In this issue:

Trade Deficit Surge Reflects Dying Wal-Mart Economy

Personal Bankruptcies Hit a New High in FY03

Wal-Martized Maytag Threatens Move to Mexico

Washington, D.C. Faces Drastic Shortage of Hospital Beds

'Unprofitable' Power Plants To Be Shut Down

Governator Arnie To Borrow $20 Billion from Banker Pals

Home-Mortgage Refinancing Fever Continues


From Volume 2, Issue Number 46 of Electronic Intelligence Weekly, Published Nov. 18, 2003

U.S. Economic/Financial News

Trade Deficit Surge Reflects Dying Wal-Mart Economy

The U.S. trade deficit in goods and services grew to $41.3 billion in September, as imports rose to $127.4 billion—a record monthly high, the Commerce Department said Nov. 13. For January-September, the trade gap was a staggering $366 billion, up 21% from the level during the same period last year.

The goods portion of the deficit rose to $46.5 billion in September, as imports jumped to a whopping $106.3 billion—proving the U.S. can no longer produce the physical means to survive, and depends on virtual slave labor around the world for its goods. Through September, the goods deficit was $410 billion.

Under the Wal-Mart "model," manufacturers have been forced to move operations, and shut down plants in the U.S., once the world's leading producer economy. Imports from China hit a record-high $14.8 billion in September, thanks to imperial Wal-Mart, resulting in a record trade deficit of $12.7 billion.

Personal Bankruptcies Hit a New High in FY03

Personal bankruptcies rose 7.8% in fiscal 2003, to 1.63 million—another record high, due to a surge in consumer debt and rising unemployment. Overall, there were 1.66 million bankruptcies, both personal and business, filed in Federal court between Oct. 1, 2002 and Sept. 30, 2003, up 7.4% from the level in fiscal year 2002, according to the Administrative Offices of the U.S. Courts. This is the highest-ever total of bankruptcy filings. In fact, since 1994, bankruptcies in Federal courts have soared a whopping 98%—nearly double in 9 years.

Personal bankruptcy filings grew by 7.8% during the 12-month period, to a record 1.63 million. Business filings declined by 7.4% to 36,183 in the year ending September 30, 2003.

Wal-Martized Maytag Threatens Move to Mexico

Maytag, under pressure from Wal-Mart, is threatening to shut its Hoover Vacuum factory in Ohio, and move production to Mexico. the Akron Beacon Journal reported this month. The appliance-maker is demanding cuts in health insurance and other benefits, plus changes in job-security rules for production workers at its Hoover vacuum manufacturing plant in North Canton, Ohio—or else, it will shut down the factory by 2005. The current union contract stipulates that two vacuum models be made in Ohio. Production would be moved to El Paso, Texas and Juarez, Mexico, where wages are lower, if the cost-cutting measures aren't approved.

Wal-Mart's power in dictating prices to suppliers, such as Hoover (whose parent company is Maytag), reportedly has already forced Hoover to shift some production jobs from Ohio, to areas with lower labor costs.

Hoover blamed its 20% decline in vacuum sales, during the third quarter, on other companies' $79 models—made in Asia to meet Wal-Mart's price demands—which are outselling Hoover's $100+ vacuum cleaners produced in the U.S.

Previously, Maytag had said that it would close its refrigeration manufacturing plant in Galesburg, Ill., by the end of 2004.

Meanwhile, Whirlpool has announced it will shift some refrigerator production from a plant at Fort Smith, Ark., to a new facility in Mexico, according to the Arkansas Times Record Nov. 12. The move would affect 2,700 Arkansans employed by Whirlpool suppliers in the Fort Smith area, as well as 1,500 workers at the refrigerator factory itself—the largest employer in Fort Smith.

Washington, D.C. Faces Drastic Shortage of Hospital Beds

Hospital beds in the nation's capital have been cut by 41.6% since 1994—from 4,741 acute-care beds in '94, to only 2,767 today, according to the D.C. Hospital Association(DCHA). The numbers, alone, however do not convey the full calamitous nature of the crisis in Washington, D.C. today. As the District of Columbia Hospital Association reports (Oct. 20), the lack of beds has caused ambulances, filled with patients needing emergency care, to line up at hospital emergency rooms, waiting for beds. Hospitals are on bypass or diversions for hours, that is, they are forced to close to ambulances for hours because there are no beds available. As the DCHA reports: "Without keen attention to this critical situation, emergency department care will remain on the edge of disaster."

The LaRouche political movement warned of exactly this crisis when the genocidal decision was made to close D.C. General Hospital in 2001. The lack of adequate bed capacity—including quarantine beds—puts the region's population in immediate danger, whether from the possibility of the resurgence of SARS (Severe Acute Respiratory Syndrome), or some other new, infectious agent, as the Centers of Disease Control and the World Health Organization recently warned, or, from an accidental or intended biochemical incident.

'Unprofitable' Power Plants To Be Shut Down

Just as an unseasonal series of hail storms in California, and wind storms in the Midwest and Atlantic Coast, have left more than 1 million people without power, unregulated independent power producers are shutting down electric-generating plants, because they are "unprofitable." Due to "low wholesale prices,"—meaning prices that have been squeezed from their inflated, Enron-style speculative frenzy down to traditional levels, older power plants are "too expensive" to run, compared with newer gas-burning plants. Producers also complain that there is "excess capacity."

International Power Plc, located in London, is considering mothballing some of its seven U.S. power plants in Massachusetts, Texas, and Georgia, which generate 4,700 MW of power. American Electric Power has mothballed nine plants, and expects to close another one this month. Houston-based CenterPoint Energy's subsidiary Texas Genco Holdings will mothball almost 3,000 MW of gas-fired plants, due to low wholesale prices. Deregulation has taken responsibility for ensuring reserve margins for power out of the hands of state regulators, and left such decisions to "the market."

Governator Arnie To Borrow $20 Billion from Banker Pals

California's Gov.-Elect Arnie Schwarzenegger plans to borrow a whopping $20 billion, to paper over the state's budget deficit. Since the state's credit rating is just above junk level, lenders will require guarantees, and high interest rates. State Treasurer Angelides predicted this will cost as much as $20 billion in interest, on top of repayment of principle, and would severely damage the state's ability to borrow in the future.

Home-Mortgage Refinancing Fever Continues

Americans continue to refinance their homes, at unprecedented rates, although statistics are that "only" 32% of refinancings were for cash-out reasons in the third quarter of this year, as compared with the 60% cash-out proportions prevailing in the refinancing boom of 2001 and 2002; and the all-time record of 93% set in mid-1989, the Washington Post reported Nov. 8. Refinancing, which Federal Reserve Chairman Alan Greenspan likes to call, home-equity "monetization," represents half of all current U.S. mortgage activity, which means half of an estimated $3.3 trillion volume this year alone.

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