U.S. Economic/Financial News
Congressional 'E-Hearing' on Auto-Industry Crisis Announced
The House Committee on Education and the Workforce Democrats will hold a 10-day "e-hearing," or online hearing, on "The American Auto Industry in Crisis: The Threat to Middle Class Jobs, Wages, Health Care and Pensions," from Dec. 6-15.
The committee Democrats, led by Rep. George Miller of California, ran such an "e-hearing" on the airline pension collapse early this year, which eventually had a very powerful impact on fighting off the White House's "pension reform" schemes. Miller and his fellow Democrats have been pushed to this form by the refusal of committee chairman John Boehner (R-Ohio) to allow them hearing rooms suitable to the importance of the subject. This is the first Congressional hearing to open up the crucial subject of the physical-economic crisis centered in the auto industry, which Lyndon LaRouche has made top priority.
The committee Democrats will set up a website, www.edworkforce.house.gov/democrats/autocrisis.html, to take testimony.
November U.S. Auto Sales Fall Again
North American auto sales in November, which were released on Dec. 1, were again downand this time, across the board, including the Japanese automakers. For the industry as a whole, sales were 10% below those of November 2004, despite an end-of-the-month "recovery" from even lower levels. According to Automotive News Dec. 1, GM sales were down 11% from last November; Ford down 18%;, Chrysler down 7%; Toyota down 3%; Honda flat; Nissan down 7.8%. The only exception was Subaru whose sales rose 7%. The November annual sales rate was only 15.4 million, down from a 16.6 million rate in November 2004. The October annual rate was 14.7 million, the lowest monthly rate in seven years.
Wall Street Threatens To Downgrade Ford Further
Ford announced it is eliminating 1,470 jobs at Volvo, or 5.3% of the unit's workforce; while it is cutting output at Jaguar by as much as 7% and may sell its historic plant in Coventry, England. Yet, Standard & Poor's said it may still downgrade both Ford Motor and Ford Credit, warning that Ford's debt rating could be cut by more than one notch. S&P also said it may downgrade auto suppliers even lower. Meanwhile, General Motors is planning temporary layoffs at its Powertrain Plant in Toledo, Ohio, starting Dec. 12. The reason given for the job cuts is to reduce its inventory of transmissions, hit by falling sales of four-wheel-drive vehicles. And DaimlerChrysler is considering lay-offs at its plant in Kokomo, Ind., effective at the start of next year.
Rebuilding New Orleans Will Cost $200 Bn; Take Ten Years
Louisiana economic development secretary Michael Olivier says that rebuilding New Orleans and other parts of Louisiana will cost $200 billion and take ten years, according to media reports Nov. 29. The Louisiana Recovery Authority, which Olivier advises on economic development issues, was expected to announce a more precise aid request after a meeting Dec. 1.
John Schwartz, of the New York Times says that Category 5 protection is a "piece of a $32 billion pie," and is probably out of reach. Herbert Saffir (co-creator of the hurricane-power scale) says that a Category 5 hurricane would only occur once every 500 years and is not worth building for, though Dutch engineer Maarten van der Vlist disagrees, saying that the Netherlands chose to protect against flooding that occurs once every 10,000 years. The problem is nationwide and requires a complete reassessment of all flood systems. Robert Bea, a civil engineer at Berkeley says that the Army Corps of Engineers should manage such a project.
The Stanford Washington Research Group says that some package of relief for the Gulf Coast utilities is likely to pass Congress by Christmas. The House version of a bill has no relief for utilities, whereas the Senate version has provisions including a longer carryback for property losses and the potential to receive community block grants for reconstruction.
Months After Katrina: Mouth of Mississippi Still Dangerous
The mouth of the Mississippi River, three months after Hurricane Katrina, remains a dangerous obstacle course, the Wall Street Journal reported Nov. 28. Tanker and barge traffic from the Gulf of Mexico to the ports of Louisiana, and down the Mississippi River to those ports, requires extra careful piloting because the sunk barges, downed landmarks, and missing aids to navigation have not yet been cleared or restored. One 30-year veteran river pilot said, it is as if "we went back 100 years," when the hurricane blew out the electricity. A U.S. Coast Guard spokesman reports that many, but not all, navigational lights and their supports along the river have been restored, and that it will take at least a year to complete, in part because they lack the needed specialized construction boats. The full impact on trade in and out of the U.S. is yet to be determined.
Existing Home Sales Fall; Inventories Highest Since '86
Existing U.S. housing sales fell by 2.7% in October, leaving inventories at the highest level since 1986, the National Association of Realtors announced in Washington on Nov. 28, adding that housing affordability, already at a 14-year low, will drop further as interest rates rise. The median price of existing homes rose by 16.6% from October 2004, to $218,000. Sales were lower in all four regions of the country. Sales of existing homes account for 85% of the market.