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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Asymmetric who wrote (160345)	2/10/2009 10:15:29 PM
From: stockman_scott	Respond to of 362563

<<...PS: Geithner and Summers are the wrong choices...>> Obama is a true Centrist (with some progressive views)...Obama made "safe" choices when he chose many of his cabinet members...It would have really worried the establishment and Wall Street if Obama had selected a Treasury Secretary like Roubini or Stiglitz...Yet, it's too bad Paul Volcker isn't a little younger (he's in his early 80s and is advising Obama but has so much credibility).

To: Asymmetric who wrote (160345)	2/10/2009 10:45:01 PM
From: stockman_scott	Read Replies (1) \| Respond to of 362563

Recession Won’t Morph Into an American Depression: Commentary by John Dorfman Feb. 9 (Bloomberg) -- There is no more important investment question at the moment than this: Is the U.S. entering a depression? There are, of course, reasons to think so. The federal government has felt obliged to take over large, well-known companies like American International Group Inc. Gross domestic product declined 3.8 percent in the fourth quarter, making it the worst quarter in the past 25 years. Layoffs and firings are endemic. Payrolls fell by 598,000 in January, the biggest drop since December 1974. The stock market’s action is another ominous sign. In 2008 the Standard & Poor’s 500 Index recorded its worst year since 1931. Both the S&P 500 and the Dow Jones Industrial Average just logged their worst January on record, down 8.6 percent and 8.8 percent, respectively. These indicators aren’t to be taken lightly. But this doesn’t mean we’re entering a depression. I define a depression as a period of economic contraction that lasts two years or more and that pushes unemployment to 10 percent or more. By comparison, the Great Depression lasted for a decade (1930-1939) and saw unemployment reach 25 percent. Today U.S. unemployment stands at 7.6 percent, the highest in more than 16 years. Recession Record The U.S. has officially been in a recession for 14 months. The two longest recessions since World War II (a period of 63 years) each lasted 16 months. This one seems almost certain to last longer. Here are six reasons why I believe we’re unlikely to have a depression, and why current conditions don’t echo those of the 1930s. -- The U.S. and its trading partners have so far resisted the temptation to fight economic fire with gasoline. They haven’t set up major new trade barriers or started trade wars in an attempt to help the home country at the expense of others. Such trade wars were a big feature of the economic landscape in the 1930s. The Smoot-Hawley Tariff Act of 1930 attempted to protect American markets by raising tariffs on 70 agricultural products and 900 manufactured goods. The measure backfired. Within two years, 25 other countries had retaliated with tariffs of their own. By 1932, partly because of the new trade barriers, American exports had fallen to $1.6 billion, from $5.2 billion in 1929. Obama vs. Hoover -- The White House is trying much harder to stimulate the economy than our leaders did in the early 1930s. During Herbert Hoover’s presidency, Congress raised taxes in the teeth of the depression in 1932, increasing the top bracket to 63 percent from 25 percent and reducing personal exemptions. By contrast, President Barack Obama is seeking tax credits for households making less than $150,000. The reasoning is that tax cuts put more money in people’s hands, spurring them to spend and rekindling economic activity. Tax cuts appeared to do just that under President John F. Kennedy in the early 1960s and under President Ronald Reagan in the 1980s. Congress is busy debating the size and nature of the stimulus package. If it turns out to be about as large as Obama has proposed (in the $800 billion to $900 billion range) and gives employers greater incentives for hiring, it too might help us avoid a depression. Shock Absorbers -- Monetary policy is friendlier than it was 75 years ago. The Federal Reserve Board is trying to keep interest rates low and the money supply ample. By contrast, the Fed allowed the U.S. money supply to contract by one third from 1929 through 1933. -- The U.S. over the past seven decades has created a number of social programs that act as shock absorbers. People who in 1933 might have become hobos or beggars today have some purchasing power thanks to programs such as unemployment insurance, welfare, Medicare, Medicaid, and Social Security. -- Today’s means of communication and transportation are better than those of the Depression era. The Internet, television and air travel make it easier for people living in one place to take advantage of job opportunities in another. -- Fourteen months into the recession, some economic indicators are showing glimmers of improvement. Sales of previously owned homes rose 6.3 percent in December. Railcar loadings, a favorite economic indicator used by investors in the 1920s, jumped more than 30 percent in the first two weeks of January from December’s depressed levels. The stock market has held for 11 weeks above its 2008 lows. The 52 percent decline in the S&P 500 from October 9, 2007, through November 20, 2008, was enough to anticipate a very stiff recession. So if we are not in a depression, we are probably in the midst of a major buying opportunity. I believe that stocks are fairly likely to be up 10 percent or more a year from now, and up 30 percent or more within three years. (John Dorfman, chairman of Thunderstorm Capital in Boston, is a columnist for Bloomberg News. The opinions expressed are his own. His firm or clients may own or trade securities discussed in this column.) To contact the writer of this column: John Dorfman at jdorfman@thunderstormcapital.com. Last Updated: February 9, 2009 00:01 EST

To: Asymmetric who wrote (160345)	2/11/2009 1:27:07 AM
From: stockman_scott	1 Recommendation Respond to of 362563

The Open-Door Bailout ____________________________________________________________ By THOMAS L. FRIEDMAN Op-Ed Columnist The New York Times February 11, 2009 Bangalore, India -- Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: immigration. “All you need to do is grant visas to two million Indians, Chinese and Koreans,” said Shekhar Gupta, editor of The Indian Express newspaper. “We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately improve your savings rate — no Indian bank today has more than 2 percent nonperforming loans because not paying your mortgage is considered shameful here. And we will start new companies to create our own jobs and jobs for more Americans.” While his tongue was slightly in cheek, Gupta and many other Indian business people I spoke to this week were trying to make a point that sometimes non-Americans can make best: “Dear America, please remember how you got to be the wealthiest country in history. It wasn’t through protectionism, or state-owned banks or fearing free trade. No, the formula was very simple: build this really flexible, really open economy, tolerate creative destruction so dead capital is quickly redeployed to better ideas and companies, pour into it the most diverse, smart and energetic immigrants from every corner of the world and then stir and repeat, stir and repeat, stir and repeat, stir and repeat.” While I think President Obama has been doing his best to keep the worst protectionist impulses in Congress out of his stimulus plan, the U.S. Senate unfortunately voted on Feb. 6 to restrict banks and other financial institutions that receive taxpayer bailout money from hiring high-skilled immigrants on temporary work permits known as H-1B visas. Bad signal. In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower — anywhere? That’s called “Old Europe.” That’s spelled: S-T-U-P-I-D. “If you do this, it will be one of the best things for India and one of the worst for Americans, [because] Indians will be forced to innovate at home,” said Subhash B. Dhar, a member of the executive council that runs Infosys, the well-known Indian technology company that sends Indian workers to the U.S. to support a wide range of firms. “We protected our jobs for many years and look where it got us. Do you know that for an Indian company, it is still easier to do business with a company in the U.S. than it is to do business today with another Indian state?” Each Indian state tries to protect its little economy with its own rules. America should not be trying to copy that. “Your attitude,” said Dhar, should be “ ‘whoever can make us competitive and dominant, let’s bring them in.’ ” If there is one thing we know for absolute certain, it’s this: Protectionism did not cause the Great Depression, but it sure helped to make it “Great.” From 1929 to 1934, world trade plunged by more than 60 percent — and we were all worse off. We live in a technological age where every study shows that the more knowledge you have as a worker and the more knowledge workers you have as an economy, the faster your incomes will rise. Therefore, the centerpiece of our stimulus, the core driving principle, should be to stimulate everything that makes us smarter and attracts more smart people to our shores. That is the best way to create good jobs. According to research by Vivek Wadhwa, a senior research associate at the Labor and Worklife Program at Harvard Law School, more than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, said Wadhwa in an essay published this week on BusinessWeek.com. He also cited a recent study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan that “found that in periods when H-1B visa numbers went down, so did patent applications filed by immigrants [in the U.S.]. And when H-1B visa numbers went up, patent applications followed suit.” We don’t want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to — we have to — come out of it with a new Intel, Google, Microsoft and Apple. I would have loved to have seen the stimulus package include a government-funded venture capital bank to help finance all the start-ups that are clearly not starting up today — in the clean-energy space they’re dying like flies — because of a lack of liquidity from traditional lending sources. Newsweek had an essay this week that began: “Could Silicon Valley become another Detroit?” Well, yes, it could. When the best brains in the world are on sale, you don’t shut them out. You open your doors wider. We need to attack this financial crisis with green cards not just greenbacks, and with start-ups not just bailouts. One Detroit is enough. Copyright 2009 The New York Times Company