Wednesday 27th of November 2024
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dumbinos .....

dumbinos .....

In Budget Choices, a Test of Obama’s Political Skills

By JOHN HARWOOD

WASHINGTON — Whatever else it is, President Obama’s budget is a political gamble of the first order.

In his ambition to put his own stamp on liberalism and to move domestic policy leftward, Mr. Obama has much going for him.

The nation seems to be yearning for leadership, and his political standing is strong. In an era where taxpayers and markets are confronting bad numbers in the trillions, the price tags on some of his initiatives do not seem quite so breathtaking, and, in any case, good economic policy demands that the fiscal floodgates remain open for a while. Populist anger could render Republican arguments against taxing the rich less powerful.

But Mr. Obama faces many constraints. He is asking Congress to take on a wide-ranging set of complicated issues all at once, after years during which it had trouble grappling directly with almost any of them. His own party remains seared by the last time it followed a new Democratic president on a course of tax increases and ambitious social engineering. Interest groups, while demonized by the White House, have hardly fled from Washington and are already mobilizing for battles that could have big winners and losers.

http://www.nytimes.com/2009/02/27/us/politics/27assess.html?_r=1&hp=&pagewanted=print

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The US economy shrank by 6.2% in the last three months of 2008, official figures have shown, a far sharper fall than had previously been reported.

Plunging exports and the biggest fall in consumer spending in 28 years dragged the annualised figure down from an earlier estimate of 3.8%.

The decline was much worse than analysts had expected, sending US stocks spiralling lower.

In 2008 as a whole, the economy grew by 1.1%, the slowest pace since 2001.

The blue-chip Dow Jones industrial average dropped 119.15 points, or 1.66%, to 7,062.93. The broader Standard & Poor's 500 Index fell 2.36% to 735.09 - a 12-year low.

http://news.bbc.co.uk/2/hi/business/7915040.stm

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February 28, 2009

Sharper Downturn Clouds Obama Spending Plans

By PETER S. GOODMAN

The economy is spiralling down at an accelerating pace, threatening to undermine the Obama administration’s spending plans, which anticipate vigorous rates of growth in years to come.

A sense of disconnect between the projections by the White House and the grim realities of everyday American life was enhanced on Friday, as the Commerce Department gave a harsher assessment for the last three months of 2008. In place of an initial estimate that the economy contracted at an annualized rate of 3.8 percent — already abysmal — the government said that the pace of decline was actually 6.2 percent, making it the worst quarter since 1982.

The fortunes of the American economy have grown so alarming and the pace of the decline so swift that economists are now straining to describe where events are headed, dusting off a word that has not been invoked since the 1940s: depression.

Economists are not making comparisons with the Great Depression of the 1930s, when the unemployment rate reached 25 percent. Current conditions are not even as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent, though many experts assert this downturn is on track to be significantly worse.

Rather, economists are using the word depression — a subjective term with no academic definition — to describe a condition of broad and extreme economic distress that remains stubbornly in place for much longer than a typical downturn.

http://www.nytimes.com/2009/02/28/business/economy/28recession.html?_r=1&hp=&pagewanted=print

forking out more dough...

March 2, 2009

U.S. Is Said Set to Offer A.I.G. Up to $30 Billion More

By ANDREW ROSS SORKIN

The federal government is preparing to loosen the terms of its huge loan to the American International Group and provide another $30 billion to the insurer as it prepares to report the biggest quarterly loss in history on Monday, $62 billion, people involved in the discussions said Sunday night.

The intervention marks the fourth time that A.I.G., the giant insurer, has had to seek assistance from the federal government. The government already owns nearly 80 percent of the insurer’s holding company as a result of the earlier interventions, which included a $60 billion loan, a $40 billion purchase of preferred shares and $50 billion to soak up the company’s toxic assets.

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OI!!!

One of the major problems is that we — the dumb and unwashed maddening toilers at the boilers — we, said I, have no idea what these "toxic assets" are... or what they mean... We've got to swallow "something went horribly wrong in the value of fish somewhere".

Are these toxic bizos : bad loans, bad deals, bad derivatives, overvalued assets that have bitten the dust, clouds on the horizon or pebbles in the bank's shoes...? Who knows...

see toon at top.

piece of cake solution...

Japanese stocks fell in early trading before recovering somewhat, after markets around the world dropped sharply on Monday.

The Nikkei index approached a 26-year-low as bank shares reacted to record losses from US insurance giant AIG.

Rattled by fears that turmoil in the financial sector is far from over, the Dow Jones fell below 7,000 points for the first time since 1997.

The FTSE 100 briefly hit a six-year low and European markets also fell sharply.

The benchmark Nikkei came within 100 points of hitting the 26-year-low of 6,994.90 in the first hour of trade before recovering slightly to 7,204.89 by mid-day.

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There is a theory floating around the financial traps, that some shrewed people are forcing the market down so they can buy at rock-bottom price, then when they buy, there will be a bum-rush so these smart cookies will sell at high water mark... just before the roller-coaster starts to give us the hubbubs again... till we throw up in the curves.

 

Gus' Simple Solution to the financial crisis:

Governments worldwide decree that speculating on money is illegal by end of March 2009...

Only "manufacturing" stocks can be traded.

The new world currency to be called Clamar, Espero or Dallop.

Only Governments (plus two major foreign government creditors divided by two), can agree at sunrise to the value of their own currency in relation to that of the Clamar, Espero or Dallop.

Governments re-gather the authority to set interest rates to below inflation, excluding the price of Oil.

Futures and derivatives become useless in value. Guns are on the table.

Raw food is non-taxable. Fast food is taxed at three times the rate of luxury cars.

Sugar is hyper-taxed.

The future is safeguarded by very strict controls on emission of CO2 and other greenhouse gases (including less farting cows). No carbon trading.

Home-grown vegies get a 150 % tax deduction per square metres.

Pedal power is encouraged by replacing buses with ultralight buggies.

Petrol is rationed, used for emergencies only.

Oldies become healthier by pedalling longer... Saves a bundle in the health system.

Get rid of the complexities in the financial system — complexities designed to profit the rich via perverse greedy loopholes — and replace it with a more equitable system.

kiss a financial adverser... goodbye. All the whizkid of the financial markets work now in the salt mines, like the rest of us.

 

 

 

now we know...

March 4, 2009

Fed Chief Says Insurance Giant Acted Irresponsibly

By DAVID STOUT and BRIAN KNOWLTON

WASHINGTON — The Federal Reserve Chairman, Ben S. Bernanke, told lawmakers on Tuesday that the country faces “a prolonged episode of economic stagnation” if they do not address the economic crisis forcefully, but he quickly encountered deep anger, particularly over the dealings of the ailing American International Group.

Mr. Bernanke told the Senate Budget Committee that the worst outlook, should action on the crisis prove inadequate, would be “further deterioration in the fiscal situation” and probably “lower output, employment and incomes for an extended period.”

But the chairman was met at once with sharp questions from the senators, some of whom said they were passing on the resentment they have been hearing from constituents, not necessarily about President Obama’s proposed $3.55 trillion budget for the next fiscal year but about the rescue plan for the financial system and the stimulus package.

“Mr. Chairman,” Senator Ron Wyden, Democrat of Oregon, asked at the outset, “at what point will the taxpayer no longer be on the hook for the massive A.I.G. failure? What is the end game for American taxpayers?”

Mr. Bernanke replied that nothing had made him more angry during the months of the sprawling financial crisis than the episode involving the insurance giant that has reported astronomical losses and has been given financial lifelines worth billions of dollars.

“A.I.G. exploited a huge gap in the regulatory system,” Mr. Bernanke said. “There was no oversight of the financial products division. This was a hedge fund, basically, that was attached to a large and stable insurance company.” And this quasi-hedge fund, Mr. Bernanke went on, to nobody’s surprise, made irresponsible bets and took huge losses.

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 "made irresponsible bets and took huge losses."??????? ... Brother... The toxic debt is made of derivatives... not bad loans. Now we know...

"cleaning up the banking system..."?

From the New York Times

“I think, both on the economy and on foreign policy, we’ve got a shared world view that allows us to work together very effectively,” Mr. Brown said, adding that new regulations should include greater supervision of “shadow banking systems.” He renewed his call for a “global New Deal that will involve all the countries of the world in sorting out and cleaning up the banking system.”

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How did it get so "dirty"?

First, remove the derivatives out of the financial system. Second, remove the derivatives out of the financial system and third, do the same thing again with guns blazing...

And STOP USING OUR MONEYS TO PAY THE BANKING SYSTEM'S GAMBLING DEBTS. Put the CEOs responsible in prison...