In this issue:

Fed Boss Praises Arnie as Follower of Free-Market Guru Milton Friedman

Historic Rouge Industries of Detroit Files for Bankruptcy

U.S. Life Insurers Hit by Huge Credit Losses

Union-Buster Wal-Mart Raided for Exploiting Illegal Immigrants

Job Cuts at 'Misfortune 500' Reflect Deepening Depression

Michigan Food-Stamp Rolls Soar by 50% Since 2000


From Volume 2, Issue Number 43 of Electronic Intelligence Weekly, Published Oct. 28, 2003

U.S. ECONOMIC NEWS

Fed Boss Praises Arnie as Follower of Free-Market Guru Milton Friedman

What do Robert McTeer, president of the Federal Reserve Bank of Dallas, and California Governor-elect Arnie "Terminator" Schwarzenegger share in common? Both are "devotees" of Milton Friedman, the Chicago school peddler of Adam Smith's "free-market" mania, McTeer boasted in a Wall Street Journal op-ed Oct. 23. A fanatic pusher of dollarization for Ibero-America, McTeer is convinced the "Beast-Man" Schwarzenegger has "gone into battle with the right armor—the ideas of Milton Friedman."

Meanwhile, the Dallas Fed is hosting a two-day conference to honor Friedman, on the heels of LaRouche's historic Oct. 22 webcast, with the theme of "Economic Liberalism at the Turn of the 21st Century." Attendees, including Sir Alan "Dracula" Greenspan, Fed Governor Ben "Bubbles" Bernanke, plus privateers from the Cato and Hoover Institutes, are babbling about government "reform" and monetary frameworks—afraid that LaRouche's growing leadership means the "tide is turning" toward FDR-style government intervention.

Meanwhile, columnist Robert Novak, writing in the Washington Post Oct. 24, says Arnie gets his marching orders from the White House. Hitler-admirer Schwarzenegger was told he must not raise taxes, but he must cut spending. Bush's re-election planners cannot tolerate a failed Republican Governor in the delegate-rich state of California.

Historic Rouge Industries of Detroit Files for Bankruptcy

Rouge Industries, the steelmaking giant of Ford's historic River Rouge industrial complex, has agreed to sell its assets to OAO Severstal, Russia's second-largest steelmaker and a major auto supplier, the Detroit News reported Oct. 24. The deal, subject to approval by a bankruptcy court, likely will mean layoffs and job cuts for some of Rouge Industries' 2,600 workers in Dearborn, Michigan. In addition, Severstal would be allowed to renegotiate Rouge Industries' labor contract with 2,000 UAW workers, and would not have to take over employee pension liabilities.

Founded in 1923, the plant was part of Henry Ford's vision of a one-site, raw-materials-to-finished-product auto-manufacturing complex. Indeed, the Rouge complex was an industrial city in itself—covering 1,300 acres with 23 miles of roadways, 100 miles of railroad tracks and more than one mile of docks. The Rouge was the largest single manufacturing complex in the U.S., and played a crucial role in World War II. It included blast furnaces, steel mills, foundries, metal-stamping facilities, an engine plant, a glass-making building, a tire plant, and its own power house, supplying steam and electricity. Rouge Steel was spun off from Ford in 1989, but remained the automaker's largest steel supplier.

Severstal, before Sept. 24, 1993, was known as Russia's state-owned Cherepovets Iron and Steel Complex.

U.S. Life Insurers Hit by Huge Credit Losses

U.S. life insurers have been hit by a massive $24.3 billion in credit losses during 2001-02, due to defaults and bonds carnage, according to a new study by Moody's Investors Service. Gross credit losses in the value of bonds and preferred stock held by 175 U.S. life-insurance companies, totaling $15.4 billion in 2002, and $8.9 billion in 2001, were due to "unprecedented default rates and severity of loss" in the bond markets, said Robert Riegel, managing director of Moody's life-insurance group. On average, the losses amounted to 79% of a company's pre-tax operating income, while some were much higher. For example, Conseco Annuity Assurance suffered whopping gross credit losses of nearly five times its pre-tax operating income.

Companies masked these credit losses in their financial reports, by adding in investment gains from sales of bonds whose prices rose.

Union-Buster Wal-Mart Raided for Exploiting Illegal Immigrants

In a 21-state raid, involving 60 Wal-Mart stores, Federal agents arrested more than 250 illegal immigrants who worked as janitors for outside contractors hired by Wal-Mart, the anti-union cheap-labor employer, the New York Times reported Oct. 24. The government believes Wal-Mart officials knew about the use of illegals for the low-end, low-paying cleaning jobs; wiretaps were used in the four-year probe, yielding recordings of conversations among Wal-Mart executives and contractors.

Job Cuts at 'Misfortune 500' Reflect Deepening Depression

Belying all the bombast about a U.S. economic recovery, the depression continues to shut down plants and throw thousands out of work.

* Pharmaceutical giant Merck said it would cut 4,400 jobs, as earnings failed to grow in the third quarter. To reduce costs, the drugmaker plans to eliminate about 3,200 full-time positions, as well as 1,200 contract or temporary employees.

* Smurfit-Stone Container Corp. announced it will cut about 1,400 jobs and shut a Canadian mill, due to manufacturers' increasing reliance on imports. In addition, the Chicago-based maker of cardboard boxes and paper bags said it will idle a machine at a Florida mill and close a paper machine at a Philadelphia plant.

* Weirton Steel won bankruptcy court approval to eliminate 950 jobs immediately.

* AK Steel said it would cut 20% of its salaried workforce, starting by the end of October, as it posted a $277.5 million third-quarter loss. The maker of flat-rolled steel will eliminate 475 employees.

* Boeing issued 60-day lay-off notices to 115 employees on Oct. 24, while another 860 workers were taken off the payroll. As a result, during the past two years, the aerospace firm has slashed 36,420 jobs.

* Exelon Corp. said it will eliminate 1,200 jobs by the end of the year, thanks to deregulation, as the largest utility in Illinois reported a $102 million loss in the third quarter. Two-thirds of the job cuts, which were previously announced in August, will be at Commonwealth Edison.

Michigan Food-Stamp Rolls Soar by 50% Since 2000

As a result of rising unemployment from the free-trade induced decimation of the manufacturing sector, and skyrocketting housing and medical costs, the number of Michigan residents receiving Federal food assistance has risen by about 50% to nearly 900,000, from 580,300 in 2000. Currently, about one in 11 state residents needs government help to afford to buy food, including many who work full time, according to the Michigan Family Independence Agency—and it's getting worse. In addition, more people are relying on non-government food banks and pantries, even as the non-profit and charitable groups can no longer count on donations from corporations and foundations.

For example, Metro Detroit's Gleaners Community Food Bank provided food to some 65,000 people in southeast Michigan, a whopping increase from 45,000 people just two years ago; families with children, and senior citizens accounted for the fastest-increasing categories.

Moreover, an estimated 300,000 Michigan residents qualify for, but are not receiving assistance.

"It's really different from a lot of other bad times," warned Jane Marshall, executive director of the Food Bank Council of Michigan that includes about 2,800 agencies statewide. Corporations and foundations, which the network previously relied on when Federal funding was slashed, "don't have resources, nor does the state."

"The poor are getting poorer and people who are the worst off, are going to be even worse off"—unless LaRouche's FDR-style recovery measures are implemented.

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