In this issue:

Infrastructure Breakdown Poses National Security Threat

U.S. Air Grid Being Dismantled

Machinists Sue United Airlines Over Pension Default

One Year Later: Mill Shutdown Leaves N.C. Town Shattered

N.Y. Lawmakers Told To Act Fast To Save Manufacturing

Will Halliburton Go the Way of Enron?

U.S. Housing Bubble Continues To Inflate


From Volume 3, Issue Number 31 of Electronic Intelligence Weekly, Published Aug. 3, 2004

U.S. Economic/Financial News

Infrastructure Breakdown Poses National Security Threat

While the Cheney-Ashcroft team trumpets the threat of terrorist activity at airports and seaports, as the pretext for advancing new police-state measures, the fact is, without a commitment to fixing the nation's broken infrastructure, the terrorist threat cannot be defeated. The case of the ports of Los Angeles and Long Beach, Calif., which are linked by a freight railroad, is exemplary. The backlog of cargo-freight, due to inadequate loading and unloading systems at these ports, poses a serious problem, reports the New York Times July 27.

The Los Angeles and Long Beach ports combined, are the nation's busiest. They handle roughly one-third of the 9 million cargo containers that arrive in the United States each year. The workforce at the ports and the standard of equipment are so insufficient, that cargo cannot be unloaded at the required rate, and gets stacked up. Often, ships must wait, anchored at the ports for five to eight days, before being unloaded.

The Dept. of Homeland Security has promulgated regulations for carrying out security checks on cargo and people at the ports. But the infrastructure bottlenecks create multiple problems. David Arian, president of Local 13 of the International Longshore and Warehouse Union, which works the Los Angeles waterfront, reports that, due to the immense freight backlog, the regulations for checking seals on containers and the cargo inside the containers "are presently not being enforced," and that the truck drivers who bring goods into and out of the ports are not checked at all.

U.S. Air Grid Being Dismantled

US Airways, the seventh-largest U.S. air carrier, plans a major overhaul, its chief executive officer announced July 27. The airline said that it will begin dismantling its hub in Pittsburgh, and replace it with direct flights between major airports. US Airways has already eliminated a third of its flights out of Pittsburgh. As of September, over a dozen cities will have service cut off from Pittsburgh. This will leave Reading, Pa., for example, with no air service at all, for the first time since 1941. Further, U.S. Airways hinted of plans for even additional cuts to air service out of Pittsburgh.

This constitutes an additional case of the Cheney-Bush Transportation Stabilization Board (TSB) helping to orchestrate the take-down of the U.S. air grid. The TSB extended US Airways a $1 billion loan, but to comply with the covenants of the TSB loan package, US Airways claims, it must have some level of cash on hand. Therefore, the airline plans to cut $800 million a year from workers' wages and benefits. CEO Bruce Lakefield has said that unless the airline's unions accept these cuts by Sept. 30, the company would run the risk of defaulting on the TSB guaranteed loans, and slide back into bankruptcy. Thus, through this game, the TSB and banks are slicing up the U.S. air grid, including United Airlines and other major carriers.

Machinists Sue United Airlines Over Pension Default

Amidst the dismantling of the nation's air grid, the union representing 37,000 current and retired United Airlines ramp workers and customer-service agents sought a court order July 29 to force the bankrupt air carrier to resume payments to employees' pension plans, demanding that the company not continue its "slash and burn" approach.

The International Association of Machinists and Aerospace Workers (IAM) accused the top United officials of a breach of fiduciary duty, by skipping a $72 million contribution this month, and announcing that the airline would not make nearly $500 million in payments scheduled this fall—under terms dictated by its lenders.

The lawsuit, filed in U.S. District Court in Chicago, seeks the amount United owes the pension plans, plus a court order requiring the airline "take all necessary steps" to fund its employee retirement accounts.

"United Airlines must get the message that they cannot abandon employee benefits at will," said IAM District 141 president Randy Canale. "They will not be allowed to continue their slash and burn approach to restructuring without realizing serious consequences."

One Year Later: Mill Shutdown Leaves N.C. Town Shattered

After 116 years of production, the Pillowtex mill in Kannapolis, N.C., which produced bedsheets and towels, closed down permanently on July 30, 2003, thanks to the free-trade delusion, eliminating 4,800 jobs in Cabarrus County—the largest mass lay-off in the state's history. One year later, some 1,600 former Pillowtex workers—one-third of those laid off—are still without jobs and will run out of unemployment benefits—for many, the only source of family income—in the next few months. USA Today reported July 30. Many former employees are living without health insurance; while others have lost their homes. Personal bankruptcies are rising.

Until just 20 years ago, when Kannapolis ("the city of looms") incorporated, the mill paid for schools, garbage collection, the police and fire departments, and water.

Shortly after the Pillowtex shutdown, Wal-Mart invaded, opening a Supercenter in Kannapolis.

N.Y. Lawmakers Told To Act Fast To Save Manufacturing

New York factory managers warned Republican state lawmakers that without emergency action, manufacturing in the state will cease altogether, the Syracuse Post-Standard reported July 30. "If you let manufacturing go down, pretty soon everybody will be ironing each other's shirts," Robert Trachtenberg, president of the Central New York Technology Development Organization, told New York State Assembly members. One factory job creates from 2.5 to three jobs in the local economy, he informed the Assembly Republican Manufacturing Task Force. Since 2000, the area already has lost a staggering 10,000 manufacturing jobs.

Will Halliburton Go the Way of Enron?

Halliburton Co. said July 23 that it had posted a loss in the second quarter, as a project went sour in Brazil, and costs climbed for asbestos litigation cases, while work orders in Iraq are falling off due to the controversy over its shady operations there, according to the Dallas Morning News July 23. One-third of Halliburton's revenue came from Iraq in the second quarter. Overall, the company took a loss for the quarter of $663 million. The report marked Halliburton's third straight quarterly loss.

"We do continue to be a political punching bag," David J. Lesar, Halliburton's chairman, told analysts in a conference call, alluding to the hits at Vice President Dick Cheney. Halliburton faces three investigations into its practices overseas, including allegations of bribery in Nigeria, violations of U.S. trade restrictions in Iran, and over-charging in Iraq. Christopher Gaut, Halliburton's EVP, said the company would increase spending on public relations to defend its reputation "at least through the election."

Lesar defended the company's record in Iraq, even before analysts asked questions. Noting that Halliburton lost 42 personnel there, he said: "No other company in the world could have operated with such dedication." But one Houston analyst wasn't so sure. "There is no doubt that there has been an ongoing series of profit revisions, and each time feels like the last time, but it isn't," he said. The investigations in particular are problematic he said. "From a financial analyst's perspective, you never want to see things like this."

U.S. Housing Bubble Continues To Inflate

The U.S. housing bubble continued to inflate in June, as the average price of an existing home jumped to a record high of $191,800, UP 9.6% from June 2003, rising in all four regions, according to the National Association of Realtors July 26. Sales of existing homes rose 2.1% to annual rate of 6.95 million units, also a record high, as homebuyers rushed to buy before mortgage rates rose even higher. Home price increases are being driven not by the myth of "supply and demand," but by the Federal Reserve's hyperinflationary liquidity pumping.

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