In this issue:

Boeing To Slash 4-5,000 More Jobs in Seattle

Dying Manufacturing Industry Challenges Bush Administration To Intervene To Save It

'Ivory Tower' Economists Declare 'Recession' Ended in November 2001

Greenspan Says Fed Could Cut Rates, Again

Energy Pirate Mirant Files for Bankruptcy Protection

Top Iowa, Nebraska Farm Teaching Centers Axed


From Volume 2, Issue Number 29 of Electronic Intelligence Weekly, Published July 22, 2003

U.S. Economic/Financial News

Boeing To Slash 4-5,000 More Jobs in Seattle

Boeing, the world's largest aircraft maker, announced July 17 that it will cut 4-5,000 more jobs at its Seattle-based commercial jet unit by the end of 2003, due to the carnage in the airlines sector, on top of the 35,000 job cuts in the unit since Sept. 11, 2001. The new, "extremely painful" job cuts reflect an "unprecedented and very difficult time" in the commercial aviation industry, said Alan Mulally (the jetliner unit's president and CEO), as air travel has plummeted and airlines have cancelled or deferred hundreds of plane orders.

Since September 2001, Boeing has already slashed its highly skilled, technological workforce to 159,800 from 199,000, a drop of 20%. Employment in the jetliner unit has plunged by 37%, from 93,000 to its current level of 58,900. The next round of 60-day layoff notices (previously announced) will be issued July 18 to 660 employees.

Dying Manufacturing Industry Challenges Bush Administration To Intervene To Save It

As U.S. machine-tool consumption reached "one of its lowest points in history," the Bush Administration must "seize the responsibility to recognize manufacturing's importance to our economy," urged Albert W. Moore, president of the Association of Manufacturing Technology (AMT), on July 14. U.S. industry consumed $140.78 million worth of machine tools in May; although down only 0.8% from April, it was a whopping 36.4% drop from the level in May 2002. During January-May, U.S. machine-tool consumption has plunged by 24.4% compared to the same period in 2002, according to a joint report by AMT and the American Machine Tool Distributors' Association. Moreover, machine-tool use had already fallen by 2002 to only 37% of the level in 1997. "America's investment in modern manufacturing equipment is at one of its lowest points in history," Moore warned.

Moore noted that the U.S. Department of Agriculture was created to recognize agriculture's economic importance, and that Reagan formed SEMATECH to help the semiconductor field; he called on the Bush Administration to make it a policy to save the "vital" manufacturing sector. "Now it's time for this Administration to seize the opportunity—as well as the responsibility—to recognize manufacturing's importance to our economy," he insisted. "This vital sector needs a permanent place in our nation's policy structure."

AMT chairman Lawrence Rhoades had urged the Administration, in House testimony on June 5, to undertake a Federally funded "national offensive" to rebuild America's machine-tool capability. In addition, the National Association of Manufacturers on June 10 had warned that the U.S. manufacturing collapse was reaching a point of no return.

'Ivory Tower' Economists Declare 'Recession' Ended in November 2001

The National Bureau of Economic Research (NBER) had its own "yellow cake" story this week, which, in the realm of economics, represents an equally huge disconnect with reality, as the now infamous "16 words" in the President's State of the Union message: The Business Cycle Dating Committee of the NBER—a private group of university economists—claimed that business activity hit a "trough" in November 2001, marking both the end of the "recession" that it said began in March 2001, and the beginning of a (mythical) economic "expansion." Denying that an economy is measured in physical terms, the panel said it based its decision mostly on the Commerce Department's estimate of U.S. Gross Domestic Product, the growth of which resulted entirely from productivity gains that EIR has repeatedly exposed as a hoax. Nevertheless, NBER was forced to admit, "employment has not begun to recover at all."

California Congressman Pete Stark, the ranking Democrat on the Joint Economic Committee, blasted the announcement. "We've declared victory over the recession, and we're still laying off a couple hundred thousand workers a month," he noted. "If it weren't so painful for so many people who are out of work, it would be hilarious," he added.

Greenspan Says Fed Could Cut Rates, Again

With the Federal funds rate now at 1%, "substantial further conventional easings could be implemented, if the Federal Open Market Committee judged such policy actions warranted," Federal Reserve chairman Alan Greenspan told the House Financial Services Committee on July 15. Even though "some financial firms would experience difficulties in such an environment," he said that the Fed plans to keep interest rates low "for as long as it takes."

Meanwhile, Greenspan may have made a "strategic miscalculation," says Michael Englund in the July 14 Business Week. The Federal Reserve chairman's deflation talk, charges Englund, may be causing a negative impact on business investment, negating the expected benefit of lower bond yields.

Energy Pirate Mirant Files for Bankruptcy Protection

Listing $20.6 billion in assets and $11.4 billion in debt, Atlanta-based Mirant Corp. filed for Chapter 11 bankruptcy protection on July 14, making it the tenth largest Chapter 11 filing on record. They join not only Enron but also NRG Energy and PG&E National Energy Group in bankruptcy court.

Mirant was one of the out-of-state power pirates that was served a subpoena by Federal prosecutors last November as part of the continuing probes into the illegal trading practices that caused the California electricity crisis three years ago. In December, Mirant was accused in a separate lawsuit of "systematically" purging potentially damaging data in the case from its computers.

Top Iowa, Nebraska Farm Teaching Centers Axed

As of June 30, many Farm Belt states saw the overnight shutdown of world-famous, high-tech agriculture research and teaching centers, as a result of insane budget cuts, instead of emergency measures to save and expand economic activity. Two examples make the point:

* The Iowa State Dairy Teaching Farm will be closed by the end of the summer. It has been in operation for decades, at the College of Agriculture at Iowa State University in Ames. (The dairy program was set up by Henry Wallace—the father of FDR's Secretary of Agriculture and later Vice President Henry Wallace—who was a professor of dairy science at Iowa State, and national Agriculture Secretary under Harding and Coolidge). The college gave the order to shut down, as part of its attempt to make up for a $2.6-million deficit. The Dairy Farm houses all six breeds of milk cow, the only university farm in the nation to do this. All the animals are being sold off; and all help fired.

* In Nebraska, June 30 marked the last day of the existence of the 35-year-old South Central Research and Extension Center, of the University of Nebraska. State budget cuts ended the facility, located in Clay Center, which specialized in high-tech, irrigated cropping systems, used widely in the state, and in many parts of the world, from Egypt to Australia.

All rights reserved © 2003 EIRNS