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Lurching Toward Gomorrah: More Signs of An Unstoppable Economic Meltdown
by Stephen Lendman
Crisis denialists are still around but are slowly and grudgingly giving way to the reality that global capitalism is in serious crisis as recession lurches toward depression in a continuing downward spiral.
Nearly every new data release confirm it. On November 19, housing starts and permits hit record lows, according to the Commerce Department. At an annual 791,000 rate last month, they were the lowest they've been since number tracking began in 1959 and are down 4.5% from a revised 828,000 September reading.
Building permits were also worrisome at an annual 708,000 rate (down from 805,000 in September), breaking the previous 709,000 March 1975 low figure.
Citizens’ Economic Stimulus Plan: Stop Paying Credit Card Debt
by Richard C. Cook
Now to the Wall Street bailouts, the plan for the government to purchase preferred shares in banks, and the takeovers of Fannie Mae, Freddie Mac, and AIG, may be added the intention announced last night that the government will throw another $20 billion at Citibank, the nation’s largest financial institution.
The announcement came after Citibank’s stock fell 60 percent last week to $3.77 a share. Of course it won’t help the 50,000 people Citibank is laying off, but, what the hey, no plan is perfect.
The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News.
That sum represents almost 60 percent of the nation's estimated gross domestic product.
That is what Bloomberg reports has been committed on behalf of the American taxpayer to bailout America’s finance system. This includes spending by the Treasury, Federal Reserve and FDIC.
- The amount is equal to half the value of everything produced in the United States last year.
- It is $24,000 for every man, woman and child in America, that is nearly $100,000 for a family of four.
- It's nine times what the U.S. has spent so far on wars in Iraq and Afghanistan.
- It is enough money to pay off more than half the country's mortgages, but bankruptcies have continued despite the bailout.
We're now at about $8.4 trillion. Of that amount, Congress approved $0.7 trillion and required minimal oversight which it did not get. Meanwhile everybody's chattering about the car makers' request for $0.025 trillion. Who the hell cares about that at this point? What we should be doing is researching what the next word is after a million and a billion and a trillion ... What comes next? And what's the one after that? Then we could start calculating the interest so we properly inform our grandchildren in our suicide notes.
UPDATE: We're not guaranteed to be at $9 trillion tomorrow, but we were at $7 trillion yesterday and $4 trillion a few days before that. Get it?
By Dave Lindorff
I was listening to Robert Reich, once the left end of the spectrum in the Clinton cabinet, talking with CNN’s Wolf Blitzer a few days ago, and Reich, who has in the past sometimes made sense, was talking about how Americans’ incomes had fallen over the last eight years of the Bush/Cheney administration and that it was necessary to get their incomes back on an upward trend, so that they could “start shopping again.”
Now I understand Reich was trying to make the case that the bailout so far has been focused on the banks and the insurance industry, and that none of this will help unless ordinary people start getting some relief, but still, there’s something completely twisted and out of whack when the best we can come up with is that we need to get Americans back into the malls.
In fact, that is a good part of what’s wrong with the US economy: Fully 75 percent of GDP in America is consumer spending.
According to the Wall Street Journal: "The White House wants Congress to rewrite a $25 billion fund for retooling plants to make more energy-efficient vehicles to allow the auto makers to tap it for bailout money—if they can show long-term viability. The auto makers and some of their Democratic supporters prefer a quick infusion of emergency cash from the $700 billion financial-rescue fund that troubled Citigroup was allowed to use."
[COULDN'T THEY HAVE GIVEN ABOUT $20,000 TO EVERY MAN WOMAN AND CHILD INSTEAD? -DS]
By Mark Pittman and Bob Ivry, Bloomberg
Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
General Motors (GM) plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.
According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."
"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.
By Dave Lindorff
The ongoing and deepening global economic crisis, to which Barack Obama owes his presidential election victory, is no small thing, to be sure. It also presents us on the left with a lot of openings to press for progressive change.
The G20 Economic Summit Won’t Change This Dirty Diaper
Remarks by Richard C. Cook | George Mason University, Fairfax, Virginia | November 15, 2008
The G20 is meeting today in Washington, D.C., to discuss the world financial crisis, its causes, and what can be done about it. But this won’t help the people of the U.S. who have been victimized by their own financial system.
The stated objectives are to find ways to stabilize and reduce speculation in the financial markets and make financial transactions more transparent, more efficient, and more international in scope. But this is also a revolt by the nations of the world against over-reliance on the U.S. dollar as the world’s reserve currency. What we are likely to see over time is a multi-currency regime that includes the Euro and one or more Asian currencies as well.
Citing Administration’s Failure and Unwillingness to use funds to Prevent Foreclosures, as Congress Intended
Washington D.C. (November 17, 2008) – Representative Dennis Kucinich (D-OH) today sent a letter to Representative Barney Frank, Chairman of the House Financial Services Committee, recommending that Congress inform the White House that it will not authorize the second $350 billion tranche of the bailout funds to the Treasury Department. The Financial Services Committee is scheduled to hold a hearing tomorrow examining oversight of the implementation of the bailout and of government lending and insurance facilities.
By Muriel Kane, Raw Story
Sen. James Inhofe (R-OK) is making waves by criticizing Treasury Secretary Paulson's handling of the bailout and saying that Congress should take back whatever is left of the $700 billion "blank check" it issued to the Bush administration in October.
In a letter posted on his website, Inhofe told his Senate colleagues that he intends to push for immediate legislation that would require Congressional authorization for any further payouts.
People Need to Organize to Break the Bailout and Demand the Economy We Want
By Kevin Zeese
October saw an increase in bankruptcies -- 108,595, an average of 4,936 every business day.
President Bush hosted the G-20 summit –the official menu included fruitwood-smoked quail, thyme-roasted rack of lamb and baked Vermont brie with walnut crostini, along with three wines . . .
More than a quarter million U.S. households received a foreclosure filing in October. A total of 279,561 properties got a default notice, were warned of a pending auction or were foreclosed.
World leaders washed down their quail and lamb with three expensive wines – one Shafer Cabernet “Hillside Select” 2003 sells at $499 a bottle.
Have these leaders ever heard of Maria Antoinette and the French Revolution?
Worse Than the Great Depression?
by Stephen Lendman
It's a minority but growing view, including from 86-year old former Goldman Sachs chairman, John Whitehead, at the November 12 Reuters Global Finance Summit in New York. As disturbing evidence mounts, he said: "I think it would be worse than the depression. We're talking about reducing the credit of the United States of America, which is the backbone of the economic system. I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America.
Hear Stephen Lendman interview David Swanson today 11AM - 1PM US Central time during the The Global Research News Hour on RepublicBroadcasting.org.
Global Economic Tremors
by Stephen Lendman
On October 28, the Financial Times' columnist Martin Wolf wrote: "Preventing a global slump must be the priority." He cited Nouriel Roubini back in February listing "twelve steps to financial disaster," all of which the US took and dragged the whole world down with it.
Priority one is to rescue it and avoid a possible depression. "Given the near-disintegration of the western world's banking system, the flight to safe assets, the tightening of credit to the real economy, collapsing equity prices, turmoil on currency markets, continued steep declines in house prices, rapid withdrawal of funds from hedge funds and ongoing collapse of the so-called "shadow banking system." More worrisome is that "next year could be far worse" so what does Wolf think should be done?
Subcommittee Demands Testimony from Treasury Official on Use of Bailout Funds; “Serious Questions” for Mr. Kashkari
Washington D.C. (November 11, 2008) – The leading Democrat and Republican of a House Oversight Subcommittee insisted on the testimony of a top Treasury official today. Congressman Dennis Kucinich (D-OH) and Congressman Darrell Issa (R-CA) sent a letter to Secretary Paulson insisting that Mr. Neel Kashkari, the Interim Assistant Secretary of the Treasury for Financial Stability, testify before a hearing of the Domestic Policy Subcommittee on Friday, November 14, 2008. Congressman Kucinich is the Chairman of the Domestic Policy Subcommittee and Congressman Issa is the Ranking Minority Member.
“There are serious questions about Treasury Department’s plans to realize the goals of the Emergency Economic Stabilization Act of 2008 that can only be addressed by the official in charge,” Kucinich and Issa wrote in the letter.
By Dave Lindorff
The one thing we are not hearing from Congress or from incoming president Barack Obama in the current economic crisis facing the country are the words “anti-trust” and “public ownership.”
From the moment the crisis first struck, with the near collapse of AIG, the mantra has been that companies like AIG, Morgan Stanley, Merrill Lynch, Citibank, etc.--and more recently General Motors Corp. and Ford--are “too big to fail.” That is, it is argued that these companies are so huge that if they were to collapse into the rubble they deserve to be, it would damage the nation irreparably.
The question is, if that is genuinely the case, why were they allowed to be that big in the first place, and why aren’t we rethinking that policy?
Fed Defies Transparency Aim in Refusal to Disclose
By Mark Pittman, Bob Ivry and Alison Fitzgerald
Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn't require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.
With attention on bailout debate, Treasury made change to tax law
By Amit R. Paley, The Washington Post
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
An Open Letter Regarding the Upcoming G-20 Meeting in Washington, D.C.
From Dennis Kucinich:
WASHINGTON, D.C. (November 6, 2008) — On Friday, November 14, 2008, at 10:00 a.m. in Rayburn House Office Building, Room 2154, the Subcommittee will hold a hearing entitled, “Is Treasury Using Bailout Funds to Increase Foreclosure Prevention, as Congress Intended?” This will be the Subcommittee’s sixth hearing in the 110th Congress examining the foreclosure crisis and its solutions.
The End of Prosperity
by Stephen Lendman
From too much of a good thing. From the 1980s and 1990s excesses. From the longest ever US bull market. Heavily manipulated to keep it levitating. From August 1982 to January 2000. An illusory reprieve from October 2002 to October 2007. Fluctuations aside, all lost in the past 12 months. The wages of sin are now due, and payment is being painfully extracted. From all nations globally. Affecting ordinary people the most who had nothing to do with creating booms and busts. They got little on the upside but are paying dearly for the down.
The measure of a person's greatness and success lies not in the office to which that person is elected but in the person's ability to be true to the electorate once in office.
Anyone can sell their soul to buy a presidency or a dictatorship. It takes real power and courage to stand up to the forces that control most members of government. It takes true greatness to stand with the people against power-buyers.
The current financial crisis is a great opportunity to teach peace. Wars may be about land, or energy, or power, but they require vast expenditures of money.
Americans are beginning to see the Teach Peace bailout grand theft warning is accurate. A JPMorgan Chase executive has confirmed the bailout funds are not to help homeowners but to consolidate power in anticipation of what could become a depression. The banks listed below are using taxpayer funds to buy smaller banks.
More from the Front Lines of the Financial Crisis
by Stephen Lendman
In its latest economic outlook, Merrill Lynch economists "worry about inflation, or more precisely," a lack of it. From crashing global equity markets, falling commodity prices, rising unemployment, stagnant wages, over-indebted households, declining production, the continuing housing crisis, and more. All pointing to several future quarters of negative growth. Showing that Fed chairman Bernanke will face "his greatest fear: deflation." An analysis of the coincident to lagging indicators signals "deep recession."
In his October 24, commentary, Merrill's North American economist David Rosenberg sees "economic data deteriorating in a very serious way (and says) we are witnessing unprecedented stuff happen:"
- the two-year housing recession "is still far from over" with new lows in a number of key readings;
- it's "morphed into a capex recession, industrial production" had its worst decline in 34 years;
- consumer confidence showed record declines;
- retail sales keep falling; evidence is that auto and chain store sales will show four straight down months; it's happened only four other times since 1947, so "we're living through a 1-in-200 event;"
- based on CPI data, prices are falling; at a rapid pace also seen only four other times since 1947;
By William Greider, The Nation
The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.
William Greider: United Steelworkers Union prez Leo Gerard cracks open the sweetheart deal that bailed out nine banks--and likely lined the Treasury Secretary's own pockets--with billions of taxpayer dollars. Does anybody care?