Tuesday, July 8, 2008

Pension plans suffer huge losses

Pension plans suffer huge losses

Report says weak markets, credit crunch have drained $280 billion from plans of largest U.S. companies

By Lara Moscrip

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Falling stock markets around the globe and the credit crunch are putting the pension funds of some of the largest U.S. companies into deeper financial holes, according to a report released Monday.

Since the credit crunch hit last fall, pension plans funded by S&P 1500 companies have lost about $280 billion in assets, according to an actuary at Mercer, a human resources consulting firm.

On paper, the losses from last October tally $160 billion. However, according to Mercer actuary Adrian Hartshorn, the asset losses are closer to $280 billion when pension plan assets and liabilities are considered together. The assets, which totaled roughly $1.7 trillion at the end of October 2007, fell by 17%, leaving about $1.4 trillion in assets at the end of June.

Companies should be concerned, he said, because - assuming no change in the market - a typical U.S. company can expect their pension expenses to increase between 20% and 30% in 2009. That's due to the higher cost of servicing the pension plan's debt and the smaller return from the plan's assets.

"I think it's important for corporations to be aware of what's going on in their pension plans, as corporations would be concerned when any part of its business is performing badly," Hartshorn said.

According to the report, the total losses on pension assets and liabilities from the last day of 2007 through the end ofJune has grown to more than $80 billion.

Part of the loss has been reflected in companies' current financial statements, but many losses incurred since the end of 2007 have yet to hit company balance sheets.

The affected pension plans are qualified and non-qualified plans.

U.S. businesses file for bankruptcy at a faster rate

U.S. businesses file for bankruptcy at a faster rate

NEW YORK: The softening economy and the collapse of the housing market caused U.S. businesses to file for bankruptcy protection at a higher annualized rate than individuals, according to data compiled from June court records.

Bankruptcy filings in the U.S. during the month rose 33 percent from a year earlier and may surpass 1 million in a year for the first time since bankruptcy laws were tightened in October 2005.

Individuals this year have filed at an annualized rate that is 23 percent above 2007, while total commercial bankruptcies rose 34 percent, data compiled by Jupiter eSources in Oklahoma City show.

Companies filing for Chapter 11 reorganization also rose at an annual rate of 34 percent above the 6,241 filings in 2007.

The Labor Department on Thursday may report that payrolls fell for a sixth straight month in June, according to a Bloomberg News survey. The U.S. lost 49,000 jobs in May, when the unemployment rate increased by half a point to 5.5 percent, the biggest jump in the jobless rate in more than two decades.

The U.S. economy expanded at an annual rate of 1 percent in the first quarter, the Commerce Department said last week. The revised figure, up from 0.9 percent released in May, caps the weakest six months of growth in five years.

The Federal Reserve last month said it foresees slow growth into 2009. "Tight credit conditions, the ongoing housing contraction and the rise in energy prices are likely to weigh on economic growth over the next few quarters," the Federal Open Market Committee said in a statement.

Bankruptcy courts had almost 513,000 new filings in the first six months of 2008, according to Jupiter's Automated Access to Court Electronic Records service. Filings began the year above 70,000 in January and rose above 90,000 by March. Monthly filings have hovered around 90,000 since then.

Rising fuel prices and weaker demand were reasons for last month's Chapter 11 filing in U.S. Bankruptcy Court in Delaware by JHT Holdings, the biggest U.S. transporter of large trucks from manufacturing plants to dealers. Retrenching consumers hurt Whitehall Jewelers, a 373-store jewelry retailer that will liquidate after seeking refuge last month, also in Delaware.

Soaring costs can affect companies even with wealthy owners like the Kenosha, Wisconsin-based JHT, which was acquired in January 2006 by institutional investors including affiliates of Goldman, Sachs, D.B. Zwirn Special Opportunities Fund, Spectrum Investment Partners, and Stonehouse Investment.

Filings fell sharply in late 2005 and early 2006 after consumers jammed the courts in advance of changes in bankruptcy law effective October 2005 that made it harder for people to erase debt.

In the two weeks before the new law, 630,000 Americans sought bankruptcy protection, bringing total filings in 2005 to a record 2.1 million. There were 590,500 filings in 2006 and 827,000 in 2007.

Home Prices Fall in 23 of 25 U.S. Metropolitan Areas

Home Prices Fall in 23 of 25 U.S. Metropolitan Areas

By Bob Ivry

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Home values fell in 23 of 25 U.S. metropolitan areas in April, according to Radar Logic Inc., as sales of a record number of foreclosed homes pushed prices down.

The Sacramento, California, region saw the biggest drop, with prices falling 31.7 percent from April 2007. Sacramento was followed by the Las Vegas area (29.9 percent), San Diego (28.1 percent), Phoenix (25.5 percent) and Los Angeles (23.4 percent), Radar Logic said.

‘‘Prices are going down so fast they can't go down much longer,'' said Christopher Thornberg, president of Beacon Economics LLC in Los Angeles, who predicts a total decline of 30 percent nationally in the housing recession. ‘‘We've never seen prices fall like this.''

Nevada and California were the states with the most homeowners entering some stage of foreclosure in May, according to RealtyTrac Inc. of Irvine, California, a seller of real estate data. Foreclosures, which reached a record high of 2.47 percent of U.S. homes in March, sell for less than occupied homes and lower the average selling price of all homes by 6 percent, according to Lehman Brothers Holdings Inc. economists Michelle Meyer and Ethan Harris.

Motivated Sales

Motivated sales -- of foreclosed homes or houses in which borrowers have fallen behind on their payments -- accounted for 35 percent of April transactions, said Radar Logic Chief Executive Officer Michael Feder.

‘‘The percentage of transactions that are occurring by motivated sellers is increasing,'' Feder said in an interview on Bloomberg TV. ‘‘It's very difficult to tell if any of these markets are any closer to hitting bottom.''

In May, one in every 118 Nevada households and one in every 183 California households had either received a notice of default, a warning that their home was being auctioned, or had their house repossessed by a lender, RealtyTrac said. The national average was one in every 483 households.

Prices in the New York area fell 3 percent from April 2007, according to Radar Logic.

Prices rose 1.5 percent in the Charlotte, North Carolina, region and 0.1 percent in the Columbus, Ohio, vicinity in April, the only two metropolitan areas where prices went up, Radar Logic said.

The RPX Monthly Housing Market Report, published by New York-based Radar Logic, measures home values using price per square foot; data reflects 28-day aggregated values, the company said. The prices are the basis for property derivatives traded on the Residential Property Index.

Amendment Would Put Spy Lawsuits, Amnesty On Hold Pending Investigation

Amendment Would Put Spy Lawsuits, Amnesty On Hold Pending Investigation

By Ryan Singel

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On Tuesday, the Senate resumes considering whether to hand new dragnet spy powers to the nation's spooks and to grant retroactive amnesty to telecoms that secretly helped the government spy on Americans without warrants for five years.

The Senate seems set to bless the president's secretive program and to free some of the nation's largest corporations from the indignity of due process under the law, making an odd amendment from New Mexico Democrat Sen. Jeff Bingaman the the last real hope for those who want a court to rule on the legality of Bush's spying program.

Democratic Sens. Christopher Dodd, Russ Feingold and Patrick Leahy have sponsored an amendment to fully strip the retroactive amnesty from the bill, therefore allowing a federal judge to decide how and whether to proceed with the class-action suits. That muscular approach failed by a substantial margin in March, and would likely do so again.

Republican Sen. Arlen Specter offered an amendment that would allow the judge in the case to dismiss a plea for amnesty if the court found that the underlying surveillance violated the Constitution. That's a nifty proposal, but one unlikely to pass -- given that the Republican-appointed judge in the combined anti-wiretapping cases all but declared the President's secret wiretapping regime to be illegal in a ruling last week.

Bingaman offers a different solution. Hitching his amendment to the anti-amnesty argument (.pdf) that Congress should not approve what it did not understand, Bingaman proposes that the court cases and amnesty powers all are put on hold, until three months after the joint report by the Inspectors General of the various intelligence services complete their report to Congress on just what transpired between the nation's telecoms and the intelligence services.

If Congress is disturbed by the report -- due a year from the day the bill becomes law, it has time to undo or tweak the rules; otherwise, it can just leave amnesty provisions to come into effect three months after the report to Congress (both public and classified).

That report is already required in the larger bill, but it's not due until next spring, far after the White House has a new inhabitant and long after the judge overseeing the anti-warrantless wiretapping program will have to dismiss the cases if the current bill is passed unmodified.

The Bingaman amendment makes the simple argument that Congress should not handing out pardons without knowing what the pardons are for.

Not surprisingly, the Director of National Intelligence and the Attorney General both told Senate Majority Leader Harry Reid (D-Nevada) that if the bill were passed with the Bingaman amendment, they and other senior Bush advisors would recommend that the President veto it.

"Continued delay in protecting those who provided assistance after September 11 will invariably be noted by those who may someday be called upon again to help the Nation," DNI Michael McConnell and AG Michael Mukasey wrote Monday. "Any amendment that would delay implementation of the liablity protection is critical to the national security."

Critics, such as the Electronic Frontier Foundation, say preventing massive cooperation with a secret government surveillance operation that targets Americans is exactly the point of the suit.

The government's set-in-stone opposition does not surprise Kevin Bankston, an EFF attorney who specializes in surveillance law.

"They want to finish up the last of the cover-up of the government's illegal, warrantless wiretapping program," Bankston said.

The Senate is set to begin debate on the bill Tuesday, though planned votes on the three pending amendments and the final bill will be Wednesday to allow senators to attend the funeral of former North Carolina Senator Jesse Helms.

Senator Christopher Dodd (D-Connecticut) is scheduled to take to the Senate floor early evening Tuesday. His orations against telecom amnesty and wider spying powers stopped the bill cold in December and evince a passion rarely seen on the Senate floor.

The New Geography of Trade: North America Doesn't Exist

The New Geography of Trade: North America Doesn't Exist

By LAURA CARLSEN

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About every six months or so, the media provide a fleeting show of North American unity. Whether on the shores of the Mexican Caribbean, the forests of Quebec, or the hurricane-torn streets of New Orleans, the script is pretty much the same. It includes a lot of back-slapping and almost no public information.

These encounters—the trilateral summits—would be imminently forgettable if not for what happens behind the photo ops.

Business leaders and government officials from the United States, Canada, and Mexico have been meeting to expand on the 1994 North American Free Trade Agreement since the trinational summit in Waco, Texas in March of 2005. Ostensibly, the premise is that this great continent of three nations must bond to create a safe, free, and prosperous haven in a threatening world.

The only problem is, North America—at least as portrayed in the summits—doesn't exist.

Flunking Geography

There is a North American land mass—a fact confirmed by any one of the 515 million people who at this moment are compelled by gravity to stand, sit or lie upon it. But nobody can even agree on its borders.

To the North, the mass breaks up into a vast expanse of ice, impossible to draw on a map as its boundaries recede due to global warming. This is creating consternation and confusion—and not just among polar bears. For the first time since modern science began recording, the fabled Northwest Passage that connects Asia and Europe via North America is free of ice, causing an international dispute over who controls it.

The confusion is even worse regarding the southern edge of our shared continent.

Children in the United States are taught that the North American continent begins in the North—which is always the "top," passes through a gray area called "Canada," to reach a vibrant, multi-colored zone divided into 50 states that most good students can name. It then begins its decline, gradually petering out below the Rio Grande. If the kids were to ask their parents where the southern limit is, they too would probably just shrug.

Mexican school children, however, will answer immediately that there really is no North America. They are taught that North and South America are a single continent—"America," without the "s." That's why if you say you're "American," they will reply, "But what country are you from?"

Turning to the experts, most geographers have decided that North America extends down through Panama. (To make matters worse, Panama used to be part of South America when it belonged to Colombia, but that's another story). That means that North America encompasses 23 sovereign nations and 16 colonies, or "dependencies" as they are referred to in this not-so-post-colonial era.

So why this brief geography lesson? Because the ongoing geographical debate offers important insights into what's wrong with the North American Free Trade Agreement and the son-of-NAFTA—the Security and Prosperity Partnership (SPP).

The problems of defining the region begin with geography, but they get way worse when politics, economics, and culture are thrown in.

Commercial Bloc-heads

The "North American Free Trade Agreement" is actually a compound misnomer. The "North America" in NAFTA is an invention of a particular point in history and a particular set of economic and geopolitical motivations.

"Trade" under the agreement has been liberalized but is far from "free." Politically powerful sectors in the United States maintain protections, whether openly in the form of tariffs or covertly as phytosanitary barriers or subsidies. All countries maintain some barriers for strategic sectors and products—often a reasonable practice, especially in the case of developing countries like Mexico.

Finally, the "agreement" did involve the Congress and civil society organizations at the moment of approval in the United States, but in the negotiating stages and certainly in Mexico, civil society was shut out of the process. NAFTA's extension into the SPP was even more non-consensual since it did not involve congressional approval or signed agreements. In Mexico, NAFTA isn't legally an agreement but rather a treaty, giving it a higher juridical stature than in the United States.

But the biggest problem here is the assumed commonality of interests. The most touted rationale for NAFTA is that the United States, Canada, and Mexico must join to form a trade bloc to compete in the global market with other trade blocs. This assumes that the three nations are on the same team. The Security and Prosperity Agreement even formed a "North American Competitiveness Council" made up of Walmart, Chevron, Ford, Suncor, Scotiabank, Mexicana, and other major corporations to represent the team interests.

But when we look at the play on the field, there is very little teamwork involved. In multilateral forums each country plays by its own game plan. In the World Trade Organization, Mexico forms part of the Group of 20 to protest U.S. and Canadian agricultural subsidies. Canada and the United States have faced off on numerous trade conflicts among themselves, many of them—like the softwood lumber case—the subject of drawn-out and bitter negotiations. Mexico has also had disputes with its supposed team mates, including the tuna-dolphin dispute, the entry of Mexican trucks into the United States under the agreed-to terms of NAFTA, and the tomato wars between northern Mexico and Florida.

If the bloc fails to act as a bloc of nations on the international level, its lack of cohesiveness is even more obvious from the point of view of its major corporations. Globalization opens up a world where everyone is out for themselves in search of cost-cutting production, cheaper resources, and closer markets. Corporations based in the United States, Canada, or Mexico have no loyalty whatsoever to building North America as a competitive bloc. An executive of a Hewlett-Packard subsidiary described how the company decided to move operations from the Mexican border to Indonesia. It was a no-brainer, he said, the labor was cheaper and it was closer to the expanding Chinese market. Like a game of Chinese checkers, the company now seeks to leap production from Indonesia directly into China as its next strategic move. NAFTA partner Mexico is left with nothing but unemployment.

Even the most regionally integrated industries, like the auto industries, measure their success not in terms of integration but by how successfully they can break down the production process into ever-cheaper components. This allows them to offshore labor intensive phases to Mexico where labor is cheap, while maintaining sales and research, management, and research and development in the United States. If anything changes in that formula, the whole concept of regional integration would be thrown out the window in search of a different global strategy. Recent negotiations to reduce wages in Mexican auto plants of Ford and General Motors based on the threat to move production to China are good examples of the logic.

Although corporate strategies are global not regional, corporations do have a reason to push the NAFTA-SPP agenda. Corporations that have operations in the three nations have an interest in developing mechanisms to lower all costs and barriers. In this sense they seek to create not a trade bloc to compete against their operations in other countries, but a pilot project for territorial reorganization along the lines of a corporate wish list. In this conception, "North America" is not a block of countries defined by a common geography and purpose, so much as a territory delineated for the optimal use of capital.

This realization explodes the first myth of "regional integration" under NAFTA. Far from a homogeneous process of integration, it promotes a curious blend of integration and fragmentation of territory. Mexico, for example, has been split in two. The North, where irrigation, climate, and topography provide advantages in agriculture and industrialization is more advanced, is tightly integrated into the U.S. economy. U.S. companies selling in U.S. markets now control much of production and Mexican export companies are concentrated in this region.

Southern Mexico remains outside this scheme and always will. Even the World Bank has recognized this in a study called "Why NAFTA did not reach the South." The response is the Plan Puebla-Panama, with a focus on public-sector loans for major infrastructure development, resource extraction, and energy grids. Since the region is too indigenous, too remote, and too rebellious for productive investment, the southern states of Mexico have been shunted off to join Central America as a facilitator region to provide natural resources and serve as a conduit for the North-South movement of goods. The local populations are considered largely extraneous.

Security for Who?

The issue of security is where the myth of a unified North America is most starkly revealed. Security didn't figure into the original NAFTA agenda, although it was implied that greater economic integration would result in harmonization of foreign policy agendas. Sept. 11 and the Bush National Security Doctrine created a strong U.S. security agenda while at the same time creating tensions with the NAFTA partners.

Canadian business sought to avoid another border closure like the one following the World Trade Center attacks and was willing to concede on other issues to assure uninterrupted trade. The government was forced to accept U.S. Homeland Security measures such as a "no-fly" list that bars "suspect individuals," including dissidents, from air travel between the two nations.

The Mexican people, as in all of Latin America, reacted to U.S. unilateralism and the invasion of Iraq with a rise in anti-American sentiment and suspicion. But both National Action Party (PAN) presidents Vicente Fox and Felipe Calderon shared much of the Bush agenda and have entered into commitments under the SPP on security issues.

The security plan put forth in the SPP is an extension of the agenda of a nation that is the world's pre-eminent military power, a major target for international terrorist attacks, a proponent of unilateral action and pre-emptive strikes, and an advocate of military over diplomatic responses and U.S. hegemony the guarantee of global governance.

Mexico is a nation that is not a target of international terrorism, has had a foreign policy of neutrality, and whose primary security threat has historically been—the United States. Nonetheless, Mexico has had to accept the failure of the binational immigration reform agenda and cooperate in aspects of the U.S. Homeland Security agenda and other counter-terrorism programs. The latest and most radical project to come out of the SPP security agenda is Plan Mexico, or the Merida Initiative—a regional security plan developed in the context of the SPP that bundles counter-narcotics, counter-terrorism, and border security measures into a new national security program for Mexico led by Washington.

The concept that Canada, the United States, and Mexico should forge a single security agenda as a non-existent continent is absurd and dangerous. Yet this is exactly what the SPP does. It is an agreement built on a convenient myth, a partnership that really consists of two countries subordinated to a superpower that agree to this subordination due to economic dependencies and the interests of corporations that cross borders seeking to maximize profits.

The New Geography

When the North American Free Trade Agreement was conceived, it was not a trinational—much less continental—affair. The negotiations focused on pasting together three separate agreements: the U.S.-Canada Free Trade Agreement—already in effect since 1989, a new U.S.-Mexico agreement and, to a lesser degree, a series of Canada-Mexico rules.

Few people realize that the resulting NAFTA reflects these differences. Critical goods for the United States, such as oil and corn, are traded under completely separate rules with Canada and with Mexico in the context of NAFTA depending on the relative bargaining power.

What has happened in the 14 years since NAFTA has fractured the continent even more. Led by the transnational corporations for whom it was designed, in practical terms NAFTA today covers an expanse of territory that runs roughly from Mexico City in the south, to mid-Canada. Through a growing network of consolidated production chains, trade links, and infrastructure development, this region—with the exception of poverty zones of little interest for capital expansion—has undergone rapid processes of concentration and integration.

Under the "vision" of North America forged under NAFTA and its follow-up, the Security and Prosperity Partnership, the three governments have attempted to convince their people that their fate lies along a common path—a path defined by geography, cemented by shared values, and marked by the assumption that just one road leads to the fulfillment of everyone's goals. But it has become increasingly clear that instead of being a pact between three nations, NAFTA constitutes a roadmap for U.S. regional hegemony.

Not So Fast ...

Right wing organizations like the John Birch Society that have been up in arms over the supposed creation of a North American Union and the construction of NAFTA superhighways, may find comfort in the thesis that North America doesn't—and shouldn't—exist. But just because I argue that each nation must define and defend its public good, doesn't mean I agree that there is a neo-Aztec conspiracy to take over the United States. The greatest threat to every country in the region is the attempt of the Bush administration to impose its failed trade and security agenda at home and abroad, and the supranational powers of transnational corporations.

Should We All Go Home Now?

The question remaining is: if North America doesn't exist, why should Canadians, U.S. citizens, and Mexicans work together to shape the NAFTA and SPP processes?

The trinational networks that have formed to monitor and question both NAFTA and the SPP play a critical role. Although each nation has its own priorities and demands, the networks serve to share information and compare notes on how regional integration affects citizens' interests.

Grassroots organizations from the three countries face common challenges and common threats. The indisputably high levels of trade, investment, immigration, and cultural exchange that exist between our countries mean that we live daily lives that overlap across borders. Maybe it isn't a region or a trading bloc in the terms conceived of under the SPP and the differences between us are many and a source of strength. But we are neighbors—as nations, as communities, and as families.

These organizations, meeting in binational or trinational conferences and to protest at official summits, explode the myth of regional homogeneity while at the same time making common cause. They expose the lie that there is only one path forward by developing alternatives in policy and practice. Precisely on the basis of their different political contexts and geographical, ethnic, and economic diversity, they have the potential to build a crossborder movement for social justice to counteract plans for regional integration designed and implemented exclusively in the upper echelons of business and government.

Fourteen years after implementation of the North American Free Trade Agreement, a majority of the population in all three countries believes the agreement has had a net negative effect on their nation and it turns out that the North American Free Trade Agreement is a misnomer in every one of its terms—it wasn't an agreement, it isn't free trade, and North America doesn't exist. So now what?

First, stop extending it. The SPP must be thoroughly reviewed and revamped. Most likely this review will lead to construction of different forums for trinational coordination that separate the trade/investment and security areas, balance out the preponderant influence of the United States government, and open up proceedings and representation to the public.

Second, stop copying it. Although NAFTA is the only trade agreement to extend into an SPP, the Free Trade Agreement model enshrined there has become a template for other agreements and, in the case of the United States, pressures to impose security plans tend to follow close behind. The Merida Initiative contains resources for Central American countries to integrate the CAFTA region into the regional security plan.

Finally, analyze and evaluate the SPP—the forces behind it, the decisions it makes that affect us, and the directions it plans for the future. Citizens have the right and the obligation to know about and participate in mapping the future, and when they do it's likely to look far different from the future mapped for us by corporate and government leaders behind the closed doors of the Security and Prosperity Partnership.

Laura Carlsen (lcarlsen(a)ciponline.org) is director of the Americas Policy Program in Mexico City. This piece was part of a talk at the Lessons from NAFTA Conference. Check out the Americas Mexico blog at www.americasmexico.blogspot.com.

AIPAC’s Hirelings Rush to Resolution

AIPAC’s Hirelings Rush to Resolution

By William A. Cook

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Perception is often the stepchild of ignorance, especially when controlled by those with the most to gain. It is especially difficult for our Congress to perceive clearly when it grovels at the feet of its master, AIPAC. America’s Knesset, servile hirelings of Israel’s lobby, rush to pass yet another resolution conceived by AIPAC and authored and co-signed by its most slavish puppets, Ackerman and Ros-Lehtinen in the House and Lieberman and Bayh in the Senate, Resolutions H. Con. 362 and S. 580, the “Iran War Resolution.” Virtually all Congressmen with the exception of Ron Paul and Dennis Kucinich and all Senators, including McCain and Obama, will vote to support this resolution. Passage provides Bush with power to impose a unilateral blockade on Iran, an act, if done without UN sanction, is an act of war. This resolution, a virtual carbon copy of the resolution that has mired us in Iraq, does nothing for the security of the United States, indeed it does the opposite, but it does secure continued funding of Republicans and Democrats by AIPAC and Israel.

The wise man seeks to see through the eyes of his perceived enemy; only then will he know his perceived failures and the rationale that gives purpose to those arraigned against him. Our Congress is driven, like the horse carriage of old, with blinders that prevent vision beyond that dictated by Israel’s interests, not America’s. Consider the “Iran War Resolution” from the perspective of the nations that compose the United Nations General Assembly, not the Security Council that is controlled by the U.S. veto.

Let’s rewrite the legislation so that it expresses the sense of the United Nations General Assembly regarding “the threat posed to international peace, stability in the Middle East, and the vital security interests of the United Nations by Israel’s possession of nuclear weapons and regional hegemony.”

Whereas Israel is NOT a party to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), has NOT foresworn the acquisition of nuclear weapons by ratification of the NPT, and is therefore able to avoid declaration of all its nuclear activity and defy constant monitoring by the International Atomic Energy Agency (IAEA);

Whereas for nearly 50 years, in clear contravention of the explicit obligations of the NPT, Israel operated a covert nuclear program until it was revealed by Mr. Mordechai Vanunu, who served 18 years in solitary confinement for providing the world information on this deceit, and, recently, by Prime Minister Olmert and former President Jimmy Carter;

Whereas Israel continues to expand the number of illegal nuclear weapons available to its military forces, as has become evident in its most recent invasion of a neighbor in 2006, Lebanon, and continues in defiance of binding UNSC resolutions demanding suspension of all such illegal activities;

Whereas the Israeli nuclear weapons capability poses a grave threat to international peace and security by fundamentally altering and destabilizing the strategic balance in the Middle East, and severely undermining the global nonproliferation regime;

Whereas Israel’s overt sponsorship of several terrorist groups, especially those aligned with the Settlers occupation in Palestine, and its close ties to the United States, demonstrates that Israel and the U.S. share their nuclear materials and technology with others;

Whereas Israel continues to develop ballistic missile technology and pursues its capability to field intercontinental ballistic missiles, a delivery system suited almost exclusively to nuclear weapons payloads;

Whereas Israeli leaders have repeatedly called for the destruction of Palestine and Lebanon, respected members of the United Nations;

Whereas Israel’s support for its rogue terrorist group, the IDF, has enabled that group to wage war against the government and people of Lebanon and Palestine leading to the invasion of Lebanon in 2006 and its political and physical domination of Palestine;

Whereas Israel’s support for its Settlers and IDF has enabled it to illegally seize control of the West Bank and Gaza and to continuously bombard and devastate Palestinian civilians with F-16s, bulldozers, tanks, and missiles;

Whereas through these efforts, Israel seeks to establish regional hegemony, threatens longstanding friends and allies of all nations in the mid-east, and endangers vital United Nations security interests; and

Whereas nothing in this resolution shall be construed as an authorization of the use of force against Israel: Now, therefore, be it Resolved by the United Nations General Assembly that the world’s international body

1. Declare that Israel disband all nuclear weapons capability;

2. Join the nations of the mid-east in signing the NPT;

3. Remove its troops from the occupied territory of Palestine;

4. Tear down the illegal wall that it has used to imprison the Palestinians;

5. Return all natural resources to the people of Palestine;

6. Pay reparation for its destruction of Lebanon;

7. Return occupied land to Lebanon and Syria;

8. Provide for the refugees illegally prevented from returning to their legitimate homes;

The above document modifies the wording of the House and Senate resolutions to indicate a totally different perspective on world affairs, one built on Justice, the requisite foundation for a lasting peace, not those of Israel alone. Considering the magnitude of the reality that exists in Israel versus Iran relative to nuclear capability alone, the absurdity, the hypocrisy, the sheer arrogance of these resolutions boggles the mind. How can the world respect a nation whose representatives avoid seeing the world from the eyes of those most impacted by the threat that Israel poses in the mid-east? How can the world understand that a nation rejects the testimony of its own CIA National Intelligence Estimate that Iran has not actively pursued nuclear weapon capability since 2003 and the evidence brought to the United Nations by the IAEA’s Director, El Baradei, after nine unannounced investigations of Iran’s nuclear facilities in this past year all revealing no evidence of weapon development? How can the world respect a Democracy that is led to such acts of vengeance by a small nation more invested in its own interests than those of America as Mearsheimer and Walt’s report testifies.

The most evil deceit resides in the conceit of those who pretend to be a friend and achieve their end by flattery, bribery, or coercion; those who fall victim to such evil remain forever the bondslave of their Overseer. They have, in effect, surrendered their principles, their conscience, and their personal freedom to a ruthless, merciless, amoral force, willingly sacrificing in the process the people they represent. Such is the state of affairs in our spineless Congress.

William Cook is a professor of English at the University of La Verne in southern California

US exports to Iran increase more than tenfold during Bush years

US exports to Iran increase in Bush years

By SHARON THEIMER

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U.S. exports to Iran grew more than tenfold during President Bush's years in office even as he accused Iran of nuclear ambitions and helping terrorists. America sent more cigarettes to Iran - at least $158 million worth under Bush - than any other products.

Other surprising shipments to Iran during the Bush administration: brassieres, bull semen, cosmetics, fur clothing, sculptures, perfume, musical instruments and possibly even weapons. Top states shipping goods to Iran include California, Florida, Georgia, Louisiana, Michigan, Mississippi, New Jersey, North Carolina, Ohio and Wisconsin, according to an analysis by The Associated Press of seven years of U.S. government trade data.

Despite increasingly tough rhetoric toward Iran, which Bush has called part of an "axis of evil," U.S. trade in a range of goods survives on-again, off-again sanctions originally imposed nearly three decades ago. The rules allow sales of agricultural commodities, medicine and a few other categories of goods. The exemptions are designed to help Iranian families even as the United States pressures Iran's leaders.

"Our sanctions are targeted against the regime, not the people," said Adam Szubin, director of the Treasury Department's Office of Foreign Assets Control, which enforces the sanctions. The government tracks exports to Iran using details from shipping records, but in some cases it's unclear whether anyone pays attention.

Sanctions are intended in part to frustrate Iran's efforts to build its military, but the U.S. government's own figures show at least $148,000 worth of unspecified weapons and other military gear were exported from the United States to Iran during Bush's time in office. That includes $106,635 in military rifles and $8,760 in rifle parts and accessories shipped in 2004, the data shows.

Also shipped to Iran were at least $13,000 in "aircraft launching gear and/or deck arrestors," equipment needed to launch jets from aircraft carriers, according to U.S. records. Iran's navy is not believed to own or operate any carriers.

Those numbers may seem small, but military items can sell for pennies on the dollar compared with what the Pentagon paid. Last year, federal agents seized four F-14 fighter jets sold to domestic buyers by an officer at Point Mugu Naval Air Station, Calif., for $2,000 to $4,000 each, with proceeds benefiting a squadron recreation fund. When F-14s were new, they cost roughly $38 million each.

Szubin said it was unlikely exports of military gear occurred, but added that the government was looking into it to be certain after the AP raised questions. He said shipping records are subject to human error, such as citing wrong commodity codes or recording "Iran" as the destination rather than "Iraq." The Treasury Department said Monday it was still checking to see whether it could offer an explanation.

"That's something that would obviously concern us greatly and concern the whole administration," Szubin said in an interview with the AP. "And so when you presented us with the question in the last day we have called over to our colleagues in other government agencies and you can be assured they're looking very carefully into it."

Bush this year signed legislation prohibiting the Pentagon from selling leftover F-14 parts. The law was prompted by AP reporting that buyers for Iran, China and other countries exploited Pentagon surplus sales to obtain sensitive military equipment that included parts for F-14 "Tomcats" and other aircraft and missile components. Two men were indicted in Florida last week on charges they shipped U.S. military aircraft parts to Iran, including Tomcat and attack-helicopter parts.

Iran received at least $620,000 in aircraft parts and $19,600 worth of aircraft during Bush's terms. Iran relies on spare parts from other countries to keep its commercial and military aircraft flying. In some cases, U.S. sanctions allow shipments of aircraft parts for safety upgrades for Iran's commercial passenger jets.

The U.S. government seems uncoordinated on efforts to limit trade with Iran.

The Securities and Exchange Commission sought to shine a light on companies active in Iran but stopped after business groups complained. The Treasury Department allowed some companies and individuals suspected of illegal trading with Iran to escape punishment. Yet the Bush administration also has collected millions of dollars in fines from trade-rule violators and pressed Congress without success to pass laws to strengthen enforcement.

The fact that the United States sells anything to Iran is news to some.

"Until you just told me that about Iran I'm not sure I knew we did any business with Iran," said Fred Wetherington, a tobacco grower in Hahira, Ga., and chairman of Georgia's tobacco commission. "I thought because of the situation between our two governments, I didn't think we traded with them at all, so I certainly didn't know they were getting any cigarettes."

The United States sent Iran $546 million in goods from 2001 through last year, government figures show. It exported roughly $146 million worth last year, compared with $8.3 million in 2001, Bush's first year in office. Even adjusted for inflation, that is more than a tenfold increase.

Exports to Iran are a politically loaded but tiny part of U.S. trade. The United States counted more than $1 trillion in world exports last year. The value of U.S. shipments last year to Canada - America's top trading partner - was more than 1,000 times the value of shipments to Iran.

Top U.S. exports to Iran over Bush's years in office include corn, $68 million; chemical wood pulp, soda or sulphate, $64 million; soybeans, $43 million; medical equipment, $27 million; vitamins, $18 million; bull semen, $12.6 million; and vegetable seeds, $12 million, according to the AP's analysis of government trade data compiled by the World Institute for Strategic Economic Research in Holyoke, Mass. The value of cigarettes sold to Iran was more than twice that of the No. 2 category on the export list, vaccines, serums and blood products, $73 million.

Iran is a top customer of Alta Genetics Inc., a Canadian company with an office in Watertown, Wis., that sells bull semen, used to produce healthier, more profitable cattle. "The animals we're working with are genetically superior to those in many parts of the world," said Kevin Muxlow, Alta's global marketing manager.

Also getting Bush administration approval for export to Iran were at least $101,000 worth of bras; $175,000 in sculptures; nearly $96,000 worth of cosmetics; $8,900 in perfume; $30,000 in musical instruments and parts; $21,000 in golf carts and/or snowmobiles; $4,000 worth of movie film; and $3,300 in fur clothing.

Few people or companies asking U.S. permission to trade with Iran are turned down by the Treasury Department, the lead agency for licensing exports to sanctioned countries. During Bush's terms, the office has received at least 4,523 license applications for Iran exports, issued at least 2,821 licenses and 213 license amendments and denied at least 178, Treasury Department data shows.

Neither the Treasury data nor trade data compiled by the Census Bureau identify exporters or specify what they shipped. The AP requested those details under the Freedom of Information Act in 2005 and still is waiting for the Treasury Department to provide them.

Though some trade with Iran is legal, some businesses prefer that people not know about it.

Citing corporate financial reports, the SEC published a list online last year of companies that said they had done business in Iran or four other countries the State Department considers state sponsors of terrorism. The SEC withdrew the list after business groups complained but is considering releasing one again.

"There's no question that people are looking for that kind of information," SEC spokesman John Nester said. "But under the current disclosure regime, it's beyond most people's abilities and time to slog through every corporate report and find companies that make reference to one of those nations."

Business groups oppose publishing such lists. It "could inappropriately label companies with legitimate activities as supporters of terrorism," the European Association of Listed Companies told the commission earlier this year.

An AP photographer strolling through shops in Tehran had no problem finding American brands on the shelves. An AP review of corporate SEC filings found dozens of companies that have done business in Iran in recent years or said their products or services may have made it there through other channels. Some are household names: PepsiCo , Tyson Foods , Canon, BP Amoco, Exxon Mobil , GE Healthcare, the Wells Fargo financial services company, Visa, Mastercard and the Cadbury Schweppes candy and beverage maker.

Georgia led states in exports to Iran over the past seven years, with cigarettes representing $154 million of the $201 million in goods it exported there. Cigarette shipments to Iran peaked in 2006, apparently from a Brown & Williamson cigarette factory in Macon, Ga.

When the plant closed, tobacco shipments to Iran fell dramatically. No U.S. tobacco shipments to Iran were reported for 2007 or the first quarter of this year, the most recent figures available.

British American Tobacco began operating in Iran in 2002, producing most of its cigarettes under a contract with the Iranian tobacco monopoly, company spokesman David Betteridge said. B.A.T. shipped Kent cigarettes from the United States to Iran until 2006, he said.

The factory in Macon closed after B.A.T.'s Brown & Williamson Tobacco Corp. and R.J. Reynolds Tobacco Holdings merged their U.S. tobacco and cigarette businesses. B.A.T. said it now makes cigarettes for export to Iran in Turkey. It declined to say how much tobacco the company previously shipped from the U.S. to Iran, but said the U.S. government approved the shipments.

The Bush administration's record enforcing export laws is mixed. The Office of Foreign Assets Control let the statute of limitations expire in at least 25 cases involving trade with Iran from 2002 to 2005, according to one internal department audit. The companies involved, disclosed to the AP under the Freedom of Information Act, include Acterna Corp., American Export Lines, Parvizian Masterpieces, Protrade International Corp., Rex of New York, Shinhan Bank, Phoenix Biomedical Corp., World Cargo Alliance and World Fuel Services.

Abdi Parvizian of the Parvizian Masterpieces rug gallery in Chevy Chase, Md., said his case was dropped because his business proved everything was imported from Iran legally. He bristled over current congressional proposals to ban imports from Iran, including carpets.

"The problem with the rugs is it has nothing to do with the government of Iran," Parvizian said. "This is something that is made by the very unfortunate people in the country, and those people are going to get hurt more than anybody else."

World Fuel Services said an employee fueled a ship out of Singapore that turned out to be Iranian-owned, and the U.S. government spotted it from a wire transfer. The company explained the mistake to Treasury with no repercussions, said Kevin Welber, general counsel of the company's marine business. It has since put in place techniques to identify Iranian-owned ships, which Welber said can be difficult because some Iranian ships sail under Cyprus flags.

Phoenix Biomedical acknowledged it shipped surgical shunts to Iran without a license. It previously was allowed during the Clinton administration to send them to Iran and sent replacement shunts without a new license, which was required, said Charles Hokanson, who sold Phoenix Biomedical to French-based Vygon and is now chief executive of Vygon USA. He said that was the last business it did with Iran.

The other companies did not respond to requests by the AP for explanations.

Failure to obtain export licenses has caused trouble for some companies whose products can legally be sold to Iran.

Months after Zimmer Dental of Carlsbad, Calif., acquired Centerpulse Dental in late 2003, it learned Centerpulse had sold dental implants and related items to Iran without necessary export licenses, Zimmer spokesman Brad Bishop said. It voluntarily reported the violations to the Treasury Department, which announced in January that Zimmer Dental had paid an $82,850 penalty.

Bishop said the company has since trained employees and also took the easiest solution to avoid such problems:

It stopped doing any business with Iran.

Iraqis Demand Timetable For Withdrawal

Iraqis Demand Timetable For Withdrawal

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On Monday, Iraqi Prime Minister Nouri al-Maliki raised the prospect of "setting a timetable for the withdrawal of U.S. troops as part of negotiations over a new security agreement with Washington." During an official visit to Abu Dhabi, the capital of United Arab Emirates, Maliki told a gathering of Arab ambassadors, "Today, we are looking at the necessity of terminating the foreign presence on Iraqi lands and restoring full sovereignty." The new emphasis on sovereignty may reflect Maliki's growing confidence in the Iraqi army, which some analysts suggest is unfounded, after recent victories against al Qaeda in Iraq. It also reflects the pressure that Maliki is feeling from members of his parliamentary coalition, as well as from Iraqis themselves, many of whom oppose the continued U.S. presence. Since President Bush has consistently opposed any timetable for withdrawal, claiming that it would "embolden our enemies," Maliki's statement setting the stage for a possible conflict between the demands of the Iraq people and Bush's plans for basing troops in Iraq. The U.N. mandate authorizing the U.S. presence in Iraq expires at the end of 2008.

IRAQIS STRESS RETURN OF FULL SOVEREIGNTY: The Bush administration has pushed hard to get a long-term agreement signed by the end of July, but this prospect seems increasingly unlikely. Many Iraqi parliamentarians have resisted supporting an agreement that they say is being negotiated in secret, with an American administration that is on its way out. "I don't know anything about this agreement and neither does parliament," said Ezzedine Dawla, a Sunni MP. The temperature was raised again several weeks ago, when a U.S. special forces unit shot and killed a cousin of the Prime Minister in a raid in Maliki's hometown of Janaja, in Karbala province, an area supposedly "under full Iraqi control." "Iraqi authorities say the raid was conducted without their knowledge or coordination." Last week, Iraq Foreign Minister Hoshyar Zebari stressed that recognition of sovereignty should be the central concern of any agreement, declaring that there will not be "another colonization of Iraq." Zebari also announced on Monday that "security contractors working in Iraq will no longer receive immunity from prosecution," voicing a major Iraqi demand. Acknowledging the approaching deadline, Zebari cited three options: "Either we conclude a status of forces agreement; or we have an interim agreement until a SOFA can be completed; or we go back to the Security Council at the end of the year and ask for another extension." Late on Monday, Maliki's office released a statement indicating his support for the second of those options, a U.S.-Iraqi "memorandum of understanding" that would extend the presence of American troops for a short period of time.

BUSH STRESSES AMERICAN SECURITY IMPERATIVES: Consistent with his tendency to maximally assert executive branch prerogatives, Bush has attempted to freeze Congress out of the security agreement negotiating process. In November 2007, Bush and Maliki signed a non-binding "Declaration of Principles for a Long-Term Relationship of Cooperation and Friendship" that set out parameters for negotiating an "enduring" political, economic, cultural, and security relationship between the United States and Iraq. Because the agreement would commit U.S. forces to continued combat operations in Iraq, Congress has repeatedly tried to assert its proper constitutional oversight role. In June, Congress heard testimony from several Iraqi parliamentarians opposing the security agreement. Congress also received a letter signed by "31 Iraqi lawmakers [saying] they will insist on ratifying the agreement as is required by [Iraq's] constitution." Iraqis and Americans responded negatively to reports last month that Bush intended to establish some 50 U.S. military bases in Iraq. This would ensure a continued U.S. presence and the use of the country as a base of operations for future military adventures in the region, a central element of Bush administration's plan for transforming the Middle East. Bush denied that he seeks "permanent bases" in Iraq but also stressed that "a strategic relationship with Iraq is important...for Iraq, it's important for the United States, and it's important for the region."

REGIONAL GOVERNMENTS FINALLY STEPPING UP?: Regional governments have been slow to work with the new Iraq. Currently, there are five Arab embassies in Baghdad: Syria, Palestine, Yemen, Lebanon, and Tunisia. However, "the diplomatic representation at these embassies is at the level of charge d'affaires, and there is no Arab ambassador in Baghdad to date." Last month, Zebari reported that Kuwait and Bahrain had committed to sending ambassadors to Iraq. The United Arab Emirates recently announced that it was forgiving $7 billion in Iraqi debt and would also post an ambassador to Baghdad. George Washington University professor Marc Lynch noted the significance of Maliki's choosing "the venue of a meeting with Arab ambassadors" to raise the idea of a timetable for withdrawal of American forces. "Not only would such a withdrawal please most Arabs," Lynch wrote, "depending on how it is handled, but it would also increase their perceived need to do something." Iraq continues to seek debt forgiveness from other Arab states for debts incurred during the reign of Saddam Hussein.

Mass layoffs, cutbacks signal further disintegration of Detroit public schools

Mass layoffs, cutbacks signal further disintegration of Detroit public schools

By Walter Gilberti
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At a specially convened session June 30, the Detroit Public Schools Board of Education voted 9 to 2 to 333initiate draconian cuts in school jobs and services. The two-year plan, designed to cover a more than $408 million deficit, was hastily enacted under threat that the district would be forced to suspend its summer operations with the ending of the fiscal year.

The board is also under pressure to demonstrate “fiscal responsibility” or face the prospect of a second state takeover of the Detroit school system. The first such takeover occurred nearly a decade ago during the administration of Republican Governor John Engler.

With the new round of cuts, as many as 1,700 school employees, including 810 teachers and support personnel, will be laid off. The teacher layoffs amount to more than 10 percent of the district’s teachers. Hundreds more office, custodial and food service workers will lose their jobs and vacant positions will be left unfilled.

The board will also consider a new round of school closings during the 2009-2010 school year. Last year the district closed a number of schools, including several high schools, with disastrous results. The recklessness of the closures led to overcrowded elementary schools in adjacent neighborhoods, increased gang violence at schools that experienced a large and sudden influx of new students, as well as the systematic looting of the closed buildings’ infrastructures and the loss of students’ records.

Other budget cuts include a “realignment” of transportation services, which will force many more students to take their chances with an already decrepit public transport system, as well as central office cutbacks that will further reduce money for already scarce school supplies. Money for school trips and necessary equipment will also be drastically reduced; in other words, everything that has traditionally characterized a functioning school district is being systematically eliminated.

Teachers will face a new round of wages and benefits concessions demands by the district. The new budget will forestall, if not eliminate, the 2.5 percent pay increase scheduled to take effect in September, the beginning of the final year of the three-year contract that was the result of the 16-day teachers strike at the start of the 2006 school year. The language of the budget includes the following: “Delay union and non-union salary increases and restore concessions, this has to be negotiated, all concessions removed in 4th year.” What this means is that teachers and other school personnel will likely face payless paydays during the 2008-2009 school year, as well as demands for further wages and benefits concessions as contract negotiations resume, if, in fact, there is to be a “new” contract.

While this latest round of cutbacks is being justified with the usual mantras of having to align the district with declining enrollment, and of being in compliance with state mandated budgetary requirements, the reality is that these cuts only accelerate the disintegration of the district, further opening the door to privatization and the spread of charter schools. Like a starving man whose body feeds on itself to delay the inevitable, there is a threshold beyond which no amount of cuts to a school system will stave off collapse.

Last year’s enrollment of 106,000 students, a figure that was actually higher than many projections, still represented a loss of 12,000 students from the previous year, and will likely cost the district $90 million in state aid. If enrollment drops to below 100,000 students for the 2008-2009 school year—a likely prospect—the district could lose its status as a large school system and the spread of charter schools would likely be unrestricted. Such a turn of events would have the complete support of Detroit Mayor Kwame Kilpatrick, a Democrat, who has long championed the spread of privatization in the city’s education system.

For years, the Detroit Public School (DPS) system has been systematically dismantled by a lethal combination of corruption and incompetence. At last Monday’s meeting, the school board, as if to contrast its attack on school employees and services, felt compelled to launch a lawsuit to attempt to recover $45 million in allegedly unauthorized contracts awarded by the district’s Risk Management Office headed by Stephen Hill to friends and business associates. Both Hill and his assistant Christina Polk-Osumah are named in the lawsuit.

However, this belated attempt to address the rampant corruption and cronyism that has been the hallmark of the management of the DPS only highlights the class divisions in Detroit, in which a layer of urban petty bourgeois view the city and its largely working class residents as its own private cash trough.

For its part the Detroit Federation of Teachers, the union representing over 6,000 teachers and support personnel, has had very little to say. Only a perfunctory article on the budget cuts appears on the union’s web site. DFT President Virginia Cantrell’s remarks at the board meeting were confined to a plaintive appeal to the board to stop trying to balance the school district’s finances off the back of its employees, and to the Michigan state legislature to change the classification of the Detroit schools so that further declines in enrollment will not result in reduced funding.

It should come as no surprise that the DFT has been reduced to virtual speechlessness in the face of the growing catastrophe confronting Detroit’s public schools. The union leadership, and its various and sundry factions, including that of its “left” wing represented by the Civil Rights Action Now caucus led by Steve Conn, advance no perspective beyond that of trade union militancy and the occasional “radical” protest—in reality, activities that appeal to the very same Democratic Party politicians that are pushing the school privatization agenda.

Long-term unemployment in the US climbs 37 percent in one year

Long-term unemployment in the US climbs 37 percent in one year

By Andre Damon
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The US economic slowdown has brought not only sustained job losses, but also a steep rise in the proportion those unemployed for prolonged periods. The number of people out of work for more than six months has shot up by 37 percent since June of 2007, according to the Bureau of Labor Statistics.

Last month, 1.5 million people had been unable to find work half a year or more. Many of these workers, without paychecks or medical insurance and having exhausted their unemployment benefits, are confronted with foreclosure on their homes, evictions and the threat of destitution.

The number of long term unemployed is up from 1.1 million in June of 2007. The average duration of unemployment climbed from 15.1 to 15.9 weeks in June from a year earlier. The increase in the number of long-term unemployed was twice the rise in the total number of jobless over the same time.

These figures come from the most recent Bureau of Labor Statistics report, which showed that the US economy shed 62,000 jobs in June, on top of an earlier 62,000 loss in May. The unemployment rate, which shot up in May by the highest amount in over 20 years, remained steady at 5.5 percent, up from 4.6 percent a year ago.

June marked the sixth straight month of falling payrolls, with the US economy having lost 438,000 jobs since the beginning of the year. The total number of unemployed reached 8.5 million last month, up from 7.0 million a year earlier.

The unemployment rate for prime-aged workers, those 25 and up, rose from 4.1 to 4.3 percent. This shift was compensated by a decline in youth unemployment, leaving the overall unemployment rate nominally unchanged.

These figures do not take into account the 1.6 million people who are “marginally attached” to the workforce, who had looked for work in the previous 12 months, but not in the last month. This figure includes approximately 420,000 “discouraged workers,” who had given up looking for work because they think that there is no work available.

The results followed layoff announcements from American Airlines, Goldman Sachs and Starbucks, which announced plans last week to close 600 stores and lay off 12,000 workers.

A significant portion of the June payroll loss was attributable to the construction sector, where employment fell by 43,000. The sector has lost some 528,000 jobs since the peak of the housing bubble in 2006.

Manufacturing did not fare much better, with some 33,000 jobs slashed in the last month. Manufacturing payrolls have shed 353,000 jobs in the past twelve months.

While six consecutive months of declining payrolls have always signaled recessions during the past 50 years, current estimates indicate that the US economy managed to continue growing in both the first and second quarters. “We have not really had a downturn quite like this one in which we lose jobs month after month but the economy somehow manages to grow,” Nigel Gault, chief domestic economist at Global Insight, told the New York Times.

The fact that the economy has continued to grow while unemployment has shot up hints that adverse economic conditions have not fully made themselves felt in consumer spending. This is likely due to the effect of the $78 billion in tax rebates recently sent out by the government, which may have temporarily boosted consumer expenditures. Once those rebates are spent, however, it is likely that the economy will begin to contract and the current hemorrhaging of jobs will only accelerate. According to a recent survey, consumer confidence has sunk to its lowest level in 16 years.

All the while, real wages have continued to plummet. Median wages have increased by 2.8 percent in the past year; the Consumer Price Index rose by over 4 percent during the same period. This adds up to a decrease in median real wages of over 1.2 percent, as workers have lost bargaining power as the labor market has softened.

Congress responded to these developments last week by passing a law to extend the duration of unemployment benefits nationwide. The bill adds 13 weeks onto the 26 weeks of unemployment benefits currently guaranteed by state governments. The extension lasts only until March. Moreover, to qualify for the extension, workers must have been on the job for 20 months before being laid off, a provision that excludes 10 percent of the long term unemployed.

The provision is estimated to cost some $8 billion, and was included in a bill funding the wars in Iraq and Afghanistan through 2009. In comparison to the war funding provision, estimated at $162 billion, the aid to the millions of unemployed amounts to a pittance.

Facing bankruptcy threat, General Motors to slash thousands more jobs

Facing bankruptcy threat, General Motors to slash thousands more jobs

By David Walsh
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Auto giant General Motors, an icon of American capitalism, is preparing to lay off thousands more white-collar employees and may sell or close down one or more of its numerous brands, according to press reports Monday. In addition, the firm may demand further concessions from the United Auto Workers union.

The moves will deepen the devastation in many North American towns and communities, reeling from the deepening economic slump. More than 17,300 employees left GM payrolls June 27, having opted for buyouts. Some 8,500 of those workers were in Michigan, already experiencing the highest unemployment rate in the country; the Flint, Michigan area, many of whose residents have been reduced to near destitution, lost 1,800 more jobs through the buyouts.

In early June, GM announced it was closing plants by 2010 in Janesville, Wisconsin; Moraine, Ohio; Oshawa, Ontario and Toluca, Mexico, eliminating more than 8,000 jobs.

White-collar jobs have also been savaged in recent years, although Wall Street investors still complain that there is “too much fat” in GM’s middle management.

In any case, despite the slashing of jobs and costs, the firm’s financial hemorrhaging has not stopped.

GM lost a staggering $38.7 billion in 2007 and is continuing to “burn” cash at the rate of an estimated $3 billion a quarter, notes the Wall Street Journal. Its sales are down 16.3 percent this year and last week GM’s stock price closed below $10 for the first time in 54 years; the price of company shares was $43 as recently as last autumn. The Detroit-based auto manufacturers combined accounted for just 47 percent of the US market in June. GM’s share hit an 83-year low.

The Journal’s article, based on the comments of “people familiar with the matter,” asserts that the new round of job cuts is likely to be approved when the auto company’s board of directors convenes in early August.

Officially, the new cuts are part of an effort to return the company to profitability by 2010. The numbers suggest, however, that General Motors is engaged in a desperate effort to stay afloat.

The Associated Press indicated that “all the options are being considered” by GM management, as the company tries “to cope with the dramatic shift in consumer buying habits from trucks to cars and crossover vehicles.”

A company spokeswoman would not comment on its plans, but Renee Rashid-Merem told the AP, “If conditions persist or deteriorate, then we’ll continue to take aggressive actions.”

GM currently produces vehicles under eight brand names. Until recently, company CEO Rick Wagoner insisted that dropping several of the brands was out of the question. Top-level company thinking, however, has apparently changed on that front. The auto firm is offering Hummer for sale, and insiders indicate that only Cadillac and Chevrolet are safe from sale or elimination.

GM’s stock price fell to its half-century low July 2 after Merrill Lynch analyst John Murphy asserted that the auto firm needed to raise as much as $15 billion in cash to shore up its liquidity and that bankruptcy was “not impossible” if the car market continued to decline.

Murphy commented, “The recent extreme deterioration in volume and mix is driving much higher cash burn and eroding GM’s cash position. We believe $15 billion is necessary because there is downside risk to our current estimates and a greater cushion is essential.”

Several other Wall Street banks also downgraded automakers and parts suppliers July 2, including Citigroup. One of the bank’s analysts lowered his estimates for 2008 vehicle sales to 14.5 million units from 15 million, “saying plummeting resale values of trucks and SUVs was crimping demand already hurt by weak housing and tighter credit” (Reuters).

The Financial Times noted July 3: “In the credit derivatives market, the cost of default protection for both GM and Ford is hovering around its highest levels ever. Standard & Poor’s last month put GM, along with Ford Motor and Chrysler, on creditwatch with negative implications, but said it expected the three automakers’ liquidity to be adequate through to the end of 2008.

“‘We’re comfortable they have enough liquidity for this year,’ said S&P’s credit analyst Robert Schulz. ‘But if these current conditions persist—lower volumes and an adverse mix—as you move through 2009, liquidity could get to undesirable levels.’”

GM, according to the Financial Times, is expected to try and raise $10-$15 billion in the next few months “offering as security its foreign operations, trademarks, inventory and its 49 per cent stake in GMAC, the financial services group it co-owns with buy-out group Cerberus, which also majority owns Chrysler.”

Merrill Lynch, however, noted that GM had “not recognised the stress in capital markets.” Shelly Lombard, senior high-yield analyst with Gimme Credit, told the Financial Times, “It’s a tough market to get anything done, then when you put the word ‘auto’ in front of the company, it’s a more difficult deal to do.”

On July 5 Time magazine ran an article headlined, “Can General Motors Recover?” and Rupert Murdoch’s New York Post published a contemptuous piece last Thursday, “General Meltdown,” which observed that “Even towel purveyor Bed Bath & Beyond and motorcycle-maker Harley-Davidson now enjoy richer market values than GM.

“‘It’s become a single-digit midget,’ said Peter Schiff, president of Euro-Pacific Capital.

“‘It’s now 1/25 the size of Toyota’s market value. The question now is who will go into bankruptcy first, GM or Ford?’”

Schiff bluntly told the Post, “The US car market is dead. It makes cars no one wants to buy, and people are too broke to pay for them if ... they do buy.” Customers are now defaulting at record levels on financed cars, he asserted.

Portfolio.com commented July 2 that the “B-word,” bankruptcy, is “Haunting Detroit.” Noting that in 2005 a GM executive dismissed “darker speculation” about the company, saying, “The idea of bankruptcy is nuts,” the web site continued: “Such talk has sounded more and more sane as the company struggles with huge losses and sagging sales.”

The potential financial failure of General Motors is a major historical event. The company, which will be 100 years old in September, was at one time the largest producer of cars and trucks in the world and perhaps its largest private employer, exceeded only by the state industries in the Soviet Union.

Considered the model of a successful American corporation, particularly under the direction of Alfred P. Sloan in the 1930s and 1940s, General Motors became the largest US company in terms of its revenues as a percentage of GDP in the postwar period.

The auto company had played a central role in the American effort in the Second World War, when its factories were entirely turned over to manufacturing for the conflict. From 1940 to 1945, GM delivered war material valued at $12.3 billion; it produced 13,000 airplanes alone and one-fourth of all US aircraft engines.

GM’s president, Charles Wilson, who famously declared that “what was good for the country was good for General Motors and vice versa,” was named by President Dwight Eisenhower as US Secretary of Defense in 1953. GM was the first US firm to pay taxes of more than one billion dollars in 1955. In 1960 the giant firm made six of every ten cars bought in America (and Detroit’s auto companies still controlled 90 percent of the domestic market).

The workers who departed with buyouts in late June represented about one-quarter of GM’s remaining 74,000 US hourly workers. Four years ago, the company had 118,000 hourly workers—in 1979, it had 600,000.

The price of one General Motors share, $10.24 Monday afternoon, compares with $543.91 for a Google share. The Financial Times observed sardonically on Saturday: “The decline of Detroit’s three carmakers has come to this: General Motors’ market value sank this week below Mattel, the maker of Matchbox toy cars.”

In its efforts to survive, GM cannot count on any mercy from the financial markets and billionaire investors. These are sharks circling the boat. The auto company can rely, however, on the never-ending willingness of the United Auto Workers bureaucracy to accept and impose on its membership ever greater concessions.

As the Wall Street Journal notes, “GM could also offer the United Auto Workers equity in the company in return for more cost concessions, Mr. Cole [David Cole, president of the Center for Automotive Research in Ann Arbor, Michigan] said. Although the union has already given GM considerable help on costs, Mr. Cole said he suspects ‘that you will see when push comes to shove, they’ll do more.’” No doubt they will.

There is talk of GM and the other auto companies attempting to ‘open up’ the rotten contract signed with the UAW last year, i.e., to obtain more and harsher concessions.

The UAW has issued no statement in reply to the reports of the new white-collar cuts. The media could not extract any comments, and the union’s web site has nothing to say about the new job destruction. On the UAW web site, however, is a recent press release announcing the ringing endorsement of Sen. Barack Obama for president, who, according to the union, “has a strong program for a safe and secure America.”

General Motors was the pre-eminent corporation during the period of America’s rise to global dominance—its bankruptcy is the bankruptcy of American capitalism as a whole, a declining economic power, whose ruling elite has turned to the most parasitic methods of making profits in recent decades: stock market and other forms of financial manipulation.

Manufacturing itself is now held in contempt by the most powerful financial interests. As noted by the WSWS last week, Bruce Birger, managing director of Birger Capital Management, asked the Detroit News rhetorically, “What’s GM worth now—$7 billion? ... People can write checks for that amount.” To have “auto” as part of a firm’s description is now a liability. This kind of a turnaround has enormous social and political implications.

A historian comments that “In the 1950s, social scientists and journalists held up the auto industry as an example of the end of class conflict in America. They argued that auto workers, who enjoyed hefty paychecks and good benefits, had become ‘embourgeoised—that is, they had entered the ranks of the middle class. By the mid-twentieth century, a majority of Detroit residents were homeowners; many autoworkers saved money to send their children to college; and tens of thousands could even afford lakeside summer cottages—leading to the rise of blue-collar resort towns throughout Michigan.” [http://www.historynow.org/03_2007/historian6.html]

Auto workers were never “embourgeoised,” of course, they remained the victims of exploitation even at the best of times. Nonetheless, the conditions that prevailed in the industry, based on the global dominance of American imperialism, certainly encouraged illusions in capitalism and its ability to satisfy the elementary needs of the population. The reversal of this situation will contribute to the radicalization of wide layers of the population and the emergence of social upheavals.