In The News Today

Posted at 11:17 PM (CST) by & filed under In The News.

Dear CIGAs,

A misjudgment by Israel, Pakistan goes nuclear and 2012 is tomorrow. If this is not it, it is close.

Israeli tanks roll into Gaza strip as ground invasion begins
BY ERICA SILVERMAN in Ramallah, West Bank and CHRISTINA BOYLE in New York
DAILY NEWS WRITERS
Updated Saturday, January 3rd 2009, 7:18 PM

Israeli troops and tanks crossed into the Gaza Strip under the cover of darkness Saturday, signaling the start of a bloody ground offensive that military leaders warned would not be short.

Hamas, which seized control of Gaza a year and a half ago and has been attacking Israel with rockets, responded with defiant threats.

"We will fight till our last breath. Your invasion of Gaza will not be a cakewalk. Gaza will be your cemetery," Hamas spokesman Ismail Radwan said.

Israeli officials called up tens of thousands of reservists and warned the incursion would not end quickly.

"It won’t be easy and it won’t be short," Defense Minister Ehud Barak said in a televised address. "We do not seek war, but we will not abandon our citizens to the ongoing Hamas attacks."

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Israel’s Worst Fears
Its U.S. ambassador says the big threat is that Iran has almost enough fuel for its first nuclear weapon.
Published Jan 3, 2009
From the magazine issue dated Jan 12, 2009

Sallai Meridor has been Israel’s ambassador to the United States since 2006. During that time, his government’s main strategic worry has been Iran, and that remains so today despite the fighting in Gaza. Israel warns that Iran is making rapid progress toward a nuclear bomb—Meridor calculates that Tehran should have enough fuel for its first bomb sometime in 2009—and that Israel will take military action unless the United States and other allies step in. A former intelligence officer, Meridor recently met with NEWSWEEK editors in New York to discuss Iran and how best to deal with it. Excerpts:

NEWSWEEK: Is there a timetable on Iran’s nuclear program? The CIA is saying they could have a weapon by 2015.
MERIDOR: Look, this is the most critical issue for America and the Western world. The major concern is instability and the potential for nuclear weapons to escape the region, which is not necessarily going to wait until Iran has a nuclear warhead on a missile. The closer they get to having a bomb, and the closer they are perceived to be, you can expect Iran’s neighbors to start acting on the assumption that Iran is going to have a bomb.

How close is Iran?
The last IAEA [International Atomic Energy Agency] report, some weeks ago, indicated that the Iranians already have 630 kilograms of low-enriched uranium. The previous report found 480 kilograms. At that pace they are producing close to 2.5 kilograms a day. And over the past few months they have had a technological breakthrough. Experts differ on how much low-enriched uranium you need for a first bomb. But even if you took the more conservative assumption, sometime in 2009 they will have enough. That nobody would argue against: no intelligence service, no experts.

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Jim’s Formula:
September 1, 2006

1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.

2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella – Goldilocks situations.

3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.

4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.

5. Lower profits leads to lower Federal Tax revenues.

6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.

7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.

8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).

9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.

10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

Therefore as you get to #12 you are automatically right back at #1. This is an economic downward spiral.

I heard all this “slow business” as negative to gold talk in the 70s. It was totally wrong then. It will be exactly the same now.

U.S. Debt Expected To Soar This Year
$2 Trillion Increase May Test Federal Ability to Borrow
By Lori Montgomery
Washington Post Staff Writer 
Saturday, January 3, 2009; Page A01

With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world’s appetite for financing U.S. government spending.

For now, investors are frantically stuffing money into the relative safety of the U.S. Treasury, which has come to serve as the world’s mattress in troubled times. Interest rates on Treasury bills have plummeted to historic lows, with some short-term investors literally giving the government money for free.

But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.

With the government planning to roll over its short-term loans into more stable, long-term securities, experts say investors are likely to demand a greater return on their money, saddling taxpayers with huge new interest payments for years to come. Some analysts also worry that foreign investors, the largest U.S. creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the United States as the bedrock of the global financial system.

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Jim Sinclair’s Commentary

This is one way to cut down on public assistance. Starve our fixed income retirees out of the equation.

Savers facing accounts with no interest
Millions of savers are braced for zero per cent accounts within days as the Bank of England is poised to cut interest rates to the lowest level in its 315-year history.
By Edmund Conway and Myra Butterworth
Last Updated: 1:44PM GMT 03 Jan 2009

Experts have warned the return on savings could plumb new depths with the Bank expected to take unprecedented steps to regain control over the economy.

They widely believe the Bank will reduce borrowing costs to below their 2 per cent level – and possibly all the way down to 1 per cent – in its first meeting of the year next week.

More than 7 million people have saving accounts which already pay interest of 1 per cent or less. If a cut is passed on in full by banks, these accounts will dive towards negative territory for the first time on record.

Many elderly people who rely on the income from savings have found themselves struggling in recent months as returns fall.

Just 18 months ago average interest rates on savings accounts were as high as 6 per cent. But consecutive cuts by the Bank’s Monetary Policy Committee have led to banks slashing their savings rates, with the current average rate being just 2 per cent.

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