U.S. Economic/Financial News

Geithner Warns Congress of October Debt Crunch

Aug. 9 (EIRNS)—A Congressional Budget Office report released today shows that the economic collapse has slashed Federal revenues by $350 billion through the first nine months of FY2009, an unheard-of 17% drop from FY2008; and that the Obama Administration is headed for a FY09 deficit of at least $1.82 trillion, four times the FY08 deficit. Only an estimate, with a quarter of the fiscal year left to go, this figure could get worse by the beginning of October, since the deficit increased by $181 billion during July alone.

Treasury Secretary Tim Geithner warned of an October debt conjuncture, in a letter to Senate Majority Leader Harry Reid, urging Congress to lift the $12.1 trillion Federal debt ceiling in September—by an unspecified amount. "It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner wrote, and warned that the limit may be hit by mid-October. The Treasury's recent estimate had been Dec. 1, when total U.S. debt would hit that ceiling.

Either a very large debt-ceiling increase, in the trillions, is being discussed between Geithner and Congressional leaders, or a request to lift the ceiling altogether by one means or another. One year ago, then-Treasury Secretary Hank Paulson and his deputies urgently demanded that Congress lift the debt ceiling entirely, for purposes of the Fannie Mae/Freddie Mac and TARP bank bailouts.

Some details of the CBO estimate for 10 months of FY09, through July: Layout for the TARP bailout (i.e., currently estimated Federal losses resulting from TARP loans): $169 billion. Layout (losses) on Fannie and Freddie bank bailouts: $83 billion. Layout for auto bailout operations: $51 billion. Increased Medicaid spending $41 billion (25%) over the same ten months of FY08, reflecting job losses and impoverishment of Americans. Increased Medicare spending $51 billion (11%) over FY08. Spending on "stimulus": $125 billion. Unemployment insurance spending: $32 billion (doubled from same 10 months of FY08). Total spending increase $530 billion (21% over FY08). And the total depression-caused Federal tax revenue drop, $350 billion (17% below ten months of FY08).

Cities Resort to Approved 'Tent Cities' for Homeless

Aug. 11 (EIRNS)—Cities all across the U.S. are in various stages of approving, and even supplying minimal services for tent cities of the homeless, because of the surge in unemployment and economic desperation. The sizable metropolitan areas with approved space for the homeless in parking lots, campgrounds, riversides, or other public areas include Nashville, Tenn.; Ontario, Calif.; Lacey, Wash. (near Olympia, the capital), and others.

Today in Tampa, Fla., city leaders planned a vote on whether to approve tent cities, a measure which has brought into being an "Anti-Tent City" coalition as well. Catholic Charities wants permission to minister to a homeless encampment of 200 people.

The numbers of dispossessed and out-of-work citizens everywhere, has put before local governments the option of reversing vagrancy laws, and instead, providing minimal services and some order to the desperate. There seems no other recourse, given the "Recovery" blather coming from Washington.

In Illinois, local ministers have asked the Champaign City Council to legalize homeless settlements of 50 people. Ventura, Calif., in July, revised its laws, to permit homeless people to stay overnight in their cars in designated locations.

Nashville's Metropolitan Homeless Commission's director, Clifton Harris, stresses that there is nowhere else to put people, because the shelters are all full, with waiting lists. Nashville is now providing portable toilets, garbage collection, and a mobile medical van.

Would Congress Dare To Expose Paulson's Corruption?

Aug. 9 (EIRNS)—Will this cowardly Congress ever hold "Pecora Commission hearings"?

Were the Senate Banking Committee of bankers' man Christopher Dodd (D-Conn.) holding such investigative hearings right now, it would be laying before the already outraged American public, the crimes of former Treasury Secretary Hank Paulson in bailing out and enriching his buddies at Goldman Sachs, while the nation's economy plunged into deep depression.

A New York Times front-pager on Aug. 8 reflected information the Times dug out about Paulson, from Freedom of Information Act (FOIA) requests over a year's time—dirt that the Senate could have laid out in weeks.

During the height of the banking/financial blowout of September 2008, Paulson—according to the phone logs and other documents—called up Lloyd Blankfein several dozen times a week. Blankfein is the CEO of Paulson's Wall Street alma mater "Goldman Sucks," and Paulson had pledged to Congress he would not speak to Blankfein about economic policy without first requesting and getting an "ethics waiver" from the White House legal office. He didn't actually request the waiver, however, until Sept. 19, 2008, at least a week into his discussions with Blankfein, which far outnumbered his talks with any other Wall Street executive or expert. Then, the waiver was granted by the White House in less than three hours, exposing it as a formality, not the serious "pledge" he had made.

Goldman Sachs reaped $13 billion from Paulson Treasury bailout payments to AIG, another $10 billion investment from Paulson's TARP program, instant conversion to a bank holding company as soon as Blankfein requested it, and elimination of its rivals Lehman Brothers and Bear Stearns. In the emergency Bush Administration meeting in which Paulson supposedly "decided" on the notorious bailout to AIG, Blankfein was the only non-governmental official present.

Rep. Cliff Stearns (R-Fla.) now understates the case, saying that Paulson "was covering himself with this waiver because he knew he had a conflict of interest with his telephone calls and with his actions." It is Senator Dodd's and Rep. Barney Frank's "covering" that Stearns ought to be attacking—the reason that no Pecora hearings on this depression have been allowed.