Headline Report for Nov. 5, 2010

The top news long-term, continues to be the following ISSUES:

    * Financial Crisis

    * GWOT

    * Cultural War (between the left and right)

    * Politics

Short-term top news centers on the following EVENTS:

    * Life’s Rich Pageant

Financial Crisis: A new direction today from China as they start trading in credit-default swaps (China Rejects `Naked Swimming' With Default Swaps). The swaps are derivatives “blamed by some European and U.S. officials for inflaming the global financial crisis.” “‘European and American markets show the main problem is blind innovation and lack of regulation,’ Shi Wenchao, secretary-general of China’s National Association of Financial Market Institutional Investors, or NAFMII, said in comments posted on the association’s website this week. ‘Market participants have been swimming naked in a huge bond market and we can imagine their desire for a well-fitting life jacket.’” In other words, the Chinese think they won’t get burned by derivatives with proper regulation. We’ll see.

The international backlash against quantitative easing continues (As money pours in, Indonesia and other emerging markets fret over Fed easing). “As the United States and other developed countries cope with what might be years of slow growth and frugality, the concern in Indonesia is—quite literally—over too much money and how to prevent it from sowing a future crisis.”

Which leads into the building currency war: “Guido Mantega, the Brazilian finance minister who was the first to warn of a ‘currency war,’ said: ‘Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter’” (Backlash against Fed’s $600bn easing).

We have a worsening situation (creating a future crisis to solve a current crisis) with the U.S. having implemented more than $1 trillion (headed to $1.6 trillion) of newly-minted dollars: “Dan Price, partner at the law firm Sidley Austin and formerly George W. Bush’s White House representative at the G20, said: ‘The US may find it increasingly difficult to galvanize countries to push China on [renminbi] appreciation when many think the Fed’s quantitative easing policy is itself a major contributor to currency misalignment and imbalances.’” That leaves one option for the U.S./Fed: print more money. What action will other countries take? “At a joint press conference with president-elect Dilma Rousseff, outgoing president Luiz Inácio Lula da Silva said on Wednesday he would travel to the G20 summit in Seoul with Ms Rousseff, ready to take ‘all the necessary measures to not allow our currency to become overvalued’ and to ‘fight for Brazil’s interests’” (Brazil ready to retaliate for US move in ‘currency war’).

Will QE2 work? Probably not, given consumer confidence and Axel Merk’s opinion: “‘Federal Reserve policies have put the US dollar at risk of crashing, which will hammer consumers through higher prices (Dollar at Risk of Crashing, Triggering Inflation: Strategist). The Fed in my view is trying to debase the dollar because printing all that money is not going to spur growth on its own. The risk is that the money doesn't stick and it doesn't go to where it's supposed to go,’ said the $500 million currency mutual fund portfolio manager and president at Merk Investments in Palo Alto, California (World stocks surge, dollar falls on Fed's QE2 plan). ‘What you achieve with quantitative easing is that you signal to investors not to buy U.S. government securities, take the money elsewhere, which in turn will weaken the dollar and spur economic growth.’” The financial crisis is now re-defining the term ‘asset’: “‘There's no such thing anymore as a safe asset. Cash is no longer safe,’ said Merk to CNBC. ‘Do what central banks do, they diversify to baskets of currencies. That's what we try to do. It's a pity for any savers out there, but we'll survive. We'll get through this.’” If you’re not a FOREX (foreign exchange) trader we suggest considering commodities, like bullion and numismatic coins.

The dollar Thursday hit an 11-month low, “opening the way for a possible test of its 2009 low of 74.17, and the euro was holding above $1.4200 after soaring as far as $1.4283, its strongest since late January. The dollar was also under renewed pressure against the yen, trading one yen above its 1995 post-war record low of 79.75 (Dollar struggles as demand for risk continues).

Conversely, gold set another record high and other commodities chalked up broad gains Thursday, increasing 3.4 percent IN ONE DAY, to $1,383.10 an ounce (Gold sets record; other commodities chalk up gains). CNBC reports today (11:12 Eastern) the dollar continues to drop and gold is up $12 an ounce to $1,395.

GWOT: “A senior missile scientist who defected from Burma after leaking secrets about the junta's suspected nuclear programme has revealed how senior generals were personally involved in plans to develop a weapons system” (Burmese defector reveals truth about junta's nuclear ambitions).

Hamas claims they succeeded in bringing "game changing" weapons into the Gaza Strip (Hamas claims 'game-changing weapons'). “Israeli security officials confirmed to WND that Hamas recently was able to bring into Gaza advanced weaponry that deeply concerns the Israel Defense Forces.”

Cultural War: A report in Joseph Farah's G2 Bulletin by a senior fellow of the International Strategic Studies Association claims “political Islam could be in control of Europe by as early as 2050” (Forecast: Europe under Islam by 2050). “‘Political Islam, resorting to asymmetrical warfare and terrorism," he said, "has already intimidated a tired and perplexed Europe and has frightened the U.S. It seems that the U.S. and the democratic West do not have a sound strategy to deal with political Islam,’ said Assad Homayoun. ‘The West appears to have no strategy or will to prevent a shifting of power, or to guard Western culture, civilization and democracy.’”

“Republicans say they'll repeal and replace President Barack Obama's health care law, but tinker and tweak is as far as they're likely to get” (No clear path for GOP on health care repeal). In the meantime it looks like AARP is about to pay the piper for endorsing ObamaCare. “Now the seniors' lobby is telling its employees their insurance costs will rise partly as a result of the law. In an e-mail to employees, AARP says health care premiums will increase by 8 percent to 13 percent next year because of rapidly rising medical costs” (Citing health overhaul, AARP hikes employee costs).

The Oklahoma chapter of CAIR (Council on American-Islamic Relations) plans to sue challenging the constitutionality of a ballot measure barring judges from considering Islamic law (CAIR sues Oklahoma for banning Islamic law). An author of the legislation responded: “‘Certainly each of these measures had critics, but the crushing margins by which these constitutional amendments passed shows without a doubt that those critics are deeply out of touch with the values and views of Oklahomans, just as Washington, D.C., is out of touch with America,’ Republican state Sen. Anthony Sykes said.”

Irony rules instead of the rule-of-law in Arizona, as the city of Phoenix, without due process or notice, ordered billboard and bus shelter ads promoting gun training torn down (City yanks down firearm safety billboards).

Politics: So much for the Saudis helping to reduce tensions between Israel and the PA (Saudi prince rules out engagement with Israel until Arab land is returned). “‘For us to take any steps toward any form of normalization with the Israeli state before these Arab lands have been returned to their rightful legitimate owners would undermine international law and turn a blind eye to immorality,’ Prince Turki al-Faisal, the former Saudi ambassador to the United States, said in a speech at the Carnegie Endowment for International Peace.”

China continues its strategic push into Europe as President Hu Jintao signed billions of euros' worth of business deals during a state visit to France Thursday (China and France sign deals as Hu Jintao visits Paris).

Muslims are starting to stand up to radical Islamists in the wake of the Baghdad mass massacre Sunday (Egypt's Brotherhood pledge to defend Christians). “Prominent Egyptian Muslims, including leaders of the outlawed Muslim Brotherhood, rallied yesterday to defend their country's Christian minority after threats from an al Qa'eda-linked group in Iraq. The Islamic State of Iraq (ISI), an umbrella group that includes al Qa'eda in Iraq and allied insurgents, declared on Wednesday that all Christians were ‘legitimate targets.’ In Abu Dhabi, up to 1,000 Muslims and Christians are expected to attend a service tonight at St Joseph's Cathedral in memory of the victims.”

Colombia, Venezuela Solidify Improved Ties: “‘We are determined that no one or anything will derail us,’ said Colombian President Juan Manuel Santos during his second meeting with Venezuelan President Hugo Chavez since August. ‘We've gone from good-intentioned statements to concrete accords,’ he added.”

More over-the-top spending for Obama’s India trip as Secret Service officials amazed Indian police officials with a kilometer-long, bomb-proof, air-conditioned, heavily-guarded over-the-ground tunnel measuring 12’ by 12’ and fitted with close-circuit TVs to ‘protect’ the president from a potential sniper threat in a nearby high-rise (Tunnel for Obama near Mani Bhavan). Press secretary Robert Gibbs yesterday claimed the trip doesn’t cost $200 million/day, but also wouldn’t provide actual costs (If not $200 million, then how much?).

Life’s Rich Pageant: Johns Hopkins Researchers claim they found a way of permanently deleting painful memories, which they say could lead to drugs for post-traumatic stress disorder (Eternal sunshine? Scientists create technique to delete traumatic memories).

The CDC claims in a report last Friday American adults with diabetes will grow (Deadly disease to hit 1 in 3 Americans), up from 1 in 10 now. The solution: lose weight. “If you're seriously overweight, maintaining a normal blood sugar level is like trying to squeeze a 42-inch waist into a pair of size 36 pants—it's next to impossible. More than 90 percent of people with type 2 diabetes are overweight. In fact, the link between diabetes and obesity is so strong that it's led to the coining of a new word: diabesity.”

Although the nation’s highest, we think the recidivism rate in California demands research followed with a public policy discussion to find a solution (Most California parolees back in prison in 3 years).

NASA is working to get you from New York to Sydney in just 2hrs 30mins, from the 21 hours it is now, by developing 'hypersonic' passenger jets that travel at five times the speed of sound. Why? “The project is thought to be aimed at making a reusable aircraft that could fly to Mars.” The agency believes they can build the aircraft on the cheap, allocating just $5 million per year for only 3 years.

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