U.S. Economic/Financial News
U.S. Economy Sinking Like a Stone
Jan. 31 (EIRNS)The numbers behind yesterday's report that U.S. GDP fell in the fourth quarter of 2008 at an annual rate of 3.8%, tell only part of the story that has caused panicked headlines in the major press. The opening line of the Washington Post's coverage, this morning, says it all: "Consumers didn't consume, businesses didn't invest, overseas buyers of American goods didn't buy and unsold products piled up in warehouses in the final months of the year."
Exports fell by 19.7%; government spending rose overall, but state and local government spending dropped; spending on equipment and software dropped at 27.8%; investment in housing fell at 23.6%; and consumer spending fell 3.5%. As a result, inventories are burgeoning, but the way GDP is calculated counts growing inventories as growth. If that "growth" had been excluded from the GDP figure for the fourth quarter, notes the Post, the actual decline would have been 5.3%.
Fannie, Freddie To Let Renters Stay in Foreclosed Homes
Jan. 31 (EIRNS)Freddie Mac and Fannie Mae have bowed to pressure from housing advocates, and will stop routinely evicting tenants of rental houses that have gone into foreclosure. Instead, beginning Feb. 1, both will be offering leases to such tenants. Tenant advocates are pushing private lenders to begin doing the same, noting that renters have been swept up in the foreclosure crisis and have usually been evicted through no fault of their own.
Of course, the real estate agents who would have to manage the properties under Fannie and Freddie's new policy are up in arms, because they would rather sell the houses at the highest prices possible, which, they complain, is only possible if the houses are empty.
U.S. Infrastructure Gets 'D' Grade
Jan. 28 (EIRNS)The American Society of Civil Engineers (ASCE) annual "report card" assigned an overall "D" grade to the nation's infrastructure, and stated that $2.2 trillion in investment would be needed to bring it into a state of good repairup from its $1.6 trillion estimate in 2005. The report was to be released in March, but the ASCE moved it up to try to influence the debate over the stimulus bill now being negotiated by the Obama Administration and Congress.
Less than a third of the current "stimulus" proposal would be spent on infrastructure, and an even smaller part of that would go toward traditional concrete-and-steel projects like roads and transit, says the New York Times. Instead, "infrastructure" includes computerizing medical records and the like.
Among the ASCE findings on some key areas of infrastructure:
* Bridges: "C"More than 26% of the nation's bridges are structurally deficient or functionally obsolete.
* Dams: "D"the number of deficient dams has risen to more than 4,000, including 1,819 high hazard potential dams.... There are more than 85,000 dams in the U.S., and the average age is just over 51 years old.
* Drinking Water: "D"America's drinking water systems face an annual shortfall of at least $11 billion to replace aging facilities that are near the end of their useful life and to comply with existing and future water regulations. Leaking pipes lose an estimated 7 billion gallons of clean drinking water a day.
* Inland Waterways: "D"The average tow barge can carry the equivalent of 870 tractor trailer loads. Of the 257 locks still in use on inland waterways, 30 were built in the 1800s and another 92 are more than 60 years old.
* Roads "D"Americans spend 4.2 billion hours a year stuck in traffic. Poor road conditions cost motorists $67 billion a year in repairs and operating costs, and cost 14,000 Americans their lives. One-third of major roads are in poor or mediocre condition, and 36% of major urban highways are congested.
Third U.S. Bank Failure of 2009
Jan. 25 (EIRNS)The First Centennial Bank of California was shut down the weekend of Jan. 23 by the FDIC and state authorities. The bank had $803 million in assets, and was the third official bank failure to be reported in 2009. There were 25 such bank failures in 2008.
All of which only proves how stupid accountants are, who pronounce such developments as "bank failures," while pretending that the entire, thoroughly bankrupt international banking system is not in the same conditionor worse.