U.S. Economic/Financial News
Home Sales Down and Still Falling
March 18 (EIRNS)U.S. housing starts (both single-family and apartment/condo) dropped in February, and building permits fell to 1.065 million, the lowest level in more than 16 years. Published reports, using figures from the Commerce Department, noted that this figure was down 0.6% from January. These figures, however, don't tell the real story, because the January figures are already depressed. If one compares the housing starts to figures from one or two years ago, housing starts are down 28% from February 2007, and are half of the February 2006 figures. (Housing starts began dropping in July 2007, with the onset of the global financial collapse.) This year's figure of 0.6% drop was tempered by an increase of 14% in multi-family homessingle-family homes actually declined by 6.7%, even when compared to last month. February's 707,000 pace was the weakest since January 1991.
An even better indicator of the collapse is the fact that new homes are selling at a pace far below the pace of construction. In January (the most recent figures available), new homes were selling at less than 600,000 per month, 40% below the construction pace.
Even Volcker Not Pleased with Bear Bailout
March 20 (EIRNS)Even former Federal Reserve chairman Paul Volcker is not pleased with the bailout of Bear Stearns. Volcker is quoted by an Los Angeles Times blogger today as saying that the Federal Reserve bailout of bankrupt investment bank is a "new departure," and he questions the Fed's action. Among the questions posed in the blog are: Why is the Fed rescuing a non-bank that it does not regulate? Isn't that a job for Congress? Why is the Fed guaranteeing bad loans?
On March 18, Volcker raising questions about the Bear Stearns bailout, in an interview on the "Charlie Rose" TV program, that nobody else except Lyndon LaRouche has raised. Earlier that day, LaRouche had issued a statement condemning the Fed bailout as illegal.
What Volcker said on the Rose show is the following:
"The Federal Reserve has not, in the past, been conceived as a place where you put in bad assets, possibly bad assets. Lending institutions take risks. I'm not suggesting the assets are terrible, but they have collateral.
"But that is a new departure. And at some point, the government ought to, in my view, the government ought to be taking responsibility for that kind of action, not the Federal Reserve, which is an independent agency designed to provide an ample supply of liquidity to the economy but not too much, protect against inflation, not to protect particular sectors of the economy from bad loans."
Rose: "So the Federal Reserve should not be doing that, in your judgment. It's not because it shouldn't be done, it's the role of the Federal government."
Volcker: "Absolutely. In this situation, they stepped in and nobody else was there to do it. They stepped into a vacuum, and I think quite appropriately, it's a judgment they had to make. But is this what you want for the longstanding regulatory support system? My answer is no."
Hyperinflation Drives Commodity Consolidation
March 17 (EIRNS)As global hyperinflation is no longer a deniable reality, now comes news of a major consolidation in commodities markets. Although the mergers and acquisition market is virtually frozen worldwide, the Chicago Mercantile Exchange today announced a takeover of the New York Mercantile Exchange (NYMEX), seemingly having no trouble coming up with the $9.5 billion purchase price. This deal was definitely not a "hostile" takeover, with the CME Group bidding just $1 over the March 14 stock price. The stock value of both companies actually fell (along with the market in general) on the news.
The NYMEX had specialized in metals trading, especially gold, and energy trading, while CME has the majority of agricultural and financial commodities. Now all of this will be under one roof. It was less than a year ago that the Chicago Mercantile Exchange bought the Chicago Board of Trade (creating the CME Group)a major consolidation. As one analyst told the New York Post, today's deal gives CME "a huge presence in the lucrative realm of trading energy and metals, adding to its dominance in financial and agricultural futures."
Further restricting accessibility, CME is said to be considering raising the price of its memberships by $100 million, as well as a stock buyback.
Mass. Governor Calls for Casinos To Raise State Revenue
March 16 (EIRNS)Massachusetts governor and Obama campaign co-chairman Deval Patrick is pushing a plan in the state legislature that would allow three casinos to be opened in the state. The town of Palmer is one of the proposed sites, according to the Washington Post; it is a former mill town that is shutting down as a result of the economic depression. Patrick argues that his "casino plan would create 30,000 construction jobs and 20,000 permanent jobs, as well as generate an anticipated $400 million a year in revenue in a state grappling with a budget shortfall," says the Post.