Indian Economy Plunges in Love America! Recession Alarm Rings around the Globe! US Stocks Dive on Belief Global Recession is at Hand.UK Economy Officially on the Brink of Recession. Now, the Global Market is Allowed ACCESS in India as Markets Bleed and RBI Keeps all Interest Rates, CRR Steady. NYT Endorses Obama, Says Palin ‘Unfit for the Office’. Bhopal Must be Replicated in Every Part of India!McCain warns working classes against Obama!

[PalashKL]

Indian Economy Plunges in Love America! Recession Alarm Rings around
the Globe! US Stocks Dive on Belief Global Recession is at Hand.UK
Economy Officially on the Brink of Recession. Now, the Global Market
is Allowed ACCESS in India as Markets Bleed and RBI Keeps all Interest
Rates, CRR Steady. NYT Endorses Obama, Says Palin ‘Unfit for the
Office’. Bhopal Must be Replicated in Every Part of India!McCain warns
working classes against Obama!



Troubled Galaxy Destroyed Dreams: Chapter 92

Palash Biswas

Panic sets in as Wall Street plunges at the open
guardian.co.uk - 1 hour ago
American stocks suffered a brutal slump within moments of the opening
bell on Wall Street as a sell-off in Asian and European markets spread
across the Atlantic.
Wall Street plunges amid global meltdown The Standard
US Stocks Slide on Global Fears News10.net

American Genocide
mark to PoliticalForum

Communists killed over 100 million of their own people in the course
of the 20th Century (as horrifyingly documented here). But even though
we have communists here in the USA, we'll never have genocide, because
our democratic safeguards would stop evil people from getting that
much power, right?

Via Stop the ACLU, here's video of Larry Grathwol, who joined the
Weather Underground as a undercover law enforcement agent:
I brought up the subject of what's going to happen after we take
over the government. We become responsible then for administrating 250
million people … and there was no answers. No one had given any
thought to economics. How are you going to clothe and feed these
people? The only thing that I could get was that they expected that
the Cubans, and the North Vietnamese and the Chinese and the Russians
would all want to occupy different portions of the United States. They
also believed that their immediate responsibility would be to protect
against what they called the counter-revolution. They felt that this
counter-revolution could best be guarded against by creating and
establishing re-education centers in the Southwest, where we would
take all of the people who needed to be re-educated into the new way
of thinking and teach them how things were going to be. I asked, well
what is going to happen to those people that we can't re-educate that
are die-hard capitalists? The reply was that they would have to be
eliminated. When I pursued this further they estimated that they would
have to eliminate 25 million people in these re-education centers.
When I say eliminate, I mean kill … 25 million people.

I want you to imagine sitting in a room with 25 people, most of
which have graduate degrees from Columbia and other well-known
educational centers, and hear them figuring out the logistics for the
elimination of 25 million people. And they were dead serious.

The Weather Underground was headed by Bill Ayers, who went on to groom
Barack Obama for office, even launching BHO's political career from
the home he shares with fellow communist terrorist Bernardine Dohrn.

Nothing is so awful that it couldn't happen if the cesspool that
produced Barack Obama takes over our government.

http://www.moonbattery.com/

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Rahul asks Maya, why are Dalits backbenchers

CNN-IBN
Published on Fri, Oct 24, 2008 at 19:30, Updated on Fri, Oct 24, 2008
at 20:10 in Nation section
Lucknow: There seems to be no end to the Mayawati versus the Gandhis
war.


After targetting Congress President Sonia Gandhi, Mayawati has decided
to take on her son and Congress General Secretary Rahul Gandhi.


The Uttar Pradesh Chief Minister on Friday ordered the cancellation of
Rahul's scheduled interaction with students at the Chandra Shekhar
Azaad University in Kanpur.


The orders were sent as a written directive to the university Vice
Chancellor, just hours before Rahul was to arrive at the auditorium.


Rahul, however, kept his date with the students and held an
interactive session with them in the cafeteria.
He also addressed Mayawati's core constituency - the Dalits - at a
public meeting in the area.


"Whenever I visit schools I start from the back. Why is it that in
Lucknow which has a government headed by a Dalit, all Dalit students
are forced to sit at the back benches?" Rahul asked.


The Congress General Secretary drove to the university auditorium and
after finding it locked, he walked to the cafeteria to interact with
the students.


The SPG personnel protecting Gandhi had a tough time controlling the
over-enthusiastic students.

When they pushed some students to check them, Rahul came to their
rescue and instructed SPG men not to prevent the students from
reaching him.


Uttar Pradesh Congress Committee President Rita Bahunguna Joshi
alleged that the Chief Minister had exerted pressure on the University
Vice Chancellor to get the function cancelled.


Almost a fortnight ago the Mayawati government had cancelled the
allotment of land for construction of a rail coach factory in Sonia's
constituency in Rae Bareli.
http://www.ibnlive.com/news/rahul-asks-maya-why-dalits-are-backbenchers-in-up/76660-3.html

Recession alarm rings around the globe! Indian People may ironically
be convinced of the Survival strategy as we, the India ABLAZE have
been launched into the Space. Chandrayaan would solve our economic
wooes! And let us hope still better as we have to start for MARS very
soon! This BASTARD mood has been injected in us since the
introduction of Post Modern Manusmriti and Apartheid packed in LPG!
The Poison of Neo Liberal Vaccination works into our enslaved psyche
like genetically Modified Seeds which KILLs us like Silent Killer Gas
Leak as it happened in Bhopal. The Government of India has ensured
that the BHOPAL must be replicated in every part of US PERIPHERY
India!

Wall Street slid on signs that the economic slowdown could be deeper
than feared! US govt is expected to announce a list of about 20 banks
in next round of companies receiving capital injections under the
rescue package!

But Indian psycheis well reflected in Republican president Mac Cain`s
stance in favour of the global Ruling class. Thus, Indian Caste Hindus
die to see Mc cain in the White House!Two days after forecasting that
the outlook for the Indian economy was "somewhat cloudy", PM Manmohan
Singh today said the global economic crisis would slow down the
nation's growth to 7 to 7.5 per cent this fiscal!

With Barack Obama off the campaign trail, Republican White House
hopeful John McCain Friday courted working class voters slamming his
rival for wanting to share out hard-earned American wealth.

Despite trailing in national polls ahead of the November 4 vote,
McCain's senior advisors hope steady attacks on Democrat Obama's
alleged "socialist" tendencies will draw back wavering Republicans and
woo key independent voters.

As Obama "told Joe the Plumber back in Ohio, he wants to quote 'spread
the wealth around,'" McCain told a rally in Denver, Colorado.

"He believes in redistributing wealth, not in policies that grow our
economy and create jobs. Senator Obama is more interested in
controlling wealth than in creating it, in redistributing money
instead of spreading opportunity.

"I am going to create wealth for all Americans, by creating
opportunity for all Americans," McCain vowed.

Dr Manmohan singh may well claim that his government of india is
creating WEALTH for Indians! The Money Machine works overtime in India
as well as United states of america Killing the Blacks as well as the
Untouchables!

FIMIN in India diverted national revenue to save the Fat BIGGIE
Capitalists and the corporates from the Worldwide Meltdown. Chettiar
Chidambaram and the World Bank Gang led by RBI do work round the clock
to save Money Making process. The Parliament was subverted to discuss
the Indo Us Nuke deal and strategic Realliance. In the same manner, we
have to wtness systematic subversions created by NDA, UPA and the Left
to bypass the parliament and do everything as Mc cain promises for the
americans. We love so much america just because we happen to be its
PERIPHERY!
Just read what Mc cain has to say!

With Barack Obama off the campaign trail, Republican White House
hopeful John McCain Friday courted working class voters slamming his
rival for wanting to share out hard-earned American wealth.

Despite trailing in national polls ahead of the November 4 vote,
McCain's senior advisors hope steady attacks on Democrat Obama's
alleged "socialist" tendencies will draw back wavering Republicans and
woo key independent voters.

As Obama "told Joe the Plumber back in Ohio, he wants to quote 'spread
the wealth around,'" McCain told a rally in Denver, Colorado.

"He believes in redistributing wealth, not in policies that grow our
economy and create jobs. Senator Obama is more interested in
controlling wealth than in creating it, in redistributing money
instead of spreading opportunity.

"I am going to create wealth for all Americans, by creating
opportunity for all Americans," McCain vowed.

The stance of our Parliamentary Players are no different! We are
witnessing the drama since so called Independence long before Laughter
Show, Indian Idol or Big Boss!

It is the same case with every european and asian leaders!
Thus, Asian and European leaders are meeting in the Chinese capital to
discuss ways to increase confidence in world markets. Chinese
President Hu Jintao has said uncertainties and instability are
increasing in China's economy as a result of the global financial
crisis. Daniel Schearf reports from Beijing.

Leaders from over 40 European and Asian countries met in Beijing
Friday to encourage solidarity in facing the crisis!

Global financial problems were at the top of the agenda as they
gathered for the first day of the two-day Asia-Europe Meeting, known
as ASEM.

East Asian nations have agreed to form an $80 billion fund to help
each other fend off the effects of the global financial crisis. As
Daniel Schearf reports from Beijing, the fund could help boost
confidence in the region's markets!

Members of the Association of Southeast Asian Nations, Japan, China,
and South Korea will be allowed to dip into the money when faced with
a financial emergency.


Former U.S. Federal Reserve Chairman, Alan Greenspan, has predicted
further negative impacts for Americans from the U.S. and global
financial crisis, which he called a credit tsunami. VOA's Dan Robinson
reports, Greenspan and two other current and former U.S. officials,
faced tough questioning from lawmakers in a congressional hearing.

The longest-serving chairman of the U.S. central bank until he was
replaced by Ben Bernanke in 2006, Greenspan called the financial and
credit crisis a "once in a century credit tsunami" brought about by
heavy demand for securities backed by sub-prime mortgages.

The crisis has been much broader than anything I could have imagined,
Greenspan said, leaving him and other economic experts in a state of
shocked disbelief.


"There's a lot of panic out there today," said Scott Fullman, director
of derivatives investment strategy for WJB Capital Group in New York.
"People have been saying that we're in a recession. This is the
realization."

These are the Voices from United states of Ameriaca! The ultimate
destination of the Ruling Brahaminical Killing Class!

Indian Economy plunges deep and deep in LOVE america! Sensex
replicates Dow shamelessly as a domestic pet! It is FUN and PUN!
Copulation with decopulation! What a HONEYMOON!

Global legal Firms enter India to kill the Black Untochable Indigenous
communities as well as Law parcticenors in Misery! Corporates well
supported by the Western Legal experts! Ratan Tata now should not be
afraid to sue Ms Mamata Bannerjee stalling development and
industrialisation!Allen & Overy and Linklaters are some of the UK-
based firms which have got informal tie-ups with Indian law firms.
They have client referral arrangements with Trilegal and Talwar,
Thakore & Associates, respectively. Others like Clifford Chance have
liaison offices in India.

Amid growing signs that the global economy is worsening, the White
House yesterday extended an invitation to developing countries to
attend a summit next month in Washington with leaders of the world’s
wealthy economies. Faced with rising food and fuel prices, some of
Africa’s poorest nations are struggling to lower earlier projections
of economic growth by focusing on how to satisfy the basic day-to-day
needs of their citizens. One avenue for attracting investment needed
to keep capital flowing in to local African businesses and public
works is the practice of microfinance, or supplying credit to the poor
at agreed-to, flexible rates which they can afford to pay back in an
acceptable time frame. But the director of the Microcredit Summit
Campaign Sam Daley-Harris says that tightening pressures are being
felt even in low-end borrowing circles and that such small but
essential programs that can make a difference for Africans facing dire
poverty are also feeling the effects of the global financial pinch.

Prime Minister Manmohan Singh on Friday blamed "failure" of
international surveillance, supervision and regulatory mechanisms for
the current global financial crisis and sought immediate "coordinated
action" to restore confidence and "de-clog" the credit market.

Making an impressive debut at the seventh Asia-Europe Meeting (ASEM)
which formally admitted India into its fold, Singh said the current
international financial crisis could be attributed to three failures.

Singh, a renowned economist who had successfully launched India's
reform process in early 90s, said the first cause was a regulatory and
supervisory failure in developed countries.

"Massive failure of regulatory and supervisory mechanism has really
been the reason for the present turmoil and if there had been a good
regulatory mechanism, this would not have happened," Singh said.

Secondly, the crisis surfaced due to a failure of risk management in
the private financial institutions and finally because of failure of
market discipline mechanism, he said as the other 44 global leaders
listened with rapt attention.

"The Prime Minister had in fact had the last word," N Ravi, Secretary
(East), Ministry of External Affairs, told reporters while briefing
about the first day's deliberations at the two-day summit.

On the other hand government of india is doing everything bypassing
parliament and quite against the interest of the masses!
Prime Minister's economic panel expects interest rates to come down in
the coming weeks following the decisions taken by the Reserve Bank to
various key policy rates during the month.
"I expect the inflation and interest rates to go down in the next few
weeks", PM's Economic Advisory Council Chairman Suresh Tendulkar told
reporters after RBI unveiled its mid-term credit review policy.
And that is why the liquidity situation is being eased, he said,
adding lowering of interest rates is something that would keep growth
on path in 2009-10.
Though RBI had not taken any major initiatives during the policy
review today, it had earlier reduced the mandatory deposit that banks
keep with the central bank by 250 basis points unlocking Rs 1 lakh
crore, in addition to lowering the short-term lending (repo) rate by 1
per cent.
Commenting on Friday's policy announcement, Tendulkar said, "they have
changed the repo rate last week and it is too early to change the
rates now.
Pointing out that slowdown of the economy is inevitable, he said, "I
think some slowdown is to be expected.
The PMEAC also projected 7.7 per cent. I think slowdown under the
current circumstances is something which is inevitable. The thing is
not to let it go much below 7 per cent."
On fiscal deficit, the panel is of the view that it would not go much
beyond estimated earlier.
"I don't think it won't very much beyond that. It may come down, our
assessment was based on international commodity prices ruling then.
They have been coming down. Clearly, it would not go beyond that," he
said.
Highlights of RBI mid-term monetary policy
Following are the highlights of the mid-term review of the RBI's
monetary policy for 2008-09:
* CRR kept unchanged at 6.5 per cent.
* Repo, reverse repo rates kept unchanged at 8 per cent and 6 per cent
respectively
* Bank rates unchanged at 6 per cent
* GDP projections lowered to 7.5-8 per cent for FY 09
* Inflation to be brought down to 7 per cent by March 2009
* RBI aims to bring inflation down to 5 per cent at the earliest
* Medium term inflation target 3 per cent
* Double-digit inflation still a matter of concern
* Enough liquidity in the banking system after recent infusion

Britain sought opening of Indian legal services to foreign players,
saying it would be in the interest of both the countries.

Last year, law minister HR Bharadwaj had indicated easing of norms for
the entry of foreign law majors in India. The proposal got shelved due
to protests from lawyers in general and the BCI in particular. The BCI
has now veered around to allowing the opening up, provided all
stipulations pertaining to reciprocity are fulfilled.

Now it is ALLOWED! UK Legal Firms would take care for us so that
Justice may be ensured!This would come as a breather to UK-based law
majors such as Linklaters, Allen & Overy and Clifford Chance which
have informal tie-ups with Indian law firms.The move would be
pathbreaking as the Bar Council of India (BCI), which was averse to
allowing market access in legal sector, has backed the proposal.
Sources say that the BCI has indicated that it may consider the matter
on a country-specific basis, provided there is a quid-pro-quo
arrangement.
Both the UK and Indian governments are keen to pave way for a two-way
entry of legal eagles. Once an agreement is finalised with the UK, the
BCI may be urged to open gates for other countries too on a reciprocal
basis.
Many UK law firms have expressed their willingness to establish
presence in India. “UK has been witnessing a negative growth for quite
some time and that is why the law firms there are eyeing India,” said
Society of Indian Law Firms president Lalit Bhasin.
“No preferential treatment can be given to any particular
jurisdiction,” he added. “Majority of the tie-ups in the Indian legal
space have been signed by the UK law firms. They are doing everything
to establish a presence in India at a time when the global economy is
witnessing a slowdown,” said Anand S Pathak of P&A Law Offices.

British Justice Minister Jack Straw raised the issue when he met Law
Minister H R Bhardwaj in New delhi last september to discuss
cooperation between the two countries in the legal sector.Straw
impressed upon Bhardwaj that opening of the legal services would be in
the interest of legal systems of both Britain and India.
Government here has been hesitant to open the legal services to
foreign players because of fears among the legal fraternity that it
would put them at a disadvantage. Now all hesitations evaporated!
Britain has sought to allay any apprehensions, saying it too had such
fears when it opened its legal services some decades ago but the
result has been beneficial.
Dr manamohan singh and the Supersalve gang mercilessly arranged mass
slaughter of Indian people. The supreme SLAVE rushed to Japan to bail
out Japanese Companies dictated by washington.
and Lo! The Hindutva forces have something to rejoice as Cash-strapped
Pakistan will have to slash its defence budget by a substantial 30 per
cent over next four years if it agrees to the Interna tional Monetary
Fund's conditions for a bailout package now being discussed. Facing
severe debt-repayment problems and massive imbalance in its foreign
exchange reserves, Islamabad hopes to get $9.6 billion from the IMF
over the next three years at a mark-up rate of 16.7 per cent a year, a
media report said.
May India dare to cut the Defence budget?
Then what about the SWISS BANK accounts, KICJKBACKS, DEFENCE deals,
strategic Realliance in US Lead, Indo US nuke deal and long long Arms
Shopping Lists? Are we so unsafe despite Our Masters US present so
strongly in south asia never before!
Latin American stocks fell across the region Thursday as investors
balanced gains in the U.S. with fears that falling commodity prices,
losses on currency derivatives and hedge funds' broad unwinding of
local assets are hastening a regional downturn.
Brazilian stocks plunged again on Friday on fears of a global
recession, falling more than 8 percent shortly after trading began
Sao Paulo's Ibovespa index was down 8.5 percent to 30,979 within the
first 30 minutes of trading. Brazil's currency, the real, fell against
the U.S. dollar despite auctions by the central bank of dollar swap
contracts aimed at propping up the local currency.
It marked the fourth straight day of losses for Brazilian equities.

European and Asian leaders, including Prime Minister Manmohan Singh on
Friday initiated discussions to find a coordinated global response t
o stem the financial turmoil and the spectre of recession sweeping the
world.
Singh, who arrived here last night from Tokyo to attend the 7th Asia-
Europe Meeting (ASEM) Summit, said he hoped the meeting will come out
with a solution to the many global problems triggered by the US credit
crunch.
"This is the first time I am attending the ASEM as Prime Minister. I
sincerely hope that this meeting of minds between Europe and Asia will
produce a solution to many global problems including the international
financial crisis," Singh said on his arrival.
Earlier, in Tokyo, Singh, an eminent economist, had said that the
world was facing "multiple challenges".
"The spectre of recession in the global economy, coming as it does in
the wake of the steep rises of energy and food prices, threatens to
disrupt the rhythm of economic development in many developing
countries," he said.
Developing countries like India are also affected by the crisis and
have to be part of the solution, he had stressed.
Leaders of the Association of Southeast Asian Nations (ASEAN) and its
three neighbours have promised joint efforts to combat the global fin
ancial crisis and maintain regional economic stability.
Chinese premier Wen Jiabao chaired the meeting of leaders of the 10-
member Asean plus China, Japan and South Korea, often called Asean
plus three.
The 13 Asian leaders held an open discussion on "issues of common
concern, especially the financial crisis and its influence on East
Asia," host nation China said.
"They expressed their willingness to enhance coordination and
cooperation and to make joint efforts to prevent and withstand the
crisis in a bid to maintain economic stability," the Chinese
government reported on the official
website of the Asia-Europe Meeting (Asem).

The Reserve Bank of India (RBI) said on Thursday it was closely
monitoring financial market developments and would respond swiftly and
pre-emptively to adverse external developments that could affect
financial and price stability.
"The Reserve Bank is committed to maintaining financial stability and
active and flexible liquidity management by using all policy
instruments," the RBI said in its review of macroeconomic and monetary
developments.
"The Reserve Bank is closely monitoring developments in the global as
well as domestic financial markets and stands ready to take such pre-
emptive action as may be necessary to contain excess volatility in the
domestic financial markets," it said.
Expressing "surprise" at RBI's decision to maintain status quo on key
policy rates, the India Inc today said the central bank should have
cut key rates to spur growth.
"The RBI's policy statement has taken the industry by surprise. The
RBI should have sent a far stronger signal of growth while
understandably, it waits to see the effects of the recent policy moves
of reduction in CRR and repo rates before the next round of
reduction," Ficci President Rajeev Chandrasekhar said.
The chamber said the credit policy has been framed keeping in mind the
7 per cent inflation target for the current fiscal. "At the present
juncture the need, however, was to give some critical boost to growth
by pushing more credit to the productive sectors," it said. There is a
need to cut the CRR by another 200 basis points and repo rate by 50
basis.
The apex bank had in the last two weeks reduced CRR by 2.5 per cent
and short term lending rate by 1 per cent.
Industry body CII, however, said given that the RBI has already
announced several measures over the past weeks to deal with the
effects of the global financial crisis, the chamber understands that
today's policy is on the expected lines.
"The fundamentals of the economy are strong and the RBI has done well
to stress that India's financial sector remains stable and healthy,"
CII Director General Chandrajit Banerjee said. The policy statement
clarifies that the RBI would continue to focus on financial
stability.
Assocham President Sajjan Jindal, said though the apex bank has been
constantly reviewing the monetary development in the wake of current
downturn, it should have reduced the repo rate by 100 basis points and
brought down CRR at 6 per cent.
The RBI should urgently create a mechanism for weekly monitoring of
banks lending to ensure smooth extension of finances to Indian Inc,
Jindal said. Expressing disappointment, PHD Chamber President L K
Malhotra said the RBI did not consider adding further liquidity into
the banking system by reducing CRR.
The chamber has asked the RBI to keep vigil on the monetary situation
to ensure adequate flow of credit at affordable cost to various
sectors of the economy. President of exporters body FIEO Ganesh Kumar
Gupta said that measures such as enhancing remittances to 3,00,000
dollar for imports (from the existing limit of 1,00,000 dollar) for
overseas
suppliers and increasing limit for advance remittance for imports both
for goods and services to 50,00,000 dollar without bank guarantee
\stand by letter of credit are positive and would help the MSME
sector.
Britain's economy shrank for the first time in 16 years between July
and September, official figures showed Friday.
The country's economic output declined by 0.5 percent last quarter,
according to Britain's Office for National Statistics.
It was the first time since 1992 that Britain's economy has
contracted, and the fall was greater than analysts' prediction of a
0.2 percent drop.
The figures put Britain halfway into a technical recession _ defined
as two or more consecutive quarters of negative economic growth.
Earlier this week, British Prime Minister Gordon Brown and Bank of
England Governor Mervyn King said that they believed the country was
heading for a recession.
The news that Britain is officially on the brink of recession will
increase expectations that the Bank of England will the cut its
interest rate from the current 4.5 percent to stimulate spending.
Russia's largest retail bank Sberbank wants to shed up to 70,000 jobs,
a quarter of its workforce, the Kommersant daily reported Friday, cit
ing a plan approved by the bank's board this week.
"As indicated in the documents from Sberbank, if in 2007 the bank
employed about 270,000 people, then by 2013 the number of employees
will not exceed 200,000-220,000," the newspaper said.
In Mumbai,Dalal Street's Friday fury today shrunk the billion-dollar
companies' club to sub-100 in size as the benchmark Sensex crashed by
over 1,000
points and the rupee hit its record low of 50-per-dollar. At the end
of today's trading, when the Sensex fell to its lowest level in about
three years, there were just about 90 companies with a market
capitalisation of at least one billion dollar. The benchmark stock
index futures on Thursday slightly widened its discount to the spot
market on unwinding of long positions and as short poistions were
rolled over to the next month, analysts said.
Giants of the auto, airline and technology industries ordered
emergency action against the global financial crisis on Friday as
shares took a new hammering amid mounting gloom.
Even a 1.5 million barrel a day production cut by OPEC failed to stop
oil prices falling amid fears of a deep global recession.
Grim news backing those fears came from around the world.
Asian leaders agreed to set up an 80-billion-dollar war fund to fight
what ex-US Federal Reserve chief Alan Greenspan called a "once-in-a-
century credit tsunami".
French auto giants PSA Peugeot-Citroen and Renault ordered huge
production cuts, while Japan's hi-tech giant Sony Corp. and Europe's
biggest airline Air France-KLM issued a grim earnings and profits
warnings.
In Britain, official figures confirmed the country is about to enter a
recession while Turkey's central bank took action to strengthen bank
liquidity and prop up the slumping currency.
The combined impact sent shares tumbling in both Asia and Europe after
overnight falls in Wall Street.
Japan's Nikkei index plunged 9.60 percent, ending below the key 8,000-
point level for the first time in more than five years, and Hong Kong
fell 8.3 percent.
French shares plummeted 10.62 percent in morning trade to their lowest
point in over five years before rallying slightly while Frankfurt's
DAX 30 index slumped 10.13 percent and London's FTSE 100 index by more
than nine percent.
Technology giant Sony, a bellwether of corporate Japan, saw its shares
plunge more than 11 percent after forecasting net profit of 150
billion yen (1.55 billion dollars) for the year to March, down 59
percent on last year.
South Korea's Samsung Electronics, the world's largest memory chip
maker, also reported a 44 percent fall in third-quarter net profit.
Air France-KLM suffered a near nine-percent drop in its share price
after acknowledging it would be "very difficult" to meet its billion-
euro (1.28-billion-dollar) earnings target.
Europe's biggest airline unveiled a plan to cut costs by up to 1.2
billion euros (1.53 billion dollars) over the next five years.
The suffering extended to the auto industry with Renault ordering
almost all French plants closed for at least one week and shorter
shutdowns in Turkey, Russia and Slovenia.
PSA Peugeot-Citroen chairman Christian Strieff said he had had ordered
"massive" production cuts as the group forecast a 17-percent fall in
car sales in Western Europe in the fourth quarter.
Company officials confirmed that the slowdown would amount to a 30
percent production cut and that plants in France would lose between
two and 16 days of work each in the last three months of 2008.
There would also be cut-backs at Peugeot's sites in Madrid and Vigo in
Spain and at Trnava, in Slovakia, they said.
ArcelorMittal, the world's biggest steel producer, also called a
temporary halt to production in France, Germany and Belgium, according
to union chiefs after a meeting with management.
The political capital appears to be thinking ahead of the financial
capital, and the market is paying a price. In a world inundated wit h
news of downgrades and defaults, finance minister P Chidambaram’s
statement on Thursday that FIIs have been told to reverse transactions
where they have lent stocks to offshore entities came like a strong,
sweeping step that could push up stock prices by driving foreign
portfolio managers to buy back the shares. The political capital
appears to be thinking ahead of the financial capital, and the market
is paying a price. In a world inundated wit
h news of downgrades and defaults, finance minister P Chidambaram’s
statement on Thursday that FIIs have been told to reverse transactions
where they have lent stocks to offshore entities came like a strong,
sweeping step that could push up stock prices by driving foreign
portfolio managers to buy back the shares.
But the euphoria was short-lived: for a while the Sensex jumped back
into green but soon began to slide. Many who interpreted the statement
as a government diktat on reversal of all outstanding positions were
in for a shock when a finance ministry official clarified in the
evening that only shares lent post October 20 will have to be
reversed. But the euphoria was short-lived: for a while the Sensex
jumped back into green but soon began to slide. Many who interpreted
the statement as a government diktat on reversal of all outstanding
positions were in for a shock when a finance ministry official
clarified in the evening that only shares lent post October 20 will
have to be reversed.

Wall Street joined world stock markets in a precipitous plunge Friday,
with the Dow Jones industrials dropping more than 400 points in the
opening minutes of trading. The growing belief that the world will
suffer a punishing economic recession has investors furiously dumping
stocks. The massive decline was caused by increasingly grim news from
overseas. In Japan, shares of Sony sank more than 14 percent after it
slashed its earnings forecast for the fiscal year. In Germany,
Daimler's stock dropped 11.4 percent in morning trading after it
reported lower third-quarter earnings and abandoned its 2008 profit
and revenue guidance. Japan's Nikkei stock average fell a staggering
9.60 percent. In Europe, Germany's benchmark DAX index was down 10.76
percent, France's CAC40 dropped 10 percent while Britain's FTSE 100
sank 8.67 percent after the government said its gross domestic product
fell 0.5 percent in the third quarter, putting the country on the
brink of recession. The dour outlook convinced investors that the
world economy is headed for a long and severe downturn despite a raft
of government rescue efforts aimed at pulling the financial system
from the brink. It also indicated that the tremors caused by the
global credit crisis may have only begun to be felt in their true
scope and magnitude.

The Reserve Bank of India kept its key lending rate steady at 8.0 per
cent as expected on Friday, to gauge the impact of a hefty, surprise
cut earlier this week to cushion the economy from the global financial
crisis.
The stock market bled heavily as investors on Friday hammered banking,
realty and oil and gas stocks, pushing the benchmark Sensex down by
about 1,100 points to 8,701.07 points. The markets which opened weak
had a free fall soon after the Reserve Bank unveiled its mid-term
review of the annual credit policy, without any changes in key policy
rates. The 1,071-points plunge in Sensex today is the steepest in any
single trading session after a 1408 (rpt) 1,408 points drop on January
21, this year and has pushed the index to its lowest in about three
years despite the continuing pep talk from Finance Minister P
Chidambaram and host of measures by RBI to prop up the markets.
Fearing more carnage in world equity markets, big hedge funds and
other institutional investors have been pulling out their money en
masse in a bid to reduce risk and raise cash — a process known as
deleveraging that only intensifies the selling. Meanwhile, individual
investors that have seen their holdings decimated in recent weeks have
been yanking money out of mutual funds, adding to the downward
pressure on markets
Meanwhile,US Presidential hopeful Barack Obama, already leading
Republican rival John McCain in opinion polls, got a major boost to
his campaign with the influential 'New York Times' newspaper lending
its endorsement to the Democrat, commending him for possessing ‘a cool
head’ and ‘sound judgement’.
Contending that Obama was better placed to deal with deteriorating
economy and sensitive world problems, including wars in Iraq and
Afghanistan, the newspaper said he was also likely to engineer sound
alliances at international and national levels.

The RBI also left the cash reserve ratio, the amount of funds that
banks have to keep on deposit with it, unchanged at 6.5 per cent, but
lowered its 2008/09 growth forecast to 7.5 to 8.0 per cent from a
previous forecast of around 8.0 per cent.
It said the current challenge was to strike an "optimal balance"
between preserving financial stability, price stability, anchoring
inflation expectations and sustaining growth.
"To manage this challenge the central bank has deployed and will
continue to deploy both conventional and unconventional tools," it
said.
The central bank already cut the repo rate, at which it infuses cash
into the banking system, for the first time in more than four years on
Monday, as part of a slew of steps by the authorities to shore up
confidence as global recession fears grip investors worldwide.
On Friday it left the reverse repo rate, the rate at which it absorbs
excess cash from banks, steady at 6.0 per cent. The bank rate remained
at 6.0 per cent.
A Reuters poll of analysts this week suggested the central bank was
expected to hold key rates unchanged at its policy review. Eleven out
of 12 economists polled expected no change in the repo rate after
Monday's cut. Other key rates were also forecast to be left
unchanged.

Realty sector stocks suffered the worst, with the group as a whole
shaving off nearly a quarter of its wealth, followed by oil and gas,
banks and metal stocks.
With all the blue chips ending in red, realty giant Unitech suffered
erosion of more than half of its market capitalisation with its shares
plunging by Rs 31.75 to settle at Rs 61.80.
According to BSE data, there was only one gainer in A-group shares and
that too a public sector entity -- Container Corporation that recorded
a meagre 45 paise increase to close at Rs 706.55.
The downhill journey caused by investor skepticism was rushed further
by the global meltdown and more so by the plunge witnessed in east
Asian bourses this morning. Over 350 companies plunged to their lowest
levels.
The key index touched the day's low of 8,556.82 as funds remained
aggressive sellers influenced by a weakening global trend.
Similarly, the wide-based National Stock Exchange index Nifty also
broke the crucial 2600 points level by ending at 2584.00, showing a
hefty loss of 359.15. It touched the day's low of 2525.05 points.
The lowering of economic growth projection by RBI to 7.5-8 per cent
also eroded investors confidence. Finance Minister P Chidambaram, who
has been advising stock market investors to take informed decision and
not to resort to panic sales, said that RBI's decision not to disturb
rates was in line with expectations.
RBI would add more liquidity as and when needed, he said.
Realty sector index suffered the most by losing 562.31 points, or 24
Indian banks face rising bad debts, funding squeeze
Indian banks may be relatively sheltered from the direct impact of
global credit turmoil, but they are fighting rising loan defaults amid
a
liquidity crunch that could hit profits. Leading private sector bank
ICICI Bank has so far borne the brunt of investor concerns about its
exposure to the financial crisis, repeatedly stressing it was solvent
and deposits were safe since Lehman Brothers filed for bankruptcy
protection in mid-September.
While bad debts are expected to rise in coming months, authorities
from the prime minister down have declared Indian banks to be safe. In
September, the central bank put out a statement saying ICICI was well
capitalised as customers in some parts of the country queued to
withdraw deposits. But ICICI's shares have still lost 70 percent of
their value so far this year as investors fear the worst.
"If a bank faces a liquidity crunch, it is serious trouble. Some of
the overseas institutions fell not because they did not have assets
but because they did not have liquidity to fund the assets," said A.K.
Purwar, a former chairman of State Bank of India, India's largest
bank. "In India, despite the mandatory requirements, it has happened
so many times before."
On Monday, top Indian lender State Bank of India is expected to post a
16 percent profit rise on solid loan growth, while ICICI is likely to
report earnings slipped for the second consecutive quarter. But all
eyes will be on ICICI's exposure to bonds linked to Lehman and other
soured credit.
India's banking system is dominated by government-run banks -- they
account for about 70 percent of assets and liabilities -- and all
banks have to hold nearly one-third of their deposits in government
bonds and as cash reserves with the central bank.
Since 1969, India has not allowed a bank to collapse, merging at least
two dozen troubled lenders with stronger, mostly state-run banks,
according to the central bank. And Indian banks' total exposure to
failed Western banks amounted to $1 bn, a fraction of their total loan
book of $510 bn at end September, according to central bank data.
"Indian banks do face headwinds, though it is not a worrying or dire
situation now," said Ritesh Maheswari, senior director of Asia
Financial Institutions Ratings at Standard & Poor's in Singapore. "But
if the credit crisis is prolonged it could have limited liquidity
constraints on Indian banks and many others in the region will also
face similar issues."
CREDIT EXPLOSION Indian banks had outstanding loans of 25.4 trillion
rupees ($510 bn) and total deposits of 34.4 trillion rupees ($690 bn)
at end-September, according to central bank data. In the three fiscal
years ending March 2008, banks' lending grew at annual rates of around
30 percent. That has slowed to around 25 percent, but still remains
above the central bank's prefered rate of 20 percent in 2008/09 (April/
March).
Retail loans, mortgages, credit cards, auto and consumer durable
loans, which were among the fastest-growing segments, are now likely
to be major risk areas as bad debts are expected to rise to 4 percent
of advances by March 2009, said rating agency CRISIL, a unit of
Standard & Poor's. Loans for housing and stock investments also
mushroomed in recent years, helped by booming economic growth. But
interest rates have risen, the stock market has plunged by more than
half this year and the property market has turned down.
Five banking analysts expect net new bad loans at Indian banks to grow
on average by close to 3 percent in the current financial year and
next, leading to higher provisions, lower profits and less money to
lend. In a September report, Morgan Stanley and Oliver Wyman forecast
defaults would peak over the next 12-24 months and overall
provisioning costs would more than triple to 750 bn rupees from 200 bn
rupees in 2008.
ICICI Bank and Axis Bank were among the most leveraged Asian banks
that were exposed to a turn in the credit cycle, Morgan Stanley said
in a separate report last month. "Korea, Australia and India are at
top of the heap. These are countries where economic slowdown can have
a big impact on asset quality and hence earnings at banks," the report
said. Analysts rank state-run banks with a strong deposit base and
second-biggest private-sector bank HDFC Bank among the best suited to
weather the storm.
LIQUIDITY PROBLEMS A lack of liquidity has forced some banks to borrow
at interest rates of 20 percent or more and frozen local money
markets, prompting policy makers to unveil a slew of measures to boost
lending activities. The central has slashed reserve requirements, cut
interest rates and pumped extra cash into markets to keep credit
flowing. Analysts say with the global credit markets virtually shut
for local firms, the scramble for bank credit will rise, pushing up
interest rates and worsen asset banks' asset quality.
V. Leeladhar, deputy governor at the Reserve Bank of India, said it
was difficult to categorically give all banks a clean bill of health
during such times, but added Indian banks were mostly well equipped to
face the fallout of the global crisis. "I think nobody will be able to
give you a certificate saying which banks are sound at such a time
because we don't know which bank will be affected next," he said
earlier this month. "Today it could be a strong bank, but tomorrow it
could be bought down to its knees."
'Tortured' by Left, Somnath ready to quit
Feeling 'tortured' by the Left parties' repeated "questioning" of his
decisions, Lok Sabha Speaker Somnath Chatterjee on Friday threatened
to step down "here and now" as a protest against "insult" to the
Chair.
Maintaining that it was “unfair” on part of Speaker Somnath Chatterjee
to hold that the Left was targeting him, the CPI(M) on Friday said
they had never “violated” any of his rulings or directives though
there could have been differences in approach.Comments by senior
CPI(M) leaders came a few hours after the Speaker said in Lok Sabha
that he felt “tortured” by the Left’s repeated “questioning” of his
decisions and threatened to step down as a protest against “insult” to
the Chair.
“In a parliamentary democracy, there will always be disputes over the
rulings of the Chair. It is not important that there are disputes, but
whether the rulings have been violated or accepted. We have always
followed the rulings of the Speaker,” Politburo member Sitaram Yechury
told reporters in response to a spate of questions on the issue.
Asked whether the CPI(M) members were “needling” the Speaker,
Yechury’s party colleague Rupchand Pal said “we have never done this.
We have very good personal relations with him and we would appeal (to
him) not to take it personally. Don’t be too harsh on us.” CPI(M)
leaders had on Thursday charged Chatterjee with discriminating against
his former party colleagues, one of whom, A P Abdullakutty, was
suspended from Lok Sabha on Wednesday for waving a paper in the
House.

The Speaker vent his unhappiness when CPI(M) leader Basudeb Acharia,
while initiating a debate on anti-Christian violence in Orissa and
Karnataka, said that for the last four days he had been pressing for a
discussion on the important issue through an Adjournment Motion but it
was not allowed.
"I have been giving notices for Adjournment Motion," the CPI(M) leader
said and wondered why it was not allowed.
Angered by this, Chatterjee said "I also tried to hear what you
raised. Let us not go into the past. I also have issues to raise. You
have sufficiently provoked me and I have kept silent."
Chatterjee said a "new culture" had emerged in the House wherein the
members "go on questioning" the Speaker's ruling.
As Acharia pointed out that this issue was not discussed, the Speaker
commented: "This is most unfortunate. I will show you video clippings.
Say where it (the discussion) could have been allowed."
CPI leader Gurudas Dasgupta got up with the Rule Book to identify
provisions under which the discussion could have been allowed.
At this, Chatterjee said Rule 60 sub clause (1) provided for consent
by the Speaker and he was not bound to give it.
Crisis forces French car groups into 'massive' production cuts
French car groups PSA Peugeot-Citroen and Renault on Friday ordered
major production cuts and European truck makers reported a collapse in
or
ders caused by the spread of the financial crisis.
Renault said it has ordered the temporary closure of plants of nearly
French plants and some abroad, while Peugeot ordered "massive"
production cuts in the fourth quarter because of a drastic fall in car
sales.
Renault has ordered the closure of nearly all its French factories for
one or two weeks from next week, the company said. The CGT union has
organised protests outside at least one plant.
A Renault spokesman said production would be halted for between one
and four days at Bursa in Turkey, a Moscow plant and at Novo Mesto in
Slovenia.
"We are in a period when, without doubt, markets are collapsing and to
avoid a brutal degradation in the company's situation, we have to
manage stocks in an extremely tight way," said the spokesman,
insisting the closures are temporary.
The firm has already announced 4,900 job cuts and said Thursday that
production would be cut 20 percent in the final three months of the
year because of falling sales.
Renault said that if conditions did not worsen further it still
expected a slight rise in the group's sales over 2007.
Peugeot chairman Christian Streiff said in a statement the group had
been forced to "react very quickly" to the crisis and take
"exceptional measures" to reduce production which would undoubtedly
hit 2008 profits.
"The production cuts will be massive in the fourth quarter because it
is essential that the group is in a good position to face the year
2009," Streiff said without out giving details of the cuts.
Peugeot forecast a 17-percent fall in car sales in Western Europe in
the fourth quarter and eight percent for the whole year. The group
said its own sales would fall about 3.5 percent after earlier
predicting a 5.0 percent rise.
With truck sales a key indicator of the health of the economy, Swedish
maker Scania said orders in western Europe fell 69 percent in the
third quarter and rival Volvo said it had seen a 55 percent fall in
another sign of a looming global recession.
Volvo chief executive Leif Johansson said that after record sales and
profits in the first two quarters, demand for heavy trucks had slowed
far faster than expected because of the impact of the global crisis.
Demand was weak in the company's main market in Europe, and also in
Japan, and signs were emerging that the economic climate was weakening
in other parts of the world.
It said truck orders had fallen 41 percent overall -- with Western
Europe down 69 percent and Eastern Europe, a growth market, falling 45
percent.
Scania chairman Lief Ostling said in a statement that even orders in
Russia had fallen. The European auto and truck market has been badly
hit by the crisis with Opel of Germany and Fiat of Italy already
announcing thousands of temporary layoffs.
Ferdinand Piech, chairman of Volkswagen, Europe's biggest carmaker,
said this week that: "The financial crisis is working like a turbo. No
one can say when we will come out of this valley. But we should
prepare ourselves for a dry spell."
ITT cuts jobs, lowers outlook as economy sours
Diversified manufacturer ITT Corp scaled back its full-year earnings
and revenue forecast on Friday as it plans to cut jobs and ramp up
its
restructuring in the face of a souring economy and unfavorable
exchange rates. The company, which has been selling off slower-growing
units to focus on its water treatment, defense and motion control
businesses, said it would spend $48 million more than it expected this
year, mostly on job reduction, as it accelerates efforts to reshape
itself.
ITT joins a growing list of US companies scaling down employment as
they brace for a recession, including Wall Street giant Goldman Sachs,
carmaker Chrysler, drugmaker Merck & Co and soft drinks company
PepsiCo Inc. Because of the extra restructuring costs, ITT cut its
full-year earnings forecast to a range of $3.97 to $4.03 per share,
from its previous outlook of $4.11 to $4.17.
Wall Street was expecting $4.17, on average, according to Reuters
Estimates. The company, which makes a range of pumps, filters and
military electronics, also cut its full-year revenue forecast by $100
million to a range of $11.5 billion to $11.6 billion due to currency
exchange levels. ITT, which sells many of its products overseas, has
suffered from the recent rise in the value of the US dollar.
That sharp rise has also hurt other manufacturing conglomerates with
big overseas markets, such as General Electric Co, United Technologies
Corp and Honeywell International Inc. "We are preparing for projected
softening of the global economy," ITT Chief Executive Steve Loranger
said in a statement.

The company plans to reduce head count at its U.S. and European
operations, but gave no details. Shares of ITT fell 8 percent to a
four-year low of $38.07 in early trade on the New York Stock Exchange.
Also on Friday, the White Plains, New York-based company reported
third-quarter earnings of $1.12 per share from continuing operations,
excluding one-time items. That beat analysts' average estimate of
$1.06. Sales rose 32 percent to $2.9 billion.




NDA nearly sold off Air India: Patel

Accusing the previous NDA Government of nearly selling off national
carrier Air India, Civil Aviation minister Praful Patel today said the
UPA has made aviation a ‘sunrise sector’.
Replying to the discussion on the Airports Economic Regulatory
Authority of India Bill 2007, which was passed by Parliament, Patel
lashed out at his predecessor Rajiv Pratap Rudy, saying though he
spoke passionately about upholding the significance of Air India, "it
was in fact during the NDA regime that tenders had been issued for
selling it off ....there was a bid by Tata-Singapore for it".

He said it was also during NDA rule "that Air India lost out to
competition as it was not allowed to buy new carriers".

The Minister also expressed surprise over Rudy's remark that there was
a "cartelisation of Air India-Jet-Sahara". He said had this been the
case then the national carrier would also have been levying congestion
charges on passengers.

Patel said the UPA government has not only upheld the dignity of Air
India, but it also provided passengers with "so much to choose from"
with the presence of several low-cost airlines. "This has also led to
the high growth in the aviation sector," the Minister said.

Promising to adhere to the suggestions of the Standing Committee on
Transport, he said the Ministry will take care of the interests of the
employees of airlines.


92.6% of bank deposits fully protected: Govt

Government said that 92.6 per cent bank deposits are fully protected
under the Deposit and Insurance and Credit Guarantee scheme.
"As at the end of March 2008, fully protected deposits accounts
constituted 92.6 per cent of total number of deposit accounts,"
Minister of State for Finance Pawan Kumar Bansal said in a written
reply in the Lok Sabha.

He, however, ruled out the possibility of formulating any special law
to protect the interests of depositors in the financial institutions.
He added that the Deposit and Insurance and Credit Gurantee
Corporation (DICGC) extends insurance cover to small investors in the
banking system of the country.

Deposit insurance is compulsory for all banks in the country and the
Deposit Insurance Scheme covers all commercial banks including local
area banks, regional rural banks, co-operative banks and private banks
across the country, he said.

He said that in the event of liquidation, reconstruction, amalgamation
of an insured bank, every depositor is entitled to repayment of his
deposit up to Rs one lakh.

Credit policy on expected lines: FM

Finance Minister P Chidambaram on Friday said the mid-term review of
Reserve Bank's credit Policy was on expected lines and the central
bank would take radical steps to deal with the emerging situation.
"RBI will continue to deploy both conventional and unconventional
tools. We cannot rely only on conventional measures but we will have
to adopt unconventional or unorthodox measures," he said while
welcoming the steps taken by the RBI.

He further said that the RBI has not touched the repo rate, reverse
repo rate or the bank rate or the cash reserve ratio and "this is
along the expected lines."

The central bank will infuse more liquidity if necessary, he said,
adding that RBI will continue to use the Liquidity Adjustment Facility
window with flexibility.

RBI, he said, had taken a number of steps between October 6 and
October 20 to inject liquidity into the system to deal with the credit
crunch.

The central bank had reduced the mandatory deposits that banks keep
with RBI by 250 basis points unlocking a whopping Rs 1,00,000 crore
into the cash-starved banking system.

Besides, it has also slashed the short term lending (repo) rate by one
per cent signaling softening of interest rates.

Volvo announces 850 job cuts in construction equip unit

Swedish heavy vehicles maker Volvo has announced 850 job cuts in its
construction equipment unit following a decline in demand for the
produ
cts globally.

"The actions we are taking now are needed in order to adjust
production capacity to declining demand and to ensure that the company
is coming out stronger from this downturn," Volvo Construction
Equipment President, Hauler Loader Business Line, Yngve Rosn said in a
statement.

Earlier, Volvo Construction Equipment had slashed 500 jobs in Sweden
and now will show pink slips to additional 850 employees.

"It is estimated that out of the additional 850 employees that has now
been given notice within Volvo CE in Sweden, approximately 10 per cent
are white collars and the rest are blue collars," the statement
added.

All Volvo Construction Equipment's locations in Sweden have been
affected and negotiations with unions have immediately started.

The statement said that global slowdown in construction equipment
market, which started in North America during last year, has now
spread to Europe.


BJP, RSS back Hindu Jagran Manch, allege conspiracy
Font Size -A +A
Express news service
Posted: Oct 24, 2008 at 1118 hrs IST

New Delhi, October 23: On a day when various non-BJP parties demanded
action against the Hindu Jagran Manch and other Hindutva organisations
alleged to have a hand in the Malegaon blasts, the BJP slammed the
“non-BJP forces” for “dragging the name of nationalist organisations
in the terror attack” while the RSS smelt a “political conspiracy” in
the whole episode.
BJP general secretary Vinay Katiyar alleged that politics was behind
the allegations and demanded a CBI inquiry into the episode. “This is
an old case. It’s only due to the approaching elections that such
allegations are being levelled. Let the accused be arrested, and let
there be a CBI inquiry into the whole episode,” said Katiyar.

The RSS, on the other hand, said there was a “conspiracy to malign
Hindu organisations”. “The charges against Hindu organstions are
utterly false and malicious. Violence and blasts must be condemned.
But we also condemn the project to malign various Hindu
organisations,” said former RSS spokesperson Ram Madhav.

On the alleged involvement of a former ABVP national executive member
in the Malegaon blasts, Ram Madhav said: “None of our functionaries
will ever be involved in such activities. We want investigating
agencies to investigate and punish the culprit.”

Maharashtra BJP general secretary Vinod Tawde, on the other hand, saw
the hand of the Sharad Pawar-R R Patil duo behind the controversy.
“The argument that the RSS, the ABVP and other nationalist
orgnaisations could be involved in the blasts is yet another attempt
to appease the Muslims. The Congress-NCP combine, especially the
Sharad Pawar-R R Patil duo here, have been making attempts to drag the
name of nationalist orgnaistions in terror blasts,” he said.

Tawde, who was active in the ABVP before joining the BJP, told The
Indian Express: “The Congress and the NCP are ruling both the Centre
and Maharashtra. What are they waiting for if they have any proof to
establish the role of nationalist organisations’ hand in the blasts?”


In Delhi, BJP vice-president Mukhtar Abbas Naqvi said the parties
alleging the involvement of Hindu groups in the Malegaon blasts lacked
“any credibility whatsoever”. “These are the same parties which have
been proudly protecting the SIMI. They have no legitimacy and
credibility in the eyes of the people,” he said.

http://www.expressindia.com/latest-news/BJP-RSS-back-Hindu-Jagran-Manch-allege-conspiracy/377266/


Maya vs Rahul: No auditorium, Rahul meets students in cafe

After Congress President, it was the turn of her son Rahul Gandhi to
be targeted by Uttar Pradesh Chief Minister Mayawati when the
administration of a university in Kanpur cancelled a scheduled
interaction with students in its auditorium.
Almost a fortnight after the controversy over the Mayawati government
cancelling the allotment of land for construction of a rail coach
factory in Sonia's constituency in Rae Bareli, the gates of the
auditorium in the Chandrashekhar Azad University were locked when
Rahul arrived in Kanpur on Friday for the interaction with students.

UPCC President Rita Bahunguna Joshi alleged that the Chief Minister
had exerted pressure on the University Vice Chancellor to get the
function cancelled. She said the administration had withdrawn all
security for the leader.

But an unfazed Rahul kept his date with the students holding an
interactive session with them in the cafeteria.

Immediately after landing at the airport, Gandhi drove to the
university auditorium and after finding it locked he walked down a
kilometre to the cafeteria with students to have an interaction with
them.

The SPG security personnel protecting Gandhi had a tough time
controlling the over-enthusiastic students. When they pushed some
students to check them, Gandhi came to their rescue and instructed SPG
men not to prevent the students reaching him.

Sensex crosses record 16 milestones in a year
Mumbai (PTI): With the Sensex plunging below 9,000-point mark on
Friday, the benchmark index has passed through a record 16 milestones
of 1,000 points each in the past one year -- but as many as 13 of them
were on the path downhill.

A year ago, the Sensex stood at 18,512.91 points on October 24, 2007,
from where it has more than halved to slip below 9,000-point mark for
the first time in about two and half years.

In the past one year, the Sensex scaled three milestones of 1,000
points -- from 19,000 points to 21,000 points between November last
year and January this year -- but there after it has breached 13
thousand-point marks till now.

Last year, in the Mahurat trading on Diwali had been trading just
below the 19,000 levels after which the index climbed two 1,000-point
milestones to 21,000 on January 10, 2008.

However, after the peak the index started losing its grip which has
seen it plummeting to 8,000 levels today -- falling by 13 milestones
of 1,000 points.

The index has seen these levels two and a half years earlier on June
14, 2006, when the Sensex had slipped to 8,929.44 points. But it had
made a sharp recovery and scaled the psychological 9,000 and 10,000
levels within a short span of six trading sessions in 2006.

Market analysts believe the bellwether index may see further downward
1000-points milestones till the end of this year as they expect Sensex
to fall even below the 8,000 levels.

Dollar falls to 95.32 yen, lowest in 13 years
TOKYO (AP): The U.S. dollar has fallen to its lowest level against the
Japanese yen in 13 years.

In afternoon trading in Tokyo Friday, the dollar sank as low as 95.32
yen.

Traders said the dollar is being pressured on worries about a
recession in the U.S. economy amid the unfolding financial crisis.

Dollar-selling also intensified amid speculation that the Federal
Reserve would cut interest rates again to shore up the sagging U.S.
economy.

A strong yen hurts Japanese exporters by eroding their overseas
earnings when converted back to yen.

RBI deputy: lower oil "beneficial" for BoP
Fri Oct 24, 2008 8:32pm IST Email | Print | Share| Single Page[-]
Text [+] MUMBAI (Reuters) - The Reserve Bank of India (RBI) has a
cushion to manage government borrowing while lower global crude prices
will have a "beneficial" effect on the balance of payments, a deputy
governor said on Friday.

"We have a cushion for managing for the government borrowing. I have
the cushion of MSS (market stabilisation scheme)," Rakesh Mohan told
reporters.

He also said the real effective exchange rate of the rupee , which
slumped to a record low of 50.15 per dollar on Friday, was not very
different from what it was in 2004/05.
Dow Closes Up 172 Points
Forbes - 20 hours ago
After a roller-coaster session on Wall Street, the Dow Jones
industrial average swung to a 172-point gain Thursday. In a day of
dramatic swings, the index fell nearly 300 points at one point.
Wall Street plunges amid global meltdown ABC Online
Stocks head for sharp decline on recession fears WOI


Short-sale can cushion dramatic fall in prices


24 Oct, 2008, 0740 hrs IST,Sandeep Parekh, TNN

Short selling is one of the most misunderstood acts in the stock
market. It is therefore blamed for everything from assassinations to
creation of financial market crises. In the past few months several
countries have restricted or banned short selling—almost invariably
with unintended and harmful consequences.

Short selling is a simple act—that of selling before buying stock.
This is possible by borrowing stocks which are then sold short. Like
all borrowings, these stocks must be returned by buying them
subsequently from the market. If on such later date, the price is
lower, the short seller makes money and if they are higher, the short
seller loses money. Because of the additional sale pressure, at the
time of the initial sale, the market prices of such stocks fall. As
regulators do not like falling prices, they dislike short sellers.

However, this is a myopic view of short selling, because there are two
benefits of short selling which not only make markets more efficient,
but also cushion a dramatic fall in prices.

First, the efficiency argument. It has been seen time and again that
short selling punctures market bubbles. Thus when there is excess
exuberance, short sellers bring prices back to earth. This enables
prices to more closely reflect reality. In the absence of an efficient
market for shorting , asset bubbles like the one we are seeing
deflated, actually bursts. Regulators have no problem with inefficient
markets so long as they are going up, bubble creation be damned.

Second, as explained above, every short position must be reversed by
purchasing from the market. Thus even in times like the present, any
immediate fall in the prices is followed by a cushion of purchases
(called “short covering’ ’ in market jargon) so that prices do not
fall beyond a particular level. Take away the right to short and you
will see a more dramatic fall in prices without a bottom as people
will still sell their current holding.

The above arguments are supported by extensive data, some as recent as
a few weeks back, examining recent bans in the US.

The recent move by SEBI outlawing or restricting short selling is
therefore deeply disturbing not just from an economics viewpoint, but
also from a market fall perspective. If we think we can become
prettier by breaking the mirror, we will not only not be prettier,
we’ll get some shrapnel of broken glass too.

(Courtesy: Timesofindia.com)

Rupee, shares punished; markets look to RBI


23 Oct, 2008, 1630 hrs IST, REUTERS

MUMBAI/NEW DELHI: The rupee fell to a record low and shares dipped to
their weakest levels in more than two years on Thursday as a global
rout of equities washed through India's markets.

All eyes were on a Reserve Bank of India (RBI) rate review on Friday,
although few market watchers expected another rate cut so soon after
it slashed the key lending rate by 100 basis points to 8.0 percent
this week as policy makers joined central banks and governments across
the world in fretting about slowing growth at home and abroad.

India's annual inflation rate is still in the double digits but data
on Thursday showed it is at least declining, allowing authorities to
focus on maintaining expansion and liquidity to weather the global
turmoil instead of price stability.

And the oil minister offered the prospect soon of a possible cut in
government-set fuel prices to ease the burden on consumers ahead of
key state elections in the next two months.

"Relaxation in the monetary policy as was witnessed in the recent past
are in line with the softening trend in inflation," said Indranil Pan,
chief economist at Kotak Mahindra Bank.

The wholesale price index, the country's most widely watched inflation
measure, rose 11.07 percent in the 12 months to Oct. 11, below the
previous week's annual rise of 11.44 percent.

Inflation peaked at 12.9 percent in August and Economic Affairs
Secretary Ashok Chawla said the government expected inflation at
9.5-10 percent by the end of 2008.

US crude oil has fallen to about $67 a barrel from a record above $147
in July, putting pressure on India to cut the price of fuels still
controlled by the government, after it raised them by about 10 percent
in June.

Some politicians urged the government for a cut to help the common
man, just as it helped ailing airlines by giving them six months to
pay jet fuel dues in instalments. Oil Minister Murli Deora said it was
watching the price of crude and would decide in a week if administered
prices should fall.

US has plundered world wealth with dollar :China paper


24 Oct, 2008, 1254 hrs IST, REUTERS

BEIJING: The United States has plundered global wealth by exploiting
the dollar's dominance, and the world urgently needs other currencies
to take i
ts place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People's
Daily said that Asian and European countries should banish the U.S.
dollar from their direct trade relations for a start, relying only on
their own currencies.

A meeting between Asian and European leaders, starting on Friday in
Beijing, presented the perfect opportunity to begin building a new
international financial order, the newspaper said.

The People's Daily is the official newspaper of China's ruling
Communist Party. The Chinese-language overseas edition is a small
circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views.
But the commentary, as well as recent comments, amount to a growing
chorus of Chinese disdain for Washington's economic policies and
global financial dominance in the wake of the credit crisis.

"The grim reality has led people, amidst the panic, to realise that
the United States has used the U.S. dollar's hegemony to plunder the
world's wealth," said the commentator, Shi Jianxun, a professor at
Shanghai's Tongji University.

Shi, who has before been strident in his criticism of the U.S., said
other countries had lost vast amounts of wealth because of the
financial crisis, while Washington's sole concern had been protecting
its own interests.

"The U.S. dollar is losing people's confidence. The world, acting
democratically and lawfully through a global financial organisation,
urgently needs to change the international monetary system based on
U.S. global economic leadership and U.S. dollar dominance," he wrote.

Shi suggested that all trade between Europe and Asia should be settled
in euros, pounds, yen and yuan, though he did not explain how the
Chinese currency could play such a role since it is not convertible on
the capital account.

A two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16
Asian countries was set to open on Friday. Though few analysts expect
much in the way of concrete agreements, Shi said it could prove
momentous.

"How can Europe and Asia grasp each other's hands and together
confront the once-in-a-century global financial crisis sparked by the
U.S.; how can they construct a new equitable and safe international
financial order?" he said.

"The world is waiting for this Asian-European meeting to achieve big
results in financial cooperation."

stralia shares hit 4-year lows in Asian rout


24 Oct, 2008, 1151 hrs IST, REUTERS

MELBOURNE: Australian shares fell 2.6 per cent on Friday to close at
four-year lows, joining a rout across Asian equity markets on worries
that a li
kely global recession would slash company earnings.

The market quickly reversed an initial 1.1 per cent gain, helped by a
late rally on Wall Street, as banking stocks slid and leading miners
extended the week's steep falls on soft commodities prices.

Australia's benchmark S&P/ASX 200 index fell 105 points to 3,869.4,
closing at its lowest level since November 2004 and extending heavy
losses into a third day. For the week, stocks were down 2.5 per cent.

The index touched a low of 3,830.0, as shares in Tokyo slumped 7
percent and markets across the region braced for the prospects of
widespread recession.

"Investors are looking at the earnings downgrades coming out of there.
It has refocused people's attention on the two sides of the problem,
the financial stresses and the slowing economy," said Eric Betts,
equities strategist at Nomura Australia.

"Things won't improve until we can see across the valley of the
economic slowdown and we get some sustained improvement in credit
spreads."

Betts said further government interventions or central bank interest
rate cuts would be needed to help stabilize markets.
New Zealand's benchmark NZX-50 index finished down 1.0 percent to
2,778.5. Banking and financial stocks sold off after holding firmer in
recent days. National Australia Bank fell 3.1 percent and ANZ Banking
Group was down 2.5 percent.

Shares in fund manager Perpetual slumped 6.8 per cent to A$43.00 after
suspending redemptions in several of its funds, along with several
other investment firms, to halt an exodus of cash into local banks
covered by a government deposit guarantee.

Axa Asia Pacific, which also halted redemptions on an income fund, saw
its shares fall 8.0 percent to A$4.14.

Leading miners Rio Tinto fell 4.3 per cent to A$64.10 and BHP lost 1.3
per cent to A$24.38, extending steep falls made on Thursday which had
been prompted by a sharp slide in commodities prices.

Building materials maker Boral Ltd dropped 8.9 per cent to A$4.63
after the company said its full-year profit would be below last year's
level, hurt by the U.S. home building slump.

In America Indian investors trust
Sensex cool to home heroics
VIVEK NAIR

Mumbai, Oct. 23: The sensex now marches to the heartbeat of the Dow.

The American and Indian indices have formed a unique cardiac rhythm,
rising and falling as part of a gigantic Mexican wave that has rumbled
through global markets over the past two months, ripping pockets and
reputations.

The global financial turmoil, which has deepened in the past two
months, has seen local investors scramble every morning to see how the
Dow fared the previous day — an obligatory ritual in an uncertain
world where paper-wealth parvenus are at risk of turning into paupers.

“Some of my retail clients are now keeping tabs on the Dow Jones
Industrial Average on an almost daily basis,” said one broker on Dalal
Street, where the Bombay Stock Exchange is located.

“If the Dow slides, we catch the chills,” said one bemused analyst who
felt that the market was ignoring the strong talk and the pump-priming
measures announced by the finance ministry and the RBI in recent
weeks.

On Thursday, for instance, the sensex opened with a gap-down of 486
points from the previous close, choosing to ignore the positive signal
sent by the RBI late on Wednesday when it permitted companies to bring
in up to $500 million of their external commercial borrowings. Gap-
down is the difference between the index’s previous close and the
following day’s opening.

At any other time, the sensex might have been expected to open strong
on such news. But in the troubled times, it has tended to take its cue
from the Dow, which plunged 5.7 per cent on the previous night.

Today, the sensex tumbled below the 10000-level to close at an over
two-year low at 9771.70, a fall of 398.20 points, or 3.92 per cent.

This is not the first time the index has set its face against positive
local factors. On October 16, it plunged over 524 points at the
opening bell even though the RBI had injected Rs 40,000 crore into the
financial system by trimming a key reserve ratio for banks.

Broker circles blamed Thursday’s crash on weak overseas markets, which
have been spooked by fears of a recession. These markets have also
seen poor corporate earnings with job cuts adding to the gloom.

“The correlation between our market and theirs is the highest in times
of euphoria and deep despair,” says Arun Kejriwal, director at KRIS.
“It is lowest when things are normal.”

Others believe that the Dow-sensex correlation is natural since the
biggest investors in the Indian markets are the financial
institutional investors (FIIs), most of whom are already heavily
invested in the US markets.

Gaurav Dua, head of research at Sharekhan, says the FIIs had invested
over $17 billion in Indian stocks last year and have pulled out $11
billion after the crisis exacerbated this year.

P. Phani Sekhar, fund manager at Angel Broking, agreed that the Dow-
sensex correlation — which is arguably closer than any other Asian
regional index — has been triggered by huge FII sales this year. He
reckoned they were forced to sell stocks and get into money because of
the turmoil in the US.

Sekhar also blamed Indian companies for failing to acknowledge the
troubles early. “They were all in denial till now about a slowdown.
But while announcing their quarterly results, they have started
talking about a possible slowdown,” he added.

An analyst with a foreign brokerage said the slump should also be seen
in the context of a perceived global economic slowdown.

“Strong Indian companies will also be affected by the slowdown. The
current share prices are reflecting this anxiety,” he added.

http://www.telegraphindia.com/1081024/jsp/frontpage/story_10013287.jsp

Inside the firm, fear and fun
Thursday morning began with the sensex dipping below 10000 points.
Samyabrata Ray Goswami spent a dog day afternoon, and a bit of the
gloomy morning, inside a brokerage firm on Dalal Street to track the
woes, and bouts of joy, of traders and their clients. The firm
requested that its name not be published.

The smiles break out a little after 1pm as the sensex recovers 100
points following the morning freefall. One of the brokers, who had
remained glued to the trading screen since 9.55am, cracks a few jokes,
all centred around the original Big Bull. Harshad Mehta is no more,
but he remains a hero to some and villain for others.

“Ajit to Robert: ‘Raabert, Harshad Mehta ka stool test karao. Pata toh
chale ki yeh bull-s*** kya cheez hai.”’

Laughter rings out, but lasts only for a few seconds. The slide has
begun again.

For most brokers, like Hariom Dave, Dalal Street has been a great
leveller.

The 28-year-old stock dealer, employed with a small, family-run
brokerage firm on the street that has seen many dreams, and mega-
bucks, made and unmade, is now living through the other side of
euphoria.

“I have only seen the good days at the markets. It is time for me to
see the other side now. That’s what makes one gritty, builds strong
nerves,” he says, climbing a paan-stained staircase leading to a
grubby corridor that takes one to his three-room office.

Dave has been with the firm for over 10 years. His father worked here
before him.

Inside, dealers sit staring at the trading terminals and mouth
expletives as the Reliance Industries scrip takes a tumble — the
company’s lowest since December 15, 2006. The behemoth is down to Rs
1215.25 from over Rs 3,000 in January.

Dave and most of his clients are worried but not Mohammed Hanif (64).

Hanif shoves a fellow client for a better look at the computer screen
— spilling a cup of tea over his keyboard in the process — but seems
nonplussed. The garment trader, who sets aside a small amount every
month for investing, says he is disturbed but not nervous.

“I have been playing the markets for the last 40 years. I have seen
upheavals. But eventually it will all pass. I look at the long term
and invest prudently, not on the basis of rumours. I have stayed on
with this firm since I first entered Dalal Street. I am not running
away scared, because some people in the US have acted silly. My
children are settled. Playing the markets is not a necessity for me,”
says the veteran of many bourse battles.

Dave settles down at his seat and after peering at his terminal,
starts making calls to clients, asking them whether they want to buy
or sell Reliance shares.

Most advise him to hold on. Some even place “buy” orders.

As banking stocks start getting battered, Dave’s colleague Amrit puts
his head down on his terminal briefly.

“I have some SBI shares, didn’t expect a 4.8 per cent drop,” he says,
but is soon up taking calls from clients for sell orders.

“There is little time to mourn your losses while trading goes on. It
is tough to handle other people’s money after having lost yours. But
we do it every day,” says Dave, who, like Amrit and most of his
colleagues, also takes trading calls for his personal stocks between
client calls.

“In fact I make more from the markets, or used to make, than from
commissions here,” says Dave, who leaves his home in the suburb of
Vikhroli at 6 in the morning to reach BSE by 8.30.

They have a morning meeting before the markets open at 9.55.

“Once trading starts, it is a daze till the closing bell at 3.30pm.
Lunch is after that,” says Dave.

But dry farsan — besan-based fried Gujarati snacks – and many cups of
tea do the rounds in between.

The tension eases a bit around 1.15 as the market limps up 100 points.
But the jubilation is short-lived as scrip after scrip starts taking a
nosedive.

The phones ring incessantly as clients begin placing sell orders.

Then the index bottoms out for the day and stands still at 9771.70,
down nearly 400 points.

The dealers stare at each other and quietly start stretching
themselves.

Dave wipes the sweat that has collected on his forehead in spite of
the air-conditioner.

Amrit gets up and goes out for a smoke in the corridor: it’s not
public space, he argues.

Clients chatter, discussing the day with dealers, with many of whom
they share over decade-long associations.

The curtain falls. The play is over.

“I am famished,” announces Amrit as he makes a re-entry. The stock
tumble is behind him, at least for now.

The older dealers pull out their lunch boxes.

Amrit and Dave head downstairs for the numerous food stalls lining the
street.

In an hour, post-trading work will resume as they don coats of
relationship managers for the firm’s bigger clients and visit them to
discuss the next day’s strategy.

“Because tomorrow is another day,” Dave says, Scarlett ’Hara style.

http://www.telegraphindia.com/1081024/jsp/frontpage/story_10013288.jsp

US infant mortality rate now worse than 28 other countries
By Patrick O’Connor
18 October 2008

A report issued Wednesday by the Centers for Disease Control and
Prevention (CDC) documents how the infant mortality rate in the United
States is growing in relation to other countries. The study, "Recent
Trends in Infant Mortality in the United States," found that at least
28 other countries now have lower death rates for infants in the first
year of life.

The US's relative position has declined steadily. In 1960, it had the
12th lowest infant mortality rate, but by 1990 had dropped to 23rd
place, and by 2004—the latest year of the CDC's comparative world
figures on living standards—the US ranked 29th. The most recent study,
published in July and titled "The Measure of America," estimated that
the US is now in 34th place.

The CDC report found that there was no improvement in the incidence of
US infant deaths between 2000 and 2005, a "plateau in the US infant
mortality rate represent[ing] the first period of sustained lack of
decline in the US infant mortality rate since the 1950s." This "has
generated concern among researchers and policy makers," the report
noted.

For the year 2000, the infant mortality rate was 6.89 per 1,000, a
rate that remained stagnant for five years before declining slightly
to 6.71 between 2005 and 2006.
The CDC noted: "The impact of child mortality is considerable: there
are more than 28,000 deaths to children under 1 year of age each year
in the United States."

Several countries in Scandinavia (Sweden, Norway, Finland) and East
Asia (Japan, Hong Kong, Singapore) have an infant mortality rate below
3.5, almost half the US rate. The CDC's 2004 rankings placed the US in
a tie with Poland and Slovakia, and only marginally ahead of Puerto
Rico and Chile. The US was behind every developed country in North
America, Western Europe, and Australasia, as well as Cuba, Hungary,
Israel, and the Czech Republic.

Infant mortality is a critical indicator of social progress. As the
CDC report explains, "Infant mortality is one of the most important
indicators of the health of a nation, as it is associated with a
variety of factors such as maternal health, quality and access to
medical care, socioeconomic conditions, and public health practices."

This decline in world rankings is another expression of US
capitalism's decay. The gutting of social programs by successive
Democrat and Republican administrations over the last four decades has
led to an extraordinary social reversion. A tiny layer at the top has
enriched itself through the dismantling of all impediments to the
accumulation of private wealth and corporate profit, supported by tax
cuts and the slashing of investment in critical social infrastructure.
That infant mortality rates are now stagnating for the first time in
five decades underscores the accelerating character of the social
crisis.

The CDC report documented the disparity of infant mortality rates
among racial classifications. "Non-Hispanic white," Latino, and Asian-
American children had lower than average rates, while "American Indian
or Alaskan Native," Puerto Rican, and "non-Hispanic black" families
had higher rates.

The report noted, however, that the "infant mortality rate did not
change significantly for any race/ethnicity group from 2000 to 2005."

In 2005, African-American infants suffered a death rate of 13.63 per
1,000 births, by far the highest average. The CDC's 2004 world
rankings indicate that a black American baby would have a better
chance of survival if born in Russia (which has a rate of 11.5) or
Bulgaria (11.7).

The CDC report did not assess infant mortality in relation to social
class or family income.

Another study released earlier this month, however, documented this
correlation. Published by the Robert Wood Johnson Foundation and
titled "America's Health Starts With Healthy Children: How do States
Compare?" the report found: "In almost every state, shortfalls in
health are greatest among children in the poorest or least-educated
households, but even middle-class children are less healthy than
children with greater advantages. Within each racial or ethnic group,
a steep income gradient is evident. Children's general health status
improves as family income increases."

It also reported: "Nationally, and in every state, infant mortality
rates increased with decreasing levels of mothers' education." The
mortality rate for children whose mothers had completed 16 or more
years of school was 4.2 deaths per 1,000 births, compared to 7.8
deaths for children whose mothers had completed 11 years or less of
school.

The failure to improve the infant death rate between 2000 and 2005
came despite significant advances in medical technology, including
care for prematurely born babies.

What the CDC termed "preterm birth"—i.e., those at less than 37 weeks
gestation—is a key risk factor for infant mortality. In 2005, 69
percent of all infant deaths occurred to preterm babies. The report
stated: "The plateau in the US infant mortality rate from 2000 to 2005
was largely due to the combina­tion of the increase in the percentage
of very preterm births and the lack of decline in the infant mortality
rate for these births."

Only those parents who can afford to pay for treatment can be sure
that their premature babies will receive the necessary care.
Similarly, many families are finding it increasingly difficult to
afford the advanced medical treatment which many infants require in
their first year. About 45 million Americans, or 15 percent of the
population, are now estimated to be without any form of health
insurance.

At every level, corporate control over the health care system distorts
and undermines the rational provision of medical services. Per capita
US health spending was $6,714 in 2006, more than twice the average of
other advanced countries. But this spending has failed to improve the
population's health. Infant mortality is one indication of this;
another is the extraordinary fact that 41 countries now have a longer
life expectancy than does the US.

Official per capita health spending figures are in fact misleading. If
the resources invested in genuine medical care and treatment were to
be calculated and compared, there is little doubt that the US would
rank far below many other countries. A substantial portion of
purported American health spending is simply siphoned off as profit by
the major health firms, insurance companies, and pharmaceutical
interests.

Paulson Is Said to Plan Buying Stakes in Regional U.S. Banks

By Robert Schmidt

Oct. 24 (Bloomberg) -- Treasury Secretary Henry Paulson is preparing
to take stakes in a number of regional U.S. banks as he seeks to halt
the freeze of credit to businesses and households, according to a
person briefed on the matter.

The Treasury may announce the plans as soon as today, the person, who
was briefed by bankers and Treasury officials, said on condition of
anonymity. The purchases would be the second round in a $250 billion
program to inject capital into financial companies, after an initial
$125 billion was allocated to nine of the largest banks.

Regional lenders, already suffering from the housing slump, are now
getting hit by rising loan delinquencies as the economic downturn
deepens, with unemployment at a five-year high. The 19- member
Standard & Poor's 500 Banks Index has lost half its value in the past
year.

``We're going to give them initial indications very quickly,'' Neel
Kashkari, the interim Treasury assistant secretary running the
department's financial-rescue office, told lawmakers yesterday,
referring to the next group of banks to get government stakes. ``It
will be a few weeks before the next batch are actually funded,'' he
told the Senate Banking Committee.

The decision to buy stakes in more lenders comes after some of the
mid-
sized American financial institutions report mounting losses. National
City Corp., Ohio's largest lender, Oct. 21 posted a wider loss, put
aside more money for unpaid loans and announced plans to eliminate
4,000 jobs. Its third-quarter net loss widened to $729 million, from
$19 million a year earlier.

SunTrust Seeks Funds

SunTrust Banks Inc., Georgia's largest lender, posted a 26 percent
decline in third-quarter profit yesterday. The bank's board authorized
the sale of $1.6 billion to $4.9 billion in preferred shares to the
U.S. Treasury, Chief Executive Officer James Wells said in a
conference call.

Paulson's focus on injecting funds into banks is a shift away from his
initial emphasis on unclogging balance sheets by purchasing troubled
mortgage-backed assets from financial institutions. Last week, the
Treasury agreed to take stakes in nine firms including Citigroup Inc.,
Morgan Stanley and Bank of America Corp.

Congress three weeks ago approved a $700 billion rescue package that
gave the Treasury wide authority to buy and guarantee assets to
prevent a U.S. financial collapse.

Equity purchases ``are on the front burner and the heat is under the
pot,'' said Wayne Abernathy, a former Treasury official who is now an
executive vice president with the American Bankers Association, a
group that represents lenders of all sizes.

`Markets Deteriorated'

Paulson had to shift gears because ``markets deteriorated much more
quickly than we had expected,'' Kashkari, a 35-year-old former Goldman
Sachs Group Inc. banker, told lawmakers. Taking stakes in banks
offered a faster way to inject funds, he said.

The person briefed on the matter didn't identify the financial
companies getting the next round of money, or specify the total
amount. Firms have until Nov. 14 to apply for government funds, though
the department has indicated it may extend that for some, such as
those that are privately held.

The Treasury's plans to buy devalued assets such as mortgage- linked
bonds and collateralized debt obligations are weeks, though ``not
months'' away from being put into effect, Kashkari said.

Congress gave the Treasury 45 days, or until mid-November, to publish
guidelines for how it would identify, value and purchase the assets. A
Treasury official said then that it would take at least four weeks
until the first auction was set up in an effort to price the toxic
securities.

Search for Managers

While the Treasury picked Bank of New York Mellon Corp. to keep the
books for the purchases, it is still completing a review of more than
100 bids to serve as asset managers, Kashkari said.

The aim of the asset purchases is to help restart a market for the
securities, providing benchmark prices and inducing private capital to
return.

Both Republicans and Democrats on the banking panel yesterday urged
the Treasury to use its new authority -- and a chunk of the bailout
money -- to help the millions of American homeowners who are facing
foreclosure.

The Bush administration hasn't shown ``the required dedication'' to
curb mortgage foreclosures, Christopher Dodd, the Connecticut Democrat
who chairs the Senate banking panel, said at yesterday's hearing.
Richard Shelby, the committee's top Republican, said that unless the
government deals with housing problems, ``we're going to be wasting a
lot of money.''

Kashkari told the panel that the Treasury is ``looking very hard'' at
a proposal by Federal Deposit Insurance Corp. chief Sheila Bair to use
federal loan guarantees to entice mortgage servicers to modify loans.

Bair's agency is developing experience in changing mortgages to make
them more affordable after taking over IndyMac Bancorp Inc., the
failed lender seized by regulators in July. The Treasury could offer
``loan guarantees and credit enhancements'' to help persuade the
holders of home loans to modify them, Bair told the Senate committee
yesterday.

To contact the reporter on this story: Robert Schmidt in Washington at
rsch...@bloomberg.net

Housing crisis accelerates blight in Detroit neighborhoods
By Debra Watson and Anne Moore
21 October 2008

Dire conditions in a once prosperous East Side Detroit neighborhood
underscore the impact the wave of home foreclosures is having on
working people across the United States. While the effect of the
mortgage crisis on the Wall Street banks is headline news, the media
rarely inquires into the social consequences of the foreclosure
epidemic.

Some three-quarters of a million people have lost their homes across
the US so far this year and foreclosure filings are up 82.6 percent
from a year ago, according to the web site ForeclosureS.com. The same
report notes that 107,500 homes were lost in September alone.

The city of Detroit has the highest repossession rate for a major city
in the US, with real-estate owned (REO) homes—that is, homes
repossessed by banks or mortgage holders—at 3.7 percent in 2007.
Cleveland, Ohio came in a close second with a 3 percent REO rate.

The social reality behind these figures is illustrated by a recent
sale of a foreclosed home in Detroit. In September, a modest two-story
single-family home on Detroit's east side near the Detroit City
Airport sold for one dollar. Less than two years ago, in November
2006, the same home sold for $65,000.

While abandoned homes are hardly a new phenomenon in Detroit, the
story of this one house is a testament to the speed, scope, and depth
of the foreclosure crisis. The one-dollar sale of the Detroit house
even made the Sunday Times of London, which recently ran a piece
titled "America's Darkest Fear: to end up like Detroit."

The WSWS interviewed Constance and her stepdaughter Toshiana, who live
near Detroit City Airport. As Toshiana explained: "I actually am
surprised that you came and talked to us at all. When the news came
they all were taking pictures of the place up the street that sold for
a dollar.

"We finally came out to see what it was about, why the news trucks
were here. It took three days before they finally came to us and asked
the people on the block what they thought. I don't think they really
care about people like us and what we think."

Prior to the collapse of auto manufacturing in Detroit, the
neighborhood had been relatively prosperous and home to thousands of
autoworkers. Now, foreclosed properties are lowering home values and
causing urban blight throughout the area. Constance rents a house on
the same street as the foreclosed home and grew up nearby.

"I heard about the house up the street selling for one dollar,"
Constance told the WSWS. "They had just fixed it up real nice a year
and half ago, new siding, things like that. It looked beautiful. Now
it's a mess."

Last summer the bank foreclosed on the home after the owners fell
behind on their mortgage. "They had some renters come in and then it
was empty. It didn't take long for them to come and strip the place
clean," Toshiana said.
"When I was a baby my father was at an auto plant," Constance added.
"He had a brother working at the plant also. I had another uncle who
worked at Dodge Main in Hamtramck. They all came up from the South in
the early 1970s. There are not many people around here at the plants
anymore. My mother says she is leaving Michigan and moving back to
Louisiana as soon as she retires."

The term "toxic mortgage" only begins to describe the effect of the
housing crisis on working class communities across the US. The family
that falls behind on mortgage payments or rent is out on the street.
Neighborhoods become distressed. Abandoned houses catch fire and burn—
a common phenomenon in Detroit—producing a noxious odor that permeates
whole neighborhoods for months.

Toshiana noted the absence of the most basic services in the city of
Detroit. "We don't even have a grocery store anymore."

She continued, "You actually have to go back to the early '90s to see
when all this started to happen. I could tell you a couple blocks I
lived on in Detroit that I watched gradually torn down. They were
really nice when I was there, but what happened? One place, I came
back five years after I had moved, just to visit. I could not believe
what had happened. The place was a mess; the houses were in terrible
shape.

"Look around here. All you see are empty lots. Realtors may call these
an investment opportunity, but who wants to live next to an empty lot?
Scrappers make money off tearing the houses up. I really don't
understand why they even give out junking licenses, when they know
this is going on in the neighborhoods. The decline is very ugly."

According to a report in the August 13 Detroit News, there are now
several properties listed for one dollar in Detroit, including a
single family home and a duplex. In some cases subprime lenders, "find
themselves the owners of whole neighborhoods of vacant, deteriorating
homes."

"My 14-year-old son could buy a block of Detroit property," said a
representative of the realty management firm that sold the one-dollar
house.

Foreclosures are rising in several metropolitan areas across the state
of Michigan. According to figures released by RealtyTrac, the state as
a whole ranked fourth nationwide in the total number of foreclosure
filings in August, with 13,605. Foreclosure filings rose 17 percent
over July levels. Michigan ranked fifth nationwide in foreclosure
filings, with one for every 332 households. That compares with a
national rate of one filing for every 416 households.

A 2006 Association of Community Organizations for Reform Now (ACORN)
report, "The Impending Rate Shock," singled out Detroit as one of the
cities likely to experience a housing disaster. In 2005 more than half
the home purchase loans made in Detroit were high-cost loans, "making
the city particularly vulnerable to rate shock," the report noted.
There were 23 metropolitan areas in the US where high-cost loans
represent at least one of every three loans made to homebuyers.

Obama, the economic crisis and war
24 October 2008

While the world's attention has been focused on the global economic
crisis, the United States has continued to prosecute its neo-colonial
war in Iraq and has expanded its military violence in Afghanistan and
the adjoining border regions of Pakistan.

Early Thursday morning, a US drone fired four missiles into a
religious school, or madrassa, in a tribal area of Pakistan's North
Waziristan, killing 11 people, according to Agence France-Presse. It
was the latest in a series of US strikes into Pakistan, including at
least one commando raid by Special Forces ground troops, launched
since the beginning of September. That the US has embarked on a
deliberate policy of spreading its war of occupation in Afghanistan
into Pakistan was underscored by last month's revelation that
President Bush signed a secret order in July authorizing the use of
American ground troops in Pakistan.

In Afghanistan itself, the US and its NATO allies have stepped up
their attacks on military and civilian targets in an attempt to stem a
widening war of resistance against foreign occupation. An overnight
airstrike by US-led coalition forces in Khost Province in eastern
Afghanistan killed nine Afghan soldiers, in an apparent "friendly
fire" incident. The civilian toll from US air strikes has risen
sharply in recent months, including an attack on an alleged Taliban
compound last August that killed more than 90 civilians, a majority of
them women and children.

Human Rights Watch reports that American and NATO air strikes have
killed some 500 Afghan civilians over the past five years, very likely
a serious underestimation of the actual toll. As the New York Times
reported on Thursday, "The latest air strike came as fighting in
Afghanistan reached its highest level since late 2001," i.e., in the
first months of the US invasion.

The deteriorating US military and political situation in Afghanistan
has become a focus of the presidential election, with Democratic
front-
runner Barack Obama taking the lead in pledging a major escalation of
the US intervention. In a campaign speech in Virginia on Wednesday,
Obama said he would order a surge of US troops, perhaps 15,000 or
more, as soon as he gained the White House. "It's time to heed the
call ... for more troops," he declared. "That's why I'd send at least
two or three additional brigades to Afghanistan."

Obama has brushed off as a "rhetorical flourish" statements made at a
Seattle fundraising event by his running mate, Senator Joseph Biden,
that within six months of Obama's inauguration, the new president
would respond to a major foreign policy crisis by taking "incredibly
tough" and unpopular decisions. Biden cited five possible flashpoints—
the Middle East, Afghanistan, Pakistan, North Korea and Russia.

That Biden's chilling remarks were no mere "rhetorical flourish" is
substantiated by a lengthy article published in Thursday's New York
Times by the newspaper's White House correspondent, David E. Sanger.
Discussing the foreign policy positions advanced by Obama and his
Republican opponent, Senator John McCain, Sanger points to key areas
where Obama has articulated an even more aggressive posture than
McCain.

On Iran, for example, the McCain campaign has suggested that it would
be willing to accept a deal that allowed Iran to produce uranium on
its territory, while the Obama campaign told the newspaper that an
Obama White House "would not allow Iran to produce uranium on Iranian
soil, the same hard-line view enunciated by the Bush administration."

Sanger notes that Obama has declared that "we will never take military
options off the table" and that he would not give the United Nations
"veto power" over a decision to hit Iranian nuclear facilities. Sanger
goes on to say that US intelligence officials claim the "threshold"
for a possible military strike—the point where Iran produces
sufficient nuclear material to build a weapon—"may be crossed fairly
early in the next presidential term."
Obama has also suggested that the US should impose a blockade on
Iranian imports of gasoline and refined petroleum products. Noting
that the Bush administration has stopped short of proposing such a
move, he writes, "A blockade, however, could constitute an act of
war..."

On Pakistan, Sanger writes, "it is Mr. Obama who has been far more
willing than Mr. McCain to threaten sending in American troops."

Obama, no less than McCain, speaks as a representative of the American
ruling class, which will determine the foreign and military policy of
the United States in accordance with what it perceives to be its
global economic and strategic interests.

The economic crisis, global in scope but centered in the decline of
the world economic position of American imperialism, will inevitably
drive that policy in an even more aggressive and belligerent
direction, regardless of which capitalist party occupies the White
House. The economic crisis injects into world affairs an ever-greater
element of tension and conflict between rival imperialist and
capitalist nations.

Even more so than in the previous decade, the United States will seek,
under conditions of financial turmoil and economic slump, to offset
its economic decline by military means. It is necessary to learn the
lessons of history. The last great world economic crisis—the
Depression of the 1930s—set off escalating military conflicts that
culminated in the holocaust of World War II.

The 2008 elections, unfolding under conditions of deepening recession
and escalating military violence, demonstrate the immense dangers
posed by political illusions in Obama and the Democratic Party. Once
again, the enormous anti-war sentiment of the American people has been
preempted by being channeled behind the Democratic wing of American
imperialism.

Should Obama win the election, as appears increasingly likely, the
struggle against militarism and war will be waged against his
administration.

Barry Grey

US layoffs mount and home foreclosures rise, a social catastrophe
By Patrick O’Connor
24 October 2008

Indicators of a worsening social crisis in the US are mounting daily
as the economic downturn takes an ever greater toll on jobs. Further
layoffs were announced yesterday in the US and around the world. New
data was also released showing escalating numbers of American families
losing their homes through foreclosure, further driving down house
prices.

A Reuters roundup of some of the US corporations which have made major
layoff announcements in the last two days alone included:

• Chrysler, which announced an additional 1,825 layoffs on Thursday

• Goldman Sachs, which said it will cut 10 percent of its staff, or
almost 3,300 jobs

• Pharmaceutical giant Merck, which announced it is shedding 12
percent of its workforce

• Biotechnology company Maxygen, which said it will cut nearly 30
percent of its workforce

• Money manager Janus Capital Group, which is sacking 9 percent of its
workforce

• Xerox, which said yesterday it will cut 5 percent of its staff, or
3,000 positions

• Mining equipment maker Terex Corporation, which is laying off
hundreds of its workers

• United Parcel Service, which announced plans to cut an unspecified
number of jobs next year

• Fidelity National Financial Inc., which announced it will slash
1,000 jobs and cut pay by 10 percent

• Financial services conglomerate Popular Inc., which is cutting 600
jobs and closing more than a quarter of its branches in the US.

The US Labor Department reported that new applications for
unemployment insurance increased by 15,000 to 478,000 in the week
ending October 18, significantly more than was anticipated by
economists. A year ago, new jobless claims stood at 333,000.

The Labor Department also found that inflation-adjusted wages for non-
managerial workers declined by 1.9 percent in the twelve months up to
September. This extraordinary figure indicates the extent to which the
social position of the working class is being further undermined as
the financial crisis and recession unfold.

The Washington Post yesterday reported that leading temp agencies are
receiving far higher numbers of inquiries from job-seekers, including
from people who are currently working but fear for their jobs. The
article noted that many desperate workers "are also willing to make
less money, even as the cost of living goes up." An example was call
center jobs that paid $9 an hour last year but now pay $8.50.

Workers in the auto industry continue to bear much of the brunt of the
growing assault on jobs and conditions. Chrysler announced 1,825
layoffs through the elimination of a shift at an assembly plant in
Toledo, Ohio and said it would bring forward the closure date of a
plant in Newark, Delaware that had been scheduled to close in December
2009.

Chrysler released figures yesterday revealing that it lost more than
$1 billion in the first six months of 2008. Standard and Poor's has
said that both Chrysler and GM may run out of cash in 2009 as auto
sales fall to their lowest level since 1991.

Germany's Daimler AG, which has a 19.9 percent stake in Chrysler, said
yesterday it was revising the book value of its stake to zero. This is
down from $220 million three months ago and $1.2 billion at the end of
2007.

GM is in an equally severe crisis. A JPMorgan analyst told Reuters he
expects the company to lose more than $12 billion next year. Like
Chrysler, GM is slashing costs ahead of a potential merger between the
two companies.

GM announced Wednesday it was considering selling AC Delco, its
international parts subsidiary, a measure which will inevitably lead
to further job losses. The company also said it will suspend many
salaried employee benefits, including matching contributions for
workers' 401(k) retirement plans.
Job losses continue to mount in the European auto industry. Sweden's
Volvo AB said yesterday it would sack 850 more workers at its
construction equipment unit. This follows an earlier announcement of
500 layoffs in the same unit, as well as 1,400 layoff notices issued
to workers at truck factories in Sweden and Belgium.
Germany's Frankfurter Allgemeine Zeitung reported yesterday that
Volkswagen plans to cut most or all of its 25,000 temporary staff. A
Volkswagen spokesman denied the report, insisting that no decision had
yet been reached.
Polish government advisors have estimated that one third of the 1.2
million Polish workers in Britain and Ireland, i.e., 400,000 people,
will either return to Poland or move to another country to try to find
work. According to a number of reports, the exodus has already begun,
with thousands of Polish workers relocating, either in response to
being laid off or to the British pound's poor exchange rate, which has
sharply reduced the value of immigrant workers' wages sent back to
their families.
Workers in countries throughout Europe are also being hit with rapidly
declining house prices and increased foreclosures. But nowhere is the
crisis more severe than in the US.
A survey released yesterday by listing service RealtyTrac found that
foreclosure filings—that is, default notices, auction sale notices and
bank repossessions—were reported on 765,000 properties in the three
months ending in September, up 71 percent from the third quarter in
2007. Six states—Nevada, California, Florida, Ohio, Michigan, and
Arizona—accounted for more than 60 percent of all foreclosure
activity. Nevada recorded the highest foreclosure rate, with one out
of every 82 housing properties issued a foreclosure filing.
The RealtyTrac report concluded that the third quarter figures
probably underestimate the situation. Several states have passed new
laws requiring lenders to issue extended notices before filing default
notices. These laws artificially suppressed September's foreclosure
figures by temporarily postponing the full impact. Rising unemployment
will further accelerate the catastrophe.
The company said 81,300 homes had been foreclosed in September, and a
total of 851,000 had been repossessed by lenders since August of 2007.
Rod Dubitsky, managing director for asset-backed securities at Credit
Suisse, told BusinessWeek he expects that more than 5 million American
families will lose their homes through the year 2012. He said 1.69
million families will lose their homes in 2008.
Falling property values have also hit homeowners. Over the last
period, the family home was widely regarded as the primary asset to
fund people's retirement, their children's college education, and even
to cover unanticipated health expenses. But yesterday, the Federal
Housing Finance Agency reported that house prices in August were 5.9
percent lower than they were a year earlier. The decline was the
greatest recorded since 1991, when data was first collected.
Hey - It’s Just Business!

Jim Kirwan
10-23-8

The ‘new’ global financial systems created for the twenty-first
century have exceeded all boundaries, and this New World Order’s grab
for worldwide domination must be allowed to crash and drown in its own
excesses.

One of its primary architects, Alan Greenspan, who headed the
privately owned Federal Reserve ‘Bank’ for eighteen and a half years,
a character of truly mythic proportions at least in his own mind said
today: “that he and others who believed lending institutions would do
a good job of protecting shareholders are in “a state of shocked
disbelief,” according to the Associated Press.

He said that the financial crisis had exposed a flaw in his and
others’ free market ideology. Banks and investment firms did not do a
good enough job analyzing the risks of the home mortgage market, and
some types of derivatives should have been subject to more
regulation.” (1)

In other words Greenspan now agrees with his critics of the government
and of the privately owned Financial-Frankenstein that he and his
owners created: However his re-cognition and befuddled enlightenment
will do nothing about replacing the eight trillion dollars that has
just been lost due to these massive thefts that are still going on.

At some point in his rambling answers to the News Hour tonight
Greenspan at first seemed mystified that he and his tribe could have
been wrong; but then he quickly tried to justify this ‘error’ by
saying that ‘these transactions were just too complicated to be
properly tracked.’

What he failed to discuss is that these complications were put in
place to hide the truth of what was going on in every area of that
type of finance which lives far above the clouds of either oversight
or regulation: It should be noted that these corporate Titians are
huge because their massive systems are that way on purpose, to keep
from inquiring minds all the dirty little secret-dealings that have
brought the world to the edge of oblivion.

Regulations were put in place after the Crash of 1929 to insure that
this kind of thing never happened again. From that day to this, the
descendents of the Robber-Barons have been slaving away to eliminate
those safe-guards in order to reap what they see as their just-revenge
for having been challenged and restrained, for their crimes of that
long ago collapse of the public’s trust.

An international agreement must be created to outlaw forever, the kind
of global banking practices that led us all to this place without any
shelter from the folly of their criminal attempts, to crash the global
economic systems of the world. This is actually as important, or
perhaps even more so, than the international agreements that were
created to govern the Rules of War.

Before the twelve central banks and their inbred families existed;
nation-states theoretically protected their own interests in a hostile
and all too dangerous world. So while certain nations could become
enslaved or stolen; the entire world was not infected by these money-
changers that have been trying to steal everything monetary from
everyone that uses the current monetary system. So how did we get
here?

“During the Clinton administration, the government required the
financial industry to start expanding the frequency of mortgage loans
to consumers who might not have qualified in the past.

When George W. Bush was named president by the Supreme Court in
December 2000, the stock market had begun to decline with the bursting
of the dot.com bubble. In 2001 the frequency of White House visits by
Alan Greenspan increased.

The Federal Reserve began cutting interest rates, and by 2002 a home-
buying frenzy was underway. Fannie Mae and Freddie Mac went along by
guaranteeing the increasing number of mortgage loans.

According to a mortgage broker this writer interviewed, word began to
come down through the mortgage banks to begin falsifying mortgage
applications to show more borrower income than borrowers actually
possessed. Banks that wrote mortgages began to offload them when Wall
Street packaged them into mortgage-backed securities that were sold
around the world as bonds to investors.

Risk-analysts at the leading credit-rating agencies, such as Standard
and Poor’s, Moody’s, and Fitch, gave their highest ratings to mortgage-
backed securities whose risks were later acknowledged to be grossly
underestimated.

Mortgage companies, with Alan Greenspan’s endorsement, began to offer
more Adjustable Rate Mortgages (ARMs), loans that would reset at much
higher rates in future years.” (2)

The point behind consolidating all the trade and monetary policies of
the planet under a huge global protectorate was not designed to enable
a better world: No, this was designed to force the bulk of the world
into complete surrender to a shadow-government of ancient criminal
dimensions that have always hungered for a Global-Empire where all
resistance would be futile!

This is reminiscent of that children’s nursery rhyme:

Humpty Dumpty sat on the Wall.
Then Humpty-Dumpty had a Great Fall,
And all the Kings Horses
And all the Kings Men
Could never put Humpty together again!

In this case; Wall Street should be walled-off and the egg-shaped
World of Humpty-Dumpty, should be returned to their individual states
and nations with international fire walls that keep them all separate
forever. That way nations that have no rules, no oversight and no
standards for clear values of properties or investments, need not be
allowed to infect those states and people that do have oversight
protections and actual international standards for loans and
investments that can be easily understood and tracked.

This would assure investors and others that they need not fear that
what they thought were sound investments might suddenly just go up in
smoke.

Since this crash was fostered and promoted as much by Corporate
States, as it was by the scheming connivances of the Money-Changers
and their pawns: perhaps it’s time to subject The Corporatocracy to
new rules—rules that would limit their lifetimes and rules that would
add new corporate responsibilities to their sole purpose; which is to
make money without any consideration for anything else that might
directly limit or effect their illicit profits.

Ordinary people are not allowed to just “make money” to the
distraction of all else: so why not limit corporations to the same set
of responsibilities that people have put up with, which includes an
end to life as well. (In theory corporations can now live forever).

If the world does not begin this process, then the Corporate States
will certainly win if there is a next time, and we will lose
everything to them because they are like infants in the crib that
worry about nothing except their single-minded purpose: In this case,
“making money!”

Imagine how different the world would be if Corporate Charters had to
include percentages of shared profit with those that work for them, as
well as having to pay for the resources they currently use for free,
and then pollute, until they kill the land the water and the air,
wherever they chose to place the mini-prisons of their offices and
factories. We jail people that are anti-social, or who trash the
communities they live and work in: why not do the same to
corporations?

The government ought to use some of those taxes we pay to give the
public real health-care. Then we could end all those extortionate
insurance companies and the medical industry that lobbies congress on
everything from health care to medications. This government has taxed
this nation to death; and we have nothing whatever to show for all
that money except two failed wars, and millions of tons of bombs,
bullets and no-bid contracts. And believe it or not this is almost
entirely due to the rarified air of the Corporate-climate in America!

Unchecked Capitalism is a cult and needs very careful watching because
it is no friend to ordinary people, or even to those that work for
them. But "Hey—it’s just business.” If that’s a good enough
explanation to us, for their treatment of those who are not part of
their upper-crust; then it ought to be the ‘standard’ by which
corporations are judged, when it comes to the terms under which they
are allowed to do business in any community.

Workers should enjoy some of the benefits that they have produced for
the company. That’s not Socialism; it’s called ROI, a fair return on
investment. People rent their lives for a portion of each week of
time, and what exactly do they get in return: and why should that
return not be reflective of the success they have helped immensely to
create? Money has no “owner” it is only valuable when it is used.

While key executives might be very influential in assisting a company
to maximize their profits: the same has to be said for those who
actually do the work and make the products that make the corporations
rich. Employees are expected to be “good citizens” within their
communities, but has anyone else noticed that corporations have no
ethics at all. Corporations certainly feel free to dump the cities,
counties and states that enabled them to rise to greatness, whenever
they get cheaper labor outside the country, hell the government even
rewards this behavior with corporate welfare—in addition to seeing to
it that the corporations pay no taxes once they are safely offshore
and making billions more than ever before. This too is “just
business!”

What about the American workforce that those offshore moves kill
outright—why is there not even a fine for doing that to people that in
some cases have invested their entire lives working for one of these
psychotic giants! When one of their ‘employees’ fails a drug test, or
is found to be doing less than he or she is “capable of” then there
are retributions and possibly termination. In fact there is usually a
long list of things that any ‘employee’ can be fired for: yet there
are no hard and fast rules for firing upper-echelon executives, for
anything. When the Corporation commits a crime, against the population
or the planet, then that crime is usually reduced to nothingness, or
ended with a miniscule fine: And if there is a conflict with an
employee the Corporation seldom has to pay for what they’ve done—
because “Hey—it’s just business!” (3)

kirwan...@sbcglobal.net

1) Greenspan Calls Credit Crisis ‘a Financial Tsunami’
http://www.pbs.org/newshour/updates/business/july-dec08/greenspan_10-23.html
2) They Did it on Purpose: The Housing Bubble and its Crash were
engineered
http://www.globalresearch.ca/index.php?context=viewArticle&code=COO20081023&articleId=10654

3) The Bailout
http://www.heyokamagazine.com/heyoka.17.why%20the%20bailoutwontwork.htm
US 30 Year Yield Drops to Lowest Since Regular Sales Began
By Sandra Hernandez and Bo Nielsen
Oct. 24 (Bloomberg) -- Treasuries rose, sending the yield on the 30-
year bond to the lowest since regular issuance of the securities began
in 1977, as widening financial turmoil wiped more than $10 trillion
off stock markets worldwide this month.
U.S. notes rallied on speculation the global slowdown will deepen. The
U.K. economy shrank more than forecast, a report showed today. Trading
in U.S. stock-index futures was limited after declines of more than 6
percent. U.S. government securities returned 1.6 percent in October,
the most since January, according to Merrill Lynch & Co.'s U.S.
Treasury Master index, as tumbling stocks spurred demand for the
safest assets.
``We're getting very close to the emotional blow-off where everybody
says, `I don't care; I want out,''' said E. Craig Coats Jr., who co-
heads fixed income at Keefe, Bruyette & Woods Inc. in New York.
``Everybody seems to be saying `I want to be in cash or
Treasuries.'''
The yield on the 4 1/2 percent bond due in May 2038 decreased 10 basis
points, or 0.10 percentage point, to 3.95 percent at 9:44 a.m. in New
York, according to BGCantor Market Data, after dropping as low as
3.8676 percent. The price advanced 1 24/32, or $17.50 per $1,000 face
value, to 109 17/32.
Ten-year note yields declined 12 basis points to 3.57 percent, and
have fallen 37 basis points this week, the most since 1995, on
speculation government and central bank efforts to revive lending
won't avert a global slowdown.
``Bonds are the instrument, par excellence, to profit from the
crisis,'' Societe Generale SA said in a report.
`Fires Are Spreading'
U.S. stocks dropped. The MSCI Asia Pacific Index of regional shares
fell as much as 6.2 percent to its lowest level since 2003. Trading in
futures on the Standard & Poor's 500 Index and the Dow Jones
Industrial Average was limited after declines in contracts of more
than 6 percent triggered a so- called limit down restriction.
``The fires are spreading around the globe,'' Peter Mueller, a fixed-
income strategist in Frankfurt at Commerzbank AG, Germany's second-
largest bank by assets, wrote in a note today. ``The flight to quality
should therefore continue to give massive support to bunds and U.S.
Treasuries as this week draws to a close.''
The difference between yields on two- and 10-year notes widened for
the first time in more than a week as the shorter maturities, which
are more sensitive to monetary policy, outperformed. The yield spread
widened 9 basis points to 2.16 percentage points. It's still narrower
than this year's high of 2.39 percentage points on Oct. 15.
Traders can profit from a widening yield spread by buying two-year
notes and selling 10-year notes.
Yen, Pound
Two-year note yields dropped 18 basis points to 1.41 percent. They
touched 1.35 percent, the lowest in more than two weeks.
This year's credit-market meltdown prompted Federal Reserve officials
to make an emergency reduction in borrowing costs on Oct. 8, and they
will cut again when they meet on Oct. 29, futures contracts indicate.
Futures on the Chicago Board of Trade show a 100 percent chance policy
makers will lower their target for overnight bank lending, now 1.5
percent, by at least a half-percentage point, compared with 38 percent
odds a week ago.
The yen climbed to a 13-year high against the dollar as the risk of a
global recession prompted investors to slash carry trades, in which
they fund purchases of higher-yielding assets with the Japanese
currency. The British pound had its biggest decline in at least 37
years after the Office for National Statistics in London said the
economy contracted 0.5 percent in the third quarter, exceeding the 0.2
percent forecast by analysts in a Bloomberg survey.
Emerging-Market Assets
Investors sold emerging-market stocks, bonds, and currencies as the
credit crisis imperiled developing economies. The Polish zloty,
Hungarian forint and South African rand headed for their biggest
weekly declines. Ukraine's credit ratings were lowered for the second
time since June by Standard & Poor's on concern about the country's
banks, a day after Russia's credit rating outlook was lowered to
``negative'' from ``stable.''
``There's uncertainty and anxiety,'' said Hiroyuki Bando, chief
manager for fixed income, equities and currencies in Tokyo at
Mitsubishi UFJ Trust & Banking Corp., part of Japan's biggest bank.
``That's supportive for Treasuries.''
Yields on three-month Treasury bills, sought as a haven in times of
uncertainty, fell 21 basis points to a one-week low of 0.75 percent.
They were 3.38 percent at the start of the year.
TED Spread
The difference between what banks and the U.S. government pay to
borrow for three months, known as the TED spread, widened for a second
day, to 2.75 percentage points. The spread, which is the difference
between three-month bill yields and the three- month London interbank
offered rate, is more than triple this year's low of 76 basis points
in May.
Another indicator of credit stress, the difference between the rate
banks charge for three-month dollar loans relative to the overnight
indexed swap rate, the so-called Libor-OIS spread, widened to 2.64
percentage points from 2.54 percentage points yesterday. The spread
has narrowed from 3.64 percentage points on Oct. 10.
Yields on Treasury Inflation-Protected Securities with maturities of
up to five years were higher than yields on conventional Treasuries of
similar maturity in another sign investors are liquidating positions
and betting on a deepening U.S. recession.
The difference between yields on five-year Treasuries and five-year
TIPS was minus 0.06 percentage points. TIPS typically yield less than
Treasuries because their principal payments rise at the rate of
inflation. A shrinking yield gap indicates investors expect inflation
to slow.
``The financial crisis is now morphing ever more clearly into an
economic one,'' Ciaran O'Hagan, a fixed-income strategist in Paris at
Societe Generale, said in a report yesterday. ``That leaves spread
markets still going in only one direction -- south.''
To contact the reporters on this story: Sandra Hernandez in New York
at shern...@bloomberg.net; Bo Nielsen in Copenhagen at
bnie...@bloomberg.net.
CITIZENS STATEMENT AGAINST PLANNED VIOLENCE AGAINST NORTH INDIANS
AND BREAK DOWN OF RULE OF LAW

We, the citizens of Maharashtra protest against the planned and
instigated violence against north Indians in Mumbai, Thane and Kalyan.
Neither Mr. Raj Thackrey nor the MNS have actually done any good to
the ordinary Maharashtrian Bahujans on whose behalf he is advocating.
The major issues of the State and its toilling masses like that of the
agrarian crisis, land and homelessness, displacement due to SEZ and
other development based projects or mill workers in Mumbai have found
any place in his agenda. The violent and dividing politicking will
result in far reaching consequences to safety and securityof the
citizens and the integrety of the nation

Repeated inflammatory public speeches and statements made by Raj
Thackeray, is ample proof of his violent and unlawful demeanor and
there is no justification for the Democratic Front led by Congress and
NCP for being a silent spectator resulting in violation of rule of
law and the rights guarenteed under the Indian Constitution.

The state has left the ordinary citizens vulnerable to the attack by
a small section of unruly MNS workers.

We assert the diversity of Mumbai and believe that the rule of law has
to prevail and Mr. Raj Thackery / MNS should not be allowed to
continue with their unruly behaviour holding the entire city in
randsom. The State is equally responsible for the breakdown of the
constituitional mechanisms and fear that has been installed in the
linguistic and regional minority in Mumbai. The violence would not
have continued with out the silent support provided by the Chief
Minister and the Home Minister.

We also denounce Thackeray's statement exhorting his party workers to
take to violence and arson as peaceful modes of protest like fasting
and Dharna are 'ineffective' and must be given up. We demand
immediate action to restore the rule of law and derecognition of MNS
as a political party and stringient legal action against Raj Thackrey,
implement the recommendation of the SHRC to reinvestigate all the
earlier cases against Raj Thackeray and initiate action as per law. We
firmly state our disagreement with all those who have silent faith in
the segregating vision of Raj Thackeray, but merely condemn his
physically brutality.

We request the ordinary, peace loving, non communal and progressive
forces in the city to come together and fight the hijacking of the
ordinary citizens agenda using violence and vested interests by
politicians like Raj Thackeray.

Sincerly yours,
Medha Patkar- NBA, NAPM,
Datta Iswaljkar - Girini Kamgar Sangharsh Samiti
Anand Teltumbede- Dalit Activist and Writer,
N.D. Patil- PWP,
Anand Patwardhan- Film maker,
Avinash Mahatekar- Activist Ambedkar Movement
Shyam Sonar and Sudhir dhawale- Republican Panther
Simpreet Singh- Ghar Banao Ghar Bachao Andolan ,
Madhuri Vairath- GBGB
Mukta Srivastava- NAPM,
Urmila Pawar- Dalit Writer and Activist ,
Feroz Mithiborwala- Awami Bharat
Prakash Reddy- CPI ,
Bhalchandra Kango-CPI,
Hasina Khan-Awaz-e-Niswan, Forum Against Opression of Women ,
Maju Varghese- YUVA ,
Deepika D'souza- ICHRL
Gerson da Cunha- Agni ,
Dolphy Disouza- Bombay Cathelic Sabha
Damjibhai Gada- NAPM
Smita Shah - Editor - Sadbhavna Sadhana
Shakil Ahmed - Nirbhay Bano Andolan
Mohan Chauhan - Sahar Vikas Manch
Is Laissez Faire Responsible for the Financial Crisis?
by George Reisman
Posted on 10/23/2008
The news media are in the process of creating a great new historical
myth. This is the myth that our present financial crisis is the result
of economic freedom and laissez-faire capitalism.
The attempt to place the blame on laissez faire is readily confirmed
by a Google search under the terms "crisis + laissez faire." On the
first page of the results that come up, or in the web entries to which
those results refer, statements of the following kind appear:

"The mortgage crisis is laissez-faire gone wrong."
"Sarkozy [Nicolas Sarkozy, the President of France] said 'laissez-
faire' economics, 'self-regulation' and the view that 'the all-
powerful market' always knows best are finished."
"'America's laissez-faire ideology, as practiced during the subprime
crisis, was as simplistic as it was dangerous,' chipped in Peer
Steinbrück, the German finance minister."
"Paulson brings laissez-faire approach on financial crisis…."
"It's au revoir to the days of laissez faire."[1]
Recent articles in The New York Times provide further confirmation.
Thus, one article declares, "The United States has a culture that
celebrates laissez-faire capitalism as the economic ideal…."[2]
Another article tells us, "For 30 years, the nation's political system
has been tilted in favor of business deregulation and against new
rules."[3] In a third article, a pair of reporters assert, "Since
1997, Mr. Brown [the British Prime Minister] has been a powerful voice
behind the Labor Party's embrace of an American-style economic
philosophy that was light on regulation. The laissez-faire approach
encouraged the country's banks to expand internationally and chase
returns in areas far afield of their core mission of attracting
deposits."[4] Thus even Great Britain is described as having a
"laissez-faire approach."
The mentality displayed in these statements is so completely and
utterly at odds with the actual meaning of laissez faire that it would
be capable of describing the economic policy of the old Soviet Union
as one of laissez faire in its last decades. By its logic, that is how
it would have to describe the policy of Brezhnev and his successors of
allowing workers on collective farms to cultivate plots of land of up
to one acre in size on their own account and sell the produce in
farmers' markets in Soviet cities. According to the logic of the
media, that too would be "laissez faire" ­ at least compared to the
time of Stalin.
Laissez-faire capitalism has a definite meaning, which is totally
ignored, contradicted, and downright defiled by such statements as
those quoted above. Laissez-faire capitalism is a politico-economic
system based on private ownership of the means of production and in
which the powers of the state are limited to the protection of the
individual's rights against the initiation of physical force. This
protection applies to the initiation of physical force by other
private individuals, by foreign governments, and, most importantly, by
the individual's own government. This last is accomplished by such
means as a written constitution, a system of division of powers and
checks and balances, an explicit bill of rights, and eternal vigilance
on the part of a citizenry with the right to keep and bear arms. Under
laissez-faire capitalism, the state consists essentially just of a
police force, law courts, and a national defense establishment, which
deter and combat those who initiate the use of physical force. And
nothing more.
The utter absurdity of statements claiming that the present political-
economic environment of the United States in some sense represents
laissez-faire capitalism becomes as glaringly obvious as anything can
be when one keeps in mind the extremely limited role of government
under laissez-faire and then considers the following facts about the
present-day United States:

Government spending in the United States currently equals more than
forty percent of national income, i.e., the sum of all wages and
salaries and profits and interest earned in the country. This is
without counting any of the massive off-budget spending such as that
on account of the government enterprises Fannie Mae and Freddie Mac.
Nor does it count any of the recent spending on assorted "bailouts."
What this means is that substantially more than forty dollars of every
one hundred dollars of output are appropriated by the government
against the will of the individual citizens who produce that output.
The money and the goods involved are turned over to the government
only because the individual citizens wish to stay out of jail. Their
freedom to dispose of their own incomes and output is thus violated on
a colossal scale. In contrast, under laissez-faire capitalism,
government spending would be on such a modest scale that a mere
revenue tariff might be sufficient to support it. The corporate and
individual income taxes, inheritance and capital gains taxes, and
social security and Medicare taxes would not exist.
There are presently fifteen federal cabinet departments, nine of which
exist for the very purpose of respectively interfering with housing,
transportation, healthcare, education, energy, mining, agriculture,
labor, and commerce, and virtually all of which nowadays routinely
ride roughshod over one or more important aspects of the economic
freedom of the individual. Under laissez-faire capitalism, eleven of
the fifteen cabinet departments would cease to exist and only the
departments of justice, defense, state, and treasury would remain.
Within those departments, moreover, further reductions would be made,
such as the abolition of the IRS in the Treasury Department and the
Antitrust Division in the Department of Justice.
The economic interference of today's cabinet departments is reinforced
and amplified by more than one hundred federal agencies and
commissions, the most well known of which include, besides the IRS,
the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC,
FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA,
NIH, and NASA. Under laissez-faire capitalism, all such agencies and
commissions would be done away with, with the exception of the FBI,
which would be reduced to the legitimate functions of counterespionage
and combating crimes against person or property that take place across
state lines.
To complete this catalog of government interference and its trampling
of any vestige of laissez faire, as of the end of 2007, the last full
year for which data are available, the Federal Register contained
fully seventy-three thousand pages of detailed government regulations.
This is an increase of more than ten thousand pages since 1978, the
very years during which our system, according to one of The New York
Times articles quoted above, has been "tilted in favor of business
deregulation and against new rules." Under laissez-faire capitalism,
there would be no Federal Register. The activities of the remaining
government departments and their subdivisions would be controlled
exclusively by duly enacted legislation, not the rule-making of
unelected government officials.
And, of course, to all of this must be added the further massive
apparatus of laws, departments, agencies, and regulations at the state
and local level. Under laissez-faire capitalism, these too for the
most part would be completely abolished and what remained would
reflect the same kind of radical reductions in the size and scope of
government activity as those carried out on the federal level.
What this brief account has shown is that the politico-economic system
of the United States today is so far removed from laissez-faire
capitalism that it is closer to the system of a police state. The
ability of the media to ignore all of the massive government
interference that exists today and to characterize our present
economic system as one of laissez faire and economic freedom marks it
as, if not profoundly dishonest, then as nothing less than delusional.

Government Intervention Actually Responsible for the Crisis
Beyond all this is the further fact that the actual responsibility for
our financial crisis lies precisely with massive government
intervention, above all the intervention of the Federal Reserve System
in attempting to create capital out of thin air, in the belief that
the mere creation of money and its being made available in the loan
market is a substitute for capital created by producing and saving.
This is a policy it has pursued since its founding, but with
exceptional vigor since 2001, in its efforts to overcome the collapse
of the stock market bubble whose creation it had previously inspired.
The Federal Reserve and other portions of the government pursue the
policy of money and credit creation in everything they do that
encourages and protects private banks in the attempt to cheat reality
by making it appear that one can keep one's money and lend it out too,
both at the same time. This duplicity occurs when individuals or
business firms deposit cash in banks, which they can continue to use
to make purchases and pay bills by means of writing checks rather than
using currency. To the extent that the banks are then enabled and
encouraged to lend out the funds that have been deposited in this way
(usually by the creation of new and additional checking deposits
rather than the lending of currency), they are engaged in the creation
of new and additional money. The depositors continue to have their
money and borrowers now have the bulk of the funds deposited. In
recent years, the Federal Reserve has so encouraged this process, that
checking deposits have been created equal to fifty times the actual
cash reserves of the banks, a situation more than ripe for implosion.
All of this new and additional money entering the loan market is
fundamentally fictitious capital, in that it does not represent new
and additional capital goods in the economic system, but rather a mere
transfer of parts of the existing supply of capital goods into
different hands, for use in different, less efficient, and often
flagrantly wasteful ways. The present housing crisis is perhaps the
most glaring example of this in all of history.
Perhaps as much as a trillion-and-a-half dollars or more of new and
additional checkbook-money capital was channeled into the housing
market as the result of the artificially low interest rates caused by
the presence of an even larger overall amount of new and additional
money in the loan market. Because of the long-term nature of its
financing, housing is especially susceptible to the effect of lower
interest rates, which can serve sharply to reduce monthly mortgage
payments and in this way correspondingly increase the demand for
housing and for the mortgage loans needed to finance it.
Over a period of years, the result was a huge increase in the
production and purchase of new homes, rapidly rising home prices, and
a further spiraling increase in the production and purchase of new
homes in the expectation of a continuing rise in their prices.
To gauge the scale of its responsibility, in the period of time just
since 2001, the Federal Reserve caused an increase in the supply of
checkbook-money capital of more than 70 percent of the cumulative
total amount it had created in the whole of the previous 88 years of
its existence ­ that is, almost 2 trillion dollars.[5] This was the
increase in the amount by which the checking deposits of the banks
exceeded the banks' reserves of actual money, that is, the money they
have available to pay depositors who want cash. The Federal Reserve
caused this increase in illusory capital by means of creating whatever
new and additional bank reserves were necessary to achieve a federal
funds interest rate ­ that is, the rate of interest paid by banks on
the lending and borrowing of reserves ­ that was far below the rate of
interest dictated by the market. For the three years 2001–2004, the
Federal Reserve drove the federal funds rate below 2 percent and, from
July of 2003 to June of 2004, drove it even further down to
approximately 1 percent.
The Federal Reserve also made it possible for banks to operate with a
far lower percentage of reserves than ever before. Whereas in a free
market, banks would hold gold reserves equal to their checking
deposits ­ or at the very least to a substantial proportion of their
checking deposits[6] ­ the Federal Reserve in recent years contrived
to make it possible for them to operate with irredeemable fiat-money
reserves of less than 2 percent.
The Federal Reserve drove down the federal funds rate and brought
about the vast increase in the supply of illusory capital for the
purpose of driving down all market interest rates. The additional
illusory capital could find borrowers only at lower interest rates.
The Federal Reserve's goal was to bring about interest rates so low
that they could not compensate even for the rise in prices. It
deliberately sought to achieve a negative real rate of interest on
capital, that is, a rate below the rate at which prices rise. This
means that a lender, after receiving the interest due him for a year,
has less purchasing power than he had the year before, when he had
only his principal.
In doing this, the Federal Reserve's ultimate purpose was to stimulate
both investment and consumer spending. It wanted the cost of obtaining
capital to be minimal so that it would be invested on the greatest
possible scale and for people to regard the holding of money as a
losing proposition, which would stimulate them to spend it faster.
More spending, ever more spending was its concern, in the belief that
that is what is required to avoid large-scale unemployment.
As matters have turned out, the Federal Reserve got its wish for a
negative real rate of interest, but to an extent far beyond what it
wished. It wished for a negative real rate of return of perhaps 1 to 2
percent. What it achieved in the housing market was a negative real
rate of return measured by the loss of a major portion of the capital
invested. In the words of The New York Times, "In the year since the
crisis began, the world's financial institutions have written down
around $500 billion worth of mortgage-backed securities. Unless
something is done to stem the rapid decline of housing values, these
institutions are likely to write down an additional $1 trillion to
$1.5 trillion."[7]
This vast loss of capital in the housing debacle is what is
responsible for the inability of banks to make loans to many
businesses to which they normally could and would lend. The reason
they cannot now do so is that the funds and the real wealth that have
been lost no longer exist and thus cannot be lent to anyone. The
Federal Reserve's policy of credit expansion based on the creation of
new and additional checkbook money has thus served to give capital to
unworthy borrowers who never should have had it in the first place and
to deprive other, far more credit worthy borrowers of the capital they
need to stay in businesses. Its policy has been one of redistribution
and destruction.
The capital it has caused to be malinvested and lost in housing is
capital that is now unavailable for such firms as Wickes Furniture,
Linens 'N Things, Levitz Furniture, Mervyns, and innumerable others,
who have had to go bankrupt because they could not obtain the loans
they needed to stay in business. And, of course, among the foremost
victims have been major banks themselves. The losses they have
suffered have wiped out their capital and put them out of business.
And the list of casualties will certainly grow.
Any discussion of the housing debacle would be incomplete if it did
not include mention of the systematic consumption of home equity
encouraged for several years by the media and an ignorant economics
profession. Consistent with the teachings of Keynesianism that
consumer spending is the foundation of prosperity, they regarded the
rise in home prices as a powerful means for stimulating such spending.
In increasing homeowners' equity, they held, it enabled homeowners to
borrow money to finance additional consumption and thus keep the
economy operating at a high level. As matters have turned out, such
consumption has served to saddle many homeowners with mortgages that
are now greater than the value of their homes, which would not have
been the case had those mortgages not been enlarged to finance
additional consumption. This consumption is the cause of a further
loss of capital over and above the capital lost in malinvestment.
A discussion of the housing debacle would also not be complete if it
did not mention the role of government guarantees of many mortgage
loans. If the government guarantees the principal and interest on a
loan, there is no reason why a lender should care about the
qualifications of a borrower. He will not lose by making the loan,
however bad it may turn out to be.
A substantial number of mortgage loans carried such guarantees. For
example, a New York Times article describes the Department of Housing
and Urban Development as "an agency that greased the mortgage wheel
for first-time buyers by insuring billions of dollars in loans." The
article describes how HUD progressively reduced its lending standards:
"families no longer had to prove they had five years of stable income;
three years sufficed… lenders were allowed to hire their own
appraisers rather than rely on a government-selected panel … lenders
no longer had to interview most government-insured borrowers face to
face or maintain physical branch offices," because the government's
approval for granting mortgage insurance had become automatic.
The Times' article goes on to describe how "Lenders," such as
Countrywide Financial, which was among the largest and most prominent,
"sprang up to serve those whose poor credit history made them
ineligible for lower-interest 'prime' loans." It notes the fact that
"Countrywide signed a government pledge to use 'proactive creative
efforts' to extend homeownership to minorities and low-income
Americans."[8] "Proactive creative efforts" is a good description of
what lenders did in offering such bizarre types of mortgages as those
requiring the payment of "interest only," and then allowing the
avoidance even of the payment of interest by adding it to the amount
of outstanding principal. (Such mortgages suited the needs of
homebuyers whose reason for buying was to be able to sell as soon as
home prices rose sufficiently further.)
Just as vast numbers of houses were purchased based on an unfounded
belief in an endless rise in their prices, so too vast numbers of
complex financial derivatives were sold based on an unfounded belief
that the Federal Reserve System actually had the power it claimed to
have of making depressions impossible ­ a power which the media and
most of the economics profession repeatedly affirmed.
Derivatives have received such a bad press that it is necessary to
point out that the insurance policy on a home is a derivative. And
many of the derivatives that were sold and which are now creating
problems of insolvency and bankruptcy, namely, "credit default swaps
(CDSs)," were insurance policies in one form or another. Their flaw
was that unlike ordinary homeowners' insurance, they did not have a
sufficient list of exclusions.
Homeowners' policies make exclusions for such things as damage caused
by war and, in many cases, depending on the special risks of the local
area, earthquakes and hurricanes. In the same way, the more complex
derivatives should have made an exclusion for losses resulting from
financial collapse brought on by Federal Reserve–sponsored massive
credit expansion. (If it is impossible actually to write such an
exclusion, because many of the losses may occur before the nature of
the cause becomes evident, then such derivatives should not be written
and the market will no longer write them because of the unacceptable
risks they entail.) But decades of brainwashing by the government, the
media, and the educational system had convinced almost everyone that
such collapse was no longer possible.
Belief in the impossibility of depressions played the same role in the
creation and sale of "collateralized debt obligations (CDOs)." Here
disparate home mortgages were bundled together and securities were
issued against them. In many cases, large buyers bundled together
collections of such securities and issued further securities against
those securities. As more and more homeowners have defaulted on their
loans, the result has been that no one is able directly to judge the
value of these securities. To do so, it will be necessary to
disentangle them down to the level of the underlying individual
mortgages. Such tangles of securities could never have been sold in a
market not overwhelmed by the propaganda that depressions are
impossible under the government's management of the financial system.
Finally, a discussion of the housing debacle would not be complete if
it did not include mention of forms of virtual extortion that served
to encourage loans to unworthy borrowers. Thus, the online
encyclopedia Wikipedia writes,
The Community Reinvestment Act [CRA] … is a United States federal law
designed to encourage commercial banks and savings associations to
meet the needs of borrowers in all segments of their communities,
including low- and moderate-income neighborhoods … CRA regulations
give community groups the right to comment or protest about banks' non-
compliance with CRA. Such comments could help or hinder banks' planned
expansions.
The meaning of these words is that the Community Reinvestment Act
gives the power to "community groups," to determine in an important
respect the financial success or failure of a bank. Only if they are
satisfied that the bank is making sufficient loans to borrowers to
whom it would otherwise choose not to lend, will it be permitted to
succeed. The most prominent such community group is ACORN.
Part and parcel of the environment that has made an act such as the
CRA possible, is threats of slander against banks for being "racist"
if they choose not to make loans to people who are poor credit risks
and also happen to belong to this or that minority group. The threats
of slander go hand in glove with intimidation from various government
agencies that exercise discretionary power over the banks and are in a
position to harm them if they do not comply with the agencies' wishes.
The same points apply to mortgage lenders other than banks.
What this extensive analysis of the actual causes of our financial
crisis has shown is that it is government intervention, not a free
market or laissez-faire capitalism, that is responsible in every
essential respect.

The Laissez-Faire Myth and the Marxism of the Media
The myth that laissez faire exists in the present-day United States
and is responsible for our current economic crisis is promulgated by
people who know practically nothing whatever of sound, rational
economic theory or the actual nature of laissez-faire capitalism. They
espouse it despite, or rather because of, their education at the
leading colleges and universities of the country. When it comes to
matters of economics, their education has steeped them entirely in the
thoroughly wrong and pernicious doctrines of Marx and Keynes. In
claiming to see the existence of laissez faire in the midst of such
massive government interference as to constitute the very opposite of
laissez faire, they are attempting to rewrite reality in order to make
it conform with their Marxist preconceptions and view of the world.
They absorb the doctrines of Marx more in history, philosophy,
sociology, and literature classes than in economics classes. The
economics classes, while usually not Marxist themselves, offer only
highly insufficient rebuttal of the Marxist doctrines and devote
almost all of their time to espousing Keynesianism and other, less-
well-known anticapitalistic doctrines, such as the doctrine of pure
and perfect competition.
Very few of the professors and their students have read so much as a
single page of the writings of Ludwig von Mises, who is the preeminent
theorist of capitalism and knowledge of whose writings is essential to
its understanding. Almost all of them are thus essentially ignorant of
sound economics.
When I refer to the educational system and the media as Marxist, I do
not intend to imply that its members favor any kind of forcible
overthrow of the United States government or are necessarily even
advocates of socialism. What I mean is that they are Marxists insofar
as they accept Marx's views concerning the nature and operation of
laissez-faire capitalism.
They accept the Marxian doctrine that in the absence of government
intervention, the self-interest, the profit motive ­ the "unbridled
greed" ­ of businessmen and capitalists would serve to drive wage
rates to minimum subsistence while it extended the hours of work to
the maximum humanly endurable, imposed horrifying working conditions,
and drove small children to work in factories and mines. They point to
the miserably low standard of living and terrible conditions of wage
earners in the early years of capitalism, especially in Great Britain,
and believe that that proves their case. They go on to argue that only
government intervention in the form of pro-union and minimum-wage
legislation, maximum-hours laws, the legal prohibition of child labor,
and government mandates concerning working conditions, served to
improve the wage earner's lot. They believe that repeal of this
legislation would bring about a return to the miserable economic
conditions of the early 19th century.
They view the profits and interest of businessmen and capitalists as
unearned, undeserved gains, wrung from wage earners ­ the alleged true
producers ­ by the equivalent of physical force, and hence regard the
wage earners as being in the position of virtual slaves ("wage
slaves") and the capitalist "exploiters" as being in the position of
virtual slave owners. Closely connected with this, they regard taxing
the businessmen and capitalists and using the proceeds for the benefit
of wage earners, in such forms as social security, socialized
medicine, public education, and public housing, as a policy that
serves merely to return to the wage earners some portion of the loot
allegedly stolen from them in the process of "exploitation."
In full agreement with Marx and his doctrine that under laissez-faire
capitalism the capitalists expropriate all of the wage earner's
production above what is necessary for minimum subsistence, they
assume that the government's intervention harms no one but the immoral
businessmen and capitalists, never the wage earners. Thus not only the
taxes to pay for social programs but also the higher wages imposed by
pro-union and minimum-wage legislation are assumed simply to come out
of profits, with no negative effect whatever on wage earners, such as
unemployment. Likewise for the effect of government-imposed shorter
hours, improved working conditions, and the abolition of child labor:
the resulting higher costs are assumed simply to come out of the
capitalists' "surplus value," never out of the standard of living of
wage earners themselves.
This is the mindset of the whole of the left and in particular of the
members of the educational system and media. It is a view of the
profit motive and the pursuit of material self-interest as inherently
lethal if not forcibly countered and rigidly controlled by government
intervention. As stated, it is a view that sees the role of
businessmen and capitalists as comparable to that of slave owners,
despite the fact that businessmen and capitalists do not and cannot
employ guns, whips, or chains to find and keep their workers but only
the offer of better wages and conditions than those workers can find
elsewhere.
Not surprisingly, the educational system and media share the view of
Marx that laissez-faire capitalism is an "anarchy of production," in
which the businessmen and capitalists run about like chickens without
heads. In their view, rationality, order, and planning emanate from
the government, not from the participants in the market.
As I say, this, and more like it, is the intellectual framework of the
great majority of today's professors and of several generations of
their predecessors. It is equally the intellectual framework of their
students, who have dutifully absorbed their misguided teachings and
some of whom have gone on to become the reporters and editors of such
publications as The New York Times, The Washington Post, Newsweek,
Time, and the overwhelming majority of all other newspapers and news
magazines. It is the intellectual framework of their students who are
now the commentators and editors of practically all of the major
television networks, such as CBS, NBC, ABC, and CNN.[9] And it is this
intellectual framework within which the media now attempts to
understand and report on our financial crisis.
In their view, laissez-faire capitalism and economic freedom are a
formula for injustice and chaos, while government is the voice and
agent of justice and rationality in economic affairs. So firmly do
they hold this belief, that when they see what they think is evidence
of large-scale injustice and chaos in the economic system, such as has
existed in the present financial crisis, they automatically presume
that it is the result of the pursuit of self-interest and the economic
freedom that makes that pursuit possible. Given this fundamental
attitude, the principle that guides contemporary journalists so-called
is that their job is to find the businessmen and capitalists who are
responsible for the evil and the government officials who set them
free to commit it, and, finally, to identify and support the policies
of government intervention and control that will allegedly eliminate
the evil and prevent its recurrence in the future.
Their fear and hatred of economic freedom and laissez-faire
capitalism, and their need to be able to denounce it as the cause of
all economic evil, is so great that they pretend to themselves and to
their audiences that it exists in today's world, in which it clearly
does not exist even remotely. By making the claim that laissez faire
exists and is what is responsible for the problem, they are able to
turn the full force of their hatred for actual economic freedom and
laissez-faire capitalism against each and every sliver of economic
freedom that somehow manages to exist and which they decide to target.
That sliver, they project, is part and parcel of the starvation of the
workers in the inhuman exploitation of labor that, in their ignorance,
they take for granted is imposed by capitalists under laissez faire.
Their brainwashed audience ­ as much the product of the contemporary
educational system as they themselves ­ then quickly follows suit and
obliges their efforts to arouse hatred.
The result is summed up in words such as these, which appeared in one
of the same New York Times articles I quoted earlier:
"We now have a collective anger, disgust, over our whole financial
system and it's obvious we're going to get a regulatory
backlash…" [with] a spillover effect to other industries because
voters have the perception that "big companies are animals and they
need to be put in their cages."[10]
In this way the enemies of capitalism and economic freedom are able to
proceed in their campaign of economic destruction and devastation.
They use the accusation of "laissez faire" as a kind of ratchet for
increasing the government's power. For example, in the early 1930s
they accused President Hoover of following a policy of laissez faire,
even as he intervened in the economic system to prevent the fall in
wage rates that was essential to stop a reduced demand for labor from
resulting in mass unemployment. On the basis of the mass unemployment
that then resulted from Hoover's intervention, which they succeeded in
portraying as "laissez faire," they deceived the country into
supporting the further massive interventions of the New Deal.
Today, they continue to play the same game. Always it is laissez faire
that they denounce, and whose alleged failures they claim need to be
overcome with yet more government regulations and controls. Today, the
massive interventions not only of the New Deal, but also of the Fair
Deal, the New Frontier, the Great Society, and of all the
administrations since, have been added to the very major interventions
that existed even in the 1920s and to which Hoover very substantially
added. And yet we still allegedly have laissez faire. It seems that so
long as anyone manages to move or even breathe without being under the
control of the government, laissez faire allegedly continues to exist,
which serves to make necessary yet still more government controls.
The logical stopping point of this process is that one day everyone
will end up being shackled to a wall, or at the very least being
compelled to do something comparable to living in a zip code that
matches his social security number. Then the government will know who
everyone is, where he is, and that he can do nothing whatever without
its approval and permission. And then the world will be safe from
anyone attempting to do anything that benefits him and thereby
allegedly harms others. At that point, the world will enjoy all the
prosperity that comes from total paralysis.
[VIEW THIS ARTICLE ONLINE]
__________________________
George Reisman, Ph.D. is the author of Capitalism: A Treatise on
Economics . (A PDF replica of the complete book can be downloaded to
the reader's hard drive simply by clicking on the book's title,
immediately preceding, and then saving the file when it appears on the
screen.) He is Pepperdine University Professor Emeritus of Economics.
His web site is www.capitalism.net.
Copyright © 2008 by George Reisman. All rights reserved.

Notes
[1] See http://www.volunteertv.com/international/headlines/29762874.html
.
[2] Steve Lohr, "Intervention Is Bold, but Has a Basis in History,"
October 14, 2008, p. A14.
[3] Jackie Calmes, "Both Sides of the Aisle See More Regulation,"
October 14, 2008, p. A15.
[4] Landon Thomas Jr. and Julia Werdigier, "Britain Takes a Different
Route to Rescue Its Banks," October 9, 2007, p. B7.
[5] I arrive at these figures by calculating total checking deposits
in January of 2001 and in August of 2008 as the sum of those contained
in M1, the "sweep" accounts compiled by the Federal Reserve Bank of
St. Louis, and money market mutual fund deposits, both retail and
institutional. From these respective totals I subtract total bank
reserves as of the same dates. I then subtract the result for 2001
from that for 2008 and divide the difference by the sum calculated for
2001.
[6] If the creation of checkbook money in excess of currency holdings
is in fact an attempt at cheating, as I described it earlier, then it
follows that a free market would actually require a 100 percent
reserve.
[7] Joe Nocera, "Shouldn't We Rescue Housing?" October 18, 2008, p.
B1.
[8] David Streitfeld and Gretchen Morgenson, "The Reckoning, Building
Flawed American Dreams," October 19, 2008, p. A26.
[9] For a comprehensive refutation of all aspects of this intellectual
framework, see George Reisman, Capitalism: A Treatise on Economics
(Ottawa, Illinois: Jameson Books, 1996), chapters 11, 14, and passim.
[10] Jackie Calmes, loc. cit.





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