From Volume 7, Issue 50 of EIR Online, Published Dec. 9, 2008

U.S. Economic/Financial News

How Big Is Our Bailout?

Nov. 30 (EIRNS)—The bailout/thievery commitments that the financial oligarchs have so far managed to get the U.S. government to go along with, something now totalling on the order of $8.5 trillion, according to Bloomberg News. To get some idea of what that looks like, Barry Ritholz calculated, in doing research for his book Bailout Nation, using inflation-adjusted figures, that it is greater than the cost of the Marshall Plan, the Louisiana Purchase, the Apollo Moon landing, the savings and loan crisis, the Korean War, the New Deal, the invasion of Iraq, the Vietnam War, and NASA—combined. The total of all those programs was just under $4 trillion.

The only American historical event that comes anywhere near the bailout commitments was World War II, at $3.6 trillion, adjusted for inflation.

Pelosi Blinks on Auto Industry Bailout

Dec. 6 (EIRNS)—After days of tension between House Speaker Nancy Pelosi (D-Calif.) and the White House, over where the money for the bailout of the U.S. auto industry should come from, Pelosi finally blinked.

She had insisted for weeks that the money the Big Three automakers were asking for should come from the Treasury Department's TARP fund, whereas the White House countered that it should come from a $25 billion fund that Congress set up in the Energy Department, to retool the industry to build energy-efficient cars. Pelosi reportedly finally agreed on the Energy Department fund, but only if the White House promises to replenish it "within a matter of weeks."

The automakers, the Congress, and the White House are now said to be in agreement on about $15 billion in loans and loan guarantees for the Big Three. Both Pelosi and Senate Majority Leader Harry Reid (D-Nev.) are expecting votes on the package next week.

One Year into the 'Recession'

Dec. 1 (EIRNS)—U.S. manufacturing declined "at the steepest rate in 26 years," according to figures released today by the Institute of Supply Management (ISM). Also, the Commerce Department reported that construction spending fell 1.2% in October, both drops being larger than official forecasts.

The ISM's "factory index" survey of U.S. manufacturers declined to 36.2, on a scale where anything under 50 indicates "contraction." Their index for new orders declined a hefty 5 points (to 27.2), also the lowest level since 1982, and their index of raw materials prices dropped to "the lowest level in six decades." All this is leading the "experts" to expect further price deflation.

All rights reserved © 2008 EIRNS