Study: Geography Greek to young Americans

WASHINGTON (CNN) -- After more than three years of combat and nearly 2,400 U.S. military deaths in Iraq, nearly two-thirds of Americans aged 18 to 24 still cannot find Iraq on a map, a study released Tuesday showed.

The study found that less than six months after Hurricane Katrina devastated New Orleans and the Gulf Coast, 33 percent could not point out Louisiana on a U.S. map.

The National Geographic-Roper Public Affairs 2006 Geographic Literacy Study paints a dismal picture of the geographic knowledge of the most recent graduates of the U.S. education system.

"Taken together, these results suggest that young people in the United States ... are unprepared for an increasingly global future," said the study's final report.

"Far too many lack even the most basic skills for navigating the international economy or understanding the relationships among people and places that provide critical context for world events."

The study, which surveyed 510 young Americans from December 17 to January 20, showed that 88 percent of those questioned could not find Afghanistan on a map of Asia despite widespread coverage of the U.S.-led overthrow of the Taliban in 2001 and the political rebirth of the country.

In the Middle East, 63 percent could not find Iraq or Saudi Arabia on a map, and 75 percent could not point out Iran or Israel. Forty-four percent couldn't find any one of those four countries.

Inside the United States, "half or fewer of young men and women 18-24 can identify the states of New York or Ohio on a map [50 percent and 43 percent, respectively]," the study said.

On the positive side, the study noted, seven in 10 young Americans correctly located China on a map, even though they had a number of misconceptions about that country. Forty-five percent said China's population is only twice that of the United States. It's actually four times larger than the U.S. population.

When the poll was conducted in 2002, "Americans scored second to last on overall geographic knowledge, trailing Canada, France, Germany, Great Britain, Italy, Japan and Sweden," the report said.

The release of the 2006 study coincides with the launch of the National Geographic-led campaign called "My Wonderful World." A statement on the program said it was designed to "inspire parents and educators to give their kids the power of global knowledge."

Find this article at: http://www.cnn.com/2006/EDUCATION/05/02/geog.test

GEOGRAPHY SURVEY

Thirty-three percent of respondents couldn't pinpoint Louisiana on a map.

Fewer than three in 10 think it important to know the locations of countries in the news and just 14 percent believe speaking another language is a necessary skill.

Two-thirds didn't know that the earthquake that killed 70,000 people in October 2005 occurred in Pakistan.

Six in 10 could not find Iraq on a map of the Middle East.

Forty-seven percent could not find the Indian subcontinent on a map of Asia.

Seventy-five percent were unable to locate Israel on a map of the Middle East.

Nearly three-quarters incorrectly named English as the most widely spoken native language.

Six in 10 did not know the border between North and South Korea is the most heavily fortified in the world.

Thirty percent thought the most heavily fortified border was between the United States and Mexico.

Source: The Associated Press

22-Nation Poll Finds Most Are Pessimistic about the Global Economy

(http://www.globescan.com)

The BBC World Service Poll was conducted from November 15, 2004 to January 3, 2005 with a representative sample of 22,953 people across the 22 countries. In eight of the countries the sample was limited to major metropolitan areas. The margin of error per country ranged from +/-2.5-4%. For more details, please see the Methodology or visit www.pipa.org.

Poll Findings Measure Americans' Attitudes Towards Freedom of Religion ...

(Poll Source Fact posted in response to "me stretching the truth about the poll" by a patron at a progressive bar in Phoenix)

Poll Findings Measure Americans' Attitudes Towards Freedom of Religion
USA TODAY Andrea Stone September 12, 2007

the First Amendment and Freedom of Religion.

Most Americans believe the nation's founders wrote Christianity into the Constitution, and people are less likely to say freedom to worship covers religious groups they consider extreme, a poll out today finds.

The survey measuring attitudes toward freedom of religion, speech and the press found that 55% believe erroneously that the Constitution establishes a Christian nation. In the survey, which is conducted annually by the First Amendment Center, a non-partisan educational group, three out of four people who identify themselves as evangelical or Republican believe that the Constitution establishes a Christian nation. About half of Democrats and independents do.

Most respondents, 58%, say teachers in public schools should be allowed to lead prayers. That is an increase from 2005, when 52% supported teacher-led prayer in public schools.

Forty-three percent say public schools should be allowed to put on Nativity re-enactments with Christian music, up from 36% in 2005.

Half say teachers should be allowed to use the Bible as a factual text in history class. That's down from 56% in 2000.

Charles Haynes, a senior scholar at the First Amendment Center, says the findings are particularly troubling during a week when the top diplomat in Iraq gave a report to Congress on progress toward achieving democracy there.

"Americans are dying to create a secular democracy in Iraq, and simultaneously a growing number of people want to see a Christian state" here, he says.

Haynes says the Constitution "clearly established a secular nation where people of all faiths or no faith are protected to practice their religion or no religion without governmental interference."

Rick Green of WallBuilders, an advocacy group that believes the nation was built on Christian principles, says the poll doesn't mean a majority favors a "theocracy" but that the Constitution reflects Christian values, including religious freedom. "I would call it a Christian document, just like the Declaration of Independence," he says.

The "scariest" number, in Haynes' opinion, is that only 56% agree that freedom of religion applies to all groups "regardless of how extreme their beliefs are." That's down from 72% in 2000. More than one in four say constitutional protection of religion does not apply to "extreme" groups.

Haynes says many Americans consider Islam extreme, especially since the Sept. 11 attacks. But he says Roman Catholics were viewed that way in the 19th century, and some people still consider Mormons "on the fringe."

"We are seeing the product of years of not teaching the First Amendment at a young age," says Gene Policinski, the center's executive director. "People are applying their own values ... rather than educated knowledge" of the Constitution.

Still, he says, support for constitutional freedoms has rebounded from a low the year after 9/11, when 49% said the First Amendment "goes too far in the rights it guarantees." Now, 25% agree.
Other findings:

*Seventy-four percent say public school students should not be allowed to wear a T-shirt with a message or picture that others might find offensive, more than at any time since the survey began in 1997.

*About a third, 34%, believe the press "has too much freedom" -- the lowest percentage in 10 years -- but most distrust the news media. Sixty percent disagree with the statement that the news media try "to report the news without bias."

Not all questions in the poll were asked every year. The survey of 1,003 adults Aug. 16-26 has a margin of error of +/-3.2 percentage points.

To see more of USAToday.com, or to subscribe, go to http://www.usatoday.com/
Copyright 2007 USA TODAY, a division of Gannett Co. Inc.

Fears of dollar collapse as Saudis take fright

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 8:39am BST 20/09/2007

Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.

"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.

"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.

The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.

As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.

The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit - expected to reach $850bn this year, or 6.5pc of GDP.

Mr Redeker said foreign investors have been gradually pulling out of the long-term US debt markets, leaving the dollar dependent on short-term funding. Foreigners have funded 25pc to 30pc of America's credit and short-term paper markets over the last two years.

"They were willing to provide the money when rates were paying nicely, but why bear the risk in these dramatically changed circumstances? We think that a fall in dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008," he said.

"This is nothing like the situation in 1998 when the crisis was in Asia, but the US was booming. This time the US itself is the problem," he said.

Mr Redeker said the biggest danger for the dollar is that falling US rates will at some point trigger a reversal yen "carry trade", causing massive flows from the US back to Japan.

Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.

The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.

"If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.

The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.

Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.

For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.

The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.

Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.

(http://www.telegraph.co.uk)

Dollar Heads for Third Weekly Loss Versus Euro on Fed Rate Bets

Dollar Heads for Third Weekly Loss Versus Euro on Fed Rate Bets

By Min Zeng

Sept. 21 (Bloomberg) -- The dollar headed for a third straight weekly loss against the euro as speculation the Federal Reserve will continue to cut interest rates reduces the appeal of U.S. assets among international investors.

The U.S. dollar has dropped versus all 16 most-actively traded currencies this week after the Fed's first reduction in borrowing costs since 2003. The dollar fell to a record low against the euro yesterday while the Canadian currency reached par with its U.S. counterpart for the first time since 1976.

``There is no end in sight for dollar selling,'' said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon in New York, the world's largest custodian bank with over $20 trillion in assets under administration. ``The interest- rate differential will continue to move against the dollar.''

The U.S. currency traded at $1.4064 per euro and 114.75 yen at 6 a.m. in Tokyo. The dollar touched $1.4098 per euro yesterday, the weakest since the European currency's introduction in January 1999.

The dollar has lost 1.3 percent this week against the euro, extending its loss this year to 6.2 percent. The dollar will fall to $1.42 per euro by the end of October, Woolfolk said.

The New Zealand dollar led the advance among the 16 major currencies this week, gaining 3.3 percent versus the U.S. dollar. The Canadian dollar has increased 2.8 percent. The U.S. dollar dropped 2.2 percent against the Australian dollar, 0.7 percent versus the yen and 1.4 percent against the Swiss franc over the same period.

4.75 Percent

The Fed on Sept. 18 cut its benchmark interest rate half a point to 4.75 percent. The European Central Bank's rate is 4 percent.

Futures contracts show 72 percent odds of a quarter- percentage point cut to 4.5 percent at the Fed's next meeting on Oct. 31.

Fed officials including Vice Chairman Donald Kohn, Governor Frederic Mishkin and Governor Kevin Warsh are scheduled to speak on monetary policy today. Fed Chairman Ben S. Bernanke told lawmakers yesterday that the central bank is ``actively working'' to avoid a repeat of the subprime-mortgage rout.

``It seems like the world is dumping the dollar,'' said John Taylor, chairman of FX Concepts Inc., a New York firm that manages $12.1 billion in currencies. ``We have sold the dollar and will continue to do so. My preference is to sell the dollar against European currencies.''

The New York Board of Trade's dollar index comparing the U.S. currency against its six primary peers, including the euro and yen, touched 78.450 yesterday, the lowest since September 1992. The Fed's major currency trade-weighted dollar index dropped to 75.73 on Sept. 19, the weakest since its inception in 1971.

Greenspan on Recession

Former Fed Chairman Alan Greenspan said in an interview yesterday the odds of a recession remain ``somewhat more'' than one in three, even after this week's cut in interest rates, with home prices likely to drop further and hurt consumer spending.

The dollar's decline pushed gold to a 27-year high yesterday. The spread between two- and 10-year Treasury note yields widened yesterday to the most since May 2005 on speculation that the tumbling dollar and Fed interest-rate cuts will fuel inflation. Crude oil touched a record $83.90 a barrel.

The weakening dollar is bolstering U.S. exports, which reached records in each of the past five months as Boeing Co., General Electric Co. and Deere & Co. shipped more airplanes, engines and tractors overseas. The trade deficit narrowed 0.3 percent to $59.2 billion in July from a revised $59.4 billion during June, the Commerce Department said Sept. 11.

``People are selling the dollar because they believe that the Fed's aggressive actions on interest rates are a move to reflate the U.S. economy to help alleviate the debt overhang,'' said Robert Robis, an international fixed income portfolio manager at OppenheimerFunds Inc. in New York, which manages $250 billion. ``Expect further dollar weakness going forward.''

To contact the reporter on this story: Min Zeng in New York at mzeng2@bloomberg.net .

Last Updated: September 20, 2007 17:01 EDT

Canadian Dollar Trades Equal to U.S. for First Time Since 1976

Canadian Dollar Trades Equal to U.S. for First Time Since 1976

By Haris Anwar and Theophilos Argitis

Sept. 20 (Bloomberg) -- Canada's dollar traded equal to the U.S. currency for the first time in three decades, capping a five-year run on the back of booming demand for the nation's commodities.

The Canadian dollar rose as high as $1.0008, before retreating to 99.87 U.S. cents at 4:16 p.m. in New York. It has soared 62 percent from a record low of 61.76 U.S. cents in 2002. The U.S. dollar fell as low as 99.93 Canadian cents today. The Canadian currency last closed above $1 on Nov. 25, 1976, when Pierre Trudeau was Canada's prime minister.

The move to parity marks a milestone for a currency dubbed the loonie for the bird that adorns the nation's one-dollar coin. Parity also symbolizes Canada's emerging clout in a world economy increasingly short of the energy, grains and metals the country produces.

``It's a long time since those heady days,'' said Frank McKenna, 59, deputy chairman of Toronto-Dominion Bank, the country's third-biggest lender, and a former ambassador to the U.S. ``Canadians should understand that this is a badge of confidence in our country.''

Canada, the world's eighth-biggest economy, has benefited from rising demand for copper, gold, wheat and oil from neighboring U.S. and emerging economies such as India and China. The country is the world's largest producer of uranium, the second-biggest exporter of natural gas, and sits on the largest pool of oil reserves outside the Middle East. Canada is also the world's second-largest exporter of wheat, which rose to a record this month.

Commodities Soar

The Reuters/Jefferies CRB Index of global commodities has risen 69 percent since January 2002 on growing demand from China and other Asian economies, boosting the value of Canadian exports and triggering investment in new mines and other resource projects. Canada's economy will be the fastest-growing among the Group of Seven nations in 2008, with an expected pace of 2.9 percent, the International Monetary Fund estimated in April.

Foreign investors are rushing into the country to tap into the boom, boosting demand for the Canadian currency. Canadian companies have been involved in announced takeovers worth $287 billion this year, surpassing the record $275 billion for all of 2006, according to data compiled by Bloomberg. The dollar almost gained a full cent on July 12, the day Rio Tinto Group offered $38.1 billion for Montreal-based Alcan Inc., the world's No. 2 aluminum producer.

Canada, which has run 10 consecutive annual budget surpluses, is using the world's growing reliance on its commodities to bolster its stature globally.

Energy Power

Prime Minister Stephen Harper has called the North American country an ``energy superpower,'' and asserted sovereignty in the Arctic, pitting Canada's claims against Russia and the U.S. Harper also has sought to increase Canada's influence in Latin America by signing trade deals and touting the country as an alternative energy source to Venezuela.

``Parity heralds Canada's reemergence on the world's economic stage,'' said Michael Gregory, a senior economist at BMO Capital Markets in Toronto.

To be sure, the stronger Canadian currency comes at a cost to some areas of the economy, from lumber producers in British Columbia to carmakers in Ontario. The stronger dollar makes their products more expensive abroad.

``We've got a speculative bubble in the Canadian dollar,'' said Stephen Jarislowsky, chief executive officer of Montreal- based Jarislowsky Fraser Ltd., which manages about $62.6 billion. ``Parity will be an unmitigated disaster for Canada. It spells -- in the not too distant future -- a major recession, at least in eastern Canada if not the rest of the country.''

Job Cuts

The Forest Products Association of Canada, an Ottawa-based lobby group, estimates 110,000 jobs have been lost in the manufacturing industry since 2002, almost a third of them in the forest sector.

The surging currency also reflects U.S. dollar weakness against all major currencies. The U.S. dollar has posted losses over the past five years against all but one of the 16 major currencies tracked by Bloomberg on concern about the nation's budget and trade imbalances, and a housing slump.

``We are going to feel the effects of the downturn in the U.S. housing market, because we are an exporter of housing materials,'' Finance Minister Jim Flaherty said in an interview in Ottawa. ``But overall we have a strong Canadian economy, our economic fundamentals are the strongest in the G-7. So we are well positioned to weather this storm.''

Offset Slump

So far, growing demand for commodities and other industrial goods produced in Canada is more than offsetting the slump in manufacturing. Canada has generated 32 consecutive quarters of current account surpluses, with receipts from outside Canada exceeding payments sent abroad by C$187 billion ($187 billion) over the period. The jobless rate remains at a 33-year low of 6 percent.

``In a resource economy, and Canada is still largely a resource economy, you'll find the exchange rate will move up and down with commodities,'' said Neil Camarta, senior vice president of oil sands at Petro-Canada, the country's third-biggest oil and gas producer.

The country is also lessening its dependence on the slowing U.S. economy, with U.S. shipments accounting for 76 percent of exports in July, down from 85 percent in 2002. Exports to the U.S. fell 3.3 percent in July, yet were up 29 percent to the European Union and 65 percent to China.

And while the U.S. Federal Reserve cut interest rates on Sept. 18 to revive growth, Canada's central bank raised rates in July and may increase them again this year to stem inflation, futures contracts show.

Good Indication

``Currency markets are a good indication relative to the country,'' said Richard Waugh, chief executive officer of Toronto-based Bank of Nova Scotia, the No. 2 bank. Waugh predicted in a March interview that the currency would reach parity.

For McKenna, the move to parity reminds him of a time when he was a boy in the 1960s, selling strawberries to U.S. tourists on the roadside in his native New Brunswick. Back then, the Canadian dollar was worth more than American money.

``It was difficult to make change,'' he recalled. ``So we used to give them a break (and) treat the currencies at par.''

To contact the reporters on this story: Haris Anwar in Toronto at hanwar2@bloomberg.net ; Theophilos Argitis in Ottawa at targitis@bloomberg.net .

Last Updated: September 20, 2007 16:17 EDT

The Last Gasp of the Dollar?

Iran bourse opens next week

By Mike Whitney

05/07/06 "ICH" -- -- If one day the world's largest oil producers demanded euros for their barrels, "it would be the financial equivalent of a nuclear strike.” Bill O'Grady, A.G. Edwards commodities analyst

“Everybody knows the real reason for American belligerence is not the Iranian nuclear program, but the decision to launch an oil bourse where oil will be traded in euros instead of US dollars….The oil market will break the dominance of the dollar and lead to a decline of global American hegemony.” Igor Panarin, Russian political scientist

Overnight the story of Iran’s proposed oil bourse has slipped into the mainstream press exposing the real reasons behind Washington’s ongoing hostility towards Tehran. Up to this point, analysts have brushed aside the importance of the upcoming oil-exchange as a Leftist-Internet conspiracy theory unworthy of further consideration. Now, the Associated Press has clarified the issue showing that an Iran oil bourse “could lead central bankers around the world to convert some of their dollar reserves into euros, possibly causing a decline in the dollar’s value”.

Currently, the world is drowning in dollars, even a small movement could trigger a massive recession in the United States. There’s nothing remotely “conspiratorial” about this. It is simply a matter of supply and demand. If the oil bourse creates less demand for the dollar, the value of the dollar will sink accordingly; pushing energy, housing, food and other prices higher.

Oil has been linked to the dollar since the 1970s when OPEC agreed to denominate it exclusively in dollars. This provided the US a virtual monopoly which has allowed it to run huge account deficits without fear of crippling interest rate hikes. As Bill O’ Grady of A.G.Edwards said, “If OPEC decided they didn’t want dollars anymore, it would be the end of American hegemony by signaling the end to the dollar as the sole reserve currency.”

“If the dollar lost its status as the world’s reserve currency, that would force the United States to fund it massive account deficit by running a trade surplus, which would increase inflationary pressures.” (Associated Press)

There’s no prospect of the US running a trade surplus anytime soon. Bush has savaged the manufacturing sector outsourcing over 3 million jobs and shutting down plants across the country. His short-sighted “free trade” policies and enormous tax cuts for the rich ensure that Americans will be left to face skyrocketing energy costs and a hyper-inflationary greenback. There’s no way we can retool fast enough to “manufacture our way” out of the quagmire of red ink.

Currently, the national debt is a whopping $8.4 trillion with an equally harrowing $800 billion trade deficit. (7% of GDP) The ever-increasing demand for the greenback in the oil trade is the only thing that has kept the dollar from freefalling to earth. Even a small conversion to euros will erode the dollar’s value and could precipitate a sell-off.

Presently, oil is sold exclusively on the London Petroleum Exchange and the New York Mercantile Exchange both owned by American investors. If the bourse opens, central banks around the world will reduce their stockpiles of dollars to maintain a portion of their currency in euros. This is the logical step for Europe which buys 70% of Iran’s oil. It is also the reasonable choice for Russia which sells two-thirds of its oil to Europe but (amazingly) continues to denominate those transactions in dollars.

Washington has succeeded in maintaining its monopoly by propping up the many corrupt and repressive regimes in the Gulf States. The prudent choice for Saudi Arabia would be to move away from the debt-ridden dollar and enhance its earnings with the stronger euro. Regrettably, Uncle Sam has a gun to their head. They understand that such a transition would invite the same response that Saddam got 6 months after he converted to euros and was removed through “shock and awe”.

Regardless, of the outcome, the profligate spending, budget-busting tax cuts, and the shocking increase in the money supply (the Fed has doubled the money supply in one decade) has the greenback headed for the dumpster. Already, China and Japan (who hold an accumulated $1.7 trillion in US securities and currency) are gradually moving away from the dollar towards the euro (although the Fed has blocked the public from knowing the extent of the damage by abandoning the M-3 publication of inflows) The European Central Bank (ECB) and Japan’s central bank are frantically trying to conceal the probability of a dollar collapse by issuing carefully worded statements to allay public fears while they to prepare for an “orderly” retreat.

But, it won’t be “orderly”. The dollar has lost 5% against the euro since April and is quickly headed south. The Iran bourse could be the final jolt that pushes the greenback over the edge. This is the bitter lesson for those who choose to ignore economic fundamentals and build their house on sand. Paul Volcker anticipated this scenario in a speech last year when he said that account imbalances were as great as he had ever seen and predicted “a 75% chance of a dollar crash in the next 5 years”.

Volcker was right, but economic advisor, Peter Grandich summarized it even better when he opined, “The only one who doesn’t know the US dollar is dead is the US dollar.”

Soros Explains Dollar Collapse

Soros Explains Dollar Collapse

MoneyNews
Wednesday, Feb 23, 2005

Soros: Oil Exporters Behind Dollar Fall

We might not like his politics, but we respect his moneymaking prowess.

And few understand currencies like George Soros.

Our ears perked up when Soros explained why the dollar is collapsing.

He said the weakness of the U.S. dollar is no accident - it's the result of Russian and Middle East oil exporters converting their oil transactions from dollars to euros.

"The oil-exporting countries' central banks have been switching out of dollars mainly into euros, and Russia also plays an important role in this. That is, I think, at the bottom of the current weakness of the dollar," Soros was quoted by Reuters.

Speaking to delegates at the Jeddah Economic Forum in Saudi Arabia, the famous investor and political activist said that while he did not expect the dollar to continue to fall, its fate could be tied to the price of oil.

Oil is now selling at about $50 a barrel, down from a high of $55.67 late last year.

"The higher the price of oil, the more dollars there are to be switched to euros, [so] the strength of oil will reinforce the weakness of the dollar," he said. "That is only one factor, but I think there is such a relationship."

Soros, a notorious currency speculator, also told the British news agency that the U.S. current-account deficit could be financed at the present level of the dollar.

"There are willing holders of the dollar. There are the Asian countries that are happy to accumulate dollar balances in order to have an export surplus and a market for their dollars," he said.

Editor's Note: In our April 2004 Financial Intelligence Report "Oil: The Critical Key to the World Economy," we predicted oil would reach $55-plus per barrel. We also warned that OPEC was moving away from dollar-denominated transactions by using the euro in an effort to undermine dollar supremacy. Read more - Go Here Now.

Korea Follows Trend, Moves Away From Dollar

But Soros may be wrong on one count. China, Japan, South Korea and other nations might not want to continue to hold dollars as their value slides.

In a move that threatens to rattle world markets and send the U.S. currency tumbling further, Korea announced its plan to follow the lead of many other countries and move away from the dollar to invest more in alternative foreign currencies.

The news caused the dollar to slide on foreign exchange markets and also prompted oil prices to surpass $50 a barrel.

These developments reinforce the reality that today's dollar is largely dependent on the decisions made by foreign central banks, which now control huge volumes of U.S. Treasury bonds and other dollar-based securities.

As described in the June 2004 edition of Financial Intelligence Report "The Dangerous Dollar: Protecting Your Wealth By Investing Abroad," "European, Japanese and Chinese banks have been absorbing trillions in U.S. mortgage paper and other debt... Unfortunately, as the dollar falls, so does the return on investment for these foreign central banks."

We also reported in this edition of Financial Intelligence Report that Asian banks were not going to take the fall for the dollar - and that they would not continue to bail us out by buying dollars and dollar-backed debt.

Read More Here about "The Dangerous Dollar."

More Free Fall of the Dollar

As word spread that the Korean Central Bank and Japan were selling dollars, overnight press reports seemed to counter those claims.

What should we believe?

Perhaps we can glean some insight from our economist friend in Panama, Hans Etienne Parisis.

"The Bank of Korea said they would diversify - and that will mean selling dollars...And that's all I'll say about that!" Etienne says.

"Yes, as I told you before," he continues, "in today's real world, the euro is the second most widely traded currency in the world and has become the offset currency to the dollar. Basically, that means it matters not that the Eurozone economy is slower than that of the U.S. As the dollar gets weaker, you will see the offset of that weakness in euro strength right away."

Etienne goes on to say:

"In international capital markets, the euro captures a 31% share of the trades, up from just 20% in 1999. Roughly 50 countries out of about 200 in the world use the euro as their "anchor" currency in their foreign-exchange policy.

"The good news - if you still want to get out of the dollar - is that it is thought that only 20% of central bank reserves are in euros, so there's a lot of room for growth. This reason - and the fact that the dollar is on the chopping block - leads me to believe, as I have said before, that the euro will reach 1.40 in 2005 or ~71 euro cents per dollar."

Editor's Note: Sir John Templeton is also bearish on the dollar. Discover his picks for the best currencies to invest in. Go Here Now.

China Attempts To Cool Economy

As the Chinese government attempts to rein in an overheated economy and avert a financial collapse, Beijing is severely curbing bank lending and stemming foreign investment, hoping to boost producer prices.

And it seems to be working. January saw a 5.8 percent increase in producer prices compared to the previous year. That was preceded by a 7.1 rise this past December.

According to The Washington Post, economists say the slowing trend makes it likely that China will be able to successfully decelerate growth without experiencing an abrupt halt that might shatter businesses and jobs and leave banks with billions in defaulted loans.

But one sector taking a hit from Beijing's actions is China's previously revved-up automobile industry. Sales have come to a drastic halt, as financing has all but disappeared.

Over the last few years, car sales in China had multiplied 35% annually, prompting many U.S. automakers to heavily invest there. But in 2004, growth slowed radically to 15%, and while that number still far exceeds the 1% car sales growth in the United States last year, auto manufacturers are rethinking their aggressive market entry.

Regardless, most analysts see promise in China's long-term economic situation.

Social Security Learns From Pension Funds

The Bush administration is now advocating stock market investment to subsidize the survival of Social Security.

But NewsMax's Financial Intelligence Report was already explaining why that was a bad idea in last October's installment "The Pension Crisis Is Already Here."

Private corporate pension funds have long utilized investments. Initially, companies put their money in the safest possible places, selecting low-risk bonds and government-backed vehicles.

But gradually the funds began to take more chances, and by the end of the 1990s about two-thirds of most funds were dispersed in various stocks. However, a bear market - like the one that hit in 2000 - almost completely destroyed the equity-rich funds, as stock prices retreated and high interest rates hit.

FIR pointed out another problem with pension fund stock investment - one that will become apparent in the next 10 to 15 years: "When it comes time to pay Baby Boomers and other retirees their pensions, a huge number of shares of stock will have to be sold. That in turn will precipitate much lower stock prices, potentially reducing pension payments."

These facts provide a strong argument against using the market to finance Social Security.

But the Bush administration is expected to suggest investment in an array of assets - 50% broad equity indexed funds, around 30% corporate bond funds and about 20% Federal Treasury bonds, according to Stephen Goss, chief actuary for the Social Security Administration.

They project that, over the long-term, this combination will bring an average annual return that is 4.6 percentage points above inflation.

(http://archive.newsmax.com)

20 metro areas by population that are forecast to witness a decline

20 metro areas by population that are forecast to witness a decline in the median existing single-family house price

(http://money.cnn.com)

Rank	Area	State	Peak	Bottom	Peak to bottom home price decline
1	Stockton	CA	06Q1	08Q4	-25.0
2	Palm Bay-Melbourne-Titusville	FL	06Q1	08Q4	-24.9
3	Sarasota-Bradenton-Venice	FL	06Q1	08Q3	-24.8
4	Reno-Sparks	NV	06Q1	09Q1	-22.4
5	Modesto	CA	06Q2	08Q3	-22.3
6	Detroit-Livonia-Dearborn	MI	05Q3	09Q1	-21.3
7	Fresno	CA	06Q2	09Q1	-20.0
8	Oxnard-Thousand Oaks-Ventura	CA	06Q2	08Q3	-19.2
9	Sacramento--Arden-Arcade--Roseville	CA	06Q1	08Q4	-19.1
10	Las Vegas-Paradise	NV	06Q2	08Q4	-18.7
11	Deltona-Daytona Beach-Ormond Beach	FL	06Q1	08Q3	-17.9
12	Phoenix-Mesa-Scottsdale	AZ	06Q2	08Q2	-17.8
13	Hartford-West Hartford-East Hartford	CT	07Q1	08Q4	-17.6
14	Cape Coral-Fort Myers	FL	06Q1	08Q4	-17.3
15	Visalia-Porterville	CA	06Q2	08Q4	-16.1
16	Riverside-San Bernardino-Ontario	CA	07Q1	09Q2	-15.9
17	Bethesda-Gaithersburg-Frederick	MD	06Q2	08Q4	-15.9
18	Lansing-East Lansing	MI	05Q3	09Q1	-15.7
19	Bakersfield	CA	06Q2	09Q1	-15.6
20	Warren-Farmington Hills-Troy	MI	05Q4	09Q1	-15.4

Pope 'refused to meet with Rice'

Pope Benedict XVI refused a recent request by US Secretary of State Condoleezza Rice to discuss the Middle East and Iraq, Vatican sources say.

The Pope refused a request for an audience during the August holidays.

Senior Vatican sources told the BBC the Pope does not normally receive politicians on his annual holiday at the Castelgandolfo residence near Rome.

But one leading Italian newspaper said it was an evident snub by the Vatican towards the Bush administration.

Christian rights

There are at least two reasons why Pope Benedict may have decided peremptorily against a private meeting with Ms Rice.

First, it was Ms Rice who just before the outbreak of the Iraq war in March 2003 made it clear to a special papal envoy sent from Rome, Cardinal Pio Laghi, that the Bush administration was not interested in the views of the late Pope on the immorality of launching its planned military offensive.

Secondly, the US has responded in a manner considered unacceptable at the Vatican to the protection of the rights of Iraqi Christians under the new Iraqi constitution.

The Bush administration has told the Vatican that as coalition forces have not succeeded in securing the whole territory of Iraq, they are unable to protect non-Muslims.

Instead of meeting the Pope, Ms Rice had to make do with a telephone conversation with the Vatican's number two, Cardinal Tarcisio Bertone, who was visiting the US during August on other business.

(http://www.bbc.com)

Paulson Tells Congress the Current Debt Ceiling Will Be Hit on Oct. 1

AP
Congress Asked to Lift Debt Ceiling
Wednesday September 19, 2:26 pm ET
By Martin Crutsinger, AP Economics Writer

WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.

He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.

The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.

In his letter to congressional leaders, Paulson said that according to data now available, the Treasury expects to hit the current debt ceiling on Oct. 1 -- the first day of the new federal budget year. However, that projection does not take into account maneuvers the government often has to employ of withdrawing investments from certain trust funds to create room for extra borrowing until Congress finally approves a debt increase.

"The full faith and credit of the United States, to which we all remain committed, is a national asset and a cornerstone of the global financial system," Paulson said in his letter. "In light of current developments in financial markets, which would be exacerbated by uncertainty in the Treasuries market, I urge the Senate to pass the legislation reported by the Finance Committee to increase the debt limit as soon as possible."

The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.

The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.

Democrats blame Bush's tax cuts and the war in Iraq for pushing the debt to record levels. Republicans defend the tax cuts, saying the deficit is now on a downward trajectory in part because of the economic stimulus provided by the tax cuts.

The House approved an increase in the debt limit in May when it adopted the annual congressional budget resolution, but the full Senate has yet to act to raise the limit.

(http://biz.yahoo.com)