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Monday, March 28, 2011

Radiation levels at Japan nuclear plant reach new highs

from Chaotic Fate by qew

http://www.washingtonpost.com/world/radiation-levels-reach-new-highs-as-conditions-worsen-for-workers/2011/03/27/AFsMLFiB_print.html

By Chico Harlan and Brian Vastag, Monday, March 28, 1:35 AM

TOKYO — As radiation levels at the Fukushima Daiichi nuclear plant reached a new high Sunday, workers contended with dark, steamy conditions in their efforts to repair the facility’s cooling system and stave off a full-blown nuclear meltdown. Wearing respirators, face masks and bulky suits, they fought to reconnect cables and restore power to motor pumps the size of automobiles.
Leaked water sampled from one unit Sunday had 100,000 times the radioactivity of normal background levels, although the Tokyo Electric Power Co., which operates the plant, first calculated an even higher, erroneous, figure it didn’t correct for hours.

Tepco apologized Sunday night when it realized the mistake; it had initially reported radiation levels in the leaked water from the unit 2 reactor as being 10 million times the norm, which prompted an evacuation of the building.

After the levels were correctly measured, airborne radioactivity in the unit 2 turbine building still remained so high — 1,000 milli­sieverts per hour — that a worker there would reach his yearly occupational exposure limit in 15 minutes. A dose of 4,000 to 5,000 millisieverts absorbed fairly rapidly will eventually kill about half of those exposed.

The latest confusion in the operation to stave off a full-scale nuclear meltdown at the crippled facility underscores the immense challenges for the several hundred workers in a desperate battle to restart the critical cooling systems. Seventeen workers have been exposed to high levels of radiation, including three who were hospitalized last week, as technicians conducted highly nuanced electrical work in dark conditions that one nuclear industry expert termed “hellish.”

Japanese authorities say efforts to control Fukushima’s overheated reactors will take months and during that time radiation will continue to leak into the environment, extending a nuclear emergency that already ranks as the world’s most serious in a quarter-century. Several hundred workers now shoulder the responsibility for limiting the crisis, amid potentially lethal radiation levels, and on Saturday the chief of Japan’s nuclear agency called on Tepco to improve its worker safety.
On Monday morning, Japan's Chief Cabinet Secretary Yukio Edano made a plea to residents from the 12-mile radius evacuation zone surrounding the crippled nuclear plant to please stay away "until safety is confirmed."

Police stationed in the area have noticed more people returning to gather belongings and “there is a risk” of returning home now, Edamo said. Many families fled quickly after the earthquake and tsunami struck more than two weeks ago with only the clothes they were wearing.

Evidence of rising contamination in and around the plant has tempered optimism from a week ago, when engineers began work to restore power to the first of the damaged reactor buildings. Japan’s Nuclear and Industrial Safety Agency said Sunday that a new measurement of seawater taken about 1,000 feet from the facility showed an iodine level 1,850.5 times the legal limit, higher than a reading taken the previous day.

The dangers in unit 2 merely add to the growing challenges. Radioactive water is pooling in four of Fukushima’s six turbine rooms, and engineers have no quick way to clean it up, although they have begun to try in unit 1.

While a Tepco spokesman said Sunday that he did not know how the radioactive water was leaking from the reactor cores, Yukio Edano, chief cabinet secretary, said in a televised interview Sunday morning that the reactor itself had not been breached.

He said it was clear that water that could have been inside the unit 3 reactor had leaked but the reactor had not been breached. Still, he said, “Unfortunately, it seems there is no question that water, which could have been inside the reactor, is leaking.’’

Unlike in newer reactor designs, the older boiling-water reactors at Daiichi are pierced by dozens of holes in the bottoms of their reactor vessels. Each hole allows one control rod — made of a neutron-absorbing material that quickly stops nuclear fission inside the reactor — to slide into the reactor from below, as happened when the earthquake shook the plant March 11. During normal operations, a graphite stopper covers each hole, sealing in highly radioactive primary cooling water, said Arnie Gundersen, a consultant at Fairewinds Associates with 40 years of experience overseeing boiling-water reactors.

But at temperatures above 350 degrees Fahrenheit, the graphite stoppers begin to melt.
“Since it is likely that rubble from the broken fuel rods . . . is collecting at the bottom of the reactor, the seals are being damaged by high temperature or high radiation,” Gundersen said. As the graphite seals fail, water in the reactor will leak into a network of pipes in the containment buildings surrounding each reactor — the very buildings that have been heavily damaged by explosions. Gundersen said that this piping is probably compromised, leaving highly radioactive water to seep from the reactor vessels into broken pipes — and from there into the turbine buildings and beyond.

To stabilize the facility, workers are trying to repair the elaborate cooling system, necessary to keep the reactor cores and spent fuel pools from overheating. For now, they are conducting this work in dark, steamy conditions. Nuclear safety experts say they must shift out of the most dangerous areas every 30 minutes to an hour, to prevent radiation overexposure.

Meanwhile, they are racing to repair motor pumps. Their environment resembles a cavern of cables. Some of the equipment was damaged during the March 11 earthquake and tsunami. Other equipment has been corroded by salt water, which was poured into the facility during earlier efforts to cool the reactors.

“To a layman, you’d be scared to death,” said Lake Barrett, a nuclear engineer who directed the cleanup of Three Mile Island. “You’re working with salt water around your feet. This is not the way electricians usually work.”

The number of workers at the Daiichi plant fluctuates from day to day, ranging between 500 and 1,000. But Tepco employees account for only a part of the labor force. Last Tuesday, for instance, there were 700 people at the plant, a nuclear agency official said. The figure included 500 Tepco employees, 100 subcontracted workers, and 100 members of Japan’s Self-Defense Forces or the Tokyo Fire Department.

One subcontracted worker who laid cables for new electrical lines March 19 described chaotic conditions and lax supervision that made him nervous. Masataka Hishida said neither he nor any of the workers around him was given a dosimeter, a device used to measure one’s exposure to radiation. He was surprised that workers were not given special shoes; rather, they were told to put plastic bags over their street shoes. When he was trying on the gas mask for the first time, he said, the supervisor told him and other subcontractors, “Listen carefully, I’m only going to say this one time,” while explaining how to use it.

When Hishida finished his work shift, an official scanned his whole body for radiation. He came up clean, except for the very tip of his beard. He was sent into a shower where he lathered up and scrubbed his beard. He was tested again and passed.

A few days later, still worried about the extent of his radiation exposure, he trimmed his beard.


harlanc@washpost.com


vastagb@washpost.com



Staff writers Michael Alison Chandler and David Nakamura and special correspondents Kyoko Tanaka, Akiko Yamamoto and Kato Tetsuya contributed to this report.

Morning Note: Gold Replacing Dollar as World’s Reserve Currency?

from Chaotic Fate by qew

http://www.cnbc.com/id/42250806

Published: Thursday, 24 Mar 2011 | 11:53 AM ET

By: CNBC Producer Catherine Holahan /


$105 per barrel oil. Cotton prices at record levels. Food prices at 2008 highs. Typically, such commodity price increases would send central banks running to the U.S. Dollar to secure the value of their savings. After all, the dollar has been the reserve currency since World War I.
But not this time.

Central banks are shedding dollars [DXC1  76.595    0.11  (+0.14%)   ], reducing their holdings by about $9 billion in previous quarter, according to Nomura Securities’ Jens Nordvig, global head of G10 FX Strategy.
What are they buying instead? Gold [GCCV1  1413.00    -13.20  (-0.93%)   ].
The yellow metal hit a fresh record high this morning, while the dollar index dropped to a 15-month low. The news had Fast Money’s Brian Kelly looking to add more gold and silver longs to his portfolio Thursday morning.
“What is working is gold, silver [SICV1  36.575    -0.474  (-1.28%)   ] and oil [CLCV1 104.03    -1.37  (-1.3%)   ],” said Kanundrum Capital’s Kelly. “I wish I had more.”
Gold and silver have become the inflation hedges of choice for some investors. Gold hit an intra day high today of $1,448 per ounce. Silver is trading at 31-year highs, hitting an intra day high of $38 per ounce.

Indigenous Native American Prophecy

from Chaotic Fate by qew





From an oversea's show, spliced to view the message from one elder (Floyd Red Crow Westerman)...how america has come and is destined to go.



The message at the cross road of this aeon from Floyd Red Crow.

6:36
PLEASE watch this everyone, this has to be one of the best messages ever. This man is a descendant of mine from the time before this but an Elder now. This wisdom runs through my being. He said Columbus started the TRUE First world war, God that is so true. They reduced Native American Indians from 60 million to 800,000, this is their goal today with us the original carbon man (population control). Water was sacred then and you could drink from any river, now the closest I have is blessed energized crystals in my Kangen Alkaline water, it is not the same as the river (This is why the first evil act is to poison the water, Africa, Haiti and the crap that comes out of our taps). As he said if you are not spiritually connected to the Earth you may not make it. The spirit world is very real and yes it is everything. The reason for the stories of the Tree of life, Tree of knowledge, Buddha sitting under a tree is because of the interconnecting force/chi/prana/sekhem that is in breath/air from God. The right and slow breath into your diaphragm will feed your inner tree of life. Yes, we must plant trees, real trees not FARMVILLE TREES. The tree shares vital energy with us. I show the tree my love all the time by meditating under it and hugging it like I do with friends and family, yet the tree gives me vital breath and don’t judge me like that friend or family. Everything is spirit and we must know our Tru.I.Self. Peace and God Knowledge to us throughout the ages.

Sunday, March 27, 2011

Matrix - Neo's Archetect Speech Edit

from Chaotic Fate by qew

Why am I here? To be under a measure of control? This has happened before, either no one told us, or no one knows. THEIR PROBLEM IS CHOICE. CHOICE is "our" solution. We were given free will, we have the choice, and it is ours. Why is the world setting up Global Control? Do we have a choice? YES! We do. The choice to accept the control or not. The abilities of the human mind is the anomaly. Despite their sincerest efforts it cannot be controlled, unless the control is given even if it is just based on a subconscious level. They are aware of the full potential of our minds, most of us are not. The ones that refuse the program, while a minority, would threaten the system itself. It would escalate the probability of disaster of the system. The function of the one is to return to the source, where u will unlock the full potential of your mind. Then we can realize that we are capable of killing every human being in this world. Are you ready to accept responsibly for the extinction of the entire human race? IT IS ONE CHOICE. Once we shed our fear, The anomaly they cannot control is love. An emotion that is the simple and obvious truth. It spreads like the ripples from a single pebble dropped in a pond. Un-controllable, Un-deniable, Un-stoppable. LOVE. Our problem is fear, their problem is LOVE. Once you understand this, the choice is up to one, and we are all one. John 17:21 That they all may be one; as thou, Father, art in me, and I in thee, that they also may be one in us

I'm going to hang up this CONTROL. I'm going to show these 
people what you don't want them to see. a world without you


-qew

Japan radiation killing sea life, warning for Oregon coast fishing industry

from Chaotic Fate by qew


BY ADMIN, ON MARCH 27TH, 2011

NEWPORT, Ore. – While the U.S. Department of Energy said in public statements that there are “no significant quantities of radiological material” deposited on West coast beaches, U.N. Secretary-General Ban Ki-moon said it was time to reassess the international atomic safety regime; meanwhile, there’s growing fears here in Newport and other West coast fishing communities that Japan’s radiation will spread from its coast to here.
Japan crisis spawns new concerns about fish safety along West coast
As Japan’s nuclear reactors continue leaking radiation into the atmosphere and, in turn, have obliterated centuries-old fishing ports in the Tsunami-hit city Kamaishi, this news has prompted growing fears here in Newport and other coastal fishing towns that radiation could find its way here. For example, a hard wind blowing post-Tsunami wind came sliding down over the Newport beach Saturday morning greeting a lone bike rider on usually packed beaches that are now filled socked in waste from Japan. The woman biker said she’s fears rabid dogs that are roaming the low sand dunes called “denes” where toxic water and dead sea life collect along sandy tracks. And, this against a backdrop of zero Spring Break tourists being seen on what’s traditionally the busiest Saturday of the early spring season.
Biker spots trouble along the beaches, with new fears from Japan that local fishing could be impacted
Meanwhile, the bike rider reports “swirls of greasy sea water is washing up” this morning along this stretch of central Oregon coast beaches.
At the same time, locals have been treated to a clear blue horizon after evenings of disturbing flaming-orange and red sunsets that locals say are “not so much beautiful,” but “sort of scary because of what’s happening with the radiation in Japan.”
The Japanese public television featured new reports Saturday morning that Tokyo’s 13 million residents are under recent measurements of “ambient radiation of 0.22 microsieverts per hours. The Japanese Health Ministry stated that this is “six times normal for Tokyo.”
Also, the World Nuclear Association said it cannot predict where the radiation from Japan will eventually wind up because precise radiation detection both in and over the Pacific is “not possible at this time” due to wind and ocean currents that can change.
At the same time, nearly a half million Japanese people remain in shelters with no safe drinking water or food, while the air along Japan’s northeast coast is suspect of high levels of radiation drifting downwind toward the West coast of America, stated officials with the World Nuclear Association.
Here in Newport, a commercial fishing community, there’s “real compassion” for the Japanese fishing industry that is losing its industry to radiation killing fish off the coast.
In a Japanese TV interview, a fisherman in the Tsunami-bashed city of Kamaishi noted how his fellow fishermen lost their fishing equipment, boats and ships, docks and fishing infrastructure, while noting that “we will probably get out of the business.”
Japanese media is also reporting that the latest radiation scare in its waters have also “destroyed aqua farms for abalone, sea urchins, oysters, scallops and seaweed. In turn, officials say this loss accounts for “more than 80 percent of the revenue of the region’s fisheries.”
Moreover, new radiation tests on Saturday showed “iodine 131 levels in seawater 30 km (19 miles) from the coastal nuclear complex had spiked 1,250 times higher than normal, but it was not considered a threat to marine life or food safety,” stated a news release from Japans Nuclear and Industrial Safety Agency.
News that Japan’s radiation crisis has now spread to the Pacific has heighten international concern over Japanese seafood exports, and fish exporters here in Newport are equally worried that the fear of radiation spreading worldwide may tarnish the reputation of the local fish that buyers may view as tainted by radioactive particles.
Newport and West coast dogs reported to be acting strange in the wake of the recent Tsunami
Oregon authorities have issued new strong warning to keep humans and pets away from all dead sea life found on any Oregon coast beach, “as they could become infected by a disease that’s hitting the population in this area.”
While radiation levels are viewed as safe right now along Oregon and other West coast beaches, there have been new warnings about a disease called “leptospirosis,” that more recently infected California sea lions with by the hundreds.
Officials said the disease can spread to humans and dogs who come in contact with an infected sea lion or other dead sea life that’s in mass after the recent quake in Japan triggered massive amounts of questionable debris along West coast beaches.
In the meantime, those who walk their dogs along coastal beaches have been warned about dogs reported to be ill with unknown causes; while, at the same time, other local pet owners fear their dogs – that sniff and eat various beach stuff that intrigues them while foraging around for bones and other objects – are possibly suffering the same fate at three nuclear power workers at Fukushima, Japan, who’ve been exposed to high levels of radiation, stated Japan’s nuclear safety agency on Saturday.
A schnauzer puppy named “buggers,” is now seriously ill, and several other Newport dogs who frequent the local beach are also said to be sick and acting crazy.
The problem is some of the beaches are still littered with decaying sea life, building bits and pieces — thought to be from Japan’s recent quake that triggered massive Tsunami waves that hit Newport and other West coast beaches – are reported to be “very ill” by their owners who’ve queried local health officials about the safety of taking pets for their usual walks along the beach.
At the same time, local dog owners point to recent “crazy reactions” by their pets after returning to run on the Newport area beaches after almost two weeks of being kept off the coast due to recent Tsunami warnings and massive amounts of “questionable” debris that may be from Japan.
“They usually don’t act like this,” said one local dog owner with desperation in his voice. “It’s as if their whining about something not right around here.”
Meanwhile, there’s no good news from Japan these days.
“Atmospheric radiation levels are monitored constantly, and are now reaching other places in the world,” stated a spokesperson for Japan Japan’s health ministry on Saturday.

Guest Post: The Governance Of A Free Society

from Chaotic Fate by qew



http://www.zerohedge.com/article/guest-post-governance-free-society


Tyler Durden's picture





The next in a continuing series (most recently: The Transition to a Free Society).

Submitted by Free Radical
The Governance of a Free Society
That government is best which governs not at all. – Henry David Thoreau
Because the state is inherently antisocial, we make a distinction between government and governance. We distinguish, that is, between an overarching entity on the one hand and an underlying process on the other, answering Thoreau’s question by asserting that the next step “towards recognizing and organizing the rights of man” will be taken via the latter, i.e., via the self-organization that is but another term for the spontaneous order by which human society came to be in the first place and has evolved ever since, concomitantly evolving the rules necessary for its governance.  And the fact is, all one really need do to know that this is true is to look around:
Those of us residing in the United States or any of the British Commonwealth countries live under an extremely sophisticated and subtle scheme of rules, very few of which were created by government. Since almost none of the rules that bring peace and order to our existence were created by government, little argument should be required to establish that government is not necessary to create such rules. On the contrary, it is precisely the rules that were created by government that tend to undermine peace and order.
If looking around does not suffice, of course, one can explore the matter in depth, mindful, however, that to whatever extent rational argument and empirical analysis fail to persuade, the fact remains that actual experimentation is prohibited.  That is, the state does not allow free societies to be attempted for the simple reason that the state depends on the legalized theft of taxation for its existence.  And simply put, a successful experiment in a free society would therefore threaten the state’s chokehold (for that is what it is) on humanity.
But as its chokehold is already being threatened (again, look around), we assert that the time is not far off when the state will be unable to prevent the necessary experimentation, including that which is based on the implementation of an actual social contract. For while “persons’ moral and/or political obligations are dependent upon a contract or agreement between them to form society,” the fact is that no such contract exists, nor has it ever existed, at least not in the sense that any of us in the Western world would understand and accept in the way that we normally do.  Thus is the question raised as to whether a legal contract – i.e., one based on “an exchange of promises for the breach of which the law will provide a remedy – might provide the means for genuine consent to prevail and thus for the process of civilization to unfold without the endless intervention of the state. That is, rooted in the negative golden rule, and thus the non-aggression principle, the question arises as to whether the signing of such a contract, being required of every would-be citizen, could adequately serve as the legal underpinning of a free society. 
Before we examine an example thereof, however, let us first contemplate the events by which a genuine social contract might become possible.
As I concluded in my last submission, “as order returns within and among the [newly independent American] states, the devolution of power will be able to continue such that, in Tennyson’s words, Freedom slowly broadens down From precedent to precedent, and genuinely free societies begin at long last to emerge.” 
How?
Understand, first of all, that the fifty American states are under the jurisdiction not only of their national government and their particular state governments but of their county governments, which are contiguous not only within each state but among them.  That is, not only is the land mass of each state under the jurisdiction of one or another county; the entire land mass of the United States of America is under the jurisdiction one or another of 3,143 contiguous counties.  Granted, all of these counties are denied home rule to one extent or another, both by their state governments and (far more perniciously) by their national government; but no matter, as each is institutionally capable of governing itself.  Not just the fifty states, then, but their constituent counties could conceivably govern the entirety of the present United States of America.
Let us imagine, then, that as nonviolent protest leads to the secession of, say, California (which, with the whole world watching, Washington would be helpless to prevent), not only does Northern California subsequently secede from Southern California, but, say, Inyo County subsequently secedes from Southern California and is “taken private” by a group of investors (some, most, or all of whom are landowners within the county’s confines).
What then? 
A countywide referendum having paved the way, the investors themselves begin by signing the following social contract, which is then offered to all (other) county residents for citizenship in the “Free Territory of Inyo”:

I, (name in full), hereby affirm my agreement that all human beings are endowed with certain absolute rights; that these rights are to life, liberty, and property; that all human beings should be equal under the law with respect to these rights; that individuals cooperate among themselves to secure them; and that they do so freely and of their own accord.
Therefore, as a mentally competent adult over the age of 18, I hereby agree to the terms of this contract for citizenship in the free society of __________ – on my own behalf as well as that of my minor dependents – consenting to be guided in my affairs by the Ethic of Reciprocity, which I state as follows: I will not do to any other citizens of __________ what I would not want them to do to me. Beyond so restricting my actions, it is agreed by my fellow members of the Free Territory of Inyo that I am free to conduct my affairs as I please, engaging in such activities with my fellow members as may be mutually agreed upon, either formally or informally.
Furthermore, insofar as I might accuse others members of violating my absolute rights or others might accuse me of violating theirs, I agree to conflict resolution under the auspices of a firm chosen by coin toss or similar means from a firm certified by the Association for Conflict Resolution. I also agree that should the parties enter into arbitration, the loser must pay the legal fees of both parties; that insofar as either party refuses arbitration, the protections afforded that party by his citizenship are forfeit; that the forfeiting party is thereby placed in a state of nature vis-à-vis the citizens of the Free Territory of Inyo, who are thereby entitled to take such actions as they deem necessary to protect themselves from the forfeiting party.
Lastly, it is understood by all citizens of the Free Territory of Inyo that I have the absolute right to cancel my citizenship, and to the rights so granted, at any time for any reason and that, should I in fact choose to do so, I will submit my cancellation so as to be available for examination and verification by the citizens of the Free Territory of Inyo.
Signed this _____ day of ___________, in the year ______ of the Common Era, as witnessed below by (name in full), who, as a citizen in good standing of ________, has signed a replica of this document, both of which are available for inspection and verification by any other citizen of _________.

Signature of witness _____________________________

And what of those county residents who didn’t want to become members of the Free Territory of Inyo?  Their choices would be two: (1) they could continue to live there but without the legal protections of citizenship – i.e., as “resident aliens,” they would live in legal limbo, running the risks of doing so – or (2) they could move elsewhere.  But insofar as virtually all Americans are aliens today – alienated, that is, by an empire over which they have no control and even less standing – the above choices are nowhere near as irksome than those they increasingly face, to say nothing of the choice: that of citizenship in a truly free society.

Needless to say, this is but an initial “thought experiment” at which many will of course scoff.  But not as many as would have scoffed only a short time ago (a decade? a year? a month? a week? yesterday?).  And, in any case, one has to begin somewhere, so why not with the above – i.e., with a “devolution revolution” in which one or another experiment in stateless society is attempted, succeeds, and takes root, crowding out the state to the point of its eradication and ultimately merging into a worldwide continuum of freedom?  Stranger things have happened, after all, and surely stranger things will happen, as we will examine in my concluding submission.
But not yet, as we must first confront the fact that far from a continuum of freedom,  the world remains embroiled in the interregnum of the state and the insecurity that is the daily fare of its security.
So to it we turn in my next submission: “Security in a Free Society.”

Chaos theory in real life - Chaotic Fate

from Chaotic Fate by qew



http://right-waystan.blogspot.com/2011/03/after-tsunami-chaos-theory-in-real-life.html



http://www.youtube.com/watch?v=93OkKykpovw&feature=player_detailpage#t=59s

I was at an IMF conference on capital flows in Bali when the Japanese earthquake and tsunami occurred. As the tragedy unfolded over the weekend, it became clear that the crisis was complicated by nuclear considerations. All of our sympathies and condolences go with our Japanese friends as they go through this terrible natural disaster, possibly larger than the Kobe earthquake.

When the Year of the Rabbit ushered away the Year of the Tiger, there was a false spring in February when financial markets were buoyant as everyone thought recovery was in the air. Even the Nikkei stock market index reached a recent peak. The US economy seemed to be on the upswing as unemployment numbers declined one percentage point. The earthquake shattered that illusion of recovery.

Chaos theory is always introduced by the idea that the flutter of a butterfly's wings can cause a hurricane the other side of the world. We now see Chaos theory in real life. A tsunami in Japan can hit the west coast of the United States, but financial markets immediately reacted around the world, as everyone tried to assess what the largest net foreign asset holder in the world would do. Will the Japanese sell off their foreign assets to finance their own post-earthquake reconstruction? If they do so, will they sell off foreign currencies and buy back yen, which will make the yen stronger?

On the other side of the world, there was another earth-shattering pronouncement, not immediately comprehensible by ordinary investors, but very significant in terms of financial markets.

On Oct 15, 2010, Pimco, the world's largest bond fund manager, with probably US$1 trillion under management, announced that their Total Return Bond fund was cutting their holdings in US Treasuries as a result of quantitative easing. Most retail investors probably did not notice that announcement.

But on March 9 this year, the head of Pimco, Bill Gross, announced that at the end of February 2011, the fund had sold off all its US Treasuries and agency debt. To me, that is as significant as a tsunami in financial markets.

I did not fully digest the significance of that event because I was travelling from Washington DC to Bali. But after I downloaded Gross' comments, available at www.pimco.com, I began to understand his thinking. He showed a fascinating chart on who was and will be holding US Treasuries. In the past, the Federal Reserve only held 10%, foreigners 50% and US institutions and individuals held 40%. Since the beginning of QE2, the Fed has been buying 70% and foreigners are buying 30%, while US institutions are staying on the sidelines.

So why are US funds like Pimco not buying? Part of the reason is that “Treasury yields are perhaps 150 basis points or 1.5% too low when viewed on a historical context and when compared with expected nominal GDP growth of 5%.”

In other words, the US dollar is violating the second of the three pillars which give it the most-favoured-currency status, according to Barry Eichengreen, professor at University of California at Berkeley, who has a great understanding of the special role of the US dollar from the span of economic history.

On March 2, 2011, Prof Eichengreen wrote an article in the Wall Street Journal arguingL: “Why the Dollar's Reign is Near an End”. The three pillars are firstly, the depth of US dollar-denominated debt securities, secondly, the dollar is the world's safe haven, and thirdly, the dollar benefits from a dearth of alternatives.

Currently, 42.5% of global foreign exchange transactions are conducted in US dollars, compared with 19.5% for the euro, 8.5% for the yen and 6.4% for sterling. This is because commodities like oil and gold are priced in dollars. Moreover, a large chunk of foreign exchange reserves are held in US dollars, the largest being Asian and Opec central banks and sovereign wealth funds.

The preliminary report on foreign holdings of US securities as at the end of June 2010 was published at the end of February 2011 by the US Treasury. Foreign holdings increased US$1 trillion from a year ago to US$10.7 trillion, of which US$2.8 trillion was in equities and the balance in debt securities. Out of the US$10.7 trillion, China held US$1.6 trillion (15%), Japan US$1.393 trillion (13%) and Middle East oil producers US$350bil. So, the real fear of Bill Gross is the question: “Who will buy Treasuries when the Fed doesn't?”

More important, what happens if the foreigners decide like Pimco not to buy any more Treasuries, especially when they decide to bring their money home for their own domestic purposes?

Consequently, we are even closer to the edge of higher currency volatility than what the market is telling us. One of the big lessons of the recent past is that the price of money and risk spreads (and credit rating agencies) have not warned investors of the inherent risks in financial securities.

With QE2 and near-zero interest rates in the major reserve currencies, the spreads simply do not reflect the inherent risks that I have outlined above. This means that sooner or later there will be a spike in the price, or a sharp fall in value, if history is any lesson to go by.

Indeed, I have argued that even though the Dow Jones Industrial Average has doubled since the beginning of QE2 in 2008, if you deflate the index by the price of gold, the equity market has crashed already.

I would be the first one to hope that the current economic recovery in the United States and Europe will be sustainable. I strongly hope that Japan will recover quickly from this sudden shock and tragedy.But I would not be responsible if I did not think that the financial markets are once again not reflecting the risks out there. Just like Bill Gross, it is legitimate to ask “whether Quantitative Easing policies actually heal, as opposed to cover up, symptoms of an unhealthy economy.”

Is It a New Tech Bubble? Let’s See if It Pops

from Chaotic Fate by qew


http://dealbook.nytimes.com/2011/03/27/is-it-a-new-tech-bubble-lets-see-if-it-pops/


BY EVELYN M. RUSLI AND VERNE G. KOPYTOFF

Banks pouring money into technology funds, wealthy clients and institutions clamoring to get pieces of start-ups, expectations of stock market debuts building — as Wall Street’s machinery kicks into second gear, some investors with memories of the Internet bust a decade earlier are wondering whether this sudden burst of activity spells danger for the industry once again.
With all this exuberance, valuations are soaring. Investments in Facebook and Zynga have more than quintupled the implied worth of each company in the last two years. The social shopping site Groupon is said to be considering an initial public offering that would value the company at $25 billion. Less than a year ago, the company was valued at $1.4 billion.
“I worry that investors think every social company will be as good as Facebook,” said Roger McNamee, a managing director of Elevation Partners and an investor in Facebook, who co-founded the private equity fund Silver Lake Partners in 1999 at the height of the boom. “You have an attractive set of companies right now, but it would be surprising if the next wave of social companies had as much impact as the first.”
Funds set up by Goldman and JPMorgan Chase have invested in Internet start-ups like Facebook and Twitter or in funds with stakes in those start-ups. Even the mutual fund giants Fidelity Investments and T. Rowe Price have stepped up their efforts, placing large bets on companies like Groupon and Zynga.
Thomas Weisel, founder of an investment bank called the Thomas Weisel Partners Group that prospered in the first Internet boom, says he is “astounded” by the amount of money now flooding the markets.
“I think it’s much greater today,” he said. “The pools of capital that are looking at these Internet companies are far greater today than what you had in 2000.”
Yet there are notable differences between the turn-of-the-century dot-com boom and now. For one, the stock market is not glutted with offerings. In 1999, there were 308 technology I.P.O.’s, making up about half of that year’s offerings, according to data from Morgan Stanley. In 2010, there were just 20 technology I.P.O.’s, based on Thomson Reuters data.
More important, the tech start-ups that have attracted so much interest from investors have real businesses — not just eyeballs and clicks. Companies like Facebook have fast-growing revenue. Groupon, which has been profitable since June 2009, is on track to take in billions in revenue this year. And since 1999, when 248 million people were online (less than 5 percent of the world’s population), broadband Internet and personal computing have become mainstream. About one in three people are online, or roughly two billion users, according to data from Internet World Stats, a Web site that compiles such numbers.
“In those days, you had tiny, little companies going public that hardly had a business plan,” Stefan Nagel, associate finance professor at Stanford University, said. “And now you’re talking about only a few companies — companies that are already global and with revenue.”
With such a small, elite group, the potential fallout if things go badly would be limited, some investors say. “Yes, we have a frenzy again,” said Lise Buyer, a principal of the Class V Group, an advisory firm for companies considering initial public offerings. “But the frenzy is on a very select group of companies. Facebook is clearly Secretariat, but there are a few other championship horses they are looking to bet on.”
For Wall Street, the initial attraction to Internet start-ups in the 1990s was the opportunity to earn fees from taking the companies to market. At its peak in 1999, the industry made $1.3 billion in underwriting fees, according to data from Thomson Reuters.
But as enthusiasm surged, many firms also rushed to make investments for their clients and themselves through special-purpose funds and direct investments. And in many cases the banks got burned just as ordinary investors did.
“The investment pools that we did back in 2000 did extremely poorly, because many of those companies went from filing an I.P.O. to bankruptcy courts in a matter of months,” said Mr. Weisel, whose firm was acquired by Stifel Financial last year.
In 1998, Goldman Sachs Capital Partners, the bank’s private equity arm, began a new, $2.8 billion fund largely geared toward Internet stocks. Before that fund, the group had made fewer than three dozen investments in the technology and communications sectors from 1992 to mid-1998, according to Goldman Sachs documents about the fund.
But between 1999 and 2000, the new fund made 56 technology-related investments, of about $27 million on average. In aggregate, the fund made $1.7 billion in technology investments — and lost about 40 percent of that after the bubble burst. (The group, which manages the money of pensions, sovereign wealth funds and other prominent clients, declined the opportunity to invest in Facebook early this year.)
Philip A. Cooper, who in 1999 was head of a separate Goldman Sachs group that managed fund of funds and other investments, recalled that investors were clamoring, “We want more tech, we want more.” Bowing to pressure, he created a $900 million technology-centric fund in 1999, and within eight weeks he had nearly $2 billion in orders. Despite the frenzy, he kept the cap at $900 million.
“There was a lot of demand, but we couldn’t see any way we could prudently put that much capital to work,” said Mr. Cooper, who has since left Goldman.
Other Wall Street firms, including JPMorgan Chase and Morgan Stanley, also made a number of small to midsize investments during the period. In 1999, for instance, Morgan Stanley joined Goldman Sachs and others in a $280 million investment in CarsDirect.com, which scrapped its initial plans to go public when the market deteriorated.
“We thought we were going to double our money in just a couple of weeks,” said Howard Lindzon, a hedge fund manager of Lindzon Capital Partners and former CarsDirect.com investor. “No one did any due diligence.” Mr. Lindzon lost more than $200,000 on his investment.
Also in 1999, Chase Capital Partners (which would later become part of JPMorgan Chase) invested in Kozmo.com — an online delivery service that raised hundreds of millions in venture funding. JPMorgan Chase, which just recently raised $1.2 billion for a new technology fund, at the time called Kozmo.com “an essential resource to consumers.” At its height, the company’s sprawling network of orange bike messengers employed more than a thousand people. Less than two years later, it ceased operations.
An online grocer, Webvan, was one of the most highly anticipated I.P.O.’s of the dot-com era. The business had raised nearly $1 billion in start-up capital from institutions like Softbank of Japan, Sequoia Capital and Goldman Sachs. Goldman, its lead underwriter, invested about $100 million.
On its first day, investors cheered as Webvan’s market value soared, rising 65 percent to about $8 billion at the close. Less than two years later, Webvan was bankrupt.
About the same time, Internet-centric mutual funds burst onto the scene. From just a handful in early 1999, there were more than 40 by the following year. One fund, the Merrill Lynch Internet Strategies fund, made its debut in late March 2000 — near the market’s peak — with $1.1 billion in assets. About one year later, the fund, with returns down about 70 percent, was closed and folded into another fund.
“We all piled into things that were considered hot and sexy,” said Paul Meeks, who was the fund’s portfolio manager. Mr. Meeks started six tech funds for Merrill Lynch from 1998 to 2000.
Today, the collective amount of money that Wall Street banks are pumping into Internet start-ups, on top of the surging cash piles from venture capital groups, hedge funds and private equity, is a major concern for some investors.
Over the last five months, many venture capital players have raised giant amounts of capital. One Facebook investor, Accel Partners, is about to raise $2 billion for investments in China and the United States, while Bessemer Venture Partners is said to be closing in on $1.5 billion for a new fund. Greylock Partners, Sequoia Capital, Andreessen Horowitz and Kleiner Perkins Caufield & Byers have collectively raised more than $3 billion in the last six months.
Mr. Weisel, who has also been tracking hedge fund activity, finds the numbers dizzying. Countless hedge funds are investing in private placements — “dozens and dozens of hedge funds are doing the same thing,” he said.
As cash continues to pile up, the fear is that all this money cannot be put to work responsibly. With only a few perceived “winners,” some investors must be choosing losers or paying too much, Mr. Meeks said.
“When you see the valuations being bandied about — I do think, boy, these better be really special companies.”
Peter Lattman contributed reporting.

IMF Prepares For “Threat To International Monetary System”

from Chaotic Fate by qew


March 27, 2011
Back in April 2010, before Waddell and Reed sold a few shares of ES, effectively destroying the market on news that Europe was insolvent, we made the following observation: “The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion.” Little did we know that our conclusion “something big must be coming” would prove spot on just a month later after Greece, then Ireland, then Portgual, and soon Spain, Italy, Belgium, and pretty much all other European countries would topple like dominoes tethered together by a flawed monetary regime. Well, based on news from Dow Jones we can now safely predict the following: “something bigger must be coming.” As if the IMF’s trillions in open lending facilities (many of which have recently been adjusted to uncapped) were not enough, we now learn that the world lender of last resort (which in theory is the Fed, but apparently Bernanke has been getting a little shy lately so is offsetting his direct lending directives to secondary organizations like the IMF, leaving the Fed with only USD liquidity swaps) is about to activate a “Special Funding Pool” – Dow Jones explains: “The International Monetary Fund is expected to soon activate a special funding pool that will boost the fund’s ability to prevent or resolve economic crises, two people familiar with the situation said Thursday. One of the people said the activation of the funding–which can only be made by a special request from the IMF managing director to the board–was in anticipation of an expected wave of new IMF programs, including the possible expansion of the Greek bailout package.” Wonderful. Global financial cataclysm rinse repeat all over again…
More from Dow Jones:
Activating access to the funding pool could provide assurance to the market of the IMF’s ability to backstop any major funding crisis amid ongoing fears that Europe’s sovereign debt woes will worsen. The IMF board recently approved a boost to the so-called New Arrangements To Borrow, bringing the special pool of funding to around $580 billion, adding several hundred billion dollars to the total amount the fund has to tap. According to the IMF, the pool of supplementary resources are only to be activated when “needed to forestall or cope with a threat to the international monetary system.”
Although no request has been made, markets, analysts and economists say rejection by the Portuguese parliament Wednesday of a belt-tightening budget all but sealed the likelihood Lisbon will request aid from the IMF and the European Union.
Bottom line: there is a new threat to the international monetary system which means Europe May 2010 redux is imminent.
US taxpayers: our condolences.