Yes we are raging...

... against a Government that spies on its citizens while ignoring the crimes of greedy bankers

By James Slack (source)

Today one of Britain's most senior police officers with responsibility for public order raises the spectre of a 'summer of rage', with victims of the increasingly bitter recession taking to the streets in possibly violent protest.

Superintendent David Hartshorn, who heads the Metropolitan police's public order branch, warned that law-abiding middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year.

Thousands of workers demonstrated in Dublin on Saturday. Police fear the worsening economic situation will lead to mass street protests in the UK

Many will consider such a scenario unlikely, or point out this has not been the 'British way' over the past two decades.

Violent protests take place in Europe - in recent weeks Greek farmers have blocked roads over falling agricultural prices, a million workers in France took to the streets to demand greater protection for their jobs and wages and Icelandic demonstrators have clashed with police in Reykjavik - but not here.

But can we really be so sure? The public's rage with the banks and the Government is growing by the day.

Thousands are losing their jobs through no fault of their own because bankers who made millions during the good times are calling in the loans which their employers need to stay afloat.

Homes are being repossessed across the country, but not the penthouse flats and country piles of bank bosses who thought nothing of taking home vast seven-figure bonuses, and consider £1 million a year a modest income.

Protesters expressed anger at being made to pay for the folly of those who caused the financial collapse

The innocent are being punished while the guilty continue to lead affluent lives.

As Ken Macdonald, the former Director of Public Prosecutions says today: 'If you mug someone in the street and you are caught, the chances are that you will go to prison. In recent years, mugging someone out of their savings or their pension would probably earn you a yacht.'

Add to this a second issue highlighted by Sir Ken: the march of the surveillance state.

Ministers have been spending their time focussing on eroding our most treasured individual freedoms, while doing little or nothing to curb criminal behaviour by the banks.

The DNA database containing the samples of hundreds of thousands of entirely innocent people...the largest number of CCTV cameras in the world...anti-terrorist powers being deployed against dog foulers...restrictions on telling religious jokes...

All of these intrusive, liberty-sapping polices were developed while the banks were blowing billions on reckless sub-prime lending.

How much better a place Britain would be today if Labour had focussed on regulating the banks and getting a grip on the shambolic, toothless Financial Services Authority, rather than building a surveillance state.

That the public is being watched by Big Brother at every turn is deeply alarming. That the innocent were being tracked going about their every day lives while a blind eye was being turned to a financial sector apparently hell-bent on destruction is unforgivable.

Thus, the idea of the 'summer of rage' may not be as far-fetched as it first appears.

Superintendent Hartshorn talks of the banks, particularly those that still pay large bonuses despite receiving billions in taxpayer money, becoming 'viable targets'. Likewise, the headquarters of multinational companies and other financial institutions in the City which are being blamed for the financial crisis.

It is to their eternal shame that our banks should find themselves in such a position, and that Labour - while eroding the civil liberties Britain has fought so hard to defend over the centuries - was prepared to sit back and allow it to happen. Full story/Permalink

Britain's Great Depression?

The full story on the financial coup d'etat in the UK

by Nadeem Walayat

Global Research

The purpose of this analysis is to map out to the trend of the UK recession for 2009 and 2010 in terms of depth, the bottom and the potential recovery. The most recently released GDP data shows that the UK economy actually did fall off of the edge of a cliff during the fourth quarter of 2008 by contracting by a shocking 1.5% GDP. This compares against the governments recent forecast for 2% GDP contraction for the whole of 2009 which paints a picture of gross under estimation of the actual extent of the degree of economic contraction that is taking place at this time, and hence the adoption of the easy going terminology of "Quantative Easing" to hide the truth of money printing on a scale that could bankrupt Britain, the evidence of which has been played out in the currency markets with sterling's fall to a 23 year low against the dollar, a fall of over 30% in barely 6 months.

The fourth quarter GDP crash of 1.5% is far higher than expected and explains why the government panicked as evident by the deep interest rate cuts from 5% to 1% in just 4 months. The rate cuts are in addition to the £1 trillion banking sector bailout liabilities. The rate of contraction at 1.5% per quarter implies an annualised collapse in the UK economy of 6% which would amount to loss of national income of £72 billion, against which the government has so far committed £40 billion in the form of tax cuts, industry support and stimulus packages. However the deviation of the trend for 2.5% growth per annum puts the gap at an additional £30 billion per annum.

The £1 trillion committed towards halting the banking sectors collapse on face value seems like a huge amount that should kick start lending, however this should be set against contraction of an estimated 30% of the UK credit market or £1.2 trillion as distressed foreign banks pulled the plug on UK operations, on top of which we have had housing market deflation of £250 billion, and stock portfolios erasing a further £400 billion, which sets the £1 trillion of injections and liabilities against deflation of an estimated £1.85 trillion.

The recession looks set to run throughout 2009, with the consensus view forming pf the opinion that the recession will be the worst since the Great Depression of the 1930's during which time the UK economy contracted by 10%, the question now being raised is whether Britain is heading for its own Great Depression on a scale worse than that of the 1930's ?

Britain's Great Depression of the 1930's

Britain's GDP during the 1930's Great Depression fell by 10%, which on face value compares favourably against that of the United States that saw GDP contract by 30%. However unlike the United States, Britain did NOT boom during the 1920's on the contrary the 1920's was a period of stagnation that started out with the Depression of 1918 to 1921 that saw GDP fall by 25%. Therefore Britain's Great Depression in fact started in 1918 and did not end until 1937 and therefore lasted nearly 20 years. However in today's economy, Britain is coming off of a 10 year+ boom, therefore even a 10% contraction would not be on the scale of what Britain experienced during its Great Depression. However the argument could be made that having enjoyed a boom, Britain subsequent bust will unwind much of the gains made during the past 10 years as the United States experienced during the 1930's, therefore this suggests economic contraction on a greater scale than that of the 1930's, especially if protectionism takes hold which was the nail in Britain's economic coffin during the 1930's.

British GDP Has Already Collapsed by 30%

British GDP (AMBI) at the end of 2008 is estimated at £1.275 trillion, against £1.267 trillion at the end of 2007. However sterling has collapsed against major global currencies by 30% or more, which translates into a real terms collapse in the countries GDP of 30%, i.e. 2007 GDP of $2.7 trillion has now fallen to $1.8 trillion a collapse in GDP of over 30%. The Government, Bank of England and FSA are failing in their primary duty which is to preserve the purchasing power of the currency.

The Labour government has destroyed the purchasing power of the British Pound by 30% so as to save on 1% or 2% on the actual officially published GDP data during 2009. That's a price of 30% for a net benefit of at most 1.5% which will still not prevent a deep recession from occurring. Quantative Easing is madness personified which for several months had been supported by the mainstream press which my November article illustrated -Bankrupt Britain Trending Towards Hyper-Inflation? , which sacrifices long-term growth for possible short-term benefit

Therefore whatever is the conclusion of this analysis in terms of sterling GDP contraction during 2009, what readers need to remember is that the real purchasing power of Britain's currency loss of 30% means that the countries GDP has already been sacrificed in lieu of hoodwinking the electorate into believing that things are not as bad as they actually are.

British Pound Crash Failing to Boost Manufacturing

Manufacturing was supposed to the save the economy from the economic bust in the light of sterling's 30% devaluation, however given the collapse in global trade and demand which has put paid to that false assumption, as I pointed out over 6 months ago, sterling's fall will not benefit Britain as the manufacturing base of the country has shrunk to such as small sector of the economy that it cannot hope to offset the Financial sector's depression which once contributed more than £40 billion in profits a year to Britain's bottom line, and now is consuming tax payers fund to the tunes of several hundreds of billions into an ever expanding black hole.

To make matters worse the crash in the oil price has hit UK North Sea oil foreign exchange earnings and therefore contributes to sterling's downtrend with an exchange rate drop of 30%+ that offsets a large part of the benefits of the fall in crude oil prices. In fact we may reach a point in the near future of rising petrol prices despite continuously depressed crude oil prices, which the analysis of 8th December ( Crude Oil Forecast 2009- Time to Buy?) concluded would remain depressed for the duration of economic contraction i.e. probably the whole of 2009.

UK Interest Rates

The February rate cut to 1% fulfills the forecast target for 2009 (4th Dec 08 - UK Interest Rates Forecast to Crash to 1% ). ,The next stop would be a similar Zero Interest Rate Policy (ZIRP) as that adopted by the United States that have cut their interest rate to 0.25%.

Whilst the base interest rate stands at 1%, the 3 month libor rate is at 2.14% and the real economic interest rate is at 3.54%, which clearly indicate evidence that the banks are still refusing to the lend and in-effect hoarding government bailout cash injections much of which is being used to reward bonuses to culpable staff.

Financial Armageddon.... Postponed?

2 minutes and 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour and threatened a further $5 trillion to be drawn out triggering a total collapse of the Worlds Financial System, which then prompted Hank Paulson's emergency $700 billion TARP bailout action.



Video Served by Youtube

Following Septembers close call with financial armageddon the governments of the world have been busy recapitalising bankrupt banks with tax payers monies, however the $500 trillion derivatives monster continues to deleverage and thereby implying that the risks of financial armageddon have only marginally improved on September 2008. There still exists the high potential risk of financial and economic collapse that would be accompanied by extreme currency market volatility.

Bankrupt Banks - HBOS Blows Up in LLoyds TSB's Face

The shot-gun wedding between HBOS and LLoyds TSB last September in the amidst of the financial markets panic following Lehman's bankruptcy to prevent another Northern Rock nationalisation is increasingly blowing up in Lloyds TSB's face as yet again the reassuring words that bankers say one week turn out to be completely untrue. The Lloyds Chairman was congratulating himself barely 3 weeks ago of how the takeover would result in cost savings of £1.5 billion per year. With today's announcement of a £10 billion loss by HBOS for 2008 shatters the Chairman's illusion and Lloyds TSB's balance sheet, as ever it will not be the bankers that pay the price but the tax payer. Already the UK Tax payer has pumped in capital injections of £18 billion into the LLoyds TSB HBOS group.

The Lloyds TSB share price crashed by nearly 50% on the news to close at just 61p valuing the bank at just £10 billion, which is set against UK Tax payer capital injections of £18 billion which therefore values tax payers £18 billion investment at just £4 billion, or a £480 loss suffered by every UK tax payer. As I have warned several times over the past 6 months, the government propaganda of actually making a profit on these capital injections into bankrupt banks is an illusion which is now being borne out.

Given the size of the HBOS and Lloyds TSB loan book, then that £10 billion loss is just the tip of the ice berg as 2009 will turn out to be a worse year than 2008 in economic terms as £10 billion of share holder equity cannot hope to defend against a loan book well in excess of £1 trillion, where even a further 1% loss due to bad debts would equate to more than total shareholder equity, and given the crash in UK house prices of 20% to date with a further 18% expected as per the UK housing market forecast, I cannot imagine how the bank can hope to survive in its present form.

HBOS Bankrupting Lloyds TSB

Lets get one thing straight, LLoyds TSB / HBOS is to big to be allowed to fail, therefore in this crisis there are two measures of bankruptcy without loss of banking operations and they are a. Nationalisation , where in effect the shareholders lose all off their holdings and in effect the bank is bankrupt as far as they are concerned, and b. Capital injections that dilute existing shareholder equity and increase tax payer exposure, in this regard the governments current holding at 43% of the group is pretty close to the magic 50.1% majority shareholding level that to all intents and purposes means nationalisation by the backdoor, and given the £10 billion loss it is only matter of time before further capital is injected into Lloyds TSB / HBOS, therefore it is highly probable that the bank will be effectively become bankrupt as far as shareholders are concerned sooner rather than later as has occurred already with the Royal Bank of Scotland where the governments holding now stands at 78% which is just a stones throw away from full nationalisation and as Northern Rock shareholders have found out, nationalisation results in the 100% destruction of shareholder equity as I warned of before Lehman's went bust (09 Sep 2008 - BANKRUPT Banks Wiped Out by Tulip Backed Securities)

Lloyds TSB / HBOS Depositors

Many customers holding accounts across the two banks are worried that they are now unnecessarily exposed in terms of the FSCS £50k guarantee per financial institution. In this respect I have some good news in that the guarantee is per licence, and as HBOS retains a separate licence to Lloyds TSB which means that savings are guaranteed at £50k per person per bank i.e. a £100k guarantee across both banks.

LLoyds TSB / HBOS Service

The 30 million or so customers of the giant UK retail bank will experience a deterioration in the quality of service as costs are cut and the number of staff that services the client base is significantly reduced this means less branches and less counter staff and therefore longer branch queues and greater difficulty in resolving account issues. Also the merger of the two has yet to be processed in terms of combining operations that was purported to save £1.5 billion per year, therefore expectations are for much disruption in client account operations especially where queries requiring manual intervention to be resolved.

Nationalisation - The Only Solution

The banks are bankrupt ! The only things keeping them alive is tax payer moneys in the form of capital injections and loans that are now nudging above £1 trillion. The only real solution as I highlighted last November ( Bankrupt Britain Trending Towards Hyper-Inflation?) is for the systematic nationalisation of all of the retail banks, where each bank is MADE INSOLVENT, then the profitable assets nationalised and quickly restructured with new competent management and re-privatised with clear limits on its business plan so as to avoid trading in any Securitized debt and a ban on any money market borrowings which are the prime reason the banks are now exposed to bankruptcy. Other controls should be placed on pay limits across the group so as to prevent the culture of bonuses that has destroyed the banks. Also retail banks should always be limited to operating within the means of their depositor base, which is how 99.9% of the public assumed was the way they operated.

IMF Revises UK GDP Forecast Again.

The IMF has revised its GDP forecast for the UK economy for 2009 from -1.5% (November 2009) to -2.8%, and the forecast for 2010 is now +0.2%. The forecast still seems overly optimistic in the light of UK fourth quarter GDP contraction of -1.5%. The IMF has a good track record of being WRONG, overly optimistic forecasts that are continuously revised lower.

The Institute of Fiscal Studies Talking Sense

Finally reports from mainstream institutions are starting to emerge that reflect the crash in the UK economy that will hit the economy hard for many years after the recession ends. The IFS in a recent press release states :

Treasury figures suggest that the credit crunch will cost the Exchequer an ongoing 3.5% of national income (or a little over £50 billion a year in today’s terms) in lost tax revenue and additional social security spending. This excludes any long-term impact from the Government’s interventions in the financial sector, although even a large one-off loss adding to public sector debt should increase the ongoing cost in extra borrowing relatively modestly compared to the impact already reflected in current Treasury forecasts.

In the PBR the Treasury signaled spending cuts and tax increases starting in 2010–11 and raising 2.6% of national income (£38 billion a year) by 2015– 16. If the public finances evolve as the Treasury hopes, this tightening would have to remain in place until the early 2030s before debt returns below the ceiling of 40% of national income Gordon Brown set as one of his two fiscal rules in 1997. So there is no prospect of a Government being able to readopt these rules any time soon. We hope they will be reformed in any event.

Unfortunately, the Green Budget does not expect tax revenues to grow as strongly as the Treasury hopes over the next few years. In the absence of any additional spending cuts or tax increases, we forecast that the Treasury would have to borrow 1.5% of national income more in 2015–16 than it predicted at PBR time – even if the economy performs no worse than expected in the PBR. This would take public sector net debt above 60% of national income, from where it would decline only very gradually over subsequent decades.

The key point is that the IFS states that the Uk will run a 1.5% budget deficit until 2016, and UK debt is not expected to return to below the ceiling of 40% of GDP until 2030 from a rate above 60%. This therefore supports my scenario that after the recession the UK will be heading for many, many years of stagflation.

Confederation of British Industry Forecasts 3.3% 2009 Contraction

The CBI - The UK's leading business group predicts the recession, which began in the third quarter of 2008, will last throughout 2009. The economy is expected to contract by 3.3 per cent and unemployment will reach close to 2.9 million by the end of the year. After six quarters of negative growth, the economy is expected to stabilise early next year with the recovery building throughout 2010.

The CBI predicts the economy will contract by a cumulative 4.5 per cent over the six quarters of negative growth. GDP growth for 2009 has been revised down from -1.7 per cent in November to -3.3 percent. In 2010, GDP growth is expected to be 0.0 per cent.

The impact of the recession and the fiscal stimulus will take a toll on the public finances with net borrowing for 2009/10 expected to reach £149 billion and £168 billion in 2010/11, which represent 10.6 per cent and 11.8 percent of GDP respectively.

The CBI is clearly following hot on the heels of the IMF in doubling its rate of contraction for the UK economy from Novembers -1.7% to now -3.3%. The key point here is the CBI now recognises that government borrowing is set to soar for the tax years 2009-10 and 2010-11 totaling £317 billion, up £100 billion and now virtually identical to my forecast of November 2008 of £314 billion, did the CBI read my forecast ?

UK Money Supply

One of the key driving forces of the 1930's Great Depression was the collapse in the money supply of the United States that fell by 25% and was tracked lower by GDP. However that lessons appears to be have learned given the amount of Quantative easing taking as both the US and UK governments embrace the money printing presses in an attempt to stop deflation from taking hold and thus igniting another Great Depression. Yes, rampant growth in the money supply is inflationary, however the money supply adjusted for the velocity of money paints a truer picture a the below graph illustrates

UK Money supply M4 (blue) has risen sharply from the 10% targeted low of mid 2008 to the current level of 16.6%, on face value this is highly inflationary and has been taken by many economists and market commentators to suggest much higher forward inflation. However the money supply adjusted for the velocity of money which takes into account the state of the economy as a consequence of the credit freeze tells a completely different story. The UK economy is now in extreme real monetary deflation of approaching -15%. The leading indicator of the implied money supply, is suggesting recent deep interest rate cuts will lift future money supply growth out of extreme deflation, however it will still be far from supporting the levels north of 15% which accurately forecast forward inflation during 2008.

Therefore the primary objective of the UK government is to prevent a deflationary downward spiral from taking hold at ANY COST. The Bank of England has been instructed to ignore inflation, and focus wholly on preventing DEFLATION. The price for this will be higher future inflation IF they succeed in preventing the deflationary downward spiral that if they fail WILL result in a another GREAT DEPRESSION. For more on the impact of economic deflation, download the world's foremost expert on and proponent of the deflationary scenario, Robert Prechter's FREE 60-page Deflation Survival eBook

UK Inflation

The Bank of England's quarterly inflation report forecast UK inflation of just 0.5% in 2 years time, with the UK economy now forecast to have fallen by GDP 4% by the middle of this year. It was not so many months ago that the Bank of England was forecasting growth of 2% for 2009.

Bank Governor Mervyn King implied by his accompanying statement that he does not have a clue what he is doing, as the UK economy under his and Gordon Browns collective stewardship continues to fall off the edge of a cliff, the Bank of England Governor stated :

“The United Kingdom economy is in deep recession. The length and depth of the recession will depend to a significant extent on developments in the rest of the world, where a severe economic downturn has taken hold.”

• The economy faces its deepest recession since the post-war years of 1945 and 1946, and its worst peace­time decline since 1931.
• The Bank is likely to reduce interest rates further, perhaps to as low as zero, in an attempt to prevent the downturn becoming worse than the depression in the 1930s.
  It will resort to new drastic measures to pump extra cash into the economy as soon as this week.
• Unemployment – which hit 1.97 million yesterday – will rise further and house prices will continue to fall in the coming months.

My commentary during the summer months of 2008 seems to have been proved accurate in that the BoE MPC at those monthly meetings remained paralysed by the fear of inflation and more or less sat sipping tea and conversing about the weather whilst the economy continued to burn towards the fourth quarter crash.

What is the Governments Solution ?

Quantative Easing aka Printing Money - The consequences of which are that Britain is at increased risk of bankruptcy as I first warned off in April 2008 following the first print run of £50 billion by the Bank of England and reiterated on a near monthly basis since ( archive ), with the most recent article ( UK Interest Rates Crash to 1% New Record Low) updating to the current position of Britain's path towards bankruptcy.

The British Pound responded to the Bank of England's report by resuming its bear market after the correctly forecast bounce from £/$1.37 to above £/$ 1.45 and now again on route towards parity to the U.S. Dollar. (21st Jan 09 - British Pound Panic Selling, Counting Down to Bankrupt Britain )

FSA - Who Should Regulate the Regulator?

To illustrate the point in how wide the gap is between competent regulation of the UK banking system and how it is actually being regulated by the FSA, not just before the credit crisis broke in August 2007, nor in the immediate aftermath which witnessed the run on Northern Rock Bank, but to this very day some 18 months on as witnessed by the resignation of Sir James Crosby, Gordon Browns own appointment as the Deputy Chairman of the FSA on allegations that during his tenure as the head of HBOS (Halifax), he sacked Paul Moore due to the alleged complaints he had made about the banks risk taking that had not been properly minuted at HBOS board meetings.

Deflation of 2009 Will Eventually Turn to Inflation

My earlier analysis of the UK inflation concluded that the UK is heading for real deflation during 2009, with the RPI inflation measure expected to go negative by mid 2009 by targeting -1.2% . The expectations are for similar deflation across the world, as deficit spending stimulus packages cannot hope to compete against the loss of asset values which are in the order of ten times the amount of planned stimulus. The analysis also concluded in that the immediate risks to the forecast are to the downside i.e. prices spiking lower than expected.

This therefore implies for further stimulus packages far beyond that which have been committed to date, with all of the associated consequences of collapsing currencies under the weight of growing deficits and liabilities which sets the scene for higher future inflation as the deflationary impact of collapse in crude oil during the second half of 2008 starts to leave the inflation indices during the second half of 2009, thereafter the deflationary forces of contracting economies will compete with the inflationary forces of money printing and rising commodity prices.

UK Unemployment

UK unemployment shot up by 48,000 for November 08 data to 1.97 million, and remains on target to bust above 2 million on release of data for December 2008. The unemployment claimant count soared by 11% for January to 1.28 million, up a shocking 129,000 on the month and confirming that the pace of unemployment is accelerating as the economy fell over the cliff during the fourth quarter.

My original UK unemployment forecast based on July 08 data is for unemployment to rise to just above 2.5 million by April 2010, however the UK economy continues to deteriorate at an alarming rate with projections of a severe recession of more than a 4% GDP contraction implies that the UK is heading for an unemployment rate that could pass above 3,000,000. The jump in claimant count alone for Dec 08 and Jan 09 totaling 226k implies sharply higher unemployment for December and January, this despite the fact that he unemployment statistics are heavily manipulated to under report true unemployment which would be nearly 6 million higher if all those of working age (16 to 64) were included in the data.

The real number of unemployed in the UK now stands at 7.86 million for November as the below graphs illustrate, the actual dip in total inactive is due to net migration as eastern european workers are apparently returning home in the face of increasing difficulties in the UK labour market.

Gordon Brown Bankrupting Britain to Win the Next Election

The indepth analysis of November 2008 illustrated why Gordon Brown is well on the route towards bankrupting Britain as the liabilities by 2012 will exceed £3.5 trillion from £1.5 trillion at the end of 2007, as the prime consideration for the Prime Minister is to win the next election at clearly ANY COST.

The above liabilities do NOT include the £5 trillion of additional liabilities should the government be forced to nationalise virtually the whole banking sector. However, again people need to realise that the future gets discounted in the present, which is why the Bank of England, Treasury and Government policy makers do not comprehend that they cannot embark on the route towards £3.5 trillion plus of liabilities without the market reacting by selling out of the currency long before the country arrives at the debt destination. The effect of this is to make the current crisis far worse as the market seeks to discount the over 80% of the £5 trillion banking sector debt which is denominated in foreign currencies. Therefore the facility to inflate out of debt through "Quantative Easing" does not work, as the repayments have to be made in foreign currencies against which the countries debt burden rises as the currency falls and therefore puts Britain's banks under greater pressure. The impact on the economy is deflationary whilst import prices rise thus suggesting a stagflationary outlook or worse.

On top of ever expanding public liabilities that at the end of 2008 stood at an estimated £2 trillion, there is also the private sector debt of £2 trillion weighing down on the economy and sterling.

Time is running out for the government, forget 2011, 2010, even mid 2009, a currency collapse would bring the debt crisis to a head within a matter of days. Just as occurred with Iceland as it did not take 3 or 4 years for Iceland to collapse into hyper-inflation, it took 3 or 4 days!, as I warned off in the article Iceland Going Bankrupt? , and subsequently warned that all of the conditions that led to the bankruptcy of Iceland are present in the UK.

Workers In revolt, What's the Answer ?

In Britain workers have been in revolt against foreign workers shipped over from mainland Europe when their exists a mass of domestic unemployed labour. Britain's free market attitude towards the labour market whilst working well during the boom times and in a level playing field, however what exists in much of Europe is not a level playing field with labour restrictions and subsidies increasingly becoming the norm. Take steel workers, in Yorkshire, Corus has announced 8700 job losses whilst in Holland 6,500 Corus steel workers receive 70% of their pay from the government. Off course this is one of the benefits of being in side the EURO which allows one to get away with such action by a country such as Holland without paying the price in terms of currency collapse.

Whilst this is a help in the short-term however as the 1970's and 1980's illustrated supporting loss making industries in the long-run is the sure fire way towards economic stagflation. Therefore whilst there is undoubtedly much pain in store amidst a global economic downturn, there is no long-term advantage towards subsidising zombie industries for which demand is collapsing. It would be better for the government to pay for the re-training of workers for new technologies and industries that will conqueror the world coming out of recession then keep them stuck in industries in terminal demise.

Bailout of the Auto Industry

Conservatives Whistling in the Wind - The conservative party, as embodied by Kenneth Clarke seems to understand the problem even less than the labour government by calls for the underwriting of car loans to support the auto industry. The flaw here is that 86% of cars bought into the UK are imported therefore such an exercise would for £1 underwritten, 86p would be supporting foreign manufacturers.

Collapse of the Euro ?

Many commentators are contemplating the death of the europe due to countries with the Euro zone pulling in opposite directions such as Ambrose Evans-Pritchard who has apparently declared war on the Euro. I would happen to guess that the vast majority of these Euro doom commentators FAIL to understand or conveniently ignoring that had countries such as Ireland been outside of the Euro then they would already have collapsed Iceland style. Therefore the current crisis has in effect strengthened the Euro domestically regardless of what the rate does against the Dollar and other currencies. Domestically there is fear amongst many of the smaller countries within the Euro of what would happen to them IF they were outside the Euro and therefore the risks of a Euro collapse are vastly exaggerated. On the contrary countries such as Iceland who were vehemently anti Euro will be lining up to join the Euro as soon as their economy has Stabalised as the risks of being outside the Euro are infinitely greater than being in the Euro.

Right across Europe Euro Skeptics have been sidelined by the collapse of the banking system that emanated out like a contaigent form the United States as every countries greedy banks sought to capitalise on the collatorised debt bubble. Clearly the Euro has been a life saver to many small countries under which umbrella has allowed the countries to undertake extreme measures that would not have been possible outside of the Euro right across the continent. From Ireland guaranteeing 100% of bank deposits, to Holland and many other countries subsidising wages upto a rate of 70% to keep workers employed. Unfortunately for Iceland, their own banks extreme level of greed and the populations fierce independence has led to the destruction of that economy.

Protectionism on the Rise

One of the primary reasons why the 1929 crash resulted in the Great Depression was because of the rise of protectionism and the collapse of global trade.

Demonstrations and many heated discussions are taking place right across the developed world to protect workers from foreign labour, more so in countries with huge trade deficits that have effectively exported their manufacturing base abroad i.e. the United States and Great Britain, against these are countries that rely heavily on exports such as the fast developing countries of China, India and developed counties of Germany and Japan.

The arguments on both sides are convincing. My own personal take is that there should be a level playing field, if there is then everyone wins, if there is not then one side loses and the other side wins. Unfortunately we are NOT living in a era of a level playing field, this is particularly true where China and other asian countries are concerned as they seek to manipulate their currencies lower and thus interfering with the normal working of the market that will tend to correct trade imbalances. Clearly the zero interest rate policy is a response to this in that the western governments are in effect punishing countries that seek to manipulate their exchange rates and therefore subsidising western budget deficits. However the severe recession itself will go a long way to correcting unsustainable trade imbalances as global trade collapses.

UK Retail Sales

Headline retail sales bounced strongly in December rising by 2% to an annualised 3.7% as distressed retailers slashed margins on stock to avert bankruptcy amidst price cutting in the wake of heavily discounted stock in the closing down sales of major retailers such as Woolworth's , Zavvi and Adams, that collectively account for some 50,000 jobs.

The expectation that over Christmas and January retail sales activity 'should' rise due to discounting materialised as our European and American cousins boosted retail sales volume by benefiting from the 30% crash in sterling which means the already liberally advertised 20% discounts translated into a 50% discount for European shoppers, much as Briton's benefited not so long ago from the cheap shopping trips to New York at an exchange rate north of £/$2.00.

However as earlier analysis suggested that the fall in sterling will result in much higher high street consumer prices during 2009 as those retailers that have not gone bust seek to replenish stocks at much higher prices during 2009. This confirms analysis that the January Sales for Britons may prove to be more illusionary than real as the fall in sterling has already soaked up corporate margins.

Retail Sales Trends

The above graphs illustrate the strong rebound in retail sales, both headline and real retail sales trend that has moved out of deep deflation. However as per the points mentioned earlier, it is highly unlikely retail sales volume will grow past the January sales season into February 2009 and March 2009, in the face of heavy job losses and retailers going bankrupt.

For more on the impact of deflation, download the world's foremost expert on and proponent of the deflationary scenario, Robert Prechter's FREE 60-page Deflation Survival eBook

UK Housing Mortgage Market Lending Crash

The Council of Mortgage Lenders (CML) mortgage lending data released today shows a 49% crash in the number of mortgages granted to home buyers to just 516,000 which is the lowest number since the mid 1970's property crash. There were 32,000 house purchase loans in December, a decline of 5% from November and the lowest level since monthly records began in 2002.

Michael Coogan, CML director general, said: "The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year. This low level of transactions is insufficient for the functioning of an efficient market.

"Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through. Further action may still be necessary to increase transactions, stabilise prices and restore confidence."

The CML data supports that of the British Bankers Association BBA which saw the total amount outstanding contract from £524 billion to £496 billion.

However on a marginally brighter note mortgage lending for house purchases rose from record lows during December 2008, which implies that the flood of tax payers money amounting to more than £1 trillion, coupled with angry arm twisting pressure from both the government and Bank of England on the part or wholly nationalised banks such as HBUST , Northern Pebble , Bradford & Bunglers and RBF'd-up is starting to show at the very least a pause in the crash of the mortgage lending market, which helped to contribute towards a small bounce in the house prices for January 2009 that my next article will elaborate upon.

UK House Prices

A cheer went up amongst housing market participants across the land as UK house prices rose by nearly 1% in January 2009 as measured by the Halifax. However the government is throwing everything including the kitchen sink at the housing market to bring about a halt to the ongoing crash in nominal terms. The amount of money printed has mushroomed from the £50 billion of April 2008. that I warned was just the tip of the ice-berg that would soon mushroom into the hundreds of billions, we are now in the process of leaving the hundreds of billions behind and moving into the trillions, sums that seriously risk the bankruptcy of Britain.

The mainstream media has jumped on the one month bounce to start contemplating the return of the housing bull market i.e. The Times reports - The 10 towns where house prices will bounce back first - " Property website's recorded a surge of activity in the first few weeks of this year, estate agents had a busier January than previous months and Halifax even reported a small rise in house prices."

UK Housing Market Affordability and Interest Rates

The February rate cut to 1% fulfills the forecast target for 2009 (4th Dec 08 - UK Interest Rates Forecast to Crash to 1% ). with the next stop a similar Zero Interest Rate Policy (ZIRP) as that adopted by the United States that have cut their interest rate to 0.25%. The deep cuts in interest rates whilst not wholly passed on have resulted in a fall in the economic rate of interest from over 6% in September 2008 to 3.54% today. This is having a positive impact on the affordability despite the recession and hence supportive of house prices in the short-term.

UK House Price Forecast 2007 - 2012

The rise in UK house prices during January 09 brings a pause to the house price crash that is now into its 18th month as the above graph illustrates as per the updated house price forecast that covers the trend into 2012 which projects for a total drop from peak to trough of 38%. However, as I have warned many times over the past 18 months, the government has in its power the ability to print money to bring nominal house price falls to standstill, this money printing is now quaintly termed as "Quantative Easing" so as to hide the truth and mask the continuing crash in house prices that despite the opinion of the mainstream press by the likes of Anatole Kaletsky and Ambrose Evans-Pritchard HAS put Britain on the path towards bankruptcy, as explained in the depth analysis of November 2008 - Bankrupt Britain Trending Towards Hyper-Inflation?

The Labour governments primary objective remains to maximise its chances of winning the next election, this will be to the detriment of future growth as the consequences of printing money and the exploding debt burden risks a currency crash that at best means many years of stagflation and at worst hyperinflationary bankruptcy along the lines of the Weimar Republic and the most recent example of Iceland. This is evidenced by the following graph of UK house prices in terms of inflation, and our key trading partner the United States (U.S. Dollar), with a similar fall observed against the Euro.

The above graphs clearly illustrate that the UK housing market has crashed by 25% (real terms) and over 40% (U.S. Dollar / Euro) which is having a severe impact on the UK economy as the real deflation of a 40% loss of value of house prices added to the more than 50% of that of stocks is tipping the UK economy towards economic depression. Therefore home buyers need to guard against the ILLUSION of stabilising house prices whilst the real terms crash in house prices continues.

UK House Prices Regional Trends

While average house prices as of December 2008 are down 20%, in terms of price crash experience Northern Ireland tops the list at 35%, meanwhile Scotland continues to buck the trend by only registering a 6% drop to date.

Commercial Real Estate Bust of 2009

As the retailers go bust, financial institutions close or get down sized, and corporations go bust, this is going to lead to a crash in the value of commercial real estate that has already begun.

UK Financial Sector

The financial sectors of all of the countries of the world are already in a deep depression, which is leading to contraction across the whole globe against which governments are battling with ever larger stimulus packages, however Britain with its extraordinarily large financial sector was always destined to suffer the most, more so then other large developed european countries such as France and Germany. Therefore all the talk by Gordon Brown showed a great deal of bare faced cheek when he repeatedly stated how Britain was best faced to face the global economic downturn when in fact the exact opposite was true. The United States estimated bank losses are in the region of $2 trillion, UK bank losses are estimated to be $1 trillion, the only problem here is that the UK economy is only about 1/7th the size if the U.S., therefore British banks are exposing the UK tax payer to 3 times the losses as U.S. tax payers hence the reason why sterling is being dumped, which as much of the debt is denominated in foreign currencies has the effect of making matters worse as the value of the debt rises in sterling. The Bank of England and the FSA have a lot to answer for, exactly what have they been doing in their ivory towers whilst the financial institutions were busy turning themselves into hollow husks ?

International Trade in Meltdown

Global trade is collapsing and taking with much of the mainstream media hype that currency devaluation of 30% will boost the British economy. Yes we have hade a 30% devaluation in sterling, but who is going to buy our goods ? Who do we export to ? World trade fell over the cliff during the past 4 months, with shocking figures come through from right across the globe. Which means that despite the 30% devaluation, 30% of the value of Great Britain PLC wiped out for NOTHING, as our exports WILL FALL during 2009 NOT RISE ! ALL of the COST of devaluation with NONE of the GAINS, which illustrates the degree of incompetence right at the core of the institutions that are taking the decisions that are destroying Britain's long-term future, and I fear far worse to come as Britain embarks on the next stage of currency devaluation that WILL lead to HIGH inflation ? How high well that depends on how much the government wastes on trying to bolster bankrupt banks.

Global Economic Slump - Japan Back in Economic Depression

Today's recession is experiencing a global meltdown in international trade, where literally economies are falling off the edge of a cliff right across the globe. What this means is that it is extremely difficult for a small economy such as Britain's to buck the trend.

Japan yesterday released truly shocking GDP data for the fourth quarter of 2008, the Japanese economy contracted by 3.3% which equates to an annualised rate of 13.2% which is on par with magnitude of contraction that is associated with an economic depression. All exporting countries are experiencing a crash in exports which fell by 14% in the quarter, as western consumers stop buying and start saving. Japans industrial plunged by nearly 10% in December 2008, down 20% on the year earlier.

Japans government is expected to respond to the economic crisis by announcing a further stimulus package of more than $200 billion as the government again attempts to fight against the deflationary spiral that has kept Japan in depression for approaching 20 years.

The collapse in the Japanese economy is ironic in a way as Japan in the same vane as many other asian countries was not exposed to U.S. subprime mortgage derivatives on the same degree as western banks, which during 2008 had given life to the argument of decoupling between the east and the West, however the exact opposite seems to be occurring with the asian exporting countries being hit harder than the consuming countries.

Global Trade Green Shoots ?

The Baltic Dry Index is a measure of global trade in terms of the price charged for chartering ships for the shipment of raw materials. Following the crash from a height of nearly 12,000 as the global economy fell off the edge of the cliff, the BDI has recently bounced, however as the chart shows the degree of recovery is insignificant compared to the preceding collapse, whilst a positive development the BDI needs to build on the rally to date to start to imply that the world economy in terms of international trade is hitting bottom, which I would expect to be reflected in 3rd and 4th quarter GDP data, which would imply a short severe global recession. This is also a potentially bullish signal for industrial commodities that have been decimated during the crash in global trade.

UK Recession Projection / Forecast Conclusion

In the final analysis, the projected course of the recession over the next 2 years is as illustrated by below graph in that the severe recession is expected to bottom at an annualised rate of -4.75% GDP in the fourth quarter of 2009, which will be followed by a recovery as the rate of GDP contraction improved as government stimulus measures announced to date and deep interest rate cuts as well as future stimulus kick into gear. The UK economic recovery is expected to continue into the fourth quarter of 2010 i.e. after the general election. The total recession from peak to trough is expected to see GDP contract by 6.3% and therefore this will be the worst recession since the 1930's Great Depression.

Unfortunately for the Labour government the economic cycle is completely out of sync with the election cycle as the economy is not expected to emerge from this severe recession until AFTER the next election as 2010 1st quarter GDP is estimated to be at an annualised rate of -3.9%, this therefore increases the probability of Labour losing the next election as the state of the economy is nearly always the primary determining factor for the electorate. However the Labour government will do its up most to battle against the election especially once GDP data shows contraction of more than 4% annualised, therefore the expectations are strong that the Labour government will sacrifice long-term growth for the short-term possibility of turning the economy around before the election. This also suggests that the 2010 recovery may not be able to take hold and therefore sets the scene for a weak 2011-2012, perhaps a double dip recession.

By Nadeem Walayat
http://www.marketoracle.co.uk

Full story/Permalink

The police are forcing pubs to install CCTV

Henry Porter

On Monday the Guardian carried a letter from Nick Gibson who told how he had taken over a pub in Islington, London, and had to apply for a new licence, which required the approval of a number of organisations, including the police.

'I was stunned,' he wrote, 'to find that the police were prepared to approve – ie not fight – our licence on condition that we installed CCTV capturing the head and shoulders of everyone coming into the pub, to be made available to them on request.'

He wrote to his MP, Emily Thornberry, but got no reply until today when she sent a letter to the Guardian – a somewhat patronising note, suggesting that this was indeed a civil liberties issue and that the staff from the nearby local Labour headquarters should be able to come and go 'without being stolen from and intimidated'. She also used the opportunity to take a swipe at the local Liberal Democrat council, which has refused to install street CCTV in Islington.

Typically for a Labour MP, she did not answer the substance of Gibson's complaint, which is that there seems to exist an unofficial policy of forcing pub licencees to install CCTV. In effect, Gibson had been compelled to go along with the policy at his pub – the Drapers Arms – to keep making a living. 'When was it that the constant small erosion of our liberties became irreversible?' he asked.

It is clear that the police do indeed have an unofficial policy that they implement in a thoroughly undemocratic manner when advising on licence applications – not on the merits of the case but on the applicant's compliance with their policy.

I contacted the Metropolitan Police Service and asked what was going on. Their statement read as follows:

The MPS overall does not have a policy of insisting CCTV is installed within licensed premises before supporting licence applications. However, individual boroughs may impose blanket rules in support of their objectives to prevent crime and disorder and to assist the investigation of offences when they do occur. Islington is one of the most densely populated districts for licensed premises in London and the borough's licensing authority is committed to providing a safe environment in which to socialise.

Islington council has suggested that Gibson can withdraw his application, take away the CCTV cameras and apply again for the licence. A sensible council would of course waive the need for this absurd procedure, and at the same time publicly state that it will stand against the surveillance creep that is blighting every city centre in Britain. CCTV has its purposes but the idea that someone going for a pint must give up their privacy by having their image taken and stored is repellent to all notions of a free society.

Gibson has been put in a difficult position and I would expect the council to make the first move to resolve what is a minor but also crucial issue of privacy, which of course is guaranteed to each one of us by the Human Rights Act.

If it fails to do so, he might like to provide a mask at the entrances to his pub with a suggestion that if people want to drink in private they hold up the mask as they pass the cameras. Or possibly drinkers may like to go equipped with their own mask. A V for Vendetta mask seems appropriate (£4.99).

Perhaps there should be a V for Vendetta evening at the Drapers Arms. If Gibson would like to suggest a date in the next two weeks, I will publicise it.

In the meantime, it is important that the police understand it is not their business to use their influence to make and implement policy affecting people's privacy."
Full story/Permalink

Bank will print money as UK sees 'deep recession' - Business News, Business - The Independent

The Independent:

The Bank of England is ready to launch a policy of "quantitative easing" – printing money – in an effort to lift the economy out of what the Bank calls "a deep recession". The Bank's central forecast, in its latest Inflation Report, suggests that annual growth in the UK economy will hit a nadir of -4 per cent in the summer of this year.

The Bank warns that 'the risks surrounding the central projection for growth are judged to be weighted heavily to the downside', with an outside chance that the economy could, at its worst, contract by an annual rate of 6 per cent in the summer, a slump of historic proportions.

This represents a savage downgrade from the predictions the Bank was making only last November. The report now suggests an overall contraction in 2009 of about 2.5 per cent, in line with recent forecasts from the IMF and others, leaving Britain at the bottom of the international growth 'league table'. If the growth forecast proves accurate, it will be the UK economy's worst year since the Second World War.

In the Budget next month or in early April, the Chancellor, Alistair Darling, is almost certain to follow the Bank and radically revise the Government's growth forecast for this year down from the current -1 per cent, with chilling implications for the scale of public borrowing, already heading to record levels. Sterling tumbled as the Bank published its views, falling as much as 1.5 per cent against the dollar.

As the scope for further cuts in interest rates diminishes – the Monetary Policy Committee has cut rates by 3.5 percentage points since the start of November, to 1 per cent – the Bank seems ready to go further, and as soon as the next MPC meeting on 4 and 5 March. The Governor of the Bank, Mervyn King, declared: 'Bank rate doesn't have to go to zero. ... We are now at the range where it doesn't make a great deal of difference where the Bank rate is – we are at the point where we need to think about taking other sorts of action.'

At the end of this week, the Bank will launch its Asset Purchase Scheme, aimed initially at the narrower target of repairing the malfunctioning market for corporate debt. A wider programme of 'unfunded' asset purchases of gilts and other securities seems likely to be agreed by the MPC in March. This will raise the commercial banks' reserves and increase the money supply, inducing a modest burst of inflation to combat falling prices. How far and how fast this will proceed has yet to be decided by the MPC, and must be formally approved by the Government.

However, the inflation forecast published by the Bank yesterday, showing the consumer price index as low as 0.5 per cent by 2010 and still well below the 2 per cent target by 2012, suggests this quantitative easing may have to be very substantial.

Mr King commented: 'The projections ... imply that further easing in monetary policy may well be required. That is likely to include actions aimed at increasing the supply of money to stimulate nominal spending.'

Even so, there was doubt in the City as to whether even this approach will work. Philip Shaw, at Investec Securities, said: 'There are no indications over how successful quantitative easing would be in stimulating lending and activity. The Japanese experiment earlier this decade is largely thought to have been ineffective. There is no guarantee that banks' excess liquidity would find its way to households or businesses, as banks could hoard the cash at the Bank of England or lend to non-bank financial corporations.'

Malcolm Barr, of JP Morgan, added: 'Given that the relationship between broad money and central bank reserves is not very stable, we wonder whether calibrating how much to supply versus what money growth is doing will be workable in practice.'

Whatever the prospects for policy, the Bank was clear about the short-term pain from a combination of depressed global demand and trade, the continuing shortage of credit and de-stocking. The most visible effect of the recession, or depression as it is being called in some quarters, is the steep rise in the dole queues. Yesterday the Office for National Statistics reported unemployment had reached 1.97 million between October and December, a 12-year high.

Mr King specifically mentioned the growing threat of protectionism, and the uncertainties about how quickly the various measures taken by the authorities around the world – banking rescues, fiscal stimulus packages, interest rate cuts and printing money – would work. In an occasionally irascible performance, Mr King tried to assure reporters that 'we have a policy framework which is capable of getting us out of this and these measures will work'. The Bank forecasts a very strong recovery in the latter half of this year and in 2010. The 25 per cent decline in sterling since the summer of 2007 will, the Bank believes, foster a 're-balancing' of the British economy, towards investment and exports, and boost the economic recovery."
Full story/Permalink

Putin Warns US About Socialsm

The Right Perspective

Russian Prime Minister Vladamir Putin has said the US should take a lesson from the pages of Russian history and not exercise “excessive intervention in economic activity and blind faith in the state’s omnipotence”.

“In the 20th century, the Soviet Union made the state’s role absolute,” Putin said during a speech at the opening ceremony of the World Economic Forum in Davos, Switzerland. “In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.”

Sounding more like Barry Goldwater than the former head of the KGB, Putin said, “Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors, and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.”

Putin also cautioned the US against using military Keynesianism to lift its economy out of recession, saying, “in the longer run, militarization won’t solve the problem but will rather quell it temporarily. What it will do is squeeze huge financial and other resources from the economy instead of finding better and wiser uses for them.” Putin’s comments come in sharp contrast to Russia’s own military buildup and expansion.

Putin also echoed the words of conservative maverick Ron Paul when he said, “we must assess the real situation and write off all hopeless debts and ‘bad’ assets. True, this will be an extremely painful and unpleasant process. Far from everyone can accept such measures, fearing for their capitalization, bonuses, or reputation. However, we would ‘conserve’ and prolong the crisis, unless we clean up our balance sheets.”

“The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peek into the future.”"

Full story/Permalink

' Worst economic collapse ever'

In 2009 were going to see the worst economic collapse ever, the Greatest Depression, says Gerald Celente, U.S. trend forecaster. He believes its going to be very violent in the U.S., including there being a tax revolt.

Full story/Permalink

Mendel was true scientist, not Darwin! - Pravda.Ru

Pravda.Ru

by Babu G. Ranganathan

It would surprise many to know that our understanding of biological change doesn't come from Charles Darwin but, rather, from Gregor Mendel. Mendel was an Austrian monk whose experiments and study of cross-breeding of plants laid the foundations of the gene theory and our understanding of modern genetics and biological variation and the transmission of biological traits within a natural species.

Darwin's and Mendel's works contradict each other. Darwin taught that there were no limits to biological variation and that, if given enough time, a fish could evolve into a human being. Mendel, on the other hand, showed that there are natural limits to biological variations. Variations within biological kinds (such as varieties of dogs, cats, horses, cows, etc.) are possible but not variations across biological kinds, especially from simpler kinds to more complex ones. Mendel showed that evolution is limited to within the 'kinds'. Mendel's works were not understood until thirty years after Darwin published 'The Origin of Species'. If Darwin had known about Mendel's work he would never written his book on the origin of species.

Darwin did show that natural selection occurs in nature, but what many don't understand is that natural selection itself does not produce biological traits or variations.

Natural selection can only 'select' from biological variations that are produced and which have survival value. The real issue is what biological variations can be naturally produced. What biological variations are naturally possible? When a biological change or variation occurs within a species and this new variation (such as a change in skin color, etc.) helps that species to survive in its environment then that variation will be preserved ('selected') and be passed on to offspring. That is called 'natural selection' or 'survival of the fittest'. But, neither 'natural selection' nor 'survival of the fittest' has anything to do with producing biological traits and variations.

The term 'natural selection' is simply a figure of speech. Nature, of course, does not do any active or conscious selecting. It is an entirely passive process. Darwin did not realize what produced biological variations. Darwin simply assumed that any kind of biological change or variation was possible in life. However, we now know that biological traits and variations are determined by the genetic code.

Natural selection works with evolution but it is not evolution itself. Again, since natural selection can only 'select' from biological variations that are possible, the real question to be asking is what kind of biological variations are naturally possible. How much biological variation (or how much evolution) is naturally possible in Nature?

The evidence from modern science shows that only microevolution (variations within biological 'kinds' such as the varieties of dogs, cats, horses, cows, etc.) is possible but not macroevolution (variations across biological 'kinds', especially from simpler kinds to more complex ones). The only evolution that is observable in Nature is microevolution (or horizontal evolution) but not macroevolution (or vertical evolution).

The genetic ability (genetic information) for microevolution exists in all species but not the genetic ability for macroevolution.

For example, when we see a couple with black hair produce a child with blonde hair that is an example of micro-evolution. Technically speaking, the genes for blonde hair did not evolve since they had already existed in the bodies of the black-haired couple.

Young people, and even adults, often wonder how all the varieties or 'races' of people could come from the same human ancestors. Well, in principle, that's no different than asking how children with different color hair (i.e., blond, brunette, brown, red) can come from the same parents who both have black hair.

Just as some individuals today carry genes to produce descendants with different color hair and eyes, humanity's first parents possessed genes to produce all the variety and races of men. You and I today may not carry the genes to produce every variety or race of humans, but humanity's first parents did possess such genes.

All varieties of humans carry genes for the same basic traits, but not all humans carry every possible variation of those genes. For example, one person may be carrying several variations of the gene for eye color (i.e., brown, green, blue) , but someone else may be carrying only one variation of the gene for eye color (i.e., brown). Thus, both will have different abilities to affect the eye color of their offspring.

Some parents with black hair, for example, are capable of producing children with blond hair, but their blond children (because they inherit only recessive genes) will not have the ability to produce children with black hair unless they mate with someone else who has black hair. If the blond descendants only mate with other blondes then the entire line and population will only be blond even though the original ancestor was black-haired.

Thus, the genes (chemical and genetic instructions or programs) for microevolution exist in every species but not the genes for macroevolution. Unless Nature has the intelligence and ability to perform genetic engineering (to construct entirely new genes and not just to produce variations and new combinations of already existing genes) then macroevolution, biological variations across kinds, will never be possible in nature.

What about mutations? Ah, now we are getting to the heart of the evolution/creation debate!

Evolutionists believe that, if given enough time, random or chance mutations in the genetic code caused by random environmental forces such as radiation will produce entirely new genes for entirely new traits which natural selection can act upon or preserve.

However, there is no scientific evidence whatsoever that random mutations have the ability to generate entirely new genes which would program for the development of entirely new traits in species. It would require genetic engineering to accomplish such a feat. Random genetic mutations caused by the environment will never qualify as genetic engineering!

Mutations are accidents in the sequential molecular structure of the genetic code and they are almost always harmful, as would be expected from accidents. Of course, just like some earthquakes that don't do any damage to buildings, there are also mutations that don't do any biological harm. But, even if a good mutation does occur for every good mutation there will be hundreds of harmful ones with the net result over time being disastrous for the species.

Furthermore, only those mutations produced in the genes of reproductive cells, such as sperm in the male and ovum (or egg cell) in the female, are passed on to offspring. Mutations and any changes produced in other body cells are not transmitted. For example, if a woman were to lose a finger it would not result in her baby being born with a missing finger. Similarly, even if an ape ever learned to walk upright, it could not pass this characteristic on to its descendants. Thus, modern biology has disproved the once-held theory that acquired characteristics from the environment can be transmitted into the genetic code of offspring.

Most biological variations within a biological kind (i.e. varieties of humans, dogs, cats, horses, mice, etc.) are the result of new combinations of already existing genes and not because of mutations.

For those who are not read-up on their biology, a little information on genes would be helpful here. What we call 'genes' are actually segments of the DNA molecule. DNA, or the genetic code, is composed of a molecular string of various nucleic acids (chemical letters) which are arranged in a sequence just like the letters found in the words and sentences of a book. It is this sequence of nucleic acids in DNA that tells the cells of our body how to construct (or build) various proteins, tissues, and organs such as nose, eyes, brain, etc. If the nucleic acids in the genetic code are not in the correct sequence then malfunctioning, or even worse, harmful proteins may form causing serious health problems and even death.

There is no law in science that nucleic acids have to come together in a particular sequence. Any nucleic acid can just as easily bond with any other. The only reason for why nucleic acids are found in a particular sequence in the DNA of the cells of our bodies is because they are directed to do so by previously existing DNA. When new cells form in our bodies the DNA of the old cells direct the formation of the DNA in the new cells.

The common belief among evolutionists is that, if given millions of years, radiation and other environmental forces will cause enough random changes (mutations) to occur in the sequential structure of the genetic code of a species so that entirely new sequences for entirely new genes will develop which in turn will program for the formation of entirely new biological traits, organs, and structures that natural selection can then act upon.

Would it be rational to believe that by randomly changing the sequence of letters in a cookbook that you will eventually get a book on astronomy? Of course not! And if the book were a living being it would have died in the process of such random changes.

Such changes, as transforming one book into another or the DNA of one species into the DNA of another, especially one more complex, simply cannot occur by random or chance alterations. It would require intelligent planning and design to change one book into another or to change the DNA of a simpler species into the DNA of a more complex one.

Yes, it is true that the raw biological materials and chemicals to make entirely new genes exist in every species, but the problem is that the random forces of nature (i.e. radiation, etc.) simply have no ability to rearrange those chemicals and biological materials into entirely new genes programming for entirely new traits. Again, mutations only have the ability to produce variations of already existing traits. It would require intelligent manipulation of genetic material (genetic engineering) to turn a fish into a human being. The random forces of the environment cannot perform such genetic engineering!

If the environment doesn't possess the ability to perform genetic engineering and if macro-evolution really did not occur then how else can one explain the genetic and biological similarities which exist between various species and, indeed, all of life. Although it cannot be scientifically proven, creationists believe that the only rational explanation for the genetic and biological similarities between all forms of life is due to a common Designer who designed and created similar functions for similar purposes and different functions for different purposes in all of the various forms of life from the simplest to the most complex. Even humans employ this principle of common design in planning the varied architecture of buildings!

If humans must use intelligence to perform genetic engineering, to meaningfully manipulate the genetic code, then what does that say about the origin of the genetic code itself!

Another reason for why macroevolution is not possible in nature is because a half-evolved and useless organ waiting millions of years to be completed by random mutations would be a liability and hindrance to a species - not exactly a prime candidate for natural selection. In fact, how could species have survived over, supposedly, millions of years while their vital (or necessary) organs were still in the process of evolving!

How, for example, were animals breathing, eating, and reproducing if their respiratory, digestive, and reproductive organs were still incomplete and evolving? How were species fighting off possibly life-threatening germs if their immune system hadn't fully evolved yet?

MIT scientist and creationist Dr. Walt Brown, in his fantastic book 'In The Beginning', makes this point by saying, 'All species appear fully developed, not partially developed. They show design. There are no examples of half-developed feathers, eyes, skin, tubes (arteries, veins, intestines, etc.), or any of thousands of other vital organs. Tubes that are not 100 percent complete are a liability; so are partially developed organs and some body parts. For example, if a leg of a reptile were to evolve into a wing of a bird, it would become a bad leg long before it became a good wing.'

What about the fossil record? One, out of many problems, is that there are no indisputable transitional forms in the fossil record. For the sake of brevity, this article will not cover fossils and many other issues of interest, but readers are encouraged to consult websites mentioned in the article body to gain detailed and more comprehensive information regarding the fossil record and other scientific issues relating to the creation/evolution debate.

Usually what is meant by the term 'biological kind' is a natural species but this may not always be the case. The key to keep in mind here is that in order for evolution in nature to occur from one biological 'kind' to another biological 'kind' entirely new genes would have to be generated and not just merely modifications and/or recombination of already existing genes. If, for example, offspring are produced which cannot be crossed back with the original stock then there is, indeed, a new species but if no new genes or traits developed then there is no macro-evolution (variation across biological kinds) and the two distinct species would continue to belong to the same 'kind'.

Science cannot prove we're here by creation, but neither can science prove we're here by chance or macro-evolution. No one has observed either. They are both accepted on faith. The issue is which faith, Darwinian macro-evolutionary theory or creation, has better scientific support. If some astronauts from Earth discovered figures of persons similar to Mt. Rushmore on an uninhabited planet there would be no way to scientifically prove the carved figures originated by design or by chance processes of erosion. Neither position is science, but scientific arguments may be made to support one or the other.

What we believe about life's origins does influence our philosophy and value of life as well as our view of ourselves and others. This is no small issue!

Just because the laws of science can explain how life and the universe operate and work doesn't mean there is no Maker. Would it be rational to believe that there's no designer behind airplanes because the laws of science can explain how airplanes operate and work?

Natural laws are adequate to explain how the order in life, the universe, and even a microwave oven operates, but mere undirected natural laws can never fully explain the origin of such order.

Of course, once there is a complete and living cell then the genetic program and biological mechanisms exist to direct and organize molecules to form into more cells. The question is how did life come into being when there was no directing mechanism in Nature. An excellent article to read by scientist and biochemist Dr. Duane T. Gish is 'A Few Reasons An Evolutionary Origin of Life Is Impossible'.

There is, of course, much more to be said on this subject. Scientist, creationist, debater, writer, and lecturer, Dr. Walt Brown covers various scientific issues (i.e. fossils, so-called transitional links, biological variation and diversity, the origin of life, comparative anatomy and embryology, the issue of vestigial organs, the age of the Earth, etc.) at greater depth on his website.

On his website, Dr. Brown even discusses the possibility of any remains of life on Mars as having originated from the Earth due to great geological disturbances in the Earth's past which easily could have spewed thousands of tons of rock and dirt containing microbes into space. In fact, A Newsweek article of September 21, 1998, p.12 mentions exactly this possibility.

An excellent source of information from highly qualified scientists who are creationists is the Institute for Creation Research in San Diego, California. Also, the reader may find answers to many difficult questions concerning the Bible (including questions on creation and evolution, Noah's Ark, how dinosaurs fit into the Bible, etc.) at http://www.ChristianAnswers.net .

It is only fair that evidence supporting intelligent design or creation be presented to students alongside of evolutionary theory, especially in public schools which receive funding from taxpayers who are on both sides of the issue. Also, no one is being forced to believe in God or adopt a particular religion so there is no true violation of separation of church and state. As a religion and science writer, I encourage all to read my Internet article 'The Natural Limits of Evolution' at my website for more in-depth study of the issue.

The author, Babu G. Ranganathan, is an experienced Christian writer. Mr. Ranganathan has his B.A. degree with concentrations in theology and biology. As a religion and science writer he has been recognized in the 24th edition of Marquis Who's Who In The East.
Full story/Permalink

Spoon-bender buys Scottish island with “links to the pyramids at Giza and the Knights Templar"

Source

“It is one of the keystones to British mythology, and I am thrilled to be its owner.” - Uri Geller

Celebrity spoon-bender Uri Geller has bought a tiny Scottish island he believes has links to the pyramids at Giza and the Knights Templar.

Geller paid £30,000 for The Lamb, an uninhabited lump of volcanic rock in the Firth of Forth.

He claimed he felt a “strong instinctive urge” to buy it after reading it was for sale.

The self-proclaimed “mystifier” said he is convinced the island is one of the most significant sites in the UK.

The Lamb is the middle of three rocky islands - the others being Craigleith and Fidra - which are said to mirror the layout of the pyramids at Giza, in Egypt.

The island covers an area of just 100 yards by 50 yards.

Geller said: “I am fascinated by the connection between the pyramids and these islands.

“The connection has been known for centuries - you can read about it in a 15th century manuscript called the Scotichronicon by Walter Bower the Abbot of Inchcolm.

“So when I heard Lamb Island was for sale I felt a strong instinctive urge to buy it - and the more I delved into the history and the archaeological lore which surrounds it, the more certain I became that this is one of the most significant sites in Britain.”

The owner of the island is unlikely to gain planning consent to build on it as it is part of a Site of Special Scientific Interest and a Special Protection Area and has a colony of seabirds.

There are no landing facilities on the island, and access can only be gained by chartered boat - which can be hazardous as landing is only possible on the rocks.
Geller paid less than half the £75,000 asking price



The island was sold by Brazilian-born internet entrepreneur Camilo Agasim-Pereira, who owns the Barony of Dirleton.

He had been bequeathed it in 2002, but had never set foot on it.

The asking price was £75,000, but a figure of just £30,000 was settled on after negotiations.

“This island has links not only to the pyramids, but to King Arthur, King Robert the Bruce and to the ancient Kings of Ireland too,” Geller added.

“It might seem forbidding, and it is certainly uninhabitable, but it is one of the keystones to British mythology, and I am thrilled to be its owner.

“I might need a helicopter, but I am determined to set foot on my island soon.”"

Full story/Permalink

Holographic Universe: Discovery Could Herald New Era In Fundamental Physics

ScienceDaily

Cardiff University researchers, who are part of a British-German team searching the depths of space to study gravitational waves, may have stumbled on one of the most important discoveries in physics, according to an American physicist.

Craig Hogan, a physicist at Fermilab Centre for Particle Astrophysics in Illinois is convinced that he has found proof in the data of the gravitational wave detector GEO600 of a holographic Universe – and that his ideas could explain mysterious noise in the detector data that has not been explained so far.

The British-German team behind the GEO600, which includes scientists from the School of Physics and Astronomy's Gravitational Physics Group, will now carry out new experiments in the coming months to yield more evidence about Craig Hogan's assumptions. If proved correct, it could help in the quest to bring together quantum mechanics and Einstein's theory of gravity.

In order to test the theory of holographic noise, the frequency of GEO600´s maximum sensitivity will be shifted towards ever higher frequencies. The frequency of maximum sensitivity is the tone that the detector can hear best. It is normally adjusted to offer the best chance for hearing exploding stars or merging black holes.

Even if it turns out that the mysterious noise is the same at high frequencies as at the lower ones, this will not constitute proof for Hogan's hypothesis. It would, however, provide a strong motivation for further study. The sensitivity of GEO600 will then be significantly improved by using 'squeezed vacuum' and by the installation of a mode filter in a new vacuum chamber. The technology of 'squeezed vacuum' was particularly refined in Hannover and would be used in a gravitational wave detector for the first time.

Professor Jim Hough of Glasgow University, one of the pioneer developers of gravitational wave detectors, says: 'Craig Hogan made a very interesting prediction. It may be the first of a number of unexpected possibilities to be investigated as gravitational wave detectors become more sensitive.'

Professor Bernard Schutz, Professor at the School of Physics and Astronomy, member of the Gravitational Physics Group at the School, and recently elected as an Honorary Fellow of the Royal Astronomical Society said: 'It would be truly remarkable if GEO600 is sensitive to the quantum nature of space and time. The only way to confirm that would be to carry out controlled experiments, the results of which can be solely attributed to holographic noise. Such an experiment would herald a new era in fundamental physics'.

Professor Dr. Karsten Danzmann, director of the Hannover Albert-Einstein-Institute, said: 'We are very eager to find out what we can learn about the possible holographic noise over the course of the coming year. GEO600 is the only experiment in the world able to test this controversial theory at this time. Unlike the other large laser interferometers, GEO600 reacts particularly sensitively to lateral movement of the beam splitter because it is constructed using the principle of signal recycling. Normally this is inconvenient, but we need the signal recycling to compensate for the shorter arm lengths compared to other detectors. The holographic noise, however, produces exactly such a lateral signal and so the disadvantage becomes an advantage in this case. You could say that this has placed us in the very centre of a tornado in fundamental research!
Searching for the graininess of space

The smallest possible fraction of distance is called the 'Planck length' by physicists. Its value is 1.6 x 10-35 m – this is impossible to measure by itself. The established physical theories cease to function at this scale. GEO600 scientists are testing a theory by US physicist Craig Hogan, who is convinced he can hear the noise of space quanta in the data of the gravitational wave detector GEO600. Hogan suggests that the mirrors in an interferometer wander relative to one another in very rapid steps of the tiny Planck amount, that accumulate during the time of a measurement into something as large as a gravitational wave would produce. Hogan and the GEO600 scientists are following up the question whether a certain 'noise signal' in the data recorded by the detector can be traced back to the graininess of space and time.

GEO600

Because of its innovative and reliable technology, GEO 600 has gained an excellent worldwide reputation and is considered a think-tank for international gravitational wave observation. It was here that the most modern lasers in the world were developed which are being used in all the gravitational wave observatories in the world today. Researchers at GEO600 are taking technology a step further with 'squeezed vacuum'. This technology is designated for use in the third generation of gravitational wave detectors.

GEO600 is a joint project of scientists of the Max Planck Institute for Gravitational Physics (Albert Einstein Institute, or AEI), Leibniz Universität Hannover, Cardiff University, the University of Glasgow and the University of Birmingham. It is funded jointly by the Max Planck Society in Germany and the Science and Technology Facilities Council in UK.

Further information:

* Max Planck Institute for Gravitational Physics (Albert Einstein Institute): http://www.aei.mpg.de
* GEO600: http://www.geo600.de
Full story/Permalink