cryptogon.com

The instructions from the Department of Personnel Administration exclude roughly 37,000 state workers in six bargaining units that recently came to tentative labor agreements with Gov. Arnold Schwarzenegger.

Some employees, such as doctors and lawyers, would get no pay because federal exempts them from any minimum wage requirement. Managers, supervisors and others who don’t get paid for working more than 40 hours per week would receive $455 per week until a budget deal got done.

…

To understand the biggest cause, you have to plough through some concepts that will make your head ache – but not half as much as they made the poor world’s stomachs ache.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer, he’ll lose some cash, but if there’s a lousy summer or the global price collapses, he’ll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into “derivatives” that could be bought and sold among traders who had nothing to do with agriculture. A market in “food speculation” was born.

So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutsche Bank, who sell it on for £30,000 to Merrill Lynch – and on and on until it seems to bear almost no relationship to Farmer Giles’s crop at all.

If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, Whoops! Why Everybody Owes Everyone and No One Can Pay, explains: “Finance, like other forms of human behaviour, underwent a change in the 20th century, a shift equivalent to the emergence of modernism in the arts – a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn’t be explained in workaday English.” Poetry found its break with realism when T S Eliot wrote “The Wasteland”. Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn’t fully understand.

So what has this got to do with the bread on Abiba’s plate? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops – and the speculators drove the price through the roof.

Here’s how it happened. In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world’s frightened investors stampeded on to this ground.

So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose – which meant the all-rolled-into-one price shot up, and the starvation began. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.

When I asked Merrill Lynch’s spokesman to comment on the charge of causing mass hunger, he said: “Huh. I didn’t know about that.” He later emailed to say: “I am going to decline comment.” Deutsche Bank also refused to comment. Goldman Sachs were more detailed, saying they sold their index in early 2007 and pointing out that “serious analyses … have concluded index funds did not cause a bubble in commodity futures prices”, offering as evidence a statement by the OECD.

How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was “the main cause” of the rise.

The trailers were discovered to have such high levels of formaldehyde that the government banned them from ever being used for long-term housing again.

Some of the trailers, though, are getting a second life amid the latest disaster here — as living quarters for workers involved with the cleanup of the oil spill.

They have been showing up in mobile-home parks, open fields and local boatyards as thousands of cleanup workers have scrambled to find housing.

Ron Mason, owner of a disaster contracting firm, Alpha 1, said that in the past two weeks he had sold more than 20 of the trailers to cleanup workers and the companies that employ them in Venice and Grand Isle, La.

Even though federal regulators have said the trailers are not to be used for housing because of formaldehyde’s health risks, Mr. Mason said some of these workers had bought them so they could be together with their wives and children after work.

“These are perfectly good trailers,” Mr. Mason said, adding that he has leased land in and around Venice for 40 more trailers that are being delivered from Texas in the coming weeks. “Look, you know that new car smell? Well, that’s formaldehyde, too. The stuff is in everything. It’s not a big deal.”

Not everyone agreed. “It stunk to high heaven,” said Thomas J. Sparks, a logistics coordinator for the Marine Spill Response Corporation, as he stood in front of the FEMA trailer that was provided to him by a company working with his firm. Mr. Sparks said the fumes in the trailer from formaldehyde, a widely used chemical in building materials like particle board, were so strong that he had asked his employer to provide him with a non-FEMA trailer.

The trailers — which are being resold for $2,500 and up — started down their road to infamy after Hurricane Katrina in August 2005, when FEMA officials ordered nearly $2.7 billion worth of trailers and mobile homes to house victims of the storm.

Within months, some of these residents began complaining about breathing problems and burning eyes, noses and throats. One man who had complained about fumes was found dead in his trailer in June 2006.

Federal officials later discovered that formaldehyde — an industrial chemical that can cause nasal cancer, aggravates respiratory problems and may be linked to leukemia — was present in many of these housing units in amounts that exceeded federal limits. Scientists have since concluded that the high levels of formaldehyde found in the trailers probably resulted from cheap wood and poor ventilation. FEMA has produced other models and later batches of the trailers that do not have the health risks that the trailers built for Hurricane Katrina victims did.

But federal officials have struggled to figure out what to do with the contaminated trailers, which have cost nearly $130 million a year to store and maintain, according to federal records. As a result, the government decided to sell the trailers in 2006.

The trailers have found a ready market in the gulf.

“The price was right,” said Buddy Fuzzell, an executive with Cahaba Disaster Recovery, a contracting firm that bought 15 trailers for about 45 cleanup workers.

Several buyers said in interviews that they were unaware of any prohibition on using the trailers for housing.

In an April hearing, members of the House Energy Subcommittee on Commerce, Trade and Consumer Protection raised concerns that the trailers would end up being used for housing. More than 100,000 trailers have been sold so far in public auctions.

The trailers are “not intended to be used as housing,” said David Garratt, FEMA’s associate administrator for mission support. “Subsequent owners must continue to similarly inform subsequent buyers for the life of the unit.”

These rules are not being followed in many cases, however. Officials with the inspector general’s office of the General Services Administration said Wednesday that they had opened at least seven cases concerning buyers who might not have posted the certification and formaldehyde warnings on trailers they sold.

Federal records indicate that of the hundreds of companies and individuals who have bought the trailers, dozens are in Louisiana. They include Henderson Auctions, which bought 23,636 units for $18 million, and Kite Brothers RV, which bought 6,511 mobile homes and travel trailers for $16 million.

On Henderson Auctions’ Web site, a spokeswoman is quoted in a news video saying that people who live on the street or in their cars would much rather live in the trailers and that the formaldehyde has dissipated after four or five years.

Caren Auchman, a spokeswoman for the General Services Administration, said in an e-mail message that her agency was taking steps to ensure that the units were not used for housing.

Most of the workers in the gulf are not living in the trailers but in newer quarters provided by BP, its subcontractors or by state or federal agencies.

Still, housing remains tight. In June, Mr. Mason’s firm and another consulting firm began proposing a plan to large contractors in the region to put about 300 of the trailers on barges for offshore worker housing.

Officials from BP and the Center for Toxicology and Environmental Health, which is BP’s subcontractor that is handling most of the air sampling in the region, said they had no plans to move forward with the proposal.

But others are not hesitating.

John Sercovich, the owner of Bud’s Boat Rentals in Belle Chasse, La., said that he thought the trailer he bought for some of his workers to stay in was more than adequate.

“We couldn’t have afforded it any other way,” he said.

Standing in a small field surrounded by a new shipment of the trailers, Mr. Mason declined to say whether he informed buyers of the formaldehyde risks or kept warning labels on the trailers.

One of Mr. Mason’s trailers, shown to a reporter, had an overpowering smell of formaldehyde inside and none of the required placards on the outside or inside indicating the formaldehyde risk or that it was not supposed to be used for housing. The trailer did, however, have a note taped inside to call FEMA.

Mr. Mason, who is based in Texarkana, Tex., added that all of his customers have been happy and that he planned to lease land for 50 more trailers that he would rent out to workers.

The clash occurred in a sparsely populated area about 12 miles (20 kilometers) from the Arizona border — a prime corridor for immigrant and drug smuggling.

Sonora’s Attorney General’s Office said in a statement that nine people were captured by police at the scene of the shooting, six of whom had been wounded in the confrontation. Authorities at the scene found seven rifles.

Officials did not say why the gunfight had broken out, but powerful and well-armed Mexican gangs often fight for control of smuggling routes into the United States.

In a city on another part of the U.S. border, gunmen killed an assistant attorney general for Chihuahua state and one of her bodyguards.

After being chased by armed assailants through the darkened streets of Ciudad Juarez, the vehicle carrying Sandra Salas Garcia and two bodyguards was riddled with bullets Wednesday night.

Arturo Sandoval, a spokesman for the Attorney General’s Office, said the second bodyguard was seriously wounded.

Paul Jennings, until last year chief executive of the Octel chemical works near Ellesmere Port, Merseyside, and his predecessor, Dennis Kerrison, exported tonnes of tetra ethyl lead (TEL), to Iraq. TEL is banned from cars in western countries because of links with brain damage to children. Iraq is believed to be the only country that still adds lead to petrol.

The National Constitution Centre is awarding him its Liberty Medal for “steadfast” efforts to broker peace in Northern Ireland and the Middle East.

Previous winners include Nelson Mandela and former US presidents Bill Clinton and George Bush senior.

Mr Blair said he was driven by values of “freedom, liberty and justice”.

The Realtors said its Pending Home Sales Index, based on contracts signed in May, fell to a record low 77.6 from 110.9 in April. Economists polled by Reuters had expected a smaller decline of 12.5 percent in May.

“Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June,” said NAR chief economist Lawrence Yun.

First-time home buyers who had signed a contract before the end of April are eligible to receive $8,000 from the government. Buyers who are selling a home and buying a new home are eligible for $6,500.

The index is 15.9 percent lower than May 2009 and fell sharply in all regions of the country.