Wednesday, November 12, 2008

Declining social conditions of students and youth in the US

Declining social conditions of students and youth in the US

By Ed Hightower

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As the world financial crisis deepens, its effect on students and young workers is becoming increasingly apparent. From the difficulty in obtaining student loans to low job prospects and declining wages, conditions for young people in the United States are deteriorating.

The seizing up of credit markets is beginning to take a toll on the availability of student loans. In the fall 2008 semester financial aid officers around the country reported that some students have been forced to drop classes, change to part-time status, or even drop out altogether because of inability to obtain adequate loans.

While federally subsidized Stafford loans are still available, they are woefully inadequate for tuition at even public colleges and universities, much less so at their private counterparts. According to the College Board, the average tuition is $6,185 at public schools and $23,712 at private schools. Stafford loans are capped at between $3,500 and $5,500.

Because Stafford loans cannot by themselves cover expenses, most students are forced to take out additional, private loans. Such loans carry higher interest rates—Sallie Mae’s average private loan rate is 12 percent—and are more difficult to get. As tuition costs have risen over the last decade, the private educational loan industry has ballooned almost 900 percent. In 2006 the dollar amount of loans in this industry totaled $18.5 billion.

But more and more lenders are tightening their lending criteria as the world economy descends into recession. Business Week reports that Sallie Mae, a leader in the industry, recently increased its lending criteria across the board for private educational loans. Also, some thirty-six lenders have left the educational finance sector altogether.

Such restrictions compel students to seek credit-worthy co-signers, often parents and relatives, who may be facing economic hardships themselves. For those students with no one to co-sign, the government slightly increases the cap on Stafford loan amounts. Still, a survey by the National Association of Independent Colleges and Universities, which represents private educational institutions, found that almost half of the 504 schools participating had between 11 and 50 students who were unable to secure private loans this semester; eleven percent of participating schools had over 50 such students. For 56 percent of these students, the inability to obtain a private loan was due to the absence of a creditworthy cosigner.

Even more alarming is how students are forced to cope with this shortage in loans. In the same survey, 46 percent of students said they planned to reduce their course load or take time off from school; 38 percent planned to work to cover the gap, and 34 percent turned to credit cards.

The NAICU survey was conducted in September. Since then, economic conditions have deteriorated considerably. Students’ financing for the fall semester had been secured before this most recent downturn. As a result, financial aid administrators predict that the impact of the credit crisis will hit much harder in the spring.

High-level university administrators continue to fleece the institutions that employ them with compensation packages rivaling those of corporate executives. University of Michigan president Mary Sue Coleman received a $21,280 raise this September, for a total compensation of $743,151, making her the fourth highest-paid public university president in the country.

E. Gordon Gee, president of Ohio State University, raked in nearly $2 million in compensation this year. Johns Hopkins University’s president William R. Brody will receive over $2 million this year.

Fewer job prospects

According to the FinAid.org website, 65.7 percent of undergraduate seniors in the United States take on some educational debt. The median amount is $17,120, but one quarter of undergraduates borrow over $24,396 and one tenth borrow $35,213 or more. Saddled with this heavy burden, how can students expect to fare as they begin their professional lives?

By all indications graduates’ prospects for earning a decent living are meager. In an article ominously titled “For ‘09 Grads, Job Prospects Take a Dive” (October 22, by Cari Tuna), the Wall Street Journal reports that US employers intend to hire only 1.3 percent more graduates than they did last year. The figure is the lowest in six years. In another reflection of the broader economic downturn, the same figure one year ago (for 2008 graduates) was a 16 percent increase from 2007.

In anticipation of hiring fewer graduates, major companies have decreased their presence at campus job recruitment fairs. Trudy Steinfeld, director of career services at New York University, told the Wall Street Journal that 15 percent fewer companies are recruiting on campus this year than in 2007. She added, “There are some students who are quite nervous, especially those who thought they were headed to a Wall Street career.”

The director of career services for the University of Wisconsin at Madison’s College of Letters and Science told the Journal that the number of employers attending the school’s career fair declined from 232 in 2007 to 225 in 2008. A similar picture appears at the University of Tampa, where there are 45 percent fewer internet job postings than this time last year.

For young people without a secondary education, conditions in the job market are abysmal. A New York Times article titled “Working Poor and Young Hit Hard in Downturn” (November 8, by Erik Eckholm) points out that the percentage of 16- to 19-year-olds working declined eight percent since October 2007, the most severe decline for any age group.

The Times describes a downward spiral of unemployment for young people whereby college graduates, finding ever fewer prospects in the fields for which they were trained, rush to the jobs typically held by the youngest workers, including retail sales and food service. Young workers with the least work experience and education face reduced hours and unemployment.

Decline in purchasing power

Accompanying the lack of employment opportunities is the fact that wages for younger workers have declined ten percent in real terms over the last 30 years, according to a recent report by the Center for Economic and Policy Research.

A separate survey funded in part by the Washington Post found that eight in ten wage workers find it difficult to buy gasoline or save for retirement; about half said they had difficulty affording food. The Post points out that this is despite the fact that productivity is at an all time high.

Margaret C. Simms, director of the Urban Institute’s Low-Income Working Families Project, told the Post, “Low-wage workers have had a difficult balancing act in terms of matching their expenses with their limited incomes. They are very limited in their ability to deal with an emergency.” (Life’s Basics More of a Stretch,” October 17, by Michael Fletcher)

The same survey found that three in ten wage workers had no health care and four in ten have no retirement plan. Six in ten said they think about money every day.

The Washington Post article followed the plight of one man and his family who were struggling to get by on his $13-per-hour wage as a hotel worker. He told the newspaper that he had to go so far as to refrain from using his stove, instead preparing sandwiches and cold meals for his children, because he could not afford his utility bill. He had made use of some local charities after he discovered that his $27,000 per year income was, absurdly, too large to qualify him for federal food stamps.

That a working family is refused assistance for the most basic necessities is all the more repugnant given that the Democrats and Republicans alike offer the US financial elite helping after helping from the federal treasury to the tune of hundreds of billions of dollars. The working class is told that it must tighten its belt, while those who caused the economic crisis snatch up an even larger share of social wealth.

Veterans’ Families Seek Aid for Caregiver Role

Veterans’ Families Seek Aid for Caregiver Role

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Tracy Keil met her husband, Matt, in August 2005 between his first and second tours of duty in Iraq. They married in January 2007. Six weeks later, Staff Sergeant Keil was shot in the neck while on patrol in Ramadi, Iraq, and rendered a quadriplegic.

Because her husband, now 27, could no longer take care of himself, not even to get a drink of water, Mrs. Keil, 31, quit her job as an accountant to take care of him.

She tried to hire others to help her, a service that is paid for by the government, but after going through four workers in nine months she gave up. She said many of the caregivers from contractors on the government-provided list “were awful.” One did not know how to use the lift system that hoists Mr. Keil out of bed; another gossiped about the family’s private business.

But the real problem was that even the good caregivers could not help Mr. Keil live as he wanted. Regulations, for example, do not permit them to take him out of the house. “Matt is back to his old self, and we like to get out and about, go grocery shopping or a see a movie,” Mrs. Keil said. “He doesn’t want just a baby sitter.”

While she has never regretted leaving her job, the financial repercussions have been serious. Although Mr. Keil gets a full disability pension of $6,800 a month and their house in Parker, Colo., was donated to them, they have lost Mrs. Keil’s salary of $58,000 a year, as well as employer contributions to her retirement account, and her dental plan.

Mrs. Keil has joined a growing group of veterans’ families who are asking to be compensated in place of a caregiver. She sees it not only as a battle about income but also about dignity and respect.

“I am here and I take wonderful care of Matt and I enjoy it,” she said. “But he would be institutionalized without me. He is my full-time job now. I just feel like I should be compensated for that. They should value what I do.”

In the last session of Congress, families and veterans groups persuaded lawmakers to introduce legislation that, among other things, would allow families of soldiers with traumatic brain injuries to be paid for their caretaking after training and certification by the Veterans Affairs Department. The Keils think they would benefit because Mr. Keil has minor brain trauma as well. The bill did not come up for a vote but the families think it stands a better chance next year because President-elect Barack Obama has endorsed other supportive legislation and the future first lady, Michelle Obama, has said helping veterans’ families will be a priority to her.

The Veterans Affairs Department opposed the legislation, saying it would create unacceptable liability; if a veteran was injured by a family member trained by the department, it would be liable. But Paul Rieckhoff, executive director and founder of Iraq and Afghanistan Veterans of America, said families of veterans suspected that the government was not compensating them for another reason: because they know they would do the work anyway. “They are kind of being taken advantage of,” Mr. Rieckhoff said.

The question of how to best take care of a service member wounded in war is a well-worn battleground. But broader compensation for family members has become a pressing issue, veterans’ groups say, because better medical technology has allowed so many soldiers to survive with serious injuries.

In 2007, the Dole-Shalala Commission said there were 3,000 service members so severely injured that they required full-time clinical- and care-management services.

Five years into the war, “the impacts of those injuries are first being fully realized by the families today,” said Jeremy Chwat, executive vice president of the Wounded Warrior Project, an organization that is lobbying for this change.

Today’s families are less likely than those of previous generations to just accept the situation, said James B. Peake, the secretary of veterans affairs.

“When Bob Dole came home from World War II wounded,” Mr. Peake said, referring to the former Senate majority leader who lost the use of his right arm after being wounded in Italy at age 21, “his mother in Kansas quit everything she was doing and came to take care of him at the hospital, no questions asked. That’s not the case anymore,” he said. Families still race to veterans’ sides, but they are demanding more from the government.

Programs are already evolving. In the 1990s, the Veterans Affairs Department allowed family members to train with the companies under contract to provide home-health aides. Certain veterans are allowed to go through those companies to hire family members, but for only four hours a day. The department does not keep data on how many families use this program.

Families who think that program does not go far enough object to giving a third party a cut of the money, and say four hours is insignificant when they often spend 24 a day in the job. It also limits compensation to time spent on medical needs like bladder assistance and feeding, leaving out other tasks like chauffeuring and paperwork.

The sense of injustice is particularly acute for families whose loved ones are suffering from brain-related injuries and who tend to get lower levels of disability pay than those with severe visible physical ailments, like blindness or paralysis. That is the case for Ted and Sarah Wade of Chapel Hill, N.C.

Mr. Wade, now 30, was wounded in Iraq in 2004 when someone threw a homemade bomb at what Mrs. Wade describes as his “roofless, doorless, unarmored Humvee.”

He was classified as 100 percent disabled because one arm was amputated, and brain damage gave him problems with speech, memory and interpreting visual signals. When Mrs. Wade took him from the hospital she was told, she said, that he should never be out of her line of sight.

But because Mr. Wade’s needs are not of the physical variety that veterans have traditionally recognized — he can use the bathroom and feed himself, for example — the family received only $3,500 a month in pension, which includes $780 a month for an aide, or four hours of daily assistance. That does not fill all of his needs, Mrs. Wade said. Mr. Wade’s vision is so poor that he cannot cross a street by himself, his short-term memory is such that he is unsafe in a kitchen, his voice is too unclear to use the phone (even the Veterans Affairs Department sometimes hangs up on him because they cannot understand him, Mrs. Wade says), and he cannot drive himself to his numerous therapy appointments.

It also does not address the quality of his life. In February, Mr. Wade plans to attend an adaptive ski program in Colorado, and he requires someone to travel with him. He likes using his adapted bicycle to go on 30-mile rides, but requires someone to keep him safe from traffic that he cannot see.

Recently the stress of caring for Mr. Wade full time became so overwhelming that they both agreed he would temporarily go into respite care, paid for by the Veteran Affairs Department at $857 a day, or about $25,700 a month.

It is a welcome break, but makes Mrs. Wade even more determined to get compensation so she can provide more help for her husband. “What makes me mad is what I see happening to him is institutionalization,” she said, “as opposed to giving him the supports he needs for the real world.”

The Midnight De-Regulation Express In His Last Days in Power, George W. Bush Wants to Change Some Rules

The Midnight De-Regulation Express

In His Last Days in Power, George W. Bush Wants to Change Some Rules

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It's something of a tradition– administrations using their final weeks in power to ram through a slew of federal regulations. With the election grabbing the headlines, outgoing federal bureaucrats quietly propose and finalize rules that can affect the health and safety of millions.

The Bush administration has followed this tradition and expanded it. Up to 90 proposed regulations could be finalized before President George W. Bush leaves office Jan. 20. If adopted, these rules could weaken workplace safety protections, allow local police to spy in the "war on terror" and make it easier for federal agencies to ignore the Endangered Species Act.

What's more, the administration has accelerated the rule-making process to ensure that the changes it wants will be finalized by Nov. 22.

That's a key date, Nov. 22. It is 60 days before the next administration takes control — and most federal rules go into effect 60 days after they have been finalized. It would be a major bureaucratic undertaking for the Obama administration to reverse federal rules already in effect.

"The Bush administration has thought through last-minute regulations much more than past administrations," said Rick Melberth, director of OMB Watch, a nonprofit group that tracks federal regulations. "They've said, 'Let's not only get them finalized; let's get them in effect.'"

So what are the new rules?

The Washington Independent has highlighted five regulations notable for their potential effect and the way they slipped through the regulatory process. Four could to be finalized by Nov. 22. One was already — on Election Day.

1) The Dept. of Labor proposed a regulation Aug. 30 that changes how workplace safety standards are met. Labor experts contend that the administration, which previously issued only one new workplace safety standard and that under court order, is trying to make it a bureaucratic nightmare for future administrations to make workplace safety rules.

Here's what it would do:

Currently, if the Occupational Safety and Health Admin. or the Mine Health and Safety Admin. want to introduce a new safety standard on, say, the level of exposure to toxic chemicals, it issues what is called a notice of proposed rule-making. This notice is published in the Federal Register and then debated by labor, business and relevant federal agencies.

The new regulation would add an "advanced notice of proposed rule-making," meaning OSHA and MSHA would have prove that, say, the said chemical was seriously harming workers.

This would open the door for industry to challenge the validity of the risk assessment and then, if necessary, the actual safety standard that may come from that risk assessment.

"The purpose of this sort of rule is to require agencies to spend more time on a regulation which gives them less of a chance to actually regulate," said David Michaels, a professor of workplace safety at George Washington University, "You're adding at least a year, maybe two years, to the process."

The regulation has not been finalized.

2) The administration proposed a rule that changes the employer-employee relationship laid out in the 1993 Family and Medical Leave Act.

Here's what it would do:

The Family and Medical Leave Act says that employers must give their workers 12 weeks of unpaid leave if they are sick or need to take care of a family member or newborn. The employer's health-care staff can check the legitimacy of the family or medical leave claim with the employee's doctor or health-care provider.

The proposed regulation would allow the employer to directly speak with the employee's doctor or health-care provider. The employer could also ask employees to provide more medical documentation of their conditions.

Why such a rule — which may threaten an employee's privacy– is needed is unclear. The only study the Labor Dept. has done on the act was in 2000. The department collected comments from employers before issuing the proposed regulation, but a report analyzing the comments was never issued.

The regulation also would gives employees the right to waive their rights under the Family and Medical Leave Act, making it the first national labor law to be optional. A worker, for instance, cannot waive his right to earn a minimum wage or get paid more for overtime.

The regulation was finalized on Election Day.

3) The Dept. of Health and Human Services proposed a rule Sept. 26 that would expand the reasons that physicians or health care entities could decline to provide any procedure to include moral and religious grounds. The language of the regulation says the department hopes to correct "an attitude toward the health-care profession that health-care professionals and institutions should be required to provide or assist in the provision of medicine or procedures to which they object, or else risk being subjected to discrimination."

Here's what it would do:

The rule change seems to apply to abortion. But they are already several rules that say physicians or health-care entities can deny an abortion request. Some women's health advocates contend that the proposed regulation's broad language is meant to increase the number of physicians who not only don't provide abortions but don't provide contraception.

"Contraception is certainly the target of this rule," contends Marylin Keefe, director for Reproductive Health at the National Partnership for Women and Families. "The moral and religious objections of health-care workers are now starting to take precedence over patients."

The regulation is notable for another reason. A rule involving an employee's religious rights must be referred to the Equal Employment and Opportunity Commission, yet the commission was never told of this proposed regulation.

A bureaucratic battled erupted when EEOC's legal counsel, Reed Russell, wrote a regulation comment (pdf) blasting both the substance of the proposed rule and its disregard for the rule-making process.

The regulation has not been finalized.

4) On July 31, the Justice Dept. proposed a regulation that would allow state and local law enforcement agencies to collect "intelligence" information on individuals and organizations even if the information is unrelated to a criminal matter.

"This is a continuum that started back on 9/11 to reform law enforcement and the intelligence community to focus on the terrorism threat," said Bush homeland security adviser Kenneth L. Wainstein in a statement.

Critics say it could infringe on civil liberties.

Here's what it would do:

"It expands local law enforcement's ability to investigate criminal activity that it deems suspicious," said Melberth of OMB Watch. "But what's suspicious to you may not be suspicious to me. They could be investigating community organizations they think are two or three steps away from a terrorist group."

The regulation has not been finalized.

5) Before a federal agency approves any construction project– anything from building a dam to a post office — government officials must consult the Fish and Wildlife Service and the National Marine Fisheries Service. These two agencies enforce the Endangered Species Act, and they can veto any project that adversely affects an animal on the endangered species list.

Here's what it would do:

A regulation proposed by the Interior Dept. Aug. 12 would end this approval process. "It destroys a system of checks and balances that have been in place for two decades," claimed Bob Davison, senior scientist at Defenders of the Wildlife. "[A federal agency] wants to go forward with a project that [it wants] to do. So you need an independent agency to look at the decision."

Davison is not the only conservation advocate up in arms. The Interior Dept. has received 200,000 public comments, which may affect the final rule.

Or not — the department shortened the comment period from 60 to 30 days in its effort to get the regulation finalized.

In May, White House Chief of Staff Josh Bolten vowed that the administration would propose no regulations after June 1. He and White House spokesman Tony Fratto have repeatedly stated their contempt for what they call "midnight regulations."

Yet with the exception of the Family and Medical Leave changes, each of these regulations were proposed after June 1. And if finalized, they will effect worker's safety, women's health-care choices, local police powers and endangered species.

"It was a pretty resounding election," said Keefe of the National Partnership for Women and Families. "But this administration acts like it still has a mandate."

New federal mortgage plan offers relief to only a few

New federal mortgage plan offers relief to only a few

Kevin G. Hall

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The Bush administration on Tuesday announced another plan to modify what it thinks will be hundreds of thousands of distressed mortgages held or backed by mortgage finance giants Fannie Mae and Freddie Mac.

But the plan, more than 15 months into a deep nationwide housing slump, is far short of the moratorium on foreclosures sought by President-elect Barack Obama and the Democrats who next year will have stronger control Congress. It would help only a relatively small number of homeowners whose loans Fannie Mae and Freddie Mac packaged and resold to investors as so-called mortgage-backed securities and a still smaller number of homeowners whose loans Fannie Mae and freddie Mac have kept on their books.

In a briefing conducted on the condition of anonymity, officials involved in the plan acknowledged that it might reach only 200,000 or so homeowners next year. That's a fraction of the 2.8 million who are thought to face foreclosure this year.

But offficials said they hope that the effort, which begins Dec. 15, will become a standard across the private sector, which holds far more troubled loans than Fannie Mae and Freddie Mac. The move follows announcements by private lenders such as Bank of America, J.P. Morgan Chase and most recently Citigroup that they'd voluntarily rework troubled mortgages.

"Troubled borrowers eligible for this program have already experienced significant erosion in their credit scores, making them unlikely to obtain mortgage credit through typical means," said James Lockhart, the director of the Federal Housing Finance Agency, which has assumed responsibility for Fannie and Freddie since the Treasury Department seized them in September.

Together, Fannie and Freddie own or back about 58 percent of all U.S. mortgage debt — about 31 million mortgages — and they've historically been associated with the nation's decades-long expansion in homeownership.

But because Fannie and Freddie were congressionally chartered private companies, they had tighter lending requirements than the Wall Street companies that securitized, or pooled, mortgages for sale to investors. Fannie's foreclosure rate through the end of September was 1.6 percent, versus nearly 20 percent for sub-prime adjustable-rate mortgages packaged and sold by Wall Street firms that have mostly gone bust.

To qualify for the new program, homeowners whose loans are owned or packaged by Fannie and Freddie must be 90 days or more past due on their payments for single-family dwellings in which they live. They must prove hardship, can't be in bankruptcy and their outstanding loan values must be at least 90 percent of their homes' current values.

That's important, since the program targets homeowners who are nearly or completely underwater, owing more than their homes are worth in a sinking market. This should help homeowners in Florida, Nevada and the less expensive inland parts of California that are suffering steep drops in home values.

If the program's thresholds are met, Fannie and Freddie will modify the mortgage with the goal of a monthly payment equal to about 38 percent of the holder's total income.

The goal could be achieved three ways: The loan could be stretched into a 40-year fixed-rate mortgage; the interest rate could be reduced; and/or money going to the mortgage balance, called the principal, could be deferred interest-free until the end of the loan and recaptured in what's known as a balloon payment. Fannie and Freddie will pay $800 to financial institutions for each loan they modify.

Officials from the departments of Treasury, Housing and Urban Development and the Federal Housing Finance Agency gave speeches touting the effort. They didn't take questions.

In a subsequent briefing conducted on the condition of anonymity, officials involved in the plan acknowledged that it might reach 200,000 or so homeowners at best next year. That's a fraction of the 2.8 million who are thought to face foreclosure this year.

"It's a first step," one official said, acknowledging that the private sector already is taking many of these steps.

Tuesday's plan was patterned after similar efforts by the Federal Deposit Insurance Corp., but it didn't go far enough for FDIC Chairman Sheila C. Bair.

"This is a step in the right direction but falls short of what is needed to achieve wide-scale modifications of distressed mortgages," Bair, a critic within the Bush administration of current mortgage-rescue efforts, said in a statement.

"Given continually rising foreclosures and their impact on the economy, we must address the need for appropriate economic incentives to prevent unnecessary foreclosures," she said. "As we lend and invest hundreds of billions of dollars to help institutions suffering leveraged losses from defaulting mortgages, we must also devote some of that money to fixing the front-end problem: too many unaffordable home loans."

Fannie Mae on Monday reported a $29 billion loss for the quarter that ended Sept. 30. Its leaders have warned that the current level of government support may not be enough to support its new mission of jump-starting the mortgage market.

The Bush administration to date has taken a voluntary approach on mortgage modifications, creating a program called Hope Now in which leading banks and financial institutions pledged to do all in their power to rework distressed mortgages.

That effort has been very slow, however, and John McCain last month criticized the administration for not using taxpayers' money to issue new loans that matched homes' present-day values.

"Everything to date has been voluntary, and it really hasn't worked and hasn't been enough," said Evan Fuguet, senior policy counsel for the Center for Responsible Lending, a housing advocacy group in Durham, N.C. "We think more needs to be done."

Lobbyists Swarm the Treasury for Piece of Bailout Pie

Lobbyists Swarm the Treasury for Piece of Bailout Pie

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When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.

Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express.

Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.

The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.

The lobbying frenzy worries many traditional bankers — the original targets of the rescue program — who fear that it could blur, or even undermine, the government’s effort to stabilize the financial system after its worst crisis since the 1930s.

Among the most rattled are community bankers.

“By the time they get to the community banks, there may not be enough money left,” said Edward L. Yingling, the president of the American Bankers Association. “The marketplace is looking at this so rapidly that those who have the money first may have some advantage.”

Adding to the frenzy is the possibility that the next Congress and White House could change the rules further. President-elect Barack ObamaHenry M. Paulson Jr., has resisted. has added his voice by proposing that the struggling automakers get federal aid, which could mean giving them access to the fund — something the Treasury secretary,

Despite the line outside its door, the Treasury is not worried about running out of money, according to a senior official. It has no plans to ask lawmakers to free the second $350 billion of the rescue package during the special session of Congress that could begin next week.

That could limit the pot of money available, at least until the next Congress is sworn in next January. Meanwhile, the list of candidates for a piece of the bailout keeps growing.

On Monday, the Treasury announced it would inject an additional $40 billion into A.I.G., amid signs that the government’s original bailout plan was putting too much strain on the company. American Express won approval Monday to transform itself into a bank holding company, making the giant marketer of credit cards eligible for an infusion.

Then there is the National Marine Manufacturers Association, which is asking whether boat financing companies might be eligible for aid to ensure that dealers have access to credit to stock their showrooms with boats — costs have gone up as the credit markets have calcified. Using much the same rationale, the National Automobile Dealers Association is pleading that car dealers get consideration, too.

“Unfortunately, I don’t have a lot of good news for them individually,” said Jeb Mason, who as the Treasury’s liaison to the business community is the first port-of-call for lobbyists. “The government shouldn’t be in the business of picking winners and losers among industries.”

Mr. Mason, 32, a lanky Texan in black cowboy boots who once worked in the White House for Karl Rove, shook his head over the dozens of phone calls and e-mail messages he gets every week. “I was telling a friend, ‘this must have been how the Politburo felt,’ ” he said.

The Congressional bailout law gave the Treasury broad authority to decide how to spend the $700 billion. Under the terms of the $250 billion capital purchase program announced last month, cash infusions are available to “qualifying U.S. banks, savings associations, and certain bank and savings and loan holding companies, engaged only in financial activities.”

That definition has grown to include private banks and insurers like Allstate and MetLife, which own savings and loans. It may also encompass industrial lenders like GE Capital and GMAC, the financing arm of General Motors, provided they win approval to reclassify themselves as a bank or savings and loan holding company.

The Treasury set a deadline of Friday for institutions to apply for capital investments, which has meant a grueling few weeks for already overworked officials like Mr. Mason.

“Jeb is like the customer service agent at Verizon when the power lines go down,” said Robert S. Nichols, president of the Financial Services Forum, a trade group for big institutions like Citigroup, Fidelity and Allstate Insurance, some of which have received federal money.

The influential independent and community bankers group, which represents smaller institutions, won an extension of the deadline for privately held banks while the Treasury considers a way for them to participate in its program as well.

The Treasury, several industry executives said, wants to avoid too strict a definition of eligible institutions, in case the Obama administration decides it wants to tweak the requirements for an investment, or even overhaul the rescue program.

Several lobbyists said the Treasury’s model contract acknowledges the possibility that Congress could impose new requirements on recipients of the money, and some Democratic lawmakers have talked about further restricting executive compensation, shareholder dividends or other uses of the money as part of the deal.

“We are like a tenant signing a lease contract with the landlord where the landlord can come back and change the terms after the fact, and in fact we are going to have a new landlord in a couple of weeks,” said Mr. Yingling of the bankers association.

The first wave of lobbying came in early October when Mr. Paulson announced the plan to buy troubled mortgage-related assets from banks. The Treasury said it would hire several outside firms to handle the purchases, and would dispense with federal contracting rules.

Law and lobbying firms that specialize in government contracting fired off dispatches to clients and potential clients explaining opportunities in the new program. Capitalizing on the surge of interest, several large firms, including Patton Boggs; Akin Gump; K&L Gates; Fried, Frank, Harris, Shriver & Jacobson; and Alston & Bird, have set up financial rescue shops.

Alston & Bird, for example, highlights its two biggest stars — former Senator Bob Dole and former Senator Tom Daschle. Mr. Dole “knows Hank Paulson very well” and has been “very helpful” with the financial rescue groups, said David E. Brown, an Alston & Bird partner involved in its effort.

“And of course, Senator Daschle is national co-chair of the Obama campaign,” Mr. Brown added, noting that because Mr. Daschle is not a registered lobbyist, his involvement is limited to “high level advisory and strategic advice.”

Ambac Financial Group, in the relatively obscure bond insurance business, never needed lobbyists before, said Diana Adams, a managing director. But its clients persuaded the company to hire two Washington veterans — Edward Kutler and John T. O’Rourke — who helped arrange a recent meeting with Phillip L. Swagel, an assistant Treasury secretary. “We haven’t really asked for much in the past,” Ms. Adams said.

Initially, the banks reacted coolly to the prospect of the government taking direct stakes in them. They worried about restrictions on executive pay, and whether there would be a stigma attached. In conference calls with industry groups, Mr. Mason helped explain the Treasury proposal — a job he and his colleagues did well, judging by the change of heart among banks.

“The biggest surprise was how quickly it went from ‘I don’t need this,’ to ‘How do I get in?’ ” said Michele A. Davis, the head of public affairs at the Treasury, who is Mr. Mason’s boss.

Underscoring the many ways companies can take part in the rescue fund, the Hispanic Chamber of Commerce and other Hispanic business groups met with Mr. Paulson to push for minority contracts in asset management, legal, accounting, mortgage services and maintenance jobs, like plumbing and masonry.

“They are going to need a lot of folks in minority communities that are able to service their own communities,” said David Ferreira, head of government relations for the Hispanic Chamber of Commerce.

As the automakers have pushed for federal help, the trade groups for car dealerships and even boat dealerships are pressing their own cases. They argue that showrooms are feeling a squeeze between higher borrowing costs to finance their inventory and slowing consumer sales to move it out the door.

“We have been encouraged by reports that Secretary Paulson is looking to broaden the program,” said Mathew Dunn, head of government relations for the National Marine Manufacturers Association.

On Friday, the automobile dealers sent Mr. Paulson a letter urging him to keep them in mind.

“A well-capitalized, financially sound dealer network is essential to the success of every automobile manufacturer,” wrote Annette Sykora, a car dealer in Slaton, Tex., and the chairwoman of the National Automobile Dealers Association. “Any government intervention should include provisions to preserve the viability of dealers.”

Some lobbyists, Mr. Mason said, had called him even though they did not have any clients looking to get into the program or worried about its restrictions. They were merely seeking intelligence on which industries would be deemed eligible for assistance. He suspects they were representing hedge funds that wanted to trade on that information.

In Final Days, Bush Pushes for Iraq's Oil

In Final Days, Bush Pushes for Iraq's Oil

by: Maya Schenwar

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As the Bush administration rumbles to an end, it is pushing with increasing urgency for a commitment to a long-term US presence in Iraq. Though the military aspect of this "commitment" has garnered substantial publicity, the administration is equally invested in the economic aspect: securing US control over Iraqi oil before Bush leaves office, according to experts in the field.

A leaked version of the US-Iraq status-of-forces agreement (SOFA), supplied and translated for Truthout by American Friends Service Committee Iraq consultant Raed Jarrar, states that the US will indefinitely "continue to protect Iraq's natural resources of gas and oil and protect Iraq's foreign financial and economic assets."

According to Jarrar, the Bush administration and the government of Iraqi Prime Minister Nouri al-Maliki are in basic agreement on the SOFA, probably because an American presence in Iraq would keep Maliki in power. However, the overwhelming majority of the Iraqi Parliament and the Iraqi people oppose the pact and reject US control over Iraq's resources.

In October, just as the Bush and Maliki administrations were attempting to finalize the SOFA's terms - under the wary gaze of Parliament - the Iraqi cabinet dropped another big one in Parliament's lap: the Iraq oil law. The law would set the rules for foreign investment in Iraq's oil industry, and determine how oil revenues are shared within Iraq. Many in Parliament say both the SOFA and the oil law would prolong the US occupation, allowing American control over both its people and its resources. Parliament will debate the oil law this week.

Cleric Hashim al-Ta'i, of the Iraqi Islamic Party, captured the sentiments of many in a late October sermon on the Baghdad Satellite Channel, saying, "There is a unanimous Iraqi voice which says: No to an agreement that consolidates the occupation and prolongs its life; no to an agreement that consolidates sectarianism and racism and fragments the country into groups and cantons; no to an agreement that mortgages the country and its resources for many decades."

However, that unified voice clashes with another, very powerful voice in Iraq: American and British oil companies, which share the interests of the Bush team, according to Antonia Juhasz, a fellow with both the Institute for Policy Studies and Oil Change International.

"US and British oil companies and the Bush administration have been circling their wagons in Iraq over the last few months to bring both the SOFA and the Iraq oil law to a conclusion before Bush's term in office officially comes to a close," Juhasz told Truthout. "The Bush administration, US oil companies and the al-Maliki government are all on the same timeline for trying to lock in the continued presence of the US military in Iraq, which is the al-Maliki government's only hope of holding on to power - and US oil corporations' only hope of securing their long-sought control over Iraqi oil."

The large oil companies seek long-term contracts that would give them control over much of Iraq's oil and oil production, according to Juhasz. Although Kurdistan has entered into several contracts with foreign oil companies, Iraqi Oil Minister Hussein Al Shahristani declared that any contract signed before the passage of the oil law is void.

In addition to pushing the international SOFA and Iraq's oil law, the Bush administration is attempting to unilaterally carve a place in US law for a takeover of Iraqi oil, according to Jim Fine, legislative secretary for foreign policy for the Friends Committee on National Legislation. In a signing statement tacked on to the 2009 Defense Authorization Bill, Bush excused himself from a provision intended to rein in US power of Iraq's oil.

The statement - if one accepts it as authoritative - would allow Bush to use defense funds "to exercise United States control of the oil resources of Iraq." Bush wrote that prohibiting such a use of funds "purport(s) to impose requirements that could inhibit the president's ability to carry out his constitutional obligations."

Experts view this latest expansion of Bush's powers in Iraq as a kind of rush to the finish line: an attempt to accomplish as many of the administration's oil-control goals before it steps down and the Obama administration - which may well have different ideas - steps up. Bush's signing statement could forebode a weighty US push for Iraq's oil in the next two months, whether or not the SOFA passes, according to Fine.

"The signing statement is in effect a corollary to the Bush doctrine of preventive warfare, which he is now extending to military action to seize control of natural resources in a foreign country," Fine told Truthout. "The logic of the signing statement is inescapable and extremely dangerous. Absent repudiation by a future president, this and other authorities that President Bush has asserted in signing statements constitute a foundation for draconian unilateral action by the US."

However, the US's next president seems to have a very different interpretation of the US's relationship to Iraq's oil. In fact, Juhasz took the title of her book, "The Tyranny of Oil," from a line in President-elect Barack Obama's Iowa Caucus victory speech. Obama emphasized his hopes for a transition away from oil and toward sustainable energy sources throughout his campaign. He has also promised a drawdown of troops in Iraq.

The next two months will measure just how far President Bush is willing to go to fulfill the objectives that, many say, underlie his occupation of Iraq. Erik Leaver, Foreign Policy in Focus's policy outreach director, says that the administration's last-ditch efforts - the signing statements, the SOFA, the oil law pressure - demonstrate that Bush has not taken his eye off Iraqi oil.

"Although Bush has verbally assured the Iraqi people that we are not occupying their country for oil, the actions of the United States
indicate otherwise," Leaver told Truthout. "The language calling for the protection of Iraq's oil resources in the long term agreement between Iraq and the US is another strong indication of what the US intent is inside of Iraq - gaining long-term access to Iraq's oil."

Some Blame Must Follow the Financial Collapse

Some Blame Must Follow the Financial Collapse

What "Change" In America Really Means

What "Change" In America Really Means

By John Pilger

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My first visit to Texas was in 1968, on the fifth anniversary of the assassination of president John F Kennedy in Dallas. I drove south, following the line of telegraph poles to the small town of Midlothian, where I met Penn Jones Jr, editor of the Midlothian Mirror. Except for his drawl and fine boots, everything about Penn was the antithesis of the Texas stereotype. Having exposed the racists of the John Birch Society, his printing press had been repeatedly firebombed. Week after week, he painstakingly assembled evidence that all but demolished the official version of Kennedy's murder.

This was journalism as it had been before corporate journalism was invented, before the first schools of journalism were set up and a mythology of liberal neutrality was spun around those whose "professionalism" and "objectivity" carried an unspoken obligation to ensure that news and opinion were in tune with an establishment consensus, regardless of the truth. Journalists such as Penn Jones, independent of vested power, indefatigable and principled, often reflect ordinary American attitudes, which have seldom conformed to the stereotypes promoted by the corporate media on both sides of the Atlantic. Read American Dreams: Lost and Found by the masterly Studs Terkel, who died the other day, or scan the surveys that unerringly attribute enlightened views to a majority who believe that "government should care for those who cannot care for themselves" and are prepared to pay higher taxes for universal health care, who support nuclear disarmament and want their troops out of other people's countries.

Returning to Texas, I am struck again by those so unlike the redneck stereotype, in spite of the burden of a form of brainwashing placed on most Americans from a tender age: that theirs is the most superior society in the history of the world, and all means are justified, including the spilling of copious blood, in maintaining that superiority.

That is the subtext of Barack Obama's "oratory". He says he wants to build up US military power; and he threatens to ignite a new war in Pakistan, killing yet more brown-skinned people. That will bring tears, too. Unlike those on election night, these other tears will be unseen in Chicago and London. This is not to doubt the sincerity of much of the response to Obama's election, which happened not because of the unction that has passed for news reporting from America since 4 November (e.g. "liberal Americans smiled and the world smiled with them") but for the same reasons that millions of angry emails were sent to the White House and Congress when the "bailout" of Wall Street was revealed, and because most Americans are fed up with war.

Two years ago, this anti-war vote installed a Democratic majority in Congress, only to watch the Democrats hand over more money to George W Bush to continue his blood fest. For his part, the "anti-war" Obama never said the illegal invasion of Iraq was wrong, merely that it was a "mistake". Thereafter, he voted in to give Bush what he wanted. Yes, Obama's election is historic, a symbol of great change to many. But it is equally true that the American elite has grown adept at using the black middle and management class. The courageous Martin Luther King recognised this when he linked the human rights of black Americans with the human rights of the Vietnamese, then being slaughtered by a liberal Democratic administration. And he was shot. In striking contrast, a young black major serving in Vietnam, Colin Powell, was used to "investigate" and whitewash the infamous My Lai massacre. As Bush's secretary of state, Powell was often described as a "liberal" and was considered ideal to lie to the United Nations about Iraq's non-existent weapons of mass destruction. Condaleezza Rice, lauded as a successful black woman, has worked assiduously to deny the Palestinians justice.

Obama's first two crucial appointments represent a denial of the wishes of his supporters on the principal issues on which they voted. The vice-president-elect, Joe Biden, is a proud warmaker and Zionist. Rahm Emanuel, who is to be the all-important White House chief of staff, is a fervent "neoliberal" devoted to the doctrine that led to the present economic collapse and impoverishment of millions. He is also an "Israel-first" Zionist who served in the Israeli army and opposes meaningful justice for the Palestinians – an injustice that is at the root of Muslim people's loathing of the United States and the spawning of jihadism.

No serious scrutiny of this is permitted within the histrionics of Obamamania, just as no serious scrutiny of the betrayal of the majority of black South Africans was permitted within the "Mandela moment". This is especially marked in Britain, where America's divine right to "lead" is important to elite British interests. The once respected Observer newspaper, which supported Bush's war in Iraq, echoing his fabricated evidence, now announces, without evidence, that "America has restored the world's faith in its ideals". These "ideals", which Obama will swear to uphold, have overseen, since 1945, the destruction of 50 governments, including democracies, and 30 popular liberation movements, causing the deaths of countless men, women and children.

None of this was uttered during the election campaign. Had it been allowed, there might even have been recognition that liberalism as a narrow, supremely arrogant, war-making ideology is destroying liberalism as a reality. Prior to Blair's criminal warmaking, ideology was denied by him and his media mystics. "Blair can be a beacon to the world," declared the Guardian in 1997. "[He is] turning leadership into an art form."

Today, merely insert "Obama". As for historic moments, there is another that has gone unreported but is well under way – liberal democracy's shift towards a corporate dictatorship, managed by people regardless of ethnicity, with the media as its clichéd façade. "True democracy," wrote Penn Jones Jr, the Texas truth-teller, "is constant vigilance: not thinking the way you're meant to think and keeping your eyes wide open at all times."

www.johnpilger.com

Global systemic crisis Alert For Summer 2009: The US Government Defaults on its Debt

Global systemic crisis Alert For Summer 2009: The US Government Defaults on its Debt

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In this 28th edition of the GEAB, LEAP/E2020 has decided to launch a new global systemic crisis alert. Indeed our researchers anticipate that, before next summer 2009, the US government will default and be prevented to pay back its creditors (holders of US Treasury Bonds, of Fanny May and Freddy Mac shares, etc.). Of course such a bankruptcy will provoke some very negative outcome for all USD-denominated asset holders. According to our team, the period that will then begin should be conducive to the setting up of a « new Dollar » to remedy the problem of default and of induced massive capital drain from the US. The process will result from the following five factors studied in detail further in this GEAB:

The recent upward trend of the US Dollar is a direct and temporary consequence of the collapse of stock markets

• Thanks to its recent « political baptism », the Euro becomes a credible « safe haven » value and therefore provides a « crisis » alternative to the US dollar

• The US public debt is now swelling uncontrollably

• The ongoing collapse of US real economy prevents from finding an alternative solution to the country's defaulting

• « Strong inflation or hyper-inflation in the US in 2009? », that is the only question.


Studying the case of Iceland can give an idea of the upcoming stages of the crisis. That is what our team has been doing ever since the beginning of 2006. This country indeed provides a good illustration of what the US and the UK should be expecting. It can be considered – and that is what most Icelandic people do today – that the collapse of Iceland's financial system came from the fact that it was disproportionate to the size of the country's economy.


Inflation in Iceland - 2003-2008 - Source Central Bank of Iceland
Inflation in Iceland - 2003-2008 - Source Central Bank of Iceland
Financially speaking, Iceland thought of itself as UK (1), in the same way as, financially speaking, UK thought of itself as the US and the US thought of themselves as the entire world. It is therefore quite useful to study the case of Iceland (2) in order to understand the course of events that London and Washington will follow in the next 12 months (3).

What we see today is a double historical phenomenon:

. on the one hand, since September 2008 (as anticipated in the February 2008 edition of the GEAB - N°22), the whole planet has become aware that a global systemic crisis is unfolding, characterised by the collapse of the US financial system and its contagion to the rest of the world.

. on the other hand, a growing number of global players are beginning to act on their own, in reaction to the ineffectiveness of the measures advocated or implemented by the US though they are the centre of this global financial system. What happened with this first Euroland (or Eurozone summit which took place on Sunday, October 12, 2008, and whose decisions, by their scope (close to 1,700-billion EUR) and their nature (4), resulted in a regain of confidence on financial markets from all over the world, is typical of the « post-September 2008 world ».

Map of deposit insurances in the EU - Source AFP - 10/09/2008
Map of deposit insurances in the EU - Source AFP - 10/09/2008
Indeed there is such a thing as a « post-September 2008 world ». According to our team, it is now clear that this past month will remain in the history books of the whole planet as the month when the global systemic crisis started; even if what is really at play is its decanting phase, the last of a series of four phases of the crisis described by LEAP/E2020 as early as June 2006 (5). As always when it comes to large human groups, the perception of change among the general public only occurs when change is already far on its way.

As a matter of fact, September 2008 is the month when the « financial detonator » of the global systemic crisis exploded. According to LEAP/E2020 indeed, this second semester 2008 is the time when « the world dives into the heart of the impact phase of the global systemic crisis » (6); which means for our researchers that, at the end of this semester, the world enters the « decanting phase » of the crisis, i.e. a phase when the outcome of the shock settles down. This phase is the longest (from 3 to 10 years, according to the country) and the one affecting the largest number of people and countries. It is also the phase when the components of new global equilibriums will start to appear, two of them being already described by LEAP/E2020 in this 28th edition of the GEAB in the graphic illustrations below (7).

Therefore, as we repeated it on and on since 2006, this crisis is far more important, in terms of impact and outcome, than the 1929 crisis. Historically, we are the very first players, witnesses and/or victims of a crisis affecting the whole planet, in a situation of unprecedented interdependence of countries (resulting from twenty years of globalisation) and people (the level of urbanization - and related dependence for all the basic needs – water, food, energy… - is also unprecedented). However, the 1929 experience and all its dreadful outcome, is still vivid enough in our collective memories to hope, if citizens are vigilant and leaders clear-sighted, that we will be spared from a « remake » leading to major conflagration(s).

Europe, Russia, China, Japan,... are certainly the collective players who can make sure that the unfolding implosion of today’s world power, i.e. the United States, does not drive the planet into a disaster. Indeed, except for Gorbachev’s USSR, empires have a tendency to strive in vain to reverse the course of History when they realize their might is escaping them. It then belongs to partner-powers to channel the process peacefully, as well as it belongs to the citizens and rulers of the concerned country to be clear-sighted and face the difficult times they are about to cross.

Total borrowings of US Depository Institutions from the US Federal Reserve (01/08/1986 – 10/09/2008) - Source Federal Reserve Bank of St Louis
Total borrowings of US Depository Institutions from the US Federal Reserve (01/08/1986 – 10/09/2008) - Source Federal Reserve Bank of St Louis
The « emergency repair » of international financial channels, achieved by the countries of the Eurozone at the beginning of this month of October 2008 (8), should not hide three fundamental facts:

• The “repair” was necessary to curb the panic that threatened to squander the entire global financial system in just a few weeks, but what it heals temporarily is merely a symptom. It has just bought a bit of time, two to three months maximum, as the global recession and the collapse of the US economy (the table above shows the staggering increase of US banks’ borrowings from the Fed) will speed up and create new tensions in the economic, social and political fields, that must be anticipated and coped with as soon as next month (as soon as the “financial packages” have been implemented)

• The huge financial means allocated worldwide for « emergency rescues » of the global financial system, though they were necessary to put back in order the system of credit, are lost for the real economy when it is on the verge of facing a global recession

• The « emergency repair » results in further marginalization, and therefore weakening, for the United States, because it sets up processes that are contrary to those advocated by Washington for the allocation of the Hank Paulson’s and Ben Bernanke’s 700-billion USD TARP: bank recapitalisation by governments (a decision Hank Paulson has now come to follow) and interbank loan guarantees (in fact Euroland governments substitute to credit insurers, a mostly American industry at the centre of global finance since decades). These trends turn more and more decision-making relays and financial flows away from the United-States when because of the explosion of their public (9) and private debt they need them more than ever; not to mention pensions going up in smoke (10).

The last aspect shows how, in the coming months, solutions to the crisis and to its various sequences (financial, economic, social and political) will increasingly diverge: what is good for the rest of the world will not be good for the United States (11), and now, Euroland in the first place, the rest of the world seems determined to make its own choices.

The sudden shock that will result from the US defaulting in summer 2009 is partly due to this decoupling of decision-making processes of the world’s largest economies with regard to the US. It is predictable and can be dampened if global players start to anticipate it. As a matter of fact, it is one of the topics developed in this 28th edition of the GEAB: LEAP/E2020 hopes that the September shock has “educated” the world’s political, economic and financial policy-makers and made them understand that it is easier to act by anticipation than in a panic. It would be a pity if Euroland, Asia and oil-producing countries, as well as US citizens of course, discover one morning of summer 2009 that, after a long-week-end or bank-holiday in the US, their US T-Bonds and Dollars are only worth 10 percent of their value because a « new Dollar » has just been imposed (12).

---------
Notes:

(1) Iceland adopted 10 years ago all the principles of economic deregulation and « financieration » advocated and implemented in the US and UK. Reykjavik thus became some sort of a financial « Mini-Me » of London and Washington, in reference to the very Americano-British movie character Austin Powers. The three countries undertook to play the financial game of « the frog that wished to be as big as the ox », in reference to a fable by Jean de la Fontaine with a very unhappy end for the frog.

(2) Icelandic stocks collapsed 76 percent after a few days suspension designed to « avoid » a panic! Source: MarketWatch, 10/14/2008

(3) On this subject, let's spend a few lines on the amount of the “financial package” announced by London, i.e. 640-billion EUR including 64-billion EUR to recapitalize banks and a further 320-billion EUR pay back those same banks’ debt (source: Financial Times, 10/09/2008). With an economy in freefall to the image of the real-estate market, with a soaring inflation, with capital-based pensions going up in smoke and a currency at the lowest,… apart from increasing the public debt and weakening even more the Sterling pound, it is difficult to imagine how the plan can « rescue » British banks. Contrary to Eurozone banks, the British financial system, exactly like its US counterpart, is at the centre of the crisis, not a collateral victim. Gordon Brown may well compare himself to Churchill and Roosevelt together (Source: Telegraph, 10/14/2008), in his ignorance of History, he seems to forget that neither Churchill nor Roosevelt had already spent 10 years in their country's governments when each of them had to cope with their « big crisis » (that goes for the US and the Bush administration – Paulson and Bernanke included - who all come from the problem and are certainly not part of the solution). Not to mention the fact that Churchill and Roosevelt organised summits such as Yalta or Tehran leaving the French and the Germans waiting at the door, while today it is him who waits at the door of the Euroland summit.

(4) Source: L'Express, 10/13/2008

(5) Source: GEAB N°5, May 15, 2006

(6) Source: GEAB N°26, June 15, 2008

(7) LEAP/E2020 made a synthesis of its anticipations on the decanting phase of the crisis by means of a world map of the impact of the crisis based on the identification of 6 large groups of countries; and of an anticipatory schedule of the 4 financial, economic, social and political sequences over 2008-2013 for each of these regions.

(8) It is indeed the Eurozone which curbed the spiral of global panic. For weeks, the US and British initiatives followed one another without any effect. The eruption of a new collective player, the « Euroland summit », and the wide-ranging decisions it made, are a new and soothing phenomenon. It is for this very reason that Washington and London have systematically prevented such a summit from taking place ever since the Euro was launched, 6 years ago. A complete set of diplomatic gesticulation was required (preliminary meeting, pre-summit group photo,…) to make the British Prime Minister believe he was not set aside the process, when in fact there is no reason why he should take part in a Euroland Summit. In this edition of the GEAB, LEAP/E202020 comes back on the phenomenon and the long-term systemic consequences of this 1st Euroland Summit.

(9) The US financial rescue plan has already increased by 17,000 USD the debt owned by each US citizen. Source: CommodityOnline, 10/06/2008

(10) It is indeed 2,000-billion USD of capital-based pensions which evaporated in the past few weeks in the US. Source: USAToday, 10/08/2008

(11) At least in the short-term. Indeed our team is convinced that it is not bad at all for the American people in the medium- and long-term if the system currently prevailing in Washington and New-York is fundamentally reappraised. This system has thrust the country into dramatic problems among which dozens of millions of US citizens now struggle, as illustrated in this article by the New York Times dated 10/11/2008.

(12) Even if it will be a minor-scale measure compared to the prospect of a US bankruptcy, those who think that it is time to invest again on financial markets may find useful to learn that the New York Stock Exchange has recently reviewed all its circuit-breaker thresholds as a result of ratings collapse. Source : NYSE/Euronext, 09/30/

Global Starvation Ignored by American Policy Elites

Global Starvation Ignored by American Policy Elites

By Peter Phillips

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A new report (9/2/08) from The World Bank admits that in 2005 three billion one hundred and forty million people live on less that $2.50 a day and about 44% of these people survive on less than $1.25. Complete and total wretchedness can be the only description for the circumstances faced by so many, especially those in urban areas. Simple items like phone calls, nutritious food, vacations, television, dental care, and inoculations are beyond the possible for billions of people.

Starvation.net logs the increasing impacts of world hunger and starvation. Over 30,000 people a day (85% children under 5) die of malnutrition, curable diseases, and starvation. The numbers of unnecessary deaths has exceeded three hundred million people over the past forty years.

These are the people who David Rothkopf in his book Superclass calls the unlucky. “If you happen to be born in the wrong place, like sub-Saharan Africa, …that is bad luck,” Rothkopf writes. Rothkopf goes on to describe how the top 10% of the adults worldwide own 84% of the wealth and the bottom half owns barely 1%. Included in the top 10% of wealth holders are the one thousand global billionaires. But is such a contrast of wealth inequality really the result of luck, or are there policies, supported by political elites, that protect the few at the expense of the many?

Farmers around the world grow more than enough food to feed the entire world adequately. Global grain production yielded a record 2.3 billion tons in 2007, up 4% from the year before, yet, billions of people go hungry every day. Grain.org describes the core reasons for continuing hunger in a recent article “Making a Killing from Hunger.” It turns out that while farmers grow enough food to feed the world, commodity speculators and huge grain traders like Cargill control the global food prices and distribution. Starvation is profitable for corporations when demands for food push the prices up. Cargill announced that profits for commodity trading for the first quarter of 2008 were 86% above 2007. World food prices grew 22% from June 2007 to June 2008 and a significant portion of the increase was propelled by the $175 billion invested in commodity futures that speculate on price instead of seeking to feed the hungry. The result is wild food price spirals, both up and down, with food insecurity remaining widespread.

For a family on the bottom rung of poverty a small price increase is the difference between life and death, yet neither US presidential candidate has declared a war on starvation. Instead both candidates talk about national security and the continuation of the war on terror as if this were the primary election issue. Given that ten times as many innocent people died on 9/11/01 than those in the World Trade centers, where is the Manhattan project for global hunger? Where is the commitment to national security though unilateral starvation relief? Where is the outrage in the corporate media with pictures of dying children and an analysis of who benefits from hunger?

American people cringe at the thought of starving children, often thinking that there is little they can do about it, save sending in a donation to their favorite charity for a little guilt relief. Yet giving is not enough, we must demand hunger relief as a national policy inside the next presidency. It is a moral imperative for us as the richest nation in the world nation to prioritize a political movement of human betterment and starvation relief for the billions in need. Global hunger and massive wealth inequality is based on political policies that can be changed. There will be no national security in the US without the basic food needs of the world being realized.

Peter Phillips is a professor of sociology at Sonoma State University and director of Project Censored a media research group. His new book Censored 2009 is now available from by Seven Stories Press.