The EU/IMF raiding bank accounts in Cyprus to bail out the country's financial system sets a dangerous precedent and investors should "run for the hills" said investor Jim Rogers, chairman of Rogers Holdings, on "Squawk on the Street" Thursday.

Rogers said that with Cyprus, politicians are saying that this is a special case and urging people not to worry, but that is exactly why investors should be concerned.

"What more do you need to know? Please, you better hurry, you better run for the hills. I'm doing it anyway," Rogers said. "I want to make sure that I don't get trapped. Think of all the poor souls that just thought they had a simple bank account. Now they find out that they are making a 'contribution' to the stability of Cyprus. The gall of these politicians."

"If you're going to listen to government, you're going to go bankrupt very quickly," he added.

"I, for one, am making sure I don't have too much money in any one specific bank account anywhere in the world, because now there is a precedent," he said. "The IMF has said 'sure, loot the bank accounts' the EU has said 'loot the bank accounts' so you can be sure that other countries when problems come, are going to say, 'well, it's condoned by the EU, it's condoned by the IMF, so let's do it too.'"

Jim Rogers, a voice closely followed by market participants, began shorting financials, home builders and Fannie Mae in 2006, and is famous for co-founding the Quantum Group of Funds with billionaire George Soros. Quantum is famously regarded for "breaking" the Bank of England and forcing a devaluation of the pound.

*

The rest of the article and video of the interview.

(Bloomberg Multimedia) -- The U.S. may lose 824,000 jobs when the government releases its annual revision to employment data on Feb. 5, showing the labor market was in worse shape during the recession than known at the time.

Click here for a Bloomberg Multimedia interactive visual analysis of the economy’s job losses.

• The Treasury prepares a record-setting debt auction.
• The Senate passes a "cash for clunkers" bill.
• The House ponders new revenue streams. Among the options: a new tax on soft drinks, a higher tax on alcohol, an increase in the income tax, an increase in the payroll tax, and a VAT.
• A jury tells a Minnesota woman to pay record labels $1.92 million for swapping 24 songs online.
• The Pentagon perceives public protests as "low-level terrorism."
• Ayatollah to protesters: Cut it out.

With Reason, Hit and Run.

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Our economy is in crisis, and our government says that bold action is required. So we're diving in head first to get things back on track. But... what are we diving into exactly?

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It’s official: General Motors will file its bankruptcy papers at 8 a.m. Monday morning. The government is expected to invest over $30 billion in turning around the company. "Under its restructuring plan, GM will shed more than $79 billion in debt, gain work-force savings worth billions of dollars a year, close unneeded facilities and reduce its dealer network by 40%," reports The Wall Street Journal. And as it begins the long road to recovery, "veteran turnaround specialist" Al Koch will be in the driver’s seat. He’s currently a managing director at AlixPartners LLP and has overseen a number of big bankruptcies, including that of Kmart. Koch will separate the ailing company—which will be liquidated—from its government-owned arm, the “New GM.”

Read it at The Wall Street Journal

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• Previous year of federal spending comes to $55,000 per household.
• Pentagon prepares new military command for cyberspace, "to conduct both offensive and defensive computer warfare."
• European countries growing cold to taking in released Gitmo detainees, citing American politicians' refusal to take any into the U.S.
• Oklahoma state troopers pull over ambulance as it was taking a patient to the hospital. Officer is then caught on tape choking an EMT in the ensuing altercation.
• San Diego City official tells couple they must apply for permit to host Bible study sessions in their home.
• Off-duty NYPD officer chasing man he thought was breaking into his car is then shot and killed by other plainclothes cops.
• Government, accounting board give banks the okay to fudge numbers in quarterly reports to make themselves look stronger than they actually are.
• Headline: “Black Hawk chopper to scare shit out of suburban grade schoolers.” It’s the drug war, of course.
• Mixed news on Obama and transparency.

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WASHINGTON (AP) -- Cut a latte or two out of your annual budget and you've just done as much belt-tightening as President Barack Obama asked of his Cabinet on Monday.

The thrifty measures Obama ordered for federal agencies are the equivalent of asking a family that spends $60,000 in a year to save $6.

Obama made his push for frugality the subject of his first Cabinet meeting, ensuring it would command the capital's attention. It also set off outbursts of mental math and scribbled calculations as political friend and foe tried to figure out its impact.

The bottom line: Not much.

The president gave his Cabinet 90 days to find $100 million in savings to achieve over time.

For all the trumpeting, the effort raised questions about why Obama set the bar so low, considering that $100 million amounts to:

• Less than one-quarter of the budget increase that Congress awarded to itself.
• 4 percent of the military aid the United States sends to Israel.
• Less than half the cost of one F-22 fighter plane.
• 7 percent of the federal subsidy for the money-losing Amtrak passenger rail system.
• 1/10,000th of the government's operating budgets for Cabinet agencies, excluding the Iraq and Afghan wars and the stimulus bill.

Obama only asked his Cabinet secretaries to identify waste in their annual operating budgets, which total a little over $1 trillion. He's leaving out war costs, the economic stimulus measure, the Wall Street bailout and benefit programs like Social Security and Medicare.

THE SPIN:

"He will challenge his Cabinet to cut a collective $100 million in the next 90 days," said a White House news release. "Agencies will be required to report back with their savings at the end of 90 days."

"I'm asking for all of them to identify at least $100 million in additional cuts to their administrative budgets," Obama told reporters afterward. "None of these things alone are going to make a difference, but cumulatively, they would make an extraordinary difference because they start setting a tone."

Read all about it here.

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The Financial Times on whispers about reviving that golden oldie of international finance: the gold standard.

....musings about a gold standard are currently cropping up in all manner of unlikely places. One savvy European property developer (who aggressively sold most of his holdings in early 2007) recently told me that he is now moving a growing proportion of his assets from government bonds into gold, even at today’s elevated prices.

“The logical conclusion of where we will end up eventually is with some type of gold standard,” he explains, arguing that future inflation will almost inevitably cause a future collapse in government bonds.

Half a world away in the Middle East, some sovereign wealth funds now say that they are stocking up enthusiastically on food and gold, due to similar reasoning.

Meanwhile, in New York a (still) formidable American hedge fund recently circulated private research that echoes the reasoning of Mr Smith. Most notably, this hedge fund points out that since the world abandoned the gold standard on August 15, 1971 credit creation has spiralled completely out of control.

But this four-decade long experiment with fiat currency is not just something of a historical aberration, it argues – but potentially very fragile too. After all, the only thing that ever underpins a fiat currency is a belief that governments are credible. In the past 18 months that belief has been tested to its limits. In coming years it could be shattered, particularly if the current wave of extraordinary policy measures unleashes a wild bout of inflation....

It might seem almost unthinkable to propose a return to a gold standard, in other words. However, the key point is that the last 18 months have already produced a stream of once unimaginable events.

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Expect to see variations on this story of weak oversight and big checks for the rest of your lives:

Housing agencies faulted in audits to get $300M of stimulus

The federal government will soon send more than $300 million in stimulus funds to 61 housing agencies that have been repeatedly faulted by auditors for mishandling government aid, a USA TODAY review has found.

The money is part of a $4 billion effort to create jobs by fixing public housing projects that have fallen into disrepair. Recipients include housing authorities in 26 states that auditors have cited for problems ranging from poor bookkeeping to money that was spent improperly, according to the review of summaries the agencies must file with the federal Office of Management and Budget (OMB).

But don't worry, gentle taxpayer! This time, "the government has promised to closely monitor how the agencies spend the money."

Doesn't that make you feel better? Here's your government oversight at work:

Congress gave the Obama administration permission to withhold stimulus aid from housing authorities that the Department of Housing and Urban Development lists as "troubled" because of factors such as poor maintenance and financial management. But HUD decided to release the money to these authorities because they "should have the opportunity to improve their housing," spokeswoman Donna White said.

And here's USA Today's list of 61 agencies cited by auditors.

Whole story here.

with Hit and Run, Reason

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The Troubled Asset Relief Program, or TARP, was launched in the midst of last fall's collapse of the nation's banking system and is designed to get loans flowing to businesses and individuals.

But "without a clearer explanation" about parts of the program, "it is not possible to exercise meaningful oversight over Treasury's actions," said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.

Noting that TARP passed Congress six months ago, Warren said that her group has repeatedly called on the Treasury Department to provide a clear strategy for the program — and that "the absence of such a vision hampers effective oversight."

Although she has asked Treasury to explain its strategy, "Congress and the American public have no clear answer to that question."

...

The Government Accountability Office shared some of the same concerns, saying in a new report that "Treasury continues to struggle with developing an effective overall communication strategy" for the TARP program.

Beyond that, the GAO's report pointed out the difficulty in even measuring whether TARP is working. As of March 27, the Treasury Department had handed out more than $300 billion of the $700 billion in approved TARP funds, the GAO said.

The majority of that money went to banks large and small around the country. And there are signs that credit is flowing from those banks; the GAO said that several hundred billion dollars in new loans were processed by the largest TARP recipients in December and January.

Read the entire article.
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As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.

the rest of the article at Wall Street Journal
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The government of Iceland today became the first to be effectively brought down by the credit crunch. [...]

After several nights of rioting over the financial crisis, Prime Minister Geir Haarde, surrendered to increasing pressure and called a general election for May.

The global financial crisis hit Iceland, which has a population 320,000, in October, triggering a collapse in its currency and financial system under the weight of billions of dollars of foreign debts incurred by its banks

The economy is set to shrink 10 percent this year and unemployment is surging.

Critics wanted Haarde, the central bank governor and other senior officials to resign.

Some senior figures in his party have also said they favour an early election, but Haarde had up to now vowed to defy plunging popularity and stay on.

Protests had been held weekly since the crisis broke last year, but since Tuesday have been held every night.

On Thursday, police used teargas on demonstrators for the first time since protests against the North Atlantic island's entry into the NATO alliance in 1949. [...]

Latvia, Bulgaria and other European countries hit hard by the global economic meltdown have also seen unrest. _______________________________________________________________

WASHINGTON (MarketWatch) -- U.S. private-sector firms shed 693,000 jobs in December, far worse than expected, according to the ADP employment index released Wednesday.

Employment in the services sector fell by 473,000, while employment in the goods-producing sectors fell by 220,000. Large firms cut 91,000 jobs, medium-sized firms cut 321,000 jobs and small firms cut 281,000 jobs.

"Sharply falling employment at medium- and small-size businesses clearly indicates that the recession has now spread well beyond manufacturing and housing-related activities," said economists for Macroeconomics Advisers in a press release.

http://www.marketwatch.co...

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McClatchy Newspapers story

WASHINGTON — The forecast Wednesday of a jaw-dropping $1.2 trillion one-year federal budget deficit will make it harder for President-elect Barack Obama to win broad support for a massive stimulus package that would add even more to the red ink.

With his party controlling both the House of Representatives and the Senate, Obama's still likely to get the OK for spending and tax cuts that cost $1 trillion or more over two years and are designed to jump-start the economy and create or save 3 million jobs.

However, while many economists, business groups and politicians agree on the need for something dramatic, Obama now concedes that he'll have to wait until February to get a bill to sign. He'll probably find conservative "blue dog" Democrats as well as Republicans balking at the idea of borrowing another $1 trillion on top of this new annual deficit.

They could deny Obama the kind of broad, bipartisan approval that he hopes will signal not only that he's changed the political culture of a divided Washington but also that he's put forward a plan that's widely popular. Such approval is crucial as he moves to rebuild trust in the government and the economy.

He plans to speak more about the need to rebuild confidence in a speech on the economy Thursday.

Yet even before he can point to a law meant to boost the economy or to post-stimulus efforts to rein in budget deficits, he has to deal with the fallout of the Congressional Budget Office's forecast that the current year's deficit will jump from last year's $455 billion to a record $1.2 trillion.

"There's a sticker shock problem," said Steven Schier, a political scientist at Carleton College in Minnesota and the author of a book on budget politics. "This is a new problem for Obama: How far out there are people willing to go?"

He noted that there are as many as 100 fiscally conservative Democrats in the House and 20 in the Senate who're probably stung by the deficit figure and reluctant to use the stimulus as an easy ride for new programs.

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LONDON (AP) -- World stock markets plunged Friday as the U.S. Senate's rejection of a $14 billion deal to rescue Detroit's ailing automakers stoked concerns that the recession in the world's largest economy will be even longer and deeper than projected.

The FTSE 100 of leading British shares was down 127.87 points, or 2.9 percent, at 4,260.82, while Germany's DAX fell 185.22 points, or 3.9 percent, to 4,581.98. The CAC-40 in France fell 130.48 points, or 4.0 percent, to 3,175.65.

Earlier, Asian markets tumbled, with Japan's Nikkei 225 stock average down 484.68 points, or 5.6 percent, to 8,235.87. Hong Kong's Hang Seng index slid 5.5 percent to 14,758.39.

U.S. stock index futures pointed to a big sell-off later on Wall Street. The Dow Jones industrial average was projected to drop 259 points, or 3.0 percent, to 8,311, while the broader Standard & Poor's 500 index was forecast to fall 32.90 points, or 3.8 percent, to 841.60.

An AP article
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It looks like the White House and Congressional Democrat leadership have reached a deal on the auto bailout, although there aren't very many details at this point. Plans for a "car czar" seem to still be included as part of the deal. So, not only will your money be spent for the bailout, it will be used to pay a new government appointee, staff his office, and take care of the other requirements that come along with that job. (It also gives them one more person to shift the blame to when the problems continue.)

All of this is being done again, of course, out of "necessity," we are told. Just like buying up all the toxic assets was a "necessity" until the Treasury got the money and decided to spend it on everything but. This is what happens when the majority of Congress is not guided by any philosophy other than the one that says that government can cure all of our ills with just a little more money (or billions more).

A vote could come at any time, with signs pointing toward later today.

UPDATE

The House was on track to vote on the bailout Wednesday night, and Democrats held out hope that it could be enacted by week's end. But a growing number of GOP senators declared they would not go along.

The White House, though not formally endorsing an agreement with congressional Democrats, dispatched administration officials to Capitol Hill to make a case for the rescue package. During a contentious, closed-door luncheon with Senate Republicans, White House Chief of Staff Josh Bolten got an earful of criticism from the rank-and-file, some of whom have already announced plans to block the measure.

"They got a good dose," said opponent Tom Coburn, R-Okla., as he emerged from the session.

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WASHINGTON (AP) - The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.

The Treasury Department says the gap between the government's revenue collections and what it paid out last month totaled $164.4 billion, the largest deficit ever recorded for the month of November.

In just the first two months of this budget year, the deficit now totals more than $401 billion, putting the country on track to hit a record $1 trillion deficit for the entire year, more than double the previous all-time high.

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Heard Michigan Sen. Carl Levin on NPR this morning.  He was defending a bailout for the big three automakers, who have until today to send Congress theirawesomest business plan yet.  Levin mocked those of us opposed to the $55 billion bailout, and said he was certain the automakers would use the money responsibly, and quickly get back to profitability.

Here’s the odd thing:  At the very beginning of the interview, he conceded that he hadn’t yet even read the new plans.  Yet he’s certain that this time, sight unseen, the perpetually failing companies will make it all work.

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THE October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board.

This is the most serious economic crisis in World history.

The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.

[...]

In a bitter irony, the engineers of financial disaster are now being considered by President-Elect Barack Obama's Transition Team for the position Treasury Secretary:

Lawrence Summers played a key role in lobbying Congress for the repeal of the Glass Steagall Act. His timely appointment by President Clinton in 1999 as Treasury Secretary spearheaded the adoption of the Financial Services Modernization Act in November 1999. Upon completing his mandate at the helm of the US Treasury, he became president of Harvard University (2001- 2006).

Paul Volker was chairman of the Federal Reserve Board in the l980s during the Reagan era. He played a central role in implementing the first stage of financial deregulation, which was conducive to mass bankruptcies, mergers and acquisitions, leading up to the 1987 financial crisis.

Timothy Geithner is CEO of the Federal Reserve Bank of New York, which is the most powerful private financial institution in America. He was also a former Clinton administration Treasury official. He has worked for Kissinger Associates and has also held a senior position at the IMF. The FRBNY plays a behind the scenes role in shaping financial policy. Geithner acts on behalf of powerful financiers, who are behind the FRBNY. He is also a member of the Council on Foreign Relations (CFR)

Jon Corzine is currently governor of New Jersey, former CEO of Goldman Sachs.

Read the rest of the article

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Nov. 23 (Bloomberg) -- Congress will send President-elect Barack Obama an economic stimulus package the day he takes office Jan. 20, two Democratic lawmakers said today.

Senator Charles Schumer of New York said on ABC’s “This Week” program that the package will be between $500 billion and $700 billion. House Majority Leader Steny Hoyer, of Maryland, said on “Fox News Sunday” that he believed the Inauguration Day goal would be met, but he declined to put a price tag on the bill.

“I think Congress will work with the president elect starting now and will have a major stimulus package on his desk by Inauguration Day,” Schumer said. “I think it has to be deep. My view it has to be between five and $700 billion.”

Obama said yesterday he aims to save or create 2.5 million jobs in his two-year plan to stimulate an economy facing a “crisis of historic proportions.”

The U.S. economic slowdown has been exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending will pressure Obama and Congress to agree on legislation that will stimulate growth, economists say.

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