In Seattle, sales at a long-established hardware store, Pacific Supply, are suddenly dipping. In Oklahoma City, couples planning their weddings are demonstrating uncustomary thrift, forgoing Dungeness crab and special linens. And in many cities, the registers at department stores like Nordstrom on the higher end and J. C. Penney in the middle are ringing less often.

With Wall Street caught in a credit crisis that has captured headlines, the forces assailing the economy are now spreading beyond areas hit hardest by the boom-turned-bust in real estate like California, Florida and Nevada. Now, the downturn is seeping into new parts of the country, to communities that seemed insulated only months ago.

The broadening of the slowdown, the plunge in home prices and near-paralysis in the financial system are fueling worries that what most economists now see as an inevitable recession could end up being especially painful.

Indeed, some economists fear it will last longer and inflict more bite on workers and businesses than the last two recessions, which gripped the economy in 2001 and for eight months straddling 1990 and 1991. This time, these experts say, a recession in which economic activity falls over a sustained period and joblessness rises across the board could even persist into next year.

“It’s not hard to construct very dark scenarios, primarily because the financial system is in disarray, and it’s not clear how to get it all back together again,” said Mark Zandi, chief economist at Moody’s Economy.com.

From the New York Times

The United States economy will produce roughly $14 trillion worth of goods and services in 2007, making it easily the largest in the world. China is next, at about $11 trillion, according to one widely used method. Per person, the American economy has the fourth largest output - about $45,000 for every man, woman and child, on average - behind Luxembourg, Bermuda and Liechtenstein.

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Gus: could it be that Luxembourg, Bermuda and Liechtenstein are tax havens for many rich Americans?...

American songbirds are being wiped out by banned pesticides

By Leonard Doyle in Washington
Friday, 4 April 2008

The number of migratory songbirds returning to North America has gone into sharp decline due to the unregulated use of highly toxic pesticides and other chemicals across Latin America.

Ornithologists blame the demand for out-of-season fruit and vegetables and other crops in North America and Europe for the destruction of tens of millions of passerine birds. By some counts, half of the songbirds that warbled across America's skies only 40 years ago have gone, wiped out by pesticides or loss of habitat.

Forty-six years ago, the naturalist Rachel Carson wrote Silent Spring, a study of the ravages caused to wildlife, especially birds, by DDT. The chemical's use on American farms almost eradicated entire species, including the peregrine falcon and bald eagle.

The pesticide was banned and bird numbers recovered, but new and highly toxic pesticides banned by the US and European Union are being widely used in Latin America.

Because of changed consumer habits in Europe and the US, export-led agriculture has transformed the wintering grounds of birds into intensive farming operations producing grapes, melons and bananas as well as rice for export.

Ornithologists say another silent spring is dawning across the US as birds are being poisoned by toxic chemicals or killed as pests in their winter refuges across South and Central America as well as the Caribbean. They say that many species of songbird will never recover, and others may even become endangered or extinct if controls are not put in place or consumer habits changed.

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Gus: Unregulated free market forces lead to this. More products more stuff more destruction of things that are not counted in the economic cauldron of the Dollar witch... We destroy life around us for a few more bucks and we are doing it faster and faster... and we don't care.

Save our mountain, Indian tribe urges banks

By Emily Dugan
Friday, 2 May 2008

For centuries, life has remained unchanged for India's Dongria Kondh tribe. Living on the remote Niyamgiri mountain, they keep to a daily routine of tilling crops, picking wild fruits and worshipping the hill god Niyam Raja.

The existence is a simple one, but, because of a British FTSE 100 mining company, their way of life, their mountain and, indeed, their very survival, is under threat.

Vedanta, a mining company owned by the London-based Indian billionaire Anil Agarwal, is planning to mine at the mountain, deep in the state of Orissa in eastern India. Its subsidiary, Sterlite, is hoping to receive permission from India's Supreme Court to begin mining bauxite, the most important aluminum ore, on land considered sacred by the tribe. The open mine would destroy the habitat that has been their home for centuries, destroying the forest and drying up water sources.

Norway has already excluded Vedanta from its national pension fund investments on the grounds that such investment would carry "unacceptable risk of complicity in present and future severe environmental damage and systemic human rights violations".

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Gus: not everybody wants to trade a peaceful, poor and happy life toiling along to the rythms of the seasons, for a fool's paradise — be it made of gold or aluminium. 

This article was reported by Jenny Anderson, Eric Dash and Andrew Ross Sorkin and was written by Mr. Sorkin.

In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, said it would seek bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.

But even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group appeared to teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.

The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.

“My goodness. I’ve been in the business 35 years, and these are the most extraordinary events I’ve ever seen,” said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration.

It remains to be seen whether the sale of Merrill, which was worth more than $100 billion during the last year, and the controlled demise of Lehman will be enough to finally turn the tide in the yearlong financial crisis that has crippled Wall Street and threatened the broader economy.

Early Monday morning, Lehman said it would file for Chapter 11 bankruptcy protection in New York for its holding company in what would be the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago, the Associated Press reported.

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see toon at top

Citigroup Says Judge’s Order Suspends Wachovia Deal

Citigroup announced late Saturday that it had persuaded a New York judge to temporarily block Wells Fargo from acquiring Wachovia, firing the first shot in what could be a prolonged legal battle.

Citigroup has accused Wells Fargo of wrecking its plan to acquire Wachovia’s banking operations for $2.2 billion, or $1 a share, in a deal arranged by the Federal Deposit Insurance Corporation. Four days after that deal was struck, it fell apart when Wachovia agreed to Wells Fargo’s offer to pay seven times as much for the entire company.

The underlying battle is over which company will emerge from the economic crisis in a stronger position among a smaller number of financial giants. Citigroup contends that the deal with Wells Fargo violates an agreement that prohibited Wachovia from having any sale or merger discussions with anyone other than Citigroup until Oct. 6.

The order issued by a judge on Saturday extends the term of that agreement until further court action, Citigroup said. A person briefed on the situation said that Citigroup was seeking $60 billion in damages from Wells Fargo for interfering with the initial transaction.

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see toon at top...

US to bail out struggling mortgagees

By Washington correspondent Kim Landers

Posted 8 hours 19 minutes ago

The US Government has launched a sweeping plan to help struggling homeowners renegotiate their loans to avoid foreclosure.

The US Government seized control of America's two biggest mortgage providers, Fannie Mae and Freddie Mac in September.

Now it has come up with a new plan for renegotiating hundreds of thousands of delinquent loans held by the two companies.

To qualify, homeowners would need to be at least three months behind on their payments.

In return the interest rate would be reduced so that they are not paying more than 38 per cent of their income on housing expenses.

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Gus: this action should have been the first line of attack to solve the mortgage crisis, but doing this would have helped the little guys first... not the big porkie-porker first, the banks that would have seen an erosion of their privileges.... see toon on top and others too... including this and this ...

Lawmakers Debate Loan Modification

WASHINGTON — It sounds simple in principle: find troubled homeowners, change their mortgages and help them keep their houses.

But behind many mortgages sits a complex chain of parties that service mortgages or invest in them amid an array of complicated legal agreements.

At a hearing of the House Financial Services Committee on Wednesday, legislators concerned about the rising tide of foreclosures encouraged the financial industry to alter the terms of more mortgages to keep people in their homes. They focused on mortgages that were sold in packages to outside investors like pension funds, hedge funds and insurance companies.

The problem is that financial executives have competing views on whether mortgages that were packaged — or securitized, in industry parlance — can be modified or not. These mortgages are no longer owned by the banks that service them; they are instead owned by numerous investors, and some in the industry think the investors might sue banks that modify mortgages.

“The servicers are telling me they’re not in power at this time,” said Representative Brad Sherman, Democrat of California. “You have 10 investors, and anyone of them can allege from a purely negligence standpoint that the value of the portfolio has not been maximized.”

At the hearing, panelists disagreed on whether modification was allowed with bundles of mortgages that were resold. An executive from Bank of America said that the contracts behind some securitizations expressly prohibited changes to the underlying mortgages. The executive, Michael Gross, managing director of loan administration loss mitigation at Bank of America, said that banks had more flexibility to modify the rules in loans that they still held.

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Gus: when one signs a contract for a mortgage, a representative of the body lending the money signs on the other side of the ledger. Now, is there somewhere in the small print, that the mortgage can be on-sold to another entity without the consent of the original signatories?

If so, how is this clearly expressed and how can an average person be made aware of this, if no other clauses are properly discussed in details, such as penalties for being late in repayment, penalties for being early in repayment, hidden "administrative" charges and a "flexible (increasing even with fed bank interest low)" interest rate left at the whim of the bank after a couple of "cheap" years...?

If at any stage, there is no provision for the mortgage to be on-sold in the original contract, then the on-selling of mortgage would be illegal. Thus the banks should be taken to court and their managers charged.

Presently, no matter what the greedy vampires desire, it would be in the interest of all parties to allow a rewriting of contracts. On one hand you might make less blood money, on the other, the whole stack of cards falls further down and the muck will hit the fan like never before... and...

Viva la revolucion!