From Volume 8, Issue 1 of EIR Online, Published Jan. 6, 2009

U.S. Economic/Financial News

U.S.-Made Steel Plunged 50% September to December

Jan. 2 (EIRNS)—Steel production in the United States virtually became a trickle after years of consolidation and shutdown of the nation's big steel companies. Profits and productivity shot up only due to this shakeout of the industry. But now even that has collapsed. The Houston Chronicle reported that output of U.S.-made steel plunged 50% since September, as credit dried up and companies closed down, especially auto makers. "By late December, output was down to 1.02 million tons a week from 2.1 million tons on Aug. 30, the American Iron and Steel Institute reported," and the price of a ton of steel is down by half since Summer. "We are making our steel at four mills instead of six," said John Armstrong, a spokesman for the U.S. Steel Corp., who added that two mills were recently idled and the four still operating are at less than full capacity.

Steel industry groups issued a call to the incoming Obama Administration for a stimulus plan to get America building and to require a goods purchased with stimulus monies to be made in America. "What we are asking," said Daniel R. DiMicco, chairman and chief executive of the Nucor Corp., a giant steelmaker, "is that our government deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a 'buy America' clause."

U.S. Treasuries Selling at Record Low Yields

Dec. 28 (EIRNS)—With interest rates scraping zero under the insane Fed policy, the U.S. Treasury is faced with selling record amounts of debt for next to nothing. Treasury claims it will sell $2 trillion in debt this fiscal year, although that is less than one fourth of the money it has dumped into the world garbage can called a banking system thus far. Bloomberg reports that the yield on the 30-year bond was 2.5090% on Dec. 18, the lowest since regular sales of the security began in 1977—going on the principle that people would rather have almost no income in government paper than lose everything in the speculation-dominated private financial system.

Hedge Funds Took Pension Funds Down with Them in 2008

Jan. 3 (EIRNS)—Hedge funds suffered their worst year yet, in 2008, losing 18% in assets and suffering a net outflow of $370 billion according to the consulting firm Hedge Fund Research, reported the Washington Post today. They're also taking many state pension funds with them, funds that made the mistake of investing in these "sophisticated investment strategies." According to Hedge Fund Research, hedge funds' capital base dropped from an all-time high of $1.93 trillion in June to $1.56 trillion by October. Investors withdrew $70 billion, and $300 billion was accounted for by performance losses. Pension funds that invested in hedge funds have suffered similarly. The Pennsylvania state pension fund lost 14.4% in the first nine months of 2008. One-fifth of it was invested in those "sophisticated investment strategies" which lost 31%. The state pension fund in Massachusetts was down 30% last year, through November, including 18% from its hedge fund investments.

States' Pension Funds Suffer Big Losses in 2008

Dec. 31 (EIRNS)—The inevitable losses to states' pensions funds occurred, as Congress failed to adopt Lyndon LaRouche's economic recovery plans. Here is a very small sample from around the nation:

* Texas: Three public pension funds for Houston government employees—fire, police, and municipal workers—have lost a combined $1.9 billion in value since the beginning of the year, according to the Houston Chronicle.

* Massachusetts: The state pension fund lost $2 billion in November, bringing its loss for the year to $16.1 billion, the worst performance since it was formed. The return on the fund, used to pay the pensions of public sector retirees, is down 30.1% for the year through November.

* New Jersey: The pension fund for teachers and government workers declined by 24.6% or about $21 billion through November, according to reports delivered to the State Investment Council.

* Wyoming: The state's investment portfolio had lost, as of November, $1 billion in market value. The Wyoming public employee pension fund has taken a 25% plunge in market value.

* California: San Jose's retirement director says the city's pension funds—one for firefighters and police and the other for civilian workers—have lost nearly $1 billion since July 1.

All rights reserved © 2009 EIRNS