Monday, February 02, 2009

Recession? ... Depression? ... What is Going On? (Part 2)

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Part 1, 06 October 2008
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Worst Economic Collapse Ever
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Communities print their own currency to keep cash flowing
By Marisol Bello, USA TODAY
11 April 2009
http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm
A small but growing number of cash-strapped communities are printing their own money.
Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.
The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.
VIDEO: Scrip: It's all the rage
Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.
Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash.
"We wanted to make new options available," says Jackie Smith of South Bend, Ind., who is working to launch a local currency. "It reinforces the message that having more control of the economy in local hands can help you cushion yourself from the blows of the marketplace."
About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it.
Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.
During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.
By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.
"We print the real thing," she says.
The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. "It's not a way to avoid income taxes, or we'd all be paying in Detroit dollars," he says.
Pittsboro, N.C., is reviving the Plenty, a defunct local currency created in 2002. It is being printed in denominations of $1, $5, $20 and $50. A local bank will exchange $9 for $10 worth of Plenty.
"We're a wiped-out small town in America," says Lyle Estill, president of Piedmont Biofuels, which accepts the Plenty. "This will strengthen the local economy. ... The nice thing about the Plenty is that it can't leave here."

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"I don't want anything from you. I don't want any free ride from you at all ..."

Oregonian people experiencing homelessness are flexing their protesting muscles and this type of action is beginning to become more and more frequent across the country. I guess you can't expect it to be much different when people have nothing else to lose and nowhere else to go....
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City Hall and homeless talking past one anotherShelters are available, but campers want the right to sleep outsideMonday, May 12, 2008
Anna Griffin
The Oregonian Staff
http://stonesoupstation.blogspot.com/2008_04_13_archive.html
As the homeless protest at Portland City Hall hits its third and apparently final week, the philosophical gap between city leaders and protesters grows even wider.
City leaders say protesters need to stop camping outside City Hall now that they've been provided with more shelter space. Homeless people and their advocates say they never asked for shelter space. Rather, they want the right to sleep outdoors and looser anti-loitering laws.
For now, there's no obvious middle ground. Even if this protest ends Tuesday, as Mayor Tom Potter seems to have declared it will with his decision to start forcing campers out over the weekend, more are likely in the future. Everybody agrees the city needs more permanent housing, but that's a long-term solution dependent on a finite -- and shrinking -- pool of money.
"This is a broader social problem all over the world," said Austin Raglione, his chief of staff. "We can't find permanent housing on demand, immediately. That takes time. But we do have shelter beds."
The protest began when a group of homeless men and women, infuriated by police sweeps of camping sites beneath the Burnside Bridge, relocated to City Hall. As many as 100 people have gathered at times, wrapping around three sides of the seat of city government and crowding busy downtown sidewalks.
Portland laws bar people from overnighting on public property and loitering. But because this is a protest, those rules don't apply.
Protesters say their immediate priority is an end to those laws, or at least a promise that city police and private security guards won't enforce them. Several headed indoors and up a floor to speak at last week's City Council meeting.
"I don't want anything from you. I don't want any free ride from you at all," said Lisa Iacuzzi, part of the group now calling itself the "Homeless Liberation Front." "I have a master's degree. I paid my way for my own education. I don't want anything free. I just don't want to be treated like a criminal."
Potter thanked Iacuzzi and the other protesters, but said he can't drop the camping ban or the loitering "sit-lie" law. "The solution to homelessness is not camping," he said. "It's moving folks into housing."
Portland leaders are trying to do exactly that.
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Surviving Recession: Medical research seen as lure in hard timesBy Carrie Peyton Dahlberg
Published: Friday, Mar. 13, 2009
http://www.sacbee.com/273/story/1696087.html
One in an occasional series to help guide you through economic troubles.
Retirement slammed Carole Jacko. Raising two grandchildren, she's too young for Medicare and too strapped to pay $600 a month for health insurance.
So when a trip to the emergency room ended with a diagnosis of diabetes, Jacko found a creative solution.
She became a medical guinea pig, offering herself to science in exchange for free medication, free doctor's visits and even a modest payment.
"It really covers costs," Jacko said. And the clinic staffers "are very good and professional. … They keep a good eye on you."
With the economy careening and millions uninsured, some doctors and researchers believe the lure of volunteering for medical research is growing – and so are potential ethical pitfalls.
"Sometimes desperation leads people to be poor shoppers," to gloss over risks or grasp at imagined benefits, said Kevin Weinfurt, a Duke University professor who focuses on medical decision-making and ethics.
No regulations limit how much a person can be paid to take part in medical research.
Payments are often modest, however, usually intended to cover gasoline, time or inconvenience. But the odd $25 here or $50 there can be dwarfed by the value of free medical care that would otherwise cost hundreds or thousands of dollars.
S. Elena MacLachlan, an Oakland nurse studying for her doctorate, is willing to undergo what might be a sham surgery for the chance to get a new type of weight-loss operation for free.
"I'm not in poverty. I have a good career. But my insurance doesn't cover it," she said, estimating a similar operation would cost her tens of thousands of dollars otherwise. "I thank God for this."
Researchers do not agree on how much money it takes to cross the line and exert "undue influence" or coercion to get someone to enroll in a study. That's something federal regulations do forbid.
"This is the most complicated issue in research ethics, and it's still an unsettled question," Weinfurt said.
It has lingered for more than 100 years, since an Army surgeon named Walter Reed paid volunteers at a Cuban outpost $100 in gold to risk being infected with yellow fever. The men got another $100 if they contracted the disease, payable to themselves – or any designated survivor.
The dangers Carole Jacko runs are far less dramatic.
She is participating in a study aimed at evaluating how three different high blood pressure medications work together. The combination being studied is approved in Europe, but not by the U.S. Food and Drug Administration. Even so, U.S. doctors can and sometimes do prescribe the combination already – but drug companies are not allowed to promote such "off label" uses.
Jacko signed a thick disclosure packet that detailed known side effects of each drug, including nausea, headaches and kidney problems. More ominously, she was warned, she would have to stop taking all medications during a "wash-out" period before the start of the study, leaving her high blood pressure temporarily uncontrolled.
That, she was told, carried a rare chance of a fatal or disabling stroke or heart attack.
"It really didn't scare me," she said, because she knew and trusted the medical assistants who saw her regularly.
With arthritis, diabetes and high blood pressure, Jacko, 60, can offer herself up again and again for a variety of research.
In one study, her blood pressure soared during the wash-out period. Clinic staffers monitored her closely, she said, and eventually gave her the option to switch to a different research project.
Now, she's back for more.
Every few weeks she drives from the Citrus Heights home she shares with her son's family to the offices of Dr. John Champlin in Carmichael. She rolls up her sleeve for a blood pressure check, gets her blood drawn, and leaves with a new supply of medication and a $45 check – payment to her for that day's office visit.
"I have no medical insurance," Jacko said. "This is a way for me to have blood tests and not have to pay the high lab costs. … This worked out really well for me."
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Mixed SignalsEndless Washington Parties, Lavish spending, foodstamps, lineupsBy Ari Bussel Tuesday, March 10, 2009
http://canadafreepress.com/index.php/article/9240
On Sunday morning I saw a line of people waiting patiently for the doors at SOVA Pantry to open so that they can get food. On the same evening I saw an even longer line of people lined up in Beverly Hills to buy $4 cupcakes “handcrafted in small batches” at Sprinkles. There are over 20 tantalizing flavors to satisfy the sweet tooth, using the freshest ingredients including sweet cream butter, bittersweet Belgian chocolate, pure Madagascar Bourbon vanilla etc. Need any today?
Ritzy, glamorous, extravagant lifestyle. The decay is so deep, yet the pain is not widespread, so it has not been felt everywhere yet. There will come a day, in the not so distant future, when standing in line to buy cupcakes will not be a status symbol anymore, people will start thinking about others as well and indulgence will be replaced by kindness if not by fear.
People refuse to recognize what is happening, so we continue behaving the same. Bloomberg online reports: “Hedge funds may cut a record 20,000 jobs as losses erode fees,” “United Technologies will cut 11,600 jobs, reduces profit, sales forecasts” and “Jobless rate in U.S. will reach 9.4% this year, economists say in survey.” Do I care about 20,000 out of work from the financial industry? When they made their hefty salaries, often in the hundreds of thousands or more, did they care about society? Did they take one step other than the one that would maximize their after-tax income (i.e. deduct the maximum for “charities,” usually of the type that includes glamorous meals at world-class hotels, raffles and other make-myself-feel-good type)?
We have already surpassed the eight percent unemployment figure, and this must make all of us worry. If you count 12 people, then on average one of them is out of work. The forecast is that one of every ten people in the United States will be unemployed. The figure historically did not include those who were out of the circle already, ineligible for any more benefits.
Did you ever stop to think what it means to be unemployed? What would be the weekly payment from the Government? What will happen to all the regular bills (cable TV may be the first to go, but then there is the cell phone with a remaining two year commitment, the regular phone, electricity, gas and water, some credit card bills, health insurance, rent or mortgage and food)? How do you take care of taxes (are benefit taxable as income?), life insurance and other “incidentals?” The word “incidental” cannot be included, for these will be the first to go, but a co-payment for a doctor’s visit or for a prescription still needs to be paid. How long can we live on unemployment benefits before they run out or before the State runs out of money?
Have you ever thought of food stamps? I saw a person using them once at a local produce store. Soon new words will enter our vocabulary. These will undoubtedly include the following: “ABAWDs” are Able Bodied Adults Without Dependents, “SNAP” is the Supplemental Nutrition Assistance Program (the new name, as of 10/1/2008, of the Federal Food Stamp Program) and ARRA is the American Recovery and Reinvestment Act of 2009 (signed into law on 2/17/2009). “Job cuts” will become a permanent part of our nomenclature.
The White House website highlights a report from March 9th by Andrew Miga of Associated Press that the President led a Kennedy Center crowd in a performance of “Happy Birthday” to Uncle Teddi. This must have been a token of appreciation to Sen. Edward Kennedy’s support during the election last year. The performers then sang “The Best is Yet to Come.” This is one of a sequence of parties in which the President and First Lady have participated lately. Money seems not to be an object – when there is not enough, print more (or borrow – future generations will pay the bill). The partying must go on.
We do not stop to think that today’s lavish spending style may need to be repaid. We no longer talk in anything but billions and trillions. The oil companies are making tens of billions in net profits, the automobile companies lose tens of billions every quarter, and we pay for it all. Soon the airlines, banks and other industries will join the line of those expecting, demanding in fact, assistance. Free for all, on whose account?

We are still paying $2.5 for a gallon of premium unleaded. It seems low relative to $4.5 of just half a year ago, but a barrel of oil then was at $150 and it is now in the low 40’s. A barrel should really be at $14 or below, gas should be at or below $1.05 and “parking lot” traffic should be eased. How were we able to live once, not that many decades ago, without each kid having a car of her own?
The “proven” old methods (spend billions on infrastructure projects) do not work anymore simply because they do not apply. People are not desperate yet, and there are large companies, the likes of Halliburton, that know how to funnel billion of well-intentioned allotments into the wrong ends (or hands).
It was imperative – some thought - not to let industries fail. Thus, trillions have been poured to save these industries, only to discover after a few weeks that the staggering sums are insufficient, and billions more are necessary to keep them afloat. Let industries fail, since they will anyway. Rather than pour money for executives to split the windfall profits while laying off thousands, sometimes tens of thousands, who end up on the unemployment payroll, let these organizations find the fate that eventually arrives without fail: become more efficient or die. Improve or cease to exist. Reduce the dependency on oil in favor of alternative energies. Life as we knew it is no longer. It is time to change our habits, to think and act differently. It is time to face the new reality.
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'Run on UK' sees foreign investors pull $1 trillion out of the City
Banking crisis undermines Britain's reputation as a safe place to hold funds
By Sean O'Grady, Economics correspondent
Saturday, 7 March 2009
http://www.globalresearch.ca/index.php?context=va&aid=12599
A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK – that is monies held in the UK on behalf of foreign investors – fell by $1 trillion (£700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London.
Some $597.5bn was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5bn haemorrhaged in the second quarter of 2008 – a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion. This is by far the largest withdrawal of foreign funds from the UK in recent decades – about 10 times what might flow out during a "normal" quarter.
The revelation will fuel fears that the UK's reputation as a safe place to hold funds is being fatally comp-romised by the acute crisis in the banking system and a general trend to financial protectionism internat- ionally. This week, Lloyds became the latest bank to approach the Government for more assistance. A deal was agreed last night for the Government to insure about £260bn of assets in return for a stake of up to 75 per cent in the bank. The slide in sterling – it has shed a quarter of its value since mid-2007 – has been both cause and effect of the run on London, seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates.
Colin Ellis, an economist at Daiwa Securities, commented: "The outflow of overseas banks' UK holdings is not surprising – indeed foreign investors in general will still be smarting from the sharp fall in the exchange rate last year, as many UK liabilities are priced in sterling terms. That raises the question of what could possibly tempt overseas investors to return to the UK. Further heavy outflows of funds are probably a given."
The Bank of England said that there had been a large fall in deposits from the United States, Switzerland, offshore centres such as Jersey and the Cayman Islands, and from Russia.
Paranoia that the UK could follow Iceland into effective national insolvency and jibes about "Reykjavik on Thames" will find an unwelcome substantiation in these statistics – which also show that stricken British banks are having to repatriate similar sums back to Britain. This is scant consolation for the authorities, however, as it means the UK and sterling are, like some emerging markets and currencies, suffering from a flight of capital. By contrast some financial centres and currencies – notably the US dollar and the Swiss franc – are enjoying a boost as "safe havens" in a troubled world.
The sudden international trend towards financial deglobalisation and the flight of money to "home" bases has nonetheless been dramatic. The Prime Minister has already warned about this drift to "financial protectionism" – even though UK banks brought back almost $600bn in the last months of 2008, as they attempted to repair fragile balance sheets. Mr Ellis added: "These data are consistent with UK banks reducing their overseas holdings, at the same time as overseas banks scale back their presence in the UK. That is not surprising, given that governments around the world are having to prop up their banking sectors, and in turn demanding that national institutions focus on domestic markets. But it does run the risk of being financial protectionism by the back door."
Investment from the West into developing countries has fallen from the level of about $1 trillion a year seen earlier this decade to about $150bn last year. Economies in eastern Europe such as Hungary and the Baltic republics, some in Asia such as Pakistan and developed nations such as Iceland have been severely hit by the collapse in foreign investment.
Like Iceland, the UK has an unusually large banking sector in relation to her national income, with liabilities four times GDP. Should the UK taxpayer have to assume these debts it will represent, in relation to GDP, about double the national debt the nation bore at the end of the Second World War, a near unsustainable burden.
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Japan's industrial output plunges
BBC News
27 February 2009
http://news.bbc.co.uk/2/hi/business/7914040.stmJapan's industrial production fell by 10% in January - the biggest monthly drop since records began more than half a century ago, the government says.
It is the fourth successive month that factory output has fallen, as the world's second-biggest economy suffers its worst recession in decades.
The latest figures come days after the government said exports plunged 45.7% in January compared with a year ago.
Japan's economy is suffering because of falling demand for its products abroad.
Consumers around the world afraid of losing their jobs in the global downturn no longer want to buy Japanese electronic gadgets and cars, the BBC's Roland Buerk in Tokyo says.
The country's car production plunged a record 41% year-on-year in January, according to the Japan Automobile Manufacturers' Association.
It said 576,539 vehicles were produced in January compared with 976,975 for the same month of 2008.
Painfully exposed
The Japanese themselves are also shopping less, with average household spending falling 5.9% in January compared with the same month a year ago, our correspondent says.
Jobs are also being slashed - the number of people unemployed rose by more than 200,000.
"The recession is having an increasing impact on the real economy," Finance Minister Kaoru Yosano said.
Japan was once seen as relatively immune to the global crisis because its banks were not as exposed to bad loans as those in the US and Europe, our correspondent says.
But he says that Japan's reliance on foreign markets to drive its economy out of a long slump in the 1990s has left it painfully exposed.
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Get Ready for Mass Retail Closings
Posted Feb 19, 2009 11:58am EST by Tech Ticker
http://finance.yahoo.com/tech-ticker/article/yftt_187534/Get-Ready-for-Mass-Retail-Closings?tickers=sks
About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it's clear there's too much retail space. Just visit Web site deadmalls.com and track retail's growing body count. And luxury retailers? They're on "life support," Davidowitz says.
Among the brandname stores Davidowitz says are in trouble:
Nordstrom
Neiman Marcus
Tiffany
Jeweler Zale Corp.
Saks
J.C. Penney
Sears
Plus, earlier we discussed:
Retail goods on sale -- perhaps permanently.
And the 'worst is yet to come:' Americans' standard of living permanently changed.
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Republicans Turn Their Backs on the People Who have Played by the Rules and Need HelpBy Susie Madrak Sunday Feb 08, 2009 4:00pm
http://crooksandliars.com/
This is what the Republicans and Blue Dog Dems are turning their backs on:
All over the New Jersey, the welfare lines are getting longer and longer. Victims of the recession are lining up to apply for food stamps and seek help paying for utilities, rent and subsidized health care in numbers that veteran social service workers have never seen before.
While the lines may run the longest in urban Essex County, rural Salem County and suburban Middlesex see the same thing: lines getting longer, lines made up more and more of people that have never stood there before.
Nikki Hernez, a 45-year-old Newark bus driver looking for work since October, said she has stood in lines all over the county. She walked 2 1/2 miles to a Newark office Monday to pick up a bus pass, only to be told to come back Thursday because the office was so jammed.
Hernez finds the line in East Orange office the most chaotic.
"The line at 50 South Clinton Avenue is crazy -- people get there early in the morning, a lot of the people are cursing, yelling and screaming," Hernez said.
"You gotta understand, people are under so much pressure there is only so much they can take," said Hernez, who ran out of unemployment benefits and applied for welfare in the fall. "But even I tell them, real nice, you're not going to get anything quick by cursing the worker out."
[...] They include people like Joan, a 52-year-old Warren County resident who applied for public assistance in December, after years of holding white-collar and part-time tutoring jobs. County workers told her to come back in January because they were "so overloaded," she said.
Joan, who declined to reveal her full name to protect her son's privacy, said she doesn't blame the county workers -- "good people doing the best they can. But I have always been a taxpaying citizen. I am playing by the rules and I can't get help."
And really, that's what it's about. If even people who worked hard and played by the rules can't get help, our leadership is a joke and our system a complete failure:
She said she pawned jewelry to make a car payment, and put food on the table by going to food pantries and taking handouts from friends and family until, upon her third visit, the county came through with a one-time food stamp grant for $227 last month.
"I never thought I would be in this situation," Joan added. "Something has to be done about people like me."
The state Department of Human Services, which oversees the distribution of welfare, Medicaid and food stamps benefits, saw a dramatic spike in the demand for these programs in the fall. Food-stamp applications doubled from 2,234 people in October 2007 to 4,547 people in October 2008, according to the most recent state data available.
During roughly the same period, there was a 61 percent spike in the number of people seeking cash assistance through public welfare, known as Temporary Assistance to Needy Families, or General Assistance. State unemployment rose to 7.1 percent in November, the highest in 15 years.
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Jobless Claims Hit Record High; Inflation JumpsBy: Reuters 19 Feb 2009
http://www.cnbc.com/id/29277460
The number of workers drawing unemployment aid jumped to a record high in early February according to data on Thursday that highlighted the deteriorating labor market as a 13-month recession deepens.
A separate report showed prices received by producers rose last month, breaking a five straight month declining trend as energy costs rebounded.
The number of people remaining on the benefits rolls after drawing an initial week of aid surged 170,000 to 4.99 million in the week ended Feb 7, the most recent week for which the data is available, the Labor Department said.
That was the highest reading on records dating back to 1967. Analysts had estimated so-called continued claims would be 4.86 million from a previously reported 4.81 million the prior week.
"We're maintaining a high level of labor market deterioration. In general I think we're moving towards the pace of maximum contraction in the economy, but evidence for that is only preliminary," said Alan Levenson, chief economist at T. Rowe Price in Baltimore.
Equity index futures pared gains after jobless data.
Treasury debt prices and the dollar held losses.
The economy, in recession since December 2007, is buckling under a heavy burden of rising unemployment as companies try to slash costs to deal with sagging demand.
The aggressive layoffs and the accompanying job insecurity mean that households, whose net worth has already been eroded by the collapse of the housing and stock markets, will further cut on spending and creating a vicious cycle for the bleeding economy.
Initial claims for state unemployment insurance benefits were a seasonally adjusted 627,000 in the week ended Feb. 14 unchanged from the previous week. According to Labor Department data, new claims hovered close to a 26-year high.
Analysts polled by Reuters had forecast 620,000 new claims.
In another report, the department said the producer price index rose 0.8 percent in January, rising for the first-time since July, compared to a 1.9 percent drop in December.
Analysts polled by Reuters had forecast a 0.2 percent rise in the overall index. However, compared to the same period last year, the producer price index fell 1 percent, the largest decline since October 2006.
Core producer prices, excluding food and energy costs, rose 0.4 percent in January, also above market expectations for an increase of 0.1 percent. Core PPI rose 0.2 percent in December.
"I wouldn't get excited about core being up 0.4 percent as a sign of stagflation. I think there are some anomalies and that we will be in a deflationary environment for several months," said Kevin Flanagan, fixed income strategist at Morgan Stanley in Purchase, N.Y.
Compared to the same period a year ago, core producer prices were up 4.2 percent.
Energy prices surged 3.7 percent in January, halting five months of declines. Gasoline prices jumped 15 percent, the biggest increase since November 2007.
Food prices fell 0.4 percent, with declines in diary and meat costs more than offsetting sharp increases in vegetables.
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Even elderly are facing evictionComplaints on rise of nursing homes forcing out residentsBy VANESSA HO P-I REPORTER
February 6, 2009
http://www.seattlepi.com/local/399219_evicted07.html
For two years, Irene Henderer lived at the West Woods boarding home in Olympia, where she was known for her lively stories and sharp wit. But in November 2007, the home gave Henderer an eviction notice, along with 20 other Medicaid residents.
Henderer, 89, grew depressed and refused to leave her room for meals. As her move approached, she quietly asked her guardian: "Why can't I just die here?"
Three days after moving out, Henderer's congestive heart failure worsened. A month later, she died.
"That was her home," said Pam Privette, Henderer's legal guardian. "If she could have stayed there, we would not have gone through any of this -- the depression, the giving up on life. This pre-empted a natural death, in my opinion."
As health care costs rise and Medicaid rates lag behind, nursing and boarding homes are forcing out sick, elderly and frail residents in what advocates say is a growing trend. No official data exist on eviction counts, but discharge complaints have climbed to record highs.
The Washington Long-Term Care Ombudsman program handled more than 700 such complaints last year, nearly a 50 percent increase over the year before. Nationally, discharge-related complaints have more than doubled in a decade -- to 12,000 in 2007, according to the U.S. Administration on Aging.
"The system is getting frayed around the edges," said Louise Ryan, the state's long-term care ombudsman, or chief resident advocate.
"People are getting harder to take care of," she said. "When (homes) can find an opportunity to discharge the person, they will. The problem is especially hard with nursing homes, because where else are they going to go? It's the end of the line."
The results are often tragic.
Another woman evicted from West Woods wandered outside one night before her move, barefoot and in a nightgown, saying she wanted "to fall down and die in the cold," Ryan said.
In Grays Harbor County last year, an evicted mentally ill man left his boarding home a week after moving in, and was found dead near some railroad tracks. In other areas, evicted residents have ended up in homes nearly a hundred miles away from loved ones.
In 2007, Seattle University forced out 115 residents when it decided to convert its nursing home into office and class space. Three months later, 14 of the residents had died.
Social workers have a name for such a swift decline after a move: "transfer trauma."
"When you get older, just transferring from one room to another can be very traumatic," said Paul Tosch, the regional long-term care ombudsman serving Thurston, Mason and Lewis counties. "The windows, the ceilings, the front door, the bathroom are all different. In a worst-case scenario, confusion sets in. It can start dementia or increase dementia. Depression sets in. They shut themselves off and say, 'I'm not going to live.' "
Homes can legally evict a resident who fails to pay, becomes dangerous or has needs a home can't meet. Boarding homes can evict Medicaid residents by slashing public-assistance beds, but federal law bars nursing homes from kicking out residents solely because of Medicaid.
But advocates say many homes find ways to bend the laws. They say homes mislead families to lure in residents, and use the broad "can't meet needs" reason to force out difficult or expensive residents.
One of the most common types of eviction is when homes send a resident to the hospital and refuse to take him back, in a practice that resident advocates call "dumping."
"We have a lot of experiences with nursing homes who load somebody up in an ambulance on a Friday night. ... They do it on a Friday, I think, because advocates go home," said Vicki Elting, the regional ombudsman in King County. By Monday morning, hospitals are struggling with a discharged patient with nowhere to go.
Industry representatives deny that "dumping" occurs and say homes are diligent in taking only residents they can care for. They attribute the rise in discharge complaints to a younger, more vocal generation now living in homes.
"This urban myth that people are getting kicked out all the time -- there's no evidence of that," said Gary Weeks, executive director of the Washington Health Care Association, a group of 400 nursing and boarding homes.
Advocates counter that dumping rarely occurs to private-pay people, but to Medicaid residents such as Florence Wade, who had lived at the Regency at Tacoma Rehabilitation Center for roughly three years.
In January, Wade, 85, went to the hospital for pneumonia and a urinary tract infection. The nursing home refused to take her back, saying she had been uncooperative with caregivers in using a hydraulic lift to move her, according to Wade's daughter, Barbara Arnold.
Arnold argued that her mother, who is obese and wheelchair-bound, simply needed coaxing and had used the lift in the hospital. The home then accused her of not doing a "bed hold" -- which she never had to do in the past -- and said the room was gone anyway. Someone else had moved in.
"They had already packed my mother's room up," said Arnold, who owns a computer-training business. "They had no intention of taking her back."
The eviction left Arnold with one stressful option: a nursing home 45 minutes away -- too far for regular visits from friends and family.
"It is very, very hard," said Arnold, who believes her previous complaints about the home prompted the eviction. "My feeling is that by isolating her like that, she isn't going to last long."
Dell Workman, vice president of operations for Regency Pacific, which owns the Tacoma facility, said the home had assessed Wade's condition and determined it couldn't meet her needs. He said federal law barred him from commenting further on Wade's condition.
Other families have felt deceived by boarding homes that promised Medicaid beds and later reneged. Or by nursing homes that discharged residents with advanced Alzheimer's disease, after touting expert dementia care.
"It's unfair, unethical and greedy," said Nancy Dapper, executive director of the local Alzheimer's Association chapter. "You go to these places as a family and they say, 'Oh yes, we have an Alzheimer's care unit.' Unless the family is extraordinarily knowledgeable, they're not going to say, 'Can my mom die here?' "
Doug Campbell recalled asking the administrator of his mother's Port Townsend boarding home what would happen when his mother's money ran out. "(The administrator) said, 'As long as I'm here, your mother will not have to move,' " said Campbell, a retired teacher.
But the administrator soon left, and the home -- Victoria House -- evicted his deaf, blind, 97-year-old mother soon after she converted to Medicaid.
Victoria House and West Woods are owned by Assisted Living Concepts, a Wisconsin-based company with 200 homes nationwide and a market value of $290 million. The company did not return calls for comment.
Elting, the King County ombudsman, said some homes, desperate to fill beds, take in difficult residents with severe mental illnesses, addictions or complex medical needs. Unequipped to deal with them, the homes often end up forcing them out, creating a cycle of needing to fill beds.
"Unfortunately, there are people who have care needs who are discharged to a shelter, or the street," Elting said. "That's the most disgraceful end result of all this."
Weeks, of the state Health Care Association, disputed that practice.
"Why would (homes) admit somebody they know they're going to let go?" he said. "From a business perspective, our buildings are trying to stay as full as possible."
He said the more pressing problem is the growing gap between care costs and Medicaid payouts. Medicaid caseloads have also grown, because people are living longer and baby boomers are aging into long-term care.
With assisted living costing residents $3,000 to $6,000 a month, and nursing homes costing up to $10,000 a month, homes lose money daily on each Medicaid resident, Weeks said. On average the state pays out about $5,000 a month for a nursing home resident, and $2,000 for a boarding home resident.
To survive, nursing homes are seeking out residents with better coverage, he said.
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Jobless claims highest in 26 yearsThe number of Americans who applied for unemployment benefits for the first time tops 600,000. Continuing claims set record high.
By Catherine Clifford, CNNMoney.com staff writer
February 5, 2009
http://money.cnn.com/2009/02/05/news/economy/jobless_claims/index.htm?section=money_latest
NEW YORK (CNNMoney.com) -- The number of Americans filing for first-time unemployment benefits surged last week to a level not seen since October 1982, according to a government report released Thursday.
The number of initial jobless claims jumped to a much-higher-than-expected 626,000 in the week ended Jan, 31, according to the Labor Department. That's up from a revised 591,000 in the previous week and the highest level since the last week of October 1982, when jobless claims reached 637,000.
Economists polled by Briefing.com were expecting the number to come in at 580,000 for the most recent week.
The four-week moving average for weekly claims totaled 582,250, up from the previous week's revised figure of 543,250.
One economist said that as bad as the report is for the labor markets, the sharp spike in the initial claims could be a peak.
That would indicate the recession is closer to the end than it is to the start, according to Robert Brusca, chief economist at Fact and Opinion Economics.
"In recessions, you tend to get spike highs in claims," said Brusca. "They tend to get up to some high level very quickly and then they tend to back off."
"History tells you that claims don't continue to deteriorate this rapidly for that long," said Brusca.
The number of workers receiving unemployment checks for one week or more rose to a record 4,788,000 in the week ended Jan. 24, the most recent data available. That tops the previous week's record of 4,768,000.
Brusca does not think that continuing claims can stay at record levels for much longer, either. The economy fell quickly, and that should lead to a sharper recovery. Brusca said a sharp recovery would also be facilitated by the government stimulus plan and aggressive monetary policy. The economy has "extremely low interest rates to help foster a turn around and a lot of fiscal help coming from the government," he said.
The four-week moving average for continuing claims was 4,672,000, up from the previous week's revised moving average of 4,628,000.
The number came ahead of the government's January unemployment report, due out Friday. The unemployment rate is expected to jump to 7.5% in January, up from 7.2% the previous month, according to a consensus estimate from Briefing.com. Employers are expected to have slashed 500,000 jobs in the month.
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Violent unrest rocks China as crisis hits
Michael Sheridan in Hong Kong
February 1, 2009
The Sunday Times
http://business.timesonline.co.uk/tol/business/economics/article5627687.ece
The collapse of the export trade has left millions without work and set off a wave of social instability
Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.
The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.
While troubling for the Chinese government, this should strengthen the argument of Premier Wen Jiabao, who will say on a visit to London this week that his country faces enormous problems and cannot let its currency rise in response to American demands.
The new US Treasury secretary, Timothy Geithner, has alarmed Beijing and raised fears of a trade war by stating that China manipulates the yuan to promote exports.
However, a growing number of economists say the unrest proves that it is not the exchange rate but years of sweatshop wages and income inequality in China that have distorted global competition and stifled domestic demand. The influential Far Eastern Economic Review headlined its latest issue “The coming crack-up of the China Model”.
Yasheng Huang, a professor at the Massachusetts Institute of Technology, said corruption and a deeply flawed model of economic reform had led to a collapse in personal income growth and a wealth gap that could leave China looking like a Latin American economy.
Richard Duncan, a partner at Blackhorse Asset Management in Singapore, has argued that the only way to create consumers is to raise wages to a legal minimum of $5 (£3.50) a day across Asia – a “trickle up” theory.
The instability may peak when millions of migrant workers flood back from celebrating the Chinese new year to find they no longer have jobs. That spells political trouble and there are already signs that the government’s $585 billion stimulus package will not be enough to achieve its goal of 8% growth this year.
The American economist Nouriel Roubini said growth figures of 6.8% in the fourth quarter of 2008 masked the reality that China was already in recession – a view privately shared by many Chinese financial analysts who dare not say so in public.
Even security guards and teachers have staged protests as disorder sweeps through the industrial zones that were built on cheap manufacturing for multinational companies. Worker dormitory suburbs already resemble ghost towns.
In the southern province of Guangdong, three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.
The Communist party is so concerned to buy off trouble that in one case, confirmed by a local government official in Foshan, armed police forced a factory owner to withdraw cash from the bank to pay his workers.
“Hundreds of workers protested outside the city government so we ordered the boss to settle the back pay and sent police armed with machine-guns to take him to the bank and deliver the money to his workforce that very night,” the official said.
On January 15 there were pitched battles at a textile factory in the nearby city of Dongguan between striking workers and security guards.
On January 16, about 100 auxiliary security officers, known in Chinese as Bao An, staged a street protest after they were sacked by a state-owned firm in Shenzhen, a boom town adjoining Hong Kong.
About 1,000 teachers confronted police on the streets of Yangjiang on January 5, demanding their wages from the local authorities.
In one sample week in late December, 2,000 workers at a Singapore-owned firm in Shanghai held a wage protest and thousands of farmers staged 12 days of mass demonstrations over economic problems outside the city.
All along the coast, angry workers besieged labour offices and government buildings after dozens of factories closed their doors without paying wages and their owners went back to Hong Kong, Taiwan or South Korea.
In southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to stop creditors breaking in to seize equipment in lieu of debts.
In northern China, television journalists were punished after they prepared a story on the occupation of a textile mill by 6,000 workers. Furious local leaders in the city of Linfen said the news item would “destroy social stability” and banned it.
At textile companies in Suzhou, historic centre of the silk trade, sales managers told of a collapse in export orders. “This time last year our monthly output to Britain and other markets was 60,000 metres of cloth. This month it’s 3,000 metres,” said one. [Read entire article at: http://business.timesonline.co.uk/tol/business/economics/article5627687.ece]
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46 of 50 States Could File Bankruptcy in 2009-2010Written by John Paul Mitchell
January 30, 2009 at 1:42 pm
http://freedomarizona.org/2009/01/30/46-of-50-states-could-file-bankruptcy-in-2009-2010/#comments
There is a high chance a majority of the States within the United States of America could file for Chapter 9 bankruptcy. There are currently 46 states with high budget deficits, Arizona being one of them.
In fact, Jan Brewer, the newly appointed Governor of Arizona has a major crisis on her hands, one that Arizona and national media isn’t covering. The alarming news is the State of Arizona has 90 to 120 days before they completely run out of money. After that, all bills and tax refunds owed to the citizens will go unpaid.
Before Janet Napolitano left for her new Homeland secretary position, she had a stand-off with Arizona Treasurer Dean Martin. The AZ Treasurer forewarned Napolitano about Arizona’s financial crisis, but she refused to heed his words.
With neighboring California on the verge of bankruptcy this year, many States will follow in their steps.
Many States are already scurrying to cut unwanted costs, cut State-funded programs, raise taxes, not issue tax refunds to their citizens, and borrow money just to survive in 2009. Unfortunately, many banks — the same banks the Fed bailed out — are refusing to loan money to the States and their Treasury agencies.
The article, State Budget Troubles Worsen, at the Center on Budget and Policy Priorities website is an excellent piece to read. It shows where each State currently stands in these challening economic times, and you see 46 of the 50 States are clearly in the financial red.
It’s very possible you’ll see the end of the United States as we know it. If the Fed doesn’t bailout the States when their cash dries up and the banks don’t loan them money, then our States will be left in financial ruin. This would be a tragic and unprecedented event never experienced in the United States.
No State has ever filed bankruptcy, but it could be coming to a State near you this year.
We are on the brink of something far worse than the Great Depression.
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Caterpillar sets more layoffs; week's total 22,000By James B. Kelleher
Fri Jan 30, 10:28 am ET
http://news.yahoo.com/s/nm/us_caterpillar;_ylt=Aqgx0OPPazXAaDFjZBBe34kDW7oF
CHICAGO (Reuters) – Caterpillar Inc (CAT.N) said it was laying off an additional 2,110 workers, bringing the week's total to about 22,000, as the company scrambles to cope with a downturn in demand for its construction and mining equipment.
The latest cuts affect plants that build products for the mining and energy industries, customers that had helped sustain Caterpillar as other key markets, like residential construction, swooned.
The recent dramatic pullback in commodity and oil prices has forced those customers to rethink their plans for investment in new equipment.
Friday's announcement of 2,110 more layoffs caps the worst week for Caterpillar employees since the mid-1980s, when the Peoria, Illinois-based company was losing $1 million a day and slashing jobs on a similar scale just to keep its doors open.
On Monday the company said it was cutting nearly 20,000 jobs and warned of a tough year ahead, with worldwide economic weakness gutting orders for it earth-moving equipment.
The production employees affected by the latest cuts work at three plants in Illinois -- in Aurora, Decatur and East Peoria -- that make wheel loaders, hydraulic excavators, off-highway trucks, track-type tractors and pipelayers.
Caterpillar said 416 support and management employees in Aurora, Decatur and East Peoria were also being laid off. It said these cuts were included in the tally released Monday.
"Over the last few months, recessionary conditions have had a very negative impact on our customers and we must drastically reduce our production levels and cost structure in order to remain competitive for the long run," Bob Williams, Caterpillar's vice president for the Americas Operations Division, said in a statement. The company said the layoffs would begin on April 13.
In an unprecedented move, Caterpillar recently reopened its order book and invited big customers and dealers to cancel or postpone some orders. The company was reported to be stunned by the response.
Caterpillar shares were down $1.75, or 5.5 percent, to $30.10 in morning trade on the New York Stock Exchange.
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93-year-old froze to death, owed big utility bill
Mon Jan 26, 3:32 pm ET
http://www.chinadaily.com.cn/world/2009-01/27/content_7429954.htm
BAY CITY, Mich. – A 93-year-old man froze to death inside his home just days after the municipal power company restricted his use of electricity because of unpaid bills, officials said.
Marvin E. Schur died "a slow, painful death," said Kanu Virani, Oakland County's deputy chief medical examiner, who performed the autopsy.
Neighbors discovered Schur's body on Jan. 17. They said the indoor temperature was below 32 degrees at the time, The Bay City Times reported Monday.
"Hypothermia shuts the whole system down, slowly," Virani said. "It's not easy to die from hypothermia without first realizing your fingers and toes feel like they're burning."
Schur owed Bay City Electric Light & Power more than $1,000 in unpaid electric bills, Bay City Manager Robert Belleman told The Associated Press on Monday.
A city utility worker had installed a "limiter" device to restrict the use of electricity at Schur's home on Jan. 13, Belleman said. The device limits power reaching a home and blows out like a fuse if consumption rises past a set level. Power is not restored until the device is reset.
The limiter was tripped sometime between the time of installation and the discovery of Schur's body, Belleman said. He didn't know if anyone had made personal contact with Schur to explain how the device works.
Schur's body was discovered by neighbor George Pauwels Jr.
"His furnace was not running, the insides of his windows were full of ice the morning we found him," Pauwels told the newspaper.
Belleman said city workers keep the limiter on houses for 10 days, then shut off power entirely if the homeowner hasn't paid utility bills or arranged to do so.
He said Bay City Electric Light & Power's policies will be reviewed, but he didn't believe the city did anything wrong.
"I've said this before and some of my colleagues have said this: Neighbors need to keep an eye on neighbors," Belleman said. "When they think there's something wrong, they should contact the appropriate agency or city department."
Schur had no children and his wife had died several years ago.
Bay City is on Saginaw Bay, just north of the city of Saginaw in central Michigan.
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Unsold Car Images From Around The World
Mike "Mish" Shedlock
http://www.silverbearcafe.com/private/01.09/unsoldcars.html
The Guardian has a series of 10 images about the Growing stocks of unsold cars around the world. I encourage you to click on the link to see them all. Here are a few of my favorites: Nissan has announced plans to cut its Sunderland workforce by 1,200. Thousands of unsold cars are stored around the factory's test track.
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Here are some related articles. Nissan cuts send shockwaves across north-east
"Everyone knows someone who works at Nissan," says Elaine Thoms, and she speaks for the whole of Washington and plenty of Wearside towns beyond.Fallout from job cuts at the carmaker, which is shedding a quarter of its 4,900 workforce, is rippling from the factory overlooking Sunderland across the whole of north-east England."My dad was one of the first to go," says Elaine. "He's one of the ones who left before Christmas at Unipress [Nissan's instrument panel supplier, which announced 90 further job cuts on Tuesday]. He thought he'd do best to get out early and find something else. But no one's taking on."
Honda to extend shut-down at Swindon plant
Friday 16 January 2009 12.48 GMTHonda said this morning it was halting production at its Swindon plant in April and May, extending the two-month closure announced before Christmas to four months.The company said in November that it would halt production in February and March, with 4,800 workers receiving full basic pay.Today the company said that because of the continuing fall in demand it was extending the closure, with workers getting 50% of their pay.Honda's move adds to the deepening gloom in the UK car industry. Nissan has announced plans to cut its Sunderland workforce by 1,200 people, and earlier this week Jaguar Land Rover said 450 jobs would go.
US car workers protest against wage cuts at glitzy launch
Car workers vented their anger at bearing the brunt of swinging cutbacks as the world's top manufacturers orchestrated glitzy launches of eco-friendly vehicles at Detroit's motor show.Noisy protesters blamed Wall Street's excesses for the credit crunch, which has frozen up car loans to consumers, leaving showrooms bereft of customers. Workers carried banners with messages such as "Cutting wages won't solve Detroit's crisis".Negotiations with the United Auto Workers' union began this week. Ford is also seeking cuts, although it has not received a government loan, on the grounds that it needs parity with its rivals.
Toyota tells managers to buy one of its own cars
More than 2,000 managers at Toyota have been "encouraged" to buy one of the firm's cars in an attempt to boost morale, as Japan's biggest carmaker braces itself for its first operating loss in more than 70 years.The company said its 2,200 general managers had agreed to the unprecedented move at informal meetings last month, and insisted they would not be coerced into buying Toyota cars or punished if they failed to do so."This is not company policy and in no way mandatory, but more of a form of unofficial encouragement," Toyota spokeswoman Ririko Takeuchi told the Guardian.Even if every manager heeds the latest call to arms, it is unlikely to make much of a dent in Toyota's inventory. Faced with a soaring yen and a collapse in the export market, Toyota is laying off 3,000 temporary workers and closing all 12 of its domestic plants for 11 days in February and March, reducing production by as many as 200,000 vehicles.
UAW Backs Idea of 'Car Czar'
The head of the United Auto Workers union said Monday that he would like the government to appoint a "car czar" who "knows something about the auto industry" to oversee the restructuring of the Big Three.On the sidelines of the Detroit auto show, UAW President Ron Gettelfinger said he doesn't favor putting a Wall Street expert in the post.
In related news, union representative Iam A. Fox was quoted as saying he backed the idea of putting a chicken expert in charge of security at the henhouse. History Repeats At Cadillac
Three months after the 1929 stock-market crash, Cadillac premiered at the New York auto show its Series 452 with a 185-horsepower V-16 engine designed to trump chief rival Packard's V-12.Fast-forward almost 80 years: Cadillac is ready for another flagship, perhaps something along the lines of the gorgeous Sixteen concept that was first shown in 2003. Except, once again, the economy isn't ready. Worse, once-mighty GM doesn't even have the money to spend on such a project -- it's got Chevy Volts and Cruzes that badly need building.All this explains why GM is taking a bigger gamble now than it did in 1929 and launching up to 10 new Cadillacs in the next five years. But it has no choice. The future of American luxury is at stake.
No Choice? What kind of statement is that? Of course GM has a choice. GM has a history of making choices, most of them horrible: ResCap, not dumping GMAC, not dumping the Hummer on time, launching the Saturn line which has never had a profitable year in its entire history, caving in to ridiculous union demand the worst of which was granting 90% pay for laid off workers, too many models in general, etc.Who cares if GM never produces another luxury car? Hardly anyone buys them anyway. With GM's new lease on life at taxpayer expense, it ought to figure out how to do one thing right rather than attempt to do 100 things, and get all of them wrong.Auto Prices About To CrashWith unsold cars stacking up by the day, demand falling faster, and bailout silliness getting sillier, I have three easy to make predictions. 1) Hundreds of dealerships are headed for bankruptcy in 2009. 2) The Fed Is Destined To Become World's Largest Auto Dealership 3) Cars are going to get cheaper, much cheaper. Auto prices will crash. Liquidation sales later this year after the 2010 models come out are going to be fabulous.It makes no sense to buy a car now, no matter how good the deal looks. The deals will get progressively better as the year rolls on.
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"We are holding this demonstration because we are hungry. We need to eat, we need to work, we are hungry. That's all. We are hungry."When you really think about it, you realize people have, for all intents and purposes, been pretty complacent with their lack of homelessness, their poverty, their marginalization within a bigger system. That may just be because they've still been able to eat. Take away their food and I think you'll see a more.....animated response......
The Worst Food Crisis in 45 YearsBy Amy Goodman, King Features Syndicate. Posted May 1, 2008.
http://stonesoupstation.blogspot.com/2008_04_13_archive.html
If our government and large food and energy interests don't change direction, the food riots in distant lands will soon be coming to their doors.
Food riots are erupting around the world. Protests have occurred in Egypt, Cameroon, the Philippines, Burkina Faso, Ivory Coast, Mauritania and Senegal. Sarata Guisse, a Senegalese demonstrator, told Reuters: "We are holding this demonstration because we are hungry. We need to eat, we need to work, we are hungry. That's all. We are hungry." United Nations Secretary-General Ban Ki-moon has convened a task force to confront the problem, which threatens, he said, "the specter of widespread hunger, malnutrition and social unrest on an unprecedented scale." The World Food Program has called the food crisis the worst in 45 years, dubbing it a "silent tsunami" that will plunge 100 million more people into hunger.
Behind the hunger, behind the riots, are so-called free-trade agreements, and the brutal emergency-loan agreements imposed on poor countries by financial institutions like the International Monetary Fund. Food riots in Haiti have killed six, injured hundreds and led to the ousting of Prime Minister Jacques-Edouard Alexis. The Rev. Jesse Jackson just returned from Haiti and writes that "hunger is on the march here. Garbage is carefully sifted for whatever food might be left. Young babies wail in frustration, seeking milk from a mother too anemic to produce it." Jackson is calling for debt relief so that Haiti can direct the $70 million per year it spends on interest to the World Bank and other loans into schools, infrastructure and agriculture.
The rise in food prices is generally attributed to a perfect storm caused by increased food demand from India and China, diminished food supplies caused by drought and other climate-change-related problems, increased fuel costs to grow and transport the food, and the increased demand for biofuels, which has diverted food supplies like corn into ethanol production.
This week, the United Nations' special rapporteur on the right to food, Jean Ziegler, called for the suspension of biofuels production: "Burning food today so as to serve the mobility of the rich countries is a crime against humanity." He's asked the U.N. to impose a five-year ban on food-based biofuels production. The Consultative Group on International Agricultural Research, a group of 8,000 scientists globally, is also speaking out against biofuels. The scientists are pushing for a plant called switchgrass to be used as the source for biofuels, reserving corn and other food plants to be used solely as food.
In a news conference this week, President Bush defended food-based ethanol production: "The truth of the matter is it's in our national interests that our farmers grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us." One part of the world that does like Bush and his policies are the multinational food corporations. International nonprofit group GRAIN has just published a report called "Making a killing from hunger." In it, GRAIN points out that major multinational corporations are realizing vast, increasing profits amid the rising misery of world hunger. Profits are up for agribusiness giants Cargill (86 percent) and Bunge (77 percent), and Archer Daniels Midland (which dubs itself "the supermarket to the world") enjoyed a 67 percent increase in profits.
GRAIN writes: "Is this a price blip? No. A food shortage? Not that either. We are in a structural meltdown, the direct result of three decades of neoliberal globalization. ... We have allowed food to be transformed from something that nourishes people and provides them with secure livelihoods into a commodity for speculation and bargaining." The report states: "The amount of speculative money in commodities futures ... was less than $5 billion in 2000. Last year, it ballooned to roughly $175 billion."
There was a global food crisis in 1946. Then, as now, the U.N. convened a working group to deal with it. At its meeting, the head of the U.N. Relief and Rehabilitation Administration, former New York City Mayor Fiorello LaGuardia, said, "Ticker tape ain't spaghetti." In other words, the stock market doesn't feed the hungry. His words remain true today. We in the U.S. aren't immune to the crisis. Wal-Mart, Sam's Club and Costco have placed limits on bulk rice purchases. Record numbers of people are on food stamps, and food pantries are seeing an increase in needy people.
Current technology exists to feed the planet in an organic, locally based, sustainable manner. The large corporate food and energy interests, and the U.S. government, need to recognize this and change direction, or the food riots in distant lands will soon be coming to their doors.
Dennis Moynihan contributed research for this column.
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