U.S. Economic/Financial News
Hyperinflation Hits the Road: Truckers Abandon Their Rigs
June 23 (EIRNS)Around the time gasoline passed $4 gallon, EIR received reports of truckers abandoning their rigs by the side of the road. Some left their rigs at gas stations, with the keys still in the ignition. One trucker confessed, "I feel like putting a bullet in someone every time I fuel up.... Three more weeks [of these high gas prices], and I'm finished."
Larry Daniels, the founder and president of the American Independent Truckers Association (AITA), called the abandonment of vehicles "an act of irresponsible desperation. You are walking away from everything you own.... When they walk away, there is nothing they are being relieved of." In the wake of the recent phase of speculation-driven hyperinflation, starting on Jan. 1, an average of 750 trucking companies have gone out of business every week.
The hardest hit are independent, owner/operators, who own their own rigs, contract their own business, and buy their own gas. With diesel soaring to $4.64/gallon, and interstate drivers paying $900-$1,000 each time they fuel up, the system of transporting basic goods is breaking down fast. Some in the industry are hoping to quell their own desperation by sharing the fuel costs with increasingly desperate distributors and consumers, whose food has traveled an average of 1,500 miles to reach them. U.S. truckers are now paying upwards of $.70 per mile in excess fuel costs, with cross-country truckers paying upwards of $5,300 per week on fuel, according to reports EIR has received from California.
Wall Street Writes Obituaries for U.S. Banks
June 23 (EIRNS)Things have become tough in the "post Bear Stearns" environment, the Wall Street Journal complained on June 23, as the pages of the Wall Street and London financial press are filled with obituaries for U.S. banks.
The Journal and the London Financial Times document 10% personnel cutbacks at both Citibank and Goldman Sachs, with similar action expected at other investment banks. And, given big losses, investors are now very skittish about putting money into those entities, refusing to participate in capital-raising transactions. "Investing in a bank right now means investing in a large portfolio of loans that are essentially a black box," one portfolio manager remarked. Given investors' reluctance to put in money, banks may have to come up with "sweeter terms," which, however, will also raise the cost of those deals.
"More Bank Bailouts Ahead?" was the headline on a Journal article today, which warned that if lenders can't find buyers, or raise needed capital, the FDIC "could be overwhelmed." The Fed's decision to take on $29 billion of Bear Stearns assets "may soon look like chicken feed," the paper moaned. While the thousands of struggling mid-sized banks don't pose the same kind of threat as Bear Stearns did, the problem is that the "other usual escape routes" available to those banks "are narrowing." It's getting harder and harder to tap either new or existing shareholders for new funds to replenish bank capital.
Utility Shutoffs Zoom
June 24 (EIRNS)In the last month, 8% of four-member households making between $33,500 and $55,000 have had their power turned off for non-payment, according to the National Energy Assistance Directors' Association (NEADA). "We're seeing a record number of shutoffs," says director Mark Wolfe, "It's hitting people in the suburbs with two cars and two kids." An unscientific but revealing sampling by USA Today verifies his statement: Pennsylvania's PPL Electric Utilities has disconnected over 7,000 customers this year, 168% more than last year; North Carolina's Duke Energy is averaging about 11,000 cutoffs a month, at which rate they will have lost 10% of their customers by year's end; disconnects are up 27% at Chicago's People's Gas, and 56% for Detroit Edison.
Service is often quickly restored, but for many families, electricity is fast becoming a luxury.