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Are our oceans dying? Phytoplankton has declined 40% in 60 years as figures reveal Earth has been getting hotter since the Eighties

Microscopic marine algae which form the basis of the ocean food chain are dying at a terrifying rate, scientists said today.

Phytoplankton, described as the ‘fuel’ on which marine ecosystems run, are experiencing declines of about 1 per cent of the average total a year.

According to the researchers from Dalhousie University in Canada the annual falls translate to a 40 per cent drop in phytoplankton since 1950.

The research into phytoplankton comes as a separate report today offered evidence that the world has been warming for the past 30 years.

Marine diatom cells (Rhizosolenia setigera), which are an important group of phytoplankton in the oceans. Much of life on Earth depends on these tiny creatures which are now in massive declineMarine diatom cells (Rhizosolenia setigera), which are an important group of phytoplankton in the oceans. Much of life on Earth depends on these tiny creatures which are now in massive decline

The reduction in the amount of algae in the seas could have an impact on a wide range of species, from tiny zooplankton to marine mammals, seabirds, fish and humans.

If confirmed, the decline of the phytoplankton would be a more dramatic change change to nature’s delicate balance than the loss of the tropical rainforests, scientist said.

The research, published in the journal Nature, said the declines were linked to rising sea-surface temperatures and changes in the conditions of the ocean, particularly close to the equator.

Most of the declines were seen in polar and tropical regions and in the open ocean, where most phytoplankton are produced.

The scientists suggested that in warmer oceans there was less movement between the layers of the sea, reducing the amount of nutrients delivered from deep water to the surface ocean.

As phytoplankton need both sunlight and nutrients to grow, the limits on the amount of nutrients in the upper layer of the sea affects production of the algae.

A new study today published a series of data that showed that many indicators of climate change, such as sea-surface temperature (above) are risingA new study today published a series of data that showed that many indicators of climate change, such as sea-surface temperature (above) are rising

In addition, large-scale fluctuations in the climate, such as El Nino in the Pacific, affect phytoplankton on a year-to-year basis, the scientists said.

The research adds to the evidence that global warming was altering the oceans, with the changes in phytoplankton potentially having an impact on the health of the seas and on fisheries which people rely on for food.

Lead author Daniel Boyce said: ‘Phytoplankton is the fuel on which marine ecosystems run. A decline in phytoplankton affects everything up the food chain, including humans.

Co-author Boris Worm, said: ‘Phytoplankton are a critical part of our planetary life support system.

‘They produce half of the oxygen we breathe, draw down surface carbon dioxide and ultimately support all our fisheries.

‘An ocean with less phytoplankton will function differently and this has to be accounted for in our management efforts.’

Fellow author Marlon Lewis added: ‘Climate-driven phytoplankton declines are another important dimension of global change in the oceans, which are already stressed by the effects of fishing and pollution.’

he figures showed that land-surface temperature had also risen dramatically in the past 30 yearsThe figures showed that land-surface temperature had also risen dramatically in the past 30 years

It comes as scientists today announced that the world is ‘unequivocally’ warming and has been for the past 30 years.

Researchers at the Met Office compiled data from a series of several independent studies including sea levels, air temperature, humidity and glacier loss.

The review also said the past decade had been the warmest on record, while Met Office scientists said this year was on track to be the warmest ever.

The report comes in the wake of the ‘climategate’ furore around climate science, which stemmed from emails stolen from the University of East Anglia’s Climatic Research Unit (CRU).

The scandal prompted prompted claims from sceptics that scientists were manipulating data to back up a theory of global warming.

They were since been cleared of any wrongdoing but were accused by an inquiry set up in the wake of the scandal of being secretive and unhelpful.

But today’s report published as part of the annual State of the Climate review led by the National Oceanographic and Atmospheric Administration, shows that global warming is ‘undeniable’, scientists said.

Sea levels have also risen steadily since the turn of the centurySea levels have also risen steadily since the turn of the century

The Met Office looked at surface temperature records and other aspects of climate that scientists predict will change as a result of increased levels of greenhouse gases, such as warming of the ocean, increased humidity and reductions in Arctic sea ice.

For each of the 10 indicators they compiled several studies done independently of each other, revealing broad agreement between different analyses on what was happening to the climate.

Seven of the areas, including air and sea surface temperatures, the amount of heat in the ocean and humidity, were on the rise, while three areas – the extent of Arctic sea ice, glaciers and winter snow cover in the northern hemisphere – were in decline.

Dr Stott said: ‘Despite the variability caused by short-term changes, the analysis conducted for this report illustrates why we are so confident the world is warming.

‘When we look at air temperature and other indicators of climate, we see highs and lows in the data from year to year because of natural variability.

‘Understanding climate change requires looking at the longer-term record. When we follow decade-to-decade trends using different data sets and independent analyses from around the world, we see clear and unmistakable signs of a warming world.’

A new image shows September Arctic sea ice in 1979A new image shows September Arctic sea ice in 1979, the first year these data were available, and 2009. September Arctic sea ice is one of the 10 key indicators of a warming planet, the report said today

Many believe that the rise in temperatures around the world is a natural, cyclical process of the world warming and cooling over time.

An Ipsos Mori survey of 1,822 people for Cardiff University in June found 40 per cent believed the seriousness of global warming was exaggerated.

But Dr Stott said studies showed the changes were consistent with an increase in greenhouse gases, which provided the ‘glaringly obvious explanation’ for why the climate was changing.

But he said it was possible the reason for the warming could be due to something scientists had not thought of – an ‘unknown unknown’ – but the patterns of change were not consistent with other suggested causes, such as solar activity or volcanoes.

Papantonio: Taxpayers On the Hook for BP Cleanup Cost?

Are taxpayers going to be footing the bill to clean up BP’s mess in the Gulf of Mexico? It’s certainly a possibility, and as Mike Papantonio explains on The Ed Schultz Show, BP is considering asking the government for a tax break to cover the cleanup costs.

Economy in U.S. Will Probably Keep Cooling as Lack of Jobs Limits Spending

The world’s largest economy will probably keep cooling in the third quarter as a lack of jobs prompts American consumers to rein in spending.

The economy in the U.S. grew at a slower-than-forecast 2.4 percent annual rate from April through June after expanding at a 3.7 percent pace in the previous three months, Commerce Department figures showed yesterday. Household purchases climbed at a 1.6 percent rate following a 1.9 percent first-quarter gain that was smaller than previously estimated.

“The economy is still struggling to gain traction,” David Resler, chief economist at Nomura Securities International Inc. in New York, said in an interview. “Consumers are going to be very cautious about spending, especially about big-ticket items.”

Growth in the past three months was supported by increases in inventories, home construction, business investment and government spending that may not be matched this quarter. The pace of recovery in the first half of the year kept unemployment hovering near 10 percent, raising the risk that household purchases will not rebound.

Nomura’s Resler forecasts the economy will expand at a 1.7 percent pace from July through September.

Most stocks climbed yesterday as better-than-projected earnings overcame concerns the economy will slow. The Standard & Poor’s 500 Index were little changed to 1,101.6 at the 4 p.m. close in New York.

Deeper Slump

The worst U.S. recession since the 1930s was even deeper than previously estimated, reflecting bigger slumps in consumer spending and housing, according to the Commerce Department’s annual revisions also issued yesterday.

The economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009, compared with the 3.7 percent drop previously on the books, the report showed. Household spending fell 1.2 percent in 2009, twice as much as previously projected and the biggest decline since 1942.

“The typical pattern is to snap back hard and you just haven’t done that,” Jay Feldman, an economist at Credit Suisse in New York, said in an interview. “We’re not calling for a double-dip, it’s a moderate recovery. Things will appear to be slowing.”

Credit Suisse forecasts growth will average 2.75 percent in the second half of the year, compared with 3.1 percent for the first six months.

Below-Average Rebound

Over the past 12 months, the economy grew 3.2 percent. The first years of recoveries from recessions in the mid 1970s and early 1980s averaged 7 percent, Feldman said.

Economists at HSBC Securities USA Inc. in New York forecast average growth of 2 percent from July through December, while the Conference Board, a New York-based research group projects 1.6 percent.

Excluding growth in inventories and residential spending, gross domestic product rose at a 0.8 annual rate percent as consumer purchases slowed and the trade deficit swelled.

The trade gap in the second quarter widened to $425.9 billion from $338.4 billion, subtracting 2.8 percentage points from growth, the biggest reduction since 1982, yesterday’s report showed. Imports grew at a 29 percent pace, while exports climbed 10 percent.

Residential construction climbed at a 28 percent pace last quarter, the biggest gain since 1983, rebounding from a weather- related first-quarter slump and supported by a government homebuyer tax credit. The expiration of the incentive has caused sales to slump, indicating the industry will weigh on growth for the rest of the year.

More Inventories

The buildup of inventories may also represent an economic stumbling block. Stockpiles climbed at a $75.7 billion annual pace last quarter, the biggest gain in more than four years. Without a pickup in consumer spending, inventories are not likely to repeat that performance, according to Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

Similarly, a 22 percent surge in business investment, the biggest advance since 1997, isn’t sustainable, he said.

“Businesses are pretty much at the point where they will only add to inventories at a replacement basis rather than a rebuilding basis,” Naroff said in an interview. “Once they finish investing in equipment and make all the adjustment in inventories, now they are back to fundamentals. There is nothing there that tells me the rest of this year will be anything special.”

Better Outlook

Not all economists are convinced the outlook is as dour.

“We find some constructive takeaways for the prospects for growth in the second half of the year,” John Ryding, chief economist at RDQ Economics in New York, said in a note to clients. “The recovery has been less dependent on consumer spending than we had thought.”

Also, stockpiles are near record lows compared to sales, indicating companies have not overbuilt, while orders for durable goods indicate business investment “appears to be ramping up,” said Ryding.

The Institute for Supply Management-Chicago Inc. said yesterday its business barometer rose to 62.3 this month, exceeding the median forecast of economists surveyed by Bloomberg. Figures greater than 50 signal expansion and the group’s employment and new orders gauges rose as well.

Americans are also cleaning up their balance sheet, putting themselves in a better position to spend, Ryding said.

The consumer savings rate has been rising, indicating “consumers may be in better financial shape, and if that’s the case, we’re likely to get a little bit of a pickup in consumer spending growth,” he said.

Hollow Men of Economics

This is a guest post by Gregor MacDonald. Gregor is an oil analyst and energy sector investor, who, in his words, “also focuses on the coming transition to alternatives”. This post was previously published on Gregor.us.Left unaddressed during the past 3 years in most of the debates between economists has been the problem of energy. The reason is simple: post-war economists don’t do energy, except as an ever-expanding resource that the credit system and technology makes available. For the post-war economist, the supply curve of energy–save for brief lags–is always coming back into rough equilibrium with the economy.

Accordingly, the ongoing dispute between Keynesians and Austrians (or Austerians if you like) is exceedingly boring in this regard. As late as 2008, for example, economist Paul Krugman was at least an infrastructure-and-engineering Keynesian. However, Paul quickly converted to becoming just a throw lots of money at the existing system Keynesian. The hollow nature of Krugman’s debate with Niall Ferguson meanwhile comes via their shared belief that the system will self-organize, if you follow their respective prescriptions. They are indeed the inheritors of Adam Smith.

However, neither allowing the economy to deflate further from here via austerity, nor throwing more debt-marked stimulus will solve the present day problem. For the United States, along with the rest of the developed world, has reached a boundary in energy.

Only an economist could wonder in their leisure now, whether energy played a significant role in our current crisis. Indeed the public remarks of Ben Bernanke on the matter of energy, during the 2005-2010 period, were at least as clueless as his embarrassing commentary on the historic bubble in housing and credit. As the nation’s chief economist, Bernanke saw no problem with credit, with derivatives, with the fast inflation in housing prices, or with energy prices. And as an American economist, he was not alone.

As state’s see their budgets collapse and start a new round of layoffs, we should consider the fact that house price inflation masked the lack of wage growth in the United States. And now that house prices continue their descent for a 5th year, American workers are more fully exposed to the decade-long march higher in energy costs. They can experience this individually through energy prices, or more generally through the overall energy cost to the economy. Hence, the chart above.

Unlike many who were either shocked or angered at the ridiculous paper released by Richmond Fed Economist Kartik Athreya, Economics is Hard, I was delighted. For, the paper confirms that at the Federal Reserve, just as in the post-war economics profession, competency has been replaced with authority. Indeed, this was in fact Athreya’s central point: that only a PhD in economics conferred the proper access to discuss economic issues. The most beautiful rebuttal came from Ambrose Evans-Pritchard, who made a point dear to me and one that I have made for years: economics is a social science, not a science. In other words, economists are working down here, alongside the rest of us humanists. History, literature, psychology, and anthropology to mention a few disciplines are all equally competitive fields of knowledge to understand the system of behavior known as an economy. Accordingly, it behooves post-war economists to dislodge themselves of the view that their discipline neatly explains energy and energy supply. Lose the attitude. The problem of energy limits awaits you.

-Gregor

Chart: United States Energy Expenditure as a Percent of GDP 1999-2008. Data used is the latest available. GDP series comes from the US Department of Commerce, Bureau of Economic Analysis. Energy Expenditure data comes via EIA Washington’s SEDS series, for all states and also the country as a whole. I put these two data series together on my own, but, checked it against EIA Washington’s own calculation of Total Energy Expenditures vs GDP. 2009 is not omitted from the chart by choice, but rather, because expenditure data is not easily available yet for that year. Background photo is of a rooftop sculpture by Antony Gormley from his project Event Horizon, which was displayed in both London and New York.

Watching The Fed Control the Economy

While we wait, watch and listen, the Fed decides when the banks will be given the word to start lending to get the domestic economy back to neutral. Action is needed quickly because the world economy is quickly deteriorating, and their recovery is simply not happening, as the administration admits to a fiscal deficit of $1.4 trillion. That would be down from a deficit of $1.9 trillion in 2009. Our long-term estimate has been $1.6 to $2 trillion. Over the past 18 months and after joint expenditures by government and the Fed of $2.3 trillion, all the administration has to show for their efforts are five quarters of stimulus growth of about 3-1/2%, which is now ending. In addition, economies worldwide are slowing as well. At the same time the credit crisis continues as the Fed’s money machine funds banks and other financial institutions worldwide in a sea of perpetually degraded dollars. The only real mission for the Fed is to keep the financial sector afloat until the elitists are ready to finally pull the plug and bring about worldwide deflationary depression, as a trigger mechanism to force people’s of the world to accept world government. Most of the major banks of the world are insolvent and keeping them functioning is the Fed’s primary mission.

Debt is devouring sovereign nations, especially in Europe, the UK, Japan and the US. Over the past 20 years ideas and policies have been discussed on how to handle such debt. Austerity programs and cutbacks have begun in a number of countries, each using their own formulas. In the US on the table are Social Security, Medicare and Medicaid, all of which run at a substantial deficit. In fact, they come close to consuming all government revenue. This is causing difficult problems because off budget items cannot be funded. They have to be funded via deficits, which are shrouded in secrecy. That is understandable as America’s wars have already cost taxpayers well over $1 trillion. These dollar denominated assets, when in fact secretly, are being funded by the privately owned Federal Reserve. The big secret of the past seven years is not a secret anymore. These are policies that are secret. If you ask the Fed specific questions all you get is that the answer is a state secret, it is classified. Of course, this is done to hide the Fed’s activities. The same is true of commissions appointed by the president under the cloak of executive orders. These are the bureaucrats that will formulate how spending will be cut and revenues will be enhanced. Their conclusions are then rubber stamped by a purchased Congress and Senate. This procedure bypasses all debate and allows progress in semi-secrecy.

The deficit is being funded and monetized by the Fed, but they won’t tell you that. Yes, foreigners buy debt, but so does the Fed.

Behind all this lurking in the shadows is the administration’s decision to allow low tax rates to elapse, which will increase taxes by some 15%. This change should be reverified after the next election. Recently Treasury Secretary Geithner said tax increases should be pursued.

Then we also expect that moves will begin to expose the administration’s program to tax or offer an exchange for retirement plans with government. Government would offer guaranteed annuity plans. This would be a method of securing assets immediately to offset deficits.

Whatever the administration wants to do they’ll have to do it before November’s election because of anti-incumbent sentiment. That has been complicated by a federal court decision to strip an Arizona law of its most important elements regarding illegal aliens. Democrats are going to bear a great deal of blame regarding this issue. Two surveys showed 90% and 94% of Americans agreed with the Arizona law regarding immigration. In addition, many solons are realizing that the accelerating deficit impedes government. Some Democrats and many republicans are sophisticated enough to see higher taxes could subdue the economy even further. If the Fed were to raise interest rates that would further put downward pressure on the economy. All these things leave few viable options. There is no question that the Fed is going to accommodate the economy, as we explained earlier, by cutting interest on banks deposits at the Fed and forcing banks’ to lend, which would invigorate the economy and raise employment. This is why the market rallied from 9800 to 10,500. Remember since Fed Chairman Ben Bernanke took office the government’s short term debt rose from $8.2 trillion to $13.3 trillion. We are sure you remember his 2002 speech as he described the Fed’s printing press abilities. All monetary expansion has been done is buy time – it has not in any way solved the underlying problems.

We wonder what the Fed will do with the trillions of dollars in toxic waste bonds held on its balance sheets? They’ll sell them and you will get billed for it. Don’t forget foreign exchange of foreign nations in dollars fell from 64.5% of assets to 59.5% of assets in just 1-1/2 years. Our friends are sellers, including China.

What Washington, the Fed and Wall Street have to understand is that you cannot borrow your way to wealth. There is an eventual law of diminishing returns. Present prosperity cannot be paid for by future production and services. The public senses this and their confidence continues to dissipate. Seventy percent believe there will be no recovery. They are angry and want to purge congress and the Senate of the criminals they previously elected. This is a reflection in part of unemployment of 22-3/8%, falling hours and wages and perpetual loss of purchasing power.

As we pointed out previously Europe and the UK and the US have chosen different paths to solve their debt, finance and economic problems. Europe has raised taxes and implemented austerity. The US so far has done neither and continues to believe that quantitative easy (QE) is the best hope of success. Heretofore it has been unsuccessful, but they keep on doing it anyway for lack of an acceptable alternative. The US is in double dip recession already. The question is can the Fed act fast enough to stave off deflationary depression? This is what Europe has done and they are about to find out much to their chagrin that they have a deflationary depression on their hands, and they have lost control. That should eventually knock the euro for a loop. The solvent members of the euro zone are going to find they have thrown good money after bad. Europe heads for depression and the US will soon follow. It is the intention to create $5 trillion in QE over the next two years to carry the US economy through the next election. There is just three months to elections. The race is on to convince the US electorate that America is ok. We do not believe that will be successful.

The Fed continues to buy toxic debt instruments. They admit to having purchased $1.3 trillion worth, but we believe that the figure is more like $1.8 bullion worth. The difference is parked offshore. As Fed chairman Bernanke says unemployment is the most pressing challenge. The way to help that situation is to have banks lend to small- and middle-sized businesses that create 70% of the jobs.

As of now we have not emerged from our inflationary depression and we are not going too. We may have a period of grace due to QE but that will be transitory.

Housing is locked into a long-term depression. Can you imagine building 549,000 new homes with a 3-year overhang, when four months is normal? Eighty percent of the building industry is dead in spite of $8,000 credits and $1.25 trillion or $1.8 trillion in purchases of MBS and CDO bonds. Foreclosures hitting the market are endless with no relief in sight. Millions of homes are underwater and will probably stay that way for years to come.

46.2% of the unemployed have been out for 27 weeks or more. They cannot buy houses – that is double the worst ever recorded. The average worker has been out of work for 35.2 weeks. Real unemployment is 22-3/8%. The average workweek is 34.1 hours. You certainly cannot have recovery with these kind of numbers.

We ask how do you have a recovery under such circumstances? By the end of the year, in the absence of a quick QE injection we should see GDP growth in the minus column or close to it. All QE sights, except for more bank lending will focus again on banking and Wall Street making sure they do not collapse.

Economists tell us the opposite, but they are only correct 1/3rd of the time. It is obvious the economy is still in deep trouble. Payrolls have fallen, state and federal revenues are way off, state unemployment disbursements are up, as are the use of food stamps, welfare and Medicaid. All these problems and we have seen $2.3 to $2.5 trillion in stimulus and zero interest rates to boot. As the planning at the Fed figures out how the 3rd stimulus will be applied the Fed still won’t talk about an exit strategy, because they have none. Bernanke, like his predecessor Greenspan, doesn’t have any workable solutions. That is because he won’t purge the system and its malinvestment. That is why his only answer can be QE and monetary inflation. After the 2012 election it will be very obvious that the banking system will be unable to properly function. This has been a lonely vigil, but others are now coming to the same conclusion as we have. Mark Farber, Jim Willie, DavidRosenberg, Jim Grant and Ambrose Evans-Pritchard have all joined us in a chorus of warnings.

We have seen a continual fall in M3 at a 9.5% contraction rate. This reduction has been going on for over a year, as money stock declined by $300 billion. All we can say is this reduction allows the Fed lots of room to reincrease M3 again.

The Fed, Wall Street and the Treasury know current levels, which are receding, cannot be maintained without more massive infusion of money and credit. Problems are about to occur if quick action is not taken.

That is reflected in the statements of St. Louis Fed President James Bullard’s comments, or should we say trial balloons. The bottom line is monetize and inflate or die.

We cannot but help make comment on the SEC’s new position that “reform” legislation exempts the SEC from the Freedom of Information Act. This really is nothing new. The SEC has been blocking access to testimony for years. Government is supposed to be seeking transparency not acting like the CIA or FBI.

Stocks are again in the process of topping out. That should further cut into the savings rate and into spending as well. Higher income families are feeling the pinch. That is complicated by the fact that almost half of all mortgages have negative equity. Homeowners are staggered by the loss in equity, which in many cases is their total life savings. As a result FICO scores are plummeting. That means more consumers are being shut out of the credit markets. Take our advice, be long gold and silver related assets.

The commercial paper market rose $1.5 billion to $1.101 trillion last week. The California fiscal emergency is much worse than Greece. There is a $19 billion shortfall, as the state House and Senate refuse to fix the problem. There is big trouble in La La land. The deficit is 22% of the $85 billion general fund budget.

State workers will take three days off without pay per month beginning in August. The budget is five weeks overdue.

Schwarzenegger says its fiscal meltdown as the state hovers a few notches above junk state, IOU’s are on the way. We saw this coming 14 years ago, and we left never to return. The governor says he will only sign a budget if it includes an overhaul of the state’s public pension system. The overall economy is on the verge of tanking. It is like the summer of 2008 again. They still have real estate and bank problems, now sovereign debt problems mixed in. After two years and the injection of almost $5 trillion the economy has little to show for it. The stock market holds up as transnational conglomerates scoop up profits made from free trade and globalization that are parked offshore escaping taxes. That is $1.5 trillion, or $525 billion in taxes that could go a long way to reducing the fiscal deficit. It is very unfair when we have two sets of rules. How can anyone have any faith in the system?

The four quarters of inventory accumulation is over and it shows how ineffectual the stimulus combination of the administration and the Fed of $2.3 to $2.5 trillion really has been. Can you imagine a revision in the second quarter from 3.7% to 2.4%. Lies, lies and more lies.

The Reuters/Ipsos Poll showed only 34% approval of Obama’s handling of the economy and jobs versus 46% who deemed it unsatisfactory.

Imports in the second quarter surged by 28.8%, which is no surprise, as the US manufactures very little anymore. Exports rose 10.3%. That provided the largest subtraction since the 3rd quarter of 1982. Business inventories increased $75.5 billion, up from $44.1 billion in the 1st quarter. That added 1.05% to GDP. Excluding inventories the economy expanded at a 1.3% rate, up from 1.1% in the 1st quarter. Now who do they sell too?

The economy shrank 2.6% last year, the steepest drop since 1946. This as unemployment surged to 22-3/8%. These figures are the worst since the Great Depression.

Employment costs rose 0.5% in the 2nd quarter. Wages and salaries rose 0.4% and benefits 0.6%. The July Chicago PMI was 62.3, up from June’s 59.1. The employment index rose to 56.6 from 54.2 in June. New orders rose to 64.6 from 59.1.

The University of Michigan Sentiment Index was 67.8, up from 66.5.

The current conditions index was the weakest since November 2009, as consumer sentiment fell to 67.8 from 76.0.

Favorable attitudes for durable goods fell to 58% from 67% in June. Consumer expectations fell to 62.3, the lowest since March 2009 versus 60.6 in early July and 69.8 in June. The consumer 12-month outlook fell to 66 from 79.

The IMF says the US financial system needs $76 billion in capital immediately.

The great recession has been far worse than depicted.

China, Japan and oil exporting countries are dumping US treasuries. Everyone now knows the Fed is practicing financial fraud.

Fixed U.S. mortgage rates set record lows last week for the sixth straight week, home funding company Freddie Mac said on Thursday.

The average 30-year loan rate edged down to 4.54 percent in the week ended July 22 from 4.56 percent the prior week and 5.25 percent a year ago.

Fifteen-year mortgage rates averaged 4 percent, also a record, down from 4.03 percent a week ago and 4.69 percent a year ago.

Records from Freddie Mac, the second largest buyer of U.S. residential mortgages, date back to 1971 for 30-year mortgages and 1991 for 15-year loans.

Lenders charged an average 0.7 percentage point in added fees and points last week, the same as the previous week.

Thirty-year mortgage rates last averaged over 5 percent in April.

While refinancing has picked up steam, the pace remains well below highs of last year when rates were similarly low.

Many borrowers who had the financial incentive either have already refinanced or do not meet lender requirements.

Applications to refinance mortgages last week declined from a 14-month high, the Mortgage Bankers Association said on Wednesday. Home buying has been quelled by dour consumer confidence, fears of job loss and tight lending practices.

Ever wonder why according to the latest economic poll published by Reuters earlier the general public’s satisfaction with Obama’s handling of the economy is deteriorating faster than any other issue? (not to mention that 46% of Americans believe Obama is not focused enough on job creation, and that 72% of republicans say they are certain to vote at the November congressional elections versus 49% of democrats). A part of the answer comes courtesy of a new study produced by National League of Cities, the U.S. Conference of Mayors and the National Association of Counties titled simply enough: “Local Governments Cutting Jobs and Services: Job losses projected to approach 500,000”, showed local governments moved to cut the equivalent of 8.6 percent of their workforces from 2009 to 2011. As a result of local government cutbacks, almost 500,000 people will lose their jobs, and the total will likely rise. The summary of the report attached below, is particularly grim: “Over the next two years, local tax bases will likely suffer from depressed property values, hard-hit household incomes and declining consumer spending. Further, reported state budget shortfalls for 2010 to 2012 exceeding $400 billion will pose a significant threat to funding for local government programs. In this current climate of fiscal distress, local governments are forced to eliminate both jobs and services.” If Americans are dissatisfied with Obama’s handling of the economy now, just until 2012.

Orders and shipments for non-military capital goods excluding aircraft climbed in June, signaling investment by U.S. businesses picked up heading into the second half of the year. Such bookings increased 0.6 percent after jumping 4.6 percent in May, more than previously reported, figures from the Commerce Department showed today in Washington. Total orders for durable goods, those meant to last at least three years, unexpectedly dropped 1 percent, depressed by a decrease in demand for aircraft which is often volatile.

Eaton Corp. is among manufacturers benefiting from a pickup in demand as companies in the U.S. and abroad update equipment that is helping to support the recovery. The gains will partially compensate for a slowdown in consumer spending that is causing the world’s largest economy to cool heading into the second half of the year.

One of the odder stories of the day comes from Dow Jones, which reports that the Chinese Sovereign Wealth Fund (China Investment Corp, or CIC), has sold $138.5 million worth of Morgan Stanley shares in the past week, after dumping 4.53 million shares at $27.17 on Wednesday and 575,000 shares at $27.13 on Thursday. CIC began accumulating a massive Morgan Stanley stake in 2007, when it purchased its initial shares in the then troubled investment bank, and followed up with a June 2009 $1.2 billion investment, The reason for the sale, DJ speculates, is for the fund to avoid “additional disclosure requirements.” Yet as a filing as recently as June 18 disclosed, the fund’s Morgan Stanley stake was openly disclosed to be 11.64%. Surely the CIC administrator, the PM and everyone else in the front and back office were all too aware of this number. Which is odd since per both initial and follow up purchase agreements, CIC had stated it would not own more than 9.9% of MS’ shares, and would remain a passive investor. That the firm would blatantly purchase 16% more than this threshold in the open market by mistake in the past year seems somewhat ludicrous. Worth recalling is that in June CIC disclosed a 10% MTM loss for the month of May or roughly about the time it announced its above normal MS exposure. Are the two related? Has the CIC been covertly liquidating assets? It is unclear, as the one and only 13F for CIC is still the original one filed from February. One would imagine there would be at least some SEC requirement that a filer that has issued at least one 13F would be so kind to follow it up with at least a second one… eventually. In the meantime there is no official statement on the transaction: “A spokeswoman for CIC said she was unaware of the reason for the sales. A Beijing-based Morgan Stanley spokeswoman declined comment.
Moody’s Investors Service on Tuesday lowered its outlooks to “negative” on certain ratings for Bank of America Corp., Citigroup Inc. and Wells Fargo & Co., citing a new law that is expected to reduce the likelihood of government bailouts of banks.

The outlooks on the banks debt and deposit ratings were previously “stable.”

In a note to investors, analyst Sean Jones wrote that Wall Street Reform and Consumer Protection Act should result in lower levels of taxpayer support for banks that run into trouble. The new law attempts to strengthen the ability of regulators to supervise and liquidate banks if need be, he wrote.

Jones said that in the near term regulators would continue facing significant obstacles in trying to liquidate global companies without causing economic upheavals, so the current ratings are still appropriate.

However, he said that as the new law is implemented over the next year or two, Moody’s “support assumptions” for major banks will likely revert to pre-crisis levels, or even lower.

“Since early 2009, Bank of America, Citigroup, and Wells Fargo’s ratings have benefited from an unusual amount of support,” Jones noted.

That support resulted in debt and deposit ratings that range from three to five notches higher than that appropriate for the banks’ intrinsic financial strength, without the support.

The banks’ long-term and short-term ratings, which have not benefited from the assumption of government support, were affirmed and not affected.

US industrial titan General Electric has agreed to pay over 23 million dollars to settle allegations that it bribed Iraqi officials, a US financial watchdog said on Tuesday.

GE had been accused by the Securities and Exchange Commission of being part of “a 3.6 million dollar kickback scheme with Iraqi government agencies to win contracts to supply medical equipment and water purification equipment.”

Four subsidiaries of the Connecticut-based company were accused of bribing officials at the Iraqi ministries of health and oil, trading cash, computer equipment and medical supplies to win lucrative contracts.

The SEC said the four GE units — two of which were not part of the firm when the alleged bribery took place — earned around 18.4 million dollars as a direct result of the kickbacks.

About 18.9 million homes in the U.S. stood empty during the second quarter as surging foreclosures helped push ownership to the lowest level in a decade.

The number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.6 million in the year-earlier quarter, the U.S. Census Bureau said in a report today. The ownership rate, meaning households that own their own residence, was 66.9 percent, the lowest since 1999.

The “new normal”: More than one in five Americans at risk of destitution

More than one in five Americans in 2009 suffered a household income loss of 25 percent or more over the previous year, according to a new report sponsored by the Rockefeller Foundation and entitled “Economic Security at Risk.” The report documents a steady increase in economic insecurity since the 1960s, and concludes that annual income losses of 25 percent or greater increased by 49.9 percent between 1985 and 2009.

“Putting this trend in terms of population,” the report states, “approximately 46 million Americans were counted as insecure in 2007, up from 28 million in 1985.” The head of the research team that prepared the report, Yale University Professor Jacob Hacker, told an interviewer, “What we’re seeing, basically, is what we’re calling ‘the new normal.’ We’re slowly ratcheting up this level of economic insecurity.”

The research group has devised what it calls the Economic Security Index (ESI), which measures the share of Americans in a given year who experience at least a 25 percent decline in their available household income and who lack a financial safety net to replace the lost income. Such a sudden income drop—usually due to the loss of employment, high medical expenses, or a combination of the two—often leaves people facing destitution.

The report does not include 2010, when long-term joblessness has become endemic. The ESI for this year will doubtless be considerably higher than for 2009.

The study notes that a staggering 60 percent of Americans experienced at least one income loss of 25 percent or more over the 1966-2006 period, and that losses of this size have become more common across most income sectors since the mid-1980s.

“Those with the most income and education have faced the least insecurity,” the report states. “The less affluent, those with limited education, African-Americans and Hispanics have faced the most. Virtually all groups, however, experienced significant increases in insecurity over the past 25 years.”

The study also found that the size of the typical income drop has grown, from 38.2 percent between 1985 and 1995 to 41.4 percent between 1997 and 2007. And the level of income insecurity relative to unemployment at any given point has risen over the past quarter century. In 1985, the unemployment rate was 7.2 percent and the ESI was 12 percent. In 2002, when the jobless rate was 5.8 percent, the ESI was 17 percent.

The report relates the protracted rise in economic insecurity to the explosive growth of both medical costs and household debt, and the decades-long increase in the concentration of wealth at the very top of the economic ladder. It notes the finding of the Congressional Budget Office that between 1979 and 2006 average after-tax income rose by 21 percent for the middle fifth of American households, but increased by 112 percent for the richest 10 percent of households and 256 percent for the top 1 percent.

The sharp rise in economic insecurity documented by the Rockefeller Foundation study is the outcome of a three-decade-long offensive by the American ruling class against the jobs, wages and living standards of the working class. This assault has only intensified since the eruption of the financial crisis in September 2008, which ushered in the worst recession since the 1930s. Under Obama, the drive to offload the crisis onto the working class has been stepped up, in the form of wage cuts, speedup and savage cuts in social spending at the state and local level.

The Obama administration extended the Wall Street bailout launched under Bush. It then signaled the intention of the ruling class to use mass unemployment to permanently lower the wages and conditions of American workers toward those of impoverished workers in Asia when its Auto Task Force drove General Motors and Chrysler into bankruptcy last year. This was done to impose new plant closures and layoffs and slash the wages of newly hired auto workers to half the previous level.

Next came the so-called health care “reform,” which will lower health costs for businesses and the government by rationing care and reducing benefits for tens of millions of workers and retirees. Since the passage of the health care overhaul, the administration has abandoned any economic stimulus measures in order to focus on slashing the budget deficit by attacking basic social programs upon which millions of working people rely.

The result of these policies is a record rise in corporate profits, based almost entirely on the reduction in labor costs through layoffs, wage and benefit cuts, and speedup. In many cases, companies have reported sharply higher profits, even though their sales and revenues have declined.

In an article headlined “Industries Find Surging Profits in Deeper Cuts,” the July 26 New York Times reported that US corporate profits jumped by 40 percent between late 2008 and the first quarter of 2010. It noted that by next year, analysts expect profit margins to reach 8.9 percent, a record high.

The Times wrote that among the S&P 500 companies that have reported their second-quarter results, 175 in all, more than one in ten had higher profits on lower sales, nearly twice the number in a typical quarter before the current recession. Among the firms that have reported earnings for the second quarter, revenues rose 6.9 percent on average while profits surged 42.3 percent.

The article cited the motorcycle producer Harley Davidson, which, despite falling sales, last week posted a $71 million profit, more than triple its profit a year ago. Last year the company cut 2,000 jobs, over a fifth of its work force, and plans to slash another 1,400 to 1,600 jobs by the end of next year. Harley stock surged 13 percent the day it released its quarterly results.

Other companies that have improved their bottom lines despite falling sales and revenues include General Electric, JPMorgan Chase, Hasbro and Ford. The latter’s North American operations are expected to earn more than $5 billion in 2010, despite a revenue plunge of $20 billion since 2005. Over the 2005-2010 period the company has slashed its North American workforce by nearly 50 percent.

The same day as the Times report, the Wall Street Journal ran an article noting that the financial markets are generally punishing companies that report expansion plans and rewarding those that plan either no new hiring or further layoffs.

This class-war policy is further enriching the financial aristocracy. The Wall Street Journal on Tuesday published its list of the past decade’s highest paid US corporate CEOs. At the top was Oracle chief executive Lawrence Ellison, who has pocketed $1.84 billion over the past ten years.

His average yearly take of $184 million helped Ellison compile his estimated fortune of $28 billion. Some idea of the lifestyle of Ellison and his fellow CEOs can be gleaned from the fact that the Oracle CEO owns several fighter jets, a $200 million estate in California complete with a man-made lake, and mansions in Malibu and Rhode Island.

The total income of the 25 CEOs on the Wall Street Journal list is $13.5 billion, an average of $540 million per executive over the decade.

Such avarice and obscene levels of wealth are the reverse side of growing economic insecurity, poverty, homelessness and hunger for millions of working people in America and billions more around the world.

Society Begins to Crack Under Harsh Measures

ATHENS, Jul 30, 2010 (IPS) – Every working day, more than a hundred people crowd around the entrance of the merchant and passenger boats’ reconstruction industry, well known as ‘The Zone’, in the southern suburb of Attiki.

Most of them are unemployed steel workers and torch welders, who wait desperately from the early hours of the morning for an announcement of jobs offered on a daily basis on the ships that dock at the port.

“Tensions often run high among them,” says Makis Kistikidis, a steel worker with 32 years of experience in the Zone, amid a scuffle between some workers scrambling to grab a two-day job slot.

“This is not the worst of days,” Kistikidis says. “Very often, there are no jobs at all. Many of these people haven’t had more than five or six days of work since the beginning of this year, and no more than 100 working days since 2008.”

While public debate is Greece is focused on austerity measures to cut the country’s ballooning budget deficit, little attention has been paid to the societal impact of growing unemployment and how these harsh measures are squeezing salaries of ordinary citizens.

The zone, once a strong industry employing over 5,000 people on a daily basis, is now a vivid example of Greece’s economic collapse. Its slow demise, as Kistikidis explains, began when the lure of cheap labour in China and the Far East propelled ship owners away from the shores of Greece.

The global financial crisis in the last two years has slowed down commerce further. Unemployment has hit the workers very hard.

“Today unemployment in the Zone is above 90 percent,” says Kistikidis. “Check out the dates of registration in the unemployment list. You’ll see how many people are stuck here since the beginning of the year or even before that.”

Aristedes G, a 58-year-old steel worker, has not had a single day of employment since 2008.

“After being unable to pay up my debt for a bank housing loan, bank authorities confiscated the property and put it on auction,” he says.

“Look, this is my food,” he says, raising a plastic bag with leftover cheese pies donated to him by owners of the café at the entrance of the zone.

Such stark stories have become all too common, says Kistikidis. He points at a line of men idling around the café. Many of them have endured economic hardships for months. “Atmosphere at home is often bad and many just prefer to spend time outside to avoid the nagging at home,” he says.

Four couples known to Kistikidis have separated over the past year, he says, precisely for this reason.

Kistikidis cites the example of one of his unemployed friends, George, a 47- year-old man who was abandoned by his wife after a bank he owed money to evicted him from his house. Kistikidis sought to visit him on a recent evening to boost his morale, but he was in for a shock. George had hanged himself.

In recent months, port workers have joined strike action, taking on the government against reforms intending to deregulate their sector. Kistikidis bristles at companies for bypassing unemployed Greek labour and importing cheap labour from Latvia and Lithuania. The average wage for Greek labourers ranges from 60 to 75 euros per day whereas Latvian or Lithuanian labourers cost about a tenth of that.

“This time we managed to stop them,” he says of the government. “But this is the future they want to give us.”

The Organisation for Economic Cooperation and Development (OECD), a grouping of rich nations, reported recently that unemployment in Greece is expected to rise beyond 14 percent, four percent higher than last year.

Experienced workers are facing hardships, just as much as novices in the market.

The problem is deteriorating work ethics, says Fannis Klissas, a 26-year-old cook. Klissas landed a job a few months ago in a pastry shop in Athens that paid 840 euros per month.

“In the beginning the agreement seemed good. The money was a bit less than what it is usually but in these times you can’t have it all,” he says.

A few weeks after he joined his job, he became aware that the owner of the shop was imposing fines on people who made mistakes during production.

“I made a mistake some weeks ago that cost the owner a few euros, but be asked me to pay a fine of 100 euros. When you work overtime everyday, six days per week, you can’t be punished for spoiling a couple of cakes. If you cannot do your job they can warn you and then ask you to leave the job, but this attitude of a boss being able to punish people the way he desires is totally unjustified.”

Klissas refused to pay up and was fired.

This culture prevails across the country, and is tolerated only because of mounting economic uncertainties, says Klissas. “People are scared and easily manipulated. Things are getting tougher here. Most of the people put up with things that they should speak against. How can they? Don’t they understand that work should be based on mutual respect and mature human relations, not domination and fear?”

Many observers say that deregulation is the price Greek society has to pay in order to increase competitiveness and cut its mounting debts. Some others predict that hardships resulting from the austerity measures could spark more severe social tensions in Greece.

Afroditi Korfiati, a special investigator with the Labour Inspectorate of the Ministry of Labour, responsible for exposing work place irregularities and resolving disputes between workers and employers, suggests people should stay calm until the impact of austerity reforms materialise.

“There is a general mood that things are deteriorating. But the actual data we are gathering proves that workplace irregularities are just as bad as last year. We are trying hard to maintain checks,” Korfiati told IPS.

The measures are also impacting her own department, she says. “We are 18 investigators less than last year. And vacancies aren’t being filled up.”

Recently, people took to the streets for the fourth general strike this year. The crowd was smaller compared to previous strikes, fuelling speculation that the fear of losing jobs is compelling people to stay quiet despite the growing frustration.

“It is not fear that keeps people away from demonstrations. It is the lack of any alternative political perspective for the future,” Xristina Kopsini, a columnist wrote in Kathimerini, a political daily. (END)