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General Electric Bankrupt 2011
The numbers are staggering! Over $660 Billion in debt. That is almost the entire US federal bail out package that was passed during the financial crisis last year. All for one, albeit very large, company. That company is General Electric. GE has over 300,000 employees and operates in more than 100 countries. Can it really go bankrupt? The answer is yes!
GE seems to have a history of building debt obligations. GE’s long-term asset base grew $200 billion (or 30%) between 2003 and 2008 when prices were at their highest. Now GE is attempting to sell off many of those assets (when prices are low, but they are desperate for cash so they are forced to sell). In the near term GE has to repay or refinance $240 Billion before the end of 2011.
In March of last year GE lost their prized AAA credit rating from Standard and Poor rating agency. Other agencies have them ranked much lower. John Atkins, a fixed-income analyst at IDEAGlobal.com, said “it remained unclear what the impact will be on GE’s borrowing costs. Even with the ‘AAA’ credit rating, the cost of insuring debt of GE Capital had been in distressed territory recently.” This is a dramatic understatement. In fact, last year, the U.S. government had to guarantee $500 billion in GE’s debt. GE’s interest on its debts are about to soar.
As Porter Stansberry said in November of 2009, with the guarantee, GE only spent roughly $17 billion last year to service its $660+ Billion in debt. That’s an annualized interest rate of 2.5%. This is not sustainable. Sooner or later, GE is going to have to pay a market interest rate. The government guarantee expires in 2011 and that is when you can expect costs to soar.
Currently, the yield on high-yield corporate debt is around 10%. GE is now rated two slots above “junk” by Egan Jones. Assuming that GE could still qualify as an investment-grade credit – (since there is some discrepancy between ratings agencies) GE would pay something like 8% on its debt in a free market.
That would cost more than $52 billion a year. Last year, GE earned $11 billion before interest and taxes – in total. That’s not nearly enough money to pay the interest on its debts – whether they’re backed by the government or not.
Check back tomorrow and I’ll show you one way to play General Electric that has already earned 40% returns in just 2 weeks, but has much more to go.
Ross Williams
WikiLeaks: China Hiding Military Build Up
AUSTRALIA’S intelligence agencies believe China is hiding the extent of a huge military build-up that goes beyond national defence and poses a serious threat to regional stability.
A strategic assessment by the agencies found China’s military spending for 2006 was $90 billion – double the $45 billion announced publicly by Beijing.
Australia’s peak intelligence agency, the Office of National Assessments, as well as the Defence Intelligence Organisation and the Defence and Foreign Affairs departments concluded that China was building a military capability well beyond its priorities of self-defence and preventing Taiwan’s independence.
”China’s longer-term agenda is to develop ‘comprehensive national power’, including a strong military, that is in keeping with its view of itself as a great power,” says a copy of the secret assessment provided by Foreign Affairs officials to the US embassy in Canberra.
”We agree that the trend of China’s military modernisation is beyond the scope of what would be required for a conflict over Taiwan. Arguably China already poses a credible threat to modern militaries operating in the region and will present an even more formidable challenge as its modernisation continues.”
Details of the 2006 intelligence assessment are contained in a US embassy cable obtained by WikiLeaks and provided exclusively to the Herald.
The Australian document goes on to warn that the pace of China’s military build-up and ”the opacity of Beijing’s intentions and programs” was ”already altering the balance of power in Asia and could be a destabilising influence”.
”There is the potential for possible misconceptions which could lead to a serious miscalculation or crisis,” it says.
The Australian intelligence agencies suggest China could overestimate its own capabilities with a significant risk of strategic miscalculation and instability.
”The nature of the [People’s Liberation Army] and the regime means that transparency will continue to be viewed as a potential vulnerability. This contributes to the likelihood of strategic misperceptions,” the document says.
”The rapid improvements in PLA capabilities, coupled with a lack of operational experience and faith in asymmetric strategies, could lead to China overestimating its military capability. These factors, coupled with rising nationalism, heightened expectations of China’s status, China’s historical predilection for strategic deception, difficulties with Japan, and the Taiwan issue mean that miscalculations and minor events could quickly escalate.”
Although successive Australian governments have called on China to be more transparent about its military spending, ministers and diplomats have studiously avoided public reference to the scale of the discrepancy between Beijing’s published figures and the likely reality behind the scenes.
The Australian estimate of a 2006 military budget of $US70 billion ($90 billion at the September 2006 exchange rate), has not been revealed previously – though it is consistent with academic and published US government estimates of China’s growing military spending.
The secret Australian assessment is also much sharper than the language later employed in the Rudd government’s 2009 Defence white paper, which said China was on the way to becoming Asia’s strongest military power ”by a considerable margin” and warned that the pace and scope of its growth could give its neighbours cause for concern if not properly explained.
The Rudd government publicly played down reports of a hostile Chinese reaction to the white paper when it was published, but secretly briefed the US that Beijing had threatened that Australia would ”suffer the consequences” if references to China’s growing military capabilities were not watered down.
The Defence Chief, Air Chief Marshal Angus Houston, and the then defence minister, Joel Fitzgibbon, insisted that China had no problem with the white paper. But other leaked US embassy cables report that the then deputy secretary for Defence, Mike Pezzullo, briefed US diplomats that he had been ”dressed down” by Chinese officials who had a ”look of cold fury” at the references to China in the white paper.
In the September 2006 briefing of the US embassy, Foreign Affairs officials advised that Australia hoped to use its defence relationship with China to promote increased transparency in that country’s military development plans.
”We remain focused on deepening the Australia-China defence relationship in areas such as peacekeeping, counter-terrorism and junior leadership exchanges, while remaining cautious to avoid practical co-operation that might help the PLA to fill capability gaps,” the Australian paper presented to the embassy concluded.
The Royal Australian Navy and the Chinese navy held their first joint exercise involving firing of live ammunition in September last year.
Last month the Defence Department secretary, Ian Watt, and Air Chief Marshal Houston attended the 13th annual Australia-China Defence Strategic Dialogue, which was hosted in China by General Chen Bingde, the chief of the PLA General Staff.
Dr Watt said that the dialogue was ”an integral component of Australia’s defence engagement with China, and provided the opportunity to have frank and open conversations and to exchange views on areas of common interest”.
Dr Watt and Air Chief Marshal Houston also met the vice-president and deputy chairman of China’s Central Military Commission, Xi Jinping.
Air Chief Marshal Houston said: ”We committed to continuing to develop our military relationship and practical cooperation together.”
EU Debt bought up by China
Published: January 6, 2011 07:46 ET in Asia
China has been increasing its holdings of European government debt, including that issued by Spain, amid the euro-zone crisis, Chinese Vice Commerce Minister Gao Hucheng was quoted as saying on Thursday.
The Spanish daily El Pais on Thursday cited Spanish government sources as saying China has committed to buy about 6 billion euros ($7.89 billion) worth of Spanish sovereign debt.
In a statement on the ministry’s website, Gao also said that China was confident in Spanish and European financial markets and confident that they would be able to overcome Europe’s debt crisis, the Wall Street Journal reported.
“We will continue to buy debt and work together with Spain,” said Gao, who is accompanying Chinese Vice Premier Li Keqiang on a visit to Spain and other European countries.
Both officials have expressed confidence that Spain will recover from its economic crisis despite market fears of an Irish-style bailout.
El Pais published an article written by Vice Premier Li, titled, “China and Spain: A brighter future through win-win cooperation.”
Political and corporate leaders increasingly see China as a source of capital. China’s foreign-exchange reserves are by far the world’s largest, totaling $2.648 trillion at the end of September.
In the meantime, the economic mood in Europe ended 2010 on a high note, a key indicator released Thursday showed.
The European Commission’s closely watched business and consumer survey for the members of the euro currency bloc rose from 105.2 in November to a more-than-forecast 106.2 last month. The consensus among economists was that the index would nudge up to 105.5.
Ben May, European economist with the research group Capital Economics, told Monstersandcritics.com the data suggested that, “the improving global economic outlook is offsetting the ongoing troubles in the periphery.”
Alex Jones and Porter Stansberry
Coldest January Since ’85
Winter has only just begun, and many people across the country are already sick of the cold. On the heels of a record-cold December, frigid weather will continue seizing areas from coast to coast through mid- to late January.
Based on this forecast, AccuWeather.com Chief Long Range Forecaster Joe Bastardi says this month could turn out to be the coldest January for the nation as a whole since 1985.
While there has been outstanding regionalized cold in January in recent years, Bastardi points out that the U.S. has not experienced this type of coast-to-coast cold since the 1980s.
Record-smashing cold already gripped a large portion of the West the first few days of the month with snow even falling in Las Vegas Monday. Bitter arctic air has also made a return to the northern Plains, while the East and South experienced a dramatic cooldown since the weekend.
More waves of arctic air will invade the country, starting late this week and continuing through next week and beyond. The period from Jan. 10-20 is when Bastardi expects the core of the cold to be in place, with the northern Plains in the heart of it.
He says places from Chicago to Denver could have one or two days with high temperatures below zero during this time. People in New York City may be looking at one day with highs in the teens, while temperatures potentially fail to rise out of the 20s in Dallas, Texas, and Jackson, Miss., for a day or two.
Bastardi also highlights the potential for rare snow in Seattle and Portland with the upcoming weather pattern.
The cold air coming to Texas starting early next week could affect the state’s citrus industry, according to Bastardi. He thinks Florida citrus, however, should be safe.
This past weekend, AccuWeather.com Expert Senior Meteorologist Alex Sosnowski started warning about the severe cold that is coming and provided more details on just how bad it will be.
China J-20 STEALTH FIGHTER VIDEO FOOTAGE
Robert Gates, the US defense secretary, recently said China would be able to produce a combat jet by 2020, but if the video is genuine, it would suggest that it may be able to do so a decade or more sooner.
The photographs come amid growing fears over China’s rapidly-expanding military capabilities. Naval experts have expressed concern over the Dong Feng-21D ballistic missile, which is designed to target aircraft carriers in mid-sea – thus denying the United States its traditional military dominance of the Pacific.
Gold Reserves of the World
Bullion analyst Mark Robinson says this is the biggest and most ambitious task that China has ever announced.
“If China wants to take its gold reserves to 10,000 tonnes in 10 years, the country needs to buy or acquire the yellow metal to the quantity of nearly 1000 tonnes per year.”
Which countries own the largest quantity of gold reserves right now?
- World leader the United States has 8133 tonnes of gold reserves, accounting for 76.5% of its foreign exchange reserves;
- Germany has the second highest gold reserves at 3412.6 tonnes;
- France has 2508 tonnes of gold constituting 58.7% of its forex assets;
- Italy has 2451.8 tonnes of gold constituting 61.9% of forex reserves;
- China became the fifth biggest holder of gold reserves this April with 1054 tonnes;
- Switzerland has 1040 tonnes of gold reserves constituting 23.8% of total forex reserves;
- India which recently bought 200 tonnes of gold from IMF has 557 tonnes of gold reserves representing 3% of total forex reserves.
- The IMF, which currently holds 3,217 tonnes of gold, is the third-largest official holder of the precious metal, but is not technically a sovereign central bank. The IMF has made gold sales a key element of its new income model aimed at lowering its dependence on lending revenue to cover expenses.
Unregulated Toxin Present in Tap Water of 31 U.S. Cities
California is the first state to consider a limit on the “Erin Brockovich” chemical, which has been found in 31 of 35 U.S. cities recently surveyed.
The tap water in many U.S. metropolitan areas was found to have higher-than-recommended levels of chromium-6, a known carcinogenic compound that is not regulated by any state or national agency, according to a study released this week by a public health research and lobbying organization.
The Environmental Working Group (EWG), who performed the study, estimated that 74 million Americans in 42 states drink chromium-polluted tap water, much of which is likely the cancer-causing chromium-6 form.
Chromium-6 comes from industrial processes used to manufacture pigments, dyes and chrome plating, in addition to commonly being discharged from steel and pulp mills. It is also used to tan leather and prevent corrosion.
The compound, also known as hexavalent chromium, is best known from the 2000 biographical film Erin Brockovich, starring Julia Roberts.
Brockovich helped to wage a class-action lawsuit against Pacific Gas & Electric Company for contaminating groundwater in Hinkley, California. The company had hired consultants to produce sham research to obscure the link between the chromium-6 and elevated cancer rates, but, in the end, the residents of Hinkley—where chromium-6 concentrations reached as high as 580 parts per billion (ppb), with natural background levels of 1.19 to 3.09 ppb—were awarded a $333 million settlement in 1996.
More recently, EWG commissioned laboratory tests of tap water from 35 U.S. cities, where previous testing by local utilities had shown high levels of “total chromium,” a measure that includes chromium-3, an essential nutrient for human glucose metabolism.
The average chromium-6 level of all 35 cities was 0.18 ppb, with samples from the city of Norman, Oklahoma registering the highest at 12.9 ppb. One part per billion is the equivalent of one faucet drip of pollutant in 66,000 gallons. Tests detected chromium-6 in samples from 31 cities, and 25 cities showed the toxic metal at concentrations above a 0.06 ppb limit being considered by regulators in California — the only state to require chromium testing.
The compound was undetected in:
- Indianapolis, Indiana
- San Antonio, Texas
- Plano, Texas
- Reno, Nevada Read more…
BP Oil Spill: “People are getting sick all over the Gulf Coast”
The effects of the disaster that poured millions and millions of barrels of oil into the Gulf of Mexico last spring will have global ramifications, a Gulf Coast activist recently warned.
“What’s been done in the Gulf is going to eventually affect every single American citizen,” Kindra Arnesen told Project Gulf Impact in a recent interview.
She continued, “This is still going to go global because as the economy and the United States goes under the sledgehammer… the rest of the world is going to feel it.”
“This isn’t just about the United States. This isn’t just about the Gulf Coast. This is about a whole planet because one hand washes the other,” she added.
Arnesen, a South Louisiana mother who with BP’s invitation toured areas devastated by the Macondo Well explosion, described the negative health effects to which she and others, including oil spill clean up crews, were exposed around the Gulf Coast.
One such crew she encountered had brown spots on their bodies. Her friend on the same crew currently has bruising across her stomach, she said.
“It didn’t look like someone punched her in the stomach,” Arnesen explained. “It looked like the blood vessels underneath the skin surface were literally breaking and the blood was slowly coming to the surface.”
“People are getting sick all over the Gulf Coast,” she added. “If people who live here can get sick, then people who come here can very well get sick.”
Arnesen also noted that the chemicals used in the clean up are known to make animals sterile.
“We’re not that much different than a species in the Gulf,” she said, taking into account the area’s children.
According to the coastal zone director of Plaquemine Parish, the oil spread across the Louisiana shoreline after the well was capped in September from 287 miles in July to 320 miles in late November.
“The government does not have a plan,” Arnesen said. “BP is about to pull the response efforts out of the gulf. We’ve got to step up to the plate and say something.”
Video:
Tower of Babel’s Ruins Waiting for Archaeologists
Archaeologists are hoping to save the ruins of the Biblical era Tower of Babel, located in Iraq, and learn how it was built before it crumbled under the weight of confusion.
Following years of devastation under the dictatorship of Saddam Hussein and the ensuing American invasion of Iraq, World Monuments Fund conservationist Jeff Allen told The New York Times this week that archeologists are beginning to work on ancient Babylonian sites and possibly restore some of them.
No one has broached the idea of reproducing the Tower of Babel, which the Creator destroyed because of the generation’s attempt to compete with Him, “make a name for ourselves,” and build a tower to the skies while everyone in the world still spoke one language.
The Bible relates that their effort turned to confusion, with no one understanding anyone else, and that the tower became a self-destructive effort, both physically and morally..
“All this is unexcavated. There is great potential at this site. You could excavate the street plan of the entire city,” said Allen.
As a first step, experts are working on a plan to prevent further deterioration of the mud-brick ruins, which were damaged by Hussein’s personal building projects.
A mound of mud-brick buildings is all that remains of the ancient city in Babylon where the Tower was being built, whose foundations appear to be a square of earthen embankments, measuring 300 feet on each side.
King Nebuchadnezzar II, who reigned nearly 2,600 years ago, tried to rebuild the Tower of Babel to a height of almost 300 feet.
It is not clear whether the original building was actually a “tower,” an English translation of the Hebrew term, or was a “ziggurat,” a stepped pyramid that was common at the time. Building materials consisted of mud and brick because stone was not readily available.
Nebuchadnezzar described how “gold, silver and precious stones from the mountain and from the sea were liberally set into the foundations” and how to rebuild it he called on “various peoples of the Empire, from north and south, from mountains and the coasts.”
The rebuilt tower also began to crumble, but a Greek historian, visiting the site 2,570 years ago, wrote, “It has a solid central tower, one furlong square, with a second erected on top of it and then a third, and so on up to eight. All eight towers can be climbed by a spiral way running around the outside, and about halfway up there are seats for those who make the journey to rest on.”
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