This year, almost 1 million people nationwide will enter a stage of foreclosure, according to RealtyTrac.com. That great tidal wave is ravaging the already beleaguered real estate market and causing repercussions from Wall Street to Washington, D.C.

In the second quarter of this year, 2,206 homes in the nine-county Bay Area were lost to foreclosure, according to real estate service DataQuick Information Systems. That was the highest number for this area since DataQuick started tracking foreclosures in 1988, and an almost nine-fold increase from 258 foreclosures in the April-June period last year. Also in the second quarter, DataQuick said 7,696 Bay Area homeowners received notices that they were in default on their mortgage payments -- the first step in the foreclosure process. That was more than double the 2,910 default notices received at the same time last year.

It is so cool that in amongst all the economic and political essays you can throw in Haiku as a topic and then have numerous readers contribute some excellent pieces. I will not add much more since this is meant as a sincere high five, but I was just thinking that of all the blogs I read not one could pull this off.

Most excellent!

I don't know how far out you have planned this week's theme, but you might want to consider doing a segment on the insanity of our food supply system. For example, how insane is it that we:

1. Have a food chain system that in the age of peak oil financially subsidizes agricorp busnesses over encouraging the small farmer, uses high energy production and dellivery techniques (read: oil based -- fertilizers, farming equipment, food processing and delivery systems) to supply us with 3000 mile Ceasar salads?

2. Distorts the market mechanism for grain by creating an artificial demand for corn to produce ethanol. This has a number of side effects. Anything that uses corn in food production becomes more expensive, and with the ubiquitous use of high-fructose corn syrup this includes a lot of what we eat. In addition, because we now have to divert wheat to feed cattle and pigs it goes up in price, and so does our bread and pasta. And we may go through our last 6 inches of topsoil in the Midwest to do it. All so we can make a product that is at best a break-even item in terms of input of energy units required to produce it versus energy units produced by it, and, ahem... well, maybe buy some votes with this policy?

3. Find it cheaper to import basic food necessities such as wheat gluten from China instead of making it ourselves so our bread isn't hard as a rock, and then surprise, surprise... we find out it's tainted with pesticide because China doesn't have the same quality control standards we do which run up the production costs supposedly in the name of safety?

4. Have developed out of existence much of the farm land that sat close at hand outside of cities, and which traditionally supplied the people in those cities with their food. In an age of cheap gas and happy motoring, no one cared and there was too much money to be made. But in an age of peak oil it may be different. Worse, if it is different, we have both stripped away the topsoil and compacted the ground for this development. If/when the suburban model fails, we simply can't get rid of the now useless development and put it back into farming. We may end up with wasted, useless land we can't do anything with at the same time we have people going hungry in nearby cities with no way to feed them.

The International Energy Agency warned Thursday that output by the Organization of Petroleum Exporting Countries had hit its lowest level in over two years on production outages and self-imposed cuts, a factor likely to drain global oil stocks in the coming months.

In its monthly oil market report, the agency, the energy security watchdog for the Organization for Economic Cooperation and Development, highlighted unexpected product-led reductions in world oil stocks and what it described as "astonishing" demand growth in China, where it was forced to revise up its growth expectations for this year.

"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."

"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."

The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.

The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections.

As for the 4T, the basis for the theory is pretty simple - as the oldest people in a society die off, most of the wisdom and experience they have goes with them - thus people tend to make the same decisions and mistakeds over and over again (history rhymes idea). And the cycle length is generally around 80 years, what the authors call a saeculum, the length of a long human life. Each of the 80 year cycles get split up into 20 year generations, so we have the GI's (now leaving life ), the Silents - born from around 1925 to 1945, the Boomers, the Gen Xers, the Millenials (another round of GI's) and now the Homelanders (another round of Silents).

Around 15-20 years before a 4T Crisis, you generally have an 'event or series of events" (what the authors call the Catalyst) which presage what the issues of the Crisis will be. In the case of WWII, I think WWI (a fairly minor war for the US) & the Great Depression definitely set the conditions (thru the Versailles treaty) that led to WWII. Likewise I think it's pretty easy to see that 9-11 and the Iraq War are easily the issues that could lead to a much bigger conflagration down the road.

IMO 911 and Iraq clearly have at their heart : OIL. And with Peak Oil raising it's ugly head, I would say this is the foundation of what is to come.

I could go on and on ... :) If you DO end up grokking the 4T - I would also highly recommend a site which I think a grand total of 5 people on the internet :) has read - Peter Savich's 'The People Vs. The Corporations'. I think it is a worthwhile addendum to the 4T theory and explains a lot about what is likely to occur over the next decade or so as the 4T Crisis approaches.

Answering the Fourth Turning

The graph of 'Square feet retail space per person' you're displaying in your blog is misleading. The numbers refer to Shopping Center Retail Space per person, not Total Retail Space per person. If anything it shows that Europe is more cozy, featuring many smaller stores.

I did a quick search and only turned up a 2005 white paper that mentions on page 5 that U.S. total retail space is about 3 times larger than English total retail space per capita (wow, still really high, but more believable). You might want to ask for better numbers from your readers.

I saw yet another headline today about the new DJIA record high. I may not be phrasing this adequately, but I hope you get my drift...I am fortunate enough to have some 401K and IRA investments but these new record highs do nothing for my daily cash flow, i.e. the cost of gasoline, milk and orange juice alone are negatively impacting my budget but this new record today helps not at all. So why should I care about the new index records? And how many people are really positively impacted 'now' by the new record, i.e. who sees any benefit today in their checkbook?

And then another thought occurred to me... As I glean from your sight, particularly this week, it ain't all rosy out there, and your readership knows that. I apologize for my ignorance, but here is the question: "Who is the "they" that are causing the index to rise? And why is the market rising?" My fear is that all of this focus on the stock market, and the resultant subliminal message to 'buy - buy - buy because the DJIA hit a new high' has absolutely nothing to do with my daily economic reality.

I hate to sound like a conspiracy theorist, but are 'they' ignoring all the issues such as you have pointed out this week just to jack up the DJIA and therefore 'they' must be benefiting from this run up somehow?....although it seems to me like it is all a house of cards.

I used to be a programmer for one of the mega-investment banks - its a household name, top 3 or 4. I did some work for the business unit controllers (similar to accountants) for the CDS (credit default swaps) at the company. This was 3 or 4 years ago and the business in CDS trading was growing like crazy.

One of the controller's jobs was to carefully watch the traders and that included marking (independently pricing) their positions periodically, which was extremely difficult to do. Unlike stocks and bonds, there is no public market for these securities and no reliable service to mark the value of the securities.

For stocks and bonds, there are the public markets and services such as Reuters and Bloomberg, which collect price information about stock and bond prices and distribute it to subscribers.

The CDS market is illiquid and not public and the controllers at this company subscribed to a service which provided CDS marks, but they were extremely unreliable. Why? Because the CDS traders at the firm knew the people that ran the CDS marking service! And I'll quote the controllers: "they went out for beers together after work". In other words, the marking service was getting their marks from our firm's traders!

To summarize, the firm couldn't even confidently mark their own positions in CDS. So it is impossible for anyone else that bought these securities to reliably know their value. As a result, you will now better understand the derivatives crack-up when it occurs.

Underwriters are affected already, having to pony up for some of the riskier corporate bonds no one is willing to buy.

"Those looking to raise money to finance the recent private-equity deals are getting a front-row view of the turbulence. Just months ago, there were more than enough eager buyers of the bonds and loans sold to support highly leveraged takeovers. But now investors are pushing back, demanding higher rates and protections from risk.

In some cases, investors are asking for so much that the bond offerings never even make it to market. ServiceMaster Co.'s underwriters called off a $1.15 billion sale of junk bonds earlier this month after investors balked at provisions in the bonds that would have let the company cover some of its interest expense by issuing more debt.

That forced the lawn-care and pest-control company to obtain a bridge loan directly from the underwriters. A $2.85 billion loan issue still needs to get done as part of the $5.5 billion takeover by private-equity firm Clayton, Dubilier & Rice and others, according to KDP Investment Advisors Inc."

In 1998 it was thought that LTCM would bring the world financial system down due to a liquidity crisis. But we have forgotten the lessons. LTCM thought it was well diversified against the risk to which it was exposed, and in a normal market they were essentially correct.

What their models couldn’t handle was the fact that during a crisis uncorrelated issues become perfectly correlated, and so they watched all of their positions move against them during the Russian default as everyone panicked. The last sentence of the above quote is simply the lesson LTCM taught us, a lesson we will soon revisit.

The more I read and study, the more I am becoming convinced that hedge funds are effects and the causality lies with fractional reserve banking and a fiat monetary system. Debt must be expanded or the system implodes, but the growth in debt is not linear, it has to be exponential and therefore is inherently unstable.

The efforts to maintain the appearance of stability are unequivocally criminal. There is but a small number of people focusing on this but when things go critical there may be greater focus by larger numbers (a central bankers worst nightmare).

For example, how is it that during the greatest bull market in our history the dollar has been in a 22-year Bear market relative to Light Sweet Crude Oil? This is not a supply/demand issue because prices of crude stayed in a relatively narrow band during this time up until 1999 (see attached chart). The dollar has been losing its value but apparently few are interested as to the “why”.

We had better awaken because implicitly, the dollar will go to zero. Personally, I speculate there is a quiet panic going on at high levels of government. Panics arise when people are fearful and don’t know what to do. I would also speculate that the current administration has put the word out to not let things blow up on their watch, which means if the Democrats win, they will get the blame.

One thing that bothers me terribly is that hedge funds are private placement, only the wealthy “sophisticated” investor can participate. This regulation is required by law. Our government feels that only the wealthy are smart enough to understand the risks involved in these funds and because of their wealth can sustain a substantial or complete loss of their invested capital. The general public cannot partake, but in a crisis it is the unsophisticated, not-so-wealthy taxpayer that provides the relief needed to save the ‘system’. This (bailouts) runs contradictory as to why the funds are regulated to wealthy investors.

This parasitic subsidization of the wealth's failed financial adventures by the middle class and poor has not caused social unrest yet and perhaps never will but nevertheless it should cease because in reality it results in a forced transfer of wealth (stealing?) from the middle class and poor to the wealthy. The “Greenspan put” should be called the “taxpayer put”. If our financial system can be destroyed by a few large firms then we must question who is really in control of this systems, the government or banks and financiers?

Funny you should mention "mall after mall" on your trip. My 14 year old son even noticed all the empty strip malls going up in the SW Chicago suburbs. He calls them "space available malls."

Not just America for MEGA shopping mail projects, here in Liverpool building is busy! WE are rebuilding the city centre to make one of the biggest shopping centres in Britain.... Just as everyone is switching to shopping on line/overseas!

Also we built loads of Apartment blocks....We call them flats....which nobody wants!

Only tonight one of our pop stars (Ex) was raided by a gang of thugs who smashed their way into said apartment and robbed her and her boyfriend. For years people have been queuing up to buy rebuilt flats from areas of Liverpool you NEVER want to be in. One block (where I used to buy drugs from) is in the middle of a "Free fire zone"....Yet they are now talking of £1 Million flats!!!!

Or....You could buy 170 miles away in deep country side a very nice period home, in 5-10 acres of land almost ZERO crime, nice people etc for half that!....Go Figger!

Today I had YET another sale lit drop on my table at work wanting me to buy industrial units (Workshops)....Everyone went out and bought land and built Shops, Workshops, Flats etc.... without wondering about the market. Now with Oil rocketing thus inflation (yes they can't hide it now) rates are going to rocket.

Recession, I bloody well hope so!

When this Credit Bubble / SubSlime Loan, NOD/NOT REstate Crash "Fully Unwinds" ... it's going to feel like the French Revolution!!

I want to tell you that your writing is wonderful. I just happened upon I-State Lines, and have been held captive throughout. I read with all my senses. I smelled the Atlantic in North Carolina, and felt the breeze as Daz and Alex enjoyed it. I could hear the slots in Vegas and the quiet of the canyon. I could even smell the desert air. Anyway I just wanted to let you know that I really enjoyed your book.

The Panic was the worst economic crisis to hit the nation in its history to that point. The National Cordage Company (the most actively traded stock at the time) went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCC's financial distress.

A series of bank failures followed, and the price of silver fell. The Northern Pacific Railway, the Union Pacific Railroad and the Atchison, Topeka & Santa Fe Railroad all failed. This was followed by the bankruptcy of many other companies; in total over 15,000 companies and 500 banks failed (many in the west). About 20%-25% of the workforce was unemployed at the Panic's peak.

The deficit for May rose to $60.04 billion. The deficit with China rose to $20.02 billion, the biggest imbalance in four months. So far this year, the deficit with China is running 17.2 percent ahead of the pace set last year when the overall deficit soared to an all-time high of $233 billion.

So far this year, the overall deficit is running at an annual rate of $709 billion, down 6.5 percent from last year's $758.5 billion, which marked the fifth consecutive year that the deficit set a record.

"Ours is really is a sick-care system. We have tremendous technical capabilities to deal with people with serious illness," Thorpe said. He argues, though, that it is far more cost-effective to prevent people from getting sick or at least catch illnesses early through better monitoring.

In 2005, $15 million of Berkeley’s $115 million general fund will pay for contributions to the California Public Employees System (PERS). Last year, the city spent $8 million on retirement benefits. The year before, when the state Legislature passed the bill that allowed Berkeley to improve the pension benefits, the city spent only $2.8 million.

Berkeley Police Lieutenant Sherrie Aldinger, who is retiring after 28 years on the job, will receive 84 percent of her highest annual salary from the city for the remainder of her life. The salary for a Berkeley Police Lieutenant ranges from $104,568 to $119,136.

Relative to the size of our population, the number of city employees is almost 3 times greater than other comparable East Bay Cities. Berkeley recently elected to purchase the 1947 Center Street Building at a cost of at least 28 million to house this ever increasing number of city employees. While Council members and staff publicly talk about a hiring freeze and a ban on overtime city departments continue to hire for replacements and even for new positions. Some employees who retire are also being rehired as consultants. They receive full pay through their pensions and also receive equivalent amounts or even more as consultants.

Is the new pension plan which guarantees retirement pay equal to 85% of top salary at age 50 for police and fire employees and 81% at age 55 for all other employees after 30 years of employment something that the city can afford? All employees also receive SRIP (supplemental retirement income pension) which is fully paid for by the city and they can voluntarily contribute to a third pension plan, similar to a 401K. With these three pension plans retiring employees, many of whom can choose to stop working in their fifties, will have a greater income during retirement for a period as long or longer than their time spent working for the city.

It seems on a large scale people are intuiting a change. I am talking more mainstream folks. My buddy Mark whom I am working with is moving back to a farm in North Dakota in a few months. He was up visiting for his parents 50th anniversary and said a whole lot of his cousins who had left the state were moving back for no particular reason. His uncle, a vietnam vet who lost a leg there, just went out with his 2 boys and all bought pistols. For no particular reason. He never owned a firearm in his life.

People I talk to at work ("homeowners"), complete strangers when I can get a good conversation going mention uneasiness or a sense of something changing or not being right. On the one hand the masses now are sensing the change but the power structure of corporate gov't is holding on with everything they have to hold together their Ponzi illusion.

Maybe if we all pull together we can turn the ship.

I would also like to thank General Taguba. He sacrificed his career for something bigger than all of us, the truth.

In the context of all that is coming to light after reading about the conversations in the New Yorker article that occurred at the highest levels in our government, I wonder how can we think that we are immune to what happened in Germany? Germany was a democracy and for a time was hijacked by fascists. The names were different but they were human beings.

This is why we can’t "wait out" this administration. Waiting out this administration assumes someone better will come along. What if Rudy wins? His track record from New York reveals he has no problem trampling on civil liberties to bring about "security". He believes we should "Stay the Course" in Iraq. Can we afford another extremist in the executive office? After all, IMHO, that what this current president is. He believes that he can trample on the laws of our land because he serves God. He believes that he can launch preemptive wars against those he believes to be evil because he is on the side of God and is therefore right. So we have extremism against extremism.

We, the American people, must impeach. We must send a clear message that we demand the highest morality, ethics, and integrity in those we entrusted and have given the privilege to guard over our nation. We must send a clear message that they serve at the pleasure of the American people. We are not their servants. We must send a clear message to the world that this is a country that respects the rule of law and individual liberty. By removing this president and vice president from office we prove to the world that democracy does work.

I become incensed every time I hear someone in the news say that an American service member died protecting our freedom. Has anyone bothered to look at the relative scope of the "GWOT"? In Iraq there is maybe a handful of Al Qaeda (that weren’t there before our invasion), probably less than 10,000. The insurgency has nothing to do with terrorism, it has to do with occupation. So in Iraq we have roughly the size of a small town grinding down the most powerful military force in the history of mankind.

Globally what are the numbers of Al Qaeda militants? Once again probably less than a small town. Al Qaeda is dispersed and currently is incapable of launching another 9/11 style attack. They have been reduced to a lethal nuisance. But we have spent almost a half trillion dollars with no end in sight fighting citizens who, for the most part, do not hail from any religious or terrorist ideal, they just want us to go home. What does this have to do with American freedom? How has the death of any one of our service members in Iraq maintained or strengthened my freedom?

What happened to our president’s promise to leave when the job is done? He reversed (revealed his true scheme) when he said he wants to have the kind of troop presence we have in South Korea. This madness will lead to an endless insurgency. Perpetual warfare. Terms like the “long war” meant to psychologically prepare us for endless warfare. To what end?

Over 3500 dead in Iraq. We would have been better off spilling their blood at Tora Bora. We had Bin Ladin trapped and let him out because we didn’t want American casualties. Instead we go to war on lies, engage in "regime change" as if the world is ours to do with as we please. To what end? All of our interventions from the past have brought us to where we are today. What makes anybody think they are endowed with some wisdom to make it better tomorrow?

No, we must not wait. We cannot afford another extremist zealot in the executive office. We must send a warning to those who aspire to that high office that they will be held accountable. We have come to accept corruption as normal. This mindset is also dangerous. This is a bad trade and the only way to end the losses is to exit the trade.

Investors in the worse-hit of two stricken Bear Stearns hedge funds are offering to sell their holdings for as little as 11 cents on the dollar but still finding no buyers, according to unfilled trades on Hedgebay, a secondary market for funds.

Vulture funds and others have been quick to bid for holdings in the two funds, but the best bid for Bear Stearns High-Grade Structured Credit Strategies Enhanced Leveraged Fund, the more geared of the two, is just 5 cents on the dollar.

Private sales of stakes are the only way investors can exit the two Bear funds, after the bank suspended redemptions in May amid a wave of withdrawals.

"There are buyers but they can't agree on price," said Jared Herman, co-founder of Bahamas-based Hedgebay.

The less-geared Bear Stearns High-Grade Structured Credit Strategies Fund, which the bank has rescued with a $1.6bn loan, is being offered at about 70 cents on the dollar. The fund is only attracting bidders at about 30 cents, according to people who use the system.

Market participants estimate the CDOs the Bear funds held would sell for at least 10 per cent less than the values calculated by lenders. "Where things transact is still many points below where dealers have been marking them," said one manager of CDOs and hedge funds. "That is the big ugly secret of this market."

What you write about is the gradual unraveling of what was once a great country.

There are four themes that you touch upon but which I think underlie your essays (not my original thoughts):

1) Private splendor, public squalor;
2) Socialize risk, privatize profit;
3) Malignant, narcissistic entitlement; and
4) A something for nothing attitude.

We are quickly creating a non-society, where our interests are limited to what we can get and what we can do for ourselves. This is reflected in our public spaces, in our attitudes toward our neighbors, and in our contempt for so many individuals who make up our society.

I grew up in Philadelphia and spent a great deal of time in the Commonwealth of Pennsylvania. As an example of #1, consider any smaller or mid-sized town in that state. I think of one in particular -- Bedford PA. Modest, well built homes, a small shopping district, a large and beautiful central part (with the requisite statue to the Union war dead), public accommodations (library, high school, VFW) that bespoke of pride in living in a great place -- the town had a center and a soul.

Compare that town (unfortunately dying) to a modern exurb today. Enormous, cheaply built houses (you were/are a carpenter -- I bet there's an essay in you about modern construction) with ostentatious flourishes. Large and soulless malls with thousands of square feet of homogeneous goods made by virtual slaves thousands of miles away. Roads that are over-crowded because we are unwilling to pay for roads. Schools that are an agglomeration of trailers (yes, despite of our public pronouncements that we're doing things "for the children", they are educated in surroundings that look no better than a 3rd world airport terminal). Town center -- none to speak of, aside from a ersatz town green surrounded by stores. Library, civic centers, etc. are old or non-existent.

So we go home to our GarageMahals and complain about the lack of amenities and civic life. It is a world of our own creation.

Our whole society is based on fudging the numbers. Whether is be reported inflation, GDP, the value of stocks and CDO's or the efficiency of certain drugs, there is some degree of cloudiness in all the numbers. By the way, health risks are calculated the same way. If two people per thousand die of a "X" disease and some bad habit increases ones risk of dying of "X" disease by 50%, then out of 1000 people with this bad habit 3 would die of "X" disease. Hmmm, let's have a beer and enjoy life!

The one statistic that they cannot fudge on is that 100% of us are going to die of something sometime. I think Americans are too obsessed with trying to figure some way to wiggle out of this reality and are willing to place untold financial burdens on future generations in the fruitless attempt to dodge death for another few months or a few years. The medical establishment knows most of us will take about any drug/treatment that is promised to make us feel better or live longer. What a goldmine for them!! The big lie is this: if we can't afford it individually then we really can't afford it collectively. Several trillion dollars worth of debt stand as a mountain of evidence to this fact.

Additionally, insurance or socialized medicine will always create a moral hazard and in the end will raise the cost of health care for everyone. I have health insurance, but pay 90% of my own medical expenses because very few of the treatments that I take advantage of are covered by insurance.

At some point we will have to ration health care. I am not sure how Americans will accept this but probably not with a grain of salt.

Composed of all volunteers, the 442nd fought in the Italian campaign. The 442nd is the most decorated unit in United States history. In less than two years of combat, the 442nd Regimental Combat Team earned more than 18,000 individual decorations including one Medal of Honor, 53 Distinguished Service Crosses, 588 Silver Stars, 5,200 Bronze Star Medals, 9,486 Purple Hearts, and eight Presidential Unit Citations (the nation's top award for combat units).

In June 2000, President Clinton awarded an additional 20 Medals of Honor to members of the 100th Battalion and 442nd Regimental Combat Team. One of these recipients was Hawaii's U.S. Senator Daniel Inouye, whose right arm was shattered by a grenade while successfully destroying three German machine gun nests. The 442nd/100th sustained 9,486 wounded and over 600 killed suffered, the highest casualty rate of any American unit during the war.

The Go For Broke National Education Center is pleased to announce that General Eric K. Shinseki (U.S. Army, Retired), a Vietnam veteran who went on to serve as the 34th Chief of Staff, United States Army, has agreed to serve as the Go For Broke National Education Center's national spokesperson. In this capacity, General Shinseki will help to ensure that the significant, but little-known, contributions of Americans of Japanese Ancestry during World War II are understood and remembered.

"There is no other story in the history of the U.S. Army like this one, and given the conditions that gave rise to the extraordinary valor of Japanese American soldiers, there may never be another story like it again," Shinseki said, referring to the valor of the 100th Infantry Battalion and the 442nd Regimental Combat Team (RCT), whose prowess in battle resulted in the award of 21 Medals of Honor.

"Here . . . comes . . . that famous General Taguba—of the Taguba report!" Rumsfeld declared, in a mocking voice. The meeting was attended by Paul Wolfowitz, Rumsfeld’s deputy; Stephen Cambone, the Under-Secretary of Defense for Intelligence; General Richard Myers, chairman of the Joint Chiefs of Staff (J.C.S.); and General Peter Schoomaker, the Army chief of staff, along with Craddock and other officials. Taguba, describing the moment nearly three years later, said, sadly, “I thought they wanted to know. I assumed they wanted to know. I was ignorant of the setting."

"I’ll talk to you about discrimination," Taguba said one morning, while discussing, without bitterness, his early years as an Army officer. “Let’s talk about being refused to be served at a restaurant in public. Let’s talk about having to do things two times, and being accused of not speaking English well, and having to pay myself for my three master’s degrees because the Army didn’t think I was smart enough. So what? Just work your ass off. So what? The hard work paid off."

Taguba had joined the Army knowing little about his father’s military experience. "He saw the ravages and brutality of war, but he wasn’t about to brag about his exploits," Taguba said. On (his father) Tomas’s eightieth birthday, he was awarded the Bronze Star and a prisoner-of-war medal in a ceremony at Schofield Barracks, in Hawaii. "My father never laughed,” Taguba said. But the day he got his medal “he smiled—he had a big-ass smile on his face. I’d never seen him look so proud. He was a bent man with carpal-tunnel syndrome, but at the end of the medal ceremony he stood himself up and saluted. I cried, and everyone in my family burst into tears."

Army regulations required that the head of the inquiry be senior to the commander of the unit being investigated, and Taguba, a two-star general, was available. “It was as simple as that,” he said.

"The dirt and secrets are in the back channel," the former senior intelligence officer noted. "All this open business—sitting in staff meetings, etc., etc.—is the Potemkin Village stuff. And the good guys—like Taguba—are gone."

In some cases, the secret operations remained unaccountable. In an April, 2005, memorandum, a C.I.D. officer—his name was redacted—complained to C.I.D. headquarters, at Fort Belvoir, Virginia, about the impossibility of investigating military members of a Special Access Program suspected of prisoner abuse.

You know whenever I see a company run by anyone outside of Germans, Scandinavians, Canadians and English, you know I do not believe a word they say (not that the above group is exempted but let us say the degree is not quite as severe).

Editor's Note: you can find various rankings by nation for ethics/corruption on the Web. One source is Transparency International which released The 2006 Transparency International Corruption Perceptions Index. While some may jump to the conclusion that such rankings are somehow racist, note that Singapore consistently ranks high on ethics rankings. Thus it is possible for Asian nations to do business ethically and transparently but most apparently choose not to, or are incapable of doing so.

About a year ago I was hired by a Wells Fargo external attorney to testify against a New Zealand CFO for a US public company. She quite honestly was incompetent and attempted to lay off her responsibility on the auditors. Since I worked 10 years for Arthur Andersen (when it was still reputable and also the largest accounting firm in the world) as well as 8 years as CFO for public companies they thought I was the perfect witness to counter her testimony. She ended up pleading guilty after my deposition.

I spent a number of years working outside the US for AA in Australia, some Asia, Canada, the Middle East and Europe. In many countries their financials once you get below the surface scream fraud. When I was in Australia, there was a Canadian in the office who said, "he forgot how bad it was until I got there." Financial information out of China, India and Russia makes me giggle to think how unreliable it is. Work in finance there and not generate the results management wants you very likely will end up dead (I have a friend who can tell you personal experiences).

You would have to be a total moron to own stock in companies in any of those countries. Part of their culture is along the lines of, if you are so stupid to trust me and give me money, it is my duty and responsibility to take the money for myself.

It would be comical if it was not so sad!

Also Wednesday, Beijing police raided a village where live pigs were force-fed wastewater to boost their weight before slaughter, state media reported.

Plastic pipes had been forced down the pigs' throats and villagers had pumped each 220-pound pig with 44 pounds of wastewater, the Beijing Morning Post reported Thursday.

Paperwork showed the pigs were headed for one of Beijing's main slaughterhouses and stamps on their ears indicated that they already had been through quarantine and inspection, the paper said. Suspects escaped during the raid and no arrests were made, it said.

Earlier this week, inspectors announced they had closed 180 food factories in China in the first half of this year and seized tons of candy, pickles, crackers and seafood tainted with formaldehyde, illegal dyes and industrial wax.

"These are not isolated cases," Han Yi, an official with Wei's quality administration, was quoted as saying in Wednesday's state-run China Daily newspaper.

Han's admission was significant because the agency has said in the past that safety violations were the work of a few rogue operators — a claim aimed at protecting China's billions of dollars of food exports.

Concerns are mounting internationally as China plays a growing role in the global food industry. The country's exports currently account for about 12% of global trade in fruits and vegetables. China's agricultural exports to the U.S. rose to $2.26 billion in 2006 from $133 million in 1980, according to the U.S. Department of Agriculture.

Other governments, including Hong Kong and Japan, systematically test imports from mainland China for metal contamination. But the U.S. FDA says it does virtually no routine testing of food imports for metals. Most of its standard tests on imports are aimed at identifying pesticide residues. Some state health departments and retail chains do their own testing for metals.

Foods from China containing high levels of lead have occasionally been discovered on U.S. supermarket shelves. In 2005, California issued a recall of sweet cured plums from the country after a routine spot test by state health inspectors found "excessively high levels of lead that could cause serious health problems."

Rudimentary sewage-treatment systems throughout much of China mean that organic waste is routinely mixed with industrial waste. When sewage is recycled into fertilizer, it may contain large amounts of metals and other toxic material.

China's soil is also compromised by waste from the thousands of private and public mines that dot the country.

Chinese scientists tested samples of soil and vegetables, including cabbage, chrysanthemum and spinach grown in the area around the mine, near Shaoxing in Zhejiang province. The soil's zinc level was 20 times higher, and cadmium levels 30 times higher, than the maximum heavy-metal concentrations allowed under China's national soil-quality standards.

Bear Stearns may dissolve the second fund after more than $600 million of investors' money dwindled to less than $200 million.

Renee S.-J. (3rd donation)	Anthony S.	Kent M.	Riley T.	Joshua B.	Jamie D.
Anthony B.	Bill M. (chimes)	John B. ($ + CD)	Cheryl A. ($$ + peanut butter)	Steve A.	Donald E. (3rd donation)
Adrian & Debby G.	James D.	Reed H.

Our Financial Contributors

Thank you all for your gracious and generous support of this modest site.

Anthony S.	Walter H.	Phil M.	Dale E.	Cheryl A.	Victor P.
Chariss M.	Loretta N.	Benjamin M.	Riley T.	Robert D.	Ken M.
Steven T.	Karen G.	Donald P.	Robert S.	John A.	Dorothy S.
Anthony B.	Phil H.	Margaret A.	H. Scott K.	Paul M.	Carl G.
Paul G.	Peter V.	Alfred C.	Patrick W.	Christopher M.	Shubhang V.
Scott H.	James D.	Keith C.	Robert H.	Thomas R.	Kevin K.
Chris S.	Tiep T.	Renee S-J.	Alexander I.	Ian D.	James M.
Jon H.	Perry & Theresa S.	Stewart F.	Gantantar N.	Eric A.	Graeme S.

Christopher D.	James D. (2nd donation)	Naveen K.	Aaron K.	Marcia I.	Kent M.
Rosanne A.	Robert B.	Jed H.	Greg R.	Robert T.	Barbara P.
John B.	Steve A.	Donald L.	Roger H.	Leo P.	Renee S-J. (2nd donation)
Steven O.	Joshua B.	Adam T.	Matthew L.	Christopher P.	Donald E.
Reed H.	Anita B.	Albert C.H.	Kelly L.	Ralf S.	Sonic Promote LLC
Vera K.	TG. Neason	Amazing Arizona Land	Doug B.	John B.	Peter S.
Michael C.	Joshua B.	David C.	Mark K.	Steve A. (2nd donation)	Tommy B.
David S.	Jonas H.	Rebecca T.	Anton L.	Jon H.	Michael M.

Michael S.	Riley T. (2nd donation)	Gary K.	Glen H.	Kent M. (2nd donation)	Alonzo J.
Anthony B. (2nd donation)	Steven R.	Richard Z.	Don E. (2nd donation)	Schahrzad B.	David C.
Renee St.-J. (3rd donation)	Shawn S.	Steve M.	Adrian & Debby G.	Susan P.	Jaimi A.
Matthew N.	Cheryl A. (3rd donation)	James D. (3rd donation)	Roger H.	Vic P.	Steve W.
Steve T.	Charlie R.	Mark S.	Kip S.	Mike D.	Lynn C.
James R.	Cory B.	Javier A.	Don E. (3rd donation)	Terence P.	Reed H. (2nd donation)

                                                                       


I would be honored if you link any essay to your website, print a copy for your own use or add my RSS or Atom feed. And of course I appreciate your recommendations of this weblog and your comments: csmith@oftwominds.com.

                                                                       

wEssay noun, combination of 'web' and 'essay,' denoting a short online essay which exploits the hyperlinks, interfaces and interactive capabilities of the World Wide Web; coined by Charles Hugh Smith on May 1, 2005, in Berkeley California.

Aphorisms I like:

"Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend, and step off before it is discredited." (George Soros)

"The way of the Tao is reversal." (Lao Tzu)

"Chance favours the prepared mind.” (Louis Pasteur)

"It is neither necessary to hope to undertake, nor to succeed to persevere." (French proverb)

"You must have a willingness to do something when everyone else is petrified. You must learn the lesson of following logic over emotion." (Warren Buffett)

"Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill)

"May a fair road always be open to you." (CHS, April 2, 2006)


All content and images copyright © 2006 - 2007 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted.