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By Anthony Faiola
The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.
Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation's wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.
The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.
Yet the administration may feel it has no choice. Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way.
The government's about-face goes beyond the banking industry. It is reasserting itself in the lives of citizens in ways that were unthinkable in the era of market-knows-best thinking. With the recent takeovers of major lenders Fannie Mae and Freddie Mac and the bailout of AIG, the U.S. government is now effectively responsible for providing home mortgages and life insurance to tens of millions of Americans. Many economists are asking whether it remains a free market if the government is so deeply enmeshed in the financial system.
Given that the United States has held itself up as a global economic model, the change could shift the balance of how governments around the globe conduct free enterprise. Over the past three decades, the United States led the crusade to persuade much of the world, especially developing countries, to lift the heavy hand of government from finance and industry.
But the hands-off brand of capitalism in the United States is now being blamed for the easy credit that sickened the housing market and allowed a freewheeling Wall Street to create a pool of toxic investments that has infected the global financial system. Heavy intervention by the government, critics say, is further robbing Washington of the moral authority to spread the gospel of laissez-faire capitalism.
The government could launch a targeted program in which it takes a minority stake in troubled banks, or a broader program aimed at the larger banking system. In either case, however, the move could be seen as evidence that Washington remains a slave to Wall Street. The plan, for instance, may not compel participating firms to give their chief executives the salary haircuts that some in Congress intended. But if the plan didn't work, the government might have to take bigger stakes.
"People around the world once admired us for our economy, and we told them if you wanted to be like us, here's what you have to do -- hand over power to the market," said Joseph Stiglitz, the Nobel Prize-winning economist at Columbia University. "The point now is that no one has respect for that kind of model anymore given this crisis. And of course it raises questions about our credibility. Everyone feels they are suffering now because of us."
In Seoul, many see American excess as a warning. At the same time, anger is mounting over the global spillover effect of the U.S. crisis. The Korean currency, the won, has fallen sharply in recent days as corporations there struggle to find dollars in the heat of a global credit crunch.
"Derivatives and hedge funds are like casino gambling," said South Korean Finance Minister Kang Man-soo. "A lot of Koreans are asking, how can the United States be so weak?"
Other than a few fringe heads of state and quixotic headlines, no one is talking about the death of capitalism. The embrace of free-market theories, particularly in Asia, has helped lift hundreds of millions out of poverty in recent decades. But resentment is growing over America's brand of capitalism, which in contrast to, say, Germany's, spurns regulations and venerates risk.
In South Korea, rising criticism that the government is sticking too close to the U.S. model has roused opposition to privatizing the massive, state-owned Korea Development Bank. South Korea is among those countries that have benefited the most from adopting free-market principles, emerging from the ashes of the Korean War to become one of the world's biggest economies. It has distinguished itself from North Korea, an impoverished country hobbled by an outdated communist system and authoritarian leadership.
But the repercussions of crisis that began in the United States are global. In Britain, where Prime Minister Margaret Thatcher joined with President Ronald Reagan in the 1980s to herald capitalism's promise, the government this week moved to partly nationalize the ailing banking system. Across the English Channel, European leaders who are no strangers to regulation are piling on Washington for gradually pulling the government watchdogs off the world's largest financial sector. Led by French President Nicolas Sarkozy, they are calling for broad new international codes to impose scrutiny on global finance.
To some degree, those calls are even being echoed by the International Monetary Fund, an institution charged with the promotion of free markets overseas and that preached that less government was good government during the economic crises in Asia and Latin America in the 1990s. Now, it is talking about the need for regulation and oversight.
"Obviously the crisis comes from an important regulatory and supervisory failure in advanced countries . . . and a failure in market discipline mechanisms," Dominique Strauss-Kahn, the IMF's managing director, said yesterday before the fund's annual meeting in Washington.
In a slideshow presentation, Strauss-Kahn illustrated the global impact of the financial crisis. Countries in Africa, including many of those with some of the lowest levels of market and financial integration and openness, are now set to weather the crisis with the least amount of turbulence.
Shortly afterward, World Bank President Robert Zoellick was questioned by reporters about the "confusion" in the developing world over whether to continue embracing the free-market model. He replied, "I think people have been confused not only in developing countries, but in developed countries, by these shocking events."
In much of the developing world, financial systems still remain far more governed by the state, despite pressure from the United States for those countries to shift power to the private sector and create freer financial markets. They may stay that way for some time.
China had been resisting calls from Washington and Wall Street to introduce a broad range of exotic investments, including many of the once-red-hot derivatives now being blamed for magnifying the crisis in the West. In recent weeks, Beijing has made that position more clear, saying it would not permit an expansion of complex financial instruments.
With the U.S. government's current push toward intervention and the soul-searching over the role of deregulation in the crisis, the stage appears to be at least temporarily set for a more restrained model of free enterprise, particularly in financial markets.
"If you look around the world, China is doing pretty good right now, and the U.S. isn't," said C. Fred Bergsten, director of the Peterson Institute for International Economics. "You may see a push back from globalization in the financial markets."
Friday, October 10, 2008
Vote Rigging and Suppression Ahead of the 2008 Election
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By Democracy Now!
ROBERT F. KENNEDY, JR. "A lot of Europeans wonder, why are Americans so crazy? They keep reelecting this guy. Well, the answer is, we don’t. You know, they keep stealing these elections. And they stole it in 2000, they stole it in 2004, and they’re all set up to steal it again."
By Democracy Now!
ROBERT F. KENNEDY, JR. "A lot of Europeans wonder, why are Americans so crazy? They keep reelecting this guy. Well, the answer is, we don’t. You know, they keep stealing these elections. And they stole it in 2000, they stole it in 2004, and they’re all set up to steal it again."
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JUAN GONZALEZ: Election Day is less than a month away, and a record-breaking voter turnout is expected in the 2008 race. But voting rights groups are warning that tens of thousands of registered voters might not be able to cast a ballot come November 4th.
Beyond the documented problems of electronic voting machines, thousands of names have been purged from the rolls in several states, including at least six swing states. In some states, voters have been deemed ineligible because of voter registration laws that require photo identification or due to state officials checking voter names against Social Security databases.
Democrats and Republicans are locked in court battles over these in a number of states across the country. While Democrats say they’re trying to prevent attempts to block votes, Republicans say they are trying to prevent voter fraud.
AMY GOODMAN: Today, we spend the hour looking at voting rights and the political manipulation of the voting process. We begin with a report filed by BBC investigative journalist Greg Palast on how both parties are accusing each other of trying to steal the election.
GREG PALAST: There’s a war on for that White House over there. Both political parties say the other is trying to take it, not by winning the vote, but by stealing it. In fact, the Democrats say the Republicans have done it before.
ROBERT F. KENNEDY, JR.: You know, a lot of Europeans wonder, why are Americans so crazy? They keep reelecting this guy. Well, the answer is, we don’t. You know, they keep stealing these elections. And they stole it in 2000, they stole it in 2004, and they’re all set up to steal it again.
GREG PALAST: Now, the Republicans accuse the Democrats of voter fraud on a massive scale. Republicans charge that Democrats have registered as many as five million illegal aliens, fakes, felons and fraudulent voters.
So, the question is, are the Democrats stuffing the rolls with millions of bogus voters, or are the Republicans blocking millions of genuine voters?
The answer is buried somewhere out here. This is no country for old men—or young ones, for that matter. It’s economic ghost town. This is the desert town of Las Vegas—the other one, Las Vegas, New Mexico—where they made the movie No Country for Old Men. For many people, work as extras on the film was the only work they had all year. Even the candidates for office are back on horseback to save gas. Odd thing, in elections earlier this year in New Mexico, one in nine people who turned up at the polls found their names had simply vanished from the voter rolls.
LAS VEGAS RESIDENT: I wasn’t on the list, and I had to do one of those—
VOTER REGISTRAR CLERK: Provisional?
LAS VEGAS RESIDENT: Yeah.
VOTER REGISTRAR CLERK: OK, let me tell you. Those lists came from the Secretary of State’s office. We—the local clerk did not have anything to do with that.
GREG PALAST: What’s going on here? We asked this man, County Elections Supervisor “Pecos” Paul Maez.
So, people are losing their vote?
“PECOS” PAUL MAEZ: Yes, because they’re not on the voter rolls, you know.
GREG PALAST: Even the supervisor had his own surprise.
I understand you had a problem.
“PECOS” PAUL MAEZ: I had a problem during the caucus, yes.
GREG PALAST: What happened? Your name was missing?
“PECOS” PAUL MAEZ: It was—yes.
GREG PALAST: And it didn’t say “Pecos Paul” on the voter roll?
“PECOS” PAUL MAEZ: It didn’t say “Pecos Paul.” It actually—
GREG PALAST: Wait, you’re the elections—you’re the elections supervisor. It didn’t have your name on the voter roll?
“PECOS” PAUL MAEZ: Yeah.
GREG PALAST: The presidency could be decided right here. Republicans won New Mexico last time by barely 5,000 votes. Which voters have gone missing?
A lot of poor folk on this street—officially, they don’t exist. In fact, this whole street doesn’t exist.
Low-income voters, especially, have been purged from voter rolls under new US law. Republicans claim these purge laws are needed to prevent voter fraud. We caught up with one of the party’s top anti-fraud crusaders at a Republican celebration. Lawyer Pat Rogers singled out ACORN, a Democratic Party-linked group.
Are the Democrats using fraudulent means to stuff the voter rolls and steal the election?
PAT ROGERS: My experience in Albuquerque with the ACORN group is that they were involved in serious registration fraud. My experience in Albuquerque with the elections over the last few years have indicated that there have been isolated instances of voter fraud.
GREG PALAST: It’s true that several ACORN workers were convicted of making up fake names for the voter rolls, because they were paid for each name they collected. But there’s no evidence that any fictional voter actually cast a ballot. Rogers still fears they’ll appear in November.
PAT ROGERS: If you’re going to go to this effort and this expense of having fraudulent people register, why would you do that? People say that there is no fraud here, but there is.
GREG PALAST: I drove into Detroit to investigate whether Republican plans to stop fraudulent voters might also capture innocent victims of the economic crisis. In Michigan, 62,000 families now face losing their homes to foreclosure on their mortgages. In neighborhoods like this, half the houses have been repossessed.
ROBERT PRATT: This house here is vacant. I mean, they’re nice houses. Look at this house. This is a nice house right here.
GREG PALAST: This is Robert Pratt. He’s next on the list.
ROBERT PRATT: This house here is vacant. Yeah, it’s empty. This house is empty.
GREG PALAST: That makes it impossible for you to sell your house.
ROBERT PRATT: To sell any house. This house is vacant. Then you look across the street over there, those houses are vacant.
I work straight with no overtime, no off-days. I’m talking seven days a week, eight hours a day. Yes.
GREG PALAST: So you’re trying to get these built [inaudible].
ROBERT PRATT: Yes, yes, yes. I want to build. I want—I mean, look at our neighborhood. Our neighborhoods are starting to look like a battle zone.
GREG PALAST: As the neighborhood spun down into poverty and violence, his son, just twelve years old, playing in the backyard, was shot dead by a stray bullet.
ROBERT PRATT: This is my son. This is my son here. This is Robert.
GREG PALAST: He’s lost his son, his home, and now he could lose his vote. A reporter for the Michigan Messenger wrote that the local Republican chairman told the journalist that his party would challenge residents right at the polling station to stop them from voting if their names are on a foreclosure list. The Republicans now deny this. But the Michigan Messenger sticks by its story.
There’s another issue. If you lose this house, there is an allegation that the Republican Party is—
ROBERT PRATT: Don’t want us to vote. And that’s not—I mean, that’s like saying we’re not a United States citizen anymore. You know, we lose our house, we lose our right to vote. That’s not right. That’s not fair.
GREG PALAST: This is the second time this family has faced foreclosure. Last time, they were thrown out by a company called Trott & Trott, a firm that evicts more than a hundred Michigan homeowners every day.
ROBERT PRATT: Trott & Trott—I mean, come on. That’s a mortgage company that’s here in Michigan that then got a lot of peoples and put a lot of peoples out on the street. I mean, to a lot of homeowners, that’s like an enemy.
GREG PALAST: Home after home after home, foreclosed, boarded up, abandoned.
But in an exclusive enclave nearby, there are no boards over the windows. These go for $10 million apiece.
Wow! No foreclosure sign on this house. This is the home of David Trott. He is Michigan’s foreclosure king. No one has evicted more families in this state.
What’s this below the Stars and Stripes? The Jolly Roger? It’s Mr. Trott’s flag. And this is Mr. Trott’s office. And it’s also Mr. McCain’s office.
The Republicans are renting their local headquarters from Mr. Trott’s eviction operation.
Greg Palast, BBC Television.
The Republicans wouldn’t speak with us, but they deny they are going to use foreclosure lists to challenge voters. So, we went upstairs.
And right upstairs from McCain headquarters, Mr. Trott.
David Trott not only houses the Republican Party, he’s also one of their biggest Michigan contributors. He and his wife have given hundreds of thousands to the party.
McCain has just given up on Michigan, yet the foreclosure controversy remains key to swing states Nevada and Florida.
And now, to the critical swing state of Colorado, where SUVs have replaced the buffalos that used to roam the plains. According to this report, Colorado voters are going the way of the buffalo: they’re disappearing. This government report says that nearly one in five voters, 19.4 percent, were taken off the rolls in an unparalleled, massive purge. Democrats accuse Republican Secretary of State Donetta Davidson of orchestrating the purge. But she says local officials have the final say over voter rolls.
She ended up here, in Washington, when George Bush appointed her head of the United States Elections Assistance Commission, where her job is to tell the rest of the nation how to run unbiased elections. She commissioned a report on election fixing. The report came in like this, but came out like this. It was written by Republican and Democratic experts. They concluded that Republican fears of widespread voter fraud were unfounded. This is the report’s author, Tova Wang.
TOVA WANG: This idea of massive in-person polling place fraud on Election Day is just an absolute myth.
GREG PALAST: The bipartisan team found Democrats were right to worry that legitimate voters were being excluded, but by the time Bush’s chairwoman published the report, the experts’ conclusions were turned upside-down.
TOVA WANG: They left out a lot of the information that we provided regarding voter intimidation and vote suppression. They left out—edited out a number of things that could be perceived as critical of the Department of Justice’s handling of voter intimidation cases.
GREG PALAST: US law permits political party workers to go right into the polling stations and challenge voters when they show up to vote. Experts fear this could lead to intimidation of legitimate voters. Despite the election experts’ views, Republicans demanded new grounds for challenge, they said, to stop Democrats cheating.
UNIDENTIFIED: We know that, and we know—your party rests on the base of electoral fraud.
GREG PALAST: The answer came from the man known as Bush’s brain, Karl Rove, who demanded new ID voting laws.
KARL ROVE: I go to the grocery store, and I want to cash a check to pay for my groceries, I’ve got to show a little bit of ID. Why should it not be reasonable and responsible to say that when people show up at the voting place, they ought to be able to prove who they are by showing some form of ID?
GREG PALAST: New ID laws will hit black voters hardest, says Robert F. Kennedy, Jr., son of the late attorney general, and voting rights lawyer.
You know, Karl Rove said he goes to the grocery store, he has to show an ID to cash a check. So, why can’t you be required to show a photo ID when you vote for president of the United States?
That seems sensible. However, in America, it raises a racial issue.
ROBERT F. KENNEDY, JR.: I have an ID, and most Americans have an ID. But one out of every ten Americans don’t have a government-issued ID, because they don’t travel abroad, so they don’t have passports, and they don’t drive a car, so they don’t have driver’s licenses. The number rises to one in five when you’re dealing with the African American community.
GREG PALAST: Altogether, an estimated 100,000 black voters in just one swing state, Indiana, will lose their vote to the new law.
But when I stopped by the Native American pueblos of New Mexico, I discovered that when it comes to voter suppression, Democrats don’t have clean hands, either. Local politicians wanted to reopen a uranium mine on the pueblos’ sacred mountain. The pueblos were not happy.
NATIVE AMERICAN MAN: See, that’s a very sacred mountain that we have. There is a place, special place, that we pray for—to have a nice summer, have good rain.
GREG PALAST: The officials gave the pueblos ballots without envelopes. Then these same politicians threw out their votes, because they didn’t come in the right envelopes. The Democrats were charged with cheating the pueblos by this man, David Iglesias, a rising Republican star appointed US prosecutor by George Bush. But the Bush administration wanted him to go after individual Democrat voters. Republicans bombarded Iglesias with allegations of fraud by Democrats.
DAVID IGLESIAS: Over 100 complaints we investigated for almost two years. I didn’t find one prosecutable voter fraud case in the entire state of New Mexico.
GREG PALAST: So the Bush administration fired him.
Not prosecuting innocent people led to your removal?
DAVID IGLESIAS: Yeah. I mean, they wanted some splashy pre-election indictments that would scare these other—these alleged hordes of illegal voters away. They were looking for politicized—for improperly politicized US attorneys to file bogus voter fraud cases.
GREG PALAST: In the last presidential election, officially, three million votes were cast and never counted. This time, it could go a lot higher.
And then, there is the chronic shortage of voting machines. In Ohio last time, voters in prosperous white neighborhoods waited only fifteen minutes to vote, while voters in poor black areas waited in line four hours. It all adds up, and it can change the outcome.
TOVA WANG: If you combine people who are disenfranchised by voter ID, people who are disenfranchised by other things, such as there not being enough voting machines, combined with people who will be shut out because they have been left off the voter registration list, that’s enough to swing the election.
GREG PALAST: If the final count is as close as the polls indicate, the next man in that house won’t be chosen by counting the votes, but by blocking the voters.
AMY GOODMAN: A report on voting rights filed by investigative journalist Greg Palast for BBC Newsnight. When we come back from break, he joins us live. Then we’ll be talking to the Secretary of State of Ohio and find out about a new report on voter purging around the country. Stay with us.
[break]
AMY GOODMAN: Greg Palast, BBC investigative reporter, joins us here in our firehouse studio, author of Armed Madhouse, as well as The Best Democracy Money Can Buy and Democracy and Regulation. Right now, he has teamed up with Robert F. Kennedy, Jr. to investigate this year’s election. They’ve just released a voting guide comic book called Steal Back Your Vote.
Welcome to Democracy Now!, Greg Palast.
GREG PALAST: Glad to be here. Let’s see how many we can steal back.
AMY GOODMAN: And your piece is coming out in Rolling Stone next week. Just summarize what we just watched, what you found as you traveled the country, the most egregious problems of people taken off the voting rolls.
GREG PALAST: Well, that’s the problem, is that we have millions and millions and millions of people being purged off the voter rolls, like in the state of Colorado, it was stunning to find out that one in five voters had their names simply erased by the Republican secretary of state. And then George Bush found—picked her out and made her the head of the US Elections Assistance Commission, as—you know, our joke in the comic book is that Bush wanted to name her “purgin’ general,” but Rove said it was a bit too much. So, this is one of the big problems.
You’re going to have millions of people walk into the voting booth, if you’re in Colorado, especially in New Mexico, Nevada, Ohio, Michigan—if you have any foreclosure problems, anything, they’re going to tell you you can’t vote, and they’re going to try to either get you out of the voting booth or give you a provisional ballot. And what we’re trying to tell you is how you can, in effect, steal it back.
So, look, Kennedy and I are coming out with an exposé in Rolling Stone next week on the massive theft of the vote in November. And we were kind of shaken up about it, because—so, Jesse Jackson recommended to us, said, “Look, that’s so grim. You’re going to discourage people from voting. They’re going to say there’s no chance. So you’ve got to do something.” So what we did is we—you know, facing a democracy crisis in America, we did what you have to do, which is to create a comic book. And it’s twenty-four pages of full color with the idea that it tells you—it gives you the Rolling Stone story, with Ted Rall and other great comics laying it out, but then also telling you how you—you know, how you steal it back. And so, we have six ways that they’re stealing the election, but then seven ways you can steal it back.
JUAN GONZALEZ: Well, one of the things that we were talking as the film was playing, the—you’re not often getting Democratic leaders in some of these states really raising a ruckus about this issue.
GREG PALAST: Oh, yeah.
JUAN GONZALEZ: And why is that? In terms of your investigations, for instance, in New Mexico, you mentioned that some of the Democratic leaders were willing to go along with these kinds of purges.
GREG PALAST: Well, as—you know, why don’t Democrats stand up? For the same reason as jellyfish. They don’t—you know, invertebrates, but—or as my co-author, Kennedy, said, they’re cowards. But, you know, he’s true blue. I’m not a Democrat. And, by the way, the guide is totally nonpartisan, so you—which means you can take it into the booth with you, by the way, to protect yourself, the Steal Back Your Vote comic.
And why don’t the Democrats protect voters? Because they’re in on the game. As you saw in New Mexico, you had Democratic Party officials knocking off the Native American vote, which is huge in New Mexico. It’s a swing vote in New Mexico. And they’re all Democrats—Native Americans—almost to a one. But they wanted to stop a uranium mine locally, and so the local policy want their baksheesh from the uranium mine are knocking off Native American votes. We see this in Colorado, we see this in Florida, where local Democratic officials are in on the purge, in on the game, trying to block the low-income minority voters. There are so many dangers now for the new voter, for the minority voter, for the elderly voter. There are so many tricks that they’re using now. It’s not one thing.
You know, I think a lot of people remember me from busting open the Florida purge of 2000 when Katherine Harris said that thousands of black folk were felons, when their only crime was voting while black. You know, that was kind of the magic bullet they gave in Florida. Kennedy, my co-author of the comic book and Rolling Stone article, showed how they stole Ohio.
Now what we see is a nationwide kind of Floridation of the nation, under something called the Help America Vote Act, because, you know, Bush is now trying to help us vote. It’s under the Help America Vote Act, where it’s like a whole series of things. So we have the mass purges. We have new ID laws.
How many new voters in America that have just signed up and all of those Obamaniacs realize that if you mail in your ballot on a first-time vote, almost every state requires you to also include a photocopy of your government ID? Obama is going to lose a million votes from absentee ballots which are mailed in without ID. It’s a new requirement. They don’t tell you that. In some cases, like Kentucky, you’ve got to serve—you have to notarize it. I mean, it’s completely out of control, the mass purging.
But there are things—I don’t want—again, I got to go back to Jesse Jackson’s admonition: don’t be discouraged. In fact, you should be encouraged. You should have the courage to now protect your vote.
JUAN GONZALEZ: And what are some of the ways you can fight back?
GREG PALAST: Yeah. Well, in Steal Back Your Vote, we actually—besides the wonderful comic book, we have a pullout page, which you can get at stealbackyourvote.org, that we have print copies. Download copies. Download them right now, stealbackyourvote.org.
But some of the things you can do is, first of all, don’t mail in your ballot. There’s just too many ways that they can throw it out: you didn’t have your ID, you didn’t have your—you know, you’re not—you’re on some type of purge list, you don’t know it.
Vote early. Today, right now in Ohio, what are you doing after this program? You’re voting. That’s what you’re doing. In Ohio, in Indiana, you can vote right now. In Florida, you can vote right now, in many states, because if you are on a purge list, Amy and Juan, then you have time to correct it, to scream.
We also have the 800 number from Election Protection, so that—bring this in with you, by the way, please. Don’t leave the voting booth. And then we say things like—that’s number four.
AMY GOODMAN: Just go one, two, three, four, five, six, seven.
GREG PALAST: One, don’t mail in your ballot. Don’t go postal.
Second, vote early, vote now.
Three, register and register. What we mean by that is check your registration. We give you a place to go from our sponsor Voto Latino. We also have this in Spanish, Voto Latino.
AMY GOODMAN: You mean, you go online.
GREG PALAST: Go online to stealbackyourvote.org, and then you can check your registration and see if you’re valid, how you’re registered, because you better know how it’s spelled. You know, if you’re Robert F. Kennedy, Jr., you better have ID that says “Jr.” on it.
The fourth thing is vote unconditionally, not provisionally. Three million people were handed provisional ballots. Now, if you’re a white listener to this program, you may not know what a provisional ballot is. If you’re Hispanic or you’re black, you sure know what it is, because they gave out three million in almost all minority areas. Provisional ballots are what you get if there’s a dispute on your ballot or your ID. They challenge you. Some guy with a Blackberry from the Republican Party is challenging you. And I’m not being partisan. It’s just the Republicans that are doing this, challenging you. You get a provisional ballot, and then they throw it out. Don’t accept a provisional ballot. Demand adjudication. Go to stealbackyourvote.org for the steps on how you do it.
The fifth one is—I call it “occupy Ohio, invade Nevada.” What that means is you should be working, you should be working on Election Day. You should vote early now, and on Election Day help people get out the word, get out the comic book, get out—you know, get out the protection. You can’t win anymore by 51 percent. You’ve got to win by 56. I’m not an Obama supporter, but I do believe that every single vote should count.
Six, we call it date a voter. As our sponsor Jesse Jackson said, arrive with five. But, you know—and what we say is, like bowling and love, don’t vote alone. The reason is, you have to protect each other. And when you go in in a group, it’s a lot easier to have the courage to stand up to the vote thieves when they’re challenging you.
And then, of course, last one is, make the democracy demand, which is that if there is games with the vote, the election doesn’t end then on November 4th. It’s Wednesday that counts as much as Tuesday. We have to change the culture of America, where we stop shrugging our shoulders, like after 2000, 2004, and say we’re going to count the votes right now.
How to Save the U.S. Economy
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By Richard C. Cook
The crashing stock market has given its verdict. The financial rescue plan currently being implemented by the U.S. Treasury Department and the Federal Reserve System will fail to revitalize the producing economy, even with continued interest rate cuts. This is because the banking system is essentially a supply-side, trickle-down mechanism with a currency based on a pyramid of bank lending and debt. All the current plans being suggested by economists and others to save the financial system by varying degrees of tinkering are useless. Similarly useless is the pumping in of credit or liquidity by Treasury or the Federal Reserve because it is no more than new debt to roll over old debt.
By Richard C. Cook
The crashing stock market has given its verdict. The financial rescue plan currently being implemented by the U.S. Treasury Department and the Federal Reserve System will fail to revitalize the producing economy, even with continued interest rate cuts. This is because the banking system is essentially a supply-side, trickle-down mechanism with a currency based on a pyramid of bank lending and debt. All the current plans being suggested by economists and others to save the financial system by varying degrees of tinkering are useless. Similarly useless is the pumping in of credit or liquidity by Treasury or the Federal Reserve because it is no more than new debt to roll over old debt.
The cause of the financial failure is that the producing and consumer economy is “maxed out” and is unable to repay existing loans much less new ones. This is because purchasing power in the U.S. has collapsed.
Purchasing power has collapsed not only because we have outsourced our industry abroad and allowed our infrastructure to crumble, but also because of structural defects identified decades ago by C.H. Douglas and John Maynard Keynes. These defects occur due to the need for retained earnings (i.e. savings) to overcome the Law of Diminishing Returns. This leads to insufficient aggregate demand; i.e., the gap between prices and purchasing power that is endemic in an industrial economy.
The problem is not the collapse of the stock market which simply reflects the deflation of the bubble economy. The problem is the oncoming recession/depression caused by the absence of an economic engine to generate new producing power.
Keynesian plans for top-down creation of jobs by government deficit spending has never worked and has always ended in an attempt by the government to inflate its way out of debt. Everything being suggested by the Obama/McCain campaigns is based on the failed Keynesian formula.
An entirely new paradigm is needed. This can be provided through dividend-based economics like the Alaska Permanent Fund, the 2008 tax rebate stimulus, and the basic income guarantee (negative income tax) discussed during the 1960s and 1970s.
Following is the “Cook Plan”:
- Non-taxable vouchers should be issued at the rate of $1,000 per month per adult and $500 per month per child which may be used for food, housing, fuel, communications media, utilities, and educational services provided at outlets within the U.S. Distribution of vouchers may be delegated to state and local governments.
- Vouchers will be deposited by service providers and vendors only in a new network of local chartered savings banks—one for each county in the U.S. Deposits will be made to the bank in the county of the local point-of-sale.
- Banks will lend locally at zero-percent interest using voucher deposits as capitalization. The banks may create loans at a 1:10 reserve ratio with borrowers paying administrative fees only. Borrowers must provide a 20% down payment as collateral or purchase default insurance at 2% of the loan principal.
- Lending will be made only to business entities, including family or commercial farms, operating from an established location within the county.
This system will create a grassroots “bottom-up” economic infrastructure to parallel the “top-down” Federal Reserve System which is collapsing. Transfers between local savings banks and the banks of the Federal Reserve System will be denominated in U.S. dollars with vouchers redeemed within the banking system.
The system could be implemented within a matter of weeks through seed-money provided by the federal government. It could be replicated by any other nation.
It is requested that readers give this plan the widest possible distribution.
Voter Purges Could Cause Florida-like Presidential Recounts
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By Steven Rosenfeld
By Steven Rosenfeld
With less than four weeks to go before the 2008 presidential vote, new practices in key swing states to update voter rolls are coming under fire for mistakes that could involve rejecting tens of thousands of legitimate voters, suggesting that close vote counts in these states could lead to legal fights echoing Florida’s presidential recount in 2000.
According to a New York Times report on Oct. 9, key swing states -- including Nevada, Ohio, Pennsylvania, Indiana and Missouri -- have been using federal Social Security data to verify voter registration information from established and potential voters. The Social Security data, which is used to authenticate voters’ identity but is known to be error-prone, has been used to purge "tens of thousands" of voters already on voter rolls, the Times reported, as well as to reject numerous new voter registration applications.
Of 7.7 million inquiries by states to the Social Security Administration to verify voter applications in 2008, nearly 2.4 million resulted in "non matches," according to the agency, which Monday issued a statement urging election officials in six states -- Alabama, Georgia, Indiana, Nevada, North Carolina and Ohio -- to "review their procedures."
This past summer, AlterNet reported that Michigan, Kansas and Louisiana were using drivers’ license databases in a similar manner to purge voters. In both instances, whether using Social Security or motor vehicle data, it is difficult to fully know how voter rolls will be affected because different states and counties have differing procedures on purging and removing voters, and because this process is often secretive.
What’s clear to leading voting rights attorneys, however, is that this "name-matching" process not only violates the guiding federal law on removing voters, the National Voter Registration Act, and violates the guiding federal law on accepting vote registrations, the National Voting Rights Act, but also creates a new basis to challenge presidential results if the vote count is close on November 4.
Unless there is litigation to force states to follow these federal laws before Election Day and restore purged voters and accept registrations from new voters, a close vote count in swing states could see post-Election Day legal fights over provisional ballots. These are ballots issued to voters whose names are not on voter lists and are later validated before they are counted. Thus, a fight over provisional ballots in 2008 could echo the fight over hanging chads -- or punches in paper ballots -- in Florida in 2000.
"I think it is a real risk," said Brenda Wright, legal director of The National Voting Rights Institute at Demos, a public interest law firm. "If you have a situation where people are showing up who think they are registered to vote, that is where provisional ballots come in. The question is will those ballots be counted. If there are thousands of provisional ballots in a number of states, there’s a danger that they may not all be counted."
"There will be an effort by the civil rights community to figure out what to do," said Jon Greenbaum, Voting Rights Program director at the Lawyers Committee for Civil Rights Under Law.
"There is the potential the perfect storm is developing," said Gerry Hebert, executive director of the Campaign Legal Center, another public-interest law firm. "New voters should be added to the rolls immediately, and then vetted and sent letters if there are problems."
The scenario of post-Election Day litigation is not speculation. Across the country, GOP partisans already have filed lawsuits over voter registration issues or said they planned to pursue polling place challenges of individual voter registrations in states such as Ohio, Wisconsin and Michigan. In federal court in Ohio, a hearing was held Thursday on a GOP suit seeking to force the state to use the Social Security data to vet new voters.
"It does add a whole other dimension to the potential debates on what is the vote," said Kimball Brace, director of Election Data Services, a Washington consulting firm. "I was Al Gore’s expert in Florida on this. ... In 2000, we were concerned with the voting equipment, and what happened with under- and over-votes. Now, if you are a lawyer looking at challenges, you don’t only look at that but at the voter side as well."
Roots of the Problem
The name-matching issue has its roots in the federal legislation that was passed after the 2000 presidential election debacle in Florida -- the Help America Vote Act of 2002. Under that law, states were instructed to compile statewide voter lists in contrast to lists that previously were maintained at the local level. States also were allowed to use Social Security data to verify registrations, but only as a last resort after other forms of voter ID could not be corroborated.
The problems that have arisen since the law took effect are multiple, but they seem to have one common factor: The practices now at issue evolved with little or no guidance from federal election officials, such as the Election Assistance Commission, or without any comment from the Justice Department, which enforces federal voting rights law.
The Help America Vote Act told states to create statewide voter registration databases, said Tova Wang, vice president for research at Common Cause, but did not tell states how to use them. Similarly, states were not told how to use provisional ballots.
Thus, states began using Social Security and motor vehicle databases to screen voter lists and purge voters instead of following the National Voter Registration Act, which requires states to contact a voter over a four-year period before removing them and to conduct no purges closer than 90 days before an election. Indeed, the Lawyers Committee for Civil Rights’ Greenbaum said his organization was filing a lawsuit on Thursday in Georgia over that state’s use of motor vehicle databases to purge voters outside of the National Voter Registration Act process.
On the issue of screening new voter registration applications, the states are overlooking the Voting Rights Act, which tells them to accept voter registration forms that might be missing some voter information, a staff attorney at the Senate Rules and Administration Committee said, citing 42 USC 1971. But this staffer and other voting rights attorneys said the Justice Department’s selective enforcement of civil rights laws during George W. Bush’s presidency allowed states to maintain voter rolls under their own standards.
Moreover, because the voter purging process and new voter registration vetting process is so secretive -- and states are not required to remove or reject voters due to non matches with these databases, Wang said it was hard to know what lays in store for voters on Election Day.
"HAVA had all the best intentions," said Wang, who, when pressed, said she was tempted to characterize the current situation as "anarchy" because of an absence of clear rules and procedures.
"You do have to ask, where is the Justice Department," Wright said.
The Name Matching Problem
The biggest problem with using Social Security or motor vehicle data to update voter rolls is government agencies often have different data for the same individual.
"It is a problem we are very worried about because this database matching so often produces false non-matches," said Wright. "It could be something as simple as you have a hyphenated name, or an apostrophe is missing for O’Leary. There are so many ways to be a non-match when there is no real world discrepancy."
Kimball Brace, whose firm parses election data, cited himself as an example. "I figured I could be eight different people if I wanted to," he said, saying he could appear as Kim, Kimball and so on.
These distinctions are hardly academic, but instead, are at the heart of current litigation that will affect who gets to vote and which votes will count in November. In Ohio, the Secretary of State Jennifer Brunner, a Democrat, and state Republican Party, had a federal court hearing on this very issue on Thursday.
"Ohio Republicans sued the secretary of state to use database matching," Wright said. "Brunner pointed out that she is being accused of violating the law for not taking names off the rolls and the Social Security Administration just sent out a notice that Ohio is overusing Social Security Association matching to take people off."
The best practice, said the Campaign Legal Center’s Hebert, who used to be Voting Section Chief at the Justice Department, would be to add people’s names to voter rolls and then subsequently seek to contact them to clear up discrepancies, which is what the NVRA prescribes.
The reason the name matching issue is so politically explosive is the number of potentially affected voters could be many times the size of the president’s margin of victory against Democrat John Kerry in 2004. According to the Social Security Administration, the number of "non-matches" for voter registrations, from January through September 2008, was: 265,691 in Georgia; 39,489 in Missouri; 716,252 in Nevada; 74,797 in North Carolina; 289,603 in Ohio; 72,137 in Pennsylvania; and 57,887 in Florida.
In the meantime, as election officials across the country continue to process voter registrations with an eye to election day, the Social Security Administration this weekend is proceeding with a planned three-day shutdown of its computer systems for maintenance purposes -- despite requests by the Senate Rules and Administration Committee to postpone that maintenance until after Election Day.
Iceland faces national bankruptcy
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By Jordan Shilton
Iceland’s entire banking system is in danger of collapse.
On Wednesday Kaupthing Bank, Iceland’s largest bank, became the third financial institution to be taken over by the government, joining Landsbanki and Glitnir, Iceland’s second and third largest banks.
Iceland’s Financial Supervisory Authority said the move was made to safeguard its domestic banking system. But later that day trading was suspended on the OMX Nordic Exchange Iceland for two days. It will not reopen until next Monday. The move was taken to prevent panic spreading throughout the country’s financial markets.
On Monday of this week the government rushed emergency powers through parliament to give it increased power over the financial system. Amongst other things, the adopted provisions permitted a suspension of competition laws, allowed the government to force ailing banks into mergers, and ensured that the government could make credit available to the country’s financial institutions.
Also on Monday, in a televised address to the nation, Prime Minister Geir Haarde made clear that the government was close to losing control of the situation. “As recently as last night it looked like the banks could continue operations for a while,” he said. “This morning and today, things have totally changed for the worse.”
He went on to spell out the potential fate of the Icelandic economy as a whole. Stating that the failure of the banking system would bring “chaos” to the country, Haarde declared, “There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy.”
Trading on banking shares had already been suspended Monday as they fell dramatically. The Icelandic Krona (ISK) fell by 30 percent against the euro. Over the course of the previous week, the currency had lost ten percent against the euro and its value has declined by half against the dollar this year.
The collapse of the ISK has made the position even worse for many of the country’s financial institutions. The institutions have large foreign debts and are struggling to raise funds. Half of Glitnir’s debt of €15 billion was due for repayment in the coming two years.
The plummeting currency will also accelerate inflation, already running at 14 percent. The central bank has been compelled to increase interest rates over the past year to try and bring inflation under control, with interest rates now at 15.5 percent. But the exceptionally high interest rates over the past year have had the effect of attracting currency speculators to the Krona who are keen to profit from the high returns on their investments. The result was a financial bubble with banks holding assets 12 times greater than Iceland’s GDP. It is a bubble that has now burst, raising the distinct possibility of Iceland becoming a failed state in the fullest sense of the term.
As the economy became more unstable throughout the first half of 2008, with investors increasingly worried that the country would be unable to meet its debts, credit default swaps on Iceland grew dramatically. With the country on the verge of financial meltdown, Haarde and his government have been forced to seek funds from elsewhere.
But their appeal fell on deaf ears in Europe, with the leaders of the European Union, led by Germany and Britain, rejecting a coordinated European approach in favour of national financial rescue packages. Iceland is not a member of the EU.
On Tuesday morning negotiations were advanced between Iceland and Russia on the terms for a loan of €4 billion to stabilise government finances. Haarde expressed his bitterness towards Europe openly. “We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends,” he said.
Haarde would not say which countries had refused to help, but added, “In a situation like this it’s turning out that it’s every man for himself, every country for itself, everybody’s taking care of their best interest and that’s what we are doing.”
The Financial Times noted that Haarde was forced to deny that his economic arrangements with Moscow also extended to military co-operation, “refuting the suggestion that Russia might be given access to an airbase vacated by the US air force in 2006.”
While Haarde maintained the loan was merely a precautionary step to increase Iceland’s foreign currency reserves, without significant assistance the country faces financial collapse. In emergency measures, the Krona was pegged at 131 against the euro in a bid to stabilise the currency. Barely 24 hours afterwards, the central bank reversed its decision and stated it was no longer going to prop up the ISK, citing lack of support for the currency.
Tuesday also saw the government announce that it was taking control of Landsbanki. It appointed an entirely new executive board to run the bank’s operations amid rumours of Landsbanki being declared bankrupt. By Wednesday, the bank had been placed in receivership. As with Glitnir, Landsbanki has significant involvement in foreign markets, particularly Scandinavia and the UK, meaning that the bank’s collapse would have severe consequences.
As these events unfolded, the government revealed it was scrapping its planned takeover of Glitnir. Stating that the full extent of the bank’s problems had not been appreciated, it instead placed the institution in receivership under the control of the financial supervisory authority.
Kaupthing Bank had been offered a loan of €500 million from the central bank in a bid to allow it to continue its operations.
There were also reports of a loan from Sweden’s Riksbank of €500 million to allow it to keep its Swedish operations running. Stefan Ingves, governor of the Riksbank had stated that Kaupthing Sverige had been granted “liquidity assistance” to “safeguard financial stability in Sweden and ensure the smooth functioning of the financial markets.” But immediately following this declaration, it was announced that Kaupthing’s Swedish operations would be put up for sale. This made Kaupthing’s takeover in Iceland inevitable.
Credit rating firm Standard & Poor’s has downgraded Iceland’s credit rating by three notches to “BBB.” It warned that Iceland now faces a deep recession.
In Britain approximately 300,000 savers hold deposits in the online bank IceSave which is controlled by Landsbanki. Following the announced takeover of Landsbanki by the Icelandic government, access to IceSave accounts was frozen. It now appears customers will have to claim compensation from the British and Icelandic governments.
Following the announcement that Landsbanki had been taken over, the Brown government in London stated that it would sue Icelandic authorities over the losses savers had incurred. While Icelandic Prime Minister Haarde issued conciliatory statements that both countries should work together to safeguard the deposits, this is yet another expression of the growing tensions between nations in the current climate.
Alongside the impact on individual savers, the banking failures in Iceland could have a major knock-on effect on the UK economy. Many local Authorities in the UK have invested millions in council taxes in Icelandic banks. According to a detailed report in the Independent, London public authorities have investments totalling around £200 million, with at least eight borough councils affected. These include Barnet Council in north London with £27 million, Hillingdon Council in west London with £20 million and Westminster Council with £17 million. Kent County Council has deposited £50 million and Transport for London has a £40 million deposit with Kaupthing Singer & Friedlander, which is now in administration.
Erik Pickles, the opposition Conservative Party’s Shadow local government secretary, told the BBC that the sums involved could exceed £1 billion.
The Local Government Authority has sought a guarantee against losses from central government like that extended to private investors, but Chancellor Alistair Darling did not do so-describing local authorities as being “more of an informed investor.”
Major problems could also hit the retail sector in Britain, with House of Fraser, Debenhams, Woolworths, Moss Bros., French Connection and the supermarket chain Iceland all enjoying substantial backing through Icelandic banks. Many jobs in the financial district in London would be lost in the event of the collapse of the Icelandic banks.
The government in Iceland is also attempting to encourage foreign investments to be sold off and brought home. Some of the pension funds have agreed to sell up to 200 billion ISK (€1.2 billion) of their assets and transfer them to the state. This means that vast sums of ordinary people’s savings will be put at risk in attempting to stabilise the financial system.
There are reports of queues at banks across Iceland, with savers keen to withdraw their money before it is lost. Rumours that a shortage in petrol would result from the massive drop in the Krona’s value on Monday prompted a rush to petrol stations. The cost of loans have jumped by nearly 50 percent and with prices for everyday goods set to rocket, many Icelanders face the prospect of losing their jobs as companies cut costs or go bankrupt.
In his speech on Monday, Haarde sought to appeal to nationalist sentiments to encourage all Icelanders to “stand together” against the economic catastrophe the country faces. The unions have been happy to oblige in this campaign, working together with the government to secure the repatriation of the country’s pension funds.
By Jordan Shilton
Iceland’s entire banking system is in danger of collapse.
On Wednesday Kaupthing Bank, Iceland’s largest bank, became the third financial institution to be taken over by the government, joining Landsbanki and Glitnir, Iceland’s second and third largest banks.
Iceland’s Financial Supervisory Authority said the move was made to safeguard its domestic banking system. But later that day trading was suspended on the OMX Nordic Exchange Iceland for two days. It will not reopen until next Monday. The move was taken to prevent panic spreading throughout the country’s financial markets.
On Monday of this week the government rushed emergency powers through parliament to give it increased power over the financial system. Amongst other things, the adopted provisions permitted a suspension of competition laws, allowed the government to force ailing banks into mergers, and ensured that the government could make credit available to the country’s financial institutions.
Also on Monday, in a televised address to the nation, Prime Minister Geir Haarde made clear that the government was close to losing control of the situation. “As recently as last night it looked like the banks could continue operations for a while,” he said. “This morning and today, things have totally changed for the worse.”
He went on to spell out the potential fate of the Icelandic economy as a whole. Stating that the failure of the banking system would bring “chaos” to the country, Haarde declared, “There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy.”
Trading on banking shares had already been suspended Monday as they fell dramatically. The Icelandic Krona (ISK) fell by 30 percent against the euro. Over the course of the previous week, the currency had lost ten percent against the euro and its value has declined by half against the dollar this year.
The collapse of the ISK has made the position even worse for many of the country’s financial institutions. The institutions have large foreign debts and are struggling to raise funds. Half of Glitnir’s debt of €15 billion was due for repayment in the coming two years.
The plummeting currency will also accelerate inflation, already running at 14 percent. The central bank has been compelled to increase interest rates over the past year to try and bring inflation under control, with interest rates now at 15.5 percent. But the exceptionally high interest rates over the past year have had the effect of attracting currency speculators to the Krona who are keen to profit from the high returns on their investments. The result was a financial bubble with banks holding assets 12 times greater than Iceland’s GDP. It is a bubble that has now burst, raising the distinct possibility of Iceland becoming a failed state in the fullest sense of the term.
As the economy became more unstable throughout the first half of 2008, with investors increasingly worried that the country would be unable to meet its debts, credit default swaps on Iceland grew dramatically. With the country on the verge of financial meltdown, Haarde and his government have been forced to seek funds from elsewhere.
But their appeal fell on deaf ears in Europe, with the leaders of the European Union, led by Germany and Britain, rejecting a coordinated European approach in favour of national financial rescue packages. Iceland is not a member of the EU.
On Tuesday morning negotiations were advanced between Iceland and Russia on the terms for a loan of €4 billion to stabilise government finances. Haarde expressed his bitterness towards Europe openly. “We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends,” he said.
Haarde would not say which countries had refused to help, but added, “In a situation like this it’s turning out that it’s every man for himself, every country for itself, everybody’s taking care of their best interest and that’s what we are doing.”
The Financial Times noted that Haarde was forced to deny that his economic arrangements with Moscow also extended to military co-operation, “refuting the suggestion that Russia might be given access to an airbase vacated by the US air force in 2006.”
While Haarde maintained the loan was merely a precautionary step to increase Iceland’s foreign currency reserves, without significant assistance the country faces financial collapse. In emergency measures, the Krona was pegged at 131 against the euro in a bid to stabilise the currency. Barely 24 hours afterwards, the central bank reversed its decision and stated it was no longer going to prop up the ISK, citing lack of support for the currency.
Tuesday also saw the government announce that it was taking control of Landsbanki. It appointed an entirely new executive board to run the bank’s operations amid rumours of Landsbanki being declared bankrupt. By Wednesday, the bank had been placed in receivership. As with Glitnir, Landsbanki has significant involvement in foreign markets, particularly Scandinavia and the UK, meaning that the bank’s collapse would have severe consequences.
As these events unfolded, the government revealed it was scrapping its planned takeover of Glitnir. Stating that the full extent of the bank’s problems had not been appreciated, it instead placed the institution in receivership under the control of the financial supervisory authority.
Kaupthing Bank had been offered a loan of €500 million from the central bank in a bid to allow it to continue its operations.
There were also reports of a loan from Sweden’s Riksbank of €500 million to allow it to keep its Swedish operations running. Stefan Ingves, governor of the Riksbank had stated that Kaupthing Sverige had been granted “liquidity assistance” to “safeguard financial stability in Sweden and ensure the smooth functioning of the financial markets.” But immediately following this declaration, it was announced that Kaupthing’s Swedish operations would be put up for sale. This made Kaupthing’s takeover in Iceland inevitable.
Credit rating firm Standard & Poor’s has downgraded Iceland’s credit rating by three notches to “BBB.” It warned that Iceland now faces a deep recession.
In Britain approximately 300,000 savers hold deposits in the online bank IceSave which is controlled by Landsbanki. Following the announced takeover of Landsbanki by the Icelandic government, access to IceSave accounts was frozen. It now appears customers will have to claim compensation from the British and Icelandic governments.
Following the announcement that Landsbanki had been taken over, the Brown government in London stated that it would sue Icelandic authorities over the losses savers had incurred. While Icelandic Prime Minister Haarde issued conciliatory statements that both countries should work together to safeguard the deposits, this is yet another expression of the growing tensions between nations in the current climate.
Alongside the impact on individual savers, the banking failures in Iceland could have a major knock-on effect on the UK economy. Many local Authorities in the UK have invested millions in council taxes in Icelandic banks. According to a detailed report in the Independent, London public authorities have investments totalling around £200 million, with at least eight borough councils affected. These include Barnet Council in north London with £27 million, Hillingdon Council in west London with £20 million and Westminster Council with £17 million. Kent County Council has deposited £50 million and Transport for London has a £40 million deposit with Kaupthing Singer & Friedlander, which is now in administration.
Erik Pickles, the opposition Conservative Party’s Shadow local government secretary, told the BBC that the sums involved could exceed £1 billion.
The Local Government Authority has sought a guarantee against losses from central government like that extended to private investors, but Chancellor Alistair Darling did not do so-describing local authorities as being “more of an informed investor.”
Major problems could also hit the retail sector in Britain, with House of Fraser, Debenhams, Woolworths, Moss Bros., French Connection and the supermarket chain Iceland all enjoying substantial backing through Icelandic banks. Many jobs in the financial district in London would be lost in the event of the collapse of the Icelandic banks.
The government in Iceland is also attempting to encourage foreign investments to be sold off and brought home. Some of the pension funds have agreed to sell up to 200 billion ISK (€1.2 billion) of their assets and transfer them to the state. This means that vast sums of ordinary people’s savings will be put at risk in attempting to stabilise the financial system.
There are reports of queues at banks across Iceland, with savers keen to withdraw their money before it is lost. Rumours that a shortage in petrol would result from the massive drop in the Krona’s value on Monday prompted a rush to petrol stations. The cost of loans have jumped by nearly 50 percent and with prices for everyday goods set to rocket, many Icelanders face the prospect of losing their jobs as companies cut costs or go bankrupt.
In his speech on Monday, Haarde sought to appeal to nationalist sentiments to encourage all Icelanders to “stand together” against the economic catastrophe the country faces. The unions have been happy to oblige in this campaign, working together with the government to secure the repatriation of the country’s pension funds.
World financial crisis leads to auto industry layoffs across Europe
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By Dietmar Henning
While governments across the globe are pumping billions into the tills of banks in order to limit their speculative losses, millions of workers whose jobs and incomes are threatened will be left stranded. Worldwide, all of the major auto companies have announced a drastic slump in sales and have introduced reduced production or direct dismissals.
Much of the current crisis in the auto industry is bound up with the fuel price increases at the beginning of the year. The consequences of the current financial crisis are only just beginning to take effect and will undoubtedly be much more pronounced in coming weeks.
The markets for luxury cars and massed-produced ordinary autos have both been hit. Until now the expensive sports cars and luxury autos produced by German companies Porsche and BMW were especially favoured by those who were able to reap huge fortunes on speculative financial transactions and could easily lay out several tens of thousands of euros for a new vehicle. Many in this layer are now jobless and can no longer afford a new car.
The Süddeutsche Zeitung reports on the sports-car producer Porsche: “So far Russia was regarded as a guaranteed customer for the small sports car manufacturer. If a market gave way somewhere, Russia was easily able to adjust the balance. The Porsche family was always able to find enough wealthy people ready to buy up their annual production of 100,000 cross-country and sports cars. This now seems to be in the past.”
The BMW company, which like Porsche specializes in high-priced cars, announced a 14 percent decrease in sales worldwide for September. BMW sales in the US have decreased by as much as a quarter in the same month. Porsche registered a decrease of 44 percent in the US and an average loss worldwide of 27 percent.
Sales are also slumping for ordinary cars. Toyota, the world’s largest carmaker, also suffered a 32 percent drop in sales in the US in September. Many potential customers are fearful of the consequences of the crisis and are not prepared to invest in a new car. Others are unable to obtain the necessary credit from their bank. According to the Ifo Institute for Economic Research at the University of Munich, the expectations of German auto salesmen have slumped to a 20-year low.
A spokesman for Opel (General Motors) at Rüsselsheim commented: “The financial crisis has led many people in Europe to hold back from purchasing an auto.” This applies particularly to Spain, Germany and Great Britain.
Auto sales in Spain, which is particularly hard hit by the real estate crisis, are 44 percent lower than a year ago. According to the calculations of the CAR research institute in Gelsenkirchen, Germany, sales in the Italian market will drop at least 14 percent this year, the US market 13 percent, the UK market 5 to 6 percent, and the German market up to 2 percent.
Phased-out production and job losses
Although the effects of the crisis are only beginning to be felt, auto companies have immediately reacted with production shutdowns and layoffs. For some time the automobile industry has complained about overcapacity. It is now utilizing the crisis to carry out plans it had been unable to implement up to now due to workforce opposition.
Swedish car producer Volvo (belonging to the Ford company) has already announced the dismissal of an additional 3,000 workers, bringing its total current level of layoffs to 6,000. Company boss, Stephen Odell, declared the job losses were necessary because of the “rapidly disintegrating market situation of the worldwide automobile industry.”
In Germany, the Ford factory in Saarlouis is dismissing approximately 200 temporary workers two months earlier than planned. The factory in Saarland has a total workforce of 6,500 and produces mainly for export.
Bavarian auto producer BMW is introducing production stops at its Leipzig factory and further temporary shutdowns are planned at other plants. BMW plans to produce 20,000 to 25,000 fewer cars this year compared to 2007.
Daimler already announced this summer that it planned to cut output this year by around 45,000 vehicles.
While Volkswagen has so far declined to slash production, it is delaying the opening of new factories. Announcing this decision, VW finance chief Hans Dieter Poetsch, blamed the “considerable deterioration” of market conditions.
Skoda, the Czech Volkswagen offshoot, is planning to limit production by 13,000 vehicles fewer than last year. The company halted production for one day this past Friday.
The most radical plans have been announced by Opel, the European subsidiary of General Motors, which plans to cut production by approximately 40,000 vehicles by the end of the year. The Opel factory in Eisenach, with a workforce of 1,800, is to close for three weeks starting next Monday.
In Bochum, the Opel factory with 5,000 workers had already closed for two weeks at the end of September in line with a deal worked out between company management and the factory council. A further shutdown of the factory is planned for the end of October. Opel has declared that it will cease production October 20-31, at its entire European works, with the exception of Rüsselsheim. This will affect the Opel factories in Kaiserslautern, Germany; Gliwice, Poland; Ellesmere Port and Luton, England; as well as Saragossa, Spain.
Opel spokesman Andreas Krömer justified these measures, commenting, “People are worried and keeping their hands in their pockets. Demand has hit rock bottom. We must react with an adjustment. We cannot build cars on a waste dump.”
In fact, Opel has been preparing job cuts and attacks on working conditions for some time. According to the works council at the Bochum Opel factory, 900 jobs are at risk there due to the slump in sales. Company management has estimated that tighter work schedules and new automation could reduce production time for a car from 27 to 15 hours.
Mass unemployment
The crisis in the automobile industry will lead to a veritable avalanche of dismissals. A total of 2.1 million workers are directly involved in the European automobile industry. This figure rises to 12 million when all auto-related industries are included.
The throttling back of production directly affects the auto supply industry, which often consists of middle-sized companies operating with narrow profit margins. Auto distribution, sales outlets and other services will also be hit. In Germany alone, an estimated 468,000 are employed in these sectors. Such companies employ an average of 12 workers, and many of these businesses are already highly indebted.
Like the banks, the major auto companies are now also demanding money from the state. In the US, the House of Representatives agreed to a draft on Wednesday making $25 billion available to automakers in the form of low interest credits.
German manufacturers have criticized this move. “This leads to a distortion in international competition,” was the comment by German Automobile Federation (VDA) head, Matthias Wissmann.
Such criticism of the US has not prevented the European automobile industry from demanding similar support from the European Union. Manufacturers are demanding various support measures, including a low interest credit package of over €40 billion for the development of more economical vehicles, plus incentives for customers to exchange their cars for newer ones.
The major companies and their shareholders stand to profit from such measures. The workers who lose their jobs cannot bank on support. In Germany the government decided just this week to cut contributions for unemployment insurance beginning next year by around 0.5 percent. This measure was aimed at decreasing subsidiary wage costs for the employers.
The immediate consequence of this decision will be decreased funding for the Federal Labour Agency, which will have even less money at its disposal for the tens of thousands of autoworkers who are likely to lose their jobs in the near future.
By Dietmar Henning
While governments across the globe are pumping billions into the tills of banks in order to limit their speculative losses, millions of workers whose jobs and incomes are threatened will be left stranded. Worldwide, all of the major auto companies have announced a drastic slump in sales and have introduced reduced production or direct dismissals.
Much of the current crisis in the auto industry is bound up with the fuel price increases at the beginning of the year. The consequences of the current financial crisis are only just beginning to take effect and will undoubtedly be much more pronounced in coming weeks.
The markets for luxury cars and massed-produced ordinary autos have both been hit. Until now the expensive sports cars and luxury autos produced by German companies Porsche and BMW were especially favoured by those who were able to reap huge fortunes on speculative financial transactions and could easily lay out several tens of thousands of euros for a new vehicle. Many in this layer are now jobless and can no longer afford a new car.
The Süddeutsche Zeitung reports on the sports-car producer Porsche: “So far Russia was regarded as a guaranteed customer for the small sports car manufacturer. If a market gave way somewhere, Russia was easily able to adjust the balance. The Porsche family was always able to find enough wealthy people ready to buy up their annual production of 100,000 cross-country and sports cars. This now seems to be in the past.”
The BMW company, which like Porsche specializes in high-priced cars, announced a 14 percent decrease in sales worldwide for September. BMW sales in the US have decreased by as much as a quarter in the same month. Porsche registered a decrease of 44 percent in the US and an average loss worldwide of 27 percent.
Sales are also slumping for ordinary cars. Toyota, the world’s largest carmaker, also suffered a 32 percent drop in sales in the US in September. Many potential customers are fearful of the consequences of the crisis and are not prepared to invest in a new car. Others are unable to obtain the necessary credit from their bank. According to the Ifo Institute for Economic Research at the University of Munich, the expectations of German auto salesmen have slumped to a 20-year low.
A spokesman for Opel (General Motors) at Rüsselsheim commented: “The financial crisis has led many people in Europe to hold back from purchasing an auto.” This applies particularly to Spain, Germany and Great Britain.
Auto sales in Spain, which is particularly hard hit by the real estate crisis, are 44 percent lower than a year ago. According to the calculations of the CAR research institute in Gelsenkirchen, Germany, sales in the Italian market will drop at least 14 percent this year, the US market 13 percent, the UK market 5 to 6 percent, and the German market up to 2 percent.
Phased-out production and job losses
Although the effects of the crisis are only beginning to be felt, auto companies have immediately reacted with production shutdowns and layoffs. For some time the automobile industry has complained about overcapacity. It is now utilizing the crisis to carry out plans it had been unable to implement up to now due to workforce opposition.
Swedish car producer Volvo (belonging to the Ford company) has already announced the dismissal of an additional 3,000 workers, bringing its total current level of layoffs to 6,000. Company boss, Stephen Odell, declared the job losses were necessary because of the “rapidly disintegrating market situation of the worldwide automobile industry.”
In Germany, the Ford factory in Saarlouis is dismissing approximately 200 temporary workers two months earlier than planned. The factory in Saarland has a total workforce of 6,500 and produces mainly for export.
Bavarian auto producer BMW is introducing production stops at its Leipzig factory and further temporary shutdowns are planned at other plants. BMW plans to produce 20,000 to 25,000 fewer cars this year compared to 2007.
Daimler already announced this summer that it planned to cut output this year by around 45,000 vehicles.
While Volkswagen has so far declined to slash production, it is delaying the opening of new factories. Announcing this decision, VW finance chief Hans Dieter Poetsch, blamed the “considerable deterioration” of market conditions.
Skoda, the Czech Volkswagen offshoot, is planning to limit production by 13,000 vehicles fewer than last year. The company halted production for one day this past Friday.
The most radical plans have been announced by Opel, the European subsidiary of General Motors, which plans to cut production by approximately 40,000 vehicles by the end of the year. The Opel factory in Eisenach, with a workforce of 1,800, is to close for three weeks starting next Monday.
In Bochum, the Opel factory with 5,000 workers had already closed for two weeks at the end of September in line with a deal worked out between company management and the factory council. A further shutdown of the factory is planned for the end of October. Opel has declared that it will cease production October 20-31, at its entire European works, with the exception of Rüsselsheim. This will affect the Opel factories in Kaiserslautern, Germany; Gliwice, Poland; Ellesmere Port and Luton, England; as well as Saragossa, Spain.
Opel spokesman Andreas Krömer justified these measures, commenting, “People are worried and keeping their hands in their pockets. Demand has hit rock bottom. We must react with an adjustment. We cannot build cars on a waste dump.”
In fact, Opel has been preparing job cuts and attacks on working conditions for some time. According to the works council at the Bochum Opel factory, 900 jobs are at risk there due to the slump in sales. Company management has estimated that tighter work schedules and new automation could reduce production time for a car from 27 to 15 hours.
Mass unemployment
The crisis in the automobile industry will lead to a veritable avalanche of dismissals. A total of 2.1 million workers are directly involved in the European automobile industry. This figure rises to 12 million when all auto-related industries are included.
The throttling back of production directly affects the auto supply industry, which often consists of middle-sized companies operating with narrow profit margins. Auto distribution, sales outlets and other services will also be hit. In Germany alone, an estimated 468,000 are employed in these sectors. Such companies employ an average of 12 workers, and many of these businesses are already highly indebted.
Like the banks, the major auto companies are now also demanding money from the state. In the US, the House of Representatives agreed to a draft on Wednesday making $25 billion available to automakers in the form of low interest credits.
German manufacturers have criticized this move. “This leads to a distortion in international competition,” was the comment by German Automobile Federation (VDA) head, Matthias Wissmann.
Such criticism of the US has not prevented the European automobile industry from demanding similar support from the European Union. Manufacturers are demanding various support measures, including a low interest credit package of over €40 billion for the development of more economical vehicles, plus incentives for customers to exchange their cars for newer ones.
The major companies and their shareholders stand to profit from such measures. The workers who lose their jobs cannot bank on support. In Germany the government decided just this week to cut contributions for unemployment insurance beginning next year by around 0.5 percent. This measure was aimed at decreasing subsidiary wage costs for the employers.
The immediate consequence of this decision will be decreased funding for the Federal Labour Agency, which will have even less money at its disposal for the tens of thousands of autoworkers who are likely to lose their jobs in the near future.
Wall Street crashes amid mounting signs of global recession
Go to Original
By Peter Symonds
With a further dramatic plunge on Wall Street yesterday, the US and global economic crisis has entered a new stage, spreading from the financial system to the productive foundations of the economy. Along with banking and insurance stocks, shares in the industrial sector, including icons of American capitalism such as General Motors and Ford, were hammered amid declining sales, a continuing credit crunch and growing fears of a protracted global recession.
A highly volatile day on the New York stock exchange concluded with a panic sell-off in the last hour of trading. The Dow Jones Industrial Average fell through the 9,000 mark for the first time since 2003, creating a slew of headlines, only to plummet further and end at 8,579—down 679 points, or 7.3 percent.
The Standard & Poor’s 500 Index fell even more sharply, losing 7.6 percent to close at 910. The Nasdaq Composite Index was also badly hit, falling 5.6 percent to 1,645. Declining stocks outnumbered rising stocks by 20 to one, as almost $900 billion in value was wiped off of US shares.
New York Times analyst Floyd Norris bluntly described the falls of the past week as “the crash of 2008,” comparing them to the October 19, 1987 collapse that wiped 20.5 percent off of the S&P index. “So far in October—after only seven trading days—the S&P is down 22 percent,” he wrote. “The only other time since the Depression that there was that large a fall within seven days was in 1987.”
General Motors led the declines among major industrial stocks, plummeting by 31 percent to $4.76—the lowest level since 1950. Ford shares plunged by 22 percent. Another industrial giant, Alcoa, was down 15.3 percent. General Electric slid by 7.9 percent and is expected to fall even further today after revising downwards its third quarter profits and full-year outlook.
The collapse of US auto shares takes place amid a shrinking global market. GM reported an overall downturn in sales in Europe on Wednesday for the first nine months of the year. Market researcher J D Power & Associates estimated that sales of cars and light trucks in the US would fall to 13.6 million this year and 13.2 million next year—the lowest figure since 1992. The total last year was 16.1 million units.
GM and Ford—once symbols of US industrial might—confront the prospect of bankruptcy. Standard & Poor’s warned yesterday that it might cut the ratings of both companies and their associated finance units, which are already at B-minus—six steps below investment grade.
S&P analyst Robert Schulz told Bloomberg.com: “These companies certainly wouldn’t choose to file bankruptcy, but they could find themselves at a point where their liquidity reached a point where they no longer could run their businesses. We think that they could be pushed into that.”
In financial stocks, the collapse continued apace. Morgan Stanley shares plunged about 22 percent amid concerns about the status of a planned $9 billion investment by Japan’s top bank, Mitsubishi UFJ Financial Group. Bank of America and Citigroup fell by more than 10 percent, and JPMorgan Chase lost 6.7 percent. American Express was down 11.5 percent.
Overall, the S&P Financial index fell 12 percent to its lowest level since October 1996. Large insurers were also savaged, with XL Capital falling 54 percent and the second largest US life insurer, Prudential Financial, falling by 23 percent.
The crash on Wall Street came just one day after many of the world’s major central banks took the unprecedented step of coordinating interest rate cuts designed to free up credit.
Just one week ago, Congress approved the Bush administration’s $700 billion bailout package for Wall Street. The bill was pushed through against popular opposition with the claim that it was needed to avert a share market meltdown and economic depression. Since then, the Federal Reserve has announced that it will buy commercial paper from banks, businesses and local governments in a bid to avert a chain reaction of collapses, and the Treasury has affirmed that it is considering plans to prop up the banks by buying shares of their stock with taxpayer money.
None of these measures has freed up frozen credit markets, as a collapse in confidence in the financial system has left financial institutions reluctant to make loans. The key Libor rate—the interest charged on inter-bank loans—remains at record highs.
The claims made by President Bush, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, congressional leaders of both parties and the Democratic and Republican presidential candidates, Barack Obama and John McCain, that the $700 billion bank bailout bill would halt the stock market slide and avert a recession have been exposed as lies. Since the bill was passed last Friday, the Dow Jones Industrial Average has fallen some 1,700 points and the financial panic has spread to basic industry.
The G-7 finance ministers and central bankers are due to meet in Washington today to discuss the crisis. Treasury Secretary Paulson has also called an emergency meeting over the weekend of the G-20 group of major economies, which includes China, India and South Korea.
Despite government bailouts in Europe and further interest rate cuts yesterday in Asia, panic continues in global share markets. The major European stock markets fell yesterday and, while share indexes were mixed in Asia yesterday, they plunged sharply on opening today. In early trading, Japan’s Nikkei plunged 11.38 percent, South Korea’s Kospi fell 7.5 percent and the Australian S&P/ASX200 fell more than 7 percent.
While calls for “international coordination” have now become a commonplace, none of the top officials or their advisers has been able to advance a plan to address the crisis. New York Times commentator Floyd Norris identified a significant difference between the Wall Street crashes of 1987 and 2008. “Directly after the 1987 crash, the Fed slashed rates and made cash available to the banks. That helped to stem the panic. This year, the Fed had done all that and much more before the crash came,” he observed.
In so far as officials are guided by a theory, it is based on the notion that certain policy decisions were responsible for the Great Depression that followed the 1929 Wall Street crash. Federal Reserve Chairman Bernanke, in particular, concluded from his study of the 1930s that the collapse was due to the Fed’s high interest rates and could have been avoided if enough money had been pumped into the financial system. The fact that such policies have been tried and failed in the current crisis points to a deep-going, historic crisis of American and world capitalism.
Decades of speculation on Wall Street fueled by the Fed’s cheap credit policies and the lifting of banking regulations have been accompanied by a hollowing out of American manufacturing. At the root of the explosion of financial manipulation and parasitism is the separation of wealth creation from the creation of real value in the process of production. The new stage of the world economic crisis, engulfing manufacturing and the retail industries that ultimately depend on it, reveals the underlying source of the financial crisis. In a word, the rotten core of American industrial capitalism.
All of the measures being proposed to address the crisis in the US and globally have one fundamental feature in common: They all proceed from the need to maintain and defend the interests of the financial aristocracy. Nothing is being proposed to address the social crisis that is hitting hundreds of millions of working people in the US and internationally—a crisis that will rapidly escalate in the form of double-digit unemployment, the wiping out of retirement savings, home foreclosures, utility shutoffs and growing poverty.
The only rational answer to this chaos and social devastation is the replacement of the bankrupt profit system with socialism. The banks and major finance houses must be taken out of the hands of the financial elite and turned into public utilities, under the ownership and democratic control of the working people. Similarly, the major industrial corporations must be removed from private ownership. Only on this basis can the wealth created by the working class be allocated and developed to meet the needs of the people, instead of serving the insatiable drive of the ruling elite for profit and personal enrichment.
The global economy must be truly integrated on a progressive basis by doing away with the irrational and destructive constrictions imposed by the outmoded nation-state system, so that social and economic development can take place in a planned manner and on a world scale.
This requires the unification of the struggles of the international working class, the political independence of the working class from the parties and political representatives of big business, and the establishment of a workers’ government.
This is the program being advanced by the Socialist Equality Party (SEP) and its presidential and vice presidential candidates—Jerry White and Bill Van Auken—in the 2008 US elections. We make an urgent appeal to all those who see the need for a socialist alternative to depression and war: Join our campaign, vote for our candidates and join the SEP.
By Peter Symonds
With a further dramatic plunge on Wall Street yesterday, the US and global economic crisis has entered a new stage, spreading from the financial system to the productive foundations of the economy. Along with banking and insurance stocks, shares in the industrial sector, including icons of American capitalism such as General Motors and Ford, were hammered amid declining sales, a continuing credit crunch and growing fears of a protracted global recession.
A highly volatile day on the New York stock exchange concluded with a panic sell-off in the last hour of trading. The Dow Jones Industrial Average fell through the 9,000 mark for the first time since 2003, creating a slew of headlines, only to plummet further and end at 8,579—down 679 points, or 7.3 percent.
The Standard & Poor’s 500 Index fell even more sharply, losing 7.6 percent to close at 910. The Nasdaq Composite Index was also badly hit, falling 5.6 percent to 1,645. Declining stocks outnumbered rising stocks by 20 to one, as almost $900 billion in value was wiped off of US shares.
New York Times analyst Floyd Norris bluntly described the falls of the past week as “the crash of 2008,” comparing them to the October 19, 1987 collapse that wiped 20.5 percent off of the S&P index. “So far in October—after only seven trading days—the S&P is down 22 percent,” he wrote. “The only other time since the Depression that there was that large a fall within seven days was in 1987.”
General Motors led the declines among major industrial stocks, plummeting by 31 percent to $4.76—the lowest level since 1950. Ford shares plunged by 22 percent. Another industrial giant, Alcoa, was down 15.3 percent. General Electric slid by 7.9 percent and is expected to fall even further today after revising downwards its third quarter profits and full-year outlook.
The collapse of US auto shares takes place amid a shrinking global market. GM reported an overall downturn in sales in Europe on Wednesday for the first nine months of the year. Market researcher J D Power & Associates estimated that sales of cars and light trucks in the US would fall to 13.6 million this year and 13.2 million next year—the lowest figure since 1992. The total last year was 16.1 million units.
GM and Ford—once symbols of US industrial might—confront the prospect of bankruptcy. Standard & Poor’s warned yesterday that it might cut the ratings of both companies and their associated finance units, which are already at B-minus—six steps below investment grade.
S&P analyst Robert Schulz told Bloomberg.com: “These companies certainly wouldn’t choose to file bankruptcy, but they could find themselves at a point where their liquidity reached a point where they no longer could run their businesses. We think that they could be pushed into that.”
In financial stocks, the collapse continued apace. Morgan Stanley shares plunged about 22 percent amid concerns about the status of a planned $9 billion investment by Japan’s top bank, Mitsubishi UFJ Financial Group. Bank of America and Citigroup fell by more than 10 percent, and JPMorgan Chase lost 6.7 percent. American Express was down 11.5 percent.
Overall, the S&P Financial index fell 12 percent to its lowest level since October 1996. Large insurers were also savaged, with XL Capital falling 54 percent and the second largest US life insurer, Prudential Financial, falling by 23 percent.
The crash on Wall Street came just one day after many of the world’s major central banks took the unprecedented step of coordinating interest rate cuts designed to free up credit.
Just one week ago, Congress approved the Bush administration’s $700 billion bailout package for Wall Street. The bill was pushed through against popular opposition with the claim that it was needed to avert a share market meltdown and economic depression. Since then, the Federal Reserve has announced that it will buy commercial paper from banks, businesses and local governments in a bid to avert a chain reaction of collapses, and the Treasury has affirmed that it is considering plans to prop up the banks by buying shares of their stock with taxpayer money.
None of these measures has freed up frozen credit markets, as a collapse in confidence in the financial system has left financial institutions reluctant to make loans. The key Libor rate—the interest charged on inter-bank loans—remains at record highs.
The claims made by President Bush, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, congressional leaders of both parties and the Democratic and Republican presidential candidates, Barack Obama and John McCain, that the $700 billion bank bailout bill would halt the stock market slide and avert a recession have been exposed as lies. Since the bill was passed last Friday, the Dow Jones Industrial Average has fallen some 1,700 points and the financial panic has spread to basic industry.
The G-7 finance ministers and central bankers are due to meet in Washington today to discuss the crisis. Treasury Secretary Paulson has also called an emergency meeting over the weekend of the G-20 group of major economies, which includes China, India and South Korea.
Despite government bailouts in Europe and further interest rate cuts yesterday in Asia, panic continues in global share markets. The major European stock markets fell yesterday and, while share indexes were mixed in Asia yesterday, they plunged sharply on opening today. In early trading, Japan’s Nikkei plunged 11.38 percent, South Korea’s Kospi fell 7.5 percent and the Australian S&P/ASX200 fell more than 7 percent.
While calls for “international coordination” have now become a commonplace, none of the top officials or their advisers has been able to advance a plan to address the crisis. New York Times commentator Floyd Norris identified a significant difference between the Wall Street crashes of 1987 and 2008. “Directly after the 1987 crash, the Fed slashed rates and made cash available to the banks. That helped to stem the panic. This year, the Fed had done all that and much more before the crash came,” he observed.
In so far as officials are guided by a theory, it is based on the notion that certain policy decisions were responsible for the Great Depression that followed the 1929 Wall Street crash. Federal Reserve Chairman Bernanke, in particular, concluded from his study of the 1930s that the collapse was due to the Fed’s high interest rates and could have been avoided if enough money had been pumped into the financial system. The fact that such policies have been tried and failed in the current crisis points to a deep-going, historic crisis of American and world capitalism.
Decades of speculation on Wall Street fueled by the Fed’s cheap credit policies and the lifting of banking regulations have been accompanied by a hollowing out of American manufacturing. At the root of the explosion of financial manipulation and parasitism is the separation of wealth creation from the creation of real value in the process of production. The new stage of the world economic crisis, engulfing manufacturing and the retail industries that ultimately depend on it, reveals the underlying source of the financial crisis. In a word, the rotten core of American industrial capitalism.
All of the measures being proposed to address the crisis in the US and globally have one fundamental feature in common: They all proceed from the need to maintain and defend the interests of the financial aristocracy. Nothing is being proposed to address the social crisis that is hitting hundreds of millions of working people in the US and internationally—a crisis that will rapidly escalate in the form of double-digit unemployment, the wiping out of retirement savings, home foreclosures, utility shutoffs and growing poverty.
The only rational answer to this chaos and social devastation is the replacement of the bankrupt profit system with socialism. The banks and major finance houses must be taken out of the hands of the financial elite and turned into public utilities, under the ownership and democratic control of the working people. Similarly, the major industrial corporations must be removed from private ownership. Only on this basis can the wealth created by the working class be allocated and developed to meet the needs of the people, instead of serving the insatiable drive of the ruling elite for profit and personal enrichment.
The global economy must be truly integrated on a progressive basis by doing away with the irrational and destructive constrictions imposed by the outmoded nation-state system, so that social and economic development can take place in a planned manner and on a world scale.
This requires the unification of the struggles of the international working class, the political independence of the working class from the parties and political representatives of big business, and the establishment of a workers’ government.
This is the program being advanced by the Socialist Equality Party (SEP) and its presidential and vice presidential candidates—Jerry White and Bill Van Auken—in the 2008 US elections. We make an urgent appeal to all those who see the need for a socialist alternative to depression and war: Join our campaign, vote for our candidates and join the SEP.
Thursday, October 9, 2008
U.S. May Take Ownership Stake in Banks
Go to Original
By EDMUND L. ANDREWS and MARK LANDLER
Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.
This new interest in direct investment in banks comes after yet another tumultuous day in which the Federal Reserve and five other central banks marshaled their combined firepower to cut interest rates but failed to stanch the global financial panic.
In a coordinated action, the central banks reduced their benchmark interest rates by one-half percentage point. On top of that, the Bank of England announced its plan to nationalize part of the British banking system and devote almost $500 billion to guarantee financial transactions between banks.
The coordinated rate cut was unprecedented and surprising. Never before has the Fed issued an announcement on interest rates jointly with another central bank, let alone five other central banks, including the People’s Bank of China.
Yet the world’s markets hardly seemed comforted. Credit markets on Wednesday remained almost as stalled as the day before. Stock prices, which had plunged in Europe and Asia before the announcement, continued to plummet afterward. And stock prices in the United States went on a roller-coaster ride, at the end of which the Dow Jones industrial average was down 189 points, or 2 percent.
On Thursday, shares rebounded somewhat in Europe, with many exchanges up more than one percent, but Asian markets were mixed.
The gloomy market response on Monday sent policy makers and outside experts on a scramble for additional remedies to stabilize the banks and reassure investors.
There is no shortage of ideas, ranging from the partial nationalization proposal to a guarantee by the Fed of all lending between banks.
Senator John McCain, the Republican presidential candidate, on Wednesday refined his proposal — revealed in a debate with the Democratic nominee, Senator Barack Obama, the night before — to allow millions of Americans to refinance their mortgages with government assistance.
As Washington casts about for Plan B, investors are clamoring for the Fed to lower interest rates to nearly zero. Some are also calling for governments worldwide to provide another round of economic stimulus through expensive public works projects.
Yet behind the scramble for solutions lies a hard reality: the financial crisis has mutated into a global downturn that economists warn will be painful and protracted, and for which there is no quick cure.
“Everyone is conditioned to getting instant relief from the medicine, and that is unrealistic,” said Allen Sinai, president of Decision Economics, a forecasting firm in Lexington, Mass. “As hard as it is for investors and jobholders and politicians in an election year, this crisis will not end without a lot more pain.”
One concern about the Treasury’s bailout plan is that it calls for limits on executive pay when capital is directly injected into a bank. The law directs Treasury officials to write compensation standards that would discourage executives from taking “unnecessary and excessive risks” and that would allow the government to recover any bonus pay that is based on stated earnings that turn out to be inaccurate. In addition, any bank in which the Treasury holds a stake would be barred from paying its chief executive a “golden parachute” package.
Treasury officials worry that aggressive government purchases, if not done properly, could alarm bank shareholders by appearing to be punitive or could be interpreted by the market as a sign that target banks were failing.
At a news conference on Wednesday, the Treasury secretary, Henry M. Paulson Jr., pointedly named the Treasury’s new authority to inject capital into institutions as the first in a list of new powers included in the bailout law.
“We will use all the tools we’ve been given to maximum effectiveness,” Mr. Paulson said, “including strengthening the capitalization of financial institutions of every size.”
The idea is gaining support even among longtime Republican policy makers who have spent most of their careers defending laissez-faire economic policies.
“The problem is the uncertainty that people have about doing business with banks, and banks have about doing business with each other,” said William Poole, a staunchly free-market Republican who stepped down as president of the Federal Reserve Bank of St. Louis on Aug. 31. “We need to eliminate that uncertainty as fast as we can, and one way to do that is by injecting capital directly into banks. I think it could be done very quickly.”
Mr. Paulson acknowledged that the flurry of emergency steps had done little to break the cycle of fear and mistrust, and he pleaded for patience.
“The turmoil will not end quickly,” Mr. Paulson told reporters on Wednesday. “Neither the passage of this law nor the implementation of these initiatives will bring an immediate end to the current difficulties.”
Mr. Paulson will play host to finance ministers and central bankers from the Group of 7 countries this Friday. But he cautioned against expecting a grand plan to emerge from the gathering.
More likely, the participants will compare notes about the measures they are adopting in their own countries. David H. McCormick, Treasury’s under secretary for international affairs, said there was no “one size fits all” remedy for the crisis, though countries were cooperating through the coordinated cuts in interest rates, with guarantees on bank deposits and in regulations.
At the Federal Reserve in Washington, officials insisted they had not run out of options and made it clear they were willing to do whatever it took to shore up the economy.
Fed officials increasingly talk about the challenge they face with a phrase that President Bush used in another context: “regime change.”
This regime change refers to a change in the economic environment so radical that, at least for a while, economic policy makers will need to suspend what are usually sacred principles: minimal interference in free markets, gradualism and predictability.
In the last month, both the Treasury and the Fed took extraordinary steps toward nationalizing three of the biggest financial companies in the country. Last month, the Treasury took over Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were on the brink of collapse. A week later, the Fed took control of the American International Group, the failing insurance conglomerate, in exchange for agreeing to lend it $85 billion.
On Wednesday, the Federal Reserve announced that it would lend A.I.G. an additional $37.8 billion.
But neither the individual corporate bailouts nor the Fed’s enormous emergency lending programs — including up to $900 billion through its Term Auction Facility for banks — have succeeded in jump-starting the credit markets.
“The core problem is that the smart people are realizing that the banking system is broken,” said Carl B. Weinberg, chief economist at High Frequency Economics. “Nobody knows who is holding the tainted assets, how much they have and how it affects their balance sheets. So nobody is willing to believe that anybody else isn’t insolvent, until it’s proven otherwise.”
By EDMUND L. ANDREWS and MARK LANDLER
Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.
The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.
This new interest in direct investment in banks comes after yet another tumultuous day in which the Federal Reserve and five other central banks marshaled their combined firepower to cut interest rates but failed to stanch the global financial panic.
In a coordinated action, the central banks reduced their benchmark interest rates by one-half percentage point. On top of that, the Bank of England announced its plan to nationalize part of the British banking system and devote almost $500 billion to guarantee financial transactions between banks.
The coordinated rate cut was unprecedented and surprising. Never before has the Fed issued an announcement on interest rates jointly with another central bank, let alone five other central banks, including the People’s Bank of China.
Yet the world’s markets hardly seemed comforted. Credit markets on Wednesday remained almost as stalled as the day before. Stock prices, which had plunged in Europe and Asia before the announcement, continued to plummet afterward. And stock prices in the United States went on a roller-coaster ride, at the end of which the Dow Jones industrial average was down 189 points, or 2 percent.
On Thursday, shares rebounded somewhat in Europe, with many exchanges up more than one percent, but Asian markets were mixed.
The gloomy market response on Monday sent policy makers and outside experts on a scramble for additional remedies to stabilize the banks and reassure investors.
There is no shortage of ideas, ranging from the partial nationalization proposal to a guarantee by the Fed of all lending between banks.
Senator John McCain, the Republican presidential candidate, on Wednesday refined his proposal — revealed in a debate with the Democratic nominee, Senator Barack Obama, the night before — to allow millions of Americans to refinance their mortgages with government assistance.
As Washington casts about for Plan B, investors are clamoring for the Fed to lower interest rates to nearly zero. Some are also calling for governments worldwide to provide another round of economic stimulus through expensive public works projects.
Yet behind the scramble for solutions lies a hard reality: the financial crisis has mutated into a global downturn that economists warn will be painful and protracted, and for which there is no quick cure.
“Everyone is conditioned to getting instant relief from the medicine, and that is unrealistic,” said Allen Sinai, president of Decision Economics, a forecasting firm in Lexington, Mass. “As hard as it is for investors and jobholders and politicians in an election year, this crisis will not end without a lot more pain.”
One concern about the Treasury’s bailout plan is that it calls for limits on executive pay when capital is directly injected into a bank. The law directs Treasury officials to write compensation standards that would discourage executives from taking “unnecessary and excessive risks” and that would allow the government to recover any bonus pay that is based on stated earnings that turn out to be inaccurate. In addition, any bank in which the Treasury holds a stake would be barred from paying its chief executive a “golden parachute” package.
Treasury officials worry that aggressive government purchases, if not done properly, could alarm bank shareholders by appearing to be punitive or could be interpreted by the market as a sign that target banks were failing.
At a news conference on Wednesday, the Treasury secretary, Henry M. Paulson Jr., pointedly named the Treasury’s new authority to inject capital into institutions as the first in a list of new powers included in the bailout law.
“We will use all the tools we’ve been given to maximum effectiveness,” Mr. Paulson said, “including strengthening the capitalization of financial institutions of every size.”
The idea is gaining support even among longtime Republican policy makers who have spent most of their careers defending laissez-faire economic policies.
“The problem is the uncertainty that people have about doing business with banks, and banks have about doing business with each other,” said William Poole, a staunchly free-market Republican who stepped down as president of the Federal Reserve Bank of St. Louis on Aug. 31. “We need to eliminate that uncertainty as fast as we can, and one way to do that is by injecting capital directly into banks. I think it could be done very quickly.”
Mr. Paulson acknowledged that the flurry of emergency steps had done little to break the cycle of fear and mistrust, and he pleaded for patience.
“The turmoil will not end quickly,” Mr. Paulson told reporters on Wednesday. “Neither the passage of this law nor the implementation of these initiatives will bring an immediate end to the current difficulties.”
Mr. Paulson will play host to finance ministers and central bankers from the Group of 7 countries this Friday. But he cautioned against expecting a grand plan to emerge from the gathering.
More likely, the participants will compare notes about the measures they are adopting in their own countries. David H. McCormick, Treasury’s under secretary for international affairs, said there was no “one size fits all” remedy for the crisis, though countries were cooperating through the coordinated cuts in interest rates, with guarantees on bank deposits and in regulations.
At the Federal Reserve in Washington, officials insisted they had not run out of options and made it clear they were willing to do whatever it took to shore up the economy.
Fed officials increasingly talk about the challenge they face with a phrase that President Bush used in another context: “regime change.”
This regime change refers to a change in the economic environment so radical that, at least for a while, economic policy makers will need to suspend what are usually sacred principles: minimal interference in free markets, gradualism and predictability.
In the last month, both the Treasury and the Fed took extraordinary steps toward nationalizing three of the biggest financial companies in the country. Last month, the Treasury took over Fannie Mae and Freddie Mac, the giant government-sponsored mortgage-finance companies that were on the brink of collapse. A week later, the Fed took control of the American International Group, the failing insurance conglomerate, in exchange for agreeing to lend it $85 billion.
On Wednesday, the Federal Reserve announced that it would lend A.I.G. an additional $37.8 billion.
But neither the individual corporate bailouts nor the Fed’s enormous emergency lending programs — including up to $900 billion through its Term Auction Facility for banks — have succeeded in jump-starting the credit markets.
“The core problem is that the smart people are realizing that the banking system is broken,” said Carl B. Weinberg, chief economist at High Frequency Economics. “Nobody knows who is holding the tainted assets, how much they have and how it affects their balance sheets. So nobody is willing to believe that anybody else isn’t insolvent, until it’s proven otherwise.”
States’ Actions to Block Voters Appear Illegal
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By IAN URBINA
Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law, according to a review of state records and Social Security data by The New York Times.
The actions do not seem to be coordinated by one party or the other, nor do they appear to be the result of election officials intentionally breaking rules, but are apparently the result of mistakes in the handling of the registrations and voter files as the states tried to comply with a 2002 federal law, intended to overhaul the way elections are run.
Still, because Democrats have been more aggressive at registering new voters this year, according to state election officials, any heightened screening of new applications may affect their party’s supporters disproportionately. The screening or trimming of voter registration lists in the six states — Colorado, Indiana, Ohio, Michigan, Nevada and North Carolina — could also result in problems at the polls on Election Day: people who have been removed from the rolls are likely to show up only to be challenged by political party officials or election workers, resulting in confusion, long lines and heated tempers.
Some states allow such voters to cast provisional ballots. But they are often not counted because they require added verification.
Although much attention this year has been focused on the millions of new voters being added to the rolls by the candidacy of Senator Barack Obama, there has been far less notice given to the number of voters being dropped from those same rolls.
States have been trying to follow the Help America Vote Act of 2002 and remove the names of voters who should no longer be listed; but for every voter added to the rolls in the past two months in some states, election officials have removed two, a review of the records shows.
The six swing states seem to be in violation of federal law in two ways. Michigan and Colorado are removing voters from the rolls within 90 days of a federal election, which is not allowed except when voters die, notify the authorities that they have moved out of state, or have been declared unfit to vote.
Indiana, Nevada, North Carolina and Ohio seem to be improperly using Social Security data to verify registration applications for new voters.
In addition to the six swing states, three more states appear to be violating federal law. Alabama and Georgia seem to be improperly using Social Security information to screen registration applications from new voters. And Louisiana appears to have removed thousands of voters after the federal deadline for taking such action.
Under federal law, election officials are supposed to use the Social Security database to check a registration application only as a last resort, if no record of the applicant is found on state databases, like those for driver’s licenses or identification cards.
The requirement exists because using the federal database is less reliable than the state lists, and is more likely to incorrectly flag applications as invalid. Many state officials seem to be using the Social Security lists first.
In the year ending Sept. 30, election officials in Nevada, for example, used the Social Security database more than 740,000 times to check voter files or registration applications and found more than 715,000 nonmatches, federal records show. Election officials in Georgia ran more than 1.9 million checks on voter files or voter registration applications and found more than 260,000 nonmatches.
Officials of the Social Security Administration, presented with those numbers, said they were far too high to be cases where names were not in state databases. They said the data seem to represent a violation of federal law and the contract the states signed with the agency to use the database.
Last week, after the inquiry by The Times, Michael J. Astrue, the commissioner of the Social Security Administration, alerted the Justice Department to the problem and sent letters to election officials in Alabama, Georgia, Indiana, Nevada, North Carolina and Ohio. The letters ask the officials to ensure that they are complying with federal law.
“It is absolutely essential that people entitled to register to vote are allowed to do so,” Mr. Astrue said in a press release.
In three states — Colorado, Louisiana and Michigan — the number of people purged from the election rolls since Aug. 1 far exceeds the number who may have died or relocated during that period.
States may be improperly removing voters who have moved within the state, election experts said, or who are considered inactive because they have failed to vote in two consecutive federal elections. For example, major voter registration drives have been held this year in Colorado, which has also had a significant population increase since the last presidential election, but the state has recorded a net loss of nearly 100,000 voters from its rolls since 2004.
Asked about the appearance of voter law violations, Rosemary E. Rodriguez, the chairwoman of the federal Election Assistance Commission, which oversees elections, said they could present “extremely serious problems.”
“The law is pretty clear about how states can use Social Security information to screen registrations and when states can purge their rolls,” Ms. Rodriguez said.
Nevada officials said the large number of Social Security checks had resulted from county clerks entering Social Security numbers and driver’s license numbers in the wrong fields before records were sent to the state. They could not estimate how many records might have been affected by the problem, but they said it was corrected several weeks ago.
Other states described similar problems in entering data.
Under the Help America Vote Act, all states were required to build statewide electronic voter registration lists to standardize and centralize voter records that had been kept on the local level. To prevent ineligible voters from casting a ballot, states were also required to clear the electronic lists of duplicates, people who had died or moved out of state, or who had become ineligible for other reasons.
Voting rights groups and federal election officials have raised concerns that the methods used to add or remove names vary by state and are conducted with little oversight or transparency. Many states are purging their lists for the first time and appear to be unfamiliar with the 2002 federal law.
“Just as voting machines were the major issue that came out of the 2000 presidential election and provisional ballots were the big issue from 2004, voter registration and these statewide lists will be the top concern this year,” said Daniel P. Tokaji, a law professor at Ohio State University.
Voting rights groups have urged voters to check their registrations with local officials.
In Michigan, some 33,000 voters were removed from the rolls in August, a figure that is far higher than the number of deaths in the state during the same period — about 7,100 — or the number of people who moved out of the state — about 4,400, according to data from the Postal Service.
In Colorado, some 37,000 people were removed from the rolls in the three weeks after July 21. During that time, about 5,100 people moved out of the state and about 2,400 died, according to postal data and death records.
In Louisiana, at least 18,000 people were dropped from the rolls in the five weeks after July 23. Over the same period, at least 1,600 people moved out of state and at least 3,300 died.
The secretaries of state in Michigan and Colorado did not respond to requests for comment. A spokesman for the Louisiana secretary of state said that about half of the numbers of the voters removed from the rolls were people who moved within the state or who died. The remaining 11,000 or so people seem to have been removed by local officials for other reasons that were not clear, the spokesman said.
The purge estimates were calculated using data from state election officials, who produce a snapshot every month or so of the voter rolls with details about each registered voter on record, making it possible to determine how many have been removed.
The Times’s methodology for calculating the purge estimates was reviewed by two voting experts, Kimball Brace, the director of Election Data Services, a Washington consulting firm that tracks voting trends, and R. Michael Alvarez, a political science professor at the California Institute of Technology.
By using the Social Security database so extensively, states are flagging extra registrations and creating extra work for local officials who are already struggling to process all the registration applications by Election Day.
“I simply don’t have the staff to keep up,” said Ann McFall, the supervisor of elections in Volusia County, Fla.
It takes 10 minutes to process a normal registration and up to a week to deal with a flagged one, said Ms. McFall, a Republican, adding that she was receiving 100 or so flagged registrations a week.
Usually, when state election officials check a registration and find that it does not match a database entry, they alert local election officials to contact the voter and request further proof of identification. If that is not possible, most states flag the voter file and require identification from the voter at the polling place.
In Florida, Iowa, Louisiana and South Dakota, the problem is more serious because voters are not added to the rolls until the states remove the flags.
Ms. McFall said she was angry to learn from the state recently that it was her responsibility to contact each flagged voter to clear up the discrepancies before Election Day. “This situation with voter registrations is going to land us in court,” she said.
In fact, it already has.
In Michigan and Florida, rights groups are suing state officials, accusing them of being too aggressive in purging voter rolls and of preventing people from registering.
In Georgia, the Justice Department is considering legal action against the state because officials in Cobb and Cherokee Counties sent letters to hundreds of voters stating that their voter registrations had been flagged and telling them they cannot vote until they clear up the discrepancy.
On Monday, the Ohio Republican Party filed a motion in federal court against the secretary of state to get the list of all names that have been flagged by the Social Security database since Jan. 1. The motion seeks to require that any voter who does not clear up a discrepancy be required to vote using a provisional ballot.
Republicans said in the motion that it is central to American democracy that nonqualified voters be forbidden from voting.
The Ohio secretary of state, Jennifer Brunner, a Democrat, said in court papers that she believes the Republicans are seeking grounds to challenge voters and get them removed from the rolls.
Considering that in the past year the state received nearly 290,000 nonmatches, such a plan could have significant impact at the polls.
By IAN URBINA
Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law, according to a review of state records and Social Security data by The New York Times.
The actions do not seem to be coordinated by one party or the other, nor do they appear to be the result of election officials intentionally breaking rules, but are apparently the result of mistakes in the handling of the registrations and voter files as the states tried to comply with a 2002 federal law, intended to overhaul the way elections are run.
Still, because Democrats have been more aggressive at registering new voters this year, according to state election officials, any heightened screening of new applications may affect their party’s supporters disproportionately. The screening or trimming of voter registration lists in the six states — Colorado, Indiana, Ohio, Michigan, Nevada and North Carolina — could also result in problems at the polls on Election Day: people who have been removed from the rolls are likely to show up only to be challenged by political party officials or election workers, resulting in confusion, long lines and heated tempers.
Some states allow such voters to cast provisional ballots. But they are often not counted because they require added verification.
Although much attention this year has been focused on the millions of new voters being added to the rolls by the candidacy of Senator Barack Obama, there has been far less notice given to the number of voters being dropped from those same rolls.
States have been trying to follow the Help America Vote Act of 2002 and remove the names of voters who should no longer be listed; but for every voter added to the rolls in the past two months in some states, election officials have removed two, a review of the records shows.
The six swing states seem to be in violation of federal law in two ways. Michigan and Colorado are removing voters from the rolls within 90 days of a federal election, which is not allowed except when voters die, notify the authorities that they have moved out of state, or have been declared unfit to vote.
Indiana, Nevada, North Carolina and Ohio seem to be improperly using Social Security data to verify registration applications for new voters.
In addition to the six swing states, three more states appear to be violating federal law. Alabama and Georgia seem to be improperly using Social Security information to screen registration applications from new voters. And Louisiana appears to have removed thousands of voters after the federal deadline for taking such action.
Under federal law, election officials are supposed to use the Social Security database to check a registration application only as a last resort, if no record of the applicant is found on state databases, like those for driver’s licenses or identification cards.
The requirement exists because using the federal database is less reliable than the state lists, and is more likely to incorrectly flag applications as invalid. Many state officials seem to be using the Social Security lists first.
In the year ending Sept. 30, election officials in Nevada, for example, used the Social Security database more than 740,000 times to check voter files or registration applications and found more than 715,000 nonmatches, federal records show. Election officials in Georgia ran more than 1.9 million checks on voter files or voter registration applications and found more than 260,000 nonmatches.
Officials of the Social Security Administration, presented with those numbers, said they were far too high to be cases where names were not in state databases. They said the data seem to represent a violation of federal law and the contract the states signed with the agency to use the database.
Last week, after the inquiry by The Times, Michael J. Astrue, the commissioner of the Social Security Administration, alerted the Justice Department to the problem and sent letters to election officials in Alabama, Georgia, Indiana, Nevada, North Carolina and Ohio. The letters ask the officials to ensure that they are complying with federal law.
“It is absolutely essential that people entitled to register to vote are allowed to do so,” Mr. Astrue said in a press release.
In three states — Colorado, Louisiana and Michigan — the number of people purged from the election rolls since Aug. 1 far exceeds the number who may have died or relocated during that period.
States may be improperly removing voters who have moved within the state, election experts said, or who are considered inactive because they have failed to vote in two consecutive federal elections. For example, major voter registration drives have been held this year in Colorado, which has also had a significant population increase since the last presidential election, but the state has recorded a net loss of nearly 100,000 voters from its rolls since 2004.
Asked about the appearance of voter law violations, Rosemary E. Rodriguez, the chairwoman of the federal Election Assistance Commission, which oversees elections, said they could present “extremely serious problems.”
“The law is pretty clear about how states can use Social Security information to screen registrations and when states can purge their rolls,” Ms. Rodriguez said.
Nevada officials said the large number of Social Security checks had resulted from county clerks entering Social Security numbers and driver’s license numbers in the wrong fields before records were sent to the state. They could not estimate how many records might have been affected by the problem, but they said it was corrected several weeks ago.
Other states described similar problems in entering data.
Under the Help America Vote Act, all states were required to build statewide electronic voter registration lists to standardize and centralize voter records that had been kept on the local level. To prevent ineligible voters from casting a ballot, states were also required to clear the electronic lists of duplicates, people who had died or moved out of state, or who had become ineligible for other reasons.
Voting rights groups and federal election officials have raised concerns that the methods used to add or remove names vary by state and are conducted with little oversight or transparency. Many states are purging their lists for the first time and appear to be unfamiliar with the 2002 federal law.
“Just as voting machines were the major issue that came out of the 2000 presidential election and provisional ballots were the big issue from 2004, voter registration and these statewide lists will be the top concern this year,” said Daniel P. Tokaji, a law professor at Ohio State University.
Voting rights groups have urged voters to check their registrations with local officials.
In Michigan, some 33,000 voters were removed from the rolls in August, a figure that is far higher than the number of deaths in the state during the same period — about 7,100 — or the number of people who moved out of the state — about 4,400, according to data from the Postal Service.
In Colorado, some 37,000 people were removed from the rolls in the three weeks after July 21. During that time, about 5,100 people moved out of the state and about 2,400 died, according to postal data and death records.
In Louisiana, at least 18,000 people were dropped from the rolls in the five weeks after July 23. Over the same period, at least 1,600 people moved out of state and at least 3,300 died.
The secretaries of state in Michigan and Colorado did not respond to requests for comment. A spokesman for the Louisiana secretary of state said that about half of the numbers of the voters removed from the rolls were people who moved within the state or who died. The remaining 11,000 or so people seem to have been removed by local officials for other reasons that were not clear, the spokesman said.
The purge estimates were calculated using data from state election officials, who produce a snapshot every month or so of the voter rolls with details about each registered voter on record, making it possible to determine how many have been removed.
The Times’s methodology for calculating the purge estimates was reviewed by two voting experts, Kimball Brace, the director of Election Data Services, a Washington consulting firm that tracks voting trends, and R. Michael Alvarez, a political science professor at the California Institute of Technology.
By using the Social Security database so extensively, states are flagging extra registrations and creating extra work for local officials who are already struggling to process all the registration applications by Election Day.
“I simply don’t have the staff to keep up,” said Ann McFall, the supervisor of elections in Volusia County, Fla.
It takes 10 minutes to process a normal registration and up to a week to deal with a flagged one, said Ms. McFall, a Republican, adding that she was receiving 100 or so flagged registrations a week.
Usually, when state election officials check a registration and find that it does not match a database entry, they alert local election officials to contact the voter and request further proof of identification. If that is not possible, most states flag the voter file and require identification from the voter at the polling place.
In Florida, Iowa, Louisiana and South Dakota, the problem is more serious because voters are not added to the rolls until the states remove the flags.
Ms. McFall said she was angry to learn from the state recently that it was her responsibility to contact each flagged voter to clear up the discrepancies before Election Day. “This situation with voter registrations is going to land us in court,” she said.
In fact, it already has.
In Michigan and Florida, rights groups are suing state officials, accusing them of being too aggressive in purging voter rolls and of preventing people from registering.
In Georgia, the Justice Department is considering legal action against the state because officials in Cobb and Cherokee Counties sent letters to hundreds of voters stating that their voter registrations had been flagged and telling them they cannot vote until they clear up the discrepancy.
On Monday, the Ohio Republican Party filed a motion in federal court against the secretary of state to get the list of all names that have been flagged by the Social Security database since Jan. 1. The motion seeks to require that any voter who does not clear up a discrepancy be required to vote using a provisional ballot.
Republicans said in the motion that it is central to American democracy that nonqualified voters be forbidden from voting.
The Ohio secretary of state, Jennifer Brunner, a Democrat, said in court papers that she believes the Republicans are seeking grounds to challenge voters and get them removed from the rolls.
Considering that in the past year the state received nearly 290,000 nonmatches, such a plan could have significant impact at the polls.
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