zTruth

U.S. Postal Service considering layoffs - a first in their history

This isn't good news:

"We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide.  Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country... a struggling economy. "We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts."

Pepper says the postal service is looking to eliminate 40,000 jobs nationwide. There's not an exact number on how many of those could be from the Ark-La-Tex. Pepper says workers who are not part of union with six or less years of service would likely be the first on the chopping block. "We've identified 16 thousand people that are not covered under contract. We'll see what those numbers add up to."

ksla.com

Two day stock market point loss largest in Dow history

The two days following the election of Barack H. Obama, a president-elect of many firsts, the stock market drop in value was the largest since 1987 and is the largest two day point loss in Dow history!

Does the financial markets not have confidence in Barack Obama and his promises to fix everything for everybody?  It may be my amateur take on things but it makes sense the market is sending this signal along with dismal economic news. 

The president-elect has nothing in his track record of managing anything that I'm aware and he has promised a lot which will cost billions.  During these trying times, which could get far worse than better, I hope his supporters are comforted by his words of hope and change and his request to his fans to believe in him. 

But it may not take long for his fans to get disenchanted.  Sensing this as a very real problem his team has formulated a plan to let people down gently from all his promises which generated a euphoria unlike we've seen in any presidential race.

Having said all this, I hope and pray that president-elect Obama will be successful for our country's sake and future.

One adoring fan of Barack Obama, whose post was allowed to say on Obama's presidential website:

 

Largest post-election stock plunge in U. S. history

This may not be good news for an Obama presidency. I don't see how he can fulfill all he said he would with the reality of what is going on:

"The stock market posted its biggest plunge following a presidential election as reports on jobs and service industries stoked concern the economy will worsen even as President-elect Barack Obama tries to stimulate growth.

The market's decline came a day after the biggest presidential Election Day gain since the New York Stock Exchange first opened for trading on a voting day in 1984.

...The report by ADP Employer Services showed companies cut 157,000 jobs in October, the most since November 2002 when the U.S. was emerging from a recession. The Institute for Supply Management said service industries in the U.S., which make up 90 percent of the economy, contracted by the most on record..."

Bloomberg

PM Brown: Saudi's will have a say in new world economic order

This is not good news:

"British Prime Minister Gordon Brown said Sunday he is confident that Saudi Arabia will contribute to the International Monetary Fund's bailout reserves after he promised business leaders in the Gulf that they would have a say in any future new world economic order.

Brown is using a four-day tour of the Gulf to call on oil-rich Middle Eastern countries to be among the biggest donors to the IMF's coffers to rescue failing nations, which at $250 billion have already been depleted by emergency cash calls from Iceland, Hungary and the Ukraine totaling some $30 billion.

...Brown has attempted to win favor with Arab states by stressing they have not been represented enough on international bodies and promising them a seat at the table amid discussions by world leaders "grasping toward new world order."

"I believe that your country has a crucial role to play and your voice must be heard," Brown told business leaders in Saudi Arabia..."

Yahoo News

The Senate has passed the financial bailout bill

The Senate has reached the needed 60 votes to pass their version of the financial bailout bill.

95 Democrats in the House voted against bailout bill!

Nearly 100 Democrats in the House of Representatives voted against the financial bailout bill yesterday.  Fifteen Democrats in California from the home state of the Speaker of the House, Nancy Pelosi, even voted against the bill.

Thirteen Democrats on the House Financial Services Committee voted against the bill, too!  And seven Democrats on the Homeland Security Committee voted against the bill, including its chairman!

Rep. Barney Frank, D-Mass., one of the main congressional negotiators, and chairman of the House Financial Services Committee failed to get his democratic team on his own banking committee on board with the bill!.  Now that's telling.

Yet, all we hear the Democrats on TV do is to spew their partisan venom against the Republicans.

Final vote

Financial bailout vote in House taking place now

The first financial bailout vote is taking place in the House of Representatives now.  The vote is split and could take an hour or two to complete.  Meanwhile, the Dow is going down over 600 points, at one point,  because the vote isn't going in the direction for bailout approval.

We all need to remind ourselves who have been in charge of both houses of Congress, the chief legislative and regulatory making bodies of our government, these past two years,  but who blame the Republicans at ever turn - the Democrats.

It might be a mistake to forget this fact.

Update 1:07 PM CT:  The financial bailout bill as it is currently written has failed in the House

Update 2:01 PM CT:  Reports are out now that the U.S. House may have passed it had it not been for Nancy Pelosi who spoke before the house during the vote blaming everything on the Bush Administration - 12 Republicans apparently switched their votes!

The Democrats are on TV are now denying this and are blaming the Republicans for putting their hurt feelings ahead of the country.

The Dow is now down by 635 points.

Update 4:05 PM:  Republicans blame Pelosi.  Meanwhile Obama calls for (sic) calm from Colorado...

What caused our economic crisis?

What has caused the near melt-down of our economy?  Ths video may give us some insight but I don't know if all of it is true so watch it with that caveat.  At the end there is a vote for McCain/Palin moment.

Economic crisis brings out partisan criticism of John McCain

Here we are in the mist of the biggest economic crisis since the great depression and we hear from the Democrats, including Sen. Majority Harry Reid,  how it's all John McCain's fault for coming to Washington. 

Give me a break.

Lawmakers agree on economic plan?

  

Doug Mills/The New York Times

Historic meeting with President Bush took place this afternoon to work out a plan to keep our economy from collapsing.

Update:  6:00 PM CT:  Reports are coming out of Washington now that the meeting ended badly with no deal.  Some say it was a disaster.  No doubt, Obama will blame McCain.

Refugees in the U.S. cost taxpayers

FYI:

Since 2000, approximately 50,000 refugees have entered the United States each year from various regions of the world.¹ Although persons with immigrant status are legally required to be vaccinated before entering the United States, this requirement does not extend to U.S.-bound persons with refugee status.* After 1 year in the United States, refugees can apply for a change of status to that of legal permanent resident, at which time they are required to be fully vaccinated in accordance with recommendations of the Advisory Committee on Immunization Practices (ACIP).^2-3 A potentially less costly alternative might be to vaccinate U.S.-bound refugees overseas routinely, before they depart from refugee camps. To compare the cost of vaccinating refugees overseas versus after their arrival in the United States, CDC analyzed 2005 data on the number of refugees, cost of vaccine, and cost of vaccine administration. This report summarizes the results of that analysis, which suggested that, in 2005, vaccinating 50,787 refugees overseas would have cost an estimated $7.7 million, less than one third of the estimated $26.0 million cost of vaccinating in the United States. Costs were calculated from the perspective of the U.S. health-care system. To achieve public health cost savings, routine overseas vaccination of U.S.-bound refugees should be considered.

JAMA

Daily amount Americans spend on fuel

April 2008 was by far the most expensive month ever for the U.S. in terms of fuel consumption.

• Numbers in OPIS’ monthly Transportation Fuel Index (TFI) show that Americans footed a $37.4-billion bill on motor gasoline in April 2008. That compares with $34.9-billion in March, and represents an increase of more than $6.5-billion from April 2007.  The five year difference finds motorists paying more than $21-billion than they paid in April 2003.
• The month ended with consumers paying about $1.337-billion each day at the pump, a record level.
• The increases were almost entirely due to stiff wholesale price increases due to the rising price of global crude. U.S. wholesale gasoline values rose 38cts gal during the month, and retail climbed 32cts gal. The larger retail increases were partially attributable to the switch from less expensive Winter blends of gasoline to less volatile Summer specifications. That transition has now been accomplished in most states, OPIS notes.
• Gasoline was the marquee product, but the numbers for diesel and jet fuel also eclipsed previous records. Average diesel prices ended the month at $4.237 gal, up 23.4cts gal.
• Jet fuel price appreciation was also staggering. The average price for jet fuel in March was $3.172 gal. The average price for jet fuel last month was $3.41 gal, an increase of 6.8% on the month and of nearly 67% from April 2007.

Source:  OPIS Transportation Fuel Index

Rising food prices is a global crisis, says UN Secretary General

A big rise in food prices world-wide is at crisis level.  What's next?

UN Secretary General Ban Ki-moon said the U.N and all members of the international community are very concerned, and immediate action is needed.

He spoke to reporters at U.N. offices in Austria, where he was meeting with the nation's top leaders for talks on how the United Nations and European Union can forge closer ties.

"This steeply rising price of food — it has developed into a real global crisis," Ban said, adding that the World Food Program has made an urgent appeal for additional $755 million.

...In Haiti, the poorest country in the Americas, protests have brought down the government and killed six, while in Cameroon at least 24 have died in protests linked partly to rising living costs.

Governments of several food-growing countries, worried about domestic shortages, have imposed export curbs, spooking markets at a time when world inventories are down sharply.

Japan announced $100 million in emergency food aid on Friday and World Food Program's executive director said on Thursday the cost of feeding the world's hungry had spiked nearly 40 percent amid spiralling food costs and oil prices.

Reuters

The cost of rice has doubled in a year

Not good news:

Rice advanced above $25 for the first time as Wal-Mart Stores Inc.'s Sam's Club warehouse unit restricted purchases of some types of rice in the U.S.

The cereal, the staple food for half the world, has more than doubled in the past year as China, Vietnam and India curbed exports to safeguard domestic supplies. Sam's Club limited customers to four bags of jasmine, basmati and long-grain white rice per visit in all U.S. stores where allowed by law, company spokeswoman Kristy Reed said by e-mail.

Consumers have started hoarding rice as supplies shrink. Thailand, which ships one third of the world's exports, may restrict sales, a World Bank official said this week. Wheat, corn and soybeans gained to records this year, spurring social unrest in countries including Haiti and Egypt.

``We have been neglecting our basic rice production infrastructure and research and development for 15 years,'' said Robert Zeigler, director-general of the International Rice Research Institute in the Philippines. ``National hoarding really doesn't help the market,'' he told Bloomberg Television.

The U.S. warehouse clubs are trying to protect business customers, like smaller restaurants, caterers, nursing homes and day-care centers, said Jim Degen, principal of J.M. Degen & Co., a food industry advisory firm based in Templeton, California.

...UN Secretary-General Ban Ki-Moon said April 20 rising food costs may hurt economic growth and threaten political security.

Bloomberg

Is there a looming food shortage worldwide?

From BBC World News

Food rationing in America? It's happening

Oh, oh:

Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing. Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks.

At a Costco Warehouse in Mountain View, Calif., yesterday, shoppers grew frustrated and occasionally uttered expletives as they searched in vain for the large sacks of rice they usually buy.

"Where's the rice?" an engineer from Palo Alto, Calif., Yajun Liu, said. "You should be able to buy something like rice. This is ridiculous."

...Due to the limited availability of rice, we are limiting rice purchases based on your prior purchasing history," a sign above the dwindling supply said.

Shoppers said the limits had been in place for a few days, and that rice supplies had been spotty for a few weeks. A store manager referred questions to officials at Costco headquarters near Seattle, who did not return calls or e-mail messages yesterday.

Spiking food prices have led to riots in recent weeks in Haiti, Indonesia, and several African nations. India recently banned export of all but the highest quality rice, and Vietnam blocked the signing of a new contract for foreign rice sales.

"I'm surprised the Bush administration hasn't slapped export controls on wheat," Mr. Rawles said. "The Asian countries are here buying every kind of wheat." Mr. Rawles said it is hard to know how much of the shortages are due to lagging supply and how much is caused by consumers hedging against future price hikes or a total lack of product.

New York Sun

Americans spent about $247.7-million more each day on gasoline in March 2008 than they did in March 2007!

Unbelievable.  Is this figure right?  Unfortunately, it probably is.  Americans have to spend nearly $250 million more per day for gas than just a year ago!  Since the Iraq war started that figure has risen to an astonishing $626 million per day spent on gas which is not available for spending or savings. 

This is seriously bad:

Retail and wholesale fuel prices shattered all previous records last month, and products used in the transportation sector began April with numbers up as much as 238% from five years ago. The wholesale and retail fuel price comparisons are included in the detailed OPIS Transportation Fuel Index (TFI) released this morning: http://www.opisnet.com/tfi.asp.

OPIS TFI Highlights:

• Americans spent about $247.7-million more each day on gasoline in March 2008 than they did in March 2007. OPIS estimates that the increase from five years ago is now $626-million per diem.
• Wholesale diesel prices ended March at an all time high of $3.288 gal, and the average retail diesel price was $4.019 gal. The largest increases - - of nearly 50cts gal - - occurred in northeastern states, but every region saw price advances of at least 41.8cts gal.
• The average nationwide price for wholesale jet fuel in March 2008 was $3.172 gal, up 42.4cts gal from February 2008 and up an incredible $2.235 gal from March 2003, or 238.7%.
• Regional retail gasoline increases on a month-to-month basis ranged from 13.6% in New England to 26.4% in western states. Wholesale gasoline prices were up some 33.1% in the month, suggesting that the uptrend in pump prices will persist into early April.

Housing debt exceeds equity for first time since 1945!

Bad news for Americans:

Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.

Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter — the third straight quarter it was under 50 percent.

That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.

Home equity, which is equal to the percentage of a home's market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.

Economists expect this figure to drop even further as declining home prices eat into the value of most Americans' single largest asset.

AP

Nation's top government financial watchdog, David M. Walker, resigns!

U.S. Comptroller, David Walker, will resign soon and become President and Chief Executive of the Peter G. Peterson Foundation, a new think tank.  Walker still had 5 years left on his 15 year term.  He was compelled to leave, I guess, due to the inaction of our seriously dysfunctional Congress.

The news foundation he will head will call attention to critical social, economic and environmental problems threatening the nation's economy and imperil the American way of life for future generations.  It might just take a foundation like this to help make changes and improvements in our government.  I hope they are successful.

One of government's chief internal watchdogs resigned yesterday, as Comptroller General David M. Walker, an outspoken gadfly and frequent witness on Capitol Hill, announced his plans to lead a new foundation focused on U.S. fiscal responsibility.

...Walker was an outspoken critic of the costs of the wars in Iraq and Afghanistan, Social Security, Medicaid and Medicare spending -- issues on which the Democratic-led Congress, and Republicans before it, have had trouble building consensus.

...Walker's resignation takes effect March 12. He will lead the Peter G. Peterson Foundation, a new think tank whose mission, according to its Web site is "to enhance public understanding of the nature and urgency of selected key sustainability challenges that threaten America's future," including "unsustainable" growth in entitlement spending, and energy consumption.   Washinton Post

Resources:

Fiscal Wake Up Tour  GAO  (Related Presentations from the former Comptroller General)

David Walker: U.S. fiscal irresponsibility worse than terrorism. (video)  zTruth

The Peter G. Peterson Foundation

America's Financial Future Part I  by David M. Walker:

America's Financial Future - Part II

Inflation highest in 26 year!

More bad news for the economy:

Wholesale inflation last year shot up by the largest amount in 26 years while retailers suffered their worst December shopping season in five years as mounting economic woes caused consumers to put away their wallets.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Meanwhile, retail sales fell by 0.4 percent in December, the worst showing in six
months, the Commerce Department reported. Consumer confidence has plunged, reflecting the worsening housing slump and a lingering credit crisis.

For inflation, the year ended on a more positive note, with wholesale prices falling
by 0.1 percent in December. That reflected decreasing costs last month for gasoline and other energy products. It was a significant slowdown after prices had soared by 3.2 percent in November, which had been the biggest one-month increase in 34 years.

...Federal Reserve Chairman Ben Bernanke last week sent a strong signal that the Fed is more worried at the moment about weak growth than inflation, given a series of weaker-than-expected data in recent weeks.

Citigroup to layoff thousands

More bad news for the economy:

Citigroup plans to announce a writedown of as much as $24 billion and layoffs that could total as much as 24,000 due to subprime and credit-related losses, CNBC has learned.

The plans will be unveiled Tuesday by Citigroup's new CEO, Vikram S. Pandit, after the banking giant reports fourth-quarter earnings. At the same time, Citigroup could also announce that it is cutting its dividend payment.Citigroup is likely to cut between 17,000 and 24,000 positions over the course of the year through a combination of layoffs, attrition and selling off businesses as part of Pandit's cost-cutting plan, sources said. Previously, it was estimated that the layoffs could reach 20,000.    Source  CNBC

Income shifting away from most of us to a few in Amerca

"Just under two-thirds (63%) of the gain in household income from 2003 to 2005 went to just 5% of the nation’s wealthiest households."

From the Economic Policy Institute:

Earlier this week Congressional Budget Office (CBO) updated its authoritative data series on household incomes (1979-2005).  The new data—highly regarded as a particularly complete source of information on this important topic—reveal a sharp increase in income inequality over the past few years. In fact, the increase in income inequality (both pre-and post-tax) as measured by the change in the shares of income going to different income classes, was greater from 2003 to 2005 than over any other two-year period covered by the CBO data.  Over these years, an amazing $400 billion in pre-tax dollars was shifted from the bottom 95% of households to those in the top 5% (all income data in this report are inflation adjusted and in 2005 dollars).  In other words, had income shares not shifted as they did, the income of each of the 109 million households in the bottom 95% would have been $3,660 higher in 2005.

...The CBO data reveal the severe depth of our inequality problem.  Though overall tax reductions during this period have meant slightly faster post-tax income growth for households in each income group, it has made little difference to the overall picture of inequality and has even exacerbated unequal outcomes over this period.

The problem is particularly stark in recent years.  Before the current problems in housing and financial markets developed, the overall economy grew solidly over this recovery, with notably strong productivity growth.  As the CBO data reveal, aggregate household income grew $1.1 trillion in the 2003-05 period (see appendix table).  But these gains have failed to flow broadly throughout the income scale, and the extent of their concentration at the top of the income scale is historically unique.  Just under two-thirds (63%) of the gain in household income from 2003 to 2005 went to just 5% of the nation’s wealthiest households.

Such concentration of income is unsustainable in a democratic society.  The distribution mechanisms that have historically worked to ensure much more equitable outcomes appear to be wholly inoperative.  Fixing them must be at the heart of any serious economic policy discussion. 

Read the report for a complete picture (see link at top).

Home Prices Fall Again

The rate of the decline in home prices is accelerating and spreading.  The gauge of 10 major metropolitan areas nationwide showed that home prices fell an average of 6.7% year-over-year, the biggest decline since the index was started in 1987. The previous record decline had been 6.3% in April 1991.

In the last five years economists note, homeowners have taken out money from their home equity which has helped drive our economy.  Will the decline in home prices and the accompanying loss of home equity purchasing power affect the economy in the months and years to come?

"The decline in home prices accelerated and spread to more regions of the country in October, according to a series of private indexes released Wednesday.

Prices fell 6.1 percent from October 2006 in 20 large metropolitan areas, according to Standard & Poor’s/Case-Shiller indexes, compared with a 4.9 percent decline in September. All but three of the 20 regions saw real estate values fall, and even the three places — Seattle, Portland, Ore., and Charlotte, N.C. — where prices were up from a year ago saw prices fall from a month earlier.

...Prices are dropping fastest in the Midwest, which has been hit hard by job losses in manufacturing, and in California, Florida and the Southwest, where the housing boom was at its frothiest. Prices have fallen the most in Miami (12.4 percent from a year ago), Tampa (11.8 percent) and Detroit (11.2 percent). Prices are also falling in the nation’s two largest metropolitan areas — Los Angeles (8.8 percent) and New York (4.1 percent).

The quickening decline in home prices could hurt the broader economy by leading to more foreclosures as homeowners have more difficulty refinancing mortgages and by sapping consumer spending as Americans feel less wealthy. But economists also noted that a faster descent from boom-era prices would allow the housing market to right itself sooner by removing vacant homes from the market."

Income Gap in America: Worst Since the 1920s

It has become quite apparent that the richest Americans control a larger and larger percentage of the nation's wealth. It's a figure that most Americans have to be sick about.  President Bush says it is because most Americans lack the proper skills.  When will Americans say enough, we are done and mean it?

According to new data from the Internal Revenue Service, the wealthiest 1 percent of Americans earned a record-breaking 21.2 percent of all income in 2005, reported today in the Wall Street Journal. Up sharply from 19 percent in 2004, and surpasses the previous high of 20.8 percent set in 2000, at the peak of the previous bull market stocks, the Journal reports.

The bottom 50 percent earned 12.8 percent of all income, down from 13.4 percent in 2004 and a bit less than their 13 percent share in 2000, according to the Journal.

"In an interview yesterday with The Wall Street Journal, President Bush said, "First of all, our society has had income inequality for a long time. Secondly, skills gaps yield income gaps.  The IRS data show that the median tax filer's income -- half earn less than the median, half earn more -- fell 2% between 2000 and 2005 when adjusted for inflation, to $30,881. At the same time, the income level for the tax filer just inside the top 1% grew 3%, to $364,657.  Wall Street Journal

The IRS data confirms the growing concerns most Americans have for their future earning power and security.  A nation that consistently only increases the earnings of its top tier earners is a failed nation.

Median Home Price: the largest year over year decline in 37 years

From Market Watch:

"This is just hideous," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. "This is more evidence that it's going to be a long and -- for a lot of people -- a painful process," said Mike Schenk, economist for the Credit Union National Association. "The soft housing market will be with us for a long time, at least 18 months."

The median sales price fell 7.5% to $225,700 compared with a year earlier, the largest year-over-year decline in 37 years..."

Some experts believe the housing market will continue to worsen for some time to come. 

..."Chief Executive Officer (of KB Home) Jeffrey Mezger said in the statement he expects ``housing industry conditions to continue to worsen through the end of the year and into 2008.'' KB Home reported its second consecutive quarterly loss after $690 million in pretax expenses to write down land and inventory.

``The writedown was much bigger than anyone had been expecting,''' said Dan Poole, who helps manage $31 billion at National City Private Client Group in Cleveland. ``If there's good news out there, it's few and far between.''

Foreclosures Up 93% from one year ago!

Rueters reports U.S. foreclosures were up 9% from June and a whopping 93% from one year ago!  States that once enjoyed a hot housing market are feeling the pain the most.  I guess this is taking the place of the dot com bust.  I wonder what will be the next hot thing?