U.S. Economic/Financial News
Save the Nation, Junk the Outmoded Henry Paulson
March 29 (EIRNS)If you had any doubts that Treasury Secretary Henry Paulson is completely incompetent, take a look at proposals he is planning to announce on March 31, to deal with the global financial crisis. Paulson's plan is right out of the bankers' playbook: giving the Federal Reserve more power to protect and bail out the bankrupt financial system, granting elements of the financial system greater self-regulatory powers, restricting the power of state governments to intervene to protect their citizens from financial abuses, and other measures, all in the name of streamlining and "modernizing" the regulatory apparatus.
The whole premise is a lie. The problem is not an outmoded regulatory apparatus, but a bankrupt financial system based upon outmoded imperial fantasies. Paulson claims that the problem with the regulatory apparatus is that it is based upon laws passed in the 1930s, but it is precisely the repealing, de-fanging and outright ignoring of those reforms passed by President Franklin Roosevelt in response to the banking crisis of that era, that permitted the current crisis to develop. Rather than destroy the remnants of those protections, we should abandon deregulation and return to the sound banking policies imposed by FDR. The real solution here is to bring the banking system back under the Constitution, ending the delusion of the bankers that saving themselves is more important than protecting the people. Pass Lyndon LaRouche's Homeowners and Bank Protection Act, and put the banking system through bankruptcy. Putting the general welfare of the people first, above the demands of the parasites: Now, there's a modern idea.
Tales from Home Foreclosure 'Ground Zero'
March 23 (EIRNS)An article in the Metro section of the March 23 Washington Post describes a variegated geographical pattern of foreclosure crisis in Northern Virginia, in terms of an "archipelago" of hotspots of foreclosures and precipitously dropping house prices, in a sea of relative calm in which some prices are even rising. The latter areas, are in the well-to-do sections such as McLean, Great Falls, Vienna, Oakton, and Fairfax Station (all in Fairfax county, which has the nation's highest median income). Other nearby towns, from Dumfries to Sterling form a "ring of fire"; parts of Dale City, Woodbridge, and Herndon are "engulfed," and Manassas and Manassas Park are "a volcano."
A report by Stephen Fuller of George Mason University's Center for Regional Analysis "found that 5.5 percent of Prince William housing units were in some sort of foreclosure by mid-February, a rate twice that of Loudoun County's, Northern Virginia's second-highest. No major metropolitan region in the country had a foreclosure rate that high in the last quarter of 2007not even Detroitaccording to Fuller's data." Examples given, from a tour with a local real estate agent specializing in foreclosures, include:
* a house in Manassas Park listed for $125,000, in a neighborhood, where two years ago, homes were selling for $300,000 to $400,000;
* neighborhoods in Manassas and Manassas Park, where every third or fourth house was empty;
* a townhouse in Manassas listed at $94,900, though assessed for taxes at $253,000, and dozens more bank-owned properties listed below $150,000, far below assessed worth.
The article says many of the areas in the "ring of fire" are home to Hispanic immigrants, who came in and tried to live the American dream of owning a home, and ended up with subprime loans and adjustable-rate mortgages, and other risky arrangements. The article notes that ironically, Prince William County's recent anti-immigrant actions have worsened that area's situation, as "Latino families already struggling financially have little incentive to remain in their homes." The article concludes with a brave "stay the course" message from the Northern Virginia Association of Realtors, that all the local fundamentals remain strong.
One in Ten Ohioans on Food Stamps
March 25 (EIRNS)The number of Ohio residents on food stamps has doubled since 2001, with one out of ten now receiving government-funded food stamps, according to the Ohio Department of Job and Family Services. It reports that nearly 1.1 million residents are now getting food stamps, and it is estimated that another nearly 500,000 are eligible for food stamps but are not currently enrolled in the program, bringing the total of Ohio citizens unable to secure sufficient food for themselves to 1.6 million.
The Ohio report is reflective of the largest increase in food stamp use since the program's 1960s peak, according to a March 31 article in the New York Times.
Also reflecting the collapse of the U.S. physical economy, nearly half the states in the Union have announced new increases in their deficits, of between $100 million and $600 million, since Jan. 1. Most will hit the wall when their fiscal year ends on June 30, but New York State will be crashing as of March 31to try and cover its $4 billion deficit, because its fiscal year ends that day.