Optimism fading

Optimism fading
(01:53) Report

Jul 2 - The Dow closed lower for the third consecutive week as larger-than-expected job cuts added to signs a U.S. economic recovery could be sluggish.
Conway Gittens reports.

Treasury Department Issues Emergency Recall Of All US Dollars

Treasury Department Issues Emergency Recall Of All US Dollars


Treasury Department Issues Emergency Recall Of All US Dollars

Obama Poll Sees Doubt on Budget and Health Care

U.S. / Politics
Obama Poll Sees Doubt on Budget and Health Care (New York Times Permalink)
By JEFF ZELENY and DALIA SUSSMAN Published: June 18, 2009
The latest New York Times/CBS News poll found a distinct gulf between President Obama’s overall standing and how some of his key initiative are viewed.

Roubini: New Regulations "Go in the Right Direction," But Not Far Enough

Roubini: New Regulations "Go in the Right Direction," But Not Far Enough

The new Wall Street regulations announced by President Obama yesterday "go in the right direction" but only accomplish about "75% of what needs to be done," says Nouriel Roubini, professor at NYU's Stern School and chairman of RGE Monitor.

For example, making the Fed the systemic risk regulator makes sense from an institutional standpoint, "but have to have individuals committed to making sure the systemic risks are controlled," Roubini says, recalling the Greenspan Fed had the power -- but not the will -- to regulate mortgage lending during the housing boom.

"They allowed all this toxic underwriting because they did not believe in supervision," he says of the Greenspan Fed. "They were in favor of any kind of financial 'innovation'."
http://finance.yahoo.com/tech-ticker/article/266396/Roubini-New-Regulations-%22Go-in-the-Right-Direction%22-But-Not-Far-Enough?tickers=XLF,FAS,FAZ,SKF,AIG,BAC,JPM

Nouriel Roubini's Three Reasons Why Stocks Are Bound to Fall

What Obama Needs to Do to Get the U.S. Off Oil -- for Good

What Obama Needs to Do to Get the U.S. Off Oil -- for Good

The next great crisis: America's debt

The next great crisis: America's debt
At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse.

(Fortune Magazine) -- Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing. What's worrying both Krugman and Ryan is the rapid increase in the federal debt - not so much the stimulus-driven rise to mountainous levels in the next few years, but the huge structural deficits that, under all projections, keep building the burden far into the future to unsustainable, ruinous heights. "The long-term outlook remains worrying," warned Krugman in his New York Times column. Krugman strongly supports President Obama's spending plans but bemoans the shortfall in taxes to pay for them.

Ryan flays the administration for piling new spending on top of already enormous deficits. "This isn't a temporary stimulus but a ramp-up in debt followed by a greater explosion in spending and debt," he told Fortune, predicting a day when America's creditors will start viewing the U.S. Treasury as a risky bet. "The bond markets will come after us with a vengeance. We're playing with fire." Krugman favors far higher taxes, while Ryan wants to curb spending, but for now what's so big and so dangerous that it distresses such diverse types as Krugman and Ryan - and should scare all Americans - is the Great Debt Threat.
The bill is far too big for only the rich to pick up. There aren't enough of them. America will have to lean on citizens far below the $250,000 income threshold: nurses, electricians, secretaries, and factory workers. Within a decade the average household that pays income tax will owe the equivalent of $155,000 in federal debt, about $90,000 more than last year. What the Obama administration isn't telling Americans is that the only practical solution is a giant tax increase aimed squarely at the middle class. The alternative, big cuts in spending, aren't part of the President's agenda. To keep the debt from wrecking the economy, the U.S. would need to raise annual federal income taxes an average of $11,000 in 2019 for all families that pay them, an increase of about 55%. "The revenues needed are far too big to raise from high earners," says Alan Auerbach, an economist at the University of California at Berkeley. "The government will have to go where the money is, to the middle class." The most likely levy: a European-style value-added tax (VAT) that would substantially raise the price of everything from autos to restaurant meals.
Read Article...
http://money.cnn.com/2009/06/05/retirement/next_crisis_americas_debt.fortune/index.htm?postversion=2009060914

Obama expedites stimulus

Obama expedites stimulus
(02:15) Report Reuters Video

Jun. 8 - President Obama is expediting the economic stimulus package that Congress passed in February in order to create 600,000 jobs over the next 100 days.

SOUNDBITES:
# U.S. President Barack Obama
# Dan Mitchell, senior fellow at the libertarian Cato Institute,Jon Decker reports.

U.S. Trillion $ deficits 'for years' ?

Obama: $1 trillion deficits 'for years'

An expensive economic recovery plan will add to the short-term federal shortfall. But experts warn the bigger problem by far is the long-term picture.
NEW YORK (CNNMoney.com) -- President-elect Barack Obama is inheriting the worst economy in decades and says he'll need to "invest an extraordinary amount of money" to get it back on track.
Indeed, Obama's first act in office will be to push through what is expected to be an $800 billion economic recovery plan.
The stimulus package, combined with the $7.2 trillion the government has invested or loaned in the past year to combat the financial crisis, will add greatly to the federal budget deficit.
On Wednesday, the Congressional Budget Office will release its 2009 budget and economic outlook, which will tell the deficit tale in black and white. A report from the Treasury Department last month found that the deficit in just the first two months of the current fiscal year exceeded $400 billion -- almost as high as it had been for all of fiscal year 2008.

CBO Press Briefing on 2009 Budget and Economic Outlook
The Congressional Budget Office will hold a pen and pad press briefing on the 2009 Budget and Economic Outlook on Wednesday, January 7th, at 11:00 a.m.
Acting CBO Director Robert Sunshine will conduct the briefing. The outlook report will be available to the press and public on our Web site at 10:00 a.m. the same day. Limited copies of the report will be available at the press briefing. Only those holding valid Congressional press credentials will be admitted to the briefing. No cameras or recording devices, please.

(Source: Associated Press/AP Online)
The federal budget deficit will hit an unparalleled $1.2 trillion for the 2009 budget year, according to grim new Congressional Budget Office figures.

The CBO estimate released Wednesday also sees the economy shrinking by 2.2 percent this year and recovering only slightly in 2010, and the unemployment rate eclipsing 9 percent early next year unless the Obama administration steps in.
"The recession - which began about a year ago - will last well into 2009," the CBO report says.
The dismal figures come a day after President-elect Barack Obama warned of "trillion-dollar deficits for years to come."

CBO's figures don't account for the huge economic stimulus bill that Obama is expected to propose soon to try to jolt the economy. At the same time, they do not reflect the full cost of the Wall St. bailout.
The shrinking economy has led to a sharp drop in estimated tax revenues of $166 billion, which is largely responsible for the deficit, along with big outlays from the Wall St. bailout. The agency expects the bailout to cost $180 billion this year after taking into account the net value of the assets the government holds from financial institutions.
Obama and Congress are promising quick enactment of the economic recovery plan, which will blend up to $300 billion in tax cuts with big new spending programs and could cost up to $775 billion over the next few years.

The flood of red ink probably won't affect that measure but could crimp other items on Obama's agenda.
"Despite the record deficits facing us, our number one task is an economic recovery package," said House Budget Committee Chairman John Spratt Jr., D-S.C. "With Americans concerned about their jobs, their homes, their retirement, and their children's' future, our economic situation is so severe that stabilizing the economy must take precedence over short-term deficits."
The $1.19 trillion 2009 figure shatters the previous record of $455 billion, set only last year. It also represents more than 8 percent of the size of the economy, which is higher than the deficits of the 1980s. The 2009 budget year began last Oct. 1.
Senate GOP Leader Mitch McConnell of Kentucky called the budget figures "a stunning and sobering reminder that Congress must strengthen its efforts to be good stewards of the taxpayers' money."

CBO predicts the deficit will come under relative control within a few years, but such predictions depend on the expiration of President Bush's tax cuts at the end of next year and repayments from financial institutions that received bailout funds.
While expected, the deficit numbers will give lawmakers second thoughts about creating new spending programs without finding ways to pay for them. And it is likely to prompt a debate about whether tax increases are necessary after the economy recovers from the current recession.
On Tuesday, Obama issued his most serious remarks yet about the danger of big budget deficits and promised his administration will take steps to bring the tide of red ink under control.
"I'm going to be willing to make some very difficult choices in how we get a handle on this deficit," Obama said Tuesday.
Economists warn that large and sustained budget deficits put upward pressure on interest rates. In the short term, however, efforts to restrain the deficit could have a contracting effect on the economy.

Nouriel Roubini : The U.S. will experience its most severe recession since WWII

The recession will continue until at least the end of 2009 for a cumulative GDP drop of over 4%; the unemployment rate will likely reach 9%

Obama will inherit and economic and financial mess worse than anything the U.S. has faced in decades: the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollar in 2009 and 2010; a huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of households are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed Funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise given price deflation while the value of financial assets is still plunging.
The world economy will experience a severe recession: output will sharply contract in the Eurozone, UK and the rest of Europe, in Canada, Japan, and Australia/New Zealand; there is also a risk of a hard landing in emerging market economies. Expect global growth – at market prices – to be close to zero in Q3 and negative by Q4. Leaving aside the effects of the fiscal stimulus China could face a hard landing growth rate of 6% in 2009. The global recession will continue through most of 2009.
The advanced economies will face stag-deflation (stagnation/recession and deflation) rather than stagflation as slack in goods markets, slack in labor markets and slack in commodity markets will lead advanced economies inflation rates to become below 1% by 2009.

Obama: Costly stimulus needed to jolt economy

Obama: Costly stimulus needed to jolt economy


Presentation of Economic team.

CHICAGO (Reuters) - President-elect Barack Obama promised on Monday to jolt the faltering U.S. economy with a costly stimulus package next year and introduced the team that will help him navigate the global financial crisis.
Obama, who warned again that the economy would likely get worse before it got better, declined to put a price tag on the two-year stimulus proposal which other Democrats have estimated at hundreds of billions of dollars.
Obama said his team was already working on the details of a package to save or create 2.5 million jobs and urged the next Congress to act on it immediately in early January.
Timothy Geithner, 47, president of the New York Federal Reserve Bank, will become Treasury secretary, and Lawrence Summers, 53, a former Treasury secretary under President Bill Clinton, will be director of the National Economic Council.
President-elect Barack Obama has chosen Christina Romer, a professor at the University of California, Berkeley, as the head of the White House Council of Economic Advisers.

President-elect Obama surrounds himself with pragmatists instead of idealogues

President-elect Obama surrounds himself with pragmatists instead of idealogues
It looks like Barack Obama is planning to govern from the center-right of the Democratic Party.
He will probably ask Robert Gates to stay on (for a year or so) as Defense Secretary as well as some of the more seasoned troop commanders like Gen. James L. Jones, the former NATO commander as National Security advisor. This is not confirmed!
This might not be a bad idea as long as the Iraq and Afghanistan situation continues.
With Tim Geithner as Treasury Secretary and Larry Summers as Senior Economic Advisor it looks like the best of both worlds.
And with Hillary Clinton as Secretary of State he gets somebody with a star like quality, a good inside knowledge and very powerful influential friends. She will get, however, a very challenging task, to restore trust and confidence in America and upgrading its status in the world is no minor job.

(Trendsbridge Team Comment: It's a well-known strategy. He does the same as in his time with the Harvard Law Review, he looks for the best people to do the job.)

U.S. / Politics (New York Times Permalink)
Obama Vows Swift Action on Vast Economic Stimulus Plan
By JACKIE CALMES and JEFF ZELENY
Published: November 23, 2008
Barack Obama offered the outlines of a plan to create or save 2.5 million jobs by investing in public works and alternative energy.