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Can Obama win in Canton, Ohio?
The Real News Network travels to Ohio and talks to people hit by economic crisis.
Stark County, Ohio is feeling the pressure of a down economy. Rising unemployment rates and financial hardships are leaving a sour taste in mouths of many voters in this crucial electoral battleground. The Real News spoke with residents of Canton, Ohio to assess the impact of the current crisis. The Real News Network travels to Ohio and talks to people hit by economic crisis. ... more -
Kucinich: Bailout opened 'financial whirlpool of insatiable greed'
Dennis Kucinich opposed the $700 billion Wall Street bailout that went into effect Monday, and now that the stock market continues to fall he's warning that the attempt to rescue the economy missed its mark.
The Ohio Democrat says any government efforts need to focus primarily on putting more money into the pockets of middle- and lower-income Americans struggling to keep their homes and jobs, not to Wall Street institutions.
“If Wall Street does come back for another bailout, we must be prepared in advance to say NO,” Kucinich said in a press release Monday. “The bailouts of Wall Street must stop. It will never be enough. When the Federal Government gets involved in picking winners and losers on Wall Street, we open up a financial whirlpool of insatiable greed."
As the government began enacting its financial rescue program Monday, the Dow Jones Industrial Average fell as much as 800 points during the day before settling down around 350 points at closing. The Dow dipped below 10,000 for the first time since 2004.
“The fundamental problem that led to the credit crisis is that millions of homeowners are in jeopardy, and millions of people are out of work. Congress rushed to bail out Wall Street but sits on its hands when millions of homeowners are at risk,” he continued. “The only way to prevent another bailout is to take action which will directly impact the market stress at its root - - the millions of homeowners who face default on their mortgages. This is the path toward market stabilization.”
Kucinich says he is preparing a bill to "prime the pump of the economy" by giving the government controlling interest in mortgage backed securities to allow homeowners to renegotiate the payments, interest and principle loans they are unable to pay.
“We are now facing the perfect financial storm. The elements are the deficit spending for the war ... the lack of serious investment in our country and now $700 billion to Wall Street. We are being hollowed out," he said. "We are going to see more unemployment and more people losing there homes. ... Now we must invest in homeowners to prevent any additional bailout.” Dennis Kucinich opposed the $700 billion Wall Street bailout that went into effect Monday, and now that the stock market continues to ... more -
The next burden: inflation
It is now clear that every government in the west is going to try their best to ensure that no savers lose any of their deposits. The Federal Reserve is lending directly to companies, and here in the UK, the government is going to start buying shares in UK banks. There is no escaping the severity of the crisis. Monetary authorities around the world are now focused on trying to ensure that we avoid the fate of the United States in the Great Depression of the 1930s, when output fell by over 30%. Instead, their hope is that the recession to come is more like the early 1970s, when western economies shrank by 5% to 10%. Painful but not catastrophic.
What we cannot escape is the fact that the amount of money in the banking sector far outweighs the value of the assets that it was lent against. This is how it works. You want to buy a house, and you need to borrow £100,000. You go to a bank and they create the loan, and at the same time deposit £100,000 in your bank account. This money did not exist before: it is new money. You buy your house, and at the other end of the chain, the sellers deposit the £100,000 back into the banking system. The amount of money in circulation has risen by £100,000 and is represented by the seller's bank "savings". But those savings are a reflection of the value of the house. If the price of the house doubled while they owned it, then £50,000 of those savings is a result of inflation caused by the banking sector creating money.
Supposing the housing market crashes. There is now more money in the banking system than the value of housing stock. The value of that the money has to fall as well. During the Asian crisis 10 years ago, this is exactly what happened. Many banks went insolvent, many savers lost their deposits, and the value of money in the economy fell so as to reflect the new and lower value of assets in the economy. This was exactly what happened in Thailand, but unlike us, their government was simply too poor to bail out savers who happened to have their deposits in the wrong bank.
In the west, we are rich enough to be able to ensure that banks do not collapse, wiping out individual savers. (Indeed, why should some savers be OK just because they were lucky enough to put their deposit in the right bank?) However, what we cannot escape from is the fact that the value of money in circulation now has to shrink to match the falling value of property against which the money was lent. However little we like it, the value of our savings has to fall. It is now clear that every government in the west is going to try their best to ensure that no savers lose any of their deposits. The ... more -
Fed Orders Emergency Rate Cut to 1.5 Percent
The Federal Reserve and a consortium of European central banks today announced a half a point cut in a key interest rate, a coordinated effort to stave off an economic slump even as they continue struggling to tackle a crisis in global financial markets.
The announcement reversed sharp losses in European stock markets and buoyed U.S. market futures that were pointing towards another troubled day on Wall Street.
The rate cuts, hinted at by Fed chairman Ben S. Bernanke yesterday then approved by the central bank overnight, reduces the target federal funds rate to 1.5 percent from 2 percent.
Joining the rate cut were central banks in Canada, England, Sweden, Switzerland and the European Central Bank.
With commodity prices falling and concerns about an economic slowdown taking root around the globe, the Fed in a statement said that it was now time to shift the focus from fighting inflation to bolstering growth. Lower interest rates make it cheaper for companies to borrow to invest in plant and equipment, and bring down the cost of a variety of consumer credit options such as bank credit cards and auto loans. The Federal Reserve and a consortium of European central banks today announced a half a point cut in a key interest rate, a coordinate... more -
Education cancelled for 4.5 million students in Zimbabwe
Economic chaos in Zimbabwe claimed its latest victim. Rampant inflation puts the entire school system on the brink of failure as staff can no longer afford to teach, and are forced to turn students away. In order to avoid the embarrassment of a complete collapse of Zimbabwe's educational system, the government has canceled the 2008 school year after only 23 days in session. That means there will be no class of '08. And who knows what this means for the future of Zimbabwe's schools.
Excerpt:
"In January teachers went on a prolonged strike over their salaries. In April, Mr Mugabe's Zanu (PF) party accused them of supporting the Movement for Democratic Change (MDC) during the March elections and blamed them for the President's first-round defeat.
Six teachers were murdered and thousands assaulted by Zanu (PF) militia in the violence that marred the second-round presidential election on June 27.
Schools were looted and turned into torture centres. Teachers disappeared. Many are still unable to return for fear of being disciplined.
Now the coup de grace to the education system is being delivered by hyperinflation. Teachers had their salaries doubled last week to the equivalent of £5.70 a month; barely enough for bus fares and bread for four days."
Can you imagine an entire generation without an education? Heartbreaking. Economic chaos in Zimbabwe claimed its latest victim. Rampant inflation puts the entire school system on the brink of failure as staff... more -
zeitgeist movie, part II - addendum
posted online today october 3rd http://video.google.com/videoplay?docid=7065205277695921912
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A 100,000,000,000 dollar bill
A one hundred billion dollar bill... Guess where this is from?
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Ron Paul schools Bernanke at Joint Economic Committee
In this clip, Ron Paul explains to Ben Bernanke why the $700 billion bailout would be bad for the economy and why where we're at is similar to where we were at right before the Depression. In this clip, Ron Paul explains to Ben Bernanke why the $700 billion bailout would be bad for the economy and why where we're at ... more
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It's time for science and reason
There was a time when we sought our answers in superstition....
Now is the time when we should use scientific methods, rational thinking and evidence to determine our way....
Anyone agree with me? There was a time when we sought our answers in superstition.... ... more -
Shrinking ethics, shrinking foods
Walk into a grocery store or a restaurant nowadays and you will see the end result of an important decision being made by many of our best known companies. The products you consume are changing. Boxes of cereal aren’t quite as full; the house salad at your favorite restaurant is less filling, and according to the Wall Street Journal this past week, even the Whopper Junior is going on a diet.
There is no question that at least part of the discussion taking place in companies today pertains to rising expenses and the need to maintain revenues. It’s surely being approached as a business issue and a business decision at high levels in our companies. And the end result is evident. Faced with higher product costs, many food companies are shrinking the size of their products, from hamburger patties to ice cream. The portion size is noticeable too; the consumerist.com website calls this downsizing the result of a mysterious “grocery shrink ray.” The prevalence of the “shrink ray” is not surprising, given the cost squeezes that many companies are facing these days.
[Essay continues....] Walk into a grocery store or a restaurant nowadays and you will see the end result of an important decision being made by many of our ... more -
The New Boomer Retirement Plan: Crash Pads?
The commune of the 1960s may be making an unwanted comeback thanks to the bursting of the housing bubble, says California investment expert and author Thomas C. Scott. In a possible sign of things to come, Scott says he's noticed that a growing number of people facing foreclosure or bankruptcy are doubling up in the middle-class version of crash pads. And he expects the trend to grow as more and more baby boomers face under-funded retirements.
Scott, CEO of Scott Wealth Management and author of the forthcoming "Fasten Your Financial Seatbelt," says that at the epicenter of the housing collapse, Orange County, "I'm hearing a pattern of stories about people caught short with maxed-out mortgages, big houses that won't sell, and eroding incomes who are throwing in the towel and sharing homes with others."
In one case, Scott says a family moved in with friends so they could rent out their own home in an effort to save it. "A retired neighbor of mine recently took in her son, daughter-in-law, and grandkids because they couldn't afford their own home anymore."
Scott says this may prove to be a major demographic shift as baby boomers swell the retirement rolls.
"Baby boomers as a group have failed to adequately save for retirement. Although every study suggests people expect to work past age 65, they won't be earning what they did during their peak years. Millions will reach retirement age with Social Security, Medicare, and whatever work they can get."
Boomers are getting squeezed from both ends, he says. "They loaded up on mortgage debt during the good times, and calculated their retirement assets based on inflated home prices. Now all that paper wealth is gone, they're stuck with white elephants, and the end of their peak earning years is in sight."
Scott says the housing bust could be lengthy, and painful. "The collapse of the 1980s took seven years to work itself out. In the next seven years, some 30 million boomers will reach retirement, many unprepared." The commune of the 1960s may be making an unwanted comeback thanks to the bursting of the housing bubble, says California investment e... more -
Moyers Interviews Phillips: Only half-way through this bursting bubble?!!
Bill Moyers interviews former Nixon White House strategist and political and economic critic Kevin Phillips, who gives a ground-level perspective on the mess we're in the middle of. Phillips rips into Bush, shakes his head at Greenspan and doesn't give the democrats much in the way of props either.
Though I am no finance major, this was a fascinating, frank and somewhat frightening discussion. Bill Moyers interviews former Nixon White House strategist and political and economic critic Kevin Phillips, who gives a ground-level ... more -
The Wealth Effect and How It Affects Our Spending
The "wealth effect" is a term used to describe consumer behavior that is influenced by rising asset prices. Asset prices can be stocks, bonds, real estate, etc. When your 401(k) statement shows a larger and larger bottom line, it makes you feel good about your current situation and future. When you feel good, you borrow and spend more. The same is true for rising real estate prices. In the case of real estate, you can even tap into the gains in the form of a home equity loan. Home equity makes people feel good. When people feel good they borrow and spend more. Consumer spending accounts for about 70% of our economic output.
"In the late 1990s, when the stock market was booming, the wealth effect was estimated to be about 3 percent to 5 percent. That is, for every $100 in stock appreciation, the typical investor would spend an extra $3 to $5. Recent studies suggest that the effect is even more pronounced with expanding housing wealth, as much as $9 per every $100 in equity. The downside, of course, is that declining values can put the brakes on consumer spending."
The Link is to an informative article that helps define what is happening in the American economy right now. The "wealth effect" is a term used to describe consumer behavior that is influenced by rising asset prices. Asset prices can... more -
Personal Inflation Calculator - Office of National Statistics
If you have ever felt that the soaring prices you pay in the shops and on your bills bear no relation to the official inflation figures, help is at hand.
The Office for National Statistics (ONS) has created an online calculator that can estimate a personal rate of inflation for each person in the country.
It hopes that the new website will help to tackle the widespread feeling that its calculation of the national inflation rate — now 4.7 per cent on the consumer price index (CPI) — is much too low. If you have ever felt that the soaring prices you pay in the shops and on your bills bear no relation to the official inflation figure... more -
New York Says Appraiser Inflated Value of Homes
The New York attorney general, Andrew M. Cuomo, accused an appraisal company yesterday of inflating the value of homes under pressure from Washington Mutual, one of the nation’s largest mortgage lenders.
The case, filed in New York Supreme Court in Manhattan, accuses a subsidiary of the First American Corporation of defrauding homeowners and investors who bought securities backed by loans that were underwritten with the appraisals it conducted.
The case centers on a central tenet of mortgage lending — determining the value of homes that secure loans. It is an area that many housing specialists have said was rife with abuse and conflicts of interest. The lawsuit also signals that Mr. Cuomo, who was secretary of Housing and Urban Development in the Clinton administration, intends to move as aggressively against the mortgage industry as he has done with college loan providers.
In a telephone interview yesterday, Mr. Cuomo said investigators had spent nine months interviewing hundreds of mortgage industry executives and poring over millions of documents obtained through subpoenas.
“This is the opening chapter of the story, and we have some other points that we are going to make in the coming weeks,” he said, adding that he expects other cases to touch on the secondary market where mortgages are securitized by Wall Street banks.
“We just don’t bring individual cases,” Mr. Cuomo said. “We try to find cases that point to a systemic flaw in the industry” The New York attorney general, Andrew M. Cuomo, accused an appraisal company yesterday of inflating the value of homes under pressure ... more -
TV prices set to rise?
"iSuppli reports that prices of flat panel TVs, monitors and laptops dropped by four to seven percent during May and June, three to 15 per cent in July, and as much as 20 per cent through August. 'LCD TV and desktop PC monitor manufacturers also are starting to cut their prices in order to reduce inventories and boost end-user demand," said Dash, who predicts that the market is about to stabilise. "Some panel prices may even increase by one to three per cent, especially those which are reaching at or below the cost levels.'
Dash blames falling housing prices, struggling financial markets, a slowdown in the job market and rising inflation worldwide for the situation. China was expected to be a major market for flat panel TVs this year given its hosting of the Olympics in Beijing and general rise in wealth, but natural disasters - such as the earthquake in Sichuan - have reduced demand, reports iSuppli..." "iSuppli reports that prices of flat panel TVs, monitors and laptops dropped by four to seven percent during May and June, three ... more -
New U.S. Census Data: Same Reality
Newly released data by the United States Census Bureau continues to show how much President George W. Bush has ravaged the American economic landscape.
Since 2000, median income has decreased 1 percent. That decline is magnified by the higher costs for energy, food and other items during that period; what families could buy for a dollar in 2000 now costs $1.25. Newly released data by the United States Census Bureau continues to show how much President George W. Bush has ravaged the American ec... more -
Poor struggle as rat meat prices soar
The price of rat meat has quadrupled in Cambodia this year as inflation puts other meat beyond the reach of poor people, officials say.Can you help. The price of rat meat has quadrupled in Cambodia this year as inflation puts other meat beyond the reach of poor people, officials say... more
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Thousands strike in pay dispute
Council workers are staging a 24-hour walkout over pay, disrupting local services such as schools, bin collections and ferry crossings.
About 200,000 members of the GMB, Unite and Unison unions were due to take part in the strike after rejecting a 2.5% deal over the next three years. Council workers are staging a 24-hour walkout over pay, disrupting local services such as schools, bin collections and ferry crossings... more -
Zimbabwe inflation hits 11,200,000%
HARARE, Zimbabwe (CNN) -- Zimbabwe's inflation rate has soared in the past three months and is now at 11.2 million percent, the highest in the world, according to the country's Central Statistical Office.
Official figures dated Monday show inflation has surged from the rate of 2.2 million percent recorded in May, despite the government's price controls.
The country's finance minister confirmed the new figure in an interview but said the rising inflation rate was not confined to Zimbabwe alone.
"While our case has been aggravated by the illegal sanctions imposed by the Western powers, rising food prices are a world phenomenon because of the use of bio-fuel," said Samuel Mumbengegwi. "But we will continue to fight inflation by making sure that prices charged are realistic."
In February, the price of a loaf of bread in the country was less than 200,000 Zimbabwe dollars. On Monday, that same loaf of bread cost 1.6 trillion Zimbabwe dollars.
Analysts have said the Zimbabwean government's official inflation rate figures are conservative. Last week, one of Zimbabwe's leading banks, Kingdom Bank, said the country's inflation rate was now more than 20 million percent.
The locally-owned bank predicted tougher times ahead for Zimbabwe in the absence of donor support and foreign investment in an economy that has been in freefall for almost a decade.
Once considered the breadbasket of Africa, Zimbabwe has been in the throes of an economic meltdown ever since the country embarked on a chaotic land reform program that has decimated commercial agriculture.
Analysts say the crisis has worsened following President Robert Mugabe's disputed reelection in the June 27 presidential run-off. His challenger Morgan Tsvangirai boycotted the race over widespread allegations of violence and voter intimidation.
The economic crisis has destroyed Zimbabwe's currency and made it difficult for Zimbabweans to buy basic commodities, electricity, fuel, and medicines. Many Zimbabweans have left the country amid rising unemployment and deepening poverty.
Last week a summit in South Africa of regional African leaders failed to persuade Zimbabwe's political parties to agree to form a government of national unity, which observers view as the best way to end Zimbabwe's record recession. HARARE, Zimbabwe (CNN) -- Zimbabwe's inflation rate has soared in the past three months and is now at 11.2 million percent, the h... more
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Inflation
