Tuesday, January 27, 2009

Florida drowning in jobless claims

Florida drowning in jobless claims

By SCOTT ANDRON

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Floridians who want state unemployment benefits may need to brush up on their computer skills. That’s because there’s no way to sign up in person, and those who apply by phone can expect either busy signals or waits of up to 90 minutes to speak with someone.

“I’ve called them on that line, and it’s been busy for hours on end,” said Marta Gonzalez, a Miami resident who wants to know why she hasn’t received any payments yet.

As the ranks of Florida’s unemployed grow, the state labor department is finding itself deluged with applications for compensation, which maxes out at $275 per week.

In December alone, the department handled more than 157,000 applications, or almost triple the number from the same month in 2007. For all of 2008, the department handled 1.3 million applications, or almost twice as many as the previous year.

And the problem continues to get worse. Last week alone the state handled 87,000 claims, or more than four times as many as in the same week of last year.

The spike in benefit applications is tied to Florida’s rising unemployment rate: 7.3 percent in November, up from 4.8 percent the previous year. December unemployment numbers are scheduled to be released today.

The federal government has extended the maximum time people can collect benefits from 26 weeks to 59 weeks in Florida. But this has added to the state’s workload as thousands of people whose benefits had expired reapply.

That translates into frustration for many applicants who don’t apply online and face busy signals or long waits to talk to someone on the phone.

“You know, I might be unemployed, but I have better things to do,” Gonzalez said.

She said she has tried e-mailing the state about the status of her claim, but received no response. Then she wrote to the governor’s office, and got no response there either.

Many frustrated applicants visit local unemployment offices only to find that claims are no longer taken in person.

In general, workers at the local offices don’t even have access to the state computer system that carries the unemployment claims.

For example, Broward’s unemployment agency, Workforce One, has one person in its Hollywood office who can look up the status of benefit applications. He can’t change the applications, but the line to see him has snaked around the office anyway.

The state says it has been doing its best to keep up.

“We’ve been working very hard, and we’ve made numerous enhancements to the system, and we’re looking at numerous other ways to help the customer get access to the system,” said Robby Cunningham, a spokesman for the state labor department whose official name is the Agency for Workforce Innovation. The agency has added 325 workers to its unemployment compensation division during the past 18 months, bringing total staff to 900, Cunningham said. An additional 81 employees will join the division in February. The positions are at a call center in Orlando or at agency headquarters in Tallahassee.

The agency also has added 345 telephone lines to its phone system for a total of 1,012 lines, Cunningham said.

And in July, the agency extended the hours in which applicants can file for or verify unemployment compensation information by phone.

Hours are now 7:30 a.m. to 7 p.m. Monday through Friday, and 8 a.m. to 4 p.m. on Saturday.

'Rescued' Citi Buying $50m Jet

JUST PLANE DESPICABLE

By JENNIFER GOULD KEIL and CHUCK BENNETT

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Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet - only this time, it's the taxpayers who are getting screwed.

Even though the bank's stock is as cheap as a gallon of gas and it's burning through a $45 billion taxpayer-funded rescue, the airhead execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal.

The French-made luxury jet seats up to 12 in a plush interior with leather seats, sofas and a customizable entertainment center, according to Dassault's sales literature. It can cruise 5,950 miles before refueling and has a top speed of 559 mph.

There are just nine of these top-of-the-line models in the United States, with Dassault's European factory churning out three to four 7Xs a month.

Citigroup decided to get its new wings two years ago, when the financial-services giant was flush with cash, but it still intends to take possession of the jet this year despite its current woes, the source said.

"Why should I help you when what you write will be used to the detriment of our company?" replied Bill McNamee, head of CitiFlight Inc., the subsidiary that manages Citigroup's corporate fleet, when asked to comment about the new 7X.

"What relevance does it have but to hurt my company?"

It's not uncommon for large companies to pay a deposit on a new plane then cancel the order before delivery, according to a source in the corporate aviation business.

Citigroup execs are also quietly trying to unload two of their older Dassault 900EXs.

Those jets, nearly 10 years old, are worth an estimated $27 million each. They were still listed for sale yesterday on the Web site of Citigroup's aviation broker, Aviation Professionals.

A company representative said she would not comment on "brokering both sides of the deal" when asked about the incoming Falcon 7X.

The Dassaults are part of CitiFlight's Gulf Sierra fleet, which includes the two Falcon 900EXs, tail numbers N399GS and N588GS, currently for sale. FAA records show Citigroup reserved a new tail number, N488GS, possibly for the incoming 7X on Nov. 10 last year.

A woman answering the phone at CitiFlight's private hangar in White Plains said she was "not authorized to release information" about the new jet.

Dassault's US sales office declined to comment.

Citigroup spokesman Stephen Cohen declined to comment.

The Torture Ban that Doesn't Ban Torture

The Torture Ban that Doesn't Ban Torture

Obama's Rules Keep It Intact, and Could Even Accord With an Increase in US-Sponsored Torture Worldwide.

By Allan Nairn

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If you're lying on the slab still breathing, with your torturer hanging over you, you don't much care if he is an American or a mere United States - sponsored trainee.

When President Obama declared flatly this week that "the United States will not torture" many people wrongly believed that he'd shut the practice down, when in fact he'd merely repositioned it.

Obama's Executive Order bans some -- not all -- US officials from torturing but it does not ban any of them, himself included, from sponsoring torture overseas.

Indeed, his policy change affects only a slight percentage of US-culpable tortures and could be completely consistent with an increase in US-backed torture worldwide.

The catch lies in the fact that since Vietnam, when US forces often tortured directly, the US has mainly seen its torture done for it by proxy -- paying, arming, training and guiding foreigners doing it, but usually being careful to keep Americans at least one discreet step removed.

That is, the US tended to do it that way until Bush and Cheney changed protocol, and had many Americans laying on hands, and sometimes taking digital photos.

The result was a public relations fiasco that enraged the US establishment since by exposing US techniques to the world it diminished US power.

But despite the outrage, the fact of the matter was that the Bush/Cheney tortures being done by Americans were a negligible percentage of all of the tortures being done by US clients.

For every torment inflicted directly by Americans in Iraq, Afghanistan, Guantanamo and the secret prisons, there were many times more being meted out by US-sponsored foreign forces.

Those forces were and are operating with US military, intelligence, financial or other backing in Egypt, Israel, Saudi Arabia, Ethiopia, Pakistan, Jordan, Indonesia, Thailand, Uzbekistan, Colombia, Nigeria, and the Philippines, to name some places, not to mention the tortures sans-American-hands by the US-backed Iraqis and Afghans.

What the Obama dictum ostensibly knocks off is that small percentage of torture now done by Americans while retaining the overwhelming bulk of the system's torture, which is done by foreigners under US patronage.

Obama could stop backing foreign forces that torture, but he has chosen not to do so.

His Executive Order instead merely pertains to treatment of "...an individual in the custody or under the effective control of an officer, employee, or other agent of the United States Government, or detained within a facility owned, operated, or controlled by a department or agency of the United States, in any armed conflict..." which means that it doesn't even prohibit direct torture by Americans outside environments of "armed conflict," which is where much torture happens anyway since many repressive regimes aren't in armed conflict.

And even if, as Obama says, "the United States will not torture," it can still pay, train, equip and guide foreign torturers, and see to it that they, and their US patrons, don't face local or international justice.

This is a return to the status quo ante, the torture regime of Ford through Clinton, which, year by year, often produced more US-backed strapped-down agony than was produced during the Bush/Cheney years.

Under the old -- now new again -- proxy regime Americans would, say, teach interrogation/torture, then stand in the next room as the victims screamed, feeding questions to their foreign pupils. That's the way the US did it in El Salvador under JFK through Bush Sr. (For details see my "Behind the Death Squads: An exclusive report on the U.S. role in El Salvador’s official terror," The Progressive, May, 1984 ; the US Senate Intelligence Committee report that piece sparked is still classified, but the feeding of questions was confirmed to me by Intelligence Committee Senators. See also my "Confessions of a Death Squad Officer," The Progressive, March, 1986, and my "Comment," The New Yorker, Oct. 15, 1990,[regarding law, the US, and El Salvador]).

In Guatemala under Bush Sr. and Clinton (Obama's foreign policy mentors) the US backed the army's G-2 death squad which kept comprehensive files on dissidents and then electroshocked them or cut off their hands. (The file/ surveillance system was launched for them in the '60s and '70s by CIA/ State/ AID/ special forces; for the history see "Behind the Death Squads," cited above, and the books of Prof. Michael McClintock).

The Americans on the ground in the Guatemalan operation, some of whom I encountered and named, effectively helped to run the G-2 but, themselves, tiptoed around its torture chambers. (See my "C.I.A. Death Squad," The Nation [US], April 17, 1995, "The Country Team," The Nation [US], June 5, 1995, letter exchange with US Ambassador Stroock, The Nation [US], May 29, 1995, and Allan Nairn and Jean-Marie Simon, "Bureaucracy of Death," The New Republic, June 30, 1986).

It was a similar story in Bush Sr. and Clinton's Haiti -- an operation run by today's Obama people -- where the DIA (Defense Intelligence Agency) helped launch the terrorist group FRAPH, the CIA paid its leader, and FRAPH itsef laid the machetes on Haitian civilians, torturing and killing as US proxies. (See my "Behind Haiti's paramilitaries: our man in FRAPH," The Nation [US], Oct 24, 1994, and "He's our S.O.B.," The Nation [US], Oct. 31, 1994; the story was later confirmed on ABC TV's "This Week" by US Secretary of State Warren Christopher).

In today's Thailand -- a country that hardly comes to mind when most people think of torture -- special police and militaries get US gear and training for things like "target selection" and then go out and torture Thai Malay Muslms in the rebel deep south, and also sometimes (mainly Buddhist) Burmese refugees and exploited northern and west coast workers.

Not long ago I visited a key Thai interrogator who spoke frankly about army/ police/ intel torture and then closed our discussion by saying "Look at this," and invited me into his back room.

It was an up to date museum of plaques, photos and awards from US and Western intelligence, including commendations from the CIA counter-terrorism center (then run by people now staffing Obama), one-on-one photos with high US figures, including George W. Bush, a medal from Bush, various US intel/ FBI/ military training certificates, a photo of him with an Israeli colleague beside a tank in the Occupied Territories, and Mossad, Shin Bet, Singaporean, and other interrogation implements and mementos.

On my way out, the Thai intel man remarked that he was due to re-visit Langley soon.

His role is typical. There are thousands like him worldwide. US proxy torture dwarfs that at Guantanamo.

Many Americans, to their credit, hate torture. The Bush/Cheney escapade exposed that.

But to stop it they must get the facts and see that Obama's ban does not stop it, and indeed could even accord with an increase in US-sponsored torture crime.

In lieu of action, the system will grind on tonight. More shocks, suffocations, deep burns. And the convergence of thousands of complex minds on one simple thought: 'Please, let me die.'

Street-Level Groups Enlisted to Report Labor Violations

Street-Level Groups Enlisted to Report Labor Violations

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To crack down on businesses that pay less than the minimum wage, fail to pay overtime or to pay wages altogether, steal tips or commit other labor violations, the New York State Department of Labor is starting an experimental program that will rely on community organizations to monitor compliance with labor laws.

In an announcement, the state labor commissioner, M. Patricia Smith, called the program, the New York Wage Watch, a “one-of-a-kind grassroots tool in the fight against illegal labor practices.”

The six-month pilot will begin with six participants: the Chinese Staff and Workers’ Association, which will focus on Chinatown, Flushing and parts of Long Island; Make the Road New York, which will focus on Bushwick; the Workplace Project, based on Long Island; the United Food and Commercial Workers union, which will look at high-end supermarkets; the Retail, Wholesale and Department Store Union, which will focus on retail stores in Lower Manhattan, Bushwick, the Kingsbridge section of the Bronx and parts of Queens; and the Centro del Inmigrante, based on Staten Island.

The six groups will conduct know-your-rights training, providing employers with information about compliance and distributing brochures to workers in supermarkets, laundromats, nail salons, day-labor sites and other work areas. They will have a designated contact in the Labor Department’s Division of Labor Standards, which enforces wage and hour laws, to whom they can refer violations or questions.

The department is to provide training and materials to the groups starting on Feb. 7.

After the first experiment in New York City and on Long Island, the Labor Department will seek additional groups for the program. The groups must be nongovernmental and nonprofit, and can include religious organizations, student groups, labor unions, business associations or neighborhood groups.

Ms. Smith said the program was loosely based on the Neighborhood Watch programs that began in Queens in the 1960s. In December 2007, she said, the Labor Department investigated a commercial strip in Bushwick. Two of the six groups now taking part in the pilot project — Make the Road New York and the Retail, Wholesale and Department Store Union — maintained a presence in the Bushwick area, staying in touch with workers and employers, and the number of labor-law violations went down, Ms. Smith said.

The Labor Department has documented numerous labor-law violations at a variety of workplaces in recent years, from restaurants and car washes to sites like the Saratoga Race Course and the Erie County Fair.

Amy Carroll, a supervising lawyer at Make the Road New York, said, “The Department of Labor can’t be in every nook and cranny of the city and the state all the time. We want employers to know there are costs for violating the law. They can’t get away with it.” ....

How The Republican Party Has Conned America for Thirty Years

Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years

by Thom Hartmann

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This weekend, House Republican leader John Boehner played out the role of Jude Wanniski on NBC's "Meet The Press."

Odds are you've never heard of Jude, but without him Reagan never would have become a "successful" president, Republicans never would have taken control of the House or Senate, Bill Clinton never would have been impeached, and neither George Bush would have been president.

When Barry Goldwater went down to ignominious defeat in 1964, most Republicans felt doomed (among them the then-28-year-old Wanniski). Goldwater himself, although uncomfortable with the rising religious right within his own party and the calls for more intrusion in people's bedrooms, was a diehard fan of Herbert Hoover's economic worldview.

In Hoover's world (and virtually all the Republicans since reconstruction with the exception of Teddy Roosevelt), market fundamentalism was a virtual religion. Economists from Ludwig von Mises to Friedrich Hayek to Milton Friedman had preached that government could only make a mess of things economic, and the world of finance should be left to the Big Boys – the Masters of the Universe, as they sometimes called themselves – who ruled Wall Street and international finance.

Hoover enthusiastically followed the advice of his Treasury Secretary, multimillionaire Andrew Mellon, who said in 1931: "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down... enterprising people will pick up the wrecks from less competent people."

Thus, the Republican mantra was: "Lower taxes, reduce the size of government, and balance the budget."

The only problem with this ideology from the Hooverite perspective was that the Democrats always seemed like the bestowers of gifts, while the Republicans were seen by the American people as the stingy Scrooges, bent on making the lives of working people harder all the while making richer the very richest. This, Republican strategists since 1930 knew, was no way to win elections.

Which was why the most successful Republican of the 20th century up to that time, Dwight D. Eisenhower, had been quite happy with a top income tax rate on millionaires of 91 percent. As he wrote to his brother Edgar Eisenhower in a personal letter on November 8, 1954:

"[T]o attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon 'moderation' in government.

"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt [you possibly know his background], a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid."

Goldwater, however, rejected the "liberalism" of Eisenhower, Rockefeller, and other "moderates" within his own party. Extremism in defense of liberty was no vice, he famously told the 1964 nominating convention, and moderation was no virtue. And it doomed him and his party.

And so after Goldwater's defeat, the Republicans were again lost in the wilderness just as after Hoover's disastrous presidency. Even four years later when Richard Nixon beat LBJ in 1968, Nixon wasn't willing to embrace the economic conservatism of Goldwater and the economic true believers in the Republican Party. And Jerry Ford wasn't, in their opinions, much better. If Nixon and Ford believed in economic conservatism, they were afraid to practice it for fear of dooming their party to another forty years in the electoral wilderness.

By 1974, Jude Wanniski had had enough. The Democrats got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their "big government" projects like roads, bridges, and highways were built giving a healthy union paycheck to construction workers. They kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that made them seem like a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class. Americans loved it. And every time Republicans railed against these programs, they lost elections.

Everybody understood at the time that economies are driven by demand. People with good jobs have money in their pockets, and want to use it to buy things. The job of the business community is to either determine or drive that demand to their particular goods, and when they're successful at meeting the demand then factories get built, more people become employed to make more products, and those newly-employed people have a paycheck that further increases demand.

Wanniski decided to turn the classical world of economics – which had operated on this simple demand-driven equation for seven thousand years – on its head. In 1974 he invented a new phrase – "supply side economics" – and suggested that the reason economies grew wasn't because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money. The more things there were, the faster the economy would grow.

At the same time, Arthur Laffer was taking that equation a step further. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would go up!

Neither concept made any sense – and time has proven both to be colossal idiocies – but together they offered the Republican Party a way out of the wilderness.

Ronald Reagan was the first national Republican politician to suggest that he could cut taxes on rich people and businesses, that those tax cuts would cause them to take their surplus money and build factories or import large quantities of cheap stuff from low-labor countries, and that the more stuff there was supplying the economy the faster it would grow. George Herbert Walker Bush – like most Republicans of the time – was horrified. Ronald Reagan was suggesting "Voodoo Economics," said Bush in the primary campaign, and Wanniski's supply-side and Laffer's tax-cut theories would throw the nation into such deep debt that we'd ultimately crash into another Republican Great Depression.

But Wanniski had been doing his homework on how to sell supply-side economics. In 1976, he rolled out to the hard-right insiders in the Republican Party his "Two Santa Clauses" theory, which would enable the Republicans to take power in America for the next thirty years.

Democrats, he said, had been able to be "Santa Clauses" by giving people things from the largesse of the federal government. Republicans could do that, too – spending could actually increase. Plus, Republicans could be double Santa Clauses by cutting people's taxes! For working people it would only be a small token – a few hundred dollars a year on average – but would be heavily marketed. And for the rich it would amount to hundreds of billions of dollars in tax cuts. The rich, in turn, would use that money to import or build more stuff to market, thus increasing supply and stimulating the economy. And that growth in the economy would mean that the people still paying taxes would pay more because they were earning more.

There was no way, Wanniski said, that the Democrats could ever win again. They'd have to be anti-Santas by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections.

When Reagan rolled out Supply Side Economics in the early 80s, dramatically cutting taxes while exploding (mostly military) spending, there was a moment when it seemed to Wanniski and Laffer that all was lost. The budget deficit exploded and the country fell into a deep recession – the worst since the Great Depression – and Republicans nationwide held their collective breath. But David Stockman came up with a great new theory about what was going on – they were "starving the beast" of government by running up such huge deficits that Democrats would never, ever in the future be able to talk again about national health care or improving Social Security – and this so pleased Alan Greenspan, the Fed Chairman, that he opened the spigots of the Fed, dropping interest rates and buying government bonds, producing a nice, healthy goose to the economy. Greenspan further counseled Reagan to dramatically increase taxes on people earning under $37,800 a year by increasing the Social Security (FICA/payroll) tax, and then let the government borrow those newfound hundreds of billions of dollars off-the-books to make the deficit look better than it was.

Reagan, Greenspan, Winniski, and Laffer took the federal budget deficit from under a trillion dollars in 1980 to almost three trillion by 1988, and back then a dollar could buy far more than it buys today. They and George HW Bush ran up more debt in eight years than every president in history, from George Washington to Jimmy Carter, combined. Surely this would both starve the beast and force the Democrats to make the politically suicidal move of becoming deficit hawks.

And that's just how it turned out. Bill Clinton, who had run on an FDR-like platform of a "new covenant" with the American people that would strengthen the institutions of the New Deal, strengthen labor, and institute a national health care system, found himself in a box. A few weeks before his inauguration, Alan Greenspan and Robert Rubin sat him down and told him the facts of life: he was going to have to raise taxes and cut the size of government. Clinton took their advice to heart, raised taxes, balanced the budget, and cut numerous programs, declaring an "end to welfare as we know it" and, in his second inaugural address, an "end to the era of big government." He was the anti-Santa Claus, and the result was an explosion of Republican wins across the country as Republican politicians campaigned on a platform of supply-side tax cuts and pork-rich spending increases.

Looking at the wreckage of the Democratic Party all around Clinton by 1999, Winniski wrote a gloating memo that said, in part: "We of course should be indebted to Art Laffer for all time for his Curve... But as the primary political theoretician of the supply-side camp, I began arguing for the 'Two Santa Claus Theory' in 1974. If the Democrats are going to play Santa Claus by promoting more spending, the Republicans can never beat them by promoting less spending. They have to promise tax cuts..."

Ed Crane, president of the Libertarian CATO Institute, noted in a memo that year: "When Jack Kemp, Newt Gingich, Vin Weber, Connie Mack and the rest discovered Jude Wanniski and Art Laffer, they thought they'd died and gone to heaven. In supply-side economics they found a philosophy that gave them a free pass out of the debate over the proper role of government. Just cut taxes and grow the economy: government will shrink as a percentage of GDP, even if you don't cut spending. That's why you rarely, if ever, heard Kemp or Gingrich call for spending cuts, much less the elimination of programs and departments."

George W. Bush embraced the Two Santa Claus Theory with gusto, ramming through huge tax cuts – particularly a cut to a maximum 15 percent income tax rate on people like himself who made their principle income from sitting around the pool waiting for their dividend or capital gains checks to arrive in the mail – and blowing out federal spending. Bush even out-spent Reagan, which nobody had ever thought would again be possible.

And it all seemed to be going so well, just as it did in the early 1920s when a series of three consecutive Republican presidents cut income taxes on the uber-rich from over 70 percent to under 30 percent. In 1929, pretty much everybody realized that instead of building factories with all that extra money, the rich had been pouring it into the stock market, inflating a bubble that – like an inexorable law of nature – would have to burst. But the people who remembered that lesson were mostly all dead by 2005, when Jude Wanniski died and George Gilder celebrated the Reagan/Bush supply-side-created bubble economies in a Wall Street Journal eulogy:

"...Jude's charismatic focus on the tax on capital gains redeemed the fiscal policies of four administrations. ... [T]he capital-gains tax has come erratically but inexorably down -- while the market capitalization of U.S. equities has risen from roughly a third of global market cap to close to half. These many trillions in new entrepreneurial wealth are a true warrant of the worth of his impact. Unbound by zero-sum economics, Jude forged the golden gift of a profound and passionate argument that the establishments of the mold must finally give way to the powers of the mind. He audaciously defied all the Buffetteers of the trade gap, the moldy figs of the Phillips Curve, the chic traders in money and principle, even the stultifying pillows of the Nobel Prize."

In reality, his tax cuts did what they have always done over the past 100 years – they initiated a bubble economy that would let the very rich skim the cream off the top just before the ceiling crashed in on working people.

The Republicans got what they wanted from Wanniski's work. They held power for thirty years, made themselves trillions of dollars, cut organized labor's representation in the workplace from around 25 percent when Reagan came into office to around 8 of the non-governmental workforce today, and left such a massive deficit that some misguided "conservative" Democrats are again clamoring to shoot Santa with working-class tax hikes and entitlement program cuts.

And now Boehner, McCain, Brooks, and the whole crowd are again clamoring to be recognized as the ones who will out-Santa Claus the Democrats. You'd think after all the damage they've done that David Gregory would have simply laughed Boehner off the program – much as the American people did to the Republicans in the last election – although Gregory is far too much a gentleman for that. Instead, he merely looked incredulous; it was enough.

The Two Santa Claus theory isn't dead, as we can see from today's Republican rhetoric. Hopefully, though, reality will continue to sink in with the American people and the massive fraud perpetrated by Wanniski, Reagan, Laffer, Graham, Bush(s), and all their "conservative" enablers will be seen for what it was and is. And the Obama administration can get about the business of repairing the damage and recovering the stolen assets of these cheap hustlers.

A Texas challenge to the Voting Rights Act

A Texas challenge to the Voting Rights Act

The United States has made progress in fighting discrimination at the polls, but we still need the protections of the Voting Rights Act

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In one of those seemingly technical cases that in fact have tremendous social significance, a tiny utility district in Austin, Texas, last week persuaded the U.S. Supreme Court to hear its argument for invalidating a critical piece of the 4-decades-old Voting Rights Act.

At issue is Section 5 of the act, which requires certain parts of the country with a history of flagrant voting discrimination to clear any changes in election practices or voting rules in advance with the Justice Department or a federal court. It sounds mundane, but the effect of this "pre-clearance" provision has been enormous. Today, nine states, dozens of counties and hundreds of cities, towns and smaller political units can't so much as move a polling place down the street without getting permission first. When it was originally passed in 1965, all of Alabama, South Carolina, Mississippi, Louisiana, Virginia and Georgia were covered under the section. Later other areas were added, including four California counties -- Kings, Merced, Monterey and Yuba.

Not surprisingly, many of those covered by Section 5 have chafed under the law's requirements. The Northwest Austin Municipal Utility District argues that it has no history of voting-related discrimination yet has been stuck for decades under this "uniquely intrusive" law. Nor has it been allowed to remove itself from the list under the existing "bailout" provisions. Austin is covered, not because of anything it's done but because all of Texas is covered -- and Texas is covered because of bad behavior that dates back decades. There is no justification for such an unconstitutional overreach, the district maintains.

On its face, the district's central argument is about the proper limitations of federal power. But on another level, it is part of a broader battle between liberals and conservatives over the status of America's long struggle with racism. A subtext of the argument is that so much progress has been made in America since the 1960s that it is now time to put such pesky anti-discrimination remedies as Section 5 behind us.

"The America that has elected Barack Obama as its first African American president is far different than when Section 5 was first enacted in 1965," write the lawyers for the district, pointing to "deep-rooted societal change" that has transformed the country. Variations of this argument have been around for a while. Affirmative-action opponents have argued that racial progress has made racial preferences unnecessary. Abigail Thernstrom of the Manhattan Institute made similar points in The Times' Opinion pages in an article titled "The voting rights battle is over. We all won." Shelby Steele of the Hoover Institution touched on it in these pages when he discussed "the death of white supremacy."

The idea is that in the new, improved, post-racial America, racism is becoming a thing of the past, inequities are being remedied, gaps are closing -- and we can finally do away with affirmative action and other race-conscious remedies that have made us so uncomfortable for so many years. Then we can all get back to the simpler business of equal justice and equal rights.

It's pretty to think so, but this page isn't buying it. Yes, there's been great progress. We're pleased that the black middle class has grown, that Jim Crow has been wiped out, that the merits of diversity are widely recognized. We realize that in 1940, 60% of all employed black women were in domestic service -- compared with 2% today. We're aware that interracial marriage is leading to a "beiging" of America, and that today's minorities are rapidly becoming the majority in many communities.

But that doesn't mean our problems are over. In the United States today, blacks and Latinos are more segregated in school than they've been in 40 years, according to UCLA's Civil Rights Project. The black male unemployment rate remains twice that of the white male rate. Only 8.2% of non-Latino whites lived in poverty in the U.S. in 2007, compared with 21.5% of Latinos and 24.5% of blacks.

There's still voting discrimination too. Before extending Section 5 in 2006, Congress held 22 hearings and finally concluded that "despite the progress made by minorities [under the Voting Rights Act], the evidence before Congress reveals that 40 years has not been a sufficient amount of time to eliminate the vestiges of discrimination following nearly 100 years of disregard." Congress also found that Section 5 had been effective at addressing the problem.

Could it be improved? Of course. We have no objection to a discussion about whether the "bail out" provision should be made less restrictive. We don't believe that a jurisdiction should be stuck on the list forever. But nor do we believe that the time has come to tear out the heart of the Voting Rights Act. We're a better country than we once were, but we have a long way to go.

Major US Companies to Slash 45,000 Jobs

Layoffs Cut Deeper Into Economy

As Recession Hits Most Industries, Corporate Giants Slash Jobs

By Annys Shin and Neil Irwin

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The nation's employers, including some of its largest and most sturdy, announced plans yesterday to slash more than 55,000 jobs, a staggering one-day toll that highlighted how quickly layoffs are accelerating and how widely misery is spreading throughout the labor market.

The cuts extended to companies that were once considered bright spots in the U.S. economy. Construction equipment maker Caterpillar, whose business last year was bolstered by strong exports, said it would cut 20,000 jobs. Pfizer, one of the giants of a health-care sector that had until recently seemed immune from the downturn, said it would cut 8,000.

In all, 22 of the 30 companies that are part of the Dow Jones industrial average have announced job cuts since the economy took a nosedive in October. Analysts say they've been surprised by just how quickly those cuts have added up. The number of people receiving unemployment insurance benefits now stands at 4.6 million, the highest level since 1982.

"These are not just numbers on a page," President Obama told reporters at the White House yesterday, as he urged Congress to pass his economic stimulus package. "These are working men and women whose lives have been disrupted. We owe it to each of them, and to every single American, to act with a sense of urgency and common purpose."

The unemployment rate, at 7.2 percent nationwide as of December, has already reached 10 percent in some states, including Michigan and Rhode Island, the hardest hit. The nation has experienced the steepest rise in unemployment since the recession of the early 1980s, a recent analysis by the Economic Policy Institute found.

The job cuts announced yesterday "are the predictable consequence of a quickly unraveling economy affecting all sectors and segments of the workforce," said Lawrence Mishel, the president of EPI. "Unfortunately, the rise in unemployment we've already had may only be halfway to where we're heading."

Construction firms, banks and automakers have been eliminating jobs for more than a year. But now positions are being cut across the economy. Those cuts signal that even financially strong companies are bracing for what they think will be a prolonged economic downturn.

Companies announcing job cuts yesterday included Sprint Nextel, the wireless provider, which cut 8,000; Home Depot, which cut 7,000; General Motors, which laid off 2,000; and Texas Instruments, which cut 3,400.

Caterpillar, viewed as a stalwart of American industry, cut more jobs than any other company yesterday. It said the economy has slowed so much in China and other once fast-growing nations that there have been fewer buyers for the company's bulldozers, graders and other heavy equipment.

At Pfizer, the announcement of job cuts came after the firm said it would acquire Wyeth. While job cuts are typical after mergers, the recession played a role as well, analysts said. Drugmakers are facing increased regulation and competition from cheaper generics. Prescription drug spending in 2007 fell to its lowest growth rate in more than 30 years, according to a study published last month by research firm IMS Health.

Sprint, the third-largest wireless provider, has announced three rounds of layoffs in the past two years as it continues to lose ground to its competitors. While analysts said the job cuts reflect problems specific to Sprint, they said the drop in consumer spending and rising unemployment has hurt the telecom industry as well. Wireless subscriber growth in the United States is slowing, said Stanford Group analyst Michael Nelson. And consumers are trading down to cheaper monthly plans and being more careful not to go over their allotted minutes.

Workers in Europe were hit by their own wave of corporate layoffs yesterday. Dutch financial firm ING said it was cutting 7,000 jobs. Steelmaker Corus said it was eliminating 3,500 jobs worldwide. Royal Philips Electronics, Europe's largest maker of televisions, said it was letting go 6,000 workers after reporting a $1.9 billion loss for the fourth quarter of 2008, its first quarterly loss in five years.

"The development of our quarterly results reflects the unprecedented speed and ferocity with which the economy softened in 2008," chief executive Gerard Kleisterlee said in a statement.

John Challenger, chief executive of Challenger, Gray & Christmas, an outplacement consulting firm, called the flurry of layoff announcements "a perverse sign of the global economy."

He said he was also disturbed by signs that well-run companies that didn't overhire in good times are now being forced to trim their workforces in bad ones. Such companies "learned their lessons from the last period of expansion in '90s," he said. "The concern is they're cutting into muscle . . . and may have damaged their ability to recover when things start to happen."

While layoffs by big names attracted the most attention yesterday, workers at thousands of smaller firms are losing their jobs as well.

Small companies with 1 to 49 employees shed 281,000 jobs in December, according to a report released this month by payroll services firm Automatic Data Processing. Medium-size firms with 50 to 499 employees cut 321,000. Large companies with more than 499 workers lost 91,000.

Many economists had forecast that a government stimulus package would help revive the economy in the second half of the year. But as the recession deepens, some wonder whether its impact will be felt as early as they had expected.

"If the stimulus gets out there, that's a chunk of money that will probably help stimulate the economy, but we're not as sure of it as we were a few months ago. Things fell apart in the fourth quarter much faster than I've ever seen it happen before," said David Wyss, chief economist for Standard & Poor's.

For the next six months, many economists do not expect the pace of layoff announcements to let up much.

"There is nothing in the economic tea leaves that suggest someone is going to be hiring. This is a broad-based economic slump. From pharma to industrial to housing to telecommunications, every aspect of this economy is in a free-fall," said Richard Yamarone, director of economic research for Argus Research in New York. "There is no safe haven."

The union way up

The union way up

America, and its faltering economy, need unions to restore prosperity to the middle class.

By Robert B. Reich

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Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America's middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline.

But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.

It's no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn't share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.

Typical families kept buying only by going into debt. This was possible as long as the housing bubble expanded. Home-equity loans and refinancing made up for declining paychecks. But that's over. American families no longer have the purchasing power to keep the economy going. Lower paychecks, or no paychecks at all, mean fewer purchases, and fewer purchases mean fewer jobs.

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won't work because they don't permanently raise wages. Most families used the rebate last year to pay off debt -- not a bad thing, but it doesn't keep the virtuous circle running.

Bank bailouts won't work either. Businesses won't borrow to expand without consumers to buy their goods and services. And Americans themselves can't borrow when they're losing their jobs and their incomes are dropping.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages -- taking home $863 a week, compared with $663 for the typical nonunion worker -- and are 59% more likely to have employer-provided health insurance than their nonunion counterparts.

Examples abound. In 2007, nearly 12,000 janitors in Providence, R.I., New Hampshire and Boston, represented by the Service Employees International Union, won a contract that raised their wages to $16 an hour, guaranteed more work hours and provided family health insurance. In an industry typically staffed by part-time workers with a high turnover rate, a union contract provided janitors with full-time, sustainable jobs that they could count on to raise their families' -- and their communities' -- standard of living.

In August, 65,000 Verizon workers, represented by the Communications Workers of America, won wage increases totaling nearly 11% and converted temporary jobs to full-time status. Not only did the settlement preserve fully paid healthcare premiums for all active and retired unionized employees, but Verizon also agreed to provide $2 million a year to fund a collaborative campaign with its unions to achieve meaningful national healthcare reform.

Although America and its economy need unions, it's become nearly impossible for employees to form one. The Hart poll I cited tells us that 57 million workers would want to be in a union if they could have one. But those who try to form a union, according to researchers at MIT, have only about a 1 in 5 chance of successfully doing so.

The reason? Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don't heed the warnings, they're fired, even though that's illegal. I saw this when I was secretary of Labor over a decade ago. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business.

This isn't right. The most important feature of the Employee Free Choice Act, which will be considered by the just-seated 111th Congress, toughens penalties against companies that violate their workers' rights. The sooner it's enacted, the better -- for U.S. workers and for the U.S. economy.

The American middle class isn't looking for a bailout or a handout. Most people just want a chance to share in the success of the companies they help to prosper. Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

Twenty-five people at the heart of the meltdown

Twenty-five people at the heart of the meltdown ...

The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis

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Alan Greenspan, chairman of US Federal Reserve 1987- 2006
Only a couple of years ago the long-serving chairman of the Fed, a committed free marketeer who had steered the US economy through crises ranging from the 1987 stockmarket collapse through to the aftermath of the 9/11 attacks, was lauded with star status, named the "oracle" and "the maestro". Now he is viewed as one of those most culpable for the crisis. He is blamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. He backed sub-prime lending and urged homebuyers to swap fixed-rate mortgages for variable rate deals, which left borrowers unable to pay when interest rates rose.
For many years, Greenspan also defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later. Billionaires George Soros and Warren Buffett might have been extremely worried about these complex products - Soros avoided them because he didn't "really understand how they work" and Buffett famously described them as "financial weapons of mass destruction" - but Greenspan did all he could to protect the market from what he believed was unnecessary regulation. In 2003 he told the Senate banking committee: "Derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so". In recent months, however, he has admitted at least some of his long-held beliefs have turned out to be incorrect - not least that free markets would handle the risks involved, that too much regulation would damage Wall Street and that, ultimately, banks would always put the protection of their shareholders first. He has described the current financial crisis as "the type ... that comes along only once in a century" and last autumn said the fact that the banks had played fast and loose with shareholders' equity had left him "in a state of shocked disbelief".

Mervyn King, governor of the Bank of England

When Mervyn King settled his feet under the desk in his Threadneedle Street office, the UK economy was motoring along just nicely: GDP was growing at 3% and inflation was just 1.3%. Chairing his first meeting of the Bank's monetary policy committee (MPC), interest rates were cut to a post-war low of 3.5%. His ambition was that monetary policy decision-making should become "boring".
How we would all like it to become boring now. When the crunch first took hold, the Aston Villa-supporting governor insisted it was not about to become an international crisis. In the first weeks of the crunch he refused to pump cash into the financial system and insisted that "moral hazard" meant that some banks should not be bailed out. The Treasury select committee has said King should have been "more pro-active". King's MPC should have realised there was a housing bubble developing and taken action to damp it down and, more recently, the committee should have seen the recession coming and cut interest rates far faster than it did.

Politicians

Bill Clinton, former US president
Clinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans. In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%.

Gordon Brown, prime minister

The British prime minister seems to have been completely dazzled by the movers and shakers in the Square Mile, putting the City's interests ahead of other parts of the economy, such as manufacturers. He backed "light touch" regulation and a low-tax regime for the thousands of non-domiciled foreign bankers working in London and for the private equity business.

George W Bush, former US president

Clinton might have started the sub-prime ball rolling, but the Bush administration certainly did little to put the brakes on the vast amount of mortgage cash being lent to "Ninja" (No income, no job applicants) borrowers who could not afford them. Neither did he rein back Wall Street with regulation (although the government did pass the Sarbanes-Oxley Act in the wake of the Enron scandal).


Senator Phil Gramm

Former US senator from Texas, free market advocate with a PhD in economics who fought long and hard for financial deregulation. His work, encouraged by Clinton's administration, allowed the explosive growth of derivatives, including credit swaps.
In 2001, he told a Senate debate: "Some people look at sub-prime lending and see evil. I look at sub-prime lending and I see the American dream in action." According to the New York Times, federal records show that from 1989 to 2002 he was the top recipient of campaign contributions from commercial banks and in the top five for donations from Wall Street. At an April 2000 Senate hearing after a visit to New York, he said: "When I am on Wall Street and I realise that that's the very nerve centre of American capitalism and I realise what capitalism has done for the working people of America, to me that's a holy place." He eventually left Capitol Hill to work for UBS as an investment banker.

Wall Street/Bankers

Abby Cohen, Goldman Sachs chief US strategist
The "perpetual bull". Once rated one of the most powerful women in the US. But so wrong, so often. She failed to see previous share price crashes and was famous for her upwards forecasts. Replaced last March.

Kathleen Corbet, former CEO, Standard & Poor's
The credit-rating agencies were widely attacked for failing to warn of the risks posed by mortgage-backed securities. Kathleen Corbet ran the largest of the big three agencies, Standard & Poor's, and quit in August 2007, amid a hail of criticism. The agencies have been accused of acting as cheerleaders, assigning the top AAA rating to collateralised debt obligations, the often incomprehensible mortgage-backed securities that turned toxic. The industry argues it did its best with the information available.
Corbet said her decision to leave the agency had been "long planned" and denied that she had been put under any pressure to quit. She kept a relatively low profile and had been hired to run S&P in 2004 from the investment firm Alliance Capital Management. Investigations by the Securities and Exchange Commission and the New York attorney general among others have focused on whether the agencies are compromised by earning fees from the banks that issue the debt they rate. The reputation of the industry was savaged by a blistering report by the SEC that contained dozens of internal emails that suggested they had betrayed investors' trust. "Let's hope we are all wealthy and retired by the time this house of cards falters," one unnamed S&P analyst wrote. In another, an S&P employee wrote: "It could be structured by cows and we would rate it."

"Hank" Greenberg, AIG insurance group

Now aged 83, Hank - AKA Maurice - was the boss of AIG. He built the business into the world's biggest insurer. AIG had a vast business in credit default swaps and therefore a huge exposure to a residential mortgage crisis. When AIG's own credit-rating was cut, it faced a liquidity crisis and needed an $85bn (£47bn then) bail out from the US government to avoid collapse and avert the crisis its collapse would have caused. It later needed many more billions from the US treasury and the Fed, but that did not stop senior AIG executives taking themselves off for a few lavish trips, including a $444,000 golf and spa retreat in California and an $86,000 hunting expedition to England. "Have you heard of anything more outrageous?" said Elijah Cummings, a Democratic congressman from Maryland. "They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill."


Andy Hornby, former HBOS boss

So highly respected, so admired and so clever - top of his 800-strong class at Harvard - but it was his strategy, adopted from the Bank of Scotland when it merged with Halifax, that got HBOS in the trouble it is now. Who would have thought that the mighty Halifax could be brought to its knees and teeter on the verge of nationalisation?


Sir Fred Goodwin, former RBS boss

Once one of Gordon Brown's favourite businessmen, now the prime minister says he is "angry" with the man dubbed "Fred the Shred" for his strategy at Royal Bank of Scotland, which has left the bank staring at a £28bn loss and 70% owned by the government. The losses will reflect vast lending to businesses that cannot repay and write-downs on acquisitions masterminded by Goodwin stretching back years.


Steve Crawshaw, former B&B boss

Once upon a time Bradford & Bingley was a rather boring building society, which used two men in bowler hats to signify their sensible and trustworthy approach. In 2004 the affable Crawshaw took over. He closed down B&B businesses, cut staff numbers by half and turned the B&B into a specialist in buy-to-let loans and self-certified mortgages - also called "liar loans" because applicants did not have to prove a regular income. The business broke down when the wholesale money market collapsed and B&B's borrowers fell quickly into debt. Crawshaw denied a rights issue was on its way weeks before he asked shareholders for £300m. Eventually, B&B had to be nationalised. Crawshaw, however, had left the bridge a few weeks earlier as a result of heart problems. He has a £1.8m pension pot.


Adam Applegarth, former Northern Rock boss

Applegarth had such big ambitions. But the business model just collapsed when the credit crunch hit. Luckily for Applegarth, he walked away with a wheelbarrow of cash to ease the pain of his failure, and spent the summer playing cricket.

Dick Fuld, Lehman Brothers chief executive
The credit crunch had been rumbling on for more than a year but Lehman Brothers' collapse in September was to have a catastrophic impact on confidence. Richard Fuld, chief executive, later told Congress he was bewildered the US government had not saved the bank when it had helped secure Bear Stearns and the insurer AIG. He also blamed short-sellers. Bitter workers at Lehman pointed the finger at Fuld.
A former bond trader known as "the Gorilla", Fuld had been with Lehman for decades and steered it through tough times. But just before the bank went bust he had failed to secure a deal to sell a large stake to the Korea Development Bank and most likely prevent its collapse. Fuld encouraged risk-taking and Lehman was still investing heavily in property at the top of the market. Facing a grilling on Capitol Hill, he was asked whether it was fair that he earned $500m over eight years. He demurred; the figure, he said, was closer to $300m.

Ralph Cioffi and Matthew Tannin

Cioffi (pictured) and Tannin were Bear Stearns bankers recently indicted for fraud over the collapse of two hedge funds last year, which was one of the triggers of the credit crunch. They are accused of lying to investors about the amount of money they were putting into sub-prime, and of quietly withdrawing their own funds when times got tough.


Lewis Ranieri

The "godfather" of mortgage finance, who pioneered mortgage-backed bonds in the 1980s and immortalised in Liar's Poker. Famous for saying that "mortgages are math", Ranieri created collateralised pools of mortgages. In 2004 Business Week ranked him alongside names such as Bill Gates and Steve Jobs as one of the greatest innovators of the past 75 years.
Ranieri did warn in 2006 of the risks from the breakneck growth of mortgage securitisation. Nevertheless, his Texas-based Franklin Bank Corp went bust in November due to the credit crunch.

Joseph Cassano, AIG Financial Products

Cassano ran the AIG team that sold credit default swaps in London, and in effect bankrupted the world's biggest insurance company, forcing the US government to stump up billions in aid. Cassano, who lives in a townhouse near Harrods in Knightsbridge, earned 30 cents for every dollar of profit his financial products generated - or about £280m. He was fired after the division lost $11bn, but stayed on as a $1m-a-month consultant. "It seems he single-handedly brought AIG to its knees," said John Sarbanes, a Democratic congressman.


Chuck Prince, former Citi boss

A lawyer by training, Prince had built Citi into the biggest bank in the world, with a sprawling structure that covered investment banking, high-street banking and wealthy management for the richest clients. When profits went into reverse in 2007, he insisted it was just a hiccup, but he was forced out after multibillion-dollar losses on sub-prime business started to surface. He received about $140m to ease his pain.


Angelo Mozilo, Countrywide Financial

Known as "the orange one" for his luminous tan, Mozilo was the chairman and chief executive of the biggest American sub-prime mortgage lender, which was saved from bankruptcy by Bank of America. BoA recently paid billions to settle investigations by various attorney generals for Countrywide's mis-selling of risky loans to thousands who could not afford them. The company ran a "VIP programme" that provided loans on favourable terms to influential figures including Christopher Dodd, chairman of the Senate banking committee, the heads of the federal-backed mortgage lenders Fannie Mae and Freddie Mac, and former assistant secretary of state Richard Holbrooke.


Stan O'Neal, former boss of Merrill Lynch

O'Neal became one of the highest-profile casualties of the credit crunch when he lost the confidence of the bank's board in late 2007. When he was appointed to the top job four years earlier, O'Neal, the first African-American to run a Wall Street firm, had pledged to shed the bank's conservative image. Shortly before he quit, the bank admitted to nearly $8bn of exposure to bad debts, as bets in the property and credit markets turned sour. Merrill was forced into the arms of Bank of America less than a year later.


Jimmy Cayne, former Bear Stearns boss

The chairman of the Wall Street firm Bear Stearns famously continued to play in a bridge tournament in Detroit even as the firm fell into crisis. Confidence in the bank evaporated after the collapse of two of its hedge funds and massive write-downs from losses related to the home loans industry. It was bought for a knock down price by JP Morgan Chase in March. Cayne sold his stake in the firm after the JP Morgan bid emerged, making $60m. Such was the anger directed towards Cayne that the US media reported that he had been forced to hire a bodyguard. A one-time scrap-iron salesman, Cayne joined Bear Stearns in 1969 and became one of the firm's top brokers, taking over as chief executive in 1993.

Others

Christopher Dodd, chairman, Senate banking committee (Democrat)
Consistently resisted efforts to tighten regulation on the mortgage finance firms Fannie Mae and Freddie Mac. He pushed to broaden their role to dodgier mortgages in an effort to help home ownership for the poor. Received $165,000 in donations from Fannie and Freddie from 1989 to 2008, more than anyone else in Congress.


Geir Haarde, Icelandic prime minister

He announced on Friday that he would step down and call an early election in May, after violent anti-government protests fuelled by his handling of the financial crisis. Last October Iceland's three biggest commercial banks collapsed under billions of dollars of debts. The country was forced to borrow $2.1bn from the International Monetary Fund and take loans from several European countries. Announcing his resignation, Haarde said he had throat cancer.


The American public

There's no escaping the fact: politicians might have teed up the financial system and failed to police it properly and Wall Street's greedy bankers might have got carried away with the riches they could generate, but if millions of Americans had just realised they were borrowing more than they could repay then we would not be in this mess. The British public got just as carried away. We are the credit junkies of Europe and many of our problems could easily have been avoided if we had been more sensible and just said no.


John Tiner, FSA chief executive, 2003-07

No one can fault 51-year-old Tiner's timing: the financial services expert took over as the City's chief regulator in 2003, just as the bear market which followed the dotcom crash came to an end, and stepped down from the Financial Services Authority in July 2007 - just a few weeks before the credit crunch took hold.
He presided over the FSA when the so-called "light touch" regulation was put in place. It was Tiner who agreed that banks could make up their own minds about how much capital they needed to hoard to cover their risks. And it was on his watch that Northern Rock got so carried away with the wholesale money markets and 130% mortgages. When the FSA finally got around to investigating its own part in the Rock's downfall, it was a catalogue of errors and omissions. In short, the FSA had been asleep at the wheel while Northern Rock racked up ever bigger risks. An accountant by training, with a penchant for Porsches and proud owner of the personalised number plate T1NER, the former FSA boss has since been recruited by the financial entrepreneur Clive Cowdery to run a newly floated business that aims to buy up financial businesses laid low by the credit crunch. Tiner will be chief executive but, unusually, will not be on the board, so his pay and bonuses will not be made public.

... and six more who saw it coming

Andrew Lahde
A hedge fund boss who quit the industry in October thanking "stupid" traders and "idiots" for making him rich. He made millions by betting against sub-prime.


John Paulson, hedge fund boss

He has been described as the "world's biggest winner" from the credit crunch, earning $3.7bn (£1.9bn) in 2007 by "shorting" the US mortgage market - betting that the housing bubble was about to burst. In an apparent response to criticism that he was profiting from misery, Paulson gave $15m to a charity aiding people fighting foreclosure.


Professor Nouriel Roubini

Described by the New York Times as Dr Doom, the economist from New York University was warning that financial crisis was on the way in 2006, when he told economists at the IMF that the US would face a once-in-a-lifetime housing bust, oil shock and a deep recession.
He remains a pessimist. He predicted last week that losses in the US financial system could hit $3.6tn before the credit crunch ends - which, he said, means the entire US banking system is in effect bankrupt. After last year's bail-outs and nationalisations, he famously described George Bush, Henry Paulson and Ben Bernanke as "a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America".

Warren Buffett, billionaire investor

Dubbed the Sage of Omaha, Buffett had long warned about the dangers of dodgy derivatives that no one understood and said often that Wall Street's finest were grossly overpaid. In his annual letter to shareholders in 2003, he compared complex derivative contracts to hell: "Easy to enter and almost impossible to exit." On an optimistic note, Buffett wrote in October that he had begun buying shares on the US stockmarket again, suggesting the worst of the credit crunch might be over. Now is a great time to "buy a slice of America's future at a marked-down price", he said.


George Soros, speculator

The billionaire financier, philanthropist and backer of the Democrats told an audience in Singapore in January 2006 that stockmarkets were at their peak, and that the US and global economies should brace themselves for a recession and a possible "hard landing". He also warned of "a gigantic real estate bubble" inflated by reckless lenders, encouraging homeowners to remortgage and offering interest-only deals. Earlier this year Soros described a 25-year "super bubble" that is bursting, blaming unfathomable financial instruments, deregulation and globalisation. He has since characterised the financial crisis as the worst since the Great Depression.


Stephen Eismann, hedge fund manager

An analyst and fund manager who tracked the sub-prime market from the early 1990s. "You have to understand," he says, "I did sub-prime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn't give a shit what it sold."


Meredith Whitney, Oppenheimer Securities

On 31 October 2007 the analyst forecast that Citigroup had to slash its dividend or face bankruptcy. A day later $370bn had been wiped off financial stocks on Wall Street. Within days the boss of Citigroup was out and the dividend had been slashed.

Bloody Monday: Over 71,400 jobs lost

Bloody Monday: Over 71,400 jobs lost

Seven companies announce massive job cuts in a scary start to the week

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The final week of January began with a bloodbath for the job market, as over 71,400 more cuts were announced on Monday alone.

At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs.


More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945.


"It's all about the consumer, and the consumer's been hit hard," said Robert Brusca, chief economist at Fact and Opinion Economics. "It's a vicious circle as weakness begets layoffs, which beget more spending weakness."


Construction machinery manufacturer Caterpillar (CAT, Fortune 500) said Monday it will cut 20,000 jobs amid a "very challenging global business environment." The company had already planned to cut 15,000 workers since the fourth quarter of 2008, but added another 5,000, bringing the total to 20,000.


Pfizer (PFE, Fortune 500) said in an earnings report it would cut 10% of its staff of 81,900 and close five of its manufacturing plants. And a second round of cuts will shed about 15% of employees from the combined Pfizer/Wyeth staff of 120,000. That makes a total of 26,000 jobs lost. The company already cut 4,700 jobs in 2008.

Sprint Nextel Corp. (S, Fortune 500) will cut a total of about 8,000 jobs by March 31, the company said in a release. The telecommunications company's plan is to reduce internal and external labor costs by about $1.2 billion on an annual basis.

Home Depot (HD, Fortune 500), the world's largest home improvement retailer, announced Monday it will eliminate its EXPO design center business and cut 7,000 associates, or approximately 2% of the company's total workforce. The company blamed a lack of demand for big ticket design and decor projects.


Texas Instruments (TXN, Fortune 500) said it will slash its workforce by 3,400 employees to cope with weak demand and the slowing economy. More than half of those cuts will be layoffs while "voluntary retirements and departures" will make up the rest.


Dutch financial group ING said Monday it will take a 2008 loss of $1.3 billion and cut 7,000 jobs. The company could not comment on where the cuts would take place. ING employs around 130,000 people across 50 countries.


Deere& Co. (DE, Fortune 500) , the world's top farm-equipment maker, said it would cut nearly 700 jobs between factories in Brazil and Iowa.


The job cuts across sectors didn't surprise Brusca, as nearly all are weak, he said.

"The services sector is shedding jobs at a horrific pace, because that's where most of the jobs are," Brusca said. "When the consumer is in tough shape it's hard for business to do well, because it all depends on consumption or investments."

Continuing the scary trend

The cuts mark a horrific start to the week, and a brutal start to 2009. In the previous week, around 40,000 cuts were announced across multiple industries.

Wednesday, in particular, was littered with a slew of job cuts: BHP Billiton, Clear Channel Communications, Intel, Rohm and Haas Co., UAL Corp. and Williams-Sonoma all announced job cuts totaling over 27,000 positions.


Schlumberger said Friday that it will cut 5,000 jobs worldwide, with 1,000 of the cuts taking place in North America.


Also last week, Time Warner Inc.'s Warner Bros. Entertainment said it would cut about 800 jobs, or 10% of its worldwide staff in the upcoming weeks, while Microsoft unveiled its plan to cut up to 5,000 jobs - 5.5% of its global workforce.

Outlook: A recovery in sight?

Brusca said he agreed with many economists' predictions that the recession will end after the second quarter of 2009. Americans might feel the job market start to bounce back a bit sooner than expected, he said.

"These recessions are like geometry," Brusca said. "It looks like we'll have a V-shaped cycle, in that we're going into this with very sharp losses. This intense-phase recession will probably recover fairly quickly, with the job market coming out it at the same angle it came in."

In the short term, the economy and the job market are in trouble, Brusca said. But "it doesn't look like the bottom is falling out of the economy," he said.
And there's a silver lining to the gloomy clouds over America's economy.

"The good news is it's so bad right now that we will have a definite, noticeable recovery when it comes," Brusca said. "We're getting a lot of adjustment out of the way early."