U.S. Economic/Financial News
Dismal Jobs Report the Latest Blow to Obamaand Obamacare
Nov. 6 (EIRNS)Following the shocks of Nov. 3's angry election results, and Nov. 5's angry citizens' rally at Capitol Hill, the dismal 10.2% unemployment report of Nov. 6 hit President Obama hard, and may have put an end to his Nazi-modelled "health-care reform" legislation.
The U.S. economy has lost 1-1.5 million jobs since "the recession ended and the recovery began" in June; it has lost 5-5.2 million jobs with Obama in the White House; it has eliminated, since his "stimulus" act became law, over 400,000 construction jobs and more than 400,000 manufacturing jobs.
Even the clueless Republicans are starting to shout, "Do something now about jobs, not health care!" For millions of furious Americans, the slogan may be "Stop the killer 'recovery' before it kills us all! Move earthbuild infrastructurestop bailouts and create jobs."
The President was at a loss, in a statement from the White House Rose Garden; he had been told by advisors like Larry Summers and Peter Orszag, after all, that unemployment wouldn't go above 7.8% after his "stimulus" act passed. All the President could come up with, was a claim that the law he'd just signed extending Federal unemployment benefits for 14 weeks, was a job-creator! And that the extension of the homebuyer's tax-credit boondoggle for eight more months would create jobs, too. These were nonsense statements.
What really happened to unemployment in October was a bright red marker for the economic/financial breakdown point Lyndon LaRouche had insisted was going to be reached that month. BLS reported 190,000 more jobs eliminated by businesses and government agencies that month. But its demographic survey of American households suggested something far worse: that just under 600,000 Americans became newly unemployed in October, and 260,000 of them dropped out of the labor force in discouragement. That is a collapse, as LaRouche was forecasting it.
Drug and Health Companies Fire Tens of Thousands of Workers
Nov. 3 (EIRNS)Johnson & Johnson, the world's biggest health-products company, after recent major "consolidation" purchases, will fire more than 7,000 employees, or 6-7% of its workforce, by 2011, in order to "save" as much as $1.7 billion. According to Bloomberg News, J&J actually began firing as many as 4,400 employees from its pharmaceutical and stent divisions in 2007. In September, the company paid $442 million for an 18% stake in Crucell NV, based in Leiden, The Netherlands, to gain access to flu vaccine.
Pfizer Inc., the world's biggest drug producer, on whose board sits budget-slasher Felix Rohatyn, plans to fire 19,000 workers following its acquisition of Wyeth and has already cut 10,000 positions since 2007.
Fannie Mae Continues To Bleed Losses in Third Quarter
Nov. 5 (EIRNS)In a submission to the Securities and Exchange Commission filed today, Fannie Mae reported a third-quarter net loss of $18.9 billion, on top of the $101.6 billion in losses reported over the previous eight quarters. As a result, Fannie Mae said it will seek $15 billion more in U.S. Treasury aid and sell $2.6 billion in unused tax credits. Fannie Mae has already taken $44.9 billion in Federal aid since April. Its shares, which peaked at $87.81 in December 2000, closed at $1.12 today in New York Stock Exchange composite trading. Fannie Mae's net worth, or the difference between assets and liabilities, was negative $15 billion as of Sept. 30, compared with negative $10.6 billion on June 30 and negative $18.9 billion on March 31.
The Treasury, which has yet to approve the sale of the unused tax credits, is considering whether to let Goldman Sachs buy some of the credits, which would allow it to lower its tax bill. Fannie Mae has accumulated about $5.2 billion in credits, and hasn't been able to recognize the majority of the tax benefits because it hasn't been profitable since 2007, when Lyndon LaRouche forecast the current ongoing collapse and proposed the Homeowners and Bank Protection Act, which could have solved the crisis, had it not been sabotaged by Rep. Nancy Pelosi and others.
Freddie Mac, which posted a second-quarter profit partly because of one-time accounting "adjustments" and mark-to-market gains, has tapped $50.7 billion in government bailout funds since November 2008. Fannie and Freddie are responsible for about 70% of all new mortgages this year, while the Federal Housing Administration accounts for about 20%.
Yesterday, the Federal Housing Administration was supposed to release its independent audit, determining the soundness of the agency. As of Oct. 1, its reserve fund dipped below the required 2% of the agency's outstanding loans for the first time in its history. On Nov. 3, the agency abruptly cancelled the release of that audit report. Apparently, those problems stem from the fact that the independent auditors determined that the risks to the agency were higher than FHA Commissioner David H. Stevens has admitted publicly. What's being questioned now, is whether the FHA can rebuild its cash reserves without a bailout from the government.
Blithely ignoring the fact that this entire system is bankrupt, the U.S. Senate and House voted overwhelmingly to extend the recent $8,000 credit to first-time home purchasers, and added a $6,500 credit for buyers who have owned their current homes for five years.