the internationale

Posted by reverb at 11:42 am
2009
May 1

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This year’s May Day protests across Europe were larger and more militant than last year’s, as the global depression marks its second year. Bloomberg reports :

“France’s eight labor unions joined for the first time for May Day demonstrations across the country to protest government measures on the economic crisis as insufficient and corporate leaders as out of touch.

Protests also took place today in Berlin, Athens and Istanbul. In Russia, tens of thousands of demonstrators for and against the government marched against a backdrop of rising unemployment and economic gloom, the Associated Press said.

‘Labor is changing; for the first time in perhaps decades, we are in agreement at the core,’ said Francois Chereque, secretary general of France’s biggest union, Confederation Francaise Democratique du Travail, in an RTL radio interview today. ‘There is a strong unity among the unions.’

Labor unrest is on the rise in France, as seen with ‘bossnappings,’ where workers hold company executives hostage to force negotiations on job cuts and plant closings, and demonstrations. In March, as many as 3 million people, or almost 5 percent of the population, marched in 213 protests. A January strike brought out 1.1 million people, according to police, and spurred President Nicolas Sarkozy to meet union leaders and offer more money in the country’s stimulus plan.”

Although the mainstream media shuns the European protests for the most part, May Day has in recent years become the occasion for massive immigrants’ rights marches in the US. According to the Associated Press :

“Thousands of immigrants and their families marched in cities from coast to coast, hoping to channel the political muscle Hispanics flexed last fall as President Barack Obama won election. This time, they hoped to jump-start an old cause: forging a path to citizenship for the estimated 12 million illegal immigrants living in the U.S.

Crowds were dampened in many areas though, as the swine flu scare kept numerous people home Friday. The area hardest hit by the swine flu is Mexico, also the native home of many rally participants.”

Bloomberg : French Unions Lead May Day Protests, Europe Marches

New York Times : Anger and Fear Fuel May Day Europe Protests

Associated Press : Immigrants push for reforms at rallies nationwide

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shrinking pains

Posted by reverb at 2:26 pm
2009
Apr 29

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This morning’s GDP numbers were markedly worse than the consensus estimate of a 4.9 percent contraction for the first quarter. But with consumer confidence up a lot and consumer spending up a little, and with the banks apparently poised to receive billions more in emergency liquidity injections from the government, Wall Street found reasons to rally.

The widespread assumption that federal action to save a few insolvent megabanks will lead to a recovery in an economy that is more than 70 percent consumer spending is worse than incorrect, it is counterproductive. And not counterproductive as in unhelpful, but counterproductive as in your economy just contracted for the third consecutive quarter. According to the Associated Press :

“The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.

The Commerce Department’s report, released Wednesday, dashed hopes that the recession’s grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.

Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.”

Most US news outlets focused almost exclusively on the 2.2 percent rise in consumer spending to achieve the positive spin preferred by American audiences, but the fact remains that the GDP numbers are the worst since Buddy Holly released “That’ll Be The Day”. The Daily Telegraph reports:

“The world’s largest economy has now shrunk by 3.3pc since its peak last year, making this the worst recession since the 1957-58 slump, when GDP fell by 3.8pc. In addition, it is the first time since the 1974-75 downturn that America has recorded third consecutive quarters of negative growth.”

Associated Press : Economy shrinks at 6.1 percent pace in 1Q

Daily Telegraph : US in worst recession for 50 years

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the japanese model

Posted by reverb at 11:47 pm
2009
Apr 22

The mainstream media reports contain few details about the apparent suicide of 41-year-old David Kellerman, who had recently been elevated to Chief Financial Officer at Freddie Mac, the insolvent and fraud-ravaged mortgage giant that was nationalized in September 2008. Obviously, if there was a detailed suicide note cataloguing financial crimes it is already secured with the black boxes from the 9/11 aircraft.

Recently, a number of media outlets have been brave enough to begin to connect some murderous rampages and suicides to the economic crisis. In the US it’s mostly formerly comfortable upper income bracketeers who don’t want to endure drastic reductions in their standard of living, the puffy discovering they aren’t so tuffy.

The legends of the previous Great Depression include bankers jumping from windows on Wall Street, the grey men diving from the fourteenth floor. In Japan’s “Lost Decade”, now entering its 19th year, there have been numerous suicides among financiers, in a modern version of ritual hara kiri.

The idea of killing oneself over an irretrievable loss of personal dignity would never gain much traction in America, where the authors of legal opinions cynically codifying a policy of torturing prisoners deliver prideful lectures to the next generation of lawyers at expensive universities.

Independent : Financier at centre of the US mortgage crisis found hanged

Baltimore Sun : As economic crisis goes on, financial fears can push some over the edge

Washington Post : Defense Secretary Gates Says He Approved of Release of CIA Memos

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nation of lone gunmen

Posted by walker at 10:10 am
2009
Apr 5

For many who saw that the crimes on Wall Street would spur a depression in the broader economy the current spate of business failures, credit defaults, job losses, and a general decline in American living standards does not represent the worst-case scenario.

Outside of the financial sector, the appalling true costs of the bankrupting of the United States are beginning to manifest themselves in unfortunately predictable ways : failing marriages, domestic violence, suicides, murders, and civil unrest. Even the US mainstream media is starting to cover the social backlash, as in this article—the second in a week—from the Christian Science Monitor :

“Details continue to emerge from Binghamton, New York, where a gunman identified as Jiverly Voong, 41, barricaded the back door of the American Civic Association Friday morning, then went in the front door shooting at everyone in the room, killing 13 and then shooting himself.

Early reports say the gunman was deeply upset over being laid off and for being disrespected for not speaking English well.

That event, as well as three policemen wounded in a Pittsburgh shooting after responding to a domestic disturbance call – friends said that gunman was also upset about his recent firing – fit a larger pattern of mass killings which have seemed to proliferate since America’s economic downturn, experts say. Forty-four people have died in a string of five such incidents in the past month, from Oakland, California to Alabama to North Carolina.”

A piece from the AFP likens the collapse of the economy to the types of “catastrophic loss” that often prompt such murderous rampages :

“A spate of high-profile mass killings in the United States in the past six months show the impact that the economic meltdown is having on rising violence, experts say.

The recession’s fallout on victims of domestic violence is also being felt as donation-starved shelters fill to capacity and are forced to turn away abused women.

Criminologist Jack Levin says there is a clear link between the economy and rising body counts.

‘A mass killer is someone who has almost always suffered a catastrophic loss — that’s the link between a recession and mass killings,’ he says, citing the loss of a job, the loss of a lot of money or the loss of a relationship.”

Christian Science Monitor : Is the economy a factor in recent shootings?

Agence France-Presse : Recession-hit US reels from violence surge

Washington Post : Some Link Economy With Spate Of Killings

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2009
Jan 26

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While the monetary policies being adopted by the Treasury and the Fed in their attempt to create a long, soft landing for the banks will eventually have huge inflationary implications for the US economy, that reckoning is many quarters in the future.

The present reality is a deflationary depression, which, after everyone gets bored with calling “the worst since the Great Depression” will eventually be seen by objective measures to be worse, and more persistent. This morning Reuters can’t make up its mind, reporting Fears of deflation, inflation coexist uncomfortably :

“Global investors have been pummelled so hard by steep losses in financial markets that some have developed a split personality: one that agonizes about deflation even as the other frets over future inflation.

The two threats appear contradictory, but may yet prove to be related. Most immediately, prices on everything from real estate and stocks to gasoline and consumer goods are plummeting, creating the very real danger of a deflationary spiral.

At the same time, there is a strong risk that the Federal Reserve’s effort to rescue the economy by pumping cash into the financial system will lead to resurgent inflation down the line, especially if the central bank waits too long to withdraw the vast emergency lending programs deployed to fight the crisis.”

Those who myopically focus on a few price hikes and see inflation have failed to consider the macroeconomic fundamentals, and must also be ignoring the copious supply of anecdotal data accumulating daily.

Everyone knows that US housing prices have collapsed and there has been an unprecedented wave of foreclosures. In a healthy economy a larger pool of available renters would mean a robust rental market, so how’s that working out? BusinessWeek reports Rents Drop Nationwide as Vacancies Spike :

“BusinessWeek.com worked with Axiometrics to come up with a list of 25 large metros where rent declines accelerated most at the end of 2008. In Salt Lake City, where the economy had been holding up better than most cities, effective rents (including landlord concessions) fell 2.3% in the fourth quarter compared with the previous quarter. By comparison, rents were climbing 3.3% in the fourth quarter of 2007.

The New York metro area, including New York City and its New York and northern New Jersey suburbs, saw a 3.7% drop-off in effective rents in the fourth quarter (compared with a 0.5% increase in the fourth quarter of 2007), according to Axiometrics, which surveys landlords across the nation once a month.

The situation has changed dramatically in the expensive Manhattan market, where tenants are suddenly in control. The layoffs on Wall Street have forced landlords to cut rents; offer one, two, or even three months’ free rent; and pay the broker fee that the tenant would otherwise pay (often 12% of the annual rent).”

Even as mainstream media outlets avoid serious discussion of deflation, they surreptitiously prepare their audiences for the effects of a prolonged deflationary depression with pieces like this editorial from the Seattle Post Intelligencer, headlined, The economy: The era of less or this article from the Denver Post, Frugality now “in vogue” .

Reuters : Fears of deflation, inflation coexist uncomfortably

BusinessWeek : Rents Drop Nationwide as Vacancies Spike

Seattle Post Intelligencer : The economy: The era of less

Denver Post : Frugality now “in vogue”


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