Thursday, April 3, 2008

U.S. Initial Jobless Claims Rose 38,000 to 407,000

U.S. Initial Jobless Claims Rose 38,000 to 407,000

By Bob Willis

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The number of Americans filing first-time claims for unemployment benefits unexpectedly increased last week and total benefit rolls rose to the highest level since July 2004.

Initial jobless claims climbed by 38,000 in the week that ended March 29 to 407,000, the most since just after Hurricane Katrina in September 2005, the Labor Department said today in Washington. The number of people remaining on benefit rolls jumped by 97,000 to 2.937 million in the prior week.

The biggest housing recession in a generation, coupled with mounting losses in financial markets, is prompting companies to sack workers and consumers to slow their spending. The Labor Department may report tomorrow the U.S. lost jobs in March for a third month, according to economists surveyed.

....It is reflecting a fundamental weakening in the labor market,’’ said Dana Saporta, an economist at Dresdner Kleinwort in New York. ....People that are already unemployed are finding it more difficult to find new jobs. All of this data is consistent with a rising unemployment rate.’’

Treasury securities rose and stock market futures dropped following the report. The yield on the 10-year Treasury note fell to 3.54 percent at 9:16 a.m. in New York from 3.60 percent late yesterday.

Economists surveyed by Bloomberg News had forecast initial claims would remain unchanged at 366,000, according to the median of 40 estimates. Estimates ranged from 350,000 to 386,000.

Four-Week Average

The four-week moving average, a less volatile measure, rose to 374,500 from 358,750. Last week’s claims may have been pushed higher as some state unemployment offices processed a backlog from the prior week, which included the Good Friday holiday, a Labor Department spokesman said.

....This is just breaking into recession-type territory,’’ Stephen Gallagher, chief U.S. economist at Societe Generale SA in New York, said in an interview on Bloomberg Television. ....400,000 is usually a trigger point when we consider recessionary times.’’

The unemployment rate among people eligible for benefits, which tends to track the U.S. jobless rate, rose to 2.2 percent from 2.1 percent. These data are reported with a one-week lag.

Twenty-two states and territories reported an increase in new claims, while 31 reported a decrease, today’s Labor report said.

Claims, Payrolls

Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.

Job losses, falling home prices and slowing retail sales are indicating a worsening economy. Federal Reserve Chairman Ben S. Bernanke this week acknowledged for the first time that a U.S. recession is possible.

....It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,’’ Bernanke said in testimony to Congress on April 2. He said he expected unemployment to move ....somewhat higher’’ in line with data showing a ....softer labor market.’’

The Labor Department tomorrow may report the economy lost 50,000 jobs in March, following a decline of 63,000 jobs in February that was the largest loss in five years, according to a Bloomberg survey of economists. Unemployment rose to 5 percent from 4.8 percent, the economists forecast.

Auto Strike

A strike at auto-parts supplier American Axle & Manufacturing Holdings Inc. is contributing to falling jobs at vehicle and parts makers. The walkout has closed or idled 30 plants at GM, affecting almost half of the automaker’s workforce.

Homebuilders and housing-related businesses, including lenders and financial service companies with exposure to mortgage-backed securities, are also stepping up firings.

Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001, according to the Securities Industry and Financial Markets Association.

This year, banks including Lehman Brothers Holdings Inc., Citigroup Inc. and Morgan Stanley have been reducing staff in fixed income trading, securitization and investment banking. So far, Lehman has eliminated 18 percent of its workforce, Morgan Stanley has cut 6 percent, and Merrill Lynch & Co. has trimmed 4.5 percent, according to the association.

Municipal Bond Losses Put Taxpayers on Hook for $7 Billion as Yields Soar

Muni Losses May Put Taxpayers on Hook for $7 Billion

By Martin Z. Braun and Jeremy R. Cooke

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On the evening of Jan. 22, Minooka, Illinois, school Superintendent Al Gegenheimer stood in front of the village board and said it had a problem: The district was running out of room to house its 3,700 students.

Minooka needed $55 million to build two schools and renovate two others in the town 50 miles (80 kilometers) southwest of Chicago, he said. Two months later, the district sold 10-year tax-exempt bonds at a 4.16 percent yield, 0.8 percentage point more than Treasuries of similar maturity. It's the first time the district sold bonds yielding more than the taxable benchmark Treasury, data compiled by Bloomberg show.

``We need to have the buildings up and running by the fall of 2009,'' Gegenheimer, 51, said in an interview. ``We're kind of behind the eight ball.''

The premium, which translates into $6.5 million in extra interest over the life of the bonds, has less to do with the Minooka school district's A1 rating and more to do with the credit crunch that has led investors to spurn all but the safest of government debt.

State and local borrowers across the U.S. may pay about $7.2 billion more in interest over 10 years after municipal bonds lost 0.82 percent on average last quarter, their worst start since 1996, as a drop in debt prices pushed yields higher, according to a Merrill Lynch & Co. index.

Higher Than Treasuries

The extra interest is based on the $90 billion of fixed- rate bonds borrowers typically sell this quarter and tax-exempt rates that now average about 0.3 percentage point more than Treasuries. Because of the tax benefits, municipals typically yield 0.5 point less than U.S. government debt, Bloomberg data show.

Rates on municipal bonds have surpassed Treasuries for five weeks straight, the longest period in at least 17 years, according to Bloomberg data.

Top-rated, tax-exempt bonds maturing in five years yielded 115 percent of Treasuries on March 28, while 30-year municipal bonds yielded 114 percent, according to New York-based Bear Stearns Cos. During the past 10 years, five-year municipals yielded 78 percent of Treasuries on average.

The weakness may continue through at least the third quarter as borrowers sell as much as $100 billion of tax-exempt bonds to replace auction-rate securities, according to Merrill.

`Overwhelming' Supply

The auction-rate market collapsed in February as dealers stopped bidding for bonds investors didn't want. Rates on bonds auctioned weekly averaged 6.72 percent as of March 26, up from 3.63 percent in January, according to a Securities Industry and Financial Markets Association index.

``Supply is overwhelming the demand for municipal bonds and it's going to stay that way for the foreseeable future,'' said Gary Pollack, who oversees $6 billion of municipal bonds as head of fixed-income trading at Deutsche Bank AG's private wealth management unit in New York.

The Bond Buyer 20-Bond General Obligation Index, which gauges the yield on municipal bonds maturing in 20 years, reached an almost four-year high of 5.11 percent on Feb. 28, from 4.15 percent on Jan. 17. The index yields 4.96 percent.

The crunch squeezing borrowers from Minooka to Houston and Albuquerque, New Mexico, has its roots in the subprime crisis that has sparked $232 billion in credit losses at banks worldwide and led to a slowdown in the economy.

Revenue Slows

U.S. state-tax collections rose at the slowest pace in almost five years during the past three months as the economic slump curbed sales- and income-tax receipts, according to the Nelson A. Rockefeller Institute of Government in Albany, New York. The money that states collected during the fourth quarter rose 2.3 percent from a year earlier, the institute said.

On top of that, investors are calling into question the creditworthiness of bond insurers from Ambac Financial Group Inc. to FGIC Corp. that guarantee 50 percent of the $2.6 trillion municipal market, after the firms sustained losses because they guaranteed debt backed by subprime mortgages. That is also causing investors to demand higher yields on municipals.

U.S. state and local governments squeezed by rising interest costs may have their credit ratings cut, Moody's Investors Service said in a report released yesterday, potentially saddling them with even higher borrowing costs. Issuers with high levels of variable debt and interest-rate swaps, weak cash cushions, or limited revenue-raising ability may face the biggest stresses, Moody's said.

Textbooks, Teachers

For Minooka, whose bonds are insured by Assured Guaranty, the added borrowing cost can be measured in textbooks and teachers' salaries. The money could be used to hire 153 teachers in a district that Moody's Investors Service describes as a hub for oil refineries and petrochemical producers in the Chicago area.

Minooka sought and gained voter approval Feb. 5 for the bond issue because the district has grown 130 percent in four years. The cash generated also covers renovations, including new classrooms, windows and pipes at its oldest school, built in 1922.

Delaying the bond issue would have been more expensive because the district would have had to put students in modular classrooms at a cost of about $150,000 to $200,000 per six units per year, Gegenheimer said.

``We're either paying out of one hand or paying out of another,'' he said.

Houston Schools

The Houston Independent School District, the largest public school system in Texas, sold $390 million of bonds March 10 to help renovate 133 schools, buy security cameras and add new facilities to alleviate crowding. The district has more than 200,000 students. Debt it sold that matures in 10 years yielded 3.86 percent, or 0.40 percentage point more than Treasuries.

``We needed the money because we're ready to start the projects,'' Melinda Garrett, the district's chief financial officer, said.

Albuquerque, New Mexico's water authority borrowed $55.6 million on March 19. Included in the offering were bonds maturing in 2033 with an interest rate of 5.07 percent. That compares with a 30-year Treasury that yielded 4.21 percent the same day.

Late Payments on Consumer Loans Highest Since 1992, ABA Says

Late Payments on Consumer Loans Highest Since 1992, ABA Says

By Hugh Son

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Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years during the fourth quarter, another sign the U.S. economy is slowing, according to an American Bankers Association survey.

Payments at least 30 days past due increased across all eight categories of loans tracked, the Washington-based group said today in a statement. Late loans climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.

``The rise in consumer credit delinquencies is consistent with a rapidly slowing economy,'' ABA chief economist James Chessen said in the statement. ``Stress in the housing market still dominates the story, but it's a broader tale.''

Lenders including American Express Co., the third-biggest credit-card network, and Capital One Financial Corp. doubled reserves for soured U.S. debt in the fourth quarter. Overdue bank-card accounts reached 4.38 percent in the quarter, according to the ABA, as the slowing economy made it harder for consumers to repay debt.

The overall increase was driven by late payments for car loans, which make up two-thirds of all closed-end consumer installment loans, Chessen said. Auto loan delinquencies rose to 1.9 percent from 1.81 percent. Overdue mobile home payments rose to 2.92 percent from 2.87 percent.

Federal Reserve Chairman Ben S. Bernanke acknowledged for the first time yesterday that a U.S. recession is possible because consumer spending, employment and homebuilding will deteriorate this year.

The U.S. economy grew at an annual pace of 0.6 percent from October to December. Growth probably slowed to a 0.2 percent annual rate in the first quarter, according to the median estimate of analysts surveyed by Bloomberg News.

`Anemic' Income Growth

Rising late payments will continue in the first half of this year, as ``food and gas prices remain stubbornly high and income growth is anemic,'' Chessen said.

MasterCard Inc. Chief Executive Officer Robert Selander said in a March 11 interview that U.S. consumers are spending more on gasoline and food, crimping spending for luxury items. MasterCard is the second-biggest payment-card network after Visa Inc.

``What we see is a mix change in how consumers are spending,'' Selander said in the Bloomberg Radio interview. ``With the price of gasoline up approximately 30 percent from where it was a year ago, with commodities prices up and working their way into prices at the supermarkets, consumers are spending more of their money now on gas and groceries.''

"Emergency" Bill Tries to Make Electronic Voting More Accurate, But Will It?

"Emergency" Bill Tries to Make Electronic Voting More Accurate, But Will It?

By Steven Rosenfeld

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Efforts to improve the machinery that will count the 2008 presidential vote fell prey to a classic Washington compromise on Wednesday, when a House committee approved a bill giving money to both opponents and supporters of controversial paperless electronic voting systems.

The "Emergency Assistance for Secure Elections Act of 2008," or H.R. 5036, now goes to the House floor, where its goal is helping cities and counties create a "verifiable" paper trail and audits for individual votes cast for president and Congress.

But just how that paper trail is achieved is broadly defined in the bill. Opponents of paperless electronic voting can seek federal funds to buy paper ballot-based systems, where voters mark ballots by hand and computer scanners tally the result. Several states, notably California, Ohio and Florida, are making this transition. Meanwhile, proponents of all-electronic voting can keep their machines but seek funds to add printers that theoretically will allow voters to see if their choices have been properly recorded.

Under the bill, the hand-marked paper ballots and new computer printouts would be used to verify the accuracy of vote counts. Jurisdictions taking federal money to buy new machinery would be required to hand count 2 percent of all ballots as part of an audit to ensure the vote count is accurate.

"It will reduce the uncertainly, questions and disputes about the election in many places in our country," said Rep. Rush Holt, D-NJ and the bill's chief sponsor. "It is intended for counties to provide voter verified paper ballots and or audits. And although it does not establish a national standard [for a paper trail], it encourages counties and states to do the right thing. And that means offer voter verified paper ballots and audits."

Election integrity activists, who documented many problems with paperless, electronic voting systems and played a big part in convincing top officials in several states to return to paper ballot-based voting, were generally disappointed in the bill.

"I do not support any version of the HOLT bill or any other proposed bill that solidifies the continued use of DREs with printer," said Nevada's Patricia Axelrod, who has an extensive technical background, in an e-mail Wednesday. DRE, or direct recording equipment, is industry slang for the paperless voting systems.

"I am well-seasoned in the use of such machines as I battling against the Sequoia AVC Edge with Verivote printer now in use throughout the entire State of Nevada since 2004," Axelrod said. "I hasten to assure you that the attachment of a Mickey Mouse printer to a poorly designed, engineered and manufactured computer - one built to the same specifications as your average lap or desk top computer; only with less oversight - is not going to assure accurate and reliable elections."

"I do not support any legislation that perpetuates the myth of verified voting," said New Hampshire's Nancy Tobi, Election Defense Alliance legislative director. "The problem is the current bill is fundamentally wrong in its originating premise. Holt and his supporters believe the key is the audit, but the key is the first count. And the audits they recommend are not even audits. They are spot checks. So you have a fake audit for a fake election."

Holt acknowledged H.R. 5036 was a compromise bill. Activists following its progress in Washington said lobbyists for the disabled community, election officials and the voting machine industry pushed to preserve the use of DREs. The House Majority Leader Steny Hoyer, D-MD, siding with those constituencies, apparently would not allow a bill on the House floor that said paper ballots were superior to paperless voting, they said. However, Holt said most election supervisors at the local level recognized that the paper-based optical-scan systems were more reliable and accurate than DREs with printers.

"We have found that electronic machines with attached printers don't work very well," he said. "I think more and more states are moving away from that. My guess is that states and counties that choose to opt in [to buy new voting machinery] would probably use the technologies that are gaining favor."

Holt said states that have been transitioning from DREs to optical-scan paper-ballot systems, such as California, Ohio and Florida, should be eligible for federal funds to acquire new voting machinery, under the bill. However, one lobbyist who has been tracking the bill questioned if that was the case under its fine print.

Beyond the apparent compromise appeasing both sides of the paperless voting machine debate, the bill also has constitutionally significant ramifications because it accords paper printouts with the same legal standing as hand-marked paper ballots. This factor could become very significant for close elections and recounts.

"Now we will rely on printed receipts as reflective of voter intent, when it's the case that they jam, they don't print, they cause long lines, and they cannot be trusted," said John Bonifaz, Counsel for Voter Action, a public interest law firm. "Voter Action endorsed the original version of this bill, HR 5036, and did that because we think it is critical that we shift from DRE machines to optically scanned paper ballot systems. This substitute bill effectively undermines the underlying principle of that original bill."

Holt said he believed hand-marked paper ballots would be taken more seriously in recounts than print-outs from add-ons to DRE systems. However, he said it was not possible, given the current political landscape, to establish a national standard for a paper record - such as legislation requiring hand-marked paper ballots.

"I think that a hard copy vote that the voter can verify is always going to be regarded better than an ethereal electronic memory. That's the lesson of the last few years," he said. "Now, it is true that in different states, the studies and the experience of the election officials shows that not all methods of recording ballots are equally good. Some systems break down. Some systems don't seem to work very well in practice with voters. But it has not been possible, this year, anyway, to establish a national standard."

The bill would also require any jurisdiction taking federal funds for new machines audit 2 percent of their precincts to determine if the vote count was accurate. An earlier version of the bill required that mandatory audit consist of 3 percent of the precincts. Election officials lobbied to ease that audit requirement, Rep. Zoe Lofgren, D-CA said, when telling Administration Committee of the changes in the bill's text.

The bill also will cover the cost of printing backup paper ballots, in case the DRE systems fail. However, like the rest of the bill, it is an "opt-in" proposal, meaning that any jurisdiction can choose to take advantage of the federal funding, as opposed to mandate.

Still, not all election integrity activists criticized the bill.

"I think it's a good bill," said Warren Stewart of VerifiedVotingFoundation.org. "Maybe it gets us some more audits. It pays for back-up paper ballots for jurisdictions with DREs. It will help states like Iowa change to paper ballots. I think it is unfortunate that it funds the purchase of flawed printers. But legislation is compromise."

Steven Rosenfeld is a senior fellow at Alternet.org and co-author of "What Happened in Ohio: A Documentary Record of Theft and Fraud in the 2004 Election," with Bob Fitrakis and Harvey Wasserman (The New Press, 2006).

Nutrition "Science" Has Hijacked Our Meals -- and Our Health

Nutrition "Science" Has Hijacked Our Meals -- and Our Health

By Terrence McNally

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Why would anyone need to write a book called In Defense of Food? If we can afford it and can get our hands on it, we eat food several times a day. Or do we?

According to Michael Pollan, most of what Americans consume isn't food. He calls it "edible foodlike substances." He also says that the way we consume it is not really eating. It's something we do pretty unconsciously as we work or drive or watch TV.

We all know about the US epidemic of obesity and diabetes over the past 25 years, top of the steady rise of chronic diseases over the past 100. Paradoxically, this happens just as Americans and the food industry are ever more aware of nutrition. What's going on here?

Pollan claims that in the Western Diet, good old food has been replaced by nutrients, mom's good advice by nutritional experts, common sense by confusion, and for most, a relatively good diet by a bad and dangerous one. The book in which he makes all these claims and advises us simply to "Eat Food. Not too much. Mostly plants," has topped the New York Times best-seller list.

Michael Pollan's previous books include >THE OMNIVORE'S DILEMMA: A Natural History of Four Meals, named one of the ten best books of 2006 by the New York Times and the Washington Post, and THE BOTANY OF DESIRE. Pollan is a contributing writer to the New York Times Magazine and a Knight Professor of Journalism at UC Berkeley.

Terrence McNally: How did you grow to focus on plants and then food?

Michael Pollan: Well all my work really begins in the garden. I was a very passionate gardener beginning at age eight, although I fell away from it for a few years. In the 1980's I was living in New York and took up gardening at a weekend house in northwestern Connecticut. I got very absorbed in the garden as a place to look at our relationship to nature.

Like a lot of Americans, my understanding of nature and our relationship to it was shaped by Emerson and Thoreau and Melville and Whitman. When I actually started to garden, I realized all those ideas about the romance of nature were distinctly unhelpful. Thoreau's love of wilderness and worship of the wild really doesn't equip you when the pests come and destroy your crops, when the woodchuck attacks your broccoli.

I got into trouble following their philosophy. I didn't have a fence, for example. I thought a fence was too alienating from the natural world. I got into a war with a woodchuck -- just like Bill Murray in Caddyshack -- until I was defoliating my property and pouring gasoline down a woodchuck burrow. I was like William Westmoreland in Vietnam, willing to destroy the village to save it.

I realized then that the garden was a very interesting place to examine our relationship to the natural world. Traditionally when Americans want to think about nature, we picture the wilderness, we go camping, we go to Yosemite. But nature is happening in our homes, in our gardens, in our lawns, and on our plates.

TMN: At that point you were writing about other things?

MP: I was an editor at Harper's Magazine, and I began writing a series of essays about what was happening to me in my garden, my woodchuck war, my dad's battle with the neighbors over his front lawn. These kinds of issues became my first book, Second Nature.

I started looking at our relationship to plants and animals, and at drugs, since a lot of drugs are plants that change our consciousness.

TMN: And that shows up in The Botany of Desire?

MP: Yes. When I was working on Botany of Desire, I visited industrial farms in Idaho to see how industrial agriculture works, and I was shocked. I was absolutely floored by these vast monocultures, the amount of pesticides that are used, the fact that the farmers are afraid to go into their fields for five days after they spray for fungus because they know how neurotoxic this stuff is.

TMN: Stuff which will later end up on our plates?

MP: In fact, they would often have a little patch of organic potatoes by the house for themselves, because they could not eat the food coming out of their farms.

I suggest they are more irresponsible than they are. Over time the potatoes leech out the worst chemicals, so you can't just dig industrial potatoes and eat them right away, or you'll get too heavy a load of residues.

I also visited organic farms, and realized that there were alternatives. People were having great success growing organic on a fairly large scale in Idaho with a completely different mind set. Not monoculture being the key fact. Heavy rotations, poly-cropping.

When I realized that eating is our most profound engagement with the natural world, I got very excited to take a hard look at the food chain that we're a part of.

What happens on our plates dictates the composition of species in the world, which ones we favor, which ones we don't -- the reason there are plenty of cows and not too many wolves left. It's the way we've shaped the landscape in terms of deforesting it for our fields. What we choose to grow and not grow has a huge bearing on our health and our happiness.

TMN: You point out a paradox. As people talk more about nutrition, food becomes less healthy.

MP: It's not a coincidence. We've stuffed our brains with biochemistry. Ordinary people in the street are talking about antioxidants, cholesterol, fiber, polyphenols, phytochemicals, all this has become the language of food, while the food is disappearing. If you read packages in stores, it's all about nutrients.

This is an ideology: nutritionism -- an ism not a science. The ideology has four premises.

The first is that nutrients are what matters, not food. See that you're getting enough of the good ones and avoiding the bad ones.

Second, like any other ism, it divides the world into good and evil.

TMN: There's always a good nutrient and a bad one, and when one is up the other is down.

MP: I remember my mother dutifully giving us all margarine instead of butter. She would say, "Some day they're going to figure out that butter is actually better for you than margarine," and we thought she was nuts. In fact, it turned out that margarine was lethal and butter is fine.

TMN: She was still feeding it to you suspecting that would happen...?

MP: The authority of mothers was essentially destroyed by the food industry. The $32 billion a year in marketing muscle out there has undercut culture's role in determining what we eat, and culture is a fancy word for your mom.

TMN: Just to emphasize that number, that's not the food industry, that's the food marketing industry.

MP: That's advertising, studying us, packaging, figuring out how to get us to eat more.

TMN: Food industry folks say "We don't think we should regulate this sort of thing because Americans believe in individualism and free choice, but we're all for public education." So maybe we'll throw $100 million of education up against that $32 billion of marketing.

MP: $100 million is one snack food's annual budget. The entire USDA/FDA effort to educate people about food equals one chip. [LAUGHS] There's no contest. They control the information about food.

Third premise: the whole point of eating is to advance or ruin your health, and that's what food is about.

Americans accept that idea but it's actually quite strange. If you go to other countries you remember very quickly that people have eaten for a great many reasons other than health. They eat for pleasure, they eat for community and communion, they eat to express their identity. And these are all equally legitimate reasons to eat.

The fourth premise is, of course, that the nutrient is the key unit in food.

Nutrients are invisible. No one's ever seen, tasted or smelled a nutrient. So you need experts to guide you in your food choices. You need scientists. You need journalists. It's like a religion. If what matters is invisible and inaccessible to you directly, you need a priesthood. And now we have a food priesthood.

And we have the health claims on the packages. We have the nutritionists that we listen to on radio and television. And we have lost any confidence in our mothers or in ourselves, in our instincts to determine what is good food. It's understandable that we would not trust our instincts, because so many of the foods now lie to us with artificial flavors and sweeteners and fats.

In this book -- by taking apart the science -- I'm trying to show you that we can't rely on food scientists to feed us. Their advice hasn't been that good. Not out of any evil intent, but to put it charitably, nutrition is a very young science. They've only been at it for about 170 years. They may get better.

The whole history of nutrition science is one missed nutrient after another. They would design a baby formula with macronutrients. Somehow the babies didn't thrive. Or you'd send men on long sea voyages with plenty of carbohydrate, protein and fat -- and they still got sick.

So then we discovered we need vitamins, but baby formula still wasn't successful. What was missing? Well, it turns out omega 3 fatty acids were missing.

That's the whole history: Every decade or two discovering another level of absolutely critical nutrients that we've previously overlooked.

TMN: Science does get better at pulling things apart and finding the single nutrients. Not necessarily better at actually delivering something that's good for us.

You've got just three basic recommendations: "Eat food. Mostly plants. Not too much."

But you also lay out corollaries from those to navigate our way through those big three. One of them is: "Avoid anything your great grandmother wouldn't recognize." Our mothers and grandmothers have been around as things have gotten cloudy. How did that begin? What led to this crazy upside down reality?

MP: I think it's built into the nature of the food industry and the economics of selling food. It's very hard to make money selling normal unprocessed foods. Ask any farmer who's growing broccoli or oats; it's a very hard way to make money.

The more you process the food, the more profitable it is. If I go to the supermarket, I can buy a pound of organic oats for 79 cents. Now that's a lot of oats, and nobody's making much money. But if you turn it into Cheerios, suddenly you have a brand. You've got your little doughnut shape, you've got an ad campaign, and suddenly you're charging four bucks for a few ounces of oats.

Then you come up with a Honey Nut Cheerio Cereal Bar with a layer of artificial milk in the middle. Now you've got a convenience food that's very much your own, because you've got this special formula to make your fake milk. And kids can eat them in the car or on the way to school. Now you're charging $10 or $20 for a few penny's worth of oats. That's the gist of the food industry. That's the economic imperative.

TMN: So, as usual, follow the money.

I was in Battlecreek, Michigan a couple of years ago --the home of Kellogg's. Some local women told me cereal sales were way down. I asked why, and they said "Because you can't eat them in the car." Thus your cereal bars.

MP: Exactly right. And now we have cereal straws.

The problem is that the more you process food, the less nutritious it is. So the economic imperative takes you in one direction, while the biological imperative is saying, "Leave it alone." There's nothing better for you for breakfast than plain oats. Cook them yourself.

To counter that, you need to make a health claim for your processed product. So you fortify it. You throw in whatever the hot nutrient of the moment is.

TMN: When you process it, you remove some of the value and nutrients. That's why you have to --

MP: -- add them back in.

TMN: You purify, you process, you refine. Then you add things back in and make claims for what you've added back in.

MP: As if you've done a big favor.

TMN: If the stuff that our great grandmother was putting on the table gives us what we need and tastes good, why have we fallen for this?

MP: A lot of reasons: marketing and convenience. We want to be liberated from the drudgery of cooking, or at least we've been convinced that we do.

TMN: And even the drudgery of eating.

MP: That's right. I mean as Wendell Berry said back in the 70s, if the food industry could profitably digest your food for you, they would. They would reach down your throat and mush it up for you. They want the meal in a pill. That's the ultimate dream of the food industry. They have to show value added, and the value they've added most successfully is convenience. Liberating women from the kitchen, cooking for us, chewing for us.

TMN: I often say that this civilization is going to die by convenience.

How did you come up with your three rules and what's underneath them?

MP: I tried to boil everything down as much as I could, and realized I could say this whole thing in seven words. I give it away on the cover.

Eat food seems obvious, but how do you distinguish the food from the edible food-like substances that are masquerading as food? So I spend 14 pages defining food in this book, which is something that really shouldn't need to be done.

TMN: If you'd told someone 100 years ago --

MP: -- I'm going to write a best seller telling people how to eat real food -- it's a crazy idea to contemplate.

I have a bunch of rules to help you find the actual food. One is "Don't eat anything your great grandmother wouldn't recognize as food." That's kind of an algorithm. Carry her with you in your imagination as you're rolling down the aisles of the supermarket. Would she know what to do with portable yogurt tubes? Would she recognize the ingredients in it? And the answer is no, she wouldn't. That's not really food. Yogurt is a very simple, wonderful food. It's milk in a bacterial culture. So what are those other 15 ingredients doing there?

Another rule: "Shop the perimeter of the supermarket." That's where you'll find the foods that have been least fiddled with: fresh produce, meat, fish, dairy products. What's really going to get you in trouble with added fat, sugar and salt, is the stuff with the long shelf life.

You'll be even better off if you leave the supermarket entirely, and do your shopping in a farmer's market. That's food your great grandmother would recognize. There might be some exotic vegetables, but basically she knows what that stuff is and she knows what to do with it.

TMN: Okay -- "Not too much."

MP: The amount we're eating is a big part of our problem, especially because we're so sedentary. It's not enough to tell people to eat less. I try to find other cultures and cultural rules that would govern appetite. The Japanese in Okinawa and this is true of the Chinese too, have a cultural rule that you eat until you're four-fifths full. How do you know when you're 80 percent full? Well, if you just stop before you're completely full, that would be huge progress.

TMN: About eight years ago, I noticed I weighed about a dozen pounds more than I ever had. My metabolism must have changed with age. I decided to simply be more conscious about when I wasn't hungry anymore, and in a little over a year I lost 25 pounds. I've regained some so that I'm back where I want to be.

MP: Americans are particularly driven by visual cues in their eating. Psychologists have compared us to the French. Ask an American, when do you stop eating? And they'll say, when the plate or the bag is empty. If you ask a European, they'll say when I feel full.

We also eat too fast. It takes the stomach about 20 minutes to notify the brain that it's had enough. But, if you finish your meal in ten minutes, that will never happen. Slowing down is a very important part of eating better.

TMN: So not too much and not too fast.

MP: The slower you eat, the less you will eat -- even if you're spending a lot of time. The French get more food experience on fewer calories. Spending time with food, enjoying food, savoring food, thinking about it, anticipating it.

What do you really want? Do you want calories or do you want food experience? I think most of us would say we want food experience. The two things aren't necessarily correlated -- except in the mind of the American consumer, who's been taught that food is about quantity rather than quality.

TMN: "Mostly plants."

MP: Especially leaves. Scientists may disagree on what's so good about plants, but they do agree that they're probably really good for you. Also, by eating a plant-based diet, you'll be consuming far fewer calories, since plant foods -- except seeds -- are typically less "energy dense" than other things you might eat.

TMN: I want to finish with a big question. Over the last few weeks I've had the privilege to interview Lester Brown, founder of WorldWatch, about his book, Plan B 3.0: Mobilizing to Save Civilization, a big picture look at energy and environment. And Nobel Peace Prize winner, Mohammed Yunus about creating a world without poverty through social business. And Laura Flanders about the power of the grass roots in the presidential campaign;

All of these share something: They look at systems and relationships, at bottom-up and local rather than top-down and mass market. It makes me hopeful that all this stuff is percolating, and it seems that it's about a worldview. Rather than food, I could be having this conversation with someone about the American healthcare system where we focus on symptoms, we look for magic bullets, we suffer with side effects ...

MP: That's a great example. The food issue and the healthcare issue are seen as separate. Of course, they're not. When I was a boy in 1960 we spent 18 percent of our national income on food -- twice as much as we do today -- and only 5 percent on healthcare. Today it's flipped. We spend 16 or 17 percent of our income on healthcare and only 9 percent on food. The less money we've been willing to spend for food, the more we've settled for processed, highly refined, cheap, fast food, the more our healthcare problems have escalated.

TMN: That statistic is even more amazing considering the fact that we eat out much more than we used to.

MP: Half our food dollars.

TMN: You point out that we've learned to increase yields, to make energy and calories cheaper.

MP: We're using the original solar technology, photosynthesis, making food from sunlight, but we've mistakenly focused on fossil fuel. We're taking 10 calories of fossil fuel energy to produce one calorie of food energy. It doesn't have to be that way.

No question about it, there's value in seeing things as systems -- seeing food as a system and your body as a system and these two things interacting. And learning to think ecologically, asking where did the energy come from that's feeding me? Of course, thinking ecologically is not strictly about the environment, it's about the whole system in which we live.

American Axle strikers in Buffalo determined to resist wage cuts

American Axle strikers in Buffalo determined to resist wage cuts

By Tony Bell and Samuel Davidson

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American Axle workers in the Buffalo, New York, area are among the more than 3,600 workers who have been engaged in a five-week strike against the auto supplier’s demands for a two-thirds cut in wages and benefits.

American Axle operates two plants in the Buffalo area: a finishing plant in Cheektowaga and a foundry in Tonawanda, which together employ about 500 workers. A third plant, Buffalo Gear and Axle, which is located inside the city’s limits, was shut down before Christmas last year, throwing 700 workers out of their jobs. Just six years ago, the plant employed over 2,000 workers.

On Sunday, American Axle began placing ads in the local newspapers to hire potential strikebreakers. Applicants, the notice stated, “will be to fill anticipated attrition replacement openings after negotiations or in place of employees involved in this strike.”

The company also sent out letters to over 200 workers in New York who were laid off or injured before the strike began on February 26 instructing them to report to work Monday or face the loss of their unemployment or disability payments. Like their counterparts in Detroit and Three Rivers, Michigan, the New York workers refused to cross the picket lines and joined their co-workers on strike.

In 1999, the United Auto Workers union agreed to allow the company to open the Cheektowaga plant with workers being paid far less than their counterparts at other American Axle plants. According to the agreement, workers would be paid on two scales. Machine operators would start out making just $13.50 an hour with gradual increases to $18.50 an hour after 8 years. Factory support workers would start at $11.50 an hour and increase to $16.50 an hour after 8 years.

In 2004, the American Axle CEO Richard Dauch and the UAW pushed through a two-tier wage package throughout the company’s plants, claiming this would prevent the closure of any plants, particularly the Buffalo plant, which had already seen much of its production shifted to a low-wage plant in Mexico.

Predictably, this promise turned out to be worthless. Instead of formally shutting the plant, American Axle “idled” the factory, leaving only a handful of workers to mothball the plant, which was officially closed when the agreement expired.

Tony, a skilled tradesmen with 15 years, has worked at both the Tonawanda and Cheektowaga plants. “It is not fair, it is not right. All that is happening is that the rich are getting richer and the poor are getting poorer.

“They say we have to compete with countries that have no environmental laws, no occupational safety laws, no labor laws. There is no way that they can expect us to do that.

“When Dauch first bought American Axle he had five plants. What they don’t tell you in the news is that the work we did in those plants gave him enough money to build 27 more plants overseas. Now he is saying we have to cut our pay so we can compete with the workers at those overseas plants.

“I am already dipping into my savings. I will not be able to survive on what they want to take from us. I have two children, one is still living at home and I am hoping to be able to send her to college.

“I am a skilled tradesman. I have over $1,000 worth of tools in there and they won’t let me get them out. They are holding my tools hostage. I can’t get another job without my tools.

“I feel we messed up a long time ago when we let Reagan fire the air traffic controllers. If you look at the conditions now, you see it all started then.”

Kevin, also a skilled tradesman with 9 years said, “They just put an ad in the paper today for both production and skill trades. That will fire up a lot of people.

“With Dauch getting more than $10 million last year, how is it fair that they want to take money away from us? I read the Internet a lot, and the news is even saying we are responsible for the recession.

“This is really starting to hurt us now, we have been out for over a month. When I started here, I thought I had found a job that I could retire from. Last year Dauch said we were a world class operation, now he says he is going to close the plant and move production if we don’t agree to work for half the wages.

“I thought the union was supposed to fight for you, not take concessions. I read a web site that listed all the salaries of the UAW officials—they are not feeling what we are. I just feel with all the money I pay in union dues I should be better represented then I am.

“The union has become a major stock holder in General Motors. I ask you, where are their interests? Where do they stand?”

De-industrialization

Buffalo, like many industrial cities in the Northeast and Midwest states, has been devastated by the deliberate policy of deindustrialization carried out by corporate America and Wall Street.

At one time, a major steel, rubber auto and auto parts center, Buffalo has lost more than 70 percent of its manufacturing jobs since 1970. It is now the second poorest big city in America—just behind Detroit—with over 29 percent of its residents living below the poverty line. Since 2006, another 17,000 manufacturing jobs have disappeared.

This has left the city virtually bankrupt. Last year, the Buffalo Fiscal Stability Authority, which overseas the city’s finances, lifted parts of a three-year wage, hiring and promotion freeze that affected teachers, fire fighters, sanitation and other public service workers. Since 2001, the city has cut 30 percent of its work force.

The American Axle strike has won widespread sympathy from other workers who have been the victims of corporate attacks and the betrayal of the unions. Workers at the Delphi auto parts plant in Lockport, which employs 2,600 people, voted down the UAW concessions contract but still saw their wages cut from $28 to $14 an hour. Last year, workers at Goodyear-Dunlop rubber were forced to accept a two-tier wage scale and massive concessions after the United Steelworkers union sold out a bitter strike, in exchange for taking control of a $1 billion retiree health care trust fund. GM and Ford both operate local plants where the UAW imposed concessions last year.

Kurt, with 6 years at the Cheektowaga plant said, “They are trying to tear apart the working class and the middle class. All they want is the poor and the wealthy. I figured out that at $11.50 an hour we would be making about $24,000 a year, which is just above the poverty line. These corporations are waging a war on the middle class and workers.”

John, also with 6 years at the Cheektowaga plant, said, “I think when they say in the papers that we are losing money it is not true. Cheektowaga is one of the lowest paid plants. Out of 130 workers, only 15 are making top rate. We run all the different machines. It is not like we just are pushing a button in there, we are really working hard. Dauch wants us to pay up to 40 percent of our medical on $11.50 an hour—that is just not possible. He just wants to take everything from us.

“I have a family of six. With overtime and everything, I make $45,000 a year. I get by, but we couldn’t live with a pay cut. I would have to take two jobs just to feed my family and pay the bills.”

Dave, with 14 years at the Tonawanda plant, said, “We will go back to work as soon as Dauch gives us a contract with a decent wage. He is not negotiating, he is demanding. Wages are our main concern but he is also demanding cuts in our medical, pensions and health care for the retirees. Dauch pretty much wants everything to be his way or no way.”

Independent truckers stage protests in US

Independent truckers stage protests in US

By David Walsh

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Independent truckers in the US parked their vehicles, slowed down traffic and rallied in numerous locations across the country beginning Tuesday on the first of three days of protest against soaring fuel prices and declining incomes. The number of drivers participating in the loosely-organized protests is difficult to determine, because hundreds have simply parked their vehicles, but that there is mounting anger over the economic calamity facing many in the industry is indisputable.

The cost of diesel has risen 42 percent in the past year and many drivers assert that they are often losing money by transporting a load. Driver Robert Lee of North Collins, New York, in a typical comment, told the Buffalo News that he was taking a week off “to pray for the economy.” When he was asked if could afford to do that, Collins told the newspaper that he was not making any money anyway. “It can’t hurt me any worse than it is,” the trucker said.

This is a list of some of the independent truckers’ actions, as reported by the wire services and various local media outlets.

On the New Jersey Turnpike, near New York City, some 200 people took part Tuesday in a protest at a service area, according to Reuters. Meanwhile truckers were driving at slow speeds on the Turnpike and disrupting traffic.

Turnpike Authority spokesman Joe Orlando told the Associated Press (AP) Tuesday that southbound trucks “as far as the eye can see” were moving at about 20 miles per hour near Newark.

Several truck drivers were ticketed for impeding traffic on Interstate 55 outside Chicago; they were driving three abreast at low speeds.

Near the Port of Tampa in Florida, dozens of independent drivers parked their trucks Tuesday in protest. According to a local television station, some 70 drivers took part. The station reported noted that the $1,200 cost of filling the drivers’ tanks, now that diesel fuel has jumped to a record $4.00 a gallon, “means they are losing money because they often are paid less than that per load.

“I don’t have a plan B. What am I going to do?” trucker Julio Rodriguez told Fox News. “Right now, I can’t go back to school; I’m too broke. Who’s going to take care of my family?”

At the same protest, AP quoted David Santiago, 35, a driver for 17 years, who said, “We can no longer haul their stuff for what they’re paying,” referring to contractors. Santiago said he can’t support his family on what he makes. “If it wasn’t for my wife, we would have been bankrupt already.”

In Baldwin, Florida, near Jacksonville, 49-year-old Charles Rotenbarger, from Columbus, Ohio, told the AP: “The oil company is the boss, what are we going to be able to do about it? The whole world economy is controlled by the oil companies. There’s nothing we can do about it.” Jimmy Lowry, 51, of St. Petersburg, Florida, told the wire service that companies are paying as little as 87 cents a mile although it costs $1 a mile to drive a tractor trailer. The price of ultra-low sulfur diesel fuel has risen from $2.463 per gallon in February 2007 to the present $4.00.

Reuters reported that some trucks were sporting signs reading “$4 diesel = higher food costs. Can you afford to eat?” One Florida-based driver commented, “Our fuel costs have doubled over the past five years and the cost of doing business has doubled. Our industry is in ruins and the rest of the economy is going into a huge tailspin.”

The Knoxville (Tennessee) News Sentinel, in a report on a local protest, took note of the situation confronting Chattanooga driver Marty Stalvey. “Two or three years ago, his monthly fuel bill was about $2,000. It is now $3,000 ... At the same truck stop, Arkansas native Roy Yates said it now costs more than $600 to fill up his 170-gallon tank on his tractor trailer.”

Some thirty independent truckers staged a protest Tuesday in their rigs at the state capitol in Atlanta, Georgia. “Fuel goes up, and the mills wont pay us any more. We can’t continue to keep going like we are going. I’ve shut my truck down and am done,” truck driver Madrid Thomas told television station WMGT in Macon, Georgia. One of the protest organizers, Sheila Walker, added, “Let me put it to you like this, I have had three paychecks in the past three months where my fuel bill has been more than my check.”

Some 250 truckers traveled from Macon to Atlanta Tuesday in a convoy to protest rising fuel costs, slowing down traffic on I-285. They had planned a larger rally in Atlanta, but failed to obtain permits.

Dozens of truckers parked their vehicles along Expressway 83 near Pharr in southern Texas, near the Mexican border, to express their anger. The Monitor in McAllen, Texas, cited the case of one of the drivers, Art Martinez of San Juan, who explained “it costs nearly $1,200 each time he fills each of his trucking company’s four semis. ... ‘Each day is getting more difficult,’ Martinez said. ‘The diesel is going up and we get paid the same. ... I don’t want to get rich; I just want to feed my family and pay the bills.’”

Mike Nidever, an independent operator from Seattle, Washington, parked his truck Tuesday at a truck stop in Richfield, Ohio, where he plans to remain in protest for 48 hours, and told Fox News in Cleveland, “Guys like me aren’t going to make it too much longer the way fuel prices are jumping.”

The Associated Press reported on a protest by dozens of independent drivers on I-40 in Galloway, Arkansas, near Little Rock. Dan Burri, a driver for J.B. Hunt, was there to support his fellow drivers. “We don’t want only the government to know, but the citizens we provide service to,” Burri told the AP. “If we go down, so will the economy of this country.”

Maryland trucker Randy Frey told WBAL-TV in Baltimore that he was planning on joining the protest. “It costs me almost about $1,100 to fill my truck up every other day to every three days,” Frey told the television station, explaining that the prices were putting him out of business. “My gross pay is $569 for two loads. I brought home $34.74,” he commented. “We can’t do anything right now. It’s hard.”

Truckers protested in the Kansas City, Missouri, area. A local television station cited the comment of driver Jim Scott: “The grocery bills are going up, the electricity. The energy rates are going up. This economy is in the tank!”

Tracy Reinke, an independent trucker told the Minneapolis-St. Paul Star-Tribune that diesel fuel costs were now gobbling up two-thirds of his revenue, compared with one-third a year ago. “The big trucking companies buy a lot of fuel and get a discount, but the little guy doesn’t,’ Reinke, who owns two semitrailer trucks, told the newspaper. “If I have a major breakdown on a truck—an engine or a transmission—I won’t have enough money to fix it.”

The Sioux City (Iowa) Journal spoke to Joe Rowley, a driver from Mississippi who parked his truck Tuesday in the Sioux City area, who explained: “I’ve had loads that paid less than the fuel to haul them—it’s eating us alive.” The Journal noted: “He [Rowley] said fuel costs are eating into his profit, making it difficult for him to pay his monthly bills, which include a $1,632 truck payment. He has to keep making the truck payment until July 2009, but said he wasn’t sure if he will make it.”

On Monday hundreds of truckers circled the capitol building in Harrisburg, Pennsylvania, honking their horns in protest and calling on Democratic Gov. Ed Rendell to eliminate the state’s diesel-fuel tax of 38.1 cents per gallon, the highest in the US. Hillary Clinton, campaigning in the state for the Democratic Party presidential nomination, met with the truckers, who held up signs saying “Fair Fuel Prices Now!” Clinton made no commitments of any kind, merely suggesting that more regulation of the energy markets was worth looking at.

Several hundred trucks are expected to participate in a convoy Friday morning in West Virginia, nicknamed the “Hillbilly Express,” beginning in Braxton County and ending at the state capitol in Charleston. Speaking of diesel fuel prices, driver Gary Davis told the local news media, “It’s just gone beyond reason.” Davis explained that many trucking companies are eliminating employees or parking their trucks to make up for the increase and, he explained to the West Virginia MetroNews, “they’ve had enough of it.”

One of the organizers of this week’s protest, Dan Little, the owner of a cattle-hauling business in Missouri, told the Lancaster (Pennsylvania) Intelligencer-Journal that he had been trying for months to reach senators and congressmen in Washington to explain to them the independent drivers’ plight. He failed to get past receptionists.

“When your top two men in political offices [in Washington] are oil-related, you’re going to dance with the one that brought you, aren’t you,” Little told the newspaper. “It’s a damn shame when you have to pay a politician to listen to you.”

The actions of the truckers, however the events this week turn out, speak to growing outrage and social resistance in the American working class in response not only to the destruction of jobs and a continuous decline in living standards. Workers in this country have eyes. They have seen the accumulation of vast wealth by a handful even as a criminal government has launched a war based on lies, democratic rights are threatened, and millions face the prospect of losing their homes. The recent jump in fuel and food prices is pushing many to the limit.

A cursory glance at some of the blogs where independent drivers and others express their opinions about the current situation provides some insight into the depth of anger and revulsion. There is much confusion, including occasional anti-immigrant bigotry and “libertarian” populist demagogy, but the level of social alienation is unmistakable.

Here are a few examples from Tuesday’s comments on www.topix.com:

From Jasper, Tennessee: “As long as we all keep paying the price at the pump it will never come back down. There is no reason for fuel to be at the price it is today. President Bush is allowing his cronies to monopolize every market it can before he’s out of office. Bush is an oil man himself, he could care less what happens to the rest of the country. He proved that with the Iraq war and our 3,000 dead soldiers.”

From St. Louis, Missouri: “Working men have to stand up for what they feel is right. When you’re getting screwed out of every cent you’re trying to bring into your home because it all has to go into the pump, that is wrong, people. The upper-class oil men are making billions and we are struggling to put hotdogs on the table because we are so busy working our butts off trying to line their pockets.”

From Glenwood, New Mexico: “The bad shape America is in, the high cost of everything and going higher, How are people/the working class people going to keep there head above water?”

From Rome, Georgia: “I’m not a truck driver, and would suffer if the drivers do strike, but you know what? I say GO FOR IT!!!!!! If you guys strike, I’ll shut my store in support, and put a sign in the window telling folks why we’re closed. The fuel surcharges are killing me, and I can only pass on so much to the customer before they quit buying. I’ve been faxing my ‘representatives’ weekly, all I ever get are platitudes from one, not a damn word from the other, I’m over it!”

From Jupiter, Florida: “Funny how the price of EVERYTHING has gone up and the reason “THEY” give us is GAS PRICES. Gas prices are driving up those costs. ...

“The truckers have not received ONE CENT of these higher prices. Corporate America has!!! Record profits across the board. ...

“If we only knew how powerful we could be if we ALL went on strike, and I don’t mean truckers, I mean the average working American. How far are we supposed to let this go before we say ...

“E N O U G H!!!!!!!!!!”

From Annapolis, Maryland: “We need to back the truckers in this strike ... !! The oil companies are making billions in profits in their greediness!! It has GOT to stop now!!”

From Baton Rouge, Louisiana: “I am a company driver. My truck is sitting in the driveway. I am a single mother of 3 + 2 that belong to a friend who just dropped her kids off and didn’t come back. My parents keep my kids and hers while I’m on the road. Neither of my parents are able to work so not only am I supporting my 3, but I also support her 2 and my parents. I said all that to point out that I really can’t afford to strike. I was supposed to go back to work yesterday. I didn’t because I totally agree with the strike. No, I can’t afford to strike, but that’s usually the reason people do ... to make better working conditions.”

From Leesburg, Florida: “If truckers and the general public joined forces! Don’t buy fuel for one day (to start). ... What happened to our protection from price gouging? Monopolies? Anti-trust ... Where?

“The stock market ruined millions of people’s lives in the 30s. Is it OK to repeat by buying oil and speculating with stability of our economy on the line?”

From Hampton, New Hampshire: “It’s not just your industry that’s suffering. Everyone in the country that has to punch a clock or try to squeeze out some profits in a small business are hurting. Meanwhile, the so-called free-marketers on Wall Street and Corporations continue to suck every last dime out of the American worker. Wall Street gets bailed out (Bear Stearns) while Main Street continues to get screwed. CEOs continue to rape and pillage companies while the average worker gets thrown to the curb (Pioneer Financial.) And what do Americans do about it? Nothing! It’s time for the peasants to grab the pitchforks and storm the castles...”

From Garden City, Kansas: “I am in a poor family, and we do live paycheck to paycheck, but I still want the strike. I know it will be hard, but, damn it, humans have lived through so much we can take a little more strife. We are adaptable, and we need to adapt. So strike, and pray that a better future will come so our children don’t have to pay.”

Congressional Democrats defer to Fed Chairman Bernanke on Wall Street bailout

Congressional Democrats defer to Fed Chairman Bernanke on Wall Street bailout

By Andre Damon

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Federal Reserve Chairman Ben Bernanke testified before the Joint Economic Committee of the US Congress on Wednesday, stating for the first time that “a recession is possible” and suggesting that the US economy is likely stagnate or contract in the first half of the year.

In his opening remarks, Bernanke highlighted the generally dire prospects facing the US economy—rising unemployment, falling consumer spending and stagnating home values—and concluded, “[I]t now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly.” He added, “The uncertainty attending this forecast is quite high and the risks remain to the downside.”

Bernanke also noted that “uncertainty about the inflation outlook has increased,” and made passing reference to the depreciation of dollar as a factor contributing to rising prices.

The Fed Chairman was noncommittal in his signals regarding interest rates. While his economic prognosis was grimmer than those he has previously given, he asserted that “much necessary economic and financial adjustment has already taken place,” hinting that the Fed may slow the pace of interest rate cuts.

Bernanke made no reference in his opening remarks to the regulatory overhaul proposed by Treasury Secretary Henry Paulson on Monday. When asked his opinion on the proposal, he merely called it an “interesting and useful first step.”

The plan would further deregulate the financial system, stripping the Fed of its longstanding role as regulator of commercial banks, while giving it new powers to intervene throughout financial markets to prevent a “systemic” crisis, presumably by engineering bailouts such as that carried out earlier this month at the investment bank Bear Stearns.

Stock indexes closed down slightly after Bernanke’s testimony, following a nearly 400-point rise in the Dow Jones Industrial Average on Tuesday. That day’s rally came despite announcements by the Swiss banking giant UBS and Deutsche Bank that they would write down billions more in debt, and news that the International Monetary Fund (IMF) had significantly reduced its forecast for US economic growth.

The IMF now estimates the chance of world recession in the coming period to be around 25 percent, and that US growth is likely to be in the neighborhood of only 0.05 percent in 2008 and 0.06 percent in 2009. This latter figure is at odds with comments made Wednesday by Bernanke, who predicts growth to return to normal next year. Three months ago, the IMF said it expected the US economy to grow at 1.5 percent in 2008.

Bernanke, in contrast to his usual central banker’s stolidity, was visibly unnerved by questions raised by committee members about the March 14 Fed-assisted sale of Bear Stearns to JPMorgan Chase. At several points, Bernanke found himself unable to answer relatively simple questions about the operation, deferring to congressional testimony slated for Thursday by the heads of the New York Fed, the Securities and Exchange Commission, and JPMorgan Chase.

Bernanke said he was not sure whether the $30 billion in Bear Stearns debt taken onto the Federal Reserve’s balance sheets had been independently evaluated, and said he could not comment on the details of how the transaction unfolded.

This barely raised an eyebrow among the Democrats and Republicans on the Joint Economic Committee. No one commented on the fact that Bernanke, who can cause a stock market crash with the wag of his tongue, was either unable or unwilling to answer rudimentary questions about an unprecedented action that took place under his supervision.

Most significant was the fact that none of the congressmen and senators went on record as opposing the Fed’s actions. No one even asked Bernanke whether the Federal Reserve was within its rights to take Bear’s securities onto its own books. As a whole, the discussion revealed the prostration of both parties before the top representative of the US financial elite, and their lack of opposition to bailing out Wall Street with taxpayer funds.

A number of Democratic members of the committee made a show of berating the Fed chairman for refusing to recommend specific fiscal measures to Congress.

After noting that an economic downturn would put pressure on state budgets, forcing states to either raise taxes or cut spending, Senator Edward Kennedy asked, “What can we do to assist our constituents, especially those who are closer to retirement?” Bernanke avoided answering the question, in response to which Kennedy theatrically removed his glasses and began raising his voice, demanding, “Are you going to provide help and assistance to the states?”

Bernanke replied that he has authority only over monetary policy, and that Congress would have to make fiscal decisions. To this, Kennedy replied, “You have to have some position.” Bernanke answered, “No, sir, I do not. I’m all in favor of helping people, sir, but that’s up to the Congress.”

The absurdity of Kennedy’s show of displeasure was underscored by the fact that Democratic Senator Charles Schumer, the committee’s chairman, said in his opening remarks that Bernanke was not testifying in order to recommend policies to Congress, and that this was not his job.

Congressman Elijah Cummings continued in a similar vein, substituting Kennedy’s bluster for pathos. He said, “There are people in my district who can’t even afford the gasoline to get to their jobs. These people will be watching now to try to understand what’s going on.” The congressman added plaintively, “You’re the expert, you’re the one that we depend on, you’re the superstar, you have to tell us what to do.”

The Democrats’ criticisms were intended to obscure the fact that they propose no serious measures to aid struggling homeowners or workers facing the loss of their jobs, falling wages and crushing debt burdens. At the beginning of the hearing, Schumer proposed a derisory program that would allocate $200 million for “pre-foreclosure counseling” and another $4 billion in “community development block grants.” To put the proposal in perspective, the war in Iraq is estimated to cost $12 billion every month, and the Fed has already allocated nearly a trillion dollars in cheap loans to bail out Wall Street.

When questioned about the precedent set by the Fed’s actions, Bernanke replied categorically, “We did not bail out Bear Stearns,” arguing that the bank’s shareholders suffered significant losses as a result of the buyout.

None of the committee members even hinted that multi-millionaire executives at Bear Stearns and other Wall Street firms that created and profited massively from the housing bubble based on shaky subprime loans should be held accountable for the economic and social disaster their policies have produced.

They know full well that involved in the speculative binge that has now collapsed were deceptive and fraudulent practices, combined with reckless risk-taking on an unprecedented scale.

Bernanke denied that more bailouts were in the offing, stating that “we are nowhere near the condition for a government bailout of the financial system.” But the reality is quite different. The front page of Tuesday’s Financial Times reported that plans for “temporary suspension of capital requirements, taxpayer-funded recapitulation of banks and outright public purchase of mortgage-backed securities” are currently under discussion among central banks and governments.

High school drop-out rate in major US cities at nearly 50 percent

High school drop-out rate in major US cities at nearly 50 percent

By Barry Grey
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A report released Tuesday by an educational advocacy group founded by retired general and former Bush administration Secretary of State Colin Powell finds that almost half of all public high school students in the US’ fifty largest cities fail to graduate.

The report states that only 52 percent of public high school students in these cities graduate after four years, while the national average is 70 percent. Some 1.2 million public high school students drop out every year, according to researchers.

The report finds that, overall, 17 of the public school systems in 50 major cities have graduation rates of 50 percent or lower, and the average graduation rate of all 50 systems is 58 percent. The findings are based on federal Department of Education statistics for the 2003-2004 school year.

The study, sponsored by America’s Promise Alliance and prepared by the Editorial Projects in Education Research Center, also shows a staggering difference between the drop-out rates in major urban school districts and those in adjoining and more affluent suburban districts. Overall, high school graduation rates are 15 percentage points lower in urban schools as compared to those in the suburbs. In twelve cities, the disparities exceed 25 percentage points.

In some cases, the gap between the cities, with their large concentrations of working class and poor residents, and the suburbs is even greater. The widest discrepancies cited in the report are in Baltimore, Maryland, where only 34.6 percent of public high school students graduate, and its suburbs, where 81.5 percent acquire diplomas after four years, and in Columbus, Ohio, with a graduation rate of 40.9 percent as compared to 82.9 percent in the suburbs.

The city-suburb split is also immense in such metropolitan centers as New York (47.4 percent vs. 82.9 percent), Cleveland (42.2 percent vs. 78.1 percent), Philadelphia (49.2 percent vs. 82.4 percent), Chicago (55.7 percent vs. 84.1 percent), Los Angeles (57.1 percent vs. 77.9 percent), and Atlanta (46.1 percent vs. 61.8 percent).

A separate chart showing the graduation rates for the principal school districts in the 50 largest US cities points to the virtual collapse of public education in major urban centers.

Detroit, by many calculations the poorest US city, graduates less than 25 percent (24.9 percent) of its public high school students. Indianapolis Public Schools graduate 30.5 percent of their students, and the figures for the Cleveland Municipal City School District and the Baltimore City Public School System are 34.1 percent and 34.6 percent respectively.

Powell founded America’s Promise Alliance, which is chaired by his wife, Alma, and is described as a joint effort of nonprofit groups, corporations, charities, community leaders, faith-based organizations and individuals. The former Secretary of State said of the study, “When more than 1 million students a year drop out of high school, it’s more than a problem, it’s a catastrophe.”

The concluding section of the document released by the Editorial Projects in Education Research Center, which publishes Education Week, addresses the central issue of social inequality that is reflected in the drop-out statistics. “If three out of every 10 students in the nation failing to graduate is a reason for concern,” it states, “then the fact that just half of those educated in America’s largest cities are finishing high school truly raises cause for alarm. And the much higher rates of high school completion among their suburban counterparts—who may literally live and attend school right around the corner—place in particularly harsh and unflattering light the deep undercurrents of inequality that plague American public education.”

Rick Dalton, president of College for Every Student, a Vermont group that helps low-income students prepare for college, said the urban-suburban divergence “just speaks to the crisis in the US. It is about income. Family income drives it all.”

The study also notes that drop-out rates are substantially higher for blacks and other minorities. It states: “The gaps between whites and historically disadvantaged minority groups can reach as high as 25 percentage point nationally.”

One measure of the social implications of the decay of the public school system was noted by researchers, who said people failing to graduate from high school were eight times more likely to end up in prison.

Of the twelve cities where the graduation gap between urban and suburban schools exceeds 25 percentage points, nine are in the Northeast and Midwest. This is the so-called “rust belt,” where three decades of plant closures in such key industries as auto and steel have had the most devastating impact. In cities such as New York, Philadelphia, Buffalo, Cleveland, Chicago and Detroit, millions of decent-paying jobs have been wiped out, workers’ wages and living standards have been driven down, and the basic social infrastructure of entire communities has been gutted.

This process, carried out under Democratic as well as Republican administrations on the national, state and local level, has had its counterpart in tax cuts for the wealthy, deregulation of big business, cuts in social services and a concentrated assault on public education for the working class. By such means, a massive redistribution of wealth from the bottom to the top has been effected, with the economy and government policy increasingly concentrated on generating ever greater income for a fabulously wealthy elite on the basis of speculation on the stock market and other parasitic forms of financial manipulation, including no small amount of outright swindling.

The Bush administration’s so-called “No Child Left Behind” educational policy, enacted with the support of congressional Democrats, has marked an intensification of the assault on public education for the majority of the population. The program, which sets performance benchmarks for public schools, entails punitive measures, up to and including the shutdown of schools that fail to “perform.” It has gone hand in hand with government subsidies of various kinds for private schools and the encouragement of “charter schools” and for-profit schools that drain resources from urban public school districts.

The inevitable—and intended—result is a more and more openly class-based education system, in which working-class youth receive substandard schooling.

The response of the Bush administration to the America’s Promise Alliance report was to call for a more standardized means of tracking drop-out rates, within the framework of “No Child Left Behind.”

The vast chasm between city and suburban schools is but one expression of a society increasingly polarized between a wealthy elite and the rest of the population. Recent studies by Edward N. Wolff of the Levy Economics Institute of Bard College reveal that the top 1 percent of the US population holds 34.3 percent of the net worth of American households. The richest 10 percent of the population holds nearly 71 percent of the national household wealth. The bottom 80 percent of American households accounts for just 15.3 percent of wealth. The bottom 40 percent of households possesses just 0.2 percent of wealth.

It is this last segment of the population that largely comprises the populations of cities like Detroit, Cleveland and Indianapolis where high school drop-out rates range from 65 percent to 75 percent.

These statistics reveal the nightmarish reality behind the “American Dream” and similar clich├ęs beloved of the media and the political establishment. The destruction of education for millions of working class youth gives the lie to the democratic pretensions of the American ruling elite.

None of the major presidential candidates and neither of the two big business parties can address the virtual collapse of public education revealed in the report issued on Tuesday. It starkly exposes the socially destructive and irrational workings of the capitalist system, which is defended by the Democrats and Republicans, and which has as its fundamental social principle not the common good, but the enrichment of a wealthy elite at the expense of the vast majority of the people.