San Jose, CA – The year-old financial crisis entered a new stage in September as the U.S. financial system suffered its worst setbacks since the Great Depression of the 1930s. Over the weekend of Sept. 6-7, Fannie Mae and Freddie Mac, two large mortgage companies that were financing three-quarters of U.S. mortgages, were taken over by the government due to their growing mortgage losses. Then a week later the 158-year old investment bank Lehman Brothers failed to find a buyer and had to declare bankruptcy. The following Tuesday, Sept. 16, the giant insurance firm American International Group (AIG), with more than $1 trillion (1,000 billion) in assets, failed to get an emergency loan and was taken over by U.S. government in exchange for an $85 billion dollar loan. The next day the Putnam money market fund had to close down as investors pulled billions of dollars out following a big loss at a smaller money market fund that had made a big loan to Lehman Brothers.
San Jose, CA – On Sept. 5 the Labor Department reported that the unemployment rate in August rose to 6.1%, from 5.7% in July. This is the highest unemployment rate in almost five years. A week earlier a report from the Commerce Department showed that real income (income adjusted for inflation) fell in July for the first time since January, dragging down household spending despite a drop in savings for the month. These two reports show that the economy may be going into a downward spiral of falling income and spending, leading to more layoffs, which in turn cut incomes and then spending even more.
Plainfield, NJ – The fight here to save Muhlenberg Hospital continues to intensify and broaden. Two public hearings of the New Jersey Health Planning Commission, on May 5 and on June 5, each drew more than 1200 people. The Commission must grant a Certificate of Need (CN) to legally allow Solaris Health Care Corporation to close the hospital.
San José, CA – Working people had less to celebrate over the holiday weekend as the number of jobs fell for the sixth month in a row in June. On July 3, the U.S. Department of Labor reported that there were 62,000 fewer jobs in June as compared to May and increased their estimates of job losses for previous months. All told, businesses have shed almost one-half a million jobs since January. Six straight months of job losses has always meant a recession is underway in the past. At the same time, the number of people applying for unemployment benefits jumped to more than 400,000, a level typical of a recession.
Trenton, NJ – 500 people traveled to Trenton, the state capital of New Jersey, April 5, to protest the threat to close Muhlenberg Hospital in Plainfield. Hospital closings are at crisis level in New Jersey and Muhlenberg, which has served Plainfield for 125 years, is only the latest to be threatened.
Plainfield, NJ – A throng of 600 turned out here, March 15, to protest against the closing of Muhlenberg Hospital by its owner, Solaris Healthcare. A 250-person protest had already come out on March 1 at the call of the People's Organization for Progress.
Federal Reserve Uses Emergency Powers from the Great Depression of the 1930s
San José, CA – On Friday, March 14, the fifth largest investment bank in the United States, Bear Stearns, failed. Over the weekend the Federal Reserve took over the riskiest mortgage-related investments worth $30 billion and arranged for J.P. Morgan Chase, the third largest U.S. bank (after Citigroup and Bank of America), to buy the rest of Bear Stearns for $2 a share, or 4% of its price on Thursday. The failure of Bear Stearns brings the growing financial crisis full circle, as it was the failure of two Bear Stearns hedge funds that invested in home mortgages that marked the beginning of the crisis last August.
Plainfield, NJ – A move to close Muhlenberg Hospital in Plainfield, New Jersey has triggered a storm of protest. Plainfield would hardly be a city without the 125-year old Muhlenberg Hospital.
San Jose, CA – New economic data released in early January 2008 showed that the U.S. economy was on the edge of a recession in December. On Jan. 2, the Institute for Supply Management reported that the manufacturing sector shrank in December. Their index fell to 47.7 from 50.8 in November, the lowest level since April of 2003. Then on Jan. 4, the Department of Labor said that the unemployment rate rose to 5% in December, from 4.7% the month before, the biggest one-month jump since the last recession in 2001. In the same report, the Labor Department also said that only 18,000 new jobs were created in December, the weakest number since August of 2003.
Fight Back News Service is circulating the following press statement from Professor Jose Maria Sison, chief political consultant of the National Democratic Front of the Philippines. The statement deals with economic developments in the Philippines and the United States.
San Jose, CA – On Dec. 6, the Mortgage Bankers Association of America reported that home foreclosures and late mortgages rose to record highs in the July to September period. The next day, Bush’s Treasury Secretary Paulson announced a plan to aid home-buyers. While consumer advocates criticized the plan for being too little, too late, Wall Street liked the plan, which would let banks off the hook, and sent stocks up.
San Jose, CA – On Sept. 18 the Federal Reserve cut two key short-term interest rates for bank loans by one-half a percentage point. These interest rate cuts followed on the heels of dismal economic data on jobs and the worsening housing and mortgage bust, as well as continued instability in financial markets. While stock markets around the world celebrated the larger-than-expected interest rate cuts with large increases, the Federal Reserve action reflects weakness, not strength, in the economy.
San Jose, CA – In July the U.S. housing market hit new lows, with the lowest number of permits for new homes and the lowest number of construction starts in more than ten years. Then in August financial markets across the globe were shaken by the growing defaults on mortgages in the United States.
San Jose, CA – Between September of 2005 and December of 2006 permits to build new homes went down 28%, as home sales have dropped and prices have started to fall. In the last 50 years there have been seven other declines in building permits of 25% or more, and every single one has been followed by a recession, the most recent being the 1990 recession.
Chicago, IL – Across the country the rich are grabbing up land, pushing poor people and people of color to the suburbs and on to the streets. In Chicago this has meant the demolition of whole communities, the tearing down of public housing, violations of renters’ rights, condo conversions and working-class displacement.
San Jose, CA – According to a U.S. Census Bureau report released in October, the cost of renting rose even faster than the cost of buying a home between 2000 and 2005. Over those five years, rents rose 20.7% as compared to an 18.75% rise in homeowner costs (these are nationwide averages, the increases for both in some areas such as California have been much higher).
San Jose, CA – The official U.S. unemployment rate rose from 4.6% to 4.8% in July as the economic growth slowed over the past months, creating fewer jobs. The number of long-term (15 weeks or more) jobless people rose, as unemployed workers had a harder time finding new jobs. A better measure of unemployment, which includes workers who have to take part-time jobs because they can’t get full-time work, and those who temporarily gave up looking because they haven’t been able to find a job, also rose in July to 7.8%.
