Category: Economy

If you’re at all familiar with Michael Fox (the columnist, not the actor), and you’re trying to decide if the current economic crisis is a recession or a full blown depression, he certainly makes it hard to be optimistic.  Back in November, Mr. Fox reported that the New Depression had already begun.  In February, he reported that it had entered Phase Two, and that it had gone global.

This morning, Treasury Secretary Henry Paulson formally announced his grand scheme to use America’s economic mess to consolidate power in the hands of the few, the economic pillagers at the Federal Reserve.

Under the guise of “increasing” regulation, Paulson’s scheme seeks to abolish the last vestiges of New Deal oversight on the U.S. economy and complete the deregulation of Wall Street. Paulson proposes nothing less than economic shock therapy to the U.S. financial sector. As The Guardian notes in its coverage of Paulson: “Big banks saw little to fear in the blueprint.”

cross posted from The Dream Antilles



Argentinian Farmers Protest

Argentinian farmers, whose strike for more than two weeks has crippled the country, have agreed temporarily to break off their strike, to negotiate with the government.  Details via the BBC:

 Farmers in Argentina have suspended a crippling strike called in protest at rises in export taxes on farm products.

A farmers’ spokesman said the 16-day protest – which included roadblocks and caused food shortages – had been halted to allow talks with the government.

Argentine President Cristina Fernandez de Kirchner had refused to negotiate with the until the action was stopped.

She says the taxes will redistribute wealth, but farmers say they and their communities will be hit hard.

Does any of this matter to the US, and if it does, where is the reportage about this strike in the traditional media?

Join me in BA.

From The New York Times: White House to Seek New U.S. Power to Keep Markets Stable

The Bush administration will propose on Monday that Congress give the Federal Reserve broad authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the country’s hodge-podge of regulatory agencies, which many specialists say failed to recognize rampant excesses in mortgage lending until after they triggered what is now the worst financial calamity in decades.

I think this is precisely what Naomi Klein warned about in her book, The Shock Doctrine. I suspect the Bush administration is going to try to use the shock of the collapsing economy to quickly deregulate the entire economy to make it easier to loot.

I know that our fine, upstanding, Corporation assisting Bush Administration is assuring us that this whole credit / housing market mess is just a “blip” on the US economic screen, and that all the “indicators” still project a strong economy, but Americans just don’t seem to be feeling it.

From CNN:

When she was laid off in February, Patricia Guerrero was making $70,000 a year. Weeks later, with bills piling up and in need of food for her family, this middle-class mother did something she never thought she would do: She went to a food bank.

    Cross-posted on Orange

Today I learned the news. The world already has a food crisis, an enormous problem, possible social upheavals, perhaps even  a “perfect storm.” Add that to your gas tank!

I’d heard bits about grain prices for a while, been shocked at prices of bread, eggs, flour and cheese–even soup! Silly me, I thought I could stock upon a few items and make do. Just about everything is going up and not just a little. I try not to panic but it’s not easy living on a small fixed income since I rather like to eat.

Frightening implications abound for the poorest of the poor the world over as a new UN Report makes clear. There’s a lot happening that we do not hear about from our pathetic media. Just as one woman says she knew she was poor, but “this is worse than poverty,” a UN official says watch for the “new face of hunger.”

Follow below for a little tour, a tiny glimpse of what’s going on, if you dare, if you care.

I was doing my usual perusing of the foreign newspaper and media websites (this is how I get the real news without that well known BushCo bias) and I came across an article at BBC.co.uk that caught my attention.

The credit crunch has hit the US economy hard. From Wall Street to Main Street, loans that looked rock-solid a year ago now look shaky.

And the US central bank, the Federal Reserve, is throwing away the rule book to contain the effects.

  My emphasis.

That is a pretty strong statement.  The Federal Reserve is Throwing Away The Rule Book to contain the effects.

There is more.

In a recent EENR entry I posted about Paul Krugman’s blog entry regarding the real reason regulators have failed to reign in the excesses of Wall Street.  Essentially, the failure was deliberate — an effort to systematically remove any and all regulation.  I guess causing one Great Depression wasn’t enough to wake up the laissez-faire assholes into realizing that the days of unrestricted greed should have remained dead and buried; they’ve been working like hell to create another while making their money, and they appear to have succeeded.

But I digress.  In today’s New York Times column, Professor Krugman expands upon this failure to reign in Wall Street by bringing the discussion to the presidential election.

Suggestions to organise a massive bailout of the banks are being floated by central bankers this week-end:

Central banks float rescue ideas

Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.

Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.

There are more details in that article (including about disagreements between the Fed and the ECB on when the package should be put in place), but two things stand out:

1) the financial crisis is now acknowledged as bad enough to require public intervention;

2) that intervention will require significant injection of public money in bank’s balance sheets.

I thought that with all the discussion regarding the US economy recently, and after the Bear Stearns fire sale to J.P. Morgan, it might be a good time to look at what is going on in America, overall.

Now, remember!  Presnit Bush sez that we are in a bit of a rough patch, but that all the leading indicators show a robust economy!  Or somes such drivel.

Unemployment Claims Surge In Latest Week

New filings for unemployment claims rose more than expected last week, matching the highest level since 2005, according to a report released Thursday by the Labor Department.

According to the report, 378,000 people filed for unemployment for the first time in the week ended March 15, up 22,000 from a revised 356,000 reported in the previous week.

The 378,000 reading, which is subject to revision, matched the number reported for the week ended Jan. 26. New jobless claims last exceeded that number on Oct. 1, 2005 when they hit 385,000.

A consensus of economists polled by Briefing.com had expected to see initial jobless claims to rise by 4,000 to 360,000.

The level of new jobless claims can be used as a recession indicator. “I think it confirms that we’re in a recession, or at least in a period of negative growth,” said Ethan Harris, chief U.S. economist for Lehman Brothers.

Have you ever noticed that since the Bush administration has come into office (Thanks again, SCOTUS!) that when a number is adjusted, it is always worse than when first reported?  Coincidence, I’m sure.

“Economically, we depend much more on China than they do on us,” French Foreign Minister Bernard Kouchner said on Wednesday. “It is an essential partner for pretty much every country in the world.

“When you conduct foreign relations with countries as important as China, obviously when you take economic decisions, sometimes it’s at the expense of human rights,” he told France’s BFM television.

link: http://www.reuters.com/article…

Just a short note to everyone regarding the buyout of Bear Stearns by the American government, er, J.P. Morgan.  

Yes, I know you heard that J.P. Morgan bought them for approximately $2.00 per share.  The stock for this company was trading one year ago today at $159.36 per share.

The stock was trading for $62.00 one week ago today.

The stock opened today at $3.20 per share. That is at an upside to the discounted price that J.P. Morgan paid.  J.P. Morgan was guaranteed the money to purchase Bear Stearns by the US Fed.  Guaranteed. The. Money. By the US Government.