Andy Narain Returns From Mumbai Alive And Well

We have a dear friend of over 12 years who found himself in Mumbai during the terrorist attack still taking place. The night before the attack, he was in one of the luxury hotels later hit by terrorists.Luckily he went bak to a home in the outer suburbs of Mumbai where he was staying. On Friday morning he was on his way to the airport to go home. He noticed heightened security. When he got to the Mumbai International Airport, he watched the horror unfold on large screeen televisions in the airport.

We heard nothing from Andy for several days. We began to expect the worst. We were over joyed when his wife sent us an email and informed us that he had made it back to San Francisco. This was our Christmas present!!!

Shanghai, China At Night 17 October,2008

Private Rocket Company SpaceX Fires 1 Million Pound Thrust Rocket

FOR IMMEDIATE RELEASE

Contact: 
Diane Murphy | VP, Marketing and Communications 
media@SpaceX.com
310.363.6714 (o)/424.236.0884 (m)

SpaceX Successfully Conducts Full Mission-Length Firing of its Falcon 9 Launch Vehicle

---

Significant Milestone Achieved as SpaceX Prepares to Demonstrate U.S. Transport to the International Space Station

Hawthorne, CA - November 23, 2008 – Space Exploration Technologies Corp. (SpaceX) successfully conducted a full mission-length firing of its Falcon 9 launch vehicle's first stage at its McGregor Test Facility in Texas, on November 22. For the static test firing, the first stage remains firmly secured to the massive vertical test stand, where it fired for 178 seconds or nearly three minutes – simulating the climb of the giant rocket from the surface of the Earth towards orbit.

At full power, the rocket generated 855,000 pounds of force at sea level. In vacuum, the thrust increases to approximately one million pounds or four times the maximum thrust of a 747 aircraft. The test consumed over half a million pounds of propellant. All nine engines fired for 160 seconds, then two engines were shut down to limit the acceleration and the remaining seven engines continued firing for 18 more seconds, as would occur in a typical climb to orbit.

The test firing validated the design of SpaceX's use of nine engines on the first stage, as well as the ability to shut down engines without affecting the functioning of the remaining engines. This demonstrates the ability of Falcon 9 to lose engines in flight and still complete its mission successfully, much as a commercial airliner is designed to be safe in the event of an engine loss. Like an airliner, the Falcon 9 engines are enclosed in a protective sheath that ensures a fire or destructive loss of an engine doesn't affect the rest of the vehicle.

The Falcon 9 will be the first vehicle since the Saturn V and Saturn 1 to have the ability to lose any engine/motor and still be able to complete its mission without loss of crew or spacecraft. Engine out reliability proved crucial to mission success on two of the Saturn V flights.

"In the past month, we performed significant upgrades to the test stand and flame trench in preparation for this test," said Tom Mueller, Vice President of Propulsion for SpaceX. "We added the flight base heat shields around the engines to protect the bottom of the rocket from the prolonged blast of heat and vibration."

"The full mission-length test firing clears the highest hurdle for the Falcon 9 first stage before launch," said Elon Musk, CEO and CTO of SpaceX. "In the next few months, we will have the first Falcon 9 flight vehicle on its launch pad at Cape Canaveral, preparing for lift-off in 2009."

About SpaceX

SpaceX is developing a family of launch vehicles intended to increase the reliability and reduce the cost of both manned and unmanned space transportation, ultimately by a factor of ten. With its Falcon line of launch vehicles, powered by internally-developed Merlin engines, SpaceX offers light, medium and heavy lift capabilities to deliver spacecraft into any altitude and inclination, from low-Earth to geosynchronous orbit to planetary missions.

On September 28, 2008, Falcon 1, designed and manufactured from the ground up by SpaceX, became the first privately-developed liquid fuel rocket to achieve Earth orbit.

As a winner of the NASA Commercial Orbital Transportation Services competition (COTS), SpaceX is in a position to help fill the gap in American spaceflight to the International Space Station (ISS) when the Space Shuttle retires in 2010. Under the existing Agreement, SpaceX will conduct three flights of its Falcon 9 launch vehicle and Dragon spacecraft for NASA, culminating in Dragon berthing with the ISS. SpaceX is the only COTS contender with the capability to return cargo to Earth and demonstrate the capability to carry crew to and from the ISS.

Founded in 2002, the SpaceX team now numbers nearly 600, located primarily in Hawthorne, California, with four additional locations: SpaceX's Texas Test Facility in McGregor near Waco; offices in Washington DC; and launch facilities at Cape Canaveral, Florida, and the Marshall Islands in the Central Pacific.

(Click picture to play video)

Photo/Video Caption: The full mission duration test firing of the Falcon 9 rocket first stage lasted 178 seconds, nearly three minutes. Conducted at the SpaceX test facility in McGregor, Texas, the nine Merlin engines produced 855,000 lbs. of thrust and consumed over half a million pounds of liquid oxygen and rocket grade kerosene during the test.

Another Great Depression?

Technical Scoop, November 24, 2008 Page 1

TECHNICAL SCOOP FOR NOVEMBER 24, 2008

Charts and technical commentary by David Chapman

Union Securities Ltd, 33 Yonge Street, Suite 901, Toronto, Ontario, M5E 1G4

Fax (416) 604-0533, (416) 604-0557, phone (toll free) 1-888-298-7405

david@davidchapman.com

www.davidchapman.com

A DEPRESSION OR NOT A DEPRESSION

It seems that the D-word is now becoming prevalent. You won’t hear it from the any of the

financial authorities, or the politicians, or anybody in an official capacity. Well okay we

overheard Stephan Harper, Prime Minister of Canada say “The world is entering an economic

period unlike, and potentially as dangerous as, anything we have faced since 1929”. Okay so

maybe there is some recognition that we are in unchartered territory. But the thought of an

economic depression is not something anyone really wants to discuss. We have stated that we

don’t believe we will see anything on the scale of the Great Depression. Trouble is, even

economists can’t agree on the definition of a recession or the rarer depression.

The rule of thumb is that a recession is two consecutive quarters where GDP declines. A

depression is a severe recession, with GDP declining by more than 10 per cent. Thus far at least

we have seen no one predict that will happen but it hasn’t stopped a host of pundits declaring that

we could be in a depression and that the stock market is probably only about half way through its

decline. Certainly if the latter were the case then that would be equivalent to the long liquidation

that took place 1929-32. In all of stock market history of North America there simply is no record

of decline of that nature either before or after. Typical panics and sharp recessions or even prior

to the 1929 crash and depression collapses usually shed no more than 50 per cent. By that

definition for the stock market we are there.

Prior to the Great Depression, economic downturns were referred to routinely as depressions. In

looking back, many of them are probably better described as recessions, even when prolonged. In

1929-33 GDP declined in the US by almost 33 per cent. Following a period of recovery a

secondary depression hit, and GDP declined 18.2 per cent in 1937-38. Since then the largest

decline was the recession of 1974-75, where GDP declined a modest 4.9 per cent.

Most depressions in modern times have occurred in emerging economies. The worst one recorded

for more advanced economies was the Russian depression of 1990-95 where GDP declined by

Technical Scoop, November 24, 2008 Page 2

almost 50 per cent. By contrast, despite all the talk about the long Japanese nightmare of the

1990s, only 1993, 1998-99 and 2001-02 saw negative growth. The worst was a 2.1 per cent GDP

decline in 2001. For sure GDP growth was way down from its go-go growth years of the late

1980s but Japan never tumbled into a huge depression like the 1930s or the Russian collapse of

1990-1995.

Today China has replaced Japan as the go-go economy. But given that its growth was always in

the area of 10 per cent annually, even a decline to five per cent is a significant slowing. But that is

not by any stretch a depression, irrespective of its impact on other economies. The real danger is

that the US is very dependent on Chinese credit. If the Chinese maintain their emphasis on

exports and on recycling those dollars into US debt then that will sustain the US economy. But if

the Chinese shift their focus to building their own consumption society encouraging their own

people to buy their own products then that would create a huge debt hole for the US to fill.

The start of the current collapse is traced back to June 2007 and the sub-prime mortgage crisis but

the financial panic portion of the collapse can be traced to September 15, 2008 the day Lehman

Brothers (LEHMQ–OTCPK) declared bankruptcy. On that day the Dow Jones Industrials closed

at 10,917. Four days later the DJI reached a high close of 11,388. Then came the deluge and the

financial panic of 2008 as the DJI fell 31 per cent in less than a month.

With unemployment now rising we are facing a further and potentially worse crisis with the

North American automotive industry and hundreds of thousands of jobs in the balance. The

unemployment rate in the US is already at 6.5 per cent (and that’s the official rate, not the much

higher rate reported at www.shadowstats.com) and with the spectre of more unemployment and

companies going under, it explains why we are seeing the D-word being tossed around.

But negative growth is not a depression, unless of course we are truly slipping off towards a GDP

decline of more than 10 per cent. But given the heights from which we have come, the signal is

already there that we are facing a crisis of severe proportions. For the boomer generation that has

known nothing but good times it is quite a shock.

So where are the signs that things could get worse? In any downturn, companies go under. The

biggest has been Lehman Brothers. Washington Mutual (WAMUQ – OTCPK) became the most

notable bank collapse. Many others were just absorbed by someone else, like Bear Stearns (taken

by J P Morgan Chase (JPM-NYSE) and Merrill Lynch (MER-NYSE), which is to be merged with

Bank of America (BAC-NYSE). Some, such as Goldman Sachs (GS-NYSE), are in the process

of converting themselves into bank holding companies.

One of the problems as we see it right now is that all of the money being thrown at the problem is

not really getting into the broad economy. Instead it is being used to try to bail out the financial

powers (i.e. banks, investment dealers). There is no guarantee that this money will find its way

into the broader economy. Numerous other banks have gone under and some big ones such as

Citicorp (C-NYSE) are teetering, threatening to lay off thousands more workers. That is the real

problem here in that the credit system has become paralyzed. In that kind of environment

everyone suffers.

Already because of job losses, home losses and portfolio losses, the consumer economy has

stopped spending. The result is that the already weakened automotive industry led by the Big

Three (General Motors (GM-NYSE), Ford (F-NYSE) and Chrysler (DAI-NYSE)) are on the

verge of bankruptcy. After the September 11, 2001 crisis the President implored for everyone to

go out and shop. Today that seems just rather quaint as if it were the solution to societal ills.

Technical Scoop, November 24, 2008 Page 3

Numerous retail stores have either entered Chapter 11 bankruptcy, such as Circuit City (CCTYQOTCPK).

Eddie Bauer (EBHI-NASDAQ) and Ann Taylor (ANN-NYSE)) are teetering, and have

closed stores. Many other large chains have also announced store closings and are warning of

problems, such as Best Buy (BBY-NYSE) and J C Penney (JCP-NYSE). Smaller stores just close

their doors as numerous ones already have. All of these result in the loss of thousands of jobs. If

the North American automotive industry is in a state of catharsis then the retail industry is having

a nervous breakdown.

But it goes even deeper. To the above companies and industries we can add airlines (Continental

(CAL-NYSE)), hotels (MGM Mirage (MGM-NYSE)), anything in Las Vegas these days, tourism

(see Las Vegas), real estate and construction, manufacturing, telephony (Vodafone (VODNYSE)),

the mining and the energy sector both of whom are having a seizure. This is just a bare

bones indication of the companies’ currently experiencing trouble. While the focus is primarily

on the automobile companies, the potential for trouble in the consumer economy beyond the auto

companies is huge. In this environment, does buying another iPhone or iPod make any economic

sense? If it doesn’t then one should be concerned about Apple (AAPL-NASDAQ) which hit new

lows on Friday. Without infusions of cash into these sectors they could be badly impacted,

leading to even more job losses.

They have defined the greatest threat to the markets as being the seizing-up of the credit markets.

Even international letters of credit which impact international trade have had credit problems of

late. But to pour funds into the banking system through the so-called Troubled Asset Relief

Program (TARP) is not the answer. Paulson’s about-face on the type of assets eligible for TARP

caught everyone by surprise and was a major factor behind the most recent sharp selloff.

TARP is not a solution because all it does is pour public money into private hands, leading to a

further concentration of wealth and power in the banking system. There is no obligation on the

part of the banks to lend the funds out to a broader economy in dire need. Indeed the banking

system is protecting its own position by not granting credit and also by calling in healthy loans,

on the pretext of protecting its capital position. This just adds to the woes of the industrial and

service sectors.

What is needed is a bailout of the consumer economy, not of creaky banks. This is one area which

if not properly addressed in the coming months could make the situation worse than it might be.

Of course that can only be accomplished by fiscal stimulus. The risk is that the authorities have

“blown their wad” so to speak, bailing out the financial system.

So how much have they blown? One needs to look at the balance sheet of the Federal Reserve. It

has jumped $1.3 trillion in the past year. Most of that occurred in the past several months as the

financial collapse got underway.

Technical Scoop, November 24, 2008 Page 4

Obvious ones that have leaped are as follows ($ billions):

Factors Affecting Reserve Balances November 20, 2008

Term Auction Credit $415

Commercial Paper Funding Facility $266

Primary Dealer Credits $50

Primary Credits (banks) $91

Other Credit $85

Other Fed Assets $565

Total $1,472

A year ago most of these were either non-existent or minimal in amounts outstanding. The Fed

has offset some of these amounts through the sale of US Treasuries from the portfolio that have

fallen $303 billion over the past year.

But this is really only a part of the explosion in funding being provided either through the Fed or

the US Treasury. A CNBC story (Financial Crisis Tab Already in the Trillions – CNBC.com Nov

18, 2008) noted funds spent or promised and assumed thus far that the actual or promised

increase in funding approximates to $4.3 trillion. ($ billions):

Financial Crisis Balance Sheet

Government Entity Sum in Billions of Dollars

Federal Reserve

(TAF) Term Auction Facility 900

Discount Window Lending

Commercial Banks 99.2

Investment Banks 56.7

Loans to buy ABCP 76.5

AIG 112.5

Bear Stearns 29.5

(TSLF) Term Securities Lending

Facility

225

Swap Lines 613

(MMIFF) Money Market Investor

Funding Facility

540

Commercial Paper Funding

Facility

257

(TARP) Treasury Asset Relief

Program

700

Technical Scoop, November 24, 2008 Page 5

Other:

Automakers 25

(FHA) Federal Housing

Administration

300

Fannie Mae/Freddie Mac 350

Total 4284.5

Note: Figures as of Nov. 13, 2008

*References include US National Archive, US Dept of Defense, US Bureau of

Reclamation, Library of Congress, NASA, Panama Canal Authority, FDIC, Britannica,

WSJ, Time, CNN.com, and a number of other websites.

The question that has to be asked is where the US Treasury is going to find the money to fund

this. Who is going to buy this – China? Japan? Or will it just be recycled back to the same banks

they are bailing out through TARP and other Fed facilities? And is that the end of it? Some

estimates have said that the $700 billion TARP program could increase to $5 trillion. Some of

this is clearly showing up in the explosion of the monetary base.

We have never seen anything like this before. We noted a few weeks ago that this is very

inflationary down the road and makes it essential that one own bullion (gold, silver, platinum).

Add to that the hints that China keeps dropping that they would like to add 4,000 tonnes of gold

to their reserves. We suppose this can only be accomplished by selling some of their US Treasury

holdings. (China has now surpassed Japan as the largest foreign holder of US Treasuries.)

Technical Scoop, November 24, 2008 Page 6

Speaking of China, things are so bad there that they had to roll out a $586 billion stimulus plan.

They are concerned that all the laid-off factory workers no longer building toys for America will

riot. So this drop is not just in the USA; it is global. And everyone is being impacted as even the

Dubai the capital of fun and luxury for the obscenely rich is facing bankruptcy, closings and the

capping of towers. We even noted that the Yellowstone Club of Montana has gone bankrupt. The

Yellowstone Club is private ski and golf resort for billionaires.

While there may be duplication with lists that others have compiled the areas of vulnerability that

need to be pointed out are:

- US consumer debt totalling $2.5 trillion is extremely vulnerable to further meltdowns.

Efforts to combat the growing delinquency and defaults in the credit card sector may

actually make things worse as the credit card issuers clamp down.

- While the automobile companies are bleeding money and in danger of bankruptcy, many

car dealerships which are independently owned are closing their doors or are themselves

threatened with bankruptcy. As dealerships go out of business there is no one for the

automobile companies to sell their cars to. The car dealerships are the face to the public.

- US States and municipalities are bleeding, not only with portfolio losses but with a

collapsing tax base. US States and municipalities are not allowed to run a deficit but many

of them if not already in deficit are headed there. The same story is being played out in

Canada although the situation is not as bad – yet. Most of the provinces are predicting

deficits in the coming year as is the Federal Government. Municipalities who cannot run

deficits will be severely squeezed and residents of towns and cities will be undoubtedly be

facing potentially large service cutbacks.

- Pension plans have been devastated, particularly corporate and private pension plans. But

even large government pension funds have taken a huge hit. The Canada Pension Plan and

the Caisse de Depot the huge financial institution that runs Quebecers pensions have both

reported large losses. Most corporate and private pension plans were in deficit even before

the onset of this crisis. Either the corporations will have to ante up a lot more (not likely)

or retirees are headed for sharply reduced pensions (most likely). Some pension plans that

invested heavily in their own stock like AIG or Freddie Mac and Fannie Mae have been

almost wiped out.

- Freddie Mac (FRE-NYSE) and Fannie Mae (FNM-NYSE) the two mortgage giants are still

in catharsis and may need more funding. How they maintain their NYSE listing as penny

stocks is beyond me.

- Bond spreads for corporate debt and especially junk bonds are still very wide, making it

difficult for them to raise cash through bond issues. If they can raise cash, it is expensive

because of high yields. Given the huge new demands of the Federal government the risk is

of crowding out so that the corporations cannot access the markets at all.

- Social security, Medicare and Medicaid in the US are unfunded to the tune of over $40

trillion. Here in Canada Medicare and Social Security (Old Age Pension and CPP) are both

secure but will come under stress.

- As unemployment rises the workers losing their jobs lose their medical benefits, adding to

the 46 million and growing who do not have medical and drug coverage in the USA.

Technical Scoop, November 24, 2008 Page 7

- The cost of two wars is now approaching $900 billion. It will go a lot higher because the

US is ensconced in Iraq and Afghanistan until at least 2011.

- There is a risk of more wars. One should not take this possibility lightly. History has clearly

demonstrated that periods of economic stress often result in wars. Anyone of these could

widen in a wider war. The global flashpoints are many.

- The US’s illegal incursions into Syria and Pakistan could risk retaliation and a widening

of the Iraq war.

- While the Iraq parliament is to debate a bill that allows US troops to stay in Iraq for

another 3 years its passage is not guaranteed as the Iraqi street is opposed to it.

- The passage of the bill may restart or escalate the crisis in Iraq. The US will not leave

Iraq lightly because of the huge investment they have already made in the invasion and

occupation of the country.

- The US under Obama has promised to up the ante in Afghanistan leading to a possible

widening of that conflict.

- The Iranian situation has not gone away. Israel in particular has threatened strikes against

Iran in retaliation to its possible building of nuclear weapons.

- Russia has reasserted its presence in its sphere of influence and this comes into direct

conflict with US interests in the Caucasus region (Georgia and the former Russian states

around the Caspian Sea, where huge reserves of oil and gas lie).

- The Israeli/Palestinian question remains unresolved and continues to fester as it has since

1948.

- Despite lower oil prices the US trade deficit is still around $650 billion annually. This

could actually improve if imports fall due to falling demand in the malls of America.

- Planned expenditures on infrastructure, while badly needed, will only add to the US debt.

You add all these up and see why some are now using the D-word. The planned move on the

infrastructure is very positive. Recall that huge infrastructure spending in the 1930s on the New

Deal. Much of that infrastructure still exists today and is what needs replacement or rebuilding

today.

Despite all of these gloomy prognications we still do not believe that we are headed for another

Great Depression. It may well be a steep recession with unemployment (the official one) rising to

10-12 per cent but that would be in line with unemployment seen in 1974-1975 and 1980-1982.

GDP may contract as much as two per cent in the coming year and could be worse. But as we

have noted in the past, the economy today is very different from that of the 1930s. (Note: In the

last Scoop November 17, 2008 – “Buy when there is blood on the streets” we noted that from

1929-1932 the Fed hiked interest rates. We were incorrect .The Fed actually lowered rates during

that period and attempted to flood the system with funds but the impact of the strategy was very

ineffective).

The recent CPI numbers showed the largest drop ever of one per cent, driven primarily by the

sharp fall in energy prices. Year-over-year the CPI is still up 3.7 per cent. The core rate, which

they love to tout, fell only 0.1 per cent, emphasizing the fall in energy prices. This has set

everyone into a panic that deflation is setting in not only in the US but globally. The monetary

and political authorities fear deflation. They will do what they need to do to prevent deflation.

Technical Scoop, November 24, 2008 Page 8

They will do what have to do to re-inflate their economies. Price declines such as we are seeing in

energy prices is temporary and oil undoubtedly will overshoot on the downside just as it overshot

on the upside. We are seeing so many negative forecasts on oil prices that the odds of it reaching

these levels ($20, $30 etc.) is probably diminishing quickly. The reality is that global demand

remains high and production is declining from many major fields. With low prices, exploration

will slow or stop altogether, ensuring that the next sharp price movement will be set in motion as

soon as demand perks up again. Any outbreak of war or upping the ante in current wars in the

Mid-East or the Caucasus will send prices up as quickly as they fell.

Given the huge infusion of liquidity into the system, the risk of a deflationary depression is

extremely low. The real risk lies in an inflationary depression or inflationary recession. The focus

then should be on the next bubble. We continue to firmly believe that the next bubble will be in

Gold and by extension silver and platinum. While the risks of a depression are certainly there, the

odds that we will actually have one are probably low.

Our monthly Gold chart shows the huge up move from the double bottom of 1999 and 2001. We

appear to have completed three major waves to the upside. Once this steep correction, a

correction of the entire move from 2003, is out of the way we will embark on another wave to the

upside. This is the one where we suspect that Gold will go to $2000 and quite possible higher

(some are calling for a move to $10,000). Of course what we are not sure of is the current

correction over as witnessed by the huge ABC drop since March 2008 or is this merely the A

wave of a larger degree with at least two more waves to come. The nature of the coming up move

will determine better where we are.

Technical Scoop, November 24, 2008 Page 9

As well there remain arguments on where the Dow Jones Industrials is headed. Many are saying

that this is a bad as it gets. Typically speaking any one collapse never or at least rarely exceeds 50

per cent (other markets clearly can experience far more). But given the risks for a depression as

noted above others believe that the fate of the DJI is actually much lower eventually. While we

may be on the cusp of a rebound (which we firmly believe) that should last a few months the

nature of that rebound will determine whether we will go through a period of wide swings such as

we saw from 1966 to 1982 or will we actually have a much larger decline.

Of course in an inflationary depression one could actually see the DJI rise even if as it fails to

keep up with inflation. We are showing a chart we found at Cycle Pro Analysis showing the US

stock market from 1800 to today. It is an inflation adjusted chart of the DJI based on yearly

prices. The chart shows a clear channel rising from those long ago dates. On an inflation adjusted

basis the decline will last until 2016-18 and fall to the 3000-4000 zone. Now remember this is on

an inflation adjusted basis so the actual may be considerably higher depending on the rate of

inflation. Note the 1982 low was below the 1974 low.

We are also showing our chart of the DJI from 1920 also adjusted for inflation. The story seems

to be largely the same. On an inflation adjusted basis the DJI has a lot further fall.

Technical Scoop, November 24, 2008 Page 10

Whether it is “To be a Depression, or not to be a Depression” we clearly have a lot more

adjustments to make in our lifestyles. For years we have been living in a world of illusion built on

a sea of debt. The piper has now arrived and the payment will be steep. But as been shown so

many times in the past Gold and bullion will once again be a panacea for global economic stress.

It has been demonstrated so many times in the past that when upheaval occurs as Europe has

experienced in the past century or even as parts of Asia has experienced many times as well the

one thing you take with you when you are uprooted is the Gold. Gold has been a currency for 3

thousand years. We expect it to be around once again through this crisis.

Technical Scoop, November 24, 2008 Page 11

David Chapman is a director of Bullion Management Group the manager of the BMG

BullionFund www.bmsinc.ca

Note: Chart created using Omega TradeStation. Chart data supplied by Dial Data.

Note: The opinions, estimates and projections stated are those of David Chapman as of the date hereof and are subject to change

without notice. David Chapman, as a registered representative of Union Securities Ltd. makes every effort to ensure that the contents

have been compiled or derived from sources believed reliable and contain information and opinions, which are accurate and complete.

Note: The information in this report is drawn from sources believed to be reliable, but the accuracy or completeness of the

information is not guaranteed, nor in providing it does Union Securities Ltd. assume any responsibility or liability. Estimates and

projections contained herein are Union’s own or obtained from our consultants. This report is not to be construed as an offer to sell or

the solicitation of an offer to buy any securities and is intended for distribution only in those jurisdictions where Union Securities Ltd.

is registered as an advisor or a dealer in securities. This research material is approved by Union Securities (International) Ltd. which is

authorized and regulated by the Financial Services Authority for the conduct of investment business in the U.K. The investments or

investment services, which are the subject of this research material, are not available for private customers as defined by the Financial

Services Authority. Union Securities Ltd. is a controlling shareholder of Union Securities (International) Ltd. and the latter acts as an

introducing broker to the former. This report is not intended for, nor should it be distributed to, any persons residing in the USA. The

inventories of Union Securities Ltd., Union Securities (International) Ltd. their affiliated companies and the holdings of their

respective directors and officers and companies with which they are associated have, or may have, a position or holding in, or may

affect transactions in the investments concerned, or related investments. Union Securities Ltd. is a member of the Canadian

Investment Protection Fund and the Investment Dealers Association of Canada. Union Securities (International) Ltd. is authorized and

regulated by the Financial Services Authority of the U.K.

Hainan Airlines Replies To My Grievous Complaint And Offers An Apology

Dear Mr. Jack Waldbewohner,

Thank you very much for choosing Hainan Airlines. We feel deeply sorry for any inconvenience that you have experienced on the flight HU7292, 13th OCT, 2008. We really appreciate if you would like to accept our sincere apology for our service that did not satisfy your expectation when the flight was delayed due to mechanical failure.

Hainan Airlines has investigated what you indicated on the pervious letter immediately. Before take-off, a transit check had been made on the HU7292 in case of making sure the flight equipment was airworthiness. During the flight, a windshield heating wire failed and the failure caused cracks inside the third layer of the windshield. The flight crew executed instantly the Emergency/Abnormal Procedures of the Quick Reference Handbook. While, QAR data shows that the operation was correct. In accordance with the CAAC’s principle that we have to land at the nearest airport as soon as possible to provide  the passengers with the utmost safety during the flight.

Aircraft control and operation differ from type to type, even from country to country. All of the flights of Hainan Airlines are operated strictly according to the aircraft manufacturer’s instruction manuals, CAAC‘s rules and regulations, company’s Operating Manuals. The safety system of Hainan Airlines has passed the CAAC’s Safety Operation Audit and IATA’s IOSA Audit. The flight safety record of Hainan Airlines has also been keeping for 15 years. Please be assured that having the safest and most reliable aircraft is the most important of Hainan Airlines’ top priorities.

With reference to your letter what a regret  that we fell short on our delay flight service. We value your professional views and suggestions very highly and we have immediately taken an action to check our service system and try our best to improve our service from now on, and enhance our staff’s ability for a better service quality. Efficient perfect service is the only way to lead our company become a successful airline brand, We commits to provide all of our customers on the highest service standard, and re-build your confidence to fly with Hainan Airlines.

Thank you again for choosing Hainan Airlines. It would be our honor to have   an opportunity to serve you again at the level of performance you expect and deserve from us.

Yours sincerely,

Hainan Airlines

Elena Relxing On The Liang River Cruise On 16 October,2008

Another View Of Xian,China At Night On 15 October,2008

Elena And I Take A Relaxed Raft Ride Down The Liang River On 16 October,2008

Another View Of A Water Buffalo On The Liang River In Southern China On 16 October,2008

China Trip

A Water Buffalo In The Waters Of The Liang River On 16 October,2008

These are not nice guys! I became familiar with them in Vietnam.

The Awesome Beauty Of The Liang River On 16 October,2008

The Liang River runs right near the border with Vietnam. It looks just like Vietnam. It was like returning to a place of awful sadness after 37 years. I adjusted to it well and did not let evil spirits haunt me.

Rommel and Sonia Orellana On The Liang River 17 October,2008

A Fishermen Using Birds To Help Him In Guilin,China On 16 October,2008

Elena And I In Guilin, China On 16 October,2008

Iceland's Economic Collapse--A Warning For The US..It Could Be Us Next!

Letter from Iceland

By Robert Jackson. Photographs by Bjarki Reyr

Published: November 14 2008 11:51 | Last updated: November 14 2008 11:51

Hallgrímskirkja cathedral looms up out of the mists and gloom of downtown Reykjavík

Think of Ireland. Rotate it 90 degrees clockwise, make it a third bigger and hang it like a pendant from the Arctic Circle. Crack open the earth’s crust below to release limitless supplies of geothermal steam, then fill its territorial waters, all 200 miles of them, with an abundance of cod.

Give it a population of 300,000, about the same as Coventry, 70 per cent of them in the cities of Reykjavik and Akureyri. Ensure they are all related and give the majority the ability to trace their ancestry back to the times of settlement, more than a thousand years earlier. Endow these people with industry and ambition. Give them their own language – all but unchanged for a millennium – a literary tradition, three national newspapers, two television channels, free universal healthcare and education and close to zero unemployment. Give this country a consistently high ranking in the world standard-of-living charts and you have the Iceland of the recent past. Not a bad place, all in all.

Now allow this country’s banks – virtually unregulated – to borrow more than 10 times their country’s gross domestic product from the international wholesale money markets. Watch as a Graf Zeppelin of debt propels its self-styled “Viking Raiders” across the world’s financial stage, accumulating companies like gamblers hoarding chips. Then sit on the sidelines as the airship flies home and explodes, showering its blazing wreckage over this once proud, yet tiny, nation.

There you see the Iceland of today – the victim of an economic 9/11 and one of the very few places in the world where the words “financial meltdown” can be used without fear of exaggeration.

. . .

There is no daytime TV in Iceland. Parents are at work and children at school, so the test card, that feature of a bygone age, is the only thing aired. For the transmitters to be switched on in mid-afternoon and a sombre-looking Geir Haarde, the prime minister, to appear behind a desk, a national flag at his side, it had to be serious – and it was. The country was on the verge of bankruptcy; the government was taking control of the banks and was going to assume far-reaching powers to secure the safety of the nation and its savers.

As I watched, I felt a detached sympathy for those poor people living on a blighted island – until it dawned on me that I was one of them. Recent events had savaged my net worth by 60 per cent and pushed up my cost of living by more than 20 per cent. Iceland’s plight was mine, too. What I failed to appreciate at the time was the emotion of this unprecedented television address, particularly in the way it finished:

“Fellow countrymen ... If there was ever a time when the Icelandic nation needed to stand together and show fortitude in the face of adversity, then this is the moment. I urge you all to guard that which is most important in the life of every one of us, to protect those values which will survive the storm now beginning. I urge families to talk together and not to allow anxiety to get the upper hand, even though the outlook is grim for many. We need to explain to our children that the world is not on the edge of a precipice, and we all need to find an inner courage to look to the future ... Thus with Icelandic optimism, fortitude and solidarity as weapons, we will ride out the storm.

“God bless Iceland.”

Edda, my partner, was in tears on the sofa beside me.

A drive across town later that afternoon, October 6, at first gave grounds for comfort. The roads were as full as usual for the Reykjavik rush-hour – a half-hour build-up of traffic. Aircraft flew in and out of the downtown airport, students made their way home from schools and universities – note the plural – while visitors went to hospitals and fitness fiends to sports clubs. Reykjavik showed all the outward appearances of carrying on.

But a different picture began to emerge from the hourly news bulletins on the car radio. The Icelandic krona’s freeze in the capital markets had now spilled over into the day-to-day transactions of Icelanders abroad. Holidaymakers and business travellers venturing “til Útlanda”, as it is called, found their credit cards refused, and those wishing to buy foreign currency could not find willing sellers, aside from one or two who limited their purchases to €200.

Trust in the banks had evaporated and people were trying to find a safe haven for their cash. One man had waited for six hours in a bank while his life savings, more than £1m in kronur (at IKr200 to the pound), were counted out in cash in front of him. “I feel like an innocent man dragged from his bed, put in a barrel and hurled over Gullfoss!” wrote one journalist that morning. “We have been brought down by a handful of men who bet our nation’s wealth, fame and prosperity on a throw of the dice.” Gullfoss is one of Iceland’s tourist attractions – a majestic 100ft waterfall.

On collecting our daughter from her handball practice, I learnt the news that her club could not obtain the foreign currency it needed to release their new team shirts from customs. The city’s myriad sports teams rely on local sponsors and our daughter also brought the news that this source of funding for her team was likely to dry up in the months to come. Later that evening, Skype, our communications lifeline, would not renew our credits with an Icelandic credit card. E-mails began to arrive from friends overseas, alarmed by news reports and asking if we were all right.

But all this was trivial compared with the financial distress, in some cases ruin, that now faces a significant proportion of the population.

Easy access to 100 per cent mortgages has seen a change to the traditional pattern of young Icelanders living with their parents until their mid-twenties. The suburbs of Reykjavik have grown by a third in the past decade, most of it housing for first-time buyers. Whole new neighbourhoods have emerged. New streets house young couples, many with children, most with two cars in the drive and furnished with the best that Ikea can provide. All bought with 100 per cent loans, many in foreign currencies.

Iceland is the only country in the world that indexes its loans in addition to charging interest. This means that when Icelanders borrow IKr1,000 from the bank and inflation increases by 5 per cent, the bank increases their debt to IKr1,050 at the end of the year. A great deal for the bank and fine for you, too – so long as the property’s value and your salary are increasing by inflation and more. The majority of Icelandic mortgages are based on this punitive system and with inflation running at nearly 20 per cent, they will see their IKr1,000 loan turn into a IKr1,200 loan. The interest burden will increase proportionally. This is bad enough, but when coupled with falling house prices, it means that many face a particularly savage variety of negative equity. The impact on highly geared borrowers, which in practice means most Icelanders, would be hard enough even with two incomes, but with unemployment set to soar, many households are going to go under.

A recent first-time buyer, a woman in her late twenties, said: “I took a 100 per cent loan to buy an apartment. I placed my savings in Kaupthing’s money market account, because it promised high interest rates, and my pensions in Kaupthing’s Vista 1 at the prospect of becoming a millionaire retiree. Both of these funds were based on stock investments and I knew that they were risky – but I took the bait and the risk. Now most of this money, if not all, is lost.”

Icelanders are by nature frugal people. It was one of the few countries in the world, perhaps the only one, that had a pension system that could meet the needs of its ageing population. But in recent years, many older people have been persuaded by the banks to invest their savings in high-yielding money-market accounts. As a result of the collapse of the banking system, many of these accounts have seen huge write-downs and some are now worth less than half of their previous values. The additional money people had put aside to top up their pensions has been hard hit.

Bjork, Iceland’s ambassadress of cool, summed it up in The Times on October 28: “Young families are threatened with losing their houses and elderly people their pensions. This is catastrophic. There is also a lot of anger. The six biggest venture capitalists in Iceland are being booed in public places and on TV and radio shows; furious voices insist that they sell all their belongings and give the proceeds to the nation. Gigantic loans, it has been revealed, were taken out abroad by a few individuals and without the full knowledge of the Icelandic people. Now the nation seems to be responsible for having to pay them back.”

A homemade banner, made of sheets, hangs over the main motorway in Reykjavik, tied to the railings of a bridge. “Stondum Saman!” it cries out. “Let us stand together!” It’s the new rallying cry of a beleaguered nation.

A cyclist in Reykjavík on a gloomy day

Icelanders have seen their economy swell and shrink from time to time over the centuries, and always handled it calmly. Perhaps their heritage in fishing and agriculture enabled them to meet good years and bad with equanimity. Now they must cope equally well with an attack of economic bulimia. To understand what makes this crisis – kreppa, as it is known here – so unlike any other, a little history is needed.

For Icelanders, the golden years were the early years, shortly after the land was settled in the ninth century. The Viking tradition, the Althing – the legislative assembly dating to 930 – and the literary canon of Sagas and Eddas are the nation’s cultural bedrock. But after that, Iceland almost disappears from the history books. While the agricultural revolution, the Renaissance, the industrial revolution came and went, while the fine cities of Europe were being built, while artists from Michelangelo to Mozart were pouring forth their creations, while the great inventions and discoveries were being invented and discovered, Icelanders were hunkering down in their turf houses, meeting the hardest challenge of all – survival.

They survived plague, famine, earthquakes and volcanoes. There were times when some even considered abandoning the island. But they stayed on. They stayed and survived. Icelanders will tell you that only the fittest survived, but that is only half the story, because survival requires another key attribute: stubbornness. And Icelanders have it in spades. It is a national trait, and they view it not as a weakness but as a virtue. It comes from experiencing hardship and enduring it. It means finding satisfaction in a simple task done well and sticking to it; finding comfort and solace in family and kinship and being bound by those familial bonds and duties. And perhaps most important of all, it means believing in the independence of the individual as part of the fabric of nationhood, and fighting for that independence. Put simply, the country has values.

And this is what sets this catastrophe apart from the earthquakes and plagues of former years. This is a man-made disaster and worse still, one made by a small group of Icelanders who set off to conquer the financial world, only to return defeated and humiliated. The country is on the verge of bankruptcy and, even more important for those of Viking stock, its international reputation is in tatters. It hurts.

. . .

Picture a pig trying to balance on a mouse’s back and you’ll get some idea of the scale of the problem. In a mere seven years since bank deregulation and privatisation, Iceland’s financial institutions had managed to rack up $75bn of foreign debt. In his address to the nation, Haarde put the problem in perspective by referring to the $700bn financial rescue package in America: “The huge measures introduced by the US authorities to rescue their banking system represent just under 5 per cent of the US GDP. The total economic debt of the Icelandic banks, however, is many times the GDP of Iceland.”

And here is the nub. Iceland’s banks borrowed more than $250,000 for every man, woman and child in Iceland, and placed an impossible burden on the modest reserves of the central bank in the event of default. And default they have.

Voices of caution – there were many in Iceland – were drowned out by a media that became fixated on the nation’s emergence from drab pupa to gaudy butterfly. Yet, Icelanders’ opinions were divided. For some, the success of their Viking Raiders, buying up the British high street, one even acquiring that most treasured bauble of all, a Premier League football club, marked the arrival of a golden era. The transformation of Reykjavik from a quiet, provincial fishing port to a brash financial centre had been as swift as it was complete, and with the musicians Bjork and Sigur Ros and Danish-Icelandic artist Ólafur Eliasson attracting global audiences, cultural prestige went hand in hand with financial success. Icelanders could hold their heads high before the rest of the world.

Hallgrimur Helgason, well-known for his novel 101 Reykjavik, said in a letter to the nation in a Sunday newspaper on October 26: “Deep down inside we idolised these titans, these money pop-stars. Awestruck we watched their adventures and admired them when they supported the arts and charities. We never had clever businessmen, not for a thousand years, not to mention men who had won battles in other countries...”

For others, the growth was too rapid, the change too extreme. Many became uncomfortable with the excesses of the Viking Raiders. The liveried private jets, the Elton John parties, the residences in St Moritz, New York and London and the yachts in St Tropez – all flaunted in Sed og Heyrt, Iceland’s equivalent of Hello! magazine – were not, and this is important, they were not Icelandic. There was a strong undertow of public opinion that felt that all this ostentatious celebration of lavish lifestyles and excess was causing the nation to disconnect from its thousand-year heritage. In his letter to the nation, Hallgrimur continued: “This was all about the building of personal image rather than the building of anything tangible for the good of our nation and its people. Icelanders living abroad failed to recognise their own country when they came home.”

What international sympathy there was for Iceland’s plight evaporated with the dark realisation that the downfall of Iceland’s three main banks – Landsbanki, Kaupthing and Glitnir – brought with it the potential loss of £8bn for half a million savers in northern Europe, the bulk of whom were British. The shrill media response in the UK was reported extensively in Iceland. The British government’s use of anti-terror legislation to freeze the assets of Landsbanki pushed Iceland’s banking system into the abyss. It was a move viewed in Iceland as hateful and unnecessary. A few days later the one remaining viable bank, Kaupthing, went under.

Pedestrians brave the cold in Reykjavík, beneath a poster of young Icelanders. The prime minister recently urged people to explain to children that ’the world is not on the edge of a precipice’

Then Landsbanki was placed on a British Treasury list of groups subjected to financial sanctions, along with al-Qaeda and the Taliban. A copy of the UK government webpage appeared in Icelandic papers and a new website,www.indefence.is, was launched. A picture on it shows a young girl with a placard that reads: “I am not a terrorist, Mr Brown.”

At this time of year, the most-watched TV show in Iceland is Saturday night’s Spaugstofan, which translates literally as The Spoof Room. It’s a hit-or-miss affair, but events of the past few weeks have provided the writers with a rich seam of source material. A recent episode featured a well-worked lampoon of the film Titanic, entitled Icetanic, with Geir Haarde and the chairman of the governors of the central bank, David Oddsson, standing on the bridge of “the economy that could not sink”. A sketch shows Gordon Brown throwing Icelanders off a life raft. “Get back in the water where you belong, you terrorist bastard!” he shouts as he throws another one overboard.

When I tried to explain Iceland’s plight to a friend in the UK who works in banking, I received short shrift. “You must have gone troppo, Robert! They may not have dressed up in burkas and strapped several kilos of Semtex around their waists. But to go into the high street, persuade charities, pensioners, local authorities to deposit money and then disappear, having trousered nigh on £8bn is, even by City standards, bad. Financial terrorism, grand larceny, call it what you will, but the government had to act and act quickly to stop funds leaving the country.”

Troppo can hardly apply one degree south of the Arctic Circle, but if its northern equivalent is to go polar, then evidently I have.

. . .

Fear, outrage, jealousy and guilt have mingled to form a volatile cocktail of emotions as the blame game has started, and Icelanders attempt to come to terms with it all. They are divided between those who blame the Viking Raiders and those who blame successive governments and central banks for allowing them to behave the way they did.

There have been demonstrations, previously almost unheard of in Iceland, in which families have marched on the parliament buildings, stringing up an effigy of Oddsson along the way.

Of the various Viking Raiders, only one, Jon Ásgeir, of Baugur fame, has had the guts to turn up and face the music on a TV chat show. But any temporary benevolence towards him evaporated when it emerged that he had arrived back in Iceland with high-street billionaire Sir Philip Green in tow. Together they proposed to buy Baugur’s debt, reported at the time as £2bn, thereby acquiring the group’s UK retail assets, including House of Fraser and Hamleys at a significant discount that would involve massive debt writeoffs.

One of the most telling images was the departure of Jon Ásgeir’s private jet on news that the government had nationalised Glitnir Bank (in which his investment vehicle Stodir was a leading shareholder), wiping out his shareholding and rattling the debt-burdened house of cards that is his Baugur business empire. Painted black and as sleek as a Stealth bomber, the aircraft was photographed taxiing from its hangar by Morgunbladid, a daily newspaper. Like the last helicopter out of Saigon, the departure of Ásgeir’s jet symbolised the end of an era, the last act of Iceland’s debt-fuelled spending spree.

Bjorgolfur Thor and his father Bjorgolfur Gudmundsson have, to date, disappeared from the radar. Together they own a majority stake in Landsbanki, and Gudmundsson owns West Ham United football club. Their jets have also flown the coop. Downtown, beside the harbour, construction work on a landmark project underwritten by them, the National Concert Hall, is expected to stop any day now. Like Hallgrimskirkja, the striking cathedral that presides over Reykjavik and that took more than 40 years to complete thanks to a lack of finance, the concert hall might need a change in the country’s fortunes before it can be completed.

The government has announced that it will carry out a thorough investigation into what happened and determine who is to blame. It will be called “The White Book”, and “leave no stone unturned in getting to the truth”. It will not be a slender volume.

. . .

We live now in a foreign-currency lockdown, and although the government has assured everyone that there are sufficient reserves to buy essentials such as oil, grain and medical supplies for the winter, such assurances only serve to create a further sense of unease in a people who have learnt to take such commodities for granted.

There is some encouraging news. The International Monetary Fund is putting the finishing touches to a $2bn bailout package and this is likely to lead to a further $4bn from a consortium of Nordic central banks. These funds will come with stringent conditions that will impose external financial controls and impinge heavily on Iceland’s hard-won sovereign independence. But they should inject some much-needed confidence into the currency and into an embattled people.

There is an Icelandic expression: “We started with two empty hands.” Whoever coined it could not have expected that it would still be so pertinent in 2008, as the nation begins the process of rebuilding its economy and that thing it covets most of all, its reputation.

It is going to be a long, hard struggle.

Robert Jackson is a British journalist who has lived in Iceland since 2003

............................................................................

How the Icelandic banks got it all so wrong

“Let me get lunch,” I said, fumbling in my handbag for my wallet. “Your bank’s just gone bust after all.” But old habits die hard and anyway, the Icelandic banker wanted to find out if his company credit card still worked. He handed it over and drummed his fingers nervously on the bar in the gloomy City pub, writes Sarah O’Connor.

The payment went through. And with a whimper – two sandwiches and two lemonades – the bank’s six-year debt-fuelled spending spree sputtered to a stop. The next day his card was refused.

Barely a month earlier, at his bank’s annual September shindig in Iceland, international financiers who had arranged loans for the bank were treated to quad-biking, axe-throwing, belly-wrestling and copious alcohol – and challenged to run round a traffic cone 10 times while resting their foreheads on top of it. “Believe it or not, but some of the participating bankers fell over. And over. And ... well, you understand,” chortled Euroweek, a trade magazine also flown out for the party.

Kaupthing, Landsbanki and Glitnir sported all the trappings of fully fledged international banks. They had offices around the world, slick PR, extravagant parties and huge amounts of debt. That culture alone could have been enough to pitch them into trouble as the credit cycle turned. But at their core, something deeper was amiss. Two things, actually. The first has been picked over and over since the trio’s calamitous demise: they were too big, and the economy upon which they rested too small to support the huge liabilities they had taken on.

The banks don’t mind this explanation; neither do Iceland’s politicians. It paints them as fearless – if foolhardy – in their expansion, but ultimately as the casualties of a global crisis. They would have survived in spite of their size, they argue, if Lehman Brothers and Washington Mutual had not collapsed, leaving their creditors empty-handed.

In September, creditors’ sense of security evaporated, and soon Glitnir was facing demands for extra money from the increasingly nervous institutions from which it had borrowed. It just didn’t have the money.

Glitnir went to Iceland’s central bank and asked for a bridging loan to see it through to the end of the month in which it was due to pay back a big bond issue. The central bank refused, and took a 75 per cent stake in Glitnir instead. The move triggered panic in international markets. Maybe the government was big enough to bail out Glitnir, but what about the other two Icelandic banks? It surely couldn’t afford to support all three.

In the face of a massive run on Landsbanki by foreign depositors and creditors, the government seized that bank, too, and soon after Kaupthing imploded as well.

A week later, in an upstairs room of the Ministers’ Residence in Reykjavik, Geir Haarde the prime minister looked weary but unruffled as he shook my hand and poured out coffee. “We spoke before didn’t we, earlier this year? As I remember you were very aggressive.”

His special adviser had called me out of the blue in March. She had heard I was writing a story about fears the government was not strong enough to underwrite the banks if they ran into trouble. Would I like to speak to the prime minister about it? I would.

In the interview, he seemed perplexed about the stratospheric cost of insuring against a default by Iceland’s banks on their debts. “If you’re worried about not being repaid, which is what the creditworthiness is about, you shouldn’t be worried when it comes to the Icelandic banks, let alone the Icelandic government,” he said.

But would the government be capable of supporting the banks, given that their foreign currency liabilities dwarfed the country’s ability to generate cash? He didn’t give a clear answer.

It was an odd episode, and highlights the other, deeper problem at the heart of Iceland’s banking system. How did the prime minister’s office know that a junior journalist in London was writing a story about Iceland? Presumably because someone from one of the banks told them. If so, why are they in such close contact? Because the whole system is run by a small group of men who go back a long way and, in the words of one businessman, “sit in the same hot tub three times a week”.

When the banks were privatised in 2002, the government – headed by David Oddsson, then prime minister, and Geir Haarde, then finance minister – sold chunky stakes to a select group of rich businessmen. Father and son team Bjorgolfur and Bjorgolfur Thor Gudmundsson, recently returned from Russia flush with cash, took a 45.8 per cent stake in Landsbanki after a process some have criticised as uncompetitive. These new shareholders used the banks to support their other businesses. For example, FL Group (which then became Stodir) – an investment company owned by the Icelandic retail entrepreneur Jon Ásgeir Johannesson – was both Glitnir’s biggest shareholder and one of its significant borrowers.

There were rumblings of discontent in Iceland over the way the system was being run, but few spoke out. Iceland’s government and supervisory authority did nothing to break up the close-knit network of relationships.

Sveinn Valfells is one malcontent. A private investor now living in London, his grandfather played a key role in setting up one of the banks that were merged to form Glitnir. Sveinn left Iceland in 2004 when he decided the banking system was spiralling out of control. “This was like Eastern Europe, this was like Russia ... In most respects it is a developed country, but the political system and business culture are significantly underdeveloped.”

The banks looked and sounded just like their large international peers. But as one businessman in Iceland says: “Astute investors should have asked themselves, ‘Does this smell right?’”

Copyright The Financial Times Limited 2008

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CNN Reports 86,000 Homes Foreclosed In The Us In October,2008

Early this morning I got the sad news that 86,000 homes were foreclosed in the US in the month of October. This is a shocking figure. Let us put this figure in perspective as follows:

1) If each household contained three people, we have 258,000 people displaced. This is like a whole small city being thrown out on the streets.

2) Each of those families thrown out on the street have to find rental accomodations. Many of them will have no credit left and no cash. What percentage of these people will be forced into homelessness? No one can say. Please consider all of the children pulled out of schools and all of the pets abandoned to die.

3) On an average, each foreclosure costs a lender $50,000 US. If we multiply $50,000 x 86,000, we come up with an astounding figure of $4,816,000,000.00 US. The lenders will have other costs to maintan these houses after foreclosure. This will add billions more to bank losses.

4) We hear glowing reports about all of the loan modification programs being offered to assist homeowners. These programs work for people with good income and stable employment histories. They do nothing for most of the homeowners.

5) We also have to consider what happens to a neighborhood after a foreclosure takes place. Property values fall. Crime goes up as drug users and homeless people take over the house that was foreclosed.

    What could happen here is spiralling deflation that plagued Japan from 1990 to 2000. It is not a pretty picture.

Contact With Aliens From Other Planets By 2025

I am a grea supporter of SETI; the search for extra terrestial life. I believe that we should listen and not make ourselves know. The world famous astrophysicist Dr. Steven Hawking has pointed out that encounters between two vastly different and technologically different cultures are never nice experiences. We need to proceed with extreme care.

November 11, 2008 9:41 PM PST

Contact with extraterrestrial life by 2025?

Posted by Daniel Terdiman

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An image of the Allen Telescope Array, a project which could give astronomers the ability to look hundreds of light years into space and, they hope, discover intelligent life.

(Credit: Daniel Terdiman/CNET News)

SAN FRANCISCO--If you're one of the many people who doubt there's intelligent life anywhere else in the universe, or even someone who thinks there is but that it will take centuries to find it, get ready to be surprised.

"We'll find E.T. within two dozen years," senior SETI astronomer Seth Shostak said Tuesday night at an event held at Yahoo's Brickhouse here.

That is, he said, if the assumptions of many researchers within the SETI Institute are correct, assumptions that are based on a collision of computing power under Moore's Law and the distance into space we can look with new instruments that will be available to researchers in the years to come.

SETI Institute senior astronomer Seth Shostak, who spoke at Yahoo's Brickhouse in San Francisco Tuesday night about when we may discover intelligent extraterrestrial life.

(Credit: Daniel Terdiman/CNET News)

Shostak's talk was largely theoretical and was a quick recap of the history of the SETI project. He explained that it had originally been a NASA project, but that it had been canceled in the 1990s by a Nevada senator unhappy with its lack of success.

Now a private nonprofit based in Mountain View, Calif., SETI is the primary organization looking for intelligent life in outer space.

And Shostak estimated that if the assumptions about computing power and the strength of forthcoming research instruments are correct, we should be able to search as far out as 500 light years into space by 2025, a distance he predicted would be enough--based on scientist Frank Drake's estimate of there being 10,000 civilizations in our galaxy alone capable of creating radio transmitters--to find evidence of life intelligent enough to broadcast its existence.

The main tool for this research, he added, could be the Allen Telescope Array, a project funded by Microsoft co-founder Paul Allen and run by the UC Berkeley radio astronomy lab (RAL) and SETI. The array, made from dozens of small antennas, could become strong enough by 2025, Shostek said, to look deep enough into space to achieve what mankind has been attempting almost as long as we've been curious enough to look into the sky.

Daniel Terdiman is a staff writer at CNET News covering games, Net culture, and everything in between. E-mail Daniel.

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