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Thread: American Economy in Dire Trouble?

  1. #1
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    American Economy in Dire Trouble?

    Hello all,

    AIG rescue fails to boost investor confidence

    $85 billion plan seen as stopgap; uncertainty over assets weigh on markets

    http://www.msnbc.msn.com/id/26758157/

    ANALYSIS
    By John W. Schoen
    Senior producer
    MSNBC
    updated 1 hour, 17 minutes agoindow.DateTime) { var dt = new DateTime(); pdt = dt.T2D(pdt); if(dt.GetTZ(pdt)) {n.innerHTML = dt.D2S(pdt,((".toLowerCase()==`false`)?false:true ));** ** ** UpdateTimeStamp(`633572850810300000`);

    The government’s rescue of insurance giant AIG prevented a deeper financial catastrophe but failed to restore confidence Wednesday as investors continued to flee the stock market.

    Part of the reason is that the unprecedented move late Tuesday is only a stopgap measure in the ongoing unwinding of a credit bubble that continues to weigh on the financial markets and the economy.

    The Fed`s decision to extend an $85 billion lifeline to AIG was intended to prevent the insurance giant`s cash squeeze from spreading to the hundreds of institutions, investors and governments it does business with.

    The immediate concern Wednesday was whether the Federal Reserve’s $85 billion loan to AIG would be enough to stop the company`s bleeding.

    Continued uncertainty about the value of AIG’s holdings left some on Wall Street wondering if the capital infusion is big enough to turn the company around.

    Investors began selling at the opening bell Wednesday, and losses accelerated in the final hour of trading, when the Dow, of which AIG is a component lost over 300 points. AIG lost another 45 percent Wednesday to close at $1.70 a share, compared with more than $20 last week and nearly $50 as recently as June.

    The blue-chip index already is down 7 percent this week.
    AIG’s problem stemmed from uncertainty about the value of a class of investment known as credit default swaps — a kind of insurance against a debt going bad.

    The explosion of this paper — some $60 trillion of these swaps are held by banks, brokerages, hedge funds and other financial institutions — is clogging the credit markets and lies at the core of the crisis now engulfing the entire financial system.

    “If the markets turn against them and those assets lose value, they’ll have to post additional collateral,” said Carlos Mendez, senior managing director with ICP Capital, referring to AIG. “The majority of that $85 billion will go out the door for collateral calls and other more immediate needs for cash.”
    Officials involved in the the rescue said it’s unlikely AIG will need more cash.

    “There could be a greater need for capital, but the valuations that were done assumed a lot of worst-case scenarios. Some of the holding companies and the noncore insurance companies were given very, very low valuations,” said Eric Dinallo, superintendent of the New York state Insurance Department.

    “So I think that while it is possible and there may be continued degradation and it would require more capital, the federal government has put into place enough to handle those transactions,” he said.

    Dinallo added that, with breathing room to sell parts of its business in a more orderly fashion, AIG can get a better price for those assets than if it had to sell under pressure. Other insurance companies already have expressed interest in buying pieces of AIG, he said.

    Here is a wikipedia biography excerpt on Phil Gramm. If you don`t trust wikipedia don`t complain. Provide any more legitimate sources that disprove it:

    http://en.wikipedia.org/wiki/Phil_Gramm

    While advising the McCain campaign, Gramm was being paid by UBS to lobby Congress about the U.S. mortgage crisis. During this time, "the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages."[10] According to Politico.com, Gramm had input on McCain`s March 26, 2008 policy speech on the mortgage crisis.[10]

    In a July 9, 2008 interview explaining McCain`s plans in reforming the U.S. economy, Gramm downplayed the idea that the nation was in a recession, stating, "You`ve heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."[11]

    Gramm`s comments immediately became a campaign issue. McCain`s opponent, Senator Barack Obama, said, "America already has one Dr. Phil. We don`t need another one when it comes to the economy. ... This economic downturn is not in your head."[12] McCain strongly denounced Gramm`s comments.[13] Gramm later attempted to clarify his comment, explaining that he had used the word "whiners" to describe the nation`s politicians rather than the public, stating "the whiners are the leaders."[14][15] In the same interview, Gramm stated, "I`m not going to retract any of it. Every word I said was true."

    On July 18, 2008 Gramm stepped down from his position with the McCain campaign. However, he often accompanies McCain during the campaign, and continues to be an unofficial adviser on economic and financial matters.[16]

    Korbel
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

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    the Wall Street Journal

    http://online.wsj.com/article/SB1221...Tabs%3Darticle

    Stocks Fall as Bank Gloom Deepens

    Stocks resumed their downward spiral Wednesday as even the Federal Reserve`s $85 billion rescue of American International Group left investors unconvinced that the broader U.S. financial system is no longer in peril.

    The Dow Jones Industrial Average ended near a three-year low, down 449.36 points, or 4.1%, at 10609.36, off 7.1% so far this week. All 30 of the Dow`s components fell, including a 45.3% drop in AIG shares. Among the blue-chip measure`s other financial names, big losers included J.P. Morgan Chase, off 12.2%, and Citigroup, down 10.9%.

    Traders questioned whether the latest bailout will stem the ripple effect failing banks are having on world markets. While AIG will continue to operate, dozens of other firms remain in deep trouble because of their own soured credit bets.

    "There`s a clear fright to the market right now," said Anthony Conroy, head of trading at BNY ConvergEx Group, a New York stock brokerage. "It`s a virus that`s running through the market. If investors don`t know what a firm`s exposure is [to credit markets], they`re just running away."

    The Nasdaq Composite Index was down 4.9% at 2098.85, down 7.2% for the week. The small-stock Russell 2000 fell 4.8% to 676.38. The S&P 500 dropped 4.7% to 1156.39, down 7.6% for the week. All the broad measure`s sectors fell Wednesday, led by an 9.6% slide in its financial category.

    Overnight borrowing costs have surged, keeping pressure on the shares of invesment banks that rely on short-term funds to bankroll their operations.
    Morgan Stanley, which surprised investors by releasing better-than-expected quarterly results -- a day early – fell nearly 25% despite that upbeat news. Goldman Sachs Group, the other remaining large independent brokerage, failed to please investors as much with its quarterly results and shares fell 13.9%.

    Signs of stress proliferated in the credit markets. A spike in Libor and a plunge in three-month Treasury bills widened the so-called TED spread, a measure of financial stress, to its widest levels since the stock-market crash in 1987 — an indication that banks have no interest in lending to each other.

    "This is a function of liquidity hoarding and just being on defense," says George Goncalves, bond strategist at Morgan Stanley. "It`s just a reluctance to lend."

    In a worrisome sign of widening fallout, a big money-market fund, the Reserve Primary Fund, announced late Tuesday that it lost money as its net asset value fell below the hallowed $1-per-share level. Money-market funds are regarded as super-safe vehicles for ordinary investors looking for a place to harbor their cash. A money fund hasn`t "broken the buck" in 14 years.

    The Reserve Primary Fund`s difficulties sprung from debt securities it holds issued by Lehman Brothers. The news raised the prospect more losses might be in store for other money-market funds holding paper from Lehman, which collapsed Monday, and from other problem-ridden firms. As of Friday, the Reserve Primary Fund had assets of around $62 billion, but they have fallen considerably since.

    The development "is really, really bad," said Don Phillips, one of the founders of Morningstar Inc. "You talk about Lehman and Merrill having been stellar institutions, but breaking the buck is sacred territory."

    Peter Demirali, portfolio manager at Cumberland Advisors in Vineland, N.J., said he was hurriedly moving his clients` money out of traditional money-market funds and into Treasury funds, essentially making a bet that the U.S. government is the only entity that is certain not to default on its commitments.

    He believes other money funds will "break the buck" in the weeks ahead and, when asked whether he believed major Wall Street firms like Goldman and Morgan Stanley will survive, Mr. Demirali said: "There`s no way to know right now because there are so many things out of management`s control."
    Such sentiment drove Treasury prices up and yields lower on Wednesday. The yield on three-month bills fell near zero, meaning that investors were willing to pocket almost no interest in return only for the certainty that they would get all their cash back in 90 days.

    Buyers also rushed to gold, also traditionally perceived as an investor haven during times of financial uncertainty. Futures on the metal soared $70.10, the biggest daily move in the history of New York trading going back to 1975. Gold contracts closed 9% higher at $846.60, up 1.4% on the year.
    The Chicago Board Options Exchange`s Volatility Index, which uses the prices of options contracts to measure investors` nervousness about an upcoming market swing, leapt 14.8%.

    Among names listed on the New York Stock Exchange, nearly 9.3 billion shares changed hands, just shy of the previous session`s record. Decliners outnumbered advancers nearly 14 to 1.

    Adding to the sense that there is no end in sight to the market`s trouble, the Commerce Department reported that housing starts fell in August by 6.2% to 895,000 units -- marking the slowest building pace since January 1991. The report added to worries about the U.S. economy that have been heightened by an upheaval in the financial sector and sent Treasurys sharply higher.

    Crude-oil futures soared $6.01, or 6.6%, to $97.16 a barrel in New York following the government`s release of inventory data showing that U.S. stockpiles fell last week more than analysts expected.

    The dollar weakened against major rivals. The euro rose to $1.4352, compared to $1.4143 late Tuesday. Against the Japanese currency, the dollar fell to 104.74 yen, down from 105.92 yen.
    —David Gaffen contributed to this article Write to Peter A. McKay at peter.mckay@wsj.com.


    Korbel
    Last edited by korbel; 09-17-2008 at 11:50 PM.
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

  3. #3
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    And now, dear American fellows, keep voting for the Republicans while Canada votes for the Conservatives and the entire North America will be ruined.

    Very sad...

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    Quote Originally Posted by metoo4
    And now, dear American fellows, keep voting for the Republicans while Canada votes for the Conservatives and the entire North America will be ruined.

    Very sad...
    Hello Metoo4,

    According to CNN the U.S. government has now put up $815,000,000,000 of tax payers money to forestall further bank, insurance and other business and economic failures. That's about double the cost of the Iraq war over the last 5 1/2 years. As I am writing this CNN just estimated the total loss in value of the stock market just for today at $700,000,000,000. Given an even larger decline yesterday of 500 points on the stock market that's about 1.4 trillion in 2 days. Ain't it grand.

    CNN is announcing the latest polls tonight show Obama gaining with a 5 point lead nationally, and gaining a slim lead among white women after having trailed by 19 points earlier.

    Toodles,

    Korbel
    Last edited by korbel; 09-18-2008 at 01:01 AM.
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

  5. #5
    Quote Originally Posted by Korbel
    Hello Metoo4,


    CNN is announcing the latest polls tonight show Obama gaining with a 5 point lead nationally, and gaining a slim lead among white women after having trailed by 19 points earlier.

    Toodles,

    Korbel
    Borrowing an act from SNL:

    Really?

    Obama was trailing 19 points behind McCain with WOMEN? Really ?
    Women being the bread and butter of the dunkey party, ops, i meant democratic party. They vote for a broom stick if it was nominated

    Is this what the 'Commie News Network' wants you to believe? Really ?
    That Hussein Obama is suddenly popular with women in USA, really?
    He got 24 points bump with women in 2 weeks, really? I guess CNN pollsters
    can't differiente between male and females.

    The media in USA is so pro- obama, it ain't even funny.

  6. #6
    Quote Originally Posted by centaurus
    The media in USA is so pro- obama, it ain't even funny.
    I agree that those polls must be cooked up. The media in general does seem to particpate far more in creating issues and forming public opinion than simply reporting the news, which implies putting the best and worst spins on both (or all) sides of a topic, maybe ending with a reporter's own opinion, but mostly leaving it to the public to decide for themselves, thus serving as a public education service. Yet we see that News has mostly become entertainment and a tool of whichever party they happen to support. Ideology over common sense. So deplorable!

    But if CNN is biased for Obama, can you totally blame them? given what a failure Bush has been? and given the McCain is just a lessor form of Bush (scored worse academically, is nearing his very aged years when the mind starts to fail.) Bush failed to see the looming financial crisis when it was widely predicted, even by his general accounting office, the comptroller general. He failed to respond to the New Orleans crisis. Yet he CREATES a big crisis for us in Iraq.

    I don't know how you consider not turning out the republicans, as the republican Chuck Hagel has hinted he'll do with his vote on election day. What is there to like or support with the McCain-Palin ticket? Why isn't it just more of the same idiocy?
    Last edited by vtguy; 09-20-2008 at 02:57 PM.

  7. #7
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    Quote Originally Posted by centaurus
    Borrowing an act from SNL:

    Really?

    Obama was trailing 19 points behind McCain with WOMEN? Really ?
    Women being the bread and butter of the dunkey party, ops, i meant democratic party. They vote for a broom stick if it was nominated

    Is this what the 'Commie News Network' wants you to believe? Really ?
    That Hussein Obama is suddenly popular with women in USA, really?
    He got 24 points bump with women in 2 weeks, really? I guess CNN pollsters
    can't differiente between male and females.

    The media in USA is so pro- obama, it ain't even funny.
    Hello Centaurus,

    I see you believe in pure demagoguic stereotype as a primary language. At least you left out the "N-word".

    Cheers,

    Korbel
    Last edited by korbel; 09-20-2008 at 09:56 PM.
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

  8. #8

    Talking Learn Languages

    Quote Originally Posted by Korbel
    Hello Centaurus,

    I see you believe in pure demagoguic stereotype as a primary language. At least you left out the "N-word".

    Cheers,

    Korbel
    Korbie,

    From your thread someone may get the impression that soon you may have to learn Chinesse and Russain.
    LISA'S FRIEND

  9. #9
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    Quote Originally Posted by eastender
    Korbie,

    From your thread someone may get the impression that soon you may have to learn Chinesse and Russain.
    да eastender

    Я беру классы прямо сейчас

    приветствия

    Korbel
    Last edited by korbel; 09-21-2008 at 08:50 AM.
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

  10. #10

    Talking Good to See

    Quote Originally Posted by Korbel
    да eastender

    Я беру классы прямо сейчас

    приветствия

    Korbel
    Korbie,

    Good to see that you are taking classes. Looks like you are in the accelerated program.

    BTW looks like the Yuan will be the currency of choice for reporting and paying MLB salaries starting next season.

    EE
    LISA'S FRIEND

  11. #11
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    Democrats Demand Limit On Executive Pay.

    Hello all,

    Lawmakers agree on mortgage aid, oversight



    http://www.msnbc.msn.com/id/26835745

    WASHINGTON - Scrambling for a swift deal on the $700 billion bailout for failing financial firms, key Democrats and Bush administration officials agreed Monday to include mortgage help for beleaguered homeowners but wrangled over other issues including “golden parachutes” for executives who benefit from the unprecedented rescue.

    Democrats demanded that the measure limit pay packages for executives of companies helped by the biggest financial rescue since the Great Depression. The administration was balking at that, and also at a proposal by Democrats to let judges rewrite mortgages to lower bankrupt homeowners’ monthly payments.

    President Bush prodded Congress during the day to pass the rescue plan quickly, declaring, “The whole world is watching.”

    “We do agree we should move quickly,” said Rep. Barney Frank, D-Mass., the Financial Services Committee chairman who was leading negotiations with Treasury Secretary Henry Paulson. “A great deal of progress has already been made,” Frank said.

    Congressional aides said the House could act on a bailout bill as early as Wednesday.

    However, Wall Street wasn’t comforted by the progress of the talks. The Dow Jones industrials plummeted 372 points, oil prices soared $25 a barrel at one point and gold prices surged anew as investors searched for a safe place to park their money. And despite encouraging talk on Capitol Hill, lawmakers on both the right and left were already assailing the deal-in-progress.

    The emergency legislation would give the government broad power to buy up devalued assets from troubled financial firms in a bid to unlock the flow of credit and stabilize badly shaken markets in the United States and around the globe.

    In one expansion of its original proposal, the administration is asking for broad power to buy up virtually any kind of bad asset — including credit card debt or car loans — from any financial institution in the U.S. or abroad in order to stabilize markets.

    Sen. Chris Dodd, D-Conn., the Banking Committee chairman, has proposed granting that request; Frank said he was working to limit the bailout to mortgage-related investments.

    Discuss on Newsvine
    Vote: Is the government doing enough?

    Differences remained with the administration on Democrats’ proposal that the government take an ownership stake in the troubled companies it bails out so that taxpayers could benefit from future profits. Frank said Paulson had accepted the idea, but several staff aides at work on the plan said there was no agreement yet on how the concept would work.

    Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to mandate that the government come up with a plan to avoid foreclosures on any mortgages it acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions.

    As for tottering financial firms, there still were divisions on which would be helped and what kind of assets the government could buy as part of the bailout.

    And in a fresh sign of a challenging road ahead, Sen. Richard C. Shelby of Alabama, the top Banking Committee Republican, blasted the emerging plan as “neither workable nor comprehensive.”

    “In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts,” Shelby said.

    Lawmakers on both extremes of the political spectrum assailed the plan as a massive, poorly conceived bailout. Conservative House Republicans and liberal House Democrats both and huddled privately to plot strategy on how to stop it.

    A partisan battle was brewing over the bankruptcy provision for homeowners’ mortgage payments, a key Democratic demand.

    “We’ll see how hard they fight — it’s something we care about,” Frank said.

    Dodd proposed ending the program at the end of next year, instead of creating the two-year initiative the Bush administration has sought.

    Investors were uncertain just how successful the administration’s plan would be in unfreezing credit markets, which many businesses depend on to fund day-to-day operations, and for propping up the still-weak housing market.

    Bush said, “Obviously, there will be differences over some details, and we will have to work through them. That is an understandable part of the policymaking process.” But he also said, “It would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions, or to insist on provisions that would undermine the effectiveness of the plan.”

    Treasury spokeswoman Brookly McLaughlin said, “We are confident that we can get a bill done this week.”

    The fast-moving negotiations between the administration and Congress unfolded a day after the government approved a request by investment houses Goldman Sachs and Morgan Stanley to change their status to bank holding companies.

    That change will allow the two venerable institutions to set up commercial banks that will be able to take deposits, significantly bolstering the resources of both institutions. It will also grant them permanent access to emergency loans supplied by the Fed rather than the temporary loan status they have had since last March when the Fed moved to prop up investment banks following the forced sale of Bear Stearns.

    Korbel
    Korbie: of the Boston Red Sox Nation...the NBA Champion Boston Celtics Pride...and...the New England Patriots Dynasty!

  12. #12

    The Economist — Examining the candidates

    I realize that this isn't exactly the correct thread to post this in, but I'm in a hurry... as a result, I only skimmed through the article, but I wanted to particularly share this graph with you...


    If The Economist's economists say so, I can only defer.


    The Economist's poll of economists
    Examining the candidates

    Oct 2nd 2008 | WASHINGTON, DC
    From The Economist print edition

    In our special report on the election we analyse the two candidates’ economic plans. Here, we ask professional economists to give us their views

    AS THE financial crisis pushes the economy back to the top of voters’ concerns, Barack Obama is starting to open up a clear lead over John McCain in the opinion polls. But among those who study economics for a living, Mr Obama’s lead is much more commanding. A survey of academic economists by The Economist finds the majority—at times by overwhelming margins—believe Mr Obama has the superior economic plan, a firmer grasp of economics and will appoint better economic advisers.

    Our survey is not, by any means, a scientific poll of all economists. We e-mailed a questionnaire to 683 research associates, all we could track down, of the National Bureau of Economic Research, America’s premier association of applied academic economists, though the NBER itself played no role in the survey. A total of 142 responded, of whom 46% identified themselves as Democrats, 10% as Republicans and 44% as neither. This skewed party breakdown may reflect academia’s Democratic tilt, or possibly Democrats’ greater propensity to respond. Still, even if we exclude respondents with a party identification, Mr Obama retains a strong edge—though the McCain campaign should be buoyed by the fact that 530 economists have signed a statement endorsing his plans. Does their opinion matter? Economics is just one of the many things the next president will have to worry about; voters still seem to prefer Mr McCain on foreign policy. And even on the economy, economists may not have the same priorities as the population at large. Arguably, what a president says about economics on the campaign trail is less important than how he responds to the unexpected challenges that inevitably arise once he is in office.

    Yet economists’ opinions should count for something because irrespective of any party affiliation, most of them approach policy decisions with the same basic tool kit. Their assessment of the candidates’ economic credentials and plans represents an informed judgment on how well they will handle difficult trade-offs between efficiency, equity, growth and consensus-building.

    Regardless of party affiliation, our respondents generally agree the economy is in bad shape, that the election is important to the course of economic policy and that the housing and financial crisis is the most critical economic issue facing America.

    [Figure]

    The detailed responses are bad news for Mr McCain (the full data are available here). Eighty per cent of respondents and no fewer than 71% of those who do not cleave to either main party say Mr Obama has a better grasp of economics. Even among Republicans Mr Obama has the edge: 46% versus 23% say Mr Obama has the better grasp of the subject. “I take McCain’s word on this one,” comments James Harrigan at the University of Virginia, a reference to Mr McCain’s infamous confession that he does not know as much about economics as he should. In fairness, Mr McCain’s lower grade may in part reflect greater candour about his weaknesses. Mr Obama’s more tightly managed image leaves fewer opportunities for such unvarnished introspection.

    A candidate’s economic expertise may matter rather less if he surrounds himself with clever advisers. Unfortunately for Mr McCain, 81% of all respondents reckon Mr Obama is more likely to do that; among unaffiliated respondents, 71% say so. That is despite praise across party lines for the excellent Doug Holtz-Eakin, Mr McCain’s most prominent economic adviser and a former head of the Congressional Budget Office. “Although I have tended to vote Republican,” one reply says, “the Democrats have a deep pool of talented, moderate economists.”

    There is an apparent contradiction between most economists’ support for free trade, low taxes and less intervention in the market and the low marks many give to Mr McCain, who is generally more supportive of those things than Mr Obama. It probably reflects a perception that the Republican Party under George Bush has subverted many of those ideals for ideology and political gain. Indeed, the majority of respondents rate Mr Bush’s economic record as very bad, and Republican respondents are only slightly less critical.

    “John McCain has professed disdain for ‘so-called economists’, and for some the feeling has become mutual,” says Erik Brynjolfsson, a professor at the Massachusetts Institute of Technology Sloan School of Management. “Obama’s team is mainstream and non-ideological but extremely talented.”

    On our one-to-five scale, economists on average give Mr Obama’s economic programme a 3.3 and Mr McCain’s a 2.2. Mr Obama, says Jonathan Parker, a non-aligned professor at Northwestern’s Kellogg School of Management, “is a pragmatist not an ideologue. I expect Clintonian economic policies.” If, that is, crushing federal debt does not derail his taxing and spending plans.

    On his plans to fix the financial crisis, Mr Obama averages 3.1, a point higher than Mr McCain. Still, some said they didn’t quite know what they were rating—reasonably enough, since neither candidate has produced clear plans of his own.

    Where the candidates’ positions are more clearly articulated, Mr Obama scores better on nearly every issue: promoting fiscal discipline, energy policy, reducing the number of people without health insurance, controlling health-care costs, reforming financial regulation and boosting long-run economic growth. Twice as many economists think Mr McCain’s plan would be bad or very bad for long-run growth as Mr Obama’s. Given how much focus Mr McCain has put on his plan’s benefits for growth, this last is quite a repudiation.

    Mr McCain gets his highest mark, an average of 3.5 and a clear advantage over Mr Obama, for his position on free trade and globalisation. If Mr Obama “would wake up on free trade”, one respondent says, “I could get behind the plans much more.” Perhaps surprisingly, the economists rated trade low in priority compared with the other issues listed. Only 53% say it is important or very important. Neither candidate scored at all well on dealing with the burgeoning cost of entitlements such as Medicare and Social Security.

    The economists also prefer Mr Obama’s tax plans. Republicans and respondents who do not identify with either political party see Mr McCain’s tax policies as more efficient but less equitable. But the former prefer Mr McCain’s plans—43% of Republicans say they are good or very good—and the latter Mr Obama’s. Of non-affiliated respondents, 31% say Mr Obama’s are good or very good.

    Either way, according to the economists, it would be difficult to do much worse than George Bush. The respondents give Mr Bush a dismal average of 1.7 on our five-point scale for his economic management. Eighty-two per cent thought Mr Bush’s record was bad or very bad; only 1% thought it was very good.

    The Democrats were overwhelmingly negative, but nearly every respondent viewed Mr Bush’s record unfavourably. Half of Republican respondents thought Mr Bush deserves only a 2. “The minimum rating of one severely overestimates the quality of Bush’s economic policies,” says one non-aligned economist.

    from http://www.economist.com/world/unite...ry_id=12342127
    Last edited by Agrippa; 10-04-2008 at 03:50 PM.
    Amantes sunt amentes.

  13. #13
    Mr. Bush's economic achievement is indeed very very bad. People tend to forget that in both 2000 and 2004 Bush pushed this ownership policy. It was a little like the chicken in every pot that was pushed by the Republicans just before the great stock market crash of 1929.

    The Bush administration did everything it could to allow just about anyone to buy a home. Everything from an artificially low interest rate policy from the Treasury to tax credits to builders. In addition it literally took away the normal Banking controls in place that allowed Bankers to package sub standard debt mixed with credit default swaps that covered normal economic default rates. This allowed bond rating agencies to Triple A this paper and without oversight by the US Government this paper was sold to everyone around the planet.

    The problem we have now is that default rates have tripled rendering the swaps useless in their protection of this paper. Now the Banks have this crap as assets and can no longer lend.

    Even with this bailout or rescue the Banks face 3X the mortgage resets next year and 4X the following year. This problem just gets worse over time.

    What people forget is that the Debt market is 10X the size of the stock market and what we are seeing is a 1929 style crash in the Bond market. As we go forward only those Companies that are self financing will do well but that will only last as long as the job market holds up.

    We are in very tough times and personally I don't see things getting better until 2012


    PK

  14. #14
    Quote Originally Posted by Maxima
    Not the Clinton administration? See the following New York Times article dated Sept 30 1999:

    http://query.nytimes.com/gst/fullpag...5AC0A96F958260

    Excerpt:
    Fannie Mae Eases Credit To Aid Mortgage Lending
    By STEVEN A. HOLMES, published September 30 1999

    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
    The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
    Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
    ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
    Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
    In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's......

    Yes I remember this. However it was more in line with how CMHC worked. In addition the Clinton Administration didn't allow debt mixes in wrapped securities, for instance when CMHC packages debt together they are all mortgage debt only, no credit cards or car loans are package together with mortgages. In addition there are no credit default swaps involved in such debt packages.

    The Bush Administration removed common sense regulations and rules regarding debt securities and now we are where we are. While talking up a good game to gain votes by taking a popular Clinton policy, Bush and his buddies setup a system that created hard to price and rather insane securities that only made the Banks very rich ... well at least in the short term.

    Why is it you Conservatives point to your failures as beginning with Clinton. There is prudent policy and then there is just plain stupidity, Clinton's policy brought the US closer to what is going on other G8 nations on housing policy, Bush and The Republicans took it way too far.


    PK

  15. #15
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    Quote Originally Posted by Maxima

    I did not know that an US Administration can allow or not allow dept mixes in wrapped securities. The US isn't a socialist country and government's (Democrat or Republican) first instinct is to stay away from regulating Wall Street.
    I thought this whole economics crisis started with out of control sub-prime lending and the burst of the real estate market.



    This statement is so uncharacteristic for any Republican administration. I thought the Repubican party is against poor people.
    Yes, we're against poor people--I'm not sure if you're being sarcastic or not, but I am. Actually, this sort of started with the Clinton administration

    Certainly Bush, whose failure is now complete, could have and should have seen this coming some time ago. However, I think the populace needs to take some responsibility. You'll never hear a politican say this, but it takes two to tango.

    Nobody forced poor people to take mortgages they couldn't afford. Yet, somehow they're victims of evil bankers...both the predatory lenders and the greedy consumers who want a lifestyle they can't afford are guilty here. It's not a one way street

    And nobody forced middle class Americans to live in "Mc-mansions" they can't afford and drive massive SUVs while always buying the latest gadgets for themselves and their kids. I hate to agree with Obama, but he's right when he says we can't go on driving our SUVs and keeping our homes at 72 degrees 365 days a year, etc--in other words, live within your means.

    But nobody in America wants to live within their means and consequently, our wreckless spending is catching up with us. I hope we learn a lesson
    Why are homely people discriminated against...we're the majority

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