Day: November 22, 2008

Where Is The Change?

From the point that it appeared that it would either be Clinton or Obama as the nominee, I said then and now I am vindicated…change is just a political buzzword and Obama’s choices are proof.

The media reaction to President-Elect Barack Obama’s reported choice of Eric Holder, a former top Justice Department official under the Clinton administration, as his attorney general has focused largely on the fact that, as the New York Times put it, Holder will be the “first African-American to serve as the nation’s top law-enforcement official.”

As with the president-elect himself, the focus on racial identity serves to mask the mounting indications that, far from fleshing out the vague promises of “change” that dominated the election campaign, the transition to the Obama presidency is laying the foundations for the continuation of many of the criminal and reactionary policies of the past eight years.

Let us look at Obama’s choice for AG, Holder.

Using his longstanding ties at the Justice Department, Holder managed to get Chiquita off the hook with a fine that amounted to 0.55 percent of its annual revenue. This was despite the overwhelming evidence—and the company’s own admission—that it had paid out millions of dollars to the United Self-Defense Forces of Colombia (known by its Spanish acronym AUC), as its gunmen carried out the massacre, assassination, kidnapping and torture of tens of thousands of Colombian workers, peasants, trade union officials and left-wing political activists. Fully half of these payments were made after AUC was formally designated as a foreign terrorist organization, and they continued for a full year after the Justice Department had warned Chiquita that it would face prosecution if it failed to halt the payments.

The emerging continuity of policies and personnel at Justice, the FBI, CIA and Pentagon means that there will be no accounting whatsoever for the war crimes and gross violations of the US Constitution carried out under the Bush administration.

This is not merely a matter of sweeping these crimes under the rug—as serious as that is. Rather, what is being prepared are cosmetic changes behind which these same methods will be employed once again to pursue US interests abroad and suppress social unrest and class antagonisms at home.

And you expected what? A change in personnel? 

CAFTA–Part 3

With the loss of protective import tariffs, most Central American farmers have no chance of competing with the US government-subsidized agricultural sector. For example, economist and CAFTA specialist Adolfo Acevedo explains that farmers in the Sébaco Valley of Nicaragua can produce rice for about $8.45 per 100 pounds, while US farmers produce the same amount for $9.40. According to Acevedo, this should imply a comparative advantage for Nicaraguan farmers. However, due to government subsidies, US rice enters the Nicaraguan market at the artificially low price of $7.65 and beats out domestic producers. Rice and corn, two of the most heavily subsidized U.S. crops, have flooded into Central American markets as a result of DR-CAFTA. Between 2006 and 2007, rice exports to the region rose 31 percent, while corn exports rose by 36 percent, according to the US Department of Agriculture.

Nevertheless, DR-CAFTA enthusiasts argue that Central American farmers can gain through the production of “specialty products” – fruits, nuts, and other goods not produced in the United States – for which the region would have a comparative advantage. However, the vast majority of Central American farmers do not have the capacity to trade these products on the international market. Small to medium-scale producers, a category that includes about 80 percent of farmers in countries like Nicaragua, are unable to produce such product lines on a large enough scale to compete in the export market or to comply with strict sanitary standards imposed by U.S. regulations. According to Matilde Rocha, a Nicaraguan activist, “the producers of specialty products are [often] too small to export individually and they lack knowledge about the rules of the market and trade regulations.” Thus, most of these farmers are forced to either sell their products to intermediary export companies (which skim off most of the profits) or to sell their land to large-scale agro-businesses.

This has led to the concentration of the food export industry into a very limited number of hands. In Nicaragua, 70 percent of the country’s export earnings go to a mere fifty businesses that possess the facilities and capital to take advantage of trade with the US. To cite an example, only one dairy processing plant in the entire country has the capacity to pasteurize milk according to USDA standards, and that plant is owned by a foreign dairy conglomerate, Parmalat. Thus, while Central American economies may have experienced a moderate amount of growth over the past few years, the benefits of U.S. trade are being reaped by only a select few, causing economic inequality to sharpen throughout the region.

World Bank Is Not Optimistic

In the lead-up to the G-20 summit in Washington, the World Bank released figures this week confirming that the global economy is rapidly heading into recession. Its global outlook predicted a growth rate of just 1 percent for the world as a whole in 2009 and a contraction of 0.1 percent for the high-income countries.

As if to confirm the forecast, Germany officially entered recession yesterday for the first time in five years, after announcing its second consecutive quarterly contraction—0.5 percent in the third quarter. EU figures to be published soon are expected to show the entire eurozone is already in recession after a 0.2 per cent drop in GDP from April to June. Japan’s third quarter figures to be released next week are also likely to show a second successive contraction.

The Organisation for Economic Cooperation and Development (OECD), which covers the world’s major industrialised economies, issued similar gloomy forecasts yesterday. The OECD predicted contractions in 2009 of 0.9 percent, 0.1 percent and 0.5 percent for the US, Japan and the eurozone, respectively. OECD economist Jorgen Elmeskov told the Financial Times that the “mess” stemmed from a financial crisis that was engulfing rich and poor countries alike.

World Bank President Robert Zoellick said on Tuesday that developing countries were increasingly seeking financial assistance. He said that his organisation expected that lending would more than double from $13.5 billion last year up to $35 billion this year. He noted that “countries that had very good, sound macro-economic programs [like] Mexico, Indonesia” were worried about getting financing and seeking World Bank assistance.

The global financial crisis has already witnessed large withdrawals by foreign investors from developing economies—fuelled both by fears of growing risk and to shore up balance sheets at home. The World Bank expects private capital flows into developing countries to almost halve, from $1 trillion last year to around $530 billion in 2009. Even this investment will not be evenly spread, with countries like China and India absorbing the largest share.

The World Bank also highlighted the rapid decline in international trade—a key indicator of a global slump—forecasting a large contraction of 2.5 percent in world trade volumes for 2009. This is a precipitous fall from an expected growth of 5.8 percent this year and of nearly 10 percent just two years ago in 2006. Alongside plunging oil prices, the World Bank predicts that prices for non-oil commodities will fall by 23.2 percent in 2009.

Falling demand, collapsing commodity prices and the international credit crunch are all impacting most heavily on the world’s poorest countries and thus on hundreds of millions of people who are already poverty stricken. The World Bank estimates that every one percent decline in the growth rate of developing countries pushes an additional 20 million people into poverty. On the basis of the World Bank forecasts, that means an additional 40 million people will join the world’s poor next year.

As with the IMF, everyone has a hand out for cash. I ask one more time, where will all this money come from? Who will be the benefactor?

What Is The Bailout Accomplishing?

Froman a Forum On Geonomics by Jeffery Smith:

The Treasury Department�s $700 billion bailout buys taxpayers preferred shares in the banks. What are taxpayers getting for their money? The promise was that the relatively healthy banks getting the cash would start lending again, defrosting the frozen credit markets.

So far, the money is going to pay either bank dividends, satisfy old debts, or to shore up their bottom lines — and, see below, pay bonuses and take over smaller banks. While banks are a business and see their job as looking out for their shareholders, now that taxpayers are significant investors, they should be working in the nation’s interests as well.

Government officials argued that attaching strings to the funds would discourage healthy institutions from participating. But it was the banks and other borrowers who asked taxpayers for the money.

Where should the government draw the line? Now automakers are lining up for tax dollars, too. Yet Little Business can lose money just as well as Big Business.

    Guardian: Wall Street banks in $70bn staff payout

The government’s cash has been poured into banks on the condition that excessive executive pay would be curbed. Yet financial workers at Wall Street’s top banks are to receive pay deals worth more than $70bn, equivalent to 10% of US government bailout package.

A substantial proportion is expected to be paid in discretionary bonuses — for their work so far this year.

Germany’s Deutsche Bank, on the other hand, said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.

While bank executives reap huge gains, many investors in the banks are wiped out. Since the start of the year, shares in Citigroup and Goldman Sachs have declined by more than 45%. Merrill Lynch and Morgan Stanley have fallen by more than 60%. Lehman Brothers collapsed.

At one point the Morgan Stanley $10.7bn pay pot was greater than the entire stock market value of the business; staff, on receiving their remuneration, could club together and buy the bank.

JJS: Bankers don�t always get away with it, at least not foreign bankers. A US federal judge sentenced three British bankers to 37 months in prison each for their roles in the collapse of Enron (MarketWatch, Feb. 22, 2008)

While we give money to big banks who lost billions and still refuse to lend, little banks who were left out still make loans and pay dividends. But where does the money come from?

    L-T: Bailout money used for takeover

Eau Claire-based Citizens Community Bancorp, the holding company for Citizens Community Federal, recently announced a quarterly dividend of 5 cents per share. The cash dividend is the 17th quarterly dividend paid since the bank’s mutual-to-stock conversion in March 2004.

In others news regarding banks with ties to the Wisconsin and Minnesota area:

Associated Banc-Corp reported net income of $37.8 million, or 30 cents a share, for the third quarter ending Sept. 30 compared with $71.7 million in the year-ago period. Associated also reported a cash dividend of 32 cents per share, the company’s 155th straight quarterly cash dividend.

U.S. Bancorp reported a total deposit growth of $4.4 billion, or 3.2 percent, for the third quarter that ended Sept. 30. Diluted earning per common share was 32 cents, lower than the 62 cents reported for the third quarter of 2007.

PNC Financial Services Group s is acquiring National City for $5.58 billion, the first bank to use fresh investments from the federal bailout to make an acquisition.

    AFP: Is the bailout keeping us out of recession?

Thirty US states were mired in recession in September, and 19 others are at risk of falling into recession — a decline in a state’s GDP on average over a six-month period, compared with the prior six-month period — in the coming months, a survey by ratings agency Moody’s Investors Service said.

JJS: Better use the stats than professional economists� guesses. The closer that a survey of the pros got to the actual downturn, the more sanguine economists became.

In the USA Today survey of 54 economists at corporations, universities, and trade associations of April, 67% thought the economy was in recession. In July, only half thought the U.S. was in recession and said the economy was likely to narrowly avoid a recession this year.

A better indicator than GDP, which can be puffed up by government spending, are such as employment, personal income, industrial production and retail sales.

A Rise In US Child Hunger

Some 691,000 children went hungry in America in 2007, a rise of 50 percent over the previous year, while one in eight Americans overall struggled to feed themselves. The figures are reported in a study on food security conducted annually by the US Department of Agriculture (USDA).

Of the 36.2 million people who struggled with hunger during the year, almost a third of these adults and children faced a substantial disruption to their food supply, meaning they went hungry at some point. The number of these most hungry Americans has grown by more than 40 percent since 2000, rising to 11.9 million individuals in 2007.

These statistics are all the more alarming since they do not reflect the impact of the current economic crisis. James Weill, president of the Food Research and Action Center, predicted the 2008 numbers would show even more hunger.

The USDA study covered about 45,600 households, selected as representative of the approximately 118 million households in the US. Households were classified as being “food secure,” having “low food security” or having “very low food security,” according to their answers to a set of questions, including:

• In the last 12 months, were you ever hungry, but didn’t eat, because there wasn’t enough money for food?

• Did you or other adults in your household ever not eat for a whole day because there wasn’t enough money for food?

Households with children up to 18 years of age were asked additional questions, such as:

• In the last 12 months, did you ever cut the size of any of the children’s meals because there wasn’t enough money for food?

• In the last 12 months, did any of the children ever skip a meal because there wasn’t enough money for food?

Just how much is being spent on war? And we cannot find enough cash to make sure children are not humgry? That is truly sad and a monumental failure the US society.