Category : President Barack Obama

Chris Farrell–The Most Damaging U.S. Deficit: Trust

That said, the most worrisome long-term economic impact of the Gulf spill lies elsewhere: The catastrophe is adding to the gradual erosion in trust in U.S. professional elites and major institutions, from government to business. It has hardly inspired confidence to watch the White House scramble to prove that President Barack Obama wasn’t as detached from the crisis as he often seemed, or to witness the inability of the world’s best oil engineers to stop the underwater gusher.

Confidence in the economy’s commanding heights has taken a beating following a long run of scandals and malfeasance. The list includes everything from the Enron and Worldcom failures, Bernie Madoff’s massive fraud, the subprime loan mess, the government rescues of Fannie Mae, Freddie Mac, and AIG (AIG), the controversy surrounding Goldman Sachs’ (GS) collateralized debt obligations, and so on. The Tea Party movement may grab all the attention with its antigovernment rhetoric, but surveys have repeatedly shown that its sentiment is widely shared. For instance, a series of long-run surveys by the Pew Research Center find that only 22 percent of those surveyed say they can trust government. That’s about the lowest measure in half a century. The ratings are similarly abysmal for large corporations and banks and other financial institutions: respectively 25 percent and 22 percent.

Trust isn’t as easy to measure as land, labor, and capital. It’s more like a recipe or a software protocol that allows for economic exchange and all kinds of innovation. Nobel Prize Laureate Kenneth Arrow famously remarked that “virtually every commercial transaction has within itself an element of trust.” Societies with high levels of trust are fertile ground for developing large corporations and innovative enterprises. Low-trust societies feature people who don’t like to do business with folks outside their family or community; smaller, family-run companies are the norm.

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Posted in * Culture-Watch, * Economics, Politics, --The 2010 Gulf of Mexico Oil Spill, Corporations/Corporate Life, Economy, Energy, Natural Resources, Ethics / Moral Theology, House of Representatives, Office of the President, Pastoral Theology, Politics in General, President Barack Obama, Psychology, Senate, The Banking System/Sector, The U.S. Government, Theology

Noam Scheiber–The Breakup: Did President Obama just dump his best friend on Wall Street?

Much has been made of the way Barack Obama has changed the sociology of the capital. There’s the shifting locus of social activity from Georgetown to Logan Circle, and the intrusion of two basketball hoops on the White House tennis court. But, even in Obama’s Washington, some of the old status symbols still matter. Take, for instance, the periodic ritual of the state dinner. In advance of such affairs, the most recent of which occurred in May, entrails-readers up and down the Amtrak corridor still scrutinize the guest lists. Invariably, they find hints about who the White House is courting (Chris Dodd, Anthony Kennedy) and who it may be shunning (no Lindsey Graham?). To this day, there’s still nothing like a state dinner sighting to shore up a hobbled official (Janet Napolitano), announce the arrival of an up-and-coming constituency (Univision anchor Jorge Ramos), or vouch for a wise man’s access (Mack McLarty ”¦ ?). The Salahis may be tacky, but fools they were not.

Coming as it did near the climax of the financial-reform fight, the May dinner held particular interest for a certain class of status-conscious gossip: Wall Street executives. Read one way, the guest list functioned as a crude, if not terribly surprising, guide to the administration’s financial-sector allegiances. Topping the list was Robert Wolf, CEO of UBS Americas, a longtime Obama fundraiser and confidant. Wolf was joined by James Gorman of Morgan Stanley, a firm with strong relationships at Treasury and the White House, and Brian Moynihan of Bank of America, whose bravery as a reformer Valerie Jarrett recently touted. Conversely, with his firm now shorthand for Wall Street double-dealing, no one should have been shocked to find Goldman Sachs CEO Lloyd Blankfein on the wrong side of the rope line.

But there was one invite decision that did seem vaguely curious: the omission of JP Morgan Chase CEO Jamie Dimon….if anyone should be attending a state dinner these days, it’s Dimon, whom The New York Times once dubbed “President Obama’s favorite banker.” And yet, as the months have passed, Dimon’s frustration over the direction of administration policy has become palpable.

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Office of the President, Politics in General, President Barack Obama, Stock Market, The Banking System/Sector

Oil spill: David Cameron confronts Barack Obama in battle to protect BP

The Prime Minister called for the company to be protected from excessive compensation claims as President Barack Obama made it agree to potentially unlimited damages.

BP provisionally agreed the biggest compensation payment in corporate history, setting up a fund worth at least £13.5 billion to cover the damage caused by its leaking oil pipe in the Gulf of Mexico.

But the US president last night made it clear that BP’s payments could be just the start, warning that the company could still face lawsuits from individuals and American states.

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Posted in * Economics, Politics, * International News & Commentary, --The 2010 Gulf of Mexico Oil Spill, Corporations/Corporate Life, Economy, Energy, Natural Resources, England / UK, Foreign Relations, Office of the President, Politics in General, President Barack Obama, The U.S. Government

BP Agrees to Set Aside About $20 Billion for Spill Claims

The White House and BP tentatively agreed on Wednesday that the oil giant would create a $20 billion fund to pay claims for the worst oil spill in American history. The fund will be independently run by Kenneth Feinberg, the mediator who oversaw the 9/11 victims compensation fund, according to two people familiar with the deliberations.

The agreement was not final and was still being negotiated when President Obama and his top advisers met Wednesday morning with BP’s top executives and lawyers. The preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.

The talks have been complicated by the fact that BP’s ultimate liabilities for the cleanup and lost business are unknowable since the two-month-old leak of its well in the Gulf of Mexico could be spewing oil for months more. To date, BP has spent more than $1 billion on containment, cleanup and claims from the Coast Guard, fishermen, oil workers and other businesses from Louisiana to Florida.

Since late last week, the negotiations have been closely held given the market sensitivity for BP, which has seen its stock lose about half its value since the spill. BP’s next dividend for shareholders is another issue on the table. Some members of Congress have called for blocking any dividend payments, though the legality of such action is in dispute, or for putting the dividend in another escrow account pending payment of claims to victims. Either option would be problematic for many institutional investors and pension funds with stock in BP.

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Posted in * Economics, Politics, --The 2010 Gulf of Mexico Oil Spill, Corporations/Corporate Life, Economy, Energy, Natural Resources, Office of the President, Politics in General, President Barack Obama

Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case

The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.

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Posted in * Economics, Politics, Budget, Economy, House of Representatives, Housing/Real Estate Market, Office of the President, Politics in General, President Barack Obama, Senate, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

Obama pleads for $50 billion in state, local aid

President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid “massive layoffs of teachers, police and firefighters” and to support the still-fragile economic recovery.

In a letter to congressional leaders, Obama defended last year’s huge economic stimulus package, saying it helped break the economy’s free fall, but argued that more spending is urgent and unavoidable. “We must take these emergency measures,” he wrote in an appeal aimed primarily at members of his own party.

The letter comes as rising concern about the national debt is undermining congressional support for additional spending to bolster the economy. Many economists say more spending could help bring down persistently high unemployment, but with Republicans making an issue of the record deficits run up during the recession, many Democratic lawmakers are eager to turn off the stimulus tap.

“I think there is spending fatigue,” House Majority Leader Steny H. Hoyer (D-Md.) said recently. “It’s tough in both houses to get votes.”

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Posted in * Economics, Politics, City Government, Economy, Office of the President, Politics in General, President Barack Obama, State Government, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

RNS: Religious left, disillusioned with Obama, coming to D.C.

More than 400 religious and secular progressives will meet here in the nation’s capitol this weekend (June 11-14) to urge President Obama to be the man “they thought they elected in 2008.”

The Network of Spiritual Progressives wants Obama to make good on campaign promises to protect the environment, fight for the poor, rein
in big business, and work for global peace.

“I’m not interested in those who want to be either for or against Obama,” said Rabbi Arthur Waskow, director of the Shalom Center in Philadelphia, Pa. “I want Obama to join us in the protection of the earth, protection of human beings.”

Waskow and about 34 other rabbis, pastors, priests, professors and congressmen are expected to speak at the four day conference, which will rally progressives around causes like a new “global Marshall plan” and a social responsibility amendment to the Constitution.

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Posted in * Culture-Watch, * Economics, Politics, Office of the President, Politics in General, President Barack Obama, Religion & Culture

The Hill: Ax may fall on tax break for mortgages

The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget ”” saying it could save $208 billion over the next decade.

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Posted in * Economics, Politics, Budget, Economy, House of Representatives, Housing/Real Estate Market, Office of the President, Personal Finance, Politics in General, President Barack Obama, Senate, Taxes, The U.S. Government

FT: Obama’s BP attacks spark worries in UK

British business on Wednesday expressed alarm at the “inappropriate” and increasingly aggressive rhetoric being deployed against BP by President Barack Obama, warning that the attacks on the oil company could affect energy security and damage wider transatlantic industry relations.

Richard Lambert, director general of the CBI, a leading British employers’ organisation, told the FT the presidential attack was “obviously a matter of concern ”“ politicians getting heavily involved in business in this way always is”.

He suggested the White House strategy was misplaced, stating that “apart from anything else, BP is a vital part of the US energy infrastructure. So the US has an interest in the welfare of BP, as much as the rest of the world does.”

Read the whole article

Posted in * Economics, Politics, * International News & Commentary, Corporations/Corporate Life, Economy, Energy, Natural Resources, England / UK, Foreign Relations, Office of the President, Politics in General, President Barack Obama

Barack Obama's attacks on BP hurting British pensioners

BP’s position at the top of the London Stock Exchange and its previous reliability have made it a bedrock
of almost every pension fund in the country, meaning its value is crucial to millions of workers. The firm’s dividend payments, which amount to more than £7 billion a year, account for £1 in every £6 paid out in dividends to British pension pots.

BP is so concerned about Mr Obama’s power to affect share value that it has urged David Cameron to appeal to the White House on its behalf. Downing Street, however, has refused to get involved. “We need to ensure that BP is not unfairly treated ”“ it is not some bloodless corporation,” said one of Britain’s top fund managers. “Hit BP and a lot of people get hit. UK pension money becomes a donation to the US government and the lawyers at the expense of Mrs Jones and other pension funds.”

Mark Dampier of the financial services company Hargreaves Lansdown said: “[Mr Obama] is playing to the gallery but is not bringing a solution any closer. Obama has his boot on the throat of British pensioners. There is no point in bashing BP all the time, it’s not helpful. It is a terrible situation, but having the American president on your back is not going to get it all cleared up any quicker.”

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Posted in * Economics, Politics, * International News & Commentary, Economy, Energy, Natural Resources, England / UK, Office of the President, Personal Finance, Politics in General, President Barack Obama, Stock Market

Stimulus Talk Yields to Calls to Cut Deficits

“My best guess is that we’ll have a continued recovery, but it won’t feel terrific,” Ben S. Bernanke, the Fed chairman, said at a dinner at the Woodrow Wilson International Center for Scholars on Monday night. “And the reason it won’t feel terrific is that it’s not going to be fast enough to put back eight million people who lost their jobs within a few years.”

One could almost envision the winces in the White House as Mr. Bernanke observed that the unemployment rate “will stay high for some time.” He went on to note that even if the economy grew at 3 percent, which would be considered a healthy pace, it would do little more than keep pace with the normal rate of growth of the work force.

Virtually every day of late, White House officials have struggled to explain how their strategies to provide economic stimulus to bring down the unemployment rate square with Mr. Obama’s oft-expressed commitment to tackle a record budget deficit. They talk about spending this year ”” in modest amounts ”” while waiting for the prescriptions of the president’s commission on debt reduction, which reports, conveniently, a few weeks after the midterm elections.

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Posted in * Economics, Politics, * International News & Commentary, Budget, Consumer/consumer spending, Corporations/Corporate Life, Economy, Europe, House of Representatives, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The National Deficit, The September 2008 Proposed Henry Paulson 700 Billion Bailout Package, The U.S. Government

Dorothy Rabinowitz:The Alien in the White House

The deepening notes of disenchantment with Barack Obama now issuing from commentators across the political spectrum were predictable. So, too, were the charges from some of the president’s earliest enthusiasts about his failure to reflect a powerful sense of urgency about the oil spill.

There should have been nothing puzzling about his response to anyone who has paid even modest critical attention to Mr. Obama’s pronouncements. For it was clear from the first that this president””single-minded, ever-visible, confident in his program for a reformed America saved from darkness by his arrival””was wanting in certain qualities citizens have until now taken for granted in their presidents. Namely, a tone and presence that said: This is the Americans’ leader, a man of them, for them, the nation’s voice and champion. Mr. Obama wasn’t lacking in concern about the oil spill. What he lacked was that voice””and for good reason.

Those qualities to be expected in a president were never about rhetoric; Mr. Obama had proved himself a dab hand at that on the campaign trail. They were a matter of identification with the nation and to all that binds its people together in pride and allegiance. These are feelings held deep in American hearts, unvoiced mostly, but unmistakably there and not only on the Fourth of July.

A great part of America now understands that this president’s sense of identification lies elsewhere, and is in profound ways unlike theirs. He is hard put to sound convincingly like the leader of the nation, because he is, at heart and by instinct, the voice mainly of his ideological class. He is the alien in the White House, a matter having nothing to do with delusions about his birthplace cherished by the demented fringe.

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I will take comments on this submitted by email only to at KSHarmon[at]mindspring[dot]com.

Posted in * Culture-Watch, * Economics, Politics, Office of the President, Politics in General, President Barack Obama

Thomas Friedman: A Gift for Grads: Start-Ups

That said, I think part of the business community’s complaint about Obama has merit. Although there are many “innovation” initiatives ongoing in this administration, they are not well coordinated or a top priority or championed by knowledgeable leadership. This administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product. And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation ”” not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness don’t seem to float Obama’s boat. He could use a buoyant growth strategy.

What might that include? I asked two of the best people on this subject, Robert Litan, vice president of research and policy at the Kauffman Foundation, which specializes in innovation, and Curtis Carlson, the chief executive of SRI International, the Silicon Valley-based innovation specialists.

Carlson said he would begin by creating a cabinet position exclusively for promoting innovation and competitiveness to ensure that America remains “the world’s new company formation leader.” “Secretary Newco” would be focused on pushing through initiatives ”” including lower corporate taxes for start-ups, reducing costly regulations (like Sarbanes-Oxley reporting for new companies), and expanding tax breaks for research and development to make it cheaper and faster to start new firms. We need to unleash millions of entrepreneurs.

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Posted in * Economics, Politics, Corporations/Corporate Life, Credit Markets, Economy, House of Representatives, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, The Banking System/Sector, The U.S. Government

Religion and Ethics Newsweekly: the Obama Cairo Speech Anniversary

RASHAD HUSSAIN (US Special Envoy to the Organization of the Islamic Conference): Well, the Cairo speech really set out the framework for””it’s a part of the dialogue that the president started as early as Inauguration Day, when he reached out to Muslim communities. On his second day in office, he appointed Senator [George] Mitchell to ensure that we’re doing everything we can to bring a resolution to the conflict in the Middle East, and it’s something that we have been persistent on, it’s something we’ll continue to be persistent on despite recent events. That event, I think you’ll see, will just redouble our efforts, our attempts to secure a peaceful resolution to the Middle East conflict. Of course, the president early on””one of the first interviews he did was with al-Arabiya. Then he traveled shortly after that to Ankara, where he made clear that the United States is not at war with Islam, and then in Cairo, where he really set forth the broad framework of dealing with Muslim communities in a comprehensive way and in a manner which addresses not just the political conflicts, one of which you mentioned, but also creates partnerships in a number of areas of mutual interest. And that’s really stemmed from the president’s belief that people all around the world, whether Muslim or non-Muslim or whether they live in a Muslim country or non-Muslim country, all share the same fundamental aspirations, and that is that they want to have access to education, they want to have the ability to pursue economic opportunity, to have health care, to raise their family in a secure way. And so part of the president’s message in Cairo was that we need to establish partnerships in a number of areas, including education, entrepreneurship, health, science, and technology, to have dialogue at the interfaith level, and we’ve continued to do that in a number of ways, and also while reaching out to the domestic Muslim community. The president sent one of his top advisers, Valerie Jarrett, to speak at the Islamic Society of North America, which is the largest gathering of American Muslims. [White House national security and counterterrorism advisor] John Brennan spoke at the Islamic Center at NYU and recently spoke to outreach to Muslim communities as a part of our national security strategy. We had recently an entrepreneurship summit. So this is really an ongoing dialogue, not an ad hoc approach, where we have a concerted effort to engage Muslim communities at all levels.

Read or watch it all.

Posted in * Culture-Watch, * Economics, Politics, * Religion News & Commentary, Foreign Relations, Globalization, Islam, Office of the President, Other Faiths, Politics in General, President Barack Obama, Religion & Culture

Mort Zuckerman: America’s jobless picture is alarmingly bleak

We are drifting. We take comfort in bits of good news, but we are in dangerous waters; the Great Recession is being starkly revealed as a global crisis with the US, the traditional engine of recovery, sputtering on every cylinder. The US government responded with dramatic financial support by transferring money to the household sector. But outside of these transfers the personal income of Americans is still declining; the residential market remains stagnant at best; consumer growth is nominal. The only real energy in the economy has come from the cessation of inventory liquidation, which is now the main factor in rising industrial output and any modest improvement in the economy.

The mood of US households is despondent. In May only 11.3 per cent believed they would see their income rise in the following six months, while 16.6 per cent thought they would see it decline. This is the first time in over four decades that more people believe they will be worse off than better. Any massive fiscal and monetary stimulus that might reverse the trend is likely to be politically unsustainable given the growing concern over the exploding national deficit.

Wherever you look the scene is bleak. Leading economic indicators fell in April ”“ unusual at such an early stage in the up-cycle. Jobless claims were up by 25,000 to 471,000. And up again above expectations in the first three weeks of May ”“ raising the four-week moving average to a level consistent with 100,000, or more, net job losses. For the past several months, claims have been nowhere near the levels of 400,000 and less that in the past were consistent with sustained job creation. We are not enjoying the normal cycle of economic improvement.

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Posted in * Economics, Politics, Economy, House of Representatives, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government

Study cited for health-cost cuts overstated Its Upside, critics say

(Please note that the title above is from the print edition–KSH)

But while the research compiled in the Dartmouth Atlas of Health Care has been widely interpreted as showing the country’s best and worst care, the Dartmouth researchers themselves acknowledged in interviews that in fact it mainly shows the varying costs of care in the government’s Medicare program. Measures of the quality of care are not part of the formula.

For all anyone knows, patients could be dying in far greater numbers in hospitals in the beige regions than hospitals in the brown ones, and Dartmouth’s maps would not pick up that difference. As any shopper knows, cheaper does not always mean better.

Even Dartmouth’s claims about which hospitals and regions are cheapest may be suspect. The principal argument behind Dartmouth’s research is that doctors in the Upper Midwest offer consistently better and cheaper care than their counterparts in the South and in big cities, and if Southern and urban doctors would be less greedy and act more like ones in Minnesota, the country would be both healthier and wealthier.

Read it all from Thursday’s New York Times.

Posted in * Culture-Watch, * Economics, Politics, --The 2009 American Health Care Reform Debate, Education, Health & Medicine, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate

LA Times–Officials warn oil spill may not be capped until August

A top Obama administration official warned Sunday that the Gulf of Mexico oil spill might not be stopped until late summer after BP’s latest attempt to plug the leak failed.

The “American people need to know” that it’s “possible we will have oil leaking from this well until August, when the relief wells will be finished,” said Carol Browner, the White House energy advisor.

Browner said on CBS that Energy Secretary Steven Chu and a team of scientists on Saturday essentially put a halt to BP’s attempt to cap the spewing well through a process known as “top kill.” The administration team worried that the increasing pressure from heavy drilling mud being forced into the well to seal it actually would make the leak worse.

The worst oil leak in U.S. history is now in its 41st day. It is sending 504,000 to 798,000 gallons a day into the Gulf of Mexico, according to estimates by a government panel.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., Corporations/Corporate Life, Economy, Energy, Natural Resources, Ethics / Moral Theology, Law & Legal Issues, Office of the President, Politics in General, President Barack Obama, Theology

Former Episcopal Bishop of Louisiana Charles Jenkins Interviewed on BBC's Sunday Programme

From here:

The coastline of Louisiana is under attack again this time from oil. The former Bishop of Louisiana is in the UK and will tell us about how Louisianans are coping with this latest disaster and how he was personally effected by Hurricane Katrina.

Click on the “listen now” audio link at the link above and go approximately 13:55 in; note that one question is asked about the Archbishop of Canterbury’s Pentecost letter–KSH.

Posted in * Anglican - Episcopal, * Economics, Politics, Archbishop of Canterbury, Corporations/Corporate Life, Economy, Energy, Natural Resources, Episcopal Church (TEC), Ethics / Moral Theology, Office of the President, Politics in General, President Barack Obama, TEC Bishops, Theology

David Einhorn–Easy Money, Hard Truths

Are you worried that we are passing our debt on to future generations? Well, you need not worry.

Before this recession it appeared that absent action, the government’s long-term commitments would become a problem in a few decades. I believe the government response to the recession has created budgetary stress sufficient to bring about the crisis much sooner. Our generation ”” not our grandchildren’s ”” will have to deal with the consequences….

The question we need to ask is this: If we don’t change direction, how long can we travel down this path without having a crisis? The answer lies in two critical issues. First, how long will the capital markets continue to finance government borrowings that may be refinanced but never repaid on reasonable terms? And second, to what extent can obligations that are not financed through traditional fiscal means be satisfied through central bank monetization of debts ”” that is, by the printing of money?

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Posted in * Culture-Watch, * Economics, Politics, Budget, Economy, Globalization, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate, The National Deficit, The U.S. Government

US Plays Down European Crisis but China Worried

The United States suggested Europe’s debt crisis would have minimal impact on global growth, but China took a more pessimistic view, warning it would impact demand for its exports and other regions would suffer too….

“The euro zone problems haven’t been cleaned up yet,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “And even though the global economy is definitely showing more signs of recovery than it did 6 months ago, worry continues that the euro zone’s woes will put a brake on this growth.”

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Asia, China, Economy, Europe, Globalization, Office of the President, Politics in General, President Barack Obama, The U.S. Government, Treasury Secretary Timothy Geithner

A Local Newspaper Editorial–End the Hidden Bailout

It is past time to end the conspiracy of silence about Fannie Mae and Freddie Mac, government-sponsored companies that buy and sell mortgages and related securities. Both were taken over by the Treasury Department in 2008. So far Washington has shelled out $140 billion to keep them afloat. A Congressional Budget Office study says their losses could reach $400 billion. Other estimates put them at $500 billion.

In contrast, the net cost to date of TARP, after loan repayments and other government income, is $172.5 billion, nearly half of which is owed by the auto industry.

While optimists foresee the repayment of most TARP funds, the same cannot be said of Fannie and Freddie, which own well over a trillion dollars in risky mortgages and mortgage-backed securities.

Unlike TARP funds, the subsidies to Fannie and Freddie do not show up in the government’s budget. If they did, it would be even further out of balance.

Read it all.

Posted in * Economics, Politics, Budget, Economy, Housing/Real Estate Market, Office of the President, Politics in General, President Barack Obama, The 2009 Obama Administration Bank Bailout Plan, The National Deficit, The September 2008 Proposed Henry Paulson 700 Billion Bailout Package, The U.S. Government

Simon Schama (FT): On the brink of a new age of rage

Far be it for me to make a dicey situation dicier but you can’t smell the sulphur in the air right now and not think we might be on the threshold of an age of rage….

Whether in 1789 or now, an incoming regime riding the storm gets a fleeting moment to try to contain calamity. If it is seen to be straining every muscle to put things right it can, for a while, generate provisional legitimacy.

Act two is trickier. Objectively, economic conditions might be improving, but perceptions are everything and a breathing space gives room for a dangerously alienated public to take stock of the brutal interruption of their rising expectations. What happened to the march of income, the acquisition of property, the truism that the next generation will live better than the last? The full impact of the overthrow of these assumptions sinks in and engenders a sense of grievance that “Someone Else” must have engineered the common misfortune. The stock epithet the French Revolution gave to the financiers who were blamed for disaster was “rich egoists”. Our own plutocrats may not be headed for the tumbrils but the fact that financial catastrophe, with its effect on the “real” economy, came about through obscure transactions designed to do nothing except produce short-term profit aggravates a sense of social betrayal. At this point, damage-control means pillorying the perpetrators: bringing them to book and extracting statements of contrition. This is why the psychological impact of financial regulation is almost as critical as its institutional prophylactics. Those who lobby against it risk jeopardising their own long-term interests. Should governments fail to reassert the integrity of public stewardship, suspicions will emerge that, for all the talk of new beginnings, the perps and new regime are cut from common cloth. Both risk being shredded by popular ire or outbid by more dangerous tribunes of indignation.

Read it all (subscription required).

Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Economy, History, Housing/Real Estate Market, Office of the President, Politics in General, President Barack Obama, Psychology, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

A Washington Post Editorial–Intelligence Failure

The resignation of Dennis C. Blair as director of national intelligence was the product of personal as well as institutional failings. A retired admiral with a distinguished record of service, Mr. Blair’s political judgment looked questionable from the beginning of his DNI tenure, when he nominated a former ambassador with close ties to China and Saudi Arabia — and crackpot views about the Israel “lobby” — to chair the National Intelligence Council. After the failed Christmas Day airplane bombing, Mr. Blair told Congress that the Nigerian suspect should have been questioned by the interagency interrogation group created by the administration for terrorism cases — only to acknowledge later that the team had not yet been launched.

Read it all.

Posted in * Economics, Politics, Defense, National Security, Military, Economy, Office of the President, Politics in General, President Barack Obama, Terrorism, The U.S. Government

AP: Senate passes massive Wall Street regulation bill

Prodded by national anger at Wall Street, the Senate on Thursday passed the most far-reaching restraints on big banks since the Great Depression. In its broad sweep, the massive bill would touch Wall Street CEOs and first-time homebuyers, high-flying traders and small town lenders.

The 59-39 vote represents an important achievement for President Barack Obama, and comes just two months after his health care overhaul became law. The bill must now be reconciled with a House version that passed in December. A key House negotiator predicted the legislation would reach Obama’s desk before the Fourth of July.

The legislation aims to prevent a recurrence of the near-meltdown of big Wall Street investment banks and the resulting costly bailouts. It calls for new ways to watch for risks in the financial system and makes it easier to liquidate large failing financial firms. It also writes new rules for complex securities blamed for helping precipitate the 2008 economic crisis, and it creates a new consumer protection agency.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Corporations/Corporate Life, Economy, House of Representatives, Law & Legal Issues, Office of the President, Politics in General, President Barack Obama, Senate, Stock Market, The Banking System/Sector

Specter Defeat Signals a Wave Against Incumbents

Senator Arlen Specter of Pennsylvania, who left the Republican Party a year ago in hopes of salvaging a 30-year career, was rejected on Tuesday by Democratic primary voters, with Representative Joe Sestak winning the party’s nomination on an anti-incumbent wave that is defining the midterm elections.

In Kentucky, Rand Paul, the most visible symbol of the Tea Party movement, easily won the Republican Senate primary and delivered a significant blow to the Republican establishment. His 24-point victory over Trey Grayson, who was supported by the most powerful Republican on Capitol Hill, Senator Mitch McConnell of Kentucky, underscored the anti-Washington sentiment echoing across the country.

The outcomes of both contests, along with a Democratic primary in Arkansas that pushed Senator Blanche Lincoln into a runoff election in June, illustrated anew the serious threats both parties face from candidates who are able to portray themselves as outsiders and eager to shake up the system.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., City Government, Consumer/consumer spending, Economy, House of Representatives, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Psychology, Senate, State Government

White House notes Iran nuclear deal skeptically

The White House on Monday showed deep skepticism about Iran’s new deal to ship low-enriched uranium off its soil, saying it has the chance to be “positive step” but warning that the deal still allows Iran to keep enriching uranium toward the pursuit of a nuclear weapon.

“Given Iran’s repeated failure to live up to its own commitments, and the need to address fundamental issues related to Iran’s nuclear program, the United States and international community continue to have serious concerns,” White House press secretary Robert Gibbs said in a written statement to the media.

In a deal struck with Turkey and Brazil, Iran said it would export much of its low-enriched uranium to Turkey. In return, Iran would get fuel rods of medium-enriched uranium to use in a Tehran medical research reactor. The move was seen as an attempt by Iran to prevent a looming round of United Nations sanctions.

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Posted in * Economics, Politics, * International News & Commentary, America/U.S.A., Defense, National Security, Military, Foreign Relations, Iran, Middle East, Office of the President, Politics in General, President Barack Obama

Meredith Whitney– The Small Business Credit Crunch

Herein lies the challenge: Small businesses, half of the private sector (and the most important part as far as jobs are concerned), have been heavily impacted by this credit crisis. Small businesses created 64% of new jobs over the past 15 years, but they have cut five million jobs since the onset of this credit crisis. Large businesses, by comparison, have shed three million jobs in the past two years.

Small businesses continue to struggle to gain access to credit and cannot hire in this environment. Thus, the full weight of job creation falls upon large businesses. It would take large businesses rehiring 100% of the three million workers laid off over the past two years to make a substantial change in jobless numbers. Given the productivity gains enjoyed recently, it is improbable that anything near this will occur.

Unless real focus is afforded to re-engaging small businesses in this country, we will have a tragic and dangerous unemployment level for an extended period of time. Small businesses fund themselves exactly the way consumers do, with credit cards and home equity lines. Over the past two years, more than $1.5 trillion in credit-card lines have been cut, and those cuts are increasing by the day….

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Posted in * Economics, Politics, City Government, Corporations/Corporate Life, Economy, House of Representatives, Labor/Labor Unions/Labor Market, Office of the President, Politics in General, President Barack Obama, Senate, State Government, The Banking System/Sector, The U.S. Government

Terry Mattingly–Sermons by Billy and Obama

Both men faced rows of loved ones still wrapped in grief after shocking tragedies.

Both men quoted the Psalms. Both concluded with visions of eternal life and heavenly reunions. Both referred to familiar songs that offered comfort.

Facing those gathered in Beckley, W.Va., to mourn the loss of 29 miners, President Barack Obama asked them to remember a rhythm and blues classic ”” “Lean on Me” ”” that had its roots in coal country life.

Songwriter Bill Withers wrote: “Sometimes in our lives, we all have pain, we all have sorrow. ”¦ Lean on me, when you’re not strong and I’ll be your friend. I’ll help you carry on, for it won’t be long ”˜til I’m gonna need somebody to lean on.”

The Rev. Billy Graham was more daring at the 1995 prayer service for the 168 victims of the bombing at the Alfred P. Murrah Federal Building in Oklahoma City. The world’s most famous evangelist even quoted an explicitly Christian hymn.

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Posted in * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, * Religion News & Commentary, Evangelicals, Office of the President, Other Churches, Parish Ministry, Pastoral Care, Pastoral Theology, Politics in General, Preaching / Homiletics, President Barack Obama, Religion & Culture, Theology

Barack Obama plans to punish BP with tax hike as Gulf spill worsens

Oil companies face an immediate tax rise of 1 cent per barrel to help to pay for the clean-up in the Gulf of Mexico under proposed legislation rushed out by the White House.

The measure, unveiled as BP began a new attempt to contain the ruptured well that has leaked millions of gallons of crude oil into America’s southern coastal waters, would put an extra $500 million (£340 million) over ten years into the Oil Spill Liability Trust Fund, which covers damage caused by such disasters.

Under a $118 million spending plan outlined in the package, people affected by the spill ”” such as fishermen who have lost their livelihoods because of the contamination ”” will be granted financial assistance, and federal agencies will get additional funds to monitor the slick and assess its impact.

President Obama, said by a spokesman to be “deeply frustrated” that the leak has still not been plugged three weeks after it erupted, intends that BP will pick up most of the cost of his new plan.

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Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Energy, Natural Resources, Office of the President, Politics in General, President Barack Obama, Taxes

Washington Post–Abortion could be sleeper issue in Supreme Court confirmation process

White House spokesman Ben LaBolt told the AP that “judges confront issues differently than staff attorneys for an administration.”

For the White House, the idea that Kagan might support tougher restrictions on abortion presents a complicated set of political opportunities and risks. The revelation may help to mute right-wing groups who often use support for abortion rights as a way of attacking a nominee.

But the 1997 memorandum may give further rise to the concerns already expressed on Monday by liberal groups, who fear that the lack of evidence of Kagan’s strong support for abortion rights throughout her career suggests that she will not be an advocate for their cause on the court.

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Posted in * Culture-Watch, * Economics, Politics, Law & Legal Issues, Life Ethics, Office of the President, Politics in General, President Barack Obama, Religion & Culture, Senate