U.S. Economic/Financial News
As Food Stamp Applicants Surge, Obama and the Congress Cut the Program
June 1 (EIRNS)The number of Americans living on food stamps surged to 44.5 million in Marchover 14% of the populationand yet Obama and the Congress are debating how much to cut from the program. As the number of recipients increased from last year by 11%, Obama is asking Congress for only a 9% increase in funding, while the Republicans in the House want far larger cuts.
The House Appropriations Committee is reviewing the fiscal year 2012 appropriations bill for the Department of Agriculture on June 1, including the $71 billion for the Supplemental Nutrition Assistance Program (food stamps), with the knives out. Nutrition assistance now accounts for about two-thirds of the USDA's budget, compared with 26% in 1980.
Goldman Sachs Subpoenaed by New York District Attorney
June 2 (EIRNS)Bloomberg.com reports today that Goldman Sachs Group Inc. has received a subpoena from the New York County DA, for information on the firm's activities leading into the credit crisis. According to two people whom Bloomberg says are familiar with the matter, "The request relates to the U.S. Senate's Permanent Subcommittee on Investigations report on Wall Street's role in the housing market collapse, which accused New York-based Goldman Sachs of misleading buyers of mortgage-linked investments...." Bloomberg notes that the Subcommittee's report was referred to the U.S. Justice Department and the Securities and Exchange Commission, which are also investigating.
Housing Collapse Now Worse than During the Great Depression
June 1 (EIRNS)According to the S&P/Case-Shiller National Index, released on May 31, home prices nationwide fell 4.2% in the first quarter, after declining 3.6% in the fourth quarter of 2010. Using the Case-Shiller measure, prices are now 33% below the 2006 peak and are back at a level last seen in the third quarter of 2002. This means that prices have now fallen by more than the 31% decline experienced during the Great Depression of the 1930s.
Since the official data does not take into account inflation, the collapse in house prices is even deeper than Case-Shiller reports.
Another 5% decline in prices will increase the share of underwater homeowners with mortgages to 28%, up from 23% at the end of 2010. A 10% drop will leave more than one-third of all U.S. mortgage holders underwater.
Home prices have now fallen for eight straight months.
At the same time that the housing crisis continues to accelerate, manufacturing continues to collapse, as well as job creation. Manufacturing in the U.S. expanded in May, according to U.S. government figures, at the slowest pace in more than a year. The Institute for Supply Management's factory index fell to 53.5 last month, the lowest level since September 2009, from 60.4 in April.
Meanwhile, according to ADP Employer Services, a national payroll-management company, employment increased by only 38,000 workers last month, the smallest increase since September, from a revised 177,000 in April.
This continuing collapse is the direct result of the failure to pass Lyndon LaRouche's Homeowner and Bank Protection Act, and underscores the need for Glass-Steagall.