The “Obama Coalition” Dampens Expectations

OK, before we start–there are a few things that have been noticed in the early dyas of an Obama Administration.  Some of the wording in these early days is a bit disturbing, is all I am saying.

The “Obama coalition,” however, is fraught with contradictions. The majority of those who voted for Obama want an end to social inequality, the erosion of democratic rights and militarism. Yet, despite Obama’s rhetoric about uniting “Main Street and Wall Street” and “the rich and the poor,” he is committed to defending the interests of the most powerful sections of the American corporate elite.

The Democratic Party is already seeking to dampen popular expectations about the incoming administration. Obama suggested this himself in his victory speech in Chicago, when he said, “The road ahead will be long…We may not get there in one year or even one term…There are many who won’t agree with every decision or policy I make as president, and we know that government can’t solve every problem.”

Leading Democrats have lined up to insist that it would be wrong to interpret the election as a mandate for substantial changes in policy. Instead, they are saying the next administration will have to rule from the “center” and rely on a bipartisan alliance with the Republicans.

In other words, the Democrats must reject the will of the American people—who just handed them control of the White House and a greater majority in Congress—and shape policy in conjunction with the most right-wing and pro-business sections of the political establishment, who were overwhelmingly rejected at the polls.

One only has to contrast this with Bush’s insistence that he had a mandate for his right-wing agenda despite losing the popular vote in 2000 and winning only a 50.7 percent majority in 2004.

While collaborating with the Republicans, the Democrats are preparing to defy popular expectations that the next administration will provide relief from the growing economic catastrophe. As the Post noted, Obama advisors “are ready for potential conflict with some Democratic constituencies or with some liberal Democrats in Congress, whose pent-up demand for action may clash with Obama’s priorities, and are prepared to say no.”

Jobs Lost Hit 14 Year High

A total of 240,000 jobs were lost last month on a net basis, significantly more than had been anticipated, again pointing to a prolonged and severe downturn. “We’re heading for a deep recession,” Nariman Behravesh, chief economist at IHS Global Insight, told Bloomberg News. “Banish the word mild from your vocabulary. It’s big, it’s bad, and it’s broad-based.”

The Labor Department revised its jobless figures for September, from the initially reported 159,000 net job losses to 284,000. Total employment has declined by 1.2 million in the first 10 months of 2008, with more than half of this fall recorded in the last three months. Economists estimate that the economy must generate an additional 100,000 jobs each month just to keep up with population growth.

Jobs were shed across a number of sectors:

• Manufacturing employment declined by 90,000 in October, including employment in fabricated metal parts (11,000 jobs lost), furniture and related products (10,000) and motor vehicles and parts (9,000).

• Construction employment fell by 49,000. The Labor Department noted that since peak activity in September 2006, construction employment has fallen by 663,000.

• The employment services industry lost 51,000 jobs.

• Retail trade employment declined by 38,000, with auto dealerships (20,000 jobs lost) and department stores (18,000) the worst affected.

• Financial sector employment fell by 24,000 and is down by 200,000 jobs since its peak in December 2006.

The rising unemployment rate is having a devastating social impact. According to the New York Times, only 32 percent of the officially unemployed are drawing state benefit checks because of onerous eligibility restrictions and other conditions designed to drive people off the books.

Moreover, the real jobless rate is far higher than the official 6.5 percent figure. The Labor Department’s monthly report acknowledged that the number of “involuntary part-time workers”—that is, those who are unable to find full-time work, or those whose hours have been cut back to part-time levels—increased in October by 645,000 to 6.7 million.

Also not counted as unemployed are those “marginally attached to the workforce”—i.e., those who wanted and were available for work and had looked for a job in the last year, but not in the four weeks preceding the survey. A total of 1.6 million people were in this category in October. Among the marginally attached were 484,000 “discouraged workers” who have stopped actively looking for employment. Other marginally attached workers include those who were unable to look for work in the preceding four weeks due to school attendance or family responsibilities.

When the involuntary part-time and marginally attached workers are counted, the unemployment rate stands at 11.8 percent, up from 11 percent in September and from 8.4 percent a year earlier.

Commenting on the Labor Department data, the Wall Street Journal’s Sudeep Reddy and Justin Lahart noted, “One of the more worrisome aspects of today’s report: signs that the labor market was declining substantially even before the worst of the credit crisis hit… If conditions were that bad before October, they’re likely to be far worse in the months to come as companies adjust to the new credit environment and consumers retrench with added pressure on housing and credit markets.”

Today In Labor History

10 November

Sit-down strike begins at Austin, Minn. Hormel plant – 1933

The ship Edmund Fitzgerald – the biggest carrier on the Great Lakes – and crew of 29 are lost in a storm on Lake Superior while carrying ore from Superior, Wisc. to Detroit. The cause of the sinking was never established – 1975

Tile, Marble, Terrazzo Finishers, Shop Workers & Granite Cutters International Union merges into United Brotherhood of Carpenters & Joiners – 1988

More Bank Failures

From CNNMoney reporter Catherine Clifford

The tally of failed banks in 2008 rose to 19 as the government announced that a Texas and a California bank had been shuttered Friday night.

Franklin Bank, a Houston, Texas-based bank and Security Pacific Bank, a Los Angeles, Calif.-based bank were shut down by state regulators Friday, marking the 18th and 19th bank failures this year.

Franklin Bank (FBTX) had total assets of $5.1 billion and total deposits of $3.7 billion as of Sept. 30, 2008, according to a statement on the Federal Deposit Insurance Corp.’s Web site.

Prosperity Bank (PRSP), based in El Campo, Texas, will assume all of the deposits of the failed Texas bank, including those that exceed the insurance limit and brokered accounts. Depositors of the failed bank will automatically become depositors of Prosperity.

In addition to taking over the deposits of the failed Franklin Bank, Prosperity will purchase $850 million of assets. The FDIC will retain the remaining assets to dispose of later.

Pacific Western Bank of Los Angeles will assume all of the deposits of Security Pacific Bank and will purchase approximately $51.8 million of the assets. The FDIC will hold on to the remaining assets to dispose of later.

In Friday’s announcement about Franklin Bank, the FDIC said that the cost of its failure to the Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.

Meanwhile, Security Pacific’s failure, the third in California this year, will cost the FDIC $210 million. The FDIC said that for both banks, acquisition of their deposits was the least costly resolution.

Smaller regional banks have been under pressure as the financial crisis continues to take its toll.

A Military Laundry

A federal jury in Trenton, N.J., today convicted U.S. Army Col. Curtis G. Whiteford and U.S. Army Lt. Col. Michael B. Wheeler of conspiracy to commit bribery and interstate transportation of stolen property, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division announced. The convictions stemmed from Whiteford and Wheeler’s roles in a scheme involving the theft of millions of dollars from the Coalition Provisional Authority (CPA) in Iraq.
According to testimony at trial before U.S. District Court Judge Mary L. Cooper, Whiteford and Wheeler conspired from December 2003 to December 2005 with at least three others — Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and U.S. Army Lt. Col. Bruce D. Hopfengardner — to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received more than $8.6 million in rigged contracts. Testimony revealed that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.

Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies. Some of the stolen money was used to purchase things of value, such as weapons including a machine gun that was seized from Wheeler’s home.
The Department announced the creation of the National Procurement Fraud Initiative in October 2006, to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. As part of this initiative, the Deputy Attorney General created the National Procurement Fraud Task Force, which includes federal prosecutors, the FBI, Special Inspector General for Iraq Reconstruction (SIGIR), and the Offices of Inspectors General for key federal agencies, and is chaired by Acting Assistant Attorney General Friedrich.

Source: U.S. Department of Justice