Most remarkable was Wal-Mart’s image overhaul. It helped that former CEO Lee Scott beefed up health care coverage for employees, thought more about the environment and became a public presence. Certain critics will never be placated and fiscal first-quarter results weren’t the greatest. But there’s no denying Scott left new CEO Mike Duke a company in fighting form.

In its response, the Treasury effectively responded that it knows what it’s doing, things could have been a lot worse, its efforts should improve matters in time, and the programs are working even if results are difficult to measure.

Unclear Answers

Throughout its report, the Treasury offers summary for explanation, recapitulating the events of late September and early October to account for its abrupt changes of course—injecting capital instead of buying toxic assets, then abandoning toxic-asset purchases altogether; ignoring the automakers only to aid them later—and describing why its programs ought to work instead of providing the evidence of results the COP members clearly sought. (Or most of them, anyway: The lone Republican on the panel at the time, Texas Representative Jeb Hensarling, declined to sign the report.)

The report also left unclear how aggressively the Treasury is seeking to determine how banks are using federal funds—a central criticism of both congressional leaders and the COP’s initial report. In Dec. 10 testimony before the House Financial Services Committee, Kashkari said his team was “working with the banking regulators to develop appropriate measurements” to track the flow of federal funds through financial institutions, “and we are focused on determining the extent to which the [federal investment] is having its desired effect.” No further detail emerged in the Treasury’s report Wednesday, which echoed Kashkari’s testimony in nearly identical language.

Central to many of the agency’s answers in the report—and echoing Paulson and Kashkari in recent weeks—is the argument that, without Treasury’s actions, worse could have happened: “The most important evidence that our strategy is working is that Treasury’s actions, in combination with other actions, stemmed a series of financial institution failures,” the report says. In other words, Treasury seems to be saying, Citigroup (C) teetered on the brink even after receiving an initial $25 billion capital infusion from the Treasury; but after a second bailout, it survived.

The union is suspending its most ridiculed perk, called the JOBS bank. That program, set up as part of a contract agreement reached between Detroit’s Big Three and the union decades ago, pays auto workers 85% of their pay while furloughed. Some workers reported for years to meeting rooms where they would sit and wait for an assignment or be sent to clean public parks. All the while, they would get paid most of their wages.

The union also agreed to defer payments that the Big Three will make to a union-led health-care trust that is to take responsibility to pay medical benefits to auto workers starting in 2010.

The JOBS bank was costly in more ways than one for General Motors (GM), Ford (F), and Chrysler. By making labor a fixed cost, it altered their manufacturing strategy. For most of the past 10 years, the car companies preferred to discount models with big rebates rather than cut production, because they had to pay workers no matter what.

so long, entitlements

The provision also became an emblem of union abuse and what industry outsiders call Detroit’s entitlement culture. “The JOBS bank became a sound bite that people used to beat us up,” said UAW President Ron Gettelfinger. “It became a lightning rod.”

The JOBS bank has become less of a financial burden since the union has accepted tens of thousands of job cuts over the past two years, though. In 2006, GM had as many as 7,000 workers in the bank. Today, the three carmakers combined have just half that number awaiting a new assignment.

On Dec. 4, the CEOs of Detroit’s Big Three and Gettelfinger will take another stab at convincing Congress that the government should lend the automakers big bucks to stay afloat. Their request has climbed to $34 billion from $25 billion (BusinessWeek.com, 12/2/08) since last month’s hearings, when the CEOs were turned away after being lambasted for not adequately explaining how the money would make their companies competitive with Japanese rivals. They didn’t help their case by flying in on company planes. Members of Congress derided the auto execs for failing to display proper willingness to sacrifice. The UAW came in for criticism of its own, some of it focused on the JOBS bank.

The governor’s outstretched hand is just the latest sign of the severity of the financial vice squeezing the nation (BusinessWeek.com, 9/29/08). Everyone from small business people to homeowners to the largest state in the nation is finding it difficult to get a loan. “Right now this credit crunch impacts just about everyone who wants to borrow,” says Doug Charchenko, head of the fixed-income department at broker Wedbush Morgan Securities. “New issues have not been able to get into the market. Institutions aren’t buying bonds, they’re hoarding cash.”

Such a federal loan to a state would substantially broaden the federal government’s efforts to stem the credit crisis—and could well lead to similar requests from other strapped states. Jennifer Zuccarelli, director of public affairs at the Treasury, confirmed that California’s request had been received but would not comment further on whether it is under consideration or when a decision might be reached.

However, in Johnson’s mind and in those of other oil workers in the Gulf, the connection to the cheaper foreign workers is clear. His allegations are part of a lawsuit moving forward in federal court in Texas, which claims that a group of U.S. energy services companies operating in U.S. waters on the Outer Continental Shelf in the Gulf of Mexico are using workers recruited from Malaysia, Mexico, the Philippines, and other countries to displace U.S. workers, at less than half of the pay. According to the lawsuit, the staffing is illegal because non-U.S. workers are working without proper visas aboard foreign-flagged vessels that are in fact controlled by American companies.

“Paid Pennies on the Dollar”

For years, immigration has been a tense topic, mostly centered around the estimated 12 million low-wage, undocumented workers and the ability of Silicon Valley companies to secure extra visas (BusinessWeek, 3/6/08) to import thousands of skilled technology workers. But now, as a recession looms and the Presidential election heats up (BusinessWeek.com, 7/28/08), attention is turning to another booming industry: oil services. It’s not widely known, but both onshore and offshore in the Gulf of Mexico, non-U.S. workers can be found doing shipbuilding, pipe-fitting, welding, rigging, and related jobs. Some of them are here on temporary visas and some may be undocumented.

Johnson’s suit, Cunningham, et al v. Offshore Specialty Fabricators, Inc. et al, was filed in U.S. District Court in the Eastern District of Texas, Texarkana Div. in December 2004. On July 21 the judge issued a scheduling order that calls for both sides to begin discovery and depositions on Aug. 10.

The case is about working conditions for both U.S. and non-U.S. workers, says plaintiff’s attorney Tony Buzbee of Buzbee Law Firm in Galveston, Tex. The foreign workers “were paid pennies on the dollar, worked grueling hours for days on end, and were essentially captives on the rigs because they were paid when repatriated,” says Buzbee. “This suit seeks remedy for the American workers who were paid less due to wage market suppression or who lost their jobs due to being replaced.”

The oil services and staffing companies named as defendants in the suit declined to comment.

However, the four-week average for people receiving benefits edged up to 3.086 million, the highest level since March 6, 2004, when the country was still struggling to recover from a prolonged period of rising unemployment. The increase in so-called continuing claims underscored the problems people are facing with rising layoffs and the difficulty in finding new jobs in a weak economy. Some analysts said the better-than-expected showing was an aberration that reflected problems the government has in adjusting the claims figures around holidays. Last week covered the Memorial Day holiday when state claims offices were closed.

The unemployment report for May will be released on Friday. Analysts are expecting that the overall civilian jobless rate will edge up to 5.1 percent, compared to 5 percent in April, and that businesses will have cut 60,000 jobs, marking the fifth straight month of job losses. This long stretch of job cuts has many economists believing the country has fallen into a recession. However, the overall economy as measured by the gross domestic product has managed to remain in positive territory with the GDP growing at an annual rate of 0.9 percent in the first three months of the year.

In other economic news, reports from major chain stores showed that consumers stepped up their shopping in May after tax rebate checks started appearing in mailboxes. Discount and lower-priced stores such as Costco Wholesale Corp and Wal-Mart Stores Inc. were among the strongest performers. The Bush administration is hoping that the $168 billion economic stimulus program which is mailing checks to some 130 million households and showering businesses with tax breaks will be enough to jump-start the economy and result in stronger growth in coming months.

The drop of 18,000 jobless claims applications last week was much better than the unchanged performance that economists had been expecting. For the week ending May 24, a total of 31 states and territories reported that claims had declined, while 22 reported increases. The states with the biggest increases were Ohio, up 2,390, because of higher layoffs in the auto, transportation and service industries, and Mississippi, with a rise of 2,028, reflecting higher layoffs in the auto industry.

The states with the biggest declines were Michigan, with a drop of 1,880, reflecting fewer layoffs in the auto industry in that state, and Pennsylvania, with a drop of 1,120, reflecting fewer layoffs in petroleum, primary metals and the furniture industry. I wonder when the job market will begin to feel the full brunt of this recession?

The shift toward more fuel-efficient cars and crossovers has hit Detroit-based automakers and their truck-heavy lineups, particularly hard. Sales for GM’s Hummer SUV line dropped 60 percent in May as the automaker said it would sell or revamp a brand that has become synonymous with gas-guzzling excess.  Personally I can’t figure out how anyone can afford to drive a gas guzzling automobile but I guess I still manage with my v-6.

Nevertheless, Almunia said eurozone finance ministers expected a “better scenario” than the International Monetary Fund’s recently reduced forecast for 1.3 percent growth this year in the bloc. Eurozone finance ministers, who were to be joined later by counterparts from all EU countries for a two-day meeting, are struggling to come up with concrete responses to the growing threats hovering over their economy.

Though under pressure to try to counter the financial crisis, deep divisions on the best strategy have so far kept the European finance ministers from taking concerted action. Huge new write-downs this week by Swiss bank UBS and Deutsche Bank of Germany added to the sense of urgency ahead of the meeting of EU finance ministers and central bankers in Slovenia, which currently holds the EU’s rotating presidency.

While the outlook for economic growth was falling, Almunia said inflation was rising and would probably top the 2.6 percent he forecast for 2008 in February.  Although eurozone finance ministers were “concerned” but not “on the pessimistic side” regarding economic growth, Almunia said “we are extremely concerned on the inflation side.”

Inflation in the 15 eurozone countries jumped in March to 3.5 percent — the highest level since the bloc was formed in 1999, according to official EU data earlier this week. For those investing in this part of the world, care and a close-eye are in order.

The statement did not provide financial details of the deal, which was announced last year, but the official Xinhua News Agency said it was worth $5.46 billion.  Most analysts will be watching this one closely.