Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. ASSA and Jet BlueThings may be relatively quiet on the D&S blog for the first week of 2009, as our busiest blogger (yours truly, D&S co-editor Chris Sturr) will be at the annual economics meetings, grandiosely named the Allied Social Sciences Association meetings (as if economists were the only social scientists!) in San Francisco.I am excited to be flying via JetBlue; since they are in the midst of a union drive, with an election coming up soon, maybe I can give the workers some moral support. If you are going to the ASSA meetings, stop by the ICAPE exhibit table (602(B), I think) to say hello--I will be there hawking D&S books. And stop by the panel I'll be speaking on, sponsored by the Union for Radical Political Economics. Info on the panel (note the august company I'll be in): Jan. 3, 12:30 pm Happy New Year! Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Contours of CrisisWe just posted a great web-only article by Shimshon Bichler and Jonathan Nitzan, co-authors of Capital as Power: A Study of Order and Creorder, RIPE series in Global Political Economy (London and New York: Routledge, forthcoming 2009).Read the article here. Labels: financial crisis, Jonathan Nitzan, Shimshon Bichler Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). 3M CEO on Plant ClosingsThis is via Doug Henwood at lbo-talk, posted under the heading "Capitalist Thought." He says he doesn't know the origin of it, but that it's from a reliable source.
Labels: 3M, closures and layoffs, Doug Henwood, Left Business Observer Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Left Economics Education Gets a NodEnvironmental activist Tim DeChristopher was in the news (and under arrest) last week after he disrupted a Bureau of Land Management auction of oil and gas leases on large tracts in southern Utah -- by walking into the auction and bidding on multiple leases. He won some leases, of course with no intention of paying up, and succeeded in bidding up the price on others.DeChristopher was interviewed on Democracy Now! on December 22. Turns out he is an econ major at the University of Utah, which is home to one of the very few economics departments in the United States with a significant heterodox/left presence. DeChristopher discussed the importance of his econ courses: The professors, especially, have been really supportive and have joined my team so far. And, you know, they kind of did their job beforehand. They kind of did their job in getting me ready for this and committing me to hold true to my values and in teaching me what was going on. In fact, the final exam that I took on Friday morning, one of the questions was about this oil sale and about, if only the oil companies were bidding on this land, are they actually going to be paying the real price for the production of oil? And, of course, the answer that the professor was expecting is no, they're not, because there's a lot of external costs that all of us have to pay for the production of oil that aren't included in those. So they did their part ahead of time in putting me where I needed to be. (Find out about other left and heterodox economics departments here.) Labels: Democracy Now, economics education, heterodox economics, University of Utah Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Economics of Immigrant Detention in R.I.This is a pretty horrifying piece from Saturday's Times--excellent reporting. We covered the Rhode Island ICE raids mentioned in the article in ICE Descends on Rhode Island, and our January/February issue will include a feature article by Tom Barry on the economics of immigrant detention.Leaning on Jail, City of Immigrants Fills Cells With Its Own By NINA BERNSTEIN | December 27, 2008 CENTRAL FALLS, R.I.—Few in this threadbare little mill town gave much thought to the Donald W. Wyatt Detention Facility, the maximum-security jail beside the public ball fields at the edge of town. Even when it expanded and added barbed wire, Wyatt was just the backdrop for Little League games, its name stitched on the caps of the team it sponsored. Then people began to disappear: the leader of a prayer group at St. Matthew's Roman Catholic Church; the father of a second grader at the public charter school; a woman who mopped floors in a Providence courthouse. After days of searching, their families found them locked up inside Wyatt—only blocks from home, but in a separate world. In this mostly Latino city, hardly anyone had realized that in addition to detaining the accused drug dealers and mobsters everyone heard about, the jail held hundreds of people charged with no crime—people caught in the nation's crackdown on illegal immigration. Fewer still knew that Wyatt was a portal into an expanding network of other jails, bigger and more remote, all propelling detainees toward deportation with little chance to protest. If anything, the people of Central Falls saw Wyatt as the economic engine that city fathers had promised, a steady source of jobs and federal money to pay for services like police and fire protection. Even that, it turns out, was an illusion. Wyatt offers a rare look into the fastest-growing, least-examined type of incarceration in America, an industry that detains half a million people a year, up from a few thousand just 15 years ago. The system operates without the rules that protect criminal suspects, and has grown up with little oversight, often in the backyards of communities desperate for any source of money and work. Last spring, The New York Times set out to examine this small city of 19,000 and its big detention center as a microcosm of the nation's new relationship with immigration detention, which is now sweeping up not just recent border-jumpers and convicted felons but foreign-born residents with strong ties to places like Central Falls. Wyatt, nationally accredited, clean and modern, seemed like one of the better jails in the system, a patchwork of county lockups, private prisons and federal detention centers where government investigations and the news media have recently documented substandard, sometimes lethal, conditions. But last summer, a detainee died in Wyatt's custody. Immigration authorities investigating the death removed all immigration detainees this month—along with the $101.76 a day the federal government paid the jail for each one. In Central Falls, where many families have members without papers, a state campaign against illegal immigrants spread fear that also took a toll: People went into hiding and businesses lost Latino customers in droves. Slowly, the city awoke to its role in the detention system, and to the pitfalls of the bargain it had struck. Read the rest of the article. Labels: ICE raids, immigrant detention, immigrants, immigration Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). WaMu ReckoningThis is from a series from the New York Times called "The Reckoning" exploring the causes of the financial crisis. Gretchen Morgenson continues to be impressive in her coverage of the crisis.The opening anecdote of the article and the idea that WaMu was "all about saying yes" is interesting: in the new Jim Carrey vehicle, The Yes Man (the reviews have been tepid), Carrey plays a loan officer. My understanding is that some kind of spell is placed on him that forces him to say "yes" to any request. He essentially became a pre-meltdown mortgage broker. Saying Yes, WaMu Built Empire on Shaky Loans By PETER S. GOODMAN and GRETCHEN MORGENSON | December 27, 2008 "We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we've done our job, five years from now you're not going to call us a bank."SAN DIEGO — As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers'. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes. Yet even by WaMu's relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer. Mr. Parsons could not verify the singer's income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved. Read the rest of the article. Labels: financial crisis, housing bubble, mortgage meltdown, Washington Mutual Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Rebuild the Economy: Invest in PeopleThe New York Times published my letter below December 26, 2008. Meanwhile, Mother Jones has just published (not yet online) a first class piece by David Cay Johnston, "Fiscal Therapy." He details how we can rebuild the economy without increasing the deficit by a dime, simply by reversing the great tax and subsidy machine that pumps wealth from the poor and middle class to the rich. "Louis Uchitelle is absolutely correct that President-elect Barack Obama’s spending plan may fail—or worse, backfire ("Maybe It Can't: A Trap in Obama’s Spending Plan," Week in Review, Dec. 21). Spending on infrastructure, even green infrastructure, is a relatively slow, low-return investment. To rebuild the economy right now, we need fast, high-return investment, public and private. "First, we need public investment in people: health care to keep us productive; education to train us for new jobs or upgrade basic skills; and extended unemployment insurance. "Second, we must unburden the sector that provides the most employment and the highest and fastest return on investment: small business. "Here is how: Rebate the payroll (Social Security) tax on low-wage earners. This tax has become a major killer of small-business jobs. Then reduce deficit spending. Treasury runs a deficit by selling bonds; the more that banks can stock up on safe government bonds, the more they will cut off relatively risky (but high-return) small business. But how to reduce deficit spending? Start by killing military pork." Polly Cleveland Labels: deficit, economic crisis, economic stimulus, financial crisis, recession Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Judge Finds Starbucks Guilty of Union-BustingSome good news: an NLRB victory for Starbucks workers, organizing with the Industrial Workers of the World, aka the Wobblies. The baristas at the Starbucks on Winter St. seemed unaware when a couple of us stopped in for eggnog lattes, but I am considering heading back to post a copy of this article on their "community" bulletin board. This was also reported in today's New York Times, here.The IWW Scores Big Victory Over Global Coffee Chain New York, NY (Dec. 23, 2008)—Following a lengthy trial here last year, a National Labor Relations Board judge has found Starbucks guilty of extensive violations of federal labor law in its bid to counter the IWW Starbucks Workers Union. In an 88-page decision, Judge Mindy E. Landow found, among other things, that Starbucks maintained multiple policies which interfered with workers' right to communicate about the union and about working conditions; terminated three workers in retaliation for union activity; and repeatedly discriminated against union supporters. The decision comes despite a 2006 New York settlement in which Starbucks pledged to stop illegal anti-union activities and mirrors federal government action against the company for its conduct toward baristas in Minnesota and Michigan. "The judge's decision coupled with previous government findings expose Starbucks for what it is—a union-busting corporation that will go to staggering lengths to interfere with the right to freedom of association," said Daniel Gross, a barista and member of the IWW Starbucks Workers Union found to have been unlawfully terminated by the coffee giant. "In these trying economic times of mass layoffs and slashed work hours, it's more important than ever that Starbucks and every corporation is confronted with a social movement that insists on the right to an independent voice on the job." The Board decision is the latest blow against a company that has experienced a stunning fall from grace. From a precipitous decrease in customer demand to its increasingly tattered socially responsible image, the myriad of challenges facing Starbucks has resulted in the company losing over half its value from just a year ago. The decision also represents a significant victory for the IWW Starbucks Workers Union which continues to grow across the country with baristas taking creative and determined actions to improve the security of work hours and win respect on the job. Starbucks faces another Labor Board trial next month in Grand Rapids, Michigan over illegal union-busting. "For the first time, a judge has confirmed the existence of a nationally coordinated anti-union operation at Starbucks," said Stuart Lichten, the attorney for the IWW Starbucks Workers Union in the case. "This decision conclusively establishes Starbucks' animosity toward labor organizing." The union is confident that Judge Landow's copiously documented and well-reasoned 88-page decision will be upheld by the National Labor Relations Board in Washington, D.C. should Starbucks appeal. The victory is sure to be gratifying for the union's international supporters who conducted spirited global days of action in defense of Isis Saenz, Joe Agins, Jr., and Daniel Gross after their terminations which the Board has now found to be unlawful. The National Labor Relations Board attorneys on the case were Burt Pearlstone and Audrey Eveillard. The union's attorney Stuart Lichten is a partner at Schwartz, Lichten & Bright, a prominent New York City labor law firm. Starbucks was represented by union-avoidance lawyers Daniel Nash, Stacey Eisenstein, and Nicole Morgan at corporate firm Akin Gump. The IWW Starbucks Workers Union is an organization of almost 300 current and former Starbucks employees united for a living wage, secure work hours, and respect on the job. Founded in 2004, the union uses direct action, litigation, and advocacy to both make systemic improvements at Starbucks and take on the company over unfair treatment of individual baristas. The Industrial Workers of the World (iww.org) is a rank and file labor union dedicated to democracy in the workplace and global solidarity. Labels: IWW, National Labor Relations Board, Starbucks, Starbucks Union, unions Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). FT Falls Down on IndyMac FraudThe Financial Times had a rather pithy piece (see below in full) on the fraud at IndyMac, reported in yesterday's New York Times (and re-reported here).A reminder about what this story is all about: apparently, last May the western regional director/senior regular from the Office of Thrift Supervision, Darrel Dochow, allowed IndyMac "to record $18m of a $50m capital infusion from its holding company as first-quarter capital," which made it possible for the bank to retain its "well-capitalized" status. IndyMac failed in July. What is most scandalous about this is that Dochow is a veteran of the S&L crisis, and actually served time for the role he played. Here's what the NYT said yesterday: Mr. Dochow played a central role in the savings-and-loan scandal of the 1980s, overriding a recommendation by federal bank examiners in San Francisco to seize Lincoln Savings, the giant savings and loan owned by Charles Keating. Lincoln became one of the biggest institutions to collapse. Mr. Keating served four and a half years in prison before his fraud and racketeering convictions were overturned. He later pleaded guilty to more limited charges, and was sentenced to the time already served.Um, how did this guy get a job as a banking regulator again? If you got your information about all this from the Financial Times, you wouldn't know a thing about Dochow's back-story. And the FT even appears to downplay the fraud: "Bankers say the practice of backdating capital has been relatively common, but backdating is typically limited to a few days or weeks, not six, as in IndyMac's case." At least they (like the NYT) included the nice quote from Republican Charles Grassley: "The role of the Office of Thrift Supervision, as the name says, is to supervise these banks, not conspire with them." Here is the whole article: IndyMac allowed to backdate its capital Labels: Charles Grassley, Darrel W. Dochow, Financial Times, fraud, IndyMac, New York Times, Office of Thrift Supervision Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Iceland Gives Christmas Frosty ReceptionA grim story from today's Financial Times (posted to their website yesterday). Best quote, from the end of the article: "Sitting in an old fisherman's cafe by the port, Orn Svavarsson shakes with rage. He sold his health food business three years ago when he was 54 and, like many of his countrymen, put the money into the stock market. It has been wiped out. "The Icelandic people are too lazy, he says. "Why don’t we go to the airport and block it until we get answers? For the first time in my life I have sympathy with the Bolsheviks; with the French revolutionaries who put up the guillotine."By Sarah O'Connor in Reykjavik | Published: December 23 2008 20:14 On the ground floor of one of Reykjavik's gleaming office buildings, a well-dressed crowd shuffles and waits. Tinny Christmas songs blare from a small hi-fi by the door. As numbers are called out one by one, people file into the next room where rudimentary shelves are filled with free tins, fish, clothes, books and wrapping paper. Some 2,500 people have applied for Christmas relief packages from Iceland's three main charities in recent weeks, a 30 per cent rise on last year, as growing numbers of the middle class lose their jobs in the wake of Iceland's banking collapse. Jon Omar Gunnarsson, a pastor at Hallgrimskirkja, Reykjavik's main church, says applications to the Church Aid group have doubled. "It's mostly middle class people who have all these obligations, mortgages that are going up, many are losing their jobs ... they just can't carry the burden alone," he says. Iceland is still reverberating after its economy crumpled in October in the face of global financial turmoil. Inflation and interest rates are both at 18 per cent as the country struggles to shore up its currency, which plunged after its three banks collapsed. It has borrowed $10bn from the International Monetary Fund and others which it needs to repay, meaning taxes are rising even as recession deepens. Read the rest of the article. Labels: Christmas, financial crisis, Iceland, IMF, recession Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Feldstein: Let the Stimulus Be MilitaryMartin Feldstein, econ professor at Harvard and chairman of the Council of Economic Advisers under President Reagan, reveals in this op-ed from yesterday's WSJ that if he has to be a Keynesian he insists on being a military Keynesian. We are not surprised.Two noteworthy bits: Marty says that if there should be an increase in DoD spending, "The same applies to the Department of Homeland Security, to the FBI, and to other parts of the national intelligence community." Oh goody. And he actually uses the term "surge" to describe what he is proposing. Defense Spending Would Be Great Stimulus All three service branches are in need of upgrade and repair. By MARTIN FELDSTEIN | OPINION | DECEMBER 23, 2008, 10:04 P.M. ET The Department of Defense is preparing budget cuts in response to the decline in national income. The DOD budgeteers and their counterparts in the White House Office of Management and Budget apparently reason that a smaller GDP requires belt-tightening by everyone. That logic is exactly backwards. As President-elect Barack Obama and his economic advisers recognize, countering a deep economic recession requires an increase in government spending to offset the sharp decline in consumer outlays and business investment that is now under way. Without that rise in government spending, the economic downturn would be deeper and longer. Although tax cuts for individuals and businesses can help, government spending will have to do the heavy lifting. That's why the Obama team will propose a package of about $300 billion a year in additional federal government outlays and grants to states and local governments. A temporary rise in DOD spending on supplies, equipment and manpower should be a significant part of that increase in overall government outlays. The same applies to the Department of Homeland Security, to the FBI, and to other parts of the national intelligence community. The increase in government spending needs to be a short-term surge with greater outlays in 2009 and 2010 but then tailing off sharply in 2011 when the economy should be almost back to its prerecession level of activity. Buying military supplies and equipment, including a variety of off-the-shelf dual use items, can easily fit this surge pattern. For the military, the increased spending will require an expanded supplemental budget for 2009 and an increased budget for 2010. A 10% increase in defense outlays for procurement and for research would contribute about $20 billion a year to the overall stimulus budget. A 5% rise in spending on operations and maintenance would add an additional $10 billion. That spending could create about 300,000 additional jobs. And raising the military's annual recruitment goal by 15% would provide jobs for an additional 30,000 young men and women in the first year. An important challenge for those who are designing the overall stimulus package is to avoid wasteful spending. One way to achieve that is to do things during the period of the spending surge that must eventually be done anyway. It is better to do them now when there is excess capacity in the economy than to wait and do them later. Read the rest of the article. Labels: Department of Defense, economic stimulus, Keynesianism, Martin Feldstein, military Keynesianism, military spending, Wall Street Journal Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). O. to Create Loopholes for Venture CapitalistsFrom our friends at the American Small Business League. We posted an earlier press release from them about Obama's appointment of Karen Gordon Mills as head of the Small Business Administration. The worry was that this would signal that the incoming administration would continue the practice of past administrations of channeling contracts set aside for small businesses to larger firms. This proposed change in federal contracting law indicates that those worries were justified.Obama To Create Loopholes for Venture Capitalists Petaluma, Calif. - President-elect Barack Obama is preparing to create significant changes in federal contracting law that will allow some of the nation's wealthiest investors to receive federal contracts earmarked for small businesses. Under the banner of "increasing access to capital" for small businesses, the policies will allow firms controlled by individual venture capitalist and even large venture capital firms to participate in federal small business contracting programs. The Obama Administration's new pro-venture capital policy could virtually repeal the Small Business Act for legitimate American small businesses by modifying the longstanding federal definition of a small business as "independently owned." Under the proposed Obama Administration policy, "independently owned" will be changed to include firms that are not independently owned, but are actually controlled by wealthy investors and possibly some of the nation's largest venture capital firms. Opponents of the new policy say it appears to be designed more to increase wealthy venture capitalist access to billions of dollars in federal small business contracts as opposed to "increasing access to capital" for legitimate small businesses. If the policy is successfully implemented it could force the average American small business to compete head-to-head with firms controlled by wealthy investors for even the smallest government orders for goods and services. Thousands of middle class jobs could be lost as billions of dollars in federal small business contracts are diverted to a small number of venture capitalist controlled firms. The plan will likely include a provision that would exempt the venture capitalist owned firms from capital gains taxes. The Obama-Biden Transition Team website, www.change.gov mentions such a proposal. The appointment of multi-millionaire venture capitalist Karen Mills to head the Small Business Administration (SBA) is the latest indication that President-elect Obama is moving forward with his plans to divert government small business contracts to venture capital controlled firms. The National Venture Capital Association (NVCA) and its members have been lobbying for the new loophole in federal contracting law for more than two years. The NVCA and its members have contributed millions of dollars to Obama and key Democratic leaders in Congress such as Nancy Pelosi, John Kerry, Joe Lieberman and Hillary Clinton. "The easiest and quickest way to stimulate our nation's failing economy is for the government to spend infrastructure funds with America's 27 million small businesses that create all the new jobs and employ most Americans," American Small Business League President Lloyd Chapman said. "This new Obama policy will do just the opposite and will push our economy closer to a depression by diverting billions of dollars in federal funds away from middle class America and into the hands of small number of wealthy investors that backed Obama." Labels: American Small Business League, Barack Obama, National Venture Capital Association, Small Business Administration, small businesses Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bill Black on IndyMac/Thrift FraudThe article on the fraud at IndyMac in the business section of today's New York Times quotes UMKC professor and D&S author William K. Black. (Black wrote the cover story for our November/December 2007 issue on banking deregulation.) If you haven't been briefed on the situation with IndyMac yet, here are the basics: an official from the Office of Thrift Supervision, Darrel W. Dochow (he is the west coast director), "allowed IndyMac's parent company to backdate an $18 million contribution to preserve its status as a 'well-capitalized' institution," according to the Times. In particular, he allowed IndyMac "to receive $18 million from its parent company on May 9 but to book the money as having arrived on March 31." IndyMac collapsed in July.Dochow apparently played a role in the S&L scandal of the 1980s. Black was was deputy director of the Federal Savings and Loan Insurance Corporation during that crisis. Here's what he told the Times: William K. Black, a senior bank regulator during the savings and loan crisis and the author of "The Best Way to Rob a Bank is to Own One," said Mr. Dochow’s lenience highlighted the longstanding unwillingness of the Office of Thrift Supervision to take charge. The Times has found Black in its Roladex several times in recent months, most notably in the incendiary article back in February about John McCain's dalliances with a lobbyist (but as we pointed out at the time, the real meat of the article was about McCain's role in the S&L scandal; the Times quoted Black basically saying that McCain shouldn't even still be a senator). In today's article, though, the Times mentions the title of Black's book--The Best Way to Rob a Bank Is to Own One. Read the rest of the article. Labels: bank closures, Darrel W. Dochow, financial crisis, IndyMac, Office of Thrift Supervision, savings and loan crisis, William K. Black Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Toyota Profits Hit PotholeToyota expects to report its first operating loss in 70 years. The company announced that it will likely post a loss of $1.7 billion for the fiscal year ending March 31. For the previous year, the company reported an operating profit of $28 billion.The company expects next year's outlook to be even grimmer. November U.S. sales plunged 33.9%, still better than GM's 41% decline. The company has seen its sales plummet not only in the United States, its largest market, but also in China and India. With little debt and $18.5 billion in reserves, Toyota is in much better shape than its American rivals. However, the company's decline, as well as those of other carmakers and electronics companies, has shaken Japan's heavily export-dependent economy. Japan's finance minister reported on Monday that the country's exports 26.7% in November, the largest recorded drop since 1980 when statistics were first collected. More from the New York Times here. Labels: auto industry, GM, Toyota Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). National Call-In Day for HR 676From Healthcare-NOW!:Give America a Gift: Single-Payer National Healthcare Dear Healthcare-NOW! Supporter, This is your reminder that Monday, December 22nd, is the National Call-In Day to Support Single-Payer Healthcare, HR 676! With your help for just a few minutes, we can get the message through to Congress that we want to remove corporate greed from our healthcare system and provide a truly equitable, guaranteed healthcare program for everyone. Every call counts! Call to guarantee our representatives hear loud and clear from their constituents to get on board with HR 676: single-payer national health care Here's how: 1) Find out if your representative supports HR 676. 2) Fax or call your federal Representative.* If you don't know your congresspersons' district office phone number, please follow these five easy steps: 1. Go to www.VoteSmart.org. 2. Enter your ZIP code in the top left of the page. 3. Click on a congressperson. 4. Click on "Complete Contact Information" under their photo. 5. Their district office phone number and address are under their photo. 3) Ask for the Chief of Staff or Health Care Aide to leave your message and use these scripts to help shape the message of your call. HR676 Co-sponsor call: Hi, my name is ----------------. I am calling to thank Representative ___________________ for his/her support of HR676, John Conyers' National Health Insurance Act. Rep. Conyers plans to reintroduce HR676 shortly after the Congress is back in session in January, but I want to reaffirm my support for HR676, single payer healthcare legislation and ask Rep. ____________________ to do the same by signing on again as a co-sponsor working for true reform of this terrible healthcare system. I say no to Massachusetts style health care, and yes to single payer health care as proposed in HR 676. Single payer gives more freedom of choice and access to quality care for patients and it is the most economical way to make sure we all can access care when we need it. Now is the time to give the gift of healthcare for all to every American. Happy holidays and thank you. If you have any questions about single payer or about me, please call me at __________________. Non-co-sponsors call: Hi, my name is ----------------. I am calling to urge Representative ___________________ to support of HR676, John Conyers' National Health Insurance Act. Rep. Conyers plans to reintroduce HR676 shortly after the Congress is back in session in January, and I want to reaffirm my support for HR676, single payer healthcare legislation and ask Rep. ____________________ to do the same by signing on as a co-sponsor and working for true reform of this terrible healthcare system. I say no to Massachusetts style health care, and yes to single payer health care as proposed in HR 676. Single payer gives more freedom of choice and access to quality care for patients and it is the most economical way to make sure we all can access care when we need it. Now is the time to give the gift of healthcare for all to every American. Happy holidays and thank you. If you have any questions about single payer or about me, please call me at __________________. 4) Contact Senator Kennedy at his in-district office. Phone: 617-565-3170 / Fax: 617-565-3183. Senator Kennedy is proposing health care legislation early next year, and he needs to know that we want it to be single-payer. Message to Senator Kennedy: Hi, my name is ----------------. I am calling to urge Senator Kennedy to make his proposed legislation for health care reform single-payer. The current reform in Massachusetts is leaving thousands uninsured and is far too expensive to be sustained because it leaves profit in our health care system. In the most recent election, local ballot initiatives supporting single payer and opposing individual mandates passed by landslide margins in all ten legislative districts where they appeared. With almost all precincts tallied, roughly 73 percent of 181,000 voters in the ten districts voted YES in support of a single-payer system. Say no to Massachusetts style health care, and yes to single payer health care as proposed in HR 676. Happy holidays and thank you. If you have any questions about single payer or about me, please call me at __________________. Please forward this message widely and let us know how your calls went. Thanks for making single-payer national healthcare a priority this holiday season. In peace and health, National Staff Healthcare-NOW! P.S. Healthcare-NOW! survives on the generosity of our supporters. Please consider making a donation to support national efforts to pass HR 676. *Emails can also be sent in support of HR 676, but calls and faxes are considered to be the most effective way to get the word out to elected officials today. Labels: health care, Healthcare NOW, Physicians for a National Health Program, single-payer Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Stampede for 'Bush shoe' creates 100 new jobsOk--this is a bit outside of the mission of our blog (except, uh, job-creation?), but I couldn't resist. From the Guardian; hat-tip to Lois Ahrens.Robert Tait in Istanbul | Monday 22 December 2008 Labels: george bush, jobs, Muntazar al-Zaidi, shoe production, Turkey Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More Working Parents Can't Afford DaycareA growing number of working parents are unable to pay for daycare, according to a story in the Washington Post. Although the article doesn't specify hard numbers, it that code enforcers, social workers, and others are finding more young kids left home alone. Daycare centers that usually have long waiting lists are cutting staff and scrambling to fill open slots.Daycare costs for preschoolers often rival rent costs, and subsidized slots are only available for families with extremely low income, if they can find providers who are willing to take the vouchers at all. Unlike other industrialized countries, the US does not provide national childcare for pre-school age children. Federal law only mandates that employers provide 12 weeks of unpaid leave during any year. Penn State economist Robert Drago takes an in-depth and comprehensive look at this and other work/life issues in his book Striking a Balance: Work, Family, Life. Labels: childcare, economic crisis, Striking a Balance, work life balance Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). $1.6 Billion of Bailout Went to Pay Top ExecsAccording to a study by the Associated Press, $1.6 billion of the federal bailout funds went into the pockets of top bank executives. Even institutions that have cut the salaries and bonuses of top corporate officers have awarded massive compensation packages, despite having logged billions of dollars in losses.Some highlights: The total amount given to 600 top executives of financial institutions that have received federal bailout money would have covered what many of the 116 banks received in taxpayer funds. Banks that received federal bailout money paid their executives an average of $2.6 million in salary, benefits, and bonuses. The top five executives of Goldman Sachs took home $242 million last year, including $54 million for CEO Lloyd Blankfein. The company has received $10 billion in taxpayer money, and has posted its first quarterly loss since going public in nine years ago. Reacting to public outrage over executive compensation, the executives have decided to forgo their bonuses this year, and live off a mere $600,000 salary (no word yet on any plans to refund last year's bonuses). The rest of the sad story can be found here. Labels: executive pay, Golden Parachutes, Goldman Sachs, TARP program, taxpayer ripoff Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Venture Capitalist at the SBAOne of the many press releases that crowd the D&S mailbox caught our eye today and seemed worth passing along. (For a detailed look at how large corporations have horned in on small business contracts, check out Christopher Moraff's piece "The Incredible Shrinking Company" from the Jan/Feb 2006 D&S. )Obama Appoints Venture Capital Executive to Head Small Business Administration Labels: American Small Business League, Barack Obama, private equity, venture capital Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Don't Worry About the DebtA great exchange between LBO Talk's Doug Henwood and Brian Doherty of Reason Magazine on whether we should be worried about the national debt:Why does Washington really need to pay down its overall debt? When does any nonhuman entity ever pay down its debt? Individuals do go through a life cycle of accumulating debts while young and reducing them with age (if circumstances cooperate, of course). But why should a corporation or especially a government, whose life spans are usually presumed to be infinite (not literally, but practically), ever pay down its debt? General Electric, one of the most solid of our large corporations despite recent wobbles, has a debt of almost $550 billion supported by annual revenues of $185 billion. GE's debt is equal to almost 300% of its revenues. Read the rest of Doug's comments, and Doherty's response, at the LA Times. Labels: Doug Henwood, Left Business Observer, national debt Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Andy Stern's 'Team America'This item is from seiuvoice.org, a reform group within SEIU. Hat-tip to Doug Henwood.December 17th, 2008 Andy Stern was featured this week on the NPR show Talk of the Nation. After refusing to answer several questions about SEIU's connection to the "pay-to-play" corruption scandal involving Illinois Gov. Rod Blagojevich, he spent the rest of the show advocating his vision of a "21st-century," more "American" form of unionism that makes the labor movement a subordinate partner to Corporate America. When confronted by an SEIU member's question about the secret backroom deals he's made with employers like Sodexho, Compass, and Aramark, Stern's defense was that "those workers are trying to find a way to have a partnership with their employer." In fact, most of those workers are completely unaware of Stern's partnership with their employer-one condition of a secret agreement that prohibits union staff from admitting to workers that the agreement exists. In his final comments, Stern admitted that he does not believe in the power of workers' collective action-specifically the right to strike-and that instead union members should rely on the political process to get the job done. "I don't think anymore that the power of unions comes from its ability to strike," he said. "I think it comes from its ability to participate in the political process and to change America in issues that we've been talking about, like health care." Stern's comments echo the position put forth in his book "A Country That Works," which emphasizes the need for labor to "partner" with Corporate America and identify ways that the union can "add value" to employers. This model flies in the face of the history of organized labor and other social justice movements, where collective action has played a pivotal role in making positive change for working people in our country. Just in the last few weeks workers at Republic Windows and Doors beat Bank of America with a sit-down strike, and over the past year healthcare workers in California have won standard setting contracts with the right to organize nonunion workers through worker-led strikes and action. Click here to listen to the show. Click here (and scroll down) to read the transcript. Labels: Andy Stern, SEIU, seiuvoice.org, strikes, unions Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Closures & Layoffs (Dec. 14-20)The weekly report from Mark Heschmeyer of the CoStar Group. See Mark's note below on looking elsewhere on the CoStar site for holiday cheer--we didn't find much (it is a real-estate site, after all). Actually, the estimate that there are only 116,000 layoffs reported so far for December makes the month look better than November, when there were 533,000 jobs lost. Then again, that was after they were revised upwards by 1/3, as December's numbers surely will be as well.Corporate Downsizings Outpace Expansions 4-to-1 High Job Losses Bode Ill for Commercial Real Estate Absorption By Mark Heschmeyer | December 18, 2008 If you're hoping for a dose of holiday cheer, you may want to skip this for another CoStar News item. This week, we tallied the job cuts announced so far this month and made some back-of-the-envelope estimates on the impact all the cuts could have on the real estate market. Corporations have announced more than 116,270 job cuts so far this month. Assuming each eliminated position represents an average per employee of 250 square feet across all commercial property types, the headcount reductions represent the potential vacancy of 29 million square feet of commercial space. In the same time frame, corporations have announced or transacted just 6.44 million gross square feet of major facility expansions or relocations. The continuing high pace of job losses likely spells big trouble for future absorption this quarter and further dims the outlook for office and industrial space absorption next year. What follows is a list of the major layoff and closure announcements the major corporations have announced since Dec. 1 through close of business Wednesday Dec. 17. Click here for the list. Labels: closures and layoffs, downsizing, jobs, Mark Heschmeyer, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Where Have All the Billions Gone?From the Inter-Press Service:
The rest of the article is here. Labels: bailout, Elizabeth Warren, financial crisis, TARP program, Treasury Department Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Dollar's Slump Erases Months Of GainsFrom today's Washington Post. Keep your eye out for the cover story in our January/February issue, which will address, among other things, whether the dollar will remain the world's reserve currency.By Anthony Faiola Washington Post Staff Writer |Thursday, December 18, 2008 The dollar yesterday staged one of its biggest one-day drops against the euro and fell to a 13-year low against the Japanese yen as near-zero interest rates and the Federal Reserve's plan to print vast sums of cash dilute the value of the greenback. The drops dramatically accelerated the dollar's reversal of fortune over the past three weeks after months of solid gains. The slide underscores the risks the Federal Reserve is taking to jump-start the U.S. economy through aggressive monetary policy. On Monday, the Fed cut its target for the federal funds rate, at which banks lend to each other, from 1 percent to a target range of 0 percent to 0.25 percent, and effectively vowed to print as much money as it needs to try to pull the United States from a worsening recession. While that policy may ultimately aid an economic recovery, it is robbing the dollar of value as investors anticipate less interest on their dollar-denominated investments and more bills in circulation, making each one worth a bit less. In response, investors are dumping the dollar and buying up other currencies. If the dollar's fall is unchecked, it could jeopardize the long-term faith of foreign investors in the value of the American currency and could cause foreign investors to dump U.S. stocks and other assets, whose value would be worth less in euros or yen. The Dow Jones industrial average fell 1.1 percent yesterday. Read the rest of the article. Labels: currencies, dollar, euro Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The End of Pensions?By Shamus Cooke | December 15, 2008Unless things change fast, human history will show that the phenomenon of "retirement" was limited to one generation. After World War II, when European and Japanese economies stood in tatters, American capitalism could fulfill "the American dream," since there was little foreign competition to speak of. For the first time ever, workers were promised that—after working thirty or so years—they would be able to securely retire. That was largely the case...for one generation. The second generation is having a devastating reality check. 2008 was supposed to be a watershed year for retirement: it was the first year that the baby-boomers turned 62, and the retirement frenzy was to begin (since people could begin to draw on their social security benefits). Early in the year, however, a study was conducted that found one-fourth of these boomers were delaying retirement (only the baby-boomers who were actually able to plan for retirement were studied). The economy has since nosedived, and many more retirements are being delayed. The unfortunate reality is that many who planned on retiring will work until the grave, joining the millions of other baby-boomers who never had such dreams. The experts are calling this the "perfect storm" for retirement. Everything that could go wrong is in fact going wrong. This storm, however, was not created by supernatural forces, but the coordinated effort of big-business and their puppet politicians. The deliberate destruction of the pension and its replacement by the 401(k) was, of course, a giant step towards attacking retirement; but now that the economic crisis has emerged, we're beginning to see just how ruinous the effects are. At the end of September, just as the crisis was beginning to gain steam, it was discovered that in the previous year the value of stocks in 401(k) accounts had fallen by nearly $2 trillion! Much more has been lost since then. This is especially devastating since almost one-third of 401(k) participants in their 60s had 80 percent of their money in stocks (pension funds have been similarly destroyed). The 401(k) was the scheme of the century. Corporations offloaded their "burdensome" pensions and used the combined forces of the media and politicians to sell the ruse to the public, to the great benefit of Wall Street. Workers were told that the boom-slump cycle was over, and that stocks were a sure thing. There were additional factors to invest in stocks: interest rates were so low that investing in bonds and other less-risky instruments offered only tiny returns; and since employers stopped contributing to retirement funds, a bigger return was required. More importantly, corporations have been driving down real wages since the seventies, allowing less money to be saved for retirement, creating a mood of desperation. Every "safe bet" for investing has been proven unsafe; the recession has left nothing untouched. After the dotcom bubble burst—taking with it millions of people's 401(k) savings—the housing market became the place to invest. Now the safest possible investment, too, has turned sour. For millions of people, the home they lived in was their nest egg, which they had planned to sell and move into a smaller place. No more. Rep. Robert Andrews (D-NJ), who chairs the House subcommittee on health, employment, labor and pensions, put it bluntly: "Some will have very little, some will have almost nothing, and some will have nothing when they retire". Of course, people who "have nothing" do not retire. This process is being accelerated by the newest trick of big business: declaring bankruptcy to destroy "pension obligations". These obligations apply with equal weight to workers already retired, many of whom are seeing their pensions slashed in half, forcing them out of retirement. Now even the threat of bankruptcy is constantly used in union contract negotiations to scare workers into concessions, since after achieving bankruptcy, labor agreements are torn up. The threat of closing the company's doors is a very effective form of intimidation. This phenomenon is at the center of the GM debate. The corporate politicians in congress cannot decide whether to appoint a "Car Tsar" to oversee the destruction of the autoworkers pensions, or use the proven method of bankruptcy. Not a day goes by that the corporate media doesn't join hands to assail the pension and health care benefits of the "spoiled" GM workers. The hypocrisy is sickening. This after the UAW had already agreed to the most shameful concessions in 2007. Although concessions are often made in the name of "job security," the result is that corporations become emboldened by such acts. Eventually, every benefit of workers that contradicts company profit will be targeted. The demand for concessions never stops, and soon the point arrives when the benefits of having a union become questioned, since dues money is not paid with concessions in mind. The autoworkers struggle is at the forefront of the pension battle nationwide, since their struggles in the 1930's originally paved the way for pensions. Equally important is the pension struggles emerging with public employees, the last stronghold of workers who receive them. Public employees will find their pensions under immense attack as the economic crisis intensifies, and government budgets are depleted. Fighting the corporate strategy of bankruptcy and business closures is an immediate need of working people. This tactic will increase in number as the crisis deepens and companies strive to "restore profitability" by drastically lowering wages. If a company attempts such a criminal act, the workers should demand a bailout for themselves; the government should take over the plant so that the workers can keep their jobs, such as was done for the banks. Management must be sacked and instead of a government bureaucrat, the workers themselves should run the business. To win this program, new levels of organizing and solidarity are needed, such as the example of the United Electrical Workers, who occupied their factory and organized in a brilliant fashion. They won a stunning victory by utilizing the methods of the original autoworkers struggles from the 1930's. If a fight is to be waged, it must be done seriously and with determination, uniting both retired and active workers. The UEW workers have shown the way forward for the labor movement, which can no longer rely on union concessions or the promises of Democratic politicians, but only their own collective strength. Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action. He can be reached at shamuscook-at-yahoo.com Labels: 401(k), bankruptcy, pensions, Republic Windows and Doors, retirement, Social Security, unions, United Electrical Workers Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Destroying What the UAW BuiltFrom yesterday's Washington Post:By Harold Meyerson Wednesday, December 17, 2008; A17 In 1949, a pamphlet was published that argued that the American auto industry should pursue a different direction. Titled "A Small Car Named Desire," the pamphlet suggested that Detroit not put all its bets on bigness, that a substantial share of American consumers would welcome smaller cars that cost less and burned fuel more efficiently. The pamphlet's author was the research department of the United Auto Workers. By the standards of the postwar UAW, there was nothing exceptional about "A Small Car Named Desire." In its glory days, under the leadership of Walter Reuther, the UAW was the most farsighted institution—not just the most farsighted union—in America. "We are the architects of America's future," Reuther told the delegates at the union's 1947 convention, where his supporters won control of what was already the nation's leading union. Even before he became UAW president, Reuther and a team of brilliant lieutenants would drive the Big Three's top executives crazy by producing a steady stream of proposals for management. In the immediate aftermath of Pearl Harbor, Reuther, then head of the union's General Motors division, came up with a detailed plan for converting auto plants to defense factories more quickly than the industry's leaders did. At the end of the war, he led a strike at GM with a set of demands that included putting union and public representatives on GM's board. That proved to be a bridge too far. Instead, by the early 1950s, the UAW had secured a number of contractual innovations—annual cost-of-living adjustments, for instance—that set a pattern for the rest of American industry and created the broadly shared prosperity enjoyed by the nation in the 30 years after World War II. The architects did not stop there. During the Reuther years, the UAW also used its resources to incubate every up-and-coming liberal movement in America. It was the UAW that funded the great 1963 March on Washington and provided the first serious financial backing for César Chávez's fledgling farm workers union. The union took a lively interest in the birth of a student movement in the early '60s, providing its conference center in Port Huron, Mich., to a group called Students for a Democratic Society when the group wanted to draft and debate its manifesto. Later that decade, the union provided resources to help the National Organization for Women get off the ground and helped fund the first Earth Day. And for decades after Reuther's death in a 1970 plane crash, the UAW was among the foremost advocates of national health care—a policy that, had it been enacted, would have saved the Big Three tens of billions of dollars in health insurance expenses, but which the Big Three themselves were until recently too ideologically hidebound to support. Narrow? Parochial? The UAW not only built the American middle class but helped engender every movement at the center of American liberalism today—which is one reason that conservatives have always held the union in particular disdain. Over the past several weeks, it has become clear that the Republican right hates the UAW so much that it would prefer to plunge the nation into a depression rather than craft a bridge loan that doesn't single out the auto industry's unionized workers for punishment. (As manufacturing consultant Michael Wessel pointed out, no Republican demanded that Big Three executives have their pay permanently reduced to the relatively spartan levels of Japanese auto executives' pay.) Today, setting the terms of that loan has become the final task of the Bush presidency, which puts the auto workers in the unenviable position of depending, if not on the kindness of strangers, then on the impartiality of the most partisan president of modern times. Republicans complain that labor costs at the Big Three are out of line with those at the non-union transplant factories in the South, factories that Southern governors have subsidized with billions of taxpayer dollars. But the UAW has already agreed to concessions bringing its members' wages to near-Southern levels, and labor costs already comprise less than 10 percent of the cost of a new car. (On Wall Street, employee compensation at the seven largest financial firms in 2007 constituted 60 percent of the firms' expenses, yet reducing overall employee compensation wasn't an issue in the financial bailout.) In a narrow sense, what the Republicans are proposing would gut the benefits of roughly a million retirees. In a broad sense, they want to destroy the institution that did more than any other to raise American living standards, and they want to do it by using the power of government to lower American living standards—in the middle of the most severe recession since the 1930s. The auto workers deserve better, and so does the nation they did so much to build. Labels: auto industry, Big Three, living standards, middle class, pensions, UAW Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Chrysler Shuts All 30 US Plants For One MonthFrom the Washington Post:Chrysler announced today that it will close all 30 of its auto manufacturing plants for at least a month starting at the end of shifts on Friday as it tries to conserve cash and avoid bankruptcy amid plunging demand for its vehicles. Rest of article. Labels: auto industry, bankruptcy, Chrysler, closures and layoffs Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Judge Places Madoff Under House ArrestRecently posted to the WSJ website. If you didn't think it was possible for Bernie Madoff's alleged $50bn ponzi scheme to get any juicier, it turns out that U.S. Atty General Michael Mukasey's son, Marc Mukasey will be working for the defense. He works for Bracewell & Giuliani (where Rudi is a partner); one of their specialties is white-collar crime.This is the same SEC that issued a mea culpa a couple of days ago for missing numerous signs that Madoff was engaged in fraud. Cox: No Evidence Yet of Wrongdoing by SEC Staff in Madoff Case[Here's the bit about Mukasey:] Also Wednesday, Attorney General Michael Mukasey recused himself from the Madoff probe, the Justice Department said.Read the full article. Labels: Bernard Madoff, Bracewell and Giuliani, Christopher Cox, Marc Mukasey, Michael Mukasey, ponzi, Rudi Giuliani, SEC Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Auto Bust Could Cost Millions of Jobs Some sobering numbers from EPI: The United States cannot afford to sacrifice the domestic auto industry. A shutdown would eliminate up to 3.3 million U.S. jobs within the next year in all 50 states and the District of Columbia. The loss of total state employment would be anywhere from 4.0% to 8.9% in Michigan, Indiana, Kentucky, Alabama, Tennessee, and Ohio. Traditional auto manufacturing states would certainly be hard hit, but Southern states—including the Carolinas, Mississippi, and Oklahoma—would be, too. Massive job losses would just be the beginning of the fallout. Widespread community disruption, loss of services, and depopulation would follow in the wake of an auto industry bankruptcy. Increased government payments and tax losses alone would exceed $150 billion in the first three years following the bankruptcy of all three domestic auto companies.1 An airline-style bankruptcy re-organization (Chapter 11) is not an option for U.S.-based automakers. U.S. consumers would abandon bankrupt car companies in droves, resulting in the widespread liquidation of company assets, dissipation of millions of highly skilled blue- and white-collar workers, and the relinquishing of the U.S. market to foreign-based car companies. Such foreign multinationals have eliminated four million U.S. jobs in the past 15 years and are directly responsible for more than one-third of the U.S. trade deficit. Click here for further info. Labels: auto industry, bankruptcy, Economic Policy Institute, EPI, jobs Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Inside Account of Activism in GreeceThis is a letter forwarded to us from D&S collective member Amee Chew (sent to her from a friend of hers), with more details about the situation in Greece--lots of good inside info and links.Friends, I don't know if others have been following the daily news of what is unfolding in Greece. The press here has mostly reported events as another explosion of "riots" in response to a police killing, without context. In fact, what is taking place in Greece is much larger than that. In its immediate context, the uprising of the last 10 days comes on the heels of a rising oppositional movement: recently, the Greeks managed to achieve a general strike with support from 80-90% of the working population against privatization of national industries and other neoliberal policies, and for doubling the minimum wage. A broad hunger strike among Greek prisoners, with mass solidarity from Greek society, has also compelled the government to agree to the release of about half the prison population (and the movement declared that this would not be enough). The "spontaneous" anger of young people against police violence has beneath and alongside it long-standing movement structures that are allowing it not simply to "discharge" and dissipate, but to grow, strengthen itself and expand into new political areas. It is taking place in a population that is highly politicized and has a history of resistance to draw from. But it's extraordinary to see the mass mobilization of very young people--high-school students between the ages of 11 and 17, taking to the streets, taking over their schools, developing a politics that addresses their lives directly. It's not just resistance to police repression now, but a wider discussion is taking place about education social organization--with students holding mass assemblies in their occupied schools, trying to decide what the meaning would be of an education that is part of the life they want for themselves, and not the life that is being prepared for them by the existing society. (The flyer at the this link, from the website of the Coordination of Occupied Schools Alexandros Grigoropulos, says it well. The slogans translate as follows: across the top "The time has come for us to take the future into our hands." On the left, is the image of a student sleeping over books with the caption "School, home, tutoring". On the right are students filling the streets, marching behind a banner that says "These days belong to Alexi: cops, pigs, murderers!" and above it, the caption reads, "Struggle, rupture, revolution." ) At this point, hundreds of schools, colleges and universities have been occupied and are being transformed into centers of organizing. They are running their own radio stations, some of which are private stations now under occupation. They are occupying public buildings; attacking police stations and government ministries. Yesterday, students occupied the central state-run television station during its news broadcast of the Prime Minister's speech and stood with a banner saying, "Stop watching and go out into the streets!" Two smaller placards read, "Freedom for all those who have been arrested," and "Immediate release for all the arrested." (Video here.) In a separate action, another group attacked the central Athens headquarters of the MAT, burning vehicles and a portion of the building. The MAT (Monades Apokatastasis Taxis "Units For Restoring Order") are the "riot police"--a specifically political branch of the police force developed to suppress "civil unrest." They were developed by police who received training in the US. (Greece has been a central recipient of US police training and technology for repression.) The dissolution of the MAT is one of the central demands that has come out of the assemblies of occupied schools and universities. (This also has a particular topical appropriateness: the MAT were first introduced by Konstantinos Karamanlis, father of the current Prime Minister and leader of the same right wing party Nea Dimokratia, in the years following the fall of the Greek junta. The leader of the junta would later write in his memoir that if the MAT had existed at that time, the junta might not have fallen.) A video from this past weekend shows a battle with MAT police in the Exarchia neighborhood--the area in which the police murder took place that sparked the current uprising, and a center of left organizing--in which youths defending their neighborhood are using laser beams to blind the police and also to pinpoint them as targets so that they can maximize the effect of their crude firepower (molotov cocktails and stones) by focusing a barrage on one target at a time. (Video.) At the center of the battle in Athens is the historic Polytechnion--the university famous for the events of November 17, 1973, when the junta attacked protesting students with tanks. As a result of that history, the police are constitutionally unable to enter the university, making it a protected enclave for political organizing and a tactical base of operations. Every evening now, after the protests and street battles, students and other active members of the movement gather for a general assembly. The Coordination of the General Assemblies and Occupations in Athens has given the movement both a political face and a structure of continuity for building, planning and deepening its political consciousness. (Website and blog.) The uprising in Greece has a particular relevance at this moment in history. If you read the military manuals and strategy papers of the US architects of empire, Greece is a centerpiece of "counterinsurgency" doctrine. In the immediate postwar period, the US and England fought an extended counterinsurgency war to suppress the left (communist and anarchist), which had become the most powerful political force in the country through the years of resistance to the German occupation. The strategy was to brutally repress the armed resistance (80,000 British troops and the arming of domestic fascists to kill, imprison, and torture left guerillas), while at the same time promoting elections and including a legitimate "socialist" opposition, which supported surrendering arms and using the parliamentary system. This is the "handbook" which the US uses in its imperial wars of conquest and occupation. It's called "promoting Democracy." Appropriate then, this declaration of the Greek uprising: "Their Democracy murders..." (here). ---------------------- [Since I haven't seen it yet appear in English, I'm pasting below the statement put out by the students who occupied the national TV yesterday. Translating as best I can:] Our action is the result of an accumulated pressure which is robbing us of our lives, and not only an emotional explosion based on the murder of Alexis Grigoropulos by the police. We are one more collective, a piece of the revolt which is taking place. Labels: activism, Greece, protest, socialism Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Fed Press Release on Rate CutVia Doug Henwood at lbo-talk, who posted this under the subject line "Fed: kitchen sink included," with the note: "This is quite aggressive - more than expected, I think. They're pushing short rates close to 0, and planning to expand their purchases of longer-dated paper."The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent. Labels: Federal Open Market Committee, Federal Reserve, financial crisis, interest rates, recession Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Open Letter to O. on Jobs and GenderThis open letter was initiated by Linda Gordon, professor of history at NYU, whose research (especially in her book Pitied but Not Entitled: Single Mothers and the History of Welfare) established that the social programs targeted at men (e.g. Social Security, unemployment insurance, and veterans' benefits) are considered entitlements, whereas social programs targeted at women (e.g. welfare) were always considered as "handouts"). The letter was circulated among feminists, historians and others--we got it too late to sign on, alas. Randy Albelda, D&S Associate and professor of economics at UMass-Boston made similar points about the possible gender bias in Obama's plans for investing in infrastructure in a recent op-ed in the Boston Globe, The Macho Stimulus Plan, and she'll have a comment in our January/February issue about the tattered social safety net.Dear President-elect Obama, As students of American history, we are heartened by your commitment to a jobs stimulus program inspired by the New Deal and aimed at helping "Main Street." We firmly believe that such a strategy not only helps the greatest number in our communities but goes a long way toward correcting longstanding national problems. For all our admiration of FDR's reform efforts, we must also point out that the New Deal's jobs initiative was overwhelmingly directed toward skilled male and mainly white workers. This was a mistake in the 1930s and it is a far greater mistake in the 21st century economy, when so many families depend on women's wages and when our nation is even more racially diverse. We all know that our country's infrastructure is literally rusting away. But our social infrastructure is equally important to a vibrant economy and livable society, and it too is crumbling. Investment in education and jobs in health and care work shores up our national welfare as well as our current and future productivity. Revitalizing the economy will require better and more widespread access to education to foster creative approaches and popular participation in responding to the many challenges we face. As you wrestle with the country's desperate need for universal health insurance, we know you are aware that along with improved access we need to prioritize expenditure on preventive health. We could train a corps of health educators to work in schools and malls and medical offices. As people live longer, the inadequacy of our systems of care for the disabled and elderly becomes ever more apparent. While medical research works against illness and disability, there is equal need for people doing the less noticed work of supervision, rehabilitation and personal care. We are also concerned that if the stimulus package primarily emphasizes construction it is likely to reinforce existing gender inequities. Women today make up 46 percent of the labor force. Simple fairness requires creating that proportion of job opportunities for them. Some of this can and should be accomplished through training programs and other measures to help women enter traditionally male-occupied jobs. But it can also be accomplished by creating much-needed jobs in the vital sectors where women are now concentrated. The most popular programs of the New Deal were its public jobs. They commanded respect in large part because the results were so visible: tens of thousands of new courthouses, firehouses, hospitals, and schools; massive investment in road-building, reforestation, water and sewage treatment, and other aspects of the nation's physical plant--not to mention the monumental Golden Gate and Triborough Bridges, the Grand Coulee and Bonneville dams. But the construction emphasis discriminated against women. At best women were 18% of those hired and, like non-white men, got inferior jobs. While some of the well-educated obtained jobs through the small white-collar and renowned arts programs, the less well educated were put to work in sewing projects, often at busy work, and African American and Mexican American women were slotted into domestic service. This New Deal policy assumed that nearly all women had men to support them and underestimated the numbers of women who were supporting dependents. Today most policy-makers recognize that the male-breadwinner-for-every-household assumption is outdated. Moreover, experts agree that, throughout the globe, making jobs and income available to women greatly improves family wellbeing. Most low-income women, like men, are eager to work, but the jobs available to them too often provide no sick leave, no health insurance, no pensions and, for mothers, pay less than the cost of child care. The part-time jobs that leave mothers adequate time to care for their children almost never provide these benefits. Meanwhile the country needs a stronger social as well as physical infrastructure. Teachers, social workers, elder and child-care providers and attendants for disabled people are overwhelmed with the size of their classes and caseloads. We need more teachers and teachers' aides, nurses and nurses' aides, case workers, playground attendants, day-care workers, home care workers; we need more senior centers, after-school programs, athletic leagues, music and art lessons. These are not luxuries, although locality after locality has had to cut them. They are the investments that can make the U.S. economically competitive as we confront an increasingly dynamic global economy. Like physical infrastructure projects, these jobs-rich investments are, literally, ready to go. A jobs-centered stimulus package to revitalize and "green" the economy needs to make caring work as important as construction work. We need to rebuild not only concrete and steel bridges but also human bridges, the social connections that create cohesive communities. We need a stimulus program that is maximally inclusive. History shows us that these concerns cannot be postponed until big business has returned to "normal." We look to the new administration not just for recovery but for a more humane direction—and in the awareness that what happens in the first 100 days and in response to immediate need sets the framework for the longer haul of reform. Labels: Barack Obama, gender, green jobs, jobs, Linda Gordon, Randy Albelda Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Smithfield Workers Finally UnionizeWorkers at the largest meat processing plant in the United States, Smithfield Packing in Tar Heel, N.C., finally voted to unionize, after years and years of ugly struggle with the company. We covered the Smithfield campaign most recently in our 2006 annual labor issue (though the article isn't posted online). Here is what the New York Times had to say:After 15 Years, North Carolina Plant UnionizesRead the rest of the article. Labels: Smithfield, unions, United Food and Commerical Workers Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Dissenting Account of the Republic SettlementAn interesting dissenting view, from Darren Hutchinson of Dissenting Justice on the settlement between Bank of America and workers who staged a sit-in at Republic Windows and Doors in Chicago. (See our recently-posted article about the sit-in and settlement here; our January/February issue will include a comment by UMass-Boston economist Randy Albelda on the financial crisis and the shredded safety net.) The back-story about the company's political connections is particularly interesting. I think part of what is going on is that people are so unused to any kind of labor militancy that they were quick to take anything they could get. An Argentine-style takeover of the factory (with or without help from the state) would have been even better than state-supported safety-net provisions and retraining, no?.What (I Think) Progressives Should Have Done for Workers of Republic Windows and Doors This is the full post; click here and scroll down for related earlier posts on Dissenting Justice. Labels: bailout, Darren Hutchinson, Dissenting Justice, financial crisis, Republic Windows and Doors, sit-in, United Electrical Workers Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Protests in Greece Have an Economic BasisWho would know, from much of the media coverage, that the protests that have been happening in Greece have to do with economics? Luckily Amy Goodman of Democracy Now! is on the story, to let us know that there has been a general strike over pension reform and privatization. Here's the introduction to the segment aired on Thursday:Listen to the segment. Labels: Amy Goodman, Democracy Now, general strike, Greece, pensions, privatization, protest Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More on the Myth of the $73/hour Auto WorkerHat-tip to D&S collective member, Dave Ryan (exiled on the West Coast) for two more responses to the claim bandied about in the MSS that auto workers make upwards of $70/hour.First is this piece from Eric Boehlert at Media Matters for America: Click here for the rest of the article. The New York Times did end up debunking the myth, but it was a couple of days ago in David Leonhardt's often excellent column "Economic Scene". Here is the crucial bit from the column, $73 an Hour: Adding It Up: Let's start with the numbers. The $73-an-hour figure comes from the car companies themselves. As part of their public relations strategy during labor negotiations, the companies put out various charts and reports explaining what they paid their workers. Wall Street analysts have done similar calculations.Of course, another way to address these costs would be to have universal, single-payer health care. Dean Baker pointed out, on his blog Beat the Press, the weaknesses in the argument that the high costs of a unionized workforce is to blame for the Big Three's failure: The U.S. auto industry is on life-support and the Post knows who the culprits are: the unions. It told readers that: "over the past three decades, they have lost ground to more agile foreign rivals that favored smaller cars built by non-unionized labor at lower wages." Labels: auto industry, Dave Ryan, David Leonhardt, Dean Baker, Eric Boehlert, Media Matters, New York Times, UAW, unions Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Drug Companies Paid For ArticlesThe New York Times reports that drug giant Wyeth paid doctors and researchers to put their names on articles to medical journals that had been ghostwritten by company hacks.Some of the articles were published extolling the benefits of the company's hormone-replacement drug Prempro after a large federal drug study had indicated that the drug could lead to an increase in breast cancer. The documents have come to light as part of investigations by Sen. Charles Grassley (R-IA).
Labels: Corporate Fraud, drug industry, Wyeth Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Beware Fudged Facts About US Auto WagesFrom EPI:With some senators turning down a rescue package for the auto industry based on their demands for immediate wage cuts for the people who build the autos, it's important that journalists are clear about what the wages levels actually are. Widespread claims that autoworkers currently receive over $70 per hour are false. Labels: auto industry, EPI, New York Times, wages Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Ex Nasdaq head ran massive Ponzi schemeFederal agents have arrested Bernard L. Madoff, a top Wall Street trader and ex-CEO of of Nasdaq for securities fraud. According to the criminal charges, Madoff is alleged to have defrauded investors of $50 billion in what he confessed to authorities was a "massive Ponzi scheme."The 70-year-old Madoff faces 20 years in prison and a $5 million fine if convicted. He was released on a $10 million bond. From the NY Times:
Labels: Bernard Madoff, Corporate Fraud, food security Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). B of A to cut 30,000+ jobs in next 3 yearsFrom the wires:Bank of America Corp. said Thursday it expects to cut 30,000 to 35,000 jobs over the next three years, as it faces a deteriorating economic environment and tries to absorb Merrill Lynch & Co. Labels: Bank of America, closures and layoffs, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Jobless Claims At Record HighMore unsurprising bad news (from the Washington Post):
The article goes on to note that US exports fell 2 percent in October, with declines coming from both the manufacturing and service sectors. World oil consumption also fell in 2008 for the first time in 25 years. Labels: exports, oil, trade deficit, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Invest in Infrastructure: Subways vs. Prisons?This is from Eric Lotke at the Campaign for America's Future Hat-tip to Peter Wagner of the Prison Policy Initiative. See also the first article in our series on the political economy of the prison crisis.Good Building, Bad Building By Eric Lotke | December 11th, 2008 - 2:16pm ET China has opened a new subway system every year for the past six years. The U.S. has opened 45 new prisons and jails. Who's setting up to lead in the 21st century? "Expanding prisons mean more jobs," explained the Fayetteville Observer over the summer. The rural North Carolina community was celebrating the $19 million expansion of a $90 million prison that opened in 2003 and immediately filled to capacity. Such growth is a boon for rural, economically distressed counties. "Prison jobs bring added payroll, boost housing markets and draw new retail customers to poor parts of the state," observed the Observer. The good news is that public investment can work. The bad news is that better choices must be made. We need to distinguish between prisons for crime control and prisons as a jobs program, between building for the future and building for the past. Read the rest of the piece. Labels: Eric Lotke, infrastructure, jobs, Prison Policy Initiative, prisons, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Big Three Spent $7.2 Billion On Ads In 2007One reason the Big Media conglomerates in the United States may want to see the Big Three transnational automobile companies get a big corporate welfare grant from the U.S. government is that GM, Daimler-Chrysler and Ford have, historically, been among the top buyers of advertising in the U.S. corporate media world. In 1999, for example, GM spent over $2.9 billion on advertising and was the Number 1 advertiser in the United States. That same year, the Number 3 advertiser in the U.S. was Daimler-Chrysler, which spent over $1.5 billion on advertising. And in 1999, Ford spent over $1.1 billion on advertising and was the Number 5 advertiser in the United States.In 2007, GM spent over $3 billion on advertising and was the Number 4 advertiser in the U.S., while Ford spent over $2.5 billion on advertising and was the Number 6 advertiser in the United States. In addition, over $1.7 billion was spent on advertising by Chrysler, which was the Number 14 advertiser in the United States. ("Advertising Age" chart for 2007 here.) --bf. Labels: advertising, auto industry, bailout, Bob Feldman Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Closures & Layoffs (Dec. 7-13)The weekly report from Mark Heschmeyer of the CoStar Group.By Mark Heschmeyer | December 11, 2008 Closures & Layoffs (Dec. 7-13): Job Losses by Industry A Weekly Report on Future Corporate Downsizings In this week's issue: * Job losses large and widespread. * Plus, a whole new round of major U.S. corporation closures and layoffs were announced in Alabama, Arizona, California, Connecticut, Florida, Georgia, Indiana, Iowa, Kentucky, Minnesota, North Carolina, Oregon, South Carolina, Texas, Washington and Wisconsin. Read the rest of the article. Labels: closures and layoffs, co-star group, Mark Heschmeyer Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Big Three's 1990s Corporate Welfare GrantIf GM, Ford and Daimler/Chrysler end up getting a big corporate welfare grant from the "U.S. Corporate Welfare State" before they begin their new wave of 2009 layoffs of UAW members, it won't be the first corporate welfare grant that the Big Three ever received.As Mark Zepezauer and Arthur Naiman noted in the 1996 edition of their book Take The Rich Off Welfare, during the 1990s the U.S. government gave "GM, Ford and Chrysler—whose combined 1994 profits were almost $14 billion--$333 million a year to develop more fuel-efficient cars;" yet "at the same time, the Big Three" propagandized "in favor of watered-down fuel-efficiency standards." During the 1990s, Ford, GM and Chrysler also "each used accelerated depreciation to defer a billion dollars in tax payments," according to the Take The Rich Off Welfare. The same book also recalled: "The extent to which automobiles dominate our lives didn't just happen by accident—at least part of it was the result of a criminal conspiracy. Back in the early 1930s, most people living in cities got around on electric streetcars. Concerned that this wasn't the kind of environment in which they could sell a lot of buses, General Motors, using a series of front companies, began buying up streetcar systems, tearing out the tracks, buying buses from itself and then selling the new, polluting bus systems back to the cities—usually with contracts that prohibited purchases of `any new equipment using fuel or means of propulsion other than gas.' Sometimes the contracts required that the new owners buy all their replacement buses from GM. "...In 1949—after these companies had destroyed more than 100 streetcar systems in more than 45 cities, including New York, Los Angeles, Philadelphia, San Francisco, Oakland, Baltimore, St. Louis and Salt Lake City—GM, Chevron and Firestone were convicted of a criminal conspiracy to restrain trade..." With regard to the most recent corporate welfare grant to the Big Three proposal, UAW Local 2334 President David Sole in Detroit recently wrote the following: "Handing more money to the same auto bosses who got us into this mess won't solve the problems the auto industry faces. "...They will continue to try to eliminate jobs and cut wages and benefits. Their only concern is maximizing profits, which is what led them to concentrate on making SUVs and trucks domestically, while shipping production of fuel-efficient cars overseas... "Since the auto bosses have brought the companies to the brink of ruin, the workers, their unions and the communities in which these factories are situated must assert their right to run the plants and replace the bloated, short-sighted executives and the big shareholders who kept them at the helm. "Worker-community control of the Big Three is the only solution. Under worker-community control the demand for government funds to rebuild and retool the plants to make energy-efficient cars and mass transit equipment could rally wide support." --bf Labels: auto industry, bailout, Bob Feldman, corporate welfare, financial crisis, UAW Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). World Bank and Food Crisis (Bloomberg--!)A critique of the World Bank and the Washington Consensus--at Bloomberg, of all places. This is part 3 of a 7-part series entitled "Recipe for Famine." Hat tip to DRedmond at lbo-talk. Look for a feature article by Mark Engler on the decline of the Washington Consensus in our January/February issue.World Bank's 'Wrong Advice' Left Silos Empty in Poor Countries Dec. 10 (Bloomberg) -- Inside and out, the rusted towers of El Salvador's biggest grain silo show how the World Bank helped push developing countries into the global food crisis. Inside, the silo, which once held thousands of tons of beans and cereals, is now empty. It was abandoned in 1991, after the bank told Salvadoran leaders to privatize grain storage, import staples such as corn and rice, and export crops including cocoa, coffee and palm oil. Outside, where Rosa Maria Chavez's food stand is propped against a tower wall, price increases for basic grains this year whittled business down to 16 customers a day from 80. "It's a monument to the mess we are in now," says Chavez, 63. About 40 million people joined the ranks of the undernourished this year, bringing the estimate of the world's hungry to 963 million of its 6.8 billion people, the Rome-based United Nations Food and Agriculture Organization said yesterday. The growth didn't come just from natural causes. A manmade recipe for famine included corrupt governments and companies that profited on misery. Another ingredient: The World Bank's free-market policies, which over almost three decades brought poor nations like El Salvador into global grain markets, where prices surged. "The World Bank made one basic blunder, which is to think that markets would solve problems of such severe circumstances," said Jeffrey Sachs, director of the Earth Institute at Columbia University and a special adviser to UN Secretary-General Ban Ki-moon. "But history has shown you need to help people to get above the survival threshold before the markets can start functioning." Read the rest of the article. Labels: Ban Ki-moon, Bloomberg, El Salvador, Jeffrey Sachs, World Bank Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Watchdogs Chide Treasury on Bailout (WSJ)Just posted to the WSJ site:By MICHAEL R. CRITTENDEN | DECEMBER 10, 2008, 4:45 P.M. ET WASHINGTON -- U.S. Treasury Department assurances that the $700 billion financial rescue plan is helping to stabilize markets aren't enough for a program that has been implemented with few internal controls, a pair of government watchdogs said Wednesday. In separate testimony, the Government Accountability Office and a congressional oversight panel said Treasury has doled out billions of dollars to banks with no way to ensure they comply with government-mandated restrictions, or they are using the money to help increase the availability of credit to consumers. The four-person oversight panel, in its first report to Congress, said it found Treasury has "administrated the [Troubled Asset Relief Program] without seeking to monitor the use of funds provided to specific financial institutions." Read the rest of the article. Read the full TARP oversight report. Labels: bailout, financial crisis, GAO, TARP program Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Green Jobs in Prisons?Hat-tip to Lois Ahrens of the Real Cost of Prison Project for this disturbing story, from a site called cleantechnica.com. This and other news about mass incarceration can be found at the RCPP blog.Company Hires Prison Inmates to Build Solar Modules More on this story here. Labels: green jobs, prisons, Real Cost of Prisons Project, Spire Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More people seeking fewer jobsThe Economic Policy Institute (EPI) put out a brief showing that there are now 3 people looking for jobs for every job opening, a ration that has skyrocketed in less than a year. See the full post here. Labels: EPI, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Jared Bernstein to Be Top VP Econ AdvisorWe somehow missed the news (from last Friday) that VP-elect Joe Biden had picked Jared Bernstein, senior economist at the left-leaning Economic Policy Institute. Here's what one of the WSJ blogs had to say:Biden Picks Jared Bernstein as His Top Economics Adviser Brad Haynes | December 5, 2008, 3:30 pm | WSJ Washington Wire Vice President-elect Joe Biden picked Jared Bernstein,a prominent liberal economist, as his top economic adviser. Bernstein expands the new administration's chorus of economists with a voice clearly to the left of the centrist advisers announced so far. Bernstein was a deputy chief economist under President Bill Clinton's Labor Secretary Robert Reich, and is now a senior economist at the union-funded Economic Policy Institute, where he has studied income inequality, low-wage labor markets and poverty. Biden called Bernstein "a proven, passionate advocate for raising the incomes of middle class families," in announcing him as his chief economist and economic policy adviser, a new post. "His expertise and background in a wide range of domestic and international economic policies will be an invaluable asset to the Obama-Biden Administration." In addition to his think tank reports and magazine articles , Bernstein has also been a consistent and occasionally cheeky blogger for the left-leaning Huffington Post and TPMCafe. Recent razzes include making fun of John McCain's comments on the economy and a strident thumbs-down to Treasury Secretary Hank Paulson's proposed financial rescue plan in late September. Labels: Economic Policy Institute, Jared Bernstein, Joe Biden Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Interest rate on US T-bills turns negativeFrom The Financial Times:Interest rate on US T-bills turns negative By Michael Mackenzie in New York Published: December 9 2008 23:27 | Last updated: December 9 2008 23:27 Nervous investors on Tuesday paid for the privilege of owning US government debt, pushing interest rates on three-month Treasury bills to negative levels for the first time in postwar history. The implied yield for three-month bills briefly traded at negative 0.01 per cent--the first time that has happened since 1940, traders said. At such a level, an investor is essentially paying someone to own the security. The flight to safety helped the Treasury sell $30bn in four-week bills at a discount rate of zero per cent for the first time. That auction followed the sale of $27bn in three-month bills at a discount rate of 0.005 per cent on Monday. Ted Wieseman, economist at Morgan Stanley, said: "Demand for cash remained extreme" and described the result of the four-week sale as "absurd". Read the rest of the article Labels: bailout, bond market, financial crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). How to Get a New New Deal (John Nichols)We noticed this in the Boston Metro, our subway paper ("world's largest circulation global newspaper" or something--it really is worldwide), by John Nichols of the Nation. We include the article in full because the Metro doesn't have permalinks (and it's a characteristically tiny article).Workers sit-down for a New Deal Much has been made about the prospect that Barack Obama's presidency might be a reprise of the New Deal era — due both to economic necessity and the President-elect's interventionist inclinations. But there will be no "new New Deal" if Americans simply look to Obama to lead them out of the domestic quagmire into which Bill Clinton and George Bush led the country —with a toxic blend of free-trade absolutism, banking deregulation and disdain for industrial policy. Just as Roosevelt needed mass movements and militancy as an excuse to talk Washington stalwarts into accepting radical shifts in the economic order, so Obama will need to be able to point to some turbulence at the grassroots. And so he may have it. After Bank of America—a $25-billion recipient of Bailout Czar Hank Paulson's "Wall Street First" largesse—cut off operating credit to Republic Windows and Doors, executives of the firm announced that they were shutting its factory in Chicago. Instead of going home to a dismal holiday season like hundreds of thousands of other working Americans who have fallen victim to the corporate "reduction-in-force" frenzy of recent weeks—which has seen suddenly-secure banks pocket their federal dollars rather than loosen up their credit—the Republic workers occupied the factory where many of them had worked for decades. Members of United Electrical Workers Local 1110, which represents 260 Republic workers, are conducting the contemporary equivalent of the 1930s sit-down strikes, which led to the rapid expansion of union recognition nationwide and empowered the Roosevelt administration to enact more equitable labor laws. And, just as in the thirties, they are objecting to policies that put banks ahead of workers; stickers worn by the UE sit-down strikers read: "You got bailed out, we got sold out." If the right history of this time is written, it will be said that the new New Deal began in Chicago—not just because of the city's rich record of labor struggle (from the Haymarket martyrs in the 19th century to the steel industry organizing of the 1930s) or Obama's Chicago ties—but because the workers there were the first to stand up by sitting down. John Nichols is a Washington correspondent for The Nation magazine. Labels: Bank of America, Barack Obama, New Deal, sit-in, United Electrical Workers Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Victory for Sit-In Workers!! BOA CavesFrom the wires:CHICAGO—Bank of America says it will extend credit to a Chicago window and door maker whose workers have occupied the factory for five days. Labels: Bank of America, Republic Windows and Doors Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Global Trade: Deal or No DealFrom yesterday's Guardian, an article on the Doha round of global trade negotiations by Kevin Gallagher, research fellow at the Global Development and Environment Institute at Tufts. The current issue of D&S includes a feature article on the economics of climate change by Frank Ackerman, also of GDAE and a long-time D&S Associate.Deal or no deal Current proposals on international trade amount to deregulation in the developing world and protectionism for the rich In Lewis Carroll's classic, Through the Looking Glass, the Red Queen says, "It takes all the running you can do, to keep in the same place". In the turbulent wake of the financial crisis, developing countries find themselves in a perilous new "wonderland" where they will need all the running room they can get. Contrary to most public pronouncements, rushing to a global trade deal, as the so-called G20 leaders proposed in their own Wonderland moment in November, could take developing countries in the wrong direction. The final G20 communiqué argued that without a swiftly negotiated agreement in global trade talks at the WTO, nations will rush to erect trade barriers and send the world economy even further into the abyss. The statement has now prompted yet another flurry of negotiations in Geneva. Warnings of rampant protectionism are fear mongering. There is no danger of the kind of protectionism that helped deepen the Great Depression. Since that time, the world has established a WTO where tariffs are at their lowest in world history. What's more, both in the communiqué and at the recent Apec summit, world leaders pledged not break their WTO commitments to respond to the crisis. Most importantly, further deregulation will not fix a problem caused by deregulation in the first place. Current proposals on the table amount to deregulation in the developing world and protectionism for the rich. Read the rest of the article. Labels: Doha round, Frank Ackerman, GDAE, Kevin Gallagher, WTO Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). BIS warns of collapse in global lendingFrom Ambrose Evans-Pritchard of Britain's Daily TelegraphBank for International Settlements warns of collapse in global lending The City of London has suffered a dramatic collapse in its core business as global lending falls at the steepest rate since records began, according to new figures from the Bank for International Settlements (BIS). By Ambrose Evans-Pritchard Last Updated: 7:15PM GMT 08 Dec 2008 Cross-border loans worldwide fell by $1.1 trillion (740bn pounds) in the first half of the year, reflecting the scramble by the financial industry to cut leverage by pulling credit lines and slashing risky exposure. Foreign lending by UK banks fell by a staggering $884bn, equal to 81pc of the entire contraction in international lending. The City is facing a double blow since worldwide issuance of bonds and securities has also gone into freefall, plummeting 77pc from over a trillion dollars to $247bn in the third quarter. The City has been the epicentre of Europe's structured credit industry. The collapse in bond issuance reflects the near-total closure of the capital markets in the late summer as credit spreads surged. Bonds issued in euros dropped by 94pc from $466bn to $28bn over the quarter. The UK banking sector includes branches of US, European, Asian and Mid-East institutions. These banks tend to use London as a base for their global credit and investment operations. Though foreign, they make up a crucial part of the City nexus and are a mainstay for accounting firms, lawyers and the panoply of financial services that enrich the City. In its quarterly report, the BIS warned the US Federal Reserve, the Bank of England and other central banks that near-zero interest rates and emergency monetary stimulus may come at a cost. By opening the cash spigot, the authorities risk displacing the money markets and may "discourage banks from lending to other banks". The money markets are a crucial lubricant for the financial system, but they cannot function if rates fall too low. The sector can wither away, as Japan discovered during its "Lost Decade". The BIS also hinted that the European Central Bank and Sweden's Riksbank may have blundered by raising rates this year to contain the oil shock. It said short-term energy spikes have no lasting effect on inflation or wage deals. "Evidence suggests an absence of strong second-round effects on inflation. The temporary inflationary impulse will soon drop out," it said. Labels: Ambrose Evans-Pritchard, bailout, Bank for International Settlements, banking system, financial crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Homeowners Redefaulting After Getting AidFrom Reuters:Homeowners redefaulting after getting aid Mon Dec 8, 2008 3:26pm EST Reuters By John Poirier and Patrick Rucker WASHINGTON (Reuters) More than half of mortgages modified in a bid to avoid foreclosure fell delinquent within six months, a top U.S. banking regulator said on Monday, casting doubt on a proposal to rewrite home loans en masse. Comptroller of the Currency John Dugan said it was unclear why so many borrowers ran into trouble again so soon after getting help, and that raises questions about how policy-makers should address loan modifications. "Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt?" Dugan said at a housing conference in Washington organized by the Office of Thrift Supervision. Read the rest of the article Labels: bailout, banking system, financial crisis, mortgage meltdown Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More Investors Believe Worst Is OverFrom Reuters:Wall St rallies on Obama infrastructure plan, autos Mon Dec 8, 2008 4:36pm EST By Leah Schnurr NEW YORK (Reuters) Stocks rallied to their highest level in a month on Monday on optimism President-elect Barack Obama's proposed infrastructure spending could limit the depth of the year-old recession and on hopes for a government bailout of the three U.S. automakers. In a second straight day of big gains, the broad S&P 500 pushed into positive territory for the month, giving weight to a growing chorus of market pundits who believe the worst is past for stocks. The U.S. equities market has not posted a monthly gain since August, before the collapse of Lehman Brothers sent the credit crisis into overdrive. Read the rest of the article Labels: bailout, Barack Obama, financial crisis, stock market Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Business Schools, Models and the CrisisThis Financial Times article is particularly interesting because it highlights the role of business schools in transmitting the credibility of faulty models that contributed so much to the crash: a point that should be made more often.Bystanders to this financial crime were manyBy Nassim Nicholas Taleb and Pablo Triana Published: December 7 2008 19:18 | Last updated: December 7 2008 19:18 On March 13 1964, Catherine Genovese was murdered in the Queens borough of New York City. She was about to enter her apartment building at about 3am when she was stabbed and later raped by Winston Moseley. Moseley stole $50 from Genovese's wallet and left her to die in the hallway. Shocking as these details surely are, the lasting impact of the story may lie elsewhere. For plenty of people reportedly witnessed the attack, yet no one did much about it. Not one of the almost 40 neighbours who were said to have been aware of the incident left their apartments to go to Genovese's rescue. Not surprisingly, the Genovese case earned the interest of social psychologists, who developed the theory of the "bystander effect". This claimed to show how the apathy of the masses can prevent the salvation of a victim. Psychologists concluded that, for a variety of reasons, the larger the number of observing bystanders, the lower the chances that the crime may be averted. Read the rest of the articleLabels: economics education, financial crisis, Financial Times Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Obama Abandoning EFCA? Not yet.Longtime labor activist Steve Early wrote an op-ed in Sunday's Boston Globe questioning President-Elect Obama's commitment to the Employee Free Choice Act. Says Early: "Rahm Emanuel [Obama's soon-to-be chief of staff] has declined to say whether the White House will support the Employee Free Choice Act."[You may have read Early's article about EFCA in the Sept./Oct. 2008 issue of Dollars & Sense.] Many union activists believe EFCA will make it easier for workers to organize and to engage in collective bargaining. Ever since the election, left-liberal bloggers have been questioning whether Obama will make EFCA a priority, as he pledged during the campaign. Last week, the Huffington Post seemed to put those fears to rest. Sam Stein wrote on Dec. 3: Some have wondered whether Emanuel, with his warm feelings for the corporate world, might try to push Obama away from the labor movement. But according to the Communication Workers of America, Emanuel voted for EFCA in the House last year. So it looks like the Obama administration will support EFCA. But there's nothing wrong with the labor movement keeping the pressure on. Labels: Barack Obama, Employee Free Choice Act, Rahm Emanuel, Steve Early Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Closures & Layoffs, 11/30-12/6/08The latest of Mark Heschmeyer's weekly reports on corporate downsizing, from CoStar.This week's report, succinctly and aptly named "Sheeeeet!" focuses on the collapse of new housing construction, including its effects on sheetrock and wallboard manufacturers. Plus, layoffs at Citigroup, Chase Home Lending, Conagra, Electronic Arts, International Paper, and many other major U.S. corporations across the country. Read the full report. Heschmeyer also writes a weekly report on the real estate property and credit markets, which includes a list of property loans in danger of default. This week's issue begins: Words of wisdom that apply well beyond the real estate market, to be sure. Labels: closures and layoffs, Mark Heschmeyer, real estate market, recession Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Support the Chicago Sit-InAdd this to the list of ways the 1930s are making a comeback.Over the weekend hundreds of workers at Republic Windows & Doors in Chicago occupied their factory to demand the owner keep it open or, if not, that they receive the 75 days' notice of the shutdown required by state law (or the equivalent in severance pay) as well as accrued vacation pay. As the company's primary source of business credit, Bank of America is implicated as well. Common Dreams has the AP story on the sit-in; and check out Jobs with Justice's campaign to force bailout-recipient Bank of America to lend so the factory can stay open. If you want to go right to the top, you can call BoA CEO Kenneth Lewis at 704-386-5687. Labels: Bank of America, closures and layoffs, Jobs with Justice, labor, labor organizing Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). It's Official: Don't Blame the CRAFrom the Wall Street Journal (12/3/08):Federal Reserve governor Randall Kroszner, a conservative economist on leave from a teaching post at the University of Chicago Booth Graduate School of Business, says the Community Reinvestment Act isn't to blame for the subprime mess, despite some accusations to the contrary.Read the rest of the article. Labels: Community Reinvestment Act, Federal Reserve, financial crisis, mortgage meltdown, subprime crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Marxism and MoralityMany Leftists encounter difficulties navigating between the Scylla of dispassionate structural economic analysis and the Charybdis of moral outrage at the atrocities of capitalism. This New Statesman article (which includes a very apt quotation from Marx) shows how the two must be related in looking at the financialized capitalism of today. Here's the basic idea: "To slip towards crime, therefore, is to slip into an economic model in which wealth is no longer created in any real sense but only extracted from what already exists." A stimulating read.Ideas The triumph of greed Clive Dilnot New Statesman Published 04 December 2008 Tax evasion, tax avoidance, money laundering: institutionalised crime is so much part of the global economy. Then there is moral crime... The events of the past few months have shown with stark clarity that the financial models pursued in the sub-prime mortgage industry were so deeply flawed that they call into question the economics on which they were based. Yet to date there is precious little evidence of any fundamental rethinking taking place, either in the financial industry or by the economics profession, much of which still seems in denial about the gravity of the present crisis. With few exceptions, the argument from all sides--and from most in politics, too--seems to be for a return to business as usual as quickly as possible. But is continuity in how markets operate what we want? Or even what we can afford? Or are the costs of doing business this way--and the moral and social, as well as financial, costs--more than we should be asked to bear? Read the rest of the article Labels: financial crisis, Karl Marx Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Flat-Earthers To Square Environment Circle?This is wacky, indeed. Got it off Agence France Presse site. A tidbit:"..."an astonishing switch" by former climate sceptics and conservative lobby groups in the United States. After years of denial or contestation, these powerful forces have now suddenly accepted that global warming is a problem. They have seized on geo-engineering as a solution that would make it unnecessary to slap costly curbs on big polluters..." Climate change: Sci-fi solutions no longer in the margins by Richard Ingham Richard Ingham Sun Dec 7, 5:30 am ET Climate change: Sci-fi solutions no longer in the margins AFP/File POZNAN, Poland (AFP) With political efforts to tackle global warming advancing slower than a Greenland glacier, schemes for saving Earth's climate system that once were dismissed as crazy or dangerous are gaining in status. Negotiating a multilateral treaty on curbing greenhouse gases is being so outstripped by the scale of the problem that those promoting a deus ex-machina -- a technical fix that would at least gain time -- are getting a serious hearing. To the outsider, these ideas to manipulate the climate may look as if they are inspired by science fiction. They include sucking carbon dioxide (CO2) out of the air by sowing the oceans with iron dust that would spur the growth of surface plankton. The microscopic plants would gobble up CO2 as they grow, and when they die, their carbon remains would slowly sink to the bottom of the sea, effectively storing the carbon forever. Another idea, espoused by chemist Paul Crutzen, who won the 1995 Nobel Prize for his work on the ozone shield, is to scatter masses of sulphur dioxide particles in the stratosphere. Swathing the world at high altitude, these particles would reflect sunlight, lowering the temperature by a precious degree or thereabouts. Read the rest of the article Labels: climate change Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Ecofriendly ImperialismVery disturbing development, with tragically ironic twists like the following:"A number of companies are growing sugar cane in Tanzania, for example, to make bioethanol for European countries to meet European Union targets." From New Scientist. Rich countries carry out '21st century land grab' 04 December 2008 by Debora Mackenzie NewScientist HISTORY may be repeating itself. Until the mid-20th century, many European countries grew rich on the resources of their colonies. Now, countries including China, Kuwait and Sweden are snapping up vast tracts of agricultural land in poorer nations, especially in Africa, to grow biofuels and food for themselves. The land grabs have sparked accusations of neocolonialism and fears that the practice could worsen poverty. Yet some organisations think this could be a chance for poor countries to trade land and labour for the technology and investment vital for developing their own food and energy production. The rush for land was triggered by this year's food crisis and the European push for biofuels. The South Korean firm Daewoo made headlines last week when it sought a 99-year lease on 1.3 million hectares of Madagascar to grow maize and oil palm. The deal is far from unusual. Read the rest of the article Labels: environmental crisis, financial crisis, food crisis Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Yves Smith on Obama's Stimulus PlanAs someone looking for work himself, I've wondered about how I--at 47 years of age, and with no relevant experience--could possibly be employed on one of Obama's infrastructure projects. I'm also very concerned about the environmental collateral damage of some of this. Not to mention the magic-like quality of how these projects are supposed to leap out of a planning stage to fruition.Sunday, December 7, 2008 Obama's Public Works Plan: Trickle Up Economics? Folks, am just back from a quick turnaround trip to Vienna, which was educational and enjoyable (although I did not have the time to see a Van Gogh exhibition at the Albertina which reportedly has a large number of rarely-exhibited top quality works). Am on the verge of doing a face plant, so forgive me for being a bit terse. Given that US infrastructure looks third-world by European standards, Obama's plan to make it a focus of Federal stimulus/job creation spending sounds, at first blush, like a good idea. The money will be spent in areas that will improve productivity. But will this massive rebuilding be effective as stimulus? Keynes stressed the the importance of a quick action to combat a big fall in demand. As much as Obama says he will move the program along quickly, I cannot see how large-scale hiring could take place in anything less than a year from now. Moreover, many of the newly or soon to be unemployed will not be suitable for this sort of work. Read the rest of the post Labels: bailout, Barack Obama, financial crisis, infrastructure, jobs, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). De ProfundisI don't buy all of the enthusiasms of this New Statesman article, but it's nice to be optimistic for a change.Socialism's comeback Neil Clark New Statesman Published 04 December 2008 At the beginning of the century, the chances of socialism making a return looked close to zero. Yet now, all around Europe, the red flag is flying again "If socialism signifies a political and economic system in which the government controls a large part of the economy and redistributes wealth to produce social equality, then I think it is safe to say the likelihood of its making a comeback any time in the next generation is close to zero," wrote Francis Fukuyama, author of The End of History, in Time magazine in 2000. He should take a trip around Europe today. Make no mistake, socialism--pure, unadulterated socialism, an ideology that was taken for dead by liberal capitalists--is making a strong comeback. Across the continent, there is a definite trend in which long-established parties of the centre left that bought in to globalisation and neoliberalism are seeing their electoral dominance challenged by unequivocally socialist parties which have not. The parties in question offer policies which mark a clean break from the Thatcherist agenda that many of Europe's centre-left parties have embraced over the past 20 years. They advocate renationalisation of privatised state enterprises and a halt to further liberalisation of the public sector. They call for new wealth taxes to be imposed and for a radical redistribution of wealth. They defend the welfare state and the rights of all citizens to a decent pension and free health care. They strongly oppose war--and any further expansion of Nato. Most fundamentally of all, they challenge an economic system in which the interests of ordinary working people are subordinated to those of capital. Read the rest of the article Labels: financial crisis, New Statesman, socialism Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Conservative Nanny StateDean Baker's apt expression takes on a new significance with this obnoxious proposal by Britain's Tories, as related by The Observer:Tories to probe long-term jobless Out-of-work families face close scrutiny of their children and home life under new opposition proposals Gaby Hinsliff, political editor The Observer, Sunday December 7 2008 Parents who are out of work will have their home lives and their children's prospects investigated under controversial Tory plans to tackle underclass Britain. Households where no one has held down a regular job for generations should be viewed as a whole, the shadow Work and Pensions Secretary, Chris Grayling, argues today. A new breed of welfare-to-work advisers would be expected not only to find the parents jobs, but to ensure their children's life chances are not being damaged by the low aspirations of adults in the home. They could examine children's school performance or problem behaviour, check whether the parents encouraged homework and school attendance, and intervene if necessary to stop children risking future unemployment. Read the rest of the article Labels: Class, Dean Baker, financial crisis, The Observer Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Krugman Sees End of US Auto IndustryPaul Krugman, in Stockholm (here's a link to the live webcast of Monday's Nobel lecture, which is entitled "Increasing Returns"--hat tip to Brad De Long) to pick up his Nobel prize, is not impressed with the incipient plan to bail out US auto industry, Die Presse of Vienna (article in German) notes. Krugman believes the plan, as it stands now, will only buy the industry two months of time, and wouldn't tackle any of the serious structural problems afflicting the industry. A more constructive approach, according to Krugman, would focus on the macro level, and consist of counter-cyclical stimulus packages of the sort proposed by President-elect Obama and already implemented by the Swedish government, rather than attempting to save a doomed industry. Clearly, Krugman doesn't believe the collapse of the industry would itself have a devastating macroeconomic impact on the economy.Larry Peterson Labels: auto industry, bailout, Brad DeLong, financial crisis, Larry Peterson, Paul Krugman Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Who Rules GM?GM is famous for being one of the world's largest transnational industrial corporations, for laying off its U.S. factory workers before it lays off its cheaper labor in its factories outside the Untied States, for manufacturing tanks for both the German Army and the U.S. Army during World War II, and for being so mismanaged that it can't compete successfully with Japanese Establishment-owned automobile manufacturers. So what's good for General Motors is not necessarily what's good for most people in the United States.But as the GM web site reveals, in recent years GM's board of directors has included the following U.S. Establishment businesspeople: 1. Morgan Stanley, North Carolina Mutual Life Insurance, Cousins Properties and Erskine Bowles & Co. Director, Carousel Capital Senior Advisor, University of North Carolina President and former Clinton White House Chief of Staff Erskine Bowles. 2. Goldman Sachs Group Director, former Sara Lee Chairman/CEO and University of Chicago and Art Institute of Chicago Trustee John Bryan. 3. Merrill Lynch, Home Depot, AMR Director and Flagler Development CEO Armando Codina. 4.Coca Cola Chairman/CEO, former Sun Trust Banks Director and Center for Strategic International Studies and U.S. Council for International Business Trustee E. Neville Isdell. 5. Deutsche Bank Advisory Board Member and former Compaq Computer CEO Eckhard Pfeiffer. 6. BP and Union Pacific Director, former Alliance Energy Chairman/CEO, University System of Georgia Chancellor and University of Chicago and Carnegie Mellon University Trustee Erroll Davis Jr. 7. Harris Corporation, Home Depot, Catalyst Director, former Pfizer Vice-chairman, Pfizer Foundation Chairman, Essex Woodlands Health Ventures Senior Adviser and University of Chicago Trustee Karen Katen. 8. Former Northrup Grumman Chairman, Fluor, Avery Denison and Mannkind Director, MIT Lincoln Library Advisory Board Member, California Institute of Technology and Haynes Foundation Trustee Kent Kresa. 9. E.I. DuPont de Nemours Executive Vice-President and Tufts University Trustee Ellen Kullman. 10. Former Ernst & Young Chairman/CEO and Loew's, Discover Financial Services and Henry Schein Director Philip Laskawy. 11. Former GE Fleet Services CEO and Ceridian Chairman/CEO Kathryn Marinello. 12. Kohlberg Kravis Roberts Senior Advisor and former Eastman Kodak Chairman/CEO George Fisher. 13. Former Astra Zeneca PLC-UK Chairman Percy Barnevik. 14. Former GM de Brasil President, Duke University Trustee and Harvard Business School Dean's Advisory Board Member G. Richard Wagoner, Jr. Similarly, in the early 1990s, GM's board of directors included the following U.S. Establishment businesspeople: 1. Citibank/Citicorp, PepsiCo and Johnson & Johnson Director Roger Smith. 2. Chevron/Gulf Oil, Bechtel and Boeing Director George Shultz. 3. J.P. Morgan & Co./Morgan Guaranty Trust Director Dennis Weatherstone. 4. Citibank/Citicorp, AT & T, Metropolitan Life Insurance Director and Rockefeller Brothers Fund Trustee James Evans. 5. National Bank of Detroit/NBD Bancorp and American Airlines Director Charles Fisher III. 6. Merck & Co. and NCR Corp. Director John Horan. 7. Marriott Corp. Director J. Willard Marriott Jr. 8. Chase Manhattan Bank/Chase Manhattan Corp., International Paper Co., and Pfizer Inc. Director Edmund Pratt Jr. 9. J.P. Morgan & Co./Morgan Guaranty Trust and Procter & Gamble Director John Smale. 10. AT&T Director Thomas Wyman. So don't be surprised if the corporate folks who still rule the privately-owned and not yet-nationalized GM eventually get a big corporate welfare grant from the U.S. Establishment's federal government—-before GM's rulers once again start laying-off more of its U.S. factory workers in 2009 who are members of the UAW. --b.f. Labels: bailout, Bob Feldman, General Motors Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Foreclosures soar. Prime borrowers next?According to the latest report by the Mortgage Bankers Association (MBA), 1.35 million homes were in foreclosure in the third quarter of the year, a jump of 73% over a year earlier. Three percent of all homes are now in foreclosure, and another 7% of homeowners are behind on their payments.With 10% of homeowners now either in foreclosure or behind on their mortgages, unemployment spiking upwards and the recession deepening, the MBA predicts that the number of troubled mortgages will increase, including a larger share of Prime as well as Subprime mortgages. Labels: mortgage meltdown Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Banks and Low Interest RatesReuters on a conundrum banks face in hard times. Given the deleveraging and subsequent asst-writedowns the banks are still facing, this old problem makes the outlook for that sector even more dire.Falling rates renew old problem for U.S. banks Wed Dec 3, 2008 3:35pm EST Reuters By Jonathan Stempel - Analysis NEW YORK (Reuters) A plunge in U.S. interest rates to levels not seen since Dwight Eisenhower's presidency means troubled banks must cope with an old problem they thought they had licked. The yield fell below 2.7 percent this week for the first time since 1955 on the benchmark 10-year Treasury note. That happened after Federal Reserve Chairman Ben Bernanke said the central bank might buy longer-term Treasuries to help pull the economy out of a year-long recession. An improved economy could help banks by limiting credit losses from the housing slump and other consumer and commercial debt, as banks work to reduce risk on their balance sheets, or deleverage. Capital infusions from the Treasury Department's $700 billion bailout package could also ease rate pressures. Yet falling long-term rates make it harder for banks to boost lending margins--the difference between what a bank earns on loans, and pays on deposits and to borrow --and make money. Read the rest of the article Labels: bailout, banking system, financial crisis, Reuters Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Something Else To Worry AboutThe Financial Times' John Authurs on last week's other (besides the US jobs reports) big event affecting the markets:Long View: Eyes on the renminbi By John Authers Financial Times Friday Dec 5 2008 16:45 In a year when we have all grown used to extreme numbers, this week was book-ended by two shocking figures. Only one seems shocking at first to those outside the market. The news came on Friday that more than half a million jobs were lost in the US last month, the worst month in more than a quarter of a century. The week began with the news that the Chinese renminbi had depreciated by 0.73 per cent on Monday. This appears trivial by comparison, but generated almost as much concern as the news on US jobs later in the week. Why? Read the rest of the article Labels: China, currencies, financial crisis, Financial Times, John Authers Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Stock Market Surges on Bad News!This posting is from D&S collective member and frequent blogger Larry Peterson. To see more of his posts, click here.Many people may be a tad mystified about yesterday's US stockmarket movements. Markets opened with a predictable fall in response to the dreadful labor market data, falling some 3 per cent (with the S&P dropping near the 800 level yet again), but reversed course around midday. By 2 pm they'd crossed into positive territory, and then shot up dramatically within minutes, with the Dow leading the way (up about 3 percent by 2.30). Gains were consolidated after that, and the S&P closed up 3.7 per cent at 876. So, markets moved around 6 per cent yesterday, which would have been a major story only a few months back, but scarcely catches the eye today. Still, the rally was unique because, unlike other, similar late rallies on days dominated by bad news, it wasn't short-sellers forced to buy stocks they'd borrowed to short, but which actually gained in value, or bottom fishers looking for bargains, who provided much of the demand. So what was it? Today's print version of the Financial Times provides some good and bad answers to these questions. According to the story ("Blue Chips Stage Dramatic Recovery in Late Trading") the two o'clock surge was based on a UBS report that regulatory changes in the insurance industry could be announced at a state insurance regulator meeting this weekend. The changes would relax insurers' capital requirements, and could, according to the note, come as soon as next Tuesday. Insurance stocks rocketed at the news, with Hartford Financial Services gaining 102%--that's three figures, not a typo. Trading on all indices was light for the day, so gains like this were enough to explain the positive gains for the day. But what moved stocks out of deeply negative territory to begin with? Here the FT is of less help. It says the fact that the S&P didn't break the psychologically significant 800 floor itself provided a reason to buy. It quoted Randy Frederick of Charles Schwab: "There's a lot of things you can use to predict a bottom. One of them is when a market stops reacting to adversely to negative news." That's the best argument against the Efficient Markets Hypothesis--at least applied to stockmarkets--I've ever heard, anyway. Other factors, such as oil dropping another 6.3% in a single day (and at below $40 a barrel right now, it can't do this much more), have been bandied about as factors encouraging buying (presumably consumers will now start opening wallets rapidly filling up with pink slips and spending money saved on cheaper fuel). But it's hard to believe that even the most jaded traders can see a real bottom here. The outlook for the corporate profits they are tentatively buying rights to is just too horrific right now. This is basically money that has nowhere else to go--except under the mattress, perhaps. Labels: financial crisis, Financial Times, Larry Peterson, stock markets Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Black Male Jobless Rate: 11.9% in Nov.The official seasonally adjusted unemployment rate for Black male workers over 20 years of age increased from 11.6% to 11.9% between October 2008 and November 2008, according to the latest Bureau of Labor Statistics data.The official Black Youth unemployment rate for 16 to 19 year-olds remained at a Great Depression level of 32.3% in November 2008, while the official white youth unemployment rate for 16 to 19 year-olds also remained high at 18.4%. At least 533,000 more jobs were eliminated by U.S. employers between October 2008 and November 2008, according to the Bureau of Labor Statistics' December 2008 report on the November unemployment situation for U.S. workers. --b.f. Labels: Bob Feldman, financial crisis, recession, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). What Now?Hongkong and Singapore Bankcorp (HSBC) post-employment report policy outlook from Across the CurveNot for the faint of heart. More from HSBC On Fed and Economy December 5th, 2008 11:00 am US Economy - Change of forecasts; cutting growth and inflation; zero funds rate now expected on 16 December Please open the attachment to view the full document 5 December 2008 * Timing of zero Fed funds call now 16 December, was 2009 Q2 * 2009 GDP growth forecast cut to -0.7% from +0.2% * Core PCE inflation 2009 forecast cut to 1% from 1.3%, 2010 cut to 0.7% from 1.6% * 10-year Treasury rate target cut to 2.0% from 2.9% POLICY FIREWORKS SET TO INTENSIFY Fed Chairman Bernanke has signalled that unconventional policy options, including aggressive quantitative easing and yield curve manipulation, is about to intensify, and as such, we now expect the Fed to cut the Fed funds rate to zero percent at the 16 December meeting, giving it a freer hand to conduct aggressive balance sheet expansion. If we are right, the December statement may also signal that the Fed is prepared to keep short rates down for a considerable period. If we are wrong and the Fed cuts 50bp or 75bp instead, we then would still expect the funds rate to be cut to zero on 28 January 2009. Based on our forecast of an 8.8% unemployment rate by 2010 (up from 8.0% previously), we think the Fed will not have to raise rates until 2011 at the earliest. This, together with the Fed making aggressive purchases of Treasuries and mortgage backed securities at the long end, is likely to drive 10-year Treasury note yields to 2.0%, eventually taking the 30-year mortgage rate to about 4.0%. Generally, we have taken an axe (yet again) to our economic forecasts (see table). GDP is expected to decline 5% annualized in Q4 (was -3%), -2.2% in Q1 (was -0.8%), before recovering back into positive territory from the second quarter, as we assume a USD600bn Obama fiscal package begins to hit the economy. We don't know exactly how big the stimulus will be, but we know it will be large; probably USD600bn and some have talked about as much as a USD1trn package Labels: bailout, financial crisis, US economy, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Nov Job Losses 1/3 More Than ForecastedThis is an awful, awful number, comparable to the 602,000 lost in December, 1974 (and September's figure was revised upward to a gigantic 403,000 job losses). In addition, the jobless rate rose to 6.7%. Professional economists were way off on this one, and it remains to be seen how much investors will be shellshocked by the figures. This crisis is clearly set to get worse, and with the Fed almost certain to cut rates later in the month--perhaps to zero--the impact of unprecedented, if often halfhearted or even confused, policy interventions continues to recede behind its scope, speed of impact, and scale. Obama and his economic team--including many who failed spectacularly to deal with the Asian crisis of the late '90s (which eventually morphed into the dot.com and subprime crises)--will be in a desperate position well before they even take office.From Reuters: November job losses steepest since 1974 Fri Dec 5, 2008 8:54am EST Reuters WASHINGTON (Reuters) Employers axed payrolls by a shocking 533,000 in November for the weakest performance in 34 years, government data on Friday showed, as the recession inflicted a mounting toll on the U.S. labor market. The Labor Department said the unemployment rate rose to 6.7 percent last month in the highest reading since 1993, compared with 6.5 percent in October, after widespread losses across the country's major industry sectors. November's job losses were the steepest since December 1974, when 602,000 jobs were shed, and were much worse than forecast by analysts polled by Reuters who had predicted a reduction of 340,000 jobs. In addition, October's job losses were revised to show a cut of 320,000, previously reported as a 240,000 loss, while September's losses were revised to a loss of 403,000 from down 284,00. That meant 199,000 more jobs were lost in September and October than previously thought and the total reduction in U.S. nonfarm payrolls for last three months was 1.256 million, with almost 2 million shed in the year so far. Service-providing businesses alone shed 370,000 jobs in November, following a loss of 153,000 jobs the month before. The length of the workweek slipped to 33.5 hours, the shortest since records began in 1964, a Labor Department official said. (Reporting by Alister Bull, Editing by Neil Stempleman) Labels: bailout, financial crisis, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Crowding Out Bites BackMany economists, like James Galbraith here, have rightly dismissed arguments to the effect that deficit spending, especially in today's highly peculiar circumstances, will result in decreased (or "crowd out") domestic investment here in the US. But the Financial Times has an article today which features a complaint from Latin American former finance officials to the effect that such issuance, by hugely increasing the supply of safer debt backed by the US and developed country treasury departments, may well choke off the ability of poorer countries to issue debt. It's a concern that deserves to be heard.Economists warn on LatAm credit squeeze By Stephen Fidler in London Published: December 4 2008 18:07 | Last updated: December 4 2008 21:20 Huge volumes of US Treasury bonds issued as part of an effort to reverse an economic slump threaten to stop access to credit by Latin American governments facing financing needs of an estimated $250bn next year, a group of prominent economists from the region has warned. The risk that Latin American and other emerging market borrowers may be “crowded out” from credit markets by a US fiscal deficit that could exceed $1,000bn next year has not been much emphasised in the scramble to save the US economy. But the economists said “powerful and innovative” new mechanisms were required to deal with the threat in order to direct money back into the region. Read the rest of the article Labels: bailout, Emerging markets, financial crisis, James K. Galbraith, US Treasury Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Harvard's Endowment Taking Big HitOur contacts at Harvard's Faculty of Arts and Sciences (the division that includes Harvard College and the graduate school) told us that there is a pretty drastic hiring freeze because of losses to the university's endowment. Staff also received an email from the university's president, Drew Faust, in which (according to our sources) she said that Harvard may have to take out loans to cover operating expenses for the rest of the fiscal year. Departments have been told to cut back spending, including items that are part of this year's budget, and including taking steps like turning the lights off during the day when no one's around.The reason? Harvard's $36.9 billion endowment is down 22% this year, and could be down by 30% by the end of the fiscal year. And the reason for that seems to be that much of the endowment was invested in private equity (which accounts both for the losses and for the uncertainty about how much will be lost). More details in an article from today's New York Times business section: Harvard Endowment Loses 22%Read the rest of the article. Labels: financial crisis, Harvard University Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Financial Crisis Hits Immigration DebateFrom MRZine:The Financial Crisis Hits the Immigration Debate by David L. Wilson Part of the right wing routinely blames undocumented immigrants for just about everything. On September 24, nine days after the financial meltdown started in earnest, the National Review Web site carried an article by columnist and blogger Michelle Malkin blaming "illegals" for the crisis and the subsequent bailout of the banks. "The Mother of All Bailouts has many fathers," she wrote. "But there's one giant paternal elephant in the room that has slipped notice: how illegal immigration, crime-enabling banks, and open-borders Bush policies fueled the mortgage crisis." Malkin's pieces often read like parodies of conservative punditry, and there's something distinctly comical about the idea that a few undocumented homeowners caused a multi-trillion dollar financial crisis. Less than a month after Malkin's article was posted, the Wall Street Journal showed that in fact mortgages bought by out-of-status immigrants have performed rather well. But the Malkin diatribe is a useful indication of how the immigration debate is likely to change over the next months. Until this September, informed opinion was that whichever party won the November elections, Congress and the new president would move in 2009 to revive the "Comprehensive Immigration Reform" (CIR) package that was voted down in the summer of 2007. CIR (which started as the "McCain-Kennedy Bill" in 2005) would combine stepped-up enforcement, a limited program for legalization, and a greatly expanded guest worker program like the notorious "bracero" operation of 1942-1964. It is no longer clear whether Congress will proceed with CIR; the politicians may put immigration on the back burner as they try to deal with more pressing economic issues. The crisis has taken much of the urgency away from "immigration reform." Undocumented immigration had already begun to decline as the U.S. economy slowed in 2007, and the employer associations that pushed CIR for the sake of the guest worker provision may be losing interest: there will be less desire to import easily exploited workers from abroad as the crisis creates a pool of jobless workers here at home. Read the rest of the article. Labels: financial crisis, immigrants, immigration, MRZine, National Review Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Recalling Big Banks' Role in Telecom BustFrom Bob Feldman:As long-time readers of Dollars & Sense probably realize, some of the same Wall Street big banks whose financially reckless banking practices helped create the "Great Recession of 2008-2009" [or since the NBER just dated the start of the recession to 2007, and since it'll probably last past 2009, we should say "of 2007-2010"? —Eds.] also apparently played a role in creating the late 1990s telecom industry bust. For example, according to the 2004 book by Roger Lowenstein, Origins of the Crash: "Gary Winnick, the architect of Global Crossing, a transoceanic fiber developer, was the most brazen of the bandwidth barons and, indeed, operated on a grand scale reminiscent of the original robber barons... "Working from an opulent Beverly Hills headquarters, whose inner sanctum was modestly designed to resemble the Oval Office, Winnick borrowed billions... "...The telecoms had a prodigious appetite for loans; moreover, the boom coincided with the repeal of Glass-Steagall, which had separated underwriting from banking. Banks such as Chase Manhattan (soon to be J.P.Morgan Chase) were now thirsting to move into underwriting. With telecoms equally thirsting for cash, banks used loans as bait to get the inside track on underwriting assignments, the precise abuse that Glass-Steagall had been intended to prevent. As Julie Creswell later revealed in Fortune, Chase was a notorious offender. It not only cut its fees to worm its way into banking deals; it courted Winnick...by introducing him to David Rockefeller, Chase's former chairman...Rockefeller escorted Winnick...on a private tour of the Museum of Modern Art. By such means, Chase became Global's banker and, indeed, the telecom industry's commercial banker of choice. There is no evidence that the bank of David Rockefeller was overly concerned with whether demand for bandwidth was truly insatiable or—in the event it was not—with how its loans would be repaid...In 1999, Global showed earnings of $10 million—before, that is, Global's interest expense of $92 million. No banker—no genuine banker—would lend on the basis of such numbers, suggesting mightily that Chase and the rest were scrambling after fees—were, that is, risking their shareholders' capital in order to book short-term profits..." —b.f. Labels: banking system, Bob Feldman, Roger Lowenstein, telecom industry Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Service Sector Posts Biggest-Ever SlumpThis is very bad news. Since services constitute such a large part of the economy, this will almost certainly mean that aggregate output and employment will continue to fall at accelerating rates, and that we are not anywhere close to the depths of the crisis. Add to this similar declines in services registered in the likewise super-service weighted UK and the Eurozone, and the outlook for global revival becomes dire, indeed. The employment-related data mentioned here virtually ensure that Friday's employment report will be the worst yet since the crisis began. From Reuters:Reuters Private jobs and services slump show recession toll Wed Dec 3, 2008 10:58am EST 10:38am EST By Burton Frierson NEW YORK (Reuters) Private employers slashed an unexpectedly high 250,000 jobs in November, the most in seven years, while the service sector that powers most of the economy posted its worst slump on record. The reports on Wednesday were the latest signs that the job market is nowhere near a bottom as the U.S. recession enters its second year and the entire economy was still in a state of trauma after the worst financial crisis in a generation. "The severe damage to the service industry is another indication of the extraordinary force of this recession," said Pierre Ellis, senior economist at Decision Economics in New York. Read the rest of the article Labels: financial crisis, service industries, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Other SqueezeCredit isn't the only thing being squeezed these days. So is labor compensation. From today's International Herald Tribune:International Herald Tribune U.S. productivity rises by more than expected Bloomberg News Wednesday, December 3, 2008 WASHINGTON: U.S. worker efficiency rose more than forecast in the third quarter and labor costs increased less than anticipated, a report showed Wednesday, signaling company efforts to rebuild profits are paying off. Productivity, a measure of employee output per hour, rose at a 1.3 percent annual rate, compared with a 1.1 percent gain estimated last month, revised figures from the Labor Department showed. Labor costs climbed at a 2.8 percent rate, less than the 3.6 percent pace forecast. Companies reduced expenses as the economy contracted by reducing employee hours at the fastest pace in six years. The drop in raw-material prices combined with the smaller-than- expected increase in labor costs indicates companies are moving to shore up profits as the economy heads for what may be the longest recession in seven decades. "Businesses have been more proactive in their response to weakening growth, cutting labor quickly in response to weaker demand, as they attempt to preserve profitability," Aaron Smith, a senior economist at Moody's Economy.com in West Chester, Pennsylvania, said before the report. Read the rest of the article Labels: compensation, financial crisis, labor, productivity Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Bailouts, Not Competition, Spur Innovation!One of several truly surreal statements offered by US automakers in their increasingly desperate plea for a survival bailout from Congress yesterday. But Ford, anyway, retained a foothold in cutthroat capitalist rationality (and contradicted Henry Ford's own original strategy of paying his workers enough to purchase his cars) when it also said: "it was in talks with the United Auto Workers union with the goal of bringing its labour costs down to the same level as foreign rivals' US plants, which are not unionised." From today's Financial Times:US carmakers ask for $34bn By Bernard Simon in Toronto and John Reed in London Published: December 2 2008 19:59 | Last updated: December 3 2008 02:01 Detroit's beleaguered carmakers sought to present themselves as lean, innovative and environmentally aware as they appealed to Congress for up to $34bn in emergency loans on Tuesday. In a second appeal to Washington in a month, General Motors, Ford Motor and Chrysler set out plans to become more competitive, stressing attempts to transform themselves from high-cost behemoths focused on gas-guzzling sports-utility vehicles. Read the rest of the article Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). O. Drops Windfall Profits Tax for Oil, GasFrom our friends at the American Small Business League (of which we are members, believe it or not; it was partly because of having published this article):Obama Backs Down from Promise to Institute Windfall Profits Tax Petaluma, Calif. -- President-elect Barack Obama has removed any reference of his promise to implement a windfall profits tax on the oil and gas industry from the Obama-Biden Transition Team website, www.change.gov. During the course of the 2008 presidential election, the Obama campaign called for a windfall profits tax on the oil industry as a means of subsidizing a $1,000 "emergency" rebate for consumers struggling with surging gas prices. However www.change.gov, which houses the Obama-Biden transition agenda, was recently cleansed of any mention of such a tax. The promise was displayed prominently at the top of the "economy" section of Obama's campaign website. That same information was transferred to Obama's transition website, www.change.gov, when it was launched on Thursday, November 6th. However, the language regarding the windfall profits tax was removed on Saturday, November 8th in an unceremonious and abrupt manner. (Pre-change,here; post-change, here.) While on the campaign trail, Obama made provocative statements regarding the cost of energy and its respective negative impact on American families. On May 6, 2008, Obama stated, "It isn't right that oil companies are making record profits at a time when ordinary Americans are going into debt trying to pay rising energy costs. That's why we'll put a windfall profits tax on oil companies and use it to help Indiana families pay their heating and cooling bills and reduce energy costs." With the election behind him, President-elect Obama has failed to justify the removal of the windfall profits tax from his tax plan. The subtle and unexplained elimination of this issue from the Obama-Biden agenda should concern Americans from every background. The American Small Business League (ASBL) questions whether the sudden elimination of this issue is a further indication that large corporations are already demonstrating their ability to influence the Obama Administration. "This is not the only campaign promise the Obama-Biden Transition Team has removed from change.gov; I believe that President-elect Obama owes the American people an explanation as to why these campaign promises have been pulled from his agenda." American Small Business League President Lloyd Chapman said. "With that in mind, someone from the mainstream media needs to ask President-elect Obama why these policies have been dropped." Labels: American Small Business League, Barack Obama, oil, oil and gas industry, windfall profits tax Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Geithner & Kiss. Ass., ConclusionFrom Bob Feldman--the last part of his series on Treasury-Secretary-to-be Timothy Geithner.Treasury Secretary-Designate Geithner's Kissinger Associates Background--Conclusion Between 1986 and 1989, U.S. Treasury Secretary-Designate Timothy Geithner was employed at Henry Kissinger, Brent Scowcroft and Lawrence Eagleburger's Kissinger Associates influence-peddling firm, which also employed George W. Bush's former special envoy to Iraq, L. Paul Bremer, during the early 1990s. Commerce Secretary-Designate Bill Richardson, also is a former employee of Kissinger Associates. In its April 30, 1989 article by Jeff Gerth and Sara Bartlett, titled "Kissinger And Friends And Revolving Doors," the New York Times observed that at the same time Henry Kissinger operated his Kissinger Associates influence-peddling operation, Treasury Secretary-Designate Geithner's former business colleage also "had a continuous window into the government's most sensitive information as a member of the President's Foreign Intelligence Advisory Board or Pfiab." According to the Times, the President's Foreign Intelligence Advisory Board was "a little-known but powerful group" of 16 scientists, business executives and former U.S. government officials which advises the U.S. President about intelligence issues and intelligence activities. At least one former Pfiab official, "who asked not to be identified because of the board's secrecy pledge," told the Times in 1989 that Henry Kissinger, "using his authority as a board member, frequently reviewed intelligence documents outside the regular board meetings." The former Pfiab official also told the Times that he believed that Kissinger's Pfiab membership gave Kissinger special business benefit because Kissinger "could not have separated the insights gained from his access to United States intelligence data from his continuing analysis and advice" to his Kissinger Associates clients--during the period when Treasury Secretary-Designate Geithner was employed at Kissinger Associates. In the year prior to taking office in the Bush I Administration, former Deputy Secretary of State Lawrence Eagleburger earned $674,000 from his work for Kissinger Associates and an affiliated Kent Associates firm (which paid $214,000 of the total Eagleburger earned from his `consulting' work for special, private corporate clients). After posing the rhetorical question "What exactly do they do for that much money?" the Times concluded in its April 30, 1989 "Kissinger And Friends And Revolving Doors" article that "little is known about what Kissinger Associates does for its clients." The Times also reported in 1989 that "When the Senate Foreign Relations Committee tried to elicit more information" on Kissinger Associates activities at his confirmation hearing, Eagleburger "was adamant in his refusal to discuss any details" with the Senate Foreign Relations Committee. Former Deputy Secretary of State Eagleburger did promise, however, "to disqualify himself for one year from matters involving his clients at Kissinger Associates," according to the Times. Given Treasury Secretary-Designate Geithner's past association with Kissinger Associates during the same period that Eagleburger worked for the firm, perhaps Geithner should, like Eagleburger, also agree to disqualify himself for one year from matters involving Kissinger Associates clients, especially since banks (like the Midland Bank of Britain) have been among the clients of Kissinger Associates, historically? And, as a member of the House Banking Committee in the early 1990s, former Representative Henry Gonzalez of Texas, wrote me in a July 16, 1991 letter: "For your information, the House Banking Committee's on-going investigation into the Banca Nazionale del Lavoro (BNI) scandal has revealed some new evidence of potential conflicts of interest involving National Security Director Brent Scowcroft, Henry Kissinger and Kissinger Associates. "Upon learning of this fact, I have asked President Bush, in a letter dated May 2, 1991, to review Mr. Scowcroft's stock portfolio to ensure any potential conflicts are eliminated. "I was deeply concerned about Mr. Scrowcroft's stock holdings, especially since he is in a position to strongly influence our national security and foreign policies. "Rest assured, I am following this matter with careful attention, and will continue to monitor Mr. Kissinger and Kissinger Associates to ensure they do not practice improper influence over U.S. foreign policy." (end of article) Labels: Bob Feldman, Kissinger Associates, Timothy Geither, Treasury Department Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Geithner & Kiss. Ass., Pt. 3The third part of Bob Feldman's article on Geithner's Kiss.-Ass. connections.Treasury Secretary-Designate Geithner's Kissinger Associates Connection—Part 3 Between 1986 and 1989, U.S. Treasury Secretary-Designate Timothy Geithner was employed at Henry Kissinger, Brent Scowcroft and Lawrence Eagleburger's Kissinger Associates influence-peddling firm, which also employed George W. Bush's former special envoy to Iraq, L. Paul Bremer, during the early 1990s. Commerce Secretary-Designate Bill Richardson also is a former employee of Kissinger Associates. Geithner's former associate at Kissinger Associates, Henry Kissinger, was not too pleased when some New York Times reporters in the late 1980s decided to write an investigative article about Kissinger Associates' clients and their past links to former Deputy Secretary of State Lawrence Eagleburger, who was the Kissinger Associates president before he moved into his State Department office in 1989. On April 14, 1989, for example, the Wall Street Journal reported that Henry Kissinger was "annoyed" at the Times for its "investigation of Kissinger Associates' clients" and was "threatening a lawsuit against the paper for harassing clients." The results of this New York Times investigation of Kissinger Associates were published on April 30, 1989, in an article titled "Kissinger And Friends And Revolving Doors" by Jeff Gerth and Sarah Bartlett. The article noted that, initially, another former Kissinger Associates colleague of Geithner, former National Security Affairs Adviser Brent Scowcroft, "told the White House he was merely a consultant to Kissinger Inc." and only "later amended his financial disclosure statement to reflect his position as vice-chairman." According to the 1989 New York Times article, Scowcroft also "told the White House he had to disclose only the name of Kissinger Associates, not the specific clients he worked with, because he was merely a consultant to the firm." Scowcroft only amended the financial disclosure statement he had filed on February 21, 1989 (to indicate that he was actually the former Kissinger Associates vice-chairman) on March 17, 1989, "one day after a reporter asked him why he had not reported" his true Kissinger Associates post on his original financial disclosure form. On his public disclosure form, according to the 1989 New York Times article, Treasury Secretary-Designate Geithner's former colleague, Scowcroft, indicated that he would "disqualify himself from specific matters involving companies he" held "stock in and former clients such as Kissinger Associates, but not from matters involving the firm's clients." The New York Times also reported in 1989 that "among those willing to pay $200,000 or more to be clients of Kissinger Associates are ITT, American Express, Anheuser-Busch, Coca Cola, H.J. Heinz, Fiat, Volvo, LM Ericsson, Daewoo and Midland Bank." The "Kissinger And Friends And Revolving Doors" article also reported in April 1989 that Treasury Secretary-Designate Geithner's former colleague, Scowcroft, "belatedly disclosed that he held stock in Kissinger Associates and, according to Mr. Kissinger and public documents, he arranged last month to have Mr. Kissinger buy it back for nine times its estimated worth"; and that Scowcroft's Kissinger Associates salary had exceeded $293,000 per year during the time that Geithner was employed by Kissinger Associates. (end of part 3) --bf Labels: Bob Feldman, Kissinger Associates, Timothy Geither, Treasury Department Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Meredith Whitney: $2 trn credit lines to be cut?From Reuters. This is especially disturbing, inasmuch as the Obama administration, in the words of Analole Kaletsky, decided last week that "the Fed could refinance essentially the whole of the US mortgage and consumer credit market..."Credit card industry may cut $2 trillion of lines: analyst Mon Dec 1, 2008 6:29am EST Reuters (Reuters) The U.S. credit card industry may pull back well over $2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banking analyst Meredith Whitney said. The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted. "In other words, we expect available consumer liquidity in the form or credit-card lines to decline by 45 percent." Bank of America Corp, Citigroup Inc and JPMorgan Chase & Co represent over half of the estimated U.S. card outstandings as of September 30, and each company has discussed reducing card exposure or slowing growth, Whitney said. A consolidated U.S. lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Whitney said. Mortgages and credit cards are now dominated by five players who are all pulling back liquidity, making reductions in consumer liquidity seem unavoidable, she said. "...We are now beginning to see evidence of broad-based declines in overall consumer liquidity." "In a country that offers hundreds of cereal and soda pop choices, the banking industry has become one that offers very few choices," Whitney wrote in a note dated November 30. She also said credit lines to consumers through home equity and credit cards had been cut back from the second-quarter levels. "Pulling credit when job losses are increasing by over 50 percent year-over-year in most key states is a dangerous and unprecedented combination, in our view," the analyst said. (Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott) Labels: bailout, Credit card industry, financial crisis, JP Morgan Chase, Meredith Whitney, Reuters Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
- Home
- Subscribe
- Magazine archive
- D&S books
- About D&S
- For instructors
- Get involved
- D&S blog
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- March 2006
- February 2006
- January 2006
29 Winter Street, Boston, MA 02108 USA
T:(617)447-2177
F:(617)447-2179
.
Copyright © 2010 Economic Affairs Bureau, Inc.