Housing Market.

All the signs are there. The housing market is slowing and not just a little bit. Around the nation prices are declining sales are plummeting foreclosures are rising as the housing market begins to cool. Indeed, in some areas banks are banding together to slow the pace of foreclosures. This is true in the Brockton area of Massachusetts;

Source: Census Bureau

Brockton homeowners received 298 foreclosure notices from mortgage lenders between January and June 30, up from 120 during the same period in 2004 -- a 148 percent increase in two years, according to ForeclosuresMass.com, which tracks filings in the state's Land Court. That exceeds the 88 percent statewide increase over the two-year period. ``We're headed toward crisis," which could hit ``in the next six months to a year," said Carol DeLorey, who heads an affordable home project for Brockton Interfaith.- Boston Globe

The problem once again, is ARM's. Folks did not think that their payments would really go up. Well, thankfully some banks have realized that they too are at risk and have put together a program that allows people to refinance their homes at a 30 year fixed rate. The program does not wait for a mortgage holder to be in trouble before they can refinance. Anyone whose who could potentially be in trouble can refinance using this program. This may (hopefully) be a trend in the future in other areas to prevent a very serious problem for both the banks and homeowners.

This housing bubble is far from being a big 'conspiracy' of big banks¹. It appears more likely that the banks were looking for quick profits in an environment that rewarded reckless lending during the housing boom. I say this because the banks are just as much at risk as the homeowners are. Their balance sheet takes a double hit with a foreclosure and they are stuck with a piece of property that is worth considerably less than the initial loan². This environment I am speaking of is Wall Street expectations. Banks must show profits or else their stocks take a hit and the way to make money during the boom was to loan money to people who really were not credit worthy or could not really afford the house they were buying. These market pressures led to bad decisions that looked good on paper but are now beginning to cause some real pain to mortgage lenders.

Across the country, millions of homeowners are finding themselves in a similar situation. Real estate purchases that once seemed like such moneymakers have become financial burdens instead. U.S. homeowners now owe about $9 trillion in mortgage debt. Of that, about $425 billion in adjustable-rate mortgages-initially pegged at historically low rates, but designed to shift with market trends after periods ranging from one to 10 years—will reset sometime this year, according to Freddie Mac, a government-sponsored housing financing company. Another $600 billion in home equity lines of credit (or HELOCs) and second-lien mortgage loans, which became popular when rates were low as a means of paying off credit card debt or financing home improvements, are also being readjusted. Those with fixed-rate mortgages payable over 15 or 30-year periods may be seeing little change, but those who banked on rates remaining near the 4.6 percent lows of 2003, are getting some unpleasant shocks when their mortgage bills arrive in the mail. As their payments rise, many are struggling to keep up. Foreclosures and delinquency rates are rising. And with the markets cooling in many regions—existing home sales across the country have slipped for three months straight and new home sales nationwide have declining as well—there are growing fears of a looming crisis. Howard Dvorkin, president and founder of Consolidated Credit Counseling Services, a nonprofit debt management organization, says up to 10 percent of those now seeking counseling are being squeezed by adjustable-rate mortgages or home equity loans. "And this is just the tip of the iceberg." - Newsweek

The story is showing up in many ways throughout the nation. What is happening in the once high flying S.F bay area?

A total of 7,941 new and resale houses and condos were sold in the nine-county region last month. That was down 19.1 percent from 9,892 for June, and down 30.8 percent from 11,470 in July last year, according to DataQuick Information Systems. - BizJournals

How about that hot Southern California market?

Los Angeles County home sales plunged 24.9 percent last month when compared with July 2005, as Southland home sales fell to their slowest pace in nine years, a real estate tracking agency reported Tuesday. Home values, however, moved higher, with the median price of a Los Angeles County home increasing 6.6 percent last month to $520,000, up from $488,000 in July 2005, according to La Jolla-based DataQuick Information Systems. - CBS

Even the DC area we are seeing a decline in sales. This is interesting to me because I live in this area and the kinds of jobs that people have here are not in a recession Defense, Government bureaucrats and contractors of every stripe. They are all still making lots of money and hiring.

The median price for a single-family home in D.C. was $415,000 last month, down from about $430,000 in July 2005. There were 669 homes sold in the District in July, a decline of more than 21 percent from that month last year. - Biz Journal

The five biggest declines this spring compared to the April-June period of 2005 were Arizona, down 26.9 percent; Florida, down 26.7 percent; California, down 25.3 percent; Virginia, down 23.9 percent, and Nevada, down 23.5 percent. - AP

Builders such as Toll Brothers are decrying the slump saying that this is the worst one in the past 40 years. That is news indeed as there is an oversupply of homes and this is clearly a serious problem for builders as this market turns sour faster than many expected.

In a statement, company chairman Robert Toll warned there is a glut of supply of homes for sale in the market, as the building boom of recent years seems to be turning into a bust. The slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak

economy, job losses or other macroeconomic factors," Toll said in his statement. - CNN

Toll's statement is probably gloomier than real market conditions and may have been targeting Fed governors in order to get them to hold off on more interest rate hikes until things settle down in the market. But the problems in the housing market will come as much from plummeting sales as from rising foreclosures as more ARMS readjust. Once again this is not just a risk for homeowner but eventually for the banks as well as flaky accounting rules allow them to book profits on these ARMS now, but may put them at risk later.

In the middle of one of the hottest U.S. markets, Coral Gables (Fla.)-based BankUnited Financial Corp. (BKUNA) posted a $14.8 million loss for the quarter ended June, 2005. Yet it reported record profits of $23.8 million for the quarter ended in June of this year -- $20.9 million of which was earned in deferred interest. Some 92% of its new loans were option ARMs. Humberto L. Lopez, chief financial officer, insists the bank underwrites carefully. "The option ARMs have gotten a bit of a raised eyebrow because we generate and book noncash earnings. But...it's our money, and we do feel comfortable we'll get it back." - Business Week

But the above linked article goes on to show how these banks are able to camouflage losses and hide them in the balance sheets, hiding the damage from investors. This is the other side of the coin in the mortgage conundrum that has yet to be fully experienced; the banks that are stuck with property they foreclosed on and is worth considerably less that the loan they are carrying.

One should remember the booms and busts of the late 1800's and how the US economy went through several of them. While many people speak evilly of government regulations and it's 'suffocating effect' on the business environment, the truth is most government regulations are there for a good reason, to prevent the kinds of mania's and corruption than can have severe economic consequences. When properly enforced they could prevent things like Enron, the housing mania, wild swings in energy prices (due to energy 'deregulation') and the likes. Sadly, the GOP seems to like the monopolies and corruption that grow out of the mire of unregulated markets. They tend to work to ensure that large monopolistic corporations and entities grow and flourish, like some economic fungus. This Congress and administration has been good at this, limiting everything from damages people can recoup from the unsafe products they buy to ensuring that one cannot get out of debt via bankruptcy, they have consistently assisted the big guys at the expense of ordinary people.

Well, in the housing arena there is good news and bad in these stories. The bad is obvious, but the good is that the sales of moderately priced homes are still good, especially in the DC metropolitan area. The problem is that the number of homes for sale in this area has tripled in the past year and there is certainly a glut of Condo's. Everywhere you drive within the 15 miles of the beltway are new housing projects. Any small piece of land that was empty saw new cardboard and plastic³ houses go up overnight. This has been the scene here over the past few years. It has added eyesore after eyesore in some land that once had some rather nice trees and vegetation and added to the rather peaceful scenery of the area. In Maryland there are still some beautiful areas that have not yet been wrecked by the curse of over development, but you have to get pretty far away from DC to see them. Hopefully our county council will begin to seriously restrict the number of new homes that can be built here so that we do not overtax our water systems, electricity grids, roadways and environment with the crush of people waiting to borrow themselves into the poor house.

The housing market is going to be one of those tell tale markets which will tell us which way the US economy is going. Billions of dollars of fiat wealth was created with purchases of homes at insanely inflated values. Additionally, according to some observers about 30% of US job growth came from the housing boom;

Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he (Roubini) said. In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened. - MarketWatch

Well, think about it; you have realtor's, appraisers, brokers, bankers, construction personnel (including subcontractors), surveyors, repairs/remodeling (from cash-out refinancing) all part of this market. Yes, one could easily say that much of the job growth in the economy is/was housing bubble driven. This estimate is probably true for the most part and it is quite likely that it will be the housing market that will account for declines in (real) employment⁴ nationwide. This will be as much driven by the fall off in employment in this sector as it will be about the inability of homeowners to tap their homes for cash to use on consumption. This will be a significant blow to economic activity in the nation, but it will be hidden in government statistics for as long as possible. The FED is running against to giant tidal waves that could seriously undermine the US economy. The first is inflation, the second will be a serious economic slowdown that will in all probability turn into a very nasty recession, you couple that with a very serious drought in the Midwest that will certainly drive up food prices and you have a recipe for big trouble.

Having said that I want to dispel one of the popular notions of economists in the pay (directly or indirectly) of the Federal government. That being that there was some kind of productivity miracle in America. While establishment economists can always point to numbers and figures put out by other economists (usually also in the pay of Uncle Sam) the reality is that these numbers rarely reflect reality. When one considers that much of this productivity came from the Federal government in the form of bureaucrats and bomb makers, one must seriously question the kinds of production that is being measured and if it has any real long term positive economic effect on the US. Granted there was a boom (and bust) in the technological sector and entire new industries sprang up in the 90's. But the reality is that real productivity on a global scale shifted out of the US and into Asia, while the US has been forced to create jobs in so called service jobs such as McDonalds, Taco Bell and Home Depot. But the new economy has been able, according to many economists, to squeeze more work out of the 'little people' for less money. This is a large part of America's productivity miracle. If we keep on moving in this economic direction, you will work 24 hours a day for no pay and become the most productive people on the planet since the slaves of ancient Rome who also had no heath care or any benefits at all.

But the figures that claimed a marked 'productivity miracle' in US workers is being challenged by economists and by revised data.

Source: BLS

While most economists cling to the notion of increased productivity others are more skeptical. One reason is that it is far to easy for economists to rely on government figures without any criticism as to how they are derived and the questionable methodology that they are derived and calculated. A perfect example is the claim of 'historically low' unemployment rates constantly sited by economists are numbers that do not reflect reality. The BLS does have somewhat hidden on its site its alternative measures of employment which can be found here. From these figures you get a better picture of who how bad the employment situation really is, but these official numbers are never talked about in the financial press. People who have not had a job for several months are simply dropped from the rolls and are not counted in the numbers repeated ad-nauseum in financial publications. Now how can one rely on numbers like that? The real questions is how can reputable economists rely on them so unquestioningly? Here is where you see the real problems in US economic thinking. It is little more than 'group think' taken to another level. Economists who ask too many questions don't get government grants, find themselves unemployable and don't get invited to symposiums. Thus everyone seems to accept the popular delusions without asking too many questions.

Bad Decisions

Many Americans just made some very bad and stupid decisions. Trying to get a nice beautiful home in a posh neighborhood, people just did not really consider fully the implications of the agreements they signed when they bought their new homes. Not realizing the risk of floating interest rates, the bills are now coming due.

"Nationwide, approximately $400 billion of [home-purchase adjustable-rate mortgages] are scheduled to reset at some point in 2006," said Frank Nothaft, chief economist with Freddie Mac in McLean, Va. "A significant number of homeowners will face some adjustments." In fact, the ARMs with scheduled payment increases this year work out to about 5 percent of all single-family debt outstanding in the country now, he said. - MSNBC

These decisions are going to put thousands, if not millions of Americans into, at best an uncomfortable financial squeeze or at worst out on the street. Young people especially think that somehow they 'deserve' to have a nice $800,000 house and mortgaged their futures in order to get what they neither deserve nor could afford. I see this all the time; Young couples who are not financially astute listening to the first broker or Realtor that comes along to help them to get into a financial disaster as easily as possible. Picking a showy house to flash to their friends so that they can show how 'good they have it'. The the reality they are sitting on an ARMed time-bomb that will go off at set intervals over the next few years. Things may get very ugly soon. But unlike many who are predicting doom, I think that it is also equally likely that a decision will have to be made at the Fed to do one of two things, let the Housing market collapse with higher interest rates or risk rising inflation and keep them low awhile longer. The recent pause in rates by Bernanke says that realtors and bankers are screaming in his ear that moderate inflation is better that a bust in the housing market that could send the nation in to deep recession. How real is that threat. I think it is very real.

In the past two years, the U.S. Federal Reserve has taken an increasingly backseat approach in tightening monetary policy to confront steadily rising U.S. inflation. Focusing more on sustaining economic growth than containing accelerating inflation, the Fed appears to be on the verge of abandoning its two year-long tightening cycle. Seemingly unbeknownst to investors, the Fed also appears to have discarded its decades-long policy of preempting inflation. The Fed's new dovish place in the trunk could greatly accelerate inflation in the second half of 2006, prompting dollar depreciation and a sharp increase in U.S. bond yields. - PINR

This is a most interesting as the article goes on to say that what is happening now at the Fed is a fundamental shift in policy. Whereas the Fed before was always concerned with curbing inflation in a preventative fashion, this many no longer be the Fed's primary concern.

Apparently, very few understood that the Fed had made a fundamental change in its approach to setting monetary policy. Since the years of the Volker Fed in the late 1970s and 1980s, U.S. monetary policy has been based on preempting inflation. In other words, monetary policy was designed to slow U.S. economic growth before inflation began to accelerate. This policy of preempting inflation was key to maintaining price stability in the United States during the past 20 years. Explicit in the Fed's last statement was a change in policy from preempting inflation to waiting until inflation accelerated further to act.

This is a significant change and shows that the Bernanke Fed will do as I stated long before he even was officially nominated to his post. He will use his printing press to keep the US economy afloat. He knows that everyone else knows, that the US housing market has kept the US economy afloat all of these years of the Bush administration and that its demise would send earthquakes rippling through the economy.

Much of US consumption was based on this market as people cashed fictional wealth out of their homes to fuel the consumption boom. This boom has not only aided US retailers and manufacturers but also those of Asia and other parts of the world that saw an expansion of activity over the past few years based on US consumption. Thus, we will see a significant fall off in retail activity in the months ahead; that is as long as housing prices and sales fall off and homeowners become increasingly less secure about the future value of their homes.

Is there a risk of a crash? According to Paul Ashworth of Capital Economics, as the housing boom runs out of steam 73,000 jobs a month will be lost. Lost jobs mean lost spending power, lost spending power means less sales and less sales means more layoffs. I look at what is happening in America's once venerable auto industry as sign of things to come. It signifies job losses because people are no longer going to take cash out of their house to buy that overpriced SUV. The risk is everywhere and is likely to show itself first in high priced goods, New cars⁵, High-end computers⁶, Big-screen TV's⁷ and work its way down the economy. The risk of the US housing markets decline seriously effecting global markets is real and should not be underestimated. But my estimation is that panic is premature and that prices will continue to slide and sales will be somewhat sluggish but a bust does not seem to be likely. Nevertheless the effect on conspicuous consumption will be real.

Pensions

This is going to be THE story after the November elections. Right now there is a new pension law signed by Bush on the 17^th of August that will be a boom to Wall Street. It was billed as a 'Pension Reform' bill. The bill had many good points, specifically it closed some loopholes that allowed many companies to claim their pension funds were fully funded when they weren't.

But there are some bad things in it as well. One is it encourages companies to automatically enroll employees into 401(k) plans. This sounds good but really it is a bad idea. First there are lots of folks who do not trust Wall Street. They do not want to be forced to put their hard earned dollars in it so that it can be stolen by many of the slicksters that operate in its 'venerable' offices. Wall Street loves this idea because it means that they can take peoples money and invest it in reckless scams. If employees get a real choice in funds to invest in (say gold, platinum and other hard asset commodities) that would be great. But the pressure from the big Corporations will be extreme on fund managers to invest in themselves and that will probably be the only choices that folks will have when they are compelled to put their money in one of the crookedest places one earth, Wall Street.

I know with my old 401(k) the fund could never tell me EXACTLY which stocks my money was in. They simply would not say. So the question is whose money is it? This bill, in my opinion is little more than a Wall Street subsidy act or hidden tax designed to shift your money right back in the scamsters that put America's money in Enron... just before election time. You might as well burn the money as to give it to these guys⁸, at least the fire will give off a little heat in the winter time. This is an extremely clever way of stealing the money people earn and calling it 'retirement'. I know that sounds harsh but without real choices and real disclosure as to where these billions of dollars will be invested this is little more than a license for more fraud.

Not only would the legislation give companies the right to automatically enroll new employees in their tax-deferred 401(k) plans, but it also would allow financial companies in which employees invest to offer them investment advice, a change critics called a conflict of interest. Under the bill, the Labor Department would have to approve the way investment advice is given. - Chicago Tribune

The good news is that the bill keeps permanent certain tax incentives that were set to expire.

But the bad is really bad. First, Companies that choose to use these new 'managed' 401(k) programs will have no liability.

The passage of the Pension Bill also means new guidelines that remove liability for companies who choose to use managed 401(k) services. This could be a significant development for those who own a 401(k). eMediaWire

So what happened soon after the bill was signed?

DuPont pension plans to be cut. In exchange, chemical company to increase employee savings and investment programs. - CNN More here

Second, despite the conflict of interest concerns mentioned above, is the fact that retirement benefits can now be invested in Narco-trafficking... (did I say that?) I mean Hedge Funds. Traditionally these secretive financial behemoths would only take in 25% of pension fund money into their portfolio's so that they could avoid anyone asking questions as to exactly how they made their money. This is a phenomenon known as regulation. A bad word if you are a crook. A not so bad word if you are a retiree who actually expects to have some money when they retire. He is a snip from a story that was out before the bill passed;

Negotiations are ongoing about a bill shoring up the nation's defined-benefit pension system, congressional aides said. Under one version of the bill, hedge funds, the lightly regulated investment pools, would be allowed to do away with a ceiling on how much money they can take from pension plans. Wall Street groups have been pushing for the change in the law. - MarketWatch

You had better believe that there is a risk in this and I am not the only one pointing it out.

Some retirees in Colorado think hedge funds are too risky a place to invest their pension assets, no matter what Congress decides on a pending pension bill. A provision in the bill moving through Congress would let hedge funds - the scantly regulated managed investment funds that are gaining in popularity nationally - to take on more pension fund money with less government scrutiny. - Denver Post

I know. I know... I am the lone ranger in warning about Hedge Funds. Most of the financial sites I visit, even those with alternative views won't touch the subject. I suspect that many, which also run their own investment funds, have put money in these entities in the hopes of high returns and don't want to hear about heroin trafficking, terrorist ties or human slave profits. Their motto, 'jusgimmedamoney'.

Well, take heart America. Europe started doing the same thing last year. Frankly this is going to be the trend of the future. Investors usually are as concerned with any moral issues of their investments funds as they are about the atmospheric pressure on the moons of Uranus. They just want the money, and if, by the way, one of these funds is set up by some of Al Qaeda's adept financiers, well, folks really don't care. So the scams continue and will do so as long as Wall Street and politically connected criminals have such sway over the US House, Senate and President.

Eying The 'Golden Egg'.

You won’t hear many candidates for Congress talking about their support for diverting Social Security taxes to fund private accounts—certainly not before the election if they can help it. But most Republicans quietly remain true believers. President Bush, his leading cabinet figures and key Republican leaders in both the House and Senate have been very clear about their plans to again push privatization—despite what the public backlash against Bush’s “big idea” did to them in 2005.

Well, with that quote alone coupled with the preceding paragraphs, I should now have your undivided attention. This is the what the GOP is really after, the Social Security 'trust fund⁹'. As I and many others have been saying for years, Bush I, Clinton, and Bush II all spent the money that was being set aside to ensure the systems solvency. Now that America is critically indebted and unable to repay all of its debt obligations, they are going to renig on some and the one that will be as easy as stealing candy from a baby (because they have been doing it so long) is Social Security. The know that it will not be difficult to fool Americans into letting Wall Street have it. Americans are not financially sophisticated enough to know a financial scam when they see it. You put a big name brokerage house on the advert and people automatically assume that it is legitimate. You even had GOP senators like Joe Lieberman (what ever his party affiliation may say, he is a NeoCon at heart) stumping for privatization. The key here is that it is still considered the third rail in US politics. What you will never hear from either side of the aisle is that we should spend less on our grossly over budgeted war machine and fix some of our internal social and infrastructure problems with this money. Instead billions go to weapons systems that don't work or will never be deployed or are useless in the kinds of wars that will be fought in the 21^st century. Bush has ranted in his usual, narrow minded style that privatization is the 'right thing to do'. If that is the case why has he not done the 'right thing' and continued to dip into our retirement so that he could destroy Iraq based on blatant falsehoods? If that is his definition of the 'right thing' we are in very big trouble. His friends are getting rich dipping into the Social Security trust fund with fat-cat no-bid contracts but you and I are getting robbed. No, the mainstream pundits will never put it in so stark terms but if any corporation had done the things that both Bush's and Clinton have done with their retirement funds they would be in jail now for in the corporate world, that is called fraud. That is exactly what has been happening to America's retirement funds for almost three decades, they have been using fraudulent accounting to shift money that was to go to the nations retirements system and putting into wars, black programs and the likes. Now they can't pay for things like Social Security without harming their friends in the death industry¹⁰.

Conclusion: Look for the NeoCons to attempt shift Social Security adeptly and deceptively into unregulated and often criminal hedge funds in the months ahead.

Ingredients for Recession

Briefly here I will cover the things I think will cause and or exacerbate the coming recession.

Oil.

The price of oil is still in the nations headlines. Indeed USA Today has a little meter on their Business home page that shows the price of oil nationwide. There are many factors that are causing the price to head higher but they are can be summed up into two important categories. Geologic factors and market factors. Geologic factors may not be playing as much as a role in todays market as many are saying but you can rest assured that they will one day soon. The world's major oil fields are old and are set to or have already reached their peak production and are set to decline. Oil prices can only be expected to rise and rise noticeably for the foreseeable future.

None of this is news to any of you who have read this site

Housing

Covered above

Inflation

The inflation factor has been talked about so much by so many I will not bore you other than to say this. One area that we have not seen significant rise in prices is food. That is about to change. The drought in the US is going to send prices higher. Cattle, corn, wheat.. you name it. They are all going to go up in the months ahead because of the drought in the US that has received little coverage. Even the water levels for the Mississippi River are being affected. This will not bring disaster on the US but it will put upward pressure on prices of food.

Falling Dollar

While the dollar has held up remarkable well recently the markets are still assessing Bernanke. If he missteps, look for the dollar to tumble significantly and prices here in the US to rise.

Mexico

The world of Mexican organized crime has undergone an exceptionally violent consolidation process during the past three years. Two factions of organized crime, known as the Sinaloa Cartel and the Gulf Cartel, have risen to the top and battle over trafficking routes that span the length and width of Mexico, from Cancun to Acapulco, and from the Guatemalan border to Nuevo Laredo. Currently, conflict is concentrated in Nuevo Laredo on the U.S. border and Acapulco on the Pacific. Each cartel protects its holdings in these and other areas with well trained assassins that execute the dirty work of defending their employer's turf. - PINR

In Mexico there is the potential for serious unrest. The man who 'lost' the recent election has consistently challenged the result believing that it was fixed by powerful men who want to ensure the continuance and expansion of NAFTA. Mexico's elections have been riddled with fraud in the past and these accusations are no revelation to anyone who knows anything about elections in Mexico. The Mexican Supreme Court denied Obrador's demand for a full recount and instead satisfied itself with a partial recount of selected polling places. The decision is one that seems troubling. Mexico's election laws were recently revamped in order to ensure that fraud is no longer widespread in its election process.

The decision appears to be one of political adeptness; trying to appease the high born politico's yet not giving Obrador an excuse for widespread civil disobedience that would almost certainly would have occurred if they had decided to disallow any recount. Obrador later, once again demanded such a recount even after the decision, vowing acts of civil disobedience to its 'ultimate consequences', obviously referring to revolution.

All the makings of a revolution are present; a large disaffected underclass, a fairly strong organization and a deep anger and resentment of the ruling class, who have robbed the poor of Mexico for decades. Obrador has some hard-core followers who can stir up serious trouble in Mexico's major cities and perhaps seriously disrupt economic activity. This obviously is on the minds of the pro-NAFTA crowd and they are taking steps accordingly. According to a report from Frontera NorteSur;

Coahuila state Governor Humberto Moreira Valdes expressed concern this week about the sudden, public disappearance of Mexican army units from his state. The border state governor contended that the withdrawal of Mexican army units from checkpoints and posts could encourage a "cockroach effect" by leaving the pantry wide open to organized crime. Moreira had no explanation for the Mexican army's vanishing act, but he speculated that it could be related to the intensifying post-electoral conflict in Mexico City. - Mexidata.info

It does appear that the real power behind North America's governments are moving in to repress Obrador's revolution should it get 'out of hand'. Should there be violent unrest in Mexico it is unclear who would win. While it is certain the Mexican army will be brought in, the loyalty of some of the commanders may be in question. This is said for some important reasons. First, Mexico is one of the world's true Narco-States. It is the primary transit nation for drugs from South America. The major cartels (Sinaloa and the Gulf Cartels) may become major players in this political drama should the Mexican army be employed. Those of us in North America must realize that much of the Mexican economy is dependent on this illegal business. Nevertheless, it is the enormous economic power the drug lords have coupled with its very close ties to the Mexican military that could make it a king-maker if violence erupts because of vote fraud. Consider that Colombian cocaine goes through Mexico and serves as a distribution point before it goes to the United States. Consider, most of the meth-amphetamine that is used in the US is produced in Mexico.

Mexico's drug gangs have tainted high government posts in a developing nation of some 93 million people that has recently teetered on the edge of political and economic crisis. American lawmakers cited that corruption in an unsuccessful fight to block certification of Mexico as a cooperating partner in anti-narcotics efforts.

U.S. intelligence analysts say that from heavily guarded homes south of the border, the Mexican kingpins use pagers, encrypted phones and fax machines to operate new distribution networks in America's heartland. - Emergency.com

Ask yourself this question: If this nebulous 'corruption' can thwart a bill decertify Mexico as a partner in the war on drugs here in the US, what else is this 'corruption' doing? This is one of the primary reasons I believe that there was and still is so much resistance to guarding our border with Mexico. The immigration problem is real and growing but the real 'money' that moves Congressmen and Senators and in this instance the executive branch to action is coming from those who have a large and endless supply of it. Drug cartels. Think about it. Who else has the resources and long term expertise at money laundering? Drug cartels. Folks these guys are very influential power-brokers in Washington. So consider carefully what I am saying here. Drug dealers are very much a 'fifth column' here in the US. I remember talking with a person who had done some unofficial research for me a few years ago. The subject was drug money and how much of it was coming into US banks and propping up our economy. The numbers are not firm but the ball park figures get into very large numbers. In fact one person at the Fed (I am getting this second hand) said that without this influx there would be a serious downturn in the US economy. I fully realize that I am digressing but this background is important in what follows.

Obrador, if he is a smart 'real-politicker', and I believe that he is, may attempt to reach out to some of these cartels for assistance should things get ugly in Mexico. Let us keep in mind that the Mexican military is very much part of the illegal drug cartels operating in Mexico, indeed they are problemo numero uno, in the eyes of many. Here is where the rub comes in; the cartels thrive on pre-exiting arrangements and thus are not likely to desire a new government that is likely to chill relations with its largest and most important market, the US. This will be an uphill battle for Obrador because the loyalty of the Mexican military may play a serious and pivotal role in the upcoming drama. Some may feel I am getting ahead of myself but I suspect that Obrador is organizing his peasant masses for real action in the weeks and months ahead and will not be told he lost the election without a full and fair recount. The history of Mexican elections demands a full recount and if the Judges were more interested in maintaining the integrity of the election system than pleasing corrupt power brokers on both sides of the Rio Grande, there would be a full recount. Know this too dear readers, it does appear that there was not just a little vote fraud but a significant amount of it.

• In 3,074 precincts (29 percent of those recounted), 45,890 illegal votes, above the number of voters who cast ballots in each polling place, were found stuffed inside the ballot boxes (an average of 15 for each of these precincts, primarily in strongholds of the National Action Party, known as the PAN, of President Vicente Fox and his candidate, Felipe Calderón).

• In 4,368 precincts (41 percent of those recounted), 80,392 ballots of citizens who did vote are missing (an average of 18 votes in each of these precincts).

• Together, these 7,442 precincts contain about 70 percent of the ballots recounted. The total amount of ballots either stolen or forged adds up to 126,282 votes altered.

• If the recount results of these 10,679 precincts (8.2 percent of the nation’s 130,000 polling places) are projected nationwide, it would mean that more than 1.5 million votes were either stolen or stuffed in an election that the first official count claimed was won by Calderon by only 243,000 votes.

• Among the findings of this very limited partial recount are that in 3,079 precincts where the PAN party is strong and where, in many cases, the Democratic Revolution Party (PRD) of candidate Andrés Manuel López Obrador did not count with election night poll watchers, one or more of three things occurred: Either the Federal Electoral Institute (IFE, in its Spanish initials) illegally provided more ballots than there are voters in those precincts, or the PAN party stole those extra ballots, or ballots were forged. - Narco News

You see the corporations that Run the US and Mexico are keeping the real news from you. They want you to think that Obrador is just some sore loser. Nothing is further from the truth. If Americans had half the moxy and courage that the and the Mexican people are showing now, America would not be at war in Iraq killing thousands of women and children based on a lie¹¹ told by those in his service while claiming to be 'Christian'. However sadly, the Propaganda mills are just as active in Mexico as they are in America.

Mexico’s television duopoly – Televisa and TV Azteca – have declined to report the irregularities that have surfaced as a result of the partial recount. The same goes for much – but not all – of the corporate media. The facts have instead broken the media blockade via Internet and organization, as well as the detailed reporting of the daily La Jornada in Mexico City, the daily Por Esto! in Yucatán (two of the nation’s four largest newspapers) and some other media. Add to this mediatic schizophrenia the factor that those who support Calderón and insist the election was clean are passive, lacking conviction, whereas those millions who believe an electoral fraud was committed are active, and in the streets, and it is evident that just as the Mexican State has lost legitimacy, the corporate (especially television) media have lost credibility and power to spin public opinion. - Narco News

Folks, this corporate megalopoly in America and the world over is something the devil created out of his own evil and twisted soul and like anything and everything the devil is involved in, it is based on lies.

So what is my 'prediction'? I have none really but my guess is that the the pro-NAFTA camp will win this one, but I think it will be a hollow victory as once the face is peeled off of the legitimacy of the pro-NAFTA candidate, many of Obradors followers will obtain weapons and training from folks who hate the Corporate-ocracy (not America per-se but the big money interests that continue to rape Latin America and) who have reduced millions to abject poverty forcing many to literally eat their meals from a garbage can. This is the real face of NAFTA and corporate America, well hidden from Americans and their news as the news camera focuses in on Shakira's hips.

The Hollow Victory

The new President of Mexico will probably be as relevant and as important as a bible is in a house of ill-repute. I say this because of what Mexico is today. It is, as one observer put it to me, a conglomeration of various quasi-corporate interests that are usually just as involved in drug trafficking as they are in legitimate enterprises. Many (probably most) of Mexico's corporations are deeply involved in drug trafficking. Some of the companies you are familiar with in your local supermarket see narco-trafficking as just another one of their 'product lines'. Understand this as well, the US knows who they are and are not about to do a thing about them. In fact those that point these inconvenient facts out to administration principles usually wind up with a thank you in the form of a pink slip. This is a serious and perennial problem in this administration particularly. Either you tout the 'party line' or you are out.

Thus, it does not seem apparent to me that an Obrador victory will solve as much as people think at least not as long as the drug lords have such sway in the military and they are so closely intertwined with legitimate business. It is those individuals who really hold the power in Mexico that will matter. I do not think I overstate the case when I say the the government in Mexico is fast becoming irrelevant. Mexico is on the verge of implosion and the only 'glue' that is likely to hold it together, barring a violent and bloody revolution is some sort of fascism. I know that sounds grim and a far cry from what most are saying or probably more accurately, not saying, I simply do not see a good end to this drama. Even now the two candidates are 'reaching out' to those who can solidify their hold on power... and yes, this includes those in the business of Narco Trafficking.

Let's just say for a moment that Obrador had won and his peasant revolution begins building a a new Mexico based on his idea of Social justice. He will undoubtedly have a new set of friends and the US, while certainly remaining their largest trading partner will continue to enjoy the benefits of NAFTA (despite Obrador's antipathy to it) folks like Chavez will want to become friendly with the new regime and this will win him powerful enemies in the US. Social justice (caring for poor people) is synonymous with communism in the Neocon dictionary. To the Neocons, frankly speaking, narco-traffickers are to be preferred to preachers of the Social Justice 'gospel'. Narco-traffickers have one thing that the Neocons love more than anything else in the world; untraceable and unlimited amounts of cold hard ca$h.

How does this effect America? What would be the result of prolonged turmoil in Mexico? Well, one thing that should concern us is the energy situation. Most people today do realize that Mexico is a major supplier of oil to US markets. According to the EIA I Energy Information Agency it is Number 2;

Source: EIA

On energy, one of the most important economic issues that the hemisphere (and the world) now faces, there is a mix of cooperation and dysfunctional disagreements. The United States now imports 50 percent of its oil from countries in the Western Hemisphere—mostly from Canada (16 percent), Mexico (15.8 percent), and Venezuela (12.9 percent)—but the average American hardly knows this, because the administration is focused much more on security against terrorism in the hemisphere than on security of oil and natural gas supplies. The United States gets 96 percent of its natural gas imports from the hemisphere, some by pipeline from Canada and some in the form of liquefied natural gas (LNG) from Trinidad and Tobago. - CSIS

The big picture can be summed up like this. The American corporate establishment cannot afford an Obrador victory nor can it long afford prolonged unrest in Mexico. Presently, it does not seem as though the real stakes are fully comprehended at Rice's State Department. She (according to some of her own subordinates) is too busy firing those who are tying to warn her. The world is changing too rapidly for this administration to adapt to because it is obsessed with 'purging' good people to replace them with political hacks. These are the plain facts whether or not people want to accept them or not.

Before I end this section I would like to point out to those who actually believe that NAFTA and neo-liberal economic policies are actually benefiting Mexico and/or its peasants, consider these rather underreported facts about the Mexican economy.

This chart can be found on CEPR site at this url.

Now if you listen to CFR apologists you would think that the only hope for Mexico is NAFTA, but as you can see the reality is far, far different. NAFTA is impoverishing everyone on the continent except the big banks, big oil companies and drug makers (legal and illegal). No , what NAFTA and these other free trade agreements are doing is not uniting the continent, but dividing it along lines of rich and poor.

I will not apologize for my views on this. I live comfortably compared to these peasants and have never starved. I cannot say what I would do if I saw my child starving to death while a crook stole an election that was our only hope for a future outside of eating out of a garbage can. These people have had everything stolen from them by a criminal conspiracy of global magnitude. I deeply feel their anger and it is my fervent wish that the real winner of Mexico's election comes to power without any bloodshed and will really look out for Mexico's righteously angry underclass and provide them with the things that make life livable.

This is why the decisions of the Mexican elite (who often get their orders from the US elite) are pivotal. The Mexican Supreme Courts decision not to count the all the votes is pretty good proof that that the fix was in from the beginning, given the history Mexican elections in the past. The fraud was there, and it was pretty widespread. The court did not want to hear that nor use its influence to assist in building confidence in the election process. From the beginning the black hand of corrupt political power can be seen. Now Obrador is going to set up a parallel government. Sadly, this ploy will not work if he cannot drum up some of the 'drug cartel' support that is already entrenched in power in Mexico and I do not see that as likely. I do see the real threat being a new type of guerrilla movement being formed and operating first in Mexico, and later here in the US where millions of Mexicans live and work and who are becoming increasingly militant and violent. I posted a story in my news section in late August on a trial that took place in Los Angeles dealing with Mexican's here in the US under orders from the Mexican Mafia to commit acts of murder in certain areas to move African Americans out of the neighborhood. This is not a new story it is just not one that the 'politically' correct media want told. There are other stories as well;

David E. Nahmias, United States Attorney for the Northern District of Georgia, Greg Jones, Special Agent in Charge, Federal Bureau of Investigation, announce that FREDDY OCHOA, a/k/a “El Kojo,” a/k/a “Shadow,” 22, and JOSE MARTINEZ-GUTIERREZ a/k/a “Angel,” 22, both of Atlanta, Georgia, were sentenced today by United States District Judge Julie E. Carnes, on charges of committing crimes of violence in aid of a racketeering enterprise. According to David E. Nahmias and the documents and information presented in court: - US Attorney, No. District of Georgia

An alleged gang member has been convicted in a firebomb attack last year that killed a Joliet woman and her young daughter.A Will County jury Thursday found Juan Santana, 26, of Joliet guilty of murder and aggravated arson in the April 9, 2005, bombing. Prosecutors said Santana and Ignacio Jacobo, 20, threw a Molotov cocktail into the first floor of a Joliet home, causing a fire that killed Lourdes Nunez, 35, and her 4-year-old daughter Merary. - Chicago Tribune

A purported member of the Latin Kings street gang has been charged with killing a good Samaritan who intervened during a fight at a Cudahy gas station in April 2003. Timothy Vallejo, 19, of Milwaukee was charged in federal court in Milwaukee with committing murder "in order to maintain or increase his position" within the gang, according to a criminal complaint filed Wednesday. The charge is a violation of the federal racketeering statute and carries a possible life prison term upon conviction. - The Milwaukee Journal Sentinel

One of Los Angeles' dirty little secrets is the rising tension between Blacks & Mexicans which is a situation that is being swept under the rug by the media, politicians, law enforcement and researchers, but for about 12 years, this has been a growing concern for residents in South LA, the South Bay area and the Westside. This conflict has manifested itself on several levels from the prisons, to high schools, among the gangs and subtly in local politics. The local print & broadcast media has nearly ignored this story completely, with the exception of FOX 11 News who produced a few stories on several murders in Compton between Black and Hispanic gang members back in 2003, but as I see it, each year in Los Angeles, the conflict between Blacks and Browns although small, is growing and the murders are slowly climbing. - Streetgangs.com

The problems are a very real and these gangs if they are organized can cause a great deal of trouble across America. This is a growing problem and one of those potential issues with very strong National Security undertones. Why do I say that? Because you have a very large, well armed, loosely organized, group of foreigners residing with our borders, many of whom have rhetoric and literature that talk incessantly about taking large swaths of the US violently away and incorporating it into 'Greater Mexico'. If that is not a National Security issue, then there is no such thing as a National Security issue.

Thus the convergence of these two issues' Obrador and America's millions of illegal residents is an issue that could possibly take on proportions that this administration is incapable of conceiving. The economic issues are key and must be understood for what they are, the main undercurrent behind much of the social trouble on both sides of the Rio Grande.

Israel/Lebanon

The situation in here is far more complicated than almost any blog, newspaper or popular 'intel' reports have stated. Why Israel made the decision to invade Lebanon for seemingly little or no provocation is a question that has eluded many commentators on both sides of the political isle. While this author will not attempt to answer these questions definitively it seems certain that there were many and not just one single reason for Israel's' actions. While many decry the loss of life they seem too willing to blind themselves to certain political realities. First and foremost is Israel's security. There is no way to describe a situation where a nation is literally surrounded by groups and even nations that are dedicated to its destruction as they continue to acquire better and more deadly weapons, waiting for the day to wipe Israel off the map. There has been a deep and visceral hatred of the Jews for over 2000 years and that hatred has neither ceased nor abated with the passage of the centuries. For many years Israel has put up with terror attacks from the likes of Hizbollah and Hamas that show no signs of abating, despite tangible actions by Israel to bring about peace (such as pulling out of Gaza and the West Bank). Could you imagine the US army ceding territory to the Apache and then having them come and terrorize Americans afterwards? Do you see anyone in America talking about giving land back to the American Indians? The US would cease to exist if all the lands stolen from Native Americans were to be returned. This analogy may not be perfect but it is instructive and frankly it is not as though the misnomered 'Palestinians' do not have a place to go. In reality they do, but the Arab nations who trumpet the cause of the Palestinians so loudly do so only when they want to placate their restive populations. They do not want the Palestinians living in Arab nations. The convenient solution has been to shove the problem onto the Jews, a nation and people hated by Islam.

"Israel will exist and will continue to exist until Islam will obliterate it, just as it obliterated others before it." - Hamas Charter

On The Ground.

The IDF has had numerous problems to contend with, not least of which is very poor political and military leadership. Ground commanders have been forced to make their own decisions and have even countermanded orders from the general staff. This may be one of the reasons that the General staff has appointed a new 'Liason' officer as its representative in the IDF's northern command during the closing days of the war. There are some serious questions as well as to the competence of General Adam, who according to Debka, is a classic tank specialist. The campaign did not go well for Israel and they have discovered that Hizbollah are far better fighters and are more deeply entrenched than originally believed. There was according to my well placed sources, a great deal of inter-service rivalry going on as well, Israeli Air Force targeting is not being done in support of the Army and made things very difficult for ground forces. Every branch is 'singing their own tune' and the music was killing Lebanon. Much of the blame can be laid at the feed of PM Olmert whose control over the situation appears to be somewhat tenuous matching his military expertise. Even the reserve call up appears to have been done without the approval of the Cabinet. It began before they even formally met on the issue.

But Olmert Government was and is in serious trouble, and his acceptance of Peace in Lebanon was due far less to his desire to stop the conflict than this simple fact; The cabinet meeting of 13 August would have Israel change direction or Olmert would be out. The pressure and criticism of him and the IDF was just that great.

Israeli tactics too have been somewhat atypical, yet this too has not worked in their favor. The Israeli army has always been good at moving large formations quickly and with heavy firepower. They usually hit logistics cut off the enemy and destroy them. Here these tactics were not employed instead relying on more 'commando' type raids which are good in some situations but proved ineffective good here. The raid an Baalbek¹² is a perfect example. There appears to have been a decision made along the way to use tactics that were not expected of the Israeli Army, thus adding to a degree of surprise. While the Hizbollah terrorists were probably surprised, the raid still cost Israel dearly and one minor success based upon flawed assumptions does not win a war. Perhaps, if the initial part of the entire offensive had employed these tactics there would have been somewhat more success, though this author is not convinced. Hizbollah has had years to plan for the IDF and appears to have done so remarkably well. Israel was shocked when pushing into places like Baalbek and finding that in the first few minutes of fighting, several of their tanks were destroyed. These tanks have very thick armor and were left smoldering ruins on the plains of Lebanon. How could Israeli intelligence be so bad as to not know the kinds of munitions they would be facing. Iran has provided the Hizbollah Terrorists with excellent antitank missiles. They appear to the old, US made tow missiles that have been refitted with state of the art warheads. How did Iran get these US missiles. From the number one arms exporter in the world, the United States of America. Do you remember Iran Contra¹³? Tow missiles were among the weapons sold to Iran in this illegal arrangement. Israel is not blameless in this either, for covert relationships were already in place to sell weapons to Iran via Israeli intermediaries at the time.

“That we but teach bloody instructions, which being taught, return to plague the inventor. This even-handed justice commends the ingredients of our poison'd chalice to our own lips.” - Macbeth

Hizbollah also has been remarkably smart in its C3, not needing to use constant streams of communications for orders and or direction, Hizbollah fighters know their orders and do not require constant contact with any higher authorities. That said, it appears that the communications systems that they do posses are extremely sophisticated, highly encrypted burst communications that are nearly impossible in intercept. Hizbollah has been getting some of the best equipment on the market. They have organized themselves and trained in such a way as to defy the usual techniques of destroying an enemy's C3. Old techniques will not work in this new situation as there is no conventional C3 structure to attack. Commands were passed down months ago as to what to do in each situation and each cell commander is on his own to deal with situations as the happen.

Thus, the Iran surrogates located in Lebanon were ready for Israel and were extremely familiar with their tactics. But the problems that plague the Israeli army go far beyond tactical incompetence. There is a deep crisis of leadership in the Israeli military. Having followed after the US model by politicizing their military beyond recognition, the Israeli's now are stuck with a new generation of General officers who are politically astute, know how to 'fill in the boxes' for promotion but have no real military experience or acumen. Recent Israeli prime ministers have turned the IDF into a politically correct animal that has lost that 'edge' it needs to win battles against and increasingly brazen and wily enemy. This inability to adapt to new strategic and tactical situations is clear to any who have been following events. The Israeli's do not know how to deal with the network of tunnels and Hizbollah has them all over southern Lebanon. How do you dislodge such an enemy? These are questions that need to be answered and quickly and the clock is ticking. As one observer noted to me, “ the clock is ticking for each side, for the Israeli's because world opinion is quickly turning against Israel as the humanitarian nightmare takes its toll. It's also ticking for Hizbollah, as many in Lebanon are starting to blame Hizbollah for the current state of affairs”. Thus the public opinion game is not over and it will be key in any future negotiations.

Another problem is that there does not appear to have been any real strategic planning on Israel's part before this operation began and only slightly more tactical planning. The question has been bantered about the net by many, some in the know and others who seem to be just ranting, as to why Israel decided to strike when she did. The answer is far simpler than many would like to believe. Israel was not going to be held hostage in negotiations over Gaza by Hizbollah terrorists and if there was any one event that tipped the scales in favor of an Israeli attack on Lebanon, it was the missile attack on Haifa. While Israel may have been content with the usual retaliatory actions over the kidnapped soldiers, the missile attack on July 16^th was the tipping point and it was a serious miscalculation by Hizbollah, who probably had no idea the kind of reaction it would engender. Israel's number one goal was (is) to eject that missile threat and as many Hizbollah militia as possible from Southern Lebanon and she is very unlikely to accept any lasting ceasefire that does not disarm and relocate Hizbollah. Thus peace negotiations are futile and will be only a pause in fighting until Lebanon decides to take verifiable steps to remove the terrorists. Sadly, this is unlikely to come until significant portions of Lebanon are reduced to rubble¹⁴. The alternative however is what may occur in the future, a partial occupation of Lebanon for an extended period of time by Israeli forces. This will enrage many in the Arab world and make things difficult for the US in the future as the US has been giving significant aid to the Jewish State.

A Wider War?

“Our struggle will end only when this entity [Israel] is obliterated. We recognize no treaty with it, no cease fire, and no peace agreements, whether separate or consolidated.” - Hizbollah Progam

Is a wider war possible in the future? Will Syria and perhaps Egypt become involved in a bigger MidEast conflict after this? Many have expressed these fears but this author is not convinced looking at all of the available temporal evidence. In fact after hearing many sides of the story, such an escalation does not seem likely. While diplomatic and perhaps economic pressures may bear down on Israel and even perhaps the US, a widening of the conflict per-se does not appear likely. Naturally a major miscalculation by Israel could embolden some to attempt to use military force or restive populations could compel some to reluctantly send in military aid to Hizbollah. However baring that unlikely eventuality, a wider does not seem probable.

Source: Wikipedia Distribution of Islam per country. Green represents a Sunni majority and blue represents a Shia majority. A Further breakdown by country can be found here.

This is said in direct contradiction to many who have stoked up the fires of fear and here I will give you the reasons. One must understand some very important facts about the middle east.

First, Hizbollah is funded by Iran which is largely Shi'ite. However as one looks at the map one can see that Shia sect is in the minority in the Middle East. Notice that I did not use the term Arab because as any Iranian will tell you, Iran proudly considers itself to be Persian, not Arab. The other nations with a Shia majority inside its borders are Bahrain, Lebanon and Azerbaijan (which is not considered part of the Middle East). This is most enlightening as it demonstrates one of those somewhat understated fault lines in the Middle East that sometimes gets lost in the shuffle. While most Arab/Islamic states are in sympathy with many of Hizbollah's aims, few are particularly happy about its ties to Iran nor do they want to see Iran's influence expanded in the region by a major victory by Hizbollah either militarily or politically. The Sunni world views Iran with a moderate degree of suspicion as many fear Iran's expansionism and radicalism undermining stability in the region and in their own respective nations. Iran's Islam is for export and they do not mind using some of the most violent and radical men to carry out its bidding. This is unnerving to many rulers in the region.

Second, many nations in the Middle East that were once dependent on Russian arms such as Syria and to a lesser degree Egypt. These nations are no longer able to obtain those weapons cheaply as they did during the days of the Soviet Empire. Today, Vladimir Putin demands cold, hard cash for his arms. No cash? Then you had better start making bows and arrows and gathering some rocks to throw. Many of these nations who were once dependent on Russia are not rich and do not have the kinds of capital needed to replace arms that will be destroyed in a conflict. Thus, nations like Syria are not likely to get involved in Lebanon directly unless Israel crosses into and attacks inside Syrian territory. Syria must content itself to assisting Hizbollah covertly thus preserving its important relationship with Iran and not risking an all out war with Israel, which may badly harm the Jewish State but leave Syria indefensible for decades to come. Iran can make its usual loud anti-semitic noises but they too are an economic basket case. Their population has grown by leaps and bounds and the youth (under 30) is over 75% of the population. The employment situation is abysmal and there is deep frustration among many youth who see no benefits from the Islamic Revolution of their parents. In short, it is a economy that is poor and getting poorer. This is almost certainly one of the reasons that its leader is constantly making wild pronouncements in public, to whip up support for a regime that is deeply corrupt, out of touch and will one day soon be toppled. It needs to buy arms as well and despite the large amount of oil it has, it still must feed its people and are having trouble doing so. Thus, Iran must content itself with funding surrogates such as Hizbollah to implement its foreign policy.

Egypt as well is another basket case economy, deeply corrupt and with a large restive Islamic population. It also has groups like the Muslim Brotherhood that wants to implement an Islamic style government in Egypt. The Muslim Brotherhood has many adherents throughout the Arab world but its center is Egypt and it too is in favor of a violent struggle with Israel. Mubarak's government while relatively stable could one day fall victim to groups such as this if his policies of 'moderation' become increasingly unpopular. They are not in a position to attack Israel as it is dependent on the US for its aid, of which is is the world's second largest recipient. It cannot afford to buy too many Russian arms that she would lose in such a conflict and the US would certainly look very dimly such a military adventure, thus Egypt is most unlikely to make any aggressive move against Israel. The rule for Mubarak and many other middle eastern nations will be this; stay in power, placate your restive populations, don't anger the Americans and secretly hope Israel neutralizes Hizbollah.

The Gulf states as well as the Saudi's are making too much money from the US to do anything more that have unproductive summits and issue statements that criticize Israel. Thus, there does not appear to be any serious prospect for a wider war. However, a miscalculation on either side could bring it about and this is where the real danger lies. Israel and Hizbollah have both miscalculated themselves into this conflict and each was forced to eat a little 'crow' to extricate themselves from it. Israel thought they could bomb in southern Lebanon and only get a few Katushya's fired in the north, they discovered that Hizbollah has longer range missiles than originally believed. Hizbollah miscalculated by launching them in the first place because it is very unlikely that they thought Israel would launch a full scale assault on Lebanon. They also miscalculated on the whole issue of kidnapped soldiers. Consequently, the probability of another miscalculation is still high but the 'who and what' are anyones guess. But there is one scenario that could cause some very serious problems. However before I scare you half to death there is something that was brought to my attention that you may find of interest.

One of my sources intimated to me that Hizbollah as attempted to negotiate with the US government over the current crisis. Feelers went out but were quickly rebuffed by the administration. It seems that Hizbollah was willing to end hostilities under a negotiated settlement. But one interesting tid-bit of information came out of it. Hizbollah says they did not know where these missing Israeli soldiers were. If fact my source says that they may not have been the ones who abducted them. Who could have abducted them? That is anyones guess, but it appears that (this is coming from someone extremely well placed) it is possible that they were taken hostage by US military contractors, perhaps mistakenly (and perhaps not). My source says this is only conjecture. However, this person has dealt directly with these contractors (who are extremely dangerous and seem to always fan the flames of war wherever they are), and says that this may be a likely scenario. In fact the bodies of two US 'persons' were found in the Levant recently bearing all the hallmarks of those who have caused trouble before in Iraq and Afghanistan.

The Israeli soldiers may have been mistaken for Hizbollah terrorists and abducted (US contractors do operate in this area) and taken in for electro-shock 'interrogation'. Hizbollah got blamed and thus we have a war that is uniting George Bush's conservative religious base behind his policies in the Middle East. From here you can draw your own conclusions. There is more than a little evidence to support this and one important piece is this; there is an extremely well placed Israeli mole in the US government. Who it is I cannot say but the Israeli's know US policy decisions as or just after they are being formulated and before they are implemented, which suggests only a handful of people. Once again you can draw your own conclusions but this mole is real and he is being sought. I wish I could say more but I do not need big brother knocking at my door and I am fairly certain that is what would happen if I elaborated.

A site suspetected to contain Syrian WMD's south of As Safirah, Syria (36°02'02"N 37°21'03"E)

Yet the horror that could one day occur is one of Chemicals being launched on Israel. Should Syria feel it is in its interest, they have the capability to launch a devastating barrage of chemical and biological weapons on Israel. These weapons can be delivered via ballistic missiles, tank shells and or areal bombs. This arsenal is significant and was originally designed to be a deterrent to Israel's nuclear capability. The kinds of agents that they posses include, Nerve Gas (persistent and non persistent) and mustard gas. The long range threat/delivery system that could wreck havoc is the Scud C. Delivered to Syria by the North Koreans this system, many believe can be and has been fitted with Chemical warheads. These warheads may also be capable of delivering Soviet made (modified) cluster bombs to carry chemical munitions. But other western nations, via a policy of willful blindness appear to have also assisted the Syrian Chemical program¹⁵.

Conclusion:

Round one is over and ended in a draw, Round two will start again soon. Israel has sustained a lot of damage to its international reputation, some of it deserved but most of it not. As long as Lebanon is willing to go to bed with terrorists, she has no right to complain when her bed gets blown out from under her, cries of innocence notwithstanding, She knows who she is sleeping with and that particular bed had a very high price. She should consider the recent damage to her beautiful nation as the first installment to its 'terrorist collaboration installment plan'. I am not at all certain she can afford the second payment and perhaps should seek other sleeping arrangements.

He who sleeps with the devil should not complain when they awaken to a bed on fire.

Caesar and Christ

Saying, Did not we straitly command you that ye should not teach in this name? and, behold, ye have filled Jerusalem with your doctrine, and intend to bring this man's blood upon us. Then Peter and the other apostles answered and said, We ought to obey God rather than men.

(Act 5:28-29)

There is a storm coming and many have been warning of its approach. It is nothing like anything that any living Christian has ever seen before. Not even those who were alive during the holocaust, will be able to compare the changes that are set to engulf the globe. This is a time when watchmen such as myself have raised the alarm bell. I have tried to do it faithfully, according to the calling God has given me. I have tried not to get into areas that God has not called me to deal with. The main purpose of this site has been to assist Christians in the world to wake up to the deceptions in their government and the Churches. Deceits which are cleverly designed to get Christians to accept evil in place of righteousness and reject the clear teachings of Christ for the teachings of the Antichrist system and not know that this is what they have done. These false teachers carefully explaining away key commandments and scriptures and replacing them with a wisdom that comes from below, this new system is already here but its hideous nature has still been concealed from most. The choice is ultimately the same one that the ancient Christians in Rome had to face it is who one believes and serves, Caesar or Christ?

'Christians are gullible', That is the observation one person who I knew and grew up with as a child made to me. He himself claimed to be one, though I frankly have some severe reservations about the sincerity of his conversion, since today he has become involved (peripherally) in the Abramoff scandal and is part of the beltway bandits that are robbing America blind and 'living large' in the process.. Nevertheless, the observation is a striking one and it for the most part is true. There are times when Christians are swept up with a naiveté that is almost comical, were not the consequences for their folly so great. Watching some of the charlatans of Christian TV do their 'miracles for dollars' is a tragicomedy that has deceived millions. Christians are not familiar with the genuine teachings of Christ and his apostles and thus are led astray by the nearest wolf in a sheepskin suit. Yet we are commanded to be wise as serpents, and in these times this commandment has special meaning. We are also to be as harmless as doves. The kind of wisdom that comes from God does not incite to rebellion, revolution or any violent act. Yet this does not mean that we are not to resist evil. This is something that Christians must do, but never through violence. Here is where many make mistakes and some of these mistakes are fatal to a Christians walk. There are two extremes; one that does nothing, it neither resists evil nor denounces it, or if it does it uses vague generalities that invariably motivate one to inaction and eventually slumber. Despite what many think and teach, the two go hand in hand. The other extreme is the 'lock and load' mentality that incites Christians to arm themselves against evil government, this is not the spirit of Christ that does motivates men to do this.

Roman Times

In Roman times, the emperor called himself God. The religion of the day demanded some kind or worship of Caesar. The Roman Caesars are not unlike nations in the world today that demand some kind of worship for their leaders. North Korea is a perfect example. This kind of devotion is and was enforced by the state. Those that did not obey could be charged and even killed for their 'sacrilege'. Thankfully we in the west, do not have to deal with that kind of government. We are essentially left alone to worship whom we will. In Roman times, people generally did not have any say in who would be their leaders. Things were not done in a democratic way and this all kinds of evils ensued from an unchecked imperial system. In such a system, the people are not and cannot be held responsible for the wickedness of the system of government they lived under. The Roman system was based on conquest and the plundering of conquered peoples. The Romans made slaves of those they defeated in battle and divided up the booty between military commanders and rich Roman nobles. The American (and western nations in general) have democratic systems of government that not only allow for participation by all citizens, it is quite dependent on it for its legitimacy. These things were not so in the times of Paul. Many of Paul's exhortations were very carefully couched in ways that never angered the Roman powers because Paul was afraid of a Roman backlash against the Christians who were a new sect and were viewed with deep suspicion by the largely reprobate Roman emperors and his imperial magistrates. This fear in Rome was well founded and his wise caution is still echoed in many nations today where people are not free to practice Christianity. In America we are unique and that uniqueness gives us Christians somewhat greater latitude but also a much greater responsibility. It is as the saying goes, with greater blessings comes greater responsibilities. Nothing could be truer of American Christians. While many want to go and play the ostrich, hide in their comfortable cubby holes, insulate themselves with the mindlessness of American pleasures, deceits and entertainments, hunting and picking scriptures that re-enforce their lethargy, the reality is that there is much that the Church should be doing and is not. Both in building the kingdom of God and in ensuring that Christians here in America and in far off places in the world are not forgotten about in our changing world.

Unlike the Roman system, public participation in the democratic process is necessary for the government to function properly. That means input from all quarters, including Christians. It means informing oneself as to what is happening so that one is not fooled by politicians who use a plethora of tricks to get elected.

More importantly, the Church is to do good works which included doing what Jesus did both assisting as well as preaching to the poor. We are to engage in charitable works and assisting those who are less fortunate is one of them. Yes, there are dangers. There is the danger of turning the church into just another aid agency and playing a dangerous game with the world system that too uses aid both for good and evil purposes. This fear has led many to abrogate their responsibilities to the poor and the downtrodden. Some of this comes from a spirit of selfishness that says 'I got mine, screw you'. The mentality is never stated that coarsely but it is it nevertheless the attitude of many, including many if not most in protestant America. Christians in America must keep all of these things in perspective and apply their actions to a rightly divided word of God¹⁶ using healthy doses of plain old common sense.

Casting away what others who went before us fought so hard to obtain is like treating ones birthright contemptuously. Those that did that were not looked upon favorably by God¹⁷. Indeed when Christians of the 16th, and 17^th centuries felt that their rights and ability to worship were too encumbered by government, they left. The Pilgrims and Puritans of the 17^th Century are perfect examples of those who fled varying degrees of religious persecution. With stuttering steps, courage and faith, they made the break with religious persecution. Yes, many mistakes were made and some began to actually practice some of the religious intolerance they sought to escape. These as well as many other problems were present with the new settlers as they founded our modern American nation.

Long and hard fought were the democratic traditions that have allowed Christians to worship in peace, and even the poorest of men to have a say in how their country is run. Indeed for while Christians are not of the world, we must certainly live in it, carefully balancing our divine mission of building the Kingdom of God, which is not an earthly kingdom, but at the same time living peacefully in a system that can easily and suddenly turn hostile to people of faith. The tragedy today, especially in the west, which historically had such strong Christian tradition is this; western culture is turning slowly but rabidly on Christ, his message and his followers.

The Theology of Abdication.

Yet today's Christians have been given over to a theology of abdication and of slumber while each condition is different they are not mutually exclusive. God granted Christians many freedoms and many used them to spread the gospel in th 19^th and 20^th Century to far off places and could teach and preach the gospel in their own country unmolested. This led to a false sense of security, many believing that the nations they lived in did not have the prince of this world as its ultimate master. Having fallen into the clutches of materialism and spiritual apathy, they eventually even lost touch with the temporal changes taking place around them. The world induced them into a slumber that ultimately will be very costly. This kind of slumber has gripped the American and European churches. It prevents any kind of spiritual growth and falls asleep at the proverbial wheel. Perhaps this is one of the many reasons that Jesus warned us to watch and pray. It is not that hard to fall asleep, especially in these times of almost universal deceit and mindless diversion.

Watch and pray, that ye enter not into temptation: the spirit indeed is willing, but the flesh is weak.

(Mat 26:41)

Take ye heed, watch and pray: for ye know not when the time is.

(Mar 13:33)

Watch ye and pray, lest ye enter into temptation. The spirit truly is ready, but the flesh is weak.

(Mar 14:38)

Watch ye therefore, and pray always, that ye may be accounted worthy to escape all these things that shall come to pass, and to stand before the Son of man.

(Luk 21:36)

Yet we are also commanded to be the salt of the earth. In ancient times salt was used to prevent the decay and decomposition of meat. That is how the Church is to be in the world. In it, but not of it. We are here as watchmen and as a kind of conscience of the world to keep it from falling into the pit of moral filth shining a light, exposing evil and preaching the Gospel.

As Christians these are the primary activities that we are to engage in in these times. Preaching the Gospel (or supporting those that do). Yet there are other things that God has given some of us to do as well. Some of us have rather unique callings in these times. Some have been sent to warn America of her sins, some have been sent to pray with some of our leaders. Some have been sent into the streets to witness the Gospel and some have been called to teach. Each has his or her own job and let none of us try to tear down one group of people who bear Christ's name just because he or she is not doing what we think they should. None of us know the mind of the LORD nor have all of his plans been revealed to any of us. Many try and criticize with the extremely limited and often fleshy understanding they have. But todays world is very different than Paul's world of the 1^st century. Travel and knowledge have increased, people can communicate around the world in terms of milliseconds rather than weeks or months. Today the gospel that was once preached to people who never heard it before has now been heard and firmly rejected by the vast majority of the planets inhabitants. That is not to say many won't change their minds, some will. But the call to go forth and preach has largely¹⁸ already been fulfilled by saints who preceded us. This does not mean that there are not those who are fulfilling the gospel's call to preach salvation, there are plenty and they should be supported by all means. But that today, there is a greater danger. In short, it is not that the world hasn't heard the gospel, it is that the world has rejected it and this leads us to our end-times dilemma.

In Roman times, there were many prohibitions that were a matter of Roman Law against criticizing the emperor. Men had to, by Roman law, respect, honor, and during some reigns even worship the emperor. In our times the command to respect our leaders is clearly outlined in scripture. However criticizing our leaders within reason is commonplace in our western world. It is not un-scriptural if done with good intentions, great care and with a hope that such criticism can conceivably bring about some good. It was not a sin for German pastors to speak out about Nazi atrocities. It is not a sin to speak about legalized abortion. It is not a sin to speak about invading nations and killing innocent men, women and children. It is not a sin to speak about bald-faced lies that lead to wanton acts of murder. The prophets of old did it and there are new testament prophets, as the New Testament clearly demonstrates¹⁹. A prophet proclaims God's word. A new testament prophet does this in addition to his testimony of Jesus Christ. While some may go over board with their criticism of what is happening today, we must remember something; we are living at the very end of our age, the days are evil, but very very deceptively so. We are commanded to be wise as serpents but as harmless as doves that means fist and foremost, knowing the times and seasons as well as (this is crucial) the word of God. Anyone with a newspaper and a mind that is relatively free of chemical inebriates can see that something is very wrong with our world. God has something to say about it. Not just to ordinary people but also to the rulers, kings and rich men of the earth as well. That message is usually, not very complementary. Yes, great care should be taken when criticizing our earthly rulers but it can be done by those with a divine mission to prophecy against the spiritual strongholds of darkness of our age.

Some have tried to criticize me saying things like 'how dare you insinuate that our President may be mentally impaired' or that he 'stole an election' or that he is 'a regular user of hard liquor and il