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Tuesday, November 30, 2010

Now Italy?...the worst single day in Mediterranean markets since the launch of monetary union.


They seemed so confident only yesterday


Contagion strikes Italy as Ireland bail-out fails to calm markets


The EU-IMF rescue for Ireland has failed to restore to confidence in the eurozone debt markets, leading instead to a dramatic surge in bond yields across half the currency bloc.

Telegraph

By Ambrose Evans-Pritchard, International Business Editor 8:15PM GMT 29 Nov 2010

Spreads on Italian and Belgian bonds jumped to a post-EMU high as the sell-off moved beyond the battered trio of Ireland, Portugal, and Spain, raising concerns that the crisis could start to turn systemic. It was the worst single day in Mediterranean markets since the launch of monetary union.

The euro fell sharply to a two-month low of €1.3064 against the dollar, while bourses slid across the world. The FTSE 100 fell almost 118 points to 5,550, while the Dow was off 120 points in early trading.

"The crisis is intensifying and worsening," said Nick Matthews, a credit expert at RBS. "Bond purchases by the European Central Bank are the only anti-contagion weapon left. It needs to act much more aggressively."

Investor reaction comes as a bitter blow to eurozone leaders, who expected the €85bn (£72bn) package for Ireland agreed over the weekend to calm "irrational markets".

While the Irish rescue removed the immediate threat of "haircuts" for senior bondholders of Irish banks, it leaves open the risk of burden-sharing from 2013 on all EMU sovereign bonds and bank debt on a "case-by-case" basis. Traders said bond funds have been dumping Club Med bonds frantically to comply with their "value-at-risk" models before closing books for the year.

Yields on 10-year Italian bonds jumped 21 points to 4.61pc, threatening to shift the crisis to a new level. Italy's public debt is over €2 trillion, the world's third-largest after the US and Japan.

"The EU rescue fund cannot handle Spain, let alone Italy," said Charles Dumas, from Lombard Street Research. "We may be nearing the point where Germany has to decide whether it is willing take on a burden six times the size of East Germany, or let some countries go."

Italy distanced itself from trouble in the rest of southern Europe early in the financial crisis, benefiting from rock-solid banks, low private debt, and the iron fist of finance minister Giulio Tremonti. But the crisis of competitiveness never went away, and the country has faced a political turmoil for weeks.

If Portugal and Spain have to follow Ireland in tapping the EU's €440bn bail-out fund – as widely feared after Spanish yields touched 5.4pc – this will put extra strains on Italy as one of a reduced core of creditor states. The rescue mechanism has had the unintended effect of spreading contagion to Italy, and perhaps beyond. French lenders have $476bn of exposure to Italian debt, according to the Bank for International Settlements.

In Dublin, Fine Gael, Labour and Sinn Fein have all vowed to vote against the austerity budget in early December, raising doubts over whether the government can deliver on its promises to the EU.

Echoing the national mood, Sinn Fein leader Gerry Adams said it was "disgraceful" that the Irish people should be reduced to debt servitude to foreign creditors of reckless banks. "The costs of this deal to ordinary people will result in hugely damaging cuts," he said.

One poll suggested a majority of Irish voters favour default on Ireland's bank debt. Popular fury raises the "political risk" that a new government elected next year will turn its back on the deal.

Premier Brian Cowen said there was no other option. "We are not an irresponsible country, " he said, adding that Brussels had squashed any idea of haircuts on senior debt. Irish ministers say privately that Ireland is being forced to hold the line to prevent a pan-European bank run.

There is bitterness over the EU-IMF loan rate of 5.8pc, which may be too high to allow Ireland to claw its way out of a debt trap. Interest payments will reach a quarter of total revenues by 2014. Moody's says the average trigger for default in recent history worldwide has been 22pc. "The interest bill is enormous. The whole process lacks feasibility," said Stephen Lewis, from Monument Securities.


Olli Rehn, the European economics commissioner, said Ireland is in better shape than it looks, recording the EU's strongest growth in industrial output in September as the IT and drug industries boost exports.

"Ireland's real economy has not gone away. It is flexible, open, has strong fundamentals, and has the capacity to rebound relatively rapidly. The Irish are smart, resilient, stubborn people, and they will overcome this challenge," he said.

54 comments:

  1. I fear a collapse:

    Italian, Spanish Government Bonds Plunge, Sending Spreads Wider
    By Paul Dobson - Nov 30, 2010 3:36 AM ET


    Italian and Spanish government bonds slumped, increasing the additional yield investors demand to hold the securities instead of benchmark German bunds, as Europe’s debt crisis intensified.

    The drop pushed the difference in yield, or spread, between 10-year Italian securities and similar-maturity German debt to more than 200 basis points for the first time since 1997. Spanish bonds fell yesterday by the most since the start of the euro era as a bailout for Ireland failed to assuage speculation that officials lack the tools to contain the debt crisis.

    “Contagion risk is still high on the agenda,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Nobody wants to expose themselves to any peripheral risks.”

    The Italian 10-year bond yield rose 18 basis points to 4.83 percent as of 8:26 a.m. in London. The 3.75 percent security due in March 2021 fell 1.36, or 13.60 euros per 1,000-euro ($1,311) face amount, to 91.79. The spread with 10-year German bonds increased to 205 basis points, a euro era record.

    The yield on similar-maturity Spanish bonds increased 20 basis points to 5.66 percent. That pushed up the yield spread to German debt to 289 basis points.

    German 10-year bonds rose, with the yield three basis points lower at 2.72 percent. The Irish 10-year yield was little changed at 9.47 percent.


    To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

    To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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  2. NEW DELHI — India’s economy grew 8.9 percent in its fiscal second quarter compared to the same period a year earlier, the Central Statistical Organization said Tuesday, as farm output and manufacturing expanded.

    The annual gross domestic product figure for the July-September period was far above Reuters analysts’ forecast of 8.3 percent growth and was greater than the 8.8 percent expansion in the fiscal first quarter.

    The manufacturing sector, in the domestic demand-driven Indian economy, rose 9.8 percent in the second quarter, supported by strong output and rural demand, while the farm sector grew 4.4 percent from a year earlier.

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  3. Echoing the national mood, Sinn Fein leader Gerry Adams said it was "disgraceful" that the Irish people should be reduced to debt servitude to foreign creditors of reckless banks. "The costs of this deal to ordinary people will result in hugely damaging cuts," he said.

    I tend to agree. I think the bankers are playing us like fools. The banks do not rule the whirled.

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  4. There's no way Germany and France are going to bail out Greece, Ireland, Italy and Spain and Portugal. There will be a revolt in the Fatherland first.

    Problem is: Spain accounts for nearly 15% of the European economy. That's a chunk. What's not clear to me is what are the implications of default? I know, creditworthiness." What good is credit if you can't afford it and can't default on it? How long should a people be forced to shoulder the burden for the failed banks? Seven years, no more. That's the historically acceptable term.

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  5. I walk upstairs with sleep in my eyes to get a sandwich and I see the wife has put the holiday tree up --all white with red balls.

    She is very creative with such things.

    Always has had that knack.

    Wherever she is, that's home.

    Happy Holidays to you all.

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  6. How long should a people be forced to shoulder the burden for the failed banks? Seven years, no more. That's the historically acceptable term.





    ha ha ha ha ah haha hah a ha ha ha ha ha ha h

    can we say......


    Now I dare not....


    h aha ha ha ha ha ha ha ha ha

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  7. How long should a people be forced to shoulder the burden for the failed banks? Seven years, no more. That's the historically acceptable term.




    Allen, if your reading this...

    have a good chuckle!!!

    We deserve it...

    Dont tell Rufus, T or Rt, their collective brains would explode...

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  8. Where do we send the military, to rectify this situation?

    Whose military do we send?

    The Germans, spending 1% of GDP, can their military make the Eyetalians toe the line?

    The Germans did poorly in Greece and the Slavic regions, in the 20th century, will they do better in the 21st?

    Does Turkey moving East make ever more sense? They foresaw the US being bogged down in Iraq and advised against our deployment, there. Does their repositioning, economically, follow that same line of sight?

    How does Libya fare, if the Eyetalions crash?

    How does it effect Iran?

    The latest report released by Eurostat indicates that the trading volume between Iran and 27 EU countries grew by 45 per cent in the first half of 2010, compared to the same period last year. The trading volume between Iran and Europe hit €11.85 billion, from €8.16 billion for the corresponding period in 2009. Experts believe that this growth is partly due to exchange rate fluctuations and oil price changes.

    The European Union imported €3.35 billion worth of goods from Iran during January to June 2009, and €6.26 billion in the first six months of 2010 – 86.9 per cent growth. Crude oil accounted for the bulk of EU imports, and the higher oil prices were the main reason behind the growth. Iran ranked fifth as an oil supplier over the period, supplying 5 per cent of EU crude oil imports.

    In the same period, the European Union exported €5.58 billion of goods to Iran, mainly machinery, showing 15.9 per cent growth. However, dissecting longer-term developments in Iran–EU trade underscores that the volume of trade depends strongly on the price of crude oil. When oil prices fell sharply between 2008 and 2009, the volume of EU imports from Iran dropped by 45 per cent. Nonetheless, it is interesting that despite international sanctions, EU's exports to Iran have grown between 2009 and 2010.

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  9. Nonetheless, it is interesting that despite international sanctions, EU's exports to Iran have grown between 2009 and 2010.

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  10. The Irish rescue package announced over the weekend, like the modified Greek plan, involves seven-years of emergency financing designed to help the government avoid the soaring borrowing costs being demanded in the markets. But these so-called rescues are misguided because they merely postpone the day of reckoning.

    That's the story of the last four years everywhere you look, nothing but bailouts and political tricks to move the inevitable pain ever out beyond the the horizon of the next election.

    What we need to do is give 'em a short, sharp shock, dig it?

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  11. According to one Wikilink cable, Saudi Arabia’s King Abdullah “frequently exhorted the US to attack Iran to put an end to its nuclear weapons program.” In 2008, the king’s envoy to Washington told Gen. David Petraeus to “cut off the head of the snake” in the Islamic Republic.

    And WiO wants to nuke his black rock.

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  12. Check out Hugh Jidette at owe no.com

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  13. I wish Allen and Trish were back. I enjoyed them both.

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  14. Here in Ideeeeho it's colder than a well digger's ass, for this time year, I'm almost thinking of putting some underwear on.

    The geese are flying around now, and we are misting with snow.

    The cat has moved inside, for the winter.

    The holiday tree is up, and the furnace is on.

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  15. Italy will "break the bank."

    If Spain doesn't.

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  16. Wait till those FRENCH Bonds start to creep up.

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  17. Should have said: French Bond "Rates."

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  18. This comment has been removed by the author.

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  19. .

    I'm almost thinking of putting some underwear on.

    Going commando in Idaho.

    Please, Bob. Spare us the details.

    .

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  20. Our very own "military expert" and defender of the Holy Rock of the Keeba states:

    According to one Wikilink cable, Saudi Arabia’s King Abdullah “frequently exhorted the US to attack Iran to put an end to its nuclear weapons program.” In 2008, the king’s envoy to Washington told Gen. David Petraeus to “cut off the head of the snake” in the Islamic Republic.

    And WiO wants to nuke his black rock.


    Now let's break this down...

    she sites a Wikilink cable about Arabia and wanting to cut the head off the snake of Iran's nuke program...

    At the same time ignores this:The newspaper also said documents report that Saudi donors remain chief financiers of Sunni militant groups like al Qaeda, and that the tiny Persian Gulf state of Qatar, a generous host to the U.S. military for years, was the "worst in the region" in counter-terrorism efforts, according to a State Department cable last December.

    From the very same yahoo news report:

    http://news.yahoo.com/s/nm/20101128/ts_nm/us_wikileaks_usa

    So the KING??? of Arabia wants to hurt Iran's NUKE program and some how that should give a free pass to Arabia and their precious ROCK that funds and fuels ISLAMIC nut jobs the world over...

    I stand CORRECT AGAIN...

    DESTROY the BLACK ROCK OF MECCA

    The sooner the better...

    At what point does does omission become a lie?

    Quoting 1/2 the story is SO 2008....

    ReplyDelete
  21. I just can't make up my mind as to boxers or briefs.

    Or long john's.

    ReplyDelete
  22. How about a thread on the pros and cons of the destruction/kidnapping and or nuking of the Keeba?

    Let's argue this out...

    How many would die, in which type of attack.

    Timing of said attacks? During the Haj? After the Haj?

    Do you use nukes, do you bulldoze it or maybe an "Ocean 11" theft?

    I for one would love to see a movie about the destruction of the Dome of the Rock, the Keeba!

    What a cool piece of fiction..

    Some our greatest novelists write about the USA and other parts of the world "biting" it...

    So if I were a General in an Army what would be the best plan for to attacking the Black Rock, NOT as an individual, but a NATION...

    Are there troops that defend it?

    Would a cruise missile destroy it?

    What weapons would a nation/army need to take it out?

    What if an unknown cyber group, hijacked an Iranian inter cont ballistic missile and programed it to hit the Keeba????

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  23. If you are going to be searched?

    Commando & wear body art...

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  24. Kidnap it, hit it with conventional H.E., that's all fine WiO, but you don't nuke the downtown core of a world city, even with a sub-kiloton tactical "silver bullet" on a first-strike basis. For it was written by the prophets, "The fathers shall not be put to death for the children, neither shall the children be put to death for the fathers: every man shall be put to death for his own sin."

    ReplyDelete
  25. Blogger Deuce said...

    I fear a collapse:


    This guy argues that because the consequences would be so dire it won't happen:

    Why the euro zone can’t break apart
    Paul Taylor

    Unlike true love, the euro really is forever.

    That may seem a reckless notion to advance just as Ireland becomes the second highly indebted member of the 16-nation single currency area to require a bailout, following Greece, and as bond markets close in on Portugal and Spain.

    But the cost to any country of leaving the euro zone would be so high, and the damage that an exit would inflict on the currency and the remaining members so great, that no government would rationally choose to secede, or to push another out.

    Argentina’s 2001-2002 economic crisis and $100-billion (U.S.) bond default, which reduced millions of people to poverty, would pale in comparison with the likely chain reaction across Europe.

    “There would be chain bankruptcies. A run on the banks would be certain. It would be far worse than Argentina,” said Jean Pisani-Ferry, director of the Brussels economic think-tank ..."

    http://www.theglobeandmail.com/report-on-business/economy/why-the-euro-zone-cant-break-apart/article1818813/

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  26. Selah said...
    Kidnap it, hit it with conventional H.E., that's all fine WiO, but you don't nuke the downtown core of a world city, even with a sub-kiloton tactical "silver bullet" on a first-strike basis. For it was written by the prophets, "The fathers shall not be put to death for the children, neither shall the children be put to death for the fathers: every man shall be put to death for his own sin."


    Dont quote scripture...

    It only makes you look small and stupid...

    Your application of selected verses or "proof texting" is not a sound basis for discussion.

    Nuke can be used in war..

    And Mecca is a war target.

    Problem here is that you are a hypocrite.

    You paint the most absurd position and then rally against it...

    Why not suggest BEFORE NUKING said small hunk of iron, the population be evacuated?

    Why does your query always assume the Haj when it's populated?

    There could be many different ways to force an evac of Mecca..

    Small Pox?

    Germ Warfare?

    Cutting off all water and power?

    EMP over mecca?

    It's a well known fact that the arab/islamic/persian world has used bio/chem weapons on each other in the past..

    No, I argue the rock an be nuked using a small tactical nuke

    The innocent cultists of death can be warned.

    If they die? they they are taught they go to heaven...

    But now you must argue that every attack by any military that might entertain civilian deaths is immoral...

    Hmmm, how does that fly in the face of serving in the USA military???

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  27. "Hmmm, how does that fly in the face of serving in the USA military???"


    Remember:

    It is still your right not to be asked and not to tell.

    For now.

    ReplyDelete
  28. Cantor, Boehner, and Obama spoke after their meeting today to voice their reactions to said meeting.

    Cantor and Boehner spoke without notes.

    Obama read from his faithful Teleprompter.

    Question:

    How did Mr. Teleprompter know all of Obama’s reactions to the meeting before Mr. Obama emerged from the meeting?

    Is the Teleprompter Telepathic?

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  29. Hope to get to your questions today or tomorrow, Quirk:

    Still a Busy Bee Honeydoing.

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  30. Also: reports now that Russia has moved tactical-nuke-capable short range (Iskander?) missiles up to their Western borders:
    http://online.wsj.com/article/SB10001424052748704584804575645212272670200.html?mod=WSJ_article_MoreIn_World


    146. dan
    From the article – question: how is “an oligarchy run by the security services” (Gates) substantively different than the USSR?

    “Sen. Christopher Bond (R., Mo.), vice chairman of the Senate Select Committee on Intelligence, refused to comment directly on the tactical nuclear warhead issue, but he said the Russians cannot be trusted to make good on their arms-control promises. “We know from published reports of the State Department that the Russians have cheated on all their other treaties, Start, chemical weapons, [biological weapons], Open Skies,” he said.

    U.S. officials say Mr. Obama’s revised approach to missile defense, and warming personal ties with Russian President Dmitry Medvedev, have fostered cooperation in key areas, from isolating Iran to opening new routes to transport gear to Afghanistan.

    But mistrust runs deep, U.S. diplomatic cables released by the organization WikiLeaks over the weekend showed. A February cable quoted Defense Secretary Robert Gates telling a French official that Russia was an “oligarchy run by the security services,” despite Mr. Medvedev’s “more pragmatic vision.” A Gates spokesman declined to comment.”

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  31. This comment has been removed by the author.

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  32. Iranian Anti-Stuxnet Progammer Assassinated


    The world owes its gratitude to the yet unnamed intelligence service that continues to dog the Iranians. Under the current administration our American intelligence umbrella is weakened and ineffectual. We have a President more interested in hobbling our Israeli allies while providing foreign aid to the Palestinians than in providing our nation with security. Thank God that forces of good and common sense remain active in the pursuit of global security.

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  33. I too think we need a thread about the efficacy of nuking the kabaa.

    You will remember I put QUIRK up to the job on a suicide mission, but he crapped out, Detroit style, as always.

    It is actually a good question, when you think about it, as most of us here never do.

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  34. Well a good start would be to cause the devaluation of oil..

    Causing mecca's cash stream to fall...

    1st an economic attack against opec.

    that seems in order...

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  35. It's really a strange strange deal - they go round and round about it, like the chimpanzees that Joe Campbell talked about.

    Fascinated by an object.

    And not even a female object.

    A damn rock.

    Blow the fucker up.

    It would be an advance in human understanding.

    ReplyDelete
  36. Blogger Quirk said...

    .

    Truly bizarre.

    .



    loons, complete loons, and more than one of them!

    ReplyDelete
  37. .

    And as you have suggested before, drop a nuke here. Another over there.

    What could possible go wrong? What could be be the downside?

    It is actually a good question, when you think about it, as most of us here never do.

    Bob, you are a nitwit.

    .

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  38. And you are not a good thinker.

    I know it's hard, but try try try.

    You will get better.

    Even clowns can make an advance.

    If they really try try try.

    You have a little humor in your soul, but there is some smarts, back there, somewhere.

    You just have to find it.

    Searching is tough.

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  39. .

    The Toa of the Gentleman Farmer.

    Precious.




    And special.

    .

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  40. One reason for nuking the kabaa - though it isn't going to happen -would be the freeing up of millions of muslin women.

    My wife, for instance, can leave me at any time. And she would, too, if she wants.

    She is going back to Ohio, in January, no bob with her. And she controls the checkbook.

    She is a FREE AMERICAN WOMAN.

    Like they all should be.

    It comes from our Scandinavian back ground.

    She says she is Irish, but she is really a Swede. I can tell the difference.

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  41. My 24 year old daughter is afraid of Rudolph. She says it's creepy and that clay shouldn't talk.

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  42. .

    I find the following story interesting on a couple levels.

    US cuts access to files as Interpol seeks Assange

    The government scrambled Tuesday to prevent future spills of U.S. secrets like the embarrassing WikiLeaks' disclosures, while officials pondered possible criminal prosecutions and Interpol in Europe sent out a "red notice" for nations to be on the lookout for the website's founder.

    Interpol placed Julian Assange on its most-wanted list after Sweden issued an arrest warrant against him as part of a drawn-out rape probe — involving allegations Assange has denied. The Interpol alert is likely to make international travel more difficult for Assange, whose whereabouts are publicly unknown.

    In Washington, the State Department severed its computer files from the government's classified network, officials said, as U.S. and world leaders tried to clean up from the leak that sent America's sensitive documents onto computer screens around the globe.

    By temporarily pulling the plug, the U.S. significantly reduced the number of government employees who can read important diplomatic messages.


    It was an extraordinary hunkering down, prompted by the disclosure of hundreds of thousands of those messages this week by WikiLeaks, the self-styled whistleblower organization...


    Interpol Issues 'Red Notice' for Wikileaks Founder

    First, it's not really cool to get everybody pissed off at you. It really leaves you no place to hide (longterm).

    Second, the current fix for the US is to take DOS off the HS grid. Interesting. You have to ask which is their bigger concern, preventing terrorism or preventing the beans being spilled again.

    Third, it appears State is pulling a TSA, reacting after the fact.

    And lastly, if 'connecting the dots' is now lower on the priority list what does that do to the government's argument that it needed the umbrella of Homeland Security and its bloated bureaucracy to pull all the disparate organizations together.

    Just one more example of CYA that is costing us billions?

    .

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  43. I think your 24 year old daughter is neat.

    Goddamn, you people just don't know what it is to deal City of Moscow these days. When my father and Roscoe his Jewish partner and Everett Will,of the John Deere and Cat guy, ran the the city, Everett who called me to his death bed, one day before he died, and told me "Bob, don't worry so much, you are going to make it" it was a hell of lot better.

    We don't have people like that any more.

    I miss them.

    Now we've a "city manager" who is just an extortionist.

    Even though we have a - relatively good council now - the city council has turned all the negotiating over to the city planner who is a godamned asshole, so I have told my lawyer woman, just get the fucker through, cause I'm getting older.

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  44. Those fuckers are extorting me to the tune of $438,000 dollars of park land I think it is, according to the appraisal, and that's just the start of it.

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  45. And it pisses me off, cause I can't do a damn thing about it.

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  46. "We remain committed to the common security of our allies in the Republic of Korea,'' Gibbs said, referring to South Korea by its official name.

    China is the main diplomatic and economic supporter of impoverished North Korea, which has defied the world with two nuclear weapons tests since 2006.

    But sensitive US cables released Monday by whistle-blower site WikiLeaks said that China doubted its own influence over Pyongyang and seemed increasingly likely to accept a North Korea absorbed by the democratic South.


    North Korea

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  47. Dad used to say "I know I'm getting screwed, I just can't figure out how."

    But I know better - Idaho Supreme Court Decision on Parkland Dedication.

    Your daughter is beautiful, Melody.

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  48. .

    Timing is everything.

    My X-box console died a couple of days ago. It was an E74 hardware failure.

    I still had two weeks left on my warranty. I contacted Microsoft and they are going to replace it for free.

    Life is good.

    Almost compensates for the money I've lost in the market over the past few days.

    You have to enjoy the little pleasures when they come your way.


    (The Toa of Quirk 13:12-15)

    .

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