Almost two years ago the US Treasury was selling large amounts of short-term Treasury bills to fund bailouts and stimulus. That caused a major increase in debt. Most of that paper was 2-year bills and it is coming due for rollover shortly. While that transpires, October will report the annual fiscal deficit of 9/30/10 of about $1.5 trillion, a figure thought impossible just 1-1/2 to 2 years ago.

This time around the Treasury will have to depend on the Fed and US banks and institutions to fund this mountain of paper. China has reduced its holdings of Treasury debt by about 6%, or by about $6 billion over ten months, or by about 10% or almost $100 billion over the past year or so. We know these figures are estimates because the Chinese government has the same trouble the US government has, it cannot discern truth from fiction.

Now that the effect of the first quantitative easing is behind us the economy is facing a hangover even with zero interest rates and a 2.42% ten-year T-note. It was just months ago that those rates were close to 4%. The sale of Treasuries for the past six months was easy with a strong US dollar caused by a manufactured crisis in Greece and in the euro. As we look back we can see almost the whole picture. We saw major NYC banks going very long the dollar and short the euro beginning in late October of last year. At the time we couldn’t figure out what they were up too, but it became apparent this past March. The contrived attack on Greece and the euro was to allow the Treasury to fund its debt and to make the banks, which own the Fed, a fortune. 100 to 1 leverage is a lock when you have inside information and are creating the crisis. Except for Greece, Euro Zone members numbers welcomed the 17% fall in the euro vs. the dollar, because their exports were cheaper and more price competitive. What is there not to like about that? As a result the bond vigilantes went into hiding, because they were afraid to go head to head with the Treasury and the Fed. This wasn’t the old days when these entities did not rig the markets. This was today, when they rig every market 24/7, under the Executive Order that created “The President’s Working Group on Financial Markets.” This is a page out of the national Socialist handbook of Germany in the 1930s. Government and markets by regulation known as corporatist fascism aided by collectivist Keynesian economics. The result has been 17 months of net financial inflows, part of which was aided by the Fed in their secret offshore operations. It is no wonder they do not want to be audited and investigated. Now we are back to square one again. We announced two months ago that QE2 was on the way, but as usual few were listening. Monetization is the name of the game. … Continue Reading

US plans to fortify its embassy in Iraq have raised new suspicion about the diplomatic outpost’s purpose in the politically-gridlocked country.

The White House has reduced the number of its troops in Iraq to around 50,000 and said it would take all its forces out of the country by the next year. But Washington has also announced plans to increase the number of American security contractors, tasked with securing American diplomats and diplomatic facilities.

In an interview with Press TV, Entifadh Qanbar from the Shia parliamentary front Iraqi National Alliance (INA) referred to the nationwide misgivings fueled by the planned security buildup.

“I think having 20,000 or 10,000 security personnel on the Iraqi ground is a serious violation of the Iraqi sovereignty,” he said.

“…it will give the impression and the perception that the US embassy is acting beyond its capacity as a diplomatic embassy rather than interference in the Iraqi politics or, as some people would like to call it, acting as a shadow government…”

The contractors would be authorized to run surveillance missions in search for alleged roadside bombs, fly spy planes and man radar facilities. The number of the US-deployed aircraft, helicopters, mine-resistant vehicles and armor-plated cars will also go up to match the reinforcement.

The most infamous among contractors is private security contractor Blackwater, currently known as Xe Services, LLC. In one incident, Blackwater employees killed 17 civilians in Baghdad’s Nisour Square during a shooting spree in 2007.

Frank Wisner, former US ambassador to Egypt and India said, “We paid a terrible price…for what we did with our intervention and it should give us great great pause. Before the United States commits force and changes the regime, we need to take through very carefully what it takes to do that, what the follow-up is and what our responsibility is over the years to come and do a careful cost-benefit analysis. Just to go in because we have the capability is not a good idea.”

The comments came at a time of political vulnerability in Iraq resulting from the March 7 parliamentary polls that did not produce a clear winner to form a new government.

Editors Note:

The Baghdad embassy—the largest of any nation on planet earth and ten times bigger than any other US embassy—is striking evidence indicating a continued US presence in the country for many years to come. The structure cost more than $700 million and is the size of 80 football fields. It is bigger than the Vatican, six times larger than the United Nations compound in New York and is about two thirds the size of the National Mall in Washington. It has space for 1,000 employees who are guarded by scores of paramilitary mercenary forces. In other words it is the perfect structure for a nation that claims to be leaving Iraq very soon.

The U.S. government will have unmanned surveillance aircraft monitoring the whole southwest border with Mexico from September 1, as it ramps up border security in this election year, a top official said on Monday.

Predator B is powered by a turboprop engine and can carry a greatly increased payload.

Homeland Security Secretary Janet Napolitano said U.S. Customs and Border Protection would begin flying a Predator B drone out of Corpus Christi, Texas, on Wednesday, extending the reach of the agency’s unmanned surveillance aircraft across the length of the nearly 2,000 mile border with Mexico.

“With the deployment of the Predator in Texas, we will now be able to cover the southwest border from the El Centro sector in California all the way to the Gulf of Mexico in Texas, providing critical aerial surveillance assistance to personnel on the ground,” Napolitano said during a conference call.

“This is yet another critical step we have taken in ensuring the safety of the border and is an important tool in our security toolbox,” she added.

Illegal immigration and security along the porous border with Mexico has become a hot topic this year, when the ruling Democrats’ control of Congress is on the line in November 2 elections.

Earlier this month, President Barack Obama signed a $600 million bill that would fund some 1,500 new Border Patrol agents, customs inspectors and other law enforcement officials along the border, as well as paying for two more unmanned drones.

Napolitano said the additional aircraft pledged under the bill, together with the new aircraft soon to begin operations in Texas, would increase the Customs and Border Protection drone fleet to six by the start of next year.

The Predator B drones are made by defense contractor General Atomics. They carry equipment including sophisticated day and night vision cameras that operators use to detect drug and human smugglers, and can stay aloft for up to 30 hours at a time.

(Reporting by Tim Gaynor; editing by Mohammad Zargham)

[Via: Reuters]