Little Brother Forum

Susan Cornwell/Reuters/September 26, 2007

WASHINGTON - Defense Secretary Robert Gates on Wednesday asked Congress to approve nearly $190 billion more in spending for the wars in Iraq and Afghanistan.

In prepared testimony to a Senate committee, Gates said the Bush administration sought the money for more training and equipment for the U.S. military, including new armored vehicles that give extra protection to troops against bomb blasts. The funds were for the 2008 fiscal year beginning October 1.

More money was also needed to train and equip Iraqi security forces as well as to improve U.S. facilities in the region and “consolidate our bases in Iraq,” Gates said. Reuters obtained a copy of his remarks in advance of his testimony on Wednesday. (more…)

You’re about to hear that the budget deficit is falling. Don’t believe it, warns Fortune’s Allan Sloan. The deficit is much, much bigger than you think.

Allan Sloan/Fortune Magazine senior editor-at-large/September 4, 2007

There will be lots of celebrating in Washington next month when the Treasury announces that the federal budget deficit for fiscal 2007, which ends September 30, will have dropped to a mere $158 billion, give or take a few bucks.

That will be $90 billion below the reported 2006 deficit and will be toasted by the White House and Treasury as a great accomplishment.

But I have a nasty little secret for you, folks. If you use realistic numbers rather than what I call WAAP - Washington Accepted Accounting Principles - the real federal deficit for the current fiscal year is more than 2-1/2 times the stated deficit. (more…)

BBC News/September 13, 2007

The US dollar has fallen to new record lows against the euro as investors fret about a world credit crunch.

In European trading, the greenback dropped as low as $1.3927 against the euro, deepening Wednesday’s losses.

The dollar has fallen in the past week, amid hopes that Federal Reserve will cut interest rates in a bid to reassure markets over current credit fears.

Analysts expect rates to fall by between a quarter and half a percentage point when the Fed meets next week. (more…)

Bob Ivry/Sydney Morning Herald/August 13, 2007

The Federal Reserve Chairman, Ben Bernanke, was wrong.

So were the US Treasury Secretary, Henry Paulson, and the chief executive officer of Merrill Lynch & Co, Stanley O’Neal.

The subprime mortgage industry’s problems were contained, they all said. It turns out that the turmoil was contagious.

The $2 trillion market for mortgages not backed by government-sponsored agencies is at a standstill. That is just the beginning. Other types of mortgages are suffering. So are firms and banks that package the debt for investors. The ripples were felt in Europe and Asia, where central banks offered cash to banks amid a credit crunch. And some corporations, from countertop makers to railways, are blaming the mortgage meltdown and housing slump for earnings that fell short of analysts’ estimates. (more…)

By Scott Lanman and Christian Vits/Bloomberg/Auguust 10, 2007

Central banks in the U.S., Europe, Japan, Australia and Canada added about $136 billion to the banking system in an attempt to avert a crisis of confidence in global credit markets.

The Federal Reserve, in a second day of action in concert with the European Central Bank, provided $38 billion of reserves and pledged more “as necessary,” in a statement unprecedented since after the Sept. 11, 2001, attacks.

Money market rates rose worldwide the past two days on evidence the subprime crisis is spreading after global investors piled into U.S. securities backed by mortgages. By the end of the day, the central bank actions helped spark a turnaround in American stocks and drive the U.S. overnight bank lending rate below the Fed’s target.

“They accomplished their short-term mission to make sure the market stabilized ahead of the weekend,” said David Resler, chief economist in New York at Nomura Securities International Inc. “It remains to be seen how much more they’ll have to do.” (more…)

Aug 10, 2007 

KENNEBUNKPORT, Maine (Reuters) - U.S. President George W. Bush and his advisers are keeping close watch on the financial markets and believe the economy’s fundamentals are strong, the White House said on Friday amid growing concerns of a global credit crunch.

“I can assure you that there are many of the president’s advisers who are keeping a very close eye on all of the market activity and making sure that policies are put in place to keep our economy strong and growing,” White House spokeswoman Dana Perino told reporters.

World markets have been rocked this week by news of widespread problems at banks and hedge funds exposed to investments in the U.S. subprime mortgage market, provoking fears of a choking-off of the cheap credit which has fueled growth in recent years. (emphasis added) (more…)

by Alex Berenson/New York Times/July 24, 2007

Two years ago, when companies received a big tax break to bring home their offshore profits, the president and Congress justified it as a one-time tax amnesty that would create American jobs.

Drug makers were the biggest beneficiaries of the amnesty program, repatriating about $100 billion in foreign profits and paying only minimal taxes. But the companies did not create many jobs in return. Instead, since 2005 the American drug industry has laid off tens of thousands of workers in this country.

And now drug companies are once again using complex strategies, many of them demonstrably legal, to shelter billions of dollars in profits in international tax havens, according to their financial statements and independent tax experts.

In one popular accounting move, companies declare their foreign markets as far more profitable than their American businesses — even though drug prices are typically higher in the United States than anywhere else in the world. (more…)

by Lou Dobbs/CNN/February 21, 2007

NEW YORK (CNN) — We’re fighting a war that is inflicting even greater casualties than the wars in Iraq and Afghanistan and, incredibly, costing even more money. We’re losing the War on Drugs, and we’ve been in retreat for three decades. (more…)

FRANKFURT, Germany (AP) - July 12, 2007

The euro broke through the US$1.38 mark Friday for the first time, as persistent worries about the strength of the U.S. economy pushed the European currency higher.

The 13-nation euro moved as high as US$1.3811 in afternoon European trading before falling back to US$1.3805. That was up from US$1.3783 in New York late Thursday.

The dollar, which has been under pressure all week, fell after the U.S. Commerce Department reported that retail sales in June fell by 0.9 percent compared with the previous month. That was its biggest drop since August 2005, and came as demand for cars, furniture and building supplies plummeted.

U.S. economic data are being scrutinized closely for hints on the U.S. Federal Reserve’s future interest rate course.

The Fed has left its benchmark rate unchanged at 5.25 percent for a year after two years of steady increases.

That contrasts with the course of the European Central Bank, which has raised rates steadily and is expected to do so again to 4.25 percent in September. The Bank of England last week increased its benchmark rate to 5.75 percent, a six-year high.

Higher interest rates, a weapon against inflation, can bolster a currency by giving better returns on fixed-income investments.

Concerns about the strength of the U.S. economy, fueled largely by woes in the subprime housing sector, have boosted the euro against the dollar.

Higher interest rates and the economic slowdown have lead to more defaults in subprime mortgages, which are loans to borrowers with weak or spotty credit histories.

The British pound continued to trade around 26-year highs against the dollar Friday. On Friday, it rose to US$2.0343 from its level late Thursday of US$2.0304.

The dollar slipped to 122.24 Japanese yen from 122.41 yen.

By Laurence Washington/Rocky Mountain Press/July 6, 2007

Secret History of the American Empire, Nonfiction by John Perkins, 2007, Dutton, $25.95.
Grade: A
Book in a nutshell: The Secret History of the American Empire begins where Perkins’ Confessions of an Economic Hit Man ended. This time, the novelist and former economic hit man - who once specialized in trapping Third World countries in a quagmire of debt so that the U.S. could demand payments in favors - travels to Latin America, Asia, the Middle East and Africa, exposing the long history of the U. S. government and big business’ brutal tactics to build an empire. Perkins backs his claim that the U.S. is an empire by noting that the U.S.:

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