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Zia clarifies his timing of declaration of independence

What Mujib Said

Jyoti Basu is dead

Dr.BR Ambedkar

Memories of Another day

Memories of Another day
While my Parents Pulin babu and Basanti Devi were living

Friday, October 24, 2008

Indian Economy Plunges in Love Americ...







 


Indian Economy Plunges in Love America! Recession Alarm Rings around the Globe! US Stocks Dive on Belief Global Recession is at Hand.UK Economy Officially on the Brink of Recession. Now, the Global Market is Allowed ACCESS in India as Markets Bleed and RBI Keeps all Interest Rates, CRR Steady. NYT Endorses Obama, Says Palin ‘Unfit for the Office’. Bhopal Must be Replicated in Every Part of India!McCain warns working classes against Obama!
 



Troubled Galaxy Destroyed Dreams: Chapter 92

 

Palash Biswas

 

Panic sets in as Wall Street plunges at the open
guardian.co.uk - 1 hour ago
American stocks suffered a brutal slump within moments of the opening bell on Wall Street as a sell-off in Asian and European markets spread across the Atlantic.
Wall Street plunges amid global meltdown The Standard
US Stocks Slide on Global Fears News10.net


American Genocide
mark to PoliticalForum


Communists killed over 100 million of their own people in the course
of the 20th Century (as horrifyingly documented here). But even though
we have communists here in the USA, we'll never have genocide, because
our democratic safeguards would stop evil people from getting that
much power, right?


Via Stop the ACLU, here's video of Larry Grathwol, who joined the
Weather Underground as a undercover law enforcement agent:
   I brought up the subject of what's going to happen after we take
over the government. We become responsible then for administrating 250
million people … and there was no answers. No one had given any
thought to economics. How are you going to clothe and feed these
people? The only thing that I could get was that they expected that
the Cubans, and the North Vietnamese and the Chinese and the Russians
would all want to occupy different portions of the United States. They
also believed that their immediate responsibility would be to protect
against what they called the counter-revolution. They felt that this
counter-revolution could best be guarded against by creating and
establishing re-education centers in the Southwest, where we would
take all of the people who needed to be re-educated into the new way
of thinking and teach them how things were going to be. I asked, well
what is going to happen to those people that we can't re-educate that
are die-hard capitalists? The reply was that they would have to be
eliminated. When I pursued this further they estimated that they would
have to eliminate 25 million people in these re-education centers.
When I say eliminate, I mean kill … 25 million people.


   I want you to imagine sitting in a room with 25 people, most of
which have graduate degrees from Columbia and other well-known
educational centers, and hear them figuring out the logistics for the
elimination of 25 million people. And they were dead serious.


The Weather Underground was headed by Bill Ayers, who went on to groom
Barack Obama for office, even launching BHO's political career from
the home he shares with fellow communist terrorist Bernardine Dohrn.


Nothing is so awful that it couldn't happen if the cesspool that
produced Barack Obama takes over our government.


http://www.moonbattery.com/


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Rahul asks Maya, why are Dalits backbenchers


CNN-IBN
Published on Fri, Oct 24, 2008 at 19:30, Updated on Fri, Oct 24, 2008 at 20:10 in Nation section
Lucknow: There seems to be no end to the Mayawati versus the Gandhis war.



After targetting Congress President Sonia Gandhi, Mayawati has decided to take on her son and Congress General Secretary Rahul Gandhi.



The Uttar Pradesh Chief Minister on Friday ordered the cancellation of Rahul's scheduled interaction with students at the Chandra Shekhar Azaad University in Kanpur.



The orders were sent as a written directive to the university Vice Chancellor, just hours before Rahul was to arrive at the auditorium.



Rahul, however, kept his date with the students and held an interactive session with them in the cafeteria.
He also addressed Mayawati's core constituency - the Dalits - at a public meeting in the area.



"Whenever I visit schools I start from the back. Why is it that in Lucknow which has a government headed by a Dalit, all Dalit students are forced to sit at the back benches?" Rahul asked.



The Congress General Secretary drove to the university auditorium and after finding it locked, he walked to the cafeteria to interact with the students.



The SPG personnel protecting Gandhi had a tough time controlling the over-enthusiastic students.


When they pushed some students to check them, Rahul came to their rescue and instructed SPG men not to prevent the students from reaching him.



Uttar Pradesh Congress Committee President Rita Bahunguna Joshi alleged that the Chief Minister had exerted pressure on the University Vice Chancellor to get the function cancelled.



Almost a fortnight ago the Mayawati government had cancelled the allotment of land for construction of a rail coach factory in Sonia's constituency in Rae Bareli.
http://www.ibnlive.com/news/rahul-asks-maya-why-dalits-are-backbenchers-in-up/76660-3.html


Recession alarm rings around the globe! Indian People may ironically be convinced of the Survival strategy as we, the India ABLAZE have been launched into the Space. Chandrayaan would solve our economic wooes! And let us hope still better as we have to start for MARS very soon!  This BASTARD mood has been injected in us since the introduction of Post Modern Manusmriti and Apartheid packed in LPG! The Poison of Neo Liberal Vaccination works into our enslaved psyche like genetically Modified Seeds which KILLs us like Silent Killer Gas Leak as it happened in Bhopal. The Government of India has ensured that the BHOPAL  must be replicated in every part of US PERIPHERY India!


Wall Street slid on signs that the economic slowdown could be deeper than feared! US govt is expected to announce a list of about 20 banks in next round of companies receiving capital injections under the rescue package!


But Indian psycheis well reflected in Republican president Mac Cain`s stance in favour of the global Ruling class. Thus, Indian Caste Hindus die to see Mc cain in the White House!Two days after forecasting that the outlook for the Indian economy was "somewhat cloudy", PM Manmohan Singh today said the global economic crisis would slow down the nation's growth to 7 to 7.5 per cent this fiscal!


With Barack Obama off the campaign trail, Republican White House hopeful John McCain Friday courted working class voters slamming his rival for wanting to share out hard-earned American wealth.


Despite trailing in national polls ahead of the November 4 vote, McCain's senior advisors hope steady attacks on Democrat Obama's alleged "socialist" tendencies will draw back wavering Republicans and woo key independent voters.


As Obama "told Joe the Plumber back in Ohio, he wants to quote 'spread the wealth around,'" McCain told a rally in Denver, Colorado.


"He believes in redistributing wealth, not in policies that grow our economy and create jobs. Senator Obama is more interested in controlling wealth than in creating it, in redistributing money instead of spreading opportunity.


"I am going to create wealth for all Americans, by creating opportunity for all Americans," McCain vowed.


Dr Manmohan singh may well claim that his government of india is creating WEALTH for Indians! The Money Machine works overtime in India as well as United states of america Killing the Blacks as well as the Untouchables!


FIMIN in India diverted national revenue to save the Fat BIGGIE Capitalists and the corporates from the Worldwide Meltdown. Chettiar Chidambaram and the World Bank Gang led by RBI do work round the clock to save Money Making process. The Parliament was subverted to discuss the Indo Us Nuke deal and strategic Realliance. In the same manner, we have to wtness systematic subversions created by NDA, UPA and the Left to bypass the parliament and do everything as Mc cain promises for the americans. We love so much america just because we happen to be its PERIPHERY!
Just read what Mc cain has to say!


With Barack Obama off the campaign trail, Republican White House hopeful John McCain Friday courted working class voters slamming his rival for wanting to share out hard-earned American wealth.


Despite trailing in national polls ahead of the November 4 vote, McCain's senior advisors hope steady attacks on Democrat Obama's alleged "socialist" tendencies will draw back wavering Republicans and woo key independent voters.


As Obama "told Joe the Plumber back in Ohio, he wants to quote 'spread the wealth around,'" McCain told a rally in Denver, Colorado.


"He believes in redistributing wealth, not in policies that grow our economy and create jobs. Senator Obama is more interested in controlling wealth than in creating it, in redistributing money instead of spreading opportunity.


"I am going to create wealth for all Americans, by creating opportunity for all Americans," McCain vowed.


The stance of our Parliamentary Players are no different! We are witnessing the drama since so called Independence long before Laughter Show, Indian Idol or Big Boss!


It is the same case with every european and asian leaders!
Thus, Asian and European leaders are meeting in the Chinese capital to discuss ways to increase confidence in world markets. Chinese President Hu Jintao has said uncertainties and instability are increasing in China's economy as a result of the global financial crisis. Daniel Schearf reports from Beijing.


Leaders from over 40 European and Asian countries met in Beijing Friday to encourage solidarity in facing the crisis!


Global financial problems were at the top of the agenda as they gathered for the first day of the two-day Asia-Europe Meeting, known as ASEM.


East Asian nations have agreed to form an $80 billion fund to help each other fend off the effects of the global financial crisis. As Daniel Schearf reports from Beijing, the fund could help boost confidence in the region's markets!


Members of the Association of Southeast Asian Nations, Japan, China, and South Korea will be allowed to dip into the money when faced with a financial emergency.



Former U.S. Federal Reserve Chairman, Alan Greenspan, has predicted further negative impacts for Americans from the U.S. and global financial crisis, which he called a credit tsunami. VOA's Dan Robinson reports, Greenspan and two other current and former U.S. officials, faced tough questioning from lawmakers in a congressional hearing.


The longest-serving chairman of the U.S. central bank until he was replaced by Ben Bernanke in 2006, Greenspan called the financial and credit crisis a "once in a century credit tsunami" brought about by heavy demand for securities backed by sub-prime mortgages.


The crisis has been much broader than anything I could have imagined, Greenspan said, leaving him and other economic experts in a state of shocked disbelief.



"There's a lot of panic out there today," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. "People have been saying that we're in a recession. This is the realization."


These are  the Voices from United states of Ameriaca! The ultimate destination of the Ruling Brahaminical Killing Class!


Indian Economy plunges deep and deep in LOVE america! Sensex replicates Dow shamelessly as a domestic pet! It is FUN and PUN! Copulation with decopulation! What a HONEYMOON!


Global legal Firms enter India to kill the Black Untochable Indigenous communities as well as Law parcticenors in Misery! Corporates well supported by the Western Legal experts! Ratan Tata now should not be afraid to sue Ms Mamata Bannerjee stalling development and industrialisation!Allen & Overy and Linklaters are some of the UK-based firms which have got informal tie-ups with Indian law firms. They have client referral arrangements with Trilegal and Talwar, Thakore & Associates, respectively. Others like Clifford Chance have liaison offices in India.


Amid growing signs that the global economy is worsening, the White House yesterday extended an invitation to developing countries to attend a summit next month in Washington with leaders of the world’s wealthy economies.  Faced with rising food and fuel prices, some of Africa’s poorest nations are struggling to lower earlier projections of economic growth by focusing on how to satisfy the basic day-to-day needs of their citizens. One avenue for attracting investment needed to keep capital flowing in to local African businesses and public works is the practice of microfinance, or supplying credit to the poor at agreed-to, flexible rates which they can afford to pay back in an acceptable time frame.  But the director of the Microcredit Summit Campaign Sam Daley-Harris says that tightening pressures are being felt even in low-end borrowing circles and that such small but essential programs that can make a difference for Africans facing dire poverty are also feeling the effects of the global financial pinch.


Prime Minister Manmohan Singh on Friday blamed "failure" of international surveillance, supervision and regulatory mechanisms for the current global financial crisis and sought immediate "coordinated action" to restore confidence and "de-clog" the credit market.


Making an impressive debut at the seventh Asia-Europe Meeting (ASEM) which formally admitted India into its fold, Singh said the current international financial crisis could be attributed to three failures.


Singh, a renowned economist who had successfully launched India's reform process in early 90s, said the first cause was a regulatory and supervisory failure in developed countries.


"Massive failure of regulatory and supervisory mechanism has really been the reason for the present turmoil and if there had been a good regulatory mechanism, this would not have happened," Singh said.


Secondly, the crisis surfaced due to a failure of risk management in the private financial institutions and finally because of failure of market discipline mechanism, he said as the other 44 global leaders listened with rapt attention.


"The Prime Minister had in fact had the last word," N Ravi, Secretary (East), Ministry of External Affairs, told reporters while briefing about the first day's deliberations at the two-day summit.


On the other hand government of india is doing everything bypassing parliament and quite against the interest of the masses!

Prime Minister's economic panel expects interest rates to come down in the coming weeks following the decisions taken by the Reserve Bank to various key policy rates during the month.

"I expect the inflation and interest rates to go down in the next few weeks", PM's Economic Advisory Council Chairman Suresh Tendulkar told reporters after RBI unveiled its mid-term credit review policy.

And that is why the liquidity situation is being eased, he said, adding lowering of interest rates is something that would keep growth on path in 2009-10.

Though RBI had not taken any major initiatives during the policy review today, it had earlier reduced the mandatory deposit that banks keep with the central bank by 250 basis points unlocking Rs 1 lakh crore, in addition to lowering the short-term lending (repo) rate by 1 per cent.

Commenting on Friday's policy announcement, Tendulkar said, "they have changed the repo rate last week and it is too early to change the rates now.

Pointing out that slowdown of the economy is inevitable, he said, "I think some slowdown is to be expected.

The PMEAC also projected 7.7 per cent. I think slowdown under the current circumstances is something which is inevitable. The thing is not to let it go much below 7 per cent."

On fiscal deficit, the panel is of the view that it would not go much beyond estimated earlier.

"I don't think it won't very much beyond that. It may come down, our assessment was based on international commodity prices ruling then. They have been coming down. Clearly, it would not go beyond that," he said.

Highlights of RBI mid-term monetary policy

Following are the highlights of the mid-term review of the RBI's monetary policy for 2008-09:

* CRR kept unchanged at 6.5 per cent.

* Repo, reverse repo rates kept unchanged at 8 per cent and 6 per cent respectively

* Bank rates unchanged at 6 per cent

* GDP projections lowered to 7.5-8 per cent for FY 09

* Inflation to be brought down to 7 per cent by March 2009

* RBI aims to bring inflation down to 5 per cent at the earliest

* Medium term inflation target 3 per cent

* Double-digit inflation still a matter of concern

* Enough liquidity in the banking system after recent infusion

 

Britain sought opening of Indian legal services to foreign players, saying it would be in the interest of both the countries.


Last year, law minister HR Bharadwaj had indicated easing of norms for the entry of foreign law majors in India. The proposal got shelved due to protests from lawyers in general and the BCI in particular. The BCI has now veered around to allowing the opening up, provided all stipulations pertaining to reciprocity are fulfilled.


Now it is ALLOWED! UK Legal Firms would take care for us so that Justice may be ensured!This would come as a breather to UK-based law majors such as Linklaters, Allen & Overy and Clifford Chance which have informal tie-ups with Indian law firms.The move would be pathbreaking as the Bar Council of India (BCI), which was averse to allowing market access in legal sector, has backed the proposal. Sources say that the BCI has indicated that it may consider the matter on a country-specific basis, provided there is a quid-pro-quo arrangement.

Both the UK and Indian governments are keen to pave way for a two-way entry of legal eagles. Once an agreement is finalised with the UK, the BCI may be urged to open gates for other countries too on a reciprocal basis.

Many UK law firms have expressed their willingness to establish presence in India. “UK has been witnessing a negative growth for quite some time and that is why the law firms there are eyeing India,” said Society of Indian Law Firms president Lalit Bhasin.

“No preferential treatment can be given to any particular jurisdiction,” he added. “Majority of the tie-ups in the Indian legal space have been signed by the UK law firms. They are doing everything to establish a presence in India at a time when the global economy is witnessing a slowdown,” said Anand S Pathak of P&A Law Offices.


British Justice Minister Jack Straw raised the issue when he met Law Minister H R Bhardwaj in New delhi last september to discuss cooperation between the two countries in the legal sector.Straw impressed upon Bhardwaj that opening of the legal services would be in the interest of legal systems of both Britain and India.

Government here has been hesitant to open the legal services to foreign players because of fears among the legal fraternity that it would put them at a disadvantage. Now all hesitations evaporated!

Britain has sought to allay any apprehensions, saying it too had such fears when it opened its legal services some decades ago but the result has been beneficial.

Dr manamohan singh and the Supersalve gang mercilessly arranged mass slaughter of Indian people. The supreme SLAVE rushed to Japan to bail out Japanese Companies dictated by washington.

and Lo! The Hindutva forces have something to rejoice as Cash-strapped Pakistan will have to slash its defence budget by a substantial 30 per cent over next four years if it agrees to the Interna tional Monetary Fund's conditions for a bailout package now being discussed. Facing severe debt-repayment problems and massive imbalance in its foreign exchange reserves, Islamabad hopes to get $9.6 billion from the IMF over the next three years at a mark-up rate of 16.7 per cent a year, a media report  said.

May India dare to cut the Defence budget?

Then what about the SWISS BANK accounts, KICJKBACKS, DEFENCE deals, strategic Realliance in US Lead, Indo US nuke deal and long long Arms Shopping Lists? Are we so unsafe despite Our Masters US present so strongly in south asia never before!

Latin American stocks fell across the region Thursday as investors balanced gains in the U.S. with fears that falling commodity prices, losses on currency derivatives and hedge funds' broad unwinding of local assets are hastening a regional downturn.

Brazilian stocks plunged again on Friday on fears of a global recession, falling more than 8 percent shortly after trading began

Sao Paulo's Ibovespa index was down 8.5 percent to 30,979 within the first 30 minutes of trading. Brazil's currency, the real, fell against the U.S. dollar despite auctions by the central bank of dollar swap contracts aimed at propping up the local currency.

It marked the fourth straight day of losses for Brazilian equities.


European and Asian leaders, including Prime Minister Manmohan Singh on Friday initiated discussions to find a coordinated global response t
o stem the financial turmoil and the spectre of recession sweeping the world.

Singh, who arrived here last night from Tokyo to attend the 7th Asia-Europe Meeting (ASEM) Summit, said he hoped the meeting will come out with a solution to the many global problems triggered by the US credit crunch.

"This is the first time I am attending the ASEM as Prime Minister. I sincerely hope that this meeting of minds between Europe and Asia will produce a solution to many global problems including the international financial crisis," Singh said on his arrival.

Earlier, in Tokyo, Singh, an eminent economist, had said that the world was facing "multiple challenges".

"The spectre of recession in the global economy, coming as it does in the wake of the steep rises of energy and food prices, threatens to disrupt the rhythm of economic development in many developing countries," he said.

Developing countries like India are also affected by the crisis and have to be part of the solution, he had stressed.

Leaders of the Association of Southeast Asian Nations (ASEAN) and its three neighbours have promised joint efforts to combat the global fin
ancial crisis and maintain regional economic stability.

Chinese premier Wen Jiabao chaired the meeting of leaders of the 10-member Asean plus China, Japan and South Korea, often called Asean plus three.

The 13 Asian leaders held an open discussion on "issues of common concern, especially the financial crisis and its influence on East Asia," host nation China said.

"They expressed their willingness to enhance coordination and cooperation and to make joint efforts to prevent and withstand the crisis in a bid to maintain economic stability," the Chinese government reported on the official
website of the Asia-Europe Meeting (Asem).


The Reserve Bank of India (RBI) said on Thursday it was closely monitoring financial market developments and would respond swiftly and pre-emptively to adverse external developments that could affect financial and price stability.

"The Reserve Bank is committed to maintaining financial stability and active and flexible liquidity management by using all policy instruments," the RBI said in its review of macroeconomic and monetary developments.

"The Reserve Bank is closely monitoring developments in the global as well as domestic financial markets and stands ready to take such pre-emptive action as may be necessary to contain excess volatility in the domestic financial markets," it said.

Expressing "surprise" at RBI's decision to maintain status quo on key policy rates, the India Inc today said the central bank should have 
cut key rates to spur growth.

"The RBI's policy statement has taken the industry by surprise. The RBI should have sent a far stronger signal of growth while understandably, it waits to see the effects of the recent policy moves of reduction in CRR and repo rates before the next round of reduction," Ficci President Rajeev Chandrasekhar said.

The chamber said the credit policy has been framed keeping in mind the 7 per cent inflation target for the current fiscal. "At the present juncture the need, however, was to give some critical boost to growth by pushing more credit to the productive sectors," it said. There is a need to cut the CRR by another 200 basis points and repo rate by 50 basis.

The apex bank had in the last two weeks reduced CRR by 2.5 per cent and short term lending rate by 1 per cent.
Industry body CII, however, said given that the RBI has already announced several measures over the past weeks to deal with the effects of the global financial crisis, the chamber understands that today's policy is on the expected lines.

"The fundamentals of the economy are strong and the RBI has done well to stress that India's financial sector remains stable and healthy," CII Director General Chandrajit Banerjee said. The policy statement clarifies that the RBI would continue to focus on financial stability.

Assocham President Sajjan Jindal, said though the apex bank has been constantly reviewing the monetary development in the wake of current downturn, it should have reduced the repo rate by 100 basis points and brought down CRR at 6 per cent.

The RBI should urgently create a mechanism for weekly monitoring of banks lending to ensure smooth extension of finances to Indian Inc, Jindal said. Expressing disappointment, PHD Chamber President L K Malhotra said the RBI did not consider adding further liquidity into the banking system by reducing CRR.

The chamber has asked the RBI to keep vigil on the monetary situation to ensure adequate flow of credit at affordable cost to various sectors of the economy. President of exporters body FIEO Ganesh Kumar Gupta said that measures such as enhancing remittances to 3,00,000 dollar for imports (from the existing limit of 1,00,000 dollar) for overseas
suppliers and increasing limit for advance remittance for imports both for goods and services to 50,00,000 dollar without bank guarantee\stand by letter of credit are positive and would help the MSME sector.

 Britain's economy shrank for the first time in 16 years between July and September, official figures showed Friday.

The country's economic output declined by 0.5 percent last quarter, according to Britain's Office for National Statistics.

It was the first time since 1992 that Britain's economy has contracted, and the fall was greater than analysts' prediction of a 0.2 percent drop.

The figures put Britain halfway into a technical recession _ defined as two or more consecutive quarters of negative economic growth.

Earlier this week, British Prime Minister Gordon Brown and Bank of England Governor Mervyn King said that they believed the country was heading for a recession.

The news that Britain is officially on the brink of recession will increase expectations that the Bank of England will the cut its interest rate from the current 4.5 percent to stimulate spending.

Russia's largest retail bank Sberbank wants to shed up to 70,000 jobs, a quarter of its workforce, the Kommersant daily reported Friday, cit
ing a plan approved by the bank's board this week.

"As indicated in the documents from Sberbank, if in 2007 the bank employed about 270,000 people, then by 2013 the number of employees will not exceed 200,000-220,000," the newspaper said.

In Mumbai,Dalal Street's Friday fury today shrunk the billion-dollar companies' club to sub-100 in size as the benchmark Sensex crashed by over 1,000 
points and the rupee hit its record low of 50-per-dollar. At the end of today's trading, when the Sensex fell to its lowest level in about three years, there were just about 90 companies with a market capitalisation of at least one billion dollar. The benchmark stock index futures on Thursday slightly widened its discount to the spot market on unwinding of long positions and as short poistions were rolled over to the next month, analysts said.
Giants of the auto, airline and technology industries ordered emergency action against the global financial crisis on Friday as shares took a new hammering amid mounting gloom.

Even a 1.5 million barrel a day production cut by OPEC failed to stop oil prices falling amid fears of a deep global recession.

Grim news backing those fears came from around the world.

Asian leaders agreed to set up an 80-billion-dollar war fund to fight what ex-US Federal Reserve chief Alan Greenspan called a "once-in-a-century credit tsunami".

French auto giants PSA Peugeot-Citroen and Renault ordered huge production cuts, while Japan's hi-tech giant Sony Corp. and Europe's biggest airline Air France-KLM issued a grim earnings and profits warnings.

In Britain, official figures confirmed the country is about to enter a recession while Turkey's central bank took action to strengthen bank liquidity and prop up the slumping currency.

The combined impact sent shares tumbling in both Asia and Europe after overnight falls in Wall Street.

Japan's Nikkei index plunged 9.60 percent, ending below the key 8,000-point level for the first time in more than five years, and Hong Kong fell 8.3 percent.

French shares plummeted 10.62 percent in morning trade to their lowest point in over five years before rallying slightly while Frankfurt's DAX 30 index slumped 10.13 percent and London's FTSE 100 index by more than nine percent.
Technology giant Sony, a bellwether of corporate Japan, saw its shares plunge more than 11 percent after forecasting net profit of 150 billion yen (1.55 billion dollars) for the year to March, down 59 percent on last year.

South Korea's Samsung Electronics, the world's largest memory chip maker, also reported a 44 percent fall in third-quarter net profit.

Air France-KLM suffered a near nine-percent drop in its share price after acknowledging it would be "very difficult" to meet its billion-euro (1.28-billion-dollar) earnings target.

Europe's biggest airline unveiled a plan to cut costs by up to 1.2 billion euros (1.53 billion dollars) over the next five years.

The suffering extended to the auto industry with Renault ordering almost all French plants closed for at least one week and shorter shutdowns in Turkey, Russia and Slovenia.

PSA Peugeot-Citroen chairman Christian Strieff said he had had ordered "massive" production cuts as the group forecast a 17-percent fall in car sales in Western Europe in the fourth quarter.

Company officials confirmed that the slowdown would amount to a 30 percent production cut and that plants in France would lose between two and 16 days of work each in the last three months of 2008.

There would also be cut-backs at Peugeot's sites in Madrid and Vigo in Spain and at Trnava, in Slovakia, they said.

ArcelorMittal, the world's biggest steel producer, also called a temporary halt to production in France, Germany and Belgium, according to union chiefs after a meeting with management.

The political capital appears to be thinking ahead of the financial capital, and the market is paying a price. In a world inundated wit h news of downgrades and defaults, finance minister P Chidambaram’s statement on Thursday that FIIs have been told to reverse transactions where they have lent stocks to offshore entities came like a strong, sweeping step that could push up stock prices by driving foreign portfolio managers to buy back the shares. The political capital appears to be thinking ahead of the financial capital, and the market is paying a price. In a world inundated wit
h news of downgrades and defaults, finance minister P Chidambaram’s statement on Thursday that FIIs have been told to reverse transactions where they have lent stocks to offshore entities came like a strong, sweeping step that could push up stock prices by driving foreign portfolio managers to buy back the shares.

But the euphoria was short-lived: for a while the Sensex jumped back into green but soon began to slide. Many who interpreted the statement as a government diktat on reversal of all outstanding positions were in for a shock when a finance ministry official clarified in the evening that only shares lent post October 20 will have to be reversed. But the euphoria was short-lived: for a while the Sensex jumped back into green but soon began to slide. Many who interpreted the statement as a government diktat on reversal of all outstanding positions were in for a shock when a finance ministry official clarified in the evening that only shares lent post October 20 will have to be reversed.


Wall Street joined world stock markets in a precipitous plunge Friday, with the Dow Jones industrials dropping more than 400 points in the opening minutes of trading. The growing belief that the world will suffer a punishing economic recession has investors furiously dumping stocks. The massive decline was caused by increasingly grim news from overseas. In Japan, shares of Sony sank more than 14 percent after it slashed its earnings forecast for the fiscal year. In Germany, Daimler's stock dropped 11.4 percent in morning trading after it reported lower third-quarter earnings and abandoned its 2008 profit and revenue guidance. Japan's Nikkei stock average fell a staggering 9.60 percent. In Europe, Germany's benchmark DAX index was down 10.76 percent, France's CAC40 dropped 10 percent while Britain's FTSE 100 sank 8.67 percent after the government said its gross domestic product fell 0.5 percent in the third quarter, putting the country on the brink of recession. The dour outlook convinced investors that the world economy is headed for a long and severe downturn despite a raft of government rescue efforts aimed at pulling the financial system from the brink. It also indicated that the tremors caused by the global credit crisis may have only begun to be felt in their true scope and magnitude.

 

The Reserve Bank of India kept its key lending rate steady at 8.0 per cent as expected on Friday, to gauge the impact of a hefty, surprise cut earlier this week to cushion the economy from the global financial crisis.

The stock market bled heavily as investors on Friday hammered banking, realty and oil and gas stocks, pushing the benchmark Sensex down by about 1,100 points to 8,701.07 points. The markets which opened weak had a free fall soon after the Reserve Bank unveiled its mid-term review of the annual credit policy, without any changes in key policy rates. The 1,071-points plunge in Sensex today is the steepest in any single trading session after a 1408 (rpt) 1,408 points drop on January 21, this year and has pushed the index to its lowest in about three years despite the continuing pep talk from Finance Minister P Chidambaram and host of measures by RBI to prop up the markets.

Fearing more carnage in world equity markets, big hedge funds and other institutional investors have been pulling out their money en masse in a bid to reduce risk and raise cash — a process known as deleveraging that only intensifies the selling. Meanwhile, individual investors that have seen their holdings decimated in recent weeks have been yanking money out of mutual funds, adding to the downward pressure on markets

Meanwhile,US Presidential hopeful Barack Obama, already leading Republican rival John McCain in opinion polls, got a major boost to his campaign with the influential 'New York Times' newspaper lending its endorsement to the Democrat, commending him for possessing ‘a cool head’ and ‘sound judgement’.
Contending that Obama was better placed to deal with deteriorating economy and sensitive world problems, including wars in Iraq and Afghanistan, the newspaper said he was also likely to engineer sound alliances at international and national levels.


The RBI also left the cash reserve ratio, the amount of funds that banks have to keep on deposit with it, unchanged at 6.5 per cent, but lowered its 2008/09 growth forecast to 7.5 to 8.0 per cent from a previous forecast of around 8.0 per cent.

It said the current challenge was to strike an "optimal balance" between preserving financial stability, price stability, anchoring inflation expectations and sustaining growth.

"To manage this challenge the central bank has deployed and will continue to deploy both conventional and unconventional tools," it said.

The central bank already cut the repo rate, at which it infuses cash into the banking system, for the first time in more than four years on Monday, as part of a slew of steps by the authorities to shore up confidence as global recession fears grip investors worldwide.

On Friday it left the reverse repo rate, the rate at which it absorbs excess cash from banks, steady at 6.0 per cent. The bank rate remained at 6.0 per cent.

A Reuters poll of analysts this week suggested the central bank was expected to hold key rates unchanged at its policy review. Eleven out of 12 economists polled expected no change in the repo rate after Monday's cut. Other key rates were also forecast to be left unchanged.


Realty sector stocks suffered the worst, with the group as a whole shaving off nearly a quarter of its wealth, followed by oil and gas, banks and metal stocks.

With all the blue chips ending in red, realty giant Unitech suffered erosion of more than half of its market capitalisation with its shares plunging by Rs 31.75 to settle at Rs 61.80.

According to BSE data, there was only one gainer in A-group shares and that too a public sector entity -- Container Corporation that recorded a meagre 45 paise increase to close at Rs 706.55.

The downhill journey caused by investor skepticism was rushed further by the global meltdown and more so by the plunge witnessed in east Asian bourses this morning. Over 350 companies plunged to their lowest levels.

The key index touched the day's low of 8,556.82 as funds remained aggressive sellers influenced by a weakening global trend.

Similarly, the wide-based National Stock Exchange index Nifty also broke the crucial 2600 points level by ending at 2584.00, showing a hefty loss of 359.15. It touched the day's low of 2525.05 points.

The lowering of economic growth projection by RBI to 7.5-8 per cent also eroded investors confidence. Finance Minister P Chidambaram, who has been advising stock market investors to take informed decision and not to resort to panic sales, said that RBI's decision not to disturb rates was in line with expectations.

RBI would add more liquidity as and when needed, he said.

Realty sector index suffered the most by losing 562.31 points, or 24

Indian banks face rising bad debts, funding squeeze

Indian banks may be relatively sheltered from the direct impact of global credit turmoil, but they are fighting rising loan defaults amid a 
liquidity crunch that could hit profits. Leading private sector bank ICICI Bank has so far borne the brunt of investor concerns about its exposure to the financial crisis, repeatedly stressing it was solvent and deposits were safe since Lehman Brothers filed for bankruptcy protection in mid-September.

While bad debts are expected to rise in coming months, authorities from the prime minister down have declared Indian banks to be safe. In September, the central bank put out a statement saying ICICI was well capitalised as customers in some parts of the country queued to withdraw deposits. But ICICI's shares have still lost 70 percent of their value so far this year as investors fear the worst.

"If a bank faces a liquidity crunch, it is serious trouble. Some of the overseas institutions fell not because they did not have assets but because they did not have liquidity to fund the assets," said A.K. Purwar, a former chairman of State Bank of India, India's largest bank. "In India, despite the mandatory requirements, it has happened so many times before."

On Monday, top Indian lender State Bank of India is expected to post a 16 percent profit rise on solid loan growth, while ICICI is likely to report earnings slipped for the second consecutive quarter. But all eyes will be on ICICI's exposure to bonds linked to Lehman and other soured credit.

India's banking system is dominated by government-run banks -- they account for about 70 percent of assets and liabilities -- and all banks have to hold nearly one-third of their deposits in government bonds and as cash reserves with the central bank.

Since 1969, India has not allowed a bank to collapse, merging at least two dozen troubled lenders with stronger, mostly state-run banks, according to the central bank. And Indian banks' total exposure to failed Western banks amounted to $1 bn, a fraction of their total loan book of $510 bn at end September, according to central bank data.

"Indian banks do face headwinds, though it is not a worrying or dire situation now," said Ritesh Maheswari, senior director of Asia Financial Institutions Ratings at Standard & Poor's in Singapore. "But if the credit crisis is prolonged it could have limited liquidity constraints on Indian banks and many others in the region will also face similar issues."

CREDIT EXPLOSION Indian banks had outstanding loans of 25.4 trillion rupees ($510 bn) and total deposits of 34.4 trillion rupees ($690 bn) at end-September, according to central bank data. In the three fiscal years ending March 2008, banks' lending grew at annual rates of around 30 percent. That has slowed to around 25 percent, but still remains above the central bank's prefered rate of 20 percent in 2008/09 (April/March).

Retail loans, mortgages, credit cards, auto and consumer durable loans, which were among the fastest-growing segments, are now likely to be major risk areas as bad debts are expected to rise to 4 percent of advances by March 2009, said rating agency CRISIL, a unit of Standard & Poor's. Loans for housing and stock investments also mushroomed in recent years, helped by booming economic growth. But interest rates have risen, the stock market has plunged by more than half this year and the property market has turned down.

Five banking analysts expect net new bad loans at Indian banks to grow on average by close to 3 percent in the current financial year and next, leading to higher provisions, lower profits and less money to lend. In a September report, Morgan Stanley and Oliver Wyman forecast defaults would peak over the next 12-24 months and overall provisioning costs would more than triple to 750 bn rupees from 200 bn rupees in 2008.

ICICI Bank and Axis Bank were among the most leveraged Asian banks that were exposed to a turn in the credit cycle, Morgan Stanley said in a separate report last month. "Korea, Australia and India are at top of the heap. These are countries where economic slowdown can have a big impact on asset quality and hence earnings at banks," the report said. Analysts rank state-run banks with a strong deposit base and second-biggest private-sector bank HDFC Bank among the best suited to weather the storm.

LIQUIDITY PROBLEMS A lack of liquidity has forced some banks to borrow at interest rates of 20 percent or more and frozen local money markets, prompting policy makers to unveil a slew of measures to boost lending activities. The central has slashed reserve requirements, cut interest rates and pumped extra cash into markets to keep credit flowing. Analysts say with the global credit markets virtually shut for local firms, the scramble for bank credit will rise, pushing up interest rates and worsen asset banks' asset quality.

V. Leeladhar, deputy governor at the Reserve Bank of India, said it was difficult to categorically give all banks a clean bill of health during such times, but added Indian banks were mostly well equipped to face the fallout of the global crisis. "I think nobody will be able to give you a certificate saying which banks are sound at such a time because we don't know which bank will be affected next," he said earlier this month. "Today it could be a strong bank, but tomorrow it could be bought down to its knees."

'Tortured' by Left, Somnath ready to quit
 Feeling 'tortured' by the Left parties' repeated "questioning" of his decisions, Lok Sabha Speaker Somnath Chatterjee on Friday threatened to step down "here and now" as a protest against "insult" to the Chair.

Maintaining that it was “unfair” on part of Speaker Somnath Chatterjee to hold that the Left was targeting him, the CPI(M) on Friday said they had never “violated” any of his rulings or directives though there could have been differences in approach.Comments by senior CPI(M) leaders came a few hours after the Speaker said in Lok Sabha that he felt “tortured” by the Left’s repeated “questioning” of his decisions and threatened to step down as a protest against “insult” to the Chair.

“In a parliamentary democracy, there will always be disputes over the rulings of the Chair. It is not important that there are disputes, but whether the rulings have been violated or accepted. We have always followed the rulings of the Speaker,” Politburo member Sitaram Yechury told reporters in response to a spate of questions on the issue.

Asked whether the CPI(M) members were “needling” the Speaker, Yechury’s party colleague Rupchand Pal said “we have never done this. We have very good personal relations with him and we would appeal (to him) not to take it personally. Don’t be too harsh on us.” CPI(M) leaders had on Thursday charged Chatterjee with discriminating against his former party colleagues, one of whom, A P Abdullakutty, was suspended from Lok Sabha on Wednesday for waving a paper in the House.


The Speaker vent his unhappiness when CPI(M) leader Basudeb Acharia, while initiating a debate on anti-Christian violence in Orissa and Karnataka, said that for the last four days he had been pressing for a discussion on the important issue through an Adjournment Motion but it was not allowed.

"I have been giving notices for Adjournment Motion," the CPI(M) leader said and wondered why it was not allowed.

Angered by this, Chatterjee said "I also tried to hear what you raised. Let us not go into the past. I also have issues to raise. You have sufficiently provoked me and I have kept silent."

Chatterjee said a "new culture" had emerged in the House wherein the members "go on questioning" the Speaker's ruling.

As Acharia pointed out that this issue was not discussed, the Speaker commented: "This is most unfortunate. I will show you video clippings. Say where it (the discussion) could have been allowed."

CPI leader Gurudas Dasgupta got up with the Rule Book to identify provisions under which the discussion could have been allowed.

At this, Chatterjee said Rule 60 sub clause (1) provided for consent by the Speaker and he was not bound to give it.

Crisis forces French car groups into 'massive' production cuts

French car groups PSA Peugeot-Citroen and Renault on Friday ordered major production cuts and European truck makers reported a collapse in or
ders caused by the spread of the financial crisis.

Renault said it has ordered the temporary closure of plants of nearly French plants and some abroad, while Peugeot ordered "massive" production cuts in the fourth quarter because of a drastic fall in car sales.

Renault has ordered the closure of nearly all its French factories for one or two weeks from next week, the company said. The CGT union has organised protests outside at least one plant.

A Renault spokesman said production would be halted for between one and four days at Bursa in Turkey, a Moscow plant and at Novo Mesto in Slovenia.

"We are in a period when, without doubt, markets are collapsing and to avoid a brutal degradation in the company's situation, we have to manage stocks in an extremely tight way," said the spokesman, insisting the closures are temporary.

The firm has already announced 4,900 job cuts and said Thursday that production would be cut 20 percent in the final three months of the year because of falling sales.

Renault said that if conditions did not worsen further it still expected a slight rise in the group's sales over 2007.

Peugeot chairman Christian Streiff said in a statement the group had been forced to "react very quickly" to the crisis and take "exceptional measures" to reduce production which would undoubtedly hit 2008 profits.

"The production cuts will be massive in the fourth quarter because it is essential that the group is in a good position to face the year 2009," Streiff said without out giving details of the cuts.

Peugeot forecast a 17-percent fall in car sales in Western Europe in the fourth quarter and eight percent for the whole year. The group said its own sales would fall about 3.5 percent after earlier predicting a 5.0 percent rise.

With truck sales a key indicator of the health of the economy, Swedish maker Scania said orders in western Europe fell 69 percent in the third quarter and rival Volvo said it had seen a 55 percent fall in another sign of a looming global recession.

Volvo chief executive Leif Johansson said that after record sales and profits in the first two quarters, demand for heavy trucks had slowed far faster than expected because of the impact of the global crisis.

Demand was weak in the company's main market in Europe, and also in Japan, and signs were emerging that the economic climate was weakening in other parts of the world.

It said truck orders had fallen 41 percent overall -- with Western Europe down 69 percent and Eastern Europe, a growth market, falling 45 percent.

Scania chairman Lief Ostling said in a statement that even orders in Russia had fallen. The European auto and truck market has been badly hit by the crisis with Opel of Germany and Fiat of Italy already announcing thousands of temporary layoffs.

Ferdinand Piech, chairman of Volkswagen, Europe's biggest carmaker, said this week that: "The financial crisis is working like a turbo. No one can say when we will come out of this valley. But we should prepare ourselves for a dry spell."

ITT cuts jobs, lowers outlook as economy sours

 Diversified manufacturer ITT Corp scaled back its full-year earnings and revenue forecast on Friday as it plans to cut jobs and ramp up its
restructuring in the face of a souring economy and unfavorable exchange rates. The company, which has been selling off slower-growing units to focus on its water treatment, defense and motion control businesses, said it would spend $48 million more than it expected this year, mostly on job reduction, as it accelerates efforts to reshape itself.

ITT joins a growing list of US companies scaling down employment as they brace for a recession, including Wall Street giant Goldman Sachs, carmaker Chrysler, drugmaker Merck & Co and soft drinks company PepsiCo Inc. Because of the extra restructuring costs, ITT cut its full-year earnings forecast to a range of $3.97 to $4.03 per share, from its previous outlook of $4.11 to $4.17.

Wall Street was expecting $4.17, on average, according to Reuters Estimates. The company, which makes a range of pumps, filters and military electronics, also cut its full-year revenue forecast by $100 million to a range of $11.5 billion to $11.6 billion due to currency exchange levels. ITT, which sells many of its products overseas, has suffered from the recent rise in the value of the US dollar.

That sharp rise has also hurt other manufacturing conglomerates with big overseas markets, such as General Electric Co, United Technologies Corp and Honeywell International Inc. "We are preparing for projected softening of the global economy," ITT Chief Executive Steve Loranger said in a statement.


The company plans to reduce head count at its U.S. and European operations, but gave no details. Shares of ITT fell 8 percent to a four-year low of $38.07 in early trade on the New York Stock Exchange. Also on Friday, the White Plains, New York-based company reported third-quarter earnings of $1.12 per share from continuing operations, excluding one-time items. That beat analysts' average estimate of $1.06. Sales rose 32 percent to $2.9 billion. 
 
 



NDA nearly sold off Air India: Patel


Accusing the previous NDA Government of nearly selling off national carrier Air India, Civil Aviation minister Praful Patel today said the UPA has made aviation a ‘sunrise sector’.
Replying to the discussion on the Airports Economic Regulatory Authority of India Bill 2007, which was passed by Parliament, Patel lashed out at his predecessor Rajiv Pratap Rudy, saying though he spoke passionately about upholding the significance of Air India, "it was in fact during the NDA regime that tenders had been issued for selling it off ....there was a bid by Tata-Singapore for it".


He said it was also during NDA rule "that Air India lost out to competition as it was not allowed to buy new carriers".


The Minister also expressed surprise over Rudy's remark that there was a "cartelisation of Air India-Jet-Sahara". He said had this been the case then the national carrier would also have been levying congestion charges on passengers.


Patel said the UPA government has not only upheld the dignity of Air India, but it also provided passengers with "so much to choose from" with the presence of several low-cost airlines. "This has also led to the high growth in the aviation sector," the Minister said.


Promising to adhere to the suggestions of the Standing Committee on Transport, he said the Ministry will take care of the interests of the employees of airlines.



92.6% of bank deposits fully protected: Govt


 Government said that 92.6 per cent bank deposits are fully protected under the Deposit and Insurance and Credit Guarantee scheme.
"As at the end of March 2008, fully protected deposits accounts constituted 92.6 per cent of total number of deposit accounts," Minister of State for Finance Pawan Kumar Bansal said in a written reply in the Lok Sabha.


He, however, ruled out the possibility of formulating any special law to protect the interests of depositors in the financial institutions. He added that the Deposit and Insurance and Credit Gurantee Corporation (DICGC) extends insurance cover to small investors in the banking system of the country.


Deposit insurance is compulsory for all banks in the country and the Deposit Insurance Scheme covers all commercial banks including local area banks, regional rural banks, co-operative banks and private banks across the country, he said.


He said that in the event of liquidation, reconstruction, amalgamation of an insured bank, every depositor is entitled to repayment of his deposit up to Rs one lakh.


Credit policy on expected lines: FM


Finance Minister P Chidambaram on Friday said the mid-term review of Reserve Bank's credit Policy was on expected lines and the central bank would take radical steps to deal with the emerging situation.
"RBI will continue to deploy both conventional and unconventional tools. We cannot rely only on conventional measures but we will have to adopt unconventional or unorthodox measures," he said while welcoming the steps taken by the RBI.


He further said that the RBI has not touched the repo rate, reverse repo rate or the bank rate or the cash reserve ratio and "this is along the expected lines."


The central bank will infuse more liquidity if necessary, he said, adding that RBI will continue to use the Liquidity Adjustment Facility window with flexibility.


RBI, he said, had taken a number of steps between October 6 and October 20 to inject liquidity into the system to deal with the credit crunch.


The central bank had reduced the mandatory deposits that banks keep with RBI by 250 basis points unlocking a whopping Rs 1,00,000 crore into the cash-starved banking system.


Besides, it has also slashed the short term lending (repo) rate by one per cent signaling softening of interest rates.


Volvo announces 850 job cuts in construction equip unit


Swedish heavy vehicles maker Volvo has announced 850 job cuts in its construction equipment unit following a decline in demand for the produ
cts globally.


"The actions we are taking now are needed in order to adjust production capacity to declining demand and to ensure that the company is coming out stronger from this downturn," Volvo Construction Equipment President, Hauler Loader Business Line, Yngve Rosn said in a statement.


Earlier, Volvo Construction Equipment had slashed 500 jobs in Sweden and now will show pink slips to additional 850 employees.


"It is estimated that out of the additional 850 employees that has now been given notice within Volvo CE in Sweden, approximately 10 per cent are white collars and the rest are blue collars," the statement added.


All Volvo Construction Equipment's locations in Sweden have been affected and negotiations with unions have immediately started.


The statement said that global slowdown in construction equipment market, which started in North America during last year, has now spread to Europe.



BJP, RSS back Hindu Jagran Manch, allege conspiracy
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Express news service
Posted: Oct 24, 2008 at 1118 hrs IST


New Delhi, October 23: On a day when various non-BJP parties demanded action against the Hindu Jagran Manch and other Hindutva organisations alleged to have a hand in the Malegaon blasts, the BJP slammed the “non-BJP forces” for “dragging the name of nationalist organisations in the terror attack” while the RSS smelt a “political conspiracy” in the whole episode.
BJP general secretary Vinay Katiyar alleged that politics was behind the allegations and demanded a CBI inquiry into the episode. “This is an old case. It’s only due to the approaching elections that such allegations are being levelled. Let the accused be arrested, and let there be a CBI inquiry into the whole episode,” said Katiyar.


The RSS, on the other hand, said there was a “conspiracy to malign Hindu organisations”. “The charges against Hindu organstions are utterly false and malicious. Violence and blasts must be condemned. But we also condemn the project to malign various Hindu organisations,” said former RSS spokesperson Ram Madhav.


On the alleged involvement of a former ABVP national executive member in the Malegaon blasts, Ram Madhav said: “None of our functionaries will ever be involved in such activities. We want investigating agencies to investigate and punish the culprit.”


Maharashtra BJP general secretary Vinod Tawde, on the other hand, saw the hand of the Sharad Pawar-R R Patil duo behind the controversy. “The argument that the RSS, the ABVP and other nationalist orgnaisations could be involved in the blasts is yet another attempt to appease the Muslims. The Congress-NCP combine, especially the Sharad Pawar-R R Patil duo here, have been making attempts to drag the name of nationalist orgnaistions in terror blasts,” he said.


Tawde, who was active in the ABVP before joining the BJP, told The Indian Express: “The Congress and the NCP are ruling both the Centre and Maharashtra. What are they waiting for if they have any proof to establish the role of nationalist organisations’ hand in the blasts?”



In Delhi, BJP vice-president Mukhtar Abbas Naqvi said the parties alleging the involvement of Hindu groups in the Malegaon blasts lacked “any credibility whatsoever”. “These are the same parties which have been proudly protecting the SIMI. They have no legitimacy and credibility in the eyes of the people,” he said.


http://www.expressindia.com/latest-news/BJP-RSS-back-Hindu-Jagran-Manch-allege-conspiracy/377266/



Maya vs Rahul: No auditorium, Rahul meets students in cafe


After Congress President, it was the turn of her son Rahul Gandhi to be targeted by Uttar Pradesh Chief Minister Mayawati when the administration of a university in Kanpur cancelled a scheduled interaction with students in its auditorium.
Almost a fortnight after the controversy over the Mayawati government cancelling the allotment of land for construction of a rail coach factory in Sonia's constituency in Rae Bareli, the gates of the auditorium in the Chandrashekhar Azad University were locked when Rahul arrived in Kanpur on Friday for the interaction with students.


UPCC President Rita Bahunguna Joshi alleged that the Chief Minister had exerted pressure on the University Vice Chancellor to get the function cancelled. She said the administration had withdrawn all security for the leader.


But an unfazed Rahul kept his date with the students holding an interactive session with them in the cafeteria.


Immediately after landing at the airport, Gandhi drove to the university auditorium and after finding it locked he walked down a kilometre to the cafeteria with students to have an interaction with them.


The SPG security personnel protecting Gandhi had a tough time controlling the over-enthusiastic students. When they pushed some students to check them, Gandhi came to their rescue and instructed SPG men not to prevent the students reaching him.


Sensex crosses record 16 milestones in a year
Mumbai (PTI): With the Sensex plunging below 9,000-point mark on Friday, the benchmark index has passed through a record 16 milestones of 1,000 points each in the past one year -- but as many as 13 of them were on the path downhill.


A year ago, the Sensex stood at 18,512.91 points on October 24, 2007, from where it has more than halved to slip below 9,000-point mark for the first time in about two and half years.


In the past one year, the Sensex scaled three milestones of 1,000 points -- from 19,000 points to 21,000 points between November last year and January this year -- but there after it has breached 13 thousand-point marks till now.


Last year, in the Mahurat trading on Diwali had been trading just below the 19,000 levels after which the index climbed two 1,000-point milestones to 21,000 on January 10, 2008.


However, after the peak the index started losing its grip which has seen it plummeting to 8,000 levels today -- falling by 13 milestones of 1,000 points.


The index has seen these levels two and a half years earlier on June 14, 2006, when the Sensex had slipped to 8,929.44 points. But it had made a sharp recovery and scaled the psychological 9,000 and 10,000 levels within a short span of six trading sessions in 2006.


Market analysts believe the bellwether index may see further downward 1000-points milestones till the end of this year as they expect Sensex to fall even below the 8,000 levels.


Dollar falls to 95.32 yen, lowest in 13 years
TOKYO (AP): The U.S. dollar has fallen to its lowest level against the Japanese yen in 13 years.


In afternoon trading in Tokyo Friday, the dollar sank as low as 95.32 yen.


Traders said the dollar is being pressured on worries about a recession in the U.S. economy amid the unfolding financial crisis.


Dollar-selling also intensified amid speculation that the Federal Reserve would cut interest rates again to shore up the sagging U.S. economy.


A strong yen hurts Japanese exporters by eroding their overseas earnings when converted back to yen.


RBI deputy: lower oil "beneficial" for BoP
Fri Oct 24, 2008 8:32pm IST  Email | Print | Share| Single Page[-] Text [+] MUMBAI (Reuters) - The Reserve Bank of India (RBI) has a cushion to manage government borrowing while lower global crude prices will have a "beneficial" effect on the balance of payments, a deputy governor said on Friday.


"We have a cushion for managing for the government borrowing. I have the cushion of MSS (market stabilisation scheme)," Rakesh Mohan told reporters.


He also said the real effective exchange rate of the rupee , which slumped to a record low of 50.15 per dollar on Friday, was not very different from what it was in 2004/05.
Dow Closes Up 172 Points
Forbes - 20 hours ago
After a roller-coaster session on Wall Street, the Dow Jones industrial average swung to a 172-point gain Thursday. In a day of dramatic swings, the index fell nearly 300 points at one point.
Wall Street plunges amid global meltdown ABC Online
Stocks head for sharp decline on recession fears WOI



Short-sale can cushion dramatic fall in prices



24 Oct, 2008, 0740 hrs IST,Sandeep Parekh, TNN


Short selling is one of the most misunderstood acts in the stock market. It is therefore blamed for everything from assassinations to creation of financial market crises. In the past few months several countries have restricted or banned short selling—almost invariably with unintended and harmful consequences.


Short selling is a simple act—that of selling before buying stock. This is possible by borrowing stocks which are then sold short. Like all borrowings, these stocks must be returned by buying them subsequently from the market. If on such later date, the price is lower, the short seller makes money and if they are higher, the short seller loses money. Because of the additional sale pressure, at the time of the initial sale, the market prices of such stocks fall. As regulators do not like falling prices, they dislike short sellers.


However, this is a myopic view of short selling, because there are two benefits of short selling which not only make markets more efficient, but also cushion a dramatic fall in prices.


First, the efficiency argument. It has been seen time and again that short selling punctures market bubbles. Thus when there is excess exuberance, short sellers bring prices back to earth. This enables prices to more closely reflect reality. In the absence of an efficient market for shorting , asset bubbles like the one we are seeing deflated, actually bursts. Regulators have no problem with inefficient markets so long as they are going up, bubble creation be damned.


Second, as explained above, every short position must be reversed by purchasing from the market. Thus even in times like the present, any immediate fall in the prices is followed by a cushion of purchases (called “short covering’ ’ in market jargon) so that prices do not fall beyond a particular level. Take away the right to short and you will see a more dramatic fall in prices without a bottom as people will still sell their current holding.


The above arguments are supported by extensive data, some as recent as a few weeks back, examining recent bans in the US.


The recent move by SEBI outlawing or restricting short selling is therefore deeply disturbing not just from an economics viewpoint, but also from a market fall perspective. If we think we can become prettier by breaking the mirror, we will not only not be prettier, we’ll get some shrapnel of broken glass too.


(Courtesy: Timesofindia.com)


Rupee, shares punished; markets look to RBI



23 Oct, 2008, 1630 hrs IST, REUTERS


MUMBAI/NEW DELHI: The rupee fell to a record low and shares dipped to their weakest levels in more than two years on Thursday as a global rout of equities washed through India's markets.


All eyes were on a Reserve Bank of India (RBI) rate review on Friday, although few market watchers expected another rate cut so soon after it slashed the key lending rate by 100 basis points to 8.0 percent this week as policy makers joined central banks and governments across the world in fretting about slowing growth at home and abroad.


India's annual inflation rate is still in the double digits but data on Thursday showed it is at least declining, allowing authorities to focus on maintaining expansion and liquidity to weather the global turmoil instead of price stability.


And the oil minister offered the prospect soon of a possible cut in government-set fuel prices to ease the burden on consumers ahead of key state elections in the next two months.


"Relaxation in the monetary policy as was witnessed in the recent past are in line with the softening trend in inflation," said Indranil Pan, chief economist at Kotak Mahindra Bank.


The wholesale price index, the country's most widely watched inflation measure, rose 11.07 percent in the 12 months to Oct. 11, below the previous week's annual rise of 11.44 percent.


Inflation peaked at 12.9 percent in August and Economic Affairs Secretary Ashok Chawla said the government expected inflation at 9.5-10 percent by the end of 2008.


US crude oil has fallen to about $67 a barrel from a record above $147 in July, putting pressure on India to cut the price of fuels still controlled by the government, after it raised them by about 10 percent in June.


Some politicians urged the government for a cut to help the common man, just as it helped ailing airlines by giving them six months to pay jet fuel dues in instalments. Oil Minister Murli Deora said it was watching the price of crude and would decide in a week if administered prices should fall.


US has plundered world wealth with dollar :China paper



24 Oct, 2008, 1254 hrs IST, REUTERS


BEIJING: The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take i
ts place, a leading Chinese state newspaper said on Friday.


The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.


A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.


The People's Daily is the official newspaper of China's ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.


Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.


"The grim reality has led people, amidst the panic, to realise that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.


Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.


"The U.S. dollar is losing people's confidence. The world, acting democratically and lawfully through a global financial organisation, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance," he wrote.


Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.


A two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries was set to open on Friday. Though few analysts expect much in the way of concrete agreements, Shi said it could prove momentous.


"How can Europe and Asia grasp each other's hands and together confront the once-in-a-century global financial crisis sparked by the U.S.; how can they construct a new equitable and safe international financial order?" he said.


"The world is waiting for this Asian-European meeting to achieve big results in financial cooperation."


stralia shares hit 4-year lows in Asian rout



24 Oct, 2008, 1151 hrs IST, REUTERS


MELBOURNE: Australian shares fell 2.6 per cent on Friday to close at four-year lows, joining a rout across Asian equity markets on worries that a li
kely global recession would slash company earnings.


The market quickly reversed an initial 1.1 per cent gain, helped by a late rally on Wall Street, as banking stocks slid and leading miners extended the week's steep falls on soft commodities prices.


Australia's benchmark S&P/ASX 200 index fell 105 points to 3,869.4, closing at its lowest level since November 2004 and extending heavy losses into a third day. For the week, stocks were down 2.5 per cent.


The index touched a low of 3,830.0, as shares in Tokyo slumped 7 percent and markets across the region braced for the prospects of widespread recession.


"Investors are looking at the earnings downgrades coming out of there. It has refocused people's attention on the two sides of the problem, the financial stresses and the slowing economy," said Eric Betts, equities strategist at Nomura Australia.


"Things won't improve until we can see across the valley of the economic slowdown and we get some sustained improvement in credit spreads."


Betts said further government interventions or central bank interest rate cuts would be needed to help stabilize markets.
New Zealand's benchmark NZX-50 index finished down 1.0 percent to 2,778.5. Banking and financial stocks sold off after holding firmer in recent days. National Australia Bank fell 3.1 percent and ANZ Banking Group was down 2.5 percent.


Shares in fund manager Perpetual slumped 6.8 per cent to A$43.00 after suspending redemptions in several of its funds, along with several other investment firms, to halt an exodus of cash into local banks covered by a government deposit guarantee.


Axa Asia Pacific, which also halted redemptions on an income fund, saw its shares fall 8.0 percent to A$4.14.


Leading miners Rio Tinto fell 4.3 per cent to A$64.10 and BHP lost 1.3 per cent to A$24.38, extending steep falls made on Thursday which had been prompted by a sharp slide in commodities prices.


Building materials maker Boral Ltd dropped 8.9 per cent to A$4.63 after the company said its full-year profit would be below last year's level, hurt by the U.S. home building slump.


In America Indian investors trust
Sensex cool to home heroics
VIVEK NAIR 
 
Mumbai, Oct. 23: The sensex now marches to the heartbeat of the Dow.


The American and Indian indices have formed a unique cardiac rhythm, rising and falling as part of a gigantic Mexican wave that has rumbled through global markets over the past two months, ripping pockets and reputations.


The global financial turmoil, which has deepened in the past two months, has seen local investors scramble every morning to see how the Dow fared the previous day — an obligatory ritual in an uncertain world where paper-wealth parvenus are at risk of turning into paupers.


“Some of my retail clients are now keeping tabs on the Dow Jones Industrial Average on an almost daily basis,” said one broker on Dalal Street, where the Bombay Stock Exchange is located.


“If the Dow slides, we catch the chills,” said one bemused analyst who felt that the market was ignoring the strong talk and the pump-priming measures announced by the finance ministry and the RBI in recent weeks.


On Thursday, for instance, the sensex opened with a gap-down of 486 points from the previous close, choosing to ignore the positive signal sent by the RBI late on Wednesday when it permitted companies to bring in up to $500 million of their external commercial borrowings. Gap-down is the difference between the index’s previous close and the following day’s opening.


At any other time, the sensex might have been expected to open strong on such news. But in the troubled times, it has tended to take its cue from the Dow, which plunged 5.7 per cent on the previous night.


Today, the sensex tumbled below the 10000-level to close at an over two-year low at 9771.70, a fall of 398.20 points, or 3.92 per cent.


This is not the first time the index has set its face against positive local factors. On October 16, it plunged over 524 points at the opening bell even though the RBI had injected Rs 40,000 crore into the financial system by trimming a key reserve ratio for banks.


Broker circles blamed Thursday’s crash on weak overseas markets, which have been spooked by fears of a recession. These markets have also seen poor corporate earnings with job cuts adding to the gloom.


“The correlation between our market and theirs is the highest in times of euphoria and deep despair,” says Arun Kejriwal, director at KRIS. “It is lowest when things are normal.”


Others believe that the Dow-sensex correlation is natural since the biggest investors in the Indian markets are the financial institutional investors (FIIs), most of whom are already heavily invested in the US markets.


Gaurav Dua, head of research at Sharekhan, says the FIIs had invested over $17 billion in Indian stocks last year and have pulled out $11 billion after the crisis exacerbated this year.


P. Phani Sekhar, fund manager at Angel Broking, agreed that the Dow-sensex correlation — which is arguably closer than any other Asian regional index — has been triggered by huge FII sales this year. He reckoned they were forced to sell stocks and get into money because of the turmoil in the US.


Sekhar also blamed Indian companies for failing to acknowledge the troubles early. “They were all in denial till now about a slowdown. But while announcing their quarterly results, they have started talking about a possible slowdown,” he added.


An analyst with a foreign brokerage said the slump should also be seen in the context of a perceived global economic slowdown.


“Strong Indian companies will also be affected by the slowdown. The current share prices are reflecting this anxiety,” he added.
 
http://www.telegraphindia.com/1081024/jsp/frontpage/story_10013287.jsp


Inside the firm, fear and fun
Thursday morning began with the sensex dipping below 10000 points. Samyabrata Ray Goswami spent a dog day afternoon, and a bit of the gloomy morning, inside a brokerage firm on Dalal Street to track the woes, and bouts of joy, of traders and their clients. The firm requested that its name not be published.


The smiles break out a little after 1pm as the sensex recovers 100 points following the morning freefall. One of the brokers, who had remained glued to the trading screen since 9.55am, cracks a few jokes, all centred around the original Big Bull. Harshad Mehta is no more, but he remains a hero to some and villain for others.


“Ajit to Robert: ‘Raabert, Harshad Mehta ka stool test karao. Pata toh chale ki yeh bull-s*** kya cheez hai.”’


Laughter rings out, but lasts only for a few seconds. The slide has begun again.


For most brokers, like Hariom Dave, Dalal Street has been a great leveller.


The 28-year-old stock dealer, employed with a small, family-run brokerage firm on the street that has seen many dreams, and mega-bucks, made and unmade, is now living through the other side of euphoria.


“I have only seen the good days at the markets. It is time for me to see the other side now. That’s what makes one gritty, builds strong nerves,” he says, climbing a paan-stained staircase leading to a grubby corridor that takes one to his three-room office.


Dave has been with the firm for over 10 years. His father worked here before him.


Inside, dealers sit staring at the trading terminals and mouth expletives as the Reliance Industries scrip takes a tumble — the company’s lowest since December 15, 2006. The behemoth is down to Rs 1215.25 from over Rs 3,000 in January.


Dave and most of his clients are worried but not Mohammed Hanif (64).


Hanif shoves a fellow client for a better look at the computer screen — spilling a cup of tea over his keyboard in the process — but seems nonplussed. The garment trader, who sets aside a small amount every month for investing, says he is disturbed but not nervous.


“I have been playing the markets for the last 40 years. I have seen upheavals. But eventually it will all pass. I look at the long term and invest prudently, not on the basis of rumours. I have stayed on with this firm since I first entered Dalal Street. I am not running away scared, because some people in the US have acted silly. My children are settled. Playing the markets is not a necessity for me,” says the veteran of many bourse battles.


Dave settles down at his seat and after peering at his terminal, starts making calls to clients, asking them whether they want to buy or sell Reliance shares.


Most advise him to hold on. Some even place “buy” orders.


As banking stocks start getting battered, Dave’s colleague Amrit puts his head down on his terminal briefly.


“I have some SBI shares, didn’t expect a 4.8 per cent drop,” he says, but is soon up taking calls from clients for sell orders.


“There is little time to mourn your losses while trading goes on. It is tough to handle other people’s money after having lost yours. But we do it every day,” says Dave, who, like Amrit and most of his colleagues, also takes trading calls for his personal stocks between client calls.


“In fact I make more from the markets, or used to make, than from commissions here,” says Dave, who leaves his home in the suburb of Vikhroli at 6 in the morning to reach BSE by 8.30.


They have a morning meeting before the markets open at 9.55.


“Once trading starts, it is a daze till the closing bell at 3.30pm. Lunch is after that,” says Dave.


But dry farsan — besan-based fried Gujarati snacks – and many cups of tea do the rounds in between.


The tension eases a bit around 1.15 as the market limps up 100 points. But the jubilation is short-lived as scrip after scrip starts taking a nosedive.


The phones ring incessantly as clients begin placing sell orders.


Then the index bottoms out for the day and stands still at 9771.70, down nearly 400 points.


The dealers stare at each other and quietly start stretching themselves.


Dave wipes the sweat that has collected on his forehead in spite of the air-conditioner.


Amrit gets up and goes out for a smoke in the corridor: it’s not public space, he argues.


Clients chatter, discussing the day with dealers, with many of whom they share over decade-long associations.


The curtain falls. The play is over.


“I am famished,” announces Amrit as he makes a re-entry. The stock tumble is behind him, at least for now.


The older dealers pull out their lunch boxes.


Amrit and Dave head downstairs for the numerous food stalls lining the street.


In an hour, post-trading work will resume as they don coats of relationship managers for the firm’s bigger clients and visit them to discuss the next day’s strategy.


“Because tomorrow is another day,” Dave says, Scarlett ’Hara style.
 
http://www.telegraphindia.com/1081024/jsp/frontpage/story_10013288.jsp


US infant mortality rate now worse than 28 other countries
By Patrick O’Connor
18 October 2008


A report issued Wednesday by the Centers for Disease Control and
Prevention (CDC) documents how the infant mortality rate in the United
States is growing in relation to other countries. The study, "Recent
Trends in Infant Mortality in the United States," found that at least
28 other countries now have lower death rates for infants in the first
year of life.


The US's relative position has declined steadily. In 1960, it had the
12th lowest infant mortality rate, but by 1990 had dropped to 23rd
place, and by 2004—the latest year of the CDC's comparative world
figures on living standards—the US ranked 29th. The most recent study,
published in July and titled "The Measure of America," estimated that
the US is now in 34th place.


The CDC report found that there was no improvement in the incidence of
US infant deaths between 2000 and 2005, a "plateau in the US infant
mortality rate represent[ing] the first period of sustained lack of
decline in the US infant mortality rate since the 1950s." This "has
generated concern among researchers and policy makers," the report
noted.


For the year 2000, the infant mortality rate was 6.89 per 1,000, a
rate that remained stagnant for five years before declining slightly
to 6.71 between 2005 and 2006.
The CDC noted: "The impact of child mortality is considerable: there
are more than 28,000 deaths to children under 1 year of age each year
in the United States."


Several countries in Scandinavia (Sweden, Norway, Finland) and East
Asia (Japan, Hong Kong, Singapore) have an infant mortality rate below
3.5, almost half the US rate. The CDC's 2004 rankings placed the US in
a tie with Poland and Slovakia, and only marginally ahead of Puerto
Rico and Chile. The US was behind every developed country in North
America, Western Europe, and Australasia, as well as Cuba, Hungary,
Israel, and the Czech Republic.


Infant mortality is a critical indicator of social progress. As the
CDC report explains, "Infant mortality is one of the most important
indicators of the health of a nation, as it is associated with a
variety of factors such as maternal health, quality and access to
medical care, socioeconomic conditions, and public health practices."


This decline in world rankings is another expression of US
capitalism's decay. The gutting of social programs by successive
Democrat and Republican administrations over the last four decades has
led to an extraordinary social reversion. A tiny layer at the top has
enriched itself through the dismantling of all impediments to the
accumulation of private wealth and corporate profit, supported by tax
cuts and the slashing of investment in critical social infrastructure.
That infant mortality rates are now stagnating for the first time in
five decades underscores the accelerating character of the social
crisis.


The CDC report documented the disparity of infant mortality rates
among racial classifications. "Non-Hispanic white," Latino, and Asian-
American children had lower than average rates, while "American Indian
or Alaskan Native," Puerto Rican, and "non-Hispanic black" families
had higher rates.


The report noted, however, that the "infant mortality rate did not
change significantly for any race/ethnicity group from 2000 to 2005."


In 2005, African-American infants suffered a death rate of 13.63 per
1,000 births, by far the highest average. The CDC's 2004 world
rankings indicate that a black American baby would have a better
chance of survival if born in Russia (which has a rate of 11.5) or
Bulgaria (11.7).


The CDC report did not assess infant mortality in relation to social
class or family income.


Another study released earlier this month, however, documented this
correlation. Published by the Robert Wood Johnson Foundation and
titled "America's Health Starts With Healthy Children: How do States
Compare?" the report found: "In almost every state, shortfalls in
health are greatest among children in the poorest or least-educated
households, but even middle-class children are less healthy than
children with greater advantages. Within each racial or ethnic group,
a steep income gradient is evident. Children's general health status
improves as family income increases."


It also reported: "Nationally, and in every state, infant mortality
rates increased with decreasing levels of mothers' education." The
mortality rate for children whose mothers had completed 16 or more
years of school was 4.2 deaths per 1,000 births, compared to 7.8
deaths for children whose mothers had completed 11 years or less of
school.


The failure to improve the infant death rate between 2000 and 2005
came despite significant advances in medical technology, including
care for prematurely born babies.


What the CDC termed "preterm birth"—i.e., those at less than 37 weeks
gestation—is a key risk factor for infant mortality. In 2005, 69
percent of all infant deaths occurred to preterm babies. The report
stated: "The plateau in the US infant mortality rate from 2000 to 2005
was largely due to the combina­tion of the increase in the percentage
of very preterm births and the lack of decline in the infant mortality
rate for these births."


Only those parents who can afford to pay for treatment can be sure
that their premature babies will receive the necessary care.
Similarly, many families are finding it increasingly difficult to
afford the advanced medical treatment which many infants require in
their first year. About 45 million Americans, or 15 percent of the
population, are now estimated to be without any form of health
insurance.


At every level, corporate control over the health care system distorts
and undermines the rational provision of medical services. Per capita
US health spending was $6,714 in 2006, more than twice the average of
other advanced countries. But this spending has failed to improve the
population's health. Infant mortality is one indication of this;
another is the extraordinary fact that 41 countries now have a longer
life expectancy than does the US.


Official per capita health spending figures are in fact misleading. If
the resources invested in genuine medical care and treatment were to
be calculated and compared, there is little doubt that the US would
rank far below many other countries. A substantial portion of
purported American health spending is simply siphoned off as profit by
the major health firms, insurance companies, and pharmaceutical
interests.


Paulson Is Said to Plan Buying Stakes in Regional U.S. Banks


By Robert Schmidt


 Oct. 24 (Bloomberg) -- Treasury Secretary Henry Paulson is preparing
to take stakes in a number of regional U.S. banks as he seeks to halt
the freeze of credit to businesses and households, according to a
person briefed on the matter.


The Treasury may announce the plans as soon as today, the person, who
was briefed by bankers and Treasury officials, said on condition of
anonymity. The purchases would be the second round in a $250 billion
program to inject capital into financial companies, after an initial
$125 billion was allocated to nine of the largest banks.


Regional lenders, already suffering from the housing slump, are now
getting hit by rising loan delinquencies as the economic downturn
deepens, with unemployment at a five-year high. The 19- member
Standard & Poor's 500 Banks Index has lost half its value in the past
year.


``We're going to give them initial indications very quickly,'' Neel
Kashkari, the interim Treasury assistant secretary running the
department's financial-rescue office, told lawmakers yesterday,
referring to the next group of banks to get government stakes. ``It
will be a few weeks before the next batch are actually funded,'' he
told the Senate Banking Committee.


The decision to buy stakes in more lenders comes after some of the mid-
sized American financial institutions report mounting losses. National
City Corp., Ohio's largest lender, Oct. 21 posted a wider loss, put
aside more money for unpaid loans and announced plans to eliminate
4,000 jobs. Its third-quarter net loss widened to $729 million, from
$19 million a year earlier.


SunTrust Seeks Funds


SunTrust Banks Inc., Georgia's largest lender, posted a 26 percent
decline in third-quarter profit yesterday. The bank's board authorized
the sale of $1.6 billion to $4.9 billion in preferred shares to the
U.S. Treasury, Chief Executive Officer James Wells said in a
conference call.


Paulson's focus on injecting funds into banks is a shift away from his
initial emphasis on unclogging balance sheets by purchasing troubled
mortgage-backed assets from financial institutions. Last week, the
Treasury agreed to take stakes in nine firms including Citigroup Inc.,
Morgan Stanley and Bank of America Corp.


Congress three weeks ago approved a $700 billion rescue package that
gave the Treasury wide authority to buy and guarantee assets to
prevent a U.S. financial collapse.


Equity purchases ``are on the front burner and the heat is under the
pot,'' said Wayne Abernathy, a former Treasury official who is now an
executive vice president with the American Bankers Association, a
group that represents lenders of all sizes.


`Markets Deteriorated'


Paulson had to shift gears because ``markets deteriorated much more
quickly than we had expected,'' Kashkari, a 35-year-old former Goldman
Sachs Group Inc. banker, told lawmakers. Taking stakes in banks
offered a faster way to inject funds, he said.


The person briefed on the matter didn't identify the financial
companies getting the next round of money, or specify the total
amount. Firms have until Nov. 14 to apply for government funds, though
the department has indicated it may extend that for some, such as
those that are privately held.


The Treasury's plans to buy devalued assets such as mortgage- linked
bonds and collateralized debt obligations are weeks, though ``not
months'' away from being put into effect, Kashkari said.


Congress gave the Treasury 45 days, or until mid-November, to publish
guidelines for how it would identify, value and purchase the assets. A
Treasury official said then that it would take at least four weeks
until the first auction was set up in an effort to price the toxic
securities.


Search for Managers


While the Treasury picked Bank of New York Mellon Corp. to keep the
books for the purchases, it is still completing a review of more than
100 bids to serve as asset managers, Kashkari said.


The aim of the asset purchases is to help restart a market for the
securities, providing benchmark prices and inducing private capital to
return.


Both Republicans and Democrats on the banking panel yesterday urged
the Treasury to use its new authority -- and a chunk of the bailout
money -- to help the millions of American homeowners who are facing
foreclosure.


The Bush administration hasn't shown ``the required dedication'' to
curb mortgage foreclosures, Christopher Dodd, the Connecticut Democrat
who chairs the Senate banking panel, said at yesterday's hearing.
Richard Shelby, the committee's top Republican, said that unless the
government deals with housing problems, ``we're going to be wasting a
lot of money.''


Kashkari told the panel that the Treasury is ``looking very hard'' at
a proposal by Federal Deposit Insurance Corp. chief Sheila Bair to use
federal loan guarantees to entice mortgage servicers to modify loans.


Bair's agency is developing experience in changing mortgages to make
them more affordable after taking over IndyMac Bancorp Inc., the
failed lender seized by regulators in July. The Treasury could offer
``loan guarantees and credit enhancements'' to help persuade the
holders of home loans to modify them, Bair told the Senate committee
yesterday.


To contact the reporter on this story: Robert Schmidt in Washington at
rschmidt5@bloomberg.net


Housing crisis accelerates blight in Detroit neighborhoods
By Debra Watson and Anne Moore
21 October 2008


Dire conditions in a once prosperous East Side Detroit neighborhood
underscore the impact the wave of home foreclosures is having on
working people across the United States. While the effect of the
mortgage crisis on the Wall Street banks is headline news, the media
rarely inquires into the social consequences of the foreclosure
epidemic.


Some three-quarters of a million people have lost their homes across
the US so far this year and foreclosure filings are up 82.6 percent
from a year ago, according to the web site ForeclosureS.com. The same
report notes that 107,500 homes were lost in September alone.


The city of Detroit has the highest repossession rate for a major city
in the US, with real-estate owned (REO) homes—that is, homes
repossessed by banks or mortgage holders—at 3.7 percent in 2007.
Cleveland, Ohio came in a close second with a 3 percent REO rate.


The social reality behind these figures is illustrated by a recent
sale of a foreclosed home in Detroit. In September, a modest two-story
single-family home on Detroit's east side near the Detroit City
Airport sold for one dollar. Less than two years ago, in November
2006, the same home sold for $65,000.


While abandoned homes are hardly a new phenomenon in Detroit, the
story of this one house is a testament to the speed, scope, and depth
of the foreclosure crisis. The one-dollar sale of the Detroit house
even made the Sunday Times of London, which recently ran a piece
titled "America's Darkest Fear: to end up like Detroit."


The WSWS interviewed Constance and her stepdaughter Toshiana, who live
near Detroit City Airport. As Toshiana explained: "I actually am
surprised that you came and talked to us at all. When the news came
they all were taking pictures of the place up the street that sold for
a dollar.


"We finally came out to see what it was about, why the news trucks
were here. It took three days before they finally came to us and asked
the people on the block what they thought. I don't think they really
care about people like us and what we think."


Prior to the collapse of auto manufacturing in Detroit, the
neighborhood had been relatively prosperous and home to thousands of
autoworkers. Now, foreclosed properties are lowering home values and
causing urban blight throughout the area. Constance rents a house on
the same street as the foreclosed home and grew up nearby.


"I heard about the house up the street selling for one dollar,"
Constance told the WSWS. "They had just fixed it up real nice a year
and half ago, new siding, things like that. It looked beautiful. Now
it's a mess."


Last summer the bank foreclosed on the home after the owners fell
behind on their mortgage. "They had some renters come in and then it
was empty. It didn't take long for them to come and strip the place
clean," Toshiana said.
"When I was a baby my father was at an auto plant," Constance added.
"He had a brother working at the plant also. I had another uncle who
worked at Dodge Main in Hamtramck. They all came up from the South in
the early 1970s. There are not many people around here at the plants
anymore. My mother says she is leaving Michigan and moving back to
Louisiana as soon as she retires."


The term "toxic mortgage" only begins to describe the effect of the
housing crisis on working class communities across the US. The family
that falls behind on mortgage payments or rent is out on the street.
Neighborhoods become distressed. Abandoned houses catch fire and burn—
a common phenomenon in Detroit—producing a noxious odor that permeates
whole neighborhoods for months.


Toshiana noted the absence of the most basic services in the city of
Detroit. "We don't even have a grocery store anymore."


She continued, "You actually have to go back to the early '90s to see
when all this started to happen. I could tell you a couple blocks I
lived on in Detroit that I watched gradually torn down. They were
really nice when I was there, but what happened? One place, I came
back five years after I had moved, just to visit. I could not believe
what had happened. The place was a mess; the houses were in terrible
shape.


"Look around here. All you see are empty lots. Realtors may call these
an investment opportunity, but who wants to live next to an empty lot?
Scrappers make money off tearing the houses up. I really don't
understand why they even give out junking licenses, when they know
this is going on in the neighborhoods. The decline is very ugly."


According to a report in the August 13 Detroit News, there are now
several properties listed for one dollar in Detroit, including a
single family home and a duplex. In some cases subprime lenders, "find
themselves the owners of whole neighborhoods of vacant, deteriorating
homes."


"My 14-year-old son could buy a block of Detroit property," said a
representative of the realty management firm that sold the one-dollar
house.


Foreclosures are rising in several metropolitan areas across the state
of Michigan. According to figures released by RealtyTrac, the state as
a whole ranked fourth nationwide in the total number of foreclosure
filings in August, with 13,605. Foreclosure filings rose 17 percent
over July levels. Michigan ranked fifth nationwide in foreclosure
filings, with one for every 332 households. That compares with a
national rate of one filing for every 416 households.


A 2006 Association of Community Organizations for Reform Now (ACORN)
report, "The Impending Rate Shock," singled out Detroit as one of the
cities likely to experience a housing disaster. In 2005 more than half
the home purchase loans made in Detroit were high-cost loans, "making
the city particularly vulnerable to rate shock," the report noted.
There were 23 metropolitan areas in the US where high-cost loans
represent at least one of every three loans made to homebuyers.


Obama, the economic crisis and war
24 October 2008


While the world's attention has been focused on the global economic
crisis, the United States has continued to prosecute its neo-colonial
war in Iraq and has expanded its military violence in Afghanistan and
the adjoining border regions of Pakistan.


Early Thursday morning, a US drone fired four missiles into a
religious school, or madrassa, in a tribal area of Pakistan's North
Waziristan, killing 11 people, according to Agence France-Presse. It
was the latest in a series of US strikes into Pakistan, including at
least one commando raid by Special Forces ground troops, launched
since the beginning of September. That the US has embarked on a
deliberate policy of spreading its war of occupation in Afghanistan
into Pakistan was underscored by last month's revelation that
President Bush signed a secret order in July authorizing the use of
American ground troops in Pakistan.


In Afghanistan itself, the US and its NATO allies have stepped up
their attacks on military and civilian targets in an attempt to stem a
widening war of resistance against foreign occupation. An overnight
airstrike by US-led coalition forces in Khost Province in eastern
Afghanistan killed nine Afghan soldiers, in an apparent "friendly
fire" incident. The civilian toll from US air strikes has risen
sharply in recent months, including an attack on an alleged Taliban
compound last August that killed more than 90 civilians, a majority of
them women and children.


Human Rights Watch reports that American and NATO air strikes have
killed some 500 Afghan civilians over the past five years, very likely
a serious underestimation of the actual toll. As the New York Times
reported on Thursday, "The latest air strike came as fighting in
Afghanistan reached its highest level since late 2001," i.e., in the
first months of the US invasion.


The deteriorating US military and political situation in Afghanistan
has become a focus of the presidential election, with Democratic front-
runner Barack Obama taking the lead in pledging a major escalation of
the US intervention. In a campaign speech in Virginia on Wednesday,
Obama said he would order a surge of US troops, perhaps 15,000 or
more, as soon as he gained the White House. "It's time to heed the
call ... for more troops," he declared. "That's why I'd send at least
two or three additional brigades to Afghanistan."


Obama has brushed off as a "rhetorical flourish" statements made at a
Seattle fundraising event by his running mate, Senator Joseph Biden,
that within six months of Obama's inauguration, the new president
would respond to a major foreign policy crisis by taking "incredibly
tough" and unpopular decisions. Biden cited five possible flashpoints—
the Middle East, Afghanistan, Pakistan, North Korea and Russia.


That Biden's chilling remarks were no mere "rhetorical flourish" is
substantiated by a lengthy article published in Thursday's New York
Times by the newspaper's White House correspondent, David E. Sanger.
Discussing the foreign policy positions advanced by Obama and his
Republican opponent, Senator John McCain, Sanger points to key areas
where Obama has articulated an even more aggressive posture than
McCain.


On Iran, for example, the McCain campaign has suggested that it would
be willing to accept a deal that allowed Iran to produce uranium on
its territory, while the Obama campaign told the newspaper that an
Obama White House "would not allow Iran to produce uranium on Iranian
soil, the same hard-line view enunciated by the Bush administration."


Sanger notes that Obama has declared that "we will never take military
options off the table" and that he would not give the United Nations
"veto power" over a decision to hit Iranian nuclear facilities. Sanger
goes on to say that US intelligence officials claim the "threshold"
for a possible military strike—the point where Iran produces
sufficient nuclear material to build a weapon—"may be crossed fairly
early in the next presidential term."
Obama has also suggested that the US should impose a blockade on
Iranian imports of gasoline and refined petroleum products. Noting
that the Bush administration has stopped short of proposing such a
move, he writes, "A blockade, however, could constitute an act of
war..."


On Pakistan, Sanger writes, "it is Mr. Obama who has been far more
willing than Mr. McCain to threaten sending in American troops."


Obama, no less than McCain, speaks as a representative of the American
ruling class, which will determine the foreign and military policy of
the United States in accordance with what it perceives to be its
global economic and strategic interests.


The economic crisis, global in scope but centered in the decline of
the world economic position of American imperialism, will inevitably
drive that policy in an even more aggressive and belligerent
direction, regardless of which capitalist party occupies the White
House. The economic crisis injects into world affairs an ever-greater
element of tension and conflict between rival imperialist and
capitalist nations.


Even more so than in the previous decade, the United States will seek,
under conditions of financial turmoil and economic slump, to offset
its economic decline by military means. It is necessary to learn the
lessons of history. The last great world economic crisis—the
Depression of the 1930s—set off escalating military conflicts that
culminated in the holocaust of World War II.


The 2008 elections, unfolding under conditions of deepening recession
and escalating military violence, demonstrate the immense dangers
posed by political illusions in Obama and the Democratic Party. Once
again, the enormous anti-war sentiment of the American people has been
preempted by being channeled behind the Democratic wing of American
imperialism.


Should Obama win the election, as appears increasingly likely, the
struggle against militarism and war will be waged against his
administration.


Barry Grey


US layoffs mount and home foreclosures rise, a social catastrophe
By Patrick O’Connor
24 October 2008


Indicators of a worsening social crisis in the US are mounting daily
as the economic downturn takes an ever greater toll on jobs. Further
layoffs were announced yesterday in the US and around the world. New
data was also released showing escalating numbers of American families
losing their homes through foreclosure, further driving down house
prices.


A Reuters roundup of some of the US corporations which have made major
layoff announcements in the last two days alone included:


• Chrysler, which announced an additional 1,825 layoffs on Thursday


• Goldman Sachs, which said it will cut 10 percent of its staff, or
almost 3,300 jobs


• Pharmaceutical giant Merck, which announced it is shedding 12
percent of its workforce


• Biotechnology company Maxygen, which said it will cut nearly 30
percent of its workforce


• Money manager Janus Capital Group, which is sacking 9 percent of its
workforce


• Xerox, which said yesterday it will cut 5 percent of its staff, or
3,000 positions


• Mining equipment maker Terex Corporation, which is laying off
hundreds of its workers


• United Parcel Service, which announced plans to cut an unspecified
number of jobs next year


• Fidelity National Financial Inc., which announced it will slash
1,000 jobs and cut pay by 10 percent


• Financial services conglomerate Popular Inc., which is cutting 600
jobs and closing more than a quarter of its branches in the US.


The US Labor Department reported that new applications for
unemployment insurance increased by 15,000 to 478,000 in the week
ending October 18, significantly more than was anticipated by
economists. A year ago, new jobless claims stood at 333,000.


The Labor Department also found that inflation-adjusted wages for non-
managerial workers declined by 1.9 percent in the twelve months up to
September. This extraordinary figure indicates the extent to which the
social position of the working class is being further undermined as
the financial crisis and recession unfold.


The Washington Post yesterday reported that leading temp agencies are
receiving far higher numbers of inquiries from job-seekers, including
from people who are currently working but fear for their jobs. The
article noted that many desperate workers "are also willing to make
less money, even as the cost of living goes up." An example was call
center jobs that paid $9 an hour last year but now pay $8.50.


Workers in the auto industry continue to bear much of the brunt of the
growing assault on jobs and conditions. Chrysler announced 1,825
layoffs through the elimination of a shift at an assembly plant in
Toledo, Ohio and said it would bring forward the closure date of a
plant in Newark, Delaware that had been scheduled to close in December
2009.


Chrysler released figures yesterday revealing that it lost more than
$1 billion in the first six months of 2008. Standard and Poor's has
said that both Chrysler and GM may run out of cash in 2009 as auto
sales fall to their lowest level since 1991.


Germany's Daimler AG, which has a 19.9 percent stake in Chrysler, said
yesterday it was revising the book value of its stake to zero. This is
down from $220 million three months ago and $1.2 billion at the end of
2007.


GM is in an equally severe crisis. A JPMorgan analyst told Reuters he
expects the company to lose more than $12 billion next year. Like
Chrysler, GM is slashing costs ahead of a potential merger between the
two companies.


GM announced Wednesday it was considering selling AC Delco, its
international parts subsidiary, a measure which will inevitably lead
to further job losses. The company also said it will suspend many
salaried employee benefits, including matching contributions for
workers' 401(k) retirement plans.

Job losses continue to mount in the European auto industry. Sweden's
Volvo AB said yesterday it would sack 850 more workers at its
construction equipment unit. This follows an earlier announcement of
500 layoffs in the same unit, as well as 1,400 layoff notices issued
to workers at truck factories in Sweden and Belgium.

Germany's Frankfurter Allgemeine Zeitung reported yesterday that
Volkswagen plans to cut most or all of its 25,000 temporary staff. A
Volkswagen spokesman denied the report, insisting that no decision had
yet been reached.

Polish government advisors have estimated that one third of the 1.2
million Polish workers in Britain and Ireland, i.e., 400,000 people,
will either return to Poland or move to another country to try to find
work. According to a number of reports, the exodus has already begun,
with thousands of Polish workers relocating, either in response to
being laid off or to the British pound's poor exchange rate, which has
sharply reduced the value of immigrant workers' wages sent back to
their families.

Workers in countries throughout Europe are also being hit with rapidly
declining house prices and increased foreclosures. But nowhere is the
crisis more severe than in the US.

A survey released yesterday by listing service RealtyTrac found that
foreclosure filings—that is, default notices, auction sale notices and
bank repossessions—were reported on 765,000 properties in the three
months ending in September, up 71 percent from the third quarter in
2007. Six states—Nevada, California, Florida, Ohio, Michigan, and
Arizona—accounted for more than 60 percent of all foreclosure
activity. Nevada recorded the highest foreclosure rate, with one out
of every 82 housing properties issued a foreclosure filing.

The RealtyTrac report concluded that the third quarter figures
probably underestimate the situation. Several states have passed new
laws requiring lenders to issue extended notices before filing default
notices. These laws artificially suppressed September's foreclosure
figures by temporarily postponing the full impact. Rising unemployment
will further accelerate the catastrophe.

The company said 81,300 homes had been foreclosed in September, and a
total of 851,000 had been repossessed by lenders since August of 2007.

Rod Dubitsky, managing director for asset-backed securities at Credit
Suisse, told BusinessWeek he expects that more than 5 million American
families will lose their homes through the year 2012. He said 1.69
million families will lose their homes in 2008.

Falling property values have also hit homeowners. Over the last
period, the family home was widely regarded as the primary asset to
fund people's retirement, their children's college education, and even
to cover unanticipated health expenses. But yesterday, the Federal
Housing Finance Agency reported that house prices in August were 5.9
percent lower than they were a year earlier. The decline was the
greatest recorded since 1991, when data was first collected.

Hey - It’s Just Business!
 
Jim Kirwan
10-23-8
 
The ‘new’ global financial systems created for the twenty-first century have exceeded all boundaries, and this New World Order’s grab for worldwide domination must be allowed to crash and drown in its own excesses.
 
One of its primary architects, Alan Greenspan, who headed the privately owned Federal Reserve ‘Bank’ for eighteen and a half years, a character of truly mythic proportions at least in his own mind said today: “that he and others who believed lending institutions would do a good job of protecting shareholders are in “a state of shocked disbelief,” according to the Associated Press.   
 
He said that the financial crisis had exposed a flaw in his and others’ free market ideology. Banks and investment firms did not do a good enough job analyzing the risks of the home mortgage market, and some types of derivatives should have been subject to more regulation.” (1)
 
In other words Greenspan now agrees with his critics of the government and of the privately owned Financial-Frankenstein that he and his owners created: However his re-cognition and befuddled enlightenment will do nothing about replacing the eight trillion dollars that has just been lost due to these massive thefts that are still going on.
 
At some point in his rambling answers to the News Hour tonight Greenspan at first seemed mystified that he and his tribe could have been wrong; but then he quickly tried to justify this ‘error’ by saying that ‘these transactions were just too complicated to be properly tracked.’
 
What he failed to discuss is that these complications were put in place to hide the truth of what was going on in every area of that type of finance which lives far above the clouds of either oversight or regulation: It should be noted that these corporate Titians are huge because their massive systems are that way on purpose, to keep from inquiring minds all the dirty little secret-dealings that have brought the world to the edge of oblivion.
 
Regulations were put in place after the Crash of 1929 to insure that this kind of thing never happened again. From that day to this, the descendents of the Robber-Barons have been slaving away to eliminate those safe-guards in order to reap what they see as their just-revenge for having been challenged and restrained, for their crimes of that long ago collapse of the public’s trust.
 
An international agreement must be created to outlaw forever, the kind of global banking practices that led us all to this place without any shelter from the folly of their criminal attempts, to crash the global economic systems of the world. This is actually as important, or perhaps even more so, than the international agreements that were created to govern the Rules of War.
 
Before the twelve central banks and their inbred families existed; nation-states theoretically protected their own interests in a hostile and all too dangerous world. So while certain nations could become enslaved or stolen; the entire world was not infected by these money-changers that have been trying to steal everything monetary from everyone that uses the current monetary system. So how did we get here?
 
“During the Clinton administration, the government required the financial industry to start expanding the frequency of mortgage loans to consumers who might not have qualified in the past.
 
When George W. Bush was named president by the Supreme Court in December 2000, the stock market had begun to decline with the bursting of the dot.com bubble. In 2001 the frequency of White House visits by Alan Greenspan increased.
 
The Federal Reserve began cutting interest rates, and by 2002 a home-buying frenzy was underway. Fannie Mae and Freddie Mac went along by guaranteeing the increasing number of mortgage loans.
 
According to a mortgage broker this writer interviewed, word began to come down through the mortgage banks to begin falsifying mortgage applications to show more borrower income than borrowers actually possessed. Banks that wrote mortgages began to offload them when Wall Street packaged them into mortgage-backed securities that were sold around the world as bonds to investors.
 
Risk-analysts at the leading credit-rating agencies, such as Standard and Poor’s, Moody’s, and Fitch, gave their highest ratings to mortgage-backed securities whose risks were later acknowledged to be grossly underestimated.
 
Mortgage companies, with Alan Greenspan’s endorsement, began to offer more Adjustable Rate Mortgages (ARMs), loans that would reset at much higher rates in future years.” (2)
 
The point behind consolidating all the trade and monetary policies of the planet under a huge global protectorate was not designed to enable a better world: No, this was designed to force the bulk of the world into complete surrender to a shadow-government of ancient criminal dimensions that have always hungered for a Global-Empire where all resistance would be futile!
 
This is reminiscent of that children’s nursery rhyme:
 
Humpty Dumpty sat on the Wall.
Then Humpty-Dumpty had a Great Fall,
And all the Kings Horses
And all the Kings Men
Could never put Humpty together again!
 
In this case; Wall Street should be walled-off and the egg-shaped World of Humpty-Dumpty, should be returned to their individual states and nations with international fire walls that keep them all separate forever. That way nations that have no rules, no oversight and no standards for clear values of properties or investments, need not be allowed to infect those states and people that do have oversight protections and actual international standards for loans and investments that can be easily understood and tracked.
 
This would assure investors and others that they need not fear that what they thought were sound investments might suddenly just go up in smoke.
 
Since this crash was fostered and promoted as much by Corporate States, as it was by the scheming connivances of the Money-Changers and their pawns: perhaps it’s time to subject The Corporatocracy to new rules—rules that would limit their lifetimes and rules that would add new corporate responsibilities to their sole purpose; which is to make money without any consideration for anything else that might directly limit or effect their illicit profits.
 
Ordinary people are not allowed to just “make money” to the distraction of all else: so why not limit corporations to the same set of responsibilities that people have put up with, which includes an end to life as well. (In theory corporations can now live forever).
 
If the world does not begin this process, then the Corporate States will certainly win if there is a next time, and we will lose everything to them because they are like infants in the crib that worry about nothing except their single-minded purpose: In this case, “making money!”
 
Imagine how different the world would be if Corporate Charters had to include percentages of shared profit with those that work for them, as well as having to pay for the resources they currently use for free, and then pollute, until they kill the land the water and the air, wherever they chose to place the mini-prisons of their offices and factories. We jail people that are anti-social, or who trash the communities they live and work in: why not do the same to corporations?
 
The government ought to use some of those taxes we pay to give the public real health-care. Then we could end all those extortionate insurance companies and the medical industry that lobbies congress on everything from health care to medications. This government has taxed this nation to death; and we have nothing whatever to show for all that money except two failed wars, and millions of tons of bombs, bullets and no-bid contracts. And believe it or not this is almost entirely due to the rarified air of the Corporate-climate in America!
 
Unchecked Capitalism is a cult and needs very careful watching because it is no friend to ordinary people, or even to those that work for them. But "Hey—it’s just business.” If that’s a good enough explanation to us, for their treatment of those who are not part of their upper-crust; then it ought to be the ‘standard’ by which corporations are judged, when it comes to the terms under which they are allowed to do business in any community.
 
Workers should enjoy some of the benefits that they have produced for the company. That’s not Socialism; it’s called ROI, a fair return on investment. People rent their lives for a portion of each week of time, and what exactly do they get in return: and why should that return not be reflective of the success they have helped immensely to create? Money has no “owner” it is only valuable when it is used.
 
While key executives might be very influential in assisting a company to maximize their profits: the same has to be said for those who actually do the work and make the products that make the corporations rich. Employees are expected to be “good citizens” within their communities, but has anyone else noticed that corporations have no ethics at all. Corporations certainly feel free to dump the cities, counties and states that enabled them to rise to greatness, whenever they get cheaper labor outside the country, hell the government even rewards this behavior with corporate welfare—in addition to seeing to it that the corporations pay no taxes once they are safely offshore and making billions more than ever before. This too is “just business!”
 
What about the American workforce that those offshore moves kill outright—why is there not even a fine for doing that to people that in some cases have invested their entire lives working for one of these psychotic giants! When one of their ‘employees’ fails a drug test, or is found to be doing less than he or she is “capable of” then there are retributions and possibly termination. In fact there is usually a long list of things that any ‘employee’ can be fired for: yet there are no hard and fast rules for firing upper-echelon executives, for anything. When the Corporation commits a crime, against the population or the planet, then that crime is usually reduced to nothingness, or ended with a miniscule fine: And if there is a conflict with an employee the Corporation seldom has to pay for what they’ve done—because “Hey—it’s just business!” (3)
 
kirwanstudios@sbcglobal.net
 
1) Greenspan Calls Credit Crisis ‘a Financial Tsunami’
http://www.pbs.org/newshour/updates/business/july-dec08/greenspan_10-23.html
2) They Did it on Purpose: The Housing Bubble and its Crash were engineered
http://www.globalresearch.ca/index.php?context=viewArticle&code=COO20081023&articleId=10654
 
3) The Bailout
http://www.heyokamagazine.com/heyoka.17.why%20the%20bailoutwontwork.htm

US 30 Year Yield Drops to Lowest Since Regular Sales Began
By Sandra Hernandez and Bo Nielsen

Oct. 24 (Bloomberg) -- Treasuries rose, sending the yield on the 30-
year bond to the lowest since regular issuance of the securities began
in 1977, as widening financial turmoil wiped more than $10 trillion
off stock markets worldwide this month.

U.S. notes rallied on speculation the global slowdown will deepen. The
U.K. economy shrank more than forecast, a report showed today. Trading
in U.S. stock-index futures was limited after declines of more than 6
percent. U.S. government securities returned 1.6 percent in October,
the most since January, according to Merrill Lynch & Co.'s U.S.
Treasury Master index, as tumbling stocks spurred demand for the
safest assets.

``We're getting very close to the emotional blow-off where everybody
says, `I don't care; I want out,''' said E. Craig Coats Jr., who co-
heads fixed income at Keefe, Bruyette & Woods Inc. in New York.
``Everybody seems to be saying `I want to be in cash or
Treasuries.'''

The yield on the 4 1/2 percent bond due in May 2038 decreased 10 basis
points, or 0.10 percentage point, to 3.95 percent at 9:44 a.m. in New
York, according to BGCantor Market Data, after dropping as low as
3.8676 percent. The price advanced 1 24/32, or $17.50 per $1,000 face
value, to 109 17/32.

Ten-year note yields declined 12 basis points to 3.57 percent, and
have fallen 37 basis points this week, the most since 1995, on
speculation government and central bank efforts to revive lending
won't avert a global slowdown.
``Bonds are the instrument, par excellence, to profit from the
crisis,'' Societe Generale SA said in a report.
`Fires Are Spreading'

U.S. stocks dropped. The MSCI Asia Pacific Index of regional shares
fell as much as 6.2 percent to its lowest level since 2003. Trading in
futures on the Standard & Poor's 500 Index and the Dow Jones
Industrial Average was limited after declines in contracts of more
than 6 percent triggered a so- called limit down restriction.

``The fires are spreading around the globe,'' Peter Mueller, a fixed-
income strategist in Frankfurt at Commerzbank AG, Germany's second-
largest bank by assets, wrote in a note today. ``The flight to quality
should therefore continue to give massive support to bunds and U.S.
Treasuries as this week draws to a close.''

The difference between yields on two- and 10-year notes widened for
the first time in more than a week as the shorter maturities, which
are more sensitive to monetary policy, outperformed. The yield spread
widened 9 basis points to 2.16 percentage points. It's still narrower
than this year's high of 2.39 percentage points on Oct. 15.
Traders can profit from a widening yield spread by buying two-year
notes and selling 10-year notes.
Yen, Pound

Two-year note yields dropped 18 basis points to 1.41 percent. They
touched 1.35 percent, the lowest in more than two weeks.

This year's credit-market meltdown prompted Federal Reserve officials
to make an emergency reduction in borrowing costs on Oct. 8, and they
will cut again when they meet on Oct. 29, futures contracts indicate.
Futures on the Chicago Board of Trade show a 100 percent chance policy
makers will lower their target for overnight bank lending, now 1.5
percent, by at least a half-percentage point, compared with 38 percent
odds a week ago.

The yen climbed to a 13-year high against the dollar as the risk of a
global recession prompted investors to slash carry trades, in which
they fund purchases of higher-yielding assets with the Japanese
currency. The British pound had its biggest decline in at least 37
years after the Office for National Statistics in London said the
economy contracted 0.5 percent in the third quarter, exceeding the 0.2
percent forecast by analysts in a Bloomberg survey.

Emerging-Market Assets

Investors sold emerging-market stocks, bonds, and currencies as the
credit crisis imperiled developing economies. The Polish zloty,
Hungarian forint and South African rand headed for their biggest
weekly declines. Ukraine's credit ratings were lowered for the second
time since June by Standard & Poor's on concern about the country's
banks, a day after Russia's credit rating outlook was lowered to
``negative'' from ``stable.''

``There's uncertainty and anxiety,'' said Hiroyuki Bando, chief
manager for fixed income, equities and currencies in Tokyo at
Mitsubishi UFJ Trust & Banking Corp., part of Japan's biggest bank.
``That's supportive for Treasuries.''
Yields on three-month Treasury bills, sought as a haven in times of
uncertainty, fell 21 basis points to a one-week low of 0.75 percent.
They were 3.38 percent at the start of the year.

TED Spread

The difference between what banks and the U.S. government pay to
borrow for three months, known as the TED spread, widened for a second
day, to 2.75 percentage points. The spread, which is the difference
between three-month bill yields and the three- month London interbank
offered rate, is more than triple this year's low of 76 basis points
in May.

Another indicator of credit stress, the difference between the rate
banks charge for three-month dollar loans relative to the overnight
indexed swap rate, the so-called Libor-OIS spread, widened to 2.64
percentage points from 2.54 percentage points yesterday. The spread
has narrowed from 3.64 percentage points on Oct. 10.
Yields on Treasury Inflation-Protected Securities with maturities of
up to five years were higher than yields on conventional Treasuries of
similar maturity in another sign investors are liquidating positions
and betting on a deepening U.S. recession.

The difference between yields on five-year Treasuries and five-year
TIPS was minus 0.06 percentage points. TIPS typically yield less than
Treasuries because their principal payments rise at the rate of
inflation. A shrinking yield gap indicates investors expect inflation
to slow.

``The financial crisis is now morphing ever more clearly into an
economic one,'' Ciaran O'Hagan, a fixed-income strategist in Paris at
Societe Generale, said in a report yesterday. ``That leaves spread
markets still going in only one direction -- south.''

To contact the reporters on this story: Sandra Hernandez in New York
at
shernandez4@bloomberg.net; Bo Nielsen in Copenhagen at
bnielsen4@bloomberg.net.

CITIZENS STATEMENT AGAINST PLANNED VIOLENCE AGAINST NORTH INDIANS
AND BREAK DOWN OF RULE OF LAW
 
We, the citizens of Maharashtra protest against the planned and instigated violence against north Indians in Mumbai, Thane and Kalyan. Neither  Mr. Raj Thackrey nor the MNS have actually done any good to the ordinary Maharashtrian Bahujans on whose behalf he is advocating.  The major issues of the State and its toilling masses like that of the agrarian crisis, land and homelessness, displacement due to SEZ and other development based projects or mill workers in Mumbai have found any place in his agenda.  The violent and dividing politicking will result in far reaching consequences to safety and securityof the citizens and the  integrety of the nation
 
Repeated inflammatory public speeches and statements made by Raj Thackeray, is ample proof of his violent and unlawful demeanor and there is no justification for the Democratic Front led by Congress and NCP   for being a silent spectator resulting in violation of rule of law and the rights guarenteed under the Indian Constitution.
 
 The state has left the ordinary citizens vulnerable to the attack by a small section of unruly MNS workers.
 
We assert the diversity of Mumbai and believe that the rule of law has to prevail and Mr. Raj Thackery / MNS should not be allowed to continue with their unruly behaviour holding the entire city in randsom.  The State is equally responsible for the breakdown of the constituitional mechanisms and fear that has been installed in the linguistic and regional minority in Mumbai.  The violence would not have continued with out the silent support provided by the Chief Minister and the Home Minister.
 
We also denounce Thackeray's statement exhorting his party workers to take to violence and arson as peaceful modes of protest like fasting and Dharna are  'ineffective' and must be given up. We demand immediate action to restore the rule of law and derecognition of MNS as a political party and stringient legal action against Raj Thackrey, implement the recommendation of the SHRC to reinvestigate all the earlier cases against Raj Thackeray and initiate action as per law. We firmly state our disagreement with all those who have silent faith in the segregating vision of Raj Thackeray, but merely condemn his physically brutality.
 
We request the ordinary, peace loving, non communal and progressive forces in the city to come together and fight the hijacking of the ordinary citizens agenda using violence and vested interests by politicians like Raj Thackeray.
 
Sincerly yours, 

Medha Patkar- NBA, NAPM, 
Datta Iswaljkar - Girini Kamgar Sangharsh Samiti
Anand Teltumbede- Dalit Activist and Writer,
N.D. Patil- PWP,
Anand Patwardhan- Film maker,
Avinash Mahatekar- Activist Ambedkar Movement
Shyam Sonar and Sudhir dhawale- Republican Panther
Simpreet Singh- Ghar Banao Ghar Bachao Andolan ,
Madhuri Vairath- GBGB
Mukta Srivastava- NAPM,  
Urmila Pawar- Dalit Writer and Activist ,
Feroz Mithiborwala- Awami Bharat
Prakash Reddy-  CPI ,
Bhalchandra Kango-CPI,
Hasina Khan-Awaz-e-Niswan,  Forum Against Opression of Women ,
Maju Varghese- YUVA ,
Deepika D'souza-  ICHRL
Gerson da Cunha-  Agni ,
Dolphy Disouza- Bombay Cathelic Sabha
Damjibhai Gada-  NAPM
Smita Shah -  Editor - Sadbhavna Sadhana
Shakil Ahmed - Nirbhay Bano Andolan
Mohan Chauhan - Sahar Vikas Manch

Is Laissez Faire Responsible for the Financial Crisis?
by George Reisman
Posted on 10/23/2008

The news media are in the process of creating a great new historical myth. This is the myth that our present financial crisis is the result of economic freedom and laissez-faire capitalism.

The attempt to place the blame on laissez faire is readily confirmed by a Google search under the terms "crisis + laissez faire." On the first page of the results that come up, or in the web entries to which those results refer, statements of the following kind appear:


"The mortgage crisis is laissez-faire gone wrong."
"Sarkozy [Nicolas Sarkozy, the President of France] said 'laissez-faire' economics, 'self-regulation' and the view that 'the all-powerful market' always knows best are finished."
"'America's laissez-faire ideology, as practiced during the subprime crisis, was as simplistic as it was dangerous,' chipped in Peer Steinbrück, the German finance minister."
"Paulson brings laissez-faire approach on financial crisis…."
"It's au revoir to the days of laissez faire."[1]

Recent articles in The New York Times provide further confirmation. Thus, one article declares, "The United States has a culture that celebrates laissez-faire capitalism as the economic ideal…."[2] Another article tells us, "For 30 years, the nation's political system has been tilted in favor of business deregulation and against new rules."[3] In a third article, a pair of reporters assert, "Since 1997, Mr. Brown [the British Prime Minister] has been a powerful voice behind the Labor Party's embrace of an American-style economic philosophy that was light on regulation. The laissez-faire approach encouraged the country's banks to expand internationally and chase returns in areas far afield of their core mission of attracting deposits."[4] Thus even Great Britain is described as having a "laissez-faire approach."

The mentality displayed in these statements is so completely and utterly at odds with the actual meaning of laissez faire that it would be capable of describing the economic policy of the old Soviet Union as one of laissez faire in its last decades. By its logic, that is how it would have to describe the policy of Brezhnev and his successors of allowing workers on collective farms to cultivate plots of land of up to one acre in size on their own account and sell the produce in farmers' markets in Soviet cities. According to the logic of the media, that too would be "laissez faire" ­ at least compared to the time of Stalin.

Laissez-faire capitalism has a definite meaning, which is totally ignored, contradicted, and downright defiled by such statements as those quoted above. Laissez-faire capitalism is a politico-economic system based on private ownership of the means of production and in which the powers of the state are limited to the protection of the individual's rights against the initiation of physical force. This protection applies to the initiation of physical force by other private individuals, by foreign governments, and, most importantly, by the individual's own government. This last is accomplished by such means as a written constitution, a system of division of powers and checks and balances, an explicit bill of rights, and eternal vigilance on the part of a citizenry with the right to keep and bear arms. Under laissez-faire capitalism, the state consists essentially just of a police force, law courts, and a national defense establishment, which deter and combat those who initiate the use of physical force. And nothing more.

The utter absurdity of statements claiming that the present political-economic environment of the United States in some sense represents laissez-faire capitalism becomes as glaringly obvious as anything can be when one keeps in mind the extremely limited role of government under laissez-faire and then considers the following facts about the present-day United States:


Government spending in the United States currently equals more than forty percent of national income, i.e., the sum of all wages and salaries and profits and interest earned in the country. This is without counting any of the massive off-budget spending such as that on account of the government enterprises Fannie Mae and Freddie Mac. Nor does it count any of the recent spending on assorted "bailouts." What this means is that substantially more than forty dollars of every one hundred dollars of output are appropriated by the government against the will of the individual citizens who produce that output. The money and the goods involved are turned over to the government only because the individual citizens wish to stay out of jail. Their freedom to dispose of their own incomes and output is thus violated on a colossal scale. In contrast, under laissez-faire capitalism, government spending would be on such a modest scale that a mere revenue tariff might be sufficient to support it. The corporate and individual income taxes, inheritance and capital gains taxes, and social security and Medicare taxes would not exist.
There are presently fifteen federal cabinet departments, nine of which exist for the very purpose of respectively interfering with housing, transportation, healthcare, education, energy, mining, agriculture, labor, and commerce, and virtually all of which nowadays routinely ride roughshod over one or more important aspects of the economic freedom of the individual. Under laissez-faire capitalism, eleven of the fifteen cabinet departments would cease to exist and only the departments of justice, defense, state, and treasury would remain. Within those departments, moreover, further reductions would be made, such as the abolition of the IRS in the Treasury Department and the Antitrust Division in the Department of Justice.
The economic interference of today's cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA. Under laissez-faire capitalism, all such agencies and commissions would be done away with, with the exception of the FBI, which would be reduced to the legitimate functions of counterespionage and combating crimes against person or property that take place across state lines.
To complete this catalog of government interference and its trampling of any vestige of laissez faire, as of the end of 2007, the last full year for which data are available, the Federal Register contained fully seventy-three thousand pages of detailed government regulations. This is an increase of more than ten thousand pages since 1978, the very years during which our system, according to one of The New York Times articles quoted above, has been "tilted in favor of business deregulation and against new rules." Under laissez-faire capitalism, there would be no Federal Register. The activities of the remaining government departments and their subdivisions would be controlled exclusively by duly enacted legislation, not the rule-making of unelected government officials.
And, of course, to all of this must be added the further massive apparatus of laws, departments, agencies, and regulations at the state and local level. Under laissez-faire capitalism, these too for the most part would be completely abolished and what remained would reflect the same kind of radical reductions in the size and scope of government activity as those carried out on the federal level.

What this brief account has shown is that the politico-economic system of the United States today is so far removed from laissez-faire capitalism that it is closer to the system of a police state. The ability of the media to ignore all of the massive government interference that exists today and to characterize our present economic system as one of laissez faire and economic freedom marks it as, if not profoundly dishonest, then as nothing less than delusional.


Government Intervention Actually Responsible for the Crisis

Beyond all this is the further fact that the actual responsibility for our financial crisis lies precisely with massive government intervention, above all the intervention of the Federal Reserve System in attempting to create capital out of thin air, in the belief that the mere creation of money and its being made available in the loan market is a substitute for capital created by producing and saving. This is a policy it has pursued since its founding, but with exceptional vigor since 2001, in its efforts to overcome the collapse of the stock market bubble whose creation it had previously inspired.

The Federal Reserve and other portions of the government pursue the policy of money and credit creation in everything they do that encourages and protects private banks in the attempt to cheat reality by making it appear that one can keep one's money and lend it out too, both at the same time. This duplicity occurs when individuals or business firms deposit cash in banks, which they can continue to use to make purchases and pay bills by means of writing checks rather than using currency. To the extent that the banks are then enabled and encouraged to lend out the funds that have been deposited in this way (usually by the creation of new and additional checking deposits rather than the lending of currency), they are engaged in the creation of new and additional money. The depositors continue to have their money and borrowers now have the bulk of the funds deposited. In recent years, the Federal Reserve has so encouraged this process, that checking deposits have been created equal to fifty times the actual cash reserves of the banks, a situation more than ripe for implosion.

All of this new and additional money entering the loan market is fundamentally fictitious capital, in that it does not represent new and additional capital goods in the economic system, but rather a mere transfer of parts of the existing supply of capital goods into different hands, for use in different, less efficient, and often flagrantly wasteful ways. The present housing crisis is perhaps the most glaring example of this in all of history.

Perhaps as much as a trillion-and-a-half dollars or more of new and additional checkbook-money capital was channeled into the housing market as the result of the artificially low interest rates caused by the presence of an even larger overall amount of new and additional money in the loan market. Because of the long-term nature of its financing, housing is especially susceptible to the effect of lower interest rates, which can serve sharply to reduce monthly mortgage payments and in this way correspondingly increase the demand for housing and for the mortgage loans needed to finance it.

Over a period of years, the result was a huge increase in the production and purchase of new homes, rapidly rising home prices, and a further spiraling increase in the production and purchase of new homes in the expectation of a continuing rise in their prices.

To gauge the scale of its responsibility, in the period of time just since 2001, the Federal Reserve caused an increase in the supply of checkbook-money capital of more than 70 percent of the cumulative total amount it had created in the whole of the previous 88 years of its existence ­ that is, almost 2 trillion dollars.[5] This was the increase in the amount by which the checking deposits of the banks exceeded the banks' reserves of actual money, that is, the money they have available to pay depositors who want cash. The Federal Reserve caused this increase in illusory capital by means of creating whatever new and additional bank reserves were necessary to achieve a federal funds interest rate ­ that is, the rate of interest paid by banks on the lending and borrowing of reserves ­ that was far below the rate of interest dictated by the market. For the three years 2001–2004, the Federal Reserve drove the federal funds rate below 2 percent and, from July of 2003 to June of 2004, drove it even further down to approximately 1 percent.

The Federal Reserve also made it possible for banks to operate with a far lower percentage of reserves than ever before. Whereas in a free market, banks would hold gold reserves equal to their checking deposits ­ or at the very least to a substantial proportion of their checking deposits[6] ­ the Federal Reserve in recent years contrived to make it possible for them to operate with irredeemable fiat-money reserves of less than 2 percent.

The Federal Reserve drove down the federal funds rate and brought about the vast increase in the supply of illusory capital for the purpose of driving down all market interest rates. The additional illusory capital could find borrowers only at lower interest rates. The Federal Reserve's goal was to bring about interest rates so low that they could not compensate even for the rise in prices. It deliberately sought to achieve a negative real rate of interest on capital, that is, a rate below the rate at which prices rise. This means that a lender, after receiving the interest due him for a year, has less purchasing power than he had the year before, when he had only his principal.

In doing this, the Federal Reserve's ultimate purpose was to stimulate both investment and consumer spending. It wanted the cost of obtaining capital to be minimal so that it would be invested on the greatest possible scale and for people to regard the holding of money as a losing proposition, which would stimulate them to spend it faster. More spending, ever more spending was its concern, in the belief that that is what is required to avoid large-scale unemployment.

As matters have turned out, the Federal Reserve got its wish for a negative real rate of interest, but to an extent far beyond what it wished. It wished for a negative real rate of return of perhaps 1 to 2 percent. What it achieved in the housing market was a negative real rate of return measured by the loss of a major portion of the capital invested. In the words of The New York Times, "In the year since the crisis began, the world's financial institutions have written down around $500 billion worth of mortgage-backed securities. Unless something is done to stem the rapid decline of housing values, these institutions are likely to write down an additional $1 trillion to $1.5 trillion."[7]

This vast loss of capital in the housing debacle is what is responsible for the inability of banks to make loans to many businesses to which they normally could and would lend. The reason they cannot now do so is that the funds and the real wealth that have been lost no longer exist and thus cannot be lent to anyone. The Federal Reserve's policy of credit expansion based on the creation of new and additional checkbook money has thus served to give capital to unworthy borrowers who never should have had it in the first place and to deprive other, far more credit worthy borrowers of the capital they need to stay in businesses. Its policy has been one of redistribution and destruction.

The capital it has caused to be malinvested and lost in housing is capital that is now unavailable for such firms as Wickes Furniture, Linens 'N Things, Levitz Furniture, Mervyns, and innumerable others, who have had to go bankrupt because they could not obtain the loans they needed to stay in business. And, of course, among the foremost victims have been major banks themselves. The losses they have suffered have wiped out their capital and put them out of business. And the list of casualties will certainly grow.

Any discussion of the housing debacle would be incomplete if it did not include mention of the systematic consumption of home equity encouraged for several years by the media and an ignorant economics profession. Consistent with the teachings of Keynesianism that consumer spending is the foundation of prosperity, they regarded the rise in home prices as a powerful means for stimulating such spending. In increasing homeowners' equity, they held, it enabled homeowners to borrow money to finance additional consumption and thus keep the economy operating at a high level. As matters have turned out, such consumption has served to saddle many homeowners with mortgages that are now greater than the value of their homes, which would not have been the case had those mortgages not been enlarged to finance additional consumption. This consumption is the cause of a further loss of capital over and above the capital lost in malinvestment.

A discussion of the housing debacle would also not be complete if it did not mention the role of government guarantees of many mortgage loans. If the government guarantees the principal and interest on a loan, there is no reason why a lender should care about the qualifications of a borrower. He will not lose by making the loan, however bad it may turn out to be.

A substantial number of mortgage loans carried such guarantees. For example, a New York Times article describes the Department of Housing and Urban Development as "an agency that greased the mortgage wheel for first-time buyers by insuring billions of dollars in loans." The article describes how HUD progressively reduced its lending standards: "families no longer had to prove they had five years of stable income; three years sufficed… lenders were allowed to hire their own appraisers rather than rely on a government-selected panel … lenders no longer had to interview most government-insured borrowers face to face or maintain physical branch offices," because the government's approval for granting mortgage insurance had become automatic.
The Times' article goes on to describe how "Lenders," such as Countrywide Financial, which was among the largest and most prominent, "sprang up to serve those whose poor credit history made them ineligible for lower-interest 'prime' loans." It notes the fact that "Countrywide signed a government pledge to use 'proactive creative efforts' to extend homeownership to minorities and low-income Americans."[8] "Proactive creative efforts" is a good description of what lenders did in offering such bizarre types of mortgages as those requiring the payment of "interest only," and then allowing the avoidance even of the payment of interest by adding it to the amount of outstanding principal. (Such mortgages suited the needs of homebuyers whose reason for buying was to be able to sell as soon as home prices rose sufficiently further.)

Just as vast numbers of houses were purchased based on an unfounded belief in an endless rise in their prices, so too vast numbers of complex financial derivatives were sold based on an unfounded belief that the Federal Reserve System actually had the power it claimed to have of making depressions impossible ­ a power which the media and most of the economics profession repeatedly affirmed.

Derivatives have received such a bad press that it is necessary to point out that the insurance policy on a home is a derivative. And many of the derivatives that were sold and which are now creating problems of insolvency and bankruptcy, namely, "credit default swaps (CDSs)," were insurance policies in one form or another. Their flaw was that unlike ordinary homeowners' insurance, they did not have a sufficient list of exclusions.

Homeowners' policies make exclusions for such things as damage caused by war and, in many cases, depending on the special risks of the local area, earthquakes and hurricanes. In the same way, the more complex derivatives should have made an exclusion for losses resulting from financial collapse brought on by Federal Reserve–sponsored massive credit expansion. (If it is impossible actually to write such an exclusion, because many of the losses may occur before the nature of the cause becomes evident, then such derivatives should not be written and the market will no longer write them because of the unacceptable risks they entail.) But decades of brainwashing by the government, the media, and the educational system had convinced almost everyone that such collapse was no longer possible.

Belief in the impossibility of depressions played the same role in the creation and sale of "collateralized debt obligations (CDOs)." Here disparate home mortgages were bundled together and securities were issued against them. In many cases, large buyers bundled together collections of such securities and issued further securities against those securities. As more and more homeowners have defaulted on their loans, the result has been that no one is able directly to judge the value of these securities. To do so, it will be necessary to disentangle them down to the level of the underlying individual mortgages. Such tangles of securities could never have been sold in a market not overwhelmed by the propaganda that depressions are impossible under the government's management of the financial system.

Finally, a discussion of the housing debacle would not be complete if it did not include mention of forms of virtual extortion that served to encourage loans to unworthy borrowers. Thus, the online encyclopedia Wikipedia writes,
The Community Reinvestment Act [CRA] … is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods … CRA regulations give community groups the right to comment or protest about banks' non-compliance with CRA. Such comments could help or hinder banks' planned expansions.
The meaning of these words is that the Community Reinvestment Act gives the power to "community groups," to determine in an important respect the financial success or failure of a bank. Only if they are satisfied that the bank is making sufficient loans to borrowers to whom it would otherwise choose not to lend, will it be permitted to succeed. The most prominent such community group is ACORN.

Part and parcel of the environment that has made an act such as the CRA possible, is threats of slander against banks for being "racist" if they choose not to make loans to people who are poor credit risks and also happen to belong to this or that minority group. The threats of slander go hand in glove with intimidation from various government agencies that exercise discretionary power over the banks and are in a position to harm them if they do not comply with the agencies' wishes. The same points apply to mortgage lenders other than banks.

What this extensive analysis of the actual causes of our financial crisis has shown is that it is government intervention, not a free market or laissez-faire capitalism, that is responsible in every essential respect.


The Laissez-Faire Myth and the Marxism of the Media

The myth that laissez faire exists in the present-day United States and is responsible for our current economic crisis is promulgated by people who know practically nothing whatever of sound, rational economic theory or the actual nature of laissez-faire capitalism. They espouse it despite, or rather because of, their education at the leading colleges and universities of the country. When it comes to matters of economics, their education has steeped them entirely in the thoroughly wrong and pernicious doctrines of Marx and Keynes. In claiming to see the existence of laissez faire in the midst of such massive government interference as to constitute the very opposite of laissez faire, they are attempting to rewrite reality in order to make it conform with their Marxist preconceptions and view of the world.

They absorb the doctrines of Marx more in history, philosophy, sociology, and literature classes than in economics classes. The economics classes, while usually not Marxist themselves, offer only highly insufficient rebuttal of the Marxist doctrines and devote almost all of their time to espousing Keynesianism and other, less-well-known anticapitalistic doctrines, such as the doctrine of pure and perfect competition.

Very few of the professors and their students have read so much as a single page of the writings of Ludwig von Mises, who is the preeminent theorist of capitalism and knowledge of whose writings is essential to its understanding. Almost all of them are thus essentially ignorant of sound economics.

When I refer to the educational system and the media as Marxist, I do not intend to imply that its members favor any kind of forcible overthrow of the United States government or are necessarily even advocates of socialism. What I mean is that they are Marxists insofar as they accept Marx's views concerning the nature and operation of laissez-faire capitalism.

They accept the Marxian doctrine that in the absence of government intervention, the self-interest, the profit motive ­ the "unbridled greed" ­ of businessmen and capitalists would serve to drive wage rates to minimum subsistence while it extended the hours of work to the maximum humanly endurable, imposed horrifying working conditions, and drove small children to work in factories and mines. They point to the miserably low standard of living and terrible conditions of wage earners in the early years of capitalism, especially in Great Britain, and believe that that proves their case. They go on to argue that only government intervention in the form of pro-union and minimum-wage legislation, maximum-hours laws, the legal prohibition of child labor, and government mandates concerning working conditions, served to improve the wage earner's lot. They believe that repeal of this legislation would bring about a return to the miserable economic conditions of the early 19th century.

They view the profits and interest of businessmen and capitalists as unearned, undeserved gains, wrung from wage earners ­ the alleged true producers ­ by the equivalent of physical force, and hence regard the wage earners as being in the position of virtual slaves ("wage slaves") and the capitalist "exploiters" as being in the position of virtual slave owners. Closely connected with this, they regard taxing the businessmen and capitalists and using the proceeds for the benefit of wage earners, in such forms as social security, socialized medicine, public education, and public housing, as a policy that serves merely to return to the wage earners some portion of the loot allegedly stolen from them in the process of "exploitation."

In full agreement with Marx and his doctrine that under laissez-faire capitalism the capitalists expropriate all of the wage earner's production above what is necessary for minimum subsistence, they assume that the government's intervention harms no one but the immoral businessmen and capitalists, never the wage earners. Thus not only the taxes to pay for social programs but also the higher wages imposed by pro-union and minimum-wage legislation are assumed simply to come out of profits, with no negative effect whatever on wage earners, such as unemployment. Likewise for the effect of government-imposed shorter hours, improved working conditions, and the abolition of child labor: the resulting higher costs are assumed simply to come out of the capitalists' "surplus value," never out of the standard of living of wage earners themselves.

This is the mindset of the whole of the left and in particular of the members of the educational system and media. It is a view of the profit motive and the pursuit of material self-interest as inherently lethal if not forcibly countered and rigidly controlled by government intervention. As stated, it is a view that sees the role of businessmen and capitalists as comparable to that of slave owners, despite the fact that businessmen and capitalists do not and cannot employ guns, whips, or chains to find and keep their workers but only the offer of better wages and conditions than those workers can find elsewhere.

Not surprisingly, the educational system and media share the view of Marx that laissez-faire capitalism is an "anarchy of production," in which the businessmen and capitalists run about like chickens without heads. In their view, rationality, order, and planning emanate from the government, not from the participants in the market.

As I say, this, and more like it, is the intellectual framework of the great majority of today's professors and of several generations of their predecessors. It is equally the intellectual framework of their students, who have dutifully absorbed their misguided teachings and some of whom have gone on to become the reporters and editors of such publications as The New York Times, The Washington Post, Newsweek, Time, and the overwhelming majority of all other newspapers and news magazines. It is the intellectual framework of their students who are now the commentators and editors of practically all of the major television networks, such as CBS, NBC, ABC, and CNN.[9] And it is this intellectual framework within which the media now attempts to understand and report on our financial crisis.

In their view, laissez-faire capitalism and economic freedom are a formula for injustice and chaos, while government is the voice and agent of justice and rationality in economic affairs. So firmly do they hold this belief, that when they see what they think is evidence of large-scale injustice and chaos in the economic system, such as has existed in the present financial crisis, they automatically presume that it is the result of the pursuit of self-interest and the economic freedom that makes that pursuit possible. Given this fundamental attitude, the principle that guides contemporary journalists so-called is that their job is to find the businessmen and capitalists who are responsible for the evil and the government officials who set them free to commit it, and, finally, to identify and support the policies of government intervention and control that will allegedly eliminate the evil and prevent its recurrence in the future.

Their fear and hatred of economic freedom and laissez-faire capitalism, and their need to be able to denounce it as the cause of all economic evil, is so great that they pretend to themselves and to their audiences that it exists in today's world, in which it clearly does not exist even remotely. By making the claim that laissez faire exists and is what is responsible for the problem, they are able to turn the full force of their hatred for actual economic freedom and laissez-faire capitalism against each and every sliver of economic freedom that somehow manages to exist and which they decide to target. That sliver, they project, is part and parcel of the starvation of the workers in the inhuman exploitation of labor that, in their ignorance, they take for granted is imposed by capitalists under laissez faire. Their brainwashed audience ­ as much the product of the contemporary educational system as they themselves ­ then quickly follows suit and obliges their efforts to arouse hatred.

The result is summed up in words such as these, which appeared in one of the same New York Times articles I quoted earlier:
"We now have a collective anger, disgust, over our whole financial system and it's obvious we're going to get a regulatory backlash…" [with] a spillover effect to other industries because voters have the perception that "big companies are animals and they need to be put in their cages."[10]
In this way the enemies of capitalism and economic freedom are able to proceed in their campaign of economic destruction and devastation. They use the accusation of "laissez faire" as a kind of ratchet for increasing the government's power. For example, in the early 1930s they accused President Hoover of following a policy of laissez faire, even as he intervened in the economic system to prevent the fall in wage rates that was essential to stop a reduced demand for labor from resulting in mass unemployment. On the basis of the mass unemployment that then resulted from Hoover's intervention, which they succeeded in portraying as "laissez faire," they deceived the country into supporting the further massive interventions of the New Deal.

Today, they continue to play the same game. Always it is laissez faire that they denounce, and whose alleged failures they claim need to be overcome with yet more government regulations and controls. Today, the massive interventions not only of the New Deal, but also of the Fair Deal, the New Frontier, the Great Society, and of all the administrations since, have been added to the very major interventions that existed even in the 1920s and to which Hoover very substantially added. And yet we still allegedly have laissez faire. It seems that so long as anyone manages to move or even breathe without being under the control of the government, laissez faire allegedly continues to exist, which serves to make necessary yet still more government controls.

The logical stopping point of this process is that one day everyone will end up being shackled to a wall, or at the very least being compelled to do something comparable to living in a zip code that matches his social security number. Then the government will know who everyone is, where he is, and that he can do nothing whatever without its approval and permission. And then the world will be safe from anyone attempting to do anything that benefits him and thereby allegedly harms others. At that point, the world will enjoy all the prosperity that comes from total paralysis.

[VIEW THIS ARTICLE ONLINE]

__________________________

George Reisman, Ph.D. is the author of Capitalism: A Treatise on Economics .  (A PDF replica of the complete book can be downloaded to the reader's hard drive simply by clicking on the book's title, immediately preceding, and then saving the file when it appears on the screen.) He is Pepperdine University Professor Emeritus of Economics. His web site is www.capitalism.net.

Copyright © 2008 by George Reisman. All rights reserved.

 


[2] Steve Lohr, "Intervention Is Bold, but Has a Basis in History," October 14, 2008, p. A14.

[3] Jackie Calmes, "Both Sides of the Aisle See More Regulation," October 14, 2008, p. A15.

[4] Landon Thomas Jr. and Julia Werdigier, "Britain Takes a Different Route to Rescue Its Banks," October 9, 2007, p. B7.

[5] I arrive at these figures by calculating total checking deposits in January of 2001 and in August of 2008 as the sum of those contained in M1, the "sweep" accounts compiled by the Federal Reserve Bank of St. Louis, and money market mutual fund deposits, both retail and institutional. From these respective totals I subtract total bank reserves as of the same dates. I then subtract the result for 2001 from that for 2008 and divide the difference by the sum calculated for 2001.

[6] If the creation of checkbook money in excess of currency holdings is in fact an attempt at cheating, as I described it earlier, then it follows that a free market would actually require a 100 percent reserve.

[7] Joe Nocera, "Shouldn't We Rescue Housing?" October 18, 2008, p. B1.

[8] David Streitfeld and Gretchen Morgenson, "The Reckoning, Building Flawed American Dreams," October 19, 2008, p. A26.

[9] For a comprehensive refutation of all aspects of this intellectual framework, see George Reisman, Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996), chapters 11, 14, and passim.

[10] Jackie Calmes, loc. cit.



 

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