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By Lyubov Pronina

July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”

“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”

The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.

The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”

Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency.

To contact the reporter on this story: Lyubov Pronina in L’Aquila, Italy at lpronina@bloomberg.net

Richard Benson
Jul 9, 2009

Our measure of how bad it is in this economy for a broad swath of Americans can be analyzed by asking three basic questions: Are people working, are they making any money, and do they have any money in reserves? To answer these questions and more, below are some shocking facts!

First, are people actually employed? The glum employment situation continues to unravel and on the summer jobs front, 16-19 year olds are facing the worst environment since 1954, before their parents were even born. In 2007, 51 percent of graduating college students had jobs lined up before graduation. This year, less than 20 percent had jobs. Because they can't find work, the youth of America are staying at home with their parents (maybe forever) and parents can be categorized as "payrents."

The number of unemployed workers reported in the "headline" unemployment rate of 9.5 percent is now 15 million, but only seven million are eligible and collecting unemployment insurance benefits. Each week, when initial unemployment claims of over 600,000 are announced, it's a virtual certainty that a million people have actually lost their jobs, considering 400,000 workers are out of the work force and not eligible to file. When a million jobs a week are lost, there is no way our current economy can replace them!

In America, only about 60 percent of workers are eligible to file for unemployment benefits. The rest are part-time, contract workers, and those that worked only a short time and don't qualify to receive benefits.

An alternative measure of unemployment reported by the Bureau of Labor Statistics ("BLS") shows a 16.5 percent unemployment rate. This measure, called the U-6, includes workers who would like a job but have stopped looking, and part-timers who want full-time work (there are approximately nine million part-timers seeking full-time employment). Unemployment and underemployment are massive.

Second, is anyone making any money? With 28 million people working part-time and 10 million self-employed (this includes dog walkers, yoga instructors and independent contractors, such as real estate sales agents), 38 million Americans in the work force are working but not making that much. Many firms and state and local governments have also begun to cut payroll hours and eliminate overtime altogether. The weekly hours worked were at their lowest level ever recorded in the BLS survey - if you don't work, you don't get paid! But the survey is very likely still overestimating personal income (hourly wages are multiplied by hours worked to give a good indication of income), so another way to measure income is to examine tax collections. If you are working part-time or are self-employed you're counted as working in the survey, but if you're not paying taxes, it's because you didn't make any money! State income tax receipts from January 2008 - April 2009 were down 26 percent from the year before, and money wired back to homes in Mexico from America is down 20 percent.

Small businesses are also failing at a catastrophic rate. These businesses used to be a major source of job growth and income, but not anymore! Mom and Pop businesses have been gutted and many used personal credit cards to fund their operations, resulting in a default rate that has grown to 12 percent on small business credit cards.

Third, does anyone have any financial resources? The government recently reported the savings rate had increased to 7 percent, but with personal income so grossly overestimated, it's likely the numbers are way off. There's a big difference between paying down your credit card debt (as your credit limit is cut), and stashing real cash in the bank. Cash in the bank is real savings, paying down credit card debt is not. But since the Fed cut interest rates to zero, many older Americans, who relied on the interest to help pay the bills, are scrambling and uncertain about the future.

In addition, 51 million Americans are collecting Social Security benefits. Nobody would consider this demographic rich or well to do. Indeed, given the high cost of living, you don't live on Social Security, you simply subsist. Another 12 million people are collecting Social Security Disability ("SSI"). (If you're 55 and used to work at an auto plant and have exhausted your unemployment benefits, SSI is likely where you will find your friends until you turn 62 and start collecting Social Security.) And still another 34 million people are collecting food stamps, and the total is rising at the rate of 4 million a year. (To be eligible for food stamps you need to have less than $2,000 in resources such as a bank deposit).

RECAP: Seven million people are collecting unemployment benefits, and another eight million are unemployed and collecting nothing! There are 38 million part-time or self employed workers, and 2.4 million people in jail (1 in 100 adults). 51 million are collecting Social Security benefits, 12 million are on Social Security Disability, and 34 million are on food stamps. What financial resources can this huge segment of the population have? Not much!

I bet no one under the age of 70 can remember an economy this bad. Tens of millions of Americans subsisting on government handouts are one paycheck away from homelessness and hunger. The hard times we are experiencing today, due to the misalignment of over-consumption financed by debt, are severe. It will take at least a few more years to work down the debt, build real savings and put the economy on a sound footing. If the American press focused on the economic statistics that reflect the seriousness of the economic catastrophe, the officials in Washington will surely panic. Americans could step up to the plate and ask for some of that bailout money that Wall Street received. It's time to get grumpy and politically active!

You have to wonder what the government will do to try and jumpstart the dying economy. We expect three major policies by the end of the year:

First, there will be another massive stimulus for job creation;

Second, there will be another round of quantitative easing from the Federal Reserve to finance the job creation stimulus; and

Third, expect a major devaluation of the dollar to encourage exports and discourage imports.

God help the Federal Deficit and the saver because printing money like crazy, and devaluing the dollar, will only get inflation started...

...Whoever said that Hard Times weren't interesting?

[Editor's comment: Got Gold?]

July 9 (Bloomberg) -- Leaders of the world’s biggest developed and emerging nations avoided a debate over the dollar’s role in the global economy as they agreed not to devalue their currencies to promote their exports.

With officials from Brazil, India, China and Russia pushing consideration of alternative reserve currencies, their joint statement’s language on foreign exchange echoed an agreement at an April summit of the Group of 20.

The leaders agreed to “refrain from competitive devaluations of our currencies,” according to the statement released after their meeting today at the G-8 summit in L’Aquila, Italy. They also agreed to “promote a stable and well-functioning international monetary system.”

The global financial crisis and the surge in U.S. borrowing have prompted Russian President Dmitry Medvedev to advocate diversification away from the dollar. Russia and its counterparts have yet to come up with a viable alternative.

British Prime Minister Gordon Brown told reporters today “there was not a serious discussion” about the topic.

“To talk about the long-term future of the world economy and the arrangements that are necessary is something that world has got to do, but I don’t want to give the impression that there’s a major change about to happen around the corner which will mean that present arrangements are disturbed,” Brown said.

Brazilian and Russian officials said they intended to raise the issue at the next G-20 meeting in Pittsburgh in September. The dollar “may well be” brought up there, Brazilian Foreign Minister Celso Amorim said. Arkady Dvorkovich, President Dmitry Medvedev’s economic aide, said currencies are a G-20 matter.

Local Currencies

Emerging nations are seeking to lower the dollar’s role in their economies. Brazil’s President Luiz Inacio Lula da Silva wants the biggest developing nations to use their own currencies in settling trade accounts, India’s Foreign Secretary Shivshankar Menon told reporters yesterday.

The so-called Group of Five -- Brazil, China, India, Mexico and South Africa -- met yesterday and discussed “looking at the use of alternate currencies, not so much as reserve currencies,” Menon said. “But Brazilian President Lula suggested that we should consider using our own currencies to settle our own trading accounts with each other.” Menon said “everyone recognizes” that the idea of a new reserve currency “is a long-term goal.”

In May, Lula and his Chinese counterpart Hu Jintao discussed ways to use their currencies in trade after China replaced the U.S. as Brazil’s biggest trading partner.

“We need to improve the international currency regime to have a better foreign exchange issuing and reserve currency system so that we can have relative stability in the reserve currencies’ rates and so that we can have a diversified and rational international reserve currency regime,” Foreign Ministry spokesman Ma Zhaoxu said today in L’Aquila.

The G-8 comprises the U.S., U.K., France, Germany, Italy, Japan, Russia and Canada.

Link:

http://www.bloomberg.com/apps/news?pid=email_en&sid=avHoRg8TzM1s

SUDDEN SUPER SUNSPOT: Sunspot 1024 is crackling with B- and C-class solar flares. The activity is so intense, astronomers can’t seem to take a picture of the sunspot without catching a flare in action. Pete Lawrence sends this example from his backyard observatory in Selsey, UK:

“Active region 1024 is putting on a fantastic show,” says Lawrence. “The center of this region is incredibly bright and fluctuating.”

Solar observers haven’t seen an active region like this one in more than two years. It is big, complex, and rapidly growing: movie. The magnetic polarity of the sunspot, revealed by SOHO magnetograms, show that it is a member of new Solar Cycle 24. This makes sense: New research shows that solar jet streams are beginning to stimulate new-cycle sunspot production. Sunspot 1024 appears to be a sign of the process at work, heralding more to come. Monitoring is encouraged.

SpaceWeather.com

Maybe this does add some validity to the Crop Circle Warnings

By Tom Fife
11-20-8

During the period of roughly February 1992 to mid 1994, I was making frequent trips to Moscow, Russia, in the process of starting a software development joint-venture company with some people from the Russian scientific community. One of the men in charge on the Russian side was named V. M.; he had a wife named T.M. V. was a level-headed scientist while his wife was rather deeply committed to the losing Communist cause - a cause she obviously was not abandoning. One evening, during a trip early in 1992, the American half of our venture were invited to V. & T.'s Moscow flat as we were about to return to the States. The party went well and we had the normal dinner discussions. As the evening wore on, T. developed a decidedly rough anti-American edge - one her husband tried to quietly rein in. The bottom line of the tirade she started against the United States went something like this: "You Americans always like to think that you have the perfect government and your people are always so perfect. Well then, why haven't you had a woman president by now? You had a chance to vote for a woman vice-president and you didn't do it." The general response went something along the lines that you don't vote for someone just because of their sex. Besides, you don't vote for vice-president, but the president and vice-president as a ticket. "Well, I think you are going to be surprised when you get a black president very soon." The consensus we expressed was that we didn't think there was anything innately barring that. The right person at the right time and sure, America would try to vote for the right person, be he or she black or not. "What if I told you that you will have a black president very soon and he will be a Communist?" The out-of-the-blue remark was met by our stares. She continued, "Well, you will; and he will be a Communist." It was then that the husband unsuccessfully tried to change the subject; but she was on a roll and would have nothing of it. One of us asked, "It sounds like you know something we don't know." "Yes, it is true. This is not some idle talk. He is already born and he is educated and being groomed to be president right now. You will be impressed to know that he has gone to the best schools of Presidents. He is what you call "Ivy League". You don't believe me, but he is real and I even know his name. His name is Barack. His mother is white and American and his father is black from Africa. That's right, a chocolate baby! And he's going to be your President." She became more and more smug as she presented her stream of detailed knowledge and predictions so matter-of-factly - as though all were foregone conclusions. "It's all been thought out. His father is not an American black so he won't have that social slave stigma. He is intelligent and he is half white and has been raised from the cradle to be an atheist and a Communist. He's gone to the finest schools. He is being guided every step of the way and he will be irresistible to America." We sat there not knowing what to say. She was obviously very happy that the Communists were doing this and that it would somehow be a thumbing of their collective noses at America: they would give us a black president and he'd be a Communist to boot. She made it quite obvious that she thought that this was going to breathe new life into world Communism. From this and other conversations with her, she always asserted that Communism was far from dead. She was full of little details about him that she was eager to relate. I thought that maybe she was trying to show off that this truly was a real person and not just hot air. She rattled off a complete litany. He was from Hawaii. He went to school in California. He lived in Chicago. He was soon to be elected to the legislature. "Have no doubt: he is one of us, a Soviet." At one point, she related some sort of San Francisco connection, but I didn't understand what the point was and don't recall much about that. I was just left with the notion that she considered the city to be some sort of a center for their activity here. Since I had dabbled in languages, I knew a smattering of Arabic. I made a comment: "If I remember correctly, 'Barack' comes from the Arabic word for 'Blessing.' That seems to be an odd name for an American." She replied quickly, "Yes. It is 'African'", she insisted, "and he will be a blessing for world Communism. We will regain our strength and become the number one power in the world." She continued with something to the effect that America was at the same time the great hope and the great obstacle for Communism. America would have to be converted to Communism and Barack was going to pave the way. So, what does this conversation from 1992 prove? Well, it's definitely anecdotal. It doesn't prove that Obama has had Soviet Communist training nor that he was groomed to be the first black American president, but it does show one thing that I think is very important. It shows that Soviet Russian Communists knew of Barack from a very early date. It also shows that they truly believed among themselves that he was raised and groomed Communist to pave the way for their future. This report on Barack came personally to me from one of them long before America knew he existed. Although I had never before heard of him, at the time of this conversation Obama was 30+ years old and was obviously tested enough that he was their anticipated rising star. Tom Fife