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Volume 10 Issue 11…Dedicated to the Dialogue on Race…March 16, 2007
US Job Market
On Friday, March 9, 2007, the US Labor Department released its February job
report, which showed an anemic 97,000 workers were added to the non-farm
payroll. Normally, just to maintain a constant unemployment rate, more than
200,000 new jobs need to be created every month. But, nothing is normal in what
some call a "Cinderella" economy.
For example, nothing seems to impact the Bureau of Labor Statistics' employment
numbers; February's unemployment rate remained stuck at 4.5 percent. Few can
remember the last time this number rose significantly above what technically
amounts to "full" employment. According the BLS' February Employment
Situation Report, "The jobless rate has remained within a narrow range --
4.4 to 4.6 percent-- since September 2006." Hence, the inane assertion by
the Bush administration economic team that the US is facing "tight"
labor markets in the face of massive layoffs in the nation's manufacturing
sector, complete with plant closings and the consolidation of operations, a
housing bubble that is deflating, sidelining thousands of construction workers,
outsouring by some of the nation's largest employers, including banks and other
financial institutions, government privatization and immigration, which all
spell fewer positions for US job seekers. Is it any wonder that so many have
stopped looking for work?
It's a fairy tale economy alright, a real tragedy, because the story does not
have a happy ending for far too many individuals and families that once enjoyed
life in the middle class or were at least gainfully employed. The bottom line,
something is rotten in Denmark. Cinderella is dressed in rags and Prince
Charming is too preoccupied with fighting wars of choice and enriching his
cronies to notice.
H1-B Visa Controversy
On Wednesday, March 7, 2007, Microsoft Chairman Bill Gates testified on Capitol
Hill before the Senate Health, Education, Labor and Pensions Committee. At the
hearing called to discuss American competitiveness, Gates told Washington
lawmakers that the nation needs to improve its education system, particularly
in science and mathematics, and keep its borders open to highly skilled
workers.
Currently, federal law annually provides 65,000 H1-B visas for scientists,
engineers, computer programmers and other professionals. Gates, who advocates
doing away with the H1-B cap, claimed Microsoft has been unable to fill
approximately 3,000 technical jobs in the United States because of a shortage
of skilled workers.
Basically, H1-B visas are temporary work permits issued by a US
Consulate/Embassy to foreign professionals. In order to apply for an H1-B visa,
the prospective foreign worker must have a sponsoring employer, which much
certify the worker will be hired to fill a professional position at the
'prevailing wage' for that position.
Under Department of Labor guidelines, employers are not required "to
demonstrate that there are no available US workers or to test the labor market
for US workers..." In fact, "...H-1B workers may be hired even when a
qualified U.S. worker wants the job, and a U.S. worker can be displaced from
the job in favor of the foreign worker."
H1-B opponents claim there is no worker shortage. Thousands of software,
telecom and other engineers are unemployed. They claim advocates of the H1-B
program, such as Gates, are more interested in maintaining a stream of cheap
foreign labor than hiring qualified US workers. The importation of foreign workers
exerts downward pressure on wages, pricing US labor out of the market.
For all the news on the fight against H1-B visas, including meetings, protests,
letter writing campaigns, boycotts and other actions, visit http://forum.noslaves.com/.
Financial Panic of
1907
The United States experienced numerous financial panics in the 1800s, which
included widespread bank runs in which depositors, lacking confidence in the
solvency or liquidity of banking institutions, tried to simultaneously withdraw
their funds. Since banks did not maintain100% reserves against deposits, many
depositors lost their savings. The 1907 financial crisis differed from previous
panics, because it focused on trust companies in New York City, rather than
state and national banks.
During the National Banking Era (1863-1914), national banks, state banks and
trust companies were the primary financial intermediaries. Less regulated than
banks, assets of trust companies in New York grew 244 percent over the period
1890-1910. Over this period, state and national banks' assets grew a modest 97
and 82 percent, respectively.
By 1907, the functions performed at trusts expanded from managing estates,
holding securities, and taking deposits to include all the functions of banks,
except issuing bank notes. Larger trusts underwrote security issues and
mortgages and directly invested in real estate, activities barred or limited
for national banks. New York City trusts' portfolios had a higher proportion of
collateralized loans with riskier investments and riskier borrowers than New
York City national banks. These risky investments included stock market call
loans.
Despite rampant speculation in the early 1900s, 'President Teddy Roosevelt was
under fire from the business community to ease regulatory measures and
antitrust prosecutions.' With profits high at trusts, many national and private
banks "gained direct or indirect control of trusts through holding
companies or by placing their associates on a trust's board of directors. In
many instances, a bank and its affiliated trust operated in the same
building."
In 1906, the US experienced a recession. The US' money supply was "low
because of the lack of cash flow from farmers due to a late season and was
further drained by over-speculation in copper, money being diverted to the
Russo-Japanese War of 1905, the rebuilding of San Francisco after the 1906
earthquake (exacerbated by huge insurance payouts), and the nationwide railroad
expansion program."
On March 12, 1907, the Dow Jones Industrial Average stood at 86.53. On March
14, it lost 8.3% of its value. The decline reached its bottom at 53.00 on
November 15. After the market's decline, "prices soared, wages decreased,
unemployment rose, and many businesses, including banks, failed. With the
economy in recession, there were numerous runs on banks and trust
companies."
A contributing factor to the severity of the 1907 financial panic involved the
failed attempt by F. Augustus Heinze and his bank, Knickerbocker Trust, to gain
control of United Copper. On October 16, 1907, the media exposed an
"intricate network of interlocking directorates across banks, brokerage
houses, and trust companies in New York City." Heinze was forced to resign
as bank president.
On October 21, a run on Knickerbocker Trust had "depositors lined up in
front of the bank's headquarters on the future site of the Empire State
Building to demand their funds. The bank closed the next day after an auditor
found that its funds were depleted. The bank's president, Charles Barney, shot
himself several weeks later, prompting some of the bank's outstanding depositors
to commit suicide as well."
"Runs on deposits forced trusts to liquidate their most liquid assets,
call loans on the stock market. Large-scale liquidation of call loans depressed
the value of stocks. Given the predominance of national banks in the call loan
market, extensive liquidation of call loans by trusts threatened the assets of
national banks."
On October 25, J.P. Morgan and other bankers developed a rescue package of
federal and private funds from investors, including Morgan's group ($10 million),
J.D. Rockefeller ($10 million), First National ($2 million), and Kuhn, Loeb,
and Company ($500,000), to save the trusts. By November, the panic had
subsided. Morgan also assisted the NYSE and engineered a bailout package for
New York City.
In May 1908, Congress passed the Aldrich-Vreeland Act which established the
National Monetary Commission to investigate the panic and to propose
legislation to regulate banking. Congress responded to its recommendations by
drafting the Federal Reserve Act, creating the Federal Reserve System.
President Woodrow Wilson signed the act into law on December 23, 1913.
(Sources: http://en.wikipedia.org,
www.buyandhold.com,
http://history.enotes.com and http://eh.net/encyclopedia)
The Dark Knight-Batman/White Ninja/Zorro is eagerly anticipating his birthday
in April (16). Plans are being made for the joyous occasion. When queried for
comments on the upcoming celebration, the Dark One/Ninja/Zorro declared,
"Just invite all the girls." Spoken like a natural-born cock!
The Patriots
By Dr. Bob Bowman
The United States is in trouble. We're in danger of becoming a fascist
dictatorship where big government and big business combine to rule, and where
the people are considered just a source of labor. The marriage of government
and the investor class has succeeded in exporting our jobs, importing illegal
aliens to provide a pool of cheap labor, and thus driving down wages for all
American workers destroying the middle class. Their foreign and military
policies have led us into unnecessary wars of aggression to gain raw materials
and enhance profits of the global robber barons. Their trade policies have
resulted in capital flight, job loss, trade deficits, and the ownership of much
of our infrastructure by foreign interests. We've gotten into this fix because
our presidents, of both parties, have been servants of the global investors and
because our representatives in Congress, again of both parties, have abdicated
their Constitutional responsibilities and subjected themselves to an imperial
presidency.
We, the People of the United States of America, deserve better. We must demand
a government which (1) follows the Constitution, (2) honors the truth, and (3)
serves the people.
We Patriots can bring about such a government by electing Patriots to Congress
and recruiting Patriots already in government to our cause. It is always
tempting to start yet another political party, but our system makes such a
course futile. Until we have instant runoff voting (IRV), proportional
representation, real campaign finance reform, re-regulation of the media, and
debates involving all political parties, no third party can win the presidency
or more than a handful of seats in Congress.
About Me: A
conservative, Dr. Bob Bowman , Lt. Col., USAF, ret. is President of the
Institute for Space and Security Studies, Executive VP of Millennium III Corp,
and retired Presiding Archbishop of the United Catholic Church. The recipient
of numerous awards, his essay can be read in its entirety at www.thepatriots.us/index.html.
On Useless Tools
By Dot
My third edition freshman college textbook, Contemporary Economics by Milton H.
Spencer (1977), is full of useless information. For one who never found much
use in the perfect competition model, since it never existed, I suppose my
economics training left me firmly on the "left" as a Keynesian. I
never saw a problem with the government intervening in the economy to make
things better for people. A thorough reading of US history shows big businesses,
including financial markets, have had no problem accepting government largesse.
Government intervention in the marketplace only seems to pose "political"
problems when the beneficiaries are the nation's less fortunate.
In the 1970s and 1980s, Keynesian economists were
taught that government spending, including deficit spending, reducing interest
rates and cutting taxes were cures for economic recessions. According to a
Business Week article, "Last summer, the Treasury Dept. released a study
that looked at the long-term impact of extending President Bush's tax cuts,
which are due to expire at the end of 2010. The study concluded that extending
the tax cuts indefinitely would boost GDP by only 0.7% over the long run.
That's less than a rounding error."
The article, "Globalization has overwhelmed
Washington's ability to control the economy," www.businessweek.com/magazine/content/06_47/b4010001.htm,
should be required reading. Not only does it explain how globalization has
rendered Keynesian prescriptions largely useless, it also shows that
"supply-side economics" is equally ineffective in economies that are
no longer "self-contained." It provides excellent examples to show
that the economic impact of US government decisions are actually waning in the
face of global competition, particularly from countries like China and India. The
rise of these economies has been more pivotal in the decline of US wages than
the government's failure to raise the minimum wage.
Should globalization continue unabated or remains
as significant as it is today, a whole new set of economic tools will be
needed, if students of the dismal science are to make useful statements about
the human condition.
Disgruntled says: Coming
as it does so late in his final term in office and when he has no political
capital to expend, some folks, especially those in the online community, are
wondering exactly why George W. Bush spent a week in South America. It is
generally agreed that Bush is not interested in halting the tide of illegal
drugs inundating US cities, when truth be told, he has been the best chief
executive that the illegal drug industry has had in recent memory, including
Bill Clinton. Furthermore, it is folly to assume his visit had anything to do
with reducing poverty. A look at the rise in US poverty shows Bush is not
interested in the plight of the poor. Thus, speculation is ripe that this trip
south was an opportunity for Bush to visit his recent land acquisition in
Paraguay, a haven for war criminals and drug lords, on taxpayers' dime and
shake hands with his future partners in crime.
Disgruntled wants to know: Sitting in for
Wolf Blitzer in CNN's Situation Room, Suzanne Malveaux asked an intriguing
question that neither political insiders Donna Brazille (D) nor Terry Jeffries
(R) answered. The segment involved the recent confession by presidential
hopeful Newt Gingrich on his marital infidelity. Newt has ditched two wives,
one while she was in the hospital recuperating from surgery, and he was having
an extramarital affair as the House of Representative, under his leadership,
was impeaching former President Bill Clinton for lying under oath about his
adulterous relationship with Monica Lewinsky. To dispel the appearance of
hypocrisy, Newt quickly pointed out, the difference is Clinton lied under oath,
just like "Scotter" Libby. Newt is in good company; other Republican
presidential hopefuls, John McCain and Rudy Giuliani, have been married
multiple times. Between the three men, there are eight current and former
spouses. Understandably, given this history of broken vows and discarded families,
Malveaux asked Jefferies the unanswered question, "What are family
values?"
Disgruntled feels: Collusion! According
to economic data published by the federal government, inflation is low, even
though prices of nearly everything US consumers buy, especially necessities,
such as gas, food and utilities, continue their sustained rise. In some
markets, gas has already topped $3.00 a gallon. As the price of a barrel of oil
rose on the global market, the price of gas at the pump rose in tandem. A barrel
of oil has fallen significantly from its most recent high, yet gas continues to
rise at the pump. Some see collusion in the actions of the oil and gas
industry. Collusion used to be illegal! Now, collusion is accepted as merely
free "market competition."
Mailbox: E-Mails, Faxes and Telephone Calls
Email www.bloomberg.com Goldman, Merrill Almost
`Junk,' Their Own Traders Say...By Shannon D. Harrington...March 2 (Bloomberg)
-- Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley, which
earned a record $24.5 billion in 2006, suddenly have become so speculative that
their own traders are valuing the three biggest securities firms as barely more
creditworthy than junk bonds. Prices for credit-default swaps linked to the
bonds of the New York investment banks this week traded at levels that equate
to debt ratings of Baa2, according to Moody's Investors Service. For Goldman,
Morgan Stanley and Merrill that's five levels below the actual Aa3 rating on
their senior unsecured notes and two steps above non-investment grade, or junk.
Email www.house.gov/paul/
The Coming Entitlement Meltdown... The official national debt figure,
approaching $9 trillion, reflects only what the federal government owes in
current debts on money already borrowed. It does not reflect what the federal
government has promised to pay millions of Americans in entitlement benefits
down the road. Those future obligations put our real debt figure at roughly
fifty trillion dollars- a staggering sum that is about as large as the
total household net worth of the entire US. Your share of this amount is about
$175,000.
Email www.progressiveexchange.com
Mortgage Defaults Start to Spread By Ruth Simon and James R. Hagerty - The Wall
Street Journal - The mortgage market has been roiled by a sharp increase in bad
loans made to borrowers with weak credit. Now there are signs that the pain is
spreading upward. At issue are mortgages made to people who fall in the gray
area between "prime" (borrowers considered the best credit risks) and
"subprime" (borrowers considered the greatest credit risks). A record
$400 billion of these midlevel loans -- "Alt-A" mortgages -- were
originated last year, up from $85 billion in 2003, according to Inside Mortgage
Finance, a trade publication. Alt-A loans accounted for roughly 16% of mortgage
originations last year and subprime loans an additional 24%.
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