SEC Gets Black Eye Over Madoff Scandal The Kansas City Star
The Bernard Madoff scandal is not only another blow to trust
and confidence on Wall Street, but another knock on the reputation of the Securities and Exchange Commission — supposedly
the cop on the financial-markets beat.
Earlier this year, SEC Chairman Christopher Cox famously said Bear Stearns was in reasonably good shape three
days before the firm went belly-up.
Now Cox has blasted his career regulators for failing to unearth the alleged $50 billion Ponzi scheme that Madoff
is accused of running with his investment firm, Bernard L. Madoff Investment Securities LLC.
Remarkably, the Madoff operation had been subjected to several SEC inquiries over the years, most recently in
But Cox, in a blistering rebuke of his own staffers, says they never sought a formal commission-endorsed investigation,
which — given the SEC's power of subpoena — would have forced Madoff to produce critical information about his
Officials say Madoff kept more than one set of books.
Unions are as American as Apple Pie and Baseball...
Sen. Ensign and the GOP like Apple Pie and Baseball, but hate the Unions, and say there will be NO bailout unless labor costs
are slashed and Union is busted.
Ensign said the GOP does NOT care if the 3 million jobs
are lost and the American Auto Industry disappears, what matters is our ideology against organized labor and the middle class.
Sen. John Ensign led the GOP efforts to block the bailout
bill from passing in the Senate, vowing to personally halt the $15 billion plan unless it is altered to require GM, Ford and
Chrysler to change their ways and bust the Unions.
As Ensign sees it, the root of the problem with the
Big Three lies in the labor contracts that prevent the companies from being competitive with the foreign companies that build
cars in the United States with nonunion labor.
A letter to my bank:
In view of what seems to be happening internationally withbanks at the moment, I was wondering if you could advise me.
If one of my checks is returned marked "Insufficient Funds," how do I know whether that refers to me or to you?
Bush Administration Created Executive Pay Loophole Filed by John Byrne
The Bush Administration inserted an eleventh-hour provision into the
$750 billion bailout bill to protect executive bonuses, a single sentence that will torpedo efforts to reduce bonuses even
as companies slash tens of thousands of jobs and use taxpayer money to gobble up other companies at fire-sale prices.
Pressured by constituents who worried that companies would take government aid and continue to pay their executives eye-popping
bonuses, Congress inserted a provision that would penalize companies who took taxpayer money and shelled out outsized bonuses.
But at the last minute, Bush officials insisted on a one-sentence provision that stopped the measure in its tracks, according
to congressional aides who spoke to the Washington Post.
The change stipulated that the sanction would only apply to firms that sold mortgage backed securities to the government
at auction, which the Bush Treasury Department said would be the method they'd use to infuse troubled companies with bailout
"Now, however, the small change looks more like a giant loophole, according to lawmakers and legal experts" who spoke to
Post reporter Amit Paley. "In a reversal, the Bush administration has not used auctions for any of the $335 billion committed
so far from the rescue package, nor does it plan to use them in the future. Lawmakers and legal experts say the change has
effectively repealed the only enforcement mechanism in the law dealing with lavish pay for top executives."
"The flimsy executive-compensation restrictions in the original bill are now all but gone," Sen. Charles Grassley, a Republican
from Iowa and ranking member of the Senate Finance Committee, told Paley.
Job Market is Awful, Sharp Jump in Unemployment Shows the Economy is Rapidly Weakening By John
Friday’s report showing the biggest monthly job loss in 34 years
confirmed forecasters' worst fears that the decline in the U.S. economy accelerated in November, after the financial system
seized up and consumers hunkered down. As the government scrambles to break the downward spiral, some economists are predicting
the unemployment rate is headed substantially higher through next year.
Since the start of the recession in December 2007, the economy has lost 1.9 million jobs, lifting the number of Americans
out of work to 2.7 million. At 6.7 percent, the jobless rate has now risen 2.3 percentage points since it bottomed in March
Most sectors of the economy are now losing jobs, including manufacturing, construction, financial firms, retailers, and
the leisure and hospitality industries. Only government, education and health services managed to post job gains.
Friday’s report also slashed another 200,000 jobs from the numbers already reported for September and October —
a sign that the economy was hit harder than first reported when the credit crunch deepened.
Economists, who had been expecting a loss of some 350,000 jobs last month, were stunned by the news, describing the report
as “horrendous,” "horrific" and “eye-poppingly bad.”
“We’re scrambling around here for historical parallels,” said Robert Barbera, chief economist at ITG,
an investment advisory firm.
More big job cuts are on the way, as companies slash costs to try to offset the expected drop in revenues. In just the
past few weeks, major employers like AT&T Inc., DuPont, Citibank, JPMorgan Chase and Pratt & Whitney have announced
steep job cuts.
"These numbers are shocking," said economist Joel Naroff, president of Naroff Economic Advisors. "Companies are sharply
reacting to the economy's problems and slashing costs. They are not trying to ride it out."
Financial Bailout Still Faces Challenges: Paulson
BEIJING (Reuters) - The United States has made clear progress in steadying
its financial system, thanks in part to a $700 billion bailout fund authorized by Congress, but the rehabilitation process
still faces many challenges, Treasury Secretary Henry Paulson said on Friday.
"The very clear purpose of the TARP was to deal with the stability of our financial system. We have made real progress
in dealing with financial stability, but there are going to be many months of challenges ahead," he told reporters after the
fifth round of the Sino-American "Strategic Economic Dialogue."
Paulson has expressed opposition to using the Troubled Assets Relief Program to bail out the U.S. auto industry, but he
said it would be wrong to allow one of Detroit's Big Three car makers to go under.
"The failure of one of the auto makers right now would not be a good thing. It would be a bad thing," he said.
Congress waits to Hear from Big Three Auto Makers This Week with Business Plan
WASHINGTON (CNN) -- Congressional Democrats are asking the Big Three
automakers to submit a plan no later than December 2 for spending the $25 billion they have requested to rescue their companies,
Senate Majority Leader Harry Reid said Thursday.
Congress probably would reconvene by December 8 to consider the proposal, which would be reviewed with an eye toward convincing
the public that they would be well-served, the Nevada Democrat said.
"The key is accountability and viability," Reid said. "We want them to get their act together."
"Until they show us the plan, we cannot show them the money," added Democratic Speaker Nancy Pelosi at a news conference
in the Capitol. Watch why the Big Three bailout is stalled »
Reid said that so far the companies have failed to convince Congress and the American people that this bailout would be
The CEOs of General Motors Corp., Ford Motor Co. and Chrysler LLC spent two days on Capitol Hill this week seeking $25
billion in loans to solve a looming cash crisis that could lead to bankruptcy filings for GM and Chrysler later this year
or early next year.
Reid said the automakers would submit the plan to Rep. Barney Frank, D-Massachusetts, and Sen. Christopher Dodd, D-Connecticut.
Frank chairs the House Committee on Financial Services and Dodd heads the Senate Banking Committee.
Reid also told reporters that members of Congress from Michigan have come up with a bipartisan agreement for the auto companies
-- "but it's their agreement."
There still is nothing on the table that could be approved by Congress or President Bush, he said.
"We're disappointed that those hopes have not been met," said Democratic Sen. Carl Levin of Michigan, who helped forge
the agreement. But he said he was encouraged that the leadership was taking all steps needed to help the auto industry survive
with bridge loans.
Frank defended the amount of time being spent on the automakers' request.
"We put through a bill putting $700 billion of taxpayers money at risk, although we hope to recover it," he said, referring
to the stimulus fund approved for banks.
"There is widespread dissatisfaction -- not just in the Congress but in the country -- with what is perceived to be a failure
of the recipients of those funds to carry out the intent that the Congress had."
He added, "There is a sense that we did not do a good enough job of safeguarding those funds. That's why we need to take
With Economy Souring, Illegal Immigrants Going Home Alfonso Chardy | Miami Herald
Malaquias Gaspar left his farm village in southern Mexico when the economy
soured in the mid-1990s. He headed north illegally and found the proverbial better opportunity in South Florida, where he
made a decent living by picking fruit and building homes.
But the U.S. economic crisis has disrupted his life and the lives of countless other illegal immigrants who are now planning
to leave or have already left.
Gaspar recently returned to Zimatlan de Alvarez in Oaxaca state, primarily to care for his ailing mother -- but also to
plan for the future should the economy worsen in South Miami-Dade County, where his wife and four children remain.
''If we can't feed our children, we'll come back,'' said Gaspar, 40, as he sat at his family home -- upgraded with money
he had sent from South Florida.
Gaspar is among millions of undocumented immigrants facing new challenges brought on by slim prospects for legalization,
more aggressive federal enforcement and a worsening economy. Now, fewer immigrants are caught while trekking through the dangerous
Sonoran Desert or risking their lives aboard makeshift boats in the Caribbean, indicating that fewer are trying. Those who
make it through can find themselves on one of several daily federal charter flights that return deportees.
The ripple effects are already being felt. Communities in Latin America and the Caribbean report a reduction in remittances
-- money sent home from the United States. That money is critical to the survival of families and the success of local civic
projects. Border communities that once thrived as way stations for those heading north are now little more than ghost towns.
Auto Slump Hits Hard in Car-Mecca California Dale Kasler | Sacramento Bee
The Saturn dealership, closed two weeks ago, is still jammed with cars;
signs at the curb promote a red-tag sale. The Ford dealership, closed since June, sits empty, stripped clean.
These are terrible times for the auto industry, and the impact shows up at places such as the Elk Grove Auto Mall. Sales
are down, staffing is down, and the loss of two dealerships hurts the survivors.
"It doesn't help the image of the auto mall to have two tenants gone," said David Johnson, general sales manager at Elk
Grove Buick Pontiac GMC. "It doesn't help with consumer confidence."
Johnson has cut his sales staff in half, eliminating six jobs.
The crisis gripping Detroit's Big 3 automakers is worsening the downturn in California and Sacramento. As executives plead
for a bailout, car sales are falling faster in California than elsewhere, and the effect is significant.
The industry's downfall is responsible for nearly 11 percent of California's job loss in the past year. It's robbed tens
of millions of dollars from state and local treasuries. It's punched holes in business districts such as Florin Road, once
a mecca for car lots. It's deprived the media of advertising revenue, and has affected corporate sponsorship of sports franchises
such as the Kings.
Swiss Bank UBS Under Cloud for Secret
Accounts Martha Brannigan | Miami Herald
the glitterati jet in for Art Basel Miami Beach, the Swiss banking giant UBS — the event's main sponsor — plans
to fete a gaggle of elite clients, as in years past, with lavish parties at the swank Setai, Delano and Tides.
But a little more than a week before the start
of this year's art festival, UBS remains under the cloud of a massive investigation into its alleged role in helping wealthy
U.S. clients avoid paying taxes by sheltering their money in secret offshore accounts.
U.S. authorities are demanding the names of thousands
of investors who counted on Swiss secrecy laws, and Swiss discretion, to keep their financial affairs private. One client,
a part-time Lighthouse Point resident unmasked early in the probe, has been forced to pay $52 million in back taxes and penalties.
Some of the bankers' alleged deeds seem downright
unbankerly: smuggling diamonds into the United States in a toothpaste tube; using encrypted computers to conduct transactions;
lying to U.S. immigration agents that business trips were for nonbusiness purposes; slipping from hotel to hotel to elude
It is all the more unseemly because UBS, one of
the world's largest banks, has a distinguished history in Switzerland and has cultivated a corporate image as a patron of
high culture, sponsoring tennis tournaments, yachting competitions and, of course, Art Basel.
But federal prosecutors say these events and others
served as fertile turf where bankers could mingle with affluent Americans and persuade them to become bank clients.
22 US Banks Collapsed This Year
NEW YORK: As many as 22 American banks have collapsed this year so far,
even as the banking giant Citigroup, led by Indian-American, Vikram Pandit, struggled this week to save itself from becoming
number 23 in this fast growing long list.
On Friday, three US banks collapsed with two of them being in California and the third one in Georgia.
The two California banks which were shut down Friday are Downey Savings and Loan of Newport Beach and PFF Bank and Trust
of Pomona. The 12.78 billion Downey, The Wall Street Journal, said is the third largest bank to fall this year. Topping the
list is $307 billion Washington Mutual.
In Georgia the Community Bank of Loganville closed down.
With little signs of improvement, The Wall Street Journal said regulators expect more failures during the remaining part
of this year and next year, as "rotting real estates and other loans continue to weigh down bank balance sheets."
The deposits and some of the assets of the two collapsed Californian banks were bought by US Bancorp, which now has emerged
as one of the strongest US banks during the current financial turmoil. Deposits and assets of the Georgian bank was acquired
by Bank of Essex from Virginia.
Among other banks, which collapsed this year - reflecting the deep trouble in which the US economy is in - include Franklin
Bank (Houston), Security Pacific Bank (Los Angeles), Freedom Bank (Florida), Silver State Bank (Nevada), Columbian Bank and
Trust (Kansas), First Priority Bank (Florida), First National Bank of Nevada, ANB Financial (Arkansas), IndyMac Bank (California).
The largest number of bank collapse has been reported from California.
Collapse of such a large number of American banks, despite a $700 billion bailout package reflects the deep turmoil of
the US economy. From 2003 to 2007 only 10 US banks were reported to have collapsed. In 2008, the figure has already touched
22 and still more than a month to go.
Govt Pays Millions for Unapproved Drugs By RICARDO ALONSO-ZALDIVAR and FRANK BASS Associated
WASHINGTON – Taxpayers have shelled out at least $200 million
since 2004 for medications that have never been reviewed by the government for safety and effectiveness but are still covered
under Medicaid, an Associated Press analysis of federal data has found. Millions of private patients are taking such drugs,
The availability of unapproved prescription drugs to the public may create a dangerous false sense of security. Dozens
of deaths have been linked to them.
The medications date back decades, before the Food and Drug Administration tightened its review of drugs in the early 1960s.
The FDA says it is trying to squeeze them from the market, but conflicting federal laws allow the Medicaid health program
for low-income people to pay for them.
The AP analysis found that Medicaid paid nearly $198 million from 2004 to 2007 for more than 100 unapproved drugs, mostly
for common conditions such as colds and pain. Data for 2008 were not available but unapproved drugs still are being sold.
The AP checked the medications against FDA databases, using agency guidelines to determine if they were unapproved. The FDA
says there may be thousands of such drugs on the market.
Medicaid officials acknowledge the problem, but say they need help from Congress to fix it. The FDA and Medicaid are part
of the Health and Human Services Department, but the FDA has yet to compile a master list of unapproved drugs, and Medicaid
— which may be the biggest purchaser — keeps paying.
Showdown Looming in Congress Over Automaker Rescue By STEPHEN OHLEMACHER Associated Press
WASHINGTON – Hardline opponents of an auto industry bailout branded
the industry a "dinosaur" whose "day of reckoning" is near, while Democrats pledged Sunday to do their best to get Detroit
a slice of the $700 billion Wall Street rescue in this week's lame-duck session of Congress.
The companies are seeking $25 billion from the financial industry bailout for emergency loans, though supporters of the
aid for General Motors Corp., Ford Motor Co. and Chrysler LLC have offered to reduce the size of the rescue to win backing
Senate Democrats intended to introduce legislation Monday attaching an auto bailout to a House-passed bill extending unemployment
benefits; a vote was expected as early as Wednesday.
A White House alternative would let the car companies take $25 billion in loans previously approved to develop fuel-efficient
vehicles and use the money for more immediate needs. Congressional Democrats oppose the White House plan as shortsighted.
Majority Democrats will need at least a dozen GOP votes in the Senate to prevent opponents from blocking their measure
— assuming all Senate Democrats support it. Senate Republican Leader Mitch McConnell of Kentucky questioned whether
there was sufficient Democratic support for an auto bailout in a statement released Sunday.
"The silence from the Democrat rank and file on this matter has been deafening," McConnell said.
So far two Republicans publicly have voiced support for the idea. Several others, including Minnesota Sen. Norm Coleman
on Sunday, have indicated they might accept a rescue under strict conditions.
Circuit City Recently Filed for Bankruptcy
The electronics retail giant announced the other day that they will
be closing 155 stores across the country. The company appears to remain hopeful, issuing the following statement on their
“We are pleased to have obtained court approval for our first day motions, a critical first step in Circuit
City’s reorganization process,” said James A. Marcum, vice chairman and acting president and chief executive officer
of Circuit City Stores, Inc. “These approvals will help position us for a more successful holiday selling season and
allow us to operate our business and serve our valued guests without interruption as we work to emerge from Chapter 11 as
quickly as possible.”
Bailout Improv: Paulson Rolls Out New TARP by Aaron Task
With the first half of the $700 billion TARP (Troubled Assets Relief
Program) program nearly depleted, Treasury Secretary Hank Paulson spoke today to both defend the program, and announce some
changes going forward.
Paulson's comments come amid criticism of his handling of the bailout and a political battle over whether the government
should rescue U.S. automakers. Assuming the answer is "yes", the debate — starting as early as next week in a lame-duck
session — will be over whether or not the funds come from the second $350 billion of TARP money, which requires Congressional
authorization (however it's used.)
As for Paulson's defense of TARP: "As I assess where we are today, I believe we have taken the necessary steps to prevent
a broad systemic event," Paulson said in prepared remarks. "Our system is stronger and more stable than just a few weeks ago.
Although this is a major accomplishment, we have many challenges ahead of us."
Key changes to the program, which Paulson hopes will address the ongoing challenges of "a weak economy, especially the
housing correction and lending contraction," include:
* Paulson has effectively abandoned the idea of buying bad debt from banks. While this is a step in
the right direction, it's an amazing 180-degree turn in a few short weeks. * Companies like American
Express seeking TARP capital going forward may be required to raise private capital first. Again, this is an improvement but
notably doesn't apply retroactively to the firms already enjoying government largess.
These changes appear smart, but the bottom line is the government is essentially making this bailout up as it goes along.
"Since announcing the [injection of capital into big banks] we have been examining a wide range of ideas that can further
strengthen the financial system and get lending going again to support the broader economy," Paulson said.
It's also clear that Paulson still doesn't have the answers ... and maybe not even a clue, which he unwittingly admitted
today: "And to adequately reform our system, we must make sure we fully understand the nature of the problem which will not
be possible until we are confident it is behind us," he said.
Huh? No wonder Paulson is counting down the days until he's "former Treasury Secretary."
US Jobless Rate Rises to Highest Level Since 1994 By: Adam Plowright
WASHINGTON (AFP) – The US October unemployment rate rose to its
highest level since 1994, official data showed Friday, with analysts forecasting it to move even higher in Barack Obama's
first year as president.
The Labor Department said the jobless rate rose to 6.5 percent as the world's largest economy shed 240,000 jobs during
the month amid the credit squeeze and downturn.
"Employment has fallen by 1.2 million in the first 10 months. Over half of the decrease has occurred in the last three
months," the department said in a statement.
The figures underlined the challenge for incoming US president Obama, who vowed Friday to tackle the economic crisis head-on
and threw his support behind a new tax and spending stimulus package.
"One thing I can say with certainty is that we're going to need to see a stimulus package passed before or after inauguration,"
Obama said in his first post-election news conference, flanked by his team of economic advisers.
Analysts forecast that the jobless rate would climb above 7.0 percent next year after Obama's inauguration in January,
with the peak seen about 7.5 percent in the middle to end of the year.
The US economy has shed jobs for 10 straight months in 2008 and the Labor Department revised losses in August and September
sharply higher to 127,000 and 284,000 rather than the 73,000 and 159,000 estimated a month ago.
"(Job) losses should remain heavy for several more months," said economist Stephen Gallagher at investment bank Societe
Generale in New York.
The data confirmed the severity of the economic downturn underway in the United States where months of turmoil on stock
markets, tightening of credit and record-low consumer confidence have taken their toll.
The economy is widely seen as being in a recessionary cycle now and is forecast to contract over the whole of 2009.
President George W. Bush said in a statement that "monthly job report numbers ... reflect the difficult challenges confronting
our economy" and he said existing government efforts would take time to materialize.
The White House has been wary of the idea of a second stimulus package after approving a 168-billion-dollar plan earlier
this year and a 700-billion-dollar rescue program on October 3.
"The federal government has taken aggressive and decisive measures to address this situation," Bush said. "It will take
time for these measures to have their full impact on an economy in which many Americans are struggling."
Democrats in Congress, fresh from electoral victories in Tuesday's election, are pushing for a new stimulus package, however,
led by House of Representatives Speaker Nancy Pelosi.
Pelosi has called for the two-stage effort to involve a 60-100 billion dollar stimulus package in November, before the
end of Bush's term on January 20.
"Most recent macroeconomic figures show a rapid pace of deterioration suggesting a deepening recession," said economist
Amine Tazi at investment bank Natixis, commenting on the jobless data.
"The unemployment rate ... is likely to breach the 7.0 percent mark early next year," said Ian Shepherdson, an analyst
at High Frequency Economics, who said the labor market report was "horrible in every way."
"It has already broken above the June '03 peak and the trend is rising almost vertically. Wages depressed too, up only
Given the turmoil, all eyes are on Obama's nomination for Treasury secretary, with Timothy Geithner, president of the Federal
Reserve Bank of New York, on the list of possible candidates.
He has acted as an intermediary between the US Federal Reserve and the financial markets and played a key role in formulating
measures to protect banks from the crisis.
Secret GOP Payoffs from Lobbyists for Freddie Mac to stop Regulation Legislation By Pete Yost Associated
WASHINGTON – Freddie Mac secretly paid a Republican consulting
firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company,
Fannie Mae, three years before the government took control to prevent their collapse.
In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul
bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired
to manage the GOP convention in September.
Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's
bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.
In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority
Leader Bill Frist, R-Tenn., to allow a vote.
"If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed
to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy
as a whole," the senators wrote in a letter that proved prescient.
Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13
states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but
always stayed on the Republican side.
In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats
also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.
McCain, R-Ariz., was not a target of the DCI campaign. He signed Hagel's letter and three weeks later signed on as a co-sponsor
of the bill.
By the time McCain did so, however, DCI's effort had gone on for nine months and was on its way toward killing the bill.
McCain's campaign manager, Rick Davis, or his lobbying firm has taken more than $2 million from Fannie Mae and Freddie
Mac dating to 2000. In December, Freddie Mac contributed $250,000 to last month's GOP convention.
Meeting G7, Bush Vows World Economic Fix Bush Pledges Coordinated Response From World Leaders
on Economic Crisis By RACHEL MARTIN and JULIA HOPPOCK
After one of the worst weeks in the stock market's history, President
Bush met foreign financial leaders today to hatch a plan to take on the international financial crisis. In a Rose Garden address
following the meeting, Bush vowed to work together with world leaders to develop a unified response.
"All of us recognize that this is a serious global crisis and, therefore, requires a serious global response for the good
of our people. We resolve to continue our strong efforts to return our economies to the path of stability and long-term growth,"
Bush was joined by financial leaders of the other G7 nations Japan, Germany, England, France, Italy and Canada as well
as Treasury Secretary Henry Paulson and Secretary of State Condoleezza Rice.
While Bush did not discuss any strategies for resolving the economic crisis, he emphasized the need for global leaders
to work together in order to avoid worsening the situation.
"As our nations confront challenges unique to our individual financial systems, we must continue to work collaboratively
and ensure that our actions are coordinated," Bush said. "We must ensure the actions of one country do not contradict or undermine
the actions of another. In our interconnected world, no nation will gain by driving down the fortunes of another. We're in
this together. We will come through it together."
Bush also praised swift action taken by some G7 nations earlier in the week to enact a joint interest rate cut. In an historical
coordinated policy action, central banks around the world, including the Federal Reserve and European Central Bank, lowered
key rates in hopes of boosting liquidity and unfreezing the credit markets.
Bush tried to instill confidence that world leaders were doing everything they could to lessen the crisis, but warned it
would take time.
"The benefits will not be realized overnight. But as these actions take effect, they will help restore stability to our
markets and confidence to our financial institutions."
BAGHDAD (UPI) -- Iraq's small stock exchange is enjoying a prosperous
year, even while markets founder in Australia, Europe, the United States and Asia.
Ninety-four companies are listed on the Iraq Stock Exchange, which has gained 25 percent this year, USA Today reported
The newspaper said trading volume is generally less than $1 million a day. The exchange still uses white boards to record
transactions. But Iraqi investors are hoping increased security will begin to attract foreign dollars.
The market's bread and butter are wealthy Iraqis, many of whom live out of the country, the newspaper said. But, for some
retired Iraqis the market has become a popular pastime.
"My wife asked me not to go anymore," Abdul Sattar Jubari, 61, a retired schoolteacher told USA Today. Nevertheless, he
still goes. "It's become a habit, like smoking," he said.
Bush Speech Panicked the nation with the following:
“The government's top
economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing
scenario would unfold.”
“More banks could fail, including some in your community. The stock market
would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures
would rise dramatically.”
“And if you own a business or a farm, you would find it harder and more
expensive to get credit. More businesses would close their doors, and millions of Americans could lose their jobs.”
How Did They Come Up With the $700Billion Figure?
“It’s not based on any particular data point,” a Treasury
spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
As I am sure by now you are aware of what’s going on
with financial institutions and the proposed $700 billion tax payer bailout, last week President Bush made a prime time speech
to the nation to help explain what is being proposed and why.
The President’s speech was pretty general in its description of how we got to where we are today, Bush
said, “Easy credit combined with the faulty assumption that home values would continue to rise, led to excesses and
“Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay.
Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher
price later on.”
Then Bush proceeded to panic the nation with the following:
“The government's top economic experts warn that, without immediate action by Congress, America could
slip into a financial panic and a distressing scenario would unfold.”
“More banks could fail, including some in your community. The stock market would drop even more, which
would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically.”
“And if you own a business or a farm, you would find it harder and more expensive to get credit. More
businesses would close their doors, and millions of Americans could lose their jobs.”
President Bush painted a gloom and doom picture, my guess for this, was to push the voting public to contact
their congressional representatives to get a deal signed.
Bush says we must have a deal as soon as possible; the consequences are just too great, Wall Street must receive
a check soon..
But why should anyone believe him since he has been wrong on so many issues and policies. Both President Bush
and Congress have said that there will be time down the road to find out exactly what cause this meltdown.
Normally when Congress considers a spending bill this large there would be months of committee meetings before
any vote would take place, but Bush expects us to take him at his word that the sky is falling and it’s falling now.
Former Presidential candidate Mike Huckabee was critical of President Bush's handling of the crisis. He said
to lay the $700 billion obligation on the nation "in 24 hours" amounts to "holding the country hostage."
"I just think the American people ought to be screaming their lungs out, saying to Congress, not so fast. That's
our money you're giving away," Huckabee said.
I honestly don’t know if a $700 billion bailout would make one bit of difference to the current situation
these financial institutions are currently experiencing. I do know that nearly two million homes are currently facing an increase
in their mortgage rates or soon will be in the coming months. But maybe a shake up on Wall St is what’s needed to prevent
similar situations from arising in the future.
I do know that financial institutions on Wall St will see this as a message that if they are on the verge of
a collapse, Uncle Sam will come to their rescue, and that is not a message that we should be sending to them.
Greed and deregulation on oversight is what brought this on, this is their own making, and maybe it is Wall
St who should be sleeping in the beds that they themselves made and not the tax payer.
At the time of my writing this story Congress was still working on a bailout and both parties said that a deal
was near, that is until John McCain road in on his White Jet to save the day. Now the GOP leadership who hours earlier said
a deal was near, are now saying just the opposite.
McCain is flying out to Mississippi today for the first of three presidential debates, McCain wanted to cancel
this debate, but has decided to go...Maybe with him gone Congress can come to some sort of a compromise, or maybe they can
come to a decision that a deal could wait until cooler heads can prevail..
David Phillips is a Vietnam Era Veteran, a Democratic Party Activist, and David is also the Publisher
and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa Ynez Valley Journal or you can go to
their web site: www.Syvjournal.com
Shocking Defeat for Economy Bailout; Record Stock Dip By JULIE HIRSCHFELD DAVIS Associated
In a stunning vote that shocked the capital and worldwide markets, the
House on Monday defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from
President Bush and congressional leaders of both parties that the economy could nosedive without it. The Dow Jones industrials
plunged nearly 800 points, the most ever for a single day.
Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide
more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning
for the year as planned.
Stocks began falling even before the 228-205 vote to reject the bill was officially announced on the House floor. The 777-point
decline for the day surpassed the 721-point previous record, on the day after the Sept. 11, 2001, terror attacks, though in
percentage terms it was well short of the drops on Black Monday of October 1987 and at the start of the Depression.
China Tells Their Banks to Stop Lending to the United States
HONG KONG (MarketWatch) -- Chinese regulators have asked domestic banks
to stop lending to U.S. financial institutions in the interbank money markets to prevent possible losses during the financial
crisis, the South China Morning Post reported Thursday. The China Banking Regulatory Commission's ban on interbank lending
of all currencies applied to U.S. banks, but not to lenders from other countries, the report added, citing a source.
John McCain: The Deregulator
I don’t think anyone who wants to increase the burden of government regulation and higher taxes has any real
understanding of economics and the economy and what is needed in order to ensure the future of this country.” –
John McCain [McCain Town Hall in Inez, Kentucky, 4/23/08]
McCain Supported A Banking Bill Because It Eliminated “The Tremendous
Regulatory Burden Imposed On Financial Institutions.” While speaking in favor of bank deregulation on the floor of the
senate, John McCain said, “This legislation takes a small but important step toward eliminating the tremendous regulatory
burden imposed on financial institutions… One principal reason banks are unable to make loans is the bewildering array
of statutory and regulatory restrictions and paperwork requirements imposed by Congress and the regulatory agencies. While
a case can certainly be made that every law and regulation is intended to serve a laudable purpose, the aggregate effect of
the rapidly increasing regulatory burden imposed on banks is to cause them to devote substantial time, energy and money to
compliance rather than meeting the credit needs of the community.” [Congressional Record, 11/19/93; emphasis added]
Corporate Welfare: Tax Payers Left Holding the Bag
By: David Phillips
What is Corporate Welfare: Corporate welfare is a term describing a government's bestowal
of money grants, tax breaks, or other special favorable treatment on corporations or select corporations. The term was coined
by Ralph Nader in 1966, and compares corporate subsidies and welfare payments to the poor, and implies that corporations are
much less needy of such treatment than the poor. (Source: Wikipedia)
Now on with the show
John McCain tour’s our country stumping and saying, “The Fundamentals of our Economy are Strong”, the rest
of us have been bending over while our government dole’s out our tax dollars for corporate bailouts.
Last week in
the wake of the collapse of American International Group (AIG) and Fannie Mae and Freddie Mac, President Bush from the White
house Rose Garden made public, measures to bailout banks from billions of dollars in bad debts with our tax dollars.
Bush said that
the recent failures of banking institutions will require "unprecedented action" that would bring the US government deeper
into a variety of financial markets.
that are being planned include emergency lending to banking institutions and a temporary freeze on short selling of stocks
to fight downward pressure on share prices.
The plan will
also try to unfreeze the credit markets by finding a way to take billions of dollars of bad mortgage-backed assets off the
books of financial institutions and into the control of our government. That’s right Uncle Sam may soon become your
called the moves "decisive" and necessary to "get our financial system moving again." Bush went on to say, "This is a pivotal
moment for America's economy,". . . There will be ample opportunity to debate the origins of this problem. Now is the time
to solve it." Meaning right after he leaves office will be the time to find out the cause of the collapse of our financial
at the Treasury Department, Secretary Paulson told reporters, "I am convinced that this bold approach will cost American families
far less than the alternative: a continuing series of financial institution failures and frozen credit markets unable to fund
asked what the costs to the American tax payers will be for this "bold" action, his answer:We're talking hundreds of billions (of tax dollars). This needs to be big enough to make a real difference and get
at the heart of the problem."
So how did all of this come about?
under the Bush administration of financial and lending institutions and no government oversight of those who offered up sub-prime
loans to people who could not afford them, which cause the collapse of the housing market, which led to the devaluation of
properties, even those properties that were not involved in sub-prime loans and who are current on payments have suffered
a loss in the value of their properties. Then all those loans were sold off to other financial institutions, who then resold
them…A domino effect.
So now, you
and I as well as every other tax payer are on the hook again for another bailout and according to the Treasury Dept. 126 other
banks and financial institutions are currently on the edge of a collapse, which is why when Paulson was asked how much the
bailouts will cost, he could only say hundreds of billions of dollars. Wall Street talking heads say it will cost at least
a half a trillion to shore up these financial institutions.
All of these
lending institutions brought this upon themselves, they wanted the government out of their business with the deregulation,
and now it is the tax payer who is left holding the bag.
David Phillips is a Vietnam Era Veteran, a Democratic Party
Activist, and David is also the Publisher and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa
Ynez Valley Journal or you can go to their web site: www.Syvjournal.com
Greenspan: Country Can't Afford McCain's Tax Cuts By GLEN JOHNSON Associated Press Writer
Alan Greenspan says the country can't afford tax cuts of the magnitude
proposed by Republican presidential contender John McCain — at least not without a corresponding reduction in government
"Unless we cut spending, no," the former Federal Reserve chairman said Friday when asked McCain's proposed tax cuts, pegged
in some estimates at $3.3 trillion.
"I'm not in favor of financing tax cuts with borrowed money," Greenspan said during an interview with Bloomberg Television.
"I always have tied tax cuts to spending."
McCain has said that he would offset his proposed cuts — including reducing the corporate tax rate and eliminating
the Alternative Minimum Tax that has plagued middle-class families — by ending congressional pork-barrel spending, unnecessary
government programs and overhauling entitlement programs such as Medicare and Social Security.
Democrats pounced on Greenspan's comments, in part because McCain professed last year that he was weaker on economics than
foreign affairs and was reading Greenspan's memoir, "The Age of Turbulence," to educate himself.
"Obviously he needs to go back to that book and study it some more," Sen. Claire McCaskill, D-Mo., said during a conference
call arranged by the campaign of Democratic nominee Barack Obama.
McCaskill said eliminating congressional earmark spending — estimated at $17 billion annually — cannot offset
McCain's proposed tax cuts.
"That's a huge amount of money, but it's not even a drop in the bucket to pay for $3.5 trillion in tax cuts," she said.
"So, every time he throws up earmarks and he's asked how he's going to pay for it, he knows he's being disingenuous, he knows
he's not being forthcoming."
McCain campaign officials dispute the $3.3 trillion figure, saying it assumes eliminating 2003 tax cuts made by the Bush
administration and then cutting from that higher level. They say McCain is proposing tax cuts worth $600 billion from current
"John McCain opposed President Bush's tax cuts in 2003, because they didn't include the necessary spending controls. Sen.
McCain's proposed job-growing tax cuts are modest in comparison to his plans to slow the exploding growth of federal expenditures
— meaning that contrary to Chairman Greenspan's assertions, this relief isn't proposed on borrowed money," said McCain
spokesman Tucker Bounds.
Tax Payers on the Hook Again, This Time for Fannie Mae and Freddie Mac Bailouts
WASHINGTON (Dow Jones) -- Treasury Secretary Hank Paulson on Monday
said the government's takeover of Fannie Mae and Freddie Mac was necessary, but it was " not something I wanted to do."
Meanwhile, the biggest potential government bailout of a generation sparked a rally in the Dow Jones Industrial Average
(DJI) after big jumps in Europe and Asia.
Under a sweeping plan, the two companies will be run by the government indefinitely, with their chief executives to be
replaced and the government investing up to $100 billion in each firm to keep them solvent.
While the two entities will survive, their stock prices fell sharply. Fannie Mae subtracted 85% to $1.09 and Freddie Mac
cratered 80% to $1.02. However, the debt issued by the two agencies fared relatively well.
To support the plan, Treasury will purchase up to $100 billion in each company to ensure they maintain a positive net worth.
The bailout involves total assets that would dwarf the savings-and-loan rescue in the 1980s that shook the banking sector
to its core.
Fannie and Freddie hold roughly $1.5 trillion in direct debt, guarantees on which could be as large as $5 trillion as well
as possible off-balance sheet obligations that could reach $3 trillion, according to recent estimates from Ladenburg Thalmann
Fannie Mae's market capitalization stands at $7.5 billion and Freddie Mac's is about $3.3 billion.
Together, Fannie Mae and Freddie Mac form the cornerstones of the U.S. mortgage market and own or guarantee almost half
the home loans in the country's roughly $12 trillion mortgage market. Over the past year, the companies have recorded combined
losses of around $14 billion.
Some reports estimated the government's cash injection ultimately could be between $15 billion and $20 billion.
Gas mileage figures come from automakers and go to the National Highway Traffic Safety Administration
and then to the EPA for verification, so it can take until well into the following year for final CAFE numbers to be published.
Based on NHTSA's preliminary data, here's where automakers stood for 2007:
Domestic Passenger Cars
Imported Passenger Cars
Profiteers are Stealing our Tax Dollars
By: David Phillips
According to a new report from the Congressional Budget Office (CBO) by the end of this
year the Bush administration will have spent more than $100 Billion dollars on private firms working in Iraq since the invasion
started in 2003. This total does not include corporations who have received billions of our tax dollars who are not in Iraq.
States has relied more heavily on contractors in Iraq than in any other war to provide services ranging from food service
to guarding diplomats. About 20 percent of funding for operations in Iraq has gone to contractors, the report said.
there are at least 190,000 contractors in Iraq and neighboring countries, a ratio of about one contractor per U.S. service
member, the report says.
Sen. Kent Conrad,
D-N.D., chairman of the Budget Committee, which requested the CBO review, said the use of contractors "restricts accountability
and oversight; opens the door to corruption and abuse; and, in some instances, may significantly increase the cost to American
In May, an
internal audit from the Defense Department's inspector general showed about $8 billion paid to U.S. and Iraqi contractors,
found that nearly every transaction failed to comply with federal laws or regulations aimed at preventing fraud.
Below is a
short list, a very short list, of companies who are fleecing American tax dollars:
·Halliburton-The first name that comes to everyone’s mind here is Halliburton. According
to MSN Money, Halliburton’s KBR, Inc. division bilked government agencies to the tune of $17.2 billion in Iraq war-related
revenue from 2003-2006 alone.
·Veritas Capital Fund/DynCorp-At first blush, a private equity fund (and not, say, Exxon-Mobil)
being the number 2 profiteer in the Iraq war might sound strange. However, the cleverly run fund has raked in $1.44 billion
through its DynCorp subsidiary.
·Washington Group International- The Washington Group International has parlayed its expertise
the repair, restore, and maintenance of high-output oil fields into $931 million in Iraq-related revenue from 2003-2006.
·Fluor-Fluor scored a monster $1.1 billion contract in 2004 to build, service, and manage
water/sewage systems in Iraq.
·Parsons-Few Iraq contractors have come under fire as much as Parsons, who reportedly mismanaged
the construction a police academy so poorly that human waste dripped from its ceilings. Far from being an isolated incident,
reports from federal government auditor’s revealed lackluster work on 13 of the 14 Iraq projects entrusted to Parsons.
Unfortunately, that hasn’t stopped the Pasadena-based firm from making off with $540 million in U.S. government funds
for the poorly executed reconstruction projects at Iraq’s healthcare centers and fire stations.
·L3 Communications-L3 Communications has carved out a neat $359 million slice of Iraq’s
security screening needs as of fiscal 2006. The New York-based company has been charged with overseeing the screening and
training of law enforcement personnel for the growing all-Iraqi security force, as well as replacing equipment in the field.
Linguistics is another one of L3’s specialties, one that is heavily relied upon to interface with native speaking Sunni
and Shia forces.
·L3 Communications has also purchased Titan, a corporate intelligence company with a $1
billion Iraq contract. Prior to being acquired by L3, Titan plead guilty to international bribery charges (a felony) and paid
a record-breaking $28.5 million under the Foreign Corrupt Practices Act.
·HSBC Bank-Already the third largest financial institution on the planet, HSBC has seen
its fortunes brighten beyond its wildest dreams since the start of combat. It has purchased a controlling stake (70%) of the
newly created Iraqi national bank, Dar es Salaam Investment Bank, which, though small, has already amassed assets of $91 million.
The above list
of war profiteers are not supplying the goods that they have been contracted to provide. According to numerous reports by
both our government and independent watch dog groups these companies and many others are promising one thing and delivering
and those that have awarded the contracts (many no-bid contracts) have had carte blanche because Bush and the Republican controlled
congress that Bush enjoyed, removed almost all oversight. In fact the latest Pentagon Inspector General had recently quit
after only a few months on the job because he did not have adequate personnel to oversee the voluminous task that was before
must stop; most of the problems Americans are now confronted with are directly related to the failed War policies installed
by Bush and the GOP.
Bush and the
GOP have created a tax dollar siphoning machine with almost zero oversight and McCain wants to continue these policies.
demand oversight on every tax dollar spent on any program, period.
David Phillips is a Vietnam Era Veteran, a Democratic Party Activist, and David is also the Publisher
and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa Ynez Valley Journal or you can go to
their web site: www.Syvjournal.com
Banks Borrow More From Fed Emergency Fund
WASHINGTON (AP) -- Banks borrowed slightly more over the past week from
the Federal Reserve's emergency lending program, while Wall Street firms did not draw any loans for a second straight week.
The Fed reported Thursday that commercial banks averaged $17.70 billion in daily borrowing over the past week. That compared
with a daily average of $17.37 billion in the previous week.
Investment houses, however, again did not take out any loans, possibly indicating that pressures on these institutions
for short-term credit may be easing.
The Fed, in the broadest expansion of its lending powers, granted investment houses the privilege of getting direct loans
from the Fed's emergency loan program back in March. That's when Fed Chairman Ben Bernanke and his colleagues were scrambling
to calm turbulent financial markets worried about rising losses from billions of dollars of bad loans on home mortgages.
The action was taken after a run on Bear Stearns, which pushed the country's fifth-largest investment bank to the brink
of collapse. It was eventually taken over by JPMorgan Chase & Co. (JPM, Fortune 500) in a deal in which the Fed provided
significant financial backing.
The Fed recently extended the privilege of borrowing by investment banks into 2009, as the central bank continues to try
to calm financial markets that have been roiled by the most severe credit crunch in decades. Originally, the borrowing privilege
was scheduled to last only until mid-September.
The Fed also has said that it will allow troubled mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune
500) the privilege of borrowing from the central bank's emergency loan program. There was no indication in the report released
Thursday that the 2 institutions had done so.
For the week ending Aug. 13, the $17.70 billion in average daily borrowings by commercial banks represented an increase
of $329 million from the average for the week ending Aug. 6.
WalMart Warns Employees about Voting for Obama
By: David Phillips
August 11, 2008
Wal-Mart, America’s largest discount retail chain recently
held meetings run by its Human Resources department warning it’s employee’s that if Obama is elected Democrats
would likely change federal law to make it easier for workers to unionize companies -- including Wal-Mart.
According to a recent front page Wall Street News article, thousands of Wal-Mart managers and department heads
have been attending meetings where the retail giant warned that a Democrat in the White House would be bad for business and
would lead to more unions.
Several Wal-Mart employees who attended meetings in seven states said, Wal-Mart executives claimed that employees
at unionized stores would have to pay hefty union dues while getting nothing in return, and may have to go on strike without
compensation. Also, unionization could mean fewer jobs as labor costs rise.
"The meeting leader said, 'I am not telling you how to vote, but if the Democrats win, this bill will pass and
you won't have a vote on whether you want a union,'" said a Wal-Mart customer-service supervisor from Missouri. "I am not
a stupid person. They were telling me how to vote," she said.
David Tovar, a Wal-Mart spokesman, told the WSJ, “If anyone representing Wal-Mart gave the impression
we were telling associates how to vote, they were wrong and acting without approval.” Tovar added, however, that Wal-Mart
feels a responsibility to “educate” employees about the dangers of unionization.
It’s quite clear that Wal-Mart is pressuring its employees on who they should vote for, which should be
illegal. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders
and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly
At the heart of Wal-Marts worries is a piece of legislation called the Employee Free Choice Act (EFCA) pushed
by unions and most Democratic lawmakers, which would likely boost union membership through a “card check” system.
The EFCA was put together by Labor Unions and Democrats in response to Corporate America’s hostile opposition
to Unions. The AFL-CIO and other Unions in the United States have said that the EFCA will be their number one agenda after
this Novembers election should Obama win.
The Bill came to a vote until last year where it sailed through the House, but Senate Republicans filibustered
the Bill and it has since been taken off the agenda for the time being. President Bush said last year that he would have vetoed
the bill had it reached his desk. Supporters of the Bill said they would reintroduce it when the new congress convenes.
Democrats and Union members are hoping for large gains in both the House and Senate this November to extend
their control of congress which would make the passage of the EFCA much easier.
Sen. Obama who co-sponsored the EFCA, which is also known as “card check,” has said several times
he would sign it into law if elected president. Sen. John McCain, the likely Republican presidential nominee, opposes the
Employee Free Choice Act and voted against it last year.
Wal-Mart was stretching the envelope when they spoke to their employees about who they should vote for, but
that’s about all, unless you want to consider how unethical it was for them to do so. But ethics and corporations are
David Phillips is a Vietnam Era Veteran, a Democratic Party Activist, and David is also the Publisher
and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa Ynez Valley Journal or you can go to
their web site: www.Syvjournal.com
in ANWR and Offshore: What You Don’t Know.
By: David Phillips
August 4, 2008
The Republican Party in Washington is saying that with the costs of gas so high, we must
now drill offshore and in the Arctic National Wildlife Refuge (ANWR) in order to lower the costs at the pumps.
This will NOT
do anything to lower the prices at the pumps until at least the year 2018 if at all. The ten year estimate is from President
of the Energy Information Administration recently said, "It would be a relatively small effect, because it would take such
a long time to bring those supplies on." Caruso went on to say, "lifting the offshore drilling moratorium would have a minor
impact on production and prices: The projections in the (Outer Continental Shelf) indicate that access to the Pacific, Atlantic,
and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before
right 2030, before more offshore drilling would have any “significant impact” on oil prices.
Bush has said
ten years the EIA has said at least twenty years, even McCain himself before his flip flop for more offshore drilling said
that it would be years before there would be any help at the pumps, but McCain did say that it would give “Psychological”
help at the pumps.
says he is being told by the experts that it would only be six months to two years. Why is McCain saying this lie over and
over again? Maybe this will answer my question for you, in the month of July of this year, McCain received $1.1 million dollars
in campaign donations from oil corporations and their employees, McCain made his flip flop for offshore drilling at the beginning
of July. The prior month, the month of June, McCain received less than $200,000 from oil corporations and their employees.
in Washington do NOT want the prices to drop at the pumps. The Republicans in Washington want to turn America’s high
prices on oil into an issue to campaign on at the expense of you, me and every other working stiff in our country.
voted against a bill that would force Oil corps to drill the oil from the 68 million acres of leased land they now hold. Many
of those leases contain oil.
voted against the release of the Strategic Oil Reserves that would have a short term effect of lowering the prices by as much
as 20 cents.
voted against closing the Enron loophole (Oil Speculation. To put back regulation) again. Closing the Enron Loophole would
drop the cost of crude by as much as 50 percent.
All of the
above were shot down by the Republicans in the last three weeks. The Democrats in Washington have now made three different
moves to help you, me and everyone else in our country, and the Republicans in Washington stopped all the attempts by Democrats
to lower prices.
week the Republican Party in Washington voted against everything that was on the agenda and said that they would not consider
anything else until they get an up or down vote on offshore drilling and more drilling in Alaska.
Well, now Congress
is on their five week vacation, and the prices at the pumps will be higher because Republicans wanted to hold their breath
and stomp their feet like children while everyone else suffers through high prices.
The 68 million
acres of public land that oil corporations now hold include 33 million acres of offshore leases and 20 million acres of leases
the offshore drilling plan noted that the recently released data by the Energy Department shows that U.S. EXPORTS of finished
petroleum products, including gasoline, diesel fuel and jet fuel, soared to 1.592 million barrels per day in May. The exports
set a record for the month and were up 31 percent from a year ago. In May, U.S. oil companies shipped 183,000 barrels of gasoline
a day out of the country, even as Americans saw prices at the pump steadily rise.
leave you with three questions to ask yourself:
the cost of oil that we drill here, cost the same as the oil that we buy from the Saudi’s and import here to the US?
it that much of the oil we drill here, we sell to other countries and not keep it for American consumers and lower the prices
at the pumps?
we expect any change on this Fleecing of America, if Exxon could drill offshore even more than they do now?
Feel free to
send your answers to the Santa Ynez Valley Journal or drop me an e-mail with your answers or thoughts.
David Phillips is a Vietnam Era Veteran, a Democratic Party Activist, and David is also the Publisher
and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa Ynez Valley Journal or you can go to
their web site: www.Syvjournal.com
First Priority Becomes Eighth Bank Failure This Year Insured deposits of small Florida bank
assumed by SunTrust, FDIC says By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) - First Priority Bank was shut down by regulators
on Friday, making the small Florida lender the eighth bank failure in the U.S. so far this year.
SunTrust Banks (STISunTrust Banks, Inc (STI) agreed to take on the deposits of First Priority, the Federal Deposit Insurance
Corporation said in a statement late Friday. The six branches of First Priority will reopen on Monday as branches of SunTrust,
At the end of June, First Priority had $259 million in assets and total deposits of $227 million. There were roughly $13
million in uninsured deposits held in about 840 accounts that potentially exceeded insurance limits, the FDIC estimated. However,
this amount will probably change after the FDIC gets more information from customers.
SunTrust also bought about $42 million of the failed bank's assets. The FDIC sold another $14 million of First Priority's
assets to LNV Corporation, a unit of Beal Bank Nevada. The FDIC said it will keep the remaining assets and sell them later.
This bank failure will cost the FDIC's insurance fund $72 million, the regulator estimated.
"Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions
like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
The number of bank failures is expected to surge in coming years as the credit crunch slows economic growth and hammers
some lenders that grew too fast during the recent real-estate boom.
Earlier last month, IndyMac Bancorp (IDMCIndyMac Bancorp Inc (IDMC) was shut down by federal regulators in one of
the largest U.S. bank failures ever.
Want Oil Prices To Remain High
By: David Phillips
are trying to make drilling for oil an issue in this Novembers election...They care more about themselves being re-elected
than they do about you, me and everyone else...The issue they are pushing is drillingoffshore and in ANWR, Bush himself said it would be at least 10 years before any oil in the areas offshore they want
to drill in would produce any oil...The Republican Caucus in Florida also does NOT want to drill off the coasts of the Mexican
Gulf or the Atlantic coasts near their shores...There are 426 offshore platforms in the Gulf, but none are near the western
shores just off Florida and Florida will not allow it, just like California and Arnold will not allow anymore near its shores...This
is all Politics, and it is the American Citizen who suffers...
1) Republicans voted against a bill that would force
Oil corps to drill the oil from the 68 million acres of leased land they now hold...Many of those leases contain oil...
2) Republicans voted against the release of the Strategic
Oil Reserves that would have a short term effect of lowering the prices by as much as 20 cents...
voted against closingthe Enron loophole (Oil Speculation...To put back regulation),
again...Closing the Enron Loophole would drop the cost of crude by as much as 50 percent ...
All of the above were shot down by the Republicans in
the last two weeks…The Democrats in Washington have now made three different moves to help you, me and everyone else
in our country, and the Republicans in Washington stopped all the attempts by Democrats to lower prices...
Congress will soon be taking it’s summer vacation,
so Americans can look forward to a summer of high prices at the pumps, in the grocery stores, and everything else that has
increased in price because of high energy prices..
All thanks to the GOP…
U.S. Congress Approves Housing Market Bailout Bill
WASHINGTON, July 26 (Reuters) - The U.S. Congress approved a massive
housing market rescue bill on Saturday, offering emergency financing to Fannie Mae (FNM.N: Quote, Profile, Research, Stock
Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), creating a new regulator for the mortgage titans and
setting up a $300 billion fund to help troubled homeowners.
With the U.S. housing market in its deepest slump since the Great Depression, Congress acted with unusual speed in recent
days to move the election-year bill to the White House, which has said President George W. Bush will sign it.
The bill, approved by the House of Representatives on Wednesday and the Senate on Saturday, also offers tax breaks to spur
home-buying; sets up the first national licensing system for mortgage brokers and loan officers; and sends about $4 billion
to localities for buying and repairing foreclosed homes in communities hit hard by a rising foreclosure rate and falling home
FDIC Shutters Two More Regional Banks July 26, 2008
CARSON CITY, NEV. (AP) -- The 28 branches of 1st National Bank of Nevada
and First Heritage Bank N.A., operating in Nevada, Arizona and California, were closed late Friday by federal regulators.
The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual
of Omaha Bank branches, the Federal Deposit Insurance Corp. said.
The FDIC said the takeover of the failed banks was the least costly resolution and all depositors -- including those with
funds in excess of FDIC insurance limits -- will switch to Mutual of Omaha with "the full amount of their deposits."
The FDIC also said accountholders can access their funds during the weekend by writing checks or using ATM or debit cards.
As of June 30, the closed banks had total assets of $3.6 billion. That's down from $4.1 billion six months earlier.
Most of the assets are in 1st National, while First Heritage accounts for $254 million. Calls to 1st National were referred
by a receptionist to Joe Martony, an executive vice president in Scottsdale, Ariz. Martony didn't return repeated calls to
In Nevada, 1st National has 10 branches and employs about 350 people. Five of its branches are in Las Vegas, three are
in the Reno-Sparks area, one is in Carson City and one is in Laughlin. Notices of the closure were being posted late Friday.
Fifteen 1st National branches are in Arizona, while Newport Beach-based First Heritage has three branches in Southern California.
Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action "is a reflection of the times for the banks. It's
a poor economy."
Uffelman cautioned against the sort of consumer concern that prompted many customers of IndyMac Bank branches to wait for
hours in line to withdraw funds across Southern California last week after that bank was seized by federal regulators.
All FDIC-insured bank deposits are guaranteed by the FDIC up to $100,000, he noted. Gov. Jim Gibbons said the bank takeover
will be closely monitored in Nevada "to ensure there's minimal disruption to business and that employees' jobs are protected
as much as possible."
Arizona Gov. Janet Napolitano spokeswoman Shilo Mitchell said in a statement that the FDIC's takeover of 1st National is
not indicative of the overall banking climate in Arizona.
"It's very important that Arizonans know that their deposits are secure," said Felecia Rotellini, superintendent of Arizona
Department of Financial Institutions. "They are well-managed and the 1st National Bank of Arizona issues should not cause
any panic in Arizona."
The FDIC action comes two weeks after after the agency took control of IndyMac bank, a Pasadena, Calif.-base mortgage lender
with $19 billion in deposits. A total of seven banks have failed this year as the credit crunch and housing correction continue
to take a toll on the economy.
With Warning, G.M. Takes Wide Cost Cuts By BILL VLASIC
DETROIT — With concern growing among investors about a possible
bankruptcy filing, General Motors on Tuesday announced sweeping cost cuts and other measures to bolster its tenuous cash position.
But even as G.M. unveiled plans to increase its liquidity by $15 billion, the automaker warned of more tough times ahead.
The broad cutbacks included a 20 percent reduction in payroll for salaried workers, elimination of health care for older
white-collar retirees, and suspension of G.M.’s annual stock dividend of $1 a share.
G.M.’s chairman, Rick Wagoner, said the sharp downturn in the American auto market forced “difficult decisions”
to protect the company’s future.
“I’m determined and highly confident that G.M. will be a survivor,” Mr. Wagoner said in an interview.
“We can do what we need to do.”
Rising gas prices and a weak economy have driven G.M.’s United States sales down 16 percent this year and crippled
the market for its big pickups and sport utility vehicles.
The steep fall in sales is eating into G.M.’s cash reserves at the rate of more than $1 billion a month, according
to some analysts, provoking fears on Wall Street that the company will run out of money before the market rebounds.
The Idiot and the Fed
Paulson Braces Public For Months Of Tough Times Treasury sectretary says problems in the
banking system are a "manageable situation" - but that it will take time to work through them. July 20, 2008
WASHINGTON (AP) -- Treasury Secretary Henry Paulson sought to reassure
an anxious public Sunday that the banking system is sound, while also bracing people for more troubled times ahead.
"I think it's going to be months that we're working our way through this period - clearly months," he said.
Paulson said the number of troubled banks will increase as they struggle to cope with big losses on bad mortgages. The
government this month took over IndyMac (IDMC) after a run led it to become the largest regulated thrift to fail.
"Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction.
But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable
situation," he said in broadcast interviews.
Paulson used appearances on the Sunday talk shows to tell people that deposits up to $100,000 are fully insured. He said
no one has lost a single penny on an insured deposit in the 75 years that the Federal Deposit Insurance Corporation has operated.
"We're going through a challenging time with our economy. This is a tough time. The three big issues we're facing right
now are, first, the housing correction which is at the heart of the slowdown; secondly, turmoil of the capital markets; and
thirdly, the high oil prices, which are going to prolong the slowdown," he said.
"But remember, our economy has got very strong long-term fundamentals, solid fundamentals. And you know, your policy-makers
here, regulators, we're being very vigilant."
Paulson said he hoped Congress soon would approve his plan to help shore up Fannie Mae (FNM, Fortune 500) and Freddie Mac
(FRE, Fortune 500), the government-sponsored mortgage companies
"I'm very optimistic that we're going to get what we need from Congress here, because Congress understands how important
these institutions are," Paulson said.
The House plans to vote Wednesday on a housing bill that is expected to include a rescue for Fannie Mae and Freddie Mac.
The companies' shares have plummeted because of fears about their financial stability. Fannie Mae and Freddie Mac are private,
but they were created by Congress to encourage homeownership by buying mortgages from banks. The two hold or guarantee more
than $5 trillion in home loans -- almost half of the nation's total.
"Our first priority today is the stability of the capital markets, the stability of the system. And these institutions
have investors all around the world ... and those investors need to know that we in the United States of America understand
the importance of these institutions to our capital markets and to our economy and to our housing market," he added.
Paulson acknowledged the U.S. is continuing to lose jobs, though he said the $168 billion economic relief plan approved
this year has created jobs that would not otherwise exist. The plan included tax rebates for people and tax breaks for businesses.
Democratic leaders, including presidential candidate Barack Obama, are pushing for a second, smaller, economic installment.
Paulson said he did not want to speculate about that idea.
"I'm focused on this stimulus package. It's made a difference in the second quarter. It's going to make a difference in
the third quarter. We need to watch this very carefully," he said.
G.M. Shifts Focus to Small Cars in Sign of Sport Utility Demise
By BILL VLASIC
DETROIT — Even General Motors, the steadfast champion of big sport utility vehicles and pickup trucks, is thinking small now.
With no end in sight for elevated gas prices, G.M. announced drastic cuts in production of sport utility vehicles and pickups on Tuesday and stepped up
plans for smaller cars and engines.
G.M.’s chairman and chief executive, Rick Wagoner, said G.M. will cease production at four North American assembly plants that make S.U.V.’s and
pickups by 2010.
And in a humbling admission that the S.U.V. era is all but over, G.M., Detroit’s leading automaker,
said it was considering selling the gas-guzzling Hummer brand it once regarded as a pillar of future growth.
In announcing the changes, Mr. Wagoner said $4-a-gallon gas prices had forced a “structural shift”
by American consumers away from large vehicles into more fuel-efficient cars.
“These prices are changing consumer behavior and changing it rapidly,” Mr. Wagoner said
before G.M.’s annual meeting in Wilmington, Del. “We don’t believe it’s a spike or a temporary shift.
We believe it is permanent.”
While Ford Motor Company already slashed its pickup and S.U.V. output last month, the deep cuts at G.M. seem to be closing a chapter
in the domestic auto industry.
“I think G.M. is basically declaring the S.U.V. dead,” said John Casesa, managing partner
of the auto consulting firm Casesa Shapiro Group in New York. “The trend away from these vehicles is irreversible.”
The moves by G.M. underscore the radical transformation of the automotive landscape in recent months.
Where large S.U.V.’s like the Chevrolet Tahoe and Ford Expedition ruled the road a few years ago, sales of those vehicles and others like them are plummeting under pressure
from high fuel costs.
At the same time, small cars and crossovers — car-based all-wheel-drive vehicles that use less
gas than S.U.V.’s — are flying out of dealerships, with the Honda Civic and Toyota Corolla ranking as the two top-selling vehicles in the United States in May.
G.M. unveiled its latest restructuring on the same day that it reported that its United States sales
plunged 30 percent in May.
Emanuel, Hinchey, Markey, Rahall to Introduce Legislation to Force Big Oil to Use Owned Leases
Emanuel, Hinchey, Markey, Rahall to Introduce Legislation to Force Big Oil to Use Owned Leases
WASHINGTON – House Democratic Caucus Chairman Rahm Emanuel, Rep.
Maurice Hinchey, Chairman Edward J. Markey and Chairman Nick Rahall today announced plans to introduce legislation that will
help lower gas prices by compelling oil companies to utilize the 68 million acres onshore and offshore that are being leased
by big oil companies, but not used to produce energy. The members were also joined by Reps. John Yarmuth and Peter Welch.
Currently, oil companies are not producing oil or gas on the nearly 68 million acres of federal land already under their
control. Offshore, big oil is producing on only about 20 percent of the acres they hold, while onshore, companies are
producing on less than 30 percent of the acres they hold. These unused areas could produce an additional 4.8 million barrels
of oil and 44.7 billion cubic feet of natural gas each day, nearly double current domestic oil production.
“With nearly 68 million acres of on-shore and off-shore public land already leased for oil and gas drilling
untouched by the energy companies who hold those leases, it's time for Republicans and oil company executives to stop making
the false claim that the U.S. is not making enough land available for energy production,” Hinchey said. “Oil corporations
are trying to take control of as much land now during the oil-friendly Bush administration years, but are holding off on drilling
until the price of oil soars to $200 or $300 a barrel so that they can make even greater profits. By stalling energy
production, these major energy corporations are cheating the American people out of a domestic oil and natural gas supply,
causing prices to unfairly and unnecessarily soar at the pump. The federal government has made tens of millions of acres
available for oil and gas development. It's the energy companies that are refusing to produce and now we will make them
pay if they continue to refuse to increase our domestic supply.”
Markey, Hinchey and Emanuel will introduce legislation that would assess a fee on land energy companies have leased but
are not using for production. This fee will escalate if leases go unused over the course of several years. Revenue raised
from these fees will go towards renewable energy and energy efficiency investments, as well as the Low Income Home Energy
Assistance Program (LIHEAP). Chairman Rahall will also introduce legislation that employs a “use it or lose it”
tactic that will compel oil and gas companies to either produce or give up the federal onshore and offshore leases they are
stockpiling by barring the companies from obtaining any more leases unless they can demonstrate that they are producing oil
and gas, or are diligently developing the leases they already hold.
“Big Oil, as many Americans already suspect, are perfectly fine with high gasoline prices at the pump, while they
hold back domestic production on federal leases and enjoy world record profits. I am calling them on the carpet. I am calling
their bluff. We are not going to continue to allow them to speculate and profiteer with public resources to the detriment
of the American people,” said Rahall, Chairman of the House Natural Resources Committee.
“Big Oil seems more concerned with pumping up prices than pumping more oil,” said Markey. “When Big Oil
already has tens of millions of acres available to them right now, it’s cynical of them to come to Congress and ask
for more drilling territory. This is a drilling decoy. With gas prices increasing by the day, it’s time for Big Oil
to produce or pay.”
“It's time for oil companies to use it or lose it,” added Emanuel. “These companies have access to millions
of acres and there is nothing stopping Big Oil from using this land to produce energy.”
Congress Urges Oil Speculation Crackdown Lawmakers Say Urgent Action Is Needed To Curb Speculation
Driving Historic Fuel Prices
WASHINGTON-(CBS/ AP) Lawmakers continue to blame large investors for
their role in propping up oil prices, pointing out Monday that speculation in crude futures has nearly doubled since 2000.
Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly
pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.
After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten
restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices.
Many Republicans, analysts and regulators, however, say soaring oil prices are a reflection of macro-economic factors,
including the falling dollar, unrest in the Middle East and increased demand from countries like China and India.
But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation.
Oil prices rose $1.38 to settle at $136.66 a barrel Monday on the New York Mercantile Exchange on disappointment over Saudi
Arabia's modest production increase and concerns that output from Nigeria will decline.
Saudi Arabia said Sunday it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it
first announced in May. But that pledge at the meeting held in the Saudi city of Jeddah fell far short of U.S. hopes for a
"Make no mistake about it, the excessive speculation in commodity markets is having a devastating effect at the gas pump
that is rippling through our entire economy," said Rep. Bart Stupak, D-Mich., who chaired the hearing of a House Energy and
Why Do Higher-Education Costs Rise More Rapidly Than Prices in General? by Robert B. Archibald
and David H. Feldman June 2008
The idea for this article dawned on us over a year ago, when we first
read David Longanecker’s article, “A Tale of Two Pities: The Story of Higher Education Finance in America,”
in the January/February 2006 issue of Change. Longanecker describes a standoff between state legislators and representatives
of state-supported colleges and universities. The legislators argue that they are doing their share in funding higher education
by pointing to data showing that appropriations per student to colleges and universities have grown more rapidly than the
inflation rate. Meanwhile, representatives of state-supported colleges and universities argue that, on the contrary, state
legislators are letting them down. They point to data showing that state appropriations are a declining percentage of college
and university revenues.
Both are right. And it does not take a rocket scientist to understand how this can be so: Costs per student in public colleges
and universities have risen much faster than the price of goods and services in the indices we use to measure inflation. But,
then, why do costs in higher education rise more rapidly than the overall inflation rate?
The study of costs in any industry, higher education included, should focus on two questions: First, what are the characteristics
that drive costs in that particular industry? Second, what are the factors that make those costs similar to costs in other
industries? The majority of the studies of cost pressures in higher education address the first question. They produce lists
of the special features of colleges and universities that have increased costs. The question that most of them (except studies
of “cost disease,” described below) ignore is whether any of the processes they describe also are underway in
other industries—or alternatively, whether there are any strong forces affecting costs in higher education common to
other industries in the economy.
Robert Archibald is Chancellor Professor of Economics at the College of William and Mary, where he has been chair of the
economics department, director of the Thomas Jefferson Program in Public Policy, and interim dean of the Faculty of Arts and
Sciences. David Feldman is University Professor for Teaching Excellence in the department of economics at William and Mary;
he also teaches in the Thomas Jefferson Program in Public Policy. The two authors are working on a book about the cost of
Oil Rises More Than $11 To Record High Some analysts forecast price could hit $150 a barrel
by Fourth of July The Associated Press
NEW YORK - Oil prices made their
biggest single-day leap ever Friday — clearing $139, dragging the Dow Jones industrials down nearly 400 points and raising
the once-unthinkable prospect of $150 oil and even higher gas prices by the Fourth of July.
The meteoric rise of nearly $11 for the day piled atop an increase of almost $5.50 the day before, taking oil futures more
than 13 percent higher in just two days, easily a record on the New York Mercantile Exchange.
And those weren't the only stunning numbers of the day: The government also reported the nation's unemployment rate zoomed
to 5.5 percent in May, a monthly rise of half a percentage point, the biggest in 22 years.
Oil surged higher after Morgan Stanley analyst Ole Slorer predicted strong demand in Asia and tight supplies in the Western
Hemisphere could drive prices to $150 by Independence Day, when millions of Americans take to the roads.
That means no end in sight for spiraling gas prices, already above $4 per gallon in much of the country.
Even longtime market observers were shocked by the magnitude and speed of oil's rally.
"We're into unchartered territory, and somewhat off the map as far as historical precedents are concerned," said Jim Ritterbusch,
president of energy consultancy Ritterbusch and Associates in Galena, Ill.
Besides the jump in the unemployment rate, the Labor Department said employers had cut 49,000 jobs in May, the fifth straight
month of nationwide losses. Job losses for the year reached 324,000.
The White House said President Bush was considering further plans to help energize the economy, already teetering on the
edge of recession and crippled by a tumbling housing market and other factors.
On Wall Street, the Dow plunged 394.64 points, more than 3 percent, to close at 12,209.81, the biggest drop in more than
15 months in both percentage and points terms.
Wall Street had managed to shrug off oil's advance on Thursday but succumbed to extreme anxiety Friday.
The stock market's great concern of late has been whether consumers would curb their spending on non-essentials as they
were forced to pay more for gas and other staples.
The previously unthinkable idea of $150 oil, and gasoline that will keep climbing above $4, made it clear to investors
that consumers would be forced to be even more conservative than they have been in recent months.
Before Thursday, oil had receded nearly $13 a barrel from its highs, a respite from its nearly record-every-day march.
But the end of the week sent it right back up again.
Food Shortages and Rising Costs
By David Phillips
May 19, 2008
Rising costs for food around the world and shortages of food in several nations have many worried how
they will feed their families.
Food riots have broken out in Bangladesh, Egypt, Burkina
Faso, Mauritania, Mozambique and Senegal. Rising prices have hit poor countries like Peru (and even developed countries like
Italy and the United States).
Why is this happening?
Several problems have come together all at the same
time, or as some might say, “a perfect Storm.” They include soaring petroleum prices, which increase the cost
of fertilizers, transport and food processing; rising demand for meat and dairy in China and India, resulting in increased
costs for grain, used for cattle feed; and the ever-rising demand for raw materials to make biofuels.
The global market has driven the growing demand for
grains and a shortage of supply. Wheat inventories, for example, have reached a 30-year low. In one year inventories in the
European Union have plummeted from 14 million to one million tons. The fact is that arable land cannot be increased at will.
Over the past three decades, the amount of arable land worldwide has stagnated at about 1.5 billion hectares (3.7 billion
acres) while the world’s population has increased.
World Bank President Robert Zoellick said, "While many
are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs and it is getting
more and more difficult every day.”
The United States uses corn to make ethanol and as we
increase the amount of ethanol requirements less corn is available for consumption.
A couple of years ago the United States Congress passed
The Energy Policy Act of 2005 which requires that increasing amounts of ethanol be used in the United States to dilute gasoline.
The law called for 4 billion gallons of ethanol to be used in 2006, 6.1 billion gallons in 2009, and 7.5 billion gallons by
Global inventories of grains are nearing historic lows,
while twenty percent of the U.S. corn crop this coming year will be used for ethanol production.
Meanwhile wheat, rice and soybean prices have reached
all-time highs and corn prices have jumped to a 12-year high.
"Congress needs to revisit these food-for-fuel policies.
We really shouldn't be pitting our fuel needs against hunger and the environment," said Scott Faber, vice president of foreign
affairs for the Grocery Manufacturers Association. "I don't think any member of Congress would have voted for this legislation
if they had known that the prices of corn would jump like this."
How long will these shortages last?
Michael Schmitz, an agricultural economist and professor,
used databases to forecast how far trends would last when global conditions change like they have recently. The professor
says that the current shortages and price hikes are not a phenomenon that will end in a few months -- or even in a few years.
Schmitz predicts: "This could continue for two or three decades."
There are many contributing factors that come into play
in this “perfect Storm”, droughts caused by Global Climate Change, a growing world population, energy costs, Wars.
More land is being used for residential and industrial uses around the world and less is being used for agriculture and there
is a lack of cooperation and some denial among many of the world’s leaders.
Riots have already broken out in parts of the world
because of food shortages, these shortages will be getting worse before they get better according to most experts. We will
see many more riots in the months and years to come if our world leaders do not start to take this crisis seriously.
If you think going to war for oil like we have is bad,
wait until millions of people start rioting because they are hungry.
David Phillips is a Vietnam Era Veteran, a Democratic Party Activist, and David is also the Publisher
and Editor of the online political magazine YodasWorld.org
You can also read David’s weekly column in the Santa Ynez Valley Journal or you can go to
their web site: www.Syvjournal.com
Oil Leaps After Bush's Saudi Trip By James Quinn Wall Street Correspondent
The price of oil soared to yet another
record high as President George W. Bush's second trip to Saudi Arabia in four months appeared to deliver a token victory in
the battle for increased oil output.
In New York, oil for June delivery touched a new high of $127.82 a barrel, spurred by investment bank Goldman Sachs predicting
an average price per barrel of $141 in the latter half of the year.
Early indications from President Bush's meeting with King Abdullah of Saudi Arabia suggested he received largely the same
reception as on his visit in January.
advertisementWhite House aides, including US National Security Adviser Stephen Hadley, said immediately after the meeting
that King Abdullah again pledged to keep pumping as much oil as needed to meet demand but said that he saw no unmet current
However, Saudi oil minister Ali al-Naimi later said that on May 10, the kingdom had increased oil output by 300,000 barrels
on the request of "about 50 customers worldwide".
The rise will bring Saudi's production in June to 9.45m barrels a day, and does not appear to have been granted in direct
response to President Bush's visit. "In the future, if the need appears, Saudi Arabia has no objection to producing more,"
Mr Al-Naimi said. However, it is understood that during his meeting with Mr Al-Naimi and the King, President Bush was warned
increased production was unlikely to lead to lower US energy prices.
Ahead of his visit, President Bush had hoped that as the world's largest supplier of oil, accounting for about 10pc of
global output, King Abdullah might be persuaded to act as a catalyst to encourage others in the OPEC cartel to also pump more
However Mr Al-Naimi said the decision to increase production by a further 300,000 barrels was purely in response to other
OPEC nations decreasing their own production.
The US leader is keen to reduce the cost of oil due to America's heavy reliance on petrol, with both the public and businesses
feeling the pinch as a result of ever higher prices at the pump.
Meanwhile oil analysts at Goldman Sachs provided little comfort, forecasting that the average price of a barrel of US crude
oil will average $141 in the second half of 2008, against its earlier forecast of $107.
Goldman also raised its average price projection for 2009 to $148 a barrel.
Gas To Hit $7 A Gallon By Marty Jerome
Both Qatar's oil minister and
the head of OPEC can see oil hitting $200 a barrel before the end of the year and one analyst says gas could reach $7 a gallon
within four years. That could mean cataclysm for the global economy.
The world got a little relief today when BP reopened its North Sea pipeline. But the price of gas is averaging $3.60 a
gallon and the price of oil is flirting with $120 a barrel with no relief in sight. Market forces don't seem to be functioning
in their normal order. OPEC controls only about half of the world's oil supply. Ordinarily, when prices spike skyward, the
world's non-cartel spigots open wide. Why isn't this happening and who's to blame?
Oil Companies. Admittedly, obscenely compensated oil executives are laying low these days. Big
Oil is rolling in profits. The Bush Administration's tax subsidies to oil companies, which were intended to prod exploration,
should infuriate commuters. And yet the profit margins of oil giants are only slightly higher than the average for the S&P
500. And much of the wealth from these companies is pumped back into the economy in dividends, employment, capital spending
and the like. Big Oil shouldn't get a walk (and windfall profit taxes make more sense than ever). But it's only a small part
of the problem.
China and India. It seems to be a global fact that an automobile signals your arrival into the
middle class. Without question, demand for oil in these countries is putting an inexorable upward push on gas prices. This
isn't going to change in your lifetime, and it should sound the alarm for North Americans and Europeans that their middle-class
lives will be threatened unless they develop alternative forms of energy -- fast. But the increasing demand for oil in China
and India is a long-term trajectory. It doesn't explain recent spikes. And in the short term, it's self correcting. As oil
prices spike, economies slow and the demand for oil eases. So does its price.
Ben Bernanke. Oil is currently priced in U.S. dollars. The Federal Reserve has feverishly tried
to calm credit markets in recent months with lower interest rates, which are a kind of Valium for bankers. As interest rates
drop, so does the value of the dollar. So it takes more dollars to buy a barrel of oil. Without question, the credit crisis
is a more pressing concern than high gas prices. Credit, after all, is the life blood of an economy. It is widely expected
that tomorrow the Feds will reduce interest rates again. But many analysts believe this is the last cut we'll see for a while.
Fighting inflation -- including rising gasoline prices -- is becoming a priority. When interest rates begin inching up again,
it will be bad news if you're taking out a car loan, good news at the pump. In the meantime, just be glad you don't have Ben
Speculators. It's never a good omen when fear swallows reason on the trading floor. But this seems
to explain part of what's happening with the price of oil. Or maybe it's just greed. Whatever. The good news is that these
speculative frenzies tend to end quickly. And ultimately, it's traders' fingers that get burned, not consumers.
Suppliers. Here's the mysterious missing piece in high gas prices: Saudi Arabia, Kuwait, Qatar
and other OPEC members try to keep supplies tight and prices high. But England, Norway, Russia and other non-OPEC countries
open the spigots to take advantage of high prices. This usually brings prices down. But supply disruptions have become rife
-- even with OPEC countries, such as Nigeria, thanks to an insurgency that keeps shutting down its pipeline. Norway's production
has dropped by 25 percent since its peak in 2001. Britain's has dropped by 43 percent. Alaska's Prudhoe Bay has dropped by
65 percent from its peak. Russia's is down and so is Mexico's. It's enough to make you think speculators are on to something.
When does fear resemble reason?
Bush Worst President In US History
President George W Bush is the most
unpopular president in modern American history, according to a new poll.
A CNN/Opinion Research Corp survey showed 71% of Americans disapprove of how Mr Bush is handling his job as president.
No US president has had a higher disapproval rating in any CNN or Gallup Poll and it is the first time such a rating has
broken the 70% mark.
Keating Holland, CNN’s polling director, told the news network: “Bush’s approval rating, which stands
at 28% in our new poll, remains better than the all-time lows set by Harry Truman and Richard Nixon (22% and 24%, respectively),
but even those two presidents never got a disapproval rating in the 70s.
“The previous all-time record in CNN or Gallup polling was set by Truman, 67% disapproval in January 1952.”
In August 1974, just before President Nixon’s resignation, his disapproval rating stood at 66%.
The poll also showed support for the Iraq war has never been lower, with 68% opposing the war and just 30% in favour.
U.S. May Need To Change Ethanol Policy To Meet Food Demand, Obama Says
Barack Obama said the U.S. may need
to revise its ethanol policy in light of rising food costs, a stance which might hurt him in agricultural states. "What I've
said is my top priority is making sure people are able to get enough to eat," he said.
"We have rising food prices around the United States. In other countries, we're seeing riots because of the lack of food
supply, so this is something we're going to have to deal with," Obama said. His stance is similar to that of McCain and Clinton.
The EPA requires ethanol, a renewable energy source, to be blended into U.S. gasoline, a mandate backed by President Bush
and the senators who represent farming states. Some scientists say food-based biofuels should be halted during the food crisis.
Oil Prices Hit Intraday Record Near 120 Dollars April 28, 2008
SINGAPORE (AFP) — World oil
prices hit an intraday record near 120 dollars a barrel on Monday after the shutdown of a major North Sea pipeline added to
supply worries, analysts said.
New York's main oil futures contract, light sweet crude for delivery in June, touched 119.93 dollars a barrel in electronic
deals and was later trading in Asia 86 cents higher at 119.38 dollars.
The contract closed 2.46 dollars higher at 118.52 dollars a barrel on Friday at the New York Mercantile Exchange.
Brent North Sea crude for June delivery rose 72 cents to 117.06 dollars a barrel after a rise of 2.00 dollars to 116.34
dollars on Friday, when the contract hit a record intraday peak of 117.56 dollars.
Over the past two weeks oil has crashed through a series of records, sparking international concern. Prices were boosted
by the weaker US dollar, supply worries and the OPEC cartel's reluctance to increase output, dealers said.
David Johnson, an oil analyst at Macquarie Research in Hong Kong, said that prices could breach the psychologically important
120-dollar level later Monday.
"Supply worries have pushed oil prices higher since Friday, and will remain the dominant influence on prices in the near
term," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
Britain on Sunday shut down a North Sea pipeline which supplies 40 percent of its oil and gas, sparking panic-buying of
petrol after a strike at a major refinery.
The start of a two-day walkout by around 1,200 workers at the Grangemouth refinery, west of Edinburgh, in Scotland, forced
the neighbouring Forties pipeline to close down at the same time, operator BP said.
The pipeline brings more than 700,000 barrels of crude oil ashore every day and supplies Britain and international markets.
It cannot function without power and steam from Grangemouth.
Prices rallied on Friday as the Grangemouth plant was shut down ahead of the strike, which is over pensions.
The disruptions in crude supplies are "potentially quite significant", said Moore. "The loss of crude oil from Scotland
is quite material in the context of the oil market."
Alan Duncan, the British Conservative party's industry spokesman, warned that the closure would hit world oil prices.
"The interdependence of our North Sea oil production and the refinery... has implications for global oil prices," he told
Sky News television.
"So world oil prices have gone up and we're going to see local oil prices and petrol prices going up."
In Africa's biggest crude producer, Nigeria, the most prominent armed group in the southern oil-producing region on Friday
sabotaged a supply pipeline belonging to Anglo-Dutch energy giant Shell.
Shell spokesman Tony Okonedo confirmed the attack but said he could not comment on the extent of the damage.
Several supply pipelines owned by Shell and Chevron have been destroyed in recent weeks.
Royal Dutch Shell is the largest oil operator in Nigeria, accounting for about half of the country's 2.1 million barrels
per day output. The company has seen a wave of attacks on its facilities in recent months.
Violence in the Niger Delta has reduced Nigeria's total production by a quarter in the past two years.
Food Crisis: UN To Reveal Battle Plan by Denis Rousseau
United Nations Secretary
General Ban Ki-moon was set Monday to lead a concerted effort by 27 key UN agencies to tackle the growing crisis caused by
a worldwide sharp rise in basic foodstuff prices.
The UN was scheduled at a two-day conference in the Swiss capital Bern to reveal a battle plan of emergency measures, while
exploring other longer-term measures to solve the world's food crisis.
This will involve adjudicating between advocates of protectionism and those who favour opening up markets, as well as between
supporters of biofuels and opponents thereof.
Rising populations, strong demand from developing countries, increased cultivation of crops for biofuels and increasing
floods and droughts have sent food prices soaring across the globe.
"The world food crisis and the solutions that the United Nations can provide will be at the centre of discussions," said
the UN. The talks hosted by Ban will take place behind closed doors at the Universal Postal Union headquarters in Bern, lasting
all day Monday and Tuesday morning.
Results of the deliberations are expected Tuesday when Ban Ki-moon gives a press conference flanked by Josette Sheeran,
Executive Director of the UN's World Food Programme, World Bank President Robert Zoellick, Jacques Diouf, head of the Food
and Agriculture Organisation (FAO), and Lennart Bage, President of the International Fund for Agriculture Development.
The FAO has warned that sharp rises in cereal prices have left 37 poor countries in an emergency situation sparking food
Ban Ki-moon called in Vienna on Friday for immediate concerted action to resolve the global food crisis.
"In the short term, we must address all the humanitarian crises which have been impacting poorest of poor pople in the
world," he said.
The World Food Programme had made an urgent appeal for additional 755 million dollars (485 million euros) to fill the gap.
But in the medium to longer term, "the international community and its leaders in particular should sit down together on
an urgent basis and address how we can first of all improve the economic system, the distribution systems, as well as how
we can promote new production of agricultural products".
"The steeply rising price of food has developed into a real global crisis," Ban told journalists in Vienna.
"The United Nations is very much concerned, as all other members of the international community are. We must take immediate
action in a concerted way throughout the international community."
Ban estimated that around 100 million of the world's poorest who previously did not require help now can not afford to
The World Trade Organisation, whose Director-General Pascal Lamy will also attend the Bern talks, says the food crisis
reinforces the need to open up world markets.
"Agricultural subsidies by rich countries have destroyed the agriculture of poor countries," a spokesman told AFP. "A more
open system will be less subject to distortion."
The UN Conference on Trade and Development (UNCTAD) is also seeking a rapid conclusion to current world negotiations in
the framework of the Doha Round.
The head of the International Labour Organisation (ILO), Juan Somavia, has warned against the danger of seeking only temporary
solutions to the latest crisis, saying this would only mean a return to the original problem in a world in which globalisation
would not benefit the world at large.
Dominique Strauss-Kahn,head of the International Monetary Fund (IMF), has criticised protectionism and the use of foodstuffs
to make biofuels, and called for a reform of world coordination of agricultural policy.
ECONOMY -- STATES TAKE THE LEAD IN POVERTY REDUCTION
A recent report released by two prominent poverty-reduction groups highlights the efforts of more than a dozen states to reduce poverty and lift Americans into the
The report's lead author, Jodie Levin-Epstein of the Center for Law and Social Policy, explains that
there are many new factors forcing state lawmakers to take action, including "growing income inequality, a general economic insecurity, and the realization that to stay globally competitive we need a workforce
that is skilled and agile. ... These add up to a new political awareness that we can not allow poverty -- and a lack of economic
opportunities for people in poverty -- to continue to be largely ignored."
Connecticut, Delaware and Vermont have pledged to cut child poverty by 50 percent in the next 10 years; Michigan will be holding its first statewide child poverty summit this fall; Minnesota has commissioned a legislative group to end poverty in the state by 2020; and Colorado and Iowa have established legislative caucuses devoted to eradicating poverty around the state.
The Center for American Progress has developed a strategy to cut poverty in half in the next 10 years.
Democrat Blames Weak Economy On Iraq War By WILL LESTER Associated Press
The growing cost to the
United States of fighting the war in Iraq "is not only linked to our economic skid, but is a leading cause of it," a Democratic
congressman said Saturday.
Rep. John Yarmuth of Kentucky linked the costly, unpopular war with the growing economic troubles — some say recession
— in this country.
Yarmuth said in the Democrats' weekly radio address that the testimony this week of Gen. David Petraeus and Ambassador
Ryan Crocker about the Iraq war served as reminder of the billions of dollars being poured into Iraq as the U.S. economy struggles.
"General Petraeus and Ambassador Crocker failed to offer a plan to change direction in Iraq and redeploy our troops," Yarmuth
said. "Instead, they offered more of the same, with U.S. troops and taxpayers paying the price."
The U.S. government has spent "more than half-a-trillion dollars" in support of the war effort, while that money could
be spent on pressing needs in this country, he said.
In February, an Associated Press-Ipsos poll found that pulling out of Iraq was the most named remedy for fixing U.S. economic
Forty-eight percent of those surveyed said a withdrawal would help the country's economic problems "a great deal" and 20
percent more said it would help somewhat. Some 43 percent said increasing government spending on health care, education and
housing programs would help a great deal; 36 percent named cutting taxes.
"Across America, our roads and bridges are crumbling and are in desperate need of repair, yet taxpayer dollars are being
squandered on an Iraqi government that is riddled with waste, fraud and corruption," Yarmuth said.
He said "the cost of one month in Iraq could extend the Children's Health Insurance Program, which the president vetoed,
to 10 million children of working families for a full year."
He noted that Congress has passed an economic stimulus package to send millions of Americans up to $1,200 that could provide
a boost to the economy.
But Yarmuth isn't satisfied.
"We know we must do more," he said, adding that Democrats are pushing for a second economic stimulus package to aid workers,
their families and businesses.
The White House said the first economic stimulus package should be given a chance to work before a second is passed.
American Airlines Cancels Flights While Investigations Continue
American Airlines had to cancel another
595 flights on Friday, bringing the week's total to 3,079 amid a safety inspection crackdown.
Safety inspections have also grounded hundreds of United, Southwest, Delta, Alaska and Midwest Airlines flights in the
wake of a scandal over skipped aircraft inspections.
Federal investigators have started to question federal safety administrators over what is being described as the cosy relationship
between them and airline bosses.
Last week, whistle-blowers detailed conduct by higher-ranking FAA officials that permitted Southwest Airlines to avoid
aircraft inspections, allowing some to fly with cracks in the aircraft wings and fuselage.
Gas Prices Set Record, Oil Moves Higher By ADAM SCHRECK AP Business Writer
NEW YORK — Gas and diesel pump
prices jumped to yet another record Friday, piling on the costs for motorists as well as consumers reliant on trucks, trains
and ships that deliver goods to market.
Retail gasoline rose 0.8 cents to a national average of $3.365 a gallon, although drivers in California could expect to
pay nearly 30 cents more for regular and over $4 a gallon for higher grades, according to AAA and the Oil Price Information
The increase marks the latest in a series of retail gasoline records in recent weeks, and leaves drivers paying 56 cents
more a gallon now than they did a year ago. And there may be more to come.
"We do think prices, particularly for self-serve regular, are going to continue to go up," AAA fuel price analyst Geoff
Oil prices also edged higher in a late-day push, but remained more than $2 below an all-time high set earlier in the week.
Light, sweet crude for May delivery rose 3 cents to settle at $110.14 on the New York Mercantile Exchange.
Analysts expect gasoline prices will continue to set records as more drivers take to the roads as summer approaches and
refineries complete their conversion to more expensive summer-grade fuel. It is unclear how high prices will go, however,
because a bigger fuel bill could convince some drivers to cut back.
Payment Schedule for Tax Returns Received and Processed by April 15.
the last two digits of your Social Security number are:
economic stimulus payment deposit should be sent to your bank account by:
the last two digits of your Social Security number are:
economic stimulus payment deposit should be sent to your bank account by:
more information, you can go to the Internal Revenue Services' website at www.irs.gov
ECONOMIC CRISIS HITS BIG BUSINESS, MEMBERS OF CONGRESS
Last month, the
New York Times reported that the banking and housing crises had moved "
taking a toll on the Mortgage Bankers Association (MBA). Last year, the MBA was "thrilled to sign a contract to buy a fancy new headquarters
building in downtown Washington." Since then, however, the group "has fallen on tough times as many of the subprime mortgages
dispensed by some of its members proved dicey."
The MBA is now finding it "harder than it imagined to pay its own mortgage," forced to make cuts to
"expenses across the board." Roll Call reports that members of Congress have also become "
"All told, tumbling share prices for more than a dozen of the most troubled banks and investment houses,
which last week continued to write off record numbers of bad loans, may have cost 51 Members as much as $13.2 million in stock
value during the past 15 months."
Drake Pacific Well Expected To Produce Over 100 bbl/d
Drake Pacific Enterprises Ltd.
(DPE) has completed preliminary production testing on the previously announced Swan Hills oil discovery.
DPE ran a multi-day swabbing program that has produced an average rate in excess of 240 Bbld; however, as pressure continues
to build on a daily basis the company must wait for stable pressure or 14 days from completion to begin production. Production
should commence before April 10th.
DPE expects that the well will have an initial production rate over 100 Bbld (Net 70 Bbld plus royalties). As DPE's current
production is approximately 130 Boe a day, this discovery will have a significant impact on oil reserves, production, and
The company plans to drill a second well at Swan Hills as part of the 2008 Fall drilling program.
DPE and its partners (DPE net working interest of 22% to 57%) have also completed construction of a pipeline to allow the
reactivation of both oil and gas wells in the Sousa area.
Total gross production from these two wells was approximately 130 Boe per day (35% oil) at the time of shut-in. Production
is expected to begin within weeks.
In addition to the ongoing programs at Sousa and Swan Hills, DPE plans an aggressive program this spring with new drills
at Retlaw (oil & gas) and Suffield (oil).
Weapons Cost Overruns With domestic programs being cut, Pentagon spending and delays are
slap in the face
A new federal audit shows that the
Defense Department’s weapons acquisitions are, for the sixth year in a row, billions over budget and years behind schedule.
The report released Monday by the Government Accountability Office, the investigative arm of Congress, shows that the $1.6
trillion the government has spent on ships, aircraft, weapons systems and satellites is $295 billion over budget. And the
delivery of these items is two years behind, on average, the GAO says.
For example, the GAO cites the Navy’s $5.2 billion Littoral Combat Ship project. The cost of the first two ships
is expected to be more than twice the $472 million budgeted.
Such cost overruns and delivery delays have been documented in the GAO’s analyses of selected weapons acquisitions
in each of the past six years. Yet, GAO auditors say, the Defense Department has yet to make marked improvements.
“It’s not getting better by any means,” Michael Sullivan, director of the GAO’s acquisition and
sourcing team, told The Washington Post. In fact, Sullivan said, the process is “taking longer and costing more.”
Part of the problem is that there are more projects than there is money, Sullivan said. And many of the technologies are not
ready to go into production, and the systems take too long to design, develop and produce.
Certainly, our military needs the best equipment and weapons the nation can provide. But the Pentagon should get a handle
on its spending by working harder to stay within its budget and setting budget projections that are more realistic.
Who's A Dropout? The country needs a consistent -- and fair -- way to count who doesn't
For too long, high schools and
states have played hide-the-dropout, artificially inflating their graduation rates. In many places, a teenager practically
has to show up at the principal's office and shout "I'm a dropout!" to get counted as one. Considering that the dropout rate
is, even by sunny estimates, distressingly high, U.S. Education Secretary Margaret Spellings is right to plan a standardized
method of reporting nationwide. The public won't demand change when it cannot clearly see the problem.
This is one subject, though, that calls for delicate handling -- not the bludgeon-likeapproach of the rest of the No Child
Left Behind Act. Depending on who's doing the counting and how, the dropout rate in the Los Angeles Unified School District
is somewhere between 25% and 55%. Spellings can do more harm than good if she devises rules that make schools look unrealistically
bad. A case in point is the study released last week by the Editorial Projects in Education Research Center, which placed
the city's dropout rate at 55%.
The study over-counts dropouts by failing to take into account that 27% of L.A. Unified's students move each academic year;
those who move out of the district are considered dropouts even though many may be attending school in a neighboring city.
In addition, the district rightly requires about 20% of its ninth-graders to repeat the grade to bring their work up to high
school level, but the study counts anyone who doesn't take a diploma within the traditional four years as a dropout. So much
for students who need an extra year to pass the exit exam or who earn an equivalency degree.
The only way to count dropouts with reasonable accuracy is with a student identification system, something that California
has promised for years but never delivered. If Spellings is committed to meaningful dropout figures, she will require -- and
fight to fund -- student identification throughout the nation. An important side benefit of student tracking: It allows states
to measure actual student progress year to year, a better way of holding schools accountable under the federal act than the
When Spellings talks about giving the public comparative figures, she should consider whether those comparisons will hold
up to scrutiny. Will states like California, which has a high school exit exam, be counted the same as states with lower expectations?
After all, it's not too hard to boost graduation rates, if that's what the U.S. Education Department wants. Just let the students
warm classroom seats for four years, then hand them a diploma, whether or not they can read. Such shenanigans were the main
impetus for the school accountability movement in the first place.
Instead of narrowly defining high school graduation as four years or you're out, Spellings should encourage schools to
move away from structures that no longer hold meaning for many students, especially immigrants who struggle to learn English
at the same time they're trying to graspalgebra. Who said high school has to consist of the traditional three years and 10
months? Spellings ought to reward schools that innovate with a second, remedial "superfreshman" year, or that launch post-senior
classes to help older students pass the exit exam, rather than labeling these schools as failures on the dropout front.
Spellings deserves praise for insisting that schools break down their dropout numbers to reflect which groups -- black,
Latino, impoverished -- leave school in the greatest numbers. She seems to possess a sincere passion for improving the educational
lot of poor and minority students. After years of ignoring its vanished students, Los Angeles Unified is finally paying attention.
As the district tries to turn this situation around, the question is whether the federal government will be its ally or an
Bush Seeks Financial Regulation Overhaul By MARTIN CRUTSINGER AP Economics Writer
The Bush administration is proposing
a sweeping overhaul of the way the government regulates the nation's financial services industry from banks and securities
firms to mortgage brokers and insurance companies.
The plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained by The Associated
The Fed would be given broad authority to oversee financial market stability. That would include new powers to examine
the books of any institution deemed to represent a potential threat to the proper functioning of the overall financial system.
The proposal, which will be outlined Monday in a speech by Treasury Secretary Henry Paulson, is certain to set off heated
debates within different sectors of the financial services industry and in Congress, where some Democrats are likely to complain
that the proposal does not go far enough to crack down on abuses.
The administration divided its recommendations into short-term goals that could be adopted quickly, intermediate recommendations
and an "optimal" regulatory framework, which contains a radical restructuring of how the government supervises banks and other
The recommendations are the product of a yearlong review that was begun in an effort to modernize the government's regulatory
structure so that the country's financial services industries could better compete in a fast-changing global economy.
The plan also seeks to address problems that have been brought to light in recent months since a severe credit crisis began
roiling financial markets last August.
That crisis has already claimed as its biggest victim Bear Stearns, the nation's fifth-largest investment bank, which came
to the brink of collapse before a government-arranged purchase by JP Morgan Chase & Co.
"I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods
of financial market stress that seem to occur every five to 10 years," Paulson will say in the remarks he will deliver on
But the plan does seek to address problems highlighted by the current crisis in which the Fed in an unprecedented move
has begun making direct loans to securities firms in an effort to shore up a system badly shaken by billions of dollars of
losses stemming from sour mortgage loans.
The proposal would allow the Fed, in its new role as "market stability regulator," to dispatch examiners to check the books
not just of commercial banks but of all segments of the financial services industry.
The administration proposal would also consolidate the current scheme of bank regulation by shutting down the Office of
Thrift Supervision and transferring its functions to the Office of the Comptroller of the Currency, which regulates nationally
The plan recommends that the Securities and Exchange Commission, which regulates stock trading, be merged with the Commodity
Futures Trading Commission, which regulates futures trades for oil, grains and various other commodities.
The plan would create a national regulator for the insurance industry, which is now largely governed by the states, and
would create a Mortgage Origination Commission to try to address the abuses exposed in the current tidal wave of mortgage
The role Federal Reserve Chairman Ben Bernanke and his colleagues have been playing to shore up the financial system would
be formalized in the administration plan by giving Fed officials greater power to detect where threats might be lurking in
The proposal is certain to generate intense scrutiny in Congress and within the financial services industry, where past
efforts to change how regulation is handled have met with fierce resistance.
Many Democrats in Congress are already pushing tougher proposals that would impose much stricter regulation in an effort
to crack down on abuses exposed by the current credit crisis.
Sen. Charles Schumer, D-N.Y., said he believed Paulson's plan offered some valid suggestions.
"In broad outlines, we agree with large parts of Secretary Paulson's plan," Schumer, chairman of the Joint Economic Committee,
said in a statement. "He is on the money when he calls for a more unified regulatory structure, although we would prefer a
single regulator to the three he proposes."
Under Paulson's approach, the long-term goal would be to designate the Fed as market stability regulator and to have a
financial regulator who would focus on financial institutions that operate with government guarantees such as providing deposit
The administration plan, which was first reported by The New York Times on its Web site Friday night, also proposes a business
conduct regulator who would be in charge of overseeing consumer protection issues.
The initial reaction from the securities industry was also positive.
"Treasury has delivered a thoughtful and sweeping plan which should provoke intense discussion, debate and potential legislative
changes," said Tim Ryan, president of the Securities Industry and Financial Markets Association.
"Our present regulatory framework was born of Depression-era events and is not well suited for today's environment where
billions of dollars race across the globe with the click of a mouse," Ryan said in a statement.
Buyers' Revenge: Trash the House After Foreclosure By Michael M. Phillips
LAS VEGAS -- Eddy Buompensiero
noticed eight pairs of shoes outside the door of the modest house on Mother of Pearl Street, evidence that the former owners
were still living there even though the bank had foreclosed.
Mr. Buompensiero, a gray-bearded inspector for REO Asset Services-1st Realty Group, rang the bell. When no one answered,
he taped a letter to the door offering the occupants $1,000 to move out. The catch: They won't get a cent if they trash the
house before they leave.
"If it was me, I'd take the money," Mr. Buompensiero said as he drove away. Either way, they're "going to get thrown
out in a couple of weeks."
The stucco subdivisions of Las Vegas are caught up in the nation's foreclosure crisis. These days, bankers and mortgage
companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched
holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate
agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have "substantial" damage,
according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C.
The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners
hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? "Yeah, somewhat,"
says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But "you lose a house,
and then you get some financial help -- it's a good thing...It's a win-win for both parties."
No one tracks how frequently such payoffs are made. In Las Vegas, agents hired by the banks to handle foreclosed properties
say the "cash for keys" approach, as it's known in the industry, is a regular part of the job. After all, formal eviction
proceedings can take months and cost potentially much more than a payoff.
However, the AP reports that ICF International, the company charged with distributing
$7.5 billion in federal relief money, "has posted strong profits, gone public, landed additional multimillion-dollar government
contracts -- and recently secured a potentially big raise from the state of Louisiana."
ICF works with
Road Home, a state-run, federally-funded program to compensate homeowners. "As of last month,
56,000 applicants -- nearly 40% of the qualified total -- had yet to receive a cent. Plagued by cost overruns and delays,
Road Home is expected to cost federal taxpayers $10 billion and has become a glaring symbol of frustration in post-Katrina
Yet ICF remains in the government's good graces: just this week, the Environmental Protection Agency
Bush Administration Defends Economic Policy By Paula Wolfson White House
The Bush administration is defending
its handling of the U.S. economy at a time of growing public unease. VOA's Paula Wolfson reports during a series of interviews
on American television Treasury Secretary Henry Paulson stressed the government will do what it takes to maintain stability
in the financial system.
The White House is waging an all-out effort to ease election year fears about the economy.
Polls show it is the number-one issue on the minds of most Americans, and from the president on down administration figures
are seeking to reassure the public.
They stress the fundamentals of the economy are sound, and steps are being taken to ensure the current slowdown is temporary.
A stimulus package of tax rebates and small business incentives has been signed into law.
And on Friday, the U.S. central bank helped strengthen a major investment firm facing collapse. The firm - Bear Stearns
- was caught up in the crisis in the home mortgage market.
On CNN's Late Edition program, Treasury Secretary Paulson said the action taken by the Federal Reserve was warranted.
"Our number-one priority with everything we are doing in the economic arena is to minimize instability, minimize spill
over into the real economy, and I think that is pretty clear from the actions you have seen the government take," said Paulson.
Paulson said officials are continuing to keep a close watch on the turmoil on the financial markets, but declined to say
if the government would step in again to rescue an investment firm.
Instead, he tried to keep the focus on the positive. During an appearance on ABC's This Week program, he expressed confidence
that the financial markets would work their way out of the current crisis.
"Our financial institutions - our banks and investment banks - are very strong and I am convinced that they are going to
come out of this situation very strong," he said. "Our markets are resilient, flexible. I am quite confident we are going
to work our way through this situation."
But top Democrats in Congress are less sure about the prospects for a speedy recovery, and they are putting the blame for
the nation's economic woes squarely on the Bush White House.
House Speaker Nancy Pelosi told This Week the Bush
administration waited too long to take action.
"I think that much of what the administration has done has been too late," said Nancy Pelosi.
Pelosi noted that Democrats are already working on a second economic-stimulus package. President Bush has said he wants
to give the current plan a chance to work before taking further measures.
The president meets with his advisory panel on financial markets on Monday. Among those taking part in the discussions
will be Paulson and Federal Reserve Chairman Ben Bernanke.
Fed Chief Warns Anew on Foreclosures By PETER S. GOODMAN
Ben S. Bernanke, the Federal Reserve
chairman, added fresh warnings on Friday about a gathering wave of home foreclosures bearing down on American communities,
while pledging new regulations to limit the impact and crack down on predatory mortgage lending.
“Mortgage delinquency and foreclosure rates have increased substantially over the past year and a half,” Mr.
Bernanke said during a speech in Washington. “Behind these disturbing statistics are families facing personal and financial
hardship and neighborhoods that may be destabilized by clusters of foreclosures.”
“These realities challenge to find ways to prevent unnecessary foreclosures,” and “ensure a regulatory
environment that promotes responsible lending,” he added.
The chairman’s words before the annual meeting of the National Community Reinvestment Coalition were perhaps most
notable for what they left unsaid: At a time of grave concern about a recession that many economists believe has already begun,
Mr. Bernanke offered no clues as to whether another cut in interest rates is in the offing when Fed governors convene on Tuesday.
Nor did Mr. Bernanke touch on intensifying fears about the global credit shortage spawned by the unraveling of American
mortgage markets. The severity of that crisis was brought home with stunning clarity by the morning’s news that Bear
Stearns, the venerable Wall Street investment bank, was leaning on emergency financing from JPMorgan Chase and the New York
That news triggered a fierce sell off on Wall Street, where the Dow Jones industrial average was down about 170 points
shortly before 1 p.m.
Even before the public distress call from Bear Stearns, markets had already assumed the Fed would drop the federal funds
rate by at least half a point and probably three-fourths of a point at next week’s meeting.
In aggressively lowering the rate on what banks charge each other for overnight loans in recent months, the Fed has been
seeking to stir economic activity: Lower rates make it easier for banks to get their hands on cash, which traditionally makes
them more likely to lend, giving businesses the wherewithal to invest and hire workers.
But lower interest rates also tend to increase inflation, because more easily flowing money leads to more buying, which
pushes prices up.
As it has dropped rates, the Fed has acknowledged longer-term concerns that this easing could ultimately worsen inflation,
even while concluding that the immediate threats to the economy — tight credit, plummeting home prices and a deteriorating
jobs market — demand freer credit at once.
Data released by the government on Friday morning appeared to give the Fed a little extra room to tilt further toward stimulating
the economy while worrying less about inflation: The Consumer Price Index showed that inflation was essentially flat in February.
That lent some credence to the argument that as the economy slows, this will diminish demand for goods, and that will automatically
apply the brakes to price increases.
Many analysts, however, argue that the February figure was an aberration. Gasoline and food prices have been rising sharply,
and this should be reflected in the data for March, removing whatever cushion Friday’s numbers appeared to provide.
None of this occupied Mr. Bernanke’s time at the podium in Washington. Instead, the Fed chairman focused on the widening
crisis in American real estate, while advertising the merits of a set of proposed new regulations he introduced in December.
Those proposals include barring lenders from making loans that borrowers cannot reasonably be expected to repay, and demanding
that lenders verify the incomes of borrowers rather than rely on their assurances.
The Fed also proposed barring lenders from marketing their mortgages as “fixed rate,” without specifying the
time the rate remains in place. That measure is a reaction to the growing number of homeowners who have landed in trouble
after their low promotional rates expire, inflicting them with much higher monthly payments.
Some 1.5 million subprime mortgages with adjustable rates are set to adjust upward this year, Mr. Bernanke said.
The Fed will take public comment on these proposed measures through April 8 before issuing final rules.
In making his case for the changes, Mr. Bernanke noted that more than half of the roughly 1.5 million foreclosure proceedings
initiated last year involved subprime mortgages — those extended to those with troubled credit, often in low-income
“Far too much of the lending in recent years was neither responsible nor prudent,” he said. “The terms
of some subprime mortgages permitted home buyers and investors to purchase properties beyond their means, often with little
or no equity. In addition, abusive, unfair or deceptive lending practices led some borrowers into mortgages that they would
not have chosen knowingly.”
But Mr. Bernanke noted that the mortgage crisis now extends far beyond subprime loans.
“In 2007, about 45 percent of foreclosures were on prime, near-prime, or government-backed mortgages,” he said.
ABC: No Question McCain Intervention Helped Airbus Filed by David Edwards and Nick Juliano
Republican presidential candidate
John McCain might be glad that he hasn't received a whole lot of attention since he officially locked up his party's nomination
earlier this month, because most eyes are on the still-ongoing Democratic race.
But critics of the Arizona senator are starting to make waves about the Arizona senator's relationships with lobbyists
with a European company, by charging that the results cost Americans jobs, according to ABC News.
European Aeronautic Defense and Space Co. and Northop Grumman Corp. were awarded a $35 billion Pentagon contract last month
to build new Air Force tankers, instead of Boeing Co., and the Seattle-based company is formally challenging the agreement.
Boeing's complaint asks the Government Accountability Office to make sure the EADS contract is fair. McCain pushed for
EADS to get the contract, and his campaign employs three former EADS lobbyists, although there is no specific evidence of
impropriety, according to ABC.
"Mr. Clean has a bunch of lobbyists that work for a company that won that contract," House Democratic Caucus chairman Rep.
Rahm Emanuel, D-Ill., told the network. "Some people claim the way the specs were written, it was all but certain that the
company that his campaign lobbyists worked for couldn't but get that contract."
McCain defended the arrangement, saying none of the EADS lobbyists he now employs lobbied him about the companies contract,
and he notes that he doesn't lack Boeing connections either, according to ABC:
But today in New Hampshire, McCain argued that his interest in opening up the bidding process was to benefit the taxpayer.
He cited his 2004 congressional investigation of a previous Boeing tanker deal, which uncovered a procurement scandal. "The
rather bizarre aspect of it is that I killed off a program that was going to cost the taxpayers an additional $6.2 billion,
executives went to jail, CEOs were fired," McCain said.
"What Senator McCain said he has tried to do is make the process for bidding more open, transparent and competitive," explained
ABC's Jake Tapper explained in a segment on the network. "In making that argument, McCain has benefited this consortium run
largely by Airbus. It has benefited that company without question. Was Senator McCain trying to benefit that company? That's
an open question but Boeing seems to think so. A lot of the Democrats in Congress seem to think that the deck was stacked
against Boeing. "
Bush Rejects Easing Of U.S. Embargo On Cuba By Matt Spetalnick
U.S. President George W. Bush said
on Friday that Cuba had replaced one dictator with another and vowed to maintain hard-line policies against the communist-ruled
island until it begins a democratic transition.
Bush insisted that Fidel Castro, despite having stepped aside last month and turned over the presidency to his brother
Raul, "is still influencing events from behind the scenes."
Speaking after a White House meeting with Cuban dissidents, he made clear he thought his critics had been wrong to see
the ailing Cuban leader's retirement as a chance to reconsider a decades-old U.S. trade embargo.
"That sentiment is exactly backward," Bush told reporters. "To improve relations, what needs to change is not the United
States. What needs to change is Cuba.
"Cuba's government must begin a process of peaceful democratic change. They must release all political prisoners. They
must have respect for human rights in word and deed and pave the way for free and fair elections," he said.
Growing ranks of U.S. politicians, from one-fourth of Congress to Democratic presidential candidate Barack Obama, are urging
a review of the U.S. policy of shunning Cuba.
Bush, who leaves office in January, has rejected any move toward normalizing relations, including holding talks with Raul
Castro, Cuba's first new leader in almost half a century. He has pledged to remain faithful to the communist revolution that
brought his brother to power in 1959.
"This is the same system, the same faces and the same policies that led to Cuba's miseries in the first place," Bush said.
"The United States is isolating the Cuban regime."
The European Union's top development aid official arrived in Cuba on Thursday to sound out the new president's plans and
relaunch ties that were largely frozen under his brother. Washington had opposed the visit.
Without naming any countries, Bush lamented that more of the world's major democracies had not joined the United States
and others in speaking out against Cuba's human rights record.
Oil Surpasses $103 For First Time By GILLIAN WONG
SINGAPORE (AP) — Oil prices
surpassed $103 a barrel for the first time Friday as persistent weakness in the U.S. dollar and the prospect of lower interest
rates attracted fresh money to the oil market.
Prices were supported by comments Thursday from Federal Reserve Chairman Ben Bernanke, who said the American economy is
not immediately threatened with stagflation, a combination of economic weakness and rising inflation.
Investors chose to see the comments as confirmation of their beliefs that the Fed will continue cutting interest rates
to try to shore up the economy.
Lower U.S. interest rates tends to weaken the dollar, and crude futures offer a hedge against a falling dollar.
"Due to the weakening dollar and the rising fear of inflation, investors have put money into commodities, oil included,"
said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"Commodities, as tangible assets, do not face as much inflationary threat as opposed to holding a currency," Shum said.
"Even though the value of money is changing, the asset continues to have an intrinsic value."
Light, sweet crude for April delivery jumped to a new trading record of $103.05 a barrel in Asian electronic trading on
the New York Mercantile Exchange before slipping back to $102.79 a barrel, up 20 cents, midafternoon in Singapore.
On Thursday, the contract jumped $2.95 to settle at a record $102.59 a barrel.
Shum warned that a price bubble was emerging in the crude futures market as investors ignored market fundamentals that
have shown continuous increases in U.S. crude supply while several recent forecasters have lowered oil demand growth predictions
for this year due to the slowing economy.
"We've seen seven straight weeks of builds in crude oil inventories. The oil market fundamentals are softening and yet
we see record highs being set, day in and day out," Shum said.
Shum warned of the possibility of a sharp correction at some point, though unlikely in the near term.
"Right now, there's a lot of trading based on emotion — emotions are high and that could keep crude oil at elevated
levels, but the market faces the risk of a price collapse."
The Japanese government on Friday urged the oil cartel OPEC to increase output to help ease record prices.
"The high crude prices are gradually damaging the global economy. This will damage the economies of oil-producing countries,"
Minister of Economy, Trade and Industry Akira Amari said.
The Organization of Petroleum Exporting Countries holds its next policy meeting on March 5. It is likely to decide to keep
current production levels unchanged, or even cut production, according to reported comments by OPEC President Chakib Khelil.
Khelil noted that oil inventories were growing, and that the recent rally in oil prices has been driven by the U.S. dollar's
weakness and speculative trades amid geopolitical risks.
Washington Post's Dana Milbank pointed out that at least nine news outlets, including the Associated Press, had covered the
predictions. Milbank said Bush, "once known for his common-guy skills, sounded eerily like his old man, who in 1992 appeared surprised that supermarkets had bar-code scanners."
in the press conference, Bush tried to duck a question about accepting foreign donations for his presidential library by insisting, "And I, frankly, have been focused elsewhere, like on gasoline
prices." The president's ignorance on the issue sets him apart from the American people: a poll released last month "found
that seven of 10 Americans expect pump prices to reach $4 a gallon by" summer.
$100 oil Won't Prompt Supply Hike - Opec by Simon Webb Reuters
Opec will not change its supply levels
in response to fresh record high prices above $100, Qatar's oil minister said on Thursday.
"We will not just react to $100 oil," Oil Minister Abdullah Al-Attiyah told Reuters by telephone. "Opec will move when
it sees physical demand for its oil."
US crude future hit a record of $101.32 on Wednesday on a surge of investor cash into commodities.
Concern that Opec will hold or even cut output when it meets on March 5 as well as uncertainty about Venezuelan and Nigerian
supplies, helped send prices to triple digits.
The surge this week was due to speculation and international political tension, not due to any problem with the fundamentals
of supply and demand, Attiyah said.
"The timing of this rise is very strange," Attiyah said. "The price is going the wrong way for the season. That shows it
is related to speculation and politics. Companies are lowering their requests for oil in March as usual ... so it doesn't
seem there is demand for more oil."
Attiyah said it was too early to say whether Opec should change its output policy at the March meeting.
"I cannot say if we will reduce supply or not, or what we will do," Attiyah said. "Who knows what the market will have
done by then?"
Demand in the second quarter typically falls as the northern hemisphere winter ends. Refiners take advantage of the dip
in demand to do maintenance.
Despite the expected drop in demand, high prices and supply uncertainty would make it difficult for oil to cut output,
Libya's top oil official and Opec sources said this week.
Analysts have suggested that Opec members could trim supply quietly if needed to stop prices falling too far, but were
unlikely to announce a formal reduction in its supply target at the meeting.
Opec kept its output steady at its previous meetings in December and February, despite calls from consumers for more oil
to douse high prices.
Nigeria's oil output has been hit by militant attacks and fellow Opec member Venezuela is threatening to halt oil sales
to the United States over a dispute with the world's biggest oil firm, Exxon Mobil. Attiyah declined to comment on the dispute
and what Opec would do if Venezuela cut US sales.
Qatar is one of the smallest producers in the 13-member Opec. The group pumps about 40% of the world's oil.
BERNANKE SAYS U.S. ECONOMIC OUTLOOK HAS 'DETERIORATED’
In a hearing
before the Senate Banking Committee last week, Federal Reserve Chairman Ben Bernanke said that "
His forecast was also echoed by Treasury Secretary Henry Paulson, who testified with him.
A new poll released last Thursday from the Pew Research Center finds that the American public's views
of the economy have "
plummeted since January." "Just 17% currently rate the nation's economy as excellent or good, down from 26%
last month. ... A majority of Americans (53%) now say their financial situation is only fair or poor, up from 49% in January."
Plan Calling For Rebates Heads To Bush's Desk
WASHINGTON -- Congress, facing
the prospect of an election-year recession, passed an emergency plan Thursday that rushes rebates of $600 to $1,200 to most
taxpayers and $300 checks to disabled veterans, the elderly and other low-income people.
President George W. Bush indicated he would sign the measure.
Passage in the House came by a 380-34 vote a few hours after Senate leaders ended a stalemate over the proposal. The $168
billion plan is intended to provide a boost for an economy battered by a housing downturn and a credit crunch.
The Senate's 81-16 vote capped more than a week of political maneuvering. The stalemate ended when majority Democrats dropped
their demand that rescue proposal offer jobless benefits, heating aid for the poor and tax breaks for the home building and
But Republican leaders agreed to add $300 rebates for older people and disabled veterans to the $161 billion measure that
the House passed last month.
The Senate vote ends more than a week of political maneuvering on the plan, which is aimed at reviving the economy. The
rebates would go to individuals making up to $75,000 a year, and to couples earning up to $150,000.
People who paid no income taxes but who earned at least $3,000 -- including through Social Security or veterans' disability
benefits -- would get a $300 rebate.
The retreat by Senate Democrats came after House Speaker Nancy Pelosi sided with Republicans, and urged the Senate to stop
its infighting and pass the stimulus plan.
Despite the fact that the newly approved bill won't land on Bush's desk until next week, officials at the U.S. Department
of Treasury said they would begin the process to issue the rebate checks immediately.
Rebate checks could begin arriving in May. The rebates would be based on 2007 tax returns, which are not due until April
Bush Proposes Record 3.1-Trillion-Dollar Budget by Claire Gallen
US President George W.
Bush on Monday unveiled a record 3.1-trillion-dollar budget for fiscal 2009 that widens the government deficit with an economic
stimulus and expenditures for the war in Iraq.
The plan drew immediate fire from opposition Democrats, including the two leading presidential contenders.
Bush's spending plan, sent to Congress for the fiscal year starting October 1, forecasts heavy deficits for the government
-- 410 billion dollars for the current year and 407 billion for the coming fiscal year.
The budget, an outline of spending plans that must be approved by Congress, is the first to exceed three trillion dollars.
Bush proposed 515.4 billion dollars in defense spending for the upcoming year, up from 479.5 billion in fiscal 2008.
The plan includes an additional 70 billion dollars dedicated for the "global war on terror," mainly for ongoing fighting
in Iraq and Afghanistan.
Although that figure is lower than the amount in the current budget, White House spokeswoman Dana Perino said the wars
in Iraq and Afghanistan would "certainly" cost more than what is in the budget.
Bush also budgeted over the current and upcoming year 145 billion dollars for the economic growth package the White House
and Congress are working to pass to help revive flagging economic growth.
The document includes a five-year budget outline that would temporarily increase the deficit for 2008 and 2009 before paring
it in subsequent years.
"The president's 2009 budget proposes to boost near-term economic growth, restrain spending, and reform entitlements, leading
to a balanced budget by 2012 and a more fiscally prudent path for the long term," Bush said in his budget message.
The deficit, which had fallen to 1.2 percent of US economic output or gross domestic product (GDP), would jump to 2.9 percent
of GDP in 2008 and ease to 2.7 percent in 2009.
Bush's $3 Trillion Budget Is US First
Bush Seeks to Preserve Legacy in Defense and Taxes With Final Budget That Hits $3 Trillion
By: MARTIN CRUTSINGER
In the nation's first-ever $3
trillion budget, President Bush seeks to seal his legacy of promoting a strong defense to fight terrorism and tax cuts to
spur the economy. Democrats, who control Congress, are pledging fierce opposition to Bush's final spending plan — perhaps
even until the next president takes office.
The 2009 spending plan sent to Congress on Monday will project huge budget deficits, around $400 billion for this year
and next and more than double the 2007 deficit of $163 billion. But even those estimates could prove too low given the rapidly
weakening economy and the total costs of the wars in Iraq and Afghanistan, which Bush does not include in his request for
the budget year beginning Oct. 1.
Last year, when Democrats were newly in the majority, there were drawn-out veto struggles. This year's fights could be
worse because it is an election year.
As in past years, Bush's biggest proposed increases are in national security. Defense spending is projected to rise by
about 7 percent to $515 billion and homeland security money by almost 11 percent, with a big gain for border security. Details
on the budget were obtained through interviews with administration officials, who spoke on condition of anonymity until the
The bulk of government programs for which Congress sets annual spending levels would remain essentially frozen at current
levels. The president does shower extra money on some favored programs in education and to bolster inspections of imported
Bush's spending proposal would achieve sizable savings by slowing the growth in the major health programs — Medicare
for retirees and Medicaid for the poor. There the president will be asking for almost $200 billion in cuts over five years,
about three times the savings he proposed last year.
There is no indication Congress is more inclined to go along with this year's bigger cuts; savings would come by freezing
payment rates for most health-care providers for three years.
Paulson Warns Senate On Stimulus Delays By Jeremy Grant Financial Times
Hank Paulson, the US Treas-ury
secretary, warned yesterday that adding direct spending measures to the $150bn economic stimulus package agreed last week
would be "a slippery slope" that could derail the deal, urging the Senate to approve it quickly.
His comments highlight Bush administration concerns that signs of dissatisfaction from top Senate Democrats with elements
of the deal - reached between the White House and House of Representatives - could at least delay the package.
"Once you start considering additions - the food stamps, unemployment insurance and so on - it's a slippery slope and there's
a real danger that we're going to [get bogged] down and screech to a stop," Mr Paulson told CNN.
This week will be critical to maintaining the bipartisan momentum behind the package. The Senate's finance committee is
expected to craft a bill that would allow congressional approval of an entire package by mid-February.
About $100bn (£50bn) in the package would go towards tax rebates to 117m families, with $50bn paying for incentives for
business such as greater tax cuts for equipment purchases.
On Friday, Chuck Schumer, the New York senator, said unemployment benefits and food stamps would generate "more bang for
the buck", and suggested that changes would be made.
Mr Paulson said the package had "good balance" aimed at giving money to the American people "and letting them decide, as
opposed to putting it into programmes".
He conceded there were "strong constituencies" for direct spending measures. But he added: "The leaders of the House .
. . were wise enough and decisive enough to recognise we need to keep this simple. And only by keeping it simple can we reach
a quick agreement and get the money out where it can make a difference. I'm optimistic that the leaders in the Senate will
do the same thing."
John Boehner, the Republican House leader, warned Democrats on Friday not to try to expand the package.
"We negotiated a solid bipartisan agreement that the White House will support. It would be irresponsible for Senate Democrats
to load this bill up with pork and other spending," the Ohio Republican said.
On Thursday, the Senate banking committee holds a hearing into the stricken US housing market. Christopher Dodd, its chairman,
wants congressional leaders to incorporate provisions that deal with the housing crisis in any stimulus bill they present
to the White House.
The package agreed last week also provides for a 12-month increase in the size of mortgages provided by Fannie Mae and
Freddie Mac, the home loans entities.
THE ECONOMIC STIMULUS PACKAGE, WILL IT HELP?
By: David Phillips
Last week, House Democrats and Republicans worked out a deal on an economic stimulus package for $150
Billion dollars in hopes of slowing the recession that most economy experts say we are heading into.
President Bush said, “The incentives in this package
will lead to higher consumer spending and increased business investment this year.”
The $150 billion package would includes rebates for
116 million individuals who file tax returns, including people who don't make enough money to pay income taxes, and $50 billion
in temporary tax breaks for businesses.
The rebates would range from $300 to $600 per individual,
or $600 to $1,200 per couple, depending on their income level. The rebates phase out completely for those making more than
$75,000, and couples making more than $150,000.
House Speaker Nancy Pelosi (D-CA) said, the stimulus
package achieve’s “putting money in the hands of America's working families”. She went on to say, that the
working families are the people "who need the money and will spend the money.”
Some of the other items include in the stimulus package
would allow businesses to write off 50 percent of capital investments on the year the equipment is placed in service. Small
businesses could immediately expense $250,000 of equipment purchases, doubling the current Section 179 expensing limit.
House Minority leader John Boehner (R-OH) said, the
tax breaks "will give businesses incentives to create and build new jobs in our country."
The stimulus package also speaks to the housing crisis
by increasing the size of mortgages insured by the Federal Housing Administration from $362,000 to $725,000. And it raises
the limit on the size of mortgages that can be purchased by Fannie Mae and Freddie Mac from $417,000 to $625,000.
The House Democrats lost their fight to include expanded
unemployment benefits and more money for Food Stamp programs in the stimulus package.
Sounds good, but is it enough, and will it work?
Michael Bloomberg has this to say about the package,
"There's just one problem: It's not going to make much of a difference because we've already been running huge deficits…"
Bloomberg went on to say, "If we spend all the money right now, and there is no recovery because of it, then we don't have
a second hand to play."
Robert Greenstein, executive director of the Center
for Budget and Public Priorities said, “The business tax cuts could lead 35 states to lose $4 billion in tax revenue
because of linkages between federal and state tax codes, and it would compel states to slash services or increase taxes, either
of which would "act as a drag on the economy."
Greenstein also said that an extension of unemployment
benefits and an increase in food stamp program are two of the most effective ways to stimulate our economy.
The Bill now goes to the Senate
The House Stimulus package that has been agreed to by
both the Republicans and the Democrats will now go to the Senate where Majority leader Harry Reid (D-NV) and the rest of the
Senate will work on their version of a Stimulus package.
Senator Reid said the Senate hopes to have a stimulus
package passed by February 18.
Treasury Secretary Henry Paulson said, “Within
roughly 60 days (after enactment) more or less, we will be able to begin making payments.”
Economy experts across the country have mixed opinions
on whether the stimulus package will have any impact on the recession, some say it’s too little too late, while others
say it may help.
Maybe it will help, I hope it does, but to me, it sounds
like we are sticking a finger in the dike. But when I do receive my check, I will be a responsible American and spend it in
hopes of stimulating our economy.
Exxon Mobil is by no means the only oil behemoth to turn high oil prices into record profits. Earlier
this week, ConocoPhillips announced a 37 percent increase in fourth-quarter profit, "even as the third-largest U.S. oil company
Fourth-quarter oil prices were over 50 percent higher than a year ago, "prompting forecasts for more
eye-popping earnings from oil majors."
Oil Crisis As Barrels Go Missing From U.S. Reserves, According to Audit Marcus Baram Reports:
How do you not notice when 308,000
barrels of oil go missing?
That's the question government auditors were asking after they looked into the Department of Energy's management of oil
received for the Strategic Petroleum Reserve, a critical program to assure energy stability in the U.S. in case of an oil
To help add to the reserve, DOE receives a portion of the royalty oil that the Department of the Interior gets in return
for allowing petroleum companies to drill on government lands and waters.
The department's Inspector General Gregory H. Friedman and his auditors found that in 28 percent of the oil transfers they
examined, the amount received did not match the estimated amount to be shipped by the Interior Department's Minerals Management
"To illustrate our findings regarding discrepancies, during a four-month period in Fiscal Year 2005, two Department contractors
reported receiving 308,000 barrels of royalty oil less than the amount that MMS had scheduled for delivery to the market center.
Yet, despite this significant shortfall, the Department took no action to resolve the discrepancy and to ensure that it had
received all of the oil shipped by MMS," according to the audit.
Eventually, the auditors received documentation from MMS to explain reasons for the discrepancy, including "a decision
by MMS to sell royalty oil rather than ship it to the Department," although 32,000 barrels could still not be accounted for
in the above example.
Reached for comment, a spokeswoman for the department issued a statement. "We are confident that all royalty oil transferred
to DOE was properly delivered to the SPR. However we recognize the need for enhanced controls and as such, we have followed
the recommendations of the report and taken steps to strengthen the RIK program by collecting additional supporting documentation
for oil receipts and increasing coordination with MMS to facilitate monthly confirmation of the quantity of oil transferred."
Last year, the Interior Department's MMS was investigated by the Government Accountability Office for losing track of billions
of dollars in royalties. A GAO report in May 2007 determined that an increase in the royalty rates, which were among "the
lowest government takes in the world," could potentially increase revenue by $4.5 billion over 20 years and help ensure "a
fair rate of return for the American people from oil production on federally leased lands and waters."
China Trade Surplus Hits Record 262 Bln Dollars In 2007: State Media
China's trade surplus surged to a
record 262.2 billion dollars last year, up 47.7 percent from 2006, the official Xinhua news agency said Friday, citing the
Total foreign trade hit a record 2.17 trillion dollars, according to Xinhua.
The surplus, a source of huge concern for the United States and China's other major trading partners, stood at 177.47 billion
dollars in 2006.
The United States and other critics have repeatedly criticised China for keeping its currency, the yuan, artificially high,
which they argue gives Chinese exporters an unfair advantage and boosts the surplus.
In response, China has allowed the yuan to appreciate gradually, and faster in recent weeks, but has refused to scrap the
The yuan hit another record high on Friday morning of 7.2672 yuan to the US dollar, which marked an appreciation of about
12 percent since the currency was de-pegged from the greenback in July 2005.
Premier Wen Jiabao and other Chinese leaders have said repeatedly that the yuan is not the sole, or even most important
reason for the trade surplus, with many other factors making the nation's exports ultra-competitive.
Mexican Trucks Allowed Deep Into U.S. In Defiance Of Congress
Dave Montgomery | McClatchy Newspapers
WASHINGTON — The Bush administration
is allowing Mexican trucks to continue to travel deep into the United States despite what critics say is a congressional mandate
to ban the trucks from U.S. highways.
Congress voted last year to halt funding for a pilot program that allows Mexican 18-wheelers to begin traveling freely
into United States as part of the 1994 North American Free Trade Agreement. The Department of Transportation contends, however,
that the congressional action permits the current program to continue while banning any new program.
The Federal Motor Carrier Safety Administration, the DOT agency that regulates the program, quietly acknowledged last week
that the program is still under way, adding that it's issued permits to 11 Mexican companies with a total of 56 trucks. Mexican
trucks previously were confined to a 25-mile border zone.
Sen. Byron Dorgan, D-N.D., in a letter Thursday to Transportation Secretary Mary Peters, scoffed at that interpretation
and called on the Bush administration to end the program immediately.
"The DOT response is both arrogant and wrong!" Dorgan wrote. "The Department of Transportation is making a serious mistake
if it believes it is not required to abide by this legislation."
The 1.4 million-member International Brotherhood of Teamsters, which represents U.S. long-haul truckers, expressed outrage
at the administration and vowed to press ahead with a lawsuit against the program, which is pending in a federal appeals court
in San Francisco.
"We're not happy," Teamsters spokeswoman Leslie Miller said. "We believe they are breaking the law."
Under the program, launched this fall, up to 500 trucks from 100 Mexican companies could travel into the U.S. interior
over the next year.
The agreement also allows 100 U.S. companies to send their trucks beyond a restrictive border zone in Mexico. Four U.S.
companies with a total of 41 trucks have been cleared to travel into the Mexican interior.
More than 500 inspectors have been deployed to enforce safety, vehicle and driver standards, said Melissa Mazzella DeLaney,
a spokeswoman for the Federal Motor Carrier Safety Administration.
DeLaney said the Mexican companies had made 71 crossings into the U.S. interior as of Dec. 11. The U.S. companies, she
said, have made 144 crossings into Mexico.
"It's something U.S. companies have never had the opportunity before to do," she said.
"There have been no incidents," DeLaney said of the Mexican trucks. "They are the most vetted, the most scrutinized and
the most inspected trucks on American roads today."
She didn't have a cost breakdown but said the Transportation Department budget paid for the program.
With lawmakers in both parties widely opposing the initiative, Congress clearly intended to strip out money for the program
in a $106 billion housing and transportation funding bill that President Bush signed Dec. 26, Dorgan said.
The legislation said: "None of the funds made available under this act may be used to establish a cross-border motor carrier
demonstration program to allow Mexico-domiciled motor carriers to operate beyond the commercial zones along the international
border between the United States and Mexico."
Dorgan released an opinion by Senate legislative counsel Polly W. Craighill asserting that the legislation was intended
"to preclude the carrying out of any demonstration program, including the pilot program put into effect in September of 2007."
Dorgan sponsored a funding-cutoff amendment that passed the Senate 74-24.
The latest furor over the controversial program erupted after Dorgan learned of the DOT statement, which received limited
attention during the holiday season. Under the 2008 funding measure, the DOT said, it will "not establish any new demonstration
programs with Mexico." But it added: "The current cross-border trucking demonstration project — established in September
— will continue to operate in a manner that puts safety first."
The Bush administration and allies in Congress contend that the program will be monitored rigidly and is necessary to fulfill
the 13-year-old free-trade agreement that expanded commerce among the United States, Mexico and Canada.
Market Determines Oil Prices: Saudi Arabia By Souhail Karam
RIYADH (Reuters) - Saudi Oil Minister
Ali al-Naimi said on Sunday that the rise in oil prices to a record high had been determined by market forces.
"The market fixes the price of oil," Naimi told reporters at an energy conference in Riyadh when asked to comment on oil's
surge to a record above $100 last week.
Naimi declined further comment on the price or what the Organization of the Petroleum Exporting Countries would decide
at its next meeting on February 1 in Vienna. Saudi Arabia is the world's largest oil exporter and the most influential voice
U.S. crude hit a record of $100.09 a barrel on Thursday. High energy costs have caused concern among some members of OPEC
about the potential impact on the global economy. But ministers say there is little they can do to tame the price, which is
driven by political tension and speculators and not supply and demand fundamentals.
OPEC President and Algerian Energy and Mines Minister Chakib Khelil said on Saturday that the steady rise in prices was
due to tension in Pakistan, escalating violence in Nigeria and a fall in oil inventories in the United States.
The world had sufficient oil supplies for now and no decision could be made to increase production before the next OPEC
meeting, Algerian state news agency APS quoted Khelil as saying.
Libya's top oil official, Shokri Ghanem, said last week that the producer group could do little about $100 oil as most
members were already pumping flat out.
OPEC, supplier of more than a third of the world's oil, decided to keep output steady at its last meeting in December,
rejecting calls from consumer countries for more supply to ease high prices.
Psssttt...I Gotta good deal on Camels...
Bleak Hiring Expectations and Financial Outlook Contribute To Drop In Worker Sentiment rasmussenreports.com
The Hudson Employment Index (SM)
fell 8.9 points in November to a record low of 91.9. Growing concerns about hiring and signs of personal financial strain
triggered the decline. In stark contrast, the Index registered 105.3 one year ago, more than 13 points above the current reading.
Hudson (NASDAQ: HHGP - news), a leading provider of permanent recruitment, contract professionals and talent management
services worldwide, publishes the Hudson Employment Index, a monthly measure of U.S. worker confidence in the employment market.
The number of workers anticipating hiring at their companies fell three points to 25 percent in November. This marks the
fewest workers to expect job growth in the history of the Hudson Employment Index. There was also a two-point jump to 17 percent
among people expecting their employer to cut staff, the highest level for this response in nearly two years.
"Simply put, U.S. workers are worried that job growth is going to slow significantly in the coming months," said Robert
Morgan, co-president of Recruitment and Talent Management, Hudson. "They remain concerned about finance-related issues, but
that apprehension has boiled over so they are now seeing a more widespread problem."
Consistent with recent months, the work force continues to be troubled by the state of their finances, as just 34 percent
claimed theirs were improving, down five points from October. In addition, 43 percent rated their financial situation favorably,
compared to 47 percent in October. There was also a two-point increase to 17 percent in the number of workers who described
their finances as "poor."
Results are not seasonally adjusted.
Dollar Hits New Low Against Euro Amid Warnings From Europe
The dollar hit a new record low against the euro on last Thursday,
provoking more worries in the eurozone about the impact of the soaring European currency.
Europe's single currency stuck a record peak of 1.4875 dollars in Asian trading hours -- the highest level since the euro's
creation in 1999.
Later in European trade, the euro stood at 1.4850 dollars, compared with 1.4854 in New York late on Wednesday. US markets
were shut Thursday owing to the Thanksgiving national holiday.
The dollar also hit an all-time low against the Swiss franc, which is viewed as a haven in troubled times for the global
economy. The US unit fell to a record low of 1.1005 Swiss francs.
Markets were still digesting Tuesday's downbeat US growth forecasts from the Federal Reserve. The economic expectations
have weighed heavily on the dollar, despite the Fed insisting it has no plans to cut US interest rates again in the coming
"With investors still exploring the extent and duration of the US economic downturn, it is no surprise markets are not
subscribing to the idea the Fed is reluctant to cut too far," said Gavin Friend, currency analyst at Commerzbank.
The Federal Open Market Committee slashed its base federal funds rate by a half-point to 4.75 percent on September 18.
It was the central bank's first rate cut in four years.
That rate cut, and a subsequent quarter-point reduction to 4.50 percent on October 31, were taken to ease a credit crunch
related to the US housing slump.
German Chancellor Angela Merkel said Thursday that the euro's record levels against other major currencies "naturally poses
problems" for exporters, the traditional engine of German growth.
"We are happy of course to have a solid currency. But for exports it naturally poses problems," Merkel told television
news channel N24.
Earlier Thursday, the German head of European plane maker Airbus, Thomas Enders, said the group might have to take new
cost-cutting measures to counter the euro's rise against the dollar, which he said had "exceeded tolerable limits."
Airbus expects "enormous losses" from foreign exchange effects, Enders said.
The dollar was also suffering from growing speculation that overseas investors may diversify from the US unit and turn
increasingly to the euro.
The euro has "benefited from heightening expectations that Gulf Arab states and Saudi Arabia will revalue their currencies
and introduce a basket to replace the dollar peg," said NAB Capital strategist John Kyriakopoulos.
Saudi newspaper al-Riyadh reported that Saudi Arabia may have started considering a revaluation of its riyal against the
dollar ahead of a meeting of heads of Gulf Arab states in early December.
Elsewhere, market participants were worried the greenback could go into free-fall against the Japanese unit, even to the
105-yen level, dealers said.
But they do not expect the Japanese central bank to intervene in the near term to rein in the stronger yen, which is hurting
"There is no longer any emotional attachment nor aversion against the yen's appreciation among Japanese politicians and
corporate executives which we saw a few years ago," said Toru Umemoto, chief forex strategist at Barclays Capital.
The US central bank last Wednesday trimmed back its growth projections citing weakness in housing and tighter credit
The Fed projected growth next year in a range of 1.8 to 2.5 percent, down from a prior forecast of 2.5 to 2.75 percent.
In late European trade last Thursday, the euro changed hands at 1.4850 dollars, against 1.4854 late on Wednesday, at 161.10
yen (161.02), 0.7208 pounds (0.7190) and 1.6358 Swiss francs (1.6366).
The dollar stood at 108.49 yen (108.38) and 1.1016 Swiss francs (1.1016).
The pound was at 2.0600 dollars (2.0650).
No Weak Dollar Reference In OPEC Statement: OPEC Chief
RIYADH (AFP) — A final statement from OPEC leaders at their summit
here will not express concern about the falling dollar despite efforts by Iran to include the weak US currency, the organisation's
chief said Friday.
"Let me be clear: the dollar will not be in the final statement," Abdullah al-Badri told reporters after emerging from
a meeting of ministers to prepare the statement, which will be issued by leaders at the end of a two-day summit on Sunday.
"It (the dollar) is an individual country issue," he added, meaning the subject would not be tackled at the level of OPEC,
which groups 12 oil-producing countries.
Earlier, Iran's Foreign Minister Manouchehr Mottaki proposed that the final declaration by OPEC leaders, who arrive here
Saturday, should express concern by member states about the fall of the dollar.
Reacting to the request, Saudi Foreign Minister Prince Saud al-Faisal warned that mentioning the falling dollar could lead
to the "collapse" of the US currency.
"There are media people outside waiting to catch this point and they will add to it (exaggerate) and we may find that the
dollar collapses," he said.
"This is a sensitive issue. It will cause the dollar to drop further, thus complicating the problems we are facing from
the dollar's fall," he added.
The exchange between US foe Iran and Saudi Arabia, one of Washington's closest allies in the Middle East, was witnessed
when a private meeting of ministers from the Organisation of Petroleum Exporting Countries was broadcast for 30 minutes on
closed-circuit television in the media room.
The fall of the US dollar, which has declined by about 15 percent in 12 months, has affected the revenues of OPEC members
because most of them price and sell their oil exports in the US currency.
Mottaki told reporters after the meeting that finance ministers would study how to prevent the falling dollar hitting the
revenues of OPEC countries.
"It was decided that finance ministers of OPEC will study the issue and suggest mechanisms for the sake of preserving revenues
of OPEC members," he said.
US Dollar Hits Record Low Against Euro By Tali Arbel, AP
US Dollar Hits New Low Against Euro for 7th Straight Session; Canadian
Dollar Hits 31-Yr. High
NEW YORK (AP) -- The dollar fell to a record low against the euro for the seventh consecutive session while
the Canadian dollar hit a 31-year high as inflation data raised expectations that the Federal Reserve Bank would again lower
The 13-nation European currency reached $1.4274 in late New York trading -- exceeding its previous peak of $1.4189, reached
Thursday. The euro had bought $1.4160 in New York late Thursday.
The euro spiked above $1.42 after the release of data showing that a key measure of inflation in the U.S. eased last month
to the slowest pace in 3 1/2 years. The inflation data boosted hopes that the Fed would cut interest rates despite surprisingly
positive consumer spending data.
The 1.8-percent rise in core inflation over the past year, which excluded energy and food, was within the Fed's comfort
zone for core price increases of between 1 percent and 2 percent, meaning they could cut again.
Although the Commerce Department reported Friday that incomes rose 0.3 percent last month, slightly less than had been
expected, economic data was mostly positive.
Consumer spending rose by 0.6 percent in August, and construction spending increased 0.2 percent -- both numbers higher
than anticipated because of the market's recession fears swarming throughout August.
"Both personal income and spending are up," said Michael Woolfolk, senior currency strategist at the Bank of New York.
"The consumer was undaunted by financial market turmoil."
Meanwhile, the Canadian dollar hit a 31-year high Friday, buying $1.0091 in U.S. currency. It later retreated to 99.37
U.S. cents in late New York trading. The loonie bought 99.87 U.S. cents late Thursday.
That country's currency -- named for a Canadian bird, the loon, on the one-dollar coin, has been on a spectacular tear
since the U.S. greenback began to weaken in the face of a credit crisis sparked by the U.S. subprime mortgage market.
The loonie reached parity with its U.S. counterpart for the first time in 31 years on Sept. 20. Just five years ago, in
January 2002, the loonie hit a record low of 61.79 US cents.
Helping the Canadian dollar's rise was a Statistics Canada report that the economy grew by 0.2 percent in July, the same
rate as in June.
The price of oil surged above C$83 (US$83.48) a barrel on Friday, closing in on its record high. Soaring oil and gas prices
have bolstered Canada's economy and currency, leading the loonie to be dubbed the petrocurrency.
In other trading, the British pound rose to $2.0454 from $2.0270 in New York late Thursday. The dollar was down to 114.74
Japanese yen from 115.59 yen and 1.1635 Swiss francs from 1.1724.
The dollar has been sliding since the Fed cut interest rates last week by a larger-than-expected half percentage point.
Since then, a week of mostly disappointing U.S. economic data have stoked expectations that another rate cut could follow.
"With the market expecting lower rates, this continues to undermine the U.S. dollar, especially with the European Central
Bank perhaps set to raise interest rates," said Woolfolk.
If September employment data expected for next week is positive and the ECB does not raise rates, he said, that could help
arrest the dollar's fall in the short term.
The lower U.S. interest rates, used to jump-start the economy, can weaken its currency as investors transfer funds to countries
where their deposits and fixed-income investments bring higher returns.
Longer term, the U.S. has been running large trade and budget deficits for years -- factors that tend to undermine a country's
currency in the long term, unless they are offset by foreigners willingness to invest their money in the United States.
Consequences of the dollar's fall include upward pressure on inflation from higher prices for imported food and goods,
and less purchasing power for Americans traveling or living abroad. On the other hand, a cheaper dollar makes U.S. exporters'
wares more competitive on a price basis overseas.
Qatar & Vietnam ditch the dollar
Announcements on Thursday from the Qatari and Vietnamese governments that they are rapidly divesting in dollar denominated
securities will not come as good news to the US government. Overseas investors hold half of America’s $4,400bn of marketable
government debt, up from a third in 2001 according to the US Treasury department.
Qatari Prime Minister, Sheikh Hamad bin Jassim bin Jabr al-Thani said on US TV that the government-backed $50bn Qatari
Investment Authority (QIA) now had less than 40 per cent of its investments in dollars, down from a high two years ago of
99 per cent.
Given that the Emirate’s oil and gas revenue is in dollars, the latest troubles in the US economy have accelerated
the need to diversify investments into non-dollar markets. Currencies such as the Euro, the British Pound and the Swiss Frank,
are all looking far more stable as investments for the QIA, said Sheikh Hamad.
Such was the Qatari PM’s concern about the sliding dollar, that he even said an oil price of $125 per barrel would
not be unreasonable.
On Thursday, the State Bank of Vietnam quietly let slip it would be ending its dollar purchase schemes, which it has
been using to hold down the Vietnamese currency.
Although it only has middling dollar reserves of $40bn, Vietnam is widely regarded as a barometer for economic sentiment
among other, bigger, regional dollar sinks like China, Taiwan, Korea or Singapore.
Hans Redeker, currency chief at BNP Paribas, told the Telegraph:
Vietnam is a relatively small country but it is symptomatic of Asia. The entire region is seeing inflation move up as
a result of mercantilist policies of holding down their currencies with ‘dirty floats’, which are designed to
help their export sectors. They need to change monetary policy.
Cue dollar sale.
Asian investors have already pulled out of US Treasuries - as FT Alphaville reported in September, foreign government
holdings of T-Bills fell 3.8 per cent in August.
Japanese investors in particular, reports Bloomberg, are anticipating another rate cut from the Fed. The world’s
second largest actively run bond fund, Japan’s Kokusai Global Sovereign is staying away from US Treasuries.
According to Masataka Horii, who oversees $47.6bn:
The US dollar will go weaker because the market expects that interest rates will be cut and the economy will slow down…
Another rate cut will make the economy stabilize. Maybe early next year, weakness in the US dollar will stop.
The problem for the US is that foreign appetite for debt has become an important prop for the economy. A 2006 study
by Federal Reserve economists concluded that foreign investment in the US economy has been a liquidity support keeping long-term
interest rates 90 basis points below where they should be.
U.S.-Owned Commercial Truck Becomes The First To Drive Deep Into Mexico
The Associated Press
WASHINGTON: A U.S.-owned commercial truck became the first to drive deep into Mexico on
Friday, days after the U.S. Senate voted to quit funding a program allowing Mexican trucks to do the same in the United States.
The U.S. Department of Transportation said a truck owned by El Paso, Texas-based Stagecoach Cartage and Distribution entered
at Nogales, Mexico, across the border from Nogales, Arizona, about noon Friday. U.S. trucks had been banned from operating
on Mexican roads.
The truck was delivering a load of plastic resin to Obregon, Mexico.
A spokesman for the carrier did not immediately respond to a phone message.
"Today is historic. We're giving U.S. trucking companies the opportunity to compete in a new market that they have never
before been allowed to penetrate," said John Hill, head of the Federal Motor Carrier Safety Administration.
On Tuesday, the U.S. Senate voted to prevent Mexican trucks from getting more access to U.S. highways by prohibiting spending
on an ongoing pilot project. The House has taken similar action. The measures are attached to separate transportation spending
bills that must still be reconciled.
A truck owned by Mexican carrier Transportes Olympic crossed the border at Laredo, Texas, and arrived in North Carolina
on Monday under the free trade pilot program.
Mexican trucks have been limited since 1982 to driving up to 25 miles (40 kilometers) from the U.S.-Mexican border, 75
miles (121 kilometers) in Arizona.
Trucks from Canada, Mexico and the U.S. were given access to roadways in all three countries under the North American Free
Trade Agreement signed in 1993.
But opposition from organized labor and safety groups delayed Mexican trucks from driving further into the U.S.
Mexico Trucks To Roll On U.S. Highways By John Crawley
The Bush administration can proceed with a plan to open the U.S. border to long haul Mexican trucks as early
as next week after an appeals court rejected a bid by labor, consumer and environmental interests to block the initiative.
The 9th Circuit Court of Appeals in San Francisco late on Friday denied an emergency petition sought by the Teamsters union,
the Sierra Club and consumer group Public Citizen to halt the start of a one-year pilot program that was approved by Congress
after years of legal and political wrangling.
The Transportation Department welcomed the decision and said in a statement that allowing more direct shipments from Mexico
will benefit U.S. consumers.
The 1994 North American Free Trade Agreement approved broader access for ground shipments from both countries but the Clinton
administration never complied with the trucking provision. A special tribunal ordered the Bush administration to do so in
"This is the wrong decision for working men and women," Jim Hoffa, president of the Teamsters, said in a statement after
the court ruling. "We believe this program clearly breaks the law." The Teamsters represents truckers that would be affected
by the change.
The emergency stay was sought on grounds the administration's pilot program had not satisfied the U.S. Congress' requirements
on safety and other issues. But the appeals court ruled otherwise.
The administration plans to start the program on September 6. Transportation Department officials hope to receive final
clearance early next week from the department's inspector general's office, which is reviewing its safety aspects, and finalize
details with Mexican authorities.
The Mexican government must grant reciprocal access to U.S. trucks under NAFTA. That provision is not expected to be a
problem, regulators said.
Mexican trucks operating in the United States have for years been restricted to U.S. points near certain large border crossings
where their goods are transferred to trucks owned by U.S. firms.
Under the pilot program, Mexican long haul trucking companies that have met safety, licensing, and other U.S. requirements
will be allowed to operate their rigs throughout the country. Proponents say this will reduce costs and speed up shipments.
Trucking regulators said in a court filing the goal is to gradually accommodate 100 Mexican trucking companies by the end
of the pilot program, or roughly 540 large trucks.
But opponents said those figures do not reflect the number of companies that could seek access to U.S. roads if the pilot
is successful, which they said raises safety concerns.
"This (pilot) program is basically a show trial. They haven't provided notice up front about who will participate. You
just don't know what the program will look like," said Bonnie Robin-Vergeer, attorney for Public Citizen.
Public Citizen and the Teamsters still plan to proceed with a lawsuit they filed in federal court, challenging the Mexican
truck program on broader grounds. That case will not likely be decided until next year.
Trucks from Canada have no operating restrictions in the United States.
China, Companies Have A Lot At Stake Over Major Recalls
Investor's Business Daily
Never mind cheap. Now "Made in China" makes you think of suicides, executions, product recalls and export bans.
A spate of reports about defective or dangerous products has sparked a global backlash over the quality and safety of Chinese-made
goods. And the bad news keeps coming.
The owner of a Chinese toy maker involved in Mattel's mat recent recall hanged himself, reports said Monday.
Meanwhile, a leading supplier of toiletries for luxury hotels recalled complimentary tubes of Chinese-made toothpaste after
tests showed some contain a potentially toxic chemical.
Suppliers Behaving Badly
Who's getting the blame for China's credibility crisis? Mostly suppliers that knowingly cut corners to reap higher profits.
But China's climb up the export ladder also poses hurdles, observers say.
Many of its factories are struggling to meet product specifications for an ever-expanding list of manufactured goods.
While China has been the source of low-cost apparel and furniture for many years, it now produces electrical goods, steel,
machinery and automobile parts.
U.S. companies that do business in China are scrambling to better police their suppliers' production lines. While rogue
suppliers have tainted China's image, sometimes its factories just struggle to be up to snuff.
"China is still very early in its industrial development and sins of omission are probably more likely than (purposeful)
sins of commission," said Kent Kedl, general manager of Technomic Asia, which advises companies sourcing out of China.
Poisoned pet food first rattled China's export juggernaut in April. Then concerns arose over China's exports of seafood,
drugs, toothpaste and tires. Mattel recalled 1.5 million Chinese-made toys worldwide in early August because of lead paint
Inept or corrupt regulators have often abetted rogue companies' efforts to substitute cheap ingredients for required materials.
China's government executed a top regulator for taking bribes. It has vowed to set up stricter quality control programs.
The stakes are high. Economists don't think product safety problems have slowed China's exports, which topped $970 billion
China's range of exports has expanded as more foreign companies tried to take advantage of low-cost labor and cheap materials,
says Andrew Bartolini, analyst at Aberdeen Group.
"China has a burgeoning expertise in manufacturing capabilities. It's undergoing a rapid evolution. But with low costs
come risks (for overseas buyers)," he said.
China can't let "Made in China" become a warning label, says David Reid, who directs the China Clinic for CEOs in Seattle
University's business school.
Aside from suppliers, Reid says China's government also wants to protect the reputation of Chinese companies that sell
products globally, such as appliance maker Haier, PC maker Lenovo (OOTC:LNVGY) , auto maker Chery and telecom gear maker Huawei.
"Beijing realizes that its biggest opportunity is to develop brands, with a reputation for high quality and reliability,
that have legitimacy in world markets," Reid said. "The (product quality) backlash isn't being taken lightly."
A Culture Of Quality
China needs to create a business culture that focuses on product quality, much as Japan, Taiwan and South Korea did earlier,
observers say. In the 1950s, many Japanese companies studied the work of American engineer W. Edwards Deming, who applied
statistical analysis to quality control.
Some U.S. companies based in China have tried to spread the gospel of "Six Sigma" quality management. Motorola (NYSE:MEU)
(NYSE:MOT) developed Six Sigma business process control techniques, which also have been used by many other companies. But
Chinese manufacturers don't collect enough data to carry out Six Sigma rules, Kedl says.
In the wake of China's product recalls, U.S. companies are racing to ensure that their suppliers are producing safe goods.
Bartolini says big companies have the financial resources to send high-level managers and quality assurance teams to China.
"It's not inexpensive to get people on the ground," he said.
Mid-sized and small companies usually rely on third-party consulting firms to audit factory conditions and inspect goods,
Bartolini says. The quality of such middlemen varies and overseas buyers should be cautious, he adds.
Mattel's toy recall, though, shows that even big companies can be fooled by suppliers, says Paul Midler, head of China
Advantage, which provides outsourcing and supply chain services.
"It's very difficult to use visual inspection or testing to solve a moral gap," Midler added.
Don't Fade Away
A common practice among some Chinese suppliers, he says, is to knowingly cut back on product quality after a few shipments
have been made. He calls the process "quality fade."
Subcontracting manufacturing is common in China. Even a retailer such as Wal-Mart (NYSE:WMT) , which imports about $20
billion in products from China annually, may not know where all its goods are made.
"Most factories in China are anonymous," Midler said. "A factory that knows it's anonymous is much more likely to be playing
While shoddy work has always been a problem in China, safety scares are a new wrinkle, says Daniel Harris, an attorney
at Seattle-based law firm Harris & Moure.
"Everybody who does business in China knows quality issues are a problem," he said. But it has usually been about little
things, handles that break off purses.
"Now, if you're constructing a building using Chinese steel, you're probably wondering if you should retest it. It's human
nature to be thinking that way."
Harris recommends that overseas buyers run credit checks on prospective suppliers. He says inspection rights should be
clearly defined in contracts.
Choosing suppliers in China's urban areas also may be a good idea, Harris says, because China's legal system is uneven.
"There's a lot more business litigation now in China than two years ago, and the courts are improving," he said. "But,
a court in Shanghai or Beijing is going to be a lot more sophisticated than one in some backwards outlying province."
In case of recalls, though, U.S. companies will find it very difficult to collect damages from suppliers.
"The typical Chinese manufacturer just doesn't have a lot of money, in part because margins are so low," Harris said.
Prices For Key Foods Are Rising Sharply
By Kevin G. Hall | McClatchy Newspapers
MIDLAND, Va. — The Labor Department's most recent inflation data showed that U.S. food prices rose
by 4.2 percent for the 12 months ending in July, but a deeper look at the numbers reveals that the price of milk, eggs and
other essentials in the American diet are actually rising by double digits.
Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can't
do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans remain glum
about the economy.
Meeting with economic writers last week, President Bush dismissed several polls that show Americans are down on the economy.
He expressed surprise that inflation is one of the stated concerns.
"They cite inflation?" Bush asked, adding that, "I happen to believe the war has clouded a lot of people's sense of optimism."
But the inflation numbers reveal the extent to which lower- and middle-income Americans are being pinched.
The Bureau of Labor Statistics said in its July inflation report that egg prices are 33.7 percent higher than they were
in July 2006. Over the same period, according to the department's consumer price index, whole milk was up 21.1 percent; fresh
chicken 8.4 percent; navel oranges 13.6 percent; apples 8.7 percent. Dried beans were up 11.5 percent, and white bread just
missed double-digit growth, rising by 8.8 percent.
These numbers get lost in the broader inflation rate for all goods and services, which measured 2.4 percent for the same
12-month period. Across the economy, rising food prices were offset by falling prices for things bought at the mall: computers,
cameras, clothing and shoes.
"All of that stuff is going down in price, but prices for gasoline have gotten higher, and food prices have gone up," said
Mark Vitner, a senior economist for Wachovia, a large national bank based in Charlotte, N.C.
People also go to the mall a lot less than they go to the grocery store, so they're constantly reminded that dietary staples
are up sharply.
Why are food prices rising?
It's partly because of corn prices, driven up by congressional mandates for ethanol production, which have reduced the
amount of corn available for animal feed. It's also because of tougher immigration enforcement and a late spring freeze, which
have made farm laborers scarcer and damaged fruit and vegetable crops, respectively. And it's because of higher diesel fuel
costs to run tractors and attractive foreign markets that take U.S. production.
The Labor Department's last detailed survey of consumer spending, in 2005, showed that Americans spent about 12.8 percent
of their income on food. A bit more than 7 percent of their income was spent on food at home, and 5.7 percent was spent on
food away from home.
These percentages suggest that higher food prices, while unwelcome, won't break the bank for most consumers. But for retirees
such as Jacqueline Wilson, 60, of Upper Marlboro, Md., rising food and fuel prices take a big bite out of fixed income.
"I make every dollar count," said Wilson, outside a Giant supermarket. "I cut back. ... I get only as much as I need. I
don't buy it because it is 10 for $10, but so that I'm using it and not wasting my money."
Asked about her view of the economy, she answered, "Terrible."
In broad terms, the economy isn't terrible. Unemployment is near record lows, and the second quarter posted a strong 3.4
percent growth rate. But it is for those Americans who are pinched by rising food and gasoline costs, and that's a lot of
folks. Half the nation's families earn below the median family income of about $56,000. Three- fifths of American families
report income under $70,000.
At the Al-Mara farm in Midland, Va., Jeff and Patty Leonard run a large dairy operation where about 600 cows produce 19,000
pounds of milk each day. They plant about 1,000 acres of corn, so they don't face all of the rising feed costs like some farmers.
But they sympathize with consumers because the costs of nitrogen fertilizers and diesel fuel have all gone up sharply, raising
production costs by nearly 30 percent.
"That's how your farmer feels here at home when we're trying to buy soybean meal, food for our cows and trying to maintain
our equipment," said Patty Leonard. "I can understand exactly what the shopper is going through."
Milk prices aren't set on the farm. That's done by marketing cooperatives, which this year have been successful in passing
on higher production costs after several dismal years of prices that took dairy farmers back to the 1970s.
"It's pretty much a realignment of the actual value of milk in today's dollar," Patty Leonard said. "Milk has been cheap
for a long, long time."
Globalization also explains higher milk prices. Australia, a leading milk exporter, is struggling through a drought, and
European governments are pulling back dairy subsidies. So U.S. farmers, aided by a weak dollar, are stepping in to meet growing
demand for milk products in China and India. That's pinched supply at home and abroad, driving up prices.
"U.S. per capita dairy consumption is the highest it's been since 1987," said Chris Galen, vice president of the National
Milk Producers Federation, pointing to rising U.S. demand for cheese, made from milk. "Americans are eating more cheese than
ever — not just volume but per capita."
To make more milk, or raise more chickens that lay more eggs, farmers need feed corn and other feed products. But corn
prices have soared over the past year as Congress pushes ethanol, a renewable fuel made from corn. Fields that previously
grew soybeans are now yielding corn, and that's driven up the price of soybeans as they become scarce.
Iowa State University's Center for Agricultural and Rural Development shocked the farm sector earlier this summer with
a report that corn farmers are expected to lock in prices of $4 a bushel through 2010, about double what corn fetched two
"You will probably be seeing these prices rise for quite a long time and stabilizing, maybe, but not going back to the
$2-a-bushel corn," said Jacinto Feitosa, co-director of the center in Ames, Iowa.
2007 McClatchy Newspapers
Republican Senators Block Union Bill
WASHINGTON — Senate Republicans on Tuesday blocked a bill that would have allowed labor organizations to unionize
workplaces without secret ballot elections.
Democrats were unable to get the 60 votes needed to force consideration of the Employee Free Choice Act, ending labor's
chance to win its top legislative priority from Congress. The bill would have required employers to recognize unions after
being presented union cards signed by a majority of eligible workers on their payrolls. Under current labor law, a company
can demand a secret ballot election supervised by the federal government after being presented the union cards.
The final vote was 51-48. Both of Washington state's senators, Democrats Patty Murray and Maria Cantwell, voted for the
Senate Minority Leader Mitch McConnell, R-Ky., had said for months that he would stop the legislation. The White House
also made clear that the bill would be vetoed if it were to pass Congress.
The House approved the bill in March. Democrats and labor unions pressed for a vote in the Senate in hopes of rallying
their voters in the 2008 elections.
The GOP also plans to use the vote for election-year campaigning. "Republicans will remind our constituents about the fact
that Democrats proposed to strip workers of their voting rights," McConnell said.
World Millionaires' Club Numbers 9.5 Million
The number of millionaires in the world increased by 8.3 percent in 2006, with about 9.5 million individuals
now estimated to have more than a million dollars in financial assets, a report said last Wednesday.
The survey by financial services group Capgemini and US investment bank Merrill Lynch said strong global economic growth
and gains on the stock market explained the expansion of the exclusive club of "High Net Worth Individuals" (HNWIs).
The financial assets owned by the group totalled 37.2 trillion dollars (27.7 trillion euros), an increase of 11.4 percent
from 2005, with Singapore, India, Indonesia and Russia producing the greatest number of new millionaires.
"Real GDP and market capitalisation growth rates, two primary drivers of wealth generation, accelerated throughout 2006,
which helped to increase the total number of HNWIs around the world as well as the amount of wealth they control," the report
The number of Ultra-HNWIs -- individuals with financial assets exceeding 30 million dollars -- increased by 11.3 percent
in 2006, with the global population of this extremely affluent group now estimated at 94,970 people.
The financial assets of Ultra-HNWIs increased by 16.8 percent compared with 2005, the report said, illustrating a trend
whereby wealth is increasingly concentrated in the hands of the already wealthy, the report said.
"Global wealth continued to consolidate in 2006, a trend we have reported for the past 11 years," the report said.
Capgemini and Merrill Lynch define a millionaire as someone with more than one million dollars in financial assets such
as cash, equities, bonds or funds.
They do not include the value of an individual's primary residence or private collections of objects such as art, antiques
Making Less Than Dad Did Report reveals that American men in their 30s earn less than their
fathers did, as family income growth decelerates. By David Ellis CNNMoney.com staff writer
NEW YORK (CNNMoney.com) -- American men in their 30s are earning less than their father's generation did, challenging a
long-held belief that each generation will be better off than the one that preceded it, according to a new study published
The report, the first in an ongoing 18-month study on economic mobility in the United States, also revealed that the income
growth of the median American household is declining.
The study was produced by a handful of politically diverse think tanks including the Pew Charitable Trusts, the American
Enterprise Institute, the Brookings Institute, the Heritage Foundation and the Urban Institute. It looked at income levels
of American men in their 30s, which can be a good indicator of lifetime income.
Relying on Census Bureau figures, the study's authors found that after adjusting for inflation, men in their 30s in 2004
had a median income of about $35,000 per year, for a 12 percent drop compared with $40,000 per year for men in the same age
group in 1974.
That stood in stark contrast to men in their 30s in 1994, who earned 5 percent more than their fathers did.
Similarly, American families, which experienced a 32 percent increase in income levels between 1964 and 1994, saw household
income growth slow to 9 percent between 1974 and 2004, according to the report.
"There is clearly some story here that U.S. productivity gains are not trickling down to the median family," said John
Morton, a co-author of the study and the managing director of economic policy initiatives at the Pew Charitable Trusts.
Even as male incomes have declined and household income growth has slowed, the nation's productivity has remained robust.
While the two once kept pace with each other, U.S. productivity has quickly outpaced income growth since the mid-1970s, according
to the report.
The study's authors, who plan to examine relative mobility, or the ability of Americans to move up or or down in social
strata, said their report shows the canonical belief in an American meritocracy may be unraveling.
"The expectation that each generation will do better than their parents has become a fundamental part of what we call 'The
American Dream,'" said Morton. "But this new analysis suggests this bedrock belief may be shifting under our feet."
HURRICANE CHIEF SAYS ADMINISTRATION
IS WASTING MILLIONS ON PR CAMPAIGN:
National Hurricane Center director Bill
Proenza said that the Bush administration is "spending millions of dollars on a publicity campaign that could be used to plug budget shortfalls hurricane forecasters are struggling with."
The National Oceanic and Atmospheric Administration
(NOAA) is spending up to $4 million to publicize a 200th anniversary celebration while the agency has cut $700,000 from hurricane
research, Proenza said. He told reporters, "No question about it, it is not justified. ... It is using appropriated funds
for self promotion."
An NOAA spokesman defended the publicity
campaign. "It's part of our responsibility to tell the American people what we do," the spokesman said. "It's inaccurate and
unfair to just characterize this as some sort of self-celebration."
USA Today reports, "The six-month hurricane season begins June 1 and private forecasters are predicting it will be busy, with 17 named storms -- five of them major hurricanes
-- expected to form over the Atlantic Ocean and Gulf of Mexico."
SECURITY -- WHITE HOUSE THREATENS TO VETO COUNTERTERRORISM BILL IF IT CONTAINS LABOR PROTECTIONS:
Wednesday, the Senate began debate on legislation that would strengthen homeland security by enacting recommendations of the 9/11 Commission. The legislation includes provisions that would let
states delay adopting standardized drivers' licenses and means to better secure cargo entering the nation.
bill, however, faces a rocky road ahead as the White House declared it would veto the bill if it contains language that
would allow Transportation Security Administration (TSA) employees to unionize.
it would be authorized to bargain on their behalf to establish work rules to govern overtime and temporary transfers, and
to protect them if they file a grievance."
the Department of Homeland Security, which houses TSA, has the unhappiest workers in the federal government. TSA employees are frequently required to work unscheduled overtime, suffer from a 30 percent illness and injury rate compared to 5 percent for all federal employees, and
have an attrition rate 10 times higher than the federal average.
Unionizing bill advances; Cheney threatens veto
WASHINGTON (Reuters) - A bill to allow workers to form unions by signing up, instead of voting, advanced in the U.S. House
of Representatives on Wednesday as the Bush administration threatened to veto it.
The Democratic-controlled House Education and Labor Committee voted along party lines, 26-19, to approve the bill, which
would require employers to recognize unions after a majority of workers have signed pro-union cards or a petition.
Vice President Dick Cheney declared the administration's opposition to the measure earlier on Wednesday, saying secret
ballots are needed to prevent possible worker intimidation.
"Our administration rejects any attempt to short-circuit the rights of workers," Cheney told the business-friendly National
Association of Manufacturers. "We will defend their right to vote yes or no by secret ballot, and their right to fair bargaining."
He said President George W. Bush "will veto the bill" if it is sent to him.
To form a union under current law, a majority of workers must vote in favor of one in a government-supervised election.
Sign-ups are permitted, but an employer can reject it and force a ballot, which often takes several weeks but can take months.
"Let the employees decide if they want an election or if a majority wants sign-up with no veto by the boss," committee
Chairman George Miller, a California Democrat, said as the panel began drafting the legislation.
Backers of the bill, the Employee Free Choice Act, argue that the election process is inherently unfair because union organizers
can be denied access to the workplace, while bosses can require workers to attend anti-union meetings.
They also cite studies showing that employers often fire workers illegally with little, if any, penalty in the months leading
up to elections. The bill's opponents counter with charges of worker intimidation in organizing campaigns, which they say
the bill would make worse.
The bill also would for the first time make labor law violators subject to civil penalties and require that unions and
companies unable to reach agreement on a first contract submit to binding arbitration.
The bill is expected to reach the House floor next month where approval is likely, since more than half of the chamber's
435 members, including a handful of minority Republicans, have co-sponsored it. A similar measure is expected to be introduced
in the Democratic-controlled Senate soon, but it's fate there is less certain.
A similar bill died in the last Congress.
House Rolls Back Big Oil Subsidies By H. JOSEF HEBERT Associated Press Writer
The House rolled back billions of dollars in oil industry subsidies Thursday in what supporters hailed as a new direction
in energy policy toward more renewable fuels. Critics said the action would reduce domestic oil production and increase reliance
The energy legislation was the last of six high-priority issues that House Speaker Nancy Pelosi (news, bio, voting record),
D-Calif., had pledged to push through during the first 100 hours of Democratic control. The bill passed by a 264-163 vote.
The bill's prospects are uncertain the Senate, where Democrats hold a narrow majority. The top Republican on the tax-writing
Senate Finance Committee, Sen. Charles Grassley (news, bio, voting record) of Iowa, said the bill was "another pig in the
poke" that targets incentives necessary to promote domestic drilling.
The legislation would impose a "conservation fee" on oil and gas taken from deep waters of the Gulf of Mexico; scrap nearly
$6 billion worth of oil industry tax breaks enacted by Congress in recent years; and seek to recoup royalties lost to the
government because of an Interior Department error in leases issued in the late 1990s.
Democrats said the legislation could produce as much as $15 billion in revenue. Most of that money would pay to promote
renewable fuels such as solar and wind power, alternative fuels including ethanol and biodiesel and incentives for conservation.
"The oil industry doesn't need the taxpayers' help. ... There is not an American that goes to a gas pump that doesn't know
that," said Majority Leader Steny Hoyer (news, bio, voting record), D-Md. Pump prices topped $3 per gallon last year as the
oil industry earned record profits.
The bill, Hoyer said, "starts to move our nation in a new direction" on energy policy.
The bill's opponents accused the Democratic majority of grandstanding and said the legislation was unnecessary.
"We do not need a tax on domestic energy production and development," said Rep. Dennis Hastert, R-Ill., the former House
speaker. "Increasing taxes on our nation's energy industry means one thing — more reliance on foreign oil and gasoline."
Added Rep. Don Young (news, bio, voting record), R-Alaska: "If you want to do things right, let's tax foreign oil."
Young, who had on a bright red shirt, made reference to it when he said, "It's the color of this bill we're debating —
Communist red." The legislation "amounts to a taking of private property" by forcing oil companies to renegotiate leases they
view as valid contracts, he said.
The bill would bar companies from future lease sales unless they agree to renegotiate flawed leases issued in 1998-99 for
deep-water drilling in the Gulf of Mexico.
Because of a government error, the leases did not contain a trigger for royalties if prices soared — as they have
in recent years. As a result, the companies have avoided $1 billion in royalties so far and stand to avoid an additional $9
billion over the life of the leases, the Interior Department says.
The White House said it strongly opposes the new production fees and future lease bans. Those steps could reduce domestic
production, according to the administration. It views the repeal of the tax break for oil companies as unfairly singling out
That break, aimed at helping U.S. manufacturers compete against imports, has saved oil companies $700 million a year, House
ECONOMY -- CONGRESSMAN WHO COMPLAINED ABOUT FIVE-DAY WORK WEEK TELLS
POOR AMERICANS TO WORK LONGER HOURS:
Rep. Jack Kingston (R-GA) made headlines last month after complaining about Congress' new schedule
that requires members to work five days a week: "Keeping us up here eats away at families," Kingston told the Washington Post. "Marriages suffer.
The Democrats could care less about families -- that's what this says." Yet on Wednesday, Kingston
offered this advice to Americans living in poverty: work longer hours.
During President Bush's six years in office, he and Congress have taken an inherited
surplus and have transformed it into a mountain of debt. "The budget outlook for the next decade is bleak," according to the Center for Budget and Policy Priorities (CBPP).
The Congressional Budget Office projects that "if the President's tax cuts are made
permanent and relief from the Alternative Minimum Tax is extended, deficits will average about $350 billion a year for the next ten years (2007-2016), even if the costs of the wars in Iraq and Afghanistan decline substantially
in a few years."
Despite the grim picture, Bush practiced a bit of "me-tooism" this week as he promised to submit a plan to "balance the federal budget by 2012," despite the fact that he has "never proposed a balanced budget since it went into deficit, never vetoed a spending bill when Republicans controlled Congress and offered
little sustained objection to earmarks until the issue gained political traction last year."
The dark clouds ahead may be a perfect storm hitting the U.S. economy.
White House cuts economic outlook Bush advisers predict less growth for 2007, increase in inflation
WASHINGTON -- U.S. economic growth will slow in 2007 compared with this year, reflecting a weaker housing market, and inflation
will increase, President Bush's economic advisers said Tuesday in their semiannual forecast.
Gross domestic product will grow 2.9 percent next year, down from 3.1 percent this year, and slower than the 3.6 percent
growth forecast in June, the Council of Economic Advisers said.
Consumer prices are forecast to rise 2.6 percent next year, up from a 2.3 percent increase this year. That's less than
the June 8 forecast for a 3.0 percent inflation rate and is still within historic averages, said Edward Lazear, chairman of
"The updated forecast projects somewhat slower economic growth" than was predicted in June, the council said in a joint
statement with the Treasury and the Office of Management and Budget. "The revisions reflect a slower-than-expected housing
sector while growth in other parts of the economy remains strong."
The administration's GDP forecast for next year is more optimistic than private sector estimates. The Nov. 10 median forecast
issued by the Blue Chip Economic Indicators was for 2.5 percent growth in 2007 and 3.3 percent this year.
"All the signs are for continued strong growth," Lazear said.
The higher inflation forecast for next year "is not especially significant" when energy prices are down from their peak,
Federal Reserve policymakers said last month that inflation is a bigger worry than the slowing economy. The Fed has left
its target interest rate at 5.25 percent at the last three policy meetings after raising the rate 17 times since June 2004
to curb inflation.
Lazear said the housing market "has been hit harder than most of us expected," though it hasn't triggered widespread layoffs
in the construction industry.
"I don't believe it's going to transmit to the rest of the economy," he said. The slump could bottom out in the next quarter
or two, but that's "still up for grabs."
The president's chief economist said it would be "unnecessary and unwise" for an incoming Democratic Congress to consider
tax increases next year, and he urged lawmakers in 2007 to focus on slowing the rate of growth in entitlement programs, such
as Medicare or Social Security.
A tax increase "is very risky, and we don't want to endanger the kind of growth we've had in the last couple of years,"
The forecast projects payroll growth to average 129,000 jobs per month next year, down from a 151,000 average increase
this year and little changed from the 5-month-old forecast.
ECONOMY -- REPORT: U.S. MIDDLE CLASS 'IN WORSE SHAPE THAN EVER':
TAXES -- CONGRESS SET TO ALLOW MIDDLE CLASS AND SMALL BUSINESS TAX
DEDUCTIONS TO EXPIRE:
Barring last minute action by an already-overbooked Congress, a set of tax write-offs for college tuition, retirement savings, teacher's school supplies, and state sales tax will be left
to the lame-duck session or fail to renew, affecting almost 20 million Americans.
The small business R&D tax credit, an effective federal policy that has been used to promote private, job-generating research in the United States, expired last year and is also unlikely to be extended before the election.
"Waiting [until the lame duck session to extend these breaks] will create headaches
and hardship for tens of millions of taxpayers,” said Senate Finance Committee Chairman Chuck Grassley (R-IA).
Faced with current policies that "consistently fail to solve problems," the
report -- which has drawn support from a bipartisan group of experts and former government officials -- concludes that the
"entire financing system needs to be modernized if the problems of inequity and antiquity are to be solved."
It proposes a plan for government at all levels to allocate funds to schools
on a "per-student basis" according to each student's needs, and not by staffing levels or special program needs or "political
jockeying," as is currently done.
The funding would follow students to whichever public school they choose to
A host of studies, some of them written by economists who served in the Bush
administration, have concluded that tax reductions mean less money for the Treasury."
Douglas Holtz-Eakin, who formerly served as chief economist for Bush's Council
of Economy Advisers, was asked if "the president's 2001 and 2003 tax cuts generated enough additional revenue to pay for themselves."
"No," answered Holtz-Eakin.
CONGRESS -- HASTERT THINKS AMERICA'S MIDDLE CLASS DOESN'T PAY TAXES:
In a House session last week , House Speaker Dennis Hastert (R-IL) claimed that "if you earn
$40,000 a year and have a family of two children, you don't pay any taxes.
While someone with a $40,000 salary and a family of four paid little or no federal income taxes last
year, Hastert ignored the other taxes paid by all Americans -- payroll taxes, gas taxes, sales taxes, etc.
For example, a family whose entire $40,000 in salary came from wages directly paid $3,060 (7.65 percent of $40,000) in federal payroll taxes last year. (Note: The employer also pays an equal amount on behalf
of the family, but most economists "believe that the portion of the payroll tax paid by the employer is borne by the worker.")
Hastert, who earns a hefty $212,010 a year salary, doesn't seem to understand that families across America are facing higher health care costs, mortgage
payments, and gas prices. And yes, they also have to pay their taxes.
ENERGY -- BUSH HYPOCRISY ON STRATEGIC PETROLEUM RESERVE REVEALED:
Last week, President Bush announced his administration will temporarily stop filling the Strategic Petroleum Oil Reserve to help increase the supply of oil in an effort to drive down high
"By deferring deposits until the fall, we'll leave a little more oil on the market. Every little bit helps," said Bush.
When President Clinton made a similar move in 2000, then-Gov. George W. Bush attacked him, stating that the "Strategic Reserve should not be used as an attempt to drive down oil prices right
before an election. It should not be used for short-term political gain at the cost of long-term
The administration had previously reiterated that limiting the oil flow into the Strategic Reserve
would weaken the nation.
When asked in March 2004 whether the administration would consider stop filling the Reserve, former
White House Press Secretary Scott McClellan said, "[T]apping the Strategic Petroleum Reserve solely for political purposes
to lower prices would reduce our protection and weaken -- and weaken us while we're at war."
Bowing to political pressure, the administration has taken an appropriate action to demonstrate some
national leadership on an issue causing pain for many Americans, but in the process, its hypocrisy has been revealed.
But the likelihood of that happening is declining. A new American Progress report by Tom Hertz of American University finds that children from low-income families have only a one percent
chance of reaching the top five percent of the income distribution, versus children of the rich who have about a 22 percent
Race also inhibits intergenerational mobility. Low-income African-American
children are nearly twice as likely to remain poor as adults than are white children whose parents had identical incomes.
Additionally, household incomes are now less stabile, especially for middle
class families. Households that saw their incomes decline by $20,000 or more rose from 13 percent in 1990-91 to over 16 percent
in 2003-04. (Find out more about the state of economic mobility in the United States here.)
INTERNATIONAL RELATIONS -- RUSSIAN-IRAN MISSILE DEAL SHOULD BE CAUSE
The Russian-Iran missile deal "significantly increases the risk of a regional war."
Meanwhile, the rhetoric between Iran and Israel has escalated and has "become increasingly bellicose."
"Russian leaders continue to mouth the usual diplomatic platitudes about democracy and global cooperation,
but Russia is actually playing a complex double game.
Last Tuesday, Russia launched a spy satellite for Israel, which the Israelis can use to monitor Iran's
On the same day, Russian leaders confirmed their opposition to any U.N. Security Council effort to
impose sanctions against Iran, and their intention to go through with the lucrative sale of 29 Tor M1 air defense missile
systems to Iran."
A regional conflict may draw the U.S. into the conflict, perhaps damaging American global influence.
"Andrei Piontkovsky, a Russian political analyst, suggests that Russia's oil and gas oligarchs wouldn't
shed any tears over a war in the Middle East, especially if it's a war that ensnares the U.S. and keeps oil prices high."
EMPLOYEES' RIGHTS -- BUSH NOMINATES FORMER WAL-MART LAWYER TO
OVERSEE LABOR DEPT. WAGE DIVISION:
"He has proposed taking overtime pay away from workers in ways that were even more extreme than what
the administration actually has done -- and suggested easy outs for bosses who misclassify workers as not eligible for overtime
Former first lady Barbara Bush donated an undisclosed amount of money to the
Bush-Clinton Katrina Fund with specific instructions that the money be spent with an educational software company owned by
her son Neil...Information about the effectiveness of the program, through district-generated reports, was not readily available
Wednesday, according to an HISD spokeswoman.
"You'd think if a woman has reached her 80th birthday she'd understand that if you make a donation
to charity, then make the charity give the donation to your son, it's not a damned donation anymore! Barbara Bush, today's
'Worst Person in the World'!"-- Keith Olbermann
On Feb. 28, the Bush administration announced it would not be providing any significant additional
funding for Iraqi reconstruction projects, with the exception of prisons.
Yesterday, Daniel Speckhard, the head of the U.S.-led program to rebuild Iraq told the Iraqi government
that it "can no longer count on U.S. funds and must rely on its own revenues and other foreign aid."
As the United States turns its back on Iraq's reconstruction, it leaves behind a legacy of waste, mismanagement,
and misplaced priorities.
"There was insufficient systematic planning for human capital management in Iraq before and during the U.S.-directed stabilization and reconstruction
operations," noted Iraq's Special Inspector General Stuart Bowen. "Of the 136 water projects first
envisioned, only 49, or 36 percent, will be completed. And only 300 of the 425 electrical projects will be completed."
Anthony Cordesman at the Center for Strategic and International Studies called the U.S. reconstruction
effort "a dismal failure. It hasn't met any of its goals. It's left a legacy of half-built projects, built to U.S. standards,
which Iraq doesn't have the capability to maintain."
"First, let me make it very clear, poor people aren't necessarily killers.
Just because you happen to be not rich doesn't mean you're willing to kill." George W. Bush, Washington, D.C., May 19, 2003
The report puts the fiscal year 2005 deficit at $760 billion by "using
generally accepted accounting principles that private businesses must use to present their finances."
The larger figure contrasts strongly with the $319 billion figure typically cited.
According to the report, standard deficit calculations give "a potentially unrealistic and misleading picture of the federal government’s overall performance, financial condition, and future fiscal outlook."
ECONOMY -- GAS PRICES SET TO RISE, OIL INDUSTRY HIRES LOBBYISTS:
The average price per gallon of gas in the U.S. today is $2.25, near the pre-Katrina high. Enjoy it while you can. Consumer Affairs reports,
"Oil industry expert Trilby Lundberg warns gasoline price declines are for the most part over and she expects the cost of
a gallon of gasoline to head up through the spring and summer."
Oil companies have shown record-breaking profits in recent months; ExxonMobil last quarter earned $4.9 million every hour.
Nevertheless, the industry has refused to rejected bipartisan calls for voluntary price restraints, and
are gearing up its lobbying efforts to fight legislation that would impose a "windfall profits" tax.
The Hill reports that, "The American Petroleum Institute has hired Ernst & Young [a powerful lobbying firm] as Congress
considers increasing the taxes oil and gas companies pay in light of record profits."
the economy was healthy, Bush said we needed a tax cut for the rich to keep it healthy.
When the economy soured
under his watch, he said we needed a tax cut for the wealthy to pull it out of the doldrums.
When that didn't work, he said we needed another tax cut for the fat cats for long-term
But those people making peanuts who voted for him still
think he's talking about them....
Character is Fate"
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