MIKE

Archive for May, 2010

Jim Christie
Reuters- SAN FRANCISCO
Thu May 27, 2010 4:51pm EDT

Antioch’s leaders earlier this month said bankruptcy could be an option for the cash-strapped city of roughly 100,000 on the eastern fringe of the San Francisco Bay area.

Antioch’s fiscal woes are standard issue for local governments in California: weak revenue from retail sales and property taxes is forcing spending cuts, layoffs and furloughs.

But cost-cutting measures may not be enough to keep Antioch’s books balanced, so its city council is openly discussing bankruptcy.

“We just want to alert people to the possibility,” Antioch Mayor Pro Tem Mary Helen Rocha said.

Orange County Treasurer Chriss Street would not be surprised if more local governments across the Golden State sound a similar alarm.

Street expects more talk of municipal bankruptcy across California because local government finances are in such dire shape — a situation underscored on Wednesday when a top finance officer for Sacramento County projected a worse-than-expected shortfall for the county of $181 million, which could force more than 1,000 layoffs from the county’s payroll.

“You don’t have the easy out of increasing revenue and you have a lot more call on services because of the economy,” Street said. “There’s no such thing as entertaining bankruptcy; there’s ending denial.”

Orange County, California’s third most populous county, declared bankruptcy in 1994, at the time marking the biggest municipal bankruptcy in U.S. history, after suffering $1.7 billion in losses from bad investments. The county emerged from bankruptcy in 1996 and its credit rating has since recovered from its post-bankruptcy “junk” status. Fitch Ratings earlier this month affirmed its ‘AA’ rating on the number of the county’s long-term obligations.

Marc Levinson, a lawyer with Orrick, Herrington & Sutcliffe LLP who is representing Vallejo in its bankruptcy proceeding, agrees that California’s hard times and lean local budgets are forcing local leaders to weigh bankruptcy.

“It’s a topic on everyone’s lips because cities and counties and local governments are hurting,” Levinson said.

OVERCOMING THE STIGMA

Municipal officials, however, are unlikely to pile into bankruptcy court in search of relief from their financial woes, Levinson said.

Chapter 9 bankruptcy filings are rare to begin, in part because many states limit them and, more important, their consequences include harm to credit ratings that determine borrowing costs, said Jim Spiotto, a partner at the Chicago law firm of Chapman & Cutler, who works on municipal finance matters.

A filing for Chapter 9, the part of U.S. bankruptcy code that applies to municipalities could also result in being locked out of the municipal debt market, adding to fiscal trouble.

“We take that very seriously,” Amy Doppelt, a managing director at Fitch Ratings, said of how talk of bankruptcy could affect credit ratings.

Bankruptcy could also scare away investment and new jobs at time when California’s unemployment rate is in the double-digits — 12.6 percent in April — and payroll growth is critical to bolstering the consumer spending and property markets that fill the coffers of local governments.

Ron Loveridge, the mayor of Riverside, California, and president of the National League of Cities, called bankruptcy a last resort.

“It becomes a description of who you are,” he said.

Despite its stigma, bankruptcy has paid an important dividend for Vallejo: It has forced public employee unions to the negotiating table, providing city leaders an opportunity to rein in compensation, which city officials said accounts for more than three-quarters of Vallejo’s general fund spending. City Councilwoman Stephanie Gomes said the effort has led to concessions from three of four city unions.

Like Vallejo, Los Angeles is suffering from weak revenue at the same time the cost of its pensions and other retirement benefits are rising. Former Mayor Richard Riordan said those factors put the government of the second largest U.S. city on track to declare bankruptcy between now and 2014.

Riordan sees bankruptcy as a necessary tactic for squeezing concessions from the city’s public employee unions. It could also pave the way for 401(k) retirement accounts for new city workers instead of defined pension benefit plans with escalating costs, he said.

Read the entire article HERE.

May 25 (Bloomberg) — The U.S. government’s AAA bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc.

The U.S. retains its top rating for now because of a “high degree of economic and institutional strength,” the New York- based ratings company said in a statement today that was little changed from a credit opinion released in February. The outlook is stable, the statement said.

The government’s finances have been “substantially worsened by the credit crisis, recession, and government spending to address these shocks,” Moody’s analysts lead by Steven A. Hess wrote. “The ratios of general government debt to GDP and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa-rated countries.”

Debt to revenue has more than doubled over the past three years and is now over 400 percent, which could lead to “potential stress” on finances, the report said.

“This whole financial crisis in Europe has actually benefitted the U.S. government in its access to finance,” Hess said in a telephone interview. “The U.S. Treasury market has become once again, as it was during the recent financial crisis globally, the safe haven, and therefore lots of money flows into the U.S. Treasury market and that is a very positive.”

Treasury Market

The euro has lost 7.1 percent against the dollar this month on speculation Greece’s fiscal crisis will spread to other nations and hamper the region’s economic growth. More than $340 billion of Treasuries changed hands today, 40 percent more than the average daily volume of $241 billion over the past three months, according to ICAP PLC, the world’s largest inter-dealer broker.

The U.S.’s stable politics, fundamentals and economic prospects support a stable outlook, and risks include waning investor confidence on the government’s future access to liquidity and flexibility, as well as costly federal programs like Social Security and Medicare, the report said.

Read the entire article HERE.

As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills to, among other things, fund the continuing wars in Afghanistan and Iraq, ramp up security on the U.S.-Mexico border and prevent teacher layoffs.

As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress pressed to pass a host of supplemental spending bills to, among other things, fund the continuing wars in Afghanistan and Iraq, ramp up security on the U.S.-Mexico border and prevent teacher layoffs.

Taken together, the Democratic-led U.S. Congress is trying to find a way to pass about $300 billion more in unfunded spending before Memorial Day — a spending spree that rivals anything drunken sailors have been accused of.

The debt-fueled spending would only add to the $13 trillion national debt, which breaks down to $42,000 for the average American.

The spending spree comes three months after President Obama lifted the cap on the amount of money the U.S. can borrow from $12.4 trillion to $14.3 trillion to keep the nation from going into default.

But another intervention may be needed since the administration has projected a $1.56 trillion deficit for the budget year ending Sept. 30 — a figure likely to grow in the wake of the current spending spree.

The underlying war funding measure that congressional leaders hope to pass by the end of the week would bring the amount provided by Congress for the Iraq and Afghanistan war efforts to $1 trillion.

But lawmakers in both parties are using Obama’s war funding request to advance unrelated pet initiatives like a $500 million administration request for border security and an Education Department request for a $23 billion teacher bailout.

In the House, Obama’s original $63 billion request for war funding, disaster relief and aid to nations like earthquake-ravaged Haiti and war-torn Afghanistan has swelled under a draft measure being readied for a key panel vote on Thursday.

Democrats such as House Appropriations Committee Chairman David Obey, D-Wis., are pushing $23 billion to help school districts avoid teacher layoffs, along with $6 billion to make up for a funding shortfall in Pell grants for low-income college students and lesser amounts to hire border patrol agents and help Mexico fight drug cartels.

Meanwhile, Senate Republicans are using a sleaker $58.8 billion version of Obama’s war funding bill to try to add billions of dollars to boost security along the U.S.-Mexico border.

Since the war funding measure is the only appropriations bill likely to pass before fall, it’s being eyed by lawmakers in both parties seeking to deal now with violence along the southern border, the Gulf oil spill disaster and a variety of domestic programs. But the pressure for more spending is running into resistance from lawmakers worried about out-of-control deficits and Congress’ reputation for extravagant spending.

“Ninety-eight percent of this bill doesn’t meet the requirements of being an emergency designation,” said Sen. Tom Coburn, R-Okla., who along with Sen. John McCain, R-Ariz., are offering amendments to pay for the war funding bill.

Coburn said the bill is being described as an “emergency” to use the federal credit card rather than finding a way to budget for the expenses.

“We are going to borrow it from the children of the people who are in Afghanistan and Iraq who are fighting this war,” he said.”We can always rationalize away the ability to make hard choices. That is what we are doing.”

Senate Majority Leader Harry Reid may not allow any votes on amendments in his quest to get the measure passed before the Memorial Day recess. Coburn says he intends to keep up his filibuster, and calls Reid an “obstructionist” for not allowing votes on amendments — a label often used by Reid and other Democrats for Republicans.

The Senate measure, currently being debated on the floor, blends about $30 billion for Obama’s 30,000-troop surge in Afghanistan with more than $5 billion to replenish disaster aid accounts, as well as funding for Haitian earthquake relief, and a down payment on aid to flood-drenched Tennessee and Rhode Island.

Because of the need to attract GOP votes, Democrats have kept the Senate bill fairly “clean,” at least as emergency spending bills go. The measure comes in under Obama’s requests and won unanimous support from the Appropriations panel this month.

Sen. John Cornyn of Texas is just one of several Republicans seeking to add money for border security. He’s offered a $2 billion amendment to award grants to state and local law enforcement agencies, provide new unmanned surveillance aircraft, and hire hundreds of immigration and border agents, among other steps.

Read the entire article HERE.

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. “This is really important,” Grimes says.

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The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries.

The Bureau of Economic Analysis reports that individuals received income from all sources — wages, investments, food stamps, etc. — at a $12.2 trillion annual rate in the first quarter.

Key shifts in income this year:

• Private wages. A record-low 41.9% of the nation’s personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.

•Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

The shift in income shows that the federal government’s stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

Read the entire article HERE.

By Nicholas Larkin, Claudia Carpenter and Millie Munshi

May 24 (Bloomberg) — Speculators are buying gold faster than the world’s biggest producers can mine it as analysts forecast a 27 percent rally that may extend the longest run of annual gains since at least 1920.

Exchange-traded products backed by bullion added 41.7 metric tons in the week to May 14, the most in 14 months, data from UBS AG show. China, Australia and the 15 other largest mining nations averaged weekly output of 41.6 tons last year, researcher GFMS Ltd. estimates. Even though prices have fallen 4.6 percent to $1,191.65 from a record $1,249.40 an ounce May 14, the median in a Bloomberg survey of 23 traders, analysts and investors shows it will reach $1,500 by the end of the year.

Buying accelerated as the MSCI World Index of 23 developed nations’ stocks tumbled as much as 16 percent since mid-April and the euro weakened to a four-year low against the dollar. Holders of ETPs, including George Soros and John Paulson, accumulated a record 1,938 tons by May 21, eclipsing all but four of the biggest central-bank holdings.

“You could see gold go up another $1,000,” said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. in San Antonio and in 2006 correctly predicted that gold would reach $700 within two years. “All of the turmoil and problems we’ve seen in Europe is just another reminder that there’s a lot of value in gold as a safe haven.”

The risk to gold bulls lies in economic growth, which should buoy the prospects of metals linked to industrial demand, such as copper and silver. The world economy will expand 4.2 percent this year, the International Monetary Fund said April 21, raising its January projection from 3.9 percent.

Industrial Metals

Astor Asset Management LLC, with $520 million under management, held as much as 10 percent of its assets in the SPDR Gold Trust, the biggest ETP backed by bullion, according to Bryan Novak, managing director of the Chicago-based company. The firm sold the stake in the first quarter.

China, the biggest consumer of industrial metals, will expand 10.1 percent this year, more than three times the pace of the U.S.’s anticipated 3.2 percent gain, according to as many as 77 economists surveyed by Bloomberg.

“The feeling now is as we move into the expansion phase of economic growth, we want to be diversified in economically sensitive metals,” Novak said. “We’re not negative on the economy now.”

‘Afraid of Debasement’

While gold is favored by investors when the dollar weakens and inflation gains, the metal can also advance at other times. Gold rose 5.8 percent in 2008 as U.S. consumer prices gained 0.1 percent. The metal added 18 percent in 2005 when the U.S. Dollar Index, a measure against six counterparts, advanced 13 percent. Gold rose 8 percent this year as the U.S. Dollar Index jumped 11 percent. U.S. consumer prices dropped in April.

“People are afraid of the debasement of all the currencies,” said Peter Schiff, president and chief global strategist for Darien, Connecticut-based Euro Pacific Capital, whose clients have more than $2 billion in assets. “What’s surprising is that gold is still as low as it is,” he said, predicting $5,000 to $10,000 an ounce in the next five to 10 years.

Since the last week of April, ETPs have been adding bullion at a pace not seen since the first quarter of 2009, in the wake of the collapse of Lehman Brothers Holdings Inc. Buying rose as European policymakers agreed on an almost $1 trillion emergency loan package to prevent sovereign defaults.

Half the Peak

Assets in gold-backed products increased 18.3 tons last week, according to UBS data. The bank revised its estimate for the previous week’s holdings.

Gold is still at half the peak set in 1980, after adjusting for inflation. Then, prices rose to $850, equal to $2,266 today, according to a calculator on the website of the Federal Reserve Bank of Minneapolis.

Supply from mines, which peaked in 2001, fell in five of the last eight years, data from London-based GFMS show. Companies are digging deeper to extract dwindling reserves, with mines in South Africa extending as far as 2.35 miles (3.8 kilometers) down.

Investment, including bars and coins, almost doubled to 1,901 tons last year, exceeding jewelry demand for the first time in three decades, according to GFMS. Jewelry will jump 19 percent to 2,100 tons this year and industrial use 8 percent to 398 tons, Sydney-based Macquarie Group Ltd. says.

Central Banks

Muenze Oesterreich AG, the Vienna-based mint that makes the Philharmonic, the best-selling gold coin in Europe and Japan, on May 12 said it had sold 243,500 ounces since April 26, more than the 205,300 ounces sold in the entire first quarter.

Central banks and governments are also buying gold, adding 425.4 tons last year, for a combined 30,116.9 tons, the most since 1964 and the first expansion since 1988, data from the World Gold Council show. Official reserves of central banks and governments may expand by another 192 to 289 tons this year, according to CPM Group, a research and asset-management company in New York.

The net-long position in Comex futures, or bets on higher prices, is within 13 percent of the record reached in November, U.S. Commodity Futures Trading Commission data show. The most widely held option gives owners the right to buy gold at $1,500 an ounce by December, data from the bourse in New York show.

Economists’ outlook may be too rosy, said Michael Pento, chief economist at Delta Global Advisors in Holmdel, New Jersey, who correctly predicted the 2008 commodity collapse. Some investors judge that a debt crisis in Greece may spread elsewhere in the euro zone, including Spain and Portugal.

Billionaire Managers

“The second half of this year will likely show very anemic growth on a global basis,” he said. “The crisis in Greece is going to spread to Spain and it’s going to be very difficult to deal with. They are bailing out debt with more debt and it isn’t sustainable. It’s a wonderful scenario for gold.”

Read the entire article HERE.

If the trouble starts — and it remains an “if” — the trigger may well be obscure to the concerns of most Americans: a missed budget projection by the Spanish government, the failure of Greece to hit a deficit-reduction target, a drop in Ireland’s economic output.

But the knife-edge psychology currently governing global markets has put the future of the U.S. economic recovery in the hands of politicians in an assortment of European capitals. If one or more fail to make the expected progress on cutting budgets, restructuring economies or boosting growth, it could drain confidence in a broad and unsettling way. Credit markets worldwide could lock up and throw the global economy back into recession.

For the average American, that seemingly distant sequence of events could translate into another hit on the 401(k) plan, a lost factory shift if exports to Europe decline and another shock to the banking system that might make it harder to borrow.

“If what happened in Greece were to happen in a large country, it could fundamentally mark our times,” Angelos Pangratis, head of the European Union delegation to the United States, said Friday after a panel discussion on the crisis in Greece sponsored by the Greater Washington Board of Trade.

That local economic development boards are sponsoring panels on government debt in Greece is perhaps proof enough that Europe’s problems are the world’s. That the dominoes can tumble fast was shown Thursday when a new and narrowly drawn stock-trading policy in Germany helped trigger a sell-off on Wall Street.

It marks a change, Barclays Capital chief European economist Julian Callow wrote in a Friday analysis, from a situation in which the bonds of European countries were considered to carry virtually zero risk to a “brave new world” where sovereign default in one of the world’s core economic areas is a tangible threat. Bank holdings of European debt are now being studied with the same focus given to holdings of U.S. mortgage-backed securities as the global financial crisis unfolded in 2008 — and with the same suspicion that problems in one part of the world could wreck others.

The most vulnerable European countries — Greece, Spain, Portugal and Ireland — may represent only about 4 percent of world economic activity, but “the debt crisis and its ripple effects are bad news for all corners of the world,” said Cornell University economist Eswar Prasad.

The risk of a worst-case scenario is still considered remote. European countries have pledged hundreds of billions of dollars to aid indebted neighbors that run into trouble, and they say they are committed to fixing the continent’s larger economic problems. The euro and U.S. markets were both higher Friday after the German Parliament approved a key piece of that support program. A renewed effort by the U.S. Federal Reserve to ensure that European banks have adequate access to dollars has generated little demand — a sign that a feared shortage of cash is not in the offing.

U.S. banks are not heavily exposed to the weaker European countries, Fed governor Daniel K. Tarullo said in testimony on Capitol Hill last week. Banks are in better shape overall, after fresh infusions of capital. Meanwhile, the U.S. economic recovery has been strengthening through the year, with jobs added in five of the last six months, and recent consumer spending and industrial output stronger than most forecasts.

But the fallout from Europe could still be widely felt. U.S. trade officials, hoping the country can dramatically boost its exports, are dismayed at the steep drop in the value of the euro — which is around $1.25, down from more than $1.50 in November. The decline makes American goods more expensive compared with those produced in Europe. The slide in the common European currency could also change the way China and a host of Asian countries approach their currency policies, possibly making them less likely to agree with U.S. demands to raise the value of their money. If they raised it, Asian goods would become more expensive in world markets, making it easier for U.S. products to compete.

Read the entire article HERE.

OPINION: What will sink us, unfortunately but inevitably, are the huge costs of the September 2008 bank bailout, writes MORGAN KELLY

IT IS no longer a question of whether Ireland will go bust, but when. Unlike Greece, our woes do not stem from government debt, but instead from the government’s open-ended guarantee to cover the losses of the banking system out of its citizens’ wallets.

Even under the most optimistic assumptions about government spending cuts and bank losses, by 2012 Ireland will have a worse ratio of debt to national income than the one that is sinking Greece.

On the face of it, Ireland’s debt position does not appear catastrophic. At the start of the year, Ireland’s government debt was two- thirds of GDP: only half the Greek level. (The State also has financial assets equal to a quarter of GDP, but so do most governments, so we will focus on the total debt.)

Because of the economic collapse here, the Government is adding to this debt quite quickly. However, in contrast to its inept handling of the banking crisis, the Government has taken reasonable steps to bring the deficit under control. If all goes to plan we should be looking at a debt of 85 to 90 per cent of GDP by the end of 2012.

This is quite large for a small economy, but it is manageable. Just about. What will sink us, unfortunately but inevitably, are the huge costs of the bank bailout.

We can gain a sobering perspective on the impossible disproportion between the bailout and our economic resources by looking at the US. The government there set aside $700 billion (€557 billion) to buy troubled bank assets, and the final cost to the American taxpayer is about $150 billion. These sound like, and are, astronomical numbers.

But when you translate from the leviathan that is America to the minnow that is Ireland, it would be equivalent to the Irish Government spending €7 billion on Nama, and eventually losing €1.5 billion in the process. Pocket change by our standards.

Instead, our Government has already committed itself to spend €70 billion (€40 billion on the National Asset Management Agency – Nama – and €30 billion on recapitalising banks), or half of the national income. That is 10 times per head of population the amount the US spent to rescue itself from its worst banking crisis since the Great Depression.

Having received such a staggering transfusion of taxpayer funds, you might expect that the Irish banks would now be as fit as fleas. Instead, they are still in intensive care, and will require even larger transfusions before they can fend for themselves again.

It is hard to think of any institution since the League of Nations that has become so irrelevant so fast as Nama. Instead of the resurrection of the Irish banking system we were promised, we now have one semi-State body (Nama) buying assets from other semi-states (Anglo) and soon-to-be semi-States (AIB and Bank of Ireland), while funnelling €60 million a year in fees to lawyers, valuers and associated parasites.

What ultimately matters for national solvency, however, is not how much the State invests in its banks, but how much it is likely to lose. It is alright to invest €70 billion, or even €100 billion, to rescue your banking system if you can reasonably expect to get back most of what you spent. So how much are the banks and, thanks to the bank guarantee, you the taxpayer, likely to lose?

Let’s start with the €100 billion of property development loans. We’ll be optimistic and say the loss here will be one-third. Remember, Anglo has already owned up to losing about €25 billion of its €75 billion portfolio, so we have almost reached that third without looking at AIB and Bank of Ireland. I think the final loss will be more than half, but we’ll keep with the third to err on the side of optimism.

Next there are €35 billion of business loans. Over €10 billion of these loans are to hotels and pubs and will likely not be seen again this side of Judgment Day. Meanwhile, one-third of loans to small and medium enterprises are reported already to be in arrears. So, a figure of a 20 per cent loss again seems optimistic.

Finally, we have mortgages of €140 billion, and other personal lending of €20 billion. Current mortgage default figures here are meaningless because, once you agree a reduction of mortgage payments to a level you can afford, Irish banks can still pretend that your loan is performing.

Banks in the US typically get back half of what they loaned when they foreclose, but losses here could be greater because banks, fortunately, find it hard to take away your family home. So Irish banks could easily be looking at mortgage losses of 10 per cent but, to be conservative, we will say five.

So between developers, businesses, and personal loans, Irish banks are on track to lose nearly €50 billion if we are optimistic (and more likely closer to €70 billion), which translates into a bill for the taxpayer of over 30 per cent of GDP. The bank guarantee may have looked like “the cheapest bailout in the world, so far” in September 2008, but it is not looking that way now.

Adding these bank losses on to the national debt means we are facing a debt by late 2012 of 115 per cent of GDP. If we are lucky.

There is more. The ability of a government to service its debts depends on its tax base. In Ireland the proper measure of tax base, at least when it comes to increasing taxes, is not GDP (including profits of multinational firms, who will walk if we raise their taxes) but GNP (which is limited to Irish people, who are mostly stuck here). While for most countries the two measures are the same, in Ireland GDP is a quarter larger than GNP. This means our optimistic debt to GDP forecast of 115 per cent translates into a debt to GNP ratio of 140 per cent, worse than where Greece is now.

And even this catastrophic number assumes that our economy does not contract further. For the last two years the Irish economy has not been shrinking, so much as vaporising. Real GNP and private sector employment have already fallen by one-sixth – the deepest and swiftest falls in a western economy since the Great Depression.

The contraction is far from over, to judge from the two economic indicators I pay most attention to. Redundancies have been steady at 6,000 per month for the last nine months. Insolvencies are 25 per cent higher than this time last year, and are rippling outwards from construction into the rest of the economy.

The Irish economy is like a patient bleeding from two gunshot wounds. The Government has moved competently to stanch the smaller, budgetary hole, while continuing to insist that the litres of blood pouring unchecked from the banking hole are “manageable”.

Capital markets are unlikely to agree for much longer, triggering a borrowing crisis for Ireland. The first torpedo, most probably, will be a run on Irish banks in inter-bank markets, of the sort that sank Anglo in 2008. Already, Irish banks are struggling to find lenders to leave money on deposit for more than a week.

Read the entire article HERE.

BEIJING, May 24 (Xinhuanet)– A U.S.-born cleric, who is hiding in Yemen and has been added to the CIA’s list of targets for assassination, called for the killing of U.S. civilians in an Al Qaeda video released Sunday.

Dressed in a white Yemeni robe in the 45-minute video, Anwar Al-Awlaki justified the civilian deaths by accusing the United States of intentionally killing one million Muslim civilians in Iraq, Afghanistan and elsewhere.

American civilians are to blame, he said, because “the American people, in general, are taking part in this and they elected this administration and they are financing the war.”

Al-Awlaki was born in New Mexico and is believed to be hiding in his parents’ native Yemen.

U.S. intelligence has linked Al-Awlaki to the 9/11 hijackers, the suspects in the November shooting at an Army base in Fort Hood, Texas, and the December attempt to blow up a U.S. jetliner bound for Detroit.

Emerging as a jprominent al-Qaida recruiter, Al-Awlaki is a top concern of CIA as he is one of the few English-speaking radical clerics able to explain to young Muslims in America and other Western countries the philosophy of violent jihad.

The U.S. placed him on the CIA’s list of targets for assassination and is actively trying to find him.

Original article can be found HERE.