The Agonist - Economics: USA

Real Independence for All Americans

Fri, 04 Jul 2008 10:23:13 -0700

I have been wondering of late where it is on the political spectrum that I would feel comfortable? There was a time when I considered myself to be a Democrat. This wasn’t because I believed in the party’s platform; it was because I disagreed with the Republican point of view. The last seven years have reinforced my view of Republicans, but at the same time my fondness for the Democrats has also waned. The truth is that frankly, I don’t see much of a difference between the two; both the Republicans and the Democrats are financed by the same entities.

Who are the people behind the curtain, so to speak? Well, they are basically the same people and organizations that have always ruled in this country (with periodic breaks from time to time). These are the captains of industry and the bankers that back them, and lately, religious groups (that pop-up occasionally). The government claim that the people are behind the government and they are responsible for electing their government is patently untrue. The only thing that the people are responsible for is rubber-stamping the candidates that are selected for us. The two political parties, the Republicans and Democrats, seem to be the only game in town, so to speak. While it is true that this nation has other political parties, in national elections, there are basically only two parties that matter.

High gas prices threaten to shut down rural towns

Wed, 02 Jul 2008 01:25:43 -0700

Greg E. Latza | Forks of Salmon, CA. | July 2

USA Today -

Percentage of gasoline price increases (click to enlarge)

The price of gas isn't an annoyance here. It's a calamity.
Peggy Hanley uses a generator that burns a gallon of diesel fuel every hour —at about $5 a gallon— to power Forks General Store, the only place to buy groceries for miles around. There's no electric service, so Hanley, the owner, uses the generator to run eight refrigerators, nine freezers, lights and two ice machines for the store, which has been in a trailer since a fire destroyed the original building in 1994.

There are no utilities and no public transportation in this unincorporated town of a couple hundred people along a narrow road that winds through the mountains 314 miles north of Sacramento. Many people here buy gas for their vehicles and gas or diesel for generators that power their homes.

"I'm scared to death" of rising fuel prices, Hanley says. At the store, the hub for visiting whitewater rafters and residents of other isolated towns, gas cost $5.30 a gallon on a recent day when the national average was $4.07.
(Click graphic to enlarge)

California Under Schwarzenegger Underperforms Davis

Mon, 30 Jun 2008 20:49:00 -0700

Michael B. Marois | Sacramento | June 30

Bloomberg - It costs California taxpayers more to borrow now than under former Governor Gray Davis, the man Arnold Schwarzenegger helped oust and succeeded in an unprecedented recall fueled by the state's sagging finances.

As the most populous U.S. state, with a gross domestic product that's No. 8 in the world, California is so strapped for cash that it must consider a short-term, $10 billion loan to cover its bills. The widening deficit means the financing may be about 0.85 percentage point more expensive than five years ago, when Davis lost his job over a budget gap twice as large as the $17 billion deficit the state now faces. That's an added $8.5 million on every $1 billion borrowed.

Chrysler to close 1 plant, cut production at 2nd

Mon, 30 Jun 2008 19:37:08 -0700

Tom Krisher | Detroit | June 30

AP - The worsening U.S. auto sales slump hit Chrysler LLC again Monday as it announced plans to close one St. Louis-area factory and cut a shift from another because of declining demand for minivans and pickups.

Officials with the Auburn Hills-based automaker said in a conference call that it will shutter the St. Louis South plant, which makes minivans, effective Oct. 31. The St. Louis North plant, which makes full-size pickups, will be cut from two shifts to one effective Sept. 2.

Barclays warns of a financial storm as Federal Reserve's credibility crumbles

Fri, 27 Jun 2008 12:07:13 -0700

June 27

Telegraph (UK) - Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.

Stocks tumble as more bad economic news piles up

Thu, 26 Jun 2008 13:14:09 -0700

Tim Paradis | New York | June 26

AP - Wall Street has suffered a huge loss, with the Dow Jones industrials plunging more than 350 points as investors contended with a barrage of bad news. A surge in oil prices past $140 a barrel and warnings of trouble in the key financial, automotive and high-tech industries created a gloomy mood across the market.

Labor Dept. To Probe Immigration Law Firm

Wed, 25 Jun 2008 13:44:02 -0700

Suzanne Gamboa | Washington | June 25

AP - The nation's largest immigration law firm is under federal scrutiny over whether it helped major U.S. corporations disqualify American job applicants and give thousands of high-paying positions to immigrants.

The unprecedented Labor Department inquiry centers on Fragomen, Del Rey, Bernsen & Loewy -- a New York firm at the forefront of a political effort to ease hiring of skilled foreign workers.

The Labor Department is auditing all pending applications for legal immigrant workers the firm has filed on behalf of its corporate clients.

Fragomen's prestigious client roster includes General Electric Co., IBM Corp., Cisco Systems Inc., Intel Corp. and Bank of America Corp., according to company publications and trade journals. The firm also represents The Associated Press on immigration issues.

The Candidates and their Energy Positions

Wed, 25 Jun 2008 10:25:30 -0700

"Story "intentionally left blank for now.

Texas Real Estate Slump Lets Mexicans Take It Back

Wed, 25 Jun 2008 09:05:41 -0700

Thomas Black | Monterrey | June 25

Bloomberg - June 25 (Bloomberg) -- More than a century and a half after Mexico lost Texas to the U.S., Virgilio Garza wants a piece of it back.

A ``Texas for Sale'' sign and cowgirls in boots and white hats greeted Garza at the Convex center in Monterrey, Mexico, earlier this month. A Monterrey developer and investor, Garza was in search of foreclosed U.S. property to buy.

Congress' nine bills to help bring down oil prices

Tue, 24 Jun 2008 07:12:07 -0700

David Goldman | Washington | June 24

CNNMoney.com - Close loopholes on foreign oil trading. Limit hedge funds from pouring money into the market. End oil speculation altogether.
Congress is vowing to take actions that it believes will reverse runaway crude and gasoline prices. Oil rose above $136 a barrel on Monday - more than double what it cost a year ago - and gas hovered around $4.07 a gallon.

Lawmakers have introduced nine different bills on speculation - not to mention many more that tackle other causes of escalating fuel and oil prices. Several of the speculation measures have bipartisan support. No fewer than four separate hearings have been scheduled for this week, including a House hearing held Monday exploring foreign trade regulation.

Their foreclosures delayed, vacant homes fall into disrepair

Mon, 23 Jun 2008 07:22:01 -0700

Paul Wenske | Kansas City, Mo. | June 23

McClatchy - Some nights Terry and Carrie Madden won't even step onto their patio -- the stench and mosquitoes from the abandoned swimming pool next door are overpowering.

The Maddens' cash-strapped neighbors moved out in August, and the lender on the now-vacant house let it fall into disrepair. The pool is slime-green. The grass is knee-high. Once Carrie Madden had to call police to chase away burglars.

"It's frustrating," she said. "It's an eyesore, and it sits right at the entrance to our neighborhood. It's not only a blight, it's unsafe."

Not what you would expect in a neighborhood of homes whose average value is about $280,000.

City officials say the house is a prime example of a little-reported but increasingly worrisome trend: Lenders are delaying foreclosing on homes vacated by owners who can't keep up with payments. Maintenance then stops, or it falls on taxpayers. And neighborhoods have to deal with a growing cancer of blight and falling home values.

Paulson To Urge New Fed Powers

Thu, 19 Jun 2008 05:47:00 -0700

Neil Irwin | Washington | June 19

WaPo - Bank Would Help Police Wall Street

Treasury Secretary Henry M. Paulson Jr. plans to call today for the Federal Reserve to be given new, explicit powers to intervene in the workings of Wall Street firms to protect the financial system, adapting his vision of how the financial world should be regulated to reflect the lessons of the collapse of Bear Stearns.

Speculators accused of dictating oil prices

Thu, 19 Jun 2008 05:27:26 -0700

Patrice Hill | June 18

Washington Times - Investors defy demand with control of futures contracts

Just how much oil prices are being driven by speculation became clearer yesterday as regulators revealed that Wall Street dealers, hedge funds, pension funds and other speculators hold 70 percent of the leading oil futures contracts traded in New York.

The price on those contracts continued to defy gravity yesterday, with premium crude closing near $134 a barrel despite trends that in the past would have weighed down prices, including falling demand for oil in the United States and a strengthening U.S. dollar. Oil's seemingly relentless rise in the face of these trends has prompted charges that speculators have taken control of the market.

The latest estimate of how large the investor involvement in the market has become was provided by the Commodity Futures Trading Commission this week to the Senate Energy and Natural Resources Committee.

Morgan Stanley profits halve

Wed, 18 Jun 2008 08:00:12 -0700

Julia Kollewe | June 18

The Guardian - Profits at Morgan Stanley more than halved in the second quarter because of trading losses and a slowdown in investment banking.

Profit from continuing operations fell to $1.03bn (£526m), or 95 cents a share, in the quarter to end May, from $2.4bn, or $2.24 a share a year ago. Revenues plunged nearly 40% to $6.5bn.

Morgan Stanley was able to beat Wall Street's already lowered expectations by raising $1.4bn through asset sales, including its Spanish wealth management business. Analysts had expected a profit of 92 cents a share on revenues of $7.1bn, according to Thomson Financial. Its shares fell almost 6% to $38.21 in early trading.

"If you have to go all the way to Spain to make numbers, it's not good," said Matt McCormick at Bahl & Gaynor Investment Counsel in Cincinnati. "How many more rabbits do they have in their hat? What's going to be the driver of earnings growth going forward?"

Understaffed Fed raises worries

Tue, 17 Jun 2008 09:04:45 -0700

Mark Trumbull | June 17

CSM - Just when the economy most needs the help of capable policymakers, America's central bank finds itself short-staffed.

The predicament: Where the Federal Reserve is supposed to have seven members on its board of governors, it now has five. A recently announced retirement, moreover, means that by late summer the number is set to drop to four.

Compared with things like the price of oil or subprime mortgages, this doesn't qualify as a crisis. But the Fed is the first line of defense against such threats – inflation and the financial fallout of house-price deflation.

The case of the missing governors may be larger than just the board's ability to perform its tasks at an important time. Since it stems from Senate inaction on nominees, it is possible that political tensions surrounding the central bank are growing.

The Fed's challenge reflects a confluence of politics and a weak economy. The coming presidential election may have inclined the Democratic-controlled Senate toward postponing action, in the hope that more slots will be filled by a president of their own party. America's economic woes make the Fed's job arguably more important and less clear-cut than it has been in years.