The G20 countries' forced postponement of the
UN Conference on the Economic Crisis
MEANS THAT THE PEOPLES STRUGGLE AGAINST
THE BANKERS IS MORE IMPORTANT THAN EVER!
Although pressure and hostility on the part of some G20 governments has resulted in the UN Conference on the World Financial and Economic Crisis and its Impact on Development being postponed from June 1 to 3 until June 24 to 26, the People's Economic Summit this Sunday, May 31 will go on as scheduled. The summit will take place from 11 a.m. until 5 p.m. in a summit tent city across the street from the UN in Dag Hammarskjöld Plaza, 47 St. and 1st Ave. The Bail Out the People Movement encourages all who have made plans to attend the People's Economic Summit on May 31 not to change those plans. The postponement of the UN meeting makes it all the more necessary that we meet on Sunday.
Because of recent developments, the May 31 Summit will not only be a critical opportunity to discuss the causes of the world economic crisis, hear the voices of those who are suffering the most because of this crisis and plan mass action, it will also be a protest against the G20 governments, especially the U.S. and European imperialist powers that have conspired for six months to either derail, discredit, or weaken the UN economic summit.
The governments and banking establishments of the U.S. and Europe, whose greed has pushed the world into the gravest economic crisis since the depression of the 1930s never wanted the UN economic conference because they don't want to listen to the poor of the world and they don't want their imperial hegemony over the world economy challenged even in the slightest way.
The rich want to use the UN, especially the Security Council, to legitimize U.S. occupation and war, or to condemn, isolate and starve countries like North Korea and Iran. The rich don't want the poor using the UN as a vehicle to demand or implement any measures that might make the governance over the world's economy, wealth and resources a little more democratic, or equitable, or less driven by greed and profits. The only UN meeting that Wall Street is interested in is one that rubber stamps the continued globalization of poverty for the maximization of their profits.
If you haven't done so yet, read the proposals in draft of the UN Economic Conference Outcome document made public on May 8 at http://www.un.org/ga/president/63/interactive/financialcrisis/outcomedoc.pdf. Amongst other reasonable measures, the document proposes that three trillion dollars, a mere 5% of the world's GDP, be allocated to bail out poor countries where the scourges of hunger, disease and homelessness have been made immeasurably worst by the worldwide depression. The bankers of the world, who have insisted that they get tens of trillions of dollars of bail out money, don't want to share any this fortune with anyone, least of all the poor of the planet.
Any measure in the May 8 document that calls for power and wealth being shared with the poor and working people of the planet will be furiously resisted by the powers that be.
The banks that the U.S. Treasury Department and Federal Reserve have given trillions of dollars to have recently demonstrated that they have the power to stop the U.S. Congress from doing anything meaningful to stop the mass eviction of millions due to home foreclosures. These very same banks believe they have the right and the power to stop the UN from bailing out the poor, and unless people organize and fight back, the banks will prevail.
The campaign of the rich against the UN conference on the world economic crisis should and must serve as a reminder that changes from above are only possible if there is mass resistance from below. It is this understanding and this purpose that the People's Economic Summit is dedicated to. The People's Economic Summit will be discussing such things as how can the mass movements work together, how can we elevate the organization of the unemployed in the struggle for jobs, and how do we respond to the next G20 summit meeting scheduled to take place in September in NYC. Please join us, take part in this important discussion and help realize the vision and plans that come out of it.
The Bail Out the People Movement invites you to a
People's Economic Summit in New York City
Another world is urgently necessary - but we must fight for it.
Sunday May 31--11 a.m.
Inside tents in DAG HAMMARSKJÖLD PLAZA, 47th St. & 1st Ave.
What you can do:
1) Endorse: http://www.bailoutpeople.org/peoplessummitendorse.shtml
2) Spread the word - forward this message to friends, fellow activists, community organizers, trade unionists, and student organizations. Ask them to endorse and participate.
3) Donate to help with organizing expenses: http://bailoutpeople.org/donate.shtml
4) Volunteer: http://www.bailoutpeople.org/g20-peoplessummitsvolorgcents.shtml
5) Become a local organizer: http://www.bailoutpeople.org/g20-peoplessummitsvolorgcents.shtml
Bail Out the People Movement
Solidarity Center
55 W. 17th St. #5C
New York, NY 10011
212.633.6646
www.BailOutPeople.org
Email: bailoutpeople.org/cmnt.shtml
Saturday, May 30, 2009
US economy shrinks at slower pace (fact or fiction?)
The US economy shrank in the first three months of 2009 at a slower pace than had originally been estimated by the Commerce Department.
Gross domestic product (GDP) declined by an annual rate of 5.7% in the first quarter, less than the 6.1% that had been estimated in April.
It also turned out that corporate profits after taxes had risen by 1.1% over the period.
This is the first time corporate profits had risen for a year.
GDP measures the total value of goods and services produced in a country.
It has shrunk for three consecutive quarters in the US - the first time that has happened since 1975.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8074014.stm
Published: 2009/05/29 12:52:17 GMT
Gross domestic product (GDP) declined by an annual rate of 5.7% in the first quarter, less than the 6.1% that had been estimated in April.
It also turned out that corporate profits after taxes had risen by 1.1% over the period.
This is the first time corporate profits had risen for a year.
GDP measures the total value of goods and services produced in a country.
It has shrunk for three consecutive quarters in the US - the first time that has happened since 1975.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8074014.stm
Published: 2009/05/29 12:52:17 GMT
May 19th Victory Statement - Campaign to Elect Chokwe Lumumba
A genuine peoples victory was won on Tuesday, May 19th, 2009, the 84th Birthday of Malcolm X (El Hajj Malik El-Shabazz). The people’s lawyer, attorney Chokwe Lumumba, was elected to the City Council in Jackson, Mississippi representing Ward 2.
The foundation of this victory was laid by the decades of dedicated community service and organizing that Attorney Lumumba, the New Afrikan People’s Organization (NAPO), and the Malcolm X Grassroots Movement (MXGM) have engaged in Jackson. The victory was secured through the broad mass mobilization and fundraising efforts of the campaigns organizers, supporters and allies in Jackson and throughout the United States.
By electing Lumumba the residents of Ward 2 declared that they want a new leadership committed to their social and economic interests, and that of the City, with a proven ability to organize, motivate, and educate for positive change. By organizing themselves into People’s Assemblies in support of the election campaign, the people of Ward 2 have begun to build and exercise the power necessary to address their needs and solve the problems of their ward. Through the vehicle of the People’s Assembly the residents of Ward 2 have determined that the People’s Platform is THEIR Platform.
A new, independent, and potentially transformative force is being built in Jackson through the combined power of the Council office and the People’s Assembly. This force will not be bound by the confines of the two-party system. The building of this force will advance the development of a genuine participatory democracy that will help our people fulfill all their human rights, including the economic, social and cultural rights so often denied in the United States.
We hope this victory and the development of this model will not only inspire but also help build a new force in Black and progressive politics in the United States, one that will put the needs of people and the environment before profits. The victory on May 19th was just the first step. Now the hard work of utilizing the limited political power this victory enables to transform Ward 2 and the entire city of Jackson and beyond begins. We hope everyone who reads and or hears about this victory will pass on this critical news and join us in the concrete work of building viable alternatives for the people of Ward 2, Jackson, the South and entire country by any means necessary!
Committee to Elect Chokwe Lumumba
New Afrikan People’s Organization (NAPO)
Malcolm X Grassroots Movement (MXGM)
The foundation of this victory was laid by the decades of dedicated community service and organizing that Attorney Lumumba, the New Afrikan People’s Organization (NAPO), and the Malcolm X Grassroots Movement (MXGM) have engaged in Jackson. The victory was secured through the broad mass mobilization and fundraising efforts of the campaigns organizers, supporters and allies in Jackson and throughout the United States.
By electing Lumumba the residents of Ward 2 declared that they want a new leadership committed to their social and economic interests, and that of the City, with a proven ability to organize, motivate, and educate for positive change. By organizing themselves into People’s Assemblies in support of the election campaign, the people of Ward 2 have begun to build and exercise the power necessary to address their needs and solve the problems of their ward. Through the vehicle of the People’s Assembly the residents of Ward 2 have determined that the People’s Platform is THEIR Platform.
A new, independent, and potentially transformative force is being built in Jackson through the combined power of the Council office and the People’s Assembly. This force will not be bound by the confines of the two-party system. The building of this force will advance the development of a genuine participatory democracy that will help our people fulfill all their human rights, including the economic, social and cultural rights so often denied in the United States.
We hope this victory and the development of this model will not only inspire but also help build a new force in Black and progressive politics in the United States, one that will put the needs of people and the environment before profits. The victory on May 19th was just the first step. Now the hard work of utilizing the limited political power this victory enables to transform Ward 2 and the entire city of Jackson and beyond begins. We hope everyone who reads and or hears about this victory will pass on this critical news and join us in the concrete work of building viable alternatives for the people of Ward 2, Jackson, the South and entire country by any means necessary!
Committee to Elect Chokwe Lumumba
New Afrikan People’s Organization (NAPO)
Malcolm X Grassroots Movement (MXGM)
US to host next G20 world meeting
The US will host the next G20 summit of world leaders in September, the White House has confirmed.
The meeting will take place in Pittsburgh, Pennsylvania, on Thursday 24 September and Friday 25 September.
April's G20 summit in London announced a $1.1tn (£691bn) rescue plan to help revive the world economy.
The September meeting is expected to monitor the implementation of the plan so far, and decide whether further measures are needed.
Regeneration city
Pittsburgh is seen as a shining example of how a one-time depressed US industrial city has managed to successfully regenerate itself.
Winning the swing state of Pennsylvania was also a key victory in Barack Obama's presidential election success.
Most commentators had previously expected the US to announce that the next G20 meeting would be held in New York.
The $1.1tn agreed in London included tripling the resources available to the International Monetary Fund to $750bn, and spending $250bn on boosting global trade.
The G20 leaders also agreed to enforce tougher global financial regulation, and introduce sanctions against secretive tax havens.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8072894.stm
Published: 2009/05/28 18:17:27 GMT
The meeting will take place in Pittsburgh, Pennsylvania, on Thursday 24 September and Friday 25 September.
April's G20 summit in London announced a $1.1tn (£691bn) rescue plan to help revive the world economy.
The September meeting is expected to monitor the implementation of the plan so far, and decide whether further measures are needed.
Regeneration city
Pittsburgh is seen as a shining example of how a one-time depressed US industrial city has managed to successfully regenerate itself.
Winning the swing state of Pennsylvania was also a key victory in Barack Obama's presidential election success.
Most commentators had previously expected the US to announce that the next G20 meeting would be held in New York.
The $1.1tn agreed in London included tripling the resources available to the International Monetary Fund to $750bn, and spending $250bn on boosting global trade.
The G20 leaders also agreed to enforce tougher global financial regulation, and introduce sanctions against secretive tax havens.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8072894.stm
Published: 2009/05/28 18:17:27 GMT
Thursday, May 21, 2009
US CO2 goals 'to be compromised'
By Roger Harrabin
Environment analyst, BBC News
US Energy Secretary Steven Chu says the US will not be able to cut greenhouse emissions as much as it should due to domestic political opposition.
Prof Chu told BBC News he feared the world might be heading towards a tipping point on climate change.
This meant the US had to cut emissions urgently - even if compromises were needed to get new laws approved.
Environmentalists said Prof Chu, a Nobel physicist, should be guided by science not politics.
The American political system is in the throes of a fierce battle over climate policy. President Barack Obama says he wants cuts in greenhouse gases but has left it to Congress to make the political running.
The House of Representatives is debating a climate and energy bill but even if it passes it may be rejected by senators, many of whom are funded by the energy industry.
Prof Chu is a Nobel prize-winning physicist and a world expert on clean energy. But he said it was impossible to ignore political reality.
"With each successive year the news on climate change has not been good and there's a growing sensation that the world and the US in particular has to get moving," he said.
“ If you could convert (with photovoltaic cells) 20% of the Sun's energy into electricity you would need 5% of the world's deserts. This is not much land ”
Steven Chu, US Energy Secretary
"As someone very concerned about climate I want to be as aggressive as possible but I also want to get started. And if we say we want something much more aggressive on the early timescales that would draw considerable opposition and that would delay the process for several years.
The US energy secretary said that awareness of climate tipping points had increased greatly only in the past five years. He added: "But if I am going to say we need to do much, much better I am afraid the US won't get started."
To the anger of environmentalists, he said that one compromise would be approving new coal-fired power plants without obliging them to capture and store their carbon. The UK government has made this a stipulation for new coal plants but Prof Chu declined to explain why the US government would not follow suit.
'Tough standards'
The first step in America, he said, should be a massive programme of efficiency for commercial buildings. This could save 80% of their energy demand, he said. He said the government would provide the research and encourage states to adopt tough standards.
He envisaged a future in which the US was largely powered by wind and solar but admitted there were technical difficulties.
On solar he explained: "The challenge is to make solar energy cost-effective. The amount of energy hitting the Earth - if you looked at it, if you could convert (with photovoltaic cells) 20% of the Sun's energy into electricity you would need 5% of the world's deserts. This is not much land. So the opportunity is enormous.
"The question is whether we can make it cost-effective. You have to transport this long distances because people don't live in deserts."
Similarly, on wind, Prof Chu told BBC News: "The good news is that many of the areas with good wind are where there aren't many people, so there are fewer objections to wind farms. The bad news is that there aren't many people. So we are planning to look at how you get an interconnecting (transmission) system, to allow us to develop these great resources."
An overriding challenge for both technologies was the need to develop storage for energy from renewables.
When informed about research from HSBC suggesting that China had invested twice as much in greening its economy with its fiscal stimulus as the US had done, he said he had not seen the figures but that he wished for more money for clean energy.
'Pressing challenge'
He said the challenge was pressing, and agreed that the world could face future spikes in energy prices because the recession had halted investment in many energy projects. This would be an issue at the upcoming G8 finance ministers meeting, he said.
Damon Moglen from Greenpeace USA was alarmed by Prof Chu's comments. "Obama has had something of a honeymoon with environmentalists," he said.
"But we are getting very concerned. Professor Chu is a good man and a good scientist, but the science on global warming is clear and he should be guided by the science not the politics.
"It is out of the question that the US should agree new power stations burning coal - the dirtiest fuel. Our targets on emissions are too low anyway - and there is no way we will meet even those low targets if we allow more coal to be burned.
"Professor Chu's comments on coal are contradictory and illogical. This administration should give him the head to develop the sort of energy policy he knows we really need."
But Prof Chu said: "I am optimistic for the first time in my life that the US will start to move in this direction (of cutting emissions) and that's why I am heartened by these efforts. If you had asked me two or three years ago what's the possibility we could move in the direction of reducing carbon emissions in the US I would have said I don't know."
When asked whether he was frustrated, he said: "No, I am realistic about the politics and as in time we can make adjustments."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/8061929.stm
Published: 2009/05/21 23:29:38 GMT
Environment analyst, BBC News
US Energy Secretary Steven Chu says the US will not be able to cut greenhouse emissions as much as it should due to domestic political opposition.
Prof Chu told BBC News he feared the world might be heading towards a tipping point on climate change.
This meant the US had to cut emissions urgently - even if compromises were needed to get new laws approved.
Environmentalists said Prof Chu, a Nobel physicist, should be guided by science not politics.
The American political system is in the throes of a fierce battle over climate policy. President Barack Obama says he wants cuts in greenhouse gases but has left it to Congress to make the political running.
The House of Representatives is debating a climate and energy bill but even if it passes it may be rejected by senators, many of whom are funded by the energy industry.
Prof Chu is a Nobel prize-winning physicist and a world expert on clean energy. But he said it was impossible to ignore political reality.
"With each successive year the news on climate change has not been good and there's a growing sensation that the world and the US in particular has to get moving," he said.
“ If you could convert (with photovoltaic cells) 20% of the Sun's energy into electricity you would need 5% of the world's deserts. This is not much land ”
Steven Chu, US Energy Secretary
"As someone very concerned about climate I want to be as aggressive as possible but I also want to get started. And if we say we want something much more aggressive on the early timescales that would draw considerable opposition and that would delay the process for several years.
The US energy secretary said that awareness of climate tipping points had increased greatly only in the past five years. He added: "But if I am going to say we need to do much, much better I am afraid the US won't get started."
To the anger of environmentalists, he said that one compromise would be approving new coal-fired power plants without obliging them to capture and store their carbon. The UK government has made this a stipulation for new coal plants but Prof Chu declined to explain why the US government would not follow suit.
'Tough standards'
The first step in America, he said, should be a massive programme of efficiency for commercial buildings. This could save 80% of their energy demand, he said. He said the government would provide the research and encourage states to adopt tough standards.
He envisaged a future in which the US was largely powered by wind and solar but admitted there were technical difficulties.
On solar he explained: "The challenge is to make solar energy cost-effective. The amount of energy hitting the Earth - if you looked at it, if you could convert (with photovoltaic cells) 20% of the Sun's energy into electricity you would need 5% of the world's deserts. This is not much land. So the opportunity is enormous.
"The question is whether we can make it cost-effective. You have to transport this long distances because people don't live in deserts."
Similarly, on wind, Prof Chu told BBC News: "The good news is that many of the areas with good wind are where there aren't many people, so there are fewer objections to wind farms. The bad news is that there aren't many people. So we are planning to look at how you get an interconnecting (transmission) system, to allow us to develop these great resources."
An overriding challenge for both technologies was the need to develop storage for energy from renewables.
When informed about research from HSBC suggesting that China had invested twice as much in greening its economy with its fiscal stimulus as the US had done, he said he had not seen the figures but that he wished for more money for clean energy.
'Pressing challenge'
He said the challenge was pressing, and agreed that the world could face future spikes in energy prices because the recession had halted investment in many energy projects. This would be an issue at the upcoming G8 finance ministers meeting, he said.
Damon Moglen from Greenpeace USA was alarmed by Prof Chu's comments. "Obama has had something of a honeymoon with environmentalists," he said.
"But we are getting very concerned. Professor Chu is a good man and a good scientist, but the science on global warming is clear and he should be guided by the science not the politics.
"It is out of the question that the US should agree new power stations burning coal - the dirtiest fuel. Our targets on emissions are too low anyway - and there is no way we will meet even those low targets if we allow more coal to be burned.
"Professor Chu's comments on coal are contradictory and illogical. This administration should give him the head to develop the sort of energy policy he knows we really need."
But Prof Chu said: "I am optimistic for the first time in my life that the US will start to move in this direction (of cutting emissions) and that's why I am heartened by these efforts. If you had asked me two or three years ago what's the possibility we could move in the direction of reducing carbon emissions in the US I would have said I don't know."
When asked whether he was frustrated, he said: "No, I am realistic about the politics and as in time we can make adjustments."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/8061929.stm
Published: 2009/05/21 23:29:38 GMT
Markets fall as debt worries rise
Global stock markets have fallen after a warning that the UK's top credit rating is at risk.
UK shares were hit after ratings agency Standard & Poor's (S&P) changed the UK's outlook to negative.
The move sparked fears that other economies, such as the US, might face a similar fate.
The Dow Jones index ended the day down 1.5%, while the UK's FTSE 100 fell 2.8%, France's Cac 40 lost 2.7% and Germany's Dax shed 2.7% by their close.
A credit rating downgrade would make is more expensive for the UK to borrow on international markets and could jeopardise spending plans.
Governments worldwide are borrowing more as they try to stimulate their economies.
"It raises questions about our own situation (in the US) in terms of our deficits and our national debt," said Alan Skrainka, US-based chief market strategist at Edward Jones.
Asian shares also ended the day lower with the Nikkei down 1%.
'Downbeat'
Meanwhile there was more pessimism about the US economy.
“ Just the thought of a downgrade would provide an excuse to sell dollars ”
Matt Esteve, trader
Claims for unemployment benefits set a record for the 16th straight week, data released earlier showed.
On Wednesday the Fed said it expected the economy would contract between 1.3% and 2% this year.
Earlier in the year, the bank predicted the economy could contract between 0.5% and 1.3%.
It also warned that US unemployment could reach 10%.
"Minutes of the last meeting painted a downbeat outlook for global economies and the financial sector, suggesting that any feelings among traders that the worst was behind us could prove premature," said David Jones, chief market strategist at IG Index.
"This combination of news over the last 24 hours has resulted in a predictable knee-jerk sell off - the question from here is whether it is the start of a more sustained slide to correct the impressive gains seen since mid-March," he added.
Debt concerns
S&P cited rising UK debt levels as a major concern.
UK public debt hit a record £8.46bn in April compared to £1.84bn in the same month last year.
Standard & Poor's said UK debt could be close to 100% of gross domestic product, and remain at that level in the medium term.
S&P's change of view on the UK economy led to a brief fall in the value of the pound against the dollar.
Immediately after the outlook change, sterling fell 3 cents to a low of $1.5519.
But the currency later recovered to hit a fresh 6-1/2 month high of $1.5890 as the dollar bore the brunt of selling pressure.
"No one wants to admit it but there might be investors nervous enough with the extreme levels of indebtedness of the US government so that just the thought of a downgrade would provide an excuse to sell dollars," said Matt Esteve, a trader at Tempus Consulting in Washington.
"If such a thing happened, the impact would be huge."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8060842.stm
Published: 2009/05/21 21:11:23 GMT
UK shares were hit after ratings agency Standard & Poor's (S&P) changed the UK's outlook to negative.
The move sparked fears that other economies, such as the US, might face a similar fate.
The Dow Jones index ended the day down 1.5%, while the UK's FTSE 100 fell 2.8%, France's Cac 40 lost 2.7% and Germany's Dax shed 2.7% by their close.
A credit rating downgrade would make is more expensive for the UK to borrow on international markets and could jeopardise spending plans.
Governments worldwide are borrowing more as they try to stimulate their economies.
"It raises questions about our own situation (in the US) in terms of our deficits and our national debt," said Alan Skrainka, US-based chief market strategist at Edward Jones.
Asian shares also ended the day lower with the Nikkei down 1%.
'Downbeat'
Meanwhile there was more pessimism about the US economy.
“ Just the thought of a downgrade would provide an excuse to sell dollars ”
Matt Esteve, trader
Claims for unemployment benefits set a record for the 16th straight week, data released earlier showed.
On Wednesday the Fed said it expected the economy would contract between 1.3% and 2% this year.
Earlier in the year, the bank predicted the economy could contract between 0.5% and 1.3%.
It also warned that US unemployment could reach 10%.
"Minutes of the last meeting painted a downbeat outlook for global economies and the financial sector, suggesting that any feelings among traders that the worst was behind us could prove premature," said David Jones, chief market strategist at IG Index.
"This combination of news over the last 24 hours has resulted in a predictable knee-jerk sell off - the question from here is whether it is the start of a more sustained slide to correct the impressive gains seen since mid-March," he added.
Debt concerns
S&P cited rising UK debt levels as a major concern.
UK public debt hit a record £8.46bn in April compared to £1.84bn in the same month last year.
Standard & Poor's said UK debt could be close to 100% of gross domestic product, and remain at that level in the medium term.
S&P's change of view on the UK economy led to a brief fall in the value of the pound against the dollar.
Immediately after the outlook change, sterling fell 3 cents to a low of $1.5519.
But the currency later recovered to hit a fresh 6-1/2 month high of $1.5890 as the dollar bore the brunt of selling pressure.
"No one wants to admit it but there might be investors nervous enough with the extreme levels of indebtedness of the US government so that just the thought of a downgrade would provide an excuse to sell dollars," said Matt Esteve, a trader at Tempus Consulting in Washington.
"If such a thing happened, the impact would be huge."
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8060842.stm
Published: 2009/05/21 21:11:23 GMT
Economic indicators up more than expected in April
By TALI ARBEL, AP Business Writer
Thu May 21
NEW YORK – A private research's group forecast of economic activity rose more than expected in April, the first gain in seven months and fresh evidence that the recession could end later this year.
The Conference Board said Thursday its index of leading economic indicators, designed to forecast economic activity in the next three to six months, rose 1 percent last month. Economists surveyed by Thomson Reuters expected a 0.8 percent increase.
Conference Board economist Ken Goldstein said that means declines in activity could switch to growth in the overall economy in the second half of the year. The recession began in December 2007.
In April, the index posted its biggest gain since November 2005, said Ian Shepherdson, chief U.S. economist at High Frequency Economics. It is now even with its level from last November.
The index is derived from 10 components including stock prices, the money supply, jobless claims and new orders by manufacturers.
The Conference Board said strengths among the components exceeded weaknesses for the first time in more than a year. "This is more broad-based. It's not just the stock market rally," Goldstein said.
Seven indicators rose, including stock prices, as the Dow Jones industrials are up by about a third since March. Consumer expectations, the average work week, manufacturers' new orders for consumer goods and deliveries by vendors grew, while initial jobless claims dropped, also a positive.
However, some analysts expressed reservations about the strength of the gain.
"How strong the upturn will be is still in doubt, and it is possible that the improvement in (consumer) sentiment seen the last couple months, which has lifted the index of leading indicators, could stall out," Deutsche Bank chief U.S. economist Joseph LaVorgna wrote in a research note. He doesn't expect the economy to grow until early 2010.
Weekly claims for jobless aid had been dragging the index down. The U.S. unemployment rate stands at 8.9 percent and is expected to hit double digits later this year or in 2010.
The Labor Department on Thursday said new requests for jobless benefits fell to a seasonally adjusted 631,000, down from a revised figure of 643,000. Claims had reached a 14-week low of 605,000 earlier this month, which many economists thought heralded an easing in the wave of layoffs.
Earlier this week, computer giant Hewlett-Packard Co. said it would cut 6,400 jobs, or 2 percent of its work force, while credit-card issuer American Express Co. said it was slashing 4,000 jobs. Beleaguered auto makers General Motors Corp. and Chrysler LLC recently announced they will terminate their contracts with around 2,000 dealerships nationwide, which likely will result in shutdowns for many. The National Automobile Dealers Association, a trade group, said the auto makers' decisions could result in 100,000 job losses.
Meanwhile, the Conference Board said building permits, manufacturers' orders for capital goods and the real money supply weighed down the index last month.
The recession was precipitated by a crisis in housing, and while homebuilders' confidence has ticked higher, both building permits and housing construction fell to record low annual rates in April, the government said earlier this week.
Thu May 21
NEW YORK – A private research's group forecast of economic activity rose more than expected in April, the first gain in seven months and fresh evidence that the recession could end later this year.
The Conference Board said Thursday its index of leading economic indicators, designed to forecast economic activity in the next three to six months, rose 1 percent last month. Economists surveyed by Thomson Reuters expected a 0.8 percent increase.
Conference Board economist Ken Goldstein said that means declines in activity could switch to growth in the overall economy in the second half of the year. The recession began in December 2007.
In April, the index posted its biggest gain since November 2005, said Ian Shepherdson, chief U.S. economist at High Frequency Economics. It is now even with its level from last November.
The index is derived from 10 components including stock prices, the money supply, jobless claims and new orders by manufacturers.
The Conference Board said strengths among the components exceeded weaknesses for the first time in more than a year. "This is more broad-based. It's not just the stock market rally," Goldstein said.
Seven indicators rose, including stock prices, as the Dow Jones industrials are up by about a third since March. Consumer expectations, the average work week, manufacturers' new orders for consumer goods and deliveries by vendors grew, while initial jobless claims dropped, also a positive.
However, some analysts expressed reservations about the strength of the gain.
"How strong the upturn will be is still in doubt, and it is possible that the improvement in (consumer) sentiment seen the last couple months, which has lifted the index of leading indicators, could stall out," Deutsche Bank chief U.S. economist Joseph LaVorgna wrote in a research note. He doesn't expect the economy to grow until early 2010.
Weekly claims for jobless aid had been dragging the index down. The U.S. unemployment rate stands at 8.9 percent and is expected to hit double digits later this year or in 2010.
The Labor Department on Thursday said new requests for jobless benefits fell to a seasonally adjusted 631,000, down from a revised figure of 643,000. Claims had reached a 14-week low of 605,000 earlier this month, which many economists thought heralded an easing in the wave of layoffs.
Earlier this week, computer giant Hewlett-Packard Co. said it would cut 6,400 jobs, or 2 percent of its work force, while credit-card issuer American Express Co. said it was slashing 4,000 jobs. Beleaguered auto makers General Motors Corp. and Chrysler LLC recently announced they will terminate their contracts with around 2,000 dealerships nationwide, which likely will result in shutdowns for many. The National Automobile Dealers Association, a trade group, said the auto makers' decisions could result in 100,000 job losses.
Meanwhile, the Conference Board said building permits, manufacturers' orders for capital goods and the real money supply weighed down the index last month.
The recession was precipitated by a crisis in housing, and while homebuilders' confidence has ticked higher, both building permits and housing construction fell to record low annual rates in April, the government said earlier this week.
Obama says US prisons tough enough for detainees
By STEVEN R. HURST, Associated Press Writer
WASHINGTON – President Barack Obama forcefully defended his plans to close the Guantanamo detention camp Thursday and said some of the terror suspects held there would be brought to top-security prisons in the United States despite fierce opposition in Congress.
He spoke one day after the Senate voted resoundingly to deny him money to close the prison, and he decried "fear-mongering" that he said had led to such opposition.
He insisted the transfer would not endanger Americans and promised to work with lawmakers to develop a system for holding detainees who can't be tried and can't be turned loose from the Navy-run prison in Cuba.
"There are no neat or easy answers here," Obama said in a speech in which he pledged anew to clean up what he said was "quite simply a mess" at Guantanamo that he had inherited from the Bush administration.
Moments after Obama concluded, former Vice President Dick Cheney delivered his own address across town defending the decisions of the Bush administration in dealing with terrorism. Expressing no remorse for the actions the Bush White House had ordered, Cheney said under the same circumstances he would make the same decisions "without hesitation."
Obama noted that roughly 500 detainees already had been released by the Bush administration. There are 240 at Guantanamo now. The president said that 50 of those had been cleared to be sent to other countries — although he did not identify which countries might be willing to take them.
Obama conceded that some Guantanamo detainees would end up in U.S. prisons and said those facilities were tough enough to house even the most dangerous inmates.
Obama decried arguments used against his plans.
"We will be ill-served by the fear-mongering that emerges whenever we discuss this issue," he declared.
Speaking at the National Archives, Obama said he wouldn't do anything to endanger the American people.
He said opening and continuing the military prison "set back the moral authority that is America's strongest currency in the world."
Obama spoke in front of a copy of the Constitution, to members of the Judge Advocate General's Corps, diplomatic, policy and development officials and representatives of civil liberties groups.
"I can tell you that the wrong answer is to pretend like this problem will go away if we maintain an unsustainable status quo," Obama said. "As president, I refuse to allow this problem to fester. Our security interests won't permit it. Our courts won't allow it. And neither should our conscience."
Obama said his administration was in the process of studying each of the remaining Guantanamo detainees "to determine the appropriate policies for dealing with them."
"Nobody has ever escaped from one of our `supermax' prisons which hold hundreds of convicted terrorists," Obama said.
Obama used the speech as an effort to try to retake the initiative on the matter. He spoke a day after the Senate, led by majority Democrats, followed the lead of the House and voted decisively to deny his request for $80 million to close the prison. Lawmakers said they would block the funds until he gave a more detailed accounting of what would happen to the detainees.
He provided some details in his speech but stopped short of offering specifics on what to do with detainees who won't be tried for war crimes but are likely to be held indefinitely.
He described this group as those "who cannot be prosecuted yet who pose a clear danger to the American people."
"I want to be honest: This is the toughest issue we will face," Obama said.
He said his administration would "exhaust every avenue that we have" to prosecute detainees but there would still be some left "who cannot be prosecuted for past crimes" yet remain a threat.
Among these, he said, are prisoners who have expressed allegiance to Osama bin Laden "or otherwise made it clear they want to kill Americans."
"So going forward, my administration will work with Congress to develop an appropriate legal regime" to handle such detainees "so that our efforts are consistent with our values and our Constitution."
Obama criticized what he said was an effort to politicize the issue.
"I know that the politics in Congress will be difficult. These issues are fodder for 30-second commercials and direct mail pieces that are designed to frighten. I get it. But if we continue to make decisions from within a climate of fear, we will make more mistakes," he said.
Obama said he had no intention of looking back and "relitigating the policies" of the Bush administration.
But at the same time, he strongly criticized former President George W. Bush's actions. "Our government made decisions based upon fear rather than foresight and all too often trimmed facts and evidence to fit ideological predispositions," he said.
"In other words, we went off course."
The president again rejected the idea of an independent commission that would investigate the whole range of national security issues under the Bush administration.
"I recognize that many still have a strong desire to focus on the past. When it comes to the actions of the last eight years, some Americans are angry; others want to re-fight debates that have been settled, most clearly at the ballot box in November," Obama said.
"I know that these debates lead directly to a call for a fuller accounting, perhaps through an independent commission," he said. But he insisted that "our existing democratic institutions are strong enough to deliver accountability."
He also defended his decision to try to block the court-ordered release of detainee abuse photos. "Release would inflame anti-American opinion" and threaten American soldiers serving in Iraq and Afghanistan, Obama said. His decision against releasing the photos has been criticized by human-rights groups.
Obama had first suggested he would allow the photos to be released, but changed his mind after listening to advice from the military and intelligence advisers.
On another recent controversy, he defended his decision to release CIA interrogation memos, saying there was "no overriding reason to protect them." He said the interrogation methods, which included waterboarding, were already known — and that he had banned them.
Cheney praised Obama for two "wise" decisions — his handling of the war in Afghanistan and his decision to try to block the court-ordered release of detainee-abuse photos. "He deserves our support" for such actions, Cheney said.
But, the former vice president said, the current administration's actions on Guantanamo and other steps in the war against terrorism "should not be based on slogans and campaign rhetoric, but on a truthful telling of history."
Cheney has become the most outspoken high-ranking Bush official in criticizing the Obama team, suggesting steps the new president has taken have made the country less safe.
Cheney denounced Obama's announcement on his second day in office that he would close Guantanamo. He said the decision came with "little deliberation and no plan."
"Now, the president says some of these terrorists should be brought to American soil for trial in our court system. Others, he says, will be shipped to third countries. But so far, the United States has had little luck getting other countries to take hardened terrorists."
Cheney spoke at the American Enterprise Institute, a conservative think tank.
WASHINGTON – President Barack Obama forcefully defended his plans to close the Guantanamo detention camp Thursday and said some of the terror suspects held there would be brought to top-security prisons in the United States despite fierce opposition in Congress.
He spoke one day after the Senate voted resoundingly to deny him money to close the prison, and he decried "fear-mongering" that he said had led to such opposition.
He insisted the transfer would not endanger Americans and promised to work with lawmakers to develop a system for holding detainees who can't be tried and can't be turned loose from the Navy-run prison in Cuba.
"There are no neat or easy answers here," Obama said in a speech in which he pledged anew to clean up what he said was "quite simply a mess" at Guantanamo that he had inherited from the Bush administration.
Moments after Obama concluded, former Vice President Dick Cheney delivered his own address across town defending the decisions of the Bush administration in dealing with terrorism. Expressing no remorse for the actions the Bush White House had ordered, Cheney said under the same circumstances he would make the same decisions "without hesitation."
Obama noted that roughly 500 detainees already had been released by the Bush administration. There are 240 at Guantanamo now. The president said that 50 of those had been cleared to be sent to other countries — although he did not identify which countries might be willing to take them.
Obama conceded that some Guantanamo detainees would end up in U.S. prisons and said those facilities were tough enough to house even the most dangerous inmates.
Obama decried arguments used against his plans.
"We will be ill-served by the fear-mongering that emerges whenever we discuss this issue," he declared.
Speaking at the National Archives, Obama said he wouldn't do anything to endanger the American people.
He said opening and continuing the military prison "set back the moral authority that is America's strongest currency in the world."
Obama spoke in front of a copy of the Constitution, to members of the Judge Advocate General's Corps, diplomatic, policy and development officials and representatives of civil liberties groups.
"I can tell you that the wrong answer is to pretend like this problem will go away if we maintain an unsustainable status quo," Obama said. "As president, I refuse to allow this problem to fester. Our security interests won't permit it. Our courts won't allow it. And neither should our conscience."
Obama said his administration was in the process of studying each of the remaining Guantanamo detainees "to determine the appropriate policies for dealing with them."
"Nobody has ever escaped from one of our `supermax' prisons which hold hundreds of convicted terrorists," Obama said.
Obama used the speech as an effort to try to retake the initiative on the matter. He spoke a day after the Senate, led by majority Democrats, followed the lead of the House and voted decisively to deny his request for $80 million to close the prison. Lawmakers said they would block the funds until he gave a more detailed accounting of what would happen to the detainees.
He provided some details in his speech but stopped short of offering specifics on what to do with detainees who won't be tried for war crimes but are likely to be held indefinitely.
He described this group as those "who cannot be prosecuted yet who pose a clear danger to the American people."
"I want to be honest: This is the toughest issue we will face," Obama said.
He said his administration would "exhaust every avenue that we have" to prosecute detainees but there would still be some left "who cannot be prosecuted for past crimes" yet remain a threat.
Among these, he said, are prisoners who have expressed allegiance to Osama bin Laden "or otherwise made it clear they want to kill Americans."
"So going forward, my administration will work with Congress to develop an appropriate legal regime" to handle such detainees "so that our efforts are consistent with our values and our Constitution."
Obama criticized what he said was an effort to politicize the issue.
"I know that the politics in Congress will be difficult. These issues are fodder for 30-second commercials and direct mail pieces that are designed to frighten. I get it. But if we continue to make decisions from within a climate of fear, we will make more mistakes," he said.
Obama said he had no intention of looking back and "relitigating the policies" of the Bush administration.
But at the same time, he strongly criticized former President George W. Bush's actions. "Our government made decisions based upon fear rather than foresight and all too often trimmed facts and evidence to fit ideological predispositions," he said.
"In other words, we went off course."
The president again rejected the idea of an independent commission that would investigate the whole range of national security issues under the Bush administration.
"I recognize that many still have a strong desire to focus on the past. When it comes to the actions of the last eight years, some Americans are angry; others want to re-fight debates that have been settled, most clearly at the ballot box in November," Obama said.
"I know that these debates lead directly to a call for a fuller accounting, perhaps through an independent commission," he said. But he insisted that "our existing democratic institutions are strong enough to deliver accountability."
He also defended his decision to try to block the court-ordered release of detainee abuse photos. "Release would inflame anti-American opinion" and threaten American soldiers serving in Iraq and Afghanistan, Obama said. His decision against releasing the photos has been criticized by human-rights groups.
Obama had first suggested he would allow the photos to be released, but changed his mind after listening to advice from the military and intelligence advisers.
On another recent controversy, he defended his decision to release CIA interrogation memos, saying there was "no overriding reason to protect them." He said the interrogation methods, which included waterboarding, were already known — and that he had banned them.
Cheney praised Obama for two "wise" decisions — his handling of the war in Afghanistan and his decision to try to block the court-ordered release of detainee-abuse photos. "He deserves our support" for such actions, Cheney said.
But, the former vice president said, the current administration's actions on Guantanamo and other steps in the war against terrorism "should not be based on slogans and campaign rhetoric, but on a truthful telling of history."
Cheney has become the most outspoken high-ranking Bush official in criticizing the Obama team, suggesting steps the new president has taken have made the country less safe.
Cheney denounced Obama's announcement on his second day in office that he would close Guantanamo. He said the decision came with "little deliberation and no plan."
"Now, the president says some of these terrorists should be brought to American soil for trial in our court system. Others, he says, will be shipped to third countries. But so far, the United States has had little luck getting other countries to take hardened terrorists."
Cheney spoke at the American Enterprise Institute, a conservative think tank.
Stocks whacked by economy, Britain
Wall Street struggles with cloudy economic forecast. Standard & Poor's lowers its outlook for the United Kingdom.
By Ben Rooney, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) -- Stocks fell sharply Thursday as enthusiasm about signs of economic improvement faded and investors were taken aback by a downgrade of the U.K. credit outlook.
The Dow Jones industrial average (INDU) and the S&P 500 (SPX) index were both down about 1.5% at midday. The Nasdaq composite (COMP) fell 1.8%.
Energy stocks slumped as oil prices fell more than 2% but remained at a 6-month high. Shares of financial services companies, which have lead the market in recent sessions, also tumbled.
"I think the market will be choppy for the next few months," said Ron Kiddoo, chief investment officer at Cozad Asset Management. He said Thursday's "malaise" could be a reflection of low volume, with many market participants absent ahead of the holiday weekend.
Stocks finished Wednesday's session lower after the Federal Reserve trimmed its 2009 economic growth targets and raised its forecast for unemployment. The central bank's dour outlook called into question the economic optimism that had lifted the market over the last few months.
"We're starting to see numbers that aren't quite as damaging," Kiddoo said. "But I don't think the market will trade to the upside until you start to see real growth."
British downgrade: Ratings agency Standard & Poor's lowered its outlook for the U.K. to "negative" from "stable."
S&P said its revision was based on the possibility that the country's debt burden could reach 100% of its gross domestic product, despite the U.K. government's "further fiscal tightening."
"The downgrade of Great Britain by S&P certainly damped enthusiasm," said Peter Cardillo, chief market economist at Avalon Partners.
Economy: The Labor Department reported that initial jobless claims declined by 12,000 in the week ending May 16.
The number of people filing for first-time jobless benefits totaled 631,000 last week, slightly more than expected. But those filing claims on an ongoing basis rose to 6.6 million, an all-time high.
Separately, the Conference Board's reading of leading economic indicators, which predicts economic conditions six to nine months in the future, rose 1% in April -- slightly better than the 0.8% analysts' expected.
The Federal Reserve Bank of Philadelphia said its index of manufacturing activity in the mid-Atlantic region improved to negative 22.6 in May from negative 24.4 in April. Economists surveyed by Briefing.com had expected the index to improve to negative 18.
World markets: Investors around the world were in a downbeat mood. In Asia, most shares finished lower. European stocks tumbled in morning trading, following S&P's downgrade of the U.K. outlook.
Companies: Auto finance firm GMAC is poised to receive a second bailout from the Treasury, according to the Detroit News. The newspaper said the company is due to receive $7.5 billion more in aid.
In one of the first Nasdaq initial public offerings of the year, OpenTable, which operates a restaurant reservation system, raised $60 million, one of the deal's underwriters told Reuters. The company priced its shares at $20 each, which was higher than expected, and nearly 40% to $27.90 in late morning trading.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.26% from 3.19% Wednesday. Treasury prices and yields move in opposite directions.
Other markets: Oil slipped from its Wednesday high, but still continued to trade above $60 a barrel. The price of oil dropped $1.46 a barrel to $60.58
In currency trading, the dollar rose versus major international currencies, including the euro, the yen and the British pound.
COMEX gold for June delivery rose $7.60 to $945 an ounce.
First Published: May 21, 2009: 9:43 AM ET
Find this article at:
http://money.cnn.com/2009/05/21/markets/markets_newyork/index.htm
By Ben Rooney, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) -- Stocks fell sharply Thursday as enthusiasm about signs of economic improvement faded and investors were taken aback by a downgrade of the U.K. credit outlook.
The Dow Jones industrial average (INDU) and the S&P 500 (SPX) index were both down about 1.5% at midday. The Nasdaq composite (COMP) fell 1.8%.
Energy stocks slumped as oil prices fell more than 2% but remained at a 6-month high. Shares of financial services companies, which have lead the market in recent sessions, also tumbled.
"I think the market will be choppy for the next few months," said Ron Kiddoo, chief investment officer at Cozad Asset Management. He said Thursday's "malaise" could be a reflection of low volume, with many market participants absent ahead of the holiday weekend.
Stocks finished Wednesday's session lower after the Federal Reserve trimmed its 2009 economic growth targets and raised its forecast for unemployment. The central bank's dour outlook called into question the economic optimism that had lifted the market over the last few months.
"We're starting to see numbers that aren't quite as damaging," Kiddoo said. "But I don't think the market will trade to the upside until you start to see real growth."
British downgrade: Ratings agency Standard & Poor's lowered its outlook for the U.K. to "negative" from "stable."
S&P said its revision was based on the possibility that the country's debt burden could reach 100% of its gross domestic product, despite the U.K. government's "further fiscal tightening."
"The downgrade of Great Britain by S&P certainly damped enthusiasm," said Peter Cardillo, chief market economist at Avalon Partners.
Economy: The Labor Department reported that initial jobless claims declined by 12,000 in the week ending May 16.
The number of people filing for first-time jobless benefits totaled 631,000 last week, slightly more than expected. But those filing claims on an ongoing basis rose to 6.6 million, an all-time high.
Separately, the Conference Board's reading of leading economic indicators, which predicts economic conditions six to nine months in the future, rose 1% in April -- slightly better than the 0.8% analysts' expected.
The Federal Reserve Bank of Philadelphia said its index of manufacturing activity in the mid-Atlantic region improved to negative 22.6 in May from negative 24.4 in April. Economists surveyed by Briefing.com had expected the index to improve to negative 18.
World markets: Investors around the world were in a downbeat mood. In Asia, most shares finished lower. European stocks tumbled in morning trading, following S&P's downgrade of the U.K. outlook.
Companies: Auto finance firm GMAC is poised to receive a second bailout from the Treasury, according to the Detroit News. The newspaper said the company is due to receive $7.5 billion more in aid.
In one of the first Nasdaq initial public offerings of the year, OpenTable, which operates a restaurant reservation system, raised $60 million, one of the deal's underwriters told Reuters. The company priced its shares at $20 each, which was higher than expected, and nearly 40% to $27.90 in late morning trading.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.26% from 3.19% Wednesday. Treasury prices and yields move in opposite directions.
Other markets: Oil slipped from its Wednesday high, but still continued to trade above $60 a barrel. The price of oil dropped $1.46 a barrel to $60.58
In currency trading, the dollar rose versus major international currencies, including the euro, the yen and the British pound.
COMEX gold for June delivery rose $7.60 to $945 an ounce.
First Published: May 21, 2009: 9:43 AM ET
Find this article at:
http://money.cnn.com/2009/05/21/markets/markets_newyork/index.htm
Wednesday, May 20, 2009
Fed's economic forecast worsens
Central bank now expects unemployment to rise to a range of 9.2% to 9.6% this year. Fed also predicts a sharper decline in GDP than it had forecast in January.
By Chris Isidore, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- The Federal Reserve's latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.
The Fed's forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.
The Fed also now expects the gross domestic product, the broadest measure of the nation's economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.
At the April meeting, the Fed decided to once again leave its key federal funds rate near 0%, a level it has been at since last December. The central bank also announced that it did not plan on increasing purchasing more long-term Treasury notes anytime soon.
The Fed disclosed plans to begin buying $300 billion's worth of such Treasurys in March in order to try and keep long-term rates down and boost economic activity.
But according to the minutes, some members of the central bank's policy committee indicated they were open to increasing its purchases of Treasury notes and mortgage securities as a way of spurring more lending.
Treasury prices rallied after the minutes were released, pushing their yield, which moves in the opposite direction, down to 3.18%.
Stocks, which have moved sharply higher during the past two months on hopes that the recession may soon be ending, fell Wednesday afternoon.
According to the minutes, Fed members did indicate they expected GDP to increase slightly in the second half of this year. However, it would not be enough to overcome the anticipated declines in the first half. GDP shrunk more than 6% in the first quarter.
Policymakers acknowledged that there were some better economic readings in the period leading up to the April meeting, but added that they were not convinced the economy was out of the woods yet.
In the minutes, Fed members indicated that there are a number of factors that "would be likely to restrain the pace of economic recovery over the medium term" and added that the credit crunch would "recede only gradually" and that "households would likely remain cautious" in their spending.
Fed members expressed concerns about rising problems in the commercial real estate market as well, indicating that this could cause further problems for financial institutions still struggling with the effects of the collapse of home prices and rising mortgage defaults.
The Fed also reduced its GDP targets for 2010 and 2011, but the central banks still expects the economy to grow in both years.
Rich Yamarone, director of economic research at Argus Research, said that the Fed's new forecasts were "more of a reality check than a revision," given the deterioration in the labor market and overall economy since January.
But he and other economists said it also appeared from the minutes that the Fed is pleased with how the economy has started to respond to the steps it has taken, including the purchases of mortgages and Treasurys.
"I read [the minutes] as 'We think it's working, let's wait a few months to see how it plays out,'" said Gus Faucher - director of macroeconomics at Moody's Economy.com. He added that it did not seem like the Fed felt a "sense of urgency" to increase the scope of its Treasury purchase program.
And Yamarone said it's important to remember that the forecasts and minutes are three weeks old, and that economic readings since the meeting, including home sales and the rate of job losses, have generally showed signs of improvement.
"These minutes look like they have a bleaker assessment, but things were darker then," he said. "I can't say it's an accurate interpretation of their outlook today. I think that would be a little more favorable."
First Published: May 20, 2009: 2:17 PM ET
Find this article at:
http://money.cnn.com/2009/05/20/news/economy/fed_minutes/index.htm
By Chris Isidore, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- The Federal Reserve's latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.
The Fed's forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.
The Fed also now expects the gross domestic product, the broadest measure of the nation's economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.
At the April meeting, the Fed decided to once again leave its key federal funds rate near 0%, a level it has been at since last December. The central bank also announced that it did not plan on increasing purchasing more long-term Treasury notes anytime soon.
The Fed disclosed plans to begin buying $300 billion's worth of such Treasurys in March in order to try and keep long-term rates down and boost economic activity.
But according to the minutes, some members of the central bank's policy committee indicated they were open to increasing its purchases of Treasury notes and mortgage securities as a way of spurring more lending.
Treasury prices rallied after the minutes were released, pushing their yield, which moves in the opposite direction, down to 3.18%.
Stocks, which have moved sharply higher during the past two months on hopes that the recession may soon be ending, fell Wednesday afternoon.
According to the minutes, Fed members did indicate they expected GDP to increase slightly in the second half of this year. However, it would not be enough to overcome the anticipated declines in the first half. GDP shrunk more than 6% in the first quarter.
Policymakers acknowledged that there were some better economic readings in the period leading up to the April meeting, but added that they were not convinced the economy was out of the woods yet.
In the minutes, Fed members indicated that there are a number of factors that "would be likely to restrain the pace of economic recovery over the medium term" and added that the credit crunch would "recede only gradually" and that "households would likely remain cautious" in their spending.
Fed members expressed concerns about rising problems in the commercial real estate market as well, indicating that this could cause further problems for financial institutions still struggling with the effects of the collapse of home prices and rising mortgage defaults.
The Fed also reduced its GDP targets for 2010 and 2011, but the central banks still expects the economy to grow in both years.
Rich Yamarone, director of economic research at Argus Research, said that the Fed's new forecasts were "more of a reality check than a revision," given the deterioration in the labor market and overall economy since January.
But he and other economists said it also appeared from the minutes that the Fed is pleased with how the economy has started to respond to the steps it has taken, including the purchases of mortgages and Treasurys.
"I read [the minutes] as 'We think it's working, let's wait a few months to see how it plays out,'" said Gus Faucher - director of macroeconomics at Moody's Economy.com. He added that it did not seem like the Fed felt a "sense of urgency" to increase the scope of its Treasury purchase program.
And Yamarone said it's important to remember that the forecasts and minutes are three weeks old, and that economic readings since the meeting, including home sales and the rate of job losses, have generally showed signs of improvement.
"These minutes look like they have a bleaker assessment, but things were darker then," he said. "I can't say it's an accurate interpretation of their outlook today. I think that would be a little more favorable."
First Published: May 20, 2009: 2:17 PM ET
Find this article at:
http://money.cnn.com/2009/05/20/news/economy/fed_minutes/index.htm
Obama: Long-term joblessness a concern
Labor may feel crunch 'for some time,' despite 'some return to normalcy' in financial markets.
May 20, 2009
WASHINGTON (Reuters) -- President Barack Obama, speaking to a high-level advisory panel of economic experts, said Wednesday that U.S. financial markets had improved recently but he was concerned the country would face higher unemployment for some time.
"We're pleased that we've seen some progress, that there is some return to normalcy in certain aspects of the financial markets," Obama said at a White House meeting of his 16-member Economic Recovery Advisory Board headed by former Federal Reserve chief Paul Volcker.
"We expect that there is going to be some stabilizing in the economy ... will begin to turn again," he added. "The concern that we have is that even in a stabilized situation there is the prospect of higher unemployment for some time to come."
Obama told the group he remained committed to looking beyond the immediate crisis and wanted to put the economy on a sounder footing by promoting clean energy and "green jobs" to help spur economic recovery in the longer term.
The president said the House Energy and Commerce Committee was "making more progress than we would have ever expected" on climate change legislation.
He led the panel, which includes GE (GE, Fortune 500) chief executive Jeffrey Immelt and Caterpillar (CAT, Fortune 500) CEO Jim Owens, in a discussion of green energy issues, including proposals for reducing greenhouse gases emissions with a market-based cap and trade system.
Panel member Richard Trumka, secretary-treasurer of the AFL-CIO labor federation, said there was great potential for the United States to lead in job-creating clean energy exports but voiced concern that free trade agreements the administration was considering would "disadvantage" American business in global competition.
First quarterly meeting
Obama announced the creation of the Economic Recovery Advisory Board in February, but its work had been entirely behind-the-scenes until Wednesday's first quarterly meeting, which was carried live by Internet feed on the White House Web site.
Volcker's role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.
Volcker has continued to weigh in on public policy matters since leaving the Fed in 1987. He was a key adviser to Obama during the campaign and speaks frequently with White House officials on financial-regulatory and other issues.
But he has vented some frustration to associates about his level of access within the White House economic power center.
Obama's inner circle on economic policy consists of National Economic Council director Lawrence Summers, a former Treasury secretary; current Treasury Secretary Timothy Geithner; Christina Romer, chairwoman of the Council of Economic Advisers; and Austan Goolsbee, a longtime Obama adviser who sits on the Council of Economic Advisers and is also chief of staff on the Volcker panel.
The economic recovery panel, which includes Democrats and Republicans and people from business, academia, public policy and labor union backgrounds, is intended to give Obama some outside perspective on economic issues.
Find this article at:
http://money.cnn.com/2009/05/20/news/economy/obama_jobless_concern.reut/index.htm
May 20, 2009
WASHINGTON (Reuters) -- President Barack Obama, speaking to a high-level advisory panel of economic experts, said Wednesday that U.S. financial markets had improved recently but he was concerned the country would face higher unemployment for some time.
"We're pleased that we've seen some progress, that there is some return to normalcy in certain aspects of the financial markets," Obama said at a White House meeting of his 16-member Economic Recovery Advisory Board headed by former Federal Reserve chief Paul Volcker.
"We expect that there is going to be some stabilizing in the economy ... will begin to turn again," he added. "The concern that we have is that even in a stabilized situation there is the prospect of higher unemployment for some time to come."
Obama told the group he remained committed to looking beyond the immediate crisis and wanted to put the economy on a sounder footing by promoting clean energy and "green jobs" to help spur economic recovery in the longer term.
The president said the House Energy and Commerce Committee was "making more progress than we would have ever expected" on climate change legislation.
He led the panel, which includes GE (GE, Fortune 500) chief executive Jeffrey Immelt and Caterpillar (CAT, Fortune 500) CEO Jim Owens, in a discussion of green energy issues, including proposals for reducing greenhouse gases emissions with a market-based cap and trade system.
Panel member Richard Trumka, secretary-treasurer of the AFL-CIO labor federation, said there was great potential for the United States to lead in job-creating clean energy exports but voiced concern that free trade agreements the administration was considering would "disadvantage" American business in global competition.
First quarterly meeting
Obama announced the creation of the Economic Recovery Advisory Board in February, but its work had been entirely behind-the-scenes until Wednesday's first quarterly meeting, which was carried live by Internet feed on the White House Web site.
Volcker's role in advising Obama is of keen interest to many on Wall Street, where the 81-year-old former central banker remains a towering figure known for breaking the back of runaway inflation during the 1980s.
Volcker has continued to weigh in on public policy matters since leaving the Fed in 1987. He was a key adviser to Obama during the campaign and speaks frequently with White House officials on financial-regulatory and other issues.
But he has vented some frustration to associates about his level of access within the White House economic power center.
Obama's inner circle on economic policy consists of National Economic Council director Lawrence Summers, a former Treasury secretary; current Treasury Secretary Timothy Geithner; Christina Romer, chairwoman of the Council of Economic Advisers; and Austan Goolsbee, a longtime Obama adviser who sits on the Council of Economic Advisers and is also chief of staff on the Volcker panel.
The economic recovery panel, which includes Democrats and Republicans and people from business, academia, public policy and labor union backgrounds, is intended to give Obama some outside perspective on economic issues.
Find this article at:
http://money.cnn.com/2009/05/20/news/economy/obama_jobless_concern.reut/index.htm
Japan's economy in record plunge
Japan's economy during the first three months of 2009 shrank at its quickest pace since records began, as exports slumped, officials figures have shown.
Output in the world's second largest economy contracted by 4% during the period, or by 15.2% on an annual basis.
Japan's economy, which depends heavily on exports, has been hit hard by the global downturn.
But economists predict a modest growth in the coming months, after a small rise in production in March.
The figures from the Cabinet Office show that this is the fourth quarterly fall in gross domestic product (GDP) in a row, after a 3.8% contraction between October and December 2008.
'Weakness spreading'
The BBC's Roland Buerk in Tokyo says people around the world are buying fewer of the cars and electronic gadgets that Japan is renowned for.
In the first quarter of this year, Japanese exports declined by 26%.
"Weakness in the corporate sector is gradually spreading to households," Prime Minister Taro Aso said during a budget hearing to Parliament.
"This is a very serious situation, so we need to respond appropriately."
Investment in factories and equipment dropped by 10.4% in the first quarter, a sign that firms are reducing their outlay. Consumer spending fell by 1.1% during the same period.
"The savings rate has gone up and that has worsened the severity of the recession," said Richard Jerram, head economist at Macquarie Securities in Tokyo.
"It seems the public has basically panicked about job security to an an extent that hasn't happened in previous cycles," he added.
The latest contraction is the biggest since records began in 1955.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8058708.stm
Published: 2009/05/20 06:05:58 GMT
Output in the world's second largest economy contracted by 4% during the period, or by 15.2% on an annual basis.
Japan's economy, which depends heavily on exports, has been hit hard by the global downturn.
But economists predict a modest growth in the coming months, after a small rise in production in March.
The figures from the Cabinet Office show that this is the fourth quarterly fall in gross domestic product (GDP) in a row, after a 3.8% contraction between October and December 2008.
'Weakness spreading'
The BBC's Roland Buerk in Tokyo says people around the world are buying fewer of the cars and electronic gadgets that Japan is renowned for.
In the first quarter of this year, Japanese exports declined by 26%.
"Weakness in the corporate sector is gradually spreading to households," Prime Minister Taro Aso said during a budget hearing to Parliament.
"This is a very serious situation, so we need to respond appropriately."
Investment in factories and equipment dropped by 10.4% in the first quarter, a sign that firms are reducing their outlay. Consumer spending fell by 1.1% during the same period.
"The savings rate has gone up and that has worsened the severity of the recession," said Richard Jerram, head economist at Macquarie Securities in Tokyo.
"It seems the public has basically panicked about job security to an an extent that hasn't happened in previous cycles," he added.
The latest contraction is the biggest since records began in 1955.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8058708.stm
Published: 2009/05/20 06:05:58 GMT
Friday, May 15, 2009
The facts: How Israel orchestrated the real Geneva ‘hate fest’ against Black and Brown people
May 14, 2009
by Arlene Eisen
On Saturday, April 18, two days before the United Nations Durban Review Conference (DRC) officially convened, anti-racist demonstrators from every continent and nearly every struggle in the world filled the streets of downtown Geneva. A sea of flags, banners and posters spoke for indigenous people from Bolivia, Mexico and Guatemala, the landless former slaves of Brazil, Tamils struggling for survival in Sri Lanka, a huge contingent of Dalits demanding an end to the caste system, Black delegates from the U.S. and other points in the Diaspora calling for reparations and freedom for political prisoners, Africans from the continent, many European migrants from the third world and their supporters and a variety of groups in solidarity with the Palestinian people. Some had handmade signs: “Zionism equals racism” and “Israel is an Apartheid State.”
At the rally, Doudou Diène, “Special Rapporteur on Contemporary forms of Racism, Racial Discrimination, Xenophobia and related intolerance” and a scholar from Senegal, spoke. He emphasized that racism is rooted in slavery and colonialism, including settler colonialism. He pointed out that the Israeli occupation of Palestine continues a tradition of settler colonialism and racism. The crowd applauded. Not a heckler was in sight.
Most of us at the demonstration had heard the news that the U.N. Office of the High Commissioner for Human Rights (OHCHR) - the organizer of the Conference - had attempted to appease the United States and Israel by deleting language supporting reparations for slavery and self determination for the Palestinian people. But the Obama administration’s threat to continue the boycott begun by Bush and Israel in 2001 did not dampen the spirits of the demonstrators that afternoon. After the demonstration, various NGO caucuses met, many for the first time, attempting to prepare position papers that would pressure the DRC to be more responsive to grassroots anti-racist movements. We were about to learn that we had been thoroughly outmaneuvered.
Most were unaware that for nearly two years, hundreds of militant pro-Israeli activists and the Israeli Foreign Ministry had been coordinating their plans to sabotage the DRC. The fiercely pro-Israel NGO-Monitor named at least 17 Zionist organizations that had been “monitoring and protesting” the Durban Review Conference since May 2007 - only a few months after the U.N. General Assembly itself had passed a resolution to convene the Durban Review Conference.
Role of the Israeli Foreign Ministry
On Sunday, Feb. 24, 2008, Israel’s Foreign Minister at the time, Tzipi Livni, announced Israel’s decision to boycott the DRC. On Feb. 25, Haviv Rettig Gur reported in the Jerusalem Post that some 30 Jewish organizations from around the world were scheduled to meet the following day with the Israeli Foreign Ministry “to coordinate efforts at preventing the Durban Review Conference from becoming an anti-Israel and anti-semitic hate fest.” According to the Jerusalem Post, at that meeting, with the guidance of the head of the NGO Unit of the Foreign Ministry, they formed a task force to coordinate efforts for Durban II.”
At the time, Bush was still president and all the 2008 presidential candidates were competing with each other to be recognized as the staunchest Israeli ally. Israel had no reason to doubt U.S. backing when it took the lead in the international campaign to derail the DRC. Through every U.S. presidency, Israel has been the largest recipient of U.S. foreign aid - currently $3.1 billion in military aid and nearly double that in non-military grants. U.S. aid has built and maintained Israel’s army - the fourth most powerful in the world - the same army that has keeps a defenseless Palestinian population under siege, occupied for the last 42 years and expelled and dispossessed for the last 60 years.
Most recently, Israel inflicted 22 days of relentless ‘round-the-clock bombing on the sliver of land of Gaza where 1.5 million Palestinians are caged. That bombing killed some 1,400 people, wounded 4,336 and terrorized the entire population. Israel perpetrated this crime against humanity with impunity, confident of the support of the Obama administration and most European allies.
Israel is aware that as a settler-colonial regime, its power rests on violence underwritten by the U.S. But U.S. support for Israel’s permanent war against the Palestinian people requires perpetuation of the myths: “Israel is a democratic, not apartheid state” and “Israel wants peace and is only defending itself against fanatic Arab terrorists.”
In Durban, the 2001 Worldwide Conference Against Racism (WCAR), sponsored by the U.N., cracked Israel’s hegemonic narrative of the “the Middle East conflict.” The final Durban Declaration and Program of Action (DDPA), signed Sept. 8, 2001, by all U.N. members except the U.S. and Israel, reflected the even-handed diplomacy of the world’s official state representatives.
“We are concerned about the plight of the Palestinian people under foreign occupation. We recognize the inalienable right of the Palestinian people to self-determination and to the establishment of an independent State and we recognize the right of security for all States in the region, including Israel, and call upon all states to support the peace process and bring it to an early conclusion.” (paragraph 63, http://www.unhchr.ch/pdf/Durban.pdf)
Other paragraphs expressed deep concern regarding anti-semitism and Islamophobia and affirmed that the “Holocaust must never be forgotten.”
Despite the declaration’s moderation, the U.S. and Israel denounced it as “anti-semitic” and walked out. The corporate media echoed the pro-Israeli narrative that demonized the Durban Conference as an “anti-semitic hate fest.” Then, before the U.N. or any of the 150 countries that signed the declaration could defend it, the Twin Towers were bombed.
The Western corporate media sealed the reputation of Durban in a tomb of anti-terror, anti-Muslim hysteria. How convenient for the Zionists to resurrect the misrepresented ghost of WCAR in order to launch their campaign to discredit and derail the 2009 Durban Review Conference.
The Zionists’ comprehensive strategy
Before any reader jumps to the conclusion that this author is resorting to the traditional anti-semitic canard by creating a fictional “Zionist conspiracy,” please note that Michael Jordan, frequent contributor to the pro-Israel online news service JTA, openly bragged about the power of their plot. The cornerstone of the plan was to campaign for an international boycott of the conference and then to accuse any critics of being anti-semitic.
On April 28, 2009, he wrote: “This time, however, the Jews actually did conspire, albeit openly, to sabotage the conference. [my emphasis]
“The World Jewish Congress[1] met with officials from 17 U.N. member states to push for a boycott. Hudson Institute scholar Anne Bayefsky banged the anti-Durban drum for months in the U.S. media, including the National Review, the New York Daily News and Forbes. And Israeli officials pressed their allies that intended to participate in the conference not to tolerate any anti-Israel resolutions.
“But for the most part, Durban II’s organizers and participants did not want to point the finger at the Jews for the anti-Durban effort for fear of being labeled anti-semites.”
The Jerusalem Post, Israel’s newspaper of record, reported frequently on the growing lobbying efforts to render the Durban Review Conference irrelevant by convincing the “world community” - read Europe and the U.S. - to boycott it. A Sept. 28, 2008, article specifically detailed a concerted three-pronged strategy: 1) To call for states to boycott the conference; 2) To urge governments and private donors not to fund either the conference or the NGOs; 3) To organize and galvanize a pro-Israeli presence at the conference. While the article didn’t publicize it, the strategy also involved pressure from inside the U.N. - especially the U.N. Office of the High Commissioner for Human Rights - through staff members who were relatively pro-Israel.
1. Lobbying for boycott
Virtually all pro-Israel forces were mobilized to press for boycott. During the presidential campaign, Obama shamelessly pandered to the American Israel Public Affairs Committee (AIPAC) - the influential lobbying organization. Yet he also had a huge political debt to Black voters and had encouraged his candidacy to be used as an anti-racist symbol.
Thus, many of his supporters were shocked Feb. 27, 2009, just five weeks into his presidency, when Obama declared the U.S. would not attend the U.N. Durban Review Conference unless its outcome document were changed to drop all references to Israel, reparations for slavery and the defamation of religion. However, Obama’s spokespeople added that they would be prepared to re-engage if the negotiations brought about a “shortened” text of the document that met their criteria.
AIPAC immediately issued a press release that applauded Obama’s boycott of the U.N.’s “celebration of racism and vile anti-semitic activity.”
Encouraged by the Obama administration’s open endorsement of Israel’s year-old boycott, Zionist forces intensified their campaign to widen the boycott to destroy any possibility of a successful conference. For example, on March 9, 2009, The Jerusalem Post reported that Dr. Moshe Kantor, president of the European Jewish Congress - an umbrella organization for many Zionist organizations - called on the European Union to boycott the conference.
While only a handful of European countries followed the lead of U.S. and Israel, the threat of a wider boycott accomplished another objective. On March 17, conference organizers announced their attempt to appease Israel, the United States and their fence-sitting allies by revising the Draft Outcome Document. They removed all references to Israel as a perpetrator of racial discrimination, cut out any mention of the Palestinians’ right to self determination and also excised all language related to reparations, an acknowledgement that the transatlantic slave trade was a crime against humanity and a proposal to strengthen the Working Group of Experts on People of African Descent. But fearing resistance from the Non-Aligned Countries, African countries and other Islamic countries, conference organizers balked at Obama’s final demand to totally renounce the hard-won Durban Declaration and Programme of Action (DDPA) of 2001.
2. Choking off funding for the conference
In addition to pressure for boycott and weakening the conference’s anti-racist program and documents, the Zionist strategy aimed to withhold funding from the U.N. conference itself and potentially hostile NGOs.
The U.N.’s budget only met part of the conference’s needs. The rest had to be raised from voluntary contributions from states and civil society, including major philanthropists like Ford and Soros Foundations. It is possible that Zionist pressure on the U.S. and other governments to withhold funds from the U.N. backfired. With no funds from the U.S., funds donated by Iran, Libya and others became more significant.
However, the campaign to starve the NGO Forum and any individual NGO that didn’t tow the Israeli line had more success. In October 2008, the NGO Monitor sent an open letter to U.N. Secretary General Ban Ki-Moon calling on him to “avoid providing official sponsorship or funding for another NGO Forum that is likely to be a venue used to promote hatred and anti-semitism.” Various other Zionist organizations - including the Simon Wiesenthal Center, the American Jewish Committee and Human Rights First, sent similar letters.
In 2001, the NGO Forum in Durban included 8,000 people and lasted more than a week. U.N. and other financial support enabled many grassroots people to participate and radicalize the process. The forum’s political influence was significantly responsible for the U.N. DDPA’s endorsement of reparations, self-determination for the Palestinian people and generally strong stand against racism. Israel’s strategy for 2009 was to torpedo any NGO Forum with the potential of exerting an anti-Zionist influence.
In preparatory meetings, each time NGOs called for an NGO Forum in Geneva in 2009, Jose Dougan-Beaca, the coordinator of the Anti-Discrimination Unit of the OHCHR, emphasized that an NGO Forum was impossible because of “lack of money and facilities.” Dougan-Beaca was responsible for conveying information in both directions between the NGOs and the OHCHR. But a delegate from Independent Jewish Voices of Canada who attended those meetings reported that he became a partisan advocate for the pro-Israel NGOs.[2]
The pro-Israel Magenta website published detailed reports of those preparatory meetings. Those reports confirm Ralph’s impression. In addition to citing financial constraints, Dougan-Beaca attempted to lower the NGOs sights for the conference by emphasizing the DRC was mandated to be a review conference, not intended to expand on the DDPA. Therefore it would be appropriate for NGO attendance to be much reduced and NGOs should not attempt to strengthen the DDPA.
In the end, rather than a fully funded official NGO Forum, barely 300 NGO representatives straggled into private venues away from the U.N. complex on the weekend before the DRC convened. And fewer than 1,100 authorized NGO delegates were able to come to Geneva at all. During the conference itself, pre-authorized “side events” that featured speakers on approved topics were supposed to meet the NGO need for a political platform. These side events reflected both Israel’s and the U.S. agenda.
Two weeks before the conference began, for example, the Office of the High Commissioner for Human Rights informed a Palestinian Refugee Rights Organization (Badil) that Palestinian-related side events would not be permitted. There was no such restriction on pro-Israel events.
It is important to understand that the campaign continues to financially strangle anti-racist NGOs that may criticize Israel. On April 26, the day after the conference adjourned, in a piece titled, “Geneva Walkout Isn’t Enough” (www.ynetnews.com), Diane Meskin praised the NGO Monitor’s campaign to cut off funding for all anti-Israel NGOs. She wrote, “The EU has much to do if it truly wants to fight anti-semitism, racism and the perpetuation of anti-Israel propaganda on the world stage. It must put its money where its mouth is and stop funding NGOs that use these funds to promote the delegitimization of Israel …” She explicitly named funding organizations that must cut off named grantees - many of whom have supported a diversity of anti-racist causes.
3. Mobilizing a strong pro-Zionist (and disruptive) presence at DRC
Pro-Israel forces at the conference had their marching orders: Protect Israel from criticism of its most recent genocidal blitzkrieg and invasion of Gaza and gag any discussion of the occupation of Palestine itself. Uniformly, pro-Israeli groups worked to keep the focus on Iran, the holocaust, anti-semitism and Muslim complicity in Darfur. They talked about the persecution of the Roma and about Rwanda, but attempted to silence all mention of land seizures, the apartheid wall, separate roads, checkpoints, home demolitions, economic strangulation, mass incarceration, theft of water and all the other racist assaults on the Palestinian people.
Throughout 2008 and during the months of 2009 leading right up to the conference, meetings of the Preparatory Committee in Geneva, Regional Meetings in Latin America, Africa, Europe, Asia and among the Islamic States and Intersessional Meetings all invited input from NGOs. Those NGOs with closer ties to the grassroots were invariably poorly funded and could not afford travel and lodging in Geneva. Thus, NGOs more closely linked to governments - especially pro-Israel NGOs - had a disproportionate presence at the preparatory meetings.
For example, the pro-Israel NGO based in the Netherlands - I-CARE, funded by the Magenta Foundation - attended the preparatory meetings and posted detailed accounts of those meetings on their website. Many of those accounts describe some of the numerous attempts by pro-Israel organizations to sidetrack conference planning. The World Jewish Congress created the highly selective World Jewish Diplomatic Corps - young professionals, an “elite force on the ground to attend the Preparatory Meetings to argue for human rights.”
Reports by I-CARE’s representatives at those meetings reflect Israel’s particular concern with both the influence and composition of the Bureau of the Preparatory Committee that had responsibility to “prepare the agenda and draft decisions for consideration by PrepCom and address all issues pertinent to its work …” Ms. Najat Al-Hajjaji, the permanent ambassador from Libya to the U.N. in Geneva and past chair of the Human Rights Council, chaired the bureau. Bureau “vice chairpersons” from the Global South outnumbered delegates from Europe 11 to 7,[3] and the Cuban ambassador to the U.N. in Geneva, Resfel Pino Alvarez, who is also the respected chair of the Non-Aligned Movement, was named vice-chairperson-rapporteur.
Two websites central to efforts to implement Israel’s anti-DRC strategy have been the www.unwatch.org, affiliated with the American Jewish Committee, and the www.ngo-monitor.org, based in Jerusalem. The latter was founded with the objective “to end the practice used by certain self-declared ‘humanitarian NGOs’ of exploiting the label ‘universal human rights values’ to promote politically and ideologically motivated anti-Israel agendas.” They functioned as promoter, clearinghouse and publicist. Some 16 months before the conference, the Dec. 22, 2008, Jerusalem Post reported that the World Union of Jewish Students formed a special task force of 60 students who would travel to Geneva “to defend Israel.”
According to www.unwatch.org, there were a total of 314 newly-registered NGOs with a total of 1,073 delegates at the DRC and some 370 delegates belonged to only two of the Jewish student unions that attended. If the delegates from all the myriad pro-Israel organizations and media are counted,[4] it is likely that more than half those who attended the conference in Geneva came with the sole purpose of building a pro-Israel presence and preventing any anti-Israel expression.
Response to the pro-Israel juggernaut
From the first day of the conference we saw the waves of disruption of Ahmedinejad’s speech - coordinated in both the General Assembly and the NGO auditorium. Some 200 pro-Israel activists then attempted to block the entrance to his press conference. Similar disruptions of side events frustrated attempts to discuss Islamophobia. And large well-publicized panels and carefully-orchestrated rallies that featured famous Zionist celebrities were sympathetically reported by a compliant Western corporate media. Even within the U.N. OHCHR, at least one press officer gave pro-Israel statements to the press.[5] All this made many non-Zionist participants feel that pro-Israel forces had hijacked the conference with military-like planning and precision.
By the second day, NGO advocates for reparations, land for the landless, the rights of Dalits, self-determination for the Palestinian people and a myriad of other anti-racist demands began to regroup. But suddenly, the U.N. OHCHR announced that the “Outcome Document of the DRC” would be approved by consensus before the close of the second day of the five-day conference. There would be no opportunity to repair the damage done by the U.N. OHCHR’s appeasement of the U.S. and Israel’s demands.
Nevertheless, a group of African and African Diaspora NGOs, progressive Islamic NGOs and those in solidarity with the Palestinians, migrants and many others continued to meet informally and strategize. They vowed to continue the struggle for recognition of their demands in other venues - including, perhaps, a Durban 2010. Anti-Zionist Jewish organizations[6] - whose presence at the conference was totally eclipsed by the pro-Israel forces - had met earlier and were heartened by the growing strength of the BDS movement to press for boycott, divestment and sanctions against Israel.
Setback and encouragement for anti-racist movements
At least 145 U.N. member states endorsed the Outcome Document by consensus. The very first paragraph reaffirmed the Durban Declaration and Program of Action as it was adopted at the World Conference against Racism in 2001. Moreover, delegate after delegate reiterated the praise that the South African Foreign Minister and spokesperson for the Africa Group gave to the DDPA:
“The DDPA is viewed as an inspiration that would define the 21st century as the century that restored to all their human dignity. It provides a solid and concrete basis for every country to develop its own measures to combat all forms of racism, and to strengthen the protection regime for victims of racism, racial discrimination, xenophobia and related intolerance.”
In the end, only 10 countries - all European or European-settler states - boycotted the DRC. At least 17 state delegates[7] expressed disapproval of the boycott in their official statements. In the language of diplomats, they denounced the boycott as revealing a lack of commitment to overcoming racism. More than 100 remaining delegates implicitly criticized the boycott orchestrated by Israel and the U.S.
Yet, pressure from the U.S. and Israel did succeed in preventing serious strengthening of the 2001 DDPA. For example, most delegations from Africa and the Africa Diaspora had been working for the DRC to adopt measures to provide effective tools for implementing a commitment to reparations[8] and establishing a “racial equality index” and timetables by which specific progress could be assessed. They also called for a Permanent Forum for People of African Descent, not simply a “panel of experts.”
But in the end, perhaps in order to prevent the majority of European countries from following the boycotters, the Outcome Document was silent on these issues. Moreover, Ban Ki-Moon and Navi Pillay explicitly repudiated Ahmedinejad’s speech, which had affirmed Palestine’s right to self-determination. Pillay admitted in her press conference on April 24 that she believed her denunciation of Iran was the price the EU demanded not to join the boycott. Except for Argentina, the 15 countries that explicitly denounced Iran were all European.[9]
Some 18 countries - none of them European - explicitly supported the Palestinian people’s right to self determination and criticized to varying degrees Israel’s denial of Palestinian rights.[10] Most of these, plus Azerbaijan and Pakistan, were among the 15 that called for stronger measures against Islamophobia. Finally, 16 countries - all except Japan from the Global South - expressed concern for protecting migrants against racist attacks and the final Outcome document included protections for migrants that most European countries had opposed.[11] In sum, about half the delegates took definite stands in their speeches on the most controversial issues of the conference. Their stands demonstrate the endurance of North-South oppressor-oppressed relations.
Israel is a bastion of “European civilization,” a settler colonial state, on the edge of the African continent. To survive as a Jewish state - by definition an apartheid state - Israel is perpetually consolidating and expanding its narrative that turns the reality of its racist colonial project on its head. The global hegemony of U.S.-led imperialism is cracking. U.S. and European complicity with Israel demonstrates how white supremacist states will increasingly join forces and circle the wagons when threatened.
The U.N.’s Durban Review Conference once again dramatized a lesson many learned long ago: Appeasing settler colonial, neo-colonial and imperialist powers only emboldens them. The Palestinian Authority and other Muslim States (including Iran) agreed to a “consensus” document that omitted any mention of Israel or Palestine. The African and Caribbean States signed onto a “consensus” document that omitted mention of reparations.
But the U.S. never compromised in its unconditional support for Israel and opposition to reparations. Hopefully those NGOs and others who argued, “Let’s just focus on our issues. The Palestine-Israeli conflict is just a distraction from the real struggle against racism,” learned from Israel’s campaign to destroy the conference. Just as the U.S., Europe and those bribed by them are united in their project to maintain their hegemony, African and African Diaspora people, Asian and indigenous people - all colonized and formerly colonized people - need unity.
Endnotes
[1] www.worldjewishcongress.org identifies the WJC as an international organization which represents organizations in 80 countries from Argentina to Zimbabwe. It has headquarters in New York City, a research institute in Jerusalem and affiliate offices in Brussels, Budapest, Buenos Aires, Geneva, Johannesburg, Moscow, Ottawa, Paris and Sydney. The WJC Office in Geneva hosted the “International Jewish Caucus at the DRC” even though it had called for states to boycott the conference at its January 2009 Plenary.
[2] Diana Ralph. “No Anti-Semitism at Durban II: Canada Should End its Boycott.” Outlook Magazine. Vol 47 #1, Jan/Feb 2007, pp. 17-18.
[3] From Africa, the vice chairs included representatives from Cameroon, South Africa and Senegal; from Asia: India, Indonesia, Iran, Pakistan, Turkey; from South America: Argentina, Brazil, Chile; and from Europe: Armenia, Croatia, Estonia, Russia, Belgium, Greece and Norway.
[4] Some of the Zionists organizations with delegates in Geneva were World Jewish Congress, American Jewish Congress, European Jewish Congress, Australia/Israel and Jewish Affairs Council, Canadian Jewish Congress, International League Against Racism and Anti-Semitism, The Simon Wiesenthal Center, B’nai Brith Canada, B’nai Brith International, International Association of Jewish Lawyers and Jurists, Human Rights First, Rabbis for Human Rights, Hadassah, Jewish Council for Public Affairs, Jewish Council for Racial Equity, Union of Jewish Women of South Africa, Institute for Advancement of Human Rights, American Jewish Committee.
[5] Pierre Hazan, a staff member of the Office of the High Commissioner for Human Rights, author of a pro-Israel book on the Six Day War and fellow of the Congressionally-funded U.S. Institute of Peace, mocked the DRC as “an immense ritual of collective atonement and social purification.” (quoted by www.news24.com April 17, 2009)
[6] There may have been others, but this author is aware of representatives of Neturei Karta, an Israeli-based group of orthodox Jews who believe Zionism is antithetical to Judaism (see www.nkusa.org), Independent Jewish Voices based in Canada (ijv@magma.ca) and the International Jewish Anti-Zionist Network-IJAN that identifies Israel as a settler colonial state. ( http://www.ijsn.net/home/)
[7] Brazil, China, Cuba, Ecuador, Organization of Islamic Councils, Indonesia, Iran, Lesotho, Namibia, Nigeria, Norway, Spain, Sri Lanka, Swaziland, Tanzania, Uganda and Uruguay. U.N. Secretary General Ban Ki-Moon, U.N. High Commission for Human Rights Navi Pillay and a number of others explicitly criticized the boycott.
[8] Twelve countries explicitly advocated for Reparations: Angola, Barbados, Cuba, Guyana, Haiti, Iran, Jamaica, Libya, Namibia, Suriname, Tanzania and Zimbabwe. Many others suggested that former colonial countries had the responsibility to ease poverty, forgive debt and assist in the economic development of the Global South.
[9] Argentina, Austria, Belgium, Denmark, France, Ireland, Lithuania, Luxembourg, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, and United Kingdom.
[10] Bahrain, Cuba, Egypt, Guyana, Indonesia, Iran, Kuwait, League of Arab States, Lebanon, Libya, Morocco, Nicaragua, Palestine (PLO), Qatar, Saudi Arabia, Sudan, Syria, United Arab Emirates
[11] Argentina, Burkina Faso, Cuba, Ecuador, Greece, Haiti, Honduras, Japan, Jordan, Mauritius, Mexico, Nigeria, Philippines, Senegal, Tanzania and Turkey.
Arlene Eisen is a writer based in San Francisco, who, since the 1960s, has been active in anti-imperialist struggles. Most recently she edited Second Lines, the newsletter of the Peoples’ Hurricane Relief Fund, traveled to South Africa where she joined a project to document the Black Consciousness Movement and participated in the United-Against-Racism-U.S.A. delegation to the U.N. Durban Review Conference in Geneva. She can be reached at arlene_eisen@sbcglobal.net .
by Arlene Eisen
On Saturday, April 18, two days before the United Nations Durban Review Conference (DRC) officially convened, anti-racist demonstrators from every continent and nearly every struggle in the world filled the streets of downtown Geneva. A sea of flags, banners and posters spoke for indigenous people from Bolivia, Mexico and Guatemala, the landless former slaves of Brazil, Tamils struggling for survival in Sri Lanka, a huge contingent of Dalits demanding an end to the caste system, Black delegates from the U.S. and other points in the Diaspora calling for reparations and freedom for political prisoners, Africans from the continent, many European migrants from the third world and their supporters and a variety of groups in solidarity with the Palestinian people. Some had handmade signs: “Zionism equals racism” and “Israel is an Apartheid State.”
At the rally, Doudou Diène, “Special Rapporteur on Contemporary forms of Racism, Racial Discrimination, Xenophobia and related intolerance” and a scholar from Senegal, spoke. He emphasized that racism is rooted in slavery and colonialism, including settler colonialism. He pointed out that the Israeli occupation of Palestine continues a tradition of settler colonialism and racism. The crowd applauded. Not a heckler was in sight.
Most of us at the demonstration had heard the news that the U.N. Office of the High Commissioner for Human Rights (OHCHR) - the organizer of the Conference - had attempted to appease the United States and Israel by deleting language supporting reparations for slavery and self determination for the Palestinian people. But the Obama administration’s threat to continue the boycott begun by Bush and Israel in 2001 did not dampen the spirits of the demonstrators that afternoon. After the demonstration, various NGO caucuses met, many for the first time, attempting to prepare position papers that would pressure the DRC to be more responsive to grassroots anti-racist movements. We were about to learn that we had been thoroughly outmaneuvered.
Most were unaware that for nearly two years, hundreds of militant pro-Israeli activists and the Israeli Foreign Ministry had been coordinating their plans to sabotage the DRC. The fiercely pro-Israel NGO-Monitor named at least 17 Zionist organizations that had been “monitoring and protesting” the Durban Review Conference since May 2007 - only a few months after the U.N. General Assembly itself had passed a resolution to convene the Durban Review Conference.
Role of the Israeli Foreign Ministry
On Sunday, Feb. 24, 2008, Israel’s Foreign Minister at the time, Tzipi Livni, announced Israel’s decision to boycott the DRC. On Feb. 25, Haviv Rettig Gur reported in the Jerusalem Post that some 30 Jewish organizations from around the world were scheduled to meet the following day with the Israeli Foreign Ministry “to coordinate efforts at preventing the Durban Review Conference from becoming an anti-Israel and anti-semitic hate fest.” According to the Jerusalem Post, at that meeting, with the guidance of the head of the NGO Unit of the Foreign Ministry, they formed a task force to coordinate efforts for Durban II.”
At the time, Bush was still president and all the 2008 presidential candidates were competing with each other to be recognized as the staunchest Israeli ally. Israel had no reason to doubt U.S. backing when it took the lead in the international campaign to derail the DRC. Through every U.S. presidency, Israel has been the largest recipient of U.S. foreign aid - currently $3.1 billion in military aid and nearly double that in non-military grants. U.S. aid has built and maintained Israel’s army - the fourth most powerful in the world - the same army that has keeps a defenseless Palestinian population under siege, occupied for the last 42 years and expelled and dispossessed for the last 60 years.
Most recently, Israel inflicted 22 days of relentless ‘round-the-clock bombing on the sliver of land of Gaza where 1.5 million Palestinians are caged. That bombing killed some 1,400 people, wounded 4,336 and terrorized the entire population. Israel perpetrated this crime against humanity with impunity, confident of the support of the Obama administration and most European allies.
Israel is aware that as a settler-colonial regime, its power rests on violence underwritten by the U.S. But U.S. support for Israel’s permanent war against the Palestinian people requires perpetuation of the myths: “Israel is a democratic, not apartheid state” and “Israel wants peace and is only defending itself against fanatic Arab terrorists.”
In Durban, the 2001 Worldwide Conference Against Racism (WCAR), sponsored by the U.N., cracked Israel’s hegemonic narrative of the “the Middle East conflict.” The final Durban Declaration and Program of Action (DDPA), signed Sept. 8, 2001, by all U.N. members except the U.S. and Israel, reflected the even-handed diplomacy of the world’s official state representatives.
“We are concerned about the plight of the Palestinian people under foreign occupation. We recognize the inalienable right of the Palestinian people to self-determination and to the establishment of an independent State and we recognize the right of security for all States in the region, including Israel, and call upon all states to support the peace process and bring it to an early conclusion.” (paragraph 63, http://www.unhchr.ch/pdf/Durban.pdf)
Other paragraphs expressed deep concern regarding anti-semitism and Islamophobia and affirmed that the “Holocaust must never be forgotten.”
Despite the declaration’s moderation, the U.S. and Israel denounced it as “anti-semitic” and walked out. The corporate media echoed the pro-Israeli narrative that demonized the Durban Conference as an “anti-semitic hate fest.” Then, before the U.N. or any of the 150 countries that signed the declaration could defend it, the Twin Towers were bombed.
The Western corporate media sealed the reputation of Durban in a tomb of anti-terror, anti-Muslim hysteria. How convenient for the Zionists to resurrect the misrepresented ghost of WCAR in order to launch their campaign to discredit and derail the 2009 Durban Review Conference.
The Zionists’ comprehensive strategy
Before any reader jumps to the conclusion that this author is resorting to the traditional anti-semitic canard by creating a fictional “Zionist conspiracy,” please note that Michael Jordan, frequent contributor to the pro-Israel online news service JTA, openly bragged about the power of their plot. The cornerstone of the plan was to campaign for an international boycott of the conference and then to accuse any critics of being anti-semitic.
On April 28, 2009, he wrote: “This time, however, the Jews actually did conspire, albeit openly, to sabotage the conference. [my emphasis]
“The World Jewish Congress[1] met with officials from 17 U.N. member states to push for a boycott. Hudson Institute scholar Anne Bayefsky banged the anti-Durban drum for months in the U.S. media, including the National Review, the New York Daily News and Forbes. And Israeli officials pressed their allies that intended to participate in the conference not to tolerate any anti-Israel resolutions.
“But for the most part, Durban II’s organizers and participants did not want to point the finger at the Jews for the anti-Durban effort for fear of being labeled anti-semites.”
The Jerusalem Post, Israel’s newspaper of record, reported frequently on the growing lobbying efforts to render the Durban Review Conference irrelevant by convincing the “world community” - read Europe and the U.S. - to boycott it. A Sept. 28, 2008, article specifically detailed a concerted three-pronged strategy: 1) To call for states to boycott the conference; 2) To urge governments and private donors not to fund either the conference or the NGOs; 3) To organize and galvanize a pro-Israeli presence at the conference. While the article didn’t publicize it, the strategy also involved pressure from inside the U.N. - especially the U.N. Office of the High Commissioner for Human Rights - through staff members who were relatively pro-Israel.
1. Lobbying for boycott
Virtually all pro-Israel forces were mobilized to press for boycott. During the presidential campaign, Obama shamelessly pandered to the American Israel Public Affairs Committee (AIPAC) - the influential lobbying organization. Yet he also had a huge political debt to Black voters and had encouraged his candidacy to be used as an anti-racist symbol.
Thus, many of his supporters were shocked Feb. 27, 2009, just five weeks into his presidency, when Obama declared the U.S. would not attend the U.N. Durban Review Conference unless its outcome document were changed to drop all references to Israel, reparations for slavery and the defamation of religion. However, Obama’s spokespeople added that they would be prepared to re-engage if the negotiations brought about a “shortened” text of the document that met their criteria.
AIPAC immediately issued a press release that applauded Obama’s boycott of the U.N.’s “celebration of racism and vile anti-semitic activity.”
Encouraged by the Obama administration’s open endorsement of Israel’s year-old boycott, Zionist forces intensified their campaign to widen the boycott to destroy any possibility of a successful conference. For example, on March 9, 2009, The Jerusalem Post reported that Dr. Moshe Kantor, president of the European Jewish Congress - an umbrella organization for many Zionist organizations - called on the European Union to boycott the conference.
While only a handful of European countries followed the lead of U.S. and Israel, the threat of a wider boycott accomplished another objective. On March 17, conference organizers announced their attempt to appease Israel, the United States and their fence-sitting allies by revising the Draft Outcome Document. They removed all references to Israel as a perpetrator of racial discrimination, cut out any mention of the Palestinians’ right to self determination and also excised all language related to reparations, an acknowledgement that the transatlantic slave trade was a crime against humanity and a proposal to strengthen the Working Group of Experts on People of African Descent. But fearing resistance from the Non-Aligned Countries, African countries and other Islamic countries, conference organizers balked at Obama’s final demand to totally renounce the hard-won Durban Declaration and Programme of Action (DDPA) of 2001.
2. Choking off funding for the conference
In addition to pressure for boycott and weakening the conference’s anti-racist program and documents, the Zionist strategy aimed to withhold funding from the U.N. conference itself and potentially hostile NGOs.
The U.N.’s budget only met part of the conference’s needs. The rest had to be raised from voluntary contributions from states and civil society, including major philanthropists like Ford and Soros Foundations. It is possible that Zionist pressure on the U.S. and other governments to withhold funds from the U.N. backfired. With no funds from the U.S., funds donated by Iran, Libya and others became more significant.
However, the campaign to starve the NGO Forum and any individual NGO that didn’t tow the Israeli line had more success. In October 2008, the NGO Monitor sent an open letter to U.N. Secretary General Ban Ki-Moon calling on him to “avoid providing official sponsorship or funding for another NGO Forum that is likely to be a venue used to promote hatred and anti-semitism.” Various other Zionist organizations - including the Simon Wiesenthal Center, the American Jewish Committee and Human Rights First, sent similar letters.
In 2001, the NGO Forum in Durban included 8,000 people and lasted more than a week. U.N. and other financial support enabled many grassroots people to participate and radicalize the process. The forum’s political influence was significantly responsible for the U.N. DDPA’s endorsement of reparations, self-determination for the Palestinian people and generally strong stand against racism. Israel’s strategy for 2009 was to torpedo any NGO Forum with the potential of exerting an anti-Zionist influence.
In preparatory meetings, each time NGOs called for an NGO Forum in Geneva in 2009, Jose Dougan-Beaca, the coordinator of the Anti-Discrimination Unit of the OHCHR, emphasized that an NGO Forum was impossible because of “lack of money and facilities.” Dougan-Beaca was responsible for conveying information in both directions between the NGOs and the OHCHR. But a delegate from Independent Jewish Voices of Canada who attended those meetings reported that he became a partisan advocate for the pro-Israel NGOs.[2]
The pro-Israel Magenta website published detailed reports of those preparatory meetings. Those reports confirm Ralph’s impression. In addition to citing financial constraints, Dougan-Beaca attempted to lower the NGOs sights for the conference by emphasizing the DRC was mandated to be a review conference, not intended to expand on the DDPA. Therefore it would be appropriate for NGO attendance to be much reduced and NGOs should not attempt to strengthen the DDPA.
In the end, rather than a fully funded official NGO Forum, barely 300 NGO representatives straggled into private venues away from the U.N. complex on the weekend before the DRC convened. And fewer than 1,100 authorized NGO delegates were able to come to Geneva at all. During the conference itself, pre-authorized “side events” that featured speakers on approved topics were supposed to meet the NGO need for a political platform. These side events reflected both Israel’s and the U.S. agenda.
Two weeks before the conference began, for example, the Office of the High Commissioner for Human Rights informed a Palestinian Refugee Rights Organization (Badil) that Palestinian-related side events would not be permitted. There was no such restriction on pro-Israel events.
It is important to understand that the campaign continues to financially strangle anti-racist NGOs that may criticize Israel. On April 26, the day after the conference adjourned, in a piece titled, “Geneva Walkout Isn’t Enough” (www.ynetnews.com), Diane Meskin praised the NGO Monitor’s campaign to cut off funding for all anti-Israel NGOs. She wrote, “The EU has much to do if it truly wants to fight anti-semitism, racism and the perpetuation of anti-Israel propaganda on the world stage. It must put its money where its mouth is and stop funding NGOs that use these funds to promote the delegitimization of Israel …” She explicitly named funding organizations that must cut off named grantees - many of whom have supported a diversity of anti-racist causes.
3. Mobilizing a strong pro-Zionist (and disruptive) presence at DRC
Pro-Israel forces at the conference had their marching orders: Protect Israel from criticism of its most recent genocidal blitzkrieg and invasion of Gaza and gag any discussion of the occupation of Palestine itself. Uniformly, pro-Israeli groups worked to keep the focus on Iran, the holocaust, anti-semitism and Muslim complicity in Darfur. They talked about the persecution of the Roma and about Rwanda, but attempted to silence all mention of land seizures, the apartheid wall, separate roads, checkpoints, home demolitions, economic strangulation, mass incarceration, theft of water and all the other racist assaults on the Palestinian people.
Throughout 2008 and during the months of 2009 leading right up to the conference, meetings of the Preparatory Committee in Geneva, Regional Meetings in Latin America, Africa, Europe, Asia and among the Islamic States and Intersessional Meetings all invited input from NGOs. Those NGOs with closer ties to the grassroots were invariably poorly funded and could not afford travel and lodging in Geneva. Thus, NGOs more closely linked to governments - especially pro-Israel NGOs - had a disproportionate presence at the preparatory meetings.
For example, the pro-Israel NGO based in the Netherlands - I-CARE, funded by the Magenta Foundation - attended the preparatory meetings and posted detailed accounts of those meetings on their website. Many of those accounts describe some of the numerous attempts by pro-Israel organizations to sidetrack conference planning. The World Jewish Congress created the highly selective World Jewish Diplomatic Corps - young professionals, an “elite force on the ground to attend the Preparatory Meetings to argue for human rights.”
Reports by I-CARE’s representatives at those meetings reflect Israel’s particular concern with both the influence and composition of the Bureau of the Preparatory Committee that had responsibility to “prepare the agenda and draft decisions for consideration by PrepCom and address all issues pertinent to its work …” Ms. Najat Al-Hajjaji, the permanent ambassador from Libya to the U.N. in Geneva and past chair of the Human Rights Council, chaired the bureau. Bureau “vice chairpersons” from the Global South outnumbered delegates from Europe 11 to 7,[3] and the Cuban ambassador to the U.N. in Geneva, Resfel Pino Alvarez, who is also the respected chair of the Non-Aligned Movement, was named vice-chairperson-rapporteur.
Two websites central to efforts to implement Israel’s anti-DRC strategy have been the www.unwatch.org, affiliated with the American Jewish Committee, and the www.ngo-monitor.org, based in Jerusalem. The latter was founded with the objective “to end the practice used by certain self-declared ‘humanitarian NGOs’ of exploiting the label ‘universal human rights values’ to promote politically and ideologically motivated anti-Israel agendas.” They functioned as promoter, clearinghouse and publicist. Some 16 months before the conference, the Dec. 22, 2008, Jerusalem Post reported that the World Union of Jewish Students formed a special task force of 60 students who would travel to Geneva “to defend Israel.”
According to www.unwatch.org, there were a total of 314 newly-registered NGOs with a total of 1,073 delegates at the DRC and some 370 delegates belonged to only two of the Jewish student unions that attended. If the delegates from all the myriad pro-Israel organizations and media are counted,[4] it is likely that more than half those who attended the conference in Geneva came with the sole purpose of building a pro-Israel presence and preventing any anti-Israel expression.
Response to the pro-Israel juggernaut
From the first day of the conference we saw the waves of disruption of Ahmedinejad’s speech - coordinated in both the General Assembly and the NGO auditorium. Some 200 pro-Israel activists then attempted to block the entrance to his press conference. Similar disruptions of side events frustrated attempts to discuss Islamophobia. And large well-publicized panels and carefully-orchestrated rallies that featured famous Zionist celebrities were sympathetically reported by a compliant Western corporate media. Even within the U.N. OHCHR, at least one press officer gave pro-Israel statements to the press.[5] All this made many non-Zionist participants feel that pro-Israel forces had hijacked the conference with military-like planning and precision.
By the second day, NGO advocates for reparations, land for the landless, the rights of Dalits, self-determination for the Palestinian people and a myriad of other anti-racist demands began to regroup. But suddenly, the U.N. OHCHR announced that the “Outcome Document of the DRC” would be approved by consensus before the close of the second day of the five-day conference. There would be no opportunity to repair the damage done by the U.N. OHCHR’s appeasement of the U.S. and Israel’s demands.
Nevertheless, a group of African and African Diaspora NGOs, progressive Islamic NGOs and those in solidarity with the Palestinians, migrants and many others continued to meet informally and strategize. They vowed to continue the struggle for recognition of their demands in other venues - including, perhaps, a Durban 2010. Anti-Zionist Jewish organizations[6] - whose presence at the conference was totally eclipsed by the pro-Israel forces - had met earlier and were heartened by the growing strength of the BDS movement to press for boycott, divestment and sanctions against Israel.
Setback and encouragement for anti-racist movements
At least 145 U.N. member states endorsed the Outcome Document by consensus. The very first paragraph reaffirmed the Durban Declaration and Program of Action as it was adopted at the World Conference against Racism in 2001. Moreover, delegate after delegate reiterated the praise that the South African Foreign Minister and spokesperson for the Africa Group gave to the DDPA:
“The DDPA is viewed as an inspiration that would define the 21st century as the century that restored to all their human dignity. It provides a solid and concrete basis for every country to develop its own measures to combat all forms of racism, and to strengthen the protection regime for victims of racism, racial discrimination, xenophobia and related intolerance.”
In the end, only 10 countries - all European or European-settler states - boycotted the DRC. At least 17 state delegates[7] expressed disapproval of the boycott in their official statements. In the language of diplomats, they denounced the boycott as revealing a lack of commitment to overcoming racism. More than 100 remaining delegates implicitly criticized the boycott orchestrated by Israel and the U.S.
Yet, pressure from the U.S. and Israel did succeed in preventing serious strengthening of the 2001 DDPA. For example, most delegations from Africa and the Africa Diaspora had been working for the DRC to adopt measures to provide effective tools for implementing a commitment to reparations[8] and establishing a “racial equality index” and timetables by which specific progress could be assessed. They also called for a Permanent Forum for People of African Descent, not simply a “panel of experts.”
But in the end, perhaps in order to prevent the majority of European countries from following the boycotters, the Outcome Document was silent on these issues. Moreover, Ban Ki-Moon and Navi Pillay explicitly repudiated Ahmedinejad’s speech, which had affirmed Palestine’s right to self-determination. Pillay admitted in her press conference on April 24 that she believed her denunciation of Iran was the price the EU demanded not to join the boycott. Except for Argentina, the 15 countries that explicitly denounced Iran were all European.[9]
Some 18 countries - none of them European - explicitly supported the Palestinian people’s right to self determination and criticized to varying degrees Israel’s denial of Palestinian rights.[10] Most of these, plus Azerbaijan and Pakistan, were among the 15 that called for stronger measures against Islamophobia. Finally, 16 countries - all except Japan from the Global South - expressed concern for protecting migrants against racist attacks and the final Outcome document included protections for migrants that most European countries had opposed.[11] In sum, about half the delegates took definite stands in their speeches on the most controversial issues of the conference. Their stands demonstrate the endurance of North-South oppressor-oppressed relations.
Israel is a bastion of “European civilization,” a settler colonial state, on the edge of the African continent. To survive as a Jewish state - by definition an apartheid state - Israel is perpetually consolidating and expanding its narrative that turns the reality of its racist colonial project on its head. The global hegemony of U.S.-led imperialism is cracking. U.S. and European complicity with Israel demonstrates how white supremacist states will increasingly join forces and circle the wagons when threatened.
The U.N.’s Durban Review Conference once again dramatized a lesson many learned long ago: Appeasing settler colonial, neo-colonial and imperialist powers only emboldens them. The Palestinian Authority and other Muslim States (including Iran) agreed to a “consensus” document that omitted any mention of Israel or Palestine. The African and Caribbean States signed onto a “consensus” document that omitted mention of reparations.
But the U.S. never compromised in its unconditional support for Israel and opposition to reparations. Hopefully those NGOs and others who argued, “Let’s just focus on our issues. The Palestine-Israeli conflict is just a distraction from the real struggle against racism,” learned from Israel’s campaign to destroy the conference. Just as the U.S., Europe and those bribed by them are united in their project to maintain their hegemony, African and African Diaspora people, Asian and indigenous people - all colonized and formerly colonized people - need unity.
Endnotes
[1] www.worldjewishcongress.org identifies the WJC as an international organization which represents organizations in 80 countries from Argentina to Zimbabwe. It has headquarters in New York City, a research institute in Jerusalem and affiliate offices in Brussels, Budapest, Buenos Aires, Geneva, Johannesburg, Moscow, Ottawa, Paris and Sydney. The WJC Office in Geneva hosted the “International Jewish Caucus at the DRC” even though it had called for states to boycott the conference at its January 2009 Plenary.
[2] Diana Ralph. “No Anti-Semitism at Durban II: Canada Should End its Boycott.” Outlook Magazine. Vol 47 #1, Jan/Feb 2007, pp. 17-18.
[3] From Africa, the vice chairs included representatives from Cameroon, South Africa and Senegal; from Asia: India, Indonesia, Iran, Pakistan, Turkey; from South America: Argentina, Brazil, Chile; and from Europe: Armenia, Croatia, Estonia, Russia, Belgium, Greece and Norway.
[4] Some of the Zionists organizations with delegates in Geneva were World Jewish Congress, American Jewish Congress, European Jewish Congress, Australia/Israel and Jewish Affairs Council, Canadian Jewish Congress, International League Against Racism and Anti-Semitism, The Simon Wiesenthal Center, B’nai Brith Canada, B’nai Brith International, International Association of Jewish Lawyers and Jurists, Human Rights First, Rabbis for Human Rights, Hadassah, Jewish Council for Public Affairs, Jewish Council for Racial Equity, Union of Jewish Women of South Africa, Institute for Advancement of Human Rights, American Jewish Committee.
[5] Pierre Hazan, a staff member of the Office of the High Commissioner for Human Rights, author of a pro-Israel book on the Six Day War and fellow of the Congressionally-funded U.S. Institute of Peace, mocked the DRC as “an immense ritual of collective atonement and social purification.” (quoted by www.news24.com April 17, 2009)
[6] There may have been others, but this author is aware of representatives of Neturei Karta, an Israeli-based group of orthodox Jews who believe Zionism is antithetical to Judaism (see www.nkusa.org), Independent Jewish Voices based in Canada (ijv@magma.ca) and the International Jewish Anti-Zionist Network-IJAN that identifies Israel as a settler colonial state. ( http://www.ijsn.net/home/)
[7] Brazil, China, Cuba, Ecuador, Organization of Islamic Councils, Indonesia, Iran, Lesotho, Namibia, Nigeria, Norway, Spain, Sri Lanka, Swaziland, Tanzania, Uganda and Uruguay. U.N. Secretary General Ban Ki-Moon, U.N. High Commission for Human Rights Navi Pillay and a number of others explicitly criticized the boycott.
[8] Twelve countries explicitly advocated for Reparations: Angola, Barbados, Cuba, Guyana, Haiti, Iran, Jamaica, Libya, Namibia, Suriname, Tanzania and Zimbabwe. Many others suggested that former colonial countries had the responsibility to ease poverty, forgive debt and assist in the economic development of the Global South.
[9] Argentina, Austria, Belgium, Denmark, France, Ireland, Lithuania, Luxembourg, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, and United Kingdom.
[10] Bahrain, Cuba, Egypt, Guyana, Indonesia, Iran, Kuwait, League of Arab States, Lebanon, Libya, Morocco, Nicaragua, Palestine (PLO), Qatar, Saudi Arabia, Sudan, Syria, United Arab Emirates
[11] Argentina, Burkina Faso, Cuba, Ecuador, Greece, Haiti, Honduras, Japan, Jordan, Mauritius, Mexico, Nigeria, Philippines, Senegal, Tanzania and Turkey.
Arlene Eisen is a writer based in San Francisco, who, since the 1960s, has been active in anti-imperialist struggles. Most recently she edited Second Lines, the newsletter of the Peoples’ Hurricane Relief Fund, traveled to South Africa where she joined a project to document the Black Consciousness Movement and participated in the United-Against-Racism-U.S.A. delegation to the U.N. Durban Review Conference in Geneva. She can be reached at arlene_eisen@sbcglobal.net .
Thursday, May 14, 2009
Obama administration to expand housing plan
By ALAN ZIBEL, AP Real Estate Writer
WASHINGTON – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don't qualify for other assistance.
The new initiatives are expected to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner's credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers' loans.
"We're seeing the first signs of homeowners being able to take advantage of lower monthly payments that the program makes possible," said Treasury Secretary Timothy Geithner.
While the number of success stories is growing, it pales compared to the rate of new foreclosures, and many housing counselors across the country are complaining that the Making Home Affordable is taking off slowly.
"Our experience at the ground level has been, so far, frustrating," said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He's going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
"It's a long process, but I still have a little hope to stay in my home" said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. "I'm pretty happy."
However Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn't expect to see large volumes of loan modifications before July or August. "The basic problem is that the program is very complicated and involved to set up," Cecala said.
The government program, unlike others before it, requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
So far, 14 companies that service about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
Since the program involves taxpayer dollars, "you want the rigor," said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. "This is a very well-thought out plan," she said. "People have to be a little bit patient."
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclosure on her home overlooking Seattle's Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she's been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she's only been able to have one phone conversation with a company representative.
"It's like this huge, concrete thick wall that you cannot get through," she said.
Last week, Aurora joined the Obama administration's loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers' home loans.
"We offer a wide range of foreclosure prevention options to our customers," Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman's case. "In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful."
The Obama administration acknowledges that not every borrower who is behind on their loans will qualify for a modification. Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody's Economy.com expect the number will be less than half that.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
With the lender's permission, the homeowner can sell the property for less than the value of the loan, this is known as a short sale. Or, the homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure.
This week, RealtyTrac reported that the number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates.
More than 342,000 households received at least one foreclosure-related notice in April. That means one in every 374 U.S. housing units received a foreclosure filing last month.
WASHINGTON – The Obama administration expanded its $50 billion mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a foreclosure if they don't qualify for other assistance.
The new initiatives are expected to streamline the process of selling a home that is worth less than the mortgage, or transfer ownership of a home to the lender. Both options will still ding the homeowner's credit score, but less than a foreclosure.
Since the program, called Making Home Affordable, was launched in March, Mortgage companies have made more than 55,000 offers to modify borrowers' loans.
"We're seeing the first signs of homeowners being able to take advantage of lower monthly payments that the program makes possible," said Treasury Secretary Timothy Geithner.
While the number of success stories is growing, it pales compared to the rate of new foreclosures, and many housing counselors across the country are complaining that the Making Home Affordable is taking off slowly.
"Our experience at the ground level has been, so far, frustrating," said Michael van Zalingen, director of homeownership at Neighborhood Housing Services of Chicago, a counseling group. Entry-level employees at mortgage companies, he said, are either steering borrowers away from the plan or are entirely unaware of it.
There are, of course, lucky homeowners like Daniel Iturriaga, 45, a warehouse worker from Compton, Calif. Working with a counselor from Springboard, a nonprofit counseling group, Iturriaga was able to get JPMorgan Chase & Co. and mortgage finance company Fannie Mae to modify his home loan.
He's going from a monthly payment of about $2,300 to about $1,275. After a three-month trial period, it should be final in mid-June.
"It's a long process, but I still have a little hope to stay in my home" said Iturriaga, who bought his home for about $400,000 in 2005 and has seen houses on the same block sell for about half as much. "I'm pretty happy."
However Guy Cecala, publisher of trade publication Inside Mortgage Finance, doesn't expect to see large volumes of loan modifications before July or August. "The basic problem is that the program is very complicated and involved to set up," Cecala said.
The government program, unlike others before it, requires numerous changes to how the mortgage industry does business. To get a loan modification, borrowers must provide proof of their income and send in a letter stating why they need help.
So far, 14 companies that service about three quarters of the mortgage market have signed up and will be paid for each loan they modify.
Since the program involves taxpayer dollars, "you want the rigor," said Faith Schwartz, executive director of Hope Now, a mortgage industry group formed in response to the foreclosure crisis. "This is a very well-thought out plan," she said. "People have to be a little bit patient."
But Rose Inman is out of patience and out of time. Aurora Loan Services is set to foreclosure on her home overlooking Seattle's Puget Sound on Friday.
Inman, 58, has lost two jobs, one with a manufacturing company, the other with the City of Seattle. Since then, she's been working as a human resources consultant, but making much less money.
Despite numerous calls, e-mails and letters, she says she's only been able to have one phone conversation with a company representative.
"It's like this huge, concrete thick wall that you cannot get through," she said.
Last week, Aurora joined the Obama administration's loan modification program. The Colorado-based company is in line for nearly $800 million in government incentives to modify borrowers' home loans.
"We offer a wide range of foreclosure prevention options to our customers," Deborah Munies, an Aurora spokesman, said in an e-mail, while declining to comment on Inman's case. "In cases where the customer has the ability and willingness to make a reasonable monthly payment, we make every effort to avoid foreclosure. Foreclosure is pursued only when a variety of other workout options have not been successful."
The Obama administration acknowledges that not every borrower who is behind on their loans will qualify for a modification. Officials estimate up to 4 million borrowers will get their loans modified, but housing experts like Mark Zandi of Moody's Economy.com expect the number will be less than half that.
The initiatives announced Thursday are aimed at ineligible homeowners. For borrowers who are unemployed or owe significantly more than their homes are worth, there are generally two options to avoid foreclosure.
With the lender's permission, the homeowner can sell the property for less than the value of the loan, this is known as a short sale. Or, the homeowner can sign the property title over to the lender in what is known as a deed in lieu of foreclosure.
This week, RealtyTrac reported that the number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates.
More than 342,000 households received at least one foreclosure-related notice in April. That means one in every 374 U.S. housing units received a foreclosure filing last month.
Jobless claims jump to 637K; producer prices rise (more distortion, spin, and outright lies)
By CHRISTOPHER S. RUGABER, AP Economics Writer
WASHINGTON – Fresh reminders that the recession likely has passed its peak, but hasn't ended, emerged Thursday in reports that first-time claims for jobless aid and wholesale prices rose more than expected.
Economists said the jumps, while bitter reminders of the country's weak economy, were not cause for great concern. Jobless claims should ease after layoffs in the automobile industry are complete, while inflation remains under control.
The Labor Department said the number of new jobless claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That's above analysts' expectations of 610,000.
Economists focused on the fact that initial claims remain below the peak reached in late March, a sign that the wave of mass layoffs announced earlier this year has crested.
"This is yet more evidence that we are now past the worst," Paul Dales, U.S. economist at Capital Economics, wrote in a research note.
Separately, the department said wholesale prices climbed 0.3 percent last month, larger than the 0.1 percent gain economists had expected. The biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products.
Even with the larger-than-expected gain in the Producer Price Index last month, wholesale prices over the past year have fallen 3.7 percent, the biggest 12-month decline since 1950. While falling prices can raise fears about deflation, economists believe the efforts by the Federal Reserve to combat the recession will prevent a dangerous bout of falling prices.
Wall Street brushed off the reports and stocks rose modestly. The Dow Jones industrial average added about 40 points in midday trading, while broader indices also increased.
Most of the increase in jobless claims was due to auto layoffs, a department analyst said. Economists estimate Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing. Chrysler on Thursday told a bankruptcy court it plans to eliminate 789 of its dealers — or about 25 percent of them — nationwide as part of its restructuring process. And General Motors Corp. has said it will temporarily shut 13 factories beginning later this month through July, potentially affecting 25,000 workers.
Still, many economists expect the downward trend in jobless claims to return once the impact of the auto industry's job cuts has passed.
In another sign of labor market weakness, the tally of people continuing to receive benefits increased to 6.56 million from 6.36 million, setting a record for the 15th straight week and worse than analysts expected. The continuing claims data lags initial claims by one week.
Abiel Reinhart, an economist at JPMorgan Chase & Co., said the increase implies that the unemployment rate, which reached 8.9 percent in April, is continuing to rise. Many economists expect it to reach 10 percent by year's end.
The large number of people on the jobless benefit rolls is a sign that unemployed workers are having difficulty finding new positions.
Economists are closely watching the health of the labor market. If layoffs continue at a rapid pace, consumers could cut back further on spending and prolong the recession.
New applications for jobless benefits have declined since reaching 674,000 in late March, the highest level in the current recession. But claims remain elevated. Weekly initial claims were 375,000 a year ago.
The four-week average of claims, which smooths out volatility, rose to 630,500, after falling for four straight weeks. Still, the average remains nearly 30,000 below its high in early April, a drop that economists at Goldman Sachs and JPMorgan Chase & Co. have said indicates that the economic downturn is bottoming out.
There have been other signs the pace of job cuts is moderating, though still brutal. Employers eliminated 539,000 jobs in April, the fewest in six months and below the average of 700,000 in the first quarter of this year.
Still, more than 5.7 million jobs have been lost since the recession began in December 2007.
More job cuts have been announced recently. Steel giant ArcelorMittal said Wednesday it will eliminate nearly 1,000 positions at an Indiana steel plant in July, while DuPont said last week it will cut 2,000 jobs.
Among the states, Illinois reported the largest increase in initial claims, which it attributed to layoffs in the construction and manufacturing industries. The next biggest increases were in Kansas, Puerto Rico, Indiana and Ohio.
New York reported the largest drop in claims of 13,386, which it said was due to fewer layoffs in the transportation and service industries. The next largest drops were in Michigan, North Carolina, Massachusetts and Connecticut. The state data is for the week ending May 2, one week behind the initial claims data.
WASHINGTON – Fresh reminders that the recession likely has passed its peak, but hasn't ended, emerged Thursday in reports that first-time claims for jobless aid and wholesale prices rose more than expected.
Economists said the jumps, while bitter reminders of the country's weak economy, were not cause for great concern. Jobless claims should ease after layoffs in the automobile industry are complete, while inflation remains under control.
The Labor Department said the number of new jobless claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That's above analysts' expectations of 610,000.
Economists focused on the fact that initial claims remain below the peak reached in late March, a sign that the wave of mass layoffs announced earlier this year has crested.
"This is yet more evidence that we are now past the worst," Paul Dales, U.S. economist at Capital Economics, wrote in a research note.
Separately, the department said wholesale prices climbed 0.3 percent last month, larger than the 0.1 percent gain economists had expected. The biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products.
Even with the larger-than-expected gain in the Producer Price Index last month, wholesale prices over the past year have fallen 3.7 percent, the biggest 12-month decline since 1950. While falling prices can raise fears about deflation, economists believe the efforts by the Federal Reserve to combat the recession will prevent a dangerous bout of falling prices.
Wall Street brushed off the reports and stocks rose modestly. The Dow Jones industrial average added about 40 points in midday trading, while broader indices also increased.
Most of the increase in jobless claims was due to auto layoffs, a department analyst said. Economists estimate Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing. Chrysler on Thursday told a bankruptcy court it plans to eliminate 789 of its dealers — or about 25 percent of them — nationwide as part of its restructuring process. And General Motors Corp. has said it will temporarily shut 13 factories beginning later this month through July, potentially affecting 25,000 workers.
Still, many economists expect the downward trend in jobless claims to return once the impact of the auto industry's job cuts has passed.
In another sign of labor market weakness, the tally of people continuing to receive benefits increased to 6.56 million from 6.36 million, setting a record for the 15th straight week and worse than analysts expected. The continuing claims data lags initial claims by one week.
Abiel Reinhart, an economist at JPMorgan Chase & Co., said the increase implies that the unemployment rate, which reached 8.9 percent in April, is continuing to rise. Many economists expect it to reach 10 percent by year's end.
The large number of people on the jobless benefit rolls is a sign that unemployed workers are having difficulty finding new positions.
Economists are closely watching the health of the labor market. If layoffs continue at a rapid pace, consumers could cut back further on spending and prolong the recession.
New applications for jobless benefits have declined since reaching 674,000 in late March, the highest level in the current recession. But claims remain elevated. Weekly initial claims were 375,000 a year ago.
The four-week average of claims, which smooths out volatility, rose to 630,500, after falling for four straight weeks. Still, the average remains nearly 30,000 below its high in early April, a drop that economists at Goldman Sachs and JPMorgan Chase & Co. have said indicates that the economic downturn is bottoming out.
There have been other signs the pace of job cuts is moderating, though still brutal. Employers eliminated 539,000 jobs in April, the fewest in six months and below the average of 700,000 in the first quarter of this year.
Still, more than 5.7 million jobs have been lost since the recession began in December 2007.
More job cuts have been announced recently. Steel giant ArcelorMittal said Wednesday it will eliminate nearly 1,000 positions at an Indiana steel plant in July, while DuPont said last week it will cut 2,000 jobs.
Among the states, Illinois reported the largest increase in initial claims, which it attributed to layoffs in the construction and manufacturing industries. The next biggest increases were in Kansas, Puerto Rico, Indiana and Ohio.
New York reported the largest drop in claims of 13,386, which it said was due to fewer layoffs in the transportation and service industries. The next largest drops were in Michigan, North Carolina, Massachusetts and Connecticut. The state data is for the week ending May 2, one week behind the initial claims data.
Wednesday, May 13, 2009
US plans derivatives regulations
The US Treasury wants more regulation of derivatives - the complex financial instruments that brought down some of Wall Street's biggest names.
Proposals to be set out by Treasury Secretary Timothy Geithner will call for an electronic system to monitor buying and selling in the market.
Firms trading in derivatives will need enough capital in case they default and will face tough reporting requirements.
AIG and Lehman Brothers were among the firms ruined by dealing in derivatives.
“ The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end ”
Timothy Geithner Treasury Secretary
Perhaps the most notorious form of derivative is the credit-default swap.
Insurance giant AIG sold these to investors as a form of of insurance to protect against defaults on mortgage-backed securities.
But the firm had to accept a hefty federal bailout after it was unable to support the contracts.
Under the Treasury's plan, the likes of AIG would have to prove they had enough reserve capital to support their sale of the derivatives.
These measures would reduce risk to the financial system, Mr Geithner said.
Hedging and speculation
Existing US law largely excludes regulation of such instruments - referred to as "over-the-counter" because they are privately traded.
"The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end," Mr Geithner told Congress.
In a draft letter, to congressional leaders, the Treasury said that "all (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation".
"Key elements of that robust regulatory regime must include conservative capital requirements, business conduct standards, reporting requirements and conservative requirements relating to initial margins on counterparty credit exposures," the department added.
Derivatives are basically financial contracts which are a way of allowing traders to hedge their bets.
They can protect companies and banks against unexpected developments, for example sudden falls or rises in the value of currencies or commodities.
Derivatives are also used in speculation, whereby investors can increase profit if the value of the underlying moves in the way they expect.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8049123.stm
Published: 2009/05/13 21:35:16 GMT
Proposals to be set out by Treasury Secretary Timothy Geithner will call for an electronic system to monitor buying and selling in the market.
Firms trading in derivatives will need enough capital in case they default and will face tough reporting requirements.
AIG and Lehman Brothers were among the firms ruined by dealing in derivatives.
“ The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end ”
Timothy Geithner Treasury Secretary
Perhaps the most notorious form of derivative is the credit-default swap.
Insurance giant AIG sold these to investors as a form of of insurance to protect against defaults on mortgage-backed securities.
But the firm had to accept a hefty federal bailout after it was unable to support the contracts.
Under the Treasury's plan, the likes of AIG would have to prove they had enough reserve capital to support their sale of the derivatives.
These measures would reduce risk to the financial system, Mr Geithner said.
Hedging and speculation
Existing US law largely excludes regulation of such instruments - referred to as "over-the-counter" because they are privately traded.
"The days when a major insurance company could bet the house on credit default swaps with no one watching and no credible backing to protect the company or taxpayers from losses must end," Mr Geithner told Congress.
In a draft letter, to congressional leaders, the Treasury said that "all (over-the-counter) derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation".
"Key elements of that robust regulatory regime must include conservative capital requirements, business conduct standards, reporting requirements and conservative requirements relating to initial margins on counterparty credit exposures," the department added.
Derivatives are basically financial contracts which are a way of allowing traders to hedge their bets.
They can protect companies and banks against unexpected developments, for example sudden falls or rises in the value of currencies or commodities.
Derivatives are also used in speculation, whereby investors can increase profit if the value of the underlying moves in the way they expect.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/8049123.stm
Published: 2009/05/13 21:35:16 GMT
Homeownership Losses Are Greatest Among Minorities, Report Finds
May 13, 2009
By JOHN LELAND
After a decade of growth, the gains made in homeownership by African-Americans and native-born Latinos have been eroding faster in the economic downturn than those of whites, according to a report issued Tuesday by the Pew Hispanic Center.
The report also suggests that the gains for minority groups, achieved from 1995 to 2004, were disproportionately tied to relaxed lending standards and subprime loans.
An exception to the reversal of homeownership gains, the research shows, can be found among foreign-born Latinos, whose rate of ownership, while low, has stalled during the downturn but has not fallen.
After peaking at 69 percent in 2004, the rate of homeownership for all American households declined to 67.8 percent in 2008. For African-American households, it fell to 47.5 percent in 2008 from 49.4 percent in 2004. Latinos, native and foreign-born together, had a longer period of growth, with homeownership rising until 2006, to 49.8 percent, before falling to 48.9 percent last year. Homeownership for native-born Latinos fell to 53.6 percent from a high of 56.2 percent in 2005.
The decline among whites was more modest, to 74.9 percent last year from 76.1 percent in 2004.
So was the decline among immigrants, to 52.9 percent last year from 53.3 percent in 2006. Latino immigrants, who have the lowest rate of homeownership among the groups studied, did not lose any ground, remaining at the high of 44.7 percent they reached in 2007.
The numbers are a reflection that immigrants today have typically been living in the country longer than immigrants of the past, said Rakesh Kochhar, associate director of research for the Pew Hispanic Center, a project of the nonprofit Pew Research Center. The longer immigrants are here, the more secure they tend to become. Among foreign-born Hispanics, “the force of assimilation into homeownership is strong,” even during a downturn, Mr. Kochhar said.
The decline in homeownership among other groups, he said, reflects both high foreclosure rates and lower rates of home buying.
Even with the decline, the rate for all groups together remains higher than before the boom, with nearly 68 percent of American households owning homes last year, up from 64 percent in 1994.
The gaps between white and minority households remain significant, however, with homeownership rates for Asians (59.1 percent), blacks (47.5 percent) and Latinos (48.9 percent) well below the 74.9 percent among whites.
Like previous studies, the report found that blacks and Hispanics were more than twice as likely to have subprime mortgages as white homeowners, even among borrowers with comparable incomes. In 2006, the last year of heavy subprime lending, 17.5 percent of white home buyers took subprime loans, compared with 44.9 percent for Hispanics and 52.8 percent for blacks.
These loans, which typically require little or no down payment and are meant for borrowers with low credit scores, made homeownership possible for many black and Hispanic families during the boom years, but also led to high rates of foreclosure.
“Basically, that gap was closed on poor loans that never should have been made and wound up harming folks and their neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, an organization of nonprofit housing groups.
African-Americans and Latinos remain more likely than whites to be turned down for mortgages, with 26.1 percent of applications from Hispanics rejected in 2007, 30.4 percent of applications from blacks and 12.1 percent of applications from whites.
Though there were no figures available on the race or ethnicity of homeowners in foreclosure, the researchers found that counties with high concentrations of immigrants had particularly high foreclosure rates.
But the research did not suggest that high rates of immigration on their own caused high levels of foreclosure, Mr. Kochhar said. High unemployment, falling home prices, subprime loans and high ratios of debt to income all contributed.
Enrique Lopez, a Miami real estate agent, said that with the tightening of credit, his Hispanic clients had had a harder time getting mortgages than non-Hispanics, in part because they had lower credit scores.
Mr. Lopez, a member of the National Association of Hispanic Real Estate Professionals, said, “There are people we work with that make enough money, and we can’t put them in homes.”
Carmen Gentile contributed reporting.
Copyright 2009 The New York Times Company
By JOHN LELAND
After a decade of growth, the gains made in homeownership by African-Americans and native-born Latinos have been eroding faster in the economic downturn than those of whites, according to a report issued Tuesday by the Pew Hispanic Center.
The report also suggests that the gains for minority groups, achieved from 1995 to 2004, were disproportionately tied to relaxed lending standards and subprime loans.
An exception to the reversal of homeownership gains, the research shows, can be found among foreign-born Latinos, whose rate of ownership, while low, has stalled during the downturn but has not fallen.
After peaking at 69 percent in 2004, the rate of homeownership for all American households declined to 67.8 percent in 2008. For African-American households, it fell to 47.5 percent in 2008 from 49.4 percent in 2004. Latinos, native and foreign-born together, had a longer period of growth, with homeownership rising until 2006, to 49.8 percent, before falling to 48.9 percent last year. Homeownership for native-born Latinos fell to 53.6 percent from a high of 56.2 percent in 2005.
The decline among whites was more modest, to 74.9 percent last year from 76.1 percent in 2004.
So was the decline among immigrants, to 52.9 percent last year from 53.3 percent in 2006. Latino immigrants, who have the lowest rate of homeownership among the groups studied, did not lose any ground, remaining at the high of 44.7 percent they reached in 2007.
The numbers are a reflection that immigrants today have typically been living in the country longer than immigrants of the past, said Rakesh Kochhar, associate director of research for the Pew Hispanic Center, a project of the nonprofit Pew Research Center. The longer immigrants are here, the more secure they tend to become. Among foreign-born Hispanics, “the force of assimilation into homeownership is strong,” even during a downturn, Mr. Kochhar said.
The decline in homeownership among other groups, he said, reflects both high foreclosure rates and lower rates of home buying.
Even with the decline, the rate for all groups together remains higher than before the boom, with nearly 68 percent of American households owning homes last year, up from 64 percent in 1994.
The gaps between white and minority households remain significant, however, with homeownership rates for Asians (59.1 percent), blacks (47.5 percent) and Latinos (48.9 percent) well below the 74.9 percent among whites.
Like previous studies, the report found that blacks and Hispanics were more than twice as likely to have subprime mortgages as white homeowners, even among borrowers with comparable incomes. In 2006, the last year of heavy subprime lending, 17.5 percent of white home buyers took subprime loans, compared with 44.9 percent for Hispanics and 52.8 percent for blacks.
These loans, which typically require little or no down payment and are meant for borrowers with low credit scores, made homeownership possible for many black and Hispanic families during the boom years, but also led to high rates of foreclosure.
“Basically, that gap was closed on poor loans that never should have been made and wound up harming folks and their neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, an organization of nonprofit housing groups.
African-Americans and Latinos remain more likely than whites to be turned down for mortgages, with 26.1 percent of applications from Hispanics rejected in 2007, 30.4 percent of applications from blacks and 12.1 percent of applications from whites.
Though there were no figures available on the race or ethnicity of homeowners in foreclosure, the researchers found that counties with high concentrations of immigrants had particularly high foreclosure rates.
But the research did not suggest that high rates of immigration on their own caused high levels of foreclosure, Mr. Kochhar said. High unemployment, falling home prices, subprime loans and high ratios of debt to income all contributed.
Enrique Lopez, a Miami real estate agent, said that with the tightening of credit, his Hispanic clients had had a harder time getting mortgages than non-Hispanics, in part because they had lower credit scores.
Mr. Lopez, a member of the National Association of Hispanic Real Estate Professionals, said, “There are people we work with that make enough money, and we can’t put them in homes.”
Carmen Gentile contributed reporting.
Copyright 2009 The New York Times Company
RealtyTrac: April foreclosures rise 32 percent
By ADRIAN SAINZ, AP Real Estate Writer
MIAMI – The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday.
More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.
April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.
"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."
While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.
But that's far from positive news. Because much of the foreclosure activity in April was in the default and auction stages — the first parts of the foreclosure process — it's likely that repossessions will increase in coming months, RealtyTrac said.
About 63,900 homes were repossessed in April, down 11 percent from about 71,700 in March, RealtyTrac said. But the mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac, together with many other lenders.
"All of these loans are now being processed pretty rapidly by the servers," Sharga said.
Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.
After banks take over foreclosed homes, they usually put them up for sale at deep discounts. Nationwide, sales of foreclosures and other distressed properties made up about half of the market in the first quarter, the National Association of Realtors reported.
First-quarter home sales fell in all but six states — Nevada, California, Arizona, Florida, Virginia and Minnesota — where buyers have been able to grab foreclosed homes at discounts, the realtors group said Tuesday.
On a state-by-state basis, Nevada had one in every 68 households receive a foreclosure filing, down 18 percent from March but still the nation's highest rate. In Florida, one in every 135 households received a filing in April. For California, the rate was one in every 138 households.
Rounding out the top 10 were Arizona, Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
Among large cities, Las Vegas led the way with one in every 56 households receiving a filing. That was a slightly higher rate than the southwest Florida metro area of Cape Coral-Fort Myers, which saw one in 57 housing units receive a filing.
Cities in California took the next six spots: Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton. The Florida cities of Miami and Orlando were ninth and 10th, respectively.
MIAMI – The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday.
More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.
April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.
The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.
"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."
While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.
But that's far from positive news. Because much of the foreclosure activity in April was in the default and auction stages — the first parts of the foreclosure process — it's likely that repossessions will increase in coming months, RealtyTrac said.
About 63,900 homes were repossessed in April, down 11 percent from about 71,700 in March, RealtyTrac said. But the mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac, together with many other lenders.
"All of these loans are now being processed pretty rapidly by the servers," Sharga said.
Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.
After banks take over foreclosed homes, they usually put them up for sale at deep discounts. Nationwide, sales of foreclosures and other distressed properties made up about half of the market in the first quarter, the National Association of Realtors reported.
First-quarter home sales fell in all but six states — Nevada, California, Arizona, Florida, Virginia and Minnesota — where buyers have been able to grab foreclosed homes at discounts, the realtors group said Tuesday.
On a state-by-state basis, Nevada had one in every 68 households receive a foreclosure filing, down 18 percent from March but still the nation's highest rate. In Florida, one in every 135 households received a filing in April. For California, the rate was one in every 138 households.
Rounding out the top 10 were Arizona, Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
Among large cities, Las Vegas led the way with one in every 56 households receiving a filing. That was a slightly higher rate than the southwest Florida metro area of Cape Coral-Fort Myers, which saw one in 57 housing units receive a filing.
Cities in California took the next six spots: Merced, Modesto, Riverside-San Bernardino, Bakersfield, Vallejo-Fairfield and Stockton. The Florida cities of Miami and Orlando were ninth and 10th, respectively.
Retail sales drop unexpectedly in April
By MARTIN CRUTSINGER, AP Economics Writer
WASHINGTON – Retail sales fell for a second straight month in April, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession.
The Commerce Department said Wednesday that retail sales fell 0.4 percent last month. Many economists had expected a flat reading, and the April weakness followed a 1.3 percent drop in March that was worse than first estimated.
Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing. But the setbacks in March and April could darken some forecasts because consumer spending accounts for about 70 percent of economic activity.
The hope had been that consumers were starting to feel better about spending, helped by the start of tax breaks included in the $787 billion stimulus bill. Households had spent the fall hunkered down in the face of thousands of job layoffs and the worst financial crisis since the 1930s.
Wall Street tumbled after the weaker-than-expected retail sales report. The Dow Jones industrial average lost about 185 points in afternoon trading, and broader indices also plunged.
The latest retail data "are yet another illustration that, although the worst is now over, there is still no evidence of an actual recovery," Paul Dales, U.S. economist with Capital Economics in Toronto, wrote in a research note.
While anecdotal evidence suggests some improvement in sales in recent weeks, "to offset the plunge in wealth, the household saving rate still needs to double from the current rate of 4 percent," Dales wrote. "With falling employment hitting incomes, this can only be achieved by a further retrenchment in spending."
The jobless rate rose to 8.9 percent in April when a net total of 539,000 jobs were lost and 13.7 million people were unemployed, the Labor Department said last week.
In a separate report, the Commerce Department said business inventories fell 1 percent in March, a decline that matched economists' expectations. It marked the seventh straight decrease, the longest stretch since businesses cut inventories for 15 straight months in 2001 and 2002, a period that covered the last recession.
Businesses are continuing to cut their stockpiles in the face of declining sales, a development that has intensified the current economic downturn. Still, the reductions in stockpiles held on shelves and in backlots eventually should help businesses get their inventories more in line with reduced sales. If that is the case, any strengthening in consumer demand should lead to increased production.
The April retail sales dip came despite a 0.2 percent increase in auto sales, which fell 2 percent in March. Excluding autos, the drop in retail sales would have been 0.5 percent, much worse than the 0.2 percent gain economists expected.
Sales outside of autos showed widespread weakness last month. Demand at department stores and general merchandise stores fell 0.1 percent and sales at specialty clothing stores dropped 0.5 percent.
Department store operator Macy's Inc. on Wednesday reported a wider loss for the first quarter due partly to restructuring charges. Still, the company expects to see an improvement in sales from its localization efforts beginning in the fourth quarter of 2009, and in the spring of 2010.
Liz Claiborne Inc. reported a first-quarter loss that was worse than Wall Street expected. The apparel maker said its quarterly loss swelled on restructuring charges and a drop in same-store sales stemming from lower consumer spending and an extra week of sales in the year-ago period.
Sales also fell in April at furniture stores, electronic and appliance stores, food and beverage stores and gasoline stations, according to the Commerce Department.
The performance at department stores and specialty clothing stores came as a surprise since the nation's big chain stores had reported better-than-expected results for April. Same-store sales, rose 0.7 percent last month compared with April 2008. It was the first overall increase in six months, according to the tally by Goldman Sachs and the International Council of Shopping Centers.
For April, some mall-based clothing stores saw their declines level off and Wal-Mart Stores Inc., the world's largest retailer, had reported its same-store sales rose 5 percent, excluding fuel, which beat expectations. Same-store sales, or sales in stores open at least one year, is considered a key metric of a retailer's financial health.
The chain store sales report last week showed that Gap, American Eagle and Wet Seal posted smaller sales declines at their established locations than analysts had forecast.
The Children's Place, T.J. Maxx owner TJX Cos. Inc. and teen retailer The Buckle saw bigger gains than expected. But luxury stores again were hard hit as their higher-end wares find fewer takers.
Consumer spending grew 2.2 percent in the first quarter of the year, after posting back-to-back quarterly declines in the last half of 2008.
Economists believe the overall economy, as measured by the gross domestic product, will show a decline of around 2 percent in the current quarter. That would represent an improvement from the steep declines of 6.3 percent in the fourth quarter of last year and 6.1 percent in the first three months of this year, the worst six-month performance in a half-century.
WASHINGTON – Retail sales fell for a second straight month in April, a disappointing performance that raised doubts about whether consumers were regaining their desire to shop. A rebound in consumer demand is a necessary ingredient for ending the recession.
The Commerce Department said Wednesday that retail sales fell 0.4 percent last month. Many economists had expected a flat reading, and the April weakness followed a 1.3 percent drop in March that was worse than first estimated.
Retail sales had posted gains in January and February after falling for six straight months, raising hopes that the all-important consumer sector of the economy might be stabilizing. But the setbacks in March and April could darken some forecasts because consumer spending accounts for about 70 percent of economic activity.
The hope had been that consumers were starting to feel better about spending, helped by the start of tax breaks included in the $787 billion stimulus bill. Households had spent the fall hunkered down in the face of thousands of job layoffs and the worst financial crisis since the 1930s.
Wall Street tumbled after the weaker-than-expected retail sales report. The Dow Jones industrial average lost about 185 points in afternoon trading, and broader indices also plunged.
The latest retail data "are yet another illustration that, although the worst is now over, there is still no evidence of an actual recovery," Paul Dales, U.S. economist with Capital Economics in Toronto, wrote in a research note.
While anecdotal evidence suggests some improvement in sales in recent weeks, "to offset the plunge in wealth, the household saving rate still needs to double from the current rate of 4 percent," Dales wrote. "With falling employment hitting incomes, this can only be achieved by a further retrenchment in spending."
The jobless rate rose to 8.9 percent in April when a net total of 539,000 jobs were lost and 13.7 million people were unemployed, the Labor Department said last week.
In a separate report, the Commerce Department said business inventories fell 1 percent in March, a decline that matched economists' expectations. It marked the seventh straight decrease, the longest stretch since businesses cut inventories for 15 straight months in 2001 and 2002, a period that covered the last recession.
Businesses are continuing to cut their stockpiles in the face of declining sales, a development that has intensified the current economic downturn. Still, the reductions in stockpiles held on shelves and in backlots eventually should help businesses get their inventories more in line with reduced sales. If that is the case, any strengthening in consumer demand should lead to increased production.
The April retail sales dip came despite a 0.2 percent increase in auto sales, which fell 2 percent in March. Excluding autos, the drop in retail sales would have been 0.5 percent, much worse than the 0.2 percent gain economists expected.
Sales outside of autos showed widespread weakness last month. Demand at department stores and general merchandise stores fell 0.1 percent and sales at specialty clothing stores dropped 0.5 percent.
Department store operator Macy's Inc. on Wednesday reported a wider loss for the first quarter due partly to restructuring charges. Still, the company expects to see an improvement in sales from its localization efforts beginning in the fourth quarter of 2009, and in the spring of 2010.
Liz Claiborne Inc. reported a first-quarter loss that was worse than Wall Street expected. The apparel maker said its quarterly loss swelled on restructuring charges and a drop in same-store sales stemming from lower consumer spending and an extra week of sales in the year-ago period.
Sales also fell in April at furniture stores, electronic and appliance stores, food and beverage stores and gasoline stations, according to the Commerce Department.
The performance at department stores and specialty clothing stores came as a surprise since the nation's big chain stores had reported better-than-expected results for April. Same-store sales, rose 0.7 percent last month compared with April 2008. It was the first overall increase in six months, according to the tally by Goldman Sachs and the International Council of Shopping Centers.
For April, some mall-based clothing stores saw their declines level off and Wal-Mart Stores Inc., the world's largest retailer, had reported its same-store sales rose 5 percent, excluding fuel, which beat expectations. Same-store sales, or sales in stores open at least one year, is considered a key metric of a retailer's financial health.
The chain store sales report last week showed that Gap, American Eagle and Wet Seal posted smaller sales declines at their established locations than analysts had forecast.
The Children's Place, T.J. Maxx owner TJX Cos. Inc. and teen retailer The Buckle saw bigger gains than expected. But luxury stores again were hard hit as their higher-end wares find fewer takers.
Consumer spending grew 2.2 percent in the first quarter of the year, after posting back-to-back quarterly declines in the last half of 2008.
Economists believe the overall economy, as measured by the gross domestic product, will show a decline of around 2 percent in the current quarter. That would represent an improvement from the steep declines of 6.3 percent in the fourth quarter of last year and 6.1 percent in the first three months of this year, the worst six-month performance in a half-century.
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