Sunday, October 5, 2008

Report blames U.S. trade gap for 5.6 million lost jobs

Report blames U.S. trade gap for 5.6 million lost jobs

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The U.S. trade deficit in goods other than oil cost American workers 5.6 million jobs last year, with Michigan and South Carolina leading the list of hardest-hit states, a report issued on Thursday said.

"Elimination of the non-oil trade deficit could support millions of new jobs in export industries and contribute to the revitalization of U.S. manufacturing," Robert Scott, director of international programs for the partially labor-funded Economic Policy Institute, said in the report.

"Despite strong export growth over the past few years, that (non-oil) deficit still totaled $473 billion in 2007, only $48 billion less than its record peak in 2006," Scott said.

The report estimated Michigan lost 319,200 jobs in 2007 due to the non-oil trade gap, or 7.5 percent of its total employment. South Carolina was second with 121,000 job losses, or 6.2 percent of its work force, Scott said.

California, Texas and New York had bigger job losses, but with less impact on their total employment because of their larger populations, Scott said.

All 50 states and the District of Colombia had some jobs "lost or displaced" because of the trade deficit, he said.

The most important causes of the non-oil trade deficit are "currency manipulation and other unfair trade practices" by China and other countries, Scott said.

In an interview, Scott said the United States should impose a tariff on Chinese goods to level the playing field.

His findings contrast with those of the business-friendly Peterson Institute for International Economics, which has estimated the overall U.S. economy is approximately $1 trillion richer each year because of globalization.

The report also comes at a time when the Bush administration and many economists are crediting growing U.S. exports with keeping the U.S. economy afloat.

In the first seven months of 2008, exports increased by 18.3 percent to $1.1 trillion compared to the same period last year while imports rose 12.9 percent to $1.5 billion.

Trade has been an issue in the U.S. presidential campaign, with Democrat Barack Obama vowing to end tax breaks that encourage corporations to ship jobs overseas and promising to crack down on China's currency practices.

Republican John McCain has criticized Obama for opposing free trade pacts with South Korea and Colombia that the Bush administration wants Congress to pass.

Payrolls sink 159,000, worst job loss in 5 years Hidden unemployment rises to 11%, highest in 14 years

Payrolls sink 159,000, worst job loss in 5 years

Hidden unemployment rises to 11%, highest in 14 years

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Main Street was really hurting even before Wall Street's latest illness, the government reported Friday.

The U.S. economy lost 159,000 jobs in September, the worst since March 2003, the Labor Department reported Friday.

The economy has now lost 760,000 jobs this year, further evidence that the economy was in a recession even before the financial market crisis of the past few weeks. See related story on the recession.

"Whatever the government might or might not do to try to bail out the financial system, a consumer-led recession is upon us, and it promises to be a serious one," wrote Josh Shapiro, economist for MFR Inc.

The unemployment rate was steady at 6.1% as expected, with 9.5 million Americans looking for work, the government said. An alternative measure of unemployment that includes discouraged workers rose from 10.7% to 11%, the highest since April 1994. Read the full government report.

The official unemployment rate will probably crest near 7%, said Stuart Hoffman, chief economist for PNC. Listen to an interview with Hoffman.

Job losses in September were worse than expected and double the average monthly loss this year. Economists surveyed by MarketWatch were forecasting payrolls to fall 110,000. See Economic Calendar.

Total hours worked in the economy fell by 0.5% in September and are now down 2% in the past year. The average workweek fell to a record-low 33.6 hours.

The number of people working part-time because no full-time job was available rose by 337,000 to 6.1 million. That figure is up by 1.6 million in the past year.

Average hourly earnings rose by 3 cents, or 0.2%, to $18.17 an hour, less than the 0.3% gain expected by economists. Average wages have risen 3.4% in the past year, while prices have gone up nearly 6%.

According to the survey of business establishments, 150,000 jobs were lost in the private-sector in September, the most since March 2003. Goods-producing industries shed 77,000 jobs, while services cut 82,000.

Job losses were widespread across industries. Of 274 industries, 38.1% were hiring in September, down from 44.7% in August, the weakest since July 2003.. Among broad sectors, only education and health services and government created jobs in September.

Within the goods-producing industries, manufacturing cut 51,000 jobs while construction cut 35,000. The total hours worked in manufacturing plunged 1%. Of 84 manufacturing industries, 26.8% were hiring in September. In the past 12 months, a quarter of manufacturing industries have added jobs.

Within services, retail companies reduced payrolls by 40,000 in September. Professional and business services lost 27,000 jobs, mostly in temporary help positions. Financial services lost 17,000 jobs.

Health care added 17,000 jobs. Government added 9,000, mostly in schools.

Payrolls fell by 73,000 in August and by 67,000 in July, revised up by 4,000 from previous estimates.

According to the survey of households, employment fell by 222,000 and the labor force fell by 121,000. The labor-force participation rate inched down to 66%. The employment-participation rate fell to 62%; it hasn't been lower since 1993.

The government said hurricanes in the Gulf Coast had little impact on employment in September.

The preliminary estimate for the annual benchmark revision to be implemented in January was for payrolls to be revised down by a very modest 21,000. Some economists had been expecting the revision to be 10 times that amount. Construction employment would be revised higher by 56,000.

Financial companies borrow record amount from Fed

Financial companies borrow record amount from Fed


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Banks and investment firms borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, providing fresh evidence of the credit stresses squeezing the country.

The Fed's report released Thursday said commercial banks averaged a record $44.5 billion in daily borrowing over the past week. That compared with a daily average of $39.36 billion in the previous week. On Wednesday alone, banks borrowed a record $49.5 billion, surpassing the previous high that came one day after the Sept. 11, 2001, terror attacks.

For the week ending Wednesday, investment firms drew a record $147.7 billion. That was up significantly from $88.15 billion in the previous week. This category was broadened last week to include any loans that were made to the U.S. and London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley and Merrill Lynch. On Wednesday alone, investment firms borrowed a record $146.6 billion, breaking the previous record set on Sept. 24.

The Fed report also showed that $122.1 billion worth of loans were made to money market mutual funds — via banks — to help the funds, which have been under pressure as skittish investors demand withdrawals.

And, the report showed that the Fed has loaned $61.3 billion to insurance giant American International Group. In mid-September, the Fed said it would provide the troubled company a two-year, $85 billion loan.

The report comes as Washington policymakers battle the worst financial crisis since the stock market crash of 1929.

Fed Chairman Ben Bernanke has urged quick action by Congress on a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry. He has warned that failing to do so would let problems fester, pushing the country into a recession and driving unemployment and home foreclosures even higher.

Investment houses in March were given similar, emergency-loan privileges as commercial banks after a run on Bear Stearns pushed what was the nation's fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.

Bear Stearns was eventually taken over by JPMorgan Chase & Co. in a deal that involved the Fed's financial backing.

The identities of commercial banks and investment houses that borrow are not released. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.

In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The Fed has since extended those loan privileges into next year.

The Fed's expanded lending programs, its involvement in the Bear Stearns rescue and the government's bailout of mortgage finance giants Fannie Mae and Freddie Mac have spurred concerns that taxpayers could be on the hook for billion of dollars. Critics also worry that the actions encourage "moral hazard," where companies take on extra risks because they believe the government will come to their aid.

Separately, as part of efforts to relieve credit strains, the Fed auctioned $25 billion in super-safe Treasury securities to investment companies Thursday. Bids were placed for $49 billion worth of the securities.

In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans.

The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.

All the Fed's extraordinary efforts, however, haven't been able to halt the crisis or prevent a seismic shake-up on Wall Street. In recent weeks, Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. AIG was thrown a financial lifeline. And, the last two investment houses — Goldman Sachs and Morgan Stanley — decided to convert themselves into commercial banks to better weather the financial storms.

Get Your Dollars Out Now! FAST!!!

Get Your Dollars Out Now! FAST!!!

By Adrian Salbuchi

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The events of the last two weeks have clearly revealed that the global financial, monetary and banking system imposed on the world by the power structures promoting "globalization" is fundamentally flawed, unviable and immoral in its effects upon the most all of Mankind. After allowing a small cabal of shady characters to illegitimately accumulate vast amounts of wealth and power over markets, corporations, industries, media, armed forces and entire nations, like the World Trade Center towers on 9/11, this entire System is now in free-fall, collapsing into itself in one massive implosion.

This loathsome and unjust Global Power System was designed and implemented over the past seven decades by the geopolitical and geoeconomic strategic planners serving the New World Order power structures, most notably its network of discrete, low-profile but highly powerful private think tanks, such as the Council on Foreign Relations (CFR, founded in New York in 1919), The Trilateral Commission (founded in 1973), The Bilderberg Conference (formed in Holland in 1954), and others like the Cato Institute, American Enterprise Institute (AEI), and the notorious Neo-con Project for a New American Century (PNAC) (1).

Considering the enormous complexity of the process that is taking place right now; the vast amounts of information we are bombarded with every minute of the day, and the apparent difficulty in foreseeing just how this global crisis will finally be resolved, we would summarize certain important aspects and key data which we believe will help us put together this veritable jig-saw puzzle, so that we may begin to fathom what the true face of this horrendous creature euphemistically called "globalization", is really like. As Argentine citizens, we have a huge advantage over other peoples including US citizens when it comes to understanding and coping with this kind of crisis. I say this because in our own lifetimes we have suffered in Argentina all of what is now happening globally - albeit on a much smaller scale in our case. We've seen this movie... We've been there, and done that... We've been pushed and dragged through the entire hysterical hocus-pocus of inflation, hyperinflation, systemic banking collapses, currency changes, Debt Bond Swaps, Mega-Debt Bond Swaps, financial "armouring", banking holidays, freezing of bank accounts, etc., etc... And we have also suffered the end-results: bank bail-outs paid for by taxpayers (or through inflation, or through the confiscation of savings), disappearance of pension funds, destruction of job posts and overall impoverishment of the population.

So, take a clue from our thirty years' experience in "financial meltdowns": GO GET YOUR DOLLARS OUT FROM YOUR BANK NOW, AND DO IT FAST!!!!

A Flawed Model

Finance versus Economics -

The financial system (i.e., the basically virtual, unreal and parasitic wonderworld of banking), was designed to function in a way increasingly contrary to the interests of the Economy (i.e., the real world of concrete work, labour and production/services). In recent decades, Finance and the Economy have increasingly parted paths, ceasing to maintain the essential balance and equilibrium that is necessary for ensuring healthy economic activity centered on the Common Good of the People. In fact, Finance and Economy have today become all but total enemies. This can be seen, for example, by the fact that the present Global Economic and Financial System rests almost completely on the concept of DEBT, which is another way of saying that the Real Economy is always controlled by, and subservient to, the interests, whims and crises of Virtual Finance.

The Debt System -

The Doctrine (or, should I say, Dogma) of Extreme Capitalism has imposed the concept of DEBT as the preferred way to move the economy. In most countries (Argentina, for example) this means that there is no proper use of the local National Currency by the State to generate credit in a controlled and non-Interest bearing manner. This is the best way of fueling economic expansion for specific social, defense, infrastructure, and technological developments, always focusing on the Common Good and prioritizing the National Interest. One of Extreme Capitalism's key dogmas says that central banks controlling the national currency must be totally "independent" of Government. However, since all such institutions must finally respond to somebody somewhere, we thus discover that nowadays central banks are subordinated and subservient not to the State (i.e., the People), but rather to the private banking superstructure, both local and global, which naturally leaves the whole concept of the Common Good and National Interest almost totally aside.

This is so in Argentina as in other countries, however in the case of the United States this is particularly extreme because its central bank - the Federal Reserve Bank (FED) - is a private institution, with almost 97% of its unique shareholding structure in the hands of the private banking infrastructure itself, both domestic (in a first instance) as well as global (if we look further afield). Once the private banking superstructure achieves control of the local central bank, it is then in a position to impose chronic and often drastic under-monetization of the Economy.

This means that there is never enough money to satisfy the true needs of the Real Economy. That's when the private banks come on stage offering to close that artificially generated "gap", becoming the prime credit generators of the economy, for which they charge interest - often at usury rates - for loans made to individuals, companies and even the State itself. We should also understand that the key source of inflation in all economies lies not so much in monetary expansion by the State (if this is kept in sync with true economic growth), but rather most inflation in any economy is fueled by interest bearing loans made by the private banking sector.

At a Geoeconomic level (2), this has also served to generate massive public debt in Third World countries like Argentina,. fueled by rampant corruption amongst the individuals involved in the lending and borrowing process, and supported by Governments that never seem to understand how to use the sovereign functions inherent in their power to issue money to fund and promote balanced economic growth. Instead, these countries adopt IMF-designed neoliberal policies on key matters spanning from central banking functions, fiscal policies, debt, rates of interest and exchange, to banking regulations and other key factors, that have all been twisted out of shape so that they run counter to the country's National Interest.

Fractional Reserve Banking System -

This is a universaly applicable banking concept in today's global marketplace, that allows the private banking infrastructure to generate "Virtual Money" literally out of thin air (i.e., electronic credit lines, loans and the like) in a proportion of 6, 10, 30 or 50 times more than the actual Real Money they hold in their bank vaults.

To add insult to injury, the banks then charge you hefty interest rates for the "money" they created out of nothing and "lent" to you, whilst they require collateral consisting of real stuff like your home, your car, or your company. The proportion between the number of Dollars or pesos in their vaults and the amount of credit they can generate, is determined by the local central bank (remember: controlled by the private banks themselves), is called minimum monetary reserves under the Fractional Reserve Banking System and reflects a statistical estimate of what portion of deposit holders will normally visit the bank to withdraw their money in cash. The problem is that the concept of "normal" is basically a group or collective psychological factor, intimately linked to the perception that deposit-holders have regarding the financial system in general, and individual banks in particular. When "abnormal" times come - and boy have they come today!! - then people panic and run to their banks all at the same time, demanding to withdraw their money, not as electronic blips on the ATM machine, but as hard cash.

That was when we all discovered that the amount of Real Money in each bank's vaults was not suffient to pay all depositors, except for a handful (normally privileged insiders who "saw it all coming"). For the rest: of us, there was nothing left and the banking system collapsed. That's when in the US for example, and barring any taxpayer funded bail-outs, the Federal Deposit Insurance Corporation (FDIC) indemnifies up to 100.000 dollars in the US or, in Argentina, that's when we all realized that we had all been totally robbed, and took to the streets to uselessly bang our pots and pans on the banks' monumental iron-clad gates, conveniently shuttered the night before... All thanks to the inherently fraudulent Fractional Reserve Banking System. This is what happened in Argentina in 2001 and this is what is unfolding right now in the US.

Investment Banking -

In the US, Commercial or Main Street banks like Bank of America, JPMorganChase or CitiGroup are allowed to generate 8 to 10 "Virtual" - i.e., fake - Dollars for every Real Buck they have in their vaults. This scheme is controlled by the authorities, i.e., the FED and the Comptroller of the Currency. However, so called "investment banks" in the US and elsewhere, do not need to comply with any such requirements; they are the ones making Mega-Loans to Corporations, the US Government and foreign Governments like Argentina's, which is why they are far less controlled and regulated This means that for every Real Dollar they hold, these investment bankers can create 26 "virtual" Dollars (Goldman Sachs), 30 "virtual" Dollars (Morgan Stanley), more than 60 (Merrill Lynch, just before they went bust), or more than 100 in the cases of Bear Stearns and Lehman Brothers. (3)

Channeling and Transference System -

Another key factor lies in the way that the global financial system has structured automatic channels to bring in profits and transfer away all losses throughout the entire system. This has the effect that in times of great growth and gigantic profits (i.e., when the whole system grows), it is stable and allows creating many trillions of dollars out of thin air). That's when profits are conveniently privatized, i.e., they naturally flow into the pockets of shareholders, speculators, directors, CEO's, top management, "investors" and other key stakeholders in financial institutions and Corporate infrastructure. But when the system suddenly contracts, and tail-spins out of control as is happening now, then mechanisms are conveniently activated to socialize all losses through State-funded bailouts, special loans, FED-funded acquisitions via specific "vehicles" like JPMorgan, Citicorp and Bank of America, so that it is the domestic and foreign populations as a whole who end up paying the bill, through such phenomenae as inflation, hyperinflation (oh, we know a lot about that in Argentina!!), banking collapses, tax hikes, debt defaults, nationalizations, etc). The 4 Pillars of the Extreme Capitalist Model - In short the key factors described above, in the long-term all function together in a coordinated, consistent and synchronized manner, which means that, even if in the short- and medium-terms there are spates of high profits where money is sloshed around big time, in the long-term the whole system just doesn't add up. That's when you have periodic meltdowns like today's. Usually, they are explained away by well-paid economic gurus writing brainy explanations in The Wall Street Journal, Financial Times or New York Times, who tell us that this is all just part of "the economic cycle". For the most part, they can isolate sections of those downturns and localize them, so that they only affect a couple of emerging markets...

Like Argentina in 2001, or Brasil in 1999, or Mexico in 1997. In short, these four pillars are:

1. Programmed Monetary Insufficiency - Artificially generated by an "independent" central bank, controlled by the local and global private banking institutions superstructure;

2. Private banking based on Fractional Reserves - As a system, this allows banks to create money out of thin air, charging interest for it - often at usury rates -, and generating huge profits for "investors" and creditors;

3. Debt - This is the key concept that "fuels" private and public economies replacing the far more economically sound concept of reinvesting company profits and promoting a savings culture. Those who benefit from the unnecessary creation of debt need to promote and instigate among the public at large in all countries, fericiously undisciplined consumerism and greed, which goes hand in hand with total rejection of the very concept of saving and preparing for a rainy day. (4)

4. Privatize Profits /Socialize Losses - As a channelling and transference scheme for the various stages of the recurrent "cycles", so that when they reach the inexorable stage where collapse is nunavoidable, there is always a way of making the population at large pay the bill.

Key Data and Concepts

A brief summary of the key events of this year leading up to the present terminal crisis of the global financial system can be very enlightening and revealing:

January 2008: Countrywide Financial bank collapses (assets US$ 172 billion)

March 2008: Investment bank Bear Stearns (assets for $399 billion) collapses and is acquired by JPMorgan Chase through a FED-funded credit for u$s 30 billion. On March 7, the FED offers up to u$s 200 billion in 28-day loans to banks and large financial institutions. On March 11, the FED offers investment banks up to $200 billion in Treasury Securities in exchange for mortgage-backed securities. On March 21st, the European Central Bank offered up to u$s 24 billion in loans to help banks shore up balance sheets. The Bank of England in turn offers up to u$s 10 billion in loans.

April 2008: Commercial bank IndyMac Bancorp collapses (assets for $32.3 billion). German bank Düsseldorfer Hypotheken Bank (assets for u$s 42.5 billion) collapses. July 2008: UK bank Alliance & Leicester (assets for $153.40 billion) collapses. Danish bank Roskilde Bank (assets for u$s 7.9 billion) collapses.

7 September 2008: The US's two largest mortgage agencies - Freddie Mac (assetsts for u$s 879 billion) and Fannie Mae (assets for u$s 885.9 billion) are taken over by the FED, at a direct cost of u$s 200 billion, and the US Governement now owns their u$s 5.4 trillion combined debt

15 September 2008: The US's fourth largest investment bank, Lehman Brothers (assets for u$s 966.2 billion) collapses. At the same time, investment bank Merrill Lynch (assets for u$s 639.4 billion) is bailed out by Bank of America at a cost of u $s 50 billion (unofficially funded by the FED, considering Bank of America did not have funds for such an acquisition)

16 September 2008: The central banks of the US, European Union UK, Japan, Switzerland and Canada set up a u$s 180 billion emergecy currency swap fund

17 September 2008: The largest insurance company in the US and the world, American International Group (AIG) (assets for u$s 1.050 trillion), is nationalized 80% by the FED at a cost of u$s 85 billion. The decision to salvage this insurance company (a decision that should have been taken by State insurance commissioners, not the FED) lies in the fact that it would have dragged down key banks like Goldman Sachs. This explains why Goldman's CEO Lloyd C. Blankfein, was the only Wall Street banker invited to participate in the last minute bail-out talks by FED governor Bernard B. Bernanke and Treasury Secretary Henry Paulson. Notably, before becoming George W Bush's Treasury Secretary in June 2006, Paulson was CEO of Goldman Sachs, at which time he was replaced by Blankfein.

19 September 2008: Henry Paulson, Bernard Shalom Bernanke and Christopher Cox (chairman of the Securities & Exchange Commission - SEC) submitted to Congress an urgent 3-page Bail-out Plan (similar in style to Argentina's "financial armouring" of December 2000 which paved the way for 2001's total financial meltdown), to the tune of u$s 700 billion which is supposed to stop further banking and financial failures in the US and worldwide. The urgency of the matter could be read in their panicky faces nut the bill crashed in the House of Rerpesentative which rejected it ob 22-Sept-08. It has since then grown to a 450-page dossier, now approved by the Senate and being resubmitted to the House.

Paulson and Bernanke seek "superpowers" from Congress, similar to the ones that former economy minister Domingo Cavallo wrenched from Argentina's Congress in 2001, which led to total collapse. In various declarations, president George W Bush stressed time and again the dire situation of this "national emergency". When asked how the amount of u$s 700 billion was arrived at, Bernanke replied that it represents 5% (!!!) of mortgages that have become non-performing. Independent analysts, however, reckon that this 5% is insufficient to cover all bail-outs and that we need to look at 10, 15 or 20 percent of non-performing mortgages, which would turn bail-out figures into unfathomable amounts. Rejection of the bail-out plan on "Bloody Monday" led to a collapse of the Dow Jones Industrial Index by 778 points (more than 7%) and a 16% fall for financial institutions. Not surprisingly, in their 21st September edition the London newspaper "The Daily Telegraph" pointed out that we may be edging towards a US Government default on its entire u$s 13.5 trillion debt.

The two remaining investment banks still considered to be "healthy" - ie}.e., prestigious Goldman Sachs and Morgan Stanley - decided to voluntarily become commercial banks, and thus accept greater regulatory scrutiny. This means they will need to very quickly and orderly reduce their loan portfolios which they overly expanded through fractional lending, as described above. Meanwhile and as a transitory emergency measure, financier Warren Buffet took a u$s 5 billion stake in Goldman Sachs to help it become "more healthy", a clear indication of just how critical the situation is.

22 September 2008: After a strange period of silence regarding its situation as a major bank, CitiGroup finally appeared on the scene helping to engineer two bank bail-outs: Washington Mutual Savings & Loan (the largest thrift in the US with assets for u$s 309.7 billion), and Wachovia Bank (assets for u$s 812.4 billion), although Wachovia is having second thoughts and may strike a deal with Wells Fargo..

September 22nd to 30th: The contagion crosses the Atlantic sending Europe into a crisis with a series of domino-like bank collapses:

Fortis (Franch-Belgium banking and insurance consortium with asssets for u$s 1.533 billion is bailed out by the governments of Belgium, The Netherlands and Luxembourg Bradford & Bigley (major UK Savings & Loans association is rescued by the Spanish Santander Group at a cost of u$s 30 billion, assets: u$s 104 billion), Hypo Real Estate AG (a German bank bailed out by the government at a cost of u$s 50 billion - with assets for u$s 622.2 billion), Dexia (another Franco-Belgian bank rescued by the respective governments - Price tag. u$s 9.2 billion - assets u$s 913 billion),

Glitnir (a major Islandic bank nationalized 75% by the government at a cost of u$s 900 billion; assets for u$s 48.9 billion). Clearly, these amounts are truly staggering as in their aggregate they are greater than the United States's Gross Domestic Product, which gives a taste of things to come, considering that rumours of further banks failures on both sides of the Atlantic still continue: UniCredit, a pan-European bank based in Italy, which owns the German HypoVereinsbank and the Bank Austria.

UBS based in Zurich, Switzerland, and National City Corporation, Downey Financial Corporation and Sovereign Bancorp, of the United States All these and more have high risk exposures to "toxic" mortgage securities, to use the charming term coined by Bernanke from the FED... Lastly, major press media and international analysts insist that the bill for these bail-outs will fall on "US Taxpayers" through future tax hikes. This is clearly only a half-truth. The full truth is that, as far as the US is concerned, the bulk of these bail-outs will be paid with even more uncontrolled monetary emission by the FED, which will further erode the value of the Dollar. In short, the cost for this desaster will be paid by companies, governments and individuals who have US-Dollar denominated assets throughout the world, and not just by the "American Taxpayers"

Plausible Scenarios

The crisis affecting the global financial system based on parasitic speculation and usury is a terminal crisis. It can no longer be solved through purely financial and monetary mechanisms and measures. If US authorities only concentrate on this type of measure, then a truly serious collapse is imminent and unavoidable.

A more pragmatic view of the global and US power structures, however, indicates that the US will not just stand by whilst this occurs, allowing the demise of the US as a global superpower. The US will not just turn-off the lights, and go home as the Soviet Nomenklatura did in the early nineties. No sir. They're gonna put up a hell of fight!! And that is a problem for all the peoples of the world, as well as for the people of the United States themselves. In this sense, we envision several scenarios out of which we have singled out three clearly defined scenarios which must no doubt have their respective alternative action plans to address this growing crises:

Plan A (i.e., addressing a relatively low intensity crisis through basically financial measures) -

This envisions continuing on-going negotiations between the FED, Treasury Dept., Congress, major bankers, European and Asian central bankers seeking further measures to stop further black-holes and bank failures, lobbying for further u$s 700 billion bail-out plans to be wrenched out of Congress and elsewhere. This will serve to control the crisis in the days and weeks to come by helping banks in trouble, including medium-sized banks anf foreign banks operating in the US (e.g. your HSBC's, Barclays', Deutsche Bank's and others), and most important, the remaining major Mega-banks like Goldman Sachs, Morgan Stanley, JPMorgan Chase and CitiGroup. The immediate effect of this will be that there will be drastic and far-reaching crisis management through financial and monetary measures. At the same time, new rules of the game will be dealt in Wall Street and Washington. The practical result will be massive transference of wealth away from small investors, pension funds, small stockholders, etc., and into the hands of the usual cabal of bankers, institutional investors, speculators and financial parasites.

Plan B (i.e., addressing a medium intensity crisis through financial and monetary measures) -

If Congress does not approve the bail-out plan, or significantly limits it, or even if Congress does approves it, it were to prove insufficient in the days and weeks to come with a further spate of major banking and insurance company failures, then the US Government - i.e., the Fed and Treasury Dept. - might very well declare a "National Economic Emergency" and introduce a totally new currency.

No, not the "Amero" which is a smoke-screen rumour, but rather something far more straight to the point: a "New Dollar" which, contrary to the present devalued dollar, would be Gold-backed, however not by just any gold: it will be 9999 proof gold bullion, with some sort of 100% fool-proof security factor - e.g., either an embedded chip or hologram that will transform it into "Global Reserve Gold", or financially "sacred" gold - that will have a value maybe ten times higher than normal "profane" Gold. At the same time, an extended banking holiday will be declared in order to implement the change of currency (just as happened in Argentina several times in recent history, notably when former president Alfonsín introduced the "Austral" to replace the highly devalued peso).

Transition to the new currency will be at terms highly beneficial for those banks, companies, citizens, allies and other "preferred allies and friends" of the US who will get One New Dollar for each "old" dollar. Then, certain powerful holders of dollar-denominated instruments - cash, US Treasury Bills and Bonds, and the like - will be given some preferential treatment based on specific US geopolitical and geoeconomic interests such as, for example, the governments and interests of the European Union, Japan, maybe China, and specific institutions and global corporations who will be able to change their old dollars for New Dollars at acceptable rates of exchange, say 2, 3 or 4 old dollars for every New Dollar.

For the rest of dollar-holders - i.e., vast numbers of private investors in all parts of the world in countries in Latin America, Central Europe, the Muslim World, Africa, etc. - the US Government will simply say that their respective local markets will need to determine how many old dollars will buy a New Dollar, and that this will be governed by the market forces of supply and demand. We will then see currency traders of all shapes and sizes offering One New Dollar for every 8, 10, or 20 old dollars in the hands of desperate masses of people trying to get rid of those creased green-backed bits of paper of falling value.(5)

The immediate effect of this would be to further spread the socializing of US banking losses into emerging markets and weaker economies outside of the United States (i.e., New Dollar would allow the bankers to selectively export the US currency's inflationary erosion towards specific regions and segments of the world).

Plan C (i.e., addressing a high intensity crisis through geopolitical and miitary measures) -

If the US authorities cannot resolve the crisis with financial, monetary and economic measures, and increasing internal social violence and political insecurity were to affect the US and its key allies, then the crisis will go into geopolitical and military mode. If an extended banking holiday is forced upon the Bush administration, freezing banking accounts, deposits, ATM machines (just like the "Corralito" - i.e., the "baby play pen" - that Argentina suffered starting 1st December 2001 generating unimaginable hardship to our country), this may later lead to trying to resolve the problem on a the international geopolitical stage by "kicking the chessboard".

This means escalating the overall conflict to political, diplomatic and military planes, fueling a generalized global war which New World Order planners seem to believe will allow them to use vast resources for war, placing the focus away from the on-going financial crisis. This will lead to imposing strict limitations on all civil liberties in the US and elsewhere, and even suspending the Constitution (We Argentines certainly know a lot about that too!).

"National Security" will be the blanket excuse at a time of grave internal emergency, and will be used to justify unilateral invasions of countries and regions in different parts of the world. In short, mobilizing the country and its allies in its material resources, whilst the collective psyche is coaxed on the need to "defend" the country against some elusive "enemy" (new or old terrorist organization suitably demonized). One of the results that would be sought would be to re-stabilize the economiy and financial system gearing it on a re-intensified military-industrial complex where the US has an unmatched position - foreign wars are always good to steer attention away from domestic troubles.

The immediate effect of this would very likely consist of a unilateral military attack on Iran with the excuse of destroying its nuclear program , that would probably be triggered by a unilateral Israeli attack on Iran's nuclear facilities once they get a green light from Washington. This would quickly bring the US into the war with incalculable consequences. Worse still, we may see a carefully orchestrated False Flag mega-attack (i.e., an attack organized or prompted by the New World Order power structures themselves, designed to put the blame on Iran or Islamic organizations, or whatever, so that it can be used as an excuse for a unilateral attack against Iran, Syria and elsewhere).

Such a False-Flag attack might take place on American soil or against US interests anywhere in the world, or those of key US allies, and would make 9/11 look like a mere bonfire in comparison. The New World Order media would ensure that global public opinion believe that Iran in particular, and the Muslim world as a whole, are responsible for such an attack and thus justify a whole series of "counter-attacks", invasions and wars. No doubt, Russia would also become involved recking havoc throughout Central Europe thus weakening the European Union.

A generalized war in the Middle East would be sufficient excuse to pass legislation to free up oil reserves in Alaska, justify invading Venezuela's oil fiels, militarize the South Atlantic continental platform in the Brazilian and Argentine maritime regions where gigantic oil reserves lie untapped and where the US Navy's IVth Fleet is already roaming, amongst many other things. China, India and Pakistan will no doubt have important roles to play and if tactical nuclear artefacts are used, then this would turn into a veritable nuclear world war which no one knows how it will continue and end.

This summary merely sets out some information, patterns and conclusions which help stress the extremely grave times all Mankind is presently living under. Its result will deeply affect the whole world. We offer these ideas as a sort of initial exercise in Global Risk Management, hoping that it will serve as a starting point to promote better and greater strategic planning exercises amongst public and private organizations in Argentina and elsewhere.

Even though Argentina's very mediocre ruling class - both in Government and in the so-called "Opposition" - hardly understand nor fathom the true significance of what is taking place in the world, the truth is that this crisis opens incredilble new vistas for Argentina and our region. We would have the opportunity of making an unprecedented Quantum Leap, however in order to take advantrage of these opportunities, we need to fully comprehend how the New World Order power structures actually work, in what refers to their political, economic, financial and monetary dynamics, objetives and methods. We strive that Argentine public opinion should begin to understand all of this as quickly as possible; hence the uregency of the matter.

Either way, the days and weeks to come will be very transcendental for all Mankind. Let us all be very alert...

Fannie Mae forgives loan for woman who shot herself

Fannie Mae forgives loan for woman who shot herself

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Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home.

Addie Polk, 90, of Akron, Ohio, became a symbol of the nation's home mortgage crisis when she was hospitalized after shooting herself at least twice in the upper body Wednesday afternoon.

On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against Polk and sign the property "outright" to her.

"We're going to forgive whatever outstanding balance she had on the loan and give her the house," Faith said. "Given the circumstances, we think it's appropriate."

Residents of Akron have rallied behind Polk, who is being treated at Akron General Medical Center. She was listed in critical condition Friday afternoon, according to Akron City Council President Marco Sommerville.

U.S. Rep. Dennis Kucinich, D-Ohio, mentioned Polk on the House floor Friday during debate over the latest economic rescue proposal.

"This bill does nothing for the Addie Polks of the world," Kucinich said after telling her story. "This bill fails to address the fact that millions of homeowners are facing foreclosure, are facing the loss of their home. This bill will take care of Wall Street, and the market may go up for a few days, but democracy is going downhill."

Neighbor Robert Dillon, 62, used a ladder to enter a second-story bathroom window of Polk's home after he and the deputies heard loud noises inside, Dillon said.

"I was calling her name as I went in, and she wasn't responding," he said.

He found her lying on a bed, and he could see she was breathing. He also noticed a long-barreled handgun on the bed, but thought she just had it there for protection. He touched her on the shoulder.

"Then she kind of moved toward me a little and I saw that blood, and I said, 'Oh, no. Miss Polk musta done shot herself,' " Dillon said.

He hurried downstairs and let the deputies in. He said they told him they found Polk's car keys, pocketbook and life insurance policy laid out neatly where they could be found, suggesting that she intended to kill herself.

"There's a lot of people like Miss Polk right now. That's the sad thing about it," said Sommerville, who had met Polk before and rushed to the scene when contacted by police. "They might not be as old as her, some could be as old as her. This is just a major problem." VideoWatch Polk's neighbor describe what he saw »

In 2004, Polk took out a 30-year, 6.375 percent mortgage for $45,620 with a Countrywide Home Loan office in Cuyahoga Falls, Ohio. The same day, she also took out an $11,380 line of credit.

Over the next couple of years, Polk missed payments on the 101-year-old home that she and her late husband purchased in 1970. In 2007, Fannie Mae assumed the mortgage and later filed for foreclosure.

Deputies had tried to serve Polk's eviction notice more than 30 times before Wednesday's incident, Sommerville said. She never came to the door, but the notes the deputies left would always disappear, so they knew she was inside and ambulatory, he said.

The city is creating programs to help people keep their homes, Sommerville said. "But what do you do when there's just so many people out there and the economy is in the shape that it's in?"

Many businesses and individuals have called since Wednesday offering to help Polk, Sommerville said.

"We're going to do an evaluation to see what's best for her," he said. "If she's strong enough and can go home, I think we should work with her to where she goes back home. If not, we need to find another place for her to live where she won't have to worry about this ever again."

For his part, Dillon hopes his neighbor of 38 years can return to her home.

"She loves that house," he said. "I hope they can get her back in. That would make me feel better because I don't know what they're going to put in there once she leaves."

He said the neighborhood is declining because so many people have lost their homes.

"There's a lot of vacant houses around here. ... Now I'm going to have a house on my left and a house on my right, vacant," he said. "That don't make me feel good, because we were good neighbors, we trusted each other, and we looked out for each other.

"This neighborhood is shot, to me, from what it used to be," he added.

"When I moved here, if it were like it is now, I would have never moved here. But it was a nice neighborhood. ...

"I'll just tough it out. I'm too old to start thinking about buying another house."

Sommerville said that by the time people call for help with an impending foreclosure, it's usually too late.

"I'm glad it's not too late for Miss Polk, because she could have taken her life," Sommerville said. "Miss Polk will probably end up on her feet. But I'm not sure if anybody else will."

FBI given new rules for investigations at a cost to constitutional protections

FBI given new rules for investigations


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The Bush administration issued new rules Friday designed to allow the FBI to pursue potential national security threats with the same vigor and techniques used against common criminals. Civil libertarians said the guidelines will come at a cost to constitutional protections.

The rules, to take effect Dec. 1, are a roadmap to the FBI's transformation. The bureau made its reputation many decades ago by successfully pursuing bank robbers. The Justice Department says it wants to ensure that the FBI can now meet the biggest threats of the 21st century: national security and terrorism.

The roadmap consolidates once-separate rules for assessing threats and investigating traditional crimes and terrorism. They tell FBI agents what they can and can't do, including when to conduct surveillance, use informants and consider race or ethnicity in determining whether someone is a suspect.

While some changes were made from preliminary rules shown to reporters, lawmakers and public interest organizations, the alterations were not enough to silence critics who say the FBI will now be able to begin investigating people with no indication they did anything wrong.

Anticipating the criticism, Attorney General Michael Mukasey and FBI Director Robert Mueller issued a joint statement saying: "We are confident these guidelines will assist the FBI in carrying out its critical national security and foreign intelligence missions while also protecting privacy and civil liberties."

Sen. Patrick Leahy, D-Vt., chairman of the Senate Judiciary Committee, was not reassured.

"I am concerned that the guidelines continue the pattern of this administration of expanding authority to gather and use Americans' private information without protections for privacy or checks to prevent abuse and misuse," Leahy said.

Three Democrats on the House Judiciary Committee asked the department to postpone the effective date until a new president takes office in January and has an opportunity to review the procedures.

"Questions still remain about why there seems to be a rush to change these procedures in the last days of this administration," Reps. John Conyers of Michigan, Robert "Bobby" Scott of Virginia, and Jerrold Nadler of New York said in a joint statement.

The three said it was unclear whether the guidelines will result in FBI agents "monitoring the religious and political activities of innocent people."

Michael German, policy counsel for the American Civil Liberties Union, said the Justice Department recently revised the rules to make it appear that limits have been imposed on what techniques the FBI can use to investigate demonstrations and civil disorders. He cited language elsewhere in the guidelines that appear to contradict the restrictions, saying there are no limits on the FBI's authority to investigate federal crimes or threats to national security during civil disorders or demonstrations.

Elisebeth Cook, chief of the Justice Department's Office of Legal Policy, said in an interview that several changes were made to accommodate critics' concerns and protect civil rights and liberties.

"To say we're in a brave new world, and the FBI has new ability to investigate without evidence of wrongdoing is misunderstood," she said.

Addressing concerns of racial profiling, Cook said race is only used as one factor in an investigation when it's relevant — such as describing a suspect. The guidelines cannot undercut any constitutional protections, state laws, executive orders or federal policies, Cook said.

Among the changes between a preliminary draft and the final rules:

_Investigations related to civil disorders now have a time limit of 30 days. The investigations are only to determine whether the president needs to use the military.

_The guidelines "cut way back," Cook said, in the types of information that can be collected in cases of civil disorders. Only four techniques will be allowed: checking public records, FBI records, other government records and online sources.

Any other methods would have to be approved by the attorney general or one of several top deputies who are confirmed by the Senate.

_Language was added to say the FBI "shall" protect speech and practice of religion rights, instead of "should."

Officials Refuse to Provide Details on Secret Previous Bailout

Officials Refuse to Provide Details on Secret Previous Bailout

Fed Made $30 Billion Deal to Manage Assets of the Collapsed Bear Sterns


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Top government officials are refusing to provide details on a secretive deal it made to manage billions in assets from an earlier bailout.

Sen. Charles Grassley, R-Iowa, has been pressing top officials for months to provide details on a deal the Federal Reserve made for a private firm to manage $30 billion in financial assets from the collapsed investment bank Bear Stearns, as part of an arrangement to facilitate J.P. Morgan Chase's purchase of the bank in March.

The Federal Reserve announced at the time that it had contracted with BlackRock Financial Management Inc. to manage the assets. Since then, it has declined to share any further details on the arrangement with anyone  not reporters, not the public, and not Sen. Grassley.

"When will I receive answers to the rest of my questions posed two-and-half months ago?" Grassley wrote to Fed chairman Ben Bernanke and Treasury Secretary Henry Paulson Sept. 23, asking for an update on the value of the assets and other details of the deal.

In his letter, Grassley pointedly noted his need for timely answers in light of "the continuing financial crisis where more transparency is being promised," and the urgent press from the administration for lawmakers to approve a massive bailout program.

Grassley's office confirmed to ABC News Wednesday afternoon it had not received any new information on the deal.

A spokesman for the Federal Reserve said he did not know the status of any congressional request. The spokesman, Andrew Williams, declined to share any information on the arrangement with BlackRock, saying, "Our general principle is we don't disclose contracts we make with outside contractors."

A spokeswoman for BlackRock also declined to speak about the deal. "As a matter of policy we don't comment on client activity or client accounts," said BlackRock's Bobbie Collins.

U.S. Treasury to Hire Up to 10 Asset Management Firms

U.S. Treasury to Hire Up to 10 Asset Management Firms

By Rebecca Christie and Robert Schmidt

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The U.S. plans to hire five to 10 asset-management firms as Secretary Henry Paulson establishes the government's new office for handling the financial bailout, a Treasury official said.

The department will also add about two dozen new employees, a mix of bankers, lawyers, accountants and others, the official said today on condition of anonymity. The Treasury's first attempt to hold an auction to buy troubled assets from financial firms will take at least four weeks to set up, said the official.

‘‘We've been doing a lot of work getting ready for this,'' Paulson told reporters after Congress passed the Bush administration's $700 billion rescue package for financial institutions. ‘‘Once the legislation is signed, we're going to be going out and lining up advisers from the private sector.''

Some of the Treasury's new employees will be on the government payroll, while others will be contractors, the official said. In selecting the asset-management firms, the Treasury plans to look at the cost and scope of services offered by the competing companies.

The Treasury is still considering guidelines on compensation and conflict-of-interest policy, the official said.

Bush Provokes Fear to Push for Bailout

Statement on Congressional Approval of Bailout

By Dean Baker

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This is the first time in the history of the United States that the president has sought to provoke a financial panic to get legislation through Congress. While this has proven to be a successful political strategy, it marks yet another low point in American politics.

It was incredibly irresponsible for President Bush to tell the American people on national television that the country could be facing another Great Depression. By contrast, when we actually were in the Great Depression, President Roosevelt said that, "we have nothing to fear, but fear itself."

It was even more irresponsible for him to seize on the decline in the stock market five hours later as evidence that his bailout was needed for the economy. President Bush must surely understand, as all economists know, that the daily swings in the stock market are driven by mass psychology and have almost nothing to do with the underlying strength in the economy.

The scare tactics of President Bush, Secretary Paulson and Federal Reserve Board Chairman Bernanke created sufficient panic, so that by the time of the vote, much of the public believed that the defeat of the bailout may actually have had serious consequences for the economy. Millions of people have changed their behavior because of this fear, with many pulling money out of bank and money market accounts, and in other ways adjusting their financial plans.

This effort to promote panic is especially striking since the country's dire economic situation is almost entirely the result of the Bush Administration's policy failures. First and foremost, the decision of Secretary Paulson and Chairman Bernanke (and previously Alan Greenspan) to ignore the housing bubble, allowed for the growth of an $8 trillion bubble, which is now collapsing.

It is the collapse of this bubble, which has already destroyed more than $4 trillion in housing wealth, and is likely to destroy another $4 trillion over the next year, that is at the root of the economy's problems. While competent economists were warning of the bubble and the dire consequences of its collapse, the top officials in the Bush administration were celebrating the rise in homeownership rates.

The Bush administration made the crisis even worse by deregulating Wall Street. This led to the huge over-leveraging of financial institutions, which has vastly complicated the country's economic policies. It is especially disturbing that Secretary Paulson personally profited from these policies, earning hundreds of millions in compensation from Goldman Sachs during his years there as its CEO.

The collapse of the housing bubble, while falling short of the magnitude of the Great Depression, is likely to lead to the worst recession since World War II. Repairing the damage caused by this bubble will be a long and difficult process. Cleaning up the damage to the political system from President Bush's unprecedented fear campaign may prove to be even more difficult.

Born-Again Democracy

Born-Again Democracy

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Our country is at a rare and dangerous juncture. The old order is crumbling, and virtually all the centers of power that govern us have been discredited by events. The president is irrelevant, weak and unbelievable, even to his own party. The Democratic majority controlling Congress is stalled by its own shortcomings. The treasury secretary, given his arrogant approach to the financial crisis, is not to be trusted as a steward of the public interest. Nor are the conservative Federal Reserve and its chairman. The private power of Wall Street is utterly disgraced and desperate.

This condition of vulnerability is sure to prevail for at least the next three months, until a new president and new Congress take office. In the meantime, the governing elites are clinging to the old order, trying to salvage it by delivering massive amounts of relief from taxpayers to the failing financial institutions. The American people correctly see this approach as a historic swindle that rewards the villains at the expense of the victims. A Nevada real estate broker asked the Washington Post, "Instead of having a bailout, why don't we have indictments?"

Indictments can wait, along with fundamental reforms. Right now the country needs to confront the fire raging through the financial system and engulfing people and productive assets in the real economy. Aroused and angry, the public, for a change, can play a decisive role in the political arena, as it did when the House rejected the bailout package. That shock to the system was valuable therapy. People can drive politicians to begin facing reality and to develop a more forceful strategy for national recovery, an approach that serves the country as a whole and has a far better chance of succeeding. The sooner our leaders recognize that the old order is gone, the sooner Americans can begin reconstructing a more viable and equitable economy.

The calamitous unwinding of financial institutions in recent months has an ominous resemblance to events that unfolded after the stock market crash of 1929, when three years of recurring waves of bank failures and economic contraction led to massive suffering. The government, led by the Federal Reserve, was scandalously derelict during that crisis. This time Washington has reacted more aggressively but still hasn't found a strategy to stabilize finance or reverse the gathering recession.

Another total collapse like the one in the 1930s may still be avoided if politics changes direction. We do have some factors in our favor. First, our living standard is abundant by comparison, despite our indebtedness to foreign nations. Second, the New Deal created economic mechanisms that remain in place as automatic stabilizers, like federal deposit insurance to prevent disastrous runs on banks like the ones that wiped out more than 10,000 back then.

Given the political paralysis, people have to find their own way. Corny as it sounds, the necessary first step is honesty--getting a clear understanding of what we are facing and what can be done, then forcing our views and ideas on the governing circles in both parties. The bitter tragedy of our era is that the hard lessons Americans learned during the crisis of the New Deal years have been tossed aside--either repealed or systematically subverted--by the present generation of governing elites. Democratic partisans who claim an aura of innocence are falsifying the past. For the last generation, Democrats have colluded with conservatives in the destruction of New Deal law and principle. And Democrats do not yet have a clear idea of how to restore those lost lessons and update them for our present predicament.

Understanding the situation begins by recognizing the real crisis--the great wound to the nation that Treasury Secretary Paulson and his supporters have obscured with their alarm-bell rhetoric. The United States has collectively suffered a massive loss of wealth--capital in the financial system as well as savings in the real economy of families and producers. With the collapse of Wall Street's phony valuations, financial capital disappeared like air from a deflating balloon. Banks are endangered because they have lost $1 trillion or maybe twice that. Therefore the banking industry will shrink considerably. We are witnessing that bloody spectacle right now--failing firms and forced mergers, either propped up by government or taken over by private investors like Warren Buffett.

When Japan went through a low-grade depression during the 1990s after its financial bubble burst, something like twenty-one major banks were reduced to four. The US system is shrinking in similar fashion, but much faster. This inspires recurring panic among investors, creditors and shareholders, but a smaller financial system will eventually be good for the country--more focused on the real purpose of banking, which is to channel capital investment into the economy. In recent years financiers have instead amassed speculative fortunes by peddling exotic debt instruments.

Paulson's solution was to relieve bankers of their rotten assets--primarily mortgage securities--and then replenish their lost capital. He did not explain this clearly, because he knows even $700 billion is not enough to save them all. So his extraordinary powers would put him or his successor in the role of savior and Grim Reaper, the titan who picks and chooses which banks will survive and which must die. But even if he chose wisely, it would not solve the basic problem. The financial system is going to shrink no matter what; under Paulson's plan, the public would be stuck with all its costly mistakes.

The other half of the nation's great loss of wealth belongs to the people--ordinary working people, mostly, who have borrowed heavily in order to sustain their faltering standard of living under pressure from flat or falling incomes. Given the bubble of inflated housing prices, people borrowed most easily from their own savings--the equity they had accumulated in their homes. When housing prices collapsed, economist Dean Baker estimates, their loss of wealth was $4 trillion to $5 trillion. Three decades ago, American homeowners held 70 percent equity in their homes. Today it has fallen below 50 percent. Many families have spent their retirement savings and are still working.

Just as the financial system is doomed to become smaller, so must millions undergo a painful fall in their standard of living. Many already have. There is no obvious way around this, but if they face the facts, people can begin to focus on what is possible and then pressure government to undertake remedies to mitigate the pain and avoid the worst. Right now, everyone is scared, hunkering down.

Only government has the leverage to "get the money moving again," as New Dealers used to say. No other sector or interest is equipped to raise the financing. Government can borrow money from people afraid to spend and wealth-holding institutions afraid to lend, then pump it into real economic activity. It can issue cheap loans if the banking system won't. It can forgive debts or relax the terms if that puts people back to work and keeps them in their homes. As economist James Galbraith suggests, it can hand off the money to state and local governments and make sure they spend it. All this is elementary Keynesian economics, the doctrine taught by the New Deal era. I restate it in plain English because even the Democratic Party seems to have forgotten the basics, having become obsessively fearful of large budget deficits (except when powerful interests want the money). Average Americans need to start saving again, and business and banking will not begin to reinvest in the economy until they see that government is leading the way.

Washington must assert its full emergency powers and tackle two things at once: manage the gradual downsizing of the financial system in an orderly fashion that sustains lending, and revive production and employment by force-feeding activities of many kinds. This cannot be a voluntary program that simply invites bankers to participate on their terms. The government must impose emergency regulatory controls to keep finance in step with the nation's overall goals. If bankers resist these terms, they should be cut off, isolated from the public's lifesaving assistance.

These are not idle suggestions. The nation is now in the grip of dynamic political change, and this will not stop with the decision on Paulson's grandiose bailout. Presuming the bailout prevails in Congress, Paulson will be handing out public billions to Wall Street players in the next few months. The political counterforce for genuine public-spirited solutions should be pushing back right away. Activists and intellectuals, public citizens and heavyweight financial players, even some members of Congress, are already at work on the details. If Congress reconvenes for a lame-duck session, you will see some of these measures surface for public debate and popular agitation.

The essence of this action will borrow ideas and models from the New Deal and update them to fit our present circumstances. This not simple nostalgia. It is a clearheaded recognition that the public interest has not been served and the crisis will not recede until it is. Here are five concepts for recovery and reconstruction that are in circulation. If we are lucky, these proposals will redefine the next presidency, whoever wins.

1. Stop the easy-money bailout. Instead of buying rotten assets from Wall Street firms with no strings attached, the government should examine their books and decide which banks can be saved with direct infusions of capital in exchange for public ownership--roughly on the terms Warren Buffett got when he aided Goldman Sachs (preferred shares and guaranteed dividends). The failing institutions should get regulatory euthanasia. This approach gives the government direct control over the survivors and ensures that the public is protected from egregious loss. The model is the Reconstruction Finance Corporation of the 1930s, which recapitalized banks and corporations under stern supervision.

2. Help the folks who are hurting--directly. A homeownership corporation patterned after the New Deal original would have the money and the flexible authority to supervise "workouts" for millions of failing families. This is what bankers do for corporations when they get in over their head. Government can do the same for indebted households: stop the liquidation, stretch out default dates and arrange manageable terms. This is not a bleeding-heart gesture--keeping families in their homes is economic stimulus, and it halts the decay of neighborhoods.

3. Get serious about economic stimulus. We need a recovery program five or six times larger than the pitiful $60 billion proposed by Democratic leaders. These billions should go for the familiar list of neglected priorities--fixing bridges and schools--but should also jump-start the green agenda for alternative fuels and restoration of ruined ecosystems. The government should subsidize the new industries of our age, just as New Deal spending financed the modern development of aircraft, petrochemicals, steelmaking and other key industries in the 1930s.

4. Re-regulate the bad actors and indict the criminals. Start by restoring the law against usury--the predatory lending practices that ruin weak and defenseless borrowers. Government cannot wait for a relaxed debate about restoring regulations. We need newly designed controls over the financiers and well-defined public obligations imposed not only on banking but also on hedge funds and private equity firms. These cannot be discretionary rules. If the money guys don't like them, they should get out of the business. Paulson's Wall Street colleagues are already mobilizing lobbyists for this fight, but they may discover that Washington has been changed by events. The easygoing deference to Big Money seems suddenly out of fashion.

5. Create a new brain for government management of the economy. The crisis and the halting decision-making by the Treasury and the Federal Reserve--not to mention the secrecy and special deal-making on behalf of financial interests--make it clear that deep reform is required. I would start with a special reconstruction and recovery agency, empowered to lead policy and oversee banking regulators and the economic stimulus. The Federal Reserve's so-called independence is an antique concession to the big banks and doesn't make any sense. Monetary policy and fiscal policy must be balanced and decided in the same process. That rational approach might have stopped the Fed from the biases and dereliction that led to this crisis.

These ideas and many others are in gestation. They will reach fruition when politicians and other leaders swallow their bruised egos and rethink their supine posture, arm in arm with Wall Street. That looks improbable at the moment. But voters can help them change their minds.

Voter Purges Publications

Voter Purges


By Myrna Pérez

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Voter registration lists, also called voter rolls, are the gateway to voting. A citizen typically cannot cast a vote that will count unless her name appears on the voter registration rolls. Yet state and local officials regularly remove—or "purge"—citizens from voter rolls. In fact, thirty-nine states and the District of Columbia reported purging more than 13 million voters from registration rolls between 2004 and 2006. Purges, if done properly, are an important way to ensure that voter rolls are dependable, accurate, and up-to-date. Precise and carefully conducted purges can remove duplicate names, and people who have moved, died, or are otherwise ineligible.

Far too frequently, however, eligible, registered citizens show up to vote and discover their names have been removed from the voter lists. States maintain voter rolls in an inconsistent and unaccountable manner. Officials strike voters from the rolls through a process that is shrouded in secrecy, prone to error, and vulnerable to manipulation.

While the lack of transparency in purge practices precludes a precise figure of the number of those erroneously purged, we do know that purges have been conducted improperly before. In 2004, for example, Florida planned to remove 48,000 "suspected felons" from its voter rolls. Many of those identified were in fact eligible to vote. The flawed process generated a list of 22,000 African Americans to be purged, but only 61 voters with Hispanic surnames, notwithstanding Florida's sizable Hispanic population. Under pressure from voting rights groups, Florida ordered officials to stop using the purge list. Although this purge was uncovered and mostly stopped before it was completed, other improper purges may go undetected and unremedied.

The secret and inconsistent manner in which purges are conducted make it difficult, if not impossible, to know exactly how many voters are stricken from voting lists erroneously. And when purges are made public, they often reveal serious problems. Here are a few examples from this year:

  • In Mississippi earlier this year, a local election official discovered that another official had wrongly purged 10,000 voters from her home computer just a week before the presidential primary.
  • In Muscogee, Georgia this year, a county official purged 700 people from the voter lists, supposedly because they were ineligible to vote due to criminal convictions. The list included people who had never even received a parking ticket.
  • In Louisiana, including areas hit hard by hurricanes, officials purged approximately 21,000 voters, ostensibly for registering to vote in another state. The purge did not follow existing legal protections that require officials to notify affected voters and give them the opportunity to contest or correct the records. A voter can avoid removal if she provides proof that the registration was cancelled in the other state, documentation not available to voters who never actually registered anywhere else.


This report provides one of the first systematic examinations of the chaotic and largely unseen world of voter purges. In a detailed study focusing on twelve states, we identified three problematic practices with voter purges across the country:

Purges rely ..-ridden lists. States regularly attempt to purge voter lists of ineligible voters or duplicate registration records, but the lists that states use as the basis for purging are often riddled with errors. For example, some states purge their voter lists based on the Social Security Administration's Death Master File, a database that even the Social Security Administration admits includes people who are still alive. Even though Hilde Stafford, a Wappingers Falls, NY resident, was still alive and voted, the master death index lists her date of death as June 15, 1997. As another example, when a member of a household files a change of address for herself in the United States Postal Service's National Change of Address database, it sometimes has the effect of changing the addresses of all members of that household. Voters who are eligible to vote are wrongly stricken from the rolls because of problems with underlying source lists.

Voters are purged secretly and without notice. None of the states investigated in this report statutorily require election officials to provide public notice of a systematic purge or even individual notice to those voters whose names are removed from the rolls as part of the purge. Additionally, with the exception of registrants believed to have changed addresses, many states do not notify individual voters before purging them. In large part, states that do provide individualized notice do not provide such notice for all classes of purge candidates. For example, our research revealed that it is rare for states to provide notice when a registrant is believed to be deceased. Without proper notice to affected individuals, an erroneously purged voter will likely not be able to correct the error before Election Day. Without public notice of an impending purge, the public will not be able to detect improper purges or to hold their election officials accountable for more accurate voter list maintenance.

Bad "matching" criteria leaves voters vulnerable to manipulated purges. Many voter purges are conducted with problematic techniques that leave ample room for abuse and manipulation. State statutes rely on the discretion of election officials to identify registrants for removal. Far too often, election officials believe they have "matched" two voters, when they are actually looking at the records of two distinct individuals with similar identifying information. These cases of mistaken identity cause eligible voters to be wrongly removed from the rolls. The infamous Florida purge of 2000—conservative estimates place the number of wrongfully purged voters close to 12,000—was generated in part by bad matching criteria. Florida registrants were purged from the rolls if 80 percent of the letters of their last names were the same as those of persons with criminal convictions. Those wrongly purged included Reverend Willie D. Whiting Jr., who, under the match ing criteria, was considered the same person as Willie J. Whiting. Without specific guidelines for or limitations on the authority of election officials conducting purges, eligible voters are regularly made unnecessarily vulnerable.

Insufficient oversight leaves voters vulnerable to manipulated purges. Insufficient oversight permeates the purge process beyond just the issue of matching. For example, state statutes often rely on the discretion of election officials to identify registrants for removal and to initiate removal procedures. In Washington, the failure to deliver a number of delineated mailings, including precinct reassignment notices, ballot applications, and registration acknowledgment notices, triggers the mailing of address confirmation notices, which then sets in motion the process for removal on account of change of address. Two Washington counties and the Secretary of State, however, reported that address confirmation notices were sent when any mail was returned as undeliverable, not just those delineated in state statute. Since these statutes rarely tend to specify limitations on the authority of election officials to purge registrants, insufficient oversight leaves room for election officials to deviate from what the state law provides and may make voters vulnerable to poor, lax, or irresponsible decision-making.

Policy Recommendations

No effective national standard governs voter purges; in fact, methods vary from state to state and even from county to county. A voter's risk of being purged depends in part on where in the state he or she lives. The lack of consistent rules and procedures means that this risk is unpredictable and difficult to guard against. While some variation is inevitable, every American should benefit from basic protections against erroneous purges.

Based on our review of purge practices and statutes in a number of jurisdictions, we make the following policy recommendations to reduce the occurrence of erroneous purges and protect eligible voters from erroneous purges.

A. Transparency and Accountability for Purges

States should:

  • Develop and publish uniform, non-discriminatory rules for purges.
  • Provide public notice of an impending purge. Two weeks before any county-wide or state-wide purge, states should announce the purge and explain how it is to be conducted. Individual voters must be notified and given the opportunity to correct any errors or omissions, or demonstrate eligibility before they are stricken from the rolls.
  • Develop and publish rules for an individual to prevent or remedy her erroneous inclusion in an impending purge. Eligible citizens should have a clear way to restore their names to voter rolls.
  • Stop using failure to vote as a trigger for a purge. States should send address confirmation notices only when they believe a voter has moved.
  • Develop directives and criteria with respect to the authority to purge voters. The removal of any record should require authorization by at least two officials.
  • Preserve purged voter registration records.
  • Make purge lists publicly available.

B. Strict Criteria for the Development of Purge Lists

States should:

  • Ensure a high degree of certainty that names on a purge list belong there. Purge lists should be reviewed multiple times to ensure that only ineligible voters are included.
  • Establish strict criteria for matching voter lists with other sources.
  • Audit purge source lists. If purge lists are developed by matching names on the voter registration list to names from other sources like criminal conviction lists, the quality and accuracy of the information in these lists should be routinely "audited" or checked.
  • Monitor duplicate removal procedures. States should implement uniform rules and procedures for eliminating duplicate registrations.

C. "Fail-Safe" Provisions to Protect Voters

States should ensure that:

  • No voter is turned away from the polls because her name is not found on the voter rolls. Instead, would-be voters should be given provisional ballots, to which they are entitled under the law.
  • Election workers are given clear instructions and adequate training as to HAVA's provisional balloting requirements.

D. Universal Voter Registration

States should:

  • Take the affirmative responsibility to build clean voter rolls consisting of all eligible citizens. Building on other government lists or using other innovative methods, states can make sure that all eligible citizens, and only eligible citizens, are on the voter rolls.
  • Ensure that voters stay on the voter rolls when they move within the state.
  • Provide a fail-safe mechanism of Election Day registration for those individuals who are missed or whose names are erroneously purged from the voter rolls.

About the Author

Myrna Pérez is counsel for the Democracy Program at the Brennan Center for Justice, focusing on a variety of voting rights and election administration issues including the Brennan Center's efforts to restore the vote to people with felony convictions. Prior to joining the Center, Ms. Pérez was the Civil Rights Fellow at Relman & Dane, a civil rights law firm in Washington, D.C. A graduate of Columbia Law School and the Harvard Kennedy School of Government, Ms. Pérez clerked for the Honorable Anita B. Brody of the United States District Court for the Eastern District of Pennsylvania and for the Honorable Julio M. Fuentes of the United States Court of Appeals for the Third Circuit.

About the Voting Rights & Elections Project

The Voting Rights and Elections Project works to expand the franchise, to ensure that every eligible American can vote, and to ensure that every vote cast is accurately recorded and counted. The Center's staff provides top-flight legal and policy assistance on a broad range of election administration issues, including voter registration systems, voting technology, voter identification, statewide voter registration list maintenance, and provisional ballots.

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