U.S. Economic/Financial News
Jobs Crisis Increases Heat on Bush Administration
Three leading columnists for the Washington Post and the New York Times, featured the jobs collapse in their op-eds on March 9. The Post's E.J. Dionne noted that the only jobs added in the past months are from local government, mostly teachers. The tax cuts have failed to stimulate any private-sector jobs, he wrote, while last month alone, 392,000 people dropped out of the statistical workforce, after giving up on finding a job. An additional 760,000 exhausted their unemployment benefits in the first two months of the year, due to the refusal of the Congress to extend those benefits.
Paul Krugman, in the Times, published a graph showing the Bush Administration's projections of job growth vs. the reality, which closely approximates Lyndon LaRouche's famous "Triple Curve" Collapse Function.
And, the Post's David Ignatius calls his column the "Mystery of the Missing Jobs." Denouncing protectionist calls from Democratic Presidential candidates John Kerry and John Edwards as courting disaster, Ignatius peddles the Bush linethat the economy is great, despite the collapse of the IT bubble, 9/11, Enron, the Iraq war, and new regulationsbut adds that employers are spooked by these things, and are hesitant to hire.
It's all a confidence game, after all.
Greenspan Repeats Call for 'Regrettable' Schachtian Policy
Federal Reserve Chairman Alan Greenspan on March 11 reiterated his demand for Congress to cut future Social Security benefits, under conditions of the breakdown of the world financial-monetary system. Greenspan claimed that the government would not be able to afford to pay all the benefits currently pledged under Social Security and Medicare. "We do not have enough in real resources to meet the promises that have already been made," he said in response to a question from Rep. Dennis Kucinich (D-Ohio). "We will not be able to fully meet the benefits to the next generation, the Baby Boomers that are retiring.... We have to construct a pattern that the benefits we do promise, will be delivered," he told the House Education and Workforce Committee. Choices would have to be made, Greenspan opined, and, "all the choices, regrettably, are negative."
CFR Man Warns of Crash; Demands Hardball Solutions
C. Fred Bergsten, writing in March/April Foreign Affairs, warned of a crash, and offered hardball policies to open markets as the only solution. Bergsten, a key player in the Delphic "New Bretton Woods, à la Felix Rohatyn" to save the IMF system, laid out his "Foreign Economic Policy for the Next President," in the Council on Foreign Relations publication, explaining that whoever wins the election will face "deep jeopardy" for the world-trade system, and a breakdown in globalization that will be "very dangerous to U.S. foreign policy." He praised the Bush Administration's push for free trade, but noted that he's failed miserably (mainly due to Congressional pressure for protection), with the collapse of WTO meetings, bilateral FTAs that are not going to pass a hostile Congress, and trade war brewing with Europe.
Unlike U.S. superiority strategically, said Bergsten, Europe is now the economic equal of the U.S., and China is on the way to becoming so, with a "new Asian bloc shattering the final vestiges of U.S. economic hegemony."
His solution: a 25% devaluation of the dollar, already exceeded; tough policies to force floating exchange rates and stop currency pegs and intervention ("implement new mechanisms limiting the deviation of exchange rates from their equilibrium values through close cooperation between economic policy makers in major countries"); stop FTAs between European and Asian nations that leave out the U.S.; use oil reserves to counter the OPEC bullies who "manipulate world energy prices," and force energy conservation at home; and, of course, unlike the neo-cons, do this all "multilaterally."
Senate Votes To Restrict Bush Tax Cuts
The U.S. Senate voted 51-48 on March 11 to impose restrictions on any new tax cuts, which could kill the President George W. Bush's plan to "make the tax cuts permanent." Since Bush has nothing else to say about the economy, the fact that several Republicans Senators voted against him on this is a severe blow. Bush and his budget director Josh Bolton lobbied intensely for the Republicans to reject this bill, and succeeded in getting Sen. Pete Domenici (NM) to drop his co-sponsorship. But GOP Senators John McCain (Ariz), Olympia Snowe (Maine), Susan Collins (Maine), and Lincoln Chafee (RI) all voted with the Democrats, as the Administration's control continues to crumble.
The House is not likely to pass the bill.
U.S. Trade Deficit Hits New High in January
Imports of $132 billion and exports of $89 billion yielded a record $43.06 billion deficit in January, topping the previous record of a revised $42.95 billion last March, as reported by the Commerce Dept. The deficit in goods was even worse, at a record $48.4 billion, while services produced a trade surplus of $5.3 billion.
Machine-Tool Consumption Plunges Even Further
U.S. machine-tool consumption in January plunged 23.9% from its depression level in December, as manufacturers were hit by soaring steel prices. U.S. industry consumed only $161.19 million worth of machine tools in January, up 19.4% from the near-record low of a year ago, according to a joint report by the American Machine Tool Distributors' Association and the Association of Manufacturing Technology, issued March 7. But January machine-tool consumption was down 23.9% from the level in December, which had been propped up by year-end tax incentives. Geographically, machine-tool use fell in all regions of the nation, with the largest drop in the South. During 2003, annual U.S. machine-tool consumption had plummeted 64% from the level in 1997, proof of the urgent need for Lyndon LaRouche's "Super-TVA" policy.
J.P. Morgan Derivatives Expert Steps Down
Another rat is leaving the sinking ship: Tim Frost, for 16 years the derivatives expert at J.P. Morgan, the world's largest derivatives trader, has suddenly left the U.S. investment bank. Frost was key to the development of Morgan's credit-default swap business, and until a few days ago was heading Morgan's credit derivatives business in Europe, headquartered in London. There has been speculation that Frost might now take up a political career in Britainhe ran for Parliament as a Conservative in 1997. J.P. Morgan, which declined to comment, has not yet decided on a replacement for him.
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