cancer Foundation
DEU Ischinger, Wolfgang Chairman, Munich Security Conference; Global Head Government Relations, Allianz SE
RUS Ivanov, Igor S. Associate member, Russian Academy of Science; President, Russian International Affairs Council
FRA Izraelewicz, Erik CEO, Le Monde
USA Jacobs, Kenneth M. Chairman and CEO, Lazard
USA Johnson, James A. Vice Chairman, Perseus, LLC
USA Jordan, Jr., Vernon E. Senior Managing Director, Lazard
USA Karp, Alexander CEO, Palantir Technologies
USA Karsner, Alexander Executive Chairman, Manifest Energy, Inc
FRA Karvar, Anousheh Inspector, Inter-ministerial Audit and Evaluation Office for Social, Health, Employment and Labor Policies
RUS Kasparov, Garry Chairman, United Civil Front (of Russia)
GBR Kerr, John Independent Member, House of Lords
USA Kerry, John Senator for Massachusetts
TUR Keyman, E. Fuat Director, Istanbul Policy Center and Professor of International Relations, Sabanci University
USA Kissinger, Henry A. Chairman, Kissinger Associates, Inc.
USA Kleinfeld, Klaus Chairman and CEO, Alcoa
TUR Koç, Mustafa Chairman, Koç Holding A.Ş.
DEU Koch, Roland CEO, Bilfinger Berger SE
INT Kodmani, Bassma Member of the Executive Bureau and Head of Foreign Affairs, Syrian National Council
USA Kravis, Henry R. Co-Chairman and Co-CEO, Kohlberg Kravis Roberts & Co.
USA Kravis, Marie-Josée Senior Fellow, Hudson Institute
INT Kroes, Neelie Vice President, European Commission; Commissioner for Digital Agenda
USA Krupp, Fred President, Environmental Defense Fund
INT Lamy, Pascal Director-General, World Trade Organization
ITA Letta, Enrico Deputy Leader, Democratic Party (PD)
ISR Levite, Ariel E. Nonresident Senior Associate, Carnegie Endowment for International Peace
USA Li, Cheng Director of Research and Senior Fellow, John L. Thornton China Center, Brookings Institution
USA Lipsky, John Distinguished Visiting Scholar, Johns Hopkins University
USA Liveris, Andrew N. President, Chairman and CEO, The Dow Chemical Company
DEU Löscher, Peter President and CEO, Siemens AG
USA Lynn, William J. Chairman and CEO, DRS Technologies, Inc.
GBR Mandelson, Peter Member, House of Lords; Chairman, Global Counsel
USA Mathews, Jessica T. President, Carnegie Endowment for International Peace
DEN Mchangama, Jacob Director of Legal Affairs, Center for Political Studies (CEPOS)
CAN McKenna, Frank Deputy Chair, TD Bank Group
USA Mehlman, Kenneth B. Partner, Kohlberg Kravis Roberts & Co.
GBR Micklethwait, John Editor-in-Chief, The Economist
FRA Montbrial, Thierry de President, French Institute for International Relations
PRT Moreira da Silva, Jorge First Vice-President, Partido Social Democrata (PSD)
USA Mundie, Craig J. Chief Research and Strategy Officer, Microsoft Corporation
DEU Nass, Matthias Chief International Correspondent, Die Zeit
NLD Netherlands, H.M. the Queen of the
ESP Nin Génova, Juan María Deputy Chairman and CEO, Caixabank
IRL Noonan, Michael Minister for Finance
USA Noonan, Peggy Author, Columnist, The Wall Street Journal
FIN Ollila, Jorma Chairman, Royal Dutch Shell, plc
USA Orszag, Peter R. Vice Chairman, Citigroup
GRC Papalexopoulos, Dimitri Managing Director, Titan Cement Co.
NLD Pechtold, Alexander Parliamentary Leader, Democrats ’66 (D66)
USA Perle, Richard N. Resident Fellow, American Enterprise Institute
NLD Polman, Paul CEO, Unilever PLC
CAN Prichard, J. Robert S. Chair, Torys LLP
ISR Rabinovich, Itamar Global Distinguished Professor, New York University
GBR Rachman, Gideon Chief Foreign Affairs Commentator, The Financial Times
USA Rattner, Steven Chairman, Willett Advisors LLC
CAN Redford, Alison M. Premier of Alberta
CAN Reisman, Heather M. CEO, Indigo Books & Music Inc.
DEU Reitzle, Wolfgang CEO & President, Linde AG
USA Rogoff, Kenneth S. Professor of Economics, Harvard University
USA Rose, Charlie Executive Editor and Anchor, Charlie Rose
USA Ross, Dennis B. Counselor, Washington Institute for Near East Policy
POL Rostowski, Jacek Minister of Finance
USA Rubin, Robert E. Co-Chair, Council on Foreign Relations; Former Secretary of the Treasury
NLD Rutte, Mark Prime Minister
ESP Sáenz de Santamaría Antón, Soraya Vice President and Minister for the Presidency
NLD Scheffer, Paul Professor of European Studies, Tilburg University
USA Schmidt, Eric E. Executive Chairman, Google Inc.
AUT Scholten, Rudolf Member of the Board of Executive Directors, Oesterreichische Kontrollbank AG
FRA Senard, Jean-Dominique CEO, Michelin Group
USA Shambaugh, David Director, China Policy Program, George Washington University
INT Sheeran, Josette Vice Chairman, World Economic Forum
FIN Siilasmaa, Risto Chairman of the Board of Directors, Nokia Corporation
USA Speyer, Jerry I. Chairman and Co-CEO, Tishman Speyer
CHE Supino, Pietro Chairman and Publisher, Tamedia AG
IRL Sutherland, Peter D. Chairman, Goldman Sachs International
USA Thiel, Peter A. President, Clarium Capital / Thiel Capital
TUR Timuray, Serpil CEO, Vodafone Turkey
DEU Trittin, Jürgen Parliamentary Leader, Alliance 90/The Greens
GRC Tsoukalis, Loukas President, Hellenic Foundation for European and Foreign Policy
FIN Urpilainen, Jutta Minister of Finance
CHE Vasella, Daniel L. Chairman, Novartis AG
INT Vimont, Pierre Executive Secretary General, European External Action Service
GBR Voser, Peter CEO, Royal Dutch Shell plc
SWE Wallenberg, Jacob Chairman, Investor AB
USA Warsh, Kevin Distinguished Visiting Fellow, The Hoover Institution, Stanford University
GBR Wolf, Martin H. Chief Economics Commentator, The Financial Times
USA Wolfensohn, James D. Chairman and CEO, Wolfensohn and Company
CAN Wright, Nigel S. Chief of Staff, Office of the Prime Minister
USA Yergin, Daniel Chairman, IHS Cambridge Energy Research Associates
INT Zoellick, Robert B. President, The World Bank Group
GBR Bredow, Vendeline von Business Correspondent, The Economist
GBR Wooldridge, Adrian D. Foreign Correspondent, The Economist


Hated filled, Cowardly War Mongering Worthless USA Females!!

Clinton and Rice: Strike On Syria in the Works

All Important Chicago PMI Tanks!

WASHINGTON (MarketWatch) – An index that meaures business conditions in the Chicago region fell in May to the lowest level since September 2009. The Chicago Business Barometer dropped 3.5 points to a seasonally adjusted 52.7 in May from 56.2 in April, according to the Chicago Purchasing Managers. While any number above 50 signifies that businesses are still expanding, the Chicago PMI has fallen three straight months. The production index fell 7.1 points, following a 11.5 drop in April. New orders declined 4.5 points to 52.9. The compilers of the report noted that three consecutive declines in the monthly PMI or the three-month rolling average have occurred before each of the last seven recessions, with a lead time of about six to eight months. The rolling average has only fallen two straight months, however.

Europe Closes-7 pc loss in May

Cameron irritates as euro’s High Noon approaches

Goldman’s O’Neill talks football … also, Greece

Argentina to vet mining company imports

Hate Filled, Lying Antichrist Mayor of NYC Defends Jaimie Dimon as Great Banker

Bloomberg said he is not Zionist, but clearly he defends his fellow  and his crimes.  Jewish wealth is built upon the blood of the gentiles. The Anglosaxon-Jewish banking establishment must be brought down!! Only Bernie Madoff possessed the same criminal genius and amorality of Jamie Dimon. Lying scum, 911 insider and self confessed ‘anglophile’ Michael Bloomberg.

RANCHO PALOS VERDES, Calif. (MarketWatch) — Jamie Dimon, the embattled CEO of J.P. Morgan Chase & Co. JPM +0.61% , received some moral support from New York’s mayor this morning. Michael Bloomberg, speaking to reporters at the All Things D conference near Los Angeles, was commenting on the recently disclosed trading losses at the bank and the criticisms leveled at banking star Dimon. “Jamie Dimon is as good a banker as there is. J.P Morgan is as good a bank as there is. Did they screw up? Yeah, they screwed up.” The bank has reportedly lost more than $3 billion to date on soured positions in derivatives markets. The losses have drawn criticism of Dimon and calls for more regulatory oversight, as well as for Dimon’s removal from a role at the New York Fed. In supporting Dimon, Bloomberg said, “Dimon is a very smart, honest, great executive. The controls failed. He’ll look at that and fix it.”

Argentina to vet mining company imports

Rothschild and Rockefeller: their family fortunes-English Propaganda and Lies

As a Rothschild trust prepares to buy a stake in the Rockefeller empire, how have these two dynasties managed to hold on to their wealth for so long?

British-Israel- Why the English are so bizarre-More Bizarre News for a  Bizzare Day

Aint Darwin, Keynes, Prince Charles, and Bertrand Russell Grand.

Lovers jailed for beating woman with riding whip during threesome-’Samuels’ and ‘Reid’

High prices in rip-off Britain hampering the recovery, says Brussels

Why The EU Wont Break up

Euro break-up ‘could wipe 50pc off London house prices’

The Old Etonian helping Chinese pupils into Britain’s public schools and universities

Blood sucking leech England looks to replace its American ‘host’.


Touching the Void climber bombarded with abuse by school children-Bizarre England

A lot of climbers have had far worse experiences than this, and don’t leave their partners to die. I never got this ‘touching the void’. Your alternatives as a climber are to keep going or die. But interesting to see how nasty English school children are and what a nasty little fellow Joe Simpson is. You lose part of yourself when you start talking in depth about personal climbing experiences. Simpson sold his soul like most English for money, now he does not like what comes from doing that. The English are subsidized by their government as climbers yet are among the worlds worst and most cowardly. They don’t do much compared to the Eastern Europeans, the French or North Americans.

Facebook Saves the Day -Bizarre News for a Bizarre Day

Fire crews demolish walls to release Britain’s fattest teen from house after she posted plight on FacebookBritain’s fattest teenager was in a mammoth rescue operation to get her out of her own home with 30 builders, scaffolders, police, fire service and ambulance crew..

One police officer said: “We want to keep people away – this is not a freak show.”

When the rescue team finally got her out of the house Georgia was crammed into an ambulance and rushed to hospital suffering from massive organ failure.

Georgia’s body is under huge pressure after years of binge eating and not properly exercising.

Georgia, of Aberdare, South Wales, was declared Britain’s fattest teen when it was revealed in August 2008 that she weighed 33st at just 15.

Doctors said she would die if she didn’t lose the pounds and she was sent to an American fat camp were she shed half her body weight.

But after returning to the UK the 5ft 6ins teen ballooned after returning to her bad habits and putting 16 stone back on.

Georgia continued with her diet of cake, chocs, crisps and endless loaves of bread – washed down with bottles of Coke.

She also glugs down masses of booze and smokes her way through pack after pack of cigarettes.

The dangerous diet has seen her become heavier than ever and locals say she is over 63 stone.

S&P 500 Poised for Worst Monthly Drop Since September

AEP-MI6 Agiprop-English Crown Party line

Spain faces ‘total emergency’ as fear grips markets

We’re in a situation of total emergency, the worst crisis we have ever lived through” said ex-premier Felipe Gonzalez, the country’s elder statesman.

The warning came as the yields on Spanish 10-year bonds spiked to 6.7pc, pushing the “risk premium” over German Bunds to a post-euro high of 540 basis points. The IBEX index of stocks in Madrid fell 2.6pc, the lowest since the dotcom bust in 2003.

Chaos over the €23.5bn rescue of crippled lender Bankia has led to the abrupt resignation of central bank governor Miguel Ángel Fernández Ordóñez, who testified to the senate that he had been muzzled to avoid enflaming events as confidence in the country drains away.

Markets are on tenterhooks as Spanish yields test levels that forced the European Central Bank to respond last November with its €1 trillion liquidity blitz. “Nobody is short Spanish debt right now because they are expecting ECB intervention,” said Andrew Roberts, credit chief at RBS. “If it doesn’t come — if we take out 6.8pc — we’re going to see a hyberbolic sell-off,” he said.

Italy felt the full brunt of contagion from Spain on Wednesday, with 10-year yileds back near 6pc. The euro fell to a 2-year low of $1.239 against the dollar. Crude oil and metal prices plummeted and save-haven flight pushed rates on 2-year German debt to zero. Gilt yields fell to 1.64pc, the lowest in history.

Mr Roberts said the collapse in Spanish tax revenues is replicating the pattern in Greece. Fiscal revenues have fallen 4.8pc over the last year, and VAT returns have slumped 14.6pc. Debt service costs have risen by 18pc.

The country is caught in a classic deflationary vice: a rising debt burden on a shrinking economic base. “Once you get into such a negative feedback loop, you can move beyond the point of no return quickly,” he said.

The European Commission has softened its stance, giving Madrid an extra year until 2014 to cuts its budget deficit from 8.9pc to 3pc of GDP, though this still amounts to a fiscal shock. Brussels told premier Mariano Rajoy to widen the VAT base and speed retirement at 67.

There is no sign so far that the ECB is ready to relent as Frankfurt and Madrid cross swords in an escalting test of will. The ECB has scotched Mr Rajoy’s tentative plans to recapitalize Bankia by drawing on ECB funds.

“It is dangerous to play chicken when you are driving a Seat and the ECB is driving a tank,” said professor Luis Garicano from the London School of Economics (LSE).

Mr Garicano said Madrid has overplayed its hand but the ECB needs to be careful too since Spain is increasingly tempted by the example of Argentina, which recovered quickly after leaving its dollar-peg. “The Rajoy people will do anything to avoid the slow agony of Greece. There is massive disaffection with the euro in Spain and papers like El Pais and Vanguardia are turning anti-German,” he said.

The latest PEW survey shows that just 37pc of Spaniards think the euro has been good for the country. Most still want to stay within EMU but the number is falling fast. The survey found that 40pc of Italians want to return to the lira.

The ECB is pushing Spain to accept a loan package from the EU bail-out fund (EFSF), the proper body for fiscal rescues. Mr Rajoy has refused vehemently. Any recourse to the EFSF is viewed with horror in Madrid, entailing an unacceptable loss of sovereignty.

The result is paralysis as both sides refuse to shift ground. Mr Rajoy is clinging to hope that the EU will take care of Spain’s banks through an EMU-wide recapitalization plan. This would avoid stigma and draconian conditions.

Brussels floated the idea on Wednesday for a eurozone “bank union” and use of the European Stability Mechanism — which has not yet been ratified by most states — to rescue banks and sever the dangerous nexus between crippled lenders and crippled states.

The proposals were shot down instantly by Berlin. Such plans amount to debt-mutualization, a form of back-door eurobonds. German opposition is “well known”, said the Kanzleramt.

Sources in Berlin say Germany wants Spain to tap the International Monetary Fund — as well as the EU — to spread the rescue burden to the US, China, Japan, Britain and others.

LSE Professor Paul De Grauwe accused the ECB of cherry-picking treaty clauses to justify inaction and failing to carry out its crucial mandate of financial stability. “They should buy Spanish and Italian bonds to cap yields at 300 basis points over Bunds, and let the lawyers argue about it for the next ten years,” he said.

Eurozone data released on Wednesday show that private credit and all key measures of the money supply contracted in April, suggesting that ECB’s €1 trillion liquidity blitz over the winter has failed to gain traction.

Guy Mandy, credit strategist at Nomura, said the ECB has lost sight of the big picture and risks losing the euro altogether if if fails to restore basic confidence. “They need to weigh up events on a grander scale, stop worrying about moral hazard, and do the job of a central bank,” he said.

Jobs data point to loss of momentum in recovery

(Reuters) – Private payroll growth accelerated only slightly last month and claims for jobless benefits rose last week, suggesting the labor market recovery was stalling after a strong performance early in the year.

Other data on Thursday showed economic growth in the first quarter was a bit softer than initially estimated, with businesses restocking shelves more slowly than previously thought and government spending declining more sharply.

“It shows we’re in a lackluster period in the economy right now,” said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

Private employers created 133,000 jobs in May, payrolls processor ADP said. That was below economists’ expectations for 148,000 jobs.

The report comes ahead of Friday’s closely watched employment report for May, which is expected to show that nonfarm payrolls increased 150,000, up from a paltry 115,000 in April. Job creation accelerated between December and February as the economy got a boost from an unusually warm winter.

While economists have largely shrugged off the recent cooling in the labor market as payback for strong gains during winter, there are signs of fundamental weakness.

Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 383,000, a Labor Department report showed. Claims have now risen in seven of the last eight weeks.

Another report showed the number of planned layoffs at firms rose to an eight-month high in May as computer maker Hewlett-Packard said it would cut about 8 percent of its workforce.

Employers announced 61,887 jobs cuts this month, a surge of 52.6 percent from 40,559 in April, according to consultancy Challenger, Gray & Christmas Inc. The computer industry accounted for 27,754 of the planned jobs cuts.

“These employment numbers are getting to the disappointing side now …. and really are suggesting that labor market momentum has stalled at this point,” said Sean Incremona, an economist at 4cast in New York.


Separately, gross domestic product increased at a 1.9 percent annual rate in the first quarter, down from the 2.2 percent the Commerce Department had estimated last month. The economy grew at a 3.0 percent rate in the fourth quarter.

The report also showed that after-tax corporate profits dropped for the first time in three years last quarter.

A modest downward revision to consumer spending, which accounts for about 70 percent of economic activity, and stronger import growth also accounted for the weaker first-quarter output. Economists polled by Reuters had expected growth would be revised down to a 1.9 percent pace.

Business inventories increased $57.7 billion, instead of $69.5 billion, adding only 0.21 percentage point to GDP growth compared with 0.59 percentage point in the previous estimate.

While the small inventory build-up held back growth in the January-March quarter, restocking of shelves, retreating gasoline prices and an improving housing market should provide a boost to output in the second quarter.

Growth in the second quarter is currently estimated at a pace of about 2.5 percent.

Excluding inventories, the economy grew at a revised 1.7 percent rate in the first quarter, rather than 1.6 percent and up from 1.1 percent in the fourth quarter.

Consumer spending grew at a 2.7 percent pace instead of the previously reported 2.9 percent. It was still an acceleration from the fourth-quarter’s 2.1 percent pace.

Government spending fell at a much steeper 3.9 percent rate, instead of the previously reported 3.0 percent. Both exports and imports were much stronger than initially estimated.

On the positive side, business spending on equipment and software was revised up to show a much firmer 3.9 percent growth rate instead of the previously reported 1.7 percent.

However, there are signs business spending weakened early in the second quarter.

Residential construction was revised slightly up in the first quarter and the retrenchment in investment on nonresidential structures was not as deep as previously thought.

The department also said after-tax corporate profits fell at a 4.1 percent rate, the biggest decline since the fourth quarter of 2008, as taxes took a big bite from earnings. After-tax profits rose 1.1 percent in the fourth quarter.

Jamie Dimon and the Fall of Nations

Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” by Daron Acemoglu and James Robinson, is a brilliant and sometimes breathtaking survey of country-level governance over history and around the world. Professors Acemoglu and Robinson discern a simple pattern — when elites are held in check, typically by effective legal mechanisms, everyone else in society does much better and sustained economic growth becomes possible. But powerful people — kings, barons, industrialists, bankers — work long and hard to relax the constraints on their actions. And when they succeed, the effects are not just redistribution toward themselves but also an undermining of economic growth and often a tearing at the fabric of society. (I’ve worked with the authors on related issues, but I was not involved in writing the book.)

The historical evidence is overwhelming. Many societies have done well for a while — until powerful people get out of hand. This is an easy pattern to see at a distance and in other cultures. It is typically much harder to recognize when your own society has an elite less subject to effective constraints and more able to exert power in an abusive fashion. And given the long history of strong institutions in the United States, it appears particularly difficult for some people to acknowledge that we have serious governance issues that need to be addressed.

The governance issue of the season is Jamie Dimon’s seat on the board of the Federal Reserve Bank of New York.

Mr. Dimon is the chief executive of JPMorgan Chase, currently the largest bank in the United States. This bank is “too big to fail” — meaning that if it were to get into difficulties, substantial financial support would be provided by the Federal Reserve System (and perhaps other parts of government) to prevent it from collapsing.

I am well aware of the moves afoot to carry out the intent of the Dodd-Frank reform legislation and to make it possible for such banks to fail, with consequent losses for their creditors. In my assessment, we are still a long way from putting in place the necessary resolution mechanisms and backing them up with sufficient political will.

If Greece were to default tomorrow — a hypothetical scenario, although I am worried about the current European trajectory — and this had devastating effects on the European and thus the United States financial system, would JPMorgan Chase be allowed to go bankrupt in the same fashion as Lehman Brothers? It would not.

The Federal Reserve Bank of New York would be a key player in the decision on how to provide support and on what basis to huge financial institutions in distress — although the final determination would presumably rest with the Board of Governors in Washington.

In the Acemoglu and Robinson tour de force, I find one of the greatest elite wealth-making (for themselves) strategies of all time to be underemphasized. Persuade the government to let you build a big bank; take a great deal of risk in that bank (particularly by increasing leverage, i.e., debt relative to equity); pay yourself based on the return on equity, unadjusted for risk; get cash payouts while times are good; and when events turn against you, the central bank can bail you out — and keep you in place because you are regarded as indispensable. This is the history of modern America.

We had strong institutions for a long time in this country — including effective checks on the power of bankers. Many people remember that history and still hold its image in their mind’s eye as they look at modern Wall Street. It’s time to wake up. In recent decades we abandoned the governance mechanisms that previously served us well. Global megabanks have obtained excessive and inappropriate power – the power to take a great deal of risk, with cash for their executives on the upside and huge damage for the rest of us on the downside.

Since I wrote about this issue here last week, a great deal of support has been expressed for the recommendation that Jamie Dimon should step down from the board of the New York Fed — including by over 32,000 people who signed the petition I drafted. (The petition is addressed to the Board of Governors of the Federal Reserve, as only it has the power to remove a director of a Federal Reserve Bank. I have requested an appointment with a governor on Monday, in order to deliver this petition and discuss the substantive issues; a relevant Fed staff member is currently checking availability. I hope to write about that meeting here next week.)

The pressure on Mr. Dimon is increasing with a steady flow of news articles concerning the care with which risk has been managed at his bank — including the suggestion that the risk committee of the JPMorgan Chase board lacks sufficient experience to understand or monitor the complexity of the bank’s operations. (See also the coverage from Forbes and CBS MoneyWatch.)

We need an independent inquiry into exactly how JPMorgan lost so much money so quickly on its London trading operations — which supposedly were just “hedging.” It would also be helpful to know how Jamie Dimon, widely regarded as a good risk manager, did not know what was happening in London until Bloomberg News brought it to his attention — and why even then he denied there was a serious issue. Is this a systematic breakdown in management and risk control systems? What exactly went wrong with the relevant models? What can we learn that would help improve the safety of the financial system? Have the largest banks grown too big and too complex to be managed safely?

More broadly, how can we rely on the Federal Reserve to oversee and constrain the actions of Mr. Dimon while he continues to sit on the board of the New York Fed — with the job of overseeing and potentially constraining the actions of that organization?

Esther George, president of the Kansas City Fed, made a strong statement at the end of last week, emphasizing that all Federal Reserve Bank board members had a responsibility to uphold the integrity and perceived legitimacy of the Federal Reserve System. She ended with a powerful line that cuts to the center of the current debate: “No individual is more important than the institution and the public’s trust.”

Those who would still prefer to keep Mr. Dimon in his current position rely on some combination of three counterarguments.

First, one line is that Mr. Dimon is elected to “represent the banks,” so he is just doing his job when he argues his corner — for example, against financial sector reform. Ernest Patrikis, former general counsel of the New York Federal Reserve, takes exactly this position; I quoted him in my column last week.

As a factual matter, any such statement defining Mr. Dimon’s responsibility as a board member at the New York Fed is inaccurate. Here are two passages from the first paragraph of the Guide to Conduct from the Board of Governors’ Web site:

Directors of Federal Reserve Banks and branches have a special obligation for maintaining the integrity, dignity, and reputation of the Federal Reserve System.

To ensure the proper performance of System business and the maintenance of public confidence in the System, it is essential that directors, through adherence to high ethical standards of conduct, avoid actions that might impair the effectiveness of System operations or in any way tend to discredit the System.

Ms. George made this point clearly and effectively in her press release last week. All board members have a responsibility — first and foremost — to the Federal Reserve System. If they have a problem with that, they should avoid serving or step down when appropriate.

For example, Jeffrey R. Immelt — chief executive of General Electric — stepped down from the New York Fed board in April 2011 when it became clear that GE Capital would be regulated by the Fed as a systemically important financial institution. That was an entirely appropriate decision, removing any perception of a potential conflict of interest. (To be clear, both Mr. Immelt and the New York Fed said that he resigned because of pressures on his time.)

The second line — including from Mr. Dimon himself — is that at the New York Fed he plays “an advisory role.”

Again, this is not factually accurate. Here is some relevant text from the Guide to Conduct:

In their capacity as directors, these individuals are charged by law with the responsibility of supervising and controlling the operations of the Reserve Banks, under the general supervision of the Board of Governors, and for ensuring that the affairs of the Banks are administered fairly and impartially.

Plenty of governmental or quasi-governmental bodies have advisory groups. I’m on two — for the Congressional Budget Office (for economic forecasts) and for the Federal Deposit Insurance Corporation (for the resolution or liquidation of systemically important financial institutions). Advisory groups do not oversee budgets and are not involved in personnel decisions.

I have no problem with the Federal Reserve — or anyone else in government — seeking and receiving input on local economic conditions. But that is no reason for a “too big to fail” banker or any other excessively powerful special interest to be on the board of the New York Fed.

The board of the New York Fed is not “advisory.” If Mr. Dimon really thinks that, he needs another orientation session with New York Fed officials. Or he could read the Federal Reserve Act.

The third position acknowledges that governance at the regional Feds is an anachronism, but argues that Mr. Dimon has done nothing wrong and that these boards can be fixed only by legislative action (see this editorial in The Financial Times on Wednesday, for example).

To be clear, I am not accusing Mr. Dimon or anyone else of any wrongdoing. I am calling for an independent inquiry into the JPMorgan losses — along the lines that my M.I.T. colleague Andrew Lo has suggested for all serious financial “accidents.”

I am also agreeing with Treasury Secretary Timothy F. Geithner who, when asked about Mr. Dimon’s role at the New York Fed, told the PBS NewsHour:

It is very important, particularly given the damage caused by the crisis, that our system of oversight and safeguards and the enforcement authorities have not just the resources they need, but they are perceived to be above any political influence and have the independence and the ability to make sure these reforms are tough and effective so we protect the American people, again, from a crisis like this.

Legislative action to further adjust the governance of the New York Fed will not happen this year and is not likely in the near future. Frankly, saying in this context “we’ll wait for Congress” is the functional equivalent of saying, “let’s not fix it.”

Undermining the “integrity, dignity, and reputation of the Federal Reserve System” in current fashion poses grave risks. A powerful elite has risen with control over global megabanks — and the ability to mismanage their way into disaster, with huge negative implications for the broader economy.

We should be strengthening the power of the New York Fed and other institutions to constrain reckless risk-taking. Instead, we are standing idly by while our “extractive elite” (to use a great term from Professors Acemoglu and Robinson) enrich themselves and endanger the rest of us.

If you want to see where we are heading, on our current course, read “Why Nations Fail.”

ADP Only 133k In May

WASHINGTON (MarketWatch) — The pace of hiring in private jobs is slowing down, according to an employment report released Thursday by payrolls-processor Automatic Data Processing Inc.

So far in the second quarter, the average monthly gain for private-sector payrolls is 123,000, compared with a pace of more than 200,000 seen for the U.S. economy in the first quarter, according to ADP.

“The sharpness of the deceleration seems consistent with other incoming data suggesting the economy, weighed down by heightened uncertainty over the European financial crisis and by growing concerns about domestic fiscal policy, slowed early in the year,” said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report for ADP.

The nation’s private-sector payrolls increased by 133,000 in May, led by small businesses and the service-providing sector. The April level was revised to growth of 113,000 from a prior estimate of 119,000.

Markets look to ADP’s report on private-sector payrolls to provide some insights on what the Labor Department’s U.S. jobs estimate will show. May’s data will be released Friday and includes information on both private- and public-sector payrolls.

Economists polled by MarketWatch expect the government to report that nonfarm-payroll employment rose 170,000 in May, compared with 115,000 in April. They also expect that the unemployment rate remained at 8.1%. See economic calendar.

Prakken said it’s unlikely that the unemployment rate declined in May, unless the labor force contracted.

“Hence, today’s estimate, especially if reinforced by a weak reading on employment from the [government] on Friday, likely will fuel concern that the economy is slowing fundamentally for the third summer in a row,” Prakken said.

Private employment rose 67,000 at small businesses in May, 57,000 at medium businesses, and 9,000 at large businesses, according to ADP. The service-providing sector added 132,000 jobs in May, compared with 1,000 in the goods-producing sector.

Also Thursday, the Labor Department reported that the number of initial filings requesting state unemployment-insurance benefits rose last week to the highest level in five weeks: 383,000. Read more about jobless claims.

Meanwhile, outplacement firm Challenger Gray & Christmas reported that employers announced plans in May to cut nearly 62,000 workers from payrolls, up 67% from corporate cuts announced the prior year. The computer industry led layoffs, with almost 28,000 cuts announced in May, the vast majority coming from a Hewlett-Packard Co. HPQ -1.32%  restructuring.

Fed’s Bullard says more quantitative easing unlikely for now, warns on Europe

Oil Set for Biggest Monthly Drop in Three Years

Oil was poised to cap the biggest monthly drop in more than three years in New York on speculation that slowing U.S. economic growth and Europe’s debt crisis will reduce fuel demand.

Crude fell as much as much as 0.8 percent after more Americans applied for jobless benefits last week, ADP said companies added fewer positions than expected in May and the economy grew more slowly than estimated. The credit rating of eight Spanish regions was cut by Fitch Ratings, bolstering concern Spain may be the next victim of Europe’s debt crisis.

“The unemployment number, the ADP report and the GDP data all combine to create a negative picture for all the markets,” said John Kilduff, a partner at Again Capital LLC, a New York- based hedge fund that focuses on energy. “Watching Europe go off the rails again this month has been damaging to both confidence and demand.”

Crude oil for July delivery declined 19 cents to $87.63 a barrel at 9:32 a.m. on the New York Mercantile Exchange. The contract decreased to $87.15, the lowest intraday price since Oct. 24. Prices are down 16 percent this month, the biggest drop since December 2008, and are 11 percent lower this year.

Brent oil for July settlement decreased 12 cents to $103.35 a barrel on the London-based ICE Futures Europe exchange. Prices have dropped 13 percent this month, the most since May 2010.

Wall Street opens flat on economy worries

Traders work on the floor of the New York Stock Exchange, May 29, 2012. REUTERS-Brendan McDermid
A trader works at his post on the floor of the New York Stock Exchange, May 30, 2012. REUTERS-Brendan McDermid
A trader works on the floor of the New York Stock Exchange at the end of the trading day, in New York, April 27, 2012. REUTERS-Andrew Burton

NEW YORK | Thu May 31, 2012 9:37am EDT

(Reuters) – Stocks traded flat at the open on Thursday, after data pointed to an economy that may have stalled while investors grapple with the euro zone’s debt crisis.

The Dow Jones industrial average .DJI dropped 6.28 points, or 0.05 percent, to 12,413.58. The Standard & Poor’s 500 Index .SPX lost 0.34 points, or 0.03 percent, to 1,312.98. The Nasdaq Composite Index .IXIC shed 0.92 points, or 0.03 percent, to 2,836.44.

Gross Says Low Quality of Debt Threatens Monetary System

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said the lower quality of sovereign debt represents a threat to the global monetary system.

Investors should favor debt of nations such as the U.S., Mexico and Brazil, and emphasize intermediate maturities over the next few years, Gross said in his monthly investment outlook posted on the Newport Beach, California-based company’s website today. Equity investors should seek companies that produce stable cash flow and that are exposed to high growth markets.

Low cost funding available in “previously sacrosanct” AAA rated nations with soaring debt to gross domestic product ratios is the result of central banks’ efforts to flood financial systems with cash since the sub-prime mortgage market collapse trigged a global crisis in 2008, Gross wrote.

“The global monetary system which has evolved and morphed over the past century but always in the direction of easier, cheaper and more abundant credit, may have reached a point at which it can no longer operate efficiently and equitably to promote growth,” Gross said. “Policy responses by fiscal and monetary authorities have managed to prevent substantial haircutting of the $200 trillion or so of financial assets that compromise our global monetary system, yet the process have increased the risk and lowered the return of sovereign securities which represent its core.”

Monetary Easing

The Federal Reserve purchased $2.3 trillion of debt in two rounds of quantitative easing that have become known as QE1 and QE2 as part of its efforts to support the world’s biggest economy. Policy makers in January said they plan to keep their benchmark interest rate near zero until at least the end of 2014. The central banks is schedule to end in June a maturity extension program, known as Operation Twist, where it is swapping $400 billion of its short-term debt with long-term debt.

The European Central Bank’s unprecedented provision of 1.02 trillion ($1.26 trillion) euros in three-year cash in December and February helped calm financial markets in the first quarter by removing concern that banks unwilling to lend to one another would run out of cash. The rebound was short-lived as doubts about the health of Spain’s banks and questions over Greece’s future send the euro to almost two-year lows.

Treasury 10-year yields fell to a record low for a second day on concern the European debt crisis is widening and as data showed the U.S. economic expansion slowed during the first quarter. The benchmark 10-year yield fell as much as three basis points, or 0.03 percentage point, to 1.5915 percent.

The $259 billion Total Return Fund run by Gross beat 99 percent of its competitors this year with a 5.07 percent return. Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.35 trillion of assets as of September.

Fed’s Pianalto Says U.S. Economy Growing at ‘Moderate’ Pace

Federal Reserve Bank of Cleveland President Sandra Pianalto said the U.S. economy will grow at a “moderate” pace that won’t reduce the unemployment rate to 6 percent for four to five years.

The world’s largest economy will expand by “slightly above” 2.5 percent this year and 3 percent in 2013 and 2014, Pianalto, a voting member on the policy-setting Federal Open Market Committee, said today in a speech in Cleveland. Inflation will probably remain close to the Fed’s 2 percent goal through 2014, she said.

“My inflation outlook, although it is close to the 2 percent objective, is based on an economy that is working through a significant amount of cyclical weakness over the projection horizon,” Pianalto said. “My outlook for both economic activity and inflation relies on monetary policy remaining accommodative.”

Fed policy makers said a loss of momentum in growth or increased risks to their economic outlook could warrant additional action to keep the recovery going, minutes of their April 24-25 meeting showed. U.S. companies probably hired 150,000 workers in May, according to the median of 79 economist estimates in a Bloomberg survey before the report due tomorrow, while unemployment probably was unchanged at 8.1 percent….

Economy in U.S. Expanded Less Than Previously Estimated

The U.S. economy grew more slowly in the first quarter than previously estimated, reflecting smaller gains in inventories and bigger government cutbacks.

Gross domestic product climbed at a 1.9 percent annual rate from January through March, down from a 2.2 percent prior estimate, revised Commerce Department figures showed today in Washington. The report also showed corporate profits rose at the slowest pace in more than three years and smaller wage gains at the end of 2011…

Jobless Claims in U.S. Increased by 10,000 to 383,000

The number of Americans applying for unemployment insurance payments rose last week to a one-month high, a sign that progress in reducing joblessness may be stalling.

First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. The initial claims exceeded the median estimate of 370,000 in a Bloomberg News survey of economists. The number of people on unemployment benefit rolls dropped.

Increased firings weaken the prospects for accelerating job growth, which in turn could weigh on consumer spending, the biggest part of the economy. Companies may be reluctant to add to payrolls as the pace of growth slows in the U.S. and in other parts of the world.

“Businesses have exhibited an extreme degree of caution in terms of capital investment as well as hiring,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “Things are just kind of slogging along.”

Stock futures trimmed earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in June rose 0.1 percent to 1,310.30 at 8:33 a.m. in New York. The benchmark Treasury 10-year note yield fell two basis points, or 0.02 percentage point, to 1.60 percent at 8:40 a.m. New York time…

Will Bilderberg elect the next US president?

Around 150 of the world’s elite will meet outside of Washington, DC this week at the annual Bilderberg Conference, and although the agenda isn’t advertised to the public, some sources are already speaking out about what this year might bring.

Officially, the details of each Bilderberg Conference aren’t anything its members will go on the record to reveal. According to spectators that have kept a close eye on the event’s happenings each year, however, the annual conference has a reputation for being a kingmaker — and an elusive and exclusive one at that.

Speaking to RT earlier this month, radio host Alex Jones shared his expectations for the coming conference. According to the journalist, “Should the elite get behind Mitt Romney or Barack Obama?” is a question that he expects to be brought up for discussion. “Both men are bought and paid for by the same financial interests, and so the discussion will be which candidate can basically con the American people to lay down the tyranny for another four years.”

But does the biggest election of 2012 really rely that much on a mysterious meeting? Many people will tell you yes, and they are often willing to provide evidence to explain. Before becoming household names, politicians such as former presidents George H.W. Bush and Bill Clinton both attended Bilderberg conferences in the years before being elected to the Oval Office. Tony Blair was on hand at the 1993 gala before becoming prime minister of England in 1997, and the 2008 conference is believed to be the catalyst for that year’s US presidential election: rumors suggest that attendees settling on backing Barack Obama for the Democratic Party nomination at that year’s event, only for contender Hillary Clinton to bow out two days later.

“For an entire day, the media in Virginia and in DC saying, ‘Where’s Obama? Where’s Obama?’ And we were there saying he’s inside, the secret service is there,” Alex Jones recalls of the 2004 conference to RT.

As with 2004, this year’s Bilderberg Conference will be held at the Chantilly, Virginia Westfield Marriott, and employees there are already privy to the fact that Jones will be ready to scrutinize every action he can witness from the grounds: on Tuesday, his reservation at the establishment was revoked and he was informed that he banned from the hotel; hours later, Jones’ Prison Planet website revealed that “all guests had been kicked out of the hotel, and offered one night’s accommodation at the Residence Inn in Chantilly (also Marriott owned).”

“Policy is being set there and this is one of the most elite meetings out there,” Jones told RT. That, many fear, is precisely why those close to the conference don’t want outsiders to have an inside scoop.

This year Jones expects details of the US presidential election to obviously be discussed, but perhaps the agenda item most interesting to many involves only one side of the race: rumors are quickly evolving about who and how the GOP will go about selecting a vice presidential nominee to run alongside their candidate of choice, former Massachusetts Governor Mitt Romney. Al Kamen, a writer at the Washington Post, recently compared a recent speech from Senator Marco Rubio with one given at the 2004 Bilderberg Conference by John Edwards — which some say was instrumental in securing the VP nod back in 2004. The rumors of  Bilderberg being a launching pad for a Rubio run under Romney at this week’s conference has since been spun by reporters at Politico, Salon and elsewhere.

Late CMBS Loan Payments Exceed 11%, Morgan Stanley Says

Brazil Signals More Cuts After Reducing Rate To Record Low 8.5%

Brazil cut its benchmark interest rate to a record low and signaled it will lower borrowing costs further as a fragile world economy contains inflation risks.

Policy makers led by bank President Alexandre Tombini voted unanimously to lower the Selic rate by a half-point to 8.5 percent last night, as forecast by 61 of 70 analysts surveyed by Bloomberg. Policy makers, in a statement, said that inflation risks are “limited” and that “fragility” abroad is having a “disinflationary” impact in Latin America’s biggest economy.

Brazil has cut borrowing costs by four percentage points since August, the most in the Group of 20, to try and revive growth. The monetary stimulus and efforts to prop up spending through tax cuts have yet to kick in as the economy unexpectedly contracted in March after shrinking in January and February.

“The statement increases the chances that interest rates will be cut to below 8 percent,” saidRoberto Padovani, chief economist at Votorantim Ctvm Ltda.

While Padovani isn’t changing for now his call for two more quarter point cuts before the easing cycle ends, he said the bank left the door open for a half-point cut at its next meeting in July and more after that.

Interest rate futures are likely to fall today as investors increase bets on a more aggressive stimulus, he said. Traders are already wagering the Selic will fall to 8 percent by August, according to Bloomberg estimates based on rate futures contracts.

“There is no reference in the statement to suggest the potential near-term ending of the current easing cycle,” Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc., said in an emailed statement..

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