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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: Hope Praytochange who wrote (54970)	8/9/2011 1:54:27 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 103300

Two things that I agree with (believe are true) came out in this interview with Hank Paulsen, President Bush's Treasury Secretary: 1) Europe problems are bigger issue then even our nations' problems: the downgrade is almost a sideshow compared with the real reason that stocks started falling Monday morning, before panic set in and the momentum of the market took over: the intractable problems in the European Union, which look a lot more like the United States banking crisis circa 2008 than what’s happening on this side of the Atlantic now. As Mr. Paulson told me, “The most pressing and significant problems in the global economy are unsustainable structural issues with regard to the E.U. — fiscal deficits and the structure of the E.U. itself.” This story might not grab as much attention, but it is this plight that is manifesting itself in the market. Now, just as was the case in the fall of 2008 before Lehman Brothers collapsed, the panicked rumor mill in Europe is in full swing. On Monday, traders were passing along rumors that a French bank and an Italian bank were on the verge of collapse. (There’s no evidence that the rumors are true, but the concern is that such chatter can become a self-fulfilling prophesy.) In the United States, the speculation game jumped the pond. This time it centered on Bank of America, after a report that David Tepper, the founder of the hedge fund Appaloosa Management, had dumped his entire 17-million-share stake in the bank. (In truth, he has sold about 40 percent of his stake.) Still, Mr. Paulson said he was less worried about the troubles in the financial sector of Wall Street than in Europe. “In the U.S., our capital markets and banks are stable and much better capitalized and better regulated than they were,” he said. 2) Even though our nation's problems are difficult, the actions we need to take to solve them are pretty well-known by now... it's just that the political class that we have in office right now isn't prepared (or politically able) to take the tough actions (against the desires of each Party's own base of supporters, the Dems on entitlement spending and the GOP on tax reforms). Most likely the current political crew won't be able to cut the long-term agreements that are necessary... and that won't happen until AFTER the coming elections. “Many of the Western democracies — including the U.S. — have a problem that voters want benefits they don’t want to pay for,” Mr. Paulson said. Nonetheless, Mr. Paulson said he actually took some solace in the debate over the debt ceiling, despite its ugliness. “The good news over the last six months or so — beginning with Bowles-Simpson — is that there is now a much better understanding of what is by far our biggest structural economic problem,” he said referring to the Bowles-Simpson bipartisan fiscal commission that looked at ways to cut the deficit. “Bowles-Simpson was particularly helpful by highlighting the fact that we are such a wealthy country that if we act soon we can deal with this problem with shared sacrifice but without any segment of our society having to sacrifice too much.” ...Unfortunately, while Mr. Paulson may be bullish on the long-term prospects for the United States and the nation’s ability to pay back its debts, he is less convinced that a solution will come anytime soon. “We need fundamental, structural reform and that is impossible without bipartisan compromise and cooperation,” he said, “which doesn’t appear to be forthcoming before an election which changes the players.” August 8, 2011, 8:50 pm DealBook Column Disaster Movie Gets a Sequel, With Subtitles By ANDREW ROSS SORKIN dealbook.nytimes.com