U.S. Economic/Financial News
California Heading Over a Cliff
LOS ANGELES, Oct. 20 (EIRNS)The rotten budget deal for fiscal year 2008-09 passed last month by California legislators has already broken down, as new figures released reveal there is still a $3 billion shortfall for this year. The shortfall remains despite cuts of over $7.6 billion, mostly in medical care and social services, due to a continuing, and growing, revenue shortfall. Tax revenue for September was $814 million below estimates, and the shortfalls will grow, as the state's economy is contracting steeply. Official unemployment figures remain at 7.7%, foreclosures continue to increase, and now, trade through the California portsthe one area of growth in 2007is contracting rapidly.
On top of this, the "balanced budget" which was passed 85 days late, pushed at least a $7 billion shortfall into the next fiscal year, to be covered by a "bridge loan" this year. The son-of-a-Nazi, former steroid-popping Gov. Arnold Schwarzenegger, said he wasn't worried about that, as he expected growth to "pick up" before the end of the fiscal year! Some legislators are projecting that next year's shortfall will surpass the $15-20 billion deficit for this year.
With the state and national economies collapsing, some Democratic Congressmen refused to go along with Speaker of the House Nancy Pelosi and Treasury Secretary Hank Paulson on the bailout. An aide to one of those who twice voted against the $700 billion bailout bills said that Pelosi and the national leadership of the Democratic Party, including Sen. Barack Obama, are out of touch with the needs and concerns of Democratic voters. Asked if she expected a change, she said "not until the people squawk louder."
Why Bernanke Is Lying About a 'New Stimulus Plan'
Oct. 20 (EIRNS)Federal Reserve Chairman "Helicopter Ben" Bernanke, money-printer and lender of nearly $2 trillion this year to a disintegrating banking system, was also the key "swing factor" in pushing through the first Congressional economic stimulus, with a speech at Columbia University in January, and in Congressional testimony. The Federal "stimulation" checks mailed to taxpayers contributed mainly to a burst of inflation through the early Summeras Lyndon LaRouche had warned they would in his Jan. 17 webcastand were eaten up in higher gasoline prices.
Now the man who said the Fed could drop money from helicopters, wants to help Speaker of the House Nancy Pelosi push through another "stimulus." Testifying today to the House Budget Committee, Bernanke said that "with the economy likely to be weak for several quarters, and some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate."
Pelosi leaped immediately, "calling on President Bush and Congressional Republicans to once again heed Chairman Bernanke's advice." Neither MsLeadership nor Helicopter Ben offered explanations as to why the first stimulus produced nothing but inflation. Bernanke has lowered the Fed lending rate from 4.25% to 1.5% since then, drawing bank deposits out of U.S. banks.
Bernanke justifies his hyperinflationary policy by claiming to be a scholar of the Great Depression, determined to avoid President Herbert Hoover's "great mistake" of "tightening credit and balancing budgets" after the 1929 stock market crash. He's either a bad scholar, or he's lying.
From the Crash of 1929 to late 1930, Herbert Hoover and Fed Chairman Roy A. Young did exactly what Bernanke, Bush, and Paulson are doing now! Young reduced the Fed discount rate 21 times in a year (in small increments), down from 4% to a then-record low of 1.25%. Hoover pushed through tax cuts of $400 million and then $160 million more, and forced the consolidation of five major (bank-owned) railroad companies, with Federal financial support. Federal Reserve lending to banks massively increased in 1930; the government congratulated itself on a recovery of bond issuance and bank lending, and a record rise of stock prices. But real estate prices, and the real economy, kept falling.
Then the bottom dropped out in late Fall of 1930, the dollar crashed, half of all foreign bank deposits fled the United States, and U.S. trade collapsed along with tax revenues. And then came the tight money, budget-balancing policy of "scholar" Bernanke's stimulating falsehoods.
State Pension Funds Lose Billions, Thanks to Boomer Market Greed
Oct. 21 (EIRNS)Boomer market greed has led to multibillion-dollar losses in state pension funds. The trillion-dollar state employee pension system, affecting 20 million current state and local government employees and 7 million retirees, has lost billions of dollars in value since January, as the foolish invest these funds in riskier market instruments, simply making it easy for the Anglo-Dutch-Wall Street thieves to steal the funds. Twenty states' funds are below the "safe" 80% funding ratio of assets to liabilities, while six more states are just above it in the 80.4% to 81.3% range. Today, 70% of these funds are "invested" in the markets, whereas in 1990 it was 38%.
"Hardly a day goes by without a state announcing a double-digit loss in the value of its pension fund," Stateline.org reported. For example, on Oct. 16, Virginia said its fund had fallen 20% since July, or $11 billion, while Tennessee's had lost 10.7% ($5 billion). North Carolina's has lost 12% ($66 billion) so far this year, while New Mexico's public employee fund has lost $9.7 billion, and its teacher fund $7 billion, just since Sept 29. Losses piled up in Massachusetts (15%) and Connecticut (11%) for the same time period. Leading culprits identified were "investments" in Lehman Brothers, AIG, Washington Mutual, and Wachovia Corp. Florida lost $350 million just in September's massacre.
Rather than adopting LaRouche's Three Steps to Survival, states are proposing: halting of cost-of-living increases, cutting benefits, and hiking employee payroll deductions and state tax to meet states obligations.