A story that needs to be read

The shocking death of Tim McLean last summer has generated the predictable torrent of blood lust on the part of the general public (check the comments section of pretty much any news story on the case). Given that climate, the Winnipeg Free Press is to be commended for running this story about the history and application of the legal finding of "not criminally responsible". Of course, many of the people leaving comments continue to decry the possibility of such a verdict:

Yes, the mentally ill definitely need treatment. However they also deserve some form of punishment to allow justice for the victim(s) and protection of society... at least keep them away from society for a couple years.

The whole idea of punishment makes sense given the premise that the person punished was aware, in some capacity, that they were doing a bad thing, and therefore needs to be taught a lesson. But the whole point of a verdict of "not criminally responsible" is that the court is convinced that the accused did not have that awareness, and that therefore punishment is not the appropriate approach to the problem. It is not a denial of the existence of a problem, simply the recognition that the problem at hand is a different sort of problem than the criminal justice system is designed to deal with.

And what the heck does the above poster mean by "to allow justice for the victim"? Now "protection of society" I can understand, and many (perhaps even most) people found to be "not criminally responsible" do need to be kept away from the public. But "justice for the victim"? Excuse me, but the guy is dead. He ain't coming back, no matter how much you torture and torment the killer. Unfortunately, a public raised on daily doses of CSI and Law and Order is very easy to whip up into a bloodthirsty frenzy when the discussion turns to crime.

Dates set for provincial budget and two by-elections

Not a big surprise here:

Voters in Elmwood and The Pas head to the polls March 24, Premier Gary said today.

The two provincial by-elections will see two new MLAs elected in ridings long held by the New Democrats.

Doer also said his government will table a new budget for the coming fiscal year on March 25, the day after the vote.

From the Winnipeg Free Press. I'm going to be working on the Elmwood by-election, and possibly doing some calling for the other one as well. Additionally, I'm working on the muncipal by-election in River Heights-Fort Garry, not to mention a convention in Brandon in two weeks, so I'm going to be pretty busy most evenings for the next while. It looks pretty good, and from what I hear the government is still doing well in the polls.

More economic chaos...

More trials and tribulations in the US auto industry:

Chrysler LLC may be sending a message to President Barack Obama’s autos task force by saying the “best option” for survival is a merger with General Motors Corp. that both sides have labeled dead.

Chrysler, propped up like GM with federal aid, is suggesting a new appraisal of a tie-up in hopes that the auto panel meeting for the first time today might force a “shotgun marriage,” said Brian Johnson, a Barclays Capital analyst in Chicago.

“I can’t imagine GM doing that without being forced into it by the government, but that’s a possibility,” said Kimberly Rodriguez, a principal at consulting firm Grant Thornton LLP in Southfield, Michigan.

Obama’s task force will start reviewing $21.6 billion in new loan requests that include Chrysler’s comment on the advantages of a GM combination. GM, the biggest U.S. automaker, abandoned merger talks in November and said it is focused on its own survival, not hooking up with No. 3 Chrysler.

From Bloomberg. Meanwhile, other big industries aren't much better off:

New York Times Co., the third-largest U.S. newspaper publisher, will stop paying a dividend for the first time in its 40-year history as a public company.

The publisher said in a statement today it suspended its quarterly dividend of 6 cents a share to help reduce debt, three months after slashing the payout. It joins McClatchy Co., owner of the Sacramento Bee, and Media General Inc. in halting dividends.

The suspension will save New York Times about $34.5 million annually, based on shares outstanding. The publisher is cutting jobs and selling assets as advertising dwindles. It’s seeking buyers for its stake in the Boston Red Sox baseball team and is in talks about a sale-leaseback on its Manhattan headquarters.

“It’s going to be very challenging for them to generate much free cash flow even after this cut,” said Mike Simonton, a credit analyst at Fitch Ratings. “It’s certainly a prudent move to preserve liquidity in light of the difficult credit market and their heavy debt burden.”

From Bloomberg once again. I guess companies at all levels are slashing their advertising budgets, which is bad news for commercial media. It's happening in Canada too:

Leonard Asper is scrambling to secure a financial lifeline for CanWest Global Communications Corp. before the end of the month to prevent his family-run media empire from sliding into bankruptcy protection.

Yet even if he is successful, the price of that lifeline could be steep. Some potential investors - including Fairfax Financial Holdings Ltd.- want to take control of CanWest away from the Asper family in exchange for any cash infusion.

At least one investor weighing a proposal said it would insist that Mr. Asper step aside as chief executive officer and that he and his siblings eliminate the dual-class share structure that gives them control of the company, according to sources familiar with the matter.

Officials at some of CanWest's main creditors believe that if the company cannot find access to hundreds of millions of dollars in new credit within the next few weeks, it could be forced to seek protection from lenders and restructure under the Companies' Creditors Arrangement Act. CanWest, which owes $3.9-billion, and its primary adviser, RBC Dominion Securities, have approached numerous institutional investors to gauge their interest in a deal.

The response from potential backers has been lukewarm, not merely because of CanWest's economic woes brought on by the recession, but because several creditors are jockeying for protection in any restructuring process.

CanWest's borrowing capacity was put on a tighter leash this month when a senior credit facility was cut back to $112-million from $300-million by Bank of Nova Scotia. The new limit is about $20-million above what CanWest has already drawn.

From the Globe and Mail. Can't say I'm shedding too many tears for the Asper family, and in any case I don't think they're going to end up living at the Main Street Project or anything. On the other hand, it would be a shame if Manitoba's second largest city were to lose its only TV station:

Another local Canadian television station has been tossed on the auction block, and could be shut down if a buyer isn't found by next month, signalling major changes in the broadcasting industry.

This time it's CTV Television Inc. that's putting CKX-TV Brandon in western Manitoba up for sale, while warning that it will pull the plug on the station if another broadcaster doesn't fork over the sufficient cash.

The announcement follows a decision by Canwest Global Communications Corp. to place five of its local E! network stations on the market after eroding advertising sales dashed its profits.

"Whether we like it or not, we are seeing the beginning of the end for small market TV stations in Canada," said Kaan Yigit, an media analyst at Solutions Research Group in an e-mail.

"They are costly to run and maintain and were having difficulty providing a decent return on investment even in good times."

From the London Free Press. I'd like to see some local media co-op form and buy the station, but I wouldn't bet on that happening.

GM, Chrysler buy a bit of time

How much is a matter of debate, though:

U.S. automakers are calling on the government to provide even more funding to ensure the survival of General Motors Corp. and Chrysler LLC.

General Motors on Tuesday said it could need up to $30 billion from the U.S. Treasury Department to continue operating.

Included in that amount is $13.4 billion the company has already received. Previously, GM had said it could need as much as $18 billion.

GM said it could run out of money by March without the new funds from the government.

From the CBC. So they're staving off bankruptcy for the time being, though they're cutting things to the bone. For instance, check out what's happening at GM:

A total 26,000 of the cuts will come from outside the U.S. as GM downsizes its global operations. It is not yet clear what the impact will be in Canada. The cuts are expected to be made by the end of 2009.

The company may be eliminating its Hummer brand and said it will make a final decision by March 31.

GM is also considering selling its Pontiac and Saab brands and the Saturn brand is being phased out, officials said. The Saturn plant will remain in operation until the end of its current life cycle in 2011, officials said.

The changes will see GM focusing its efforts on Chevrolet, Cadillac, GMC and Buick.

Kind of a shame about Saturn actually; I kind of liked some of their lineup (though Phil Edmonston and others question their quality control). I know my friends in Waterloo who are on their third Saturn will be disappointed. Saab might well get taken over by the Swedish government (which wouldn't be a bad outcome actually). As for Hummer, good riddance. Meanwhile, at Chrysler they're doing the same:

It plans to cut 3,000 jobs and three models — the PT Cruiser, Dodge Durango and Chrysler Aspen — as part of its restructuring plan. None of Chrysler's job cuts are expected to impact its Canadian operations.

No great loss lineup-wise, though it's a bit of a surprise that the PT Cruiser is on the list given the number of the things I see on the streets. Maybe sales have fallen off more dramatically than other vehicles in their lineup, or maybe they never sold as well in their core markets as they have in Canada.

Speaking of the PT Cruiser, one of my disreputable friends once told me she had an idea to get a black PT Cruiser and tell people it was a hearse for midgets. Her original idea was to say it was a hearse for babies, but she figured that would annoy too many people.

On a clear day you can see General Motors...

...spiralling inexorably earthwards:

General Motors Corp [GM-N], nearing a Tuesday deadline to present a viability plan to the U.S. government, is considering as one option a Chapter 11 bankruptcy filing that would create a new company, the Wall Street Journal said in its Saturday edition.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked."

Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing.

GM declined to comment, the story said.

From the Globe and Mail. Of course, talk of bankruptcy might be simply another tactic to scare the government into handing them more bailout money, but it's noteworthy that Ford has not yet asked for money. But then, Ford's product line of late has been better than GM's, especially in Europe (a lot of people lament the fact that the European version of the Focus isn't sold on this side of the pond).

Even if GM files for Chapter 11, the company might continue running, though that would likely render their contracts with the UAW null and void... not a good situation if you've been working for them for 25 years and were hoping to retire on your pension. But consider this comment to the story:

Allan VCR from Vancouver, Canada writes: Best Option;
Chapter 11 for GM & Chapter 7 for Chrysler

Chapter 7, of course, means liquidation. It's possible under such circumstances for some divisions (e.g. Jeep) to be sold off as units and thus stay open, but the effect of this would still be dramatic, to say the least. And this sounds decidedly plausible; I bet the folks at Cerberus are kicking themselves for buying it, at least.

Thing is, though, the car industry is going to have to shrink, whether we like it or not; we can't afford the energy that goes in or the pollution that comes out. Too bad, but as Ray from Trailer Park Boys would say, "That's the fuckin' way she goes."

Darwin's 200th

In honour of the occasion, here's Richard Dawkins on why Darwin matters:

Charles Darwin had a big idea, arguably the most powerful idea ever. And like all the best ideas it is beguilingly simple. In fact, it is so staggeringly elementary, so blindingly obvious that although others before him tinkered nearby, nobody thought to look for it in the right place.

Darwin had plenty of other good ideas - for example his ingenious and largely correct theory of how coral reefs form - but it is his big idea of natural selection, published in On the Origin of Species, that gave biology its guiding principle, a governing law that helps the rest make sense. Understanding its cold, beautiful logic is a must.

Natural selection's explanatory power is not just about life on this planet: it is the only theory so far suggested that could, even in principle, explain life on any planet. If life exists elsewhere in the universe - and my tentative bet is that it does - some version of evolution by natural selection will almost certainly turn out to underlie its existence. Darwin's theory works equally well no matter how strange and alien and weird that extraterrestrial life may be - and my tentative bet is that it will be weird beyond imagining.

From the Guardian. On a somewhat more mundane note, Terry and Marcy were talking about Darwin's birthday on the radio this morning, and it was commented that there's a resemblance between Darwin and Harvey Smith. I suppose there may be some resemblance:

Judges accused of jailing kids for cash

Yes, you read that right:

For years, the juvenile court system in Wilkes-Barre operated like a conveyor belt: Youngsters were brought before judges without a lawyer, given hearings that lasted only a minute or two, and then sent off to juvenile prison for months for minor offenses.

The explanation, prosecutors say, was corruption on the bench.

In one of the most shocking cases of courtroom graft on record, two Pennsylvania judges have been charged with taking millions of dollars in kickbacks to send teenagers to two privately run youth detention centers.

"I've never encountered, and I don't think that we will in our lifetimes, a case where literally thousands of kids' lives were just tossed aside in order for a couple of judges to make some money," said Marsha Levick, an attorney with the Philadelphia-based Juvenile Law Center, which is representing hundreds of youths sentenced in Wilkes-Barre.

Prosecutors say Luzerne County Judges Mark Ciavarella and Michael Conahan took $2.6 million in payoffs to put juvenile offenders in lockups run by PA Child Care LLC and a sister company, Western PA Child Care LLC. The judges were charged on Jan. 26 and removed from the bench by the Pennsylvania Supreme Court shortly afterward.

From Yahoo, via World Traveler in this iTulip thread.

US bank failures increasing exponentially

Canadian Silver Bug has pointed out something interesting:

I just noticed that the several banks when under last Friday and I decided to go to the FDIC home page and get a total count for the year. While I was there I decided to look at other years failures to point out the trend and this is what I found

2007 1 lone failure
2008 24 failures
2009 9 already and its only Feb 9th

If this trend continues at only the average of 4.5 every month we could be heading for over twice last years failures, however if we go with the higher number of 1.5 banks a week so far this year we are looking at 78 failed banks.

Of course, they have the FDIC, and they'll have no choice to bail it out, but how long can this go on? There's just too many things that they have to spend money on. The increasing indebtedness of the US should, by rights, have seriously weakened their currency by now, but so far it has not; the US dollar is holding its own against most currencies. Perhaps it's because the rest of the world depends on the US dollar retaining its value, though that can't be relied upon to continue. After all, all it takes is for some large economy to think that other large economies are about to unload their dollars, and the fan will be hit by a larger chunk of shit than has already hit. (Where's Jim Lahey when you need him anyway?)

If nothing else, this might put a stop to America's foreign military adventures for a little while. On the other hand, it could just as easily drive them to try harder...

Thousands march in Paris against university "reform"

Yeah, well, the quotation marks weren't there in the original headline, so sue me. The actual article is worth a read, though:

Some 43,000 students, researchers and professors took to streets in Paris and other French cities Tuesday to demand an increase in scholarship funds and protest government plans to cut university jobs amid the economic downturn.

The protests are the latest of several challenges piling up for President Nicolas Sarkozy, who faced nationwide strikes and protests last month by workers who say his government hasn't done enough to ease the pain of the crisis.

Some 17,000 protesters gathered at the Pantheon on Paris' Left Bank, according to police. Another 26,000 protested in cities from Strasbourg in the east to Toulouse in the Pyrenees and Nantes near the Atlantic, according to police estimates.

Source. And given the authorities' tendency to lowball these things, that's a lot of angry people. In a typical North American city you'd be lucky to get a fraction of that. I wonder why that is? It isn't like they don't have TV over there, so why hasn't it sapped their resolve the way it seems to have sapped ours?

Finally some good news...

... amid all the stories of war, bushfires, drought, economic collapse, and so forth, we have something positive out there. Yes, Ann Coulter is under investigation for vote fraud (she's accused of voting in a state she didn't live in). Thanks to jblaque for the link!

Could this be why the Liberals supported the budget?

The Tories are dropping their silly lawsuit:

Prime Minister Stephen Harper has dropped a $3.5-million libel lawsuit against the Liberal party over statements published on the party's website suggesting the Tories offered a bribe to the late Independent MP Chuck Cadman.

Lawyers for both parties issued a joint news release late Friday, saying they've settled all issues in the case.

Neither side will make any further comment.

Harper launched the lawsuit in March 2008 after the Liberal party posted website headlines alleging two senior Conservatives attempted to bribe Cadman to secure his co-operation on a crucial budget vote that threatened to topple the Liberal minority government in May 2005. The headlines claimed Harper also knew about the alleged bribe.

Back in March, Harper called the allegations "absolutely false" and "despicable."

In a book published earlier in 2008, B.C. author Tom Zytaruk quotes Cadman's widow, Dona, as saying her husband told her that Conservatives offered him a $1-million life insurance policy in return for his vote against the Liberals.

In an interview for the book, Harper can be heard on tape saying: "I don't know the details, I know that, um, there were discussions, um, but this is not for publication?"

From the CBC. It doesn't seem to be in the article, but on the radio this morning it was said that no cash payment occurred. The Liberals have been really hard up for cash lately, so perhaps this was an offer they couldn't refuse.

Will Afghanistan be Obama’s Vietnam?

You have to wonder, don't you? Gwynne Dyer certainly does:

You aren’t really the U.S. president until you’ve ordered an air strike on somebody, so Barack Obama is certainly president now: two in his first week in office. But now that he has been blooded, can we talk a little about this expanded war he’s planning to fight in Afghanistan?

Does that sound harsh? Well, so is killing people, and all the more so because Obama must know that these remote-controlled Predator strikes usually kill not just the “bad guy”, whoever he is, but also the entire family he has taken shelter with. It also annoys Pakistan, whose territory the United States violated in order to carry out the killings.

It’s not a question of whether the intelligence on which the attacks were based was accurate (although sometimes it isn’t). The question is do these killings actually serve any useful purpose. And the same question applies to the entire U.S. war in Afghanistan.

For those who would say, "But Obama didn't get America into Afghanistan", it's worth remembering that Lyndon Johnson, who gets the lion's share of the blame for Vietnam, didn't get America into that mess either:

The parallel with Vietnam is not all that far-fetched. Modest numbers of American troops have now been in Afghanistan for seven years, mostly in training roles quite similar to those of the U.S. military “advisers” whom presidents Dwight D. Eisenhower and John F. Kennedy sent to South Vietnam from 1955 to 1963.

Funny how a lot of people forget Kennedy's role in that tragedy, but that's another issue. What matters is what it might mean:

We already know how this story ends. There was not a lot in common between presidents Kennedy and George W. Bush, but they were both ideological crusaders who got the United States mired in foreign wars it could not win and did not need to win. They then bequeathed those wars to presidents who had ambitious reform agendas in domestic politics and little interest or experience in foreign affairs.

That bequest destroyed Johnson, who took the rotten advice of the military and civilian advisers he inherited from Kennedy because there wasn’t much else on offer in Washington at the time. Obama is drifting into the same dangerous waters, and the rotten advice he is getting from strategists who believe in the “war on terror” could do that for him, too.

Yes, LBJ actually did have pretty progressive domestic policies, at least by American standards. Most of the civil rights advances happened under his watch (even though Kennedy often gets the credit because there's footage of him talking to Martin Luther King or something like that).

As for us, the message we as Canadians should take from this is that we need to elect a government here that will get us the fuck out of Afghanistan as soon as possible. We've done enough of the Americans' dirty work already.

Will GM flee Canada?

Some folks think it's possible:

Earlier Tuesday, Canadian Auto Workers union representative Chris Buckley said he was concerned General Motors -- teetering on financial ruin until the U. S. government agreed to a bailout in December -- would pull out of Ontario and preserve its operations south of the border.

But both GM and Chrysler have yet to agree to accept similar bailout loans from Canada and Ontario worth $4 billion, raising fears jobs north of the border are in jeopardy.

From the St. Catharines Standard. Could this happen? I suppose if they had to close some plants, they'd rather keep the US ones open because that's the government that can offer them the most. So maybe they're not accepting the Canadian bailout offers because they don't want to be obligated to keep plants open here. On the other hand, others think that this is simply the CAW preparing their workers for the inevitable concessions that they'll have to make:

But Richard Cooper, vice-president of J.D. Power in Toronto, called fears of GM closing its operations here "an extreme view."

"We are trying to speculate here in Canada, but we are part of a North American situation and it would be extreme to shut down Canadian operations completely, they are so intertwined it is difficult to do."

The CAW will sit down with the Detroit Three automakers to bargain concessions as part of the manufacturers' getting a government loan package.

"He is pitching a dire scenario for his members. He is laying the groundwork to say this is serious. . . . They are opening a bargaining position for themselves internally. I think everyone is getting a healthy dose of realism in Canada."

It is unlikely GM will shut its operations here as they are among the industry's top performers, and are launching new vehicles. The Harbour Report, a quality and productivity survey has placed three Canadian GM plants among the top five of the best plants in North America for all automakers.

In addition Cami, which finished fifth in the Harbour survey, is launching two new vehicles, the redesigned Equinox in the spring and the new Terrain CUV this summer.

The Oshawa plants, which finished second and third, are launching the new Camaro this spring.

But the industry is changing so quickly, and is in such dire straits, all options are on the table for the future of the industry, said Dan LeFrank, acting CAW plant chairperson for Cami.

"We are being clear with our members we have to be part of the solution," said LeFrank. "We are not immune from anything. When GM, Ford and Chrysler talk strategy nothing is out of the realm of the possible."

From the London Free Press. Time will tell which version is more accurate, I suppose. One thing that does bother me, though, is the choice of models for the Canadian plants. The Camaro? That sounds like a great idea... for 1966. When you're (a) in a recession and (b) facing serious increases in gas prices in the near future, an expensive gas guzzler does not seem to be the sort of thing you want to depend on for your job. And presumably GM knows that. No, I wouldn't rule out Chris Buckley's scenario just yet.

Right wing think tank advocates sale of Hydro-Québec

Not surprising, of course, and hopefully the Quebec government won't listen, but still:

Hydro-Québec is racked by wretched inefficiency and would be better off to Quebec being privatized, according to a new study commissioned by the Montreal Economic Institute.

The long-awaited study, to be released Tuesday and authored by Claude Garcia, the retired former head of Standard Life's Canadian unit, is likely to reignite a political debate in Quebec about how to best exploit the province's vast hydroelectric resources.

Mr. Garcia last year estimated Hydro-Québec's market value at an eye-popping $130-billion, based on average North American electricity prices. Actually getting that much for Hydro-Québec, the developed world's biggest hydroelectric utility, would be unlikely, however, since power rates in Quebec are currently fixed well below market prices.

Hydro-Québec, a symbol of provincial economic prowess that took flight with the 1963 nationalization of the province's hydroelectric industry, currently charges deeply discounted rates to consumers in the province. Surpluses are sold to customers in the United States at market rates, but the highly profitable exports only account for about 10 per cent of Hydro-Québec's $12.3-billion in annual sales.

From the Globe and Mail.

A few more unsettling stories about the economy

First, how about the fact that the reserve fund that guarantees Ontario pension plans is vulnerable?

Ontario's unique pension-plan safety net, which makes payments when companies go bankrupt, is close to being wiped out and could fold if a large corporation were to go under soon, experts warn.

The provincial government is accepting comments on a report it commissioned in 2006 — the first review of pension laws in 20 years — and lead author Harry Arthurs concluded that the Pension Benefits Guarantee Fund, the only program of its kind in Canada, could soon become history.

"I think one sufficiently large company or several large companies (going bankrupt) would cause the plan to go broke," Arthurs said in an interview, adding that the Ontario government isn't required to save the pension-insurance program.

"They certainly have no legal obligation to bail it out ... and I think it's an interesting question: If there isn't enough money, what happens next?"

Since 1980, the Pension Benefits Guarantee Fund has provided pensioners with up to $1,000 a month in the case that a pension plan fails to provide its full benefit, or any at all.

The program is funded by corporate payments and has been run successfully for decades.

But the report notes it's increasingly common that companies are reporting high levels of unfunded pension liabilities — shortfalls in funds needed to pay pension requirements — and the provincial fund is threatened by a possible "shipwreck scenario."

That could occur if a bankrupted company with many employees flooded the fund with claims and the government found the shortfall too expensive to make up.

From the CBC. Secondly, the smart money is looking for safe havens:

Barrick Gold Corp. Chairman Peter Munk said an “unpleasant and frightening” trend of investors buying gold as protection against uncertainty in world markets may help push the metal over $1,000 an ounce.

Munk, founder of Toronto-based Barrick, the world’s largest gold producer, said he has received an increasing number of calls from wealthy investors looking for ways to buy bullion. While that is positive for the metal market, it is a “sad part of a civilized society,” Munk said.

“That’s not where you want to be, it’s alarming,” he said today in an interview from Davos, Switzerland, where he is attending the World Economic Forum. “Do I personally believe gold will break through $1,000? It’s not a question of if, it’s a question of how soon.”

The strong demand is being mirrored among professional investors whose funds are buying gold and shares of the companies that produce it. That helped the metal to its eighth straight annual gain last year and has driven a rally in gold stocks in recent months. Gold miners including Newmont Mining Corp. and Yamana Gold Inc. are taking advantage of the trend to raise cash, with new equity worth more than $2 billion sold since November.

From Bloomberg. What's interesting here is not simply that they're looking for safe havens, it's the choice of safe haven. Lately we've been hearing about deflation as a major risk (and it may well be) but the best hedge against deflation would be things like cash or bonds. Gold doesn't do as well in deflationary times (its price tends to fall along with everything else). But if you see serious inflation as a possibility, then gold starts looking good. So maybe the inflationists are right. On a similar note, consider this:

For the first time since 2007, Treasury investors are betting that inflation will accelerate.

The yield on 10-year notes exceeds the consumer price index by 2.72 percentage points, the most since December 2006. The gap between two- and 10-year rates widened at the fastest pace in a year last month as traders demanded more compensation for longer-term debt. Treasury Inflation Protected Securities that signaled falling prices as recently as Nov. 20 show they will increase in the U.S. this year.

Deflation was the growing concern for investors in 2008 as government bond yields fell to historic lows in December, the Reuters/Jefferies CRB Index of commodities tumbled 53 percent since July and home prices plunged 18 percent amid a deepening recession. Now, the bond market is saying Federal Reserve interest rates at zero percent, President Barack Obama’s $819 billion planned stimulus package and $8.5 trillion of U.S. initiatives to revive credit markets will reignite inflation.

Bloomberg once again. And let's not forget that America's biggest state is caught up in a budget crisis and is having trouble paying its bills:

Running short of cash, California has started delaying $3.5 billion in payments to taxpayers, contractors, counties and social service agencies.

With the governor and state lawmakers locking horns on resolving California's budget crunch, the controller Monday halted checks covering these obligations so the state could continue funding its school system and making its debt payments.

The delay will inflict more pain on the already sorry condition of the Golden State, which is facing a $40 billion budget gap. People won't have tax refund money to spend, businesses won't get paid for their services and agencies won't have funds to help the needy until the budget situation is addressed.

Nearly $2 billion in personal state income tax refunds are being held up, according to state estimates. Last year, some two million Californians received refunds in February.

From CNN. Of course, part of the problem arises from the fact that California not only uses a presidential/congressional system (hence no provision for early elections in the event of loss of supply) but the fact that they require a two-thirds majority to pass a budget. Not a good thing.

Yeah, this situation