Warriors Archives 2002- It still applies today

Warren Buffett warns, “Global Economic Crash Ahead” Derivatives pose ‘mega-catastrophic’ risk

Stock markets giving last bait-and-switch performance before taking Americans back to “school
of hard knocks”

The U.S. Govt. released information that the Fed. had increased the money supply by 55 Billion in one week alone; this is what has been driving stocks up for the moment. Yet, at the same time has been pushing up precious metals prices due to the devaluing of the U.S. dollar by creating massive amounts of dollar-denominated credit through the Fed.

The difference is that the short term effect in stocks will be reversed very soon with heavy selling in paper assets, due to foreign interest in U.S. paper assets continuing to wane and undermine any positive movement in stocks or bonds.

For $150, you can own the top 100 companies on the NASDAQ. If the NASDAQ moves 750 points, you could make 10 times your money ($5,000 will turn into$50,000). It’s happened 29 times in the last 35 months. Is it getting ready to happen again? What goes up and up and up will eventually…you know the rest. Stop Limits…Short term trades….and risk capital are the only protections against a reversal. Enjoy any profits…take the meat out of the middle…don’t wait for the top….buy low and sell high…and good luck.

The amount of money Congress has appropriated to the Defense Department is staggering. And when you look at it item by item, it’s even more astonishing. Of 13 appropriations bills in Congress, only two have been passed into public law; the Defense bill and the Military Construction bill.

To get an appreciation for just how much money the United States spends on defense, consider some of the following numbers:

The Air Force will spend $13 billion on 15 C-17 transport aircraft. The GDP of Mauritius, a current member of the U.N. Security Council, is $4.5 billion. The Army will spend $2.2 billion on appropriations for tracked vehicles, including equipment, ordinance, and spare parts. The Navy will spend $4.6 billion on procurement.

Procurement of new weapons systems was the only portion of the defense budget that President Bush did not ask for an increase in. Congress increased it anyway. But the biggest increases in defense spending were in pay for military personnel and funding for current operations.

That figures to change in the next five years. The Bush administration has requested over $2.1 trillion in funding over the next five fiscal years. Annual defense spending would go from about $350 billion in 2002 to nearly $470 billion by 2007.

Right now, defense spending is about 3% of GDP. While it’s true the historic average is much higher, the United States now spends more on defense than the next 20 nations combined. Even a modest increase in the percentage of GDP dedicated to defense would send the total dollar figure well in excess of $500 billion a year - pretty much tantamount to a total declaration of war on the rest of the world for the indefinite future. Of course, the Bush administration has said in print that its aim is total military superiority. From its national security blueprint issued late this summer:

“The United States must and will maintain the capability to defeat any attempt by an enemy - whether a state or non-state actor - to impose its will on the United States, its allies, or our friends. We will maintain the forces sufficient to support our obligations, and to defend freedom. Our forces will be strong enough to dissuade potential adversaries from pursuing a military build-up in hopes of surpassing or equaling the power of the United States.”

None of this is good news for pacifists. The Aerospace/Defense group as a whole sports a market cap of $119 billion. Yet the 5 largest of the 56 companies in the group - Boeing (BA), General Dynamics (GD), Honeywell (HON), Lockheed Martin (LMT), and Northrop Grumman (NOC) - have a combined market cap of $98.5 billion - nearly 80% of the sector’s total market value.

After these, 5 of the remaining 51 companies have market caps in excess of one billion dollars. Let me finish the math for you: this means that 46 of the 56 companies in this sector are fairly small companies. And the big institutional investors usually ignore stocks like these with market caps below $1 billion. This means there’s an opportunity for individual investors to find some attractively priced stocks. ASE should be reviewed

In fact, this may be the perfect “contrarian play” for the existing environment. An article in the Wall Street Journal trashed defense stocks. The article says the post 9-11 run-up in the big-cap defense stocks has run its course. It also claims that growth rates in the federal defense budget are likely to plateau in coming years.

Will Americans skimp on defense…especially in the midst of permanent and unsettling threats from terrorists. We think not.

What should give us pause today is that so much of our capital is now being consumed. America isn’t the country it was in 1942. Our GDP may be larger, but our economic habits are worse. If we fail to return to a model of saving and investing in capital goods, rather than consuming, we will impair our ability to fight and win the wars of the 21st century.

Deficit spending has broad political support in the context of an ideological war. An ideological war is exactly what this war on terror has become. That alone should continue to drive defense spending.

When the rally is over, prices usually fall. This time they may not recover for a dozen years

Corporate profits are falling; not rising. And corporate balance sheets are in tatters. But that’s not topping investors from loading up on yesterday’s heroes, as if it were still yesterday. The Dow surged 148 points to 8,623, while the Nasdaq leapt more than 3% to 1,419.

Housing starts tumbled a seasonally adjusted 11% in October, more than reversing September’s gains. The October drop was the steepest monthly decline in eight years. The 10-year T-note’s yield jumped to 4.06% from Tuesday’s 3.98%. Gold fell $1.20 to $317.60 an ounce.

Even with very low financing, low to moderate-income families are finding it harder to pay for housing. The number of such households where 50% or more of income goes to pay for housing has increased 68% in the last 5 years. The biggest group -41% with critical housing needs is in the suburbs. People are getting poorer in America. Median household income fell to $42,220 in 2001, down from $43,160 the year before.The wealth created by the stock market bubble and Greenspan’s easy credit, is and will continue to be an illusion.Debt is real and is still with us today. Tomorrow, we’ll have to reckon with it.

Posted and Archived November 21,2002  Dow at 8875

Silver is the most undervalued at this time and in light of the supply / demand crisis coming up shortly in silver, along with an increasing reliance on silver in the technology, communications and military industries and of course the tanking U.S. dollar, which has lost 25% against major foreign currencies in the last 12 months, silver should be a must in everyone’s diversified savings / retirement plan to be sure that what you have worked for will still be there when you need it.

The world’s most famous value investor Warren Buffett started a stampede into Chinese oil stocks after his Berkshire Hathaway vehicle disclosed back in May it had taken a significant stake in state-run oil firm PetroChina (symbol - PTR). Most of the so-called Chinese blue chips are dual-listed in both Hong Kong and China though the valuations are wide apart.

The 1997 IRA amendment now offers IRA investors the opportunity to diversify their investments from pure paper, stocks, bonds and mutual funds, to solid hard-asset investments-precious metals.

Silver Eagles are the only US silver coins specifically approved for IRAs, though the .999 fine clause makes Silver Maple Leafs also eligible. However, pre-1965 US 90% silver coins are not eligible for IRAs. For IRA investors who prefer silver, bullion bars are recommended

Gold bullion and silver bullion were approved for IRAs by the US government in 1997. Heretofore, only Gold Eagles and Silver Eagles coins were acceptable for IRA Plans. This change is especially beneficial to IRA investors who would like to diversify their IRA holdings to include more than stocks, bonds and mutual funds.

Warriors Archives 2002- It still applies today
Warren Buffett warns, “Global Economic Crash Ahead” Derivatives pose ‘mega-catastrophic’ risk. Stock markets giving last bait-and-switch performance before taking Americans back to “school of hard knocks”

The U.S. Govt. released information that the Fed. had increased the money supply by 55 Billion in one week alone; this is what has been driving stocks up for the moment. Yet, at the same time has been pushing up precious metals prices due to the devaluing of the U.S. dollar by creating massive amounts of dollar-denominated credit through the Fed.

The difference is that the short term effect in stocks will be reversed very soon with heavy selling in paper assets, due to foreign interest in U.S. paper assets continuing to wane and undermine any positive movement in stocks or bonds.

Thanks to lax Bush administration policies allowing illegal aliens to use “matricula consular cards” and taxpayer-identification numbers to open bank accounts, mortgage fraud has grown. Money-lenders still have no access to a verification system to check Social Security numbers before approving loans.

October 2001, President Bush signs the USA Patriot Act. In section 326(b) is a provision that allows US banks to accept Mexican Matricula Consular cards as valid ID for opening bank accounts. (NOTE: No Mexican banks accept their own government’s Matricula Consular card as valid ID to open a bank account because the bearer’s identity is virtually untraceable. In contrast, almost all US banks will accept it.) An estimated 9 million Matricula cards have been issued in the US FDIC Regulations on Matricula Cards

U.S. law enforcement officials cite that Matrícula Consular cards are issued by Mexican Consulate without checking the authenticity of the applicant’s supporting documentation. In testimony to the Senate Judiciary Committee, the FBI disclosed and reported that the Matrícula Consular card is inherently unreliable and unverifiable as an identification card and is highly vulnerable to fraud, regardless of its security

AS panicked politicians prepare to fork over $1 trillion in taxpayer funding to rescue Wall Street, they’ve fingered regulation, deregulation, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Jimmy Carter, Bill Clinton, both Bushes, greedy banks, greedy borrowers, greedy short-sellers and minority-home-ownership promoters for blame.

But there’s one villain that has slipped notice: how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis. It’s no coincidence that the areas hardest hit by the foreclosure wave - Loudoun County, Va., California’s Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix - also happen to be some of the nation’s largest illegal alien sanctuaries. Half of the mortgages to Hispanics are subprime. A quarter of all those subprime loans are in default and foreclosure.

Regional reports across the country have decried the subprime meltdown’s impact on illegal-immigrant “victims.” A July report showed that in seven of the 10 metro areas with the highest foreclosure rates, Hispanics were at least one-third of the population; in two of those areas - Merced and Salinas-Monterey, Calif. - Hispanics comprised half the population. The National Council of La Raza and its Development Fund have received millions in federal funds to “counsel” their constituents on obtaining mortgages with little to no money down; the group almost succeeded in attaching a $10 million earmark for itself in one of the housing bills passed this spring.

For the last five years, I’ve reported on the rapidly expanding illegal-alien home-loan racket. The top banks clamoring for their handouts as their profits plummet, led by Wachovia and Bank of America, launched aggressive campaigns to woo illegal-alien homebuyers. The quasi-governmental Wisconsin Housing and Economic Development Authority guaranteed home loans to illegal immigrants.

The Washington Post noted in 2005: “Hispanics, the nation’s fastest-growing major ethnic or racial group, have been courted aggressively by real-estate agents, mortgage brokers and programs for first-time buyers that offer help with closing costs. Ads proclaim: “Sin verificacion de ingresos! Sin verificacion de documento!” - which loosely translates as, ‘Income tax forms are not required, nor are immigration papers.’ ”

Fraudsters also have engaged in house-flipping rings using illegal aliens as straw buyers. Among many examples the FBI cites: a conspiracy in Las Vegas involving a former Nevada First Residential Mortgage Company branch manager who directed loan officers and processors in the origination of 233 fraudulent Federal Housing Authority loans valued at over $25 million. The defrauders made and submitted false employment and income documentation for borrowers; most were illegal immigrants from Mexico. To date, the FBI reported, “Fifty-eight loans with a total value of $6.2 million have gone into default, with a loss to the Housing and Urban Development Department of over $1.9 million.”

It’s the tip of the iceberg. Thanks to lax Bush administration policies allowing illegal aliens to use “matricula consular cards” and taxpayer-identification numbers to open bank accounts, mortgage fraud has grown. Money-lenders still have no access to a verification system to check Social Security numbers before approving loans.

In an interview about rampant illegal-alien home-loan fraud, a spokeswoman for the US General Accounting Office told me five years ago: “Considering the size of Los Angeles, New York, Chicago, Houston and other large cities throughout the United States known to be inundated with illegal aliens, I don’t think the federal government is willing to expose this problem for financial reasons as well as for fear of political repercussions.”

The chickens are coming home to roost. Law-abiding taxpayers are going to pay for it.
Editorial by Michelle Malkin  - Web Site  MichelleMalkin.com

UndocumenteBorderGuard wrote:
I WAS WRITING THE NEWSPAPERS (IE:PROPAGANDA MACHINES); THE CITY COUNCIL; THE DEPARTMENT OF COMMERCE; LOCAL BROKERS AND STATE REPS… FOR MONTHS.

I STARTED WRITING THEM 5 YEARS AGO WHEN I NOTICED THIRD WORLD TACO BELL WORKING ILLEGAL ALIENS PURCHASING HOUSES IN THE 200-300K RANGE - HOUSES THAT WERE, OBVIOUSLY, WAY BEYOND THEIR MEANS…

THESE PEOPLE WERE TRASHING AND ABANDONING HOUSES IN NEIGHBORHOODS THAT ONCE THRIVED; HOUSES THAT I PERSONALLY HAD WITNESSED, GOOD HARDWORKING, LAW
ABIDING CITIZENS SPEND A LIFETIME WORKING FOR AND PAYING OFF AFTER DECADES OF LABOR.

THESE PEOPLE CAME IN AND DECIMATED THIS AREA IN MONTHS TIME. THEY WOULD TRASH THEM AND THEN WALK AWAY BECAUSE THEY HAD ABSOLUTELY NOTHING IN THEM -
NOT EVEN THEIR CREDIT OR GOOD NAME WAS TIED TO THESE WRITE-OFFS…THEY DIDNT CARE BECAUSE IT WAS AN AMERICANS GOOD NAME THAT WAS STOLEN ALONG WITH THEIR SOCIALSECURITY NUMBER THAT MADE THIS QUARTER MILLION DOLLAR SQUAT AVAILABLE TO STINK UP FOR A YEAR UNTIL THE EVICTION NOTICE CAME FOR NON PAYMENT DEFAULT.

I SAW IT ALL… I SAW THESE HOUSES BEING TOSSED AROUND LIKE LOST TOYS FROM A FORGOTTEN BOARD GAME…

I SENT DOZENS AND DOZENS OF EMAILS ASKING HOW THIS WAS HAPPENING? WHO WAS RESPONSIBLE?

HOW DID THESE THIRD WORLD UNDOCUMENTED ILLEGAL ALIENS WITH NO CREDIT HISTORY WITH NO EDUCATION WITH NO SKILLS WITH NO MONEY -WITH NO ID - GET LOANS FOR $250,000.00 HOUSES, ONE AFTER ANOTHER…HOW DID THIS HAPPEN WHEN NO ONE EVEN KNEW WHO THEY WERE?

HOW ARE THESE SAME PEOPLE FLOODING THE WELLS FARGO BANK IN THE SUPERMARKETS SETTING UP ACCOUNTS AND LOANS WHEN THEY AREN’T EVEN USING THEIR OWN LEGIT IDENTIFICATION? HOW IS THIS HAPPENING?

MY QUESTION TO THE MANY I EMAILED WAS “HOW ARE ILLEGAL ALIENS WITH ZERO CREDIT AND QUESTIONABLE IDENTITY -THAT ARE LITERALLY UNDOCUMENTED - GETTING
A 250 THOUSAND DOLLAR HOME LOAN” NO QUESTIONS ASKED? HOW?

The American Issues Project’s ad began airing Thursday, August 21, and will continue through the Democratic Convention. An electronic version of the ad and full documentation of all statements made are available at American Issues Project’s website: www.americanissuesproject.org

Barack Obama’s general counsel Bob Bauer sent a second, sharper letter to the Justice Department, directly attacking the Dallas billionaire funding a harsh attack ad, Harold Simmons.

“We reiterate our request that the Department of Justice fulfill its commitment to take prompt action to investigate and to prosecute the American issues Project, and we further request that the Department of Justice investigate and prosecute Howard Simmons for a knowing and willful violation of the individual aggregate contribution limits,” he wrote. He called the group’s activities “patently illegal.”

A spokeswoman for the Justice Department, Laura Sweeney, had no comment on the second letter.

The American Issues Project released a statement responding to the letter.
“Having failed in its attempts to get our legal, factual and fully-supported ad off the air, Barack Obama’s campaign now wants to put our donors in prison for exercising their right to free speech,” said Ed Martin, the group’s president. “These over-the-top bullying tactics are reminiscent of the kind of censorship one would see in a Stalinist dictatorship, with the only difference being that those guys generally had to wait until they were in power to throw people who disagreed with them into jail.”

The group said its ad would continue to air through the end of the Democratic National Convention. Simmons has spent almost $3 million to air the ad, which can be seen on the group’s site.

It’s worth noting that this isn’t the first time Bauer has called for criminal investigations and prosecutions into the donors to independent groups critical of Obama, including one supporting John Edwards and another supporting Hillary Rodham Clinton. His words did have the effect of scaring their donors and consultants, but haven’t yet appeared to result in any prosecution.

This article reveals extremely disturbing evidence that foreign nationals from the Muslim world are trying to influence our presidential election thru illegal contributions to Obama’s campaign. We’re not talking a few dollars here. As Timmerman notes, the Federal Election Commission has compiled a list of questionable foreign contributions totaling nearly $34,000,000! We urge you to read the entire article.

Secret, Foreign Money Floods Into Obama Campaign By: Kenneth R. Timmerman NewsMax.com

More than half of the whopping $426.9 million Barack Obama has raised has come from small donors whose names the Obama campaign won’t disclose.

And questions have arisen about millions more in foreign donations the Obama campaign has received that apparently have not been vetted as legitimate.

Obama has raised nearly twice that of John McCain’s campaign, according to new campaign finance report.

But because of Obama’s high expenses during the hotly contested Democratic primary season and an early decision to forgo public campaign money and the spending limits it imposes, all that cash has not translated into a financial advantage — at least, not yet.

The Obama campaign and the Democratic National Committee began September with $95 million in cash, according to reports filed with the Federal Election Commission (FEC).

The McCain camp and the Republican National Committee had $94 million, because of an influx of $84 million in public money.

But Obama easily could outpace McCain by $50 million to $100 million or more in new donations before Election Day, thanks to a legion of small contributors whose names and addresses have been kept secret.

Unlike the McCain campaign, which has made its complete donor database available online, the Obama campaign has not identified donors for nearly half the amount he has raised, according to the Center for Responsive Politics (CRP).

Federal law does not require the campaigns to identify donors who give less than $200 during the election cycle. However, it does require that campaigns calculate running totals for each donor and report them once they go beyond the $200 mark.

Surprisingly, the great majority of Obama donors never break the $200 threshold.
“Contributions that come under $200 aggregated per person are not listed,” said Bob Biersack, a spokesman for the FEC. “They don’t appear anywhere, so there’s no way of knowing who they are.”

The FEC breakdown of the Obama campaign has identified a staggering $222.7 million as coming from contributions of $200 or less. Only $39.6 million of that amount comes from donors the Obama campaign has identified.

It is the largest pool of unidentified money that has ever flooded into the U.S. election system, before or after the McCain-Feingold campaign finance reforms of 2002.

Biersack would not comment on whether the FEC was investigating the huge amount of cash that has come into Obama’s coffers with no public reporting.

But Massie Ritsch, a spokesman for CRP, a campaign-finance watchdog group, dismissed the scale of the unreported money.

“We feel comfortable that it isn’t the $20 donations that are corrupting a campaign,” he told Newsmax.

But those small donations have added up to more than $200 million, all of it from unknown and unreported donors.

Ritsch acknowledges that there is skepticism about all the unreported money, especially in the Obama campaign coffers.

“We and seven other watchdog groups asked both campaigns for more information on small donors,” he said. “The Obama campaign never responded,” whereas the McCain campaign “makes all its donor information, including the small donors, available online.”

The rise of the Internet as a campaign funding tool raises new questions about the adequacy of FEC requirements on disclosure. In pre-Internet fundraising, almost all political donations, even small ones, were made by bank check, leaving a paper trail and limiting the amount of fraud.

But credit cards used to make donations on the Internet have allowed for far more abuse.

“While FEC practice is to do a post-election review of all presidential campaigns, given their sluggish metabolism, results can take three or four years,” said Ken Boehm, the chairman of the conservative National Legal and Policy Center.

Already, the FEC has noted unusual patterns in Obama campaign donations among donors who have been disclosed because they have gone beyond the $200 minimum.

FEC and Mr. Doodad Pro and Mr. Good Will
When FEC auditors have questions about contributions, they send letters to the campaign’s finance committee requesting additional information, such as the complete address or employment status of the donor.

Many of the FEC letters that Newsmax reviewed instructed the Obama campaign to “redesignate” contributions in excess of the finance limits.

Under campaign finance laws, an individual can donate $2,300 to a candidate for federal office in both the primary and general election, for a total of $4,600. If a donor has topped the limit in the primary, the campaign can “redesignate” the contribution to the general election on its books.

In a letter dated June 25, 2008, the FEC asked the Obama campaign to verify a series of $25 donations from a contributor identified as “Will, Good” from Austin, Texas.

Mr. Good Will listed his employer as “Loving” and his profession as “You.”

A Newsmax analysis of the 1.4 million individual contributions in the latest master file for the Obama campaign discovered 1,000 separate entries for Mr. Good Will, most of them for $25.

In total, Mr. Good Will gave $17,375.

Following this and subsequent FEC requests, campaign records show that 330 contributions from Mr. Good Will were credited back to a credit card. But the most recent report, filed on Sept. 20, showed a net cumulative balance of $8,950 — still well over the $4,600 limit.

There can be no doubt that the Obama campaign noticed these contributions, since Obama’s Sept. 20 report specified that Good Will’s cumulative contributions since the beginning of the campaign were $9,375.

In an e-mailed response to a query from Newsmax, Obama campaign spokesman Ben LaBolt pledged that the campaign would return the donations. But given the slowness with which the campaign has responded to earlier FEC queries, there’s no guarantee that the money will be returned before the Nov. 4 election.

Similarly, a donor identified as “Pro, Doodad,” from “Nando, NY,” gave $19,500 in 786 separate donations, most of them for $25. For most of these donations, Mr. Doodad Pro listed his employer as “Loving” and his profession as “You,” just as Good Will had done.

But in some of them, he didn’t even go this far, apparently picking letters at random to fill in the blanks on the credit card donation form. In these cases, he said he was employed by “VCX” and that his profession was “VCVC.”

Following FEC requests, the Obama campaign began refunding money to Doodad Pro in February 2008. In all, about $8,425 was charged back to a credit card. But that still left a net total of $11,165 as of Sept. 20, way over the individual limit of $4,600.

Here again, LaBolt pledged that the contributions would be returned but gave no date.

In February, after just 93 donations, Doodad Pro had already gone over the $2,300 limit for the primary. He was over the $4,600 limit for the general election one month later.

In response to FEC complaints, the Obama campaign began refunding money to Doodad Pro even before he reached these limits. But his credit card was the gift that kept on giving. His most recent un-refunded contributions were on July 7, when he made 14 separate donations, apparently by credit card, of $25 each.

Just as with Mr. Good Will, there can be no doubt that the Obama campaign noticed the contributions, since its Sept. 20 report specified that Doodad’s cumulative contributions since the beginning of the campaign were $10,965.

Foreign Donations
And then there are the overseas donations — at least, the ones that we know about.
The FEC has compiled a separate database of potentially questionable overseas donations that contains more than 11,500 contributions totaling $33.8 million. More than 520 listed their “state” as “IR,” often an abbreviation for Iran. Another 63 listed it as “UK,” the United Kingdom.

More than 1,400 of the overseas entries clearly were U.S. diplomats or military personnel, who gave an APO address overseas. Their total contributions came to just $201,680.

But others came from places as far afield as Abu Dhabi, Addis Ababa, Beijing, Fallujah, Florence, Italy, and a wide selection of towns and cities in France.

Until recently, the Obama Web site allowed a contributor to select the country where he resided from the entire membership of the United Nations, including such friendly places as North Korea and the Islamic Republic of Iran.

Unlike McCain’s or Sen. Hillary Clinton’s online donation pages, the Obama site did not ask for proof of citizenship until just recently. Clinton’s presidential campaign required U.S. citizens living abroad to actually fax a copy of their passport before a donation would be accepted.

With such lax vetting of foreign contributions, the Obama campaign may have indirectly contributed to questionable fundraising by foreigners.

In July and August, the head of the Nigeria’s stock market held a series of pro-Obama fundraisers in Lagos, Nigeria’s largest city. The events attracted local Nigerian business owners.

At one event, a table for eight at one fundraising dinner went for $16,800. Nigerian press reports claimed sponsors raked in an estimated $900,000.

The sponsors said the fundraisers were held to help Nigerians attend the Democratic convention in Denver. But the Nigerian press expressed skepticism of that claim, and the Nigerian public anti-fraud commission is now investigating the matter.

Concerns about foreign fundraising have been raised by other anecdotal accounts of illegal activities.

In June, Libyan leader Moammar Gadhafi gave a public speech praising Obama, claiming foreign nationals were donating to his campaign. “All the people in the Arab and Islamic world and in Africa applauded this man,” the Libyan leader said. “They welcomed him and prayed for him and for his success, and they may have even been involved in legitimate contribution campaigns to enable him to win the American presidency…”

Though Gadhafi asserted that fundraising from Arab and African nations were “legitimate,” the fact is that U.S. federal law bans any foreigner from donating to a U.S. election campaign.

The rise of the Internet and use of credit cards have made it easier for foreign nationals to donate to American campaigns, especially if they claim their donation is less than $200.

Campaign spokesman LaBolt cited several measures that the campaign has adopted to “root out fraud,” including a requirement that anyone attending an Obama fundraising event overseas present a valid U.S. passport, and a new requirement that overseas contributors must provide a passport number when donating online.

One new measure that might not appear obvious at first could be frustrating to foreigners wanting to buy campaign paraphernalia such as T-shirts or bumper stickers through the online store.

In response to an investigation conducted by blogger Pamela Geller, who runs the blog Atlas Shrugs, the Obama campaign has locked down the store.

Geller first revealed on July 31 that donors from the Gaza strip had contributed $33,000 to the Obama campaign through bulk purchases of T-shirts they had shipped to Gaza.

The online campaign store allows buyers to complete their purchases by making an additional donation to the Obama campaign.

A pair of Palestinian brothers named Hosam and Monir Edwan contributed more than $31,300 to the Obama campaign in October and November 2007, FEC records show.

Their largesse attracted the attention of the FEC almost immediately. In an April 15, 2008, report that examined the Obama campaign’s year-end figures for 2007, the FEC asked that some of these contributions be reassigned.

The Obama camp complied sluggishly, prompting a more detailed admonishment form the FEC on July 30.

The Edwan brothers listed their address as “GA,” as in Georgia, although they entered “Gaza” or “Rafah Refugee camp” as their city of residence on most of the online contribution forms.

According to the Obama campaign, they wrongly identified themselves as U.S. citizens, via a voluntary check-off box at the time the donations were made.

Many of the Edwan brothers’ contributions have been purged from the FEC database, but they still can be found in archived versions available for CRP and other watchdog groups.

The latest Obama campaign filing shows that $891.11 still has not been refunded to the Edwan brothers, despite repeated FEC warnings and campaign claims that all the money was refunded in December.

A Newsmax review of the Obama campaign finance filings found that the FEC had asked for the redesignation or refund of 53,828 donations, totaling just under $30 million.

But none involves the donors who never appear in the Obama campaign reports, which the CRP estimates at nearly half the $426.8 million the Obama campaign has raised to date.

Many of the small donors participated in online “matching” programs, which allows them to hook up with other Obama supporters and eventually share e-mail addresses and blogs.

The Obama Web site described the matching contribution program as similar to a public radio fundraising drive.

“Our goal is to bring 50,000 new donors into our movement by Friday at midnight,” campaign manager David Plouffe e-mailed supporters on Sept. 15. “And if you make your first online donation today, your gift will go twice as far. A previous donor has promised to match every dollar you donate.”

FEC spokesman Biersack said he was unfamiliar with the matching donation drive. But he said that if donations from another donor were going to be reassigned to a new donor, as the campaign suggested, “the two people must agree” to do so.

This type of matching drive probably would be legal as long as the matching donor had not exceeded the $2,300 per-election limit, he said.

Obama campaign spokesman LaBolt said, “We have more than 2.5 million donors overall, hundreds of thousands of which have participated in this program.”

Until now, the names of those donors and where they live have remained anonymous — and the federal watchdog agency in charge of ensuring that the presidential campaigns play by the same rules has no tools to find out.