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Archive for November 27th, 2008

$800 BILLION MORE, BUT WILL AMERICA’S HOMEOWNERS SEE A DIME ???

Posted by Gilmour Poincaree on November 27, 2008

November 27, 2008

This past short week was remarkable. The Government, lead by General Paulson, promised to cover more than $300 billion of liabilities of Citigroup. Thus, once again, demonstrating that those controlling America’s money, are protected from their own stupidity and risky behavior. Those who had bought C stock last Friday almost doubled their money by betting on Paulson. After he screwed Lehman bondholders and the buyers of the Fannie and Freddie preferred shares, this guru is being smart by not trusting in the benevolence of irrational leadership!!!

General Paulson on Tuesday announced an $800 Billion plan to add capital to the consumer finance markets, student loans, auto loans and small businesses. Once again, it only benefits those finance companies that took risk during the economic expansion, who are looking for someone to buy assets they no longer wish to own!! Sir Paulson’s rational was that by selling these assets, these financiers will begin to lend again. Most others, including this humble writer, believe that they will behave like the banks under TARP. They will take the money, and not take any risks with it. They will hold it, or use it for bonuses, or to buy companies of friends, or buy Treasury bills and bonds, or FDIC guaranteed issuances from other financial institutions.

To assume they would use this money for lending, would be like the Sir Paulson’s team buying a home on the verge of foreclosure, and assuming that the seller would take the proceeds and use it to buy a new real estate investment.

President Elect Obama has promised new spending and infrastructure projects to jump start the economy. I do not know any bridge builders, airport construction workers , or road builders, so I do not know anyone who will benefit directly. Hopefully , those wearing ties to work, and those in the manufacturing sector will benefit as well.

In these times, with all the volatility, risks, threats and uncertainty, we must all stop and say THANKS for all the good we have, for our families and friends, for health and our prosperity, irregardless of how limited it may seem at the moment!!!!

Give Thanks, have faith, and strive to make the world better, without taking unneeded risks.

Have a great day!!!!

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PUBLISHED BY ‘Guru@moneyassistant.org’s’

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Posted in BANKING SYSTEM - USA, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL MARKETS, HOUSING CRISIS - USA, INDUSTRIAL PRODUCTION - USA, INDUSTRIES - USA, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE PRESIDENCY - USA, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

GOVT SEES GOOD ’09 FOR COCO PRODUCTION (Philippines)

Posted by Gilmour Poincaree on November 27, 2008

First Posted 03:43:00 11/27/2008

by Amy R. Remo – Philippine Daily Inquirer

Philippine coconut production will likely expand 11 percent to 2.77 million metric tons in copra terms in 2009 from an estimated 2.5 million this year, thanks largely to a salt fertilization program, the Philippine Coconut Authority (PCA) said Wednesday.

The program involves fertilizing farms with two kilograms of salt per tree per year for three years to increase yield by at least 25 percent, PCA Deputy Administrator Arturo Liquete said at a news briefing.

The method increases the thickness of coconut meat and the number of nuts harvested, and is also credited for making coconut trees resistant to drought, pests and diseases, he said.

Liquate said that if all programs of the PCA would be put in place this year, coconut production could reach 3.2 million metric tons in 2009, given the farms’ recovery from typhoon devastation in late 2006 and infestation by the invasive beetle (Brontispa longgisima gestro), which damaged seedlings and mature trees.

The increase in coconut production would boost coconut oil exports to as much as one million metric tons in 2009, from an estimated 850,000 this year, and 886,561 million in 2007, he added.

The Philippines is the world’s biggest supplier of coconut oil, exporting 80 percent of its output.

“There’s a slow buying this year across export products due partly to the global recession,” Liquete said.

The United Coconut Associations of the Philippines earlier said the sector would likely miss its target volume for coconut oil exports this year because of “over-expectation of the recovery of local coconut production.”

The group said that while the coconut sector did not recover as fast as expected, the export figure this year would still exceed last year’s level.

Edited by INQUIRER.net

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PUBLISHED BY ‘THE PHILIPPINE BUSINESS INQUIRER’

Posted in AGRICULTURE, COCONUT OIL, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FERTILIZERS, FINANCIAL CRISIS 2008/2009, INDUSTRIAL PRODUCTION, INTERNATIONAL, PHILIPPINES, RECESSION | Leave a Comment »

MELTDOWN FAR FROM OVER, NEW MORTGAGE CRISIS LOOMS (USA)

Posted by Gilmour Poincaree on November 27, 2008

Thu Nov 27, 1:17 pm ET

by Matt Apuzzo – Associated Press Writer

WASHINGTON – The full scope of the housing meltdown isn’t clear and already there are ominous signs of a new crisis — one that could turn out the lights on malls, hotels and storefronts nationwide.

Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure.

Hotels in Tucson, Ariz., and Hilton Head, S.C., also are about to default on their mortgages.

That pace is expected to quicken. The number of late payments and defaults will double, if not triple, by the end of next year, according to analysts from Fitch Ratings Ltd., which evaluates companies’ credit.

“We’re probably in the first inning of the commercial mortgage problem,” said Scott Tross, a real estate lawyer with Herrick Feinstein in New Jersey.

That’s bad news for more than just property owners. When businesses go dark, employees lose jobs. Towns lose tax revenue. School budgets and social services feel the pinch.

Companies have survived plenty of downturns, but economists see this one playing out like never before. In the past, when businesses hit rough patches, owners negotiated with banks or refinanced their loans.

But many banks no longer hold the loans they made. Over the past decade, banks have increasingly bundled mortgages and sold them to investors. Pension funds, insurance companies, and hedge funds bought the seemingly safe securities and are now bracing for losses that could ripple through the financial system.

“It’s a toxic drug and nobody knows how bad it’s going to be,” said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.

Unlike home mortgages, businesses don’t pay their loans over 30 years. Commercial mortgages are usually written for five, seven or 10 years with big payments due at the end. About $20 billion will be due next year, covering everything from office and condo complexes to hotels and malls.

The retail outlook is particularly bad. Circuit City and Linens ‘n Things have sought bankruptcy protection. Home Depot, Sears, Ann Taylor and Foot Locker are closing stores.

Those retailers typically were paying rent that was expected to cover mortgage payments. When those $20 billion in mortgages come due next year — 2010 and 2011 totals are projected to be even higher — many property owners won’t have the money.

Some will survive, but those property owners whose loans required little money up front will have less incentive to weather the storm.

Refinancing formerly was an option, but many properties are worth less than when they were purchased. And since investors no longer want to buy commercial mortgages, banks are reluctant to write new loans to refinance those facing foreclosure.

California, New York, Texas and Florida — states with a high concentration of mortgages in the securities market, according to Fitch — are particularly vulnerable. Texas and Florida are already seeing increased delinquencies and defaults, as are Michigan, Tennessee and Georgia.

The worst-case scenario goes something like this: With banks unwilling to refinance, a shopping center goes into foreclosure. Nobody can buy the mall because banks won’t write mortgages as long as investors won’t purchase them.

“Credit markets have seized up,” corporate securities lawyer Michael Gambro said. “People are not willing to take risks. They’re not buying anything.”

That drives down investments already on the books. Insurance companies are seeing their stock prices fall on fears they are too invested in commercial mortgages.

“The system has never been tested for a deep recession,” said Ken Rosen, a real estate hedge fund manager and University of California at Berkeley professor of real estate economics.

One hope was that the U.S. would use some of the $700 billion financial bailout to buy shaky investments from banks and insurance companies. That was the original plan. But Treasury Secretary Henry Paulson has issued a stunning turnabout, saying the U.S. no longer planned to buy troubled securities. For those watching the wave of commercial defaults about to crest, the announcement was poorly received.

“He’s created havoc in the marketplace by changing the rules,” Rosen said. “It was the stupidest statement on Earth.”

The Securities and Exchange Commission is considering another option that might ease the crisis, one that would change accounting rules so banks don’t have to declare huge losses whenever the market declines.

But the only surefire remedy is for the economy to stabilize, for businesses to start expanding and for investors to trust the market again. Until then, Tross said, “There’s going to be a lot of pain going forward.”

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PUBLISHED BY ‘YAHOO NEWS’

Posted in BANKING SYSTEM - USA, CONSTRUCTION INDUSTRIES, ECONOMIC CONJUNCTURE, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, HOUSING CRISIS - USA, INDUSTRIES - USA, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE PRESIDENCY - USA, USA | Leave a Comment »

BANANA FIGHT THREATENS DOHA DEAL – Deals in the Doha global trade talks next month are at risk if the European Union fails to settle a long-running banana dispute

Posted by Gilmour Poincaree on November 27, 2008

November 27, 2008

by Alonso Soto in Quito, Ecuador

Article from: Reuters

Ecuador, the world’s top banana exporter, said it would not agree to agricultural accords in the Doha talks after the World Trade Organisation upheld a ruling against the EU in the lung-running “banana wars” pitting Brussels against the United States and Latin American producers.

“Unfortunately, our country will not agree to the consensus to settle the agriculture terms of the (Doha) round … if this problem is not properly resolved by then,” the Foreign Ministry said in a statement.

A top government official told Reuters later that Latin American banana producers were demanding that the EU lower import tariffs on the fruit, beginning with a series of cuts starting next year.

The official, who asked not to be identified, said the EU should eventually cut its current duty of €176 ($349) per tonne of bananas to €114 ($226) in eight years.

Latin American states came close to securing a deal with the EU during a WTO ministerial meeting in July, but Brussels walked away from the deal when the broad Doha negotiations fell apart.

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PUBLISHED BY ‘THE AUSTRALIAN’ (USA)

Posted in 'DOHA TALKS', AGRICULTURE, BELGIUM, COMMERCE, COMMODITIES MARKET, ECONOMY, ECUADOR, FRUITS AND FRESH VEGETABLES, INTERNATIONAL RELATIONS, LATIN AMERICA, THE EUROPEAN UNION, USA, WORLD TRADE ORGANIZATION | Leave a Comment »

AT LEAST YOU’VE GOT OPTIONS …

Posted by Gilmour Poincaree on November 27, 2008

Last update: November 27, 2008 – 11:02 AM

by Seth Freeman – (*)

LOS ANGELES – Please listen carefully, as this menu has changed. HOLD THE MENU ... I JUST WANT A GLASS OF WATER

For English, press or say “one.” Para espaqol, oprima o diga “dos.” For all other languages, press or say “three.”

One.

Thank you for your interest in our service. If this is a true spiritual emergency, please hang up and dial the number on the upper left-hand corner of the mailing label of your last solicitation. Otherwise, please stay on the line and your prayers will be answered in the order in which they were received.

All right, let’s get started. For prayers of repentance, press or say “two.” For prayers of supplication, press or say “three.” For prayers of forgiveness, press or say “four.” For prayers of serenity, press or say “five.” For all other prayers, press or say “six.”

I guess … er … supplic — three. Three.

I think you said “two.” Is this correct?

No.

I think you said “no.” Is this correct?

Yes.

OK, let’s try that again. For prayers of repentance, press or say “two.” For prayers of supplication, press or say “three.” For prayers —

Three.

— of forgiveness —

Three!

— say “four.” For prayers of serenity, press or say “five.” For all other prayers, press or say “six.”

Three.

I think you said, “Three.” Is this correct?

Yes. Correct. Yes.

All right. Let me see if I can help you. Please say the category for which you are supplicating. For example, if you are praying for help with a personal life problem, say “problem.” If you are praying for a material object like a new Lexus, say “car.”

Uh …

I’m sorry. I didn’t understand your answer. Please repeat your answer slowly and clearly.

It’s hard to describe. Things no longer make … sense …

I think you said “vengeance.” Is this correct?

No.

Good, because vengeance is mine. Please repeat your answer slowly and clearly.

Prob. Lem.

I think you said “problem.” Is this correct?

Yes. Correct.

Thank you. Let me connect you to that department.

Hold music: Pachelbel, “Canon in D” — tenor sax version (Kenny G) …

Please stay on the line. Your prayer is important to us. Your wait time is approximately seven minutes.

Hold music …

We’re sorry you are still on hold. We appreciate your patience and look forward to being of service.

Hold music …

Thank you for holding. We apologize for the inconvenience. Please state the problem for which you would like help. For example, if you would like help healing someone who is sick, you could say “illness.” If you would like help in making a woman who barely knows that you exist become interested in you romantically, you could say “wingman.”

No more menus.

I’m sorry. I didn’t understand your answer. Please state the problem for which you would like help.

I want help without having to go through six levels of options.

I think you said you would like help with sexual dysfunction. Is this correct?

No.

I think you said “no.” Is this correct?

Yes.

OK, please restate your problem. Speak slowly and clearly —

I’m sick of these menus.

I think you said you would like help curing a sickness. Is this correct?

No, no, these menus are driving me crazy.

I think you said you would like help dealing with a mental illness. Is this correct?

No. No, no!

I’m having difficulty understanding the problem for which you are seeking help. Please state your problem slowly and clearly.

My problem is … I … forgot why I called.

I think you said you no longer recall your problem. Is this correct?

I guess. I don’t know. Yes.

Excellent. We are pleased to have been of service. How else can we provide you with a wonderful day?

(*) – Seth Freeman is a writer for television. He wrote this article for the Los Angeles Times.

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PUBLISHED BY ‘STAR TRIBUNE’ (USA)

Posted in ECONOMY, RELIGIONS, USA, USA HUMOR | Leave a Comment »

PRESIDENT OF UNITED ARAB EMIRATES DOWNPLAYS IMPACT OF FALLING OIL PRICES AHEAD OF OPEC MEETING (Dubai)

Posted by Gilmour Poincaree on November 27, 2008

Last update: November 26, 2008 – 6:36 AM

Associated Press

DUBAI, United Arab Emirates – The president of the United Arab Emirates is Secretary-General Ban Ki-moon (left) holds a bilateral meeting with Khalifa Bin Zayed Al Nahya, President of the United Arab Emirates, at the Royal Guest Palace in Riyadh, Saudi Arabiadownplaying concerns about falling oil prices ahead of an emergency OPEC meeting later this week.

The Emirates is one of the world’s top oil producers.

Sheik Khalifa bin Zayed Al Nahyan says fluctuations in the price of crude are nothing new. He says the Gulf nation has lived through periods were prices were below where they are today.

The sheik spoke in an interview with Egypt’s influential Al Ahram newspaper. The Emirates state news agency WAM on Wednesday provided a transcript of the interview.

Khalifa says the Emirates is “closely monitoring” oil market dynamics and working with partners in OPEC “to face any negative impacts on the stability of world markets.”

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PUBLISHED BY ‘STAR TRIBUNE’ (USA)

Posted in COMMERCE, COMMODITIES MARKET, DUBAI, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, FINANCIAL CRISIS 2008/2009, INDUSTRIAL PRODUCTION, INTERNATIONAL, OPEC, PETROL, RECESSION, UNITED ARAB EMIRATES | Leave a Comment »

CHINA SIGNS GREEK PORT DEAL

Posted by Gilmour Poincaree on November 27, 2008

Nov 26, 2008 6:38 AM

Chinese President Hu Jintao vowed to increase maritime investment in GREEK PROTESTERS - ReutersGreece after the signing of a 3.4 billion euro deal to run the country’s largest port, despite protests from dockers.

Hu and Greek Prime Minister Costas Karamanlis witnessed the signing of the contract by state-controlled China Ocean Shipping Company (Cosco) to operate the container port of Piraeus (OLP) for 35 years, part of Greece’s privatisation agenda.

“Our priorities are to widen our economic cooperation … to strengthen maritime cooperation and investments,” the Chinese leader told journalists, during a three-day state visit.

Greece controls one fifth of the world’s merchant fleet. Its ship owners have profited from a huge boom in demand for iron ore, oil and grain from China in recent years, and they are the largest clients for Chinese shipbuilding yards.

Until a collapse in freight rates earlier this year, the boom helped Greece’s economy grow by 4% a year for a decade.

“The agreement between OLP and Cosco signals a new important chapter,” said Greek Prime Minister Costas Karamanlis. “Greek ports can become transit points for Chinese goods to the EU and southeast Europe, as well as the Mediterranean.”

Several hundred dockworkers, carrying a banner reading “Cosco Go Home” and waving black flags, marched past the Greek parliament before the signing, saying the deal would mean job losses and tougher labour conditions.

“They must not sell the ports. OLP is a profitable business … it doesn’t make sense,” said Manolis Gemeliaris, 54, an engineer at the port. “When Cosco comes, we will lose our jobs.”

The Chinese company has insisted that it will create 1,000 new jobs at the port for Greek workers and more than double its capacity by 2015.

Hu, who toured the ancient temples of the Acropolis in central Athens with his wife, has insisted during his visit that China’s economy is still experiencing “significant growth” and he would cooperate with international efforts to tackle the global economic downturn.

However, the World Bank said in a report published Tuesday that China’s economic growth would slow to 7.5% next year, its lowest rate since 1990, despite a 4 trillion yuan ($US586 billion) stimulus package.

Despite the opposition of Greece’s restive unions, the conservative government is pressing ahead with privatisations and has put loss-making Olympic Airlines on the block.

The ruling New Democracy party, whose parliamentary majority was cut to one seat this month by the expulsion of a rebel deputy, has fallen behind in opinion polls for the first time since winning power in 2004 amid discontent at its economic policies. Many analysts expect an early election next year, ahead of a 2011 deadline.

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PUBLISHED BY ‘TVNZ’ (New Zealand)

Posted in CHINA, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FOREIGN POLICIES, GRAINS, GREECE, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, INTERNATIONAL RELATIONS, IRON ORE, MARITIME, NATIONAL WORK FORCES, PETROL, SHIPYARD INDUSTRIES, THE FLOW OF INVESTMENTS, THE WORK MARKET, THE WORKERS, TRANSPORT INDUSTRIES, WORLD BANK | Leave a Comment »

PLAN TO SELL 51PC SHARES OF NPCC APPROVED (Pakistan)

Posted by Gilmour Poincaree on November 27, 2008

November 27, 2008 Thursday Ziqa’ad 28, 1429

by Our Staff Reporter

ISLAMABAD, Nov 26: The board of Privatisation Commission (PC) on TARBELA DAM - PAKISTANWednesday approved a plan for holding an open bidding for the acquisition 51 per cent shares of National Power Construction Company (NPCC).

The meeting chaired by Federal Minister for Privatisation Syed Naveed Qamar gave the go-ahead for the bidding of NPCC together with management control on “as is where is” basis.

An official statement issued here said the PC board also formulated its recommendations for the approval of the Cabinet Committee on Privatisation (CCoP) prior to announcing the bidding schedule for NPCC.

The parties pre-qualified for taking part in the bidding of the NPCC include Pak Elektron Limited (PEL), ICC (Pvt) Limited, Al-Tuwairqi Steel Mills, Karachi, Saudi Cable Company Limited, KSA, JS PE Management, Karachi, Alfanar Construction Company, KSA and Zad Investment Company.

The meeting was informed that the signing ceremony for the share purchase agreement of Hazara Phosphate Fertilisers (Pvt) Limited (HPFL) is being scheduled for Nov 28 at the Privatisation Commission secretariat after receiving the remaining payment and it will be handed over to the successful buyer.

The meeting also reviewed the status and progress of various ongoing and upcoming transactions.

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PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, FINANCIAL MARKETS, INDUSTRIES, INTERNATIONAL, PAKISTAN, THE FLOW OF INVESTMENTS | Leave a Comment »

WATER SHORTAGE AFFECTS WHEAT SOWING IN SINDH (Pakistan)

Posted by Gilmour Poincaree on November 27, 2008

November 27, 2008 Thursday Ziqa’ad 28, 1429

by Muzaffar Qureshi

KARACHI, Nov 26: Water shortage, especially in lower Sindh, is adversely affecting wheat sowing, which in other areas has started in full swing.

An official of the Sindh agriculture department confirmed on Wednesday that water shortage is the main problem in wheat sowing which has become a sensitive cash crop in view of the looming food shortage worldwide.

The areas affected by water shortage are: Hyderabad, Thatta, Badin, Matiari, Nawabshah and Naushero Feroze.

Growers complained that the fields situated at the tail-end of water canals were suffering most, and President of Sindh Abadgar Board Majeed Nizamani feared that the wheat target for year 2008-09 would not be achieved if water shortage was not tackled. The growers said that there was no real shortage of water, which has been created by mismanagement in water distribution and corruption in the irrigation department.

The water is supplied to influential and big growers offering incentives to the irrigation staff, they alleged.

Explaining the distribution network in the province, Nizamani said that the water available at the Guddu Barrage irrigates about eight million acres of land on both sides of the barrage through four major canals on the left side and three on the right side. The distribution network comprises about 210 water channels.

He said that the water shortage during the current wheat crop has been estimated at 35 per cent which means that out of four weeks, there will be no water supply to the farms for one week. However, he said that if judicious distribution of the available water is made, wheat target could be achieved.

Mr Nizamani said that otherwise factors, such as availability of phosphate and urea fertilizers, etc., were favourable for a bumper crop.

More land will be available for wheat sowing this year as growers of edible oil crop, who are not keen to grow sunflower in view of declining prices of edible oil in the world market, will instead contribute their land for wheat sowing.

Similarly, he said that if sugarcane is lifted by the sugar mills earlier, more land could be made available for wheat cultivation.

The government has fixed wheat cultivation area in Sindh this year at 2.5 million acres while the production target is 25 million tons.

Another leading wheat grower pointed to the corruption, which has reached its climax in the irrigation department.

The officials of the department are so powerful that the agriculture ministry finds itself helpless in dealing with the department.

He called for proper management of cultivation of various crops as is managed in Australia where the government fixed the land units for sowing of a particular crop, which is decided after assessing the domestic requirements.

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PUBLISHED BY ‘DAWN’ (Pakistan)

Posted in AGRICULTURE, COMMODITIES MARKET, CORRUPTION, ECONOMIC CONJUNCTURE, ECONOMY, FERTILIZERS, INTERNATIONAL, PAKISTAN, SUNFLOWER, WATER, WHEAT | Leave a Comment »

SHOOTING AN ELEPHANT

Posted by Gilmour Poincaree on November 27, 2008

1920 – 1940

THE COLLECTED ESSAYS, JOURNALISM AND LETTERS OF GEORGE ORWELL – Vol. 1

AN AGE LIKE THIS

Pages 265, 266, 267, 268, 269, 270, 271, 272

88. Shooting an Elephant

GEORGE ORWELL In Moulmein, in Lower Burma, I was hated by large numbers of people – the only time in my life that I have been important enough for this to happen to me. I was sub-divisional police officer of the town, and in an aimless, petty kind of way anti- European feeling was very bitter. No one had the guts to raise a riot, but if a European woman went through the bazaars alone somebody would probably spit betel juice over her dress. As a police officer I was an obvious target and was baited whenever it seemed safe to do so. When a nimble Burman tripped me up on the football field and the referee (another Burman) looked the other way, the crowd yelled with hideous laughter. This happened more than once. In the end the sneering yellow faces of young men that met me everywhere, the insults hooted after me when I was at a safe distance, got badly on my nerves. The young Buddhist priests were the worst of all. There were several thousands of them in the town and none of them seemed to have anything to do except stand on street corners and jeer at Europeans.

All this was perplexing and upsetting. For at that time I had already made up my mind that imperialism was an evil thing and the sooner I chucked up my job and got out of it the better. Theoretically – and secretly, of course – I was all for the Burmese and all against their oppressors, the British. As for the job I was doing, I hated it more bitterly than I can perhaps make clear. In a job like that you see the dirty work of Empire at close quarters. The wretched prisoners huddling in the stinking cages of the lock-ups, the grey, cowed faces of the long-term convicts, the scarred buttocks of the men who had been flogged with bamboos – all these oppressed me with an intolerable sense of guilt. But I could get nothing into perspective. I was young and ill educated and I had had to think out my problems in the utter silence that is imposed on every Englishman in the East. I did not even know that the British Empire is dying, still less did I know that it is a great deal better than the younger empires that are going to supplant it. All I knew was that I was stuck between my hatred of the empire I served and my rage against the evil-spirited little beasts who tried to make my job impossible. With one part of my mind I thought of the British Raj as an unbreakable tyranny, as something clamped down, in saecula saeculorum, upon the will of prostrate peoples; with another part I thought that the greatest joy in the world would be to drive a bayonet into a Buddhist priest’s guts. Feelings like these are the normal by-products of imperialism; ask any Anglo- Indian official, if you can catch him off duty.

One day something happened which in a roundabout way was enlightening, [t was a tiny incident in itself, but it gave me a better glimpse than t had had before of the real nature of imperialism – the real motives for which despotic governments act. Early one morning the sub-inspector at a police station the other end of the town rang me up on the phone and said that an elephant was ravaging the bazaar. Would I please come and do something about it? I did not know what I could do, but I wanted to see what was happening and I got on to a pony and started out. I took my rifle, an old .44 Winchester and much too small to kill an elephant, but I thought the noise might be useful in terrorem. Various Burmans stopped me on the way and told me about the elephant’s doings. It was not, of course, a wild elephant, but a tame one which had gone ‘must’. It had been chained up as tame elephants always are when their attack of ‘must’ is due, but on the previous night it had broken its chain and escaped. Its mahout, the only person who could manage it when it was in that state, had set out in pursuit, but he had taken the wrong direction and was now twelve hours’ journey away, and in the morning the elephant had suddenly reappeared in the town. The Burmese population had no weapons and were quite helpless against it. It had already destroyed somebody’s bamboo hut, killed a cow and raided some fruit-stalls and devoured the stock; also it had met the municipal rubbish van, and, when the driver jumped out and took to his heels, had turned the van over and inflicted violence upon it.

The Burmese sub-inspector and some Indian constables were waiting for me in the quarter where the elephant had been seen. It was a very poor quarter, a labyrinth of squalid bamboo huts, thatched with palm-leaf, winding all over a steep hillside. I remember that it was a cloudy stuffy morning at the beginning of the rains. We began questioning the people as to where the elephant had gone, and, as usual, failed to get any definite information. That is invariably the case in the East; a story always sounds clear enough at a distance, but the nearer you get to the scene of events the vaguer it becomes. Some of the people said that the elephant had gone in one direction, some said that he had gone in another, some professed not even to have heard of any elephant. I had almost made up my mind that the whole story was a pack of lies, when we heard yells a little distance away. There was a loud, scandalized cry of ‘Go away, child! Go away this instant!’ and an old woman with a switch in her hand came round the corner of a hut, violently shooing away a crowd of naked children. Some more women followed, clicking their tongues and exclaiming; evidently there was something there that the children ought not to have seen. I rounded the hut and saw a man’s dead body sprawling in the mud. He was an Indian, a black Dravidian coolie, almost naked, and he could not have been dead many minutes. The people said that the elephant had come suddenly upon him round the corner of the hut, caught him with its trunk, put its foot on his back and ground him into the earth. This was the rainy season and the ground was soft, and his face had scored a trench a foot deep and a couple of yards long. He was lying on his belly with arms crucified and head sharply twisted to one side. His face was coated with mud, the eyes wide open, the teeth bared and grinning with an expression of unendurable agony. (Never tell me, by the way, that the dead look peaceful. Most of the corpses I have seen looked devilish.) The friction of the great beast’s foot had stripped the skin from his back as neatly as one skins a rabbit. As soon as I saw the dead man I sent an orderly to a friend’s house near by to borrow an elephant rifle. I had already sent back the pony, not wanting it to go mad with fright and throw me if it smelled the elephant.

The orderly came back in a few minutes with a rifle and five cartridges, and meanwhile some Burmans had arrived and told us that the elephant was in the paddy fields below, only a few hundred yards away. As I started forward practically the whole population of the quarter flocked out of their houses and followed me. They had seen the rifle and were all shouting excitedly that I was going to shoot the elephant. They had not shown much interest in the elephant when he was merely ravaging their homes, but it was different now that he was going to be shot. It was bit of fun to them, as it would be to an English crowd; besides, they wanted the meat. It made me vaguely uneasy. I had no intention of shooting the elephant – I had merely sent for the rifle to defend myself if necessary – and it is always unnerving to have a crowd following you. I marched down the hill, looking and feeling a fool, with the rifle over my shoulder and an ever-growing army of people jostling at my heels. At the bottom when you got away from the huts there was a metalled road and beyond that a miry waste of paddy fields a thousand yards across, not yet ploughed but soggy from the first rains and dotted with coarse grass. The elephant was standing eighty yards from the road, his left side towards us. He took not the slightest notice of the crowd’s approach. He was tearing up bunches of grass, beating them against his knees to clean them and stuffing them into his mouth.

I had halted on the road. As soon as I saw the elephant I knew with perfect certainty that I ought not to shoot him. It is a serious matter to shoot a working elephant – it is comparable to destroying a huge and costly piece of machinery – and obviously one ought not to do it if it can possibly be avoided. And at that distance, peacefully eating, the elephant looked no more dangerous than a cow. I thought then and I think now that his attack of ‘must’ was already passing off; in which case he would merely wander harmlessly about until the mahout came back and caught him. Moreover, I did not in the least want to shoot him. I decided that I would watch him for a little while to make sure that he did not turn savage again, and then go home.

But at that moment I glanced round at the crowd that had followed me. It was an immense crowd, two thousand at the least and growing every minute. It blocked the road for a long distance on either side. I looked at the sea of yellow faces above the garish clothes – faces all happy and excited over this bit of fun, all certain that the elephant was going to be shot. They were watching me as they would watch a conjurer about to perform a trick. They did not like me, but with the magical rifle in my hands I was momentarily worth watching. And suddenly I realized that I should have to shoot the elephant after all. The people expected it of me and I had got to do it; I could feel their two thousand wills pressing me forward, irresistibly. And it was at this moment, as I stood there with the rifle in my hands, that I first grasped the hollowness, the futility of the white man’s dominion in the East. Here was I, the white man with his gun, standing in front of the unarmed native crowd – seemingly the leading actor of the piece; but in reality I was only an absurd puppet pushed to and fro by the will of those yellow faces behind. I perceived in this moment that when the white man turns tyrant it is his own freedom that he destroys. He becomes a sort of hollow, posing dummy, the conventionalized figure of a sahib. For it is the condition of his rule that he shall spend his \ life in trying to impress the ‘natives’ and so in every crisis he has got to do what the ‘natives’ expect of him. He wears a mask, and his face grows to fit it. I had got to shoot the elephant. I had committed myself to doing it when I sent for the rifle. A sahib has got to act like a sahib; he has got to appear resolute, to know his own mind and do definite things. To come all that way, rifle in hand, with two thousand people marching at my heels, and then to trail feebly away, having done nothing – no, that was impossible. The crowd would laugh at me. And my whole life, every white man’s life in the East, was one long struggle not to be laughed at.

But I did not want to shoot the elephant. I watched him beating his bunch of grass against his knees, with that preoccupied grandmotherly air that elephants have. It seemed to me that it would be murder to shoot him. At that age I was not squeamish about killing animals, but I had never shot an elephant and never wanted to. (Somehow it always seems worse to kill a lar^e animal.) Besides, there was the beast’s owner to be considered. Alive, the elephant was worth at least a hundred pounds; dead, he would only be worth the value of his tusks – five pounds, possibly. But I had got to act quickly. I turned to some experienced-looking Burmans who had been there when we arrived, and asked them how the elephant had been behaving. They all said the same thing: he took no notice of you if you left him alone, but he might charge if you went too close to him.

It was perfectly clear to me what I ought to do. I ought to walk up to within, say, twenty-five yards of the elephant and test his behaviour. If he charged I could shoot, if he took no notice of me it would be safe to leave him until the mahout came back. But also I knew that I was going to do no such thing. I was a poor shot with a rifle and the ground was soft mud into which one would sink at every step. If the elephant charged and I missed him, I should have about as much chance as a toad under a steam-roller. But even then I was not thinking particularly of my own skin, only the watchful yellow faces behind. For at that moment, with the crowd watching me, I was not afraid in the ordinary sense, as I would have been if I had been alone. A white man mustn’t be frightened in front of ‘natives’; and so, in general, he isn’t frightened. The sole thought in my mind was that if anything went wrong those two thousand Burmans would see me pursued, caught, trampled on and reduced to a grinning corpse like that Indian up the hill. And if that happened it was quite probable that some of them would laugh. That would never do. There was only one alternative. I shoved the cartridges into the magazine and lay down on the road to get a better aim.

The crowd grew very still, and a deep, low, happy sigh, as of people who see the theatre curtain go up at last, breathed from innumerable throats. They were going to have their bit of fun after all. The rifle was a beautiful German thing with cross- hair sights. I did not then know that in shooting an elephant one should shoot to cut an imaginary bar running from ear-hole to ear-hole. I ought therefore, as the elephant was sideways on, to have aimed straight at his ear-hole; actually I aimed several inches in front of this, thinking the brain would be further forward.

When I pulled the trigger I did not hear the bang or feel the kick – one never does when a shot goes home – but I heard the devilish roar of glee that went up from the crowd. In that instant, in too short a time, one would have thought, even for the bullet to get there, a mysterious, terrible change had come over the elephant. He neither stirred nor fell, but every line of his body had altered. He looked suddenly stricken, shrunken, immensely old, as though the frightful impact of the bullet had paralysed him without knocking him down. At last, after what seemed a long time – it might have been five seconds, I dare say – he sagged flabbily to his knees. His mouth slobbered. An enormous senility seemed to have settled upon him. One could have imagined him thousands of years old. I fired again into the same spot. At the second shot he did not collapse but climbed with desperate slowness to his feet and stood weakly upright, with legs sagging and head drooping. I fired a third time. That was the shot that did for him. You could see the agony of it jolt his whole body and knock the last remnant of strength from his legs. But in falling he seemed for a moment to rise, for as his hind legs collapsed beneath him he seemed to tower upwards like a huge rock toppling, his trunk reaching skyward like a tree. He trumpeted, for the first and only time. And then down he came, his belly towards me, with a crash that seemed to shake the ground even where I lay.

I got up. The Burmans were already racing past me across the mud. It was obvious that the elephant would never rise again, but he was not dead. He was breathing very rhythmically with long rattling gasps, his great mound of a side painfully rising and falling. His mouth was wide open – I could see far down into caverns of pale pink throat. I waited a long time for him to die, but his breathing did not weaken. Finally I fired my two remaining shots into the spot where I thought his heart must be. The thick blood welled out of him like red velvet, but still he did not die. His body did not even jerk when the shots hit him, the tortured breathing continued without a pause. He was dying, very slowly and in great agony, but in some world remote from me where not even a bullet could damage him further. I felt that 1 had got to put an end to that dreadful noise. It seemed dreadful to see the great beast lying there, powerless to move and yet powerless to die. and not even to be able to finish him. [ sent back for my small rifle and poured shot after shot into his heart and down his throat. They seemed to make no impression. The tortured gasps continued as steadily as the ticking of a clock.

In the end I could not stand it any longer and went away. [ heard later that it took him half an hour to die. Burmans were arriving with dahs and baskets even before I left, and I was told they had stripped his body almost to the bones by the afternoon.

Afterwards, of course, there were endless discussions about the shooting of the elephant. The owner was furious, but he was only an Indian and could do nothing. Besides, legally I had done the right thing, for a mad elephant has to be killed, like a mad dog, if its owner fails to control it. Among the Europeans opinion was divided. The older men said I was right, the younger men said it was a damn shame to shoot an elephant for killing a coolie, because an elephant was worth more than any damn Coringhee coolie. And afterwards I was very glad that the coolie had been killed; it put me legally in the right and it gave me a sufficient pretext for shooting the elephant. I often wondered whether any of the others grasped that I had done it solely to avoid looking a fool.

New Writing, No. 2, Autumn 1936; Penguin New Writing, No. 1, [November] 1940; broadcast in the B.B.C. Home Service, 12 October 1948; .S.E.; O.R.; C.E.

Posted in ASIA, ENGLAND, ENVIRONMENT, FOREIGN POLICIES, HISTORY, INTERNATIONAL, INTERNATIONAL RELATIONS, LITERATURE, UNITED KINGDOM | Leave a Comment »

AFRICA’S CHINESE CONNECTION AND THE DOWNTURN (South Africa)

Posted by Gilmour Poincaree on November 27, 2008

Posted to the web on: 27 November 2008

by Greg Mills – (*)

YOU know that it’s a globalised world when the man in front of you on the flight from Hong Kong THE GREAT WALLto Beijing starts a conversation, across several rows of seats, about the fast-bowling merits of Dale Steyn versus those of Morne Morkel — in Afrikaans.

Yet this very phenomenon — of an increasingly integrated world of trade, technology, skills and capital — is not only seen to be under threat due to the global economic crisis, but in the eyes of some is the cause of the crisis.

But that’s not how China sees things, in spite of some loss of export markets because of the credit crunch.

The formula for global economic growth has, over the past two decades , in simple terms, comprised western consumption of cheap Asian goods fuelled by access to cheap credit produced in turn by high Asian savings.

The cheapness of Asian goods relates to their productivity, which is related once again to the number of workers that are joining the global economy — 20-million annually from China’s rural to urban areas, at the last estimate.

Once in the cities they produce (up to three times) more and save more.

The downturn in demand for manufactured goods is likely to hit China hard — just as it has depressed commodity prices, the third leg of the western consumption-Asian thrift formula.

The supply of African oil and minerals has driven up continental growth rates, of course, and radically changed the level of external interest in African affairs.

China has been in part responsible for “globalising” Africa.

In doing so, it has certainly shown African prospects in a different light to the one shone by western firms and governments.

This relationship is represented in a plethora of statistics: In 1980, China’s share of world trade was less than 1%. By 2003 it had risen to 6%, where exports make up one-third of China’s gross domestic product. In 1980 China’s exports were worth less than $20bn. Last year, they exceeded $1-trillion. Such trade largely involves China’s processing of raw materials and the assembly of parts.

China’s trade with Africa has dramatically increased from $11bn in 2000 to $56bn in 2006 and $73bn last year, much of the increase due to oil.

Beijing has an African trade target of $100bn by 2010.

The second-largest global energy importer behind the US, China imported more than 6-million barrels of oil per day in 2006. This figure is expected to double in the next 15 years.

With only half of its energy needs now supplied by domestic sources, Angola has become China’s largest suppler of oil, while Sudan and Nigeria are important investment partners.

China today receives about one-third of its oil imports from Africa, comprising just less than 10% of the continent’s total oil exports. By comparison, the US purchased one-third of a percent of Africa’s total oil exports in 2006.

By 2006, more than 800 Chinese state-owned enterprises were active in Africa, with Chinese firms investing more than $6bn in 900 projects. The following year, China invested $4,5bn in African infrastructure projects alone.

Yet current figures put the downturn in manufacturing order books by more than 50% worldwide. China’s third-quarter growth has dipped to 9% from 12% last year. A loss of markets and growth, potentially compounded by rising labour costs depressing productivity, is a spectre that no Chinese politician fancies.

Beijing believes it will cope with the credit crisis by focusing on substituting its internal market for those lost overseas. Hence the announcement of a $586bn infrastructure stimulus package.

For example, the Chinese government has committed, in the short-term, an extra R1-trillion to railway infrastructure. That will buy a lot of steel, and much else, at current prices.

For this reason, for the moment, China aims to continue with its strategy to secure raw materials from Africa at source, in so doing managing the prospect of input price inflation.

This offers further prospects to African businesses with an appetite for partnership in exploiting the long-term trend of increasing global flows of capital to emerging markets.

But despite its strategy to beef up internal demand, China retains a big stake in globalisation.

Without sizeable external markets it cannot provide for its citizens, with all the economic fallout and political instability that would denote.

For experience teaches that large numbers of job seekers cannot be absorbed by government, or to satisfy local demand. For China, as in Africa, if they cannot find a place for themselves in the global economy, many will not be able to find a place at all.

(*) – Dr Mills heads the Brenthurst Foundation and has been researching in China.

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PUBLISHED BY ‘BUSINESS DAY’ (South Africa)

Posted in CENTRAL BANKS, CHINA, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FOREIGN POLICIES, FUELS, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, INTERNATIONAL RELATIONS, MACROECONOMY, METALS, METALS INDUSTRY, MINING INDUSTRIES, PETROL, RAILWAY TRANSPORT, RECESSION, SOUTH AFRICA, THE FLOW OF INVESTMENTS, TRANSPORT INDUSTRIES | Leave a Comment »

VENEZUELA, RUSSIA SAY OIL PRICES MUST STABILISE

Posted by Gilmour Poincaree on November 27, 2008

Posted to the web on: 27 November 2008

Sapa-AP

CARACAS – Venezuela will support Opec oil production cuts until prices increase, Oil Minister Venezuela's Oil Minister Rafael Ramirez speaks with the media in Caracas, Feb. 8, 2008Rafael Ramirez said yesterday.

During a visit by Russian President Dmitry Medvedev, he said Venezuela will support Opec production cuts of 1-million-barrels per day at Opec’s upcoming meeting on Saturday. But if new cuts are not enough to increase prices, “we will keep cutting until the market stabilises,” he said.

President Hugo Chavez has said he’s proposing Opec countries consider setting a price range for oil to stabilise the global market.

“Let’s look for a band between $80 and $100; we’re thinking about that,” Chavez said Monday.

“We think that price would be a fair price for oil.” Venezuela is a founding member of Opec, which cut production by 1,5-million-barrels per day last month to boost prices.

While Russia is not an Opec member, Chavez has often spoken of the necessity to strengthen relations between Opec and Russia. Russian President Dmitry Medvedev did not respond directly when asked if he would support Chavez’s price band, but said Russia wants “just and stable” oil prices.

“These don’t need to be really low or really high” he said through an interpreter. In Nymex trading, prices for light, sweet crude for January delivery rose slightly to settle at $54,44 a barrel yesterday. Oil prices have recently fallen to a third of their July value.

Among other things, yesterday’s prices were affected by speculation that Russia – one the world’s largest crude producers – may join Opec in output cuts, Energy Minister Sergei Shmatko said in New Delhi on Tuesday, Press Trust of India news agency reported.

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Posted in COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ENERGY, ENERGY INDUSTRIES, FOREIGN POLICIES, FUELS, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL RELATIONS, OPEC, PETROL, RECESSION, REFINERIES - PETROL/BIOFUELS, RUSSIA, VENEZUELA | Leave a Comment »

FOUR NEW REPORTS REVEAL BATTERED ECONOMY (USA)

Posted by Gilmour Poincaree on November 27, 2008

Nov 26, 2008 1:54 PM (18 hrs ago)

by Martin Crtsinger, AP

WASHINGTON (Map, News) – The government released a quartet of reports Wednesday that paint a bleak picture of the nation’s economy: Jobless claims remain at recessionary levels, Americans cut back on their spending by the largest amount since the 2001 terrorist attacks, orders to U.S. factories plummeted and new-home sales fell to the lowest level in nearly 18 years.

The Labor Department reported that initial requests for unemployment benefits fell to a seasonally adjusted 529,000 from the previous week’s upwardly revised figure of 543,000. But claims remain at recessionary levels. The four-week average, which smooths out fluctuations, rose to 518,000, its highest level since January 1983, when the economy was emerging from a steep recession.

One minor bright spot showed the number of people continuing to claim unemployment insurance dropped unexpectedly to 3.96 million, from the previous week’s 4.02 million, which was the highest level in 25 years. The labor market has grown by about half since 1983.

Meanwhile, the Commerce Department reported that consumer spending plunged by 1 percent in October, even worse than the 0.9 percent decline that had been expected. Consumer spending accounts for two-thirds of total economic activity.

Orders to U.S. factories for big-ticket manufactured goods also plunged last month by the largest amount in two years. Orders for durable goods dropped by 6.2 percent, more than double the decline economists expected. The Commerce Department report showed widespread declines throughout manufacturing led by decreases in autos and airplanes.

The department also reported that new-home sales decreased 5.3 percent last month to a seasonally adjusted annual sales pace of 433,000 homes, the lowest level since January 1991, another period when the country was undergoing a steep housing downturn.

The median price of a new home sold in October fell to $218,000, down 7 percent from a year ago, and the lowest since September 2004.

The Dow Jones industrial average rose about 50 points in early afternoon trading Wednesday.

With the economy showing further signs that it is headed into a steep swoon, the administration and the Federal Reserve rolled out two new programs Tuesday that would provide up to $800 billion in an effort to get more loans flowing in such critical areas as mortgage lending, credit cards, auto loans and small business loans.

Credit markets liked the new efforts, but private economists said the new moves were not likely Treasury Secretary Henry Paulson appears on a television as a trader works on the floor of the New York Stock Exchange, Tuesday Nov. 25, 2008 - AP Photo - Richard Drewto be the last changes in the government’s vast rescue program, which has already undergone significant alterations since it was passed by Congress on Oct. 3.

Analysts believe more work will need to be done because of their expectations that the economy’s vital signs will continue to worsen as the country slips into what many believe could be the worst recession since the early 1980s.

The unemployment rate has hit a 14-year high of 6.5 percent, putting pressure on personal incomes. The government reported Tuesday that the overall economy, as measured by the gross domestic product, shrank at an annual rate of 0.5 percent in the July-September quarter, reflecting the fact that consumer spending fell at the fastest pace in 28 years.

Nariman Behravesh, an economist at IHS Global Insight, said he was expecting GDP to shrink at a 4 percent rate in the current quarter, reflecting the battering consumers are taking from the worst financial crisis since the 1930s. He predicted that the economy would remain in recession through the first half of next year.

“We are in the early stages of one of the worst recessions in the postwar period, even factoring in a massive stimulus program,” Behravesh.

To revive the economy, President-elect Barack Obama has said a top priority will be working with Congress to enact a stimulus package with the goal of creating 2.5 million new jobs over the next two years. Analysts believe such an effort will require spending between $500 billion to $700 billion, a figure that would be on top of all the money being spent to stabilize the financial system.

In the latest efforts to stabilize the financial system, the Federal Reserve announced Tuesday that it will buy $200 billion in securities backed by different types of debt including credit card loans, auto loans, student loans and loans to small businesses. That market essentially froze in October. These types of loans as a result have become harder to obtain and have carried higher interest rates

The Fed also announced that it will spend $500 billion to buy mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly purchase mortgages held by Fannie, Freddie and the Federal Home Loan Banks.

This would greatly expand an initial modest effort announced in September with the goal of creating increased demand for mortgage-related assets. The hope is that this will drive down the price of mortgages and make home loans more available.

Analysts predict the Fed program could send mortgage rates down by as much as one-half to a full percentage point in coming months, helping to spur demand in the beleaguered housing market, which is suffering its worst downturn in decades.

The latest federal moves raised U.S. commitments to contain the financial crisis to nearly $7 trillion – though no one thinks the government will actually spend anything like that figure.

In the case of the Federal Reserve, the amount covers huge loans that financial institutions will have to pay back. In the case of the Treasury rescue effort, the government will at some point sell the stock it owns back to the banks, presumably when the banking system is doing better and the stock will be worth more.

Copyright 2008 The Associated Press. All rights reserved.

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Posted in BANKING SYSTEM - USA, BANKRUPTCIES - USA, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, CONSUMERS AND PSYCHOLOGICAL FACTORS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL MARKETS, HOUSING CRISIS - USA, INDUSTRIAL PRODUCTION - USA, INDUSTRIES - USA, MACROECONOMY, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE PRESIDENCY - USA, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

ASSAULT ON THE AMERICAN WORKER

Posted by Gilmour Poincaree on November 27, 2008

24 November, 2008

Posted by lobotero

The events of the past few days have made clear that a proposed $25 billion bailout of the US Businesses in California are lining up to oppose a bill, introduced by Assembly member Fiona Ma, requiring paid sick leave for workersBig Three auto companies is being used to intensify the ruling class offensive against auto workers and the American working class as a whole.

In an entirely cynical manner, the media and politicians of both parties are issuing pseudo-populist denunciations of General Motors, Ford and Chrysler while seizing on the near-collapse of the companies as an opening to rip up union contracts and destroy workers’ pensions, health benefits, wages and working conditions. This is to be the centerpiece of a ruthless restructuring of the industry, involving the closure of more factories and the destruction of tens of thousands more jobs. The aim is to provide, in the form of a far smaller and more highly exploitative industry, a source of profitable investment for Wall Street bankers and speculators.

The destruction of auto jobs and gutting of all that remains of the gains won by generations of auto workers since the mass sit-down strikes of the 1930s will be used as a precedent for similar attacks on workers in every sector of the economy and every part of the country. As with the Chrysler bailout of 1979-80, but on a far broader and even more brutal scale, mass unemployment will be used as a weapon to bludgeon the working class.

Whether through the bankruptcy courts or a bailout bill conditioned on unprecedented concessions — which the United Auto Workers (UAW) will accept and help impose — the workers are to be forced to labor for near-poverty wages and be stripped of basic health and retirement benefits.

President-Elect Barack Obama, for his part, has solidarized himself with demands for sweeping contract concessions, declaring that any auto bailout be contingent on the industry’s future “viability.” Among his chief economic advisers is Paul Volcker, the former Wall Street banker who was appointed chairman of the Federal Reserve by Democratic President Jimmy Cater and engineered a massive rise in unemployment, which was used to break the power of the unions and undermine the resistance of the working class to layoffs and wage cuts. The Chrysler bailout was carried out during his tenure at the Fed.

There is only one way to save the workers from the assaults they are sure to face. And that is?

There is only one policy that can defend the interests of auto workers and the working class as a whole. That is a socialist policy of nationalizing the auto industry and transforming it into a publicly owned enterprise under the democratic control of working people. This must be carried out in conjunction with the nationalization of the banks under public control, so that economic life can be based on the principle of production for human need, not private profit.

The design, engineering and manufacture of automobiles involve tens of millions of people around the world and vast natural, financial and human resources. The only way to guarantee decent living standards for all workers and to end destructive national competition is to unite auto workers internationally on the basis of a socialist program.

I know Irene…not what you want to hear, but put yourself in the place of an autoworker….what would you do to preserve your job?

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PUBLISHED BY ‘LOBOTERO’S INFO INK’

Posted in AUTOMOTIVE INDUSTRY, BANKING SYSTEM - USA, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL MARKETS, INDUSTRIAL PRODUCTION - USA, INDUSTRIES - USA, MACROECONOMY, NATIONAL WORK FORCES, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE PRESIDENCY - USA, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

LIST OF TROUBLED BANKS GROWS BY 50 PERCENT (USA)

Posted by Gilmour Poincaree on November 27, 2008

Published: Nov 26, 2008 12:30 AM – Modified: Nov 26, 2008 02:05 AM

The Associated Press

NEW YORK – The Federal Deposit Insurance Corp. said Tuesday that the list of banks it considers FDIC Chairwoman Sheila Bair cites 'profound problems.'to be in trouble shot up nearly 50 percent to 171 during the third quarter.

The 171 banks on the FDIC’s “problem list” encompass only about 2 percent of the nearly 8,500 FDIC-insured institutions. “We’ve had profound problems in our financial markets that are taking a rising toll on the real economy,” said FDIC Chairwoman Sheila Bair.

The FDIC said total assets held by troubled institutions climbed from $78.3 billion to $115.6 billion — a figure that suggests that the nation’s top 20 banks aren’t on the list. The FDIC does not reveal the names of the institutions it deems troubled.

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PUBLISHED BY ‘THE NEWS & OBSERVER’ (USA)

Posted in BANKING SYSTEM - USA, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL MARKETS, HOUSING CRISIS - USA, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, USA | Leave a Comment »

CHINA SHARES UP AS ROAD-BUILDING PLANS REVEALED

Posted by Gilmour Poincaree on November 27, 2008

Published: Nov 26, 2008 03:44 AM

The Associated Press

SHANGHAI, China – China’s shares edged up Wednesday for the first time in five sessions, led by In July 7, 2008 photo, an investor looks at a stock price board at a private securities' company in Shanghai, China. Chinese shares fell sharply Friday, Aug. 8, 2008, on heavy selling of airlines and other market heavyweights, as investors and analysts puzzled over why expectations of a rally linked to the Beijing Olympic games never materialized. The benchmark Shanghai Composite Index sank 4.5 percent, or 122.81 points, to 2,605.16. The Shenzhen Composite Index of China's smaller, second market dropped 5.6 percent to 74transportation and steel stocks after the government announced road-building plans under a stimulus package.

The benchmark Shanghai Composite Index ended up 0.5 percent, or 9.17 points, to close at 1897.88. The Shenzhen Composite Index for China’s smaller second exchange rose 0.6 percent to 535 points.

Trading was thin, reflecting the market’s search for direction after a rally – prompted by Beijing’s Nov. 9 announcement of its stimulus package – faded, analysts said.

“If the policies become clearer, the euphoria could continue,” said Huang Xiangbin, an analyst for Cinda Securities.

Stocks in toll road operators and steel makers rose after the Ministry of Transport said it would spend 1 trillion yuan ($146 billion) on building highways and rural roads as part of the stimulus.

The package is meant to help shield China from the global downturn by pumping money into the economy through higher spending on construction, tax cuts and aid to the poor.

Guangxi Wuzhou Communications Ltd. advanced by the daily limit of 10 percent to 4.62 yuan, while Jiangxi Ganyue Expressway Co. jumped 2.9 percent to 8.15 yuan.

Steel stocks rose after iron ore supplier BHP Billiton Ltd. dropped its bid for rival Rio Tinto Group, which eased concerns that a tie-up would give the mining group too much leverage to raise prices.

Baoshan Iron & Steel Ltd., China’s biggest steel maker, gained 3.9 percent to 5.02 yuan. Anshan Iron and Steel Group rose 6 percent to 7.1 yuan.

Real estate stocks rose on expectations of a possible interest rate cut, despite comments by a central bank deputy governor who said the current level is appropriate.

China Vanke Ltd., the country’s biggest developer, climbed 3.7 percent to 6.8 yuan, and rival Poly Real Estate Group rose 2.6 percent to 17.38 yuan.

In currency markets, China’s yuan weakened to 6.8282 to the U.S. dollar in over-the-counter trading around 0800 GMT, down from Tuesday’s close of 6.8220.

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BAILOUTS: $7 TRILLION AND RISING – Every day brings more news about the government’s efforts to fix the economy. Here is how the plans are taking shape

Posted by Gilmour Poincaree on November 27, 2008

Last Updated: November 26, 2008: 3:29 PM ET

by David Goldman, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) — The U.S. government is now willing to spend more than $7 trillion BURNING DOLLARS AND WASTING MONEY WITH THE BAILOUT PLANSto help rescue the economy. That’s about $23,000 for every American, and more than half of U.S. annual gross domestic product.

It’s a staggering and unprecedented amount of money. The last time the government went on a spending spree to cure a crisis was in the late 1980s and 1990s during the savings and loan crisis. But the $160 billion ($237 billion in today’s dollars) it spent then comes nowhere close to what’s being spent now.

But it may not be as bad as it seems: A substantial portion of that $7 trillion is investment, the government hasn’t spent close to the total allotment yet, and the taxpayer may come out on top in the end.

“It’s a lot of money, but it’s not like it’s out the door, never to be seen again,” said Dean Baker, co-director of the Center for Economic and Policy Research. “A lot will be lost, but we’re not going to lose anywhere close to $7 trillion.”

The government has invested about $3 trillion of the total allotment, and it has already received much of that investment back. For instance, the Fed has gotten back about $1.2 trillion of the $1.6 trillion it has lent banks in its ongoing Term Auction Facility.

The government collects interest on its loans and when it takes an equity stake in a company or takes hold of an asset-backed security, those holdings could mature in value over the duration of the government’s possession of them.

“At the end of the day, it’s an expensive plan, but the government had to step in,” said John Silvia, chief economist at Wachovia. “It’s a difficult thing to estimate, but the government could sell the assets at a decent price once the market’s better.”

Furthermore, some of the $7 trillion will likely never be spent. The government can spend up to $1.4 trillion in purchases of short-term business debt under the Fed’s Commercial Paper Funding Facility, but so far it has spent just $270 billion on the program.

Pessimists say the government is spending too much, putting taxpayer dollars at risk. Some say, that for all the government has spent, the results don’t match the actions.

But optimists argue that much of the bailout serves as a guardrail, preventing the financial system from falling into a total collapse. And most economists argue that the cost of not acting would be far greater.

“We’re doing this to prevent a financial collapse,” said Baker. “Not acting would be much worse, because the financial system would grind to a halt.”

More bailout measures still may be coming, as economists say the serious problems facing financial institutions have not yet subsided.

“More banks will likely fail, and I wouldn’t be surprised if the FDIC has to go to Congress to get recapitalized,” said Baker. “There’s lots more bad debt that has yet to show up.”

There’s also a growing chorus of voices outside of Treasury to spread bailout money around.

The recent struggles of GM (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler have built momentum for a bailout of the U.S. auto industry. Automakers have until Dec. 2 to submit proposals for how they would use – and pay back – $25 billion of government funding. The Bush administration has said it does not want a Detroit bailout to come from TARP funds.

Some government officials like FDIC Chair Sheila Bair have called for TARP money to be used to guarantee mortgages backed by private lenders to encourage them to restructure loans to troubled homeowners.

And President-elect Barack Obama has stated his support for another economic stimulus package in the form of tax rebates to consumers, states and municipalities. Economists believe the bill will cost about $500 billion. The proposal has gained traction in Congress, with hopes that consumer spending and aid to governments will help boost the economy.

Here is how the government has thus far invested billions of dollars to rescue banks, companies, consumers and their homes.

SAVING WALL STREET

The government has taken these steps to aid financial institutions.

Term-auction facility: $1.6 trillion in loans to banks so far in exchange for otherwise unwanted collateral. The Fed increased its monthly auction limit to $300 billion in October, up from $20 billion when the Fed began the program.

Dollar swap lines: Unlimited dollars to 13 foreign central banks to provide liquidity to foreign financial institutions. The Fed lifted its cap after raising it to $620 billion in October from $24 billion in December.

Bear Stearns: $29 billion in a special lending facility to guarantee potential losses on its portfolio. With the lending facility, JPMorgan was able to step in to save Bear from bankruptcy.

Lending to banks: $70 billion lent on average every day to investment banks, after facility opened to non-commercial banks for first time in March. $92 billion a day to commercial banks.

Cash injections: $250 billion allocated to banks from $700 billion rescue package in exchange for equity stake in the financial institutions in the form of senior preferred shares.

Citigroup: $300 billion in troubled asset guarantees and $45 billion in cash-injections to prevent fourth-largest bank from failing.

Fed rate cuts: Down to 1% in October 2008, from 5.25% in September 2007.

SAVING MAIN STREET

Consumers are benefiting from the government’s actions in recent months.

Stimulus checks: $100 billion in stimulus checks made their way to 140 million tax filers to boost consumer spending and help grow the economy.

Unemployment benefits: $8 billion toward an expansion of unemployment benefits, to 39 weeks from 26 weeks. Some states must now offer 39-week benefits after an extension act was passed in November.

Bank takeovers: $15.5 billion drawn down so far from the FDIC’s deposit insurance fund after 22 bank failures in 2008.

Rehab foreclosed homes: $4 billion to states and municipalities in assistance to buy up and rehabilitate foreclosed properties.

Student loan guarantees: $9 billion so far in government purchases of student loans from private lenders. Higher borrowing costs made student loans unprofitable for a number of lenders, many of whom stopped issuing the loans.

Money-market guarantees: $50 billion in insurance for money-market funds. The Fed then began to lend an unlimited amount of money to finance banks’ purchases of debt from money-market funds. The Fed then agreed to purchase up to $69 billion in money-market debt directly. In October, the Fed said it would loan up to $600 billion directly to money-market funds, which was extended for six months in November.

Housing rescue: $300 billion approved for insurance of new 30-year, fixed-rate mortgages for at-risk borrowers. The bill includes $16 billion in tax credits for first-time home buyers. But lenders have been slow to sign on.

Deposit insurance: $250,000 in insurance for interest-bearing accounts, up from $100,000. The FDIC also issued unlimited guarantees on non-interest- bearing accounts and newly issued unsecured bank debt.

Consumer loans: $800 billion extended to consumer loan-backed securities, including $200 billion for assets backed by credit cards and car loans and $500 billion in mortgage-backed securities. The Fed will also buy $100 billion of Fannie Mae and Freddie debt to try to make loans cheaper.

SAVING CORPORATE AMERICA

Uncle Sam has intervened to help companies in the following ways.

Business stimulus: $68 billion in tax breaks to corporations to help loosen the stranglehold on businesses trying to finance daily operating expenses.

Fannie Mae, Freddie Mac: $200 billion to bail out the mortgage finance giants. Federal officials assumed control of the firms and the $5 trillion in home loans they back.

AIG: $152.5 billion restructured bailout, including a direct investment through preferred shares, a easier terms on a $60 billion loan, and new facilities meant to take on the companies exposure to credit-default swaps.

Automakers: $25 billion in low-interest loans to speed the industry’s transition to more fuel-efficient vehicles.

Commercial paper facility: $271 billion in corporate debt purchased so far by the Fed since its so-called Commercial Paper Funding Facility opened. The Fed allocated $1.4 trillion for the program.

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AUTO INDUSTRY BAILOUT CONUNDRUM (USA)

Posted by Gilmour Poincaree on November 27, 2008

20 November 2008 at 12:20 pm

by muddledblog

The political tides keep changing for and against providing the auto industry with government loans to keep them from bankruptcy. The U.S. auto industry thinks that a $25 Billion no strings attached loan should be enough to solve their problems. Personally, I doubt it. It has become fairly apparent that the U.S. auto industry has been badly managed and bloated and that they will need to get even more money to keep themselves from bankruptcy in the future. There are two options, use bankruptcy to allow the companies to reorganize or give them loans and hope they figure out how to be competitive in a global market place. None of these seem to be good options. One of the first things to go in bankruptcy would be the pension and health care benefits of their retirees which seems unfair. Further, the more profitable sections are likely to be auctioned off leaving a company with very little to compete with. On the other hand, the loans are also unlikely to result in a competitive company. The issue is that these companies have way too much liabilities in their union contracts, pension and health care benefits for retirees, and contracts with dealerships to be able to become competitive without some sort of renegotiation of those liabilities.

What I find interesting is that if the government passed a universal single payer health care insurance system, then the one of the major liabilities that prevents the U.S. auto industry, in fact the U.S. manufacturing industry as a whole, from being globally competitive would be removed. I wonder just how much it would cost compared to just giving out billions of dollars in loans. Sure our taxes would go up, but so would our pay checks since our employers would no longer have to pay huge health insurance premiums.

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MEDIDAS GARANTEM LIQUIDEZ PARA QUE BANCOS CONTINUEM A EMPRESTAR (Brasil)

Posted by Gilmour Poincaree on November 27, 2008

26 de Novembro de 2008

Na edição de hoje, o Em Questão apresenta o segundo tema da série “Enfrentando a crise global”, em que aborda as medidas tomadas para fornecer liquidez no mercado interbancário nacional e destravar o crédito.

No Brasil, apesar de os bancos não apresentarem problemas de solvência, foi sentido o reflexo da falta de crédito mundial. Como a edição de ontem do Em Questão mostrou, a crise mundial levou à contração do crédito em todo o mercado financeiro. A quebra de bancos e as perdas bilionárias anunciadas por instituições financeiras dos Estados Unidos e de países da União Européia difundiram um clima de incerteza por todo o mundo. Com isto, as outras instituições deixassem de emprestar, levando ao encarecimento do crédito.

Para enfrentar este quadro, as principais mudanças aconteceram na regulamentação do compulsório (depósito que os bancos são obrigados a recolher ao Banco Central) com o objetivo de aumentar os recursos em circulação. Até o dia 18 de novembro, o Banco Central estima que o mercado interbancário foi irrigado com R$ 85 bilhões.

Compulsório – A primeira medida, anunciada no dia 24 de setembro, adiou o recolhimento do compulsório em títulos federais sobre Depósitos Interfinanceiros captados de sociedades de arrendamento mercantil (leasing). O que liberou R$ 8 bilhões de liquidez no mercado interbancário. As outras medidas ampliaram, primeiramente, de R$100 milhões para R$ 300 milhões e depois de R$ 300 milhões para R$ 1 bilhão o valor a ser deduzido pelas instituições financeiras do cálculo da exigibilidade adicional sobre depósitos a prazo, depósitos de poupança e recursos à vista, liberando outros R$ 8 bilhões. E ampliação de R$ 300 milhões para R$ 700 milhões e, posteriormente, de R$ 700 milhões para R$ 2 bilhões o valor a ser deduzido pelas instituições financeiras do cálculo do recolhimento compulsório de depósitos a prazo, feito em títulos públicos, liberando R$ 13,1 bilhões de liquidez.

Além disso, foram reduzidas de 8% para 5% as alíquotas usadas para o cálculo da exigibilidade adicional sobre depósitos à vista e depósitos a prazo das instituições financeiras, permitindo a liberação de R$ 16,9 bilhões. E redução da alíquota de exigibilidade do recolhimento compulsório sobre recursos à vista de 45% para 42%, com impacto estimado de R$ 3,6 bilhões; e do recolhimento compulsório sobre os depósitos à vista para instituições financeiras que adiantarem contribuições mensais ao Fundo Garantidor de Crédito (entidade privada que garante os depósitos bancários no Brasil).

Foi dada ainda permissão para que as instituições financeiras possam deduzir do cumprimento de exigibilidade de recolhimento compulsórios de depósitos interfinanceiros, os valores de operações de aquisição de moeda estrangeira junto ao Banco Central, com volume liberado estimado de até R$ 20 bilhões.

Compra de carteiras – No início de outubro, foi dada autorização para instituições financeiras abaterem do recolhimento compulsório sobre depósitos a prazo (cuja alíquota é de 15%) o valor de aquisição de operações de crédito de outras instituições financeiras com patrimônio de referência de até R$ 7 bilhões. E o valor da dedução é limitado até 70% do total do compulsório sobre depósitos a prazo. Tal medida tem impacto estimado na liquidez de R$ 29,5 bilhões.

Outra mudança importante, que pode direcionar mais recursos para operações de compra de carteira e de outros ativos, foi feita na forma de recolhimento do compulsório sobre depósitos a prazo: antes da medida, o recolhimento era feito 100% em títulos públicos (com remuneração) e, a partir do dia 14 de novembro, passou a ser feito 30% em títulos públicos e 70% em espécie, sem remuneração.

Editado pela Secretaria de Comunicação Social da Presidência da República
Nº 733a – Brasília

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WEAPONS COME SECOND (USA)

Posted by Gilmour Poincaree on November 27, 2008

Middle East – Nov 27, 2008

by Frida Berrigan

Even saddled with a two-front, budget-busting war and a collapsing economy, Barack Obama may THE PENTAGON FROM WITHINbe able to accomplish a lot as president. With a friendly Congress and a relieved world, he could make short work of some of the most egregious overreaches of the George W Bush White House – from Guantanamo to those presidential signing statements. For all the rolling up of sleeves and “everything is going to change” exuberance, however, taking on the Pentagon, with its mega-budget and its mega-power, may be the hardest task he faces.

The mega-Pentagon

Under Bush, military spending increased by about 60%, and that’s not including spending on the wars in Iraq and Afghanistan. Eight years ago, as Bush prepared to enter the Oval Office, military spending totaled just over US$300 billion. When Obama sets foot in that same office, military spending will total roughly $541 billion, including the Pentagon’s basic budget and nuclear warhead work in the Department of Energy.

And remember, that’s before the “war on terror” enters the picture. The Pentagon now estimates that military operations in Iraq and Afghanistan will cost at least $170 billion in 2009, pushing total military spending for Obama’s first year to about $711 billion (a number that is mind-bogglingly large and at the same time a relatively conservative estimate that does not, for example, include intelligence funding, veterans’ care, or other security costs).

With such numbers, it’s no surprise that the United States is, by a multiple of nearly six, the biggest military spender in the world. (China’s military budget, the closest competitor, comes in at a “mere” $120 billion.) Still, it can be startling to confront the simple fact that the US alone accounts for nearly half of all global military spending – to be as exact as possible in such a murky area, 48% according to the International Institute for Strategic Studies. That’s more than what the next 45 nations together spend on their militaries on an annual basis.

Again, keep in mind that war spending for 2009 comes on top of the estimated $864 billion that lawmakers have, since 2001, appropriated for the Iraq war and occupation, ongoing military operations in Afghanistan, and other activities associated with the “war on terror”. In fact, according to an October 2008 report by the Congressional Research Service, total war spending, quite apart from the regular military budget, is already at $922 billion and quickly closing in on the trillion dollar mark.

Common sense cuts?

Years late, and with budgets everywhere bleeding red, some in Congress and elsewhere are finally raising questions about whether this level of spending makes any sense. Unfortunately, the questions are not coming from the inner circle of the president-elect.

Democratic Representative Barney Frank drew the ire and consternation of hardline Republicans and military hawks when, in October, he suggested that Congress should consider cutting defense spending by a quarter. That would mean shaving $177 billion, leaving $534 billion for the US defense and war budget and maintaining a significant distance – $413 billion to be exact – between United States and our next “peer competitor”. Frank told a Massachusetts newspaper editorial board that, in the context of a struggling economy, the Pentagon will have to start choosing among its many weapons programs. “We don’t need all these fancy new weapons,” he told the staff of the New Bedford Standard Times. Obama did not back him up on that.

Even chairman of the House Appropriations Sub-committee on Defense, Democrat John Murtha, a Congressman who never saw a weapons program he didn’t want to buy, warned of tough choices on the horizon. While he did not put a number on it, in a recent interview he did say: “The next president is going to be forced to decrease defense spending in order to respond to neglected domestic priorities. Because of this, the Defense Department is going to have to make tough budget decisions involving trade-offs between personnel, procurement and future weapons spending.”

And now, Obama is hearing a similar message from the Defense Business Board, established in 2001 by secretary of defense Donald Rumsfeld to give advice to the Pentagon. A few weeks ago, in briefing papers prepared for president-elect Obama’s transition team, the board, hardly an outfit unfriendly to the Pentagon, argued that some of the Defense Department’s big weapons projects needed to be scrapped as the US entered a “period of fiscal constraint in a tough economy”. While not listing the programs they considered knife-worthy, the board did assert that “business as usual is no longer an option”.

Desperate defense

Meanwhile, defense executives and industry analysts are predicting the worst. Boeing chief executive officer Jim McNerney wrote in a “note” to employees, “No one really yet knows when or to what extent defense spending could be affected, but it’s unrealistic to think there won’t be some measure of impact.” Michael Farage, Sikorsky’s director of air force programs, was even more colorful: “With the economy in the proverbial pooper, defense budgets can only go down.”

Kevin G Kroger, president of a company making oil filters for army trucks, offered a typical reaction: “There’s a lot of uncertainty out there. We’re not sure where the budgets are going and what’s going to get funded. It leaves us nervous.”

It’s no surprise that, despite eight years of glut financing via the “war on terror”, weapons manufacturers, like the automotive Big Three, are now looking for their own bailout. For them, however, it should probably be thought of as a bail-up, an assurance of yet more good times. Even though in recent years their companies have enjoyed strong stock prices, have seen major increases in Pentagon contracts, and are still looking at boom-time foreign weapons sales, expect them to push hard for a bottom-line guarantee via their holy grail – a military budget pegged to the gross domestic product (GDP).

“We advocate 4% of the GDP as a floor for defense spending. No question that has to be front and center for any new president’s agenda,” says Marion Blakey, president of the Aerospace Industries Association, a trade group representing companies like Lockheed Martin and Northrop Grumman.

Listening to defense industry figures talk, you could get the impression that the Pentagon’s larder was empty and that the pinching of pennies and tightening of belts was well underway. While the cuts suggested by the Defense Business Board report got a lot of attention, the Pentagon is already quietly laying the groundwork to lock the future Obama administration into a possibly slightly scaled-down version of the over-the-top military spending of the Bush years.

Business as usual?

At the beginning of October, the Pentagon’s latest five-year projection of budget needs was revealed in the Congressional Quarterly. These preliminary figures – the full request should be released sometime next month – indicate that the Pentagon’s starting point in its bargaining with the new administration and Congress comes down to one word: more.

The estimates project $450 billion more in spending over those five years than previously suggested figures. Take fiscal year 2010: the Pentagon is evidently calling for a military budget of $584 billion, an increase of $57 billion over what they informed Bush and Congress they would need just a few months ago.

Unfortunately, when it comes to military spending and defense, the record is reasonably clear – Obama is not about to go toe-to-toe with the military-industrial-complex.

On the campaign trail, his stump speech included this applause-ready line suggesting that the costs of the war in Iraq are taking away from important domestic priorities: “If we’re spending $10 billion a month [in Iraq] over the next four or five years, that’s $10 billion a month we’re not using to rebuild the US, or drawing down our national debt, or making sure that families have health care.”

But the “surge” that Obama wants to shift from Iraq to Afghanistan is unlikely to be a bargain. In addition, he has repeatedly argued for a spike in defense spending to “reset” a military force worn out by war. He has also called for the expansion of the size of the army and the marines. On that point, he is in complete agreement with Defense Secretary Robert Gates. [1]

They even use the same numbers, suggesting that the army should be augmented by 65,000 new recruits and the marines by 27,000. The Congressional Budget Office estimates that these manpower increases alone would add about $10 billion a year – that same campaign trail $10 billion – to the Pentagon budget over a five-year period.

The word from Wall Street? In a report entitled “Early Thoughts on Obama and Defense”, a Morgan Stanley researcher wrote on November 5, “As we understand it, Obama has been advised and agrees that there is no peace dividend … In addition, we believe, based on discussions with industry sources that Obama has agreed not to cut the defense budget at least until the first 18 months of his term as the national security situation becomes better understood.”

In other words: Don’t worry about it. Obama is not about to hand the secretary of defense a box of brownie mix and order him to hold a bake sale to buy a bomber.

Smarter, not more, military spending

Sooner rather than later, the new administration will need to think seriously about how to spend smarter – and significantly less – on the military. Our nose-diving economy simply will no longer support ever-climbing defense budgets.

The good news is that the Obama administration won’t have to figure it all out alone. The contributors to Foreign Policy In Focus’s new Unified Security Budget have done a lot of the heavy lifting to demonstrate that some of the choices that need to be made really aren’t so tough. The report makes the case for reductions in military spending on outdated or unproven weapons systems totaling $61 billion. The argument is simple and straightforward: these expensive systems don’t keep us safe. Some were designed for a geopolitical moment that is long gone – like the F-22 meant to counter a Soviet plane that was never built. Others, like the ballistic missile defense program, are clearly meant only to perpetuate insecurity and provoke proliferation.

To cut the military budget more deeply, however, means more than canceling useless, high-tech weapons systems. It means taking on something fundamental and far-reaching: America’s place in the world. It means coming to grips with how we garrison the planet, with how we use our military to project influence and power anywhere in the world, with our attitudes towards international treaties and agreements, with our vast passels of real estate in foreign lands, and, of course, with our economic and political relationships with clients and competitors.

As a candidate, Obama stirred our imagination through his calls for a “new era of international cooperation”. The United States cannot, however, cooperate with other nations from atop our shining Green Zone on the hill; we cannot cooperate as the world’s sole superpower, policeman, cowboy, hyperpower, or whatever the imperial nom du jour turns out to be. Bottom line: we cannot genuinely and effectively cooperate while spending more on what we like to call “security” than the next 45 nations combined.

A new era in Pentagon spending would have to begin with a recognition that enduring security is not attained by threat or fiat, nor is it bought with staggering billions of dollars. It is built with other nations. Weapons come second.

Note

1. According to media reports on Wednesday, Gates on Tuesday night accepted Obama’s offer to remain as defense secretary.

Frida Berrigan is a senior program associate at the New America Foundation’s Arms and Security Initiative (ASI). She is a columnist for Foreign Policy in Focus and a contributing editor at In These Times. In early December, ASI will release “Weapons at War 2008: Beyond the Bush Legacy”, co-authored by Berrigan and William D Hartung, an examination of US weapons sales and military aid to developing nations, conflict zones and nations where human rights are not safeguarded. Email berrigan@newamerica.net if you would like a copy of the executive summary.

(Copyright 2008 Frida Berrigan.)

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OCEANS’ ACIDITY THREATENING CORAL AND MUSSEL SURVIVAL (USA)

Posted by Gilmour Poincaree on November 27, 2008

4:00AM Wednesday Nov 26, 2008

by Steve Connor

Rising carbon dioxide levels are increasing acidity in the oceans faster than scientists thought, Species such as the threadfin butterfly fish will suffer if coral dies off - Photo - NZ Heraldposing a greater threat to shell-forming creatures such as coral and mussels.

An eight-year project in the Pacific has found that rising marine acid levels will challenge many organisms, because their shell-making chemistry is critically dependent on a less acidic, more alkaline environment.

The study monitored seawater pH levels at the northeast Pacific island of Tatoosh off Washington state in the United States.

Timothy Wootton, from Chicago University, said scientists found that acidity levels rose at more than 10 times the rate predicted by computer models designed to study the link between atmospheric concentrations of CO2 and ocean acidity.

Atmospheric CO2 levels have increased by about 100 parts per million since the start of the industrial revolution and are now at their highest point in at least 650,000 years.

About a third of man-made CO2 emissions has dissolved into the oceans.

As CO2 dissolves in seawater, it forms carbonic acid, which lowers the ocean’s alkalinity and pH level, making it more acidic.

The Intergovernmental Panel on Climate Change (IPCC) predicted last year that most coral reefs would disappear by the century’s end because of rising temperatures and ocean acidity.

However, this latest study, published in the journal Proceedings of the National Academy of Sciences, suggests that the rate of ocean acidification may be far higher than the rate used by the IPCC scientists in their assessment of future prospects for shell-forming marine creatures such as corals.

Professor Wootton said: “An alarming surprise is how rapidly pH has declined over the study period … These data point to the urgency of obtaining a globally extensive set of ocean pH data through time, and suggest that our understanding of ocean pH may be incomplete.

“The results showed that variation on ocean pH through time was most strongly associated with increasing atmospheric carbon dioxide, which supports the prediction that increasing release of CO2 to the atmosphere leads to ocean acidification.”

The study was unusual in that it looked at acidity in the ocean’s intertidal region, inhabited by shell-forming creatures such as barnacles and mussels. Professor Wootton said there was a shortage of data on ocean acidification, especially in non-tropical regions, which this study addressed.

“Our study reveals the strongest negative impacts of declining pH are on several species of particular importance in large calcifying mussels and goose barnacles.

“This finding illustrates several reasons why the effects of declining ocean pH are of general concern, as these species create critical habitats for other coastal species, are important players in coastal nutrient processing, and reflect the more general risks to shellfish harvesting.”

– INDEPENDENT

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PUBLISHED BY ‘THE NEW ZEALAND HERALD’

Posted in ENVIRONMENT, USA | 1 Comment »

KANSAS FEEDYARDS SEE SHARP DECLINE IN CATTLE (USA)

Posted by Gilmour Poincaree on November 27, 2008

Posted on Tue, Nov. 25, 2008

by Roxana Hegeman – The Associated Press

WICHITA, Kan. – At a time when the consumer appetite for beef is waning amid the economic downturn, the number of cattle going into feedlots in Kansas and across the nation also has taken a steep dive.

The latest cattle-on-feed statistics come at a time of high input costs for fattening the beef and deep losses for the nation’s cattle-feeding industry.

On Monday, the Kansas Agricultural Statistics Service reported that the state had 2.23 million head of cattle in its large feedyards as of Nov. 1. That number is down 8 percent from the same month a year ago, but up 3 percent from last month.

Cattlemen during October also placed 15 percent fewer cattle on feed, meaning the available slaughter supply will remain tight in the coming months. The number of animals leaving the feedyard for slaughter was down 12 percent in October, compared with the same month last year in Kansas.

At Hitch II feeders, assistant manager Dale Nicodemus said the feedyard near Garden City is running at less than three-fourths full. The feedyard has a capacity of 45,000 head.

“At this time of year that is significant. Most of the time we are jammed full at this time of the year,” Nicodemus said.

Some of the smaller feedyards , those with a capacity of fewer than 1,000 head of cattle , are empty and for sale, he said.

“Normally we are very full this time of year. The fall run was very small this year , almost nonexistent,” Nicodemus said.

He blamed the smaller numbers of cattle coming into the yard in part to a wetter year in Kansas that has allowed cattle to remain on grazing longer and to drought conditions elsewhere that have forced producers to cut the size of their herds.

The Kansas numbers were reflective of trends nationwide.

The U.S. inventory of cattle and calves on feed totaled 11 million head on Nov. 1, down 7 percent from the same month last year. Placements nationwide during October were down nearly 11 percent below 2007 to 2.44 million cattle, while the number of animals leaving the feedyard for slaughter were down 3 percent from last year to 1.81 million cattle.

While cattle supplies have tightened a little more than the industry was expecting before the report came out, the big story remains what is happening to the demand side, said James Mintert, a Kansas State University economist.

Industry experts say the economic downturn may continue to affect the demand for beef, particularly more expensive cuts such as tenderloin, as cash-strapped consumers turn to cheaper cuts or to chicken or pork.

Prices for tenderloin at the beginning of July were running about the same as a year ago. Two weeks ago, they were 28 percent to 32 percent below last year. They recovered slightly in the past week and are now running about 12 percent to 13 percent below a year ago.

“That is indicative at the wholesale level of buyers backing away from high-valued cuts because they were concerned about their ability to market to consumers in an environment where everybody is worried about their income, everybody is worried about what is happening to their asset values,” Mintert said.

Those cattle industry concerns also are reflected in the futures market. Since Labor Day, live cattle futures have dropped $20 a hundredweight because of concerns about domestic and export demand, Mintert said.

“We hope that demand can rebound when the economy starts to grow again,” said Todd Domer, spokesman for the Kansas Livestock Association. “Nobody knows when and if we’ve reached bottom yet.”

***

BISMARCK, N.D. (AP) , North Dakota’s Mill and Elevator reported a $12 million loss during July, August and September, which its manager said was the largest quarterly loss in the 86-year history of the state-owned mill.

Vance Taylor, the mill’s general manager, blamed the loss on large price swings for hard red spring wheat last spring, along with turbulence in the futures markets , which the mill has used to limit its financial risks , and a decline in flour demand.

In its last budget year, which ended June 30, the mill lost $821,607. It was the flour mill’s first annual loss since 1994.

William Wilson, a North Dakota State University economics professor, told the state Industrial Commission on Monday that grain market volatility is likely to continue for three to five years.

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PUBLISHED BY ‘PHILADELPHIA DAILY NEWS’ (USA)

Posted in CATTLE, COMMODITIES MARKET, ECONOMY, ECONOMY - USA, USA | Leave a Comment »